Past as Prologue: Is there Hope for America’s Patent System?

By Gene Quinn
May 17, 2017

Several weeks ago I published The Top 3 Reasons America’s Patent System is in Decline. While those familiar with America’s patent system could likely rattle off more than three reasons, I chose only three because if there were a reversal of fortunes on those three points America’s patent system would be immediately begin to flourish. They were: (1) the Supreme Court’s decision in eBay v. MerchExchange; (2) the Supreme Court’s decision in Mayo v. Prometheus; and (3) the creation of post grant administrative challenges at the Patent Trial and Appeal Board.

If and when these three issues are address there will be reason to celebrate the U.S. patent system. I don’t expect that will be anytime soon, but we do need to remember that we’ve seen America’s patent system in near complete collapse before. In the 1960s and 1970s the Supreme Court never saw a patent that was valid, which lead to the creation of the United States Court of Appeals for the Federal Circuit. In the 1970s and early 1980s there was great concern that Japan would win the technology future and America would become an also-ran in the burgeoning technological revolution, but that never happened.

President Ronald Reagan, conservative icon, was a supporter America’s patent system. It was President Reagan who demanded a build up of the USPTO as part of his overall strategy to make America great again and compete with the Japanese for technology dominance. It was President Reagan that demanded the Patent Office push down unacceptably high pendency rates, getting the average pendency down to 18 months. President Reagan accomplished this goal by reaching a compromise with Congress. According to then head of the USPTO, Gerald Mossinghoff, President Reagan would commit to reducing patent application pendency if “Congress would enact a meaningful increase in user fees, which the USPTO could retain…” See Ronald Reagan, The Intellectual Property President (an essay in Reagan Remembered).. Thus, President Reagan did exactly the opposite of what politicians have been doing over the last generation. President Reagan did not raid the USPTO coffers, instead he reinvested in the USPTO so they could do their job.

As a result of the shifting technological dominance to Asia by the end of the 1970s, particularly to Japan, President Reagan also appointed a Presidential Commission on Industrial Competitiveness to determine why America was losing its competitive edge. That Commission was headed by John Young, then CEO of Hewlett Packard, and included numerous leaders of American businesses. The Commission Report, which was issued in 1985, analyzed a massive migration of technology and industry from the United States to Germany, Japan, Korea and other parts of the globe. The Report concluded that the lack of meaningful intellectual property protection was a principal driver of that outflow of technology and industry, and that corrective action was required. See A Short History Lesson on Patent Policy.

With respect to intellectual property, the 1985 Commission Report explained:

Since technological innovation requires large investments of both time and money… Research and development are always risky. If the developers of a new technology cannot be assured of gaining adequate financial benefits from its commercialization, they have few incentives to make the huge investments required.

Today, the need to protect intellectual property is greater than ever. A wave of commercial counterfeiting, copyright and design infringement, technology pirating, and other erosions of intellectual property rights is seriously weakening America’s comparative advantage in innovation….

Those same words could be spoken with equal force today.

 

Future of America’s Patent System

The problem today, however, is two-fold: (1) The Federal Circuit, which was created in order to bring stability to patent law, is among those that are destabilizing patent law; and (2) President Donald Trump has yet to announce any clear vision that acknowledges the need for government to promote innovator friendly policies.

The entire reason the Federal Circuit was created was to harmonize patent laws across the United States and act as the chief patent appeals court in the United States. So if the Federal Circuit declines to provide stability in uncertain, unstable and evolving areas of the law the Court is not living up to the reason it was created. If the Federal Circuit does not recognize that patents are important property rights that must be presumed to be valid and adjudicated to be valid in all but the most extraordinary cases, then the Federal Circuit has become no different than the Supreme Court and other federal courts from the 1960s and 1970s, which is a real concern.

The problem associated with an absence of leadership from President Donald Trump on the issue of patents and innovation policy is difficult to understand. For reasons that are unknown, President Trump has allowed Obama Administration USPTO Director Michelle Lee to continue as Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. While it is very difficult to get high-caliber candidates interested to serve at the end of a second Presidential term given the limited amount of time there would be to accomplish anything meaningful, we are at the beginning of a new term now where there has been a tremendous optimism associated with the possibility of a new, pro-inventor, pro-innovation policy coming from the Administration. While it is openly known in DC circles that numerous A-List candidates were not interested in the position during the second Obama term, today there are numerous high-caliber, eminently qualified candidates who are interested in the position. There are also many who have interviewed for the position – some rumors putting the number interviewed as high as 16 candidates – yet the President and Commerce Secretary Wilbur Ross continue to rely on an Obama appointee who has a track record of supporting policies preferred by those who do not respect the patent rights of others. To call this confusing seems insufficient.

