Patents and Innovation Policy

Patents and Innovation Policy

Patents and Innovation Policy
June 25, 2022
Encouraging scientific and technological innovation and U.S. economic competitiveness has
been a longstanding interest of Congress and other federal policymakers. Motivated by the
Emily G. Blevins
widely-held view that scientific and technological advances drive economic growth,
Analyst in Science and
Congressional interest has focused on the patent system—perhaps the longest-running element of
Technology Policy
U.S. innovation policy. Congressional authority over the patent system is grounded in the U.S.

Constitution, which states that “The Congress Shall Have the Power.... To promote the Progress
of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive
For a copy of the full report,
Right to their respective Writings and Discoveries.” Today, Title 35 of the U.S. Code provides
please call 7-5700 or visit
the statutory basis for U.S. patent law.
www.crs.gov.
Patent ownership is designed to incentivize innovation by offering a limited-time monopoly over the use of an invention in
exchange for the public disclosure of the invention. By granting a temporary monopoly on the invention, patents may
generate financial returns that could help offset costs incurred by the inventor during the discovery process. Likewise, by
publicly disclosing the technical details of the invention, patents may also contribute to the growth of knowledge in the public
domain.
Different views exist, however, regarding how to best structure and administer the patent system to encourage innovation,
without unduly harming competition. Some argue, for example, that strong patent rights are essential to spur innovation and
generate economic growth. Such arguments contend that recent changes in patent law, which have made it easier to challenge
patents, have led to decreased investment in technological research and development, harming U.S. competitiveness and
economic growth.
Others contend that, at least in some situations, more flexibility in patent rights is necessary to ensure the wider dissemination
and reduced costs of a particular invention, which may result in economic and social benefits to the public. For example,
during the global COVID-19 pandemic, advocates have argued for waivers or other flexibilities in patent rights to increase
the availability and distribution of technologies such as COVID-19 vaccines. Still, others argue that patents are too often
granted for inventions that are not truly innovative, leading to increased costs for products (like pharmaceutical drugs) and
potentially blocking future inventions that are truly innovative.
As Congress considers whether the patent system most effectively encourages innovation, a number of issues related to how
patents are awarded, implemented, and protected may be of interest, including:
 Patent subject matter eligibility standards determine the types of inventions that can be patented. Changes
to the scope and implementation of such standards could either hinder or strengthen the patent system’s
ability to protect and encourage innovation—particularly in key emerging technology sectors.
 Patent quality generally refers to whether granted patents actually meet the standards of patentability
specified in current statute. When unclear or otherwise invalid patents are granted, they can breed
uncertainty in the enforceability of patent rights as well as make it more difficult for others to “invent
around” a particular patent, thus making investing in innovation a riskier financial prospect.
 The belief that poor quality patents inhibit innovation has spurred debate over the costs and benefits of
making it easier to challenge the validity of patents once they are granted. The 2011 Leahy-Smith America
Invents Act (P.L. 112-29) introduced the Patent Trial and Appeal Board (PTAB) and new administrative
mechanisms to challenge the validity of issued patents, which has recently been the subject of criticism and
reform proposals.
 U.S. technological competitiveness is also believed to (at least partially) rely on the quality and diversity of
inventive ideas that fuel innovation, making equity-related aspects of patent policy potentially of interest.

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Contents
Introduction ..................................................................................................................................... 1
An Overview of the U.S. Patent System ......................................................................................... 2
Role of Patents in U.S. Innovation Policy ....................................................................................... 4
Current Issues and Concerns ........................................................................................................... 6
Patent Subject Matter Eligibility Standards .............................................................................. 6
Implications for Investments in Innovation .................................................................. 8
Implications for Emerging Technology ........................................................................ 8
Patent Quality ............................................................................................................................ 9
Challenging the Validity of Issued Patents .............................................................................. 10
Equity in Innovation ................................................................................................................. 11
Considerations for Congress.......................................................................................................... 13
Patent Eligibility Standards ..................................................................................................... 14
Changing Statutory Standards .................................................................................... 14
Changes to the Patent Examination Process ............................................................... 15
Patent Quality .......................................................................................................................... 15
Reforming the Patent Examination Process ............................................................... 15
The Patent Trial and Appeal Board (PTAB) ............................................................................ 17
Reforming or Eliminating PTAB ................................................................................ 17
Equitable Innovation ............................................................................................................... 17
Inclusive Innovation: Collecting Biographical Data from Inventors .......................... 17
Innovation for Equity .................................................................................................. 18
Drug Affordability and IP Enforcement in International Trade .............................................. 18
Concluding Observations .............................................................................................................. 19

Figures
Figure 1. USPTO Utility Patents Granted to U.S. Owners Per 1,000 Residents, by U.S.
County: 2020 .............................................................................................................................. 12

Contacts
Author Information ........................................................................................................................ 19

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Patents and Innovation Policy

Introduction
Congressional interest in innovation policy takes many forms—from federal investments in
university research and development (R&D) programs and subsidies for private research
initiatives to federal programs and incentives to spur the commercialization of products and
services.
The patent system is a cornerstone of congressional efforts to encourage innovation—the creation
and implementation of new knowledge or products to improve efficiency and create value.
Perhaps the oldest and longest-running element of innovation policy, the patent system is
grounded in the U.S. Constitution, which states that “The Congress Shall Have the Power ...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.”1 Because patents
confer on their owners a limited-time monopoly on the use of their invention, inventors have the
potential to receive financial returns that may help offset the costs of the discovery process or
generate net profits. In this way, patent ownership is designed to be an incentive for innovation.
As former U.S. President Abraham Lincoln explained in 1859, the patent system adds “the fuel of
interest to the fire of genius, in the discovery and production of new and useful things.”2
The widely-held view that scientific and technological advances underpin innovation and drive
economic growth has fueled congressional interest in patent policy and reform.3 Such interest has
intensified as the American economy has shifted from primarily relying on investments in
“tangible capital” (such as machinery) to investments in “intangible capital” (such as research and
development (R&D)) to stimulate economic growth.4 For example, by the mid-1990s, U.S.
companies began spending more on R&D and its commercialization than tangible capital assets.5
Though difficult to measure precisely, some have argued that intellectual property (IP) rights have
increasingly enabled economic growth by helping to protect these intangible capital assets.6 By
some estimates, intangible assets account for as much as 90% of all assets held by companies
listed in the S&P 500—a stock market index tracking 500 large, publicly-traded, U.S.
companies.7 Additionally, a 2021 study released by business consulting firm McKinsey and
Company finds a positive correlation across economic sectors between company investments in
intangible assets and growth rates.8 According to the United States Patent and Trademark Office

