The U.S. patent system is the primary contributor for the U.S. economy. Since the founding of the nation, the patent system has fostered an innovation culture that is directly responsible for making inventions that are more than all inventions accumulated in all major civilized regions in several thousands of years. However, the U.S. has inherent disadvantages in the political system and court systems. The inefficiency in patent adjudication has been used by corporations as an excuse for creating an anti-patent culture that is to make all inventions free for corporations. Corporate lobbying activities and litigation agenda have gradually influenced the government in forming an anti-patent political landscape in the last half a century.
In this anti-patent political landscape, the government treats inventions as commodities, regulate inventing activities like producing goods, treats patents as public properties, and changes patent laws and procedures like rearranging office furniture. After inventors have spent years of hard work, exercised inventive skills, and consumed personal resources to invent and dedicate their inventions to the public, the inventors can only hope that the government would deliver its constitutional promise. However, the government has done everything possible to frustrate the right of patent owners to enforce their constitutional rights. The government has changed rules and laws in prior art scope, invention priority, injunction conditions, litigation venue, patent construction, error correction, enabling disclosure requirements, expanded mental step doctrine, abstract idea doctrine, invalidation procedures etc. to make sure that patent applicants will not get patents, patent applications will be denied, granted patents will be invalidated, survived patents cannot be enforced, patents in suit will get less or no damages, and patent owners are thrown out of court or rewarded with liabilities. The mistreating inventors have reached the highest point shortly after the passing of the AIA. The combined effect of all government actions by legislature, federal courts, and the patent office is nothing less than outright forfeiture of constitutionally promised rewards.
I show by a hypothetical example how this anti-patent movement has become. The AIA provides multiple post-grant procedures for invaliding patents. An issued patent may be challenged for unlimited times. Thus, if a patent with a marginal merit which would be invalidated by 0.5 probability, its survival probability after five times independent challenges would be 0.03. For one hundred such patents, if the Patent Office only hears challenge once, about 50 patents would survive. If each of the patents were challenged five times independently, only about 3 patents would survive. The designers of the invalidation procedures are not aware of this fatal flaw in the common law model, which was developed by Kings in an ancient time. By conducting a simple model study, they should see that successive challenges would result in a bias in favor of invalidation. Unlimited challenges eventually hit a lottery, repetitive dismissal motions will succeed in throwing plaintiffs out of court, and repetitive prosecution of defendants would surely result in conviction. A nation cannot use such a clearly flawed procedure to deliver justice. This kind of patent justice is no justice. It is a patent joke that should shock the world. In reality, the outcome of the above hypothetical example would be worse. Even those three patents would not survive according to hypothetical probabilities because the outcome of each challenge would be heavily influenced by political climate. In this anti-patent time, it must be “right” for patent judges to invalidate a patent. So, patent judges can use unlimited devices from technicalities, no-mercy rules, procedural features, evidence credibility, to personal bias to reach what they think is a right result. When nothing can be used to achieve a result of invalidating patents, they just call apples oranges. No body can see factual distortions in their opinions because they characterize facts in their languages. Many patent board decisions are as worse as calling apples oranges. On top of all, they can use the most powerful weapon: using worldwide references in any combinations. Any patent can be invalidated in one challenge, two challenges, more challenges, and still more challenges. Even after a patent has survived one hundred challenges, more references may be dug out from a graveyard somewhere in a remote country, or translated from rare languages, or manufactured and planted by patent thieves. Now, the patent is finally invalidated because no body can show reference problems. The absolute accuracy ideology is incomprehensible in contrast to the extremely low validity of legal theories and procedures originated from common-law courts. The Patent office must stop invalidation procedure now because the entire invalidation procedure based on NO science violates substantive due process.
