US falls to 12th in world for patent protection

The US patent protection system has fallen to Number 12 in the world, according to a new report from the US Chamber of Commerce.

The Chamber released the 2018 International IP Index, a ranking of 50 nations based on how committed they are to “ensuring intellectual property owners can protect their creations and enforce their legal rights.”

The report said the patent opposition system in the US provides a channel for “bad faith actors” and injects a “great deal of cost and uncertainty for patent owners” compared with other post-grant opposition systems.

The report said that although the US did well overall — with the US, UK and EU economies remaining at the top the global IP rankings — the US’s overall lead narrowed due to “systemic challenges to the US patent system.”

The report said: “In Category 1: Patents, Related Rights, and Limitations, the U.S. has dropped its ranking in successive editions of the Index.

“This change is primarily driven by relative weakness in patentability requirements and patent opposition.

“For the former, the patentability of basic biotech inventions was compromised by the Supreme Court decisions in the 2013 Molecular Pathology v. Myriad Genetics and 2012 Prometheus Laboratories, Inc v. Mayo Collaborative Services cases.

“The rulings raised uncertainties over the patentability of DNA molecules that mimic naturally occurring sequences as well as other patented products and technologies isolated from natural sources.

“In 2017, interpretation of the recent Supreme Court decisions in Myriad, Mayo, and Alice Corp vs. CLS Bank International by lower courts and guidance from the USPTO remained inconsistent and difficult to apply.

“There is considerable uncertainty for innovators and the legal community, as well as an overly cautious and restrictive approach to determining eligibility for patentable subject matter in areas such as biotech, business method, and computer-implemented inventions.

“This seriously undermines the longstanding world-class innovation environment in the U.S. and threatens the nation’s global competitiveness.

“As a result, in 2017, a number of legal societies and industry groups called for legislative reform of Section 101 of the U.S. Patent Act, citing the need for clarity on patentability in a wider, legislative context rather than in highly specific guidelines and case law.

“With respect to opposition proceedings, despite the best intentions of new opposition mechanisms introduced in the America Invents Act, the ease of challenging patents during the post-grant period, particularly through inter partes review, has led to a high volume of trials (particularly for life sciences claims) and a disproportionate rate of rejections.

“Concerns have also been raised over a perceived reduced opportunity to amend claims in opposition proceedings and a lower burden of proof for opposing parties than in district court proceedings.

“As such, the opposition system in the U.S. provides a channel for bad faith actors and injects a great deal of cost and uncertainty for patent owners compared with other post-grant opposition systems.”

Biotechnology Innovation Organization (BIO) CEO James Greenwood said: “This year’s International IP Index from The Global IP Center reveals deeply concerning facts about America’s steady decline as an innovation-supporting economy.

“While most of the world’s top economies continue to make the advances to intellectual property rights that fuel innovation ecosystems, the United States continues to slide backwards.

“The Index’s authors chiefly blame effects related to the 2011 America Invents Act (AIA) that created an unbalanced patent challenge system that adds substantial costs and uncertainty for innovators, who are forced to repeatedly fend off abusive attacks on previously-approved patents within the U.S. Patent and Trademark Office’s (PTO) review system.

“For biotechnology companies, this means procedural battles that never end – forcing them to spend too much of their time and limited resources in court and at the PTO and not enough in the lab.

“Particularly for small firms, often the most innovative of all, even the threat of such challenges can put them out of business.

“Under the PTO’s prior leadership, it repeatedly refused to reign in such abuses, claiming it is not its responsibility to do so.

“The end result is clear: America’s inventors and businesses, large and small, are left to question the ultimate strength and value of their patent portfolios, and all of us are left with a system which, while created to improve the quality of our intellectual property, threatens to weaken it instead.

“BIO remains ready and willing to work with Congress and the new PTO leadership to reform these flaws and ensure that reforms better support the inventors, the investors, and the people waiting for new innovations to improve their lives and their environment.”