1 U.S. Constitution, Article I, Section 8, Clause 8.
2 Abraham Lincoln, “Second Lecture on Discoveries and Inventions, 1859,” in Collected Works of Abraham Lincoln,
vol. 3 (Ann Arbor: University of Michigan Digital Library Production Services, 2001), p. 363, at
http://name.umdl.umich.edu/lincoln3; emphasis in the original.
3 Gregory Tassey, The Economics of R&D Policy (Connecticut: Quorum Books, 1997), p. 54. See also Technology and
the Wealth of Nations, eds. Nathan Rosenberg, Ralph Landau, and David C. Mowery (Stanford: Stanford University
Press, 1992); Edwin Mansfield, “Intellectual Property Rights, Technological Change, and Economic Growth,” in
Intellectual Property Rights and Capital Formation in the Next Decade, eds. Charles E. Walker and Mark A.
Bloomfield (New York: University Press of America, 1988).
4 Andrew A. Toole, Richard D. Miller, and Nicholas Rada, Intellectual Property and the U.S. Economy: Third Edition,
USPTO, Alexandria, VA, March 2022, p. ii, at https://www.uspto.gov/ip-policy/economic-research/intellectual-
property-and-us-economy.
5 Ibid.
6 Ibid., p. 1.
7 See, for example, Visual Capitalist, “The Soaring Value of Intangible Assets in the S&P 500,” November 12, 2020, at
https://www.visualcapitalist.com/the-soaring-value-of-intangible-assets-in-the-sp-500/.
8 McKinsey and Company, “Getting Tangible About Intangibles: The Future of Growth and Productivity?,” discussion
paper, June 16, 2021, at https://www.mckinsey.com/business-functions/growth-marketing-and-sales/our-insights/
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(USPTO), in 2019 IP-intensive industries accounted for $7.8 trillion of U.S. GDP9 and 44% of
total U.S. employment, amounting to some 63 million jobs.10
Policymakers have long debated, though, how to best structure and administer the patent system
to effectively encourage the economic and social benefits of innovation, as different perspectives
persist regarding which patent policies best serve these objectives.
Some assert that strong patent rights are essential to incentivize innovation and generate
economic growth. Others contend that certain situations require greater flexibility in patent rights
to ensure the wider dissemination of a particular invention, which may result in economic and
social benefits that outweigh any potential costs associated with weakened patent rights.
This report surveys current issues related to patent and innovation policy, including patent
subject-matter eligibility standards; patent quality; patent validity challenges; equity in
innovation; past congressional action; current legislative proposals; and selected policy options.
An Overview of the U.S. Patent System
Congressional authority over patent rights—a form of IP11—is set forth in the U.S. Constitution.12
Under this authority, Congress has enacted patent laws that grant inventors the exclusive right to
the make, use, import, sell or offer for sale their inventions for a set period, in exchange for
publicly disclosing information related to their inventions.
The United States patent system has existed since 1790. The basic structure of modern U.S.
patent law—including the general mechanics of patent administration and specific policies such
as those governing what may be patented—however, was outlined in the Patent Act of 1952 (P.L.
82-593). The Patent Act of 1952 is codified in Title 35 of the U.S. Code.
Congress established the United States Patent and Trademark Office (USPTO) to issue patents on
behalf of the government.13 As the entity responsible for administering the U.S. patent system,
USPTO:

getting-tangible-about-intangibles-the-future-of-growth-and-productivity. See also, Neal Solomon, “Correlation of U.S.
Patent System and Productivity Growth,” IPWatchdog, September 29, 2016, at https://www.ipwatchdog.com/2016/09/
29/correlation-us-patent-system-productivity-growth/id=73254/.
9 Andrew A. Toole, Richard D. Miller, and Nicholas Rada, Intellectual Property and the U.S. Economy: Third Edition,
USPTO, Alexandria, VA, March 2022, p. 3, at https://www.uspto.gov/ip-policy/economic-research/intellectual-
property-and-us-economy. To identify IP-intensive industries, the study constructed a measure of industry-level IP
intensity (for each form of IP protection: utility patents, design patents, trademarks, and copyrights) equal to the
number of IP rights obtained during the five-year period ending in 2016 per 1,000 employees.
10 Ibid., p. iii.
11 Patents represent one of four main forms of federal legal protection for IP: patents, copyrights, trademarks, and trade
secrets. For a comprehensive overview and analysis of IP law see CRS In Focus IF10986, Intellectual Property Law: A
Brief Introduction, by Kevin J. Hickey.
12 Article I, Section 8, Clause 8, empowers Congress 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.”
13 The Patent Office was established in 1802 within the Department of State and was overseen by a “Superintendent of
Patent.” In 1836, newly enacted patent laws reorganized the office, designating the “Commissioner of Patents” as the
head official. The Patent Office was transferred from the Department of State to the Department of Interior in 1849 and
later transferred to the Department of Commerce in 1925, where it remains today. In 1975, the Patent Office was
renamed as the Patent and Trademark Office, before receiving its current name in 2000—the United States Patent and
Trademark Office. For more on the organizational history of USPTO see the “United States Patent and Trademark
Office” section of “General Information Concerning Patents,” USPTO, available at https://www.uspto.gov/patents/
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examines applications and grants patents on inventions when applicants are entitled to
them; it publishes and disseminates patent information, records assignments of patents,
maintains search files of U.S. and foreign patents, and maintains a search room for public
use in examining issued patents and records.14
USPTO grants three types of patents: utility patents, which “may be granted to anyone who
invents or discovers any new and useful process, machine, article of manufacture, or composition
of matter, or any new and useful improvement thereof”; design patents, which “may be granted to
anyone who invents a new, original, and ornamental design for an article of manufacture”; and
plant patents, which “may be granted to anyone who invents or discovers and asexually
reproduces any distinct and new variety of plant.”15
Patent applications are reviewed by USPTO technical experts referred to as patent examiners. The
process of applying for and (potentially) receiving a patent is called “patent prosecution.” In order
to receive a patent, an applicant must satisfy a number of requirements related to the specificity
and scope of information disclosed in the patent application. A patent application must contain a
sufficiently detailed and clear description of an invention to enable a person skilled in the field to
make and use the claimed invention. A patent’s technical details, which are referred to as its
“specification,” must also be detailed enough to support the patent’s “claims.” Patent claims
constitute an important aspect of the patent application, as they must clearly define the scope of
the exclusive legal rights potentially granted by the patent.
Other patentability requirements relate to the substance of the invention. In general, to be
patentable, an invention must be useful, novel, and nonobvious, and claim patentable subject
matter. The requirement of usefulness, or utility, is satisfied if the invention is operable and
provides some tangible benefit.16 To be judged novel, the invention must not be fully anticipated
by a prior patent, publication, or other state of the art knowledge that is collectively termed the
“prior art.”17 A nonobvious invention must not have been readily within the ordinary skills of a
competent artisan at the time the invention was made.18
In the process of determining an invention’s patentability, a USPTO examiner considers a range
of guidance, including statutory definitions of patentability established by Congress, judicial
guidance that may interpret or clarify statutory standards of patentability, as well as guidance
issued by USPTO in its Manual of Patent Examining Procedure (MPEP) that specifies how
examiners should apply such standards when evaluating patent applications.19
If the patent examiner judges an application and corresponding invention as having met these
requirements, USPTO will issue a patent. A patent confers certain legal rights on its owner for a
period beginning when the patent issues and ending twenty years after the date the patent
application was filed.20 A valid patent grants its holder the “right to exclude others from making,
using, offering for sale, or selling” the covered invention in the United States, as well as the right

basics/general-information-patents.
14 USPTO, “General Information Concerning Patents,” available at https://www.uspto.gov/patents/basics/general-
information-patents.
15 Ibid.
16 35 U.S.C. §101.
17 35 U.S.C. §102.
18 35 U.S.C. §103.
19 USPTO, Manual of Patent Examining Procedure, 9th ed., Alexandria, VA, June 2020, available at
https://www.uspto.gov/web/offices/pac/mpep/index.html.
20 35 U.S.C. §154(a)(2).
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to exclude others from importing the invention into the United States.21 Persons that violate these
exclusive rights are said to “infringe” the patent, and may be sued in court for money damages or
other legal remedies.22 Thus, a patent grants its owner only the “negative” right to prevent others
from using the invention without permission, and not the “positive” right to practice (use) the
invention, which distinguishes it from other forms of property rights.23 Once the term of the
patent ends, the covered invention enters into the public domain and may generally be used freely
by anyone without regard to the expired patent.
Patent rights are not self-enforcing; patentees must enforce their patents. The main way patents
are enforced is through civil lawsuits that patentees may file against alleged infringers in federal
district court.24 The U.S. Court of Appeals for the Federal Circuit (Federal Circuit) possesses
national jurisdiction over most patent appeals from district courts. The U.S. Supreme Court has
discretionary authority to review cases decided by the Federal Circuit.
Role of Patents in U.S. Innovation Policy
Patent ownership is designed to incentivize innovation by offering a limited-time monopoly over
the use of an invention in exchange for public disclosure of information related to the invention
(published in the patent application). In this way, the patent system is intended to encourage the
long-term economic growth that many perceive as resulting from innovation. This section surveys
various explanations of how the patent system encourages inventive activity as well as competing
views that assert patent policies may inhibit innovation.
Patent ownership is intended to stimulate the investment necessary to develop an idea and bring it
to the marketplace. It is primarily through the commercialization and use of new products and
processes that companies and economies realize productivity gains and the scope and quality of
goods and services are expanded. Patent licensing, in particular, allows patent holders to secure a
return on investment by allowing others to make or use the patented product or process in
exchange for some agreed-upon remuneration. For example, patent licensing may allow patent
holders to receive a return on investment even if the patent holder lacks the capacity to bring an
invention to market (such as in cases when required capital or manufacturing facilities are
unavailable), or chooses not to engage in the commercialization process (such as an academic
researcher lacking an interest in entrepreneurship).
Another often-cited positive effect relates to the patent system’s encouragement of the disclosure
of new products and processes, which might otherwise be kept as trade secrets by their
discoverers. Each issued patent must include a description sufficient to enable skilled artisans to
practice the patented invention.25 At the end of the patent’s 20-year term, others may practice the
claimed invention without regard to the expired patent. In this manner the patent system
ultimately contributes to the growth of knowledge in the public domain.

