Canary in a Coal Mine: Sovereign Measures to Shield Patents from PTAB Raise Great Concerns

The important questions being raised in the Courts about the application of Eleventh Amendment immunity, as well as the application of Tribal Sovereign Immunity, go well beyond the specific legal questions presented – and well beyond whether patents owned by States and Indian Tribes should be exempt from the jurisdiction of Patent Trial and Appeal Board. These actions by patent owners should be of great concern to Congress, the Courts, the United States Patent and Trademark Office (USPTO) and everyone concerned about a functioning patent system in America. Not because of the constitution and comity issues that specifically arise in the context of sovereign immunity, but rather because these extraordinary measures taken by patent owners are a sign – a canary in a coal mine.

The Courts unfortunately seem content to allow the PTAB to continue unabated, observing egregious conduct like stacking panels to achieve a desired outcome and expressing skepticism that such actions are legal, but then doing nothing to stop the PTAB’s effort to pick winners and losers. This means it will be left to Congress, and perhaps new USPTO Director Andrei Iancu, to implement legislative and regulatory changes to protect innovators from the arbitrary, capricious and sometimes intentional actions of the PTAB.

Director Iancu and Members of Congress should be asking why some patent owners now feel it is necessary to assign their patents to sovereign entities to aid in the enforcement of their patents?

If this question is asked it will become clear that some patent owners – perhaps even many patent owners – now see engaging in these extraordinary measures as both reasonable and necessary. By assigning their patents to sovereigns these patent owners attempt to “avoid the unfairness of, and the many abuses that surround, inter partes reviews (IPRs) as they currently exist,” explained Phil Johnson, former Senior VP of Intellectual Property Policy and Strategy for Johnson & Johnson, when he testified before the House Subcommittee on Courts, the Internet, and Intellectual Property on November 7, 2017.

[[Advertisement]]

Beyond asking why patent owners are resorting to the extraordinary measure of assigning patents to sovereigns, Congress should also be asking why it is not enough to have any validity issues decided in the federal district courts, particularly with patents owned by sovereigns? When sovereign patent owners enforce their patents, it should be enough to have their issues decided only in the federal district courts.

The entire philosophy underlying sovereign immunity is to ensure full, fair and unbiased adjudication when a sovereign is involved. And lets be perfectly clear — we are not only talking about situations when sovereigns are assigned patents in an attempt to intentionally divest the PTAB of jurisdiction. State universities, for example, collectively own many tens of thousands, if not hundreds of thousands of U.S. patents. Those State universities follow federal laws that authorize them to protect and own the rights to the innovations they make. There is no legitimate rationale for abrogating sovereign immunity and subjecting State sovereigns to the whims and fancy of a truly arbitrary and capricious PTAB.

“IPRs are unnecessary because only the federal courts can resolve all the issues between the parties when a sovereign is involved,” Johnson explained in his testimony. “And to the extent additional input from the United States Patent & Trademark Office (“USPTO”) might be helpful, ex partereexaminations, which have not been held to be precluded by sovereign immunity, will still allow the USPTO to consider all of the issues that could have been raised in an IPR. While to some this may not seem ideal, it is a framework that respects the dignity to which sovereigns are entitled while still ensuring that all relevant issues pertaining to their patents will be heard and decided.”

But all of this begs the most essential question: What reforms are needed to level the playing field so no meaningful advantage can be gained by assignments to sovereigns?

Congress must remove any meaningful advantage from sovereign ownership of patents by revising USPTO post-grant procedures so outcomes are more aligned with adjudication in the federal courts. Such patent reform would not only address the constitutional crisis presented by sovereign immunity being denied in actions adjudicated by the PTAB, but it would also trickle through and inure to the benefit of all patent owners, thereby increasing certainty and predictability within the system, eliminate gaming, and streamline adjudication by coordinating rules and laws so there is no substantive or procedural advantage to either challengers or patent owners in one forum over the other.

If adjudication procedures and outcomes were reformed to be similarly fair at both the PTAB and in the federal courts there would be no incentive to arbitrage the differences between the PTAB and district courts. Thus, there would be no reason to seek extraordinary solutions because the forum in which the dispute was to be litigated would not matter. Sadly, today the forum matters greatly for patent owners. So much so that patent owners in some cases are giving up on America and focusing on China and Europe, and in other cases they are resorting to assigning patents to sovereigns, which is obviously a desperate attempt — a Hail Mary — to avoid the PTAB. These actions should be viewed as a cry for help, not a sign that the system is working.

