By Kirti Gupta, Andrei Iancu, Walter G. Copan, and Chris Borges
This report was originally published on March 26th with CSIS. Download the full report here.
Executive Summary
The United States is undergoing a generational shift in how economic policy intersects with national security. Decades of globalization have exposed critical vulnerabilities in the U.S. economy, as dependence on foreign competitors for essential goods and the offshoring of manufacturing have weakened industrial capacity, eroded economic resilience, and threatened national security. These challenges are further compounded by geopolitical shifts, disruptive technologies like artificial intelligence (AI), and the rise of China as a strategic competitor that exploits its control over vital value chains and engages in economic coercion.
While these circumstances present the new administration with enormous challenges, they also offer a rare opportunity. The administration is in a unique position to define a consistent and coherent economic strategy that not only addresses the numerous challenges presented by current global circumstances, but also secures U.S. economic and technological leadership for decades to come.
To effectively achieve these goals and bolster U.S. economic and national security, this strategy must incorporate intellectual property (IP) rights—a fundamental yet often overlooked component of innovation and national security policy. A strong and predictable system of IP rights, where the rights of IP owners are well-defined and enforced, will enable investment in innovation, empower small businesses, and ultimately drive technological leadership. Secure IP rights will likewise encourage and enable U.S. workers and businesses to innovate and take risks, harnessing the U.S. entrepreneurial spirit to develop new technologies, establish new businesses, and create new jobs.
However, decades of inconsistent policies and weakened protections have eroded the U.S. IP framework, allowing adversaries to exploit these gaps and challenge U.S. leadership. A myopic view of IP rights by U.S. policymakers, who view IP rights as separate from the broader U.S. economic and national security toolkit, has further weakened the U.S. IP environment. By reestablishing robust IP protections and integrating them into the broader economic and national security strategy, the administration can strengthen U.S. innovation, secure economic prosperity, and ensure long-term national security.
IP Policy: A Cornerstone of Innovation and Security
The U.S. Constitution enshrines IP rights into the foundation of the United States, granting Congress the power to “promote the progress of science and useful arts” by securing exclusive rights for creators and inventors for defined periods of time. These exclusive rights laid the foundation for
an economy driven by creativity and ingenuity, fostering a unique culture of innovation that the United States retains to this day. Secure, stable, and predictable IP rights encourage risk-taking
and investment in innovation, protect small businesses, promote downstream innovation, and ultimately ensure that the United States retains its competitive edge in critical technologies. Conversely, weak and unpredictable protections stifle investment, hinder small innovators, and allow adversaries to gain unfair advantages through IP theft and coercion.
Despite the critical importance of secure, stable, and predictable IP rights for innovation and
U.S. economic and national security, over the past several years U.S. IP policy has devolved into a state of incoherence, characterized by weakened protections, inconsistent enforcement, and legal uncertainty. These shifts threaten to erode the innovation ecosystem that has long been a pillar of U.S. economic strength and global leadership. At a time when the nation is striving to reinvigorate its technological base amid fierce global competition, particularly with China, an unstable IP environment risks undermining this effort.
The Challenge: Erosion of IP Protections
Innovators face several primary challenges in the U.S. IP system, which ultimately undermine U.S. innovation, economic security, and national security:
- Legal uncertainty. Certain elements of the U.S. patent system, such as statutory authority and case law around patent eligibility, are currently plagued by high levels of uncertainty and instability, disincentivizing the risk-taking and investment required to innovate in many critical technology fields and undercutting the market position of startups and other small enterprises.
- Enforcement gaps. Mechanisms to invalidate patents, such as the Patent Trial and Appeal Board (PTAB), are prone to abuse that disproportionately harms small innovators, while the reduced availability of injunctions has greatly diminished the ability to enforce patent rights and, therefore, the value of patents.
- Domestic missteps. The last administration abandoned several long-held U.S. IP policy positions at home and abroad that underpinned U.S. leadership. For instance, proposals like an expansive view of march-in authority, reinterpretations of Title 28, Section 1498, of the U.S. Code (“Section 1498”), and the Trade Related Aspects of Intellectual Property Rights (TRIPS) waiver threaten to destabilize the patent system while being unlikely to meet their stated goals, thereby undermining the security, stability, and predictability of IP rights.
- Foreign exploitation. Nations such as China are leveraging state-sponsored IP theft, forced technology transfers, and legal maneuvers such as anti-suit injunctions to undermine U.S. innovation and manipulate global IP standards. All the while, the United States has shrunk from its leadership position in the global IP system, not only by failing to push back on abuse, but through advancing ideas that weaken global IP protections.
