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By Patrick Leahy and Bob Goodlatte
Former members of Congress
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Global economic leadership is more up for grabs now than it has been at any time in recent memory. Emerging technologies like AI, advanced semiconductor chips, and innovations in energy production and storage are reshaping nearly every aspect of the economy. This disruption may spawn incredible progress, but it also presents a once-in-a-generation opportunity for our nation's competitors to upend the status quo.
Countries that can efficiently develop and widely adopt cutting-edge ideas will be best positioned for the future. But recent warnings about the quality of American intellectual property call into question whether the U.S. will be able to do just that.
The Government Accountability Office (GAO), our government's own internal watchdog, sounded alarms earlier this year about "persistent examination and quality challenges" at the U.S. Patent and Trademark Office (USPTO), finding there is "greater emphasis on meeting output goals for the number of applications reviewed over issuing quality patents."
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Patents are the foundation of innovation, but not all patents are created equal. Quality patents—those that are novel, nonobvious, and related to eligible subject matter—encourage public sharing of ideas, incentivize invention, and support a dynamic economy.
But when the patent office issues low-quality patents, waste and abuse ensues. As the GAO notes, low-quality patents "can impose significant costs on society" in the form of reduced competition, higher costs, and expensive legal abuse that gums up the invention and adoption of new technologies.
The underlying concept is simple: put good in and get good out, put bad in and get bad out.
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More than half of all patents granted by the USPTO are issued to entities based outside the U.S., and direct competitors like China have seen the greatest surge in American IP. In fact, Huawei—the Chinese telecommunications giant that has long been mired in accusations of IP abuses and close ties to the Chinese government—received the fifth-most U.S. patents granted to any company or inventor in the world last year, with more than 3,000.
Why are there so many low-quality patents, and why do U.S. competitors like Huawei get so many? The answer may simply be an overloaded patent examiner not having the time and resources to complete a thorough review, while under pressure to produce volume instead of quality.
Yet, despite being unintentional, these mistakes have dire consequences.
Once a bad patent is out the door, it's fair game to be weaponized. Competitors abroad use low-quality patents to initiate meritless infringement lawsuits against American innovators, weighing them down under massive costs and slowing their ability to bring new products to market.
Low-quality patents are also often transferred to shell companies known as patent trolls, which exclusively use patents to pursue lawsuits, not to make products. Increasingly, these activities are supported by outside investors, including overseas hedge funds and sovereign wealth funds. In addition to imposing costs on companies defending against baseless accusations, shell companies and their investors may also be using patent lawsuits as tools to gain access to defendants' confidential information.
The original sin of issuing invalid patents enables these outcomes, but fortunately it's a problem that can be addressed.
Simply ensuring that patent examiners have the time and tools they need to make accurate determinations, and that the patent office has leadership that prioritizes examination quality alongside speed, would put the U.S. innovation economy in a better position to stay ahead of competitors.
The USPTO can limit the economic damage caused by low-quality patents by bolstering its first line of defense against patent abuse: the Patent Trial and Appeal Board (PTAB). At the PTAB, expert patent judges reassess the validity of patents challenged by members of the public. This means that when foreign actors or shell companies try to weaponize low-quality patents in lawsuits, American companies can request the more efficient, more reliable, and less costly PTAB review process as an alternative to expensive, slow, high-risk litigation.
More than 60 percent of patent challengers at the PTAB are U.S. companies, while nearly 70 percent of the patent owners are foreign-owned corporations or their affiliates. Even though the PTAB is benefiting American industry, in recent months agency leadership has made changes to severely limit which patents are re-reviewed. If the USPTO erred in granting a patent initially, warping the review process to reject American companies seeking reconsideration of the patent when it is used against them adds insult to injury and enriches foreign-backed trolls at the expense of U.S. innovation leadership.
So long as the USPTO is issuing low-quality patents related to AI and other technologies of the future, those patents will be used to undermine the very progress they should be advancing.
If the U.S. wants to remain at the forefront of emerging technologies, addressing our patent quality vulnerability is essential.
It's past time for a patent quality reset at the U.S. patent office.
Patrick Leahy was a U.S. senator from Vermont from 1975 to 2023, he served as chair of the Senate Judiciary Committee and chair of the Judiciary Subcommittee on Intellectual Property.
Bob Goodlatte represented Virginia's 6th District in the U.S. House of Representatives from 1993 to 2019, and served as chair of the House Judiciary Committee.
The views expressed in this article are the writers' own.
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