Studies conclusively show weakening patents reduces private R&D investment

Some recent data reveals a negative impact on innovators by the weakening of the U.S. patent system and by the Alice-Mayo inquiry. First, a recent survey study by Professor David Taylor of investors and representatives from companies in the innovation industries reported as its “first principal finding [that] investors who responded to the survey overwhelmingly believe patent eligibility is an important consideration when their firms decide whether to invest in companies developing technology.”66 More specifically, Professor Taylor found that “overall 62% of the investors agreed that their firms were less likely to invest in a company developing technology if patent eligibility makes patents unavailable.”67 Similar to other empirical studies,68 Professor Taylor found that the significance of the availability of and reliance on patents varied between different sectors of the U.S. innovation economy, such as between biotechnology (higher reliance) and software/Internet services (lower reliance).69 In fact, Professor Taylor found the most significant “negative impact of the Supreme Court’s eligibility cases generally on investment . . . in terms of its impact on public health: the biotechnology, medical device, and pharmaceutical industries.”70 Still, Professor Taylor’s survey finds that “the results show the Court’s decisions [on patent eligibility doctrine] have negatively impacted each and every area of technological development studied” in his survey, including even in software technologies.71 The negative relationship identified by Professor Taylor between the ill effects of the Alice-Mayo inquiry and investment decisions is in accord with the many studies summarized earlier that consistently find a positive relationship between reliable and effective patent rights and economic growth.72

Other studies have provided additional data that the U.S. patent system is in distress, and that the U.S. innovation economy is faltering in important respects. The World Intellectual Property Organization (WIPO) reported a 1.6% drop in U.S. patent filings in 2018—the first decline since 2009 when the U.S. was in the midst of the Great Recession.73 In fact, the decline in U.S. patent applications in 2018 was not associated with either an economic recession or war, the two factors that have historically correlated with declines in patent applications in the U.S. Although patent applications increased again in 2019, they decreased in the ensuing years and only began to reverse this trend in 2022 with a moderate 0.5% increase over 2022.74 While it may be tempting to attribute the continued decline in U.S. patent filings in both 2020 and 2021 to the COVID-19 pandemic, the European Patent Office, South Korea, and China all experienced an increase in patent filings in 2021 while the U.S. experienced another decrease in patent filings that same year.75 Another revealing chart in the WIPO 2023 report on intellectual property data shows a flattening in the trend in U.S. patent filings since shortly after 2010, compared to varying positive growth trends in patent filings in the European Patent Office, South Korea, and China:76

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