By Manny W. Schecter
Chief Patent Counsel, IBM Corporation
The recently-released tally of US Patents awarded in 2011 gives those who are concerned about America’s global competitiveness plenty to think about. Only two US companies, IBM at No. 1 and Microsoft at No. 6, appear on the top 10 list. Hewlett-Packard and Intel have dropped off. The rest of the companies in the top 10 are headquartered in Asia.
This news reminds us that we live in a highly competitive, global economy and it is vital that we remain vigilant about preserving and fostering an environment for US companies to innovate. That includes strengthening science, technology, engineering, and math curricula at all levels, investing in fundamental scientific research, making it easier for entrepreneurs to launch and grow their companies, and strengthening our patent system.
There is another message hidden in the rankings. The results show that the United States is a magnet for global innovation. Why do foreign companies apply for so many patents here? Simple: The US has balanced intellectual property laws, a fair patent system and a strong rule of law that protects the creative work of inventors.
The recently-enacted America Invents Act (AIA) is the most significant reform to the patent system in 60 years. The AIA improves the fairness of the system and the quality of patents by giving third parties the opportunity to submit information related to a pending application for consideration by the patent examiner and by expanding the ability to challenge existing patents. These reforms will help ensure that patents are issued and enforced only for inventions that are truly novel and deserving of a patent. The Act also harmonizes US patent law with those of other major countries by switching to a first-inventor-to-file system from a first-to invent system. This is important for businesses that must operate in an increasingly global economy and will help speed examination by promoting work sharing between patent offices.
On the judicial front, America’s court system provides patent holders ample opportunities to enforce their patent rights while at the same time providing fairness and balance in the remedies applied. The US Supreme Court decision in eBay Inc. v. MercExchange LLC established firm guidance for the lower courts: the balance of hardships between plaintiff and the defendant—and the public interest—must be considered before issuing an injunction preventing the sale of products. In cases where the plaintiff does not use the patented invention in products, lower courts’ application of eBay has resulted in fewer injunctions. As the Federal Trade Commission indicated in its recent Evolving IP Marketplace report, the eBay decision allows courts a more nuanced analysis that recognizes injunctions may in some situations unnecessarily raise costs and deter innovation.
Reform isn’t a one-time act. It must be continuous in response to changing circumstances. So we applaud US PTO Director David Kappos’s vow to produce what he calls a “National IP Strategy” this year. He aims to outline the Obama administration’s key IP priorities, its plan to improve patent protection for small businesses and efforts to increase engagement with China on issues of IP enforcement.
It’s a remarkable time for innovation globally. Think of IBM’s Watson data management and analytics technology, Samsung’s advances in flat-screen TVs, Apple’s iPad, and Facebook’s social media. The future will be bright, too, and the United States will continue to be a locus for innovation, if American companies and foreign firms alike get world-class protections for their inventions and fairness in resolving competing claims. Government and industries must continue to work together to preserve and strengthen U.S. innovation.