Beware, Inventors Worldwide

Beware, Inventors Worldwide
Shun-Kuo Su 03.18.08, 6:00 AM ET
http://www.forbes.com/2008/03/14/patents-taiwan-reform-oped-cx_sks_0318patents.html?partner=alerts
Many Americans probably assume that the U.S. Patent and Trademark Office awards patents exclusively to American inventors. But in 2006, almost half of all patents granted by the U.S. were awarded to foreigners.

Why so much foreign interest in the American system? U.S. patents are renowned for being the world's strongest form of intellectual property protection.

It's therefore puzzling that the U.S. Congress is looking to radically change this system. Given America's growing concern about its image abroad, U.S. leaders would be making a grave error undermining their patent system. It stands as a key component of America's soft power.

What is Congress looking to do?

First, it would replace America's unique "first-to-invent" rule with a "first-to-file" system. Under "first-to-invent," the first person to actually invent a product is granted a patent. "First-to-file" merely awards the first person to arrive at the patent office.

"First-to-file" stacks the deck against individuals and small firms, as only large corporations have the legal and financial resources to navigate the patent bureaucracy effectively.

Second, the bill would eliminate patent-holders' protection against frivolous lawsuits. A cumbersome post-grant review process would be the new method of adjudication, allowing patents to be challenged almost indefinitely.

These and other changes in the proposed legislation would cause inventors' costs to skyrocket. Patent values would erode as their legal stature fall into question.

That uncertainty spells trouble for the future of research-intensive innovation. Currently, foreigners are driving much of the innovation passing through the Patent Office. Inventors the world over depend on the U.S. to protect the intellectual property that drives their entrepreneurial ambitions.

Without its strong patent system, the American market would look significantly less appealing--and American influence would wane considerably.

My home country of Taiwan, for example, relies heavily on the American patent system. In 2006, Taiwanese inventors edged out their U.S. counterparts, nabbing 3.3 patents per 10,000 inhabitants, compared with 3.1 per 10,000 in the U.S.

And it is not just Taiwanese inventors flocking to the U.S. Patent Office. It's the busiest patent authority in the world; of the nearly 450,000 patent applications received by the U.S. Patent Office in 2006, about 210,000 were filed by foreigners.

Weakening the U.S. patent system would damage an important source of foreign goodwill toward America. The ramifications would be especially damaging to important allies.

Even more distressing, the U.S. Congress seems strangely unconcerned that large-scale counterfeiters and copycat artists would profit handsomely under the new system. Such companies, often wholly or partly state-sponsored, thrive on weak protection of intellectual property rights.

The Government Pharmaceutical Organization (GPO) in Thailand is a great example. In late 2006 and early 2007, the state-owned company violated the patents of three popular drugs: the anti-AIDS medicines Kaletra and Efavirenz and the heart-disease drug Plavix. Thailand's government blessed the move.

It's likely that organizations like the GPO will be even more brazen in seizing intellectual property if patent protections are weakened.

Other copycat companies have already said they will do as much. "Seeking invalidation of patents is likely to be a part of the patent strategy that Indian generics companies may follow in the U.S.," promised the secretary general of the Indian Pharmaceutical Alliance.

Such a coordinated attack on American patents would be devastating to inventors--and to consumers who rely on their products.

In deciding whether to pass the Patent Reform Act, Congress must choose whether it wants to protect the world's most productive and innovative minds or prop up manufacturers whose only contributions are made through imitation.

The choice should be easy.

Mr. Shun-Kuo Su served as Majority Whip of Taiwan's Provincial Assembly from 1977 to 1980. He also served as a professor of law at the Chinese Culture University. He is currently chairman of a nonprofit organization promoting better ties between Taiwan and the U.S.