A Closer, Evidence-Based Look at ‘Patent Quality’ Advocacy

“‘Patent troll’ scaremongering and that narrative’s flimsy evidentiary basis is alive and well and back in use with a vengeance by those who don’t respect patents.”

https://depositphotos.com/6496641/stock-photo-looking-at-the-opinion-section.htmlThe Patent Infringer Lobby has ramped up banging the drum about “patent quality.” They dedicated a week-long campaign to questioning “patent quality,” which its constituents regard as a huge problem.

Advocates have taken advantage of the vacuum left after U.S. Patent and Trademark Office (USPTO) Director Andrei Iancu left the building.

Patent “Assertions” of a Different Sort

Anti-patent advocates are exploiting the new dynamic of Senator Patrick Leahy, coauthor of the America Invents Act (AIA), who now chairs the Senate Intellectual Property Subcommittee. Leahy recently did the Infringer Lobby the favor of holding a hearing on this subject.

Key takeaway: “Patent troll” scaremongering and that narrative’s flimsy evidentiary basis is alive and well and back in use with a vengeance by those who don’t respect patents.

Claims of “weak patents,” assertions about “patent trolls,” defending the Patent Trial and Appeal Board (PTAB) as a “faster, cheaper” necessity—it’s deja vu all over again, circa 2011.

But the facts don’t support the “patent quality” narrative.

Evidence-Based Perspectives

However, conservative thought leaders are giving an evidence-based perspective on the necessity of reliable patents, meaningful patent rights and how our patent system suffers from “reforms.”

It’s clear: The Infringer Lobby has diminished patent rights. And weakened U.S. patents aid and abet China.

How Weakened Patents Benefit China

The House Republican Study Committee (RSC) has focused on the U.S.-China competitiveness battle. RSC identifies reliable intellectual property as key to U.S. success in cutting-edge technology leadership.

RSC’s “Maintaining U.S. Tech Supremacy Through IP Protection” notes that, in addition to PTAB, “a number of issues form an incentive structure that strongly disadvantages small inventors and independent IP creators. The Supreme Court’s decision in eBay v. MercExchange effectively ended meaningful injunctive relief to patent holders in cases of infringement. Oil States Energy Services v. Greene’s Energy Group and the more recent Google v. Oracle devalue patents and make investment in startup companies more difficult and riskier. The narrowing of patentability cuts off avenues of innovation in fields such as medical research and computer-implemented inventions, especially when taken in comparison to the EU and China.”

As RSC’s paper explains, China’s broader strategy “is predicated upon the ability to steal IP from America, replicate it in China, force usage of the Chinese-made good within China, then sell a heavily subsidized Chinese variant of the stolen IP abroad, undercutting the market for the IP creator. When done repeatedly, especially targeting economic sectors in which the U.S. is dominant, such as avionics and medical research, this tactic can constitute a strategic level threat to both the U.S. economy and national security.”

The Infringer Lobby loves its offspring, the PTAB and inter partes review (IPR). Every PTAB patent invalidation makes easy pickings for China. The invalidated patent’s owner has lost property rights and the ability to defend the IP. Private property now becomes prior art. China may freely take the invention, commercialize it, and ship products for American consumers to buy.

The RSC examines the PTAB and IPRs in a backgrounder, “The Patent Trial & Appeal Board and Big Tech.” This paper observes that “in seeking to curb patent trolling, the AIA created a prime environment for another form of abuse with our patent system.” It notes the frequent flyers at PTAB are Apple, Samsung, Google and Microsoft. “Additionally, the costs of PTAB trials are often prohibitively expensive for small businesses and lone inventors. The average AIA trial costs roughly half a million dollars.” The paper continues:

[L]arge corporations, especially those in the business of utilizing other entities’ IP (such as computer programs and apps), realized that they have an advantage in the PTAB system. This is due to the low standard of proof and inapplicability of the statutory presumption of validity that federal courts must apply. This structure facilitates companies that want to make use of already patented IP to browbeat and barrage small IP holders with PTAB challenges. Statistics regarding PTAB adjudication bear this out. Between 2012 to 2020, 62 percent of PTAB’s 3,414 final written decisions determined that all challenged patent claims were unpatentable, 18 percent found some claims were unpatentable, and a mere 20 percent found all claims were patentable.