This anti-patent political landscape has caused irreparable damages to the public trust in the patent system, where exchanges between inventors and the public under the U.S. constitution are voluntary. When patents become lottery tickets or even liability hooks, rewards are empty promises. On top of all problems, reduced damages awards imposed by courts have an effect of kicking out litigation firms, assertion companies, IP venture funds, insurance companies, and “patent trolls” out of the patent litigation business. As a result, inventors end up with nothing from their decades-long inventive venture. After they dedicate their inventions to the public, they cannot get back their inventions. Such rewards are as unworkable as no-reward-for-inventions in the human histories and are same as invention state-ownership once known in Russian. Given the high amounts of prosecution costs and litigation costs, only a tiny fraction (less than 0.1%) of the U.S. population could afford to make an invention venture. Such a patent system no longer encourages the population to invent and disclose, but rather frighten inventors away. The patent system has become a special government unit for managing corporate product improvements, and patent enforcement has become only a business venture for big corporations.
This anti-patent movement took place at the worse time when the U.S. is facing intensive competition in the world. This is the time when the U.S. experiences in competition inherent disadvantages of low productivity caused by state and federal law conflicts and the court system, while competing nations have increased their productivity dramatically. U.S. anti-patent culture started discouraging innovation activities, while competing nations including China and Japan steadily improved their patent systems and increased rewards for patents. Even Russian added monetary damages as remedies and thus made its patent system more favorable to patent owners. While most nations amended patent law to promote innovation, the U.S. does exactly the opposite. As a result of the U.S. anti-patent movements, the U.S. patent system has limited potential inventors to only a tiny percent of the general population, while the competing nations have expanded their inventor pool to reach more people in their general populations. This fact is reflected in patent filing numbers: China annual patent filing number has exceeded the U.S. figure, with a double-digit annual increment rate. The total number of people who would be inventors in competing nations probably exceeds the U.S. figure by several magnitudes. Rewards by exclusive rights are more deliverable in most competing nations because litigation costs are much lower. In comparison, exclusive rights in the U.S. have become meaningless due to high uncertainty in patent validity, courts inefficiency, and corporate litigious culture. Each of those nations has strengths in one or more distinctive technological fields. By looking at the combining strengths of inventing activities of all competing nations, the U.S. does not have a chance to maintain its current competitive position.
Ignoring this war-losing situation, U.S. corporations still complain about the number of patent disclosures by pushing for absolute patent quality standard and promoting so-called “international standard” etc. The government failed to understand that an international standard affects different nations differently, depending upon technological roles in their economies. A uniform international standard is most harmful to the U.S., less harmful to less advanced nations, beneficial to developing nations, and most beneficial to nations that compete with the U.S. It is obvious that adopting an international standard in patent hurts the U.S. the most. The government still advances corporate interests by trying to reduce the number of patents and invalidating granted patents. Even though it is obvious the U.S. patent system is completely dead and this two hundred years innovation culture is gone, the government has not realized what must be done to ensure that patent system will have inventors and the public will enjoy future inventions. In such anti-patent climate, the government is blind to widespread corporate policies of not negotiating with inventors, open pledges for not suing each other on patents, and price-fixing practices intended to remove the market of patents and depress the prices of inventions. On July 13, 2017, House IP Subcommittee holds another one-sided hearing on bad patents and patent trolls. None of the witnesses pointed out that patent trolls are natural consequences of the judicial inefficiency that must be addressed by improving the court system. The witnesses failed to point out that bad patents comprise only a very small number, their adverse effects are trivial in comparison with the huge contribution of inventions and the underlying innovation culture to the economy. The Congress failed to see that the U.S. is in a war-losing situation, and failed to focus what is really important to the U.S. future. It must tolerate a few bad apples to make the big system work and any attempt to eliminate the few bad apples would surely doom the patent system. Dooming the whole system is what it has done. The unwise actions of government ensure that the U.S. ceases innovative activities and is losing technological competition in all areas including production art, basic research, disruptive technologies, and ground-breaking technologies. The losing U.S. technological position is partially reflected in trade performance data.
