The CHIPS Act and the Need for Strong IP Protection

The CHIPS Act and the Need for Strong IP Protection

By The Fatty Fish Editorial Team - June 14, 2023

President Biden signed the CHIPS Act, officially known as Creating Helpful Incentives to Produce Semiconductors for America Act, into law on August 9, 2022. The law allocates a total of $280 billion, with more than $50 billion specifically designated for semiconductors, between 2023 and 2027. Additionally, it introduces a 25% tax credit for semiconductor manufacturing. To implement the act, President Biden signed an executive order on August 25, 2022. The new law’s appropriation includes $39 billion to be allocated over 5 years to encourage semiconductor manufacturers to finance US-based fabrication equipment and facilities, or “fabs.” The act also supplements that money with a tax credit, which was not included in the original CHIPS law. In addition, it allocates $11 billion to the Department of Commerce for a set of new research and development (R&D) programs, and $2 billion to the Department of Defense to create a National Network for Microelectronics R&D.

While many experts support the federal funding into important sectors of tech development, some experts note that certain intellectual property (IP) elements, such as those originally included in the IDEA Act and enjoying bipartisan support, were removed from the legislation before its approval. According to a Hill aide, the IP provisions were eliminated not because they faced opposition, but rather to streamline the bill for swift passage. Due to the removal of these IP elements, some experts feel the act does not adequately address the significance of IP rights in promoting innovation in the United States. They argue that, while the act aims to boost domestic chip manufacturing and research, it fails to recognize the crucial role of IP protection in incentivizing innovation and investment. According to some of the experts, the CHIPS act focuses on funding semiconductor manufacturing and research initiatives, but overlooks the importance of safeguarding IP rights. They emphasize that strong IP protection is essential for fostering a conducive environment for innovation, and encouraging inventors and investors to bring their ideas to fruition.

Some experts suggest that by neglecting IP rights, the act could undermine the incentives for innovation. They highlight how IP protections, such as patents, provide inventors with exclusive rights and financial incentives, which in turn encourages them to invest time and resources into developing new technologies. In their opinion, the lack of robust IP protections may result in innovators being less motivated to take risks and bring their inventions to market, which could impede technological progress and economic growth. Here is an opinion piece we found of interest relating to the importance of IP rights in promoting innovation.

CHIPS and Science Act Neglects the Importance of IP Rights in Encouraging American Innovators

In an opinion piece “CHIPS and Science Act Neglects the Importance of IP Rights in Encouraging American Innovators” for IP Watchdog, Steve Brachmann, graduate of the University at Buffalo School of Law, argues that while the CHIPS and Science Act delivers a major windfall of federal funding into important sectors of tech development, it lacks attention to IP rights for protecting the technologies that result from federally-funded R&D projects. He adds that the 1,054-page bill mentions “technology transfer” a total of 36 times, “intellectual property” is mentioned 27 times, and the word “patent” appears only four times throughout this enormous legislative package.

Despite sporadic mentions of intellectual property, Brachmann believes the CHIPS and Science Act appears to have limited concern for patent rights and intellectual property, despite the potential for stronger statutory language to advance the legislation’s core objectives. As an example, he notes the bill should have considered implementing a prioritized patent application program for eligible technology developers in the U. Patent and Trademark Office (USPTO), similar to what the agency has done in response to the COVID-19 pandemic. Brachmann adds, considering the substantial amount of taxpayer money being allocated under this new law, it would have been desirable to see lawmakers in Washington, DC demonstrate an understanding of the significance of patents and licensing in supporting American innovators and fostering domestic economic growth. Read the full article on IP Watchdog.

The Fatty Fish Editorial Team

The Fatty Fish Editorial Team includes a diverse group of industry analysts, researchers, and advisors who spend most of their days diving into the most important topics impacting the future of the technology sector. Our team focuses on the potential impact of tech-related IP policy, legislation, regulation, and litigation, along with critical global and geostrategic trends — and delivers content that makes it easier for journalists, lobbyists, and policy makers to understand these issues.