The failed PTAB experiment has been a colossal mistake

By Paul Morinville
September 15, 2017

The five year experiment of the Patent Trial and Appeal Board (PTAB) is a colossal mistake. It is a failure to inventors, startups, early stage investors, job creation, economic growth, our national standing, and most importantly, our national security. The extraordinary damage of the PTAB on so many levels cannot be overstated.

I’ve always believed that it’s okay to make a mistake. A mistake can be corrected. But the real sin is ignoring that mistake and watching it become a disaster. Congress made a huge mistake in creating the PTAB. If Congress ignores it, it will absolutely become a national disaster. And, we are on the brink of that national disaster right now.

The America Invents Act (AIA), which created the PTAB, was made law in 2011. Not so coincidentally, China began strengthening its own patent system the same year. By 2015, nearly twice as many patents were filed in China than in the U.S. And massive amounts of venture capital moved to China. With that tectonic shift of venture investment, the number of startups in China is growing at a very high rate and Chinese firms now control entire fields of new technology. Conversely, in the U.S., the number of angel and seed stage funding rounds has dropped 62% and startups are at a 40 year low. If the PTAB is allowed to continue, we will be purchasing technologies critical to our military and national security from China, an expansionist Communist oligarchy that threatens our military on a daily basis.

This is because the PTAB is invalidating property rights at a rate greater than 90% of the patents it evaluates. None of this should surprise anyone. The Federal Circuit reprimanded the PTAB for acting arbitrary and capricious, and also for completely ignoring the statute and creating their own standards. The PTAB refuses to consider timely-submitted evidence, and there is no right to amend despite the statute saying otherwise. PTAB judges do not have a code of conduct and at least one PTAB Judge was hearing cases and writing decisions favoring a former client. And now in a stunning act of corruption, the USPTO admits to stacking the panel of judges in PTAB trials to get the invalidation decision the USPTO Director wants.

The PTAB has driven the patent system into total chaos. But, the PTAB was set up to enable corruption from the beginning. The power to both create a property right and to take the same property right away were consolidated into one person, the USPTO Director. The AIA created an autocratic dictatorship with absolute power over the most important property right we have, patents. The consolidation of this much power into the hands one person is not only against our constitutional foundation (due process, trial by jury, separation of power, etc.), it creates a superhighway for huge multinational corporations to drive the invalidation rates of patents sky high through regulatory capture, political contributions (read more correctly known as bribes) and a revolving door between USPTO and other related government employees, and tech giants and google funded lobbying organizations. This is the swamp.

But a large majority of those in Congress did not know the facts at the time they voted for the AIA. To attract the votes of Members in the House and Senate, both Judiciary Committees hid the facts and instead fed a narrative that patent reform is the first major step in a larger tort reform agenda. Simultaneously, Google, Facebook, Microsoft, Apple, Amazon and other consumer internet giants created cover for the destruction of the patent system. It must be noted that these companies control the feed of information in their respective sites to therefore to their monopolistic user bases. They put hundreds of millions of dollars into creating a false narrative of patent trolls eating mom and pop businesses even buying once respected colleges and universities to produce false and misleading reports. Then they pushed their creation, the now seemingly justified patent troll narrative, to the top of the beltway media and their respective social media platforms. It became easy to believe, which is why there was never a real inventor allowed to testify in any hearing in either Judiciary Committee in the multiyear run up to passing the AIA. This of course would have set the story straight and killed the legislation at its birth – an unacceptable outcome for the swamp.

Now. Today. The magnitude of the PTAB mistake cannot be ignored. Congress must act to correct this before it becomes the greatest blunder in American history handing our innovation and job creation engines as well as our national security to Chinese Communists.

The Author

Paul Morinville

Paul Morinville is Managing Director of US Inventor, Inc., which is an inventor organization working in Washington DC and around the US to advocate for strong patent protection for inventors and startups. Paul has been walking the halls of Congress knocking on doors and sitting down with hundreds of offices to explain the damage suffered by inventors due to patent reforms. Paul is an independent inventor with dozens of patents and pending patent applications in enterprise software. He is also CEO of OrgStructure, LLC, an early stage enterprise middleware provider in Northwest Indiana.

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 16 Comments comments.

  1. angry dude September 15, 2017 9:23 am

    it’s no mistake, dude

    it is a deliberate and well calculated plot to destroy what’s left of US patent system

    congrats

    us patent system is now dead and stinking

    to the morgue

  2. CP in DC September 15, 2017 11:06 am

    I get the anger against IPRs, but lets keep the discussion in perspective.
    Fine, IPRs are a mess, but calling for abolishing the PTAB is shortsighted.

