A Framework for Aligning Private and Government Goals on IP

“In today’s environment, companies want increased trade with China while national security is looking to limit China’s access to critical and emerging technologies. [This] means that there is a misalignment of strategic objectives around IP.”

Both the Biden and Trump Administrations have made it abundantly clear that economic and technology security is now national security. In the latest National Security Strategy, the Biden Administration stated, “Technology is central to today’s geopolitical competition and to the future of our national security, economy, and democracy. U.S. and allied leadership in technology and innovation has long underpinned our economic prosperity and military strength. In the next decade, critical and emerging technologies are poised to retool economies, transform militaries, and reshape the world.”

At a recent meeting of the Five Eyes intelligence chiefs (United States, Britain, Canada, Australia and New Zealand), they discussed the unprecedented economic espionage efforts of China. “The Chinese government is engaged in the most sustained scaled and sophisticated theft of intellectual property and expertise in human history,” said Mike Burgess, the Australian Security Intelligence Organisation’s director-general. Further, said Ken McCallum, the head of MI5, “If you’re working today at the cutting edge of technology then geopolitics is interested in you, even if you’re not interested in geopolitics.”

Technology development is underpinned with inventions, and often those are protected with patents. Today, patents are sources of both value and risk for companies. Patents are both political and geopolitical tools for nation states. The many roles mean that patent stakeholders, including individual inventors, companies, universities, agencies, Congress and the courts, are definitely not properly aligned on the highest and best use of patents to promote innovation.

Winning the Race

In our 2023 Annual Report, the Patent Public Advisory Committee (PPAC), an advisory board to the U.S. Patent and Trademark Office (USPTO) of which I am a current member, highlighted these issues and clearly articulated our belief that we must unite around a clear objective for intellectual property (IP): “How can we best utilize IP for the benefit of the nation”?

There are numerous reports outlining the rise of China as a rising innovation nation and the decreasing role the U.S. has on global R&D. The world is embroiled in a global innovation race and the implications of falling behind are ominous. The only feasible way our country can compete in such a race is to broaden our base of innovators and encourage more Americans to participate in the invention of new and more diverse and disruptive technologies. Fundamental to this goal is the assurance to individual inventors, universities, companies and investors that their efforts and investments will be both sustainable and predictable through a robust and reliable patent ecosystem.

As the rhetoric around access to technology has heated up between countries, we should take a moment to understand how technology development has changed in the U.S. Government spending, as a share of the total spent on R&D has dropped from a high of 67% in 1966, to around 22% in 2018. This means that our national security is largely dependent on the private sector to create, develop, and deploy the necessary innovations to keep our country safe while maintaining our economic and technological edge. While this shift from public to private sector technology development may be both cost and time effective, it also means that national competitiveness must compete with the unwavering corporate focus on increasing shareholder value. As you can see in today’s environment, companies want increased trade with China while national security is looking to limit China’s access to critical and emerging technologies. So, as we consider IP as a new tool in the national security toolbox, we should also recognize that what is best for the nation may not be what is best for the private sector, which means that there is a misalignment of strategic objectives around IP.

As was noted in the 2023 PPAC report, the USPTO has been tightening the link between economic and technological competitiveness, specifically as to patents. The USPTO and many other federal agencies’ actions are, however, often inconsistent with that objective. Maintaining and growing gross domestic product (GDP) is the job of Congress and the White House and that growth is under threat from adversarial nations. Even without the advent of foreign competition, strategies that would engage more Americans to participate more fully in our economic system are, in and of themselves, a positive action. Given that the legitimate threat from foreign innovators will persist in a fair and open market, a focus on creating a counter strategy to negate the domestic piracy of U.S. patents becomes truly important and critical for the United States.

America’s long standing economic prosperity and global leadership in innovation depends on first ensuring a level playing field for all inventors to create, protect and commercialize their inventions.

