The dream of developing the next best mousetrap, selling it, and then retiring or moving on to create the next big thing is part and parcel of the American vision of success. Strong intellectual property rights are critical to protecting innovation—protections were enshrined in Article 1, Section 8 of the Constitution: “To 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.”
Innovation has flourished in America because of this important clause.
Patents or intellectual property rights have led to the most amazingly innovative 250 year period in human history, spurring invention after invention leading up to the point that you can read this from a computer screen anywhere in the world (most likely one in the palm of your hand).
But granting patents is only half of the battle.
When patents are infringed, the patent-holder must also be protected and have the ability to defend against infringement. This is so important because patents give inventors the assurance that they can invest in the research, the development, the manufacturing, and distribution of a product with knowledge that if someone tries to steal their intellectual property, the inventors can defend themselves.
Working closely with inventors for the last 10 years, I frequently hear infuriating stories of second-movers plundering their inventions. The early bird gets the worm, but the second mouse gets the cheese, so to speak.
Consider a recent case a company called Varian—a manufacturer of medical devices and software for treating cancer. In 2015, Varian filed a complaint that another company was infringing on its innovations—and an initial determination by an International Trade Commission (ITC) Administrative Law Judge (ALJ) was issued on October 27, 2016, which found that this other company had in fact infringed on three of Varian’s patents. While it is promising that the ALJ found the infringement, it has been a little more than a year since the investigation started and the time on the Varian’s patents is still ticking.
The ITC is an independent, administrative trade forum that investigates claims of patent infringement. If a violation is found, the ITC can exclude the violating articles—alternatively it can also decide to forgo the exclusion, and put the brakes on future innovation, if it finds that doing so is in the public interest.
Following the initial public interest comment period—happening now—the commission will review the investigation and provide a final order sometime in early January 2017.
The ITC has an important role to play in defending patent rights and in ensuring that companies are not allowed to import infringing products into the U.S.
In its final determination the ITC should grant a “limited exclusion order”—essentially an import ban on any products from the infringing company in question that contain the infringing technology.
Innovation takes investment, risk, and time. The device that lets you read this anywhere in the world didn’t just magically appear one day. Defending the risks inspires more risk-taking. More risks means more breakthroughs that we, as a society, can benefit from.
Innovation is in the public’s interest. Incentivizing risk is in the public’s interest. We must continue to provide the right incentives for an inventor to risk their business and wealth today, so that they might reach the pinnacle of retiring to Florida while sipping a piña colada (or whatever dream they have).
Charles Sauer is president of The Market Institute.
