The United States was once again the top ranked country in overall score in the U.S. Chamber of Commerce’s annual Global IP Index for 2018, but the rankings are closer than ever. This year the United States edged out the United Kingdom by a mere .01 points on the Chamber scale. The U.S. position was helped by improved scores relating to copyrights and trademarks, but was dragged down as the U.S. patent ranking decreased for the sixth consecutive year as the result of a patent climate that the Chamber characterizes as causing “considerable uncertainty for innovators.”
While the United States continues to do well overall, patent protection continues to be problematic. In 2017 the U.S. ranked 10th worldwide in terms of offering patent protection to innovators. This year, the U.S. fell out of the top 10, tumbling to a tie for 12th with Italy. Countries ahead of the United States for patent protection are (in order from first place on the Chamber patent index): Signapore, France, Germany, Ireland, Japan, Netherlands, South Korea, Spain, Sweden, Switzerland, and the United Kingdom. See page 35 of the Chamber report.
While the U.S. continues to take steps backwards in terms of the overall patent landscape, a number of countries around the world have taken positive steps forward, including countries you might not ordinarily consider as patent friendly jurisdictions. Canada, China, Ecuador, India, Israel, Italy, South Korea, Spain, Taiwan, and the Ukraine all improved their scores relative to patent protection over the 2017 Chamber report. See page 22 of the Chamber report. Compared to 2017, China dramatically improved its score, raising from a score of 4.35 (out of 8) in 2017 to a score of 5.5 (out of 8) in 2018.
With a decrease in the score relative to patent protection from 2017 to 2018, the United States joins a handful of other countries that are not thought of as being particularly intellectual property friendly. Those countries having a weaker performance relative to patents in 2018 include the United States, Turkey, Saudi Arabia, Peru, Mexico, Indonesia, Columbia, Chile and Australia. See page 22 of the Chamber report.
The Chamber report notes that the U.S. score for patent protection has fallen lower in each of the successive editions of these Chamber rankings. To justify the patent ranking given to the United States the Chamber cited to Supreme Court decisions on patent eligibility (i.e., Mayo, Myriad, and Alice), and in particular to recent interpretations of those cases and guidance from the United States Patent and Trademark Office. The Chamber also expressed concern over how easy it has become to challenge patents in post-grant proceedings at the Patent Trial and Appeal Board.
The Chamber report explains:
[T]he patentability of basic biotech inventions was compromised by the Supreme Court decisions in the 2013 Molecular Pathology v. Myriad Genetics and 2012 Prometheus Laboratories, Inc v. Mayo Collaborative Services cases. The rulings raised uncertainties over the patentability of DNA molecules that mimic naturally occurring sequences as well as other patented products and technologies isolated from natural sources. In 2017, interpretation of the recent Supreme Court decisions in Myriad, Mayo, and Alice Corp vs. CLS Bank International by lower courts and guidance from the USPTO remained inconsistent and di cult to apply. There is considerable uncertainty for innovators and the legal community, as well as an overly cautious and restrictive approach to determining eligibility for patentable subject matter in areas such as biotech, business method, and computer-implemented inventions. This seriously undermines the longstanding world-class innovation environment in the U.S. and threatens the nation’s global competitiveness. As a result, in 2017, a number of legal societies and industry groups called for legislative reform of Section 101 of the U.S. Patent Act, citing the need for clarity on patentability in a wider, legislative context rather than in highly specific guidelines and case law.
With respect to opposition proceedings, despite the best intentions of new opposition mechanisms introduced in the America Invents Act, the ease of challenging patents during the post-grant period, particularly through inter partes review, has led to a high volume of trials (particularly for life sciences claims) and a disproportionate rate of rejections. Concerns have also been raised over a perceived reduced opportunity to amend claims in opposition proceedings and a lower burden of proof for opposing parties than in district court proceedings. As such, the opposition system in the U.S. provides a channel for bad faith actors and injects a great deal of cost and uncertainty for patent owners compared with other post- grant opposition systems.
“The majority of countries took steps to strengthen their IP systems and foster an environment that encourages and incentivizes creators to bring their ideas to market,” said David Hirschmann, president and CEO of the U.S. Chamber of Commerce Global Innovation Policy Center. “While a clear pack of leaders in IP protection top the rankings, the leadership gap has narrowed in a new global race to the top. There is still work to be done, and we hope governments will use this Index as a blueprint to further improve their IP ecosystems and grow competitive, knowledge-based economies. When countries invest in strong IP systems, we all benefit.”
Innovation Alliance Executive Director Brian Pomper today issued the following statement in response to the release of the U.S. Chamber of Commerce’s Global Innovation Policy Center’s 2018 International IP Index, which showed the U.S. falling to 12th place in its ranking of patent system strength:
The alarm bells continue to ring. The Chamber’s 2018 International IP Index is the latest evidence that harmful congressional actions and court decisions have dangerously weakened the U.S. patent system, the central foundation of our innovation economy. Last year, the U.S. dropped to 10th place in this ranking, marking the first time that the U.S. was not ranked #1. This year, the U.S. fell even further, to 12th place, and is now tied with Italy and behind countries such as South Korea and Spain.
According to the Chamber’s report, the U.S. has dropped in its ranking primarily due the excessive cost and uncertainty for U.S. innovators created by the America Invents Act’s inter partes review process, as well as recent Supreme Court decisions that have created confusion over what can and cannot be patented. The Chamber notes that these decisions ‘seriously undermine the longstanding world-class innovation environment in the U.S. and threaten the nation’s global competitiveness.’
This disturbing ranking follows warning signs in similar measures, including the recently-released Bloomberg Innovation Index, which showed the U.S. falling out of the top 10 most innovative countries for the first time. The U.S. must reassert its position as an international leader in innovation with smart fixes like the bipartisan STRONGER Patents Act, which would strengthen patent protections. We must not stand by as the U.S. continues to struggle and slip behind global competitors. We must act to ensure our patent system continues to serve as an engine for U.S. innovation and job creation.
UPDATED @ 1:32pm ET to include the statement of David Hirschmann.