Patents used to be a property right, now a patent is a liability

By Adrian Pelkus
November 12, 2016

“Stifling innovation and curtailing investments are the effects of the AIA from what I see and hear. This is infuriating! It is disincentivizing inventors, innovators and investors!”

Problem, Risk, Danger and Liability words on a speedometer or gauge to measure your legal exposure from injuries or other hazards or troubleFor 35 years my wife and I have made our living for our family as a new product developer, manufacturer and I am an inventor myself.

My wife Amy and I are both ex NAVY, avionics trained. We began our business in San Marcos building 500 microcontroller based/ remote car alarms that I designed from scratch. My friend wrote the code for in our garage. Our product was knocked off by a Korean company within 3 months. I never patented it, so there was little we could do. That was my first lesson in patents.

We are proud parents and grandparents. Our kids grew up in our shops and offices watching their parents living the American dream and helping others attain theirs. Since 1985 in total we have helped develop over 300 new products for inventors, plus my own. In doing so I am a named inventor on 14 issued patents and have filed dozens of provisional patent applications. Many of these patents became commercialized and licensed, winning awards along the way.

I say this not to gloat but to show I know how patents help the small inventor and startup. Having to raise funding all these years has required strong patents. I have been working with some of the top IP firms in the nation to acquire the ones I have.

In an effort to help other inventors I reformed the San Diego Inventors Forum a decade ago and have grown it to be one of the largest inventor groups in the US. As a 501(c)3 our mission is to Motivate, Educate and Network inventors to become successful entrepreneurs creating new businesses and jobs. We hold monthly meetings of around 40 people and I give a no charge one on one mentoring and coaching with 2 to 5 mostly new inventors every Thursday.

At every group meeting we talk about what has happened to patent laws, how that threatens innovation in America and negatively impacts the individual inventor’s life. We are hearing about more cases of inventors losing their incomes and businesses because their issued patents were challenged, which is a direct result of the new patent laws. So to those who think the new laws only impact so-called patent trolls, I can attest to the fact that is simply not true. The new laws have a real and frightening impact on individual inventors who are losing their livelihood.

At the private weekly meetings in my office I am hearing more and more inventors voice their concerns and that the new patent laws are scaring and stopping them. Many are recent retirees that had saved a nest egg to start their new life on an idea they had years ago and always wanted to achieve. That American dream they saved up for is now a nightmare of possible litigation and losses if they file a patent. A patent they believed would be the path to profits is now useless to stop an infringer and could become an expense that takes their retirement away.

I’m also an Entrepreneur in Residence (EIR) at CONNECT. At our Springboard meetings we review new product ideas and help prepare their inventors to present for funding. Investors are becoming wary of investments in startups because they can lose big, which wasn’t the case before the AIA.

Stifling innovation and curtailing investments are the effects of the AIA from what I see and hear. This is infuriating! It is disincentivizing inventors, innovators and investors!

Before last year I have never been an activist or protested anything publically. The AIA issue has change that for me.

I was called and very proud to join the coalition of inventors that flew in to DC to protest H.R.9, which lead to its demise. More recently I was proud to stand and protest with my fellow inventors who protested Congressman Darrell Issa, one of the main supporters of what would be crippling new patent reform legislation.

We are standing to protect the rights of Americans to profit from their ideas. The patent system has been broken and rigged to suit corporations. Stealing IP is cheaper than developing it. You, your kids and our entire society’s future depends on innovation. Curtailing innovation would be to forfeit our economic future. I can’t stand by and see not only my life and my friends lives but our entire way of life be destroyed by patent law changes.

A friend recently asked me if I really wanted to take sides, or if I should remain impartial. My answer was yes! We cannot allow the AIA to proceed. As an inventor, my life is now at risk because of the changes to the patent laws. I have to stand for what’s right. There is right and wrong, and in my humble opinion being impartial is apathy.