By forfeiting patent rights, the U.S. naturally is enjoying a short period of economic boom as expected. Corporations really enjoy benefits from harvesting seedlings to fill stomachs. After this short boom is over, the U.S. will feel the impacts of lost technological edges in all fields. The U.S. will be losing product competitiveness in all areas, losing technological license revenues, increasing trade deficits, losing tax revenues, adding more national debts, seeing more broken roads and bridges, losing tourist business, and diminishing its capacity of addressing problems caused by social unrest, environmental pollution, natural disasters, and epidemic outbreaks. When a day comes that the public needs new inventions to save the nation or the population lives, no inventor will be found, and no inventions will fall from the sky. The lost competitiveness in U.S. exportable products and technologies will lead to loss of the dollar role as the world currency, and its GDP, which contains high portion of junk revenues and extremely high service charges, will collapse. The GDP loss, as rated in foreign currencies, from a changed dollar’s status alone would be more than half of its current figure. I predict that the U.S. GDP can retain at most one tenth of the value in terms of purchase power according to pricing scales used in Asian and BRICK nations.
In making a legislature to secure national future, the Congress should affirmatively recognize the role of the U.S. patent system in making the superpower and critical roles of technologies in competition in the world. The Congress should consider patent costs relative to the contribution of the patent system to the economy and the consequence of shutting down the patent system. Even based on the largest claim that patent litigation (mostly by patent trolls) cost U.S. business $29-$60 billions a year, the overall cost was only less than 0.3% of the whole economy. Certainly far and far than 0.3% of the whole economy could be contributed to the inventions and business opportunities brought about by innovation activities. The Congress should see that any attempt to eliminate this tiny fraction of the patent litigation costs would cripple this whole economy. Adverse impact of wrong fixes is not 0.3%, not 3%, or not even 30% of the economy. Both China and Russian tried inventions-for-public or invention state-ownership policy in recent histories, both nations suffered serious consequences in technological advancement and economic growth. By studying China’s economic performance before it opened door, and Russian economic performance in its inventions-state-ownership era, anyone can figure out how such policy has a terminal impact on national economy. Both China and Russian abandoned free-invention-for-everyone ideology. The U.S. should not have entered into the free-inventions-for-corporations and patent’s public right era.
In addition, the Congress should consider the following facts. First, the benefits from promised patent rewards constitute only a tiny fraction of the benefits that the public receives from all patent deals between inventors and the public. It is a bad policy to mistreat inventors in any case resulting in a loss of a large number of deals for the public. Second, among the public member, corporations benefit the most from the patent system. We should note that most large corporations use thousands to millions of inventions that are originated from the patent system. None of the inventions are free. Third, treating patent right as a public right would result in fewer patent disclosures: this is well reflected in invention accumulation paces in the thousands years of histories of the four major civilized regions in the world. Demanding free inventions means no invention. Treating inventive activities like corporate business will suppress inventing activities. Finally, most importantly, turning patents into lottery tickets and liability hooks dramatically reduces patent values. The reduced damages awards would discourage litigation funds, insurance companies, and venture funds from funding patent litigation. The high validity uncertainty with limited damages imposed by the courts makes patents unenforceable. For all those reasons, patent law must be most favorable to inventors if the government wants inventors to invent and make patent disclosure.
How much the U.S. will get from inventors will depend upon how much real reward it gives. The free-invention concept never worked in thousands years of human histories, and the idea of compelling inventors to invent never worked neither. A sound patent policy must be formulated to provide sufficient incentive to inventors, who are leading economy growth. A sound policy is to reduce patent-eligible standard for patent, eliminate patent uncertainty, abolish inequitable conduct rule, reduce prior art standard, restore the first-to-invent rule, restore injunction as a right, eliminate patent application fees and maintenance fees, reduce or eliminate court fees for patent cases, eliminate no-mercy rule, abolish inequitable conduct defense, criminalize all anti-competitive commercial activities relating to patents, eliminate all common law defenses, pre-empty state regulations in any area relating to patents, and revive invalidated patents. It is the time to study all inventor-hostile cases and statutes to understand how they collectively destroyed the patent system. The Congress should systematically overrule them. The Congress should address all patent laws by using a whole system approach, and must clearly aware that each inventor-hostile statute or court decision intended to fix an isolated problem will discourage other inventors and may result in loss of a large number of critical inventions; using absolute accuracy ideology in patent validity could discourage inventors from contributing their inventive talents but encourage the formation of a harmful culture of infringing patents and stealing inventions; and systematic mistreatment of inventors has a final effect of shutting down the patent system. Inventors are free to walk away from inventing and disclosing.
