Fundamental Incongruities of PTAB Operations Affect the Integrity of the Patent System

This article appeared first on ipwatchdog.com

The first 100 days of the Trump Administration have now come and gone. So far, they have not revealed much more than the obvious fact that there is a significant disconnect between President Trump’s 4-year re-election objectives and the 2-year re-election timetable of House Republicans. Retaining their seats is job one for both. The President believes that will require Republicans to enact legislation on the issues central to the President’s campaign and the party Platform; issues Republicans have been complaining about over the past eight years.

The mismatched re-election priorities of Republicans can be expected to continue roiling Capitol Hill throughout the remainder of 2017 and likely into 2018. With healthcare and tax reform likely to take up much of the summer oxygen in Washington, DC, and into the fall of 2017 when insurance premium hikes will be announced again, what, if any, signature Republican issues will be addressed remains in significant doubt.

With small ball policy left far behind by both inter-party and intra-party politics, what will the current state of Congressional legislative enactment capacity mean for patent reform? An argument could be made that so much energy will be placed elsewhere that matters of peripheral importance in the greater scheme – like patent reform – will receive no attention. But intellectual property generally and patent policy more specifically tends to be an apolitical issue where ideologues on both sides of the aisle can reach agreement. Without knowing how the cards will fall, and given that those who perpetually seek patent reform are once again working the halls of the Capitol, prudence suggests that those with a pro-patent vision remain ever vigilant.

Last week IPWatchdog.com explained why eBay, Mayo and the creation of the Patent Trial and Appeal Board to hear post-grant challenges to patents were the three most significant legal causes of today’s patent crisis.  The common thread that led to each “event” was a brilliant anti-patent strategy that converted policy maker apathy towards patents and our nation’s innovation ecosystem into a belief that simply stopping a few bad actors by passing comprehensive patent litigation reform would solve any ills.

The patent troll narrative has worked well. Indeed, at a recent hearing of the Senate Judiciary Committee Senator Dick Durbin (D-IL) quipped: “Whoever came up with that phrase should get a special bonus because they manage to mischaracterize anyone who goes to court to assert patent rights as a troll…”

The beauty of the patent troll narrative was it took little time to absorb and instantly painted a pejorative picture in the minds-eye of the listener. It became easy to repeat. Its bumper-sticker simplicity led to widespread usage, which ultimately (and quickly) became accepted as fact without much, if any, critical thought. Most important, the strategy by-passed the arcane complexity of its convoluted subject matter by shifting the burden of Congressional persuasion to its victimized and under-resourced opponents. Politically outmatched from the start – inventors and innovators had, up until this point in our history, always been held in high esteem were overwhelmed. That suddenly changed with the patent troll narrative and inventors became persona non grata, even viewed as evil and villainous. Indeed patent reform’s innate obscurity was its most important ally. Few knew more than the patent troll narrative, so as it was often repeated people unfamiliar with patents on even the most basic level became horrified by the myth the narrative painted.

Over the next 100 days, patent reform’s obscurity may become the enemy of patent reform instead of its ally. After all, if the public isn’t interested in patent reform why should President Trump spend time on the issue? Moreover its proud parent, “efficient infringement,” has now become the enemy of Trump’s conservative, property-devoted base. Patents are property rights as has been recognized by the U.S. Supreme Court for over 100 years and as stated explicitly in the Patent Act. Nevertheless, the patent troll narrative has returned to Capitol Hill. Even with more pro-property right, security-conscious, conservative allies than in previous cycles patent reform opponents, who 500 days ago rallied loudly enough to make HR 9 too controversial for pre-campaign enactment, must rise again.