21 35 U.S.C. §154(a)(1).
22 35 U.S.C. §28–29.
23 This means the patent holder has legal recourse only when the right to have the patent not infringed is violated by an
infringer.
24 35 U.S.C. §281. In some circumstances, patent owners may also file complaints with the U.S. International Trade
Commission when they allege that articles being imported into the United States infringe their patent, 19 U.S.C. §
1337(a)(1)(B) cited in CRS Report R46525, Patent Law: A Handbook for Congress, coordinated by Kevin J. Hickey.
25 35 U.S.C. § 112.
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Even during the term of a patent, others may be encouraged to “invent around” or, build upon, the
disclosure contained in the patent to produce technologies that fall outside the exclusive rights
associated with it.26 In this way, a patent may point the way to new products, markets, economies
of production, and even entire industries.
Some commentators argue, however, that this potential benefit has been greatly diminished by the
increasing opacity with which inventions are commonly described in patent applications. They
argue that this strategy may make it impossible to recreate an invention based on the associated
patent application. If a patentee successfully avoids disclosing critical information that could lead
to competitive innovation, it negates the original intent of the patent system.27
Though the belief that patents stimulate innovation is widely held and is the prevalent view
motivating current policy discussions, others raise questions about the role and efficacy of patents
in stimulating innovation.28 Some argue that the U.S. patent system currently places a drag on
innovation and that the rate of innovation and technological progress might be greater without the
current patent regime.29 Seeking to validate this perspective, one study examined the net effect
patents have on stimulating firm investments in innovation by comparing patent-related profits to
R&D spending rates.30 In general, they found that the costs of patent litigation and the necessary
R&D investments underlying patented inventions outweighed profits attributed to patents. The
study, however, found two key industry-level variations in this trend. For firms in the chemical
and pharmaceutical industries, patent profits largely eclipsed patent litigation and R&D costs.31
In 2016, Jason Furman, then Chairman of the White House Council of Economic Advisers, noted
that “a balance needs to be struck between the dynamic incentives conferred by intellectual
property [protections] and the static costs of the monopoly power.... Moreover, it is increasingly
understood that overly stringent intellectual property practices can impede innovation itself—
including by reducing the follow-on innovation that so often can be important, especially in areas
like technology.”32
Other scholars have gone further. In a 2013 journal article, the authors argue that the patent
regime should be completely dismantled and that patents do not significantly increase innovation
and productivity and, in fact, may generally impede innovation by limiting market and intra-firm
competition in a way that helps large, incumbent firms and harms small, new, creative

26 Rebecca S. Eisenberg, “Patents and the Progress of Science: Exclusive Rights and Experimental Use,” University of
Chicago Law Review, vol. 46, issue 3, pp. 1017-1170 (1989).
27 Michele Boldrin and David Levine, “The Case Against Patents,” Journal of Economic Perspectives, vol. 27, no. 1
(2013), pp. 3-22.
28 Zia Qureshi, “Boosting Productivity and Reducing Inequality: An Interconnected Policy Agenda,” in Productive
Equity: the Twin Challenges of Reviving Productivity and Reducing Inequality (Brookings Institution and Chumir
Foundation, 2019), p. 204; Petra Moser, “Patents and Innovation: Evidence from Economic History,” Journal of
Economic Perspectives, vol. 27, no. 1 (2013), pp. 23-44; Heidi Williams, How Do Patents Affect Research Investments,
National Bureau of Economic Research, Working Paper 23088, Cambridge, MA, 2017, at https://www.nber.org/papers/
w23088.
29 James Bessen and Michael Meurer, Patent Failure: How Judges, Bureaucrats, and Lawyers Put Innovators at Risk
(Princeton: Princeton University Press, 2008). The study evaluated a sample of public firms between 1995 and 1999.
30 The study uses R&D spending as a measure of firm investment in innovation. Ibid., p. 145.
31 Ibid.
32 Jason Furman, “Beyond Antitrust: The Role of Competition Policy in Promoting Inclusive Growth,” Remarks by the
Chairman of the White House Council of Economic Advisers at the Searle Conference on Antitrust Economics and
Competition Policy, Chicago, IL, September 16, 2016, at https://obamawhitehouse.archives.gov/sites/default/files/page/
files/20160916_searle_conference_competition_furman_cea.pdf.
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businesses.33 Further, they argue that competition plays a more significant role than patent
protections in stimulating innovation, citing as evidence historical examples where competitive
business environments enabled the initial bursts of innovation that led to new industries.34
Current Issues and Concerns
There are a number of policies that govern how patents are awarded, implemented, and protected
that impact the patent system’s ability to effectively incentivize innovation. The following section
provides an overview of selected issues in patent policy that have been the subject of recent
discussions and which have particular relevance to innovation policy.
Patent Subject Matter Eligibility Standards
The types of inventions that can be patented may affect the patent system’s ability to serve as an
effective incentive for innovation. For example, if the standards of subject matter eligibility are
set too broadly, inventors might be able to patent general concepts or principles that are so
fundamental to technological progress that patent rights might block future innovation. By
contrast, if eligibility standards are set too narrowly, important areas of technological
development might be deemed ineligible, thus removing the incentive to invest in developing and
commercializing particular technologies or fields.
In addition, an inconsistent application of eligibility standards might introduce enough
uncertainty to the patent process that investors may view the potential financial rewards of
securing patent rights as too risky to justify their investments. Such inconsistencies could have
negative effects on innovation. As Kathi Vidal, Under Secretary of Commerce for Intellectual
Property and Director of the USPTO, asserted in 2022, “innovation cannot thrive in
uncertainty.”35
Section 101 of the Patent Act provides the statutory basis for patent eligible subject matter. It
outlines broad categories of innovation which are patentable, including any new and useful
process, machine, manufacture, or composition of matter. In addition to the statute, subject matter
eligibility criteria have been shaped by over a century of Supreme Court decisions, which have
identified certain categories as not patent eligible, including abstract ideas, natural laws, and
natural phenomena.36
The breadth of these judicially created exceptions has expanded in recent years with several
prominent U.S. Supreme Court rulings from 2012 to 2014, including Mayo Collaborative Servs.
v. Prometheus Labs., Inc., Ass’n for Molecular Pathology v. Myriad Genetics, Inc., and Alice
Corp. Pty. v. CLS Bank Int’l.37 These cases established a new two-step test, known as the