At present, even fully and fairly litigated district court judgments are not being respected as final resolutions. An alleged final judgment in a district court proceeding does not provide quiet title to patents because they may be challenged over and over again by the same or different persons in IPRs, thereby thwarting our Constitution’s promise that the inventors’ patent rights will be secured. Indeed, because of the nature of PTAB processes, the reality that patents can and are serially challenged by multiple parties (and sometimes the same party), the agency has become the final arbiter and district court – even Federal Circuit – decisions are little more than advisory opinions. The ultimate authority rests with the PTAB, not Constitutional Officers. This creates an absurd result, encouraging gaming of the system, and subjects patent owners to abusive challenges without any real protection from an independent Judiciary.

The problems with IPRs are now widely recognized within the patent owning community, but still the PTAB has defenders that claim it processes are fair and open. Whatever one’s opinion of the PTAB might be, everyone should be able to agree that the PTAB processes are not open and transparent. The PTAB is cloaked with secrecy of a kind seldom seen in any tribunal in the western world. Administrative Patent Judges are removed at whim without explanation, including after having dissented in favor of the patent owner. Entire panels are removed and replaced, sometimes repeatedly, again without explanation (see here and here). APJs have been known to have decided cases dealing with former litigation clients (see here and here), which is a serious breach of ethics, but the PTAB still to this day does not have a Code of Conduct or any ethical rules that specifically apply to Judges.

It seems with each passing month there are fresh new stories about serious problems with the PTAB. The aforementioned wholesale panel changes occurred without explanation as late as August 2018. Given the PTAB’s inability to correct itself, time is of the essence because confidence in the U.S. patent system is rapidly eroding. Since the implementation of IPRs just six years ago, the U.S. patent system has dropped in the U.S. Chamber of Commerce’s ranking from 1st to 12th place, due largely to the impact IPRs are having on patent reliability.

To obtain the benefits of a strong patent system “we must not only provide fair and consistent fora for determining validity and infringement, but also ensure that patent owners may enjoy quiet title to their patent properties without fear from unfair IPR proceedings,” Johnson told the House Subcommittee. He is precisely right. At some point title to a patent must quiet if we want investors to provide the many tens of millions of dollars of funding necessary to achieve truly paradigm shifting innovation that we always hear our leaders tell us they, and we, want.

 

Image Source: Deposit Photos

Share

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 as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com.

Join the Discussion

38 comments so far.

  • [Avatar for LazyCubicleMonkey]
    LazyCubicleMonkey
    September 20, 2018 09:23 pm

    @Anon

    So tell me, what should a defender in a patent suit do, if the patent/suit has no merit/not applicable to the defendant? How is court better than PTAB for said defendant? I’m sure it’s better for the patent owner, but there’s two parties impacted by this – so the benefit analysis must include both parties. I’m all ears.

    Reading the possible defenses, it still costs an innocent parties at least 6 figures to defend against such a suit in court. So even if they win, they still lose. So tell me, what remedy do you propose for a genuinely innocent (non-infringing) party?

  • [Avatar for Anon]
    Anon
    September 20, 2018 02:11 pm

    LCM,

    Your sense of “better” is coming strictly from a “patents must be bad” place. See 35 USC 282.

  • [Avatar for LazyCubicleMonkey]
    LazyCubicleMonkey
    September 18, 2018 12:18 am

    While it’s true that the PTAB may be biased/opaque/unfair/etc., do you really need to ask why there’s a need for it?

    Consider the cost of defending a patent lawsuit in court… Even a suit that has absolutely no merit. Discovery alone will cost more than the nuisance settlement requested by the patent owner. This is indeed a real-world problem that has arisen many times over. While PTAB may be the worst solution possible, it’s still better than court… (for the defender of said suit).

    So… what solution do you propose?

  • [Avatar for Anon]
    Anon
    September 14, 2018 08:55 am

    litig8tor,

    Please make up your mind.

