Uncertainty alone undermines small innovators and startups
Andrei Iancu, 24 – Partner, Sullivan & Cromwell; former Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. Responses to Questions from Senator Alex Padilla, before the Subcommittee on Intellectual Property in the Senate Judiciary Committee, “The Patent Eligibility Restoration Act – Restoring Clarity, Certainty, and Predictability to the U.S. Patent System” 1/23, https://www.judiciary.senate.gov/imo/media/doc/2024-01-23_-_qfr_responses_-_iancu.pdf //DH
4. How does the current state of the law impact smaller innovators and academic research?
RESPONSE TO QUESTION 4: The current state of the law hurts small innovators in at least two ways: first, it impedes their ability to attract capital investment. Venture capitalists and others are more likely to feel comfortable investing in research-intensive startups and small businesses that have patents to secure their rights. If patent protection is unavailable or uncertain in specific areas of technology, it will be harder for those startups and small businesses to receive funding.11 If those businesses start disappearing from the U.S. or never get started in the first place, or are started in other countries with stronger patent systems, America’s role as a global technology leader will suffer. Second, small innovators who lack access to robust, reliable patent protection will be less able to defend themselves against competitors, especially large, established competitors, who might copy successful products. Also, because the established competitor did not have to incur the research and development costs to create that successful product, it will be easier for them to undercut the smaller innovator on price. Even if the smaller innovator has a patent, if it is in a technological area falling within the uncertainty created by the Supreme Court’s line of § 101 cases, the established company can bet that it will have at least a reasonable chance of invalidating the patent if it is sued for infringement, possibly quite early in the litigation without that company incurring many litigation expenses.
Academic researchers in areas with uncertain or unavailable patent protection also will face similar difficulties if they make discoveries with great potential for becoming consumer products because they will have trouble finding private sector partners and investors. For example, research that could lead to a new diagnostic tool will typically take significant investment beyond the initial laboratory success, including the expenses involved in FDA approval in many cases. Without patent protection to deter would-be copiers, the private sector will take its investment dollars elsewhere and the academic research will remain merely academic.