33 Michele Boldrin and David Levine, “The Case Against Patents,” Journal of Economic Perspectives, vol. 27, no. 1
(2013), pp. 3-22.
34 Ibid. Boldrin and Levine cite innovations related to chemicals, cars, radio, television, personal computers, and
investment banking as examples of the relatively importance of competition compared to patent protections.
35 USPTO, “Following a Series of Supreme Court Decisions, New USPTO Report on Patent Subject Matter Eligibility
Finds Diversity of Views Regarding the Current State of Jurisprudence in the U.S.,” press release, June 28, 2022, at
https://content.govdelivery.com/accounts/USPTO/bulletins/31df580.
36 United States Patent and Trademark Office, Patent Eligible Subject Matter: Public Views on the Current
Jurisprudence in the United States, Report to Congress, June 2022, p. 3, at
http://www.uspto.gov/sites/default/files/documents/USPTO-SubjectMatterEligibility-PublicViews.pdf.
37 Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 70 (2012); Ass’n for Molecular Pathology v.
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Alice/Mayo framework, to determine patentable subject matter.38 In response to a letter from a
bipartisan group of lawmakers,39 USPTO published a July 2021 notice in the Federal Register
inviting public comment on the impacts of recent subject matter eligibility jurisprudence on
investment and innovation.40
In June 2022, USPTO submitted a report to Congress which reviewed the comments received on
the topic of patent subject matter eligibility by a wide range of stakeholders, including legal
associations, industry organizations, advocacy groups, nonprofit entities, businesses, law firms,
practitioners, academics, and inventors.41 Stakeholder feedback varied widely on the degree to
which changes in the interpretation and application of subject matter eligibility standards either
encouraged or impeded innovation. This variability underscores an important aspect of patent and
innovation policy: changes to patent policy often impact innovative capacity in different ways
depending on a number of factors, including the economic sector, industry, firm size in question,
among others.
A number of groups reported that recent interpretations of subject matter eligibility standards are
having positive impacts on innovation. For example, several civil liberties and nonprofit
organizations argued in favor of current legal exclusions on the patentability of basic tools and
concepts, which they claimed helped foster invention and innovation in the public interest. One
group cited the example of freely-available genomic information that assisted researchers in the
recent fight against COVID-19. Additionally, the 2022 USPTO report cited an investor who
credited the inability to patent overly general ideas, particularly by “non-practicing entities”
(NPEs)42 with encouraging innovation by freeing up resources for firms to invest in development
and commercialization that would otherwise be directed toward legal fees required to defend
against infringement suits.43
Other respondents, however, reported negative impacts on innovation as a result of the expansion
of judicially created exclusions, especially the life sciences and warned of the potential negative

Myriad Genetics, Inc., 569 U.S. 576, 590-94 (2013); Alice Corp. Pty. v. CLS Bank Int'l, 573 U.S. 208, 217 (2014).
38 Step one addresses whether the patent claims are “directed to” a law of nature, natural phenomenon, or abstract idea.
If the answer is no, the invention is patentable. If the answer is yes, however, the second step is applied. Step two asks
whether the patent claims have an “inventive concept,” meaning that the patent claim amounts to something
“significantly more” than a patent on an ineligible concept. For an overview of the case and its legal implications for
the patent process, especially the two-step test determining subject matter eligibility referred to as the Alice/Mayo
framework, see CRS Report R45918, Patent-Eligible Subject Matter Reform in the 116th Congress, by Kevin J.
Hickey.
39 Letter from Senators Thom Tillis, Christopher A. Coons, Mazie K. Hirono, and Tom Cotton, United States Senate, to
Drew Hirshfeld, Commissioner for Patents, March 5, 2021, at https://www.tillis.senate.gov/services/files/04D9DCF2-
B699-41AC-BE62-9DCA9460EDDA.
40 Patent and Trademark Office, “Patent Eligibility Jurisprudence Study,” 86 Federal Register 36257, 2021.
41 Public comments associated with Docket ID PTO-P-2021-0032 are available at https://www.regulations.gov/docket/
PTO-P-2021-0032; also see U.S. Patent and Trademark Office, Patent Eligible Subject Matter: Public Views on the
Current Jurisprudence in the United States, June 2022, appendix C, at https://www.uspto.gov/sites/default/files/
documents/USPTO-SubjectMatterEligibility-PublicViews.pdf.
42 NPEs are also referred to as “patent assertion entities” (PAEs) or, more colloquially, as “patent trolls.” These groups
seek to profit from buying and asserting patent rights against other firms rather than commercializing or developing
patentable inventions. For more information on NPEs and PAEs see CRS Report R46525, Patent Law: A Handbook for
Congress, coordinated by Kevin J. Hickey.
43 United States Patent and Trademark Office, Patent Eligible Subject Matter: Public Views on the Current
Jurisprudence in the United States, Report to Congress, June 2022, p. 21, at
http://www.uspto.gov/sites/default/files/documents/USPTO-SubjectMatterEligibility-PublicViews.pdf.
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implications for the United States’ position as a global leader in innovation.44 For example, one
representative of the biotechnology industry stated that current interpretations of subject matter
eligibility standards had jeopardized the industry’s ability to develop and deliver “precision
medicine, pharmaceutical treatments, and diagnostics” to patients.45
A third group of commenters argued that it was impossible to determine the relationship between
patent eligibility standards and innovation. For example, a number of academics argued that
determining whether limits on patent eligibility would increase or decrease innovation would
require relying on a counterfactual scenario in which the evolution of innovation could be
measured absent any change in eligibility standards.46
Implications for Investments in Innovation
Changes to how patent eligibility standards are interpreted can also impact the ability of inventors
to attract the capital investments on which their innovations rely. As discussed in a previous
section, the patent system aims to incentivize individuals and businesses to engage in inventive
activity and to commercialize such inventions. Any perceived risk to the reliability with which
patent rights might secure financial returns on investment, however, might discourage such
investments in the first place.
One USPTO study demonstrated that limiting the scope of what is considered patent-eligible
subject matter may increase uncertainty for innovators using the patent system. This could serve
as an impediment to innovation given that economic research has shown that greater levels of
uncertainty may reduce investments.47 Additionally, the study concluded:
Higher levels of uncertainty may also negatively impact previously issued patents by
lowering their expected value, reducing patent purchases and licensing transactions, and
limiting opportunities to obtain entrepreneurial financing.48
Many argue that the uncertainty and unpredictability in how subject matter eligibility standards
have been interpreted especially affect startups and small and medium-sized enterprises (SMEs).
Without reliable patent rights, such entities are, according to the USPTO, increasingly unable to
attract the outside investments on which they rely more than larger firms.49
Implications for Emerging Technology
Innovation in emerging technology areas may face unique challenges due to the restricted scope
of what counts as patentable subject matter as well as the variability in how such standards are
interpreted during the patent examination process. For example, an emerging area of policy

44 Ibid., p. 22.
45 Quoted in ibid., p. 22.
46 Ibid., p. 21.
47 Andrew Abel et al., “Options, the Value of Capital, and Investment,” Quarterly Journal of Economics, vol. 111,
issue 3, pp. 753-777 (1996); Edward Sherry and D. Teece, “Royalties, Evolving Patent Rights, and the Value of
Innovation,” Research Policy, vol. 33, issue 2, pp. 179-191 (2004); Joshua Gans et al., “The Impact of Uncertain
Intellectual Property Rights on the Market for Ideas: Evidence from Patent Grant Delays,” Management Science, vol.
54, issue 5, pp. 998-1014 (2008).
48 Andrew A. Toole and Nicholas A. Pairolero, Adjusting to Alice: USPTO Patent Examination Outcomes After Alice
Corp. v. CLS Bank International (2020), p. 2, at https://www.uspto.gov/sites/default/files/documents/OCE-
DH_AdjustingtoAlice.pdf.
49 United States Patent and Trademark Office, Patent Eligible Subject Matter: Public Views on the Current
Jurisprudence in the United States, Report to Congress, June 2022, p. 41.
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concern relates to patent-eligible subject matter standards as they apply to innovations in artificial
intelligence (AI). Though the number of patent applications pertaining to AI-related subject
matter have been increasing, stakeholders have reported concern that AI-inventions are at risk of
patent ineligibility under the current framework because “they may be characterized as methods
of organizing human activity, mental processes, or mathematical concepts.”50
Patent Quality
In addition to subject matter eligibility standards, the quality of patents issued by USPTO is also
widely considered a major factor in the patent system’s ability to stimulate or hinder innovation.51
Patent quality generally refers to whether granted patents actually meet the standards of
patentability specified in current statute. These include requirements that the invention claimed in
a patent be novel,52 non-obvious,53 and clearly described.54
Perhaps the most frequently articulated justification for why patent quality matters for innovation
relates to the patent system’s ability to confer rights to inventions with predictability and
certainty. When unclear or otherwise invalid patents are granted, they can breed uncertainty in the
enforceability of patent rights as well as make it more difficult for others to “invent around” a
particular patent, thus making investing in innovation a riskier financial prospect. On the other
hand, patent quality can also suffer if valid patents are wrongly rejected by examiners, potentially
inhibiting the patent system’s ability to incentivize innovation.
Some argue that low patent quality is the result of the USPTO patent examination and
administration processes.55 One critique focuses on the effects of USPTO’s budget and its
dependence on revenue collected by patent fees. Since 1991, USPTO has been almost solely
funded by user fees associated with the application and maintenance of patents.56 One study
linked this budgetary structure to a rise in the issuance of low quality patents. Because the costs
the agency incurs to examine patent applications outweigh the revenue generated by examination
fees (which are paid when a patent application is filed), USPTO is heavily dependent on revenue
from issuance and maintenance fees (which are paid only after a patent is granted) to fund its
operations. The authors of the study stated that, as a result, USPTO might have a “possible
incentive to grant rather than deny patents.”57
Other critiques of patent examination practices focus on the insufficiency of time examiners have
to devote to patent application review.58 Research has demonstrated that patent examiners spend

