Eight months ago I published a fictionalized letter from Director Iancu to the USPTO. The hope of this “daydream” was the new Director would introduce holistic reforms to enhance predictability, transparency, and reliability. These reforms are now underway. Even more importantly, Dir. Iancu has reminded patent system stakeholders what US inventors have given the world and the right way to enhance the system.
The headline issues in “my” letter have been discussed extensively, and I won’t belabor them here. But I will list some, just to acknowledge the blistering pace of a reinvigorated Patent Office:
- Harmonized claim construction standards. This eliminates the frustrating paradox of Schrödinger’s Patents which are simultaneously valid and invalid depending on the forum.
- Transparency in PTAB internal procedures enhancing confidence in PTAB fairness.
- The General Plastics These guidelines lessen “Gang Tackling” and help quiet title, the very essence of reliability.
- Clarity in PTO procedures for determining eligible subject matter. The USPTO’s “Berkheimer Memo” enhances predictability and should aid courts by providing needed guidance.
I do want to call out newly proposed rules for claim amendments in IPRs because this issue defines the raison d’etre of the Patent Office. From “Iancu’s” letter:
People have been asking me about my new job: Are we going to be advocates for a “strong” patent system or a “weak” one? Are we in favor of “good” patents and opposed to “bad” ones? I answer that those questions have no place in this Office. Our ideal is to issue every valid patent applied for – and not a single invalid one.
The US Patent Office – of which the PTAB is a part – issues patents. That’s why it exists. So if the PTAB finds an error in a granted patent, fix it. Maybe that fix renders the patent so narrow it’s worthless in the market. If so, that’s the applicant’s issue. The point is that all the components of the Patent Office should be resources for inventors, not adversaries, working to issue valid patents. As Director Iancu says, “It is a new day at the PTAB!
All these enhancements advance Dir. Iancu’s underlying theme, forcefully emphasized at numerous venues over the last months: Cherish our patent system’s enabling capabilities, and as necessary, propose narrowly-tailored solutions that address actual shortcomings. In other words, ex ante, would anyone have seriously proposed the Alice decision as the most surgical way to deal with abusive demand letters sent to coffee shops?
The internationally recognized expensive nature of the US litigation system with its extensive pretrial discovery process provides a fertile playground for abusive gamesmanship by all litigants:
- Is it abusive behavior when a patent owner sends a 3-paragraph demand letter to a small company threatening litigation if the company doesn’t pay $5,000 for a patent license? Of course it is.
- Is it abusive behavior when a Fortune 50 company disregards entirely a substantive and legitimate notice package from an individual inventor requesting a licensing discussion and says, “sue me”? Of course it is.
Too often, this abusive behavior is conflated with ownership models to deflect attention from the real problems. PR efforts targeting “trolls” have warped stories of threats to mom & pop businesses to cast large companies as the equally helpless victims of these ruthless predators. In both examples above, the real issue is abusive behavior, and that’s what needs to be targeted.
Or as Dir. Iancu recently put it:
Similarly, in our zeal to eliminate “trolls” and “the bad patents” they allegedly use to terrorize society, we have over-corrected and risk throwing out the baby with the bathwater. This must now end, and we must restore balance to our system.
So instead of focusing exclusively on policies that highlight dangers in the system, we should focus on policies that encourage inventors and entrepreneurs. And when we do encounter abuses, we should address them promptly and with narrowly tailored solutions.
The responsibility for ending abuse rests not only with the Patent Office and the federal courts but also with the stakeholders in the patent system themselves. The stakeholders cannot simply complain and lobby for one-sided solutions. They must work together to improve the system upon which they all depend.
For example, the Licensing Executives Society is developing a consensus-based set of best-practices under which patent owners and users can engage in licensing discussions as an alternative to litigation. These standards are voluntary, and companies will be able to seek recognition of their behavior by following these rules. Notably, there’s nothing in the standards that wouldn’t also be required by a judge once companies engage in litigation.
The standards’ core “trade” precisely addresses abusive behavior. Recall the two examples of abusive behavior above. In response, the standard first requires that patent owners wanting to discuss a license have to provide a substantive notice package: identification of infringing products, claim charts, a list of patents, information about the company, etc.
In exchange, the recipient of the notice package is required to acknowledge receipt and to have an initial discussion with the patent owner within a mutually-agreed schedule. If it makes sense for both sides, there are provisions for further discussions and guidelines on what information to swap and how to communicate.
Following these rules eliminates both problems: skimpy-to-ridiculous notice packages and throwing legitimate packages in the trash. It doesn’t matter whether the companies are large or small or whether they’re direct operating competitors or have completely different ownership models. The critical point is that these standards are targeted to prohibit abusive behavior per se.
The US patent system was the envy of the world for generations. It can be again if we’re honest about its shortcomings and address them in direct and balanced ways. The LES Licensing Standards are one example of how well-intentioned actors who know their own industry cold can focus on real problems and address them without unintended spill-over.
Director Iancu has shown us that daydreams can indeed come true if we are all honest about our objective and work to achieve them with a balanced and fair system.
Image Source: Gene Quinn.