U.S. Improves in Annual Property Rights Index, but Much Work Remains Print
By Timothy H. Lee
Thursday, October 24 2019
As the world economy becomes more competitive and information-based, the importance of IP to our continued prosperity will only increase.

Property rights, as most Americans understand, provide the foundation for our free market system. 

As the familiar adage goes, you’ll never see someone taking a rental car to the car wash.  Without skin in the game, innovation and investment evaporate, and people’s natural right to enjoy the fruits of their labor withers. 

What remains less recognized, however, is the importance of intellectual property (IP) – creations of the mind such as patents, copyrights, and trademarks – in explaining America’s unmatched legacy of innovation, prosperity and power.  Many nations recognize and protect private property, but America’s record of IP protection stands unique. 

And in an increasingly knowledge-based global economy, IP only becomes more and more important for continued economic growth and employment. 

That was brought to the fore again this week, as the Property Rights Alliance (PRA) released its annual International Property Rights Index.  In welcome news, the United States improved its overall ranking, which measures nations’ (1) physical property rights, (2) intellectual property rights and (3) nations’ legal and political environments, as the Index highlights in its Key Findings introduction: 

The United States experienced increases in all categories, and moves past Denmark and the United Kingdom on the way from 14th to 12th in property rights protections overall.  The United States leads the world in copyright and patent intellectual property protections. 

In last year’s PRA Index, the U.S. placed a disappointing 14th overall, and 20th in terms of political and legal environment.  “Alarmingly,” the Index announced last year, “for the first time the United States fell from being 1st in the world for intellectual property protections to 2nd, yielding to Finland, which also passed New Zealand to become 1st in the Index overall.” 

Our sudden and alarming decline in IP primacy was explained by Obama Administration changes to our patent system, such as the creation of a Patent and Trademark Appeals Board (PTAB) that eliminated at least one patent in 80% of petitions it adjudicated, and judicial branch rulings that weakened patent enforcement and interpretation of federal laws.  That introduction of uncertainty erodes certainty and property protection that made our patent system the best in the world. 

In more cheerful news, the Trump Administration has demonstrated improvement from the Obama Administration by recognizing the importance of IP to our economy, combating foreign theft of American IP and making IP protection a more central focus of trade negotiations. 

Congress can also help return the U.S. to its traditional spot atop the world in IP protection by passing bipartisan legislation such as the Support Technology and Research for Our Nation’s Growth and Economic Resilience (STRONGER) Patents Act.  Among other provisions, that bill would guarantee that patents receive the same protection as other types of property, permit patent owners to seek injunctions against infringement during the litigation process, improve and clarify the process by which patents are granted and enforced, bring greater balance to PTAB reviews and reform the U.S. Patent and Trademark Office (PTO) fee process. 

We simply cannot forfeit our leadership position in protecting IP. 

When drafting our Constitution, the Founding Fathers recognized the importance of IP rights by explicitly protecting them in the text of Article I of the Constitution, which reads, “Congress shall have the Power … [t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” 

James Madison, while advocating ratification of the Constitution, wrote in The Federalist No. 43 that, “The copyright of authors has been solemnly adjudged, in Great Britain, to be a right of common law.”  Later, former patent attorney Abraham Lincoln similarly observed that, “The patent system added the fuel of interest to the fire of genius.” 

Today, America’s record of invention, prosperity and worldwide influence stands unmatched as a result.  We pioneered flight, the internet and media, and two-thirds of all new pharmaceuticals emerge from the U.S., which is an astonishing proportion.  Our music, film and television influence dominate the world.  And our trademarks are the globe’s most instantly recognizable.  Our domestic IP value totals approximately $5 trillion, which exceeds the entire economies of every other nation in the world except second-place China’s.  Our IP-centric industries also account for over half of all American exports, and employ approximately 55 million workers whose incomes are nearly 30% higher than non-IP workers. 

As the world economy becomes more competitive and information-based, the importance of IP to our continued prosperity will only increase.  We must jealously safeguard America’s IP supremacy, but the good news is that Congress and the White House can do precisely that by passing corrective legislation and continuing to protect our innovations against foreign encroachment and competition.