50 Ibid, p. 1; see also USPTO, Public Views on Artificial Intelligence and Intellectual Property Policy, 2020, at
https://www.uspto.gov/sites/default/files/documents/USPTO_AI-Report_2020-10-07.pdf.
51 Patent quality should not be confused with patent value. The following discussion considers patent quality on the
basis of a granted patent’s fulfillment of statutory patentability requirements. Though sometimes correlated with patent
quality, patent value can be understood as relating to a patent’s potential market as well as the patent’s scope relative to
the potential market, in addition to other factors.
52 35 U.S.C. §102.
53 35 U.S.C. §103.
54 35 U.S.C. §112.
55 Halimah DeLaine Prado, “Reforming the Patent System to Support American Innovation,” The Keyword, Google,
April 28, 2022 at https://blog.google/outreach-initiatives/public-policy/reforming-the-patent-system-to-support-
american-innovation/.
56 Michael D. Frakes and Melissa F. Wasserman, “Does Agency Funding Affect Decisionmaking?: An Empirical
Assessment of the PTO’s Granting Patterns,” Vanderbilt Law Review, vol. 66, no. 1 (2013), pp. 67-146.
57 Ibid., p. 80.
58 Patent application review includes a number of time-consuming procedures, including: “reading the application,
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an average of 19 hours reviewing each patent application, which may not be adequate given that
the initial burden of proving unpatentability rests on USPTO.59 To reject a patent application, a
patent examiner must explicitly state the reasons why it does not meet the patentability
requirements. As a result, having insufficient time to fully vet an application might lead to
examiners granting low quality patents due to time and, in effect, funding constraints.60
Challenging the Validity of Issued Patents
Given the common opinion that poor quality patents impede innovation, congressional interest
has also focused on the issue of what to do about such patents once they are granted. In 2011,
Congress passed H.R. 1249 , the Leahy-Smith America Invents Act (AIA, P.L. 112-29),
considered one of the most substantial reforms to patent policy since the 1952 Patent Act.61 The
AIA introduced a number of reforms including new mechanisms by which to challenge the
validity of issued patents.
Accused infringers have long been able to challenge patent validity if sued in court,62 but the AIA
introduced a new administrative means to challenge patents with the creation of the Patent Trial
and Appeal Board (PTAB). Formed within USPTO, the PTAB reviews patent application
rejections made by examiners (referred to as ex parte appeals) and decides patentability
challenges raised by third parties about issued patents (referred to as AIA trials).63 Third parties
may challenge the validity of claims in issued patents before PTAB through two main types of
proceedings: inter partes review (IPR) and post grant review (PGR).64 Lawmakers intended the
proceedings to provide an important avenue to address invalid patents “on the back end.”65 Using
IPR or PGR to challenge patents is often more advantageous than judicial proceedings for
challengers as the PTAB process is typically faster, less expensive, and requires a lower burden of
proof for invalidating patents.

searching for prior art, comparing the prior art with the application, and (in the case of a rejection) writing a rejection,
responding to the patent applicant’s arguments, and conducting an interview with the applicant’s attorney.” The process
is elaborated in Michael D. Frakes and Melissa F. Wasserman, Decreasing the Patent Offices Incentives to Grant
Invalid Patents, The Hamilton Project, Brookings, Policy Proposal 2017-17, December 2017, p. 11, at
https://www.hamiltonproject.org/papers/decreasing_the_patent_offices_incentives_to_grant_invalid_patents.
59 Michael D. Frakes and Melissa F. Wasserman, “The Failed Promise of User Fees: Empirical Evidence from the U.S.
Patent and Trademark Office,” Journal of Empirical Legal Studies, vol. 11, no. 4 (2014), pp. 602-636.
60 Michael D. Frakes and Melissa F. Wasserman, “Is the Time Allocated to Review Patent Applications Inducing
Examiners to Grant Invalid Patents?: Evidence from Micro-Level Application Data,” Review of Economics and
Statistics, vol. 99, no. 3 (2017), pp. 550-563; R. Polk Wagner, “Understanding Patent-Quality Mechanisms,” Faculty
Scholarship at Penn Law, vol. 157 (2009), pp. 2135-2173 at https://scholarship.law.upenn.edu/cgi/viewcontent.cgi?
article=2195&context=faculty_scholarship; Gideon Parchomovsky and R. Polk Wagner, “Patent Portfolios,” University
of Pennsylvania Law Review, vol. 154, issue 1, p. 77 (2005).
61 John Villasenor, The Comprehensive Patent Reform of 2011: Navigating the Leahy-Smith America Invents Act,
Brookings, Policy Brief #184, September 8, 2011, at https://www.brookings.edu/research/the-comprehensive-patent-
reform-of-2011-navigating-the-leahy-smith-america-invents-act/; Nathan Hurst, “How the America Invents Act Will
Change Patenting Forever,” Wired, March 15, 2013, Design, available at https://www.wired.com/2013/03/america-
invents-act/.
62 35 U.S.C. §282(b).
63 USPTO, “About PTAB,” at https://www.uspto.gov/patents/ptab/about-ptab.
64 USPTO, “What Are AIA Proceedings?” at https://www.uspto.gov/patents/patent-trial-and-appeal-board/about-ptab/
what-are-aia-proceedings.
65 Senator Patrick Leahy and Senator Thom Tillis, “Ensuring That the Patent Trial and Appeal Board Is a Truly Fair
and Impartial Forum,” The Hill, April 12, 2022, Opinion, at https://thehill.com/blogs/congress-blog/3265982-ensuring-
that-the-patent-trial-and-appeal-board-is-a-truly-fair-and-impartial-forum/.
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Critics, however, have criticized the PTAB’s ability to invalidate patents, labeling it a “patent
death squad.”66 Others have argued that the increased ability to challenge the validity of patents
that USPTO has already deemed valid, undercuts the value and reliability of the patent system as
a whole. For example, the Alliance of U.S. Startups and Inventors for Jobs (USIJ) has argued that
the Patent Trial and Appeal Board and Inter Partes Review processes have introduced a degree of
uncertainty that has stifled innovation.67 Strong intellectual property protections, or the ability for
an inventor to guarantee rights to a patent that has been issued, they argue, helps attract
investments from venture capitalists who rely on patent protections to minimize risks to their
investments. Groups like the USIJ report that the weakening of property rights by such reforms
has led to a decrease in capital availability in patent-intensive industries and early-stage startups,
which often entail the riskiest investments.68
Equity in Innovation
Scholars, policymakers, and administrators have increasingly expressed concerns over who
participates in America’s innovation ecosystem, and who is and is not able to access the benefits
it affords. For example, the Biden administration’s Office of Management and Budget and the
Office of Science and Technology Policy have emphasized the importance of “innovation for
equity” in the “Multi-Agency Research and Development Priorities for the FY 2023 Budget”
memoranda that is issued to the heads of executive departments and agencies each year outlining
the priorities for federal R&D, including to “advance equity for all.”69
This section of the report focuses on aspects of U.S. patent policy that are related to equity. For
example, some have advocated for reforms to patent policy that might encourage particular
inventions, such as pharmaceuticals, to be distributed more equitably during public health
emergencies like the recent COVID-19 pandemic.70
Others have called for federal initiatives that focus on improving regional innovative capacity and
the equitable distribution of patenting activity throughout the United States.71 Analyzing the
“geography of U.S. patenting,” the 2022 Science and Engineering Indicators report, published by
the National Science Board, found that areas of high patenting intensity in the United States are
primarily concentrated along the coasts, in Texas, and in parts of the Great Lakes and Rocky

