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

Time to Undo eBay

Are infringed patent holders entitled to remediation as owners of the personal property? Or do valid as violated patents protect their subject matter with ill-defined”liability” theory with “attributes” derived from their structure, owner identity, or developmental stage in the stream of commercial development.? The debate depicted by this false “choice” is economically and legally debilitating. It is undermining the centuries-old reliability of US patents. With SCOTUS benches filled again our patent system’s future now depends upon reversing the 2006 eBay detour from our patent system’s history and original purpose. SCOTUS must act soon or it will be too late to save US based innovation. The Court should return our patent law to the Lockean definition our founding fathers relied on while drafting our Constitution. It is time to recall Abe Lincoln’s famous phrases about investors’ “fuel of interest” in inventors’ “fire of genius”. The fuel of investors’ interest is running low. Our innovation ecosystem is sputtering. Investment in commercializing university basic research is shrinking. For some institutions such investment public and private investment funding it is an existential issue.
eBay and its concurring opinion by Justice Kennedy signaled SCOTUS’ surrender to the misdirection of a congressional and amicus brief “bait-and-switch” campaign by big ICT tech. Its “bait-and-switch assertions have since been proven wrong. Whatever merit they once had have been appropriately addressed.  Big techs’ strategic goal was to protect themselves from the remedial consequences of their “efficient infringement”, an economically fruitful but systemically amoral business model they feel compelled to continue. Sadly they conned the Courts into killing injunctions for everyone but themselves.  Big tech’s tactical rhetoric is what infected eBay. Ever since it has contaminated SCOTUS jurisprudence. It has also led to sanctioning PTAB’s intrusive elimination of statutory presumptive validity and its unconstitutional obliteration of trial by jury. Injunctions may be commercially disruptive, but the Blackberry injunction scare never happened and besides is ancient history.
Judicially framing patent infringement remediation theory with vague “liability” theory instead of “property “theory corrodes our patent system by degrading patent value. Our ICT patent community colleagues have been selfishly pursuing “liability theory” for more than a decade. Junk science academic accusations of a “tax on innovation”, speculative theories about patent “holdups”, “thickets” and “royalty stacking” and phony litigation and troll crises are over. Global markets moving up the value chain are signaling it’s time for the US to revalue patents as investors redirect their support to China and the EU. Talented researchers and students are headed there as well.Unless our new Court changes its direction, US innovation’s competitive advantage will follow them.

Continue reading Time to Undo eBay

Personal Property? Not so much!

In a recent post at IPWatchdog’s Gene Quinn questioned PTAB’s strange allowance of serial challenges to patents even after rejecting other challenges to them. Suggesting a more efficient solution he said

“One and done challenges to patents are a fiscally conservative and responsible approach to government, and the only legitimate way to treat what the Patent Act tells us is supposed to be a property right – by at some point settling title of the patent at least insofar as challenges at the United States Patent and Trademark Office are concerned.”  Within his post, Gene says ” a patent is not a property right like any other.”

Sadly, as the saying goes, “Truer word were never spoken!”

The status of patents as personal “property” has been shrinking for a decade, a trend that must be reversed if TTO’s expect commercialization to survive the trend’s shrinkage of investment capital. The Patent Act’s Sec 261 states that:

“Subject to the provisions of this title, patents shall have the attributes of personal property.”

Really? If you own a car, somewhere in your files is a “Certificate of Title” proving that you own it. Whatever your job, driving habits, use or non-use they have no bearing on your attributes of auto ownership. Under the law, all owners are treated equally. Produce a valid Certificate and you can trade it in. If stolen, it must be returned. Continue reading Personal Property? Not so much!

11th Amendment Sovereignty Protection for Certain Research Universities

The Steve Brachmann IPWatchdog post below provides further analysis of UFRF’s successful employment of its state sovereignty status under the 11th Amendment as a defense to PTAB review proceedings by a public research university. Because it is definitely within our subject wheelhouse it warrants inclusion and reference availability at our website. Continue reading 11th Amendment Sovereignty Protection for Certain Research Universities

Commercialization Bridge On-ramp “Loss is as Lethal as Off-ramp Failure”

The fog of war on the Hill is thick. Now chaos is the only constant. This is not your usual “dead on arrival” termed presidential budget where negotiation showmanship calls for partisan disdain. These players are all Republicans. The victim list includes almost everyone. As long as Trump’s advisors are calling the shots, Speaker Ryan’s choice is to accept Trump’s “Deconstruction of the Administrative State” or follow former Speaker Boehner’s footsteps into retirement. The disrupted atmosphere promises incapacitating injury to all non-military entities. There will be no exceptions made for the low hanging fruit of R&D’s annual $130 billion budget allocation. And as the saying goes with massive budget cuts, ” if you are not at the table, you are on the menu “. It isn’t validated yet officially but the simple math of discretionary federal budget remainders following a $54 Billion military increase and educated whispers point to the coming cut of at least 8% to10% in R&D research by Trump’s budget proposal, doubling down on the Control Budget Act’s sequester.