    In reply to me at 6:23 (as I point out that it is incorrect from a legal perspective to label the deal as a sham), you want to “re-focus on the different point of the court conclusion, yet literally minutes prior at 6:04 you state that the issue is not moot (even as in the same breath there you also state that immunity does not apply even if valid (not a sham).

    It’s like you are trying to play a shell game with two different legal points, and avoiding the actual point I directly put to you. Do you think that somehow you “save face” with this attempt to move the goalposts?

    I have no issue whatsoever with your conclusion that the CAFC reasoning eliminates ALL sovereign immunity (even as they say that they have not decided on State Sovereign Immunity, nothing in their decision provides a “different hook” between State and Tribe), I did — and still do — take issue with the false conclusion that the Tribal deal was a sham deal.

    Even though you want to move on to the conclusion with which we may both agree, you still want to ALSO hold on to using a legal term more for emotional impact than for the proper legal use.

    Whatever the reason for not deciding (and this both with Bryson below and at the CAFC), not deciding was a mistake in so far as people like you jump to improperly using the “sham” term. As to Bryson, why start the analysis if he knew that he was not going to finish it? It’s as if he wanted the taint, but did not want the legal clarity. I hope that you can recognize how improper that is coming from the supposed neutral arbitr8or. He did not do anyone any favors with opening the can and not finishing it. Inviting misuse of legal terms is bad enough, but to do so with an emotive trigger goes beyond bad form.

    Jimmy @ 28, there really is no debate. As a legal matter, offering an emotive trigger on a single prong in consideration of the legal test just does not cut it. As I stated, it would have been much better for the court (any of the courts) to finish the opened can rather than leave the initiated emotive trigger as was done.

  • [Avatar for Jimmy]
    Jimmy
    September 13, 2018 08:10 pm

    Gene @ 28

    I think this is a good debate between those who do believe and those who don’t. Just like Justice Bryson, everyone has a opinion and those opinions are what makes for a good argument (and somewhat educational).

    I do have an issue @ 26 with the cereal box tops – it may have been the prize within the box of Cracker Jacks…. 🙂

  • [Avatar for litig8or]
    litig8or
    September 13, 2018 06:23 pm

    @Anon,

    I’ve said a few times now that the Federal Circuit has held that immunity is entirely inapplicable in IPR proceedings. As such, it does not matter whether the Allergan deal was legitimate. Judge Bryson did not decide the issue only because his ruling came in the context of joining a necessary party such that his final judgment could not be vacated on a non-merits issue. To be safe he joined everybody. But in doing so, he made clear his skepticism about the legitimacy of the scheme. Given the current state of the law, the only way the “sham” question could be answered is if the en banc Fed Cir (or SCOTUS) reverses the Federal Circuit and finds that immunity can be asserted. Then, the questions are (1) whether the immunity deal is legitimate, and if so, (2) whether immunity was waived via the lawsuit.

  • [Avatar for Anon]
    Anon
    September 13, 2018 06:17 pm

    litig8tor,

    You keep on acting as if the analysis was complete and that the legal status of “sham” was reached.

    It was not.

    You are the one that continues to engage in a manner of clear error.

    As to your actual schooling, I really do not care. I care more for the fact that you continue to act as if you did not attend law school at all.

    As to Benny’s response – really no surprise there, given the level his views mirror that of a mere mouthpiece for denigration of strong patent rights and that in this case, the actions at point are in direct reaction to the AIA and its weakening of patent rights.

  • [Avatar for litig8or]
    litig8or
    September 13, 2018 06:04 pm

    @josh:

    The dispute is not moot because Allergan appealed the district court decision. Also, if Allergan’s immunity rental scheme is legitimate, then it will be widely copied, which is a great reason to decide the broader legal issue. (And it HAS been copied). Under current law it is irrelevant whether the deal was a sham because the Federal Circuit held that immunity doesn’t apply even if the deal was valid.

  • [Avatar for Josh Malone]
    Josh Malone
    September 13, 2018 06:01 pm

    What is the fetish with the PTAB cannibalizing the dead Restasis patent? The Eastern District of Texas already declared this patent invalid. Yet the USPTO and the DoJ insist that the PTAB must be allowed to brutalize the corpse. This is sick. It’s not a sham. They just ask that the dead patent be given a decent burial rather than be eaten by its mother.

