“The current system favors the people with deep pockets, and that’s not what most Americans believe in; most people think anybody should have a fair shot and that we should all be treated equally.” – Rep. Steve Stivers
Representative Steve Stivers (R-OH) and Representative Bill Foster (D-IL) introduced the Support Technology & Research for Our Nation’s Growth and Economic Resilience (STRONGER) Patents Act, which would in part restore injunctive relief as a remedy for patent infringement, in the U.S. House of Representatives in March of last year. While there has been much talk about closed-door discussions taking place on Capitol Hill recently around fixing Section 101 law, the House has not yet re-introduced the STRONGER Patents Act, and has thus far been focused on other issues this term. But Rep. Stivers seems confident that the Act has a chance this term, and says that this could be the consensus legislation the House needs.
Read below for more on Rep. Stivers’ thoughts about patent reform in the 116th Congress, where the America Invents Act went wrong, and how we ensure the U.S. patent system is restored to number one.
QUINN: Thank you Congressman, I really appreciate you taking the time to talk to us about patents today. I think there’s more optimism this year than other years that something might be getting done on patent reform on the Hill, and maybe an open-ended question to start is: is that accurate? Do you think that things are moving?
STIVERS: It is my perception that that is true, and I think that’s a result of a bunch of factors. One is that at the USPTO, they have instituted many of these reforms on their own and they are working; if you look at what they’ve done and the fact that the U.S. Chamber of Commerce has actually made some new evaluations that show our patent system is getting better, I think that matters.
People are very involved, too. The new House leadership changes things, but in the Senate, you’ve got Thom Tillis and folks who I think are open to these changes as well.
QUINN: I’ve heard you talk a couple of times about how it is that you came to be interested in this issue. Can you share that with our readers?
STIVERS: Absolutely. I’m not a patent lawyer like Senator Coons, and I’m not an inventor, but I have a lot of small constituent companies. One of them talked to me about their worry that they were going to be bankrupted by litigation costs around a patent that they originated and owned—somebody else was trying to come in and create a real problem for them. They almost went out of business. As a result of digging into that case and getting involved in some of the innovation, I’ve had a lot of small companies tell me that they are very concerned about litigation and the whole process of defending their patents. They go bankrupt defending their patents, and the system is just not efficient.
While we made some reforms in the America Invents Act, I think there are some things we could have done better, and one of them is ensuring that intellectual property is treated like other property and that there is injunctive relief. We need to make sure the system is consistent and uses the same standards whether you are in the [Patent Trial and Appeal Board] PTAB process or in a lawsuit. As I said, the USPTO has already started that reform, which is great, and that’s why the U.S. IP system actually improved in the international rankings for the first time in 10 years. But if we can bring back injunctive relief and codify that change, [that would be a big improvement].
The problem with having that done by an administration is that the next administration could come in and undo it. The FAANG folks—Facebook, Amazon, Apple, Netflix and Google—have a lot of power, and they might get the next administration to undo those reforms because they have deep pockets. The current system favors the people with deep pockets, and that’s not what most Americans believe; most people think anybody should have a fair shot and that we should all be treated equally. Unfortunately, in the old system, that is the way it was for intellectual property, so the STRONGER Patents Act hopes to fix some of those inequities.
Toward STRONGER Patents
QUINN: What is the status of the STRONGER Patents Act?
STIVERS: I am hopeful we can actually get it done this time. Bill Foster and I in the House, and of course Senator Coons in the Senate, have worked to build some consensus out there, and I feel like there’s a really good chance to get some movement on this in Congress.
QUINN: The one thing that really interests me about that bill is dealing with injunctions. A patent is supposed to be a property right, and if you don’t have the ability to stop others from trampling on your property, then you really don’t have a piece of property.
STIVERS: That’s exactly right. Injunctive relief, I would argue, is still available, but it is certainly not frequently used. Main Street is just as much an inventor as Silicon Valley, and little companies can be trampled on.
QUINN: They talk about the patent trolls, and there have bad actors, but there are bad actors on both sides. It seems to me that what has gone on historically in a lot of cases is the innovation comes from the small actor, who takes risks and then comes up with something very interesting, and if you don’t have the ability to get the larger entities to pay attention to you, then they just walk all over you. The way that attention used to come is with the threat of an injunction, but today, without the threat of an injunction, these companies can’t even get the larger entities to the bargaining table. I don’t know what the right answer to this is, because what we’re talking about doesn’t fit on a bumper sticker the same way that “patent troll” does.
