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.