At least $17 million. That is what my Bunch O Balloons patent has cost so far. It could grow to $50 million. Yes, we are talking about water balloons, not smartphones.
How can this be? Because the patent grant issued by the U.S. Patent and Trademark Office means nothing to infringers like Telebrands and Walmart. They simply ignore the patent and rush to take over the market with their knock-offs (Balloon Bonanza in 2015, Battle Balloons in 2016, and Easy Einstein Balloons in 2017). Then they use those revenues to hire attorneys and experts to say the patent is invalid. If the patent owner lacks deep pockets or good lawyers, his patent will not survive. If he does have access to infinite funds, he has about a 5 percent chance of survival thanks to the America Invents Act (AIA) and the USPTO’s implementation of the Patent Trial and Appeal Board (PTAB).
Fortunately, sales of the original Bunch O Balloons have been sufficient to maintain the legal fight. Zuru, the exclusive licensee of my patents, has done an outstanding job producing, marketing and distributing the original Bunch O Balloons. They have cooperated in defending the challenges to the patents brought by the infringers. We have mountains of objective indicia of non-obviousness, including recognition as best selling toy and an admission of copying by the infringer: “[t]his is only the first proto so assume this will have 37 filler rods and balloons…exactly like the original ‘Bunch of Balloons.’” Every fact is in our favor. It is the most cut and dry patent infringement case imaginable. But the outcome is uncertain due to the deteriorated condition of our patent system.
While the District Court for the Eastern District of Texas (my home district) has provided some relief in the form of preliminary injunctions against the infringing products, it is expensive and untimely. For example, one of the preliminary injunctions cost $1 million in legal fees, $4 million for bond, and took 9 months to obtain. Each year, Telebrands reboots with a minor change to the design – rinse and repeat. We won our third preliminary injunction back in May of 2017, but today Walmart is still selling pallet loads of the Easy Einstein knock-offs.
The $17 million investment would have secured my patents by now, except for the PTAB. The PTAB division of the USPTO hears inter partes review (IPR) and post grant review (PGR) challenges to issued patents. These procedures were created under the 2011 America Invents Act, ostensibly to efficiently remove defective patents that were mistakenly issued.
Instead, the PTAB simply encourages infringers like Telebrands to double down on the expense of litigation, rather than acquiescing to the adjudication by the District Court. Here, there is no service to the public by reviewing and expunging defective patents. It is nothing more than a cheap “get out of jail free” card for the infringer, a big second bite at the apple.
The USPTO has issued six patents for my invention. The primary examiner considered over 150 references of prior art, over 100 which he found with his own search. Multiple officials took part in the examination including two different primary examiners, three different supervisor examiners, one or more training quality assurance specialists, and a Technology Center Director. The patents were entirely prosecuted under the AIA and in light of the Enhanced Quality Initiatives of former USPTO Director Michelle Lee. The USPTO was aware of, and considered the validity challenges of, the earlier patents that were ongoing during examination of the later patents. Bottom line, these patents were rigorously and thoroughly examined by competent officials of the USPTO – they were not mistakenly issued!
But that does not matter to the administrative patent judges (APJs) of the PTAB. They determined that all claims of my first patent were “unpatentable.” Contrary to the applicant, examiners, the district court, the Court of Appeals for the Federal Circuit, and every child in America, the PTAB held that one of ordinary skill could not understand the phrase “substantially filled with water.” In the PTAB, it matters not whether the actual infringer understood the term or whether they copied the original invention without any regard for the patent. As a result of this aberrant ruling by the PTAB, the first trial against Telebrands and their Balloon Bonanza copycat has been postponed indefinitely. If the PTAB is upheld on appeal, the infringers will avoid liability for all their 2015 sales – tens of millions of dollars worth.
Recently the PTAB declared the claims of the second and third patents to be more likely than not obvious in light of a combination of Saggio and Donaldson. These are two of the references the examiner considered, as well as the District Court. The PTAB denied my motion to reconsider institution which, in part, asked if it is obvious, then why has nobody done it before? Why were water balloons filled one at time and tied with a knot for 63 years prior to my patent? Since the panel refused my rehearing request, I have to come up with another half-million dollars to re-prove that my invention warrants a patent. I have to endlessly prove over and over again that that I have an invention – there is no end in sight.
I am very thankful that my invention has been such a success. I am thankful for our historic patent system that gave me confidence to try. I am thankful that I am still in the fight, and even have hope to one day actually secure a patent that effectively protects my invention. But the risk is too great. I would not do it again, and would not recommend it to other inventors. What can I tell someone who has an invention and is preparing to scrape together $5,000 to $10,000 to file a patent application? Or quit his day job to launch a business around an innovative product? We can deal with the design risks, the marketing risks, the financial risks, and all the other challenges that set inventors apart – but that sealed and signed patent cannot be another gamble. We are crazy, but we are not stupid. If a patent’s costs are in excess of $17 million, and it still is not secure, how can we innovate?
US Inventor Rally/Protest on August 11 at USPTO Headquarters
Please join me and US Inventor on August 11 at the USPTO in Alexandria, Virginia. We will be supporting the work of the USPTO by presenting the first annual A1:8 Examiner Awards. Examiners will be honored for their contributions to “securing to inventors the exclusive right to their discoveries” according to Article 1, Section 8 of the United States Constitution.
Award categories will include:
- Best rejections
- Best interviews
- Best amendments
- Best prior art search
- Best notice of allowance
- Best all around examination
Patent owners/applicants are encouraged to submit nominations here.
Following the award ceremony there will be a peaceful protest demanding an end to the PTAB. Details and registration for the event are at http://usinventor.org/rally.