America’s Patent System Was Built for a Different Century | IPWatchdog Unleashed

When I sat down with former U.S. Patent and Trademark Office (USPTO) Director Andrei Iancu for this week’s episode of IPWatchdog Unleashed, I expected a serious conversation about the condition of the U.S. patent system. Instead of rehashing everything that has gone wrong with the U.S. patent system from the perspective of an innovator over the last two decades, what took place was a deep and revealing conversation about whether the legal architecture that once made the United States the world’s innovation leader is still fit for purpose in an economy increasingly defined by software, artificial intelligence, data, biotechnology, and other intangible assets.

Iancu, of course, needs little introduction to anyone in the intellectual property community. Before serving as Director of the USPTO, he was one of the nation’s preeminent patent litigators. Since leaving government service, he has returned to private practice while remaining deeply engaged in the policy debates that will shape the future of American innovation. As I often like to do with guests, before diving into substantive patent law and innovation policy, we began with how he found his way into the IP profession.

From Engineer to Patent Policy Leader

Before law school, Iancu was an engineer at Hughes Aircraft, working on antenna payloads for satellites. Like many patent lawyers, he came to intellectual property through the combination of technical training and legal education. “I was an engineer,” Iancu explained, recalling the path that eventually led him to law school and then to Lyon & Lyon, one of the great West Coast IP boutiques of the day. That opening provided a useful lens through which to examine not only Iancu’s career, but the evolution of the IP bar itself.

The legal market for intellectual property has always had a cyclical quality. I said during our conversation that the industry almost seems to breathe: it gets big, then small, then big again. For years, patent law was the domain of specialist firms. General practice firms viewed it as too technical, too esoteric, and perhaps best left to the “geeky patent lawyers with pocket protectors,” as Iancu put it. That changed as large firms discovered that patent litigation could be profitable, strategically important, and useful to institutional clients already relying on them for corporate, transactional, and commercial litigation work.

But that shift has not been uniform. Iancu noted that large general practice firms have largely embraced patent litigation, while prosecution has often remained with specialist firms and boutiques. That makes sense from an economic standpoint. Patent litigation can support premium rates and institutional relationships. Patent prosecution, by contrast, is often treated as lower-margin, process-driven work, even though the quality of that work determines whether an asset is worth anything when litigation, licensing, financing, or acquisition scrutiny arrives.

The Defendant’s Expanded Playbook

From there, our conversation moved into the harsher realities of modern patent enforcement. I said what many patent owners already know: for defendants, the playbook has expanded dramatically over the last 15 to 20 years. In many cases, all a defendant needs to do is “yell 101” and press for an early motion to dismiss. If that does not work, there is the Patent Trial and Appeal Board (PTAB). If that does not work, there are stays, obviousness challenges, insufficient damages that always seem to be reduced anyway, uncertain Federal Circuit review, and little realistic opportunity to obtain an injunction even after winning.

Iancu agreed with the broader diagnosis. “There are many paths towards winning a case,” he said, describing the modern defendant’s toolkit. A patent owner, by contrast, must win at every stage. The accused infringer needs only one successful defense, one procedural delay, one administrative challenge, one appellate issue, or one doctrinal trapdoor. That structural imbalance has become a defining feature of the U.S. patent system.

While the plaintiff always has the burden, I explained the gauntlet that a patent owner must run, and often re-run, doesn’t seem to be how the system is supposed to work, and simply leads to the weaponization of delay. As I pointed out, it feels like the patent system of some other countries is more like the American patent system of old than our own system does today when compared to the past.

The Constitutional Bargain Is Breaking Down

That led to the central question of the episode: if we were designing a patent system today, untethered from pending bills, half-measures, and regulatory tinkering, what should it look like?

Iancu’s answer began with the Constitution. If he were “king for a day,” the first thing he would do is restore the patent as an exclusive right. “It’s the right to exclude,” he said. That should not be controversial. The constitutional bargain is straightforward: inventors disclose their inventions to the public in exchange for a limited exclusive right. If the right is not meaningfully exclusive, the bargain collapses. If the right cannot be reliably enforced, the incentive to disclose is weakened. If disclosure is no longer rewarded, innovators will rationally retreat to secrecy.

An 18th-Century Framework in a 21st-Century Economy

But Iancu also pushed the conversation beyond familiar patent-owner complaints. The deeper issue is that the basic statutory architecture of patent law was built for a tangible economy. Section 101, in language that still tracks the language adopted in the late 18th-century, reflects a world of machines, manufactures, compositions of matter, and processes. That framework worked reasonably well for a very long time. It could accommodate the steam engine, the telegraph, the light bulb, the automobile, and the airplane. It can still work well in some sectors, particularly where the invention maps cleanly onto a tangible product and where long development cycles justify long exclusivity. But does it really work for most of the innovation happening today? Probably not.