I tell all my friends this really is not a left or right issue, it’s an American issue. Your individual rights to own and profit from your ideas are at risk. These rights were a cornerstone of our foundation, specifically mentioned in the Constitution and supported by none other than George Washington, James Madison and Abraham Lincoln, who as an inventor himself understood the patent system stokes the fire of creative genius for the benefit of society.

Patents used to be a property right, now a patent is a liability. That is not how it was a decade ago, and it doesn’t need to be the way it is in the future. Let’s make patents great again!

UPDATED Sunday, November 13, 2016 at 2:19pm ET to include a link to “patent law changes” that was included by the author in the first draft but not retained in subsequent edits. This was my error. GQ.

The Author

Adrian Pelkus

Adrian Pelkus is an inventor with 30+ years experience developing over 300 different electronic products and high technology processes that have helped startup several technology companies. Mr. Pelkus is named inventor on fourteen issued U.S. Patents including the "Baby Think it Over" infant simulator, a “Thin Film Flexible Solar Cell”, the FDA cleared "Jaw Elevation Device" and O2MislyTM Wound Treatment System. In 2005 Mr. Pelkus reorganized the San Diego Inventors Forum now a 501(c)(3) to help startup entrepreneurs. Mr. Pelkus serves on the Board of Directors of both United Inventors Association of America (UIA) and US Inventor, organizations dedicated to assisting and educating inventors.

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 41 Comments comments.

  1. angry dude November 12, 2016 5:28 pm

    Yeah, it’s been a little over 10-years since the infamous
    eBay v. MercExchange decision by SCOTUS
    In these 10 years US Patent system has been reduced to nothing
    Started under Bush, then continued full force under Obama

  2. Night Writer November 13, 2016 2:44 am

    Don’t worry. Google’s moonshot division will provide all the innovation our country needs.

  3. Benny November 13, 2016 5:31 am

    Reverting to pre AIA inter-parties re-examination is potentially equally lethal to patents claims, assuming valid prior art is found.

  4. Edward Heller November 13, 2016 8:57 am

    Repeal IPRs.

  5. Night Writer November 13, 2016 9:04 am

    How do not appoint a person the SCOTUS unless they are science literate. And, impeach those on the SCOTUS that cannot pass a basic science literacy test.

    That–believe it or not–would be fair.

  6. Benny November 13, 2016 9:09 am

    Edward,
    What do you suggest we replace the IPR with? Perhaps rephrase 102 to read “unless prior art is found by a semi competent patent examiner in a brief search focused mainly on US patent documents” ?

  7. Anon November 13, 2016 10:02 am

    Benny,

    You both hit and miss the point.

    Your miss is thinking that a change in law is required.
    Your hit is recognizing that examination needs to be better.

    There is no change in law required to drive a better examination.

  8. Ternary November 13, 2016 10:16 am

    The AIA is a huge dis-incentive. Many under-funded independent inventors learning about the pitfalls of our ‘new and improved’ patent system are taken aback by the potential cost and heartbreaks that pursuing a patent may bring. Many will reach the conclusion: this is probably not for me. Others have come to the conclusion that they were suckered in and should never, ever have started into the patent world and regret it with a passion. Talk about a disincentive. Adrian Pelkus is absolutely right. Keep up the good work. Novice inventors absolutely need a support network to succeed.

    Yes, the IPR has to go. As an inventor I rely on the USPTO to issue a valid patent. A do-over on the failure of Examination should not be at the cost of an inventor. The whole Alice nonsense (which has no scientific and epistemological basis) has to be reversed. And the full 1 year grace period has to be re-installed. That would be a good start.

  9. EP November 13, 2016 11:52 am

    What part of the AIA is stifling innovation?

  10. Gene Quinn November 13, 2016 12:04 pm

    EP-

    The PTAB and post grant proceedings.

    -Gene

  11. Gene Quinn November 13, 2016 12:10 pm

    Benny-

    You ask: “What do you suggest we replace the IPR with?”