As we have said before, Bayh-Dole commercialization is like a bridge having an on-ramp and an off-ramp. Its off-ramp is quickly narrowing as private capital backs away from piling up uncertainties enveloping the future of patent enforcement as Congress and the courts keep moving the goal posts of patent reliability. Post development PTAB nullifications, looming life science price controls and the confused subjective analysis of Alice/ Mayo eligibility have combined to virtually defeat the prudent possibility of private investor participation in ROI-driven B-D partnerships. Now however, B-D’s protective focus is shifting to the commercialization bridges’ on-ramp entry by R&D’s basic science funding through federal grant agencies.

The federal government’s “deconstruction” is taking shape in reality not just rhetoric.  The parlous consequences for universities are well described in an WSJ op-ed last December by MIT’s President Rafael Rief, who after highlighting findings of a National Science Foundation report ….. Continue reading Commercialization Bridge On-ramp “Loss is as Lethal as Off-ramp Failure”

Take Back the Rights

On March 9, 2017, I will be serving on a panel moderated by former Federal Circuit Court CJ Paul Michel and Robert Sterne Esq. at the USPTO. The UT Panel on the Global Patent Landscape is a well-attended, mixed assembly where patent jurists and practitioners gather to consider patent law developments and trends from a more detached and wider vantage point than daily contention with individual cases allows. Wearing my university hat, I will be joined by representative panelists Paul Evans, Paul Stone, Peter Detkin and Damon Matteo each of whom expertly exercises keystone roles in our innovation ecosystem. Sadly, although there are many pressing issues confronting the IP community our panel preparation calls have inevitably focused on one overriding issue.

Inadvertently or not, SCOTUS, Congress, CAFC and PTAB have combined to drape an iron curtain of enforcement cost and uncertainty over patent enforcement, weakening US patents to the point of risk-adjusted irrelevance. For under-resourced patent holders, a growing cohort growing larger with expanding litigation overuse of post grant process, patents’ statutory presumption of validity has become a presumption of non-enforceability. Biopharma interests may still count on patents, but incumbent ICT operating companies whose efficient infringement business model has substantially reduced patent values see their value now only as weapons to preserve global market share and/or as clubs to beat down component product pricing, daring their suppliers to assert.  In short U.S. Patents are rapidly losing their critical investment attracting role within our national innovation ecosystem. The question now is what we can do about it?   Continue reading Take Back the Rights

More on Judge Gorsuch

The Judge Gorsuch concurrent Gutierrez opinion calls for fresh analysis of the venerable Chevron Doctrine, according to which agency interpretations of ambiguous statutory language are routinely deferred to by the courts. According to Judge Gorsuch, this gives the Executive branch what amounts to unconstitutional Article I law-making authority clearly conferred on Congress by Article II. Continue reading More on Judge Gorsuch

State Research University Immunity from PTAB Review

In a recent post, patent law guru Dennis Crouch discussed PTAB’s 11th Amendment Sovereign Immunity decision exempting state research universities and their affiliates from IPR review.

For those of us inclined to suspect PTAB’s justifiable fears of constitutional elimination (which also could nullify AIA itself which has no savings clause) one reader’s anonymous comment was intriguing …

“Believe me, PTAB considered all angles before this decision. My informed speculation would be this decision is from the solicitors office and the political branch and was given to the panel. It’s pure self preservation. To ignore the 11th as this juncture, would create a SCOTUS scenario, in which the entire framework of the IPR construct would need to be squared against a separation of powers and federalism framework implicated by the purpose behind the 11th amendment. Screwing the requestor and dismissing under the 11th, allows the IPR construct to survive another day. And the longer PTO can keep the IPR construct in place, the better chance it has to survive.”