Expect big tech and its leftist bed-fellows to exert more effort to “de-propertize” patents on Capitol Hill and in the courts. Expect to hear that every patent holder who protects her lawfully established exclusivity by responding to efficient infringement in courts to be called “ambulance chasers.” Expect proponents of reform to mischaracterize patent reform as a step towards tort reform, which is nearly comical given that the tortfeasor in the equation is the party that is trampling on the property rights of patent holders through infringement, which is many times purposeful and willful. Expect lobbyists for Main Street retailers to again be flattered by attention from big shot Silicon Valley lobbyists and support their latest version of the anti-patent, anti-property right patent troll narrative. Expect new academic junk science and more speculation by professorial patent policy “experts.” Expect the USPTO to praise the PTAB’s star-chambered repression of so-called “bad patents.” Expect efficient infringement to continue while the courts and Congress are asked to dither over patent trolls.

We must explain the truth to those who understandably drank the patent troll Kool-Aid and believed that Silicon Valley’s tears for Main Street retailers were real. Efficient infringement’s cheaper, faster, better economics compel its continued deployment. The patent troll narrative has distracted Congress and the courts from seeing how it protects incumbency for our nation’s most dominant big caps by diluting investability in new technology that might one day unseat them. The patent troll narrative’s flaw is that the repressive litigation it supports applies not to a few remaining patent abusers but to ALL patent holders, especially startups who produce the most jobs.

The efficient infringement narrative is no more complicated than the troll narrative. The patent troll narrative just reached the Hill first, which means the story of efficient infringers trampling patent property rights, though perfectly true, has a tougher road given it must not only gain its own traction but it has to undo the damage caused by the misleading patent troll narrative.

To be re-elected Congress may need to focus on less obscure issues this year than patent reform. But if party leaders choose to consider patent reform the bill will be driven by the patent troll narrative, not its content. Pro-patent Senator Chris Coons (D-DE) has wisely reminded us that Congress likes to learn through stories. Patent reform’s proponents will again bypass content explanations by repeating the patent troll narrative. Pro-patent opponents can respond with their own efficient infringement narrative. Let proponents then explain the contents of any bill in simple, easy to understand terms. Let us work to put a face on efficient infringement, which has ruined so many inventors who have seen Silicon Valley giants make so many millions of dollars infringing patents after taking technology originally invented by individuals and small start-up businesses who never had a chance.

 

Our Patent System Needs More Than An IPR Fix

Under Secretary of Commerce, Michelle Lee has begun an initiative to further shape and improve PTAB  Her Senior Advisor at the PTO will be “coordinating this effort.  Because her tenure is ending soon her post grant “effort’s” timing has caused some to wonder whether she plans to fix AIA’s second windows or to preserve them. Whatever her unspoken motives, if any, an official in-depth review of PTAB’s past performance is warranted. But is the PTO looking in the right places?

Continue reading Our Patent System Needs More Than An IPR Fix

“Landslide Lee” Is Lurking

If the Patent Reform saga has a “Darth Vader villain”, it is able attorney Mark Lemley . Earlier this week, 3000 miles away from his Silicon Valley death star, he realized he was at an “away game” when pro-patent hero former Chief Judge Paul Michel assumed the podium at the Leadership 2017 policy conference at Washington DC’s Newseum and in his keynote speech said,

“Several years ago, it would have been little exaggeration to say that we are facing a challenge. Today we are facing a crisis.”

In another post IPWatchdog’s Gene Quinn reviews the pro-patent positions of other conference speakers whose views reflect the work of pro patent home state universities. Gene reiterates the truth about “efficient infringement” and the need to reestablish patent rights as property not liability rights or post-eBay “public rights” to recover judicially-awarded monetary damages after risky and expensive infringement proceedings that at best result in compulsory licensing.

Sadly while we’re watching a patent system train-wreck in USA, China’s innovation bullet train, freshly loaded with US recruited researchers and hungry venture capitalists is speeding towards a reliable patent system in a huge market. Meanwhile US House Judiciary tub-thumper for ICT mega-techs, “Landslide Lee” Issa is promising to add “modular” HR 9 amendments to the next relevant vehicle bill that comes his way this session. Issa heard from angry inventors during a re-election he barely won in a ballot recount. But he won. He is angry. And he needs to hear more. Our own ‘Darth Vader Lemley” as Gene diplomatically points out, was out-manned on the Leadership DC dais this week. But unless we continue working to save commercialization for federal grant agencies and ourselves, when an opportune bill reaches Issa’s subcommittee desk this session “Landslide Lee” will not be similarly out-manned. See Inconvenient Truth: America no longer fuels the fire of creative genius with the patent system .