66 Peter J. Pitts, “‘Patent Death Squads’ vs. Innovation,” Wall Street Journal, June 10, 2015, Opinion; Susan Decker,
“Apple Likes the Patent ‘Death Squad.’ Allergan Pays to Avoid It,” Bloomberg, September 2, 2017, Technology; Gene
Quinn, “A Kinder, Gentler ‘Death Squad’ Ten Years in, Despite Some Reforms, the USPTO Is Still Killing U.S.
Patents,” IP Watchdog, September 19, 2021, Government.
67 Alliance of U.S. Startups and Inventors for Jobs, “Why Patents Matter,” at https://www.usij.org/why-patents-matter.
68 USIJ, “For Principles for a Stronger Patent System,” at https://www.usij.org/4-principles-for-a-stronger-patent-
system.
69 “Multi-Agency Research and Development Priorities for the FY 2023 Budget,” Memorandum for the Heads of
Executive Departments and Agencies, From Shalanda D. Young, Acting Director, Office of Management and Budget;
Eric S. Lander, Director, Office of Science and Technology Policy (M-21-32: August 27, 20221), p. 4; “Multi-Agency
Research and Development Priorities for the FY 2024 Budget,” Memorandum for the Heads of Executive Departments
and Agencies, From Shalanda D. Young, Director, Office of Management and Budget; Alondra Nelson, Deputy
Assistant to the President Performing the Duties of the Director, Office of Science and Technology Policy (M-22-15:
July 22, 2022), p. 7.
70 Shobita Parthasarathy, “Innovation as a Force for Equity,” Issues in Science and Technology, vol. XXXVIII, no. 2
(Winter 2022).
71 Jonathan Gruber and Simon Johnson, Jump-Starting America: How Breakthrough Science Can Revive Economic
Growth and the American Dream (New York: Public Affairs, 2019).
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Mountains regions (see Figure 1).72 The report also found that, in 2020, 41.6% of U.S. counties
had zero patents granted to owners residing in that county.73
Figure 1. USPTO Utility Patents Granted to U.S. Owners Per 1,000 Residents, by
U.S. County: 2020

Source: Figure INV-4 National Center for Science and Engineering Statistics; Science-Metrix; PatentsView,
USPTO, accessed June 2021; Population data from the U.S. Census Bureau accessed June 2021 at
https://www.census.gov/newsroom/press-releases/2021/2020-vintage-population-estimates.html cited in National
Science Board, National Science Foundation, Invention, Knowledge Transfer, and Innovation. Science and Engineering
Indicators 2022, NSB-2022-4. 2022, at https://ncses.nsf.gov/pubs/nsb20224/.
Likewise, others have argued that who innovates also impacts the nation’s innovative capacity
and potential economic impacts stemming from such innovations.74 Some studies suggest that the
marginalization of certain groups within society, in terms of who can access the “innovation
ecosystem” (including advanced training and education, R&D funding, and venture capital) has a
dampening effect on innovation.75 When significant numbers of potential innovators do not

72 National Science Board, National Science Foundation, Invention, Knowledge Transfer, and Innovation. Science and
Engineering Indicators 2022, NSB-2022-4, Alexandria, VA, p. 19 at https://ncses.nsf.gov/pubs/nsb20224/.
73 Ibid., p. 20.
74 Alexander Kersten and Gabrielle Athanasia, Untapped Innovation? The Racial and Gender Divides That Hinder the
U.S. Knowledge Economy, Center for Strategic and International Studies, CSIS Briefs, May 2022, at https://csis-
website-prod.s3.amazonaws.com/s3fs-public/publication/220525_Kersten_Untapped_Innovation.pdf?
xSNyYflYj1TUlHfA_TJ7mdbu2TLxijpb.
75 Lisa D. Cook, Policies to Broaden Participation in the Innovation Process, The Hamilton Project, Brookings, Policy
Proposal 2020-11, August 2020.
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participate in the innovation process, they assert, their unique perspectives and ideas on problems
confronting society and potential solutions are lost.76
For example, a 2010 study found that during the period from 1970 to 2006, Black inventors in the
United States were granted 6 patents per million people, compared to the overall rate (including
all inventors) of 235 patents per million people.77 Another paper cited a 2016 study, which found
Black Americans “apply for patents at nearly half the rate of whites.”78
Additionally, one recent study published in Nature found that women are 58% less likely to
receive credit for their work on patentable inventions than men.79 Though the study’s authors
recognize that numbers alone do not explain why women receive less credit, they argue that their
analysis of related qualitative data reveals a more detailed explanation of potential causes. When
interviewed, both men and women reported feeling that their work was underestimated but the
study found that women more frequently reported such experiences.80
Some economists argue that the stakes of ignoring equity within the patent system are particularly
high for the U.S. economy. For example, in a recent interview one economist asserted that
attempts to promote innovation by narrowly focusing on ensuring strong property rights ignores
other important factors that impact preconditions for innovation, such as societal inequities and
even threats to physical safety, which may be experienced more acutely by various demographic
groups within society. Additionally, she argued that these impacts limit the economic effects of
innovative activity. 81
Considerations for Congress
Congress has demonstrated continued interest in technology and innovation policy in response to
concerns about U.S. leadership in critical and emerging technology sectors as well as scientific
research and development.82 Given the perceived importance of patents in encouraging
innovation, Congress may consider whether changes to the patent system are necessary in order
to improve America’s innovative capacity.

76 Holly Fechner and Matthew S. Shapanka, “Closing Diversity Gaps in Innovation: Gender, Race, and Income
Disparities in Patenting and Commercialization of Inventions,” Technology and Innovation, vol. 19 (2018), pp. 727-
734.
77 Ibid.
78 Shontavia Jackson Johnson, “The Colorblind Patent System and Black Inventors,” Landslide, The American Bar
Association, vol. 2, no. 4 (2019).
79 Matthew B. Ross et al., “Women Are Credited Less in Science Than Men,” Nature, vol. 608 (June 22, 2022), pp.
135-145.
80 Ibid.
81 Hyun-Sung Khang, “The Accidental Economist: Michigan State University’s Lisa D. Cook Shows How Racism and
Sexism Hurt Us All,” Finance & Development (Publication of the International Monetary Fund), December 2020, pp.
48-51.
82 National Science Board, Vision 2030, May 2020, at https://www.nsf.gov/nsb/publications/2020/nsb202015.pdf; The
National Counterintelligence and Security Center, Protecting Critical and Emerging U.S. Technologies from Foreign
Threats, October 2021, at https://www.dni.gov/files/NCSC/documents/SafeguardingOurFuture/
FINAL_NCSC_Emerging%20Technologies_Factsheet_10_22_2021.pdf.
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Patent Eligibility Standards
A range of policy options currently exist regarding the scope, clarification, and consistent
implementation of patent subject matter eligibility standards to protect and encourage innovation,
especially in particular emerging technology sectors. Options include statutory changes that might
clarify judicial standards as well as altering aspects of patent administration, such as the
examination process.
Changing Statutory Standards
Given potential uncertainty over subject matter patent-eligibility, Congress may consider
changing the statutory standards governing which inventions are patentable.
An example of this approach is found in Section 7 of H.R. 5874, the “Restoring America’s
Leadership in Innovation Act of 2021, which would amend Section 101 of Title 35 of the U.S.
Code to abrogate the previously cited Supreme Court decisions relating to patentable subject
matter. The bill would institute an eligibility exception only for any invention that “exists in
nature independently of and prior to any human activity, or exists solely in the human mind.”83 As
a result, H.R. 5874 seeks to “ensure that life sciences discoveries, computer software, and similar
inventions and discoveries are patentable, and that those patents are enforceable.”84
Congress may also wish to consider legislation that would build on the intent of judicial standards
relating to patentability, while also specifying statutory exceptions related to certain technologies.
Given the potential economic impacts of innovations in critical and emerging technology areas
(artificial intelligence, quantum computing, biotechnology, etc.), Congress may wish to create
specific statutory exceptions to patent eligibility standards to ensure that innovations in these
fields are eligible for patents.
Creating such specific exceptions could serve as a mechanism by which to tailor patent policy in
a way that simultaneously addresses the concerns of multiple stakeholders: those who favor
eligibility standards that exclude abstract ideas because they operate in industries where overly
vague patents routinely serve as the basis for what some see as abusive litigation practices and
those who oppose such exclusions because they are seen as a threat to the viability of patents in
emerging fields that rely on comparatively abstract concepts.85
S. 4734, the Patent Eligibility Restoration Act of 2022, for example, would replace current
judicial exceptions to patent eligibility with a list of more limited statutory exceptions.86
Proponents of the bill argue that it would provide much needed clarity to patent eligibility
exceptions and could expand eligibility for patents related to software or the life sciences.87 Some
of the bill’s critics, however, argue that it doesn’t provide enough clarity and that innovations in
areas like medical diagnostics, many of which have been deemed ineligible to be patented under
current standards, would still face uncertainty. They argue that the bill could include more
specific language addressing medical diagnostics and processes, to ensure that future
developments in the field would be patent eligible.88

