One of the many questions about the Trump Administration after its first month is how it views the U.S. patent system. Predicting Patent Policy Under the Trump Administration by Mark Hannemann and his colleagues at Shearman & Sterling, LLP, which reaches many of the same conclusions as the earlier analysis of Peter Harter and Gene Quinn on the topic (see here, here and here), is an excellent summary of the on-going patent reform debate with informed speculation on where the Trump Administration will come down.
“… unlike Ms. Clinton and President Obama, President Donald Trump has given almost no indication about his position on issues of patent policy. The anecdotal consensus, however, seems to be that the Trump administration will be more pro-patent than the low bar set by the Obama Administration, which was likely to have been followed by President Clinton.”
I asked several experienced veterans of the patent reform wars to review the article and share their thoughts on some key questions. Before getting to that, here’s a quick snapshot of the column. It nicely summarizes the patent reform issues and lists the pro patent influences in the new Administration including:
- Vice President Pence, previously a defender of inventors on the House Judiciary Committee and as Governor of Indiana;
- Donald Trump, Jr., who partnered with MacroSolve “a company … that engaged in an aggressive enforcement campaign of a single software patent. Trump Jr. wrote an editorial in The Daily Caller in 2012 in defense of ‘genuine’ patent enforcement, in which he distinguished ‘trolls’ who ‘hoard software patents with the sole intention of leveraging them for a quick payday’ from companies who enforced ‘innovative’ technology.”
- Steve Bannon, chief strategist to President Trump, who ran several pro patent articles while leading Breitbart News;
- Ken Blackwell, who served on the transition team, author of “The Conservative Case Against Patent Reform;”
- Wilbur Ross, the new Secretary of Commerce, a strong advocate of cracking down on intellectual property theft;
- The Heritage Foundation, which Politico called “one of the most influential forces shaping President Donald Trump’s transition team” which opposed H.R.9, the failed patent “reform” bill in the last Congress, fearing it further weakened the patent system; and
- The American Conservative Union an advocate of a strong patent system which threatened to negatively score any member of Congress who supported H.R. 9.
Regarding the future of patent reform, the article concludes:
In sum, if Trump exerts no influence on Congress, it seems likely that neither the “pro-reform” House bill nor the “pro-patent” Senate bill will go anywhere soon. However, if he chooses—consistent with the above discussion of his and his team’s patent views— to push the latter one, there may be room for bi-partisan compromise to get it passed.
After reading the article, I posed three questions to several insiders who agreed to comment without attribution:
Do you feel that the Trump Administration will be pro-patent? Can you provide any reasons for your opinion?
- I think it’s too early to tell where the Trump administration will be on patents. I’m somewhat hopeful, but a bit more on the international scene than domestically. Wilbur Ross at Commerce should help spur action to protect our inventive companies with patent-oriented business models against Chinese and other foreign abuse of “antitrust” against exclusive IP owners to steal our IP and advantage their own companies. Making FTC Commissioner Maureen Ohlhausen the acting chairman was a positive move and promising indicator.
- I think Mr. Trump’s stance will depend on how the issue is presented. if the President believes we need a strong patent system to counteract foreign competition I think he might support those policies. Unfortunately I think it much more likely that he will bow to pressure on drug prices and from Silicon Valley and follow the tendency to support less rather than more patenting. There is just too much pressure from knowing-nothings who think it an easy target to blame patenting for increased healthcare costs, competition from Asia on electronics etc. for someone who likes to play populist (and who I see no evidence as being a deep thinker on most issues) to buck this trend. Like much of what is written about the President, the article is an exercise in tea leaf reading that, while providing a good overview of the voices he will hear has little predictive value. The first month of Mr. Trump’s presidency has shown that he really has no governing philosophy other than wanting to hear the roar of the crowd, and I don’t think we have any way of knowing what policies he will pursue because he doesn’t know himself.
- Eric Trump’s 2012 column strongly suggests that his father will lean in the same direction. There are also several high-ranking White House officials who are decided pro-patent and none that are in line with the tech aversion to strong patent rights. Signs point in a favorable direction.
- Donald Trump recognizes the importance of the Trump brand, and has turned it into an enormous intellectual asset. He knows that intangibles inherent in intellectual property can drive revenue, economic development, and the creation of new businesses, products and jobs. IP has the potential, more so than any other economic or legal incentive, to make America great again. Given all that, I expect that President Trump will recognize that, and will continue to appoint smart, successful individuals experienced in the business world and who likewise recognize the benefits of a robust and reliable IP regime, and who will reverse the recent trend toward weakening that regime.
