“Eventually Congress will recognize that all the changes enacted to address the overblown patent troll issue has resulted in far more damage to U.S. competitiveness… In the interim, inventors and U.S. companies need to re-evaluate their IP protection strategy.”
In a recent article that was first published in The Hill, I stated that American innovators have paid a heavy price for shortsighted sweeping changes made to address abusive patent litigation. To move its agenda for the last 12 years, the anti-patent lobby has dehumanized patent owners by labeled them “patent trolls” who contributed nothing to society. They created a compelling narrative that these trolls were extorting huge sums of money from hard working U.S. companies, including main-street mom and pop businesses, and that their actions threatened the very fabric of the nation’s economy. This got Congress’ bipartisan attention to “save U.S. businesses from extortionists.”
I was not ignoring that abusive patent litigation was a problem but believe the “reform” far exceeded what was necessary to address the limited problem. The cumulative result of all the anti-patent changes led the U.S. Chamber of Commerce to recently rank the U.S. patent system 10th in the world. Eventually Congress will recognize that all the changes enacted to address the overblown patent troll issue has resulted in far more damage to U.S. competitiveness. This revelation, unfortunately, will take time as the old patent troll narrative is still being cited on the Hill. Senators Chris Coons (D-Del.), Tom Cotton (R-Ark.), Dick Durbin (D-Ill.) and Mazie Hirono (D-Hawaii) have taken a bold step and acknowledge the need for improvements and recently introduced the STRONGER Patents Act (S.1390) to make some much needed repairs to the U.S. patent system. The STRONGER Patents Act is not perfect but it contains many good ideas to begin healing the U.S. patent system.
In the interim, inventors and U.S. companies need to re-evaluate their IP protection strategy. The following recommendations are some ways to hedge against the continued degradation of the U.S. patent system.
1. Re-evaluate your international strategy
Consider foreign jurisdictions as a strategic alternative to U.S. protection. This is not a recommendation to stop seeking all U.S. patents but an acknowledgement that the U.S. has slipped as a global leader of IP protection. For example, software related inventions, that are necessary for every innovative company, currently enjoy stronger protection in China and Europe than the U.S. Future changes in Europe, such as a unified patent court, also show promise for even stronger IP enforcement. China has made great strides in IP protection and over the next 10 years may lead the world in protecting patent rights as Chinese companies continue the migration from manufacturing to innovation. Chinese President Xi Jinping recently stated that IP infringers need to be punished more severely and pay a higher price. Unfortunately, the U.S. has moved in the opposite direction.
2. Evaluate your current portfolio
Take the time to remove U.S. patents that have little business value over the next 10 years. These may include patents in some software areas and business method technologies. Have your counsel audit your portfolio and examine the prosecution records to determine which patents are susceptible to an easy IPR challenge. Consider ex parte reexamination for valuable, but susceptible, patents.
3. Invest more for your key assets (not less)
Too often the reaction to losing portfolio value is to decrease investment in the portfolio. That is the wrong approach. More effort and investment need to be made to identify key assets, perform thorough prior art searches and draft applications/claims that can withstand an IPR petition. Keep a patent application family alive with very diverse claim strategies for these key assets.
4. Hire the best firms
See # 3. Now is not the time to cut budgets or look for the cheapest counsel. A better strategy is to reduce the number of patent applications filed annually and increase the budget per case filed. I used this strategy effectively in the past to hire the best available counsel. I would prefer to have 20-30% less patents in a portfolio but know that I did not cut corners in building the remaining portfolio.
5. Increase Ex parte appeals
The PTAB has been working very hard for the last 2 years to reduce the inventory of ex parte appeals. As Deputy Director my goal for the USPTO was to reach an appeal decision in 12 months (I am happy to say that the PTAB is moving closer to meeting this goal). The APJ’s who decide appeals are also the same APJ’s that decide IPR’s. Although there is no deference given to patents that issue after a successful appeal, I would prefer an indication of the PTAB’s view early in the patent life cycle – better to lose on appeal than in an IPR.
6. Pick the right IPR counsel
Is there a benefit to having litigation counsel perform an IPR trial or should prosecuting attorneys be selected? After all, both disciplines are capable of drafting high quality work product and mastering the applicable art. It is important to remember that PTAB judges are not interested in typical litigation posturing, they want an honest presentation of the art and its proposed application to the claims. As such, consider adding an independent prosecution attorney to an IPR team. A second opinion is worth it. Finally, moot the case before oral argument so that it is not a “litigation closing statement.” The judges really want to discuss technical issues at trial, not simply hear a restatement of the briefs they have studied.