They deter innovation over critical areas like climate change

The Biden administration and Congress have recently made a series of commitments to support industries that are of high strategic importance. The Inflation Reduction Act and Chips and Science Act provide much-needed resources to bolster advances in green energy and increase our domestic supply of semiconductors – two critical long-term priorities.

Yet, there’s another significant challenge facing our innovation economy, one that often goes under reported. Abusive patent lawsuits against some of our most innovative companies are on the rise, forcing more and more successful businesses to delay hiring new workers, raising wages, and developing new products. Instead, they’re forced to spend money defending themselves against meritless accusations.

The wealthy investors who file these abusive lawsuits, and are often referred to as “patent trolls,” buy up portfolios of broad, unused patents that, in many cases, the U.S. Patent & Trademark Office (USPTO) never should have issued in the first place. They then assert the low-quality patents in lawsuits to accuse others of patent infringement – all this even though the patents being asserted will continue to go unused.

The impact on American innovation is devastating. According to one study, each year, patent trolls create $29 billion in direct, out-of-pocket costs from the companies they go after. Another study found that the companies that settle with patent trolls, or lose to them in court, wind up reducing investments in research and development by an average of more than $160 million over the next two years. Massive amounts of money are being drained from the hardworking people who are driving our economy forward to instead line the pockets of wealthy investors who are offering no goods or services of their own.

The problem is especially threatening for progress in areas like the renewable energy sector, an industry where products often rely on hundreds or even thousands of underlying patents. U.S. leadership in green technology is critical both to curb emissions and because renewable energy has the potential to be a hub of innovation and strategic advantage for decades to come.

The USPTO recognizes the sector’s importance, and its climate change mitigation program will foster research and development in this area. Yet, automakers and other companies generating cutting-edge technology in this sector are constantly forced into battles with patent trolls that drain resources and delay innovation. Letting patent trolls slow down green-energy advancements would be a colossal mistake.

Critics say that the problem of patent trolling is an invention of large corporations, and that cracking down on patent trolls will mean hurting “the little guy.” These assertions are not backed up by the data: Analysis has shown that almost 60% of the companies sued by patent trolls are small or medium-sized; patent-troll litigation costs smaller companies more relative to their revenue; and when infringement claims are settled out of court, smaller companies again pay patent trolls more relative to their revenue.

It is past time for Washington to fix this broken part of our patent system and ensure innovators and entrepreneurs have the tools they need not just to get by, but to get ahead.

Over the long term, the USPTO needs to be resourced to handle the high volume of patent applications it receives and focus on patent quality, only granting patents when an idea is novel, useful, and non-obvious. On average, examiners now only spend 19 hours to reviewing each application. We must also improve transparency in the patent system so that the public knows who the true owners of patents are and patent trolls are prevented from misrepresenting their identities. But the director of the USPTO, Kathi Vidal, also has an opportunity to take immediate action that will substantially improve how our patent system functions and advance U.S. innovation.