    How about nothing? Regardless of the myopic view of Congress or the Supreme Court, an Executive agency that handed out a property right has no business stripping that property right away, period.

    Silicon Valley lobbied for third party pre-issuance submissions so they could get prior art in front of examiners so mistakes wouldn’t be made. What a bunch of BS. Pre-issuance submissions are almost NEVER used.

    The PTAB simply cannot be trusted.

    The fact that the Patent Office continues to employ recalcitrant patent examiners and patent examiners that you, and many others, believe are semi-competent cannot support the outright screwing of patent owners.

    -Gene

  12. Gene Quinn November 13, 2016 12:12 pm

    Benny-

    You say: “Reverting to pre AIA inter-parties re-examination is potentially equally lethal to patents claims, assuming valid prior art is found.”

    Then explain why inter partes reexamination was virtually never used? In fact, it was used about 15% of the time compared to IPR. So excuse me for noticing that your statement is factually nonsense. Inter partes reexamination was absolutely NOT as lethal or damaging to patent owners or the patent system at large.

  13. Bemused November 13, 2016 3:03 pm

    Mr. Pelkus,

    Thank you for taking a stance and for speaking out. I truly hope the incoming administration will reverse the damage done to the US patent system these past 8 years.

    B

  14. Benny November 13, 2016 3:50 pm

    Gene,
    All the patent systems I know of outside the US include some provision for post grant review and correction of government agency mistakes. I find it difficult to accept the notion that omissions of government employees must be enshrined in stone, with no relief offered to those harmed by them.

  15. angry dude November 13, 2016 4:45 pm

    Benny @14

    US Patent System used to have ex-parte re-exam requests which PTO could either accept or reject
    That’s what was used in the famous Blackberry case which eventually led to infamous EBay decision to strip all underfunded NPEs (regardless of technology in question and validity of their patents) of patent rights once and for all…

    Especially infuriated are the patent holders like myself who applied for US patents in early 2000s long before Ebay and were issued patents after EBay (patent applications are published at 18 months)

    “Fool me once – shame on you, fool me twice – shame on me”

  16. Independent Inventor November 13, 2016 5:08 pm

    Adrian — thank you for saying what needs to be said … and doing what needs to be done.

    If we inventors don’t all stand up together, we will surely all fall down together.

    Why is our very own government working so hard to protect American innovation from being stolen by those outside our borders while at the same time crushing the very same innovation here at home?

  17. Edward Heller November 13, 2016 5:39 pm

    Benny, no relief? Where do you get off? Accused infringers have always had a day in court to assert invalidity.

    Observe that PGRs are taking place during the term of the patent. They effectively deny term and increase expense to obtain a patent by the cost of the PGR. The review is conducted by the PTO, an institution that is inherently political and anti-patent.

    Patent owners, like anyone else, have a right to due process and due process requires and unbiased, independent, and inherently neutral trier of fact. That is not being received by patent owners in the PTO as every patent owner that has been subjected to that process will affirm.

    Reexaminations were originally sold to Congress as a means for patent owners to strengthen their patents in litigation. What reexaminations and other PGR have done in fact is lower the burden of proof of invalidity and introduce BRI that is an examination expedient designed to clarify claims before they are issued. When the patent owner is forced to amend to narrow because of the lower burden and BRI, he is losing past damages — which is the real objective of those who use reexaminations and other PGRs.

    Benny, you are poster child for the suckers who have drunk the Kool Aid.

  18. Anon November 13, 2016 6:21 pm

    Mr. Heller,

    Within a certain degree, Benny’s comments about what other nations have decided to do may be fully accurate – with what those nations may have chosen.

    However, the US grabbed the lead in world innovation due in no small part tot he climate of being pro-innovation with strong patent rights.

    In this regard, Benny could not be more wrong about what is good for the US.

