Reverse Patent Reform in 2017 or Wipe out a Generation of Inventors

By Paul Morinville & Gene Quinn
January 3, 2017

Start over2016 represented a turning point. The damage of a decade of inventor killing reform finally came to light. We now know that we are crushing the greatest economic engine ever invented in our maniacal quest to kill imaginary patent trolls.

Here are just a few highlights of the damage. Patents are invalidated at astronomical rates. Whether it is in the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office, or in the federal district courts where it seems much commercially valuable innovation is deemed patent ineligible, patents are dropping left and right.

The cost of defending a patent right has skyrocketed. Infringement damages are in free fall. Patent valuations have crashed. There is no longer economic incentive in defending patents so contingency patent litigators and investors have largely left the business. Patent holding companies, the folks that once purchased patents from inventors, now buy large patent portfolios and are not interested in the smaller portfolios of independent inventors or startups. It is now more efficient to steal someone else’s invention than to invent it yourself, or even ask permission and pay a fair licensing fee for the rights. And if you steal it, you keep it, because eBay eliminated injunctive relief, which I will never understand given that a patent is nothing but an exclusive right.

While there isn’t much of a patent system left for inventors and startups, the real damage is bigger than just that. While our government has been killing imaginary patent trolls, China has been strengthening their own patent system. China now leads the world in new patent filings. A huge percentage of venture capital has moved to China as a result. We are giving our economic engine to China.

The good news (that’s a strange way to say it) is that the patent system can’t get much worse. That means if there are changes in 2017 it can only be for the better. Either the patent system will languish as it has and we will kill our economic engine for the next generation, or it will be fixed by a new administration working with Congress (in spite of the courts) and patents will be made great again.

Today, big companies are pushing back. One effort is to end the judicially created exception to patentable subject matter called the “abstract idea” exception. The Supreme Court legislated this exception from the bench and it is a calamity for real innovators because on the cutting edge of new technologies the uninformed, non-technologist always seems to be able to be confused by science and convinced to make decisions that benefit the status quo. I believe legislation fixing the abstract idea will pass on its own merits in the 115th Congress.

But the abstract idea doctrine is not the only issue crippling the patent system. At the very minimum, there are three additional issues that must be fixed if we are going to save our economic engine.

  • PTAB procedures are laying waste to property rights by allowing the Executive Branch to both give and take patented property rights like a third world dictator. PTAB panels are invalidating or neutering too many of the patents they see and investment in startups is crashing as a result. While the Patent Office likes to tout misleading statistics that make the problem seem less bad than it really is, increasingly patent owners are being harassed without protections. If the PTAB refuses 4 separate requests to institute a challenge but then grants an identical fifth request the USPTO thinks that corresponds to a 20% institution rate. Of course, what it means is the patent owner has been harassed and the patent challenged until the PTAB said yes. The PTAB must be eliminated.
  • Since eBay, injunctive relief is nearly impossible to obtain. Infringers tell us that once they steal a patented invention, they ought to keep it because they have placed a product or service into the stream of commerce. They argue that by stealing the rights from the inventor they have innovated and that the inventor did nothing, which is absurd. That would mean Thomas Edison did nothing worthy of note, and neither do any universities or research laboratories. But with no injunctive relief the government practically encourages theft of patent rights. A fair market value for the patent cannot be determined because there is no incentive to negotiate and no penalty for stealing. If you cannot determine a fair market value, you cannot attract investment at an early stage. This has not only encouraged infringement, but it has reduced capital availability for early stage startups. Injunctive relief must be restored as the default remedy for infringement.
  • Venue reform is the current push by the infringer lobby. While their PR campaign is targeted at the Eastern District of Texas (ED TX) because they say the local rules are inventor friendly, it forces inventors to file cases in the headquarters location of the infringer, which drive costs much higher for inventors. The real problem is not where a patent suit is filed – it is that local rules are not uniform. We need standardized rules for all courts. Since it is impossible to know what a patent covers until the claims are defined, standardized rules must restrict filing of invalidity motions until after claim construction, and that includes the ubiquitous motions to dismiss for lack of patent eligible subject matter. How can you know if the claim covers patent eligible subject matter without doing a claim construction? Uniform court rules and mandatory claim construction prior to any dispositive motions or rulings will solve venue issues lobbied for by infringers.