- We think President Trump is connected to a number of conservative sources, as detailed in the article, some of which have openly advocated for a more “pro-patent” stance than the last Administration. He also seems focused on showing strength vs. China, so he could take a more “pro-patent” stance if he thinks that there is a systematic problem with cheap Chinese imports infringing U.S. patents.
What do you make of the decision to retain Michelle Lee?
- Holding Lee at PTO is a negative signal. It seems that the President is letting this ripen for now. I hear there are two competing camps. The Peter Thiel-Jared Kushner camp advocates to keep Lee as an overture to Silicon Valley. The conservative advisors advocate replacing her on account of some important conservatives who backed Trump in the primaries and in the general election (including Phyllis Schlafly and Matt Schlapp).
- Michelle Lee has been surprisingly even-handed, notwithstanding her past employment with Google. She seems to have a genuine appreciation for the importance of patents for innovation. She seems to have “grown in office.”
- President Trump will get the recommendation of his Commerce Secretary and let the department sort itself out.
- Michelle Lee has participated in the weakening of our IP system. She has not demonstrated the type of leadership we need to make America great again by leveraging the creative and inventive American spirit. Instead, that spirit, and the willingness to turn it to economic advantage, is in decline. The USPTO needs a strong voice for a strong patent system, and regrettably, Michelle Lee has not provided that voice.
- It’s really unclear whether Michelle Lee is still the USPTO Director, and if so, how long that will last. Therefore, I really can’t comment just yet on how to interpret the current status.
Do you think the Administration and Congress will work together on patent reform this session and if so, what elements are most likely to be addressed?
- Regarding Congress, it doesn’t seem the White House and “patent reform” leaders in Congress have discussed this much. Immigration reform and the Supreme Court are much higher priorities for both right now. Throw in tax reform, trade reform, and regulatory relief across the board, you have a pretty full Congressional agenda. And there are still drivers for criminal justice reform. I expect Congress to take elements of anti patent measures, including venue, into its “litigation reform” rubric. That’s where movement seem the most probable.
- Patent Reform on Capitol Hill is all but a dead letter. There is a chance that venue reform might move through one or both chambers, but even that narrow-cast legislation will face substantial headwinds from the small inventor community and others who stand to lose out.
- This remains indeterminate. It seems the agents aligned with weakening our patent system through more sweeping legislation have set a somewhat more conservative agenda for this Congress. However, we should not assume that this means there will not be action behind the scenes to further erode IP rights. There is too much at stake, and very deep pockets among those who would benefit from such erosion. The IP system is the great equalizer – affording the creative entrepreneur an equal shot at bringing forth the next big thing and reaping rightful rewards. Senators Coons and Durbin are among the few who understand this complicated yet important system, and the potential it affords both society and the individual. We would all do well to listen intently to their views on this issue.
- Senator Hatch has already said litigation reform is on the agenda. While many bar groups are looking to have the Section 101 mess addressed, there are many on the other side of the issue who are committed to maintaining the dysfunctional status quo. So I see little prospect for the short term.
- The early indication is that not much will happen on the legislative front in the near term, except possible venue reform, which seems to depend on the outcome in TC Heartland. In the longer term, we wouldn’t be surprised to see some of the recent comments from David Kappos, IPO, AIPLA, and others on Section 101 gain traction.
While the patent policy fight is usually framed as the clash between giant industry interests or philosophical debates on the nature of innovation, one respondent chose not to answer my questions. Instead, he starkly captured the reality of the current patent system to many entrepreneurs:
My company has gone from being worth over $30 million, to virtually nothing (had a signed letter of intent). I am working 100 hour weeks for free, and we will likely go bankrupt, because the potential buyers know they do not have to buy, when they can just take all the fruits for free. [Why buy a house when you can just move into someone else’s and no judge in the courts will protect the home owner?] The loss of the patent injunction has been catastrophic. The cost of patent litigation is out of reach for small businesses. There is no way to enforce a patent, and if you try, the “killing squads” of the PTAB will make sure you cannot by invalidating the patent. Michelle Lee has made sure inventors pay high prices to get a patent that she can then use the money to fund the PTAB to invalidate the patent she just granted. It is a horrible situation for any inventor when all three of the branches of Government are doing all they can to kill inventors. My recommendation: stop inventing in America. It has become impossible.
I certainly hope that Trump will make things better. If he doesn’t start protecting patents, small businesses will continue to die faster than being born. This will lead to continued job losses and low paying jobs. If he wants to “Make America Great Again,” he needs to start with protecting property rights, and most importantly patents, which create wealth.
Like other issues facing Congressional gridlock, efforts to strengthen our patent system hinge on the involvement of President Trump. Let’s hope messages like the one above cut through the clutter to reach him.