  19. Ternary November 13, 2016 6:59 pm

    One of the great successes of creating an innovation stimulating environment is the CONNECT program of UCSD in San Diego. I was privileged to have known and work with Bill Otterson. Bill, CONNECT and UCSD were instrumental in changing the SD/La Jolla environment into a high tech center. It was clear how hard it was to bring and keep all resources (that were definitely there) together and aligned to create this phenomenal economic growth. It was also clear how easy it would have been to undermine this economic development. Getting a patent was a minor (but important) element to start a technology based company. I mean minor in the sense of going through the bureaucratic steps to obtain a patent and beyond the advice that you had to take care of patents it never got much attention.

    Obtaining and defending a patent has become an unnecessary risk, raises cost and creates a barrier to young start-ups, which it never has been on this scale. It requires disproportional amounts of attention, money and efforts. Patents have become a true pain in the neck.

    I applaud Adrian for his work in CONNECT and the independent inventor community. AIA and its consequences are infuriating to independent inventors. There is little in AIA that helps the independent inventor and a lot to discourage him/her. We really don’t need this barrier.

  20. FRANK LUKASIK November 13, 2016 8:19 pm

    Lucree v. U.S. No. 14-1340 I challenged the changes to the Patent system and it was dismissed. Expiration of Patents for non-payment of Maintenance Fees and First-To-File were also challenged.

  21. Jeff Lindsay November 13, 2016 9:09 pm

    San Diego is famous for the vibrant community of inventors that has prospered with the help of Adrian and others. Thank you! What you and San Diego have done is a tremendous example for innovation success. How tragic that those innovators, like innovators all over the nation, have been deprived of due process by the US government with the anti-patent mania of the current administration and its Googlized USPTO, by the unjust AIA passed with deception by both parties, and by science-illiterate judges who have forged insanely dangerous weapons against patents like Alice. May the public understand that these steps threaten America’s ability to prosper, and may they and wiser leaders rise up to reverse the harm and return to due process and a respect of intellectual property rights.

  22. angry dude November 13, 2016 10:30 pm

    Jeff Lindsay @21

    Dude,

    Please, cut the bull

    The present situation with patents has very little to do with (dis)respect for science or left-wing aversion to the notion of patent rights,
    and it has everything to do with the desire of large multinational corporations like Google not to share any profits with independent inventors and small startups not of their choosing in this new innovation-driven economy

    That’s all to it

    Karl Marx was right after all…

  23. Simon Smith November 14, 2016 3:52 am

    I could not agree with you more. The jealousy of the infringers and the onus on you to sue (and cost) defeats the purpose of getting the patent in the first place, especially if the infringer is the Government and the law is on the side of the infringer who takes your all of your patent years making your patent unenforceable challenging it regardless of whether they win or lose.

  24. Anon November 14, 2016 7:13 am

    angry dude at 22,

    You should be aware that more than one ideology is active against patents. Do not be confused or complacent about that.

  25. Chris Whewell November 14, 2016 12:01 pm

    As a patent practitioner since 1993, I’ve seen the system slowly degrade, beginning with NAFTA. The basic premise that has been destroyed is the presumption of validity. Infringers are motivated to do IPR’s because they perceive a good chance at invalidation. If patent quality were not at issue, validity would be questioned less often and there’d be very few IPR’s. Part of the effective loss of presumption of validity comes from the PTO examining corps, even though they’ve been perpetually “trying” to improve. Witness the fiasco over section 101 rejections as re what is patentable subject matter. Also, the wave of newfangled section 112 written description requirement rejections stemmed from the loss of the Doctrine of Equivalents, which is also a part of the reason for the effective loss of presumption of validity, via slow train of erosions provided by various court cases since NAFTA. It is an erosion of personal property rights, according to Marxist Doctrine. I’m sitting on a wonderful air conditioning invention that uses no compressor or freon that uses about 2/3 the watts per BTU of conventional systems and is only slightly larger in size, but I’ve been ripped off enough in the past, that I ponder the wisdom of sharing it. It saves me about $100 a month in the summer and I’m content with that. Why risk my peace of mind by filing a spec on a good invention, that will likely be challenged by the envious ? I would like to rub it in my P-chem teacher’s face however, the dude was a douche

  26. Edward Heller November 14, 2016 3:19 pm

    Chris: If patent quality were not at issue, validity would be questioned less often and there’d be very few IPR’s.