    Remember PTAB also hears ex parte appeals. So who will hear appeals about the shortcomings of examination? Without the PTAB, examiners would be beyond review. Yes, let that sink in the next time you have an examiner that will not follow law or facts (many articles on this site support the existence of such examiners).

    The call to abolish this or that lead us to this state. Remember, the presence of NPEs that demanded high license rates came about because district court litigation was and still is expensive. IPRs and PGR were instituted to address that problem. We can revert to that prior state, but remember what to expect.

    I agree with Judge Michel, who during congressional hearings called for reform rather than abolishment. There are many things that need reform, we all know the long list. But lets keep in mind that reform may be a better option and keep open the door to that conversation.

    Ask yourself, why does opposition practice work in Europe?

  3. Curious September 15, 2017 11:10 am

    I like to think of the PTAB experiment as, in some ways, comparable to the experiment of Communism. In THEORY, Communism is a Utopian society in which everybody shares equally the fruits of everybody’s labor. However, in practice, Communism is a disaster since it doesn’t take into account the real world gaming of the system in which high performers are penalized the most and lowest performers have the most to gain.

    In theory, the PTAB was supposed to present a low-cost panel of neutral technology-experts to decide invalidity issues as an alternative to litigation. However, the reality is far from what the PTAB was advertised to be.

    First, the PTAB is not a neutral body. Rather, they act at the whims of the executive branch. This first point cannot be overstated. Our intellectual property system should not be so vulnerable to politics (and lobbyists).
    Second, the “technology” expertise of these APJs at the PTAB is overblown — while they understand technology, they are rarely experts in the particular field of the application. Similarly, most APJs would be associates or low-level partners in private practice — they are not the creme of the crop when it comes to legal talent. It would be a huge mistake to compare them to a Federal Judge.
    Third, going to the PTAB is NOT a “low-cost alternative … to litigation.” It is not low-cost and in a high percentage of instances, it is an adjunct to litigation.
    Fourth, it is EXTREMELY patent-owner unfriendly and arguably miserably fails the U.S. Constitution’s mandate of “promot[ing] the progress of science and useful arts.” Owning a valuable patent as a small business is literally an invitation to choose between giving up your patent or being bankrupted by having to defend multiple IPR challenges to your patent. It says a lot about the IPR system and the PTAB that patents have now become a detriment to the health of the businesses that own them.

  4. Curious September 15, 2017 11:12 am

    Without the PTAB, examiners would be beyond review. Yes, let that sink in the next time you have an examiner that will not follow law or facts (many articles on this site support the existence of such examiners).
    I don’t think anybody is calling for abolishing all functions of the PTAB — only their role in IPRs. One’s right to appeal a decision of the Examiner in an ex parte application is entirely separate from the IPR regime.

  5. CP in DC September 15, 2017 11:59 am

    Curious @ 4

    Just four days ago, Gene wrote: “The only solution for the transgressions of the PTAB is to disband this runaway tribunal”

    If you disband it, who does the other functions?

    What I am asking is that the critique be directed to the real culprit, IPRs. The PTAB and PTO have done a very poor job of implementing IPRs. Can this procedure be saved or should it be abolish? If abolished should it be replaced? I would like to hear more thoughts about that topic.

    Remember NPE will still exist and still demand payment.

    We have discussed the prohibitive cost associated with a patent owner defending multiple IPRs. Remove IPRs and that same patent owner must now bankroll a district court litigation (at a much higher price) to enforce the patent or defend against a declaratory action.

  6. Anon September 15, 2017 12:14 pm

    CP in DC,

    I disagree with you in part: the problem has not been in the execution of the legislation.

    The problem is in the legislation itself.

    And is at a fundamental level.

  7. Invention Rights September 15, 2017 12:18 pm

    CP @2 – a Board of Patent Appeals and Interferences (BPAI) can do that job. PTAB must be abolished because the PTO cannot be conducting trials on the property rights that they issued in the first instance.

  8. Night Writer September 15, 2017 1:37 pm

    @CP in DC: this guy is just blowing smoke out his a$$.

    >>If you disband it, who does the other functions?

    Really boy. As in ex parte appeals. No one said there is a problem with that. And every understands that getting rid of the PTAB means ending the post grant reviews/procedures.