STIVERS: No, but injunctive relief is a very important piece that levels the scales of justice for small, less capitalized companies. As you said, historically, most people have thought of intellectual property as a property right; I mean, it’s called intellectual property for God’s sake. So, if you have a property right, you should be able to stop somebody from stealing your property; that’s the whole point of injunctive relief.
Fear of FAANG
QUINN: What makes it particularly infuriating is that the other side of the argument here uses the fear of FAANG that keeps people from coming forward to say, “See there is nothing wrong with the patent marketplace, because nobody comes forward to say that they are being injured by it.” But we know that they are being injured by it because they talk to us in private, they show us their numbers in private, we know where they are going bankrupt, we know they can’t get patents, we know they can’t get investment, and the only reason they are not coming forward is because they are afraid of the Googles, Facebooks, Amazons of the world just stomping on them.
STIVERS: Which is a really sad state of business affairs in the United States of America, and it’s not what people expect to happen here in what is supposed to be a free market.
QUINN: Right, exactly. I don’t know what the answer is. I sometimes think that maybe Teddy Roosevelt might have had a different solution here, but I think maybe some of these companies have become too big. I don’t know that that’s the right answer either, but it certainly seems that the patent policies of America have grown to favor the few and not the many.
STIVERS: And I think we can fix that by fixing the patent system, rather than a more draconian approach like Elizabeth Warren announced recently.
QUINN: Yeah. As an engineer myself, you don’t want to fix things that don’t need fixing; you want to tweak things. So, I guess maybe the question here is, do you think that tweaking things with something like the STRONGER Patent Act would put us back into some kind of equilibrium where we can jumpstart the individuals, entrepreneurs and startups?
STIVERS: I think it will. I don’t claim the STRONGER Patents Act is a panacea and the only change that needs to be made. When you look at Section 101 and what is patentable, we have to look at the fact that, in Ohio, the Cleveland Clinic, one of the best health systems in the world, stopped investing in diagnostics because you can’t patent them, and so all that work has gone to Asia, mostly China. To say a diagnostic is unpatentable is perplexing to me, because that is going to drive personalized health. I think diagnostics are going to be a bigger part of health going forward and to take that out of the United States’ economy and away from America and lose those jobs because those inventions can’t be patented here but can be in other countries is pretty silly.
QUINN: What drives this on Capitol Hill? Because this is not a political issue in terms of Republican versus Democrat.
STIVERS: It really comes down to sort of how you view the world and maybe where you’re from. I’m sure that the Silicon Valley Congressman is not hip on these reforms, but if you are from anywhere near middle America, these are things that you should be for.
Good, Bad, or Ugly
QUINN: I totally agree with you on that. Another question that I have is, since I have you here and you’ve mentioned the reforms that the Patent Office is doing, there are a variety of opinions as to whether or not those are good, bad, or ugly. I’m a fan of them because I think that somebody needs to be doing something and I think by and large they are moving the needle in the right direction. Do you have a feel for what you think of those?
STIVERS: I think they are absolutely good. My only concern is that they are not permanent. Because the next administration could come in and change them, but it is clear that not only are they driving the conversation, but they are driving the way people view our patent system. The U.S. Chamber moved the United States back up to number 2 from 12 because of these reforms, so clearly, folks in the business community think they are working. I believe the U.S. Chamber is not biased, I think they are trying to look out for the American free enterprise system and American business, I don’t think they are going to cherry pick one business over another. I see them as a neutral observer of the patent system that wants to make sure that innovation continues in America.
I talked to an inventor last week from Columbus, Ohio who is selling technology that is going to help secure our border, among other things, and he told me that he won’t even file patents anywhere because he doesn’t believe in the patent system. He doesn’t believe it provides him any protection, and he uses exclusively trade secrets. I was like, “wow!” That’s telling, when inventors shy away from the patent system because the protection it’s supposed to provide isn’t worth it.
QUINN: You know 10 years ago, Congressman, that would have been a crazy thought.