After the irreparable damages of public trust in the patent system, overhauling the patent system is no longer a feasible option. To continue existing as a powerful nation in the world, the U.S. must put its population back to the inventing business and create a renewed innovation culture, which could reach the entire population. It cannot count on the “miserable system” known in Thomas Edison’s time. Due to intensified competition and critical roles of technologies in competition, America must do far more than what is necessary to turn the dead patent system back to the same “miserable system”. One more thing that the Congress should do is to revive all invalidated patents under the AIA.
The expected litigation expenses would scare all people in the general population. Inventing is no longer a venture for independent inventors, small business and non-profit organizations. Due to lack of realistic revenues to enforce patent right in the current court system, the Congress should consider establishing Patent Infringement Determination Board for determining patent infringement. In light of the current corporate culture of resisting paying for inventions, and the extreme inefficiency of common-law court systems, rewarding exclusive right by providing litigation tickets is no longer sufficient. The problem has reached a terminal stage when the patent damages rewards are so limited. In many times, patent rewards may be insufficient to cover one to three millions of dollars litigation expenses. It must provide a low-cost alternative forum.
The U.S. should consider providing cash rewards to inventors. To counter the corporate culture of infringing patents, rewarding inventors with cash is the only way to attract future inventors. Technologies will not advance unless the U.S. gives definite, substantial, meaningful, and prompt rewards. The only reasonable way to get reward funds is to levy invention usage fees from matured corporations according to their invention usage levels. This is the only solution to solve the sharp conflict between corporate free-invention demand and reality that nobody can make free inventions. In addition, the patent office fee structure should be restructured according to applicants’ usage of inventions. Applicants who only contribute inventions should not be required to pay any fees, but the applicants who are inventions users should pay fees based upon their usage levels of inventions. This fee structure is clearly better than the current fee structure.
One main reason for the U.S. loss in the world trade war is excessively high patent-eligibility requirements. Without any incentive to product incremental improvements, the U.S. will never improve product quality. Therefore, adding protection like a utility model grant is critically important to the U.S. future. Americans can make good products but corporations fail to provide incentives to make small product improvements. This often results in situations where ten small improvements in foreign products make them far more attractive to consumers. Many competing nations including Germany, Australia, Japan, China, Russian (Newly added), India (will add) grants protection for utility models. As far officials of JPO are concerned, 96% were of the view that utility models have played an important role in the economic and technological development, whereas 76% agreed that utility model system was also responsible for fast growing industrialization of Japan in the past. Such protection would be even more important in the U.S. because the patent eligibility standard in U.S. is very high. This leaves a big technological space where no protection is available. No body will spend time to make small improvements when any improvements can be copied and used by anyone. This is precisely why U.S. products could not sell well even if its overall quality and features are better. The U.S. products are full of small imperfections in looks, use configuration, materials, weights and sizes, and durability. An opposing argument might be that an additional protection may burden corporate business. That argument is as absurd as the argument that shutting down the patent system is the best solution to all patent-related problems.
When the nation was foundered, America was innovative in creating the patent system more then two hundreds years ago. In this new era when technology is the key in competition, America must be more innovative in creating a new patent system. Such a new patent system is designed to foster innovation culture that includes all potential inventors. America, as the technological leader, should never have moved backwardly to join so-called international standards to become a follower, but must pull away from the crowd by creating a new patent system with stronger incentives for innovation. America must do anything necessary to build new public trust in the new patent system so that the new patent system will attract the entire population to invent and disclose. It is hoped that those proposed measures would buy more time for the U.S. to fix root problems in conflict state-federal legal system and the court problems.