Every time a new patent reform bill moves forward in Congress, the courts create case law eliminating the need to pass the bill. They legislate from the bench to protect their turf. The infringer lobby took advantage of this dynamic and pushed bills that would stimulate response from the courts.

After all, passing legislation the old fashioned way is an inefficient process. A bill has to make it through both the house and the senate and then the president has to sign it into law. All that nonsense forces a lot of debate. Staffers must talk to people, attend panels, fact check, analyze and propose positions. Congress would have been forced to listen to inventors, which is not what the infringer lobby wanted.

I think we should employ this well proven method of changing law. I know this is not how our government is supposed to work, but let’s be pragmatic. We cannot force an unwilling government to follow its own constitutional processes. So, we need to work with what is available.

The courts consider local rules to be their turf. If a bill standardizing local patent rules moves in Congress it will likely trigger the courts into legislative action. If history holds true, the courts will spring into action and legislate from the bench to thwart passage of the overall bill and therefore protect their turf. Using the federal court’s propensity to legislate may be the best way to fix at least one of the issues facing the patent system in 2017 and save our country’s economic engine.

The Author

Paul Morinville

Paul Morinville is Managing Director of US Inventor, Inc., which is an inventor organization working in Washington DC and around the US to advocate for strong patent protection for inventors and startups. Paul has been walking the halls of Congress knocking on doors and sitting down with hundreds of offices to explain the damage suffered by inventors due to patent reforms. Paul is an independent inventor with dozens of patents and pending patent applications in enterprise software. He is also CEO of OrgStructure, LLC, an early stage enterprise middleware provider in Northwest Indiana.

Paul Morinville

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 12 Comments comments.

  1. EG January 3, 2017 7:38 am

    Hey Paul,

    Another nice article. You’ve pretty much hit all the “hot button” items that need to be addressed. Or as you astutely note, otherwise our innovation engine will completely “crash and burn.”

  2. FRANK LUKASIK January 3, 2017 9:24 am

    The worst change for independent Inventors was the “First-To-File”. The oldest change was the Maintenance Fee expiration. The Supreme Court rejected these changes (Lucree v. U.S.).

  3. Valuationguy January 3, 2017 9:38 am

    With regard to injunctive relief….I would suggest lobbying the new Trump admin to reverse the U.S. Trade Advisor anti-patent policy that Obama put in place three years ago…which short-circuited NPE patent owners ability to get effective injunctive relief via the ITC. Trump could reverse this with a pen stroke if he chose. (Of course getting rid of Obama appointees in the ITC might take longer…)

  4. angry dude January 3, 2017 11:49 am

    In the meantime China is strengthening their patent laws and doing everything else possible in an unprecedented effort to create startup ecosystem

    US ? What about US ? A third-world country in the making…

    http://www.forbes.com/sites/jordyndahl/2016/05/03/chinese-government-luring-sea-turtles-home-to-launch-startups/#38b7056e478a

  5. Kip Azzoni January 3, 2017 3:45 pm

    Thank you Gene and Paul for this thoughtful article. I appreciate the bullet points you fire off that define the entry wounds the independent inventors have taken this past decade. Exit wounds for too many of us small size portfolio patent holders seem to bring the death to our hard fought patent quests and start ups. Much appreciate your work. I’m trying hard to understand this patent battle.

  6. step back January 3, 2017 5:41 pm

    Remember how Trump’s clarion call about this election being “rigged” got the ire of his supporters?

    Well the message is going out that the US Patent system is “rigged” as against small inventors who can’t afford those wars of attrition through the Alice/Mayo landmine territories and then through PTAB-stan double jeopardy trenches. Many will quit even before starting.

    And who wins from this?

    Certainly not the general welfare of We the People of these United States who are endeavoring to form a more perfect union for the benefit of ourselves and our posterity (Check out the Preamble to the US Constitution.)

    http://constitutionus.com/

  7. Adrian January 4, 2017 10:42 am

    Great article Paul. How long can we sit and suffer as our nation commits intellectual suicide?

