Happy Birthday AIA: Celebrating an Unmitigated Disaster and the Destruction of American Innovation

By Gene Quinn
September 16, 2016

Happy BirthdayToday is the fifth anniversary of the signing of the America Invents Act (AIA). Without any exaggeration, the AIA ushered in the biggest changes to U.S. patent law in generations. Truthfully, the sweeping and unprecedented changes brought into being by the AIA were the most radical changes to U.S. patent laws in the 226-year history of the U.S. patent system.

The single word that best describes the AIA is this: disastrous.

For those casually interested in patents the largest focus of the change was modifying U.S. laws from first to invent to first to file. For those in the industry who knew better this was a minor change that hardly affected day-to-day practice. In almost all situations the applicant who filed a patent application first was the party who received the patent, so why not just acknowledge what happened in more than 99.9% of all cases?

Without a doubt the biggest change brought into being by the AIA, and why the AIA has been an unmitigated disaster, is the creation of three new procedural challenges to issued patents. These post grant challenges – inter partes review (IPR), post grant review (PGR), and covered business method (CBM) review – give those who don’t like patents fresh new opportunities to seek the invalidation of property rights issued by the Patent Office. These new procedures are added to challenges already available in federal district court, as well as reexamination, which continues to be available at the Patent Office.

Does it strike anyone as odd that the Patent Office would require patent applicants to jump through a series of quite onerous hoops, spend tens of thousands of dollars and wait between five to ten years to get a patent issued only to then turn around and sell the opportunity to challengers to defeat the patents that the agency just ostensibly put their stamp of approval on and which are supposed to be statutorily presumed to be valid property rights? Welcome to the brave new world of the AIA! If the applicant actually has a commercially relevant innovation the Patent Office will put the applicants through round after round of torturous review only to get a patent that invites them to spend many hundreds of thousands of dollars defending in a post grant review process.

“The current implementation of PTO post issuance proceedings is undermining confidence in our patent system, chilling innovation at its roots, and, in eyes of some, giving the AIA a bad name,” wrote Phil Johnson, Senior Vice President for Intellectual Property Strategy for Johnson & Johnson. According to Johnson, one of the biggest concerns with respect to the administrative patent trials created by the America Invents Act is “whether these proceedings are providing the level of due process and fairness to all parties in them that they should be.” See Are PTAB Proceedings Fundamentally Unfair to Patent Owners?

What’s worse, the way the Patent Office reports what actually is happening at the PTAB in these post grant proceedings is so hopelessly misleading that it disguises the reality of the what is happening. For example, the Patent Office conveniently includes “claims remaining patentable and not subject to a final written decision” in their calculations of which claims survive post grant challenge. The Office can do this because the PTAB doesn’t have to issue decisions that address all claims they agree to consider. Technically those claims not subject to a final written decision do remain patentable, but those claims have NOT been determined to be patentable by the PTAB. The PTAB simply ignored those claims when they wrote their final IPR decision, which astonishingly is something they are allowed to do and do quite frequently. It is hardly a ringing endorsement of the continued viability of those claims moving forward, particularly given that the PTAB leaves standing an initiation decision that determined that those claims are likely invalid. Thus, it is disingenuous to rely on those ignored claims to suggest IPR outcomes are not devastating to patent owners as they actually are.

So why would the Patent Office clearly and objectively slant the way they report post grant proceeding statistics? Because commercially valuable patents are being killed at alarming rates.

These post grant proceedings have been so horribly one-sided that it is almost impossible to believe they are being carried out within an American system of any kind. The statute gives patent owners the right to amend patent claims, but the PTAB denies virtually all motions to amend because the PTAB interprets the statute that gives the right to amend as merely a right to file a motion to amend, which they nearly universally deny. Thankfully, the Federal Circuit has recently reversed a refusal to allow an amendment in an IPR as being arbitrary and capricious, and the entire Federal Circuit will soon review the PTAB amendment practice. In the meantime, the PTAB continues to operate as a kangaroo court doing whatever they want, operating in arbitrary and capricious ways.