The Path Forward: A Strategic IP Agenda
To reclaim global innovation leadership, the United States must adopt a comprehensive IP strategy aligned with its economic and national security goals. Key recommendations include:
1. Integrate IP policy into the national security strategy.
- Publicly reaffirm the importance of strong and secure IP rights. The president should make a public statement emphasizing robust IP rights as essential to U.S. innovation, economic security, and global leadership, setting a strategic tone for domestic reforms and international collaboration.
- Strengthen the position of IP enforcement coordinator and appoint a pro-IP leader to champion IP rights and innovation. The administration should appoint a pro-IP leader to the position of IP Enforcement Coordinator (IPEC) to champion secure, stable, and predictable IP rights in the United States and to defend U.S. IP from theft and coercive transfer abroad. Further, it should strengthen the position of and empower the IPEC to ensure coherence, coordination, and strategic foresight across the U.S. IP policy landscape, with the explicit objective of strengthening and stabilizing IP rights and promoting innovation.
2. Bolster the U.S. Patent and Trademark Office (USPTO).
- End the practice of fee-diversion at the USPTO. Despite being a fully fee-funded agency that does not receive any tax-payer money, the USPTO faces chronic underfunding issues due to the practice of fee diversion—the diversion of funding received from patent application and maintenance fees away from the USPTO. The administration should end fee diversion at the USPTO so that the office can utilize the money it generates to modernize its resources to enhance efficiency, support innovation, and maintain global competitiveness.
- Empower the USPTO to hire patent examiners. As the USPTO is fully fee-funded, the administration should, at a minimum, exempt the USPTO from government-wide hiring freezes and efforts to reduce workforce headcount. In fact, the administration should consider expanding the USPTO workforce, as such efforts will be essential to reduce the patent backlog, expedite decisions, and provide inventors with greater certainty to advance their innovations.
- Implement patent examination reform. Instead of overly prioritizing reduction of erroneous patent approvals, the USPTO should adopt a balanced approach to reduce both erroneous approvals and erroneous denials, thereby enhancing the reliability and predictability of the patent system.
3. Uphold, strengthen, and lead the international IP system.
- Remain engaged in international IP bodies and commit to robust and reliable IP protections globally. The United States should remain a global champion of secure, stable, and predictable IP rights through international institutions. The new administration can lead by reaffirming U.S. commitment to fair and nondiscriminatory global IP protections and addressing concerns in multilateral forums.
- Push back on demands to erode IP rights in the name of access to innovation. The administration should oppose measures that weaken IP rights in the name of access to innovation, recognizing that a high-functioning global system of IP rights is essential to bringing more developing countries into the innovation ecosystem as effective partners.
- Call out China and other bad actors in the international IP system. The United States should strengthen its stance against IP abuses, support World Trade Organization (WTO) actions against unfair practices, and restore robust reporting of global IP violations to uphold international standards.
4. Reduce uncertainty in the U.S. IP system.
- Revisit USPTO guidelines on patentability of AI-assisted inventions. The USPTO should revisit the guidelines for AI-assisted inventions to reduce the potential for legal uncertainty and ensure that the United States remains competitive in AI-driven innovation.
- Update U.S. Code guidelines to provide clarity for innovators. Clearer standards for patent eligibility under Title 35, Section 101 of the U.S. Code will reduce ambiguity, encourage investment, and promote innovation in emerging technologies (More on Section 101 later in this report).
- Reject government overreach on patent rights. The administration should reinforce the seminal role of government in the U.S. innovation ecosystem by affirming mechanisms such as the Bayh-Dole framework that promote commercialization of new technologies from advances in scientific knowledge.
- Advocate for reinstating the historical presumption of injunctive relief. Restoring the expectation of injunctive relief will empower innovators, deter infringement, and align the United States with international best practices in patent enforcement.
- Empower the Patent Trial and Appeal Board (PTAB) to employ discretionary denial of petitions to reduce duplicative litigation. Limiting duplicative challenges by aligning PTAB processes with district court litigation will streamline patent disputes and reduce resource waste.
In the face of global competition and technological disruption, IP policy is not just a legal matter—it is a strategic priority. A revitalized IP system will drive U.S. innovation, protect national security, and secure economic resilience. By implementing bold reforms and reaffirming its commitment to strong IP protections, the United States can maintain its leadership in the technologies shaping the future while also ensuring the security and prosperity of its people.
