Foreign IP Violators Could Halt Colorado's New Gold Rush

Almost 200 years after its first gold rush, Colorado is in the midst of a second one. This time, the gold isn't in the Rockies but in the motherboards of our booming tech industry.

With more than 270,000 tech workers producing nearly a fifth of Colorado's total economic output, this 21st-century boom may be more lucrative than the 19th-century one. But the industry faces a new hitch.

The tech sector depends on strong patent protections. A type of intellectual property (IP), patents ensure that copycats can't immediately swoop in on a new invention and make knockoffs. Patent rights give pioneering companies a limited period of exclusivity, during which they can recoup their expenditures and potentially earn a return. This allows companies to attract the investment that pays for research and development.

Over the last few years, unfortunately, the federal government has taken a step back from enforcing U.S. patent rights abroad. Specifically, the Office of the U.S. Trade Representative, or USTR, has watered down an annual report used to identify violations and pressure governments to stop them.

Unless this dangerous trend is reversed, Colorado's tech boom could turn into fool's gold.

Currently, people and companies in our state's tech industry are granted thousands of patents each year, drawing billions of dollars in venture capital investment. Over a third of all private sector workers in the Centennial State work in IP-intensive industries, according to the U.S. Patent and Trademark Office. So if the federal government continues to look the other way on patent theft, the impact here could be huge.

The annual USTR report on global IP rights — known as the Special 301 Report — has for decades called out practices that infringe on U.S. patents. For instance, earlier reports criticized "restrictive patentability criteria," which are laws that set overly narrow boundaries around what can be patented. For instance, some countries won't patent improvements to existing medicines or chemical compounds.

Let's walk through an example of how that could directly affect a Colorado company. Boulder-based Enveda is testing a new drug discovered through the company's first-of-its-kind AI platform, which identifies potential clinical uses for existing natural compounds. In November, the company brought in $130 million in new investment, largely from outside Colorado.

Enveda's platform finds promising candidates for further research four times faster than the industry average, which could exponentially speed up the discovery of new cures. But because the company builds on pre-existing compounds, governments with restrictive patentability criteria could refuse to patent the advancements.

Earlier editions of the Special 301 Report called out countries, including Argentina, India, and Indonesia, for too-narrow patentability criteria. Yet the 2024 report made no reference to these concerns, despite the fact that Argentina and India have not reversed their policies. Essentially, the federal government is greenlighting continued foreign infringement of American IP.

The most recent report also ignored other types of IP infringement, including price controls, which devalue American inventions, and compulsory licensing, a practice that allows one company to copy another's IP without authorization. In short, the Special 301 Report — once a bulwark against patent infringement — now signals to foreign governments that America is no longer interested in enforcing IP rights. And the report tells entrepreneurs at home that their patents aren't secure, which drives away investment.

The task now falls to Colorado's representatives in Congress to turn the situation around. Using their powers of persuasion, they must convince USTR to denounce global IP violations as it once did. As a member of the House Subcommittee on National Security, Illicit Finance and International Financial Institutions, Representative Brittany Pettersen is well-positioned to lead this charge.

With a revitalized Special 301 Report, we can be sure that the Colorado tech boom won't fade like the gold rush, but become a sustainable part of our economy for the long term.

Kristina M. L. Acri, née Lybecker, Ph.D., is a professor of economics at Colorado College, where she chairs the Department of Economics and Business; she's also a Senior Fellow at the Fraser Institute.

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