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Infringers and Implementers vs. Innovators and Entrepreneurs

A CATO Institute article, “Why Big Tech Likes Weak IP,” casts light on what’s behind the Infringers Lobby’s assertions. Southern Cal Law Prof. Jonathan Barnett discusses the business models of those companies for which others’ IP is a cost or barrier. Hence their systematic practice of predatory infringement (also known as “efficient infringement”) and benefits from weak patents.

Barnett notes “the relative unimportance of patents for firms that specialize in mostly everything else that is required to convert R&D into products and services that deliver value to end?users. For large, integrated firms with established market positions, various types of evidence indicate that, outside the biopharmaceutical and related life sciences industries, patents are generally not the leading tool used to capture value on innovation.”

For IP-centric innovators small and large, enforceable exclusivity is vital. Barnett continues: “For firms that are smaller in size or have not integrated into the production and distribution stages of the technology supply chain, a robust patent portfolio is likely to be a critical predicate for entering into joint ventures and other relationships with potential sources of capital and commercialization expertise. This predicament reflects what is sometimes known as Arrow’s Paradox (originated by Nobel economics laureate Kenneth Arrow): it is impossible to transact over an innovation without disclosing it but, in doing so, the counterparty’s willingness to pay falls to zero because it can now replicate the innovation freely.”

Weak IP, what the Infringers Lobby advocates, advantages incumbents such as Big Tech and disadvantages innovators and entrepreneurs. “[W]eak?IP environments are hospitable for large, integrated firms that maintain internal markets for financing and conducting R&D and then embed the resulting intellectual output in goods and services for the end?user market,” explains Barnett. “By contrast, strong?IP environments enable entry by smaller firms that specialize in R&D and monetize the resulting intellectual outputs through external relationships with third parties. This organizational distortion matters because larger firms tend to excel in incremental and process?related innovation that refines existing technologies while smaller firms tend to excel in product innovation that challenges existing technologies.”

History is on Inventors’ Side

George Mason Law Professor, Adam Mossoff, an affiliate of the Heritage Foundation, exposes the underlying, destabilizing false narrative of the Infringers Lobby. For instance, Mossoff analyzes an 1878 case, McKeever v. United States, where a patent owner sued the U.S. Army for buying and using his patented cartridge boxes without permission. Mossoff’s Heritage report, “The Constitutional Protection of Intellectual Property,” examines the Takings Clause analysis the Court of Claims undertook. The patent-infringing government agency asserted that the case involved a government-issued privilege rather than private property:

First, the McKeever court analyzed the text of the Copyright and Patent Clause to understand whether the Framers adopted in the Constitution the English Crown’s personal privilege and thus incorporated the limitations of this personal privilege, such as its being unenforceable against the sovereign if the sovereign used the patent without authorization. The court noted that the plain text of the Copyright and Patent Clause—the use of the terms ‘right’ and ‘exclusive,’ the absence of the English legal term ‘patent,’ and the absence of an express reservation in favor of the federal government—evidenced a fundamental break between English and U.S. patents. In other words, the property right in a U.S. patent issued by the federal government is fundamentally different from the personal privilege in an English patent bestowed by the Crown.

Mossoff’s close examination of the historical record regarding patents as private property is nothing short of withering and well worth reading. (Perhaps the errant Supreme Court will do so and apply it for a course correction.)  In McKeever, writes Mossoff, the Court of Claims’s “conclusion that McKeever’s patent was ‘property’ secured under the Takings Clause of the Fifth Amendment—prohibiting the U.S. Army’s use of his patented cartridge boxes without payment of just compensation—the McKeever court was not writing on a blank slate. It repeatedly cited and relied on numerous decisions throughout the 19th century by the Supreme Court and lower federal courts that patents are protected as ‘property’ under the Constitution. This is likely the reason why, after the federal government’s appeal of the decision, the Supreme Court summarily affirmed the McKeever court in which ‘no opinion was delivered or report made.’”

End the False Narratives

Debates over “patent quality,” the effects of weakening our patent system and our patents, and how best to ensure innovation, entrepreneurship and U.S. industrial competitiveness versus China — based on home-grown innovation leadership in emerging technologies — deserve better than false narratives.

Honest advocates, lawmakers and those involved in the U.S. economy will decry those who make up “facts” to fit their narrative. The nation deserves debates that are evidence-based, truthful and trustworthy.

 

Image Source: Deposit Photos
Author: stuartmiles
Image ID: 6496641

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Join the Discussion

17 comments so far.

