Are the United States' Leading Tech Companies Run by Morons?

September 04, 2017

That seems to be the argument by Rana Foroohar in a Financial Times column (sorry, behind paywall). The argument is that because recent changes to the patent law have made it easier to challenge inappropriately granted patents, inventors are unable to benefit from their inventions. She argues that this is causing companies to shift their research to other countries where their patents enjoy more protection.

There are two problems with this story. The first is that the United States has a notoriously lax patent system. In 1999, a patent was granted for a peanut butter and jelly sandwich. Unlike many countries, the United States does not allow pre-patent challenges from other parties. While recent reforms have made it easier for competitors to challenge a patent, the system in the U.S. is almost certainly still more patent-friendly than in almost any other country.

However, the more important point is that there is no connection between the strength of patent protection and where research is conducted. Under a wide variety of treaty commitments, the United States and other major countries are prohibited from discriminating in patent issuance and enforcement based on the country in which the research was conducted. This means that, contrary to the claim in the column, a lessening of patent strength in the United States would provide absolutely zero incentive for a company to shift its research to Europe or China.

If the people running the company are familiar with arithmetic, they would do their research in the low-cost country regardless of its level of patent enforcement. In other words, there could be reasons to worry about our patent laws not sufficiently protecting innovation (unlikely), but the threat of moving research is not one of them.

 

Addendum

jconroy4989 points out in his comment that as of September 2012 there has been a mechanism, “pre-issuance patent submissions” through which third parties can submit information arguing against the granting of a patent. In this way, the United States was getting more in line with most other countries which had long allowed for pre-issuance challenges.

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