Is Our Own Government Siding Against Us in a New Cold War?
The country may not know it yet, but the U.S. is already embroiled in a new cold war — this time not over territory but over technological dominance. The winner will gain prosperity and security. The contest pits the U.S. against China to determine which nation will lead in the 21st century’s foundational technologies. These include Artificial Intelligence, 5G telecommunications, robotics, autonomous vehicles, and the new medical frontier of genetic cures, immuno-therapies and personalized drugs. Although the U.S. is currently holding on to the lead in many of them, the gap is closing fast, and China is massively investing while the US is not.
Years of cyber-hacking, industrial espionage, and employee theft of U.S. technology enabled China to gain the ability to leapfrog the U.S. China has made no secret of its intent, announced repeatedly in published plans, including its Made in China 2025 Plan: They are determined to surpass the U.S. in all these fields within the next 5 years.
China is supporting this effort by committing enormous governmental and private capital. And, its effort involves the whole government, with many coordinated parts that leverage private sector companies as well as state enterprises. The U.S., however, lacks any such plans, and it is not investing as it could.
In fact, our government's funding of R&D as a proportion of GDP has declined steadily for decades. Private investment is now proportionally shifting away from technology such as computer chips toward entertainment and hospitality. And, it is flowing away from the U.S. to China and other counties that better protect investments with reliable patents.
Red flags abound. China excels in Artificial Intelligence and 5G. China has already replaced the U.S. as the most favored location for clinical trials of new cures, vaccines and diagnostics. It already manufactures a major share of the world's drugs and diagnostics, and most pills sold here contain active pharmaceutical ingredients that originate in China. Do we really want to remain dependent on China for life-saving medical products?
Aside from technology theft and central planning, how did China make such fast progress? China spent the last decade strengthening its patent system while we kept weakening ours. The Supreme Court made some technologies, including diagnostic methods, no longer eligible for patenting. Today, although diagnostics are not eligible here, they are in China. Computer-implemented technologies are also under a cloud regarding patent eligibility. And in China, court enforcement is more reliable and far faster and cheaper than here. Non-monetary remedies are also stronger. Our Supreme Court made injunctions to bar further infringement rarely obtainable, while in China they are routine.
Some of our best technology companies are even being attacked by one of our own anti-trust authorities. Although China's leading 5G contender, Huawei, is seen by our intelligence agencies as a security threat, the Federal Trade Commission nevertheless sued Qualcomm, our best contender in the 5G race. The result was to shrink its licensing revenue which funds most of its R&D. Huawei is subsidized by the Chinese government, but Qualcomm is not funded by our government. So, in various ways our own government is, in effect, helping China win the race to dominate global 5G. Yet 5G will be the platform for most other 21st century technologies.
Meanwhile, Congress has done nothing to fix the damage to our patent system. For over a decade, it has failed to restore injunctions to stop on-going infringement. For almost 9 years, it has failed to correct the design flaws in its 2011 patent reform law that allow the patent office to cancel patents on less evidence than courts require. Nor has it addressed the Court-made exceptions to patent eligibility that put us at such a competitive disadvantage with Europe and China. Remarkably, the unacceptable status quo is being vigorously defended by the "big-tech" giants in Silicon Valley who, with allies, control coalitions such as the High Tech Inventors Alliance that spearhead massive lobbying to block reforms.
As for the Supreme Court fixing the eligibility chaos it created by re-writing the statute Congress enacted, there is little hope. In the past 6 years it has been asked to do so nearly 50 times but declined every time. Nor has it revisited its 2006 decision limiting injunctions against proven infringers.
Our democracy cannot permit 9 unelected Justices to frame national innovation policy. Under the Constitution, that is the job of 535 elected Representatives and Senators. In addition, judges are not equipped by training, expertise, or experience to dictate tech policy. Furthermore, they lack the vast factual record that Congress amasses in such matters.
Therefore, Congress is the best hope, perhaps the only hope, for reviving and spurring technological resurgence in America. Let's hope Congress acts before China takes over world tech leadership from the U.S. As in the prior Cold War, winning is imperative.
Judge Paul Michel was chief judge of the United States Court of Appeals for the Federal Circuit, the nation’s top patent court, until his retirement in 2010.