Number of 2018 applications decreased as they grew elsewhere in the world

The World Intellectual Property Organization reported the first U.S. decrease in patent applications since 2009.

BY GENE QUINN

The World Intellectual Property Organization’s 2019 report, “World Intellectual Property Indicators,” is eye-opening and should be mandatory reading for policy makers and legislators in the United States.

For the first time since 2009, the United States had a decline in the number of patent applications filed. This remarkable statistic comes as patent applications are growing in number across the rest of the world. And let’s not forget that 2009 was a time of particular economic crisis in the United States and around the world, due to the global financial crisis and Wall Street meltdown brought on by the housing market collapse.

Troubling numbers

In 2018, the United States had a 1.6 percent decline in the number of patent applications filed. Meanwhile, patent filings grew by more than 5 percent worldwide.

Patent filings grew in China (11.6 percent), India (7.5), Korea (2.5), Singapore and the European Patent Office (4.7). Even low-and middle-income countries are seeing substantial increases in patent filings: Pakistan (27.8 percent), Philippines (26.7), Uzbekistan (17.5), Morocco (14.1) and Vietnam (12.8%) recorded particularly rapid growth in 2018.

Even the African Intellectual Property Organization, the African Regional Intellectual Property Organization and the Eurasian Patent Organization all reported strong growth in applications in 2018—6.2 percent, 11.2 percent and 5.6 percent, respectively.
Despite the 2018 decline in U.S. patent applications, American applicants filed the largest number of applications abroad (230,085).

A decade of decline

These statistics seem to confirm what those in the monetization, patent litigation and venture capital business have reported for several years: Innovators and innovation funding are shifting away from the United States.

Anyone who has been paying attention to the decline of the U.S. patent system, well chronicled on the pages of IPWatchdog.com during the past decade, will hardly find this shocking. Each day, it seems there are only further reasons to deter U.S. inventors to file patent applications.

In 2012, in Mayo Collaborative Services v. Prometheus, the Supreme Court was faced with patent claims that no one in the patent community thought were novel or non-obvious. Yet the Supreme Court took the opportunity to invalidate the claims as being patent ineligible because the claims at issue added so little beyond observing the natural law that the defined claim couldn’t possibly be worthy of a patent.

In 2014, in Alice Corp. v. CLS Bank, the Supreme Court was faced with patent claims that related to computerizing the function of what was essentially, in the view of the Supreme Court, a checkbook register. During oral arguments, the Supreme Court was even told—twice—that the invention could have been coded by a second-year engineering student over a weekend. How trivial must the code be for that to be correct?

Where we are now

Rather than recognize that the facts of Mayo were peculiar and represent the most trivial of situations, the United States Court of Appeals for the Federal Circuit has used Mayo to destroy medical diagnostics and reiterate again and again a conclusion that is contrary to the text of the statute and Constitution: that discoveries are not patent eligible.

We are now at a point where a method for manufacturing a shaft assembly of a driveline system is considered to be patent ineligible as being a natural law. See American Axle & Manufacturing, Inc. v. Neapco Holding LLC (Federal Circuit, Oct. 3, 2019). Judge Kimberly Moore, in dissent, referred to the majority ruling in American Axle as “validity goulash”—which is being polite.

It is asinine for a method of manufacturing a drive shaft to be patent ineligible as being a natural law. This ruling means all methods of manufacturing, and quite possibly all methods and even all patent claims, are patent ineligible because on some level everything is based upon a law of nature.

The fact that you are not floating out of your desk chair as you read this relies on a law of nature. Does that mean sitting down is a law of nature? It just might, in the view of certain federal circuit judges.

Rather than recognize the peculiarly simple, even trivial code that was admitted by the patent owner to have been written over a weekend by a second-year engineering student, the federal circuit has so expanded the Supreme Court’s ruling in Alice that we are now at a point where a wireless controller system for a garage door is abstract—as if it doesn’t exist in any concrete or tangible form. See The Chamberlain Group, Inc. v. Techtronic Industries Co. (Federal Circuit, Aug. 21, 2019).
Obviously, a wireless garage door control system is not abstract and does exist, as do the hundreds of thousands of other wirelessly controlled innovations that have been patented all the way back to the original discovery of wireless control by Nikola Tesla.

Swallowed

Obviously, the federal circuit has jumped the shark, and is ignoring the Supreme Court’s direction.

The Supreme Court specifically told the federal circuit—and all other courts and tribunals—that too strict an application of patent eligibility as a gatekeeper would swallow all of patent law, and cautioned decision makers not to allow patent law to become so swallowed.

With the law evolving to the point where no medical diagnostics are patent eligible, a wireless controller system for a garage door is considered abstract, and a method of manufacturing a drive shaft is a natural law, well, patent law has become swallowed by extreme overreach by an activist court that is driving innovation funding overseas—and is now driving patenting activities overseas as well.

If this WIPO report is not the cry for help that Congress or the Supreme Court will hear, where will the industry be in 2020? 2025? The future does not look bright without intervention by those at the top who have authority to fix the mistakes they made and a willingness to put the federal circuit genie back into its bottle.