From empty auto lots to empty shelves in consumer electronics stores, we have seen firsthand the impact of the global semiconductor shortage. It’s a symptom of a much larger problem — over the last 30 years, the United States has fallen behind the rest of the world when it comes to semiconductor manufacturing.
We’ve gone from inventing the semiconductor to ceding manufacturing of this critical element of our supply chain to America’s strategic and economic competitors. In fact, the U.S. share of global semiconductor manufacturing stands at a mere 12%, while 75% is concentrated in East Asian countries such as China, South Korea, and Taiwan.
It’s no exaggeration to say this poses a real threat to U.S. national security and economic security. In a recent appearance before Congress, Secretary of Commerce Gina Raimondo testified to exactly that: “[I]t is not an exaggeration to say at the moment that we have a crisis in our supply chain. … [It’s] a national security risk and an economic security risk.”
This threat hasn’t escaped policymakers. There is broad bipartisan support in Congress for robust investments into semiconductor manufacturing in the U.S., helping to counter decades of unfair foreign competition and U.S. underinvestment. Hopefully, Congress will act quickly, because each day Congress delays, we fall further behind our competitors.
But there’s another problem hindering U.S. semiconductor manufacturing, and it’s entirely of our own making. There’s an epidemic of low-quality semiconductor patents in the U.S. that never should have been issued in the first place. According to one recent analysis of the U.S. Patent and Trademark Office’s data, 70% of semiconductor patents that are challenged in USPTO review proceedings are found to be invalid. These invalid or low-quality patents are too often weaponized through abusive litigation by patent trolls who don’t innovate, build businesses, or create domestic jobs. In fact, on average, companies that settle with or lose to patent trolls in court reduce their investments in research and development by $160 million in the two years following the case. The end result is irreparable harm to U.S.-based semiconductor manufacturers and an enormous risk to our economic and national security.
A decade ago, through the bipartisan America Invents Act, Congress created a system to review and invalidate such low-quality patents in a fair, efficient, and cost-effective manner. This process worked as intended and provided an important safeguard against abusive litigation until 2018, when the agency issued a rule designed to deny such reviews without ever considering whether the patents in question were valid. Not only did the new rule violate the intent of the law that I helped author, but it has unleashed a flurry of litigation that is impeding innovation and economic growth.
The consequences have been profound, especially for the U.S. semiconductor industry. Just recently, a shell company sued Intel (the sole remaining U.S.-based leading-edge semiconductor manufacturer) using two patents that it purchased and never actually used or licensed in the real world. Intel’s request for a hearing to review and invalidate the patent in question was denied in accordance with the new rule. Despite the law we passed, the case went to a lay jury with no expertise in patent law. After a short trial, during which the jury had to digest complex issues of technology, patent infringement, and theories of damages, Intel was left holding the bag, owing a massive $2.175 billion judgment — a significant chunk of what it takes to build a semiconductor manufacturing facility here in the U.S.
Verdicts the size of $2.2 billion should not be based on questionable patents that haven’t been meaningfully reviewed. There is no way that leading-edge manufacturing in the U.S. can compete on a global playing field if our own patent system is being taken advantage of by abusive litigators.
The USPTO needs to remedy its own mistake and return to following the law as written by Congress. If the administration won’t act on its own, Congress should address the issue again legislatively. Sens. Patrick Leahy and John Cornyn introduced the bipartisan Restoring the America Invents Act, which would crack down on the abusive litigation targeting innovators and bring back balance to our patent system.
One need not serve in Congress to realize how hard it is to build bipartisan support for meaningful legislation. But having served in the Capitol, I can assure you that there is bipartisan support for fixing problems that threaten our competitiveness, national security, and economy. As Raimondo correctly noted, the U.S. semiconductor industry and the associated supply chain are in crisis. So let’s turn that bipartisan support into real action and send a message that both parties can come together to prevent abusive practices and to ensure the products that power so much of our economy can be made in America.
Bob Goodlatte is a former congressman and chairman of the House Judiciary Committee.