So what should we do? That is a complicated question with differences of opinion. For example, Bob Stoll, former Commissioner for Patents, recently wrote that it would be a mistake for Congress to get involved and try and fix the problems of the AIA. Stoll argues that the USPTO and the Courts are the proper venue for change. Meanwhile, Alden Abbott, Senior Fellow at the Heritage Foundation, recently wrote that Congress must get involved to curb the IPR process, particularly given the Supreme Court decided not to do so in Cuozzo.

Both Stoll and Abbott are correct. The USPTO has set up a set of rules that are fundamentally unfair on a procedural level and the courts are unwilling, or unable, to address. Within our system of government it is absolutely imperative for Congress to step in and fix the mess they created. But the thought of turning to Congress to fix something they clearly do not understand, and do not seem to want to understand, strikes me as a patent specific definition for insanity. The options are both awful.

Meanwhile, post grant proceedings are simply not working as they were intended. According to Manny Schecter, who is Chief Patent Counsel for IBM, IPR statistics combined with the increasing phenomenon of efficient infringement suggests, “the post grant challenge proceedings as currently implemented are not a substitute for litigation and may, unfortunately, instead actually promote litigation.” Of course, the rise of efficient infringement and the ease with which to challenge patents and tie up patent owners has dramatically, and negatively, affected the value of patents. “In the wake of the AIA, the cloud of uncertainty hanging over patents is dark indeed,” wrote Ashley Keller, co-founder and Managing Partner of Gerchen Keller. “This uncertainty has depressed the value of patents and the returns to research and development, and may have broader ramifications that are yet to be seen.”

There were other things in the AIA that were mistakes, for example doing away with a real grace-period and instead creating a convoluted grace period that couldn’t possibly be useful in any real world scenario. See First to File Means File First! Similarly, it was rather idiotic to adopt a worldwide view of prior art that recognizes foreign filed patent applications as prior art as of their foreign filing date. By making these changes the U.S. went from being different from the rest of the world to being bizarre and just different in stupid ways.

None of the things that can and should be fixed in the AIA matter though as long as post grant proceedings exist in current form.

I’ve said it many times before and I’ll say it again. All of the post grant challenges ushered in by the America Invents Act (AIA) were a bad idea. They never should have been created in the first place. All the post grant proceedings have done is make infringing patents a more economical choice, while making it more costly for innovators to obtain and keep the protection they need to make innovating a worthwhile endeavor. It was all too predictable that a new tribunal would over assert its own jurisdiction, but the breadth of just how arbitrary, capricious and fundamentally unfair the process would be was simply not predictable. Still, if there was any doubt that there would be a predisposition toward killing patents that myth was burst early on when the then Chief Judge of the PTAB said at a public meeting of the Patent Public Advisory Committee (PPAC) that if the PTAB wasn’t doing death squading they weren’t doing their job.

For the rest of our AIA 5th Anniversary Series please see: The America Invents Act Five Years Later: Reality, Consequences and Perspectives.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 18 Comments comments.

  1. angry dude September 16, 2016 9:43 am

    “it was rather idiotic to adopt a worldwide view of prior art that recognizes foreign filed patent applications as prior art as of their foreign filing date.”

    Correct.

    Only a complete idiot (or foreign spy) could assign any meaning to “foreign filing date” (not a publication date, even in a language other than English )

    In a lot of countries you can stamp any filing date you want, even in the future,
    for a small fee

  2. Anon September 16, 2016 10:26 am

    Just one (of many) pro-Big Corp (read that as multinational corporations who have NO loyalty to any one country) result of the expanded juristic person’s voice that is “equal” under Citizen’s United to actual US citizens’ voices (read that as real people with loyalty to this sovereign).

    It would be a little Polly Anna to say that this could not be foreseen (and for the record, not only did I foresee this, but I discussed this with my Congressional representatives in the run-up of the AIA passage). My voice though did not compare to the “voices” of Big Corp.