Early Stage Innovation’s Chance to Save Itself

Congressional pursuit of HR 9-type comprehensive patent reform seems to have slowed. Maybe inventors, investigators and investors can breathe easy for a while. Or not! Unless universities and others engaged in early stage commercialization can convince Congress now that Bayh-Dole-based commercialization is the bridge created by Congress to connect past and future congressional R&D funding to the public benefits of jobs, growth and medical progress contemplated by its annual R&D appropriation, trouble lies ahead. R&D funding on one side of the commercialization bridge must reliably cross to its public benefit side or Congress will invest its billions elsewhere.
Google was just tagged with a $ 20M patent infringement damages award. Despite AIA’s built-in deterrents, big tech’s efficient infringement business model exposes ICT firms to similar damages. Continue reading Early Stage Innovation’s Chance to Save Itself

Hard Times Ahead

Congressional pursuit of HR 9-type comprehensive patent reform seems to have slowed. Maybe we can all breathe easy for a while. Or not!  Unless universities can convince Congress that Bayh-Dole based commercialization is the key to the growth and medical progress intended by past and future R&D funding, they are targeted for trouble.

Google was just tagged with a $ 20M patent infringement damages award.  Big tech’s efficient infringement business model exposes big ICT firms to similar damages. On a pure cost-benefit basis, the enforcement protection provided by HR 9-type legislation is still compelling to big ICT aggregators. Beyond denying court access to most patent holders, HR-9 reduces the cost of the ICT components they aggregate, which increases their ICT’s share of consumers’ purchase price. Moreover, their past investments in PR-spawned patent trolls, junk science analysis, academic blather and indirect judicial influence are getting stale but haven’t reached their “sell by date”. Big tech has new pressing priorities and they no longer have the president in their thrall, but as long as Reps. Goodlatte and Issa run IP issues in House Judiciary, any IP legislation that comes their way can be converted into all or any part of HR 9. More than one bill may be on the way and in this year’s budget battle R&D funding is in jeopardy. (Read more at Ipstrategic.com)

House Judiciary Chair Goodlatte publicly admitted that recent judicial responses to issues addressed by HR 9 have reduced its urgency. His IP Subcommittee Chair Issa has indicated that the HR 9 issues are more likely to be addressed on a “modular” rather than on a comprehensive basis. Both blame universities for stalling HR 9 after it had earlier passed the House by a vote of 325 to 91. They have said that fixing the venue problem would be considered depending on how it is addressed by the SCOTUS in the now pending Heartland case. Senator Hatch has said that fixing the venue problem should await Heartland but also said however heartland is decided the venue issue needs to be addressed by Congress

Then there’s the Alice/ Mayo controversy outlined and explained in an IPWatchdog post by Manny Schecter.  A number of major IP players including; The American Bar Association’s Section on IP, AIPLA, IPO and PhRMA have expressed the need for a Section101 fix. IPO is already circulating a draft bill. It thus seems highly likely that if and when the House and Senate Judiciary Committees find the time to deal with Alice/Mayo, patent reform will be in play again.