Sovereign Immunity Excuses University of Florida from IPR Challenge by Dennis Crouch

As public universities continue to obtain more patents, issues of sovereign immunity continue to arise. In a recent decision, the Patent Trial and Appeal Board (PTAB) dismissed a trio of inter partes review proceedings against the University of Florida based upon its claim of sovereign immunity.[1]

The 11th Amendment to the US Constitution limited the “Judicial power of the United States” so that it does not “extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.”[2] Although the text of the amendment appear to include several important limitations that might exclude an administrative action (“judicial power; “suit in law or equity”), the Supreme Court has broadly interpreted the statute precluding many adjudicative administrative proceedings.  For anyone who is not an American lawyer, you may need to pause here to recognize that each of the 50 American states are treated as sovereign governments and, although the Federal Government sets the “supreme law of the land,” its powers are limited by the U.S. constitution and federalist structure.

The Supreme Court has interpreted this amendment to encompass a broad principle of sovereign immunity, whereby the Eleventh Amendment limits not only the judicial authority of the federal courts to subject a state to an unconsented suit, but also precludes certain adjudicative administrative proceedings, depending on the nature of those proceedings, from adjudicating complaints filed by a private party.  Following Supreme Court precedent from other areas of law, the Federal Circuit held in Vas-Cath[3] that Missouri’s sovereign immunity allowed it to avoid an interference proceeding.

The petitioner Covidien argued that the PTAB should think of the IPR as an in rem action directed at the patent rather than at the patent owner.  However, the PTAB rejected that argument – finding that the procedural elements of inter partes reviews and estoppel provisions make it look much like contested litigation – the very thing protected by the 11thAmendment.

The Panel:

On the whole, considering the nature of inter partes review and civil litigation, we conclude that the considerable resemblance between the two is sufficient to implicate the immunity afforded to the States by the Eleventh Amendment. Although there are distinctions, such as in the scope of discovery, we observe that there is no requirement that the two types of proceedings be identical for sovereign immunity to apply to an administrative proceeding. Further, we note that there are several similarities between civil litigation and inter partes review that are not unlike those compared in Vas-Cath for interferences.

Outcome here – Dismissed before Institution based on Sovereign Immunity of the patentee.  Moving forward it will be interesting to see whether the Federal Circuit is willing to hear an appeal or instead apply the standard law that institution decisions are not subject to appeal.

The dispute between the parties extends back to a license agreement between UFL and Medtronic/Covidien of the patent at issue. UFL exerted its right to audit the books, but was refused by Medtronic.  UFL then sued in state court on the contract.  Medtronic counterclaimed for DJ of invalidity/noninfringement and removed the case to federal court on the patent claims and on diversity grounds.  The district court however remanded back to state court on sovereign immunity grounds.  That remand is now on appeal at the Federal Circuit, although the court has just issued a show-cause – asking whether the case should be transferred to the 11th Circuit.  Under the AIA-revised statute, cases go to the Federal Circuit if either the civil action “arises under” US patent law or a “compulsory counterclaim” arises under patent law.  Here, it is clear that the counterclaim is a patent claim, but the big question is whether it is “compulsory” – normally defined as one that “arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim.”[4]

Of interest though, in the order to show cause, the court suggests that it might keep the case in the “interest of justice” rather than transfer it. [5][federalcircuitjurisdictionorder]

= = = =

[1] See Covidien LP v. University of Florida Research Foundation Inc., Case Nos. IPR 2016-01274; -01275, and -01276 (PTAB January 25, 2017).

[2] U.S. CONST. amend. XI.

[3] Vas-Cath, Inc. v. Curators of Univ. of Missouri, 473 F.3d 1376 (Fed. Cir. 2007).

[4] Fed. R. Civ. P. 13(a)(1)(A).

[5] 28 U.S

 

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?

PTAB Elevates State University Research Values

“A very important decision has just been issued by PTAB impairing the capacity of private parties to challenge the validity of patents owned by state research universities and their TTO affiliates.”

In Covidian LLP v University of Florida Research Foundation Inc. http://www.reexamlink.com/wp-content/uploads/2017/01/Board-Dismisses-IPRs-on-Sovereign-Immunity.pdf, PTAB thoroughly examined the applicability of the Eleventh Amendment’s state sovereign immunity doctrine to IPR patent challenge proceedings. PTAB concluded that as an “arm” of the state, UF’s TTO affiliate was immune to IPR challenge absent Florida’s consent by waiver of its sovereign immunity. The decision has been appealed to the Federal Circuit but for now it clearly enhances TTO patent licensing values. Continue reading PTAB Elevates State University Research Values