China is filling the void due left by US patent ineligibility

These and other similar studies and articles demonstrate that: (1) unreliable patent protection depresses investment in R&D in key areas, including those that generate economic growth, lead to important innovations, and enable the U.S. to compete with China; (2) those investments have declined in the U.S. due to constricted and unreliable patent protection; and (3) patent filings in areas affected by Section 101 have dropped in the U.S. while increasing in China. Together, these points demonstrate that Section 101 is causing the U.S. to lose ground, decreasing R&D investment incentives in industries critical to America’s strategic and public interests.

China, meanwhile, is following an opposite trajectory. With a historically weak IP system for biopharmaceuticals and software, no foreign innovators in these fields placed major R&D operations or invested in significant R&D activity in China. That changed when the Chinese government began strengthening its biopharmaceutical and software IP laws over the last decade. Today, as China’s patent laws begin to rival—and, in the case of patent eligibility, surpass—U.S. patent laws, we have seen an explosion of R&D investment and innovation in China, including massive investments by foreign investors and foreign innovative companies. Since the U.S. upended its law governing patent eligibility, many patent applications are approved as patents in China but rejected as ineligible in the United States—all due to Section 101.

Given past U.S. leadership relative to other world economies in providing patent protection for new innovations, the disparate outcomes now commonplace represent a worrisome trend for the future of the U.S. innovation economy. Three years ago, for example, the National Security Commission on Artificial Intelligence issued its report on, among other things, the preparedness of our country to compete on a global basis with our most important competitor nations. The report includes the following cautionary observation: “China is both leveraging and exploiting intellectual property (IP) policies as a critical tool within its national strategies for emerging technologies … The United States has failed to similarly recognize the importance of IP in securing its own national security, economic interests, and technology competitiveness. … China is poised to ‘fill the void’ left by weakened U.S. IP protections, particularly for patents, as the U.S. has lost its comparative advantage in securing stable and effective property rights in new technological innovation.”9

Strong and predictable patent protection is vital for America’s success. The current Section 101 regime is broken and the courts have been running unguided for too long. This issue cannot be ignored any longer. It is time for Congress to fix America’s law of patent subject matter eligibility.