The problem with pounding an 18th-century patent system into a 21st-century century reality is that so much of the modern economy no longer looks like the economy of the past. Artificial intelligence, large language models, software, analytics, biotechnology, diagnostics, and computational biology—to name a few—frequently depend on information processing, intangible architectures, and massive data sets. The innovation may be extraordinarily valuable, but it does not always fit comfortably into the statutory categories we inherited from the 1793 Patent Act.

As Iancu explained, the country must now ask how we protect and incentivize innovation “in an intangible world.” That will become the defining IP policy question of the next decade and beyond.

Does One Size Still Fit All?

I raised the concern that a one-size-fits-all patent system may no longer make sense. For years, many in the patent community resisted that idea, fearing that industry-specific patent rules would balkanize the system and create something resembling the tax code. That concern is not frivolous, because once Congress starts carving up industries, rent-seeking and special treatment follows. Line-drawing becomes political and new technologies rarely stay in neatly defined boxes. But it may be a risk worth taking. It is certainly worth discussing.

The current one-size-fits-all model feels increasingly untenable. The pharmaceutical industry, software industry, independent inventor community, universities, platform technology companies, and data-driven AI enterprises do not all innovate in the same way. They do not face the same investment horizons, commercialization timelines, infringement risks, or disclosure incentives. A drug protected by a composition-of-matter patent is not the same as a machine-learning model trained on massive data sets. A patent protecting a consumer product is not the same as a patent covering a foundational software platform. So, why does patent law treat them the same?

Iancu acknowledged that he has historically been skeptical of balkanizing patent law, but he also said we need to think in new paradigms. The United States has done this before. FDA data exclusivity is a sui generis right. Plant patents are different from utility patents. Protection for sexually reproduced plants is administered outside the USPTO. Mask work protection exists, even if it never became a major commercial tool. Design patents occupy their own lane. The point is that while not every sui generis experiment succeeds, Congress has successfully created tailored IP rights when the market, technology, and policy need warranted them.

Data is perhaps the most obvious example. Much of the AI economy depends on data, yet data sets receive little direct IP protection beyond trade secrecy. That creates a strategic problem. If trade secrecy is the only viable protection, companies with the largest data sets will guard them as crown jewels. The biggest players get bigger. Smaller innovators, start-ups, and garage inventors face a structural disadvantage. The public disclosure function of IP law deteriorates. Innovation becomes less dynamic, less open, and more concentrated.

Ownership, Investment, and the Innovation Bargain

This is where the classic quid pro quo matters. Iancu emphasized that any functioning IP system must do two things simultaneously: incentivize investment in risky innovation and encourage public sharing of technical knowledge. Trade secrecy can help with investment incentives, but it does not serve the public disclosure function. Patents, at their best, do both. They protect investment while enabling others to learn, design around, improve, and eventually practice the invention once the term expires.

That bargain has powered American innovation for more than two centuries. The question now is whether the bargain can be recalibrated for the technologies that will define the next century.

As I explained during our conversation, investment is the linchpin. Innovation does not happen at scale simply because someone has a good idea. It requires capital, time, talent, and risk tolerance. In many sectors, the required investment is no longer a few hundred thousand dollars or even a few million dollars. It may be tens of millions, hundreds of millions, or even billions. And as Priceline founder Jay Walker once explained, you cannot invest in what you do not own. If an asset cannot be owned, protected, licensed, financed, or reliably enforced, it becomes much harder—if not impossible—to justify the investment required to bring it to market.

The current system too often advantages incumbents. Large technology companies can lobby, litigate, delay, and absorb risk in ways smaller entities cannot. I do not fault them for pursuing their business interests. That is what companies can and should do. But national innovation policy should not be designed exclusively around the preferences of incumbents and at the expense of small businesses and individuals. Many of today’s dominant technology companies began as small teams in garages or dorm rooms—including Google and Apple. A system that protects only those who have already achieved scale will not reliably produce the next generation of challengers, who have the next great, breakthrough ideas.

The Conversation Congress Needs to Have

Our conversation ended where the next serious policy discussion must begin: with a national conversation about what kind of IP rights are necessary for a 21st-century innovation economy. Congress will ultimately have to act. But before Congress acts, industry, inventors, investors, universities, start-ups, practitioners, policymakers, and judges need to confront one overarching question. Not whether one pending bill can fix Section 101. Not whether one USPTO rule package can recalibrate PTAB practice. Not whether one Federal Circuit decision will clean up a decade of doctrinal confusion. The real question is much more fundamental: what should the American innovation system be in order to maximize innovation.

For Iancu, the starting point is clear. Restore the exclusive nature of the patent right. For me, the next step is equally clear. We must stop pretending that a patent framework built for an 18th-century tangible economy can automatically serve every 21st-century technology. Some parts of the old system still work. Others are breaking under the pressure of modern innovation. The task now is to identify which is which—and to build a system that once again rewards disclosure, guarantees investment, and gives the next generation of innovators a fighting chance.

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