Indeed, Lee has in her speeches while Director used the famous quote from Thomas Jefferson often used by infringers to justify the stealing of intellectual property as victimless. Jefferson wrote: “He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.” To patent owners this fundamental disrespect of rights, and view that taking really takes nothing at all, is difficult to accept coming from the Director of the Patent Office. What Lee and others do not seem to appreciate is that inventors have been besieged by bad legislation, bad judicial rulings and an Executive Branch that for the last decade believed patents are the problem.

With all due respect to Thomas Jefferson, he is wrong, and so too is Michelle Lee. When you take from me you do lessen my right. If you take from me and I do nothing about it, whether that is my choice or because the law is not there to assist me, how can I ever expect anyone to do anything but take from me? Why would you pay me for my rights if willful infringers ignore my patent rights and take what they want and don’t pay? And if no one is going to pay then how can innovators make the business of innovating worthwhile enough to innovate? It should be no great mystery why China is outspending the U.S. in late stage innovation. China respects patent rights and gives patent owners meaningful remedies for infringement, the U.S. no longer does.

As we know from our experience in the 1980s, a strong patent system was the primary driver for the economic achievements that unleashed American enterprise and allowed the United States to compete on the world stage. It worked in the 1980s to address what was a similarly difficult time, and it will work today. Given the confluence of events we may be seeing history repeat itself. Of course, that will require real leadership and cooperation from a Federal Circuit that was created to address this very problem. It will also take real leadership from someone with the vision of President Reagan, and an executive team that embraces innovators as the solution.

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 14 Comments comments. Join the discussion.

  1. Night Writer May 17, 2017 1:08 pm

    >President Ronald Reagan, conservative icon, was a supporter America’s patent system.

    I think Carter is the one that started the strengthening of the patent system as a cure to the great malaise. I think Carter is the one that proposed the CAFC, but Reagan actually signed the Bill that created the CAFC. I am so old that I remember those times.

    The answer to your question is no. We are all doomed. Our next president will wear epaulets and medals they didn’t earn. Google, Microsoft, Amazon, and Apple will become international corporations that don’t care about the USA–oh wait, didn’t that already happen? And, there won’t be any new episodes of Better Call Saul.

  2. SMK May 17, 2017 3:01 pm

    It’s interesting if Lee were to read just a little past the quote she likes from Jefferson.

    “Society may give an exclusive right to the profits arising from them, as an encouragement to men to pursue ideas which may produce utility …”
    Thomas Jefferson to Isaac McPherson
    13 Aug. 1813

    Yes, the spread of ideas should be free, and disclosure is a vital part of the patent process. However, one should only be free to create your OWN idea from MY idea, not to wholly appropriate it for your own use and call it yours. That’s the true concept of lighting your taper from my taper, to borrow from the metaphor in TJ’s original quote.

  3. angry dude May 17, 2017 4:27 pm

    to the morgue doc said…

    and no new magic pills for those senile congress/scotus critters

  4. Edward Heller May 17, 2017 5:07 pm

    Idea:

    We need new legislation that provides that a patent can undergo only one post grant review (PGR, IPR or CBM) or reexamination. Just one.

    After that review is over, by legislation, provide that a patent cannot be challenged by anyone (or their privies) that could have joined such post-grant review but chose not to, on grounds that could have been raised in such a review.

    Further provide that after such a post grant proceeding has confirmed the validity of the claims at issue, if infringement is more likely than not, a court “shall” issue both preliminary and final injunctions, subject only to public interest factors.

    Finally, allow a patent owner to invoke an IPR against an infringer who asserts invalidity to take advantage of the broad estoppel.

  5. Anon May 17, 2017 5:40 pm

    Mr. Heller,

    The artificial limit of “just one” is not enough and too much at the same time.

    It is not enough to address the fundamental legal issues being discussed as to the gamut of the full bundle of sticks making up the property right, and it is too much to constrain the attack to one single attempt – in the manner of who decides who gets that single attempt, how much gets to be spent, and what controls would be needed to prevent a less than bona fide challenge.

    Partial measures will not work.

  6. Gene Quinn May 17, 2017 6:47 pm

    Anon & Edward-

    I agree with Edward. We already have joinder provisions. We know how to extinguish rights in other areas of the law. In bankruptcy, for example, if someone files all others who have any rights must appear or lose those rights. I see no reason why a single post grant challenge should not be enough. At some point a property right needs to quiet. If title never quiets then it isn’t a property right. We need to get back to patents being property rights!

