America’s 250th an Opportunity to Revive the Founders’ IP Vision

As the nation is about to celebrate America’s 250th anniversary, we should recognize and appreciate the U.S. intellectual property framework, particularly patents and copyrights. For it has played crucial roles in our country’s prosperity, economic and national security, and the prolific degree to which creativity and ingenuity here produce the innovative fruits that Americans enjoy every day.

The recent publication of my book To Invent Is Divine: Creativity and Ownership has acutely raised my anticipation of America’s 250th. A section of To Invent Is Divine focuses on the novel provision in our Constitution in which the Founding Fathers provided for exclusive legal rights in one’s IP.

The Historic Innovation that Blessed America

George Mason law professor Adam Mossoff calls Article I, Section 8, Clause 8, the IP clause, “unprecedented. No country’s founding document had [contained an individual property right] before.” The newly formed Constitution treated intellectual property the same as other forms of property, which the Bill of Rights later secured.

Though not a controversial matter, putting IP rights in foundational law was intended as the “same fundamental break from the English patent system as other U.S. political and legal institutions.” Patents and copyrights would no longer rest on cronyism with the sovereign; common folks could now obtain protection of what they made, the originality and ingenuity of the creative works—the merit of a composition or an invention—is what matters. The U.S. government doesn’t grant rights, it merely secures those already held, ascertaining the boundaries of newly created property.

This displaces trade secrecy and low innovation from primacy, with immediate dissemination of learnings, exclusive, enforceable rights throughout the IP term, and the creative work’s eventual entry into the public domain, allowing anyone freely to make and sell copies.

Further, securing inherent property rights in one’s creative and inventive works was intended to incentivize widespread creativity and ownership of new inventions, new discoveries and new knowledge. The First Congress in the Patent Act of 1790 sought to replace the shortages, modest domestic ingenuity and challenges of Revolutionary War times with an explosion of the body of knowledge, individual pursuits applying new knowledge to creating new and useful things, and resulting in rapid growth of America’s industry and economy. This democratized meritocracy’s fruits would include wealth creation and technological advancement beyond anything the world had seen.

The Divine Basis for Human Flourishing

Our Founders were biblically literate and lived in a Christian society. The Bible was prominent in their world. They were well versed in its teachings. They knew Genesis 1:1: “In the beginning, God created the heavens and the earth.” They knew the Ten Commandments include prohibition of stealing. They knew that God made humans as His image bearers. They knew Micah 4:4’s metaphor of the vine and the fig tree, where the owner has the right to the fruits of his labor.

As creatures bearing God’s image, finite humans possess the divine attributes of creativity and ownership. It’s no surprise that, as with the infinite Creator, creativity and ownership go together. In fact, the combination of creativity and ownership are God’s provision for humanity’s flourishing.

Humans, Christian or not, continue the working and keeping of God’s creation that Adam did. We apply our faculties and abilities to bringing order to creation, to discovering its secrets, to solving problems and to improving the human condition.

The Founding generation understood all this. Though finite and fallen, we get to participate in God’s mission of caring for our fellow human beings. Our exercising our creativity and our inherently owning what we invent or create actually results in widespread human flourishing. This is the model the Founders adopted.

Forgetting the Keys to Flourishing

By the end of the 20th century, we began to take for granted the careful balance of creativity and ownership together, in the U.S. IP system, as the key to America’s prosperity—the means by which we surpassed the world in standard of living, per capita income, global innovation leadership and dynamic competition.

Moreover, we’ve allowed what Southern Cal law professor Jonathan Barnett notes in his book The Big Steal are midsupply-stream technology aggregators and implementers to hijack the U.S. policy and litigation agenda. These enemies of IP rights are weakening IP protection and commoditizing cutting-edge technologies’ value. In other words, antipatent players from Silicon Valley and beyond have been steadily dismantling the Founders’ biblical, win-win innovation machine.

For example, U.S. innovators in standards-based fields such as 5G and 6G wireless technologies lead the world in standard-essential patents, licensing and royalties. But opponents aim to tackle these innovation pacesetters. SEP royalty setting is already headed down the commoditization path in the EU and the UK. They’re pursuing a government takeover of market-based negotiations between innovators and implementers. The latter favor U.S. adoption of the government-run model.

Meanwhile, socialists and populists advocate for and ramp up regulatory, tax and other interventions that—in the name of “affordability”—ignore the tremendous public benefits of the creativity-ownership IP model. Among the most egregious ideas is a tax on patents’ value. The wise counsel of leading conservatives is disregarded.

