Congress’ patent reform plan is an assault on workers

The “Help Wanted” signs are up all across America. After shedding several hundred thousand jobs in the 2000, manufacturing has expanded payrolls the past four years. Firms are looking to fill about 350,000 positions. That’s welcome news for 600,000 still-unemployed manufacturing laborers.  

Congress might take the wind out of those economic sails if the public doesn’t watch them. Lawmakers are preparing to vote on the Innovation Act, which would gut the patent protections that enable innovators to create and manufacture new products. Without strong patents, companies will scale back research and development projects and lay off thousands of workers. To protect American laborers, legislators must oppose the Innovation Act. 

{mosads}Anyone who watches the ABC hit show “Shark Tank” knows the first question investors ask, “Where’s your patent?”  Patents give firms the right to sue rival companies that copy their patented designs. By preventing freeloading and unfair competition, patents supply innovators with the confidence to hire workers, build facilities, and create new products. 

Since Thomas Jefferson, patent protections have been the foundation of America’s economy. Industries that rely on intellectual property add $5 trillion and 40 million jobs to the U.S. economy. These jobs tend to pay well — wages in patent-intensive industries are 73 percent higher than the national average. 

Admittedly, a small minority of companies have abused patent protections. These “patent trolls” acquire patents for obvious ideas and then file frivolous lawsuits against firms that “infringe” on these weak patents. Trolls have been a real burden to Silicon Valley tech companies, who waste time and money fighting off this extortion.  

But in its attempts to fight patent trolls, Congress has harmed legitimate patent holders. 

In 2012, Congress established the Patent Trial and Appeal Board to review the legitimacy of disputed patents. PTAB was supposed to provide a way for tech companies and others harassed by trolls to cheaply and efficiently challenge the validity of a patent. 

However, PTAB weighs patent challenges using standards that favor the challengers — putting patent holders at a severe disadvantage. PTAB has invalidated patents at a much higher rate than district courts, which use less biased standards.

The broken PTAB challenge system has proved particularly disastrous for biopharmaceutical companies, who employ over 800,000 Americans. Since anyone can file a challenge, hedge-fund managers have begun challenging patents at PTAB while betting against drug companies’ stocks. The challenges — and the potential for an invalidated patent — scare investors and depress the stock price. Wall Street financiers make a killing — by killing the influx of research funding that supports Main Street biopharmaceutical jobs.  

Other special interests also want to maintain the innovation-killing PTAB. Chief among them is the insurance lobby. Healthcare insurance companies reap profits when patents are unfairly overturned, since they’re able to buy cheaper generic versions of the invalidated drugs.  

Despite opposition from insurers and a few tech giants, it’s clear that Congress must reform PTAB to ensure future medical innovation. Ideally, drug patents would be entirely exempted from PTAB review. That would stimulate continued investment in biopharmaceutical research, which improves the job market and public health. 

But instead of fixing PTAB, Congress’ latest patent reform efforts would make things worse.  The law would require all patent holders — not just trolls — to file excessive amounts of paperwork to begin an infringement lawsuit. New provisions would delay courts from making swift rulings to stop infringers. And other measures would force companies to disclose financial information that could run afoul of confidentiality agreements. 

Such provisions make it harder and more expensive for companies to defend their patents. If patents aren’t secure, manufacturers may hesitate to invest in job-creating research. 

That’s particularly true in industries where astoundingly high research expenses necessitate strong patent protections. Agricultural firms, for instance, often spend $100 million to develop a single new product. In the biopharmaceutical industry, the cost of bringing a drug from lab to market totals $2.6 billion.  

Agricultural and biopharmaceutical manufacturers have urged Congress to rework the Innovation Act to avoid undermining job-creating innovation. 

As a former congressman, I voted with the AFL-CIO 96 percent of the time and enjoyed support from more than 50 other labor unions. 

But I also realize as a business owner and entrepreneur that without business there is no job and without patents there is no business. 

Klink served in the House from 1993 to 2001.


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