24 Jan
2017

Key FTC Commissioner states patents should remain a cornerstone of an effective US innovation policy

A member of the Federal Trade Commission has highlighted the importance of the US patent system to the country’s innovation economy, warning that investment in new technologies could be threatened by a weakening of patent rights.

In a paper titled “Patent rights in a climate of intellectual property rights skepticism” due to be published in the Harvard Journal of Law & Technology, Commissioner Maureen Ohlhausen – who has been tipped to become the commission’s new chair following the departure of Edith Ramirez next month - argues that strong patent rights should remain “at the heart of US industrial policy”.

Ohlhausen concedes that the system can be open to abuses, at times by patent assertion entities (PAEs), and that it should not be subject to ever-broader patents in all industries; but her fundamental point is that patents play an important role in driving incentives in R&D and that policymakers and lawyers should act with caution when contemplating changes. “I worry that today’s calls for diluted patent rights often go beyond incremental adjustment and threaten to weaken patents systemically, which could compromise R&D investment,” she writes.

Ohlhausen concedes that the relationship between innovation and patents is complex, admitting that it is not always easy to identify when patents are a “but-for cause of innovation”. But she cautions that they are an essential part of the innovation ecosystem: “There is ample evidence that patents serve a materially valuable role in promoting innovation in at least some settings. Given the rich innovation in markets where claimed patent-related problems are most prevalent… the cautious, informed and in my view, correct response is incremental, targeted adjustment, patents should remain a central feature of US technology policy.”

In her view, this is particularly important given the US’s leadership in IP matters and the fact that in countries such as China and South Korea antitrust agencies have started to cast a far more critical eye over the rights of some patent owners. 

She concludes her paper by asserting: “The responsible reaction to the various strengths and weaknesses of the contemporary patent system lies in incremental adjustment. Patents should remain a cornerstone of effective innovation policy.”

Ohlhausen is currently the lone Republican among the three FTC commissioners, but with Ramirez due to step down on February 10, President Trump will have three vacancies to fill, meaning there’s a good chance that she could be appointed as Ramirez’s successor (she told a conference in Washington DC yesterday that she has yet to speak to the new President about the role). In other words her views matter, not only through the FTC’s actions but also through her ability to help shape the narrative around patent rights in the US more generally.

In addition, Ohlhuasen’s paper adds another layer of interest to her recent dissent in the FTC’s case against Qualcomm. As well as being the lone voice against in a 2-1 vote to launch the suit, Ohlhausen issued a strongly worded statement which was sharply critical of parts of the FTC’s arguments. 

This and her latest paper may presage a very different relationship between America’s antitrust authorities and IP licensors in the new administration. Former FTC commissioner Professor Joshua Wright has been advising the Trump transition and could also be in line for the FTC chairmanship or another senior antitrust role in the new government. Like Ohlhausen, Wright has some views on antitrust’s role in IP licensing that are sharply different to those that shaped much of the Obama administration’s thinking.

It may still be some time before a change in approach becomes evident, but the early signs are that it could offer encouragement to beleaguered patent licensors. 

Richard Lloyd

Author | Editor

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