“What the CTA fails to recognize in their patent troll mischaracterization is that the particular design of the American patent system in its early beginnings is what has enabled it to do what no other patent system in the world has before—to energize the inventive spirit and genius of the private citizen.”
USPTO Director Andrei Iancu participated in a fireside chat, titled “The Crossroads of Technology and Innovation,” hosted by the Consumer Technology Association (CTA) at its sixth annual Innovation Policy Day on Tuesday, March 12 at SXSW in Austin, Texas. Sitting with Director Iancu was host Michael Hayes, Sr. Manager of Government Affairs for the CTA. The chat was quite short and briefly touched on topics such as celebrating the 10 millionth-issued patent, the preparedness of the patent system for the future, artificial intelligence and patent eligibility, and the availability of patenting for all peoples. Then, in what some may consider to be an unscrupulous move, Hayes introduced the narrative of patent trolls:
Hayes (CTA host):
“Time being limited, I would be remiss if I didn’t bring up patent trolls. We have an audience full of tech entrepreneurs and people who work at tech companies. Unfortunately, a lot of them have personal experience with this, right? They may be named inventors on patents, but they’re spending their time and their legal team’s time fighting these junk lawsuits. And for those of you that haven’t experienced this, when I say “patent trolls”, I’m talking about entities that use patents simply as a weapon in litigation. They are trying to use them for a quick shakedown.”
The CTA is a trade association that markets itself on its website as an advocate for technologists and encourages companies to become paying members. For the CTA to preach the “patent troll” narrative to the crowd, and right in front of Director Iancu at that, was rather striking, but it was not entirely unexpected given that the CEO of the CTA is Gary Shapiro, who has been exposed for taking a self-righteous stand against patent trolls despite having an obvious bias in favor of infringers. At least the CTA’s attempt to goad the audience into a troll frenzy fell flat, as not one person in the crowd indicated they had any such experience.
Iancu Calls Out Patent Troll Fairy Tale
One may recall that, during his previous visit to the Lone Star State, Director Iancu called out the patent troll narrative as a fairy tale and “Orwellian ‘doublespeak’,” saying that those who advance the narrative do so deceitfully; they argue that they support innovation, yet by their “highlighting, relentlessly, the dangers in the patent system,” do otherwise. He stated that the zeal to eliminate “trolls” and “the bad patents” has resulted in an over-correction and risks throwing out the baby with the bathwater, and he voiced his stance against preaching the fairy tale of patent trolls. “This must now end, and we must restore balance to our system,” Director Iancu emphasized in October.
Now, with Director Iancu’s statements still ringing in the air, Hayes nevertheless decided to double down on the CTA’s position and preach the “patent troll” fairy tale to the audience. He then posited his question to Director Iancu:
“What can we do to make sure that, moving forward, our patent system gets back into the hands of inventors, that it is really for the inventor, and it’s not for their patent lawyer, right? We prevent people from weaponizing these things, and we get back to making sure at their core that a patent is about inventing something and then creating something wonderful – something that really benefits people.”
It should be noted that the view expressed by the CTA here is incorrect as far as what a patent actually does provide to those holding its title. With such an incorrect view, it is evident why one might believe in the patent troll fairy tale. Any informed inventor or patent practitioner will tell you that a patent does not grant the right for its owner to create anything. Rather, a United States patent is an exclusionary right, and, as per the statement provided by the USPTO on the face of an issued patent, “grants to the person(s) having [its title] the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States … .” Regarding an inventor’s right to exclude others being recently trampled by the Supreme Court in its 2006 eBay decision, that is a separate issue, but nowhere in the law does a patent grant to a person having its title the right to create or produce something, as suggested by the CTA. Accordingly, asserting one’s patent rights, even without creating something, is not weaponizing, but merely enforcing the rights of the entity holding its title to exclude others. Failing to recognize this fact—and failing to recognize that many individual inventors do hold title to their patents and are incentivized by licensing their work product—does indeed risk over-correction that throws out the baby with the bathwater, as Director Iancu said, and actions that take rights away from these inventors discourage innovation all the more.
Rightly so, Director Iancu focused his response on support of the original innovation of the inventor and the need for balance:
“A patent, and the patent system in general, needs to be carefully balanced. We want to make sure we have a system that incentivizes that original innovation, that gives the inventors the right to their original innovations, that allows investments to be made in such innovation with a level confidence that, if successful, the benefits of that investment can be recouped.”
Director Iancu said that Hayes was referring to a particular kind of abuse, and the Patent Office wants “to identify, surface, and deal with any abuses in the system.”
One hopes that Iancu recognizes that the practice of efficient infringement—an identified abuse of the patent system that was interestingly, and perhaps strategically, omitted by the CTA in this fireside chat—is more dangerous to our innovation system than the mythical patent trolls ever were. One example of efficient infringement occurs when a company chooses to use (i.e. infringe upon) patented technology without seeking a licensing arrangement with the rightful patent owner in hopes that the owner cannot bear the financial gauntlet of litigation to defend his patent rights.