We must use this temporary “lull” to explain to our congressional delegations how Bayh-Dole commercialization is the bridge to the public benefit contemplated by Congress when it annually appropriates $130 bn. to R&D. State budget cuts to universities should alert us to what may happen at the federal level. Budget issues lie at the heart of DC’s current chaos. Deficit hawks are circling like buzzards and every dollar appropriated in the past for R&D has been eye-balled and will be sought by other desperate interests on the congressional chopping block. Listen to William Bonvillain, who directs MIT’s Washington Office;

“Citing federal budget trends, with an expected tax cut and infrastructure spending program as well as a possible dismantling of the Affordable Care Act, William Bonvillian, director of MIT’s Washington office, said that discretionary federal spending is set to be squeezed. That, in turn, can be expected to hit scientific research budgets, he said, and in turn, the federal and university based research community. “There is going to be a challenge” to research and development programs, Bonvillian said. “We’re going to need to tell the story, that R&D is actually a key part of the solution, it’s part of growth. But the challenge this time in telling that story is going to be even greater than usual.”

Research universities must explain to their congressional delegations why R&D must be funded and its Bayh-Dole based commercialization must be protected iso congressional funds already in the pipeline can produce the future jobs and beneficial scientific progress they expected when they voted to support it. And they must do it now, HR 9’s choke-hold on private sector investment leads eventually to reduced congressional R&D appropriations. But in the budget battle now fully underway unless universities actively justify their commercialization of federally- funded R&D, other influential interests on the Hill who care little about scientific study but care a lot about their own survival see R&D’s annual funding as a source to save themselves.

 

Representative Goodlatte’s Patent Reform Planning

By way of follow-up to yesterday’s report on Rep. Goodlatte’s 115th Congress agenda, below are Gene Quinn’s patent litigation reform observations regarding his Wednesday announcement. http://www.ipwatchdog.com/2017/02/01/goodlatte-patent-litigation-reform-copyright-reform/id=77879/

We note that IP Sub-Committee Chair Issa and full Committee Chair Goodlatte have historically and unabashedly carried big IT’s water in the House for years. But because of an apparent diminution of big tech’s White House enthrallment, Reps. Goodlatte and Issa may need to protect other big tech priorities than efficient infringement. Be assured however, that Judiciary Committee leadership will seize every opportunity available during the 115th Congress to insert HR 9 type litigation “reform” into any measure open to such shenanigans. Continue reading Representative Goodlatte’s Patent Reform Planning

Justice Gorsuch?

We believe it will be messy but Judge Gorsuch will be confirmed as Justice Gorsuch. Significantly his textual originalism tilts his constitutional analysis towards limiting the kind of federal agency overreach we have come to expect from USPTO’s IPR. We suspect he similarly will be suspicious of AIA’s legislative history shenanigans, some of which occurred after its passage. He thus is unlikely to support efforts by any USPTO Director to administratively bend AIA’s ambiguities in ICT tech’s direction. Continue reading Justice Gorsuch?

Does Apple’s Suit Against Qualcomm Signal the End of Congressional Patent Reform?

Worldwide skirmishing between Apple and Qualcomm has now erupted into a US legal battle. Apple has launched a billion dollar U.S. suit attacking Qualcomm’s licensing model. The suit’s specifics are thoroughly explained by Steve Brachman in an IPWatchdog post. Research university TTO’s generally pay little attention to such big tech combat but this suit is worth watching because Apple now seeks relief from the marketplace bargaining envisioned by our patent system through more narrowly focused judicial pricing. In an earnings conference call earlier this week, Qualcomm’s CEO put it bluntly. “Apple’s complaint contains a lot of assertions, but in the end this is a commercial dispute over the price of intellectual property,” CEO Steve Mollenkopf said. “They want to pay less than the fair value that Qualcomm has established in the marketplace for our technology even though Apple has generated billions in profits from using that technology.” See Forbes article here. Mollenkopf’s blunt assessment summarizes what the last ten years of congressional patent reform have been all about lowering the supplier cost of patented components to ICT assemblers who distribute finished products to the public in a very competitive global market governed by the exponentially accelerating pace of Moore’s Law. After fighting with each other over product market share, big ICT tech patent reformers are gladly holding Apple’s coat as it tries to suppress Qualcomm’s share of its product’s sales price by judicially attacking its licensing model.