  3. Gene Quinn September 16, 2016 11:03 am

    Anon-

    You say: “It would be a little Polly Anna to say that this could not be foreseen…”

    You must be in a very good and generous mood today! What an understatement! So many of us beat the drum as loudly as we could, it just didn’t matter.

    -Gene

  4. David September 16, 2016 11:08 am

    There is nothing too complicated going on here: the PTAB confers very significant power to Congress (and, by proxy, the donors). If the Article III courts are willing to give the patent adjudication power to Congress, Congress will very happily take it.

    Congress isn’t going to hand it back because a bunch of aggrieved patent geeks don’t like the new status quo. That isn’t how D.C. works.

  5. Anon September 16, 2016 12:21 pm

    David,

    You presume far too much.

    Even Congress, the proper branch under the Constitution with the allocated power to write the statutory law that is patent law does not have unlimited powers in writing whatever it wants to write.

    Especially concerning laws that affect property.

    Gene,

    Yes, I am being generous as I fully realize that I was not the only one trying to inform Congress of what was going on.

  6. Patent Investor September 16, 2016 12:24 pm

    Across the board, well said Gene!

  7. David September 16, 2016 1:28 pm

    Anon – the point was simply that if the Article III courts tell Congress that it has the constitutional authority to create an administrative court with the power to invalidate issued patents (as the CAFC in its infinite wisdom has done), then it will do so.

    In this particular scenario, the onus is on the judiciary to pursue checks and balances and protect the separation of powers. If Cooper and/or MCM are denied, the PTAB will proliferate – rapidly.

  8. step back September 16, 2016 2:54 pm

    The demise of patent rights and the loss of reverence for inventors in the USA is just a symptomatic tip of an iceberg that is causing the whole of USA Titanic to take on water and starting to go down.

    We have acquiesced to corporate mind control and to a government that them with the most Citizens United “voice” get to control. Our Founding Fathers are turning in their graves. Why did we even bother? they ask themselves.

    As Gene laments above, no one is listening and no one cares. It’s just another reality TV show scripted for mass consumption and mass infotainment.

    Happy Birthday AIA.

  9. Edward Heller September 16, 2016 5:54 pm

    I take it that recommendation is to repeal PGRs and to resist strongly any attempt to reinstate them.

    To this, I say, amen.

    But, given the political forces being IPRs, the only way forward at the moment is the Supreme Court. Cooper and MCM.

    The decision of the Supreme Court whether to take the cases is just weeks away.

  10. Chris Gallagher September 17, 2016 10:03 am

    Thanks for speaking AIA’s truth to power Gene, from your lips to SCOTUS’ ears .

  11. Ron Hilton September 17, 2016 11:23 am

    It’s the “troll” narrative that we have collectively failed to adequately address that has resulted in where we are now. The problem is there is a grain of truth to that narrative, and we should have been more proactive against the bad actors and in favor of improving patent quality.

  12. Bemused September 17, 2016 11:49 am

    Gene,

    Great recap of the past five disastrous years of the AIA. The comments above rightly touch upon the corporate influence peddling that brought about the AIA. I wonder how much influence peddling is being employed by big pharma at the US Supreme Court (please, no commentary about how the Supremes are impervious to outside influences – let’s talk real world here) in connection with the pending writs in the Cooper/MCM cases?

    Clearly, us “common folk” don’t have the means to influence change. Certainly, big pharma does and they’re the ones that have been reaping the stupidity of their decision to not fight big tech on passage of the AIA. IMHO, a ruling by SCOTUS that the AIA is unconstitutional is the fastest/surest way to kill off this abomination of a law.

    B

  13. Anon September 17, 2016 1:34 pm

    Bemused,

    It is not without a small bit of irony that you may have Congressmen wanting the Court to find the AIA unconstitutional.

