Posts Tagged: "patent system reform"

HTIA’s letter argues that venture capital funding and startup activity have grown in recent years, further proof of their view that the federal government has properly pursued patent system reforms. Using data tools available through PwC MoneyTree, the HTIA cites data indicating that venture capital investments in the U.S. have increased from $32.8 billion in 2012 up to $61 billion in 2016, representing an 86 percent increase in that time. Of course, the letter easily lets go of the fact that the graph shows that venture capital funding actually dropped significantly by about $15 billion between 2015 and 2016 alone, a point the HTIA’s own data graphs prove. As for startup activity, the HTIA collected data from the Kauffman Index of Startup Activity to make its argument that startup activity has increased by 194 percent between 2012 and 2016. Again, there’s no acknowledgement of a concerning recent data point, here the absolute stagnation of new startup activity between 2015 and 2016.

Congress sent H.R. 5, the House-passed Regulatory Accountability Separation of Powers Restoration Act, to the Senate’s Homeland Security & Governmental Affairs Committee on January 12, 2017. When enacted it will overrule Chevron deference. This enactment will therefore shine the disinfecting sunlight of appellate review where it has not gone before…. Patent practitioners need to realize that the Act will eliminate stare decisis over earlier court approvals of specific Patent Office rules. First, after the Act, it will be an open question whether the Patent Office may use BRI within IPR proceedings. That is because the law will have changed over what deference a court must give Patent Office regulations. In Cuozzo, the Court cited Chevron in analyzing whether rulemaking imposing BRI on IPR proceedings constituted “a reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office.” Cuozzo, 136 S. Ct. at 2144. After walking through a collection of policy rationales that made BRI seem “reasonable” to the majority, the Court concluded by explicitly noting that the “Patent Office’s regulation, selecting the broadest reasonable construction standard, is reasonable in light of the rationales described above. . . .” Id. at 2146.

The PTO then drifted towards being a very user unfriendly operation that has become a center of suspicion and cynicism. I do not think Director Lee necessarily played a direct role in this, i.e., guided this trajectory with policy objectives, but rather was present when it occurred. I do think, however, that politics and branding may have played a role. Kappos had been perceived as too “pro patent”; after all, he hailed from the PTO’s largest customer, IBM. Then Lee became the “anti-patent antidote”; hailing from a patent system foe, Google.

Patent offices are failing to keep up with the growth of the innovation economy and the resulting increase in patent applications. Unfortunately, the problem could easily get worse in coming years. Many patent offices apparently have yet to process applications from recent years, when huge increases in applications have occurred. It’s a problem that threatens to undermine the global patent system, but what’s both encouraging and discouraging by turns is that it’s largely a basic problem of good governance. Many of the solutions to the problem are relatively straightforward. They require the application of sufficient resources and a willingness to hire an appropriate number of examiners and share work between patent offices. These solutions are a matter of political will and effective management, rather than complex policy. Some countries have shown the will to turn things around, and we hope others will follow.

The information the FTC has been collecting regarding patent assertion entities is extensive. Along with standard corporate information, the FTC is making a survey of each patent in PAE portfolios going back to 2008 to investigate the date of patent acquisition, the patent’s maintenance fee status as well as the assertion history for all patents upon which the PAE has attempted to enforce its rights. Firms are also being asked to describe their business model, the methods used to organize their patent portfolios and the aggregate costs of patent acquisition and assertion. The FTC has sent information requests to 25 PAEs in order to build its evidence.