  • [Avatar for litig8or]
    litig8or
    September 13, 2018 05:57 pm

    Gene,

    You could make your point without constantly saying something about my legal education (I graduated with honors from a top LS, but that is not actually relevant). You say that straw men are used “all the time” in contracts. Fair enough. But they are not used “all the time” as a vehicle to assert immunity to protect the patents that had been asserted by a party having no such immunity. This has not been tried before, and your appeal to basic contract law only goes so far because the public interest is at stake. The transaction has no real economic substance because the patent owner is paying the tribe to assert immunity for the patent owner; the tribe is not paying to own the patents. Even if reasonable people can disagree about whether this transaction is legitimate, you seem to argue that it is a slam dunk obviously valid arrangement. So Judge Bryson is wrong, the Department of Justice is Wrong, I am wrong, etc… At some point, when everyone else is wrong, maybe you should drop the personal attack.

  • [Avatar for Gene Quinn]
    Gene Quinn
    September 13, 2018 04:21 pm

    Benny-

    You say: “none of you can take criticism yet dish it out…”

    What are you talking about?

    I guess when someone disagrees and does so in a conclusory nature I’m just suppose to say “oh well, gee whiz, you are right” otherwise in your eyes I can’t take criticism? So much for debate.

  • [Avatar for Benny]
    Benny
    September 13, 2018 03:09 pm

    Litig8tor et al.,
    This going to go on for long ? I think we’ve all got the point by now, and the level of discussion is heading down. It’s almost comical how none of you can take criticism yet dish it out wholesale. Can’t you just write “”exploit legal loophole” and leave it at that ?

  • [Avatar for Gene Quinn]
    Gene Quinn
    September 13, 2018 02:51 pm

    litig8or-

    Use of a straw man can’t lead to a conclusion of a sham. Unless you obtained your law degree from a correspondences school by mailing in box tops from cereal you’d know that third parties and straw men are used all the time in contracts and in the corporate world. You might not like it, you might even think it is amoral, but it is not illegal and certainly not something the law prohibits.

  • [Avatar for Anon]
    Anon
    September 13, 2018 02:18 pm

    litig8tor,

    I politely decline to appease you, but feel free to use those attorney skills of yours to find a complete definition and then realize just why perhaps satisfying only a single prong of that definition is a definite FAIL for wanting to use the legal term.

    By the way, the tribe being paid (and thus obtaining a true value) is a point AGAINST the deal being a sham deal. You stop – much like Bryson – WAY TOO SHORT in the analysis. Just as the single item without more MAY be an indicator, the single item and then abandoning the rest of the analysis, is a sure fire way to NOT decide whether the deal IS a sham deal. Until that point is actually reached, to use “sham” based on emotion and an incomplete analysis is decidedly UN-attorney like. As I stated from the start, it is too bad that the courts have NOT decided on the “it’s a sham” aspect. As an attorney, I do hope that you realize the nature of the non-decision on that aspect here.

    My larger point here is NOT the actual definition of a sham deal – the point for YOU to consider is that you should not engage in emotion on a legal point. It simply does not take ANY provision from me of the underlying legal definition for you to consider that point.

  • [Avatar for litig8or]
    litig8or
    September 13, 2018 01:18 pm

    Mr. Anon, maybe you can define a sham transaction for us, provide a few examples, and then explain precisely why paying a Tribe to assert immunity is not a sham deal? I’m open to consider your points, if you would only articulate them.

  • [Avatar for Night Writer]
    Night Writer
    September 13, 2018 01:02 pm

    @22 litig8or

    I haven’t really looked at this case, but what would be wrong with setting a patent licensing firm hat enjoyed the sovereign immunity? What they have to offer is sovereign immunity from IPR in the USA and they want to run a licensing firm for patents.

    How is that different than people setting up businesses in Ireland to avoid taxes?

  • [Avatar for litig8or]
    litig8or
    September 13, 2018 11:51 am

    Also a big clue that the deal is a sham is that the money is flowing in the wrong direction: the assignor is paying the assignee instead of the other way around. Cf. Reverse settlements & antitrust law.