STIVERS: It is astounding to me that somebody would say, “I do not want patent protection, it’s not worth it.” That tells me maybe we need to take a look at our patent system. Not that everybody has to use the patent system, but if somebody says what he said to me, it’s not worth it, then you have to ask a bunch of follow-up questions, which I did. Why is it not worth it? Well, the cost, the legal uncertainty and the fact that he feels like trial lawyers and others will take his filing and try to find somebody to sue him. He thinks he’s not on the radar if he’s not making filings, and sadly, on that count, he’s probably right.
QUINN: I think he probably is exactly right, and that’s the thing here is, he’s not unique. I hear that a lot. Ten years ago, you would have told the person why they were wrong, and if they held to that belief, you would have just written them off. Now today, you leave the conversation saying, well, you know, that’s a legitimate point of view.
STIVERS: Which is sad.
The PTAB Problem
QUINN: It is sad. And one of the other real problems is the way that the patent system has evolved with the PTAB is that, if you come up with something that is truly valuable and remarkable, you know for sure you are going to get an invitation to defend that at the PTAB. And if you win at the PTAB, which is going to cost you a half a million to a million dollars per patent to win, then you are going to get challenged again. These serial challenges at the PTAB are an enormous problem, and I know the Patent Office statistics say that it doesn’t happen, but the reason that their statistics say it doesn’t happen is because the patents so often lose the first time around, so there is no second challenge.
STIVERS: I remember when we passed America Invents Act, which created the PTAB process, it was sold to us as something that would be faster and more efficient. Unfortunately, it’s become less efficient and made the process longer and more expensive because it’s just an extra hurdle.
QUINN: Right. And not only is it an extra hurdle, it literally is like an Olympic hurdle event, where there are multiple hurdles.
STIVERS: They just put the hurdle closer to where you start running is all they did. It doesn’t ever stop you from having to do the other hurdles, which is the promise it was sold under—that it would be faster, more efficient, and would eliminate litigation. Almost everybody appeals because there is a different standard at the district courts than there is at the PTAB, and that’s where the harmonization of that by the USPTO is such a big deal that I believe will actually get us to the promise of a more efficient system to defend patents. I’m hopeful about that.
QUINN: Yeah, so, in the STRONGER Act, I think that if that gets passed, it will obviously become a much better environment as well, but what do you think the odds of getting that really are this Congress or next Congress?
STIVERS: Well, I think I feel really good over the next three to four years that we can make it happen, but I am increasingly hopeful that we might have a shot in this Congress to do it. I always hesitate to put odds on it because, until you do it, the odds are zero, and then once you’ve done it, the odds are 100%. But, in reality, I think we’ve got a good shot and we’re going to work every day to make that chance better.
QUINN: Not to get political, but the reason folks I talk to in the patent industry don’t think that it has too much of a chance in this Congress is because it seems like the leadership of the House sometimes is more interested in investigating the Administration than in doing a lot, and by the time that might change, we’re going to be into the election cycle. So, what I’m hearing you say, and maybe I’ll have you comment on it, is that maybe inside the Capitol there is more reason for optimism and we may be reading too much into the 24/7 news cycle?
STIVERS: Every day, we have floor time and we actually pass legislation, and the STRONGER Patents Act has a chance to be consensus legislation, ultimately. While there will be some opposition, I actually believe if we do this right in the House, the STRONGER Patents Act can pass on what we call suspension, which is a three-fifths vote. I think there’s a chance of that. Just because the focus is on the investigation by the House Majority, I don’t think that means we can’t get something done on things like patent reform that are bipartisan. There are Democrats and Republicans that want the Stronger Patents Act.
QUINN: Right, because it matters to everybody’s district really.
STIVERS: Absolutely. And it matters to the American economy.
QUINN: And it should matter to national security as well. I’m really surprised that the news that Chinese artificial intelligence startups are getting more funding than U.S. artificial intelligence startups. I thought that was going to get a lot more traction. People like you know it, but it doesn’t seem to have sent the same shockwave through Capitol Hill that I thought it was going to.
STIVERS: Well, I think both AI and 5G are two of the drivers that we can use to get a lot of lawmakers’ attention. While I think you are right that people don’t understand that we are not as far ahead as we should be in the artificial intelligence battle against China, I think a lot of people want to do something as quick as they can, and the STRONGER Patents Act is a way to make our system more effective so that we can generate more investment. If you create more legal certainty, you will get more investment I believe.
QUINN: Okay, well, I really appreciate you taking the time to chat with me, Congressman, and thank you and please keep up the fight.
STIVERS: Thank you, we will.