An article, published March 24th and titled Hard Times For Patent Trolls And Challengers As Courts, Targets Fight Back, is ostensibly about recent failures of the Kyle Bass-backed Coalition for Affordable Drugs at the Patent Trial and Appeal Board (PTAB). As the author notes, March wasn’t a successful month for Bass at the PTAB, losing out on challenges to patents covering Ampyra, a multiple-sclerosis (MS) treatment marketed by Acorda Therapeutics (NASDAQ:ACOR), and Tecfidera, another MS treatment which is marketed by Biogen Inc. (NASDAQ:BIIB)
But the article, which is difficult to read at times because it talks about patent trolls trying to “enforce patents instead of knocking them out,” jumbles the Bass strategy of attempting to challenge what he believed were weak drug patents in a series of inter partes review (IPR) challenges with patent trolls and licensing entities, which are not the same according to the Federal Trade Commission patent assertion entity report. The Forbes article also throws the word “innovation” around in a casual and non-specific way, which is unfortunately all too common.
Right in the second paragraph, however, there’s already an acrid stench of anti-patent rhetoric, which may not be a completely conscious choice on the part of the writer but exists all the same. First, the author calls the business model employed by Bass “innovative.” Imagine that: A business model predicated on eliminating patents is “innovative.” It used to be that earning patents, and not eliminating them, indicated that a company was innovative. Patents used to be a proxy for innovation, now getting rid of patents and challenging patents is considered innovative.
There will no doubt be some that think we are making a mountain out of a molehill, but the way we view innovation in America has changed dramatically. When a product or process worth stealing is created the party that is considered the innovator is the thief and the party that is considered to be standing in the way of innovation is the party that actually invented the thing in the first place. What an entirely screwed up way of viewing the world of innovation!
Merriam-Webster’s dictionary defines innovation in this way: “1: the introduction of something new; 2: a new idea, method, or device: novelty.” Thus, it is rather clear that those from big-tech who rail against inventors who stand in the way of products or services freely being used for their commercial gain are the ones who are misleading the public by incorrectly defining the term “innovation,” conflating it with products or services being placed in the stream of commerce. Innovation is NOT about products in the hands of consumers or services entering the marketplace. Innovation is about advance, period. And those that copy the innovations of others are not innovators, they are patent infringers.
What makes this particular misuse of the word “innovative” truly galling is that this so-called “innovative” organization is financially viable because Bass shorts the stock of the company being targeted for patent elimination through his Hayman Capital Management hedge fund. So patents aren’t particularly innovative, apparently, but the attempt to kill patents for profit is innovative. Unbelievable.
It costs billions of dollars to develop a single successful drug and even just challenging the validity of a patent covering a pharmaceutical can cause the stock to drop, which makes money for Bass when he sells a short call in advance of the stock’s drop in price. The Forbes author goes on to acknowledge that this “innovative” business model is considered “misguided” by some. Others, however, would call it abusive.
It’s along this scatological line of reasoning that the truly disingenuous pigswill begins to pour down from the waste buckets and into the troth it has ungraciously provided for its readers. Obviously, this article was intended to just mention as many patent related buzzwords to capture search engine traffic. How else could you pivot from a discussion of Kyle Bass to a discussion of TC Heartland v. Kraft? It’s not the same type of court at all: one is about the federal judiciary, the other is an appellate board within an agency of the executive branch, which may very well be unconstitutional. And the media narrative surrounding the impact of TC Heartland on patent trolls in the U.S. District Court for the Eastern District of Texas (E.D. Tex.) is a fake news narrative, and that is being generous. Plenty of amici briefs have been filed discussing the impact of trolls in Eastern District of Texas, yes, but even the most ideologically anti-patent Supreme Court Justice, Justice Stephen Breyer, wondered during oral argument why the Eastern District of Texas has any bearing at all on the case. See page 14 of the transcript of oral arguments in TC Heartland.
Of course, that doesn’t stop Forbes from saying that patent trolls will be in trouble if the Supreme Court decides “defendants can pull cases from the plaintiff-friendly Eastern Texas district.” But TC Heartland has absolutely nothing to do with the Eastern District of Texas, or Texas, or the South for that matter. And it has absolutely nothing to do with patent trolls either! Of course, you’d never know that from reading Forbes. In fact, you’d think the exact opposite. If your patent news and information were limited to this Forbes article you’d think the Supreme Court was dealing with an issue specifically relating to the Eastern District of Texas and that the Supreme Court may issue a targeted ruing allowing defendants to pull cases from that court specifically. It is unreal what passes for thoughtful patent related commentary in the popular press.
In TC Heartland, Kraft Foods was the patent owner, and since Kraft Foods is incorporated in Delaware they made the sensible decision to sue an infringer (i.e., TC Heartland) in Delaware. Kraft is not a patent troll and they did not go to some remote, unrelated venue in search of some kind of untoward judicial advantage. Instead, TC Heartland is about a specific legal question that requires a close interpretation of federal statutes governing venue in patent cases. Without getting into the legalese, the question is this: Did actions taken by Congress in the late 1980s overrule a decision of the Supreme Court from the 1950s? TC Heartland has nothing to do with entities uninformed observers may think are abusing the patent system no matter how opportunistic patent hating crusaders wish otherwise.
There are other points in the Forbes article to critique, such as the line drawn that connects Bass’ struggles at PTAB to the patent monetization firm Intellectual Ventures or the fact that IV’s struggles in federal court somehow expose a “flaw” in the company’s strategy. Yes, that’s right, to the minds of the business gurus at Forbes, Bass’s struggles make him “innovative” while IV, an entity that actually deals with innovation, licensing technology, starting up companies and expanding upon already patented innovative technologies are not only not innovative but what they are doing is somehow “flawed.”
If you want to call Bass’ IPR strategy “innovative” fine, even though it doesn’t fit within the meaning of that term as understood in the context of the patent and invention business. But if you are going to refer to Bass as innovative then at least have the guts to acknowledge real technological innovation and stop minimizing the hard work it takes to actually innovate from nothing and come up with a product or process worth stealing in the first place!