Manufacturing is a key driver contributing to Tennessee’s tremendous economic growth. Across our entire state from urban, suburban and rural areas, it boasts an annual average income that is well over other sectors. It also has one of the largest economic ripple effects with estimates showing for every $1 in wage paid, it produces almost $3 in economic activity.
Is an especially trying time for not just manufacturers in Tennessee but across our entire nation, and we must recognize how integral US manufacturers are still to our economy. In Tennessee, makers of automobiles and parts, food and beverages, chemicals and plastics, appliances, machinery, paper, boats and other products comprise over 16% of the state’s economic output. More than 350,000 Tennesseans have jobs in the manufacturing sector — in rural, suburban and urban areas. As paychecks from these jobs are spent in our communities, manufacturing continuously bolsters indirect economic growth across our state as well.
Misuse of the legal system, however, is threatening to gum up the wheels of progress. Such is the case with patent litigation, where, unfortunately, many manufacturers continue to endure hassles and threats over patent rights claims.
American law and tradition have long respected creations of the human intellect. In an age when modern capitalism was taking hold, our nation’s Founders made sure the US Constitution protected intellectual property. Confidence that one’s inventions and discoveries could not be copied and used without permission or fair payment has always served as an incentive to engage in the relentless pursuit of a better mousetrap.
The America Invents Act
However, over the years, patent cases have become more numerous and complex. Amid this proliferation were many claims based on weak or even bogus patents that were more like placeholders than actual breakthroughs worthy of legal protection. To address this concerning trend, the America Invents Act became law in 2011. Its purpose was to improve patent quality by streamlining and clarifying the process by which the US Patent and Trademark Office considered and awarded patents.
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A key component of the AIA was the creation of the inter partes review process to help the USPTO weed out flimsy patent claims from solid ones and create an efficient way for manufacturers and other inventors to challenge bad patents. The IPR process was designed to affirm protections for serious patent holders but curtail the number of multi-year, multi-million-dollar lawsuits initiated by dubious patent claimsants.
Today, unfortunately, a class of clever operators known as “patent trolls” are profiting from the USPTO’s underuse of the IPR process. In the first quarter of 2021 alone, the number of patent infringement suits were up more than 40% compared to the same period in 2020. Patent trolls, or “non-practicing entities,” buy patent rights for the purpose of accusing infringement, often It’s predatory legal gamesmanship, plain and simple.
Patent lawsuits can be lengthy, complex and expensive. A patent troll’s suit or threat of legal action can force manufacturers to choose between a protracted court battle and hiring, expanding, building and other investments. Often, the choice is to take a huge hit by settling outside of court, just so they can get on with the business of manufacturing. Patent trolls — and the hedge fund investors financing the purchase of weak, low-quality patents — walk away richer. Manufacturers not at fault, the US economy and the American people, on the other hand, are left poorer.
The Restoring the America Invents Act
Legislation — the Restoring the America Invents Act — recently introduced by Sens. Patrick Leahy, D-Vermont, and John Cornyn, R-Texas, recognizes that it’s time to reinstate the AIA’s strong system for upholding patent rights and protecting the patent process from abuse by trolls. The Tennessee Manufacturers Association fully supports the RAIA; In fact, we joined the US*MADE Coalition to stand with other US manufacturers to reaffirm AIA’s importance.
As the economy continues to recover from the COVID-19 pandemic, high-tech manufacturing will play a vital role in America’s rehabilitation and growth. Patent trolls are standing in the way of US manufacturers being able to buttress US global competitiveness and domestic prosperity, but the Restoring America Invents Act can change that. It’s time for Congress to take action that will improve patent quality and protect access to inter parts review that protects against the weaponization of poor-quality patents. American manufacturers deserve a fair defense.
Bradley Jackson serves as the president and CEO of the Tennessee Manufacturers Association.