    Hardly.

    Reexaminations and IPRs do not involve a presumption of validity. The burden of proof is lower, and combined with BRI. The result forces amendments that cause a loss of damages.

    Reexaminations and IPRs would be employed even if patent quality were high because of the advantages the give infringers.

  27. Anon November 14, 2016 4:32 pm

    Mr Heller, may I yet again remind you of the sticks in the bundle of property rights and exactly when (and who) takes those sticks without remuneration of any kind and without chance of Article III review for that separate legal act.

    With the refusal of cert of the last chance (this term) of the Square D case, the issue must rest until the next case comes up.

  28. Edward Heller November 14, 2016 4:46 pm

    anon, the Supreme Court will not soon consider another appeal concerning IPRs.

    Personally, looking back, I think it was a mistake to rely on Article III. The right to jury trial issue was much more straight forward.

  29. Anon November 14, 2016 6:18 pm

    The takings argument would have been best / a shame then that you never seemed able to grasp it, Mr. Heller.

  30. Edward Heller November 14, 2016 6:45 pm

    anon, you raise it the next time you represent a patent owner in and IPR.

    1. Your position is that patents are property; and
    2. That filing an IPR is a taking.

    But, how are patents property if they are public rights? If they are public rights, they are only privileges.

  31. Chris Whewell November 14, 2016 7:20 pm

    Thank for the reply Edw. Heller. I was considering presumption of validity from the risk analysis viewpoint of a would-be potential infringer, not the court. If I am in business to make money and it appears from previous IPR results in the same field of art and close/similar fact pattern that my target mark patentee has a 50% chance of losing, strictly from a statistical viewpoint, the net effect is that the presumption of validity among similar thinkers as I is weaker than it was in days past. Part of the reason ties into patent quality – if IPR results were only 3% of cases being overturned that would be one thing. Unfortunately that is not the case in some fields !! I hope that makes sense. If decision-makers are told that half the patents that come out of Tech Center XXXX are being invalidated in IPR, what does that say about patent quality ?

  32. Anon November 14, 2016 8:08 pm

    Mr. Heller,

    As I have previously explained, it is not the filing of the IPR that is the taking, but rather it is the institution decision and what happens at that separate legal point that constitutes a taking.

  33. Anon November 14, 2016 8:09 pm

    Mr. Heller,

    Patents are property by (at least) the direct words of Congress.

    That’s another point that you left out of your arguments, as I recall.

  34. Curious November 15, 2016 12:30 am

    The takings argument would have been best / a shame then that you never seemed able to grasp it
    Based, mostly on your writings, I have reviewed some of the “takings” case law. My inexpert opinion is that a takings argument would probably be a loser. The Penn Central Supreme Court case (1978) appears to be the lead case on it, and from my readings, the fact that there is some economic loss as a result of government action does not necessarily raise the government action to the level of a “taking” under the Fifth Amendment.

    Knowing your passion for this particular issue, this comment is not made lightly.

  35. Curious November 15, 2016 12:41 am

    How do not appoint a person the SCOTUS unless they are science literate. And, impeach those on the SCOTUS that cannot pass a basic science literacy test.
    There is a HUGE difference between knowing science and appreciating science. There is also a HUGE difference between appreciating science and appreciating the benefits provided by a strong patent system.

    What we need is a Supreme Court that understands that patents are property rights and that the more uncertainty as to whether these validity and/or strength of these property rights (e.g., because of EBay, KSR, Bilski, Alice, Mayo, IPRs, AIA), the much less valuable these property rights are.