83 H.R. 5874 §7.
84 Ibid.
85 S. 4734.
86 S. 4732 §2.
87 Samantha Handler and Riddhi Setty, “New Patent Eligibility Bill Takes Aim at High Court Inaction,” Bloomberg
Government, August 3, 2022.
88 Ryan Davis, “New Patent Bill Could Boost Diagnostics, but Needs Work,” Law360, August 12, 2022.
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Changes to the Patent Examination Process
Congress may wish to consider reforms to patent administration. Such an approach might include
directing USPTO to issue technology-specific guidance to patent examiners that would influence
how subject matter eligibility standards are applied during the prosecution process. This could
avoid inconsistency or undue effects on emerging technology areas—especially if the policy goal
is to incentivize innovation in these fields.
For example, the Supreme Court’s 2014 decision in Alice Corp. Pty. v. CLS Bank Int’l rejected a
patent claim on a method of mitigating settlement risk in financial transactions using a computer
because the claim pertained to an abstract idea. Subsequently, USPTO reported that the allowance
rate for patent applications containing AI applications or, the number of applications judged by
USPTO examiners to meet the standards of patentability and other specified requirements,
decreased based on subject matter ineligibility compared to non-AI related applications.89 USPTO
responded to such concerns by giving additional guidance to patent examiners that clarified how
to apply the Supreme Court’s two-step subject matter eligibility test, known as the Alice/Mayo
framework, which led to an increase in the allowance rate for applications containing AI.90
In a July 2022 Director’s Blog post, USPTO Director Kathi Vidal commented on past agency
efforts to improve subject matter eligibility guidance and signaled the agency’s interest in
potentially making additional changes.91 As part of this effort, USPTO has requested public
feedback and comments on subject matter eligibility guidance for examiners by September 15,
2022.92 Based on USPTO’s findings and any potential actions, Congress may wish to continue
oversight on this issue, consider additional actions, or review USPTO’s findings and assess the
alternatives for technology-specific guidance for examiners to assist in the evaluation of whether
related inventions qualify as subject matter eligible to ensure that innovation in emerging
technology areas is not hindered.
Patent Quality
To encourage the issuance of high quality patents, upon which the patent system’s ability to
stimulate innovation depends, Congress may wish to consider a range of policy options to
improve patent quality.
Reforming the Patent Examination Process
S. 4704, the Patent Examination and Quality Improvement Act of 2022, introduced during the
117th Congress, expresses the “the sense of Congress that Congress must do more to enable the
Office to improve—(1) the quality of patents issued by the Office; and (2) the patent examination
process at the Office.” The act would require the U.S. Government Accountability Office (GAO)
to submit a report to the House and Senate Judiciary committees on the patent examination
process and the overall quality of patents issued by USPTO93 that includes:

89 Alice Corp. Pty. v. CLS Bank Int’l, 573 U.S. 208, 217 (2014); United States Patent and Trademark Office, Patent
Eligible Subject Matter: Public Views on the Current Jurisprudence in the United States, Report to Congress, June
2022, pp. 12-13.
90 Ibid., p. 13.
91 Kathi Vidal, “Providing Clear Guidance on Patent Subject Matter Eligibility,” Director’s Blog: the Latest From
USPTO Leadership, USPTO, July 25, 2022 at https://www.uspto.gov/blog/director/entry/providing-clear-guidance-on-
patent.
92 Ibid.
93 S. 4704.
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 Recommendations to improve patent quality and the examination process,
specifically emphasizing how to avoid multiple claims and defining what
constitutes a clear and thorough search by a patent examiner;
 An evaluation of whether USPTO needs to establish clear standards regarding
what constitutes patent quality as well as establish patent quality metrics;
 An evaluation of whether USPTO needs to provide examiners with additional
time to examine patent applications; and
 Recommendations to improve the training of patent examiners, including fields
affected by emerging and complex technologies and data science, to ensure they
are fully equipped to understand the applications of those technologies.94
The study’s proposed scope would overlap with a 2016 GAO report that also reviewed issues
related to patent quality. The 2016 report, Intellectual Property: Patent Office Should Define
Quality, Reassess Incentives, and Improve Clarity, issued several recommendations, including
those related to improving patent quality definitions and standards as well as increasing patent
examination times—all of which the GAO website currently lists as “implemented” by the
agency.95 Given the persistence of concerns over patent quality, Congress may wish to consider
additional GAO assessment of USPTO efforts to improve patent quality.
Reforms to USPTO’s fee structure may offer a means to potentially improve the quality of issued
patents. Some argue that USPTO’s fee schedule should better align examination fees with
examination costs, so that revenue is primarily generated through pre-allowance fees (collected
before a patent is granted) rather than post-allowance fees (collected after a patent is granted).96
Congress may wish to consider whether increases in examination fees might discourage under-
resourced inventors and small and medium-sized enterprises (SMEs) from filing patents. Others
argue that fee reductions meant to encourage SMEs to file patents have had the unintended
consequence of biasing USPTO toward granting patents to larger firms, since their higher fee
rates have the potential to generate higher revenues for the agency.97
The time USPTO examiners allocate to reviewing each patent application is another issue that
may be of interest to Congress. Advocates for increasing examination time argue this may
encourage a more consistent review process regardless of the specific examiner chosen to review
an application.98 Alternatively, increasing examination time without increasing USPTO resources
to hire additional examiners might diminish the agency’s capacity to review the patent
applications received.