The Bayh-Dole Act of 1980 applies the principles for flourishing by democratizing technology management out of Washington bureaucrats’ hands and providing secure patent rights as the means for deriving practical use of federally funded research discoveries. Before Bayh-Dole, such inventions wasted away on bureaucracies’ shelves by the tens of thousands. But, populist and socialist officials aim to deform the successful 45-year Bayh-Dole framework, pursuing misuse of “march-in,” “affordability” requirements in research funding and IP licensing contracts, and raiding universities' patent royalties.

Today, U.S. biopharmaceutical firms set the innovation pace for the world in drug development, including against diseases that not long ago were a death sentence for patients. This, too, is under threat from the Left and the Right. Price controls like “most favored nation” (importing the most socialist foreign drug price controls), antitrust weaponization and regulatory hurdles at the Food and Drug Administration will slow medical innovation and harm a major economic sector.

The Democrat-only “Inflation Reduction Act” set up price controls and regulatory hurdles, including government’s direct drug price setting authority, that reduce follow-on discoveries and inventions that benefit cancer patients. The IRA discourages biopharma innovation, which causes patients to suffer more and increases long-term health care costs. Studies find that the IRA’s antipatent and price control provisions have already chilled more than 50 follow-on drug research projects and killed 26 prospective cancer drugs from being developed—far more than the one new medicine the Congressional Budget Office underestimated the IRA would kill in 10 years.

A Time for Renewal

The occasion of America’s 250th birthday provides the opportunity to consider our heritage—particularly what the Founders bestowed on posterity through a patent and copyright framework that applies the God-given model of creativity plus ownership producing flourishing, prosperity, and improvement of the human condition.

If we act wisely, as To Invent Is Divine discusses, we’ll embrace our divine image-bearing and restore the creativity-ownership-centered American IP system. The stakes are the difference between surviving and thriving—as individuals, as a nation and as a flourishing people.

Senate Finance Must Reject Socialist “Solutions”

The U.S. Senate Finance Committee has scheduled a hearing ahead of Republican leadership’s fulfilling a deal with Democrats—a vote on Democrats’ Obamacare premium subsidies in exchange for a handful of votes by senators from the minority side to proceed with legislation to fund the government and finally end the Democrats’ heartless federal shutdown of nearly a month and a half.

The November 19 hearing, titled “The Rising Cost of Health Care: Considering Meaningful Solutions for all Americans,” holds the potential for health reforms that benefit patients, taxpayers, employers, health care providers and others in the U.S. health care ecosystem.

There are some grownups on both sides of the aisle in this committee. But the rosters include senators of each party who don’t value the art of legislating, but make up for that with blind ideology, either of the socialist Left or the populist Right.

The Democrats will likely march lockstep behind rescuing the expiring government handouts. Their “plan” is to continue Obamacare premium subsidies for people well into the upper middle class and others who shouldn’t qualify. Or worse.

Most Republicans will probably lean toward free-market-based solutions. That would be great, if they inject more consumer choice and competition into a highly regulated sector of the economy.

A good start would be to expand use of and access to health savings accounts. HSAs empower consumers to behave like consumers—comparing the value, cost and quality of medical goods and services, just as they do when buying other types of goods and services. The HSA provisions of the One Big, Beautiful Bill Act are a good first step. But properly amended, HSAs have the potential to enable consumers to move the needle significantly toward constrained costs, better quality care and greater value for the health care dollar.

Another free-market solution would empower patients and medical professionals with greater market power. Rent-seeking middlemen, such as pharmacy benefit managers and insurers, should undergo reforms that benefit the rightful decisionmakers (i.e., docs and patients). PBMs should no longer be able to game formularies to collect higher fees or keep manufacturer discounts that ought to help reduce patients’ out-of-pocket costs. And insurers’ barriers to patient-doctor decisions, such as prior authorizations, should be addressed.

Biden-era socialist price controls are contained in the Inflation Reduction Act. Those radical policies, which include the extortionary 95% excise tax on drugs and the “pill penalty,” continue to raise Medicare premiums, reduce coverage options and advantage China’s growing competitiveness in such areas as biotech and pharmaceutical innovation. One necessary, market-based solution is the Ensuring Pathways to Innovative Cures (EPIC) Act.

Other low-hanging health policy fruit that would clean up waste, fraud and abuse, reverse the Obama-era Affordable Care Act’s irresponsible expansion of 340B-eligible facilities, improve charity care for the truly needy indigent and help rural hospitals is 340B reform. The Congressional Budget Office finds that spending in this program grew from 2010-2021 about sevenfold. The 340B ACCESS Act would be a great place to start in fixing this problem.