    The value of a patent for a small entity is arguably negative right now — between how much it costs just to obtain and how much it would cost more to defend it (in an IPR) and then to litigate it as compared to the small chance of it surviving that gauntlet — in the aggregate, more inventors probably lose money on patents than make money.

  36. Night Writer November 15, 2016 3:52 am

    Curious—the problem is that they cannot appreciate that which they have absolutely no clue about.

    What we need to do is get serious about science literacy. If a person cannot pass a basic literacy test in science, then they should be deemed unqualified to be appointed to SCOTUS.

    That is our path forward. Expecting someone like Ginsburg (a mix of arrogance and ignorance that is toxic and repugnant) to understand the issues is like trying to get a person who cannot read to appreciate a Shakespeare play by reading it.

  37. Anon November 15, 2016 8:31 am

    I think that you are both correct.

    Appreciation of what one does not understand would temper the hubris, while understanding would bring wisdom.

    The Court remains far too insular. How many non-Ivy League Justices sit on the bench? (Zero).

    We speak of diversity, and it is nice to have gender and ethnic diversity, but more important would be to have ideological diversity.

  38. Edward Heller November 15, 2016 12:49 pm

    “What we need is a Supreme Court that understands that patents are property rights …”

    Absolutely agree, which is why the election of any Republican as president was important for patent law.

    We need a lot more like Roberts on the court.

    And, we need the very same on the Federal Circuit. Particularly, we need a lot fewer of the likes of Prost and Dyk.

  39. Anthony Prestigiacomo November 15, 2016 10:25 pm

    Actually, it would seem the most expedient and effective single measure that could be taken now to push back is to mount a coordinated campaign to gain access to the jobs creation people in the Trump administration and some key legislators. Refocus the discussion on how small businesses create over half of new jobs, and new tech businesses hire high-pay skilled workers. Tell them there are serious problems with the patent system that are significantly hindering innovation and formation of such new small businesses. Add the impact to University IP holdings and the academic incubator infrastructure, and how that system leverages economic impact through local job retention.
    The Statement, “Small businesses and job creation are being crippled by problems with the patent system.” Save the details for a short position paper with a couple of graphs showing history and projections under the existing system, and estimate projections of increased business startups, IP and capital formation. Include a bullet list of key actions you want these people to take. Offer to help research and draft policy and other docs. All of us write and call our legislators and any relevant committees once the prior steps are completed. Waiting on SCOTUS will be too slow. I note that with new incoming Administration, both Democrats and Republicans are going to be bipartisan about helping small businesses create more high-paying jobs. Further, addressing this issue should help startups holding IP in raising valuations and funding. Finally, I suspect a compromise will be required, best have elements of that up front. Recall Trump has committed to jobs and Make America Great. Bottom line, Trump and his people are deal guys, and I am pretty sure they and the Jobs Creation people are not really aware of this problem holding back small tech businesses and jobs. There will be a very different management style than we have previously seen in government, and it will have a honeymoon period we should be ready for.

  40. Anon November 17, 2016 12:31 pm

    Well stated, Anthony.

  41. Anon November 19, 2016 10:29 am

    Curious at 34.

    Penn is an excellent case to start with.

    But also consider the overall facets of takings: both the impact to worth (which is far more drastic with patents than seen in Penn), as well as the lack of Article III review.

    Further, this type of takings falls away from the type of regulatory takings that guided Penn, and more to ward the property takings of such cases as Andrus v Allard 444 US 51, United States v Causby, 328 US 256, Griggs v Allegheny County 369 US 84, and Ruckelshaus v Monsanto Co 467 US 986.

    With patents as expressly personal property (per Congress – albeit the courts appear eager to mess this up), there is an absence of the regulatory takings style that would place Penn as the controlling case. Patents simply are not as analogous to the zonings flavor.