A Surreal Endeavor: Asserting Patent Rights in the U.S.

By Meredith Addy
February 15, 2018

A Surreal Endeavor: Asserting Patent Rights in the U.S.I’ve now been at Chicago-based litigation boutique Tabet DiVito & Rothstein for a year-and-a-half, and I’m enjoying working with a team of top-notch litigators helping companies navigate today’s perilous patent waters.

While my patent litigation practice represents both patentees and defendants, I remain concerned about developments in our patent laws that undercut protections for innovators. I continue to believe that the playing field is unfairly tipped to accused infringers.

Asserting patent rights is a surreal endeavor these days. While the statistics on survival at the PTAB are improving, with the percentage of initiated proceedings declining and some patents seeing their claims affirmed, the cost and time necessary for a patentee to claw their way back to the district court—i.e., back to Square One—proves too much for many patentees.

Spending hundreds of thousands of dollars (or more) to fight at the PTAB simply to confirm issued patent claims is pushing many patentees out of the enforcement market. With such oppressive legal hurdles and costs, what good is a patent? For many, it cannot be enforced?

Even when patentees make it to the district court, Section 101 eligibility challenges can put a quick end to a patentee’s campaign.  And, once on appeal, patentees and their counsel must grapple with how to interest the Federal Circuit in patented technology that the district court simply ignored.

One bright spot for me in last year’s battles was the Federal Circuit’s reversal of a Rule 12 dismissal in Thales Visionix v. U.S. and Elbit Systems. I hope we see more such reversals in 2018. The recent decision in Berkheimer v. HP, which acknowledged that underlying factual disputes may be present in a patent eligibility challenge, gives hope.

Since Alice, district courts have invalidated patents as abstract countless times. And, the Federal Circuit affirms over 90% of the time. More than half of these affirmances have been via Federal Circuit Rule 36, which means they are delivered without an opinion. By contrast, the Federal Circuit has reversed a trial court’s Section 101 invalidity determination fewer than ten times since 2014.

Another disturbing trend is that 90% affirmance rate for Section 101 cases also applies to cases on appeal from the PTAB. Federal Circuit review of PTAB decisions for substantial evidence is far more deferential than its purported de novo review of Section 101 invalidations. Hence, the affirmance rate should not be the same for both de novo and substantial evidence review.

The substantial deference being afforded the PTAB is making the Board an increasingly important tribunal, if not the most important and influential one in the patent world.

Innovators are looking for greener pastures.  Just the other day, IPWatchdog noted that: “For the first time since the inception of the Bloomberg Innovation Index, the United States was ranked outside the top 10 in the list, ranking 11th out of the 50 economies in the index after having placed 9th in the 2017 version… .”

Even more recently, the Global IP Center of the U.S. Chamber of Commerce released its ranking of 50 global patent systems. For the first time the U.S. patent system has fallen out of the top 10 jurisdictions. The U.S. sits in a tie for 12th place with Italy.

To reverse these trends, we need to speak up. Merely being advocates for our clients specific issues will not improve these trends. Last July, Judge Michel testified before the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property and the Internet on the damage to our nation’s innovation ecosystem of AIA’s “reforms.” (See this published statement and this supplemental statement.)

Judge Michel argued that, “We have to do something or they’ll go elsewhere to invent and secure protection.” I agree. Alice and inter partes review are a deadly one-two punch for many patentees. Innovators correctly choose to locate where their innovations can be protected. Increasingly, that is not in the United States.

Last year, I worked with several inventor organizations and professors who recognize the need for change.  We filed certiorari petitions and amicus briefs highlighting cases where patentees had suffered in this new environment.  The Supreme Court denied our petitions, one right after the other. Yet, according to a 2016 report from Department of Commerce, IP intensive industries support at least 45 million jobs in the United States, and contribute more than $6 trillion dollars to the U.S. gross domestic product (GDP), which corresponds to over 38 percent of U.S. GDP. I marvel that the Court does not concern itself with protecting this country’s innovation economy.

Although eroding patent values wasn’t the intent of AIA, it is the result. I remain optimistic about the Supreme Court’s upcoming Oil States decision, but I’m discouraged at the Federal Circuit’s refusal to refine Alice and the Supreme Court’s indifference to what has happened in the wake of Alice and Mayo.