    Watching our nation commit intellectual suicide is gut wrenching stupid.
    We need to remember what made this nation great, IP laws that supported the independent inventors dreams of making their lives better by creating something new. This helped build our technological society and added directly to the growth of the economy. To Make America Great Again we need to make Patents Great Again!

    This is a national security issue as well as economic priority.
    Our right as inventors must be protected for future generations.
    Repeal A.I.A and Alice before we lose all new innovations to other countries without such ridiculous and dis-incentivizing patent laws.
    This ruling has stymied innovation and stopped investments in such here in the USA. Look where this is going… Stop A.I.A and Alice from taking us off the road to prosperity. Save American Innovators, save the future.

  8. Eric Berend January 6, 2017 9:04 am

    This generation of inventors is assassinated, already (metaphorically speaking). As I have mentioned previously in comments made on a previous article on this site, it will take at least a full generation, to even begin to reverse the effects of these mendacious forces – and, that is assuming the power and will to make these essential changes can be summoned; which, in and of itself, is no sure thing.

    The U.S. inventor community is now reduced to a small enclave of disenfranchised innovators, limited to advocacy for the sake of some future generation, should this nation survive this enormous folly. Those who still care enough and have time and energy enough, to fight the legal and social rear-guard actions necessary to preserve even a modicum of hope for turnaround and revival, are all that is left to carry on a thread of possible opportunity and optimistic hope.

    It’s not enough; and everyone in the inventor and patent prosecution communities, knows it – this kind of treatment, ostracism and bleak outlook is simply too awful for reasonable humans to contemplate, for long. Thus, the ‘hole of denial’ in thinking about a comprehensive, realistic picture of the true situation at hand.

    No, the masses of ignorant rubes – who in fact now are the true trolls carping down inventors, rather than any canard of the other way around – will have to experience the pain of seeing other nations with more robust, accomplished economies, the inevitable ‘brain drain’ to more fertile venues, and the ego humiliation of being not only no longer “first-class” in the world, but swiftly plummeting towards third world status in many areas of the U.S.

    Only then, when serious, unavoidable pain hits the horde of idiots who populate so many of the demographic cohorts across the U.S., will some begin to realize that maybe, just maybe, those of us possessing applied intelligence with a tools making goal are not something to be feared, denigrated, ridiculed, bullied or stolen from.

    Even then, what power on Earth will put ‘Humpty-Dumpty back together again’? It seems quite fatuous to assume, and historical experience; as well as the old nursery rhyme; suggests that it is generally impossible.

  9. FRANK LUKASIK January 6, 2017 9:14 am

    With 56 years of experience, starting as a Patent Examiner, I have volunteered to give up my retirement pay and volunteer to serve on the Supreme Court to straighten out the Patent System

  10. staff January 10, 2017 12:44 pm

    ‘Patents are invalidated at astronomical rates’

    But it’s even worse. Not only do inventors have to fight to keep their patents, but we have to fight to get them. That’s why the small entity patent filing share has plunged to single digits according to a recent sampling of the PTO site, whereas historically they have ranged between 50-60% and been as high as 80%. When we have to fight to get or keep our patents we go out of business. Meanwhile, our large competitors are now free to rob and crush us which they now do with abandon.

    For our position and the changes we advocate (the rest of the truth) to truly reform the patent system, or to join our effort, please visit us at https://aminventorsforjustice.wordpress.com
    or, contact us at aifj@mail.com

  11. Adrian April 6, 2017 6:54 pm

    A consortium of national inventor groups and clubs is rallying.
    Look forward to the largest petition of its kind for inventors against AIA circulating in the next week or so.

    This will go to every member of Congress letting them know we are joining forces to demand and make change. History is about to be made, please follow US Inventor in the next couple weeks and help spread the word.
    Our country needs us, its time to act. Save Inventors, Save America!!

  12. FRANK LUKASIK April 7, 2017 9:46 am

    I agree and tried to eliminate the “First To File” change which took the Patent System away from the Independent Inventor (Lucree v. U.S., Supreme Court).