Michelle Lee, Director of the United States Patent and Trademark Office, recently spoke with Politico at SxSW, answering questions about fostering innovation and the various patent reform proposals circulating Capitol Hill. “We should be open to everything that can help curtail abusive patent litigation while also enabling holders of legitimate patent rights to enforce their patent rights as appropriate,” said Lee. One of those things Lee thinks is appropriate to consider is venue reform, which is code for making it more difficult, if not impossible, for patent owners to file patent infringement lawsuits in the Eastern District of Texas.
For me, talk of “legitimate patent rights” is like fingers on the chalkboard.
Use of this phrase strikes me as indefensible because by its very nature it implies picking winners and losers after the Patent Office has already issued a patent and taken money from the inventor. Or worse, it reinforces the two-class patent system that we increasingly see today, between those that “have” the resources to attack or defend patents and the “have nots” (everyone else). Once a patent issues it is a private property right. Period. By definition a patent is legitimate because it exists!
Patents are Presumed Legitimate
First, patents that have been issued by the Patent Office are supposed to be presumed valid (see 35 U.S.C. 282), or at least that is what the law says if we are actually going to concern ourselves with legal niceties like statutory reality. Of course, I do realize that the Patent Office refuses to presume that issued patents are valid, which again is like fingers on a chalkboard. What is the point in having a patent examination process, or a Patent Office, if the government agency that is responsible for issuing the patents in the first place won’t stand behind its own work product?
Not to put too fine a point on it, but there is something fundamentally wrong with the administration of a Patent Office that takes many years, sometimes over a decade, to issue a patent at such great cost – both in terms of USPTO fees and attorney fees. All the while during that long wait, that patent application is put through an often unfair process, where poorly reasoned rejections have become the norm in some technical areas. This process, for which there seems to be no accountability, costs the patent applicant many tens of thousands of dollars, and for what? Waiting for the applicant at the end is a refusal to presume the patent issued is valid by the agency that just spent a decade verifying that the claims were valid! On what planet does that make any sense?
What’s worse, once the applicant achieves a patent, if that patent is commercially viable and being infringed by those who took rather than licensed or engineered around, the patent owner will be sucked back into the Patent Office for an extremely costly defense of the rights the Office granted. This mandatory invitation to defend the patent in a post grant proceeding will force the patent owner to now spend many hundreds of thousands of dollars.
Tens of thousands to obtain a patent that the agency granting the patent won’t even presume is valid only to get the right to spend hundreds of thousands of dollars to defend the patent in a horribly one sided proceeding that simply does not provide even the illusion of due process for the patent owner? I understand that Congress mandated that post grant proceedings happen with extraordinary speed, but no where in the statute does the speed required of the Patent Office give them the right to strip a vested property right that is supposed to be presumed valid without any procedural safeguards.
Perhaps the conversation shouldn’t be about “legitimate patent rights,” but rather about the legitimacy of a Patent Office that charges people to get delayed rights and then sells the privilege of challenging those rights to others for a hefty fee. I’ve said it before and I’ll say it again, the post grant proceedings were ill conceived from the beginning, Congress made a grave error of judgment creating post grant challenges, and the Patent Office has been put in a horrible position where they clearly have a conflict of interest.
Who is a Legitimate Patent Owner?
As dismissive of the statutory presumption of validity as it is, talk of legitimate patent rights is not nearly as revolting as talk of so-called legitimate patent owners. When those pushing patent reform talk about legitimate patent owners they are by necessary implication saying there are illegitimate patent owners. Of course, they never say that, and they never define who those illegitimate patent owners are, but if certain owners are legitimate that must mean that other owners are illegitimate.
Sadly, this talk of legitimate patent owners is done to continue to vilify those who are deemed unworthy of being entitled to the full rights and privileges of ownership. To say this creates a dangerous slippery slope doesn’t even begin to scratch the surface.
In his prepared remarks at a Senate Judiciary hearing on patent reform on March 18, 2015, Senator Patrick Leahy (D-VT) recognized that balance is needed to ensure that innovators are able to enforce legitimate patent rights. In part Senator Leahy said:
Many have raised concerns that, if taken too far, litigation reforms like those in the House-passed Innovation Act would harm legitimate patent holders when they enforce their rights in court.
Obviously, Senator Leahy or whoever wrote his prepared remarks must believe there are illegitimate patent holders who presumably should not be entitled to enforce their rights in court. But exactly how do you decide who is legitimate and who is illegitimate? Exactly who are the illegitimate patent holders that should be appropriately harmed by new patent legislation? If patents are a property right (see 35 U.S.C. 261), which they are, who owns the right should be completely irrelevant. The question ought to be whether the property rights are being trampled, not whether the patent owner is somehow worthy, or more worthy compared to others.
The problem with this language is it become infectious. Even those who are advocates for a strong patent system start to use this language, which gives up the linguistic high ground and often loses the debate then and there. For example, in How the Unintended Consequences of the Innovation Act Could Undermine Patent Protection, PhRMA repeatedly talks about “legitimate patent owners’” and “legitimate patent holders.” In one place they write:
[T]he proposed legislation is so broad that legitimate patent holders, including those in the biopharmaceutical R&D ecosystem like large companies, startups, and universities, could find themselves in the crosshairs.
Certainly large research and development companies, startups, and universities, are legitimate patent owners. But what about independent inventors, small businesses, or even small or mid-sized research and development companies, aren’t they legitimate patent owners too?
Would anyone ever talk about “legitimate real estate owners” versus “illegitimate real estate owners”? If investors in real estate were deemed illegitimate because they weren’t the one’s who built the house and were denied access to the courts so they couldn’t enforce their rights the very fabric of ownership would come under attack in the United States.
It would be ridiculous to say, suggest or even think that real estate investors or landlords shouldn’t have legitimate ownership rights, yet those who own and finance patents, or those who engage in patent licensing, are somehow illegitimate abusers of the patent system that must be punished? Talk about absurdity meeting the preposterous!
The Problem is Judicial Inefficiency, Not Patents
We need to stop talking about legitimate patent rights and legitimate patent owners. Patents are presumed valid, period. Whether patent owners are nice people or good corporate citizens doesn’t matter, period. Litigation abuse is the problem and the solutions need to focus on litigation and pre-litigation abuses, period. The abuse that needs to be stopped, and which can be stopped tomorrow, relates to those who seek to exploit judicial inefficiencies to shake down defendants, or those they threaten with lawsuits. This is not a patent problem, period. Reforming the patent system won’t’ make the problem of litigation abuse go away, it will only kill the patent system for everyone and push the abusers into another area where they can exploit judicial inefficiencies in order to shake down defendants.
Talk of legitimate patent rights and legitimate patent owners does nothing other than needlessly polarize the industry on an issue that everyone should agree on. Shakedowns are bad, which should be self-evident to practically everyone. But to solve the problem of shakedowns you don’t need patent reform, and you most certainly don’t need to vilify patent owners or ignore the statutory presumption of validity.
UPDATED: 1:05pm ET on March 15, 2016