Patent reforms occur in the context of China trying to exploit the current system

America’s competitors have benefited from the weakened patent protections. Patents rejected here have been upheld in Chinese and European courts. Long guilty of stealing and exploiting American IP, China now profits from American innovation in another way: by expanding its own subject matter and making Chinese patents harder to invalidate. This makes it more attractive for American researchers, investors and entrepreneurs in research-intensive sectors like software and pharmaceuticals to shift capital and patent their inventions abroad.

Governments don’t tend to pursue this strategy because they’re ideologically committed to IP. They do it to position themselves as forerunners in the global innovation economy with its concomitant economic rewards.

The PERA and PREVAIL Acts attempt to remedy these issues. Although PERA commendably confirms the patentability of some cutting-edge technologies, its flaw is that it effectively prohibits patenting novel business methods. Though not always technologies in and of themselves, patenting business methods facilitates the commercialization of new technologies.

The PREVAIL Act requires patent challengers to face infringement lawsuits before granting standing to contest patents. It reduces duplicative lawsuits by blocking funders of existing lawsuits from bringing their own. Challengers must also choose either the PTAB or district court as a venue. Importantly, the PTAB would have to stop making invalidation decisions on the “balance of probabilities.” The required “clear and convincing evidence” for patent invalidity would be necessary, in-line with district court standards. Finally, introducing a code of conduct and transparency requirements for PTAB judges would also reduce conflicts of interest. These changes would maintain the PTAB as an expedited forum for contesting faulty patents whilst better balancing the interests of patent holders and challengers.

Whatever shape both reforms ultimately take, there is no reason why the United States can’t continue being a world leader in innovation by protecting intellectual property. With ongoing external threats of IP theft, we shouldn’t handicap ourselves at home.