One of the questions that gets asked this time of year, when the world is busy flipping the calendar from one year to the next, is “What are you looking forward to in the new year?” For patent owners operating in the U.S., however, it may be better to ask, “What are you looking ahead to in 2018?” Looking forward would seem to denote a sense of optimism and such optimism has been in short supply among those in the tech space who don’t have the deep wallets to withstand the costs of pursuing infringers, including those costs incurred by the efficient infringer cartel’s use of the Patent Trial and Appeal Board (PTAB).
One thing that U.S. patent owners should be looking ahead to is the next iteration of the U.S. Chamber of Commerce’s IP Index. Given the lack of progress on key weaknesses noted in the Chamber’s IP index released in January 2017, it would be very surprising if the United States’ system of patent rights doesn’t slip further from its 10th-place ranking after having been 1st-place in every previous edition of the IP index. Those key weaknesses include the country’s patent opposition system which adds substantial costs and uncertainty to patent rights and a narrow interpretation of the patentability of inventions in the biotech and computer sectors. Thanks to the effects of recent U.S. Supreme Court jurisprudence in TC Heartland LLC v. Kraft Foods Group Brands LLC, it wouldn’t be surprising to see restrictions in proper venue for patent plaintiffs cited as another developing weakness to our system, especially in light of a recent Court of Appeals for the Federal Circuit decision which found that SCOTUS’ decision in TC Heartland changed controlling law, enabling retroactive motions to transfer venue for defendants.
Patent owners should also be looking ahead to see what the fallout will be from the changing Republican leadership at the U.S. House of Representatives after the retirement exodus which included announcements from more than two dozen Republican representatives who will not seek re-election in 2018. These retirements include a couple of key Republican players who have been instrumental in pushing patent reforms through Congress in recent years. In early November, reports indicated that Rep. Lamar Smith (R-TX), chairman of the House Committee on Science, Space, & Technology and co-sponsor of the Leahy-Smith America Invents Act (AIA) of 2011, had announced his retirement despite a strong re-election result in the previous cycle. Within a week of that announcement, Rep. Bob Goodlatte (R-VA), chair of the House Judiciary Committee, announced that he would also retire from the House; like Smith, Goodlatte’s re-election campaign funding for the 2018 cycle was being outpaced by a rival prior to the retirement announcement.
At first blush, these retirements might seem to give patent owners reasons to be optimistic. After all, the Leahy-Smith AIA enacted the PTAB, an agency which renders defective more than 90 percent of patents challenged through validity trials. As for Goodlatte, he had made additional patent litigation reforms a priority for his agenda during the 115th Congress and he was a champion of the Innovation Act, a bill which would have increased the risks of enforcing patent rights and chilled investment into important fields of technology. Of course, there’s still one very important player still in the field of Republican House leadership: efficient infringer ally and patent troll Rep. Darrell Issa (R-CA), currently the chair of the House IP Subcommittee. He’s an individual with an important position in the U.S. patent system who has gone on record stating that all patent plaintiffs are patent trolls. He has used his political power to attempt to influence at least one member of the independent federal judiciary in a way which prompted a scathing response from the American Board of Trial Advocates (ABOTA). In one House IP Subcommittee hearing held this June, he openly guffawed at the reality that China is pursuing a more tolerant patent policy than the United States. If the leadership void among House Republicans leads to Issa achieving an even more powerful position, smaller players in the U.S. patent system should be looking ahead to stay on top of patent system reform legislation which Issa will undoubtedly pursue.
One thing that patent owners may be able to look forward to in 2018 is growing support for stronger patent enforcement rights among conservative political groups. An open letter penned in November by 16 leaders from conservative groups noted that the Supreme Court’s upcoming decision in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC will be crucial for protecting patents as fundamental property rights. Many conservative leaders are concerned that a decision in Oil States supporting the patent validity challenges available at the PTAB would continue the stripping of private rights as was seen in 2005’s Kelo v. City of New London, a case which upheld a Connecticut town’s seizure of private property through eminent domain for sale to private developers which the Court found did not violate the takings clause of the Fifth Amendment. If the Court decides to side with Greene’s Energy Group and find that the PTAB’s ability to extinguish property rights in a non-Article III forum is constitutional and not in violation of the Seventh Amendment’s guarantee to a jury trial, U.S. patent owners will likely be looking ahead towards the further disintegration of their private property rights.
A decision in Oil States in favor of the efficient infringer cartel would likely only increase their lobbying efforts in Washington, doubling down on the poor rhetoric offered by representatives of the High Tech Inventors Alliance (HTIA). The HTIA includes a strong contingent of efficient infringer firms and it is publicly represented by general counsel John Thorne, an individual who had pursued a legal strategy of patent acquisition for the extortion of valuable property through legal threats while serving as senior VP and deputy general counsel of Verizon Communications, activities which would have likely resulted in a different company being branded as a “patent troll.” Thorne has also publicly misrepresented the views presented by a book on American administrative law to the point that the author of that book came out with a public rebuttal of Thorne’s statements.
Indeed, if there is anything that U.S. patent owners can truly look forward to, it may be the better prospects they face under evolving patent law in China. That country’s growing appreciation of intellectual property was in full focus last summer when President Xi Jinping commented that “IP infringers will pay a heavy price” at an important Chinese national economic forum. Through 2017, China’s federal government actively worked to address key weaknesses noted by the U.S. Chamber of Commerce’s IP Index, including historic levels of IP infringement, a lack of adherence to international standards on IP laws as well as the ability of IP holders to secure adequate remedies for IP infringement. So even if the U.S. patent system’s ranking slips even further, as many expect, China’s system seems to be improving to the benefit of foreign IP owners. Although the World Intellectual Property Organization (WIPO) likely won’t release updated statistics for 2017 until December, it wouldn’t be shocking to see patent applications at China’s State Intellectual Property Office (SIPO) increase past the record 1.3 million applications filed during 2016.