  • [Avatar for litig8or]
    litig8or
    September 13, 2018 11:43 am

    Judge Bryson has a good analysis of what a sham transaction is. In all cases where a sham is found, there appeared to be a transaction of economic substance (and consideration). But in reality a party was paying a straw party to avoid the law, with no other substance behind the deal. If payment was the end of the inquiry, there could never be such a thing as a sham transaction. Here it is apparent that the Indian tribe isn’t in the pharma business and “owns” those patents to rent its immunity to the party that had asserted those patents.

  • [Avatar for Anon]
    Anon
    September 13, 2018 11:41 am

    litg8tor,

    You have shown your true colors with the statement of “some of the best legal scholars such as Prof. Lemley.

    You say that you are an attorney, and yet you persevere in such NON-attorney ways as embracing an emotional term in the direct face of how that term has a distinct legal meaning, which the court (quite aside from Judge Bryson) did NOT state was the case. Your link at post 15 does NOT prove the point that you think that it does.

    That you feel that Gene is “incorrect,” while he is so obviously correct impugns you, not he. You are the one continuing based on emotion and in disregard for the legal meaning of terms in use.

  • [Avatar for Gene Quinn]
    Gene Quinn
    September 13, 2018 11:39 am

    litig8or-

    If I am incorrect, please define consideration. What is required for consideration to be sufficient?

    We all know you won’t answer the question because you, the Federal Circuit and the “best” legal minds (including Professor Lemley) are incorrect. Apologies if you don’t like being told you are wrong when you are wrong.

  • [Avatar for litig8or]
    litig8or
    September 13, 2018 10:42 am

    Aside from the “sham” assignment issue, no party has immunity in Patent Office proceedings that review the patentability of claims issued by the Federal Government. That is the holding of the Federal Circuit, supported by the United States and others including some of the best legal scholars such as Prof. Lemley. Gene continues to secretly respond only to me stating that I must not be a lawyer because I am too ignorant to grasp his argument. I am a lawyer, and I fully understand his point; it is just incorrect.

  • [Avatar for Gene Quinn]
    Gene Quinn
    September 13, 2018 09:56 am

    litig8or-

    Judge Bryson is wrong, and so too is the United States amicus. Anyone with any level of legal knowledge knows this transaction is not a sham. The word sham has a specific meaning. Obviously, Judge Bryson is allowing his personal view to cloud his legal judgment, which is a very real and serious problem with Federal Circuit judges.

    It is difficult to believe you are an attorney making such a ridiculous argument that this transaction is a sham. You really need to go back to your law school curriculum. First year, first week and revisit what “consideration” means. It will be eye opening!

  • [Avatar for Anon]
    Anon
    September 13, 2018 08:08 am

    litig8tor,

    Do you even recognize the legality of “sham?”

    You continue to use that term as if the court (the full court) made that legal determination.

    The court did NOT make that determination.

    They may have started down that road, but stopped well short.

    The court would have been better off completing the journey. But as they did not, you show yourself to NOT be an actual attorney by not being able to recognize this.

    I suspect that you may be the same “armchair” “wannabe” attorney that likes to post under historical pseudonyms (as you “get close” with the pseudonym choice, but ultimately fail to grasp the legal or historical take-aways, and your “choice” tends to unintentional irony).

  • [Avatar for litig8or]
    litig8or
    September 12, 2018 10:24 pm

    Judge Bryson, a scholarly and distinguished judge, recognizes that this Allergan deal is likely a sham.

    https://www.documentcloud.org/documents/4110279-522-Allergan-Opinion.html

    The United States as amicus does as well. This is not a simple matter of contract between private parties that is at issue. Rather, the public interest is also at stake.

    Let’s assune that the PTAB judges are unethical nincompoops. That does not mean that patent owners enjoy immunity as to the government’s review of the patents it issued.

  • [Avatar for Gene Quinn]
    Gene Quinn
    September 12, 2018 08:08 pm

    litig8or-

    WOW. Hopefully you are not an attorney and your moniker is just to pretend you are informed. Of course the Tribe owns the patents. Allergan transferred the patents to the tribe. There was the requisite consideration. If you were actually an attorney you would know that very little — even a peppercorn — is enough consideration. So there was ample consideration for the transaction to be legitimate, not a sham.