    Why else would Congress explicitly reject a severability amendment? All they had to do was pass that amendment and only one small piece here or there would be scrapped (as the necessity for such emerged). Think about that for awhile – you have the single largest IP bill EVER, full of new and untested wording, with some rather questionable – and questioned provisions, and you reject a savings measure outright?

    Instead, Congress deliberately removed the ability of the Court to use an avenue of saving the legislation by defeating the notion of having severability.

    One (admittedly jaundiced,or you might say pragmatic) reason why this was done was that by so doing, ALL of those “voices” would once again need to march up Capitol Hill and donate their “voices” into the pockets of the politicians all over again.

    Remind me again just how much money was spent by lobbyists in the run-up and during the passage of the AIA?

  14. Yes the PTO Blacklists Law Firms September 18, 2016 9:40 pm

    Good article, and just the tip of the iceberg.
    Since 1997, the Patent Office has twisted “to promote science and the useful arts” into a stalking-clown “to promotes easy idea and inventive theft.”
    Indeed, the AIA informally changed the name of the Pat Office to the Anti-Invention-Administration.

  15. Greg DeLassus September 23, 2016 9:42 am

    Just a few responses:

    (1) “Unmitigated disaster” seems too strong, although I agree that there are still problems with IPRs/PGRs to be worked out.

    (2) I think that on balance IPRs have been largely salutary for the system as a whole. I would be disappointed if they were to go away entirely (either by Court ruling or Congressional reversal). That said, I definitely agree that the current implementation of IPRs so far lacks adequate due process. I had hoped that the CAFC would be the instrument to enforce adequate due process, but unfortunately so far the CAFC has taken exactly the opposite approach. I guess that they figure that the flood of PTAB appeals threatens to overwhelm them if they actually have to put any effort into policing due-process in the PTAB, so they have regrettably issues a series of precedents that allow the CAFC to take a hands-off approach to the PTAB, thus freeing the CAFC to deal with most appeals from the PTAB on a Rule 36 basis. This is not acceptable, and if the SCotUS does not force the CAFC back into line on this point, then I will reluctantly have to join the chorus calling for the outright repeal of IPRs.

    (3) What I just said in point #2 is especially true with regard to amendments. Amendments ought to be granted on something close to an “of right” basis.

    (4) Re#13. There never was a vote not to include a severability clause. This is nothing but an internet rumor.

  16. Anon September 24, 2016 1:29 pm

    Mr. DeLassus,

    Your assertion of “just a rumor” received quite the discussion on “the other blog.”

    As I see it though, your assertion is only an assertion. Further, the “logic” that you attempted to use throughout the discussion on that other blog is in clear error.

    I “get” that you do not want anything decided “on a rumor,” which in and of itself is admirable, but ploying a “that’s just a rumor” to STOP the discussion is simply every bit as “bad” as what you want to criticize.

  17. Greg DeLassus September 24, 2016 4:58 pm

    Fair enough. I will rephrase.

    Until such time as someone cites the citation in the Congressional record where this alleged rejection of a severability provision occurred, I believe that one should regard the existence of such a vote as nothing more than an internet rumor.

    A thorough search in the Congressional record’s electronic search utility did not locate such a vote. There is no good reason to suppose that it ever happened.

    Moreover the accounts of this supposed vote vary according to the one telling the story. In some accounts, severability was present in an early draft, but was removed before final passage (this one is very easy to disprove, because all drafts that were ever pending in either chamber of Congress are published in the Congressional record, and none—even the earliest—contain such a provision). In other tellings, the severability provision was offered as an amendment and affirmatively rejected by a vote. In some tellings, this vote was in the house, but in others the vote was in the senate.

    In short, the whole idea of the alleged rejection of severability has all the marks of an urban legend. That is how it should be regarded unless and until someone actually finds it in the Congressional record.

  18. Anon September 24, 2016 8:01 pm

    Fair enough of a rephrase – however, “on that other blog,” there remains the matter that your logic is even more suspect than any “urban legend.”