94 Thom Tillis, “Tillis and Leahy Introduce Bipartisan Legislation to Improve Patent Quality,” press release, August 2,
2022, https://www.tillis.senate.gov/2022/8/tillis-and-leahy-introduce-bipartisan-legislation-to-improve-patent-quality.
95 U.S. Government Accountability Office, Intellectual Property: Patent Office Should Define Quality, Reassess
Incentives, and Improve Clarity, GAO-16-490, June 2016, at https://www.gao.gov/assets/gao-16-490.pdf.
96 Michael D. Frakes and Melissa F. Wasserman, “Does Agency Funding Affect Decisionmaking?: An Empirical
Assessment of the PTO’s Granting Patterns,” Vanderbilt Law Review, vol. 66, no. 1 (2013), p. 122.
97 Ibid., 124-125.
98 Michael D. Frakes and Melissa F. Wasserman, Decreasing the Patent Offices Incentives to Grant Invalid Patents,
The Hamilton Project, Brookings, Policy Proposal 2017-17, December 2017, p. 15, at https://www.hamiltonproject.org/
papers/decreasing_the_patent_offices_incentives_to_grant_invalid_patents.
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The Patent Trial and Appeal Board (PTAB)
A number of policy options have been proposed during the 117th Congress related to addressing
concerns expressed about the role and efficacy of the PTAB, ranging from targeted reform to
repeal.
Reforming or Eliminating PTAB
Some members of Congress have proposed preserving the main functions of the PTAB, including
IPR and IGR, but amending the AIA to improve their functioning, in light of previously discussed
criticisms. For example, Senator Leahy, one of the original sponsors of the AIA, issued a
statement in June 2022 touting the successes of PTAB proceedings but also acknowledging
needed reforms.99 One set of possible reforms was introduced in S. 4417, the Patent Trial and
Appeal Board Reform Act of 2022, and included policies designed to cut down on the prevalence
of serial petitions filed against patent owners, which may increase the costs required to defend
their patent rights; prohibit USPTO from declining proceedings based on ongoing civil actions;
and increase the transparency with which the USPTO director may engage with PTAB
decisions.100
Others have proposed eliminating the IPR and PGR procedures created by the AIA. Critics of
these proceedings have called for their abolishment. For example, H.R. 5874, Restoring
America’s Leadership in Innovation Act of 2021, introduced by Representative Thomas Massie,
would repeal Sections 6 and 7 of the AIA which established IPR, PGR, and the PTAB.101
Equitable Innovation
Congress could consider changes to U.S. patent policy to achieve a more equitable innovation
ecosystem and, in doing so, whether such changes might potentially improve innovation and
economic growth. Such changes could include policies that promote greater inclusiveness with
respect to who participates in the innovation process and who benefits from innovation.
Inclusive Innovation: Collecting Biographical Data from Inventors
The ability to develop potential policy solutions aimed at increasing the diversity of those
participating in the innovation ecosystem may be restricted, in part, by the absence of data.
Currently, USPTO does not request or track demographic information from patent applicants.102
Such data may be helpful to policymakers in assessing the existence or scope of potential
inequities embedded in the patent system and potentially offer insights into possible solutions.103

99 Patrick Leahy, “Statement of Senator Patrick Leahy Hearing on ‘The Patent Trial and Appeal Board: Examining
Proposals to Address Predictability, Certainty, and Fairness,’” press release, June 22, 2022, at
https://www.leahy.senate.gov/press/statement-of-senator-patrick-leahy-hearing-on-the-patent-trial-and-appeal-board-
examining-proposals-to-address-predictability-certainty-and-fairness.
100 S. 4417.
101 H.R. 5874.
102 Shontavia Jackson Johnson, “The Colorblind Patent System and Black Inventors,” Landslide, vol. II, no. 4 (National
Bar Association, 2019).
103 Michelle K. Lee and Andrei Iancu, “To Get More Women and Minority Inventors, We Need Data,” International
Business Times, May 29, 2022, at https://www.ibtimes.com/get-more-women-minority-inventors-we-need-data-
3524667?amp=1.
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For example, two bills introduced in the 117th Congress, S. 632 and H.R. 1723, both known as the
Inventor Diversity for Economic Advancement Act of 2021 or the IDEA Act, would require
USPTO to request demographic information (defined as including gender, race, and military or
veteran status) from the inventor on each patent application submitted to the agency. Both bills
stipulate, however, that inventors would not be required to provide demographic information. The
bills also include provisions that would direct USPTO to publicly report collected demographic
data. The data collected may help clarify who participates in the innovation process, as measured
by patents awarded, and potentially inform changes to patent policy that may encourage a more
inclusive innovation ecosystem. Provisions from both bills were included in S. 1260, the United
States Innovation and Competition Act of 2021, as engrossed in the Senate,104 and H.R. 4521, the
America COMPETES Act of 2022, as engrossed in the House.105 Ultimately, however, provisions
related to demographic data collection of inventors were not included in the enacted legislation,
P.L. 117-167.106
Critics of S. 632 and H.R. 1723 have expressed concern that cases may arise where demographic
information might be reported to USPTO without the consent of individual inventors.107 Such
cases might arise when a company CEO files a patent application that lists employees as co-
inventors and discloses their demographic information without their permission. Congress may
wish to weigh any potential benefits yielded by demographic data collection against any potential
harms associated with privacy violations.
Innovation for Equity
Changes to patent administration policy might be used to incentivize specific categories of
innovation, such as technologies that might mitigate poverty or uneven access to public health
services.108 For example, Congress might wish to consider whether USPTO could encourage
patent applications in specific topic areas by offering reduced fees for particular applications,
expediting application review, or other means.
In this regard, H.R. 5796, the Patents for Humanity Act of 2021 and S. 4210, the Patents for
Humanity Act of 2022 introduced in the 117th Congress, would direct USPTO to hold a
competition at least every two years that would recognize patent applications seeking to address
humanitarian issues.109 USPTO would award such applications certificates that would be used to
accelerate certain agency proceedings.
Drug Affordability and IP Enforcement in International Trade
Finally, though not the focus of this report, a number of bills under consideration by the 117th
Congress include provisions that would affect aspects of patent policy and intellectual property
rights related to two major concerns: prescription drug availability and affordability,110 and the
protection and enforcement of intellectual property rights, specifically within the context of

104 S. 1260 §6204.
105 H.R. 4521 §80102.
106 P.L. 117-167.
107 Megan Mineiro, “Senate Judiciary Committee Markup: Panel Advances Bipartisan Bill to Collect Gender and Other
Demographic Data,” CQ Committee Coverage, April 29, 2021.
108 Ibid., xxxix.
109 H.R. 5796 and S. 4210.
110 For example, see H.R. 1976, H.R. 3035, H.R. 3788, H.R. 5260, H.R. 7430, S. 1435, S. 1683, and S. 1898.
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international trade.111 When evaluating potential changes to patent law and associated regulations
to alter pharmaceutical pricing regimes or IP enforcement mechanisms in the global marketplace,
Congress may wish to consider a number of overlapping policy and regulatory issues (see, for
example, CRS Report R46679, Drug Prices: The Role of Patents and Regulatory Exclusivities,
coordinated by Erin H. Ward; CRS Report R46741, Drug Pricing and Intellectual Property: The
Legislative Landscape for the 117th Congress, by Kevin J. Hickey, Kevin T. Richards, and Erin
H. Ward; and CRS In Focus IF10033, Intellectual Property Rights (IPR) and International Trade,
by Shayerah I. Akhtar and Liana Wong).112
Concluding Observations
If Congress chooses to enact patent reforms, it might consider the potential consequences, both
intended and unintended, that such policies might have on the U.S. innovation ecosystem. For
example, changes to patent subject matter eligibility standards might have an outsized effect on
the patentability of emerging technologies. Additionally, changes to patent administration,
especially administrative mechanisms used to challenge patent validity, might either strengthen or
reduce the quality of patents issued by the USPTO. Any such changes to patent policy, for
example, could impact the perceived certainty and enforceability of patent rights, which may
increase the financial risk associated with investing in innovation. Additionally, the extent to
which targeted reforms of the patent system might impact who participates in the U.S. innovation
ecosystem as well as the quality of the inventions it produces.

Author Information

Emily G. Blevins

Analyst in Science and Technology Policy

111 For example, see H.R. 2471, S. 1060, S. 1169, S. 1245, S. 1924, S. 3799, S. 39, and S. 687.
112 Additional related CRS resources include: CRS Report R46679, Drug Prices: The Role of Patents and Regulatory
Exclusivities, coordinated by Erin H. Ward; CRS In Focus IF11561, Pharmaceutical Patenting Practices: A Legal
Overview, coordinated by Kevin J. Hickey; CRS In Focus IF11214, Drug Pricing and the Law: Pharmaceutical Patent
Disputes, by Kevin J. Hickey; CRS Report RL34292, Intellectual Property Rights and International Trade, by
Shayerah I. Akhtar, Ian F. Fergusson, and Liana Wong; CRS In Focus IF11858, Potential WTO TRIPS Waiver and
COVID-19, by Shayerah I. Akhtar and Ian F. Fergusson; and CRS Report R46532, Intellectual Property Violations and
China: Legal Remedies, coordinated by Kevin J. Hickey.
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Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
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under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
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