I continue to offer perspectives on these issues on my blog, Business De Novo. And in coming months, I plan to talk more frequently to owners, innovators, and attorneys, to learn their perspectives. Please don’t hesitate to contact me if you want to share perspective, or offer a comment below.

 

The Author

Meredith Addy

Meredith Addy is a partner with AddyHart P.C., where she focuses her practice on a unique blend of business and legal strategy. Addy has over 25 years of litigation experience and has handled more than 30 cases before trial courts and argued more than 40 appeals to the Federal Circuit. Addy has held leadership positions at several AmLaw100 firms and is a recipient of many awards and honors. She has testified before Congress to address issues relating to the Federal Circuit and the state of patent law. Addy has been a member of the Federal Circuit’s Advisory Council and a member of the board of directors of the Federal Circuit Bar Association. She is also a founder of the Richard Linn American Inn of Court, which is directed to intellectual property, and she served as its first president. Addy has also been recognized as one of the Most Influential Women in IP Law by Law360. For more information, or to contact Meredith, please visit her profile page.

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 15 Comments comments.

  1. StrongIPRight February 15, 2018 4:39 pm

    A valid snapshot of the state of the US patent landscape today. Hopeful that yesterday’s Aatrix Software ruling by the Fed. Circuit (combined with their recent Berkheimer ruling) are indicative of a trend towards mitigating Alice.

  2. Patent Investor February 15, 2018 11:31 pm

    “Although eroding patent values wasn’t the intent of AIA, it is the result.”

    Actually, I think it was exactly the intent of those who introduced and sponsored the bill, regardless of what they said in discussion leading up to its passage.

  3. Bill Duncan February 16, 2018 12:45 am

    Unfortunately, the day of the small inventor in the US is dead. An issued US patent is not worth the paper it is written on until it has been through CBM/IPR, District Court and Federal court, and even for good patents the outcome is just too uncertain. Small inventors can’t afford this and the large infringing companies know that. My company has 5 infringed US business method patents (the most recent one issued late last year) but contingency firms and litigation funders won’t take them on due to the uncertainty created by Alice. The only one benefiting is China.

  4. Thomas G Erdmann February 16, 2018 8:55 am

    I was awarded a Patent on May 5th 2015. My competitor immediately sued me claiming patent infringement on their patents. What I cannot wrap my head around is that the USPTO examiner reference cites their patents that I am being sued over. If he looked directly at these prior inventions, why would he issue a patent to me?

    I went over this with my Patent Attorneys office thoroughly prior to filing for my own patent on this design. I was NOT infringing.

    If I knew I were infringing, do you think I would have continued on the same path knowing I would be shut down and had wasted time money and reputation??

    So now, hundreds of thousands of dollars later, we are in litigation.

    I have lost faith in the USPTO. There is really no reason to get a patent if you cannot defend it.

  5. Benny February 16, 2018 9:15 am

    “We have to do something or they will go elsewhere to invent and secure protection”.
    That’s drivel. First, the inventor’s home address has no relevance to the patent protection. A sizeable percentage of US patents are submitted by non US residents. Second, protecting my invention outside the US is of no value to me if my market is in the US (and vice versa, of course).

  6. Paul Morgan February 16, 2018 10:16 am

    This article does note that Sup. Ct. decision are making patent assertions more difficult. But if it was primarily due to IPRs the number of new patent suits filed would have already dropped significantly a few years ago. But the largest drop has occurred since the Sup. Ct. decision effectively removing most new patent suits from E.D.TX. by overruling the Fed. Cir. decision that had mooted the patent suit venue statute.

  7. angry dude February 16, 2018 12:42 pm

    “Although eroding patent values wasn’t the intent of AIA”

    You lost me on this

    Eroding patent values was the EXACT intent behind AIA

    It was all carefully planned and generously financed by Google & friends in Congress, Scotus and Obama’s White House

    And now it’s too late to undo the damage or even reverse the trend

    Trump may hate google “dont be evil” punks and that freak bezos but he will never allow those stocks to fall – too much damage to stock market, 401ks etc etc

    Too late

    The doc said ‘to the morgue’ — to the morgue it is!