    -Gene

  7. Invention Rights May 17, 2017 7:32 pm

    Edward, good plan provided either 1) the review occurs prior to issuance or 2) invalidation is appealable de novo to the district court. Must not allow the political branch even one shot at taking a property – they will abuse it.

  8. Anon May 17, 2017 8:16 pm

    Gene,

    Your joinder model is vastly different from Mr. Heller’s, and I might consider such a “join or forever hold your peace” that would provide true quiet title.

    That being said, I have also seen “models” that mimic the statutory challenge periods found in trademark law. I bring that up because there is a fundamental difference in the Constitutional directives for each of trademarks (Commerce Clause) and patents (Patent Clause). I would pont out that just because other and different sections of laws have “joinder” provisions, such may not fully account to what the property at stake is. It remains key that patents as property are a negative right of exclusion explicitly “live” for an extremely short time period (as property goes).

    In order to foster others to actually take notice of what the Office publishes (a key part of its mission to promote, as the advertising meaning of that word indicates), I would also make the window of any such suit be extremely short – say six months after grant.

  9. David May 17, 2017 8:29 pm

    Would ex parte reexamination satisfy this proposed one-and-done model?

  10. Gene Quinn May 17, 2017 8:46 pm

    Anon-

    It sounds like our positions are not far off, if at all.

    Trademarks, which can theoretically last forever, allow for the filing of incontestable status after 5 years. Something shorter than that seems certainly appropriate for patents given the shorter duration. I don’t know whether 6 months is the right number, but I think challenges should be funneled into PGR and away from IPR. One and done. Then quieted title. As with trademarks I’d be willing to consider fraud on the Office as an ongoing challenge.

  11. Anon May 18, 2017 7:57 am

    As with trademarks I’d be willing to consider fraud on the Office as an ongoing challenge.

    Agreed – but I do not think that there is anyone out there suggesting otherwise.

    Also, I am not sure that I see why you are distinguishing PGR and IPR.

    After all, IPR is merely one form of PGR.

  12. Frank Lukasik May 18, 2017 8:02 am

    Stop expiring Patents at 4, 8, or 12 years for non-payment of Maintenance Fees (Anon 2).

  13. Paul Cole May 18, 2017 8:58 am

    As Dante wrote in the 14th century in the Divine Comedy: “Abandon all hope, ye who enter here.”

  14. Raymond Van Dyke May 18, 2017 6:36 pm

    I wrote on the gradual destruction of our patent system on Gene’s blog recently. http://www.ipwatchdog.com/2017/03/09/silent-spring-patents/id=79319/ The public is oblivious to this destruction – and even cheer it to some degree!

    Goggle and other large corporations don’t want to foment competition, and want to squelch inventors who dare to combat them for infringement. Efficient infringement is the order of the day.

    The last dire state of patents, less than 40 years ago, on the cusp of the computer, Internet and biotech ages, demanded action, and dramatic action was taken in 1982. Strong Federal Circuit Judges like Rich, Rader and Michel marshalled the court to protect innovation and created patent jurisprudence. They did their job too well it seems, and the great unraveling is in process.

    Now, hundreds of millions in lobbyist fees and outright “purchase” of some Congresspeople, along with the ongoing condemnation of innovators by the clueless press, have demonized patentees as scammers, and the patent system as corrupt.

    If only Abraham Lincoln were alive today! He had a lifelong passion for technology and spoke extensively about innovation and the patent system. He said that in “the world’s history, certain inventions and discoveries occurred, of peculiar value, on account of their great efficiency in facilitating all other inventions and discoveries. Of these were the arts of writing and of printing, the discovery of America, and the introduction of Patent laws.” Patents are THAT important to society! Our society!

    We are all witness to the decline of patents, and the silencing of innovators. (Winter is coming;) Just look to the increase in trade secret laws of late. This could not come at a worse time – and not just for trading purposes. The emergence and convergence of new technologies have created a cornucopia of invention – and Americans are at the forefront of this revolution! Alas, most of these new intangible innovations are now nonpatentable – by virtue of a Supreme Court seemingly mired in 18th Century Industrial Revolution thinking, and the creation of corporations that exert their influence to the detriment of a patent system created by our Founders for all – then individuals and small companies since corporations, as now envisioned, were not around.

    Our Founders inherently democratized our patent system, making it available to all – not just one with connections or great wealth. This undoing of our Founders’ intent is shameful, and will bring ruin to our country in ways we cannot measure. It is the American spirit of innovation, the better mouse trap, that is being undone.

    Ray

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