Reaching for a ‘Robust and Reliable’ System

The past year has seen much discussion on making the patent system more robust and reliable, from the granting of the patent right at the USPTO through to investors and ultimately product sales in the marketplace. Creating a robust and reliable patent system will take more effort than just making small tweaks to the system. The courts and Congress bear considerable responsibility for the decline in both U.S. innovation and successful inventorship. The U.S. Chamber of Commerce recently published a set of IP Principles to help visualize the level of effort needed to transform our innovation ecosystem to one that our nation can be proud of, providing jobs and economic prosperity, while making sure our citizens are safe, secure and have access to the latest technologies to improve their lives. This task will not be easy. It will require all of us to acknowledge our internal biases about IP and patents, focus on a common goal – how patents can improve our national competitiveness – and look to bolster our IP system against bad actors and our adversaries who want to exploit or undermine our economic and technological competitiveness.

In October 2023, Penn State Dickinson Law hosted a number of stakeholders, including industry, academia, inventors, policy makers and national security advisors, to discuss many of these issues. Listening to the differing viewpoints on what needs to be done led me to put together the following list of questions that I think should be considered when discussing how to make the patent system more robust and reliable and consistent with the objective of utilizing IP for the benefit of the nation:

1. USPTO
   1. Is the USPTO adequately funded? Should the agency be given autonomy to collect, spend, and set user fees?
   2. Is the current system for examining applications adequate or can, and should, it be updated to ensure a more timely and accurate granting of rights?
   3. How can the USPTO use its large trove of public patent data to better inform government decisions and national security? Should it be required to do so?
   4. How can the USPTO, Department of Commerce, the Department of Defense, and other entities within the Government work more collaboratively to ensure national competitiveness?
   5. How can the USPTO address the current lack of trust that inventors and investors have in the USPTO and the patent system in general?
   6. How can the USPTO increase transparency in decision making, and IP ownership to ensure that agency goals and objectives are both aligned with and given actionable metrics around increasing national competitiveness?
   7. How can the USPTO ensure there is no misuse of the USPTO system by either bad actors or nation states?
   8. How can the USPTO make PTAB fair, cost efficient and effective, and enable it to work as it was intended to do?
2. COURTS
   1. Within the Federal Circuit, do judges, or staff, have available the necessary technical and specific industry expertise to secure a comprehensive understanding of the technical issues underpinning the trial?
   2. Do judges have sufficient expertise to understand the economic and national security impacts that their rulings may have?
   3. Can judges deter and punish bad actors with existing authorities or are new ones required?
   4. Is there sufficient transparency around who is bringing and controlling litigation decisions or are new authorities or requirements needed?
   5. Is the training of trial judges on patent law and litigation adequate? Should there be some training on the use of IP as a business asset?
   6. Should court policies such as inequitable conduct be reviewed to determine if there are causing unnecessary complication of patent examination by requiring patent attorneys to submit excess material for examination out of fear of ethics violation?
3. GOVERNMENT
   1. Should the government develop a unified view and set of objectives around IP and national competitiveness?
   2. Should the government consider utilizing public patent and IP data in policy decisions where appropriate, such as immigration, R&D funding, trade, national security, education, taxes, Antitrust policy, and more?
4. CONGRESS
   1. How can Congress modernize the patent ecosystem considering new technologies such as AI and quantum computing, while also ensuring the system meets the needs of our nation for the next several decades?
   2. Should Congress take a more proactive role in setting a national innovation and IP strategy for the nation?
   3. How should Congress review, improve and/or clarify the law regarding the following areas, and what data should they rely upon:
      1. Injunctions – Should Congress make injunctions more available to protect the right to exclude stated in the Constitution?
      2. Eligibility – Should Congress clarify what inventions are patent-eligible?
      3. Claim construction – Should Congress make clear how courts and the Patent Trial & Appeal Board (PTAB) are to construe patent claims?
      4. Obviousness – Should Congress clarify what constitutes non-obviousness?
      5. Enablement/ Written Description – Should Congress clarify the sufficiency of patent disclosures especially for genus claims in biotech?
      6. Post-grant reviews at the PTAB – Should Congress assess whether the system has worked as intended and if not, make adjustments to better align the outcomes with the intended objectives?

In summary, patents are critical building blocks for technology development and should be viewed as important elements of growing individual wealth, institutional wealth, state and national GDP and keeping our nation safe from our adversaries. Don’t we owe it to ourselves to align our national objective and the IP system on how to utilize patents and IP for the betterment of the nation?

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