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.

 

Patents are Property

As usual Paul Morinville, (joined this time by his good colleagues) is right-on. State universities and their affiliates have been given a “get out of PTAB card ” by the University of Florida decision because of their 11th Amendment sovereignty. It may be that other research universities are not so blessed. But the patents as property issue he details affects everyone. Paul’s IPWatchdog piece is, therefore, essential reading for all. The difference between the juridical “liability” and “property” theories is how research universities were punished by eBay in 2006 and ever since. Now its “Public Rights Vs Property Rights,” and that debate not only affects everyone it affects the very survival of our patent system. Paul explains it well enough to help readers tell it to their congressional delegation. To read their excellent and detailed explanation, please visit our IPStrategic.com website.

Patent Decline’s Top Causes and US Chamber’s Plea for Increasing its Strength

In his World Property Day post, IPWatchdog’s Gene Quinn predicts continued but not permanent decline for US patents after naming its three top contributors. His typically insightful prose pulls no punches and IMHO correctly identifies the decline’s legal culprits and their consequences. But in IMHO he fails to give due credit is to the influence of the ubiquitous Patent Troll narrative created first at Intel then brilliantly injected into the minds of congressional, SCOTUS and PTO lawmakers. Propagated by unsubstantiated law journalists’ speculations, bogus economist projections, misleading falsities to a lazy, uninformed press, occasional anecdotes and the over-anxious suspension of disbelief accorded to the Silicon Valley vanguard of the Information Age, its self-serving shiny object distraction penetrated DC policy top of mind. Its “litigation crisis” theme delivered it to sympathetic Judiciary Committee salons, an under-informed Supreme Court and a politically pliable PTO. Fueled by Amici blather Justice Kennedy’s injection of trolls into eBay blessed it. PTAB was presumably established to curb trolls. Mayo’s expedient nullifications based on expanded eligibility grounds reflect the story’s so-called “bad patents” allegedly wielded by patent trolls. The patent troll narrative was conjured to protect the efficient infringement that compelled the cut-throat competitive smartphone markets. Indeed, efficient infringement inevitably helped create them. The troll story masked efficient infringement and perpetuated because it has worked so well and will be needed still. Mega-tech wars among big tech peers may someday shift to cars and IoT. But big tech’s need to push down patented component costs and infringe their patents will remain. The troll narrative was an early avatar of alternative facts and fake news. It will be hard to extinguish. But until the troll story is snuffed out by targeted legislation and thoroughly debunked by public disbelief, today’s decline in patents will continue. Yesterday offering “the other half of the story” the US Chamber of Commerce issued a statement strongly supporting our economic need for strong patents saying:

“Over the past decade, a growing number of academic and industry researchers have been exploring the relationship between patent protections and innovations, particularly as it relates to technology startups. What they continue to find is that patents and other intellectual property protections are absolutely vital to supporting innovation; in fact, many of the technologies and innovations we take for granted today would never have come to bear without patents.”

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