    As for your question about whether the moderator (presumably me) knows of whether Allergan’s actions related to the numerous egregious actions by the PTAB, all you have to do is look to the statements actually made by Allergan (which we have reported). Allergan has explained they sought to escape the PTAB because it is a clearly biased and unfair tribunal. The Tribe has said they have no problem acquiescing to federal district court jurisdiction, which is fair and equal. So it would seem you are commenting where you are rather uninformed.

    As for whether this is legal, of course an arms length transaction between parties is legal. If Congress wants to take immunity away they can from the Indian Tribe. What you fail to consider, however, is the PTAB has refused States their due sovereign immunity as well. So your obvious bias and racial animus against Native Americans notwithstanding you still haven’t addressed the question of State sovereign immunity.

    As for whether an arms length transaction advances the interests of justice, that is not a question for contract law. Nor is it a question properly raised when a sovereign raises immunity.

  • [Avatar for litig8or]
    litig8or
    September 12, 2018 06:16 pm

    Paying a Tribe to “own” a pharma comoany’s patents, for the express purpose of asserting “immunity,” is a sham because the Tribe doesn’t really own the patents. However, I would be interested in your explanation as to how this arrangement is (1) legal and (2) advances the interests of Justice.

  • [Avatar for Anon]
    Anon
    September 12, 2018 06:11 pm

    litig8tor @ 10,

    It is too bad that the court did NOT reach that same conclusion (sham deal).

    Sham has a very real legal meaning. You appear to not care or not know enough as you bandy about that term.

    For all of your concern about what a “bad argument” will do, you are starting in negative territory.

  • [Avatar for Brad Olson]
    Brad Olson
    September 12, 2018 02:51 pm

    Gene raises some excellent points in his OpEd that should be subject to this debate. Gene correctly points out many areas where PTAB/IPR practice needs to be clarified and/or codified. We should be glad that IPWatchdiog has always an editor who is not afraid to express personal opinion whether or not we individually agree with him at all times.

  • [Avatar for litig8or]
    litig8or
    September 12, 2018 02:20 pm

    Allergan rented immunity from an Indian tribe to shield its invalid patent from review. Does the moderator have any evidence that this sham deal has anything to do with the instances where APJs sat on panels involving former clients? If so, please enlighten us. Allergan’s patent was also invalidated by Judge Bryson in the EDTX, and the sham deal was universally panned and caused Allergan’s stock to take a hit. In short, the post tries but fails to make connections that just aren’t there.

  • [Avatar for Gene Quinn]
    Gene Quinn
    September 12, 2018 11:56 am

    litig8or @7-

    First, you say the Federal Circuit has already decided the sovereign immunity question. A decision has been reached in one case, but it is doubtful that is the final word on the topic.

    Second, focusing on the decision in that case proves only that you missed the entire point of this article. Typical I suppose for a myopic defender of the PTAB like yourself.

    Third, you say that the Professional Rules of Conduct apply to PTAB judges. Obviously that is incorrect. APJ Matt Clement decided 25 Apple cases after having represented Apple. That is a clear conflict of interest. If a practicing attorney engaged a matter where there was such a clear conflict of interest there would be sanctions. Clement has not been sanctioned.

    Fourth, what I said is 100% accurate and actually confirmed by the USPTO. There is no set of professional conduct rules that are applicable specifically to PTAB judges. There are, however, specific rules of Conduct that apply to federal judges separate and apart from the Professional Rules of Conduct that apply to federal judges as lawyers.

    Fifth, my judgment is not clouded and everything I’ve written about the PTAB has been documented. Your comment, on the other hand, merely reaches the erroneous conclusion that I am biased. Rather, it is you who are biased and defending a tribunal that is clearly indefensible.

    Why don’t you try and defend the wholesale changing of Judges? Why don’t you defend APJs deciding cases involving former clients? Why don’t you defend the policy that dissents are not allowed unless approved by supervisors? Why don’t you try and defend the clear violations of the APA where supervisory judges deliberate with judges assigned to the case in secret? Why don’t you defend the PTAB stacking panels to pick winners and losers?

    You don’t defend those things (and many other breaches of procedural norms) because they are indefensible. Yet somehow you reach the asinine conclusion that I am biased. Hilarious!