  8. Anon February 16, 2018 1:39 pm

    angry dude,

    Thank you once again from the Efficient Infringer group for advocating on their behalf.

    As to feelings from those of use still giving the good fight, help or get the F out of the way.

  9. Roger Heath February 16, 2018 4:29 pm

    Benny #5

    In fact I carefully consider skipping a U.S. patent altogether. We can’t really “produce” the products in my designs because manufacturing is crippled or expensive. So the U.S. will still be buying my product – without subjecting me to their abuses but losing the best of my benefits to the economy.

    The efficient (U.S.) infringers that would copy the product could be limited to the U,S. market without the opportunity to take rapid fire shots at me.

    With unrestricted copying the U.S. market goes to the cheapest lowest quality knockoffs for the poor (the wealthy can always buy the best, which keeps the best more expensive and less available to the poor).

    So, drivel? More like disaster.

    But feel free to tell me how I am wrong. I don’t want to make mistakes.

  10. Paul Morinville February 17, 2018 3:52 am

    Benny @5. “First, the inventor’s home address has no relevance to the patent protection.”

    But the location of the patent matters. If you file in China, you can protect your patent there and you can get funding there.

    There is no patent system in the US, so what difference does it make if you patent it here. You cannot protect it here. Don’t file here. File in China and your filing in China will be the first to file, so nobody can patent it here. There is no wasted money filing here and no protection, but there would be none anyway.

    China is a much larger market. F the US. It is bought by Google, et al. There is no point in filing here.

  11. angry dude February 17, 2018 12:35 pm

    Paul Morinville@10

    China ???

    Seriously, dude ?

    Why would a middle-aged American-educated English speaking married with children living in his own house engineer/inventor want to go to China ?

    So no

    American inventor will not go to China

    Instead he/she will just stop inventing and start playing corporate (in my case government) ladder game aka bs politics

    they wanted it ?
    they got it
    amen

  12. Thomas Erdmann February 17, 2018 1:07 pm

    Sorry Angry Dude, Paul is right. Even if you have Patent Protection, you really don’t have protection unless your wealthy. And then, you are subject to our broken court system. The USPTO. Needs a complete overhaul. They had out Patents like tic tacos. And that will be the down fall of inovation. Why develop if you are just educating your competitors.

  13. Roger Heath February 17, 2018 3:47 pm

    Angry Dude #11

    I suppose that filing, rather than going to China, is sufficient. Inform me if otherwise please. Repercussions (legal or otherwise) of avoiding U.S. IP submission by citizens are not readily discussed.

    There are a lot of other treaty countries to file in as well – not going to move there either.

    Creative problem solutions are natural to a talented inventor – thus the inventing.

    “Ladder games” are the anathema that sucks the life out of … … life.

    Clearly “they wanted it”. Better that they choke on it, than choke us with it to perpetuity.

    If one must “go there”, then someone needs to organize a group business package for regular IP trips abroad. Unless someone ex-pat’s at least some of the money comes home to the U.S. (but none of the glory). Let that hit the news.

  14. staff March 20, 2018 11:51 am

    ‘claw their way back to the district court’

    We agree. Any law which denies our right to a trial by jury, or appreciably diminishes that right must be struck down. These post issue proceedings can cost us upwards of $1M. We don’t have the cash so we end up defenseless and lose by default. So that’s justice?? The unfairness is mind numbing.

    One inventor while asserting a patent against large infringers ended up in one such proceeding. Lacking any alternative he defended pro se and after a more than one year struggle lost the patent he had worked for over 10 years to obtain. In an interview at the PTO for that proceeding as he signed in at the desk there was another party in a separate proceeding who had at least 5 attorneys representing them. So much for a level playing field. This is America??

    For inventors the American patent system is largely rubble. We can’t get patents and when we surprisingly do we cant keep or enforce them. For us the patent system is a sport of thieves, allowing our large competitors to rob and crush us.

    For our position and the changes we advocate (the rest of the truth) to restore the patent system, or to join our effort, please visit us at https://aminventorsforjustice.wordpress.com/category/our-position/
    or, contact us at aifj@mail.com