Big tech intermediaries who market their ICT products (like smart phones) to consumers gained overwhelming bargaining leverage over their suppliers when the eBay decision effectively denied non-practicing patent holders the protection of permanent injunctive relief. Having judicially secured that bargaining edge, price negotiations with lesser-resourced component suppliers reverted to under-payment or simple avoidance. Efficient infringement had become irresistible but led to the creation of secondary market specialists who were branded ” patent trolls “by efficient infringers. For big ICT tech, which already had weaponized patents to fight for market share with big tech adversaries eBay set the stage for big tech to open up a second front they called patent reform. This new war would be waged on Capitol Hill against the patent trolls but in fact it was brought by big tech aggregators against their supply chain component originators in order to gain a greater share of final product price. In this battle the warring ICT intermediaries were allies. For lesser-resourced component suppliers’ efficient infringement and AIA eroded patent values. But well-resourced suppliers able to afford post AIA enforcement suits were impervious to efficient infringement and could manage the punitive costs of AIA. Qualcomm is such a supplier. Its size and must-use technology supplier enabled pricing that had to be attacked in court.

At congressional patent reform’s outset, efficient infringers had little to lose. If eventually they were found guilty, unauthorized use of the patented infringed technology would be “judicially priced” in the form of damages hypothetically calculated under Georgia Pacific’s royalty requirements. Royalty damages would be hypothetically calculated as if their use had been mutually agreed to in timely pre-infringement negotiations. This is retroactive compulsory licensing in effect without further imposition of other contractual limitations on the “compulsory licensee’s” conduct and use of the patented technology. “Infringe now and price later” may have been economically advisable in ICT markets propelled by Moore’s Law, but is unlawful under US patent law. Moreover, this widespread business model has clogged courts and has encouraged genuinely abusive and predatory trolling conduct. But well-resourced suppliers are not intimidated in the new post AIA environment. They must be bargained with on even terms. The courts have now been drawn into a battle to unbalance those terms. In order reduce Qualcomm’s licensing powers Big ICT tech wants to undermine Qualcomm’s licensing strength, hoping that judicially-imposed licensing restraints will lower supplier costs giving Apple a larger share of their product’s sales price.

 

 

 

 

Capitol Hill Heuristics

Every day, Hill Members and staff are assailed by lobbyists they know and like whose interests and arguments are opposed. To get to the truth many use Hill heuristics or “rules of thumb” to help them decide which side’s argument to believe. For example, they prefer arguments based on actual narratives to manipulatable numbers. Constituent experiences with an issue in conflict are easy to understand and recall and of course are politically relevant. Recent Hill appearances by inventors already harmed by AIA also have been persuasive. Sometimes it helps to “follow the money”. Which side has the most to gain or lose can provide independent understanding regarding what is really going on. Mr. Issa’s public characterization of university opposition to HR 9 (see earlier post) not only confirms the persuasive power of past direct constituent congressional contact, it can provide valuable insight into the true motivation driving his attachment to the issue. Continue reading Capitol Hill Heuristics

Rep. Issa Publicly Addresses Future Patent Troll Legislation Last Week

Despite recent FTC’s disapproval of its lobbyist use on the Hill, CES dedicated an entire panel last week to “patent trolls”, combining high praise for USOTO Director Michelle Lee with candid commentary from “surprise” visitor (and Lee supporter) House Judiciary IP Sub-Committee Chair Darrell Issa. Mr Issa HR 9’s sponsor and chief congressional tub-thumper last session. Hoping to hide efficient infringement by resuscitating the tired troll “issue”, the panel’s prominence warns us; that Mr. Issa is still smarting from HR 9’s demise last session, that he blames its defeat on universities and BIO, that HR 9 will return this session in “modular” form, and that university “troll-like behavior” is in his crosshairs. A “rough transcription’ of his remarks ( see below) has been recently circulated among pro-patent advocates.  It was forwarded by Dave Winwood. Continue reading Rep. Issa Publicly Addresses Future Patent Troll Legislation Last Week