  • [Avatar for Jimmy]
    Jimmy
    September 12, 2018 11:30 am

    @2 Non Sequitur II

    I’m not saying that challenging a patent is out of the question and I’m all for a challenge as long as it is within a court system (not IPR). Patent Act 1790 states that the district court shall be used and furthermore, the Bill of Rights state “In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any court of the United States…” which last time I checked, a patent does have a value exceeding this.

    What I’m saying is in over 200+ years of congress (excluding 1790) and the courts intervening, they have royally screwed up the entire U.S patent system (including the Sovereign immunity). One of the biggest is the Oil State decision whereby the Supreme Court using the Privy Council argument as a reason for invalidating. Yes it is true that the granted patent had a standard revocation clause similar to below which is part of the actual granted patent (this is Aaron Hill’s patent of 1713):

    “Provided always and these our Letters patents are and shall be upon this Condition That if at any time during the said Term hereby Granted it shall be made appear to us our heires or Successors or any six or more of our or their Privy Councill That this our Grant is contrary to law or preiudiciall or inconvenient to our Subiects in Generall or that the said Invention is not a new Invention as to the Publick use and Exercise thereof within that part of our Kingdom of Great Britain called England our Dominion of Wales and Town of Berwick upon Tweed aforesaid or not Invented or found out by the said Aaron hill as aforesaid Then upon Signification and Declaration thereof to be made by us our heires or Successors under our or their Signetes or Privy Seale or by the lords or others of our or their Privy Council or any six or more of them under their handes these our Letters Patents shall forthwith cease Determine and be utterly void as to all Intents and purposes any thing herein before contained to the contrary in any wise notwithstanding”

    This is basically the cover page of the patent which is sealed with the stamp of the Kingdom. The U.S. Supreme Court has a tendency to “cherry pick” portions of laws that best suits their needs (which is understandable since patent examiners do the same on prior art). However, the cover page for patents issued in the United State states:

    “The Director of the United States Patent and Trademark Office Has received an application for a patent for a new and useful invention. The title and description of the invention are enclosed. The requirements of the law have been complied with, and it has been determined that a patent on the invention shall be granted under the law: Therefore this United States Patent Grants to the person(s) having title to this patent the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States of America or importing the invention into the United States of America, and if the invention is a process, of the right to exclude others from using, offering for sale or selling throughout the United States of America, or importing into the United States of America, products made by that process, for the term set forth in 35 U.S.C. 154(a)(2) or (c)(1), subject to the payment of maintenance fees as provided by 35 U.S.C. 41(b). See the Maintenance Fee Notice on the inside of the cover”.

    The two cover pages are completely different and as you can see, nothing in the U.S states that the “Privy Council” (IPR, PTAB) has a right to invalidate the patent. In fact, according to the Director of the United States Patent and Trademark Office, all requirements of the law have been complied with, and it has been determined that a patent on the invention shall be granted under the law.

    Furthermore, both cover pages do have a conditional component of the granted patent. The 1713 cover page condition is that the Privy Council has the right to invalidate said Letter Patent. In comparison, the U.S patent cover only conditional component is that the patentee/grantor is subject to payment of maintenance fees.

    If the Supreme Court is now saying that patents are “franchise rights”, does that mean that each person holding a patent actually has a “contract” with the U.S. government? If it is a contract, then each party has agreed to the terms which are submitted before them which is the government grants the rights for 20 years and the patentee/grantor pays the maintenance fees and according to the Director of the United States Patent and Trademark Office, all requirements of the law have been meet. If lawyers, government, and the courts like to go by the letter of the law and by what is agreed to by both parties, shouldn’t the cover page of a patent be part of the discussion.

    Additionally, can anyone provide a U.S. patent form that any patent applicant signs that states that the government (either courts or U.S Patent Office) have the right to invalidate a granted patent because it is a low quality patent and the U.S. Patent Office made a mistake in granting and as such, said patentee/grantor agrees with this.

    Overall, the entire patent system is flawed. I have a half dozen granted technology patents that at least two are constantly being infringed upon by large technology companies and yet I’m afraid of reaching out to those companies for a licensing option for the fear that they or one of their association will file an IPR. Since when did the United States Patent Office become the office creating “fear of innovation” instead of “progress of innovation” for individuals?

