By Charles Duan When I was 7 years old, I found a wallet on the sidewalk on my way home from the park. My mother told me I had to return it to the lost and found. When I asked why I couldn’t keep it, she responded, "Just because you happened to get it, doesn’t mean it belongs to you.”
A refresher in this lesson is in order for those supporting Sen. Chris Coons’s, D-Del., STRONG Patents Act, a bill that eviscerates the new America Invents Act post-grant proceedings for reconsidering patents. Though the bill masquerades as "balanced reforms,” it in fact is the opposite of reform, insulating owners of bad patents from challenges.
By all accounts, the new post-grant proceedings are a major improvement for a patent system plagued by bad patents that never should have been issued. Ordinary patent litigation is ineffective for dealing with this slew of bad patents partly because cases are decided by non-expert judges and juries. The new proceedings fix this by having skilled patent examiners decide whether patents were correctly issued.
The proceedings are also an order of magnitude cheaper than litigation, but they are by no means a walk in the park. The filing costs are more than $20,000, attorney fees have been estimated at half a million, and an adverse decision carries preclusive legal ramifications for the patent challenger. So you can imagine that challengers only go after the most questionable patents. The data bears this out: 77 percent of patents sent through the process are fully revoked.
But a key, unexpected benefit of the America Invents Act is that it creates avenues for small entities to deal with problematic patents. Many people can’t afford $5 million litigation but can pool resources to bring an America Invents Act review proceeding. Groups such as the Electronic Frontier Foundation and Unified Patents have already coordinated such resource-pooling to take on patents on downloading Web pages or distributing podcasts. This is crowdsourcing the patent quality problem, something that the White House and others agree is a good thing.
So I am astonished that the STRONG Patents bill would undo these good things. Specifically, the bill does the following:
1. It cuts off almost the entire public from using the AIA procedures, and in particular those groups like EFF and Unified, allowing only those “charged with infringement” to use them.
2. It upends the rules for reviewing challenged patents, imposing a “presumption of validity” and then applying notoriously complex rules of patent interpretation rather than the much simpler rules the Patent Office has used for more than a century, thus unduly raising the costs.
3. It allows patent owners to freely move the goalposts by allowing them to change the text of the patents substantially, and it gives patent owners (but not challengers) extra rounds of response filings.
4. It requires the Patent Office to allocate two panels of judges for every proceeding, doubling the number of people who need to learn the facts of the case and raising administrative costs to boot.
None of these “reforms” improve the quality of examination or effectiveness of the procedures. Instead, these proposals purely make the America Invents Act proceedings harder to use, regardless of whether the challenged patents are valid (as 77 percent apparently were). This effectively keeps bad patents alive and well, free to threaten the public and drag down the economy.
What is perhaps most disturbing is how the patent-insiders community, the strongest supporters of this new bill, perceive these America Invents Act proceedings. Former Chief Judge Randall Rader, notorious for his coziness with patent attorneys, claimed the high invalidation rate proved flaws in the post-grant proceedings, calling these proceedings a “death squad for patents.”
Never mind that selection bias explains the high rate. The proceedings are not a death squad for patents any more than cardiologists are a “death squad for hearts” because most of their patients are diagnosed with heart disease. Expecting that a procedure intended for diseased patents should grant any large fraction of them a clean bill of health is just wishful thinking. Demanding legislation to hamper the procedure and change the results, though, is the patent special-interest community’s bald attempt to protect patents they never should have received.
When I was seven, I picked up a wallet that wasn’t given to me and had to give it back. If I received a patent that shouldn’t have been given to me, I should give it back as well. So why do patent owners so fiercely resist this, demanding legislation to help them hold onto things not rightfully theirs? Whether it be narrow-mindedness, or delusion, or greed, the result comes at the expense of all of us.
Charles Duan is director of the Patent Reform Project at Public Knowledge .
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