From the Alliance

Dec. 7, 2016

Inventing America and IP Watchdog Section 101 Conference Speakers Call For Strong Patent Protections For All Innovative Industries

Washington, D.C. – At an Inventing America and IP Watchdog conference in Washington, D.C. focused on the impact of a series of recent Supreme Court decisions related to Section 101, concerning patent subject matter eligibility, speakers called for strong patent protections for all innovative industries. The speakers – from government, research, finance and academia – said weakened patent rights would drive companies, investment and jobs overseas to competing nations like China. Video from the conference is available at:

Here are some key quotes from the conference speakers:

Senator Chris Coons (D-DE)

“Strong patents and a strong innovation economy are absolutely essential to America’s competitiveness overseas.”

“If meaningful patent protections are cut off, then I think we’re incentivizing exactly the wrong direction.”

“Equally worrisome is the sheer amount of uncertainty that the courts Section 101 jurisprudence is creating. The only thing certain right now is that this area of law is utterly uncertain.”

“All of these things in combination, I think, lead to very real harm to our prospects for future economic growth. More importantly, we’re ceding to our competitors these specific areas. It’s not as if Europe and China have followed the Supreme Court’s jurisprudence in this area. It’s not as if Europe and China have said ‘we’re not going to issue any patents in this area until the courts of the United States figure out exactly what line they’re going to follow.’ Instead, they’re roaring ahead and providing patent protection and providing eligibility and clarity in areas where we aren’t.”

“In this area, where we have a trade surplus of some $85 billion, meaning licensing of IP rights, we are steadily undermining our competitive advantage against these two very critical jurisdictions. And I think we ought to be doing things in Congress to seek to contain that competitive advantage and provide more clarity in this area of law.”

David Kappos, Former Director, USPTO; Partner, Cravath, Swaine & Moore LLP

“Large swaths of software innovation are no longer protectable by valid and enforceable patents. You might get some through the patent office, but you are not going to have anything near a settled estate.”

“So when you take a field like that and make it basically unpatentable, without protection by defendable, strong patents, you are definitely going to cause investment capital to move away from that industry, there is no question about it, that’s how the field works.”

“… [We] have a real problem, it is really costing U.S. innovation leadership, and I think jobs.”

“This is an issue that as the economists say, operates at the margin…You bring the margins in 10%, 15%, 20%, and cause that much innovation to go elsewhere, that is the difference between an economy that is growing robustly and an economy that, as the Wall Street Journal said this week, is stalled out. And that’s the issue I believe we are dealing with, is an issue at margins that are actually rather wide margins.”

Paul Michel, Former Chief Judge, U.S. Court of Appeals for the Federal Circuit

“In the last half decade, the patent world has been turned upside down. But the Supreme Court doesn’t realize that yet. The Congress doesn’t seem fully to realize that yet. So we need a better sense of history.”

“And secondly, we need a much better sense of proportion. So, for example, the Congress has been so propagandized for the last decade, that it thinks that frivolous lawsuits are the number one problem in the patent world. They are a real problem. I don’t deny there are some frivolous lawsuits, occasionally courts so find. But on a relative basis, the problem of eligibility I would say is a thousand times more important than the problem of occasional frivolous lawsuits. But the sense of proportion is upside down.”

“The Congress thinks the problem is NPE lawsuits, based on frivolous or invalid patents. I think the big problem is that the AIA regime as it’s actually worked in practice, who could have maybe predicted, but as it has actually worked in practice, and now we know, has been unduly harmful and has greatly added to the uncertainty that’s killing investment, killing invention.”

Brian Pomper, Executive Director, Innovation Alliance

“… [A] variety of changes in the system from different quarters, in the courts, the Judicial Conference, from the implementation of the AIA, from other matters, really seems to have changed some of this narrative that we hear… We are here to talk about the changes in the interpretation of Section 101 that are truly wreaking havoc in the patent system.”

Laurie Self, Counsel and Vice President of Government Affairs, Qualcomm

“One of the anecdotes that I hear in talking to many throughout the invention ecosystem, if you will, is that we are increasingly in a world where patent applications are being denied in the United States but granted in other parts of the world. That really is, I think, a reversal of the dynamic that we historically have enjoyed in the United States where we have benefitted from a patent system that is far more flexible in allowing new fields of inventive activity than other parts of the world.”

Ami Patel Shah, Managing Director, Fortress Investment Group

“I’d say in the last few years, companies have come to us for financing, and unfortunately for us, because of new case law, and a lot of these companies don’t know about the 101 changes, so ignorance was bliss for them, and they thought they were still valuable and they continued on. But as you educate them on the recent uncertainty and the drastic change in the 101 rules and what has happened with their patents, we were not able to provide them financing, nor was anyone else in the venture community giving them venture financing because then it became known that their product was unprotected, that anyone could copy it. So companies were put in bankruptcy or they had a fireside sale.”

“And what is distressing is we are seeing that most of the acquisitions have happened from foreign buyers. So all of that intellectual property, all of that R&D money that went in from U.S. companies, from U.S. institutional investors, and after all that work, it is a foreign purchaser who got all acquisition and the know how to then take it to the next stage.”