  • [Avatar for litig8or]
    litig8or
    September 12, 2018 11:21 am

    The Federal Circuit has already decided that sovereign immunity does NOT apply in IPR proceedings, contrary to Mr. Johnson’s testimony in 2017. He is not a judge and his personal views are entirely irrelevant (and incorrect). Also, the Rules of Professional Responsibility apply to PTAB judges–the PTO doesn’t need to make duplicative rules. I get it that Mr. Quinn doesn’t like the PTAB but such displeasure has clouded his judgment and caused him to make a number of bad arguments, thereby diluting any good points he may have.

  • [Avatar for Chris Gallagher]
    Chris Gallagher
    September 12, 2018 10:45 am

    11th Amendment sovereign immunity shields patents owned by state research universities from PTAB review. This confers valuable patent reliability advantages over other patents. Because of SCOTUS’ predictable patent antipathy it is likely that relief from this disparity must to come from Congress. But eliminating disparate PTAB exposure calls for more than mandated PTAB modification. Mere modification will not be enough. Even if PTAB’s parlous conduct were reversed, its inherent costs and delay provide sufficient incentive to pursue its continued avoidance by stretching sovereign immunity to its judicial limits. That is why sovereign immunity’s uneven patent value distortion can be eliminated only by abolishing PTAB in its entirety.

  • [Avatar for Josh Malone]
    Josh Malone
    September 12, 2018 09:36 am

    Canary? We’ve had a total collapse. . Most the miners are buried and long dead. The few survivors are being kicked back down the hole the moment they reach the surface.

  • [Avatar for Benny]
    Benny
    September 12, 2018 05:40 am

    “So much so that patent owners in some cases are giving up on America and focusing on China and Europe…”
    A fat lot of good that will do you if your market is in the US. Conversely, if your market is EU or China, a US patent isn’t going to be of much help either. Do these patent owners realize that a patent can also be invalidated in Europe and China ?

  • [Avatar for Non Sequitur II]
    Non Sequitur II
    September 11, 2018 09:52 pm

    Jimmy, Congress could have made patent validity uncontestable, but it didn’t, and I don’t see how the constitution obligated Congress to do so. There is a serious debate about where and how patent validity can be challenged, but I don’t think there is any strong argument that patents cannot be challenged anywhere at any time.

  • [Avatar for Non Sequitur II]
    Non Sequitur II
    September 11, 2018 09:47 pm

    “The entire philosophy underlying sovereign immunity is to ensure full, fair and unbiased adjudication when a sovereign is involved.”

    No, the philosophy underlying sovereign immunity can be summarized as “It’s good to be the King.” Sovereign immunity reflects the reality that the sovereign can generally do whatever it wants. State sovereign immunity (i.e, an exception to generally) is simply a feature of our Constitutional Republic that is also unrelated to “full, fair, and unbiased.” Given that waiver of state sovereign immunity is discretionary, it will only occur when it is believed to be advantageous, which is not an overlapping criteria.

    To be clear, I’m not disputing your conclusion, I’m merely contending that the philosophy of sovereign immunity isn’t the road to get there.

  • [Avatar for Jimmy]
    Jimmy
    September 11, 2018 05:27 pm

    As a pro-se inventory, I always like to play the why question.

    So why is it that any court (including supreme) are involved with validating or voiding patents? According to the U.S. Constitution only congress shall have the power, “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;”?

    So why is it that courts like to quote or use English laws as part of their argument when the reason for the Declaration of Independence was to break from those same laws/rulings because the government/courts were corrupted (i.e. including using privy council)?

    So why is it that courts and the companies using the IPR/PTAB justification is that IPR/PTAB are to correct an error because the USPTO issued a low quality patent by mistake when in reality, there is no status to cover when the so-call “USPTO” makes a mistake. The status is based on the patentee/grantor is the one who is responsible for the error “That whenever any patent is inoperative or invalid, by reason of a defective or insufficient specification, or by reason of the patentee claiming as his own invention or discovery more than he had a right to claim as new, if the error has arisen by inadvertence, accident, or mistake, and without any fraudulent or deceptive intention….” (at least in 1870)?