  • [Avatar for ipguy]
    ipguy
    August 2, 2021 08:04 pm

    @16

    You’re probably somewhat correct. Plenty of Primaries dot every “I” and cross every “T” but there are many who don’t.

  • [Avatar for Zete4vr]
    Zete4vr
    August 1, 2021 06:06 pm

    “QMA 1(b) Checking applications for technological accuracy
    QMA 11 Evaluating/applying caselaw as necessary
    QMA 12 Evaluating the sufficient of affidavits/declarations
    QMA 14 Promoting compact prosecution by including all reasonable grounds of rejections, objections and formal requirements. (MPEP 707.07(g), etc.)
    QMA 15 Making the record, taken as a whole, reasonably clear and complete.”

    Primaries were never doing those things anyway.

  • [Avatar for Anon]
    Anon
    August 1, 2021 09:17 am

    Thanks Julie – mea culpa for my mistake.

  • [Avatar for Julie Burke]
    Julie Burke
    July 31, 2021 09:57 pm

    Anon @ 13

    The link @ 13 is for this article which is being commented on.

    Here is the link my the July 1, 2021 entitled Does the USPTO’s Roadmap to Quality Lead to Lake Wobegon.

    Within the July 1, 2021 article linked below, please find links to the examiner’s performance plans.

    2021https://ipwatchdog.com/2021/07/01/usptos-roadmap-improved-patent-quality-lead-lake-wobegon/id=135152/

  • [Avatar for Julie Burke]
    Julie Burke
    July 31, 2021 03:23 pm

    Anon @ 11

    Links and email address in the Lake Wobegon article.

  • [Avatar for Anon]
    Anon
    July 31, 2021 10:28 am

    Julie,

    Wow – great info.

    Do you have links?

  • [Avatar for Pro Say]
    Pro Say
    July 30, 2021 07:38 pm

    “Maintaining U.S. Tech Supremacy Through IP Protection”

    Sorry, but it’s too late to maintain; by at least 5 years.

    Thanks to SCOTUS, the CAFC, the AIA / PTAB Death Squad, and Congress (especially Senator Leahy and his Big Tech cool aid-swilling ilk), we’re now behind China and the EU.

    And falling still farther behind due to the CAFC’s continued and ever-expanding ineligibility assault on innovation.

    The accurate title:

    “Regaining U.S. Tech Supremacy Through IP Protection”

  • [Avatar for Pro Say]
    Pro Say
    July 30, 2021 07:11 pm

    “Your patents are low quality!”

    “Our patents, on the other hand (though often only a hair’s-breath different than yours; and examined by the very same Examiners), are all high quality!”

    — The Infringer Lobby

    Hypocrisy rules.

  • [Avatar for George]
    George
    July 30, 2021 06:27 pm

    @Julie Burke

    100% agree! Most of our problems are now caused by VERY POOR quality and TOTALLY INCONSISTENT examination conclusions. I have cases where the examiner completely forgot what was said in their prior OA’s and then I have to remind them! I have cases where a supervisor completely ‘sidelines’ an Examiner’s 20+ pages of objections & just suggests 3 ‘very small’ amendments that will FIX EVERYTHING & get ALL CLAIMS ‘immediately allowed’ (but which on closer examination would also render the claims legally worthless & unenforceable). This is one of their sneakier (good cop – bad cop) ‘bait & switch’ tricks (. . . so don’t ever fall for it).

  • [Avatar for George]
    George
    July 30, 2021 06:14 pm

    @Martin D Hoyle #2

    “This is yet more proof that the AIA was never created to remove so-called “bad patents” but was and is mainly used to get rid of potential competition by larger entities.”

    More like the ‘other way around’. Most small entities can’t afford to defend their patents – at all. Not possible for small entities to get contingency representation anymore. Way to risky for firms after the AIA & recent decisions.