    You must be a propagandist.

  9. angry dude September 15, 2017 1:40 pm

    CP in DC @5

    “Remove IPRs and that same patent owner must now bankroll a district court litigation (at a much higher price) to enforce the patent or defend against a declaratory action.”

    You are full of it, as usual, “esquire”

    there used to be a (relatively) healthy system of patent enforcement for valid tech patents where contingency law firm would asses the validity and infringement and then bankroll litigation

    now its all gone – thanks to guys like you

    shame on you, dude

  10. Night Writer September 15, 2017 2:09 pm

    I think that CAFC needs to go too. Obama has stacked it with goons that have no science background, no innovation background, and no patent law background.

    Disband and reform with qualified judges. People like Taranto are a joke. He was put on their to burn the system down. We are stuck with a goon for another 20 years unless we disband the CAFC.

  11. CP in DC September 15, 2017 3:06 pm

    Ok, so I’m answering all in one comment.

    Anon. I agree, if the legislation needs rewriting, then lets talk about that. We can take on one statute at a time, see where the problems are and what solutions could help. The conversation would be helpful and more productive than the current topics. Also any rewrite would benefit from real user experience.

    Invention Rights. You get my point that someone has to do the ex parte appeals.
    The BPAI was replaced with the PTAB on September 16, 2012, so abolish the PTAB and then what? The BPAI judges just became PTAB judges, so it’s the same people (and a few more to deal with IPRs). How about renaming PTAB to BPAI, there fixed.

    Night Writer. Yes, no one has problems with ex parte appeals (there are some but that’s for later). So the title should not read “the failed PTAB experiment…” but “the failed IPR experiment…” Good luck with getting rid of the CAFC, before 1982 everyone wanted a single court of appeal to avoid forum shopping and split decisions.

    Angry Dude. As angry as ever. For the years I have been at law firms, they don’t like patent contingency cases, too risky for the payout. There is paying work without the risk. A small inventor would go with smaller law firms that stand to lose more (economically) should it not pay out. Big firms won’t be contingency lawyers, look at the firm split between brand name pharma and generics. Firms do one or the other because clients won’t let you do both. Brand won’t hire firms that represent generics and vice versa. But I can be convinced. So mention three patents that were enforced (won) on a contingency basis and I’ll buy your argument.

  12. John Wu September 15, 2017 5:48 pm

    Night Writer@10

    I think that CAFC needs to remove those “that have no science background, no innovation background, and no patent law background” unless they are willing to learn.

    What about the U.S. Supreme Court? They all count cases, issues, pages…. in their routine business. They do NOT know that “issue” lacks a comparative basis, and cases cannot be compared. The judicial activists do not know how their decisions hurt the patent system and the nation. The remaining justices just sign on each of their options. What could be done? Most decisions are based upon junk sciences at least in part. With due respect for their power to do whatever they want, I am disappointed with the justices who know nothing about inventing and patenting practices.

  13. Night Writer September 15, 2017 5:55 pm

    @12 John Wu: they were selected by Google to be anti-patent. My bet is too that they agreed to get the “patents” under control as a condition of their appointment or nomination.

    We have a goon squad.

  14. Peter Kramer September 18, 2017 12:24 am

    I wouldn’t call it a failure because it is doing exactly what the Big Boys wanted, what it (AIA post grant challenges) was intended for, assisting them in stealing from the independent inventor. It has been a huge success for the Owners of Congress.

  15. Ben September 18, 2017 2:09 am

    I can’t find the disclaimer where the author mentions that they recently lost in front of PTAB…

  16. staff September 18, 2017 4:27 pm

    ‘Congress made a huge mistake in creating the PTAB.’

    We agree, but the mistake goes further. The full error was in passing AIA, or as we prefer to call it the America Stops Inventing Act, or ASIA for short as that’s where it sends America’s jobs.

    Simply put, the purpose of the patent system is to encourage inventors. But AIA did nothing but discourage. No doubt, post issue review is a huge part of the problem, but there were many other severe problems in the bill such as first to file, expedited processing, etc. No, there was nothing in that bill that was good for inventors. In fact, it did manifest harm and may prove to be irreparable if Congress waits too long to correct. This is what Congress gets when it locks out inventors from cmte hearings and instead swings the door open wide for large infringers. Yes, AIA is a disaster for America, but a windfall for large multinational infringers (thieves). Any time thieves win, America loses. AIA must be repealed.

    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