Foreign applicants claim most US patents – broadening eligibility undermines competitiveness and raises prices

Finally, some have also argued that concerns about PERA should be ignored because the expanded availability of patents, in and of itself, would enhance U.S. competitiveness. While providing a comprehensive response to this claim is beyond the scope of my testimony, it should suffice to point out that the majority of patents granted by the USPTO claim foreign inventions and were issued to foreign applicants. The principal effects of enacting PERA would thus be to incentivize foreign innovation and enrich foreign patent owners. This would come at the expense of U.S. businesses and consumers, because substantially all the harms with respect to increased liability, greater business uncertainty, and higher litigation costs would fall on those doing business in the United States, with most of these costs ultimately being passed on to American consumers in the form of higher prices. There can be no serious argument that subsidizing foreign innovation or enriching foreign entities at the expense of American consumers and businesses somehow benefits the United States. This alone should cast serious doubt on claims that an unprecedented expansion of patent eligibility is justified simply because it would allow for increased patenting.

In sum, HTIA and its member companies are deeply concerned about the broad expansion of patentable subject matter that would result from the enactment of PERA as currently drafted. Both empirical evidence and historical experience indicate that expanding patent eligibility to include nontechnological subject matter will undermine incentives to invest in technological innovation and impose substantial dead-weight losses on the U.S. economy, thereby harming U.S. competitiveness at a time when retaining our technological and economic advantages relative to adversarial nations is critical to our national security.