    So, it’s easy to jump to the ‘wrong conclusions’ based on just statistics (without considering ALL the factors involved). Cost has a HUGE impact on everything relating to IP. It’s obviously not a level playing field. It’s actually two entirely different IP worlds we’re talking about. Those will lots of money & those without! Those without just get screwed ALL THE TIME! Show me any recent cases where the independent inventor has won ‘big’, against a giant company? Especially any of the ‘monopolies’. The USPTO & the courts actually HELP to protect these entities. They almost never lose anymore! That patents asserted against them are ‘guaranteed’ never to be broad enough to ‘get them’ because the PTO now REFUSES to allow broad patents. Without a broad patent, a small entity doesn’t stand a chance. So, by the PTO doing this, they now ensure infringement suits against big guys will always fail (at some point). Big entities just can’t lose in the ‘IP game’! Haven’t ever seen it happen in the last 20 years! Have you? Have you ever seen Apple, Facebook, Amazon, Google, Microsoft, etc., pay out a ‘huge sum’ to any independent inventor, or even any other small entity? Let me know.

  • [Avatar for Julie Burke]
    Julie Burke
    July 30, 2021 03:30 pm

    @5. Yes, Anon, attention should be focused on p00r examination quality.

    Unfortunately the USPTO seems to be heading in the opposite direction.

    While under Congressional review, the USPTO has downgraded the evaluation standard a primary examiner must meet in determining compliance with Sections 102, 103 and 112 from the Advanced to Basic level. Compare 2015 PAP with the 2021 PAP. This places the amount and extent of analysis required to determine compliance with Sections 102, 103 and 112 on the same level as that used to check the brief description of the drawings or review an Information Disclosure Statement.

    Also the USPTO gutted the evaluation standards for seven of the nineteen examiner’s quality functions to a newly invented non-error-based assessment. Tasks no longer reviewed for quality include

    QMA 1(b) Checking applications for technological accuracy
    QMA 11 Evaluating/applying caselaw as necessary
    QMA 12 Evaluating the sufficient of affidavits/declarations
    QMA 14 Promoting compact prosecution by including all reasonable grounds of rejections, objections and formal requirements. (MPEP 707.07(g), etc.)
    QMA 15 Making the record, taken as a whole, reasonably clear and complete.

    See Tables 3 and 4 of the July 1, 2021 IPWatchdog article entitled
    Does the USPTO’s Roadmap to Improved Patent Quality Lead to Lake Wobegon?

  • [Avatar for Anon]
    Anon
    July 30, 2021 12:54 pm

    My lower case friend, please take your position one (logical) step further: the complaining should be refocused NOT on “patent quality” but instead on “examination quality.”

    Then keep in mind that p00r examination quality includes BOTH errors of Type 1 (patents granted when they should not have been) AND errors of Type 2 (patents NOT granted when they should have been).

    The presence (and level) of the presumption of validity has been well-established. As has the persuasive reasons FOR having such a thing.

    The answer to ANY ‘quality’ problem then needs — first and foremost — to identity exactly what needs to be put into focus.

  • [Avatar for anon]
    anon
    July 30, 2021 10:36 am

    The IPR statistics could just as easily be used to argue that the patents are weak. The same statistics came out of reexaminations. We should instead be complaining that the USPTO is issuing patents that don’t withstand scrutiny, and only survive if validity is presumed.

  • [Avatar for PTO-indentured]
    PTO-indentured
    July 30, 2021 10:34 am

    In other words — a ‘non-fiction challenged’ decision-maker audience — readily buying “false narratives”, has been found perpetually vulnerable to Big Business gamesmanship (selling them these narratives)?

    Well, at least we get to know it’s because efficient infringer practitioners (US patent compro-misers) continually hoodwink an audience so gullible.

  • [Avatar for Martin D Hoyle]
    Martin D Hoyle
    July 30, 2021 04:47 am

    First of all, the majority of patents killed by the PTAB were issued on or after the AIA was passed in 2011.
    Second, Of the more than 12,000 IPR petitions that have been filed between September 16, 2012 and November 30, 2020, less than 2% comprise small and medium-sized entities against NPEs. The vast majority of petitions are filed by large operating companies, usually against a smaller competitor.

    https://www.law360.com/articles/1348182/ptab-trials-disproportionately-harm-small-businesses

    This is yet more proof that the AIA was never created to remove so-called “bad patents” but was and is mainly used to get rid of potential competition by larger entities.

  • [Avatar for ipguy]
    ipguy
    July 29, 2021 05:55 pm

    In my experience, those who don’t respect patents and those who do are often the same person, and the respect (or lack thereof) varies from one extreme to another depending on that person’s business objectives, and who owns the patents in question. For example, the belief that their patents should be respected but have no respect for their competitors’ patents. I’m talking about my real-world experience as opposed to an academic’s view