Finally, in the “first, do no harm” category, the committee must soundly reject any type  of government price controls, including importation of “most favored nation” foreign drug price controls. Adopting any form of price controls—particularly on biopharmaceuticals, one of America’s critical and emerging technologies—would cement in the law of the United States social democracy’s means of undermining economic liberty. This would be unconscionable and disastrous.

Remember what conservative intellectual Michael Novak said: “Social democracy is based on the same errors as socialism, but in a form that takes a little longer to effect self-destruction.”

Going Where Free Enterprise and Property Rights Fear to Tread

In the middle of a lot of good policies, such as tax cuts, deregulation, curbing California’s stranglehold that forces its zany extremist regulatory hell on the rest of America and demanding that European countries pay their share for their defense, some really bad policy ideas have also come forth. The latter will certainly undermine the benefits the good ideas otherwise would produce.

Commerce Secretary Howard Lutnick has floated trial balloons — one for the government to collect a share of university inventions’ patent royalties, another for a patent tax of 1% to 5% of a patent’s value. Both ideas should be deep-sixed. Either or both will damage the U.S. innovation ecosystem and cost us far more than the secretary acknowledges.

Busting Bayh-Dole’s Successful Model

Taxpayers already benefit from federally funded research, thanks to the Bayh-Dole Act. This law ensures that taxpayer-supported discoveries reach the marketplace — they didn’t before Bayh-Dole. That generates more than a trillion dollars in economic activity, millions of jobs and thousands of new companies while delivering to Americans life-changing products. And all those translate into tax revenue for the government and an expanding economy.

Congress deliberately omitted government revenue-sharing from the 1980 Bayh-Dole Act because it would discourage licensing and slow commercialization. Lawmakers understood that the public gets the greatest returns in many forms when private industry has confidence to develop and invest in turning university basic research into practical applications. They proved to be absolutely right.

Universities don’t reap unrestricted profits from patent licensing. They must cover the costs of securing and managing patents, share royalties with inventors, and reinvest the remainder into future research. Not only does this cycle fuel breakthroughs in consumer products, it also yields essential medicines and technologies that benefit American consumers for generations. Redirecting a slice of that revenue to Washington would break this cycle, undermine property rights and diminish investment in early-stage technologies. As the Bayh-Dole Coalition notes, “Altering this model would deter future breakthroughs, jeopardize America’s leadership in science and technology, and undermine our national security.”

A Tax on Innovation

Assessing a tax on the supposed value of a patent is nothing less than a tax on American innovation. This unwise proposal courts extremely great risk from complexity, disincentivizing investors and entrepreneurs in patent-centric technologies, and handing competitive advantage to our foreign competitors.

The most knowledgeable experts, such as Grover Norquist of Americans for Tax Reform and economist Steve Moore of Unleash Prosperity (see item 2), have assessed this proposal and found it wanting. For instance, the U.S. Chamber of Commerce, along with allied cosignatories, explains: “This unprecedented idea, if implemented, would undermine the foundations of America’s intellectual property (IP) system, diminish our global competitiveness, and put millions of innovation-driven jobs at risk. Moreover, this approach conflicts with the administration’s laudable goal of reshoring manufacturing to the United States, a goal which depends on a strong and reliable IP framework to attract investment and foster domestic innovation.” IPWatchdog founder Gene Quinn’s bottom line is, “Charging patent owners a percentage of the overall value of a patent is catastrophically stupid.”

Nearly 40 center-right organizations, including the leading tax reform groups, wrote Sec. Lutnick opposing his patent tax scheme, explaining how it's bad tax policy and is at odds with and counterproductive to the One Big Beautiful Bill. Notably, this coalition said the tax would “undermine the benefits of hard-fought business tax provisions of the OBBBA for America’s most innovative and competitive companies – including the Foreign-Derived Intangible Income provision that encourages companies to develop and locate intellectual property (IP) in the United States. This tax on valuable patents would simultaneously drive private venture capital away from U.S. R&D innovators while making our competitors in overseas markets more attractive as investment opportunities.”

Now is not the time to undercut the innovation system that’s delivered so much value to American taxpayers, workers and consumers.  However, that’s exactly what the proposed university patent royalty share, the tax on patent valuation or both will do. Grownups in the administration must reject this proposal. Rather than gush money to line Uncle Sam’s pockets, these tax leeches will stall innovation, jeopardize America's security and open the door for foreign rivals to surpass us in science and technology.

The United States must protect the framework that keeps us at the forefront of global innovation and progress. Official rent seeking is still rent seeking, which disincentivizes enterprise while shrinking the rewards of pursuing innovation and commercialization. Or as Steve Moore put it, “Someone needs to remind Secretary Lutnick that when you tax something you get less of it.”