Preaching Fiction to Weaken the System
Now, follow the business logic here. The CTA offers different member programs to its paying members, one program being the Disruptive Innovation Council. Its members include such “disruptive” businesses such as Airbnb, Boingo, Facebook, Google, Pandora, Snapchat, Uber, etc. The CTA promotes “provid[ing] support and advocacy to help [these] disruptive innovation companies navigate market and policy challenges” as one of its key initiatives. Any observer to this arrangement may reasonably ask, “So what happens when one of these ‘disruptive’ companies has a product that relies on technology patented by a non-CTA member, and thus the policy challenge becomes patent law?” Well, if one of these companies owns patents themselves, it might very well make business sense in this instance for it to view its patents as weapons in litigation for a quick shakedown, as mentioned by Hayes, because it can use its patents to attack the innovators (or their licensees) whose technology it wants to use.
But perhaps it makes even more sense for these companies, once they reach the top of the ladder, to pull up the ladder by weakening the patent system entirely so that innovators cannot afford to enforce their patents when these companies decide to engage in efficient infringement. And what is one way to accomplish the goal of weakening the patent system? Preaching the patent troll fairy tale, as Director Iancu wisely pointed out.
It then goes without saying that not only was the patent troll narrative unilaterally pushed by the CTA in this fireside chat, but the CTA’s support for post grant reviews was made clear. When Director Iancu mentioned the existence of post grant review proceedings put into place by the America Invents Act (AIA) to address the abuse the CTA was concerned about, Hayes smiled and said, while pointing to the back of the room, “I can see some companies that have actually used those proceedings over there, so, yeah, they are enormously important.”
However, given that some independent inventors were also present in the audience, and that none of them were on the panel to challenge the CTA’s position, one might ask, “Are these so-called ‘enormously important’ post grant reviews supported by everyone in the room? Could it be the case that the CTA here is merely trying to cater to their paying member companies with such a comment?” Director Iancu stressed that the purpose of the statute that created post grant review proceedings was to create a less expensive, faster alternative to district court litigation. At least Director Iancu wants to stay true to that congressional intent, stating his desire to provide standards that do provide these efficiencies, and the record shows that he has indeed worked diligently to provide harmonizing standards. However, given the testimony of Josh Malone and the staggering costs he has endured in the fight for his patent rights, one may legitimately question whether or not these reviews, at their core, do indeed provide a better alternative to private citizens.
Private Citizen Stands Up
In fact, during the Q&A following the panel discussion, I personally stood and announced myself as an independent inventor, holding my patents in hand, and Director Iancu’s face immediately lit up with joy. An independent inventor was in the room! I thanked him for signing my last patent, and I then challenged these post grant reviews held against private citizens, asking Director Iancu if he found it fair that no inventor who entered into the patent bargain and disclosed his invention to the public prior to the AIA subscribed to the substantial rule changes that were retroactively applied by the AIA to patents having priority dates that predated the law. I reminded Director Iancu that he has the power to deny institution of an IPR, and I asked whether he would consider first his oath to defend and support the Constitution— in which the Takings, Due Process, and Ex Post Facto Clauses are immediately present—as a way to protect the patent grant on which the inventors who never entered into the AIA “patent bargain” so dearly rely.
Director Iancu responded by saying that, although the Supreme Court in Oil States (2018) did not address this, he could not comment on whether he found retroactive application of IPRs fair because this question was currently being litigated. He did say that currently, “as an administrative agency, we are going to enforce the laws that are on the books.”
Indeed, retroactive application of IPRs is unfair to all inventors holding patents having priority dates prior to the AIA, as these inventors did not subject themselves, nor did they agree, to the provisions of the AIA title when their inventions were disclosed. One need to look no further than Federalist No. 44 to see that our founders understood that laws such as the AIA applied retroactively “are contrary to the first principles of the social compact, and to every principle of sound legislation.” Had I known, for example, that the rules were going to be so drastically changed in the middle of the game by way of the AIA’s new rules and procedures, I would have never disclosed my inventions to the public in the first place. All I can do now is hope that the courts will ultimately favor justice and fairness for innovative individuals holding such patents with respect to the original patent bargain and social contract into which they entered and the patent property rights they have been granted.
America, Standing Out
Now, what the CTA fails to recognize in their patent troll mischaracterization is that the particular design of the American patent system in its early beginnings is what has enabled it to do what no other patent system in the world has before—to energize the inventive spirit and genius of the private citizen. At the birth of our nation, our founders were pressed with creating political stability and the growth of American industry for the nation’s economic survival. The construction of our Constitution was intentional and careful, and what blossomed was an intellectual property clause crafted to stimulate innovation. As a result, for the first time in history, a private citizen—an individual, the common person—could specialize fully in inventive work, and the result of that innovation was treated the same as a property right.
Make no mistake about it; what made the United States the leader in innovation and the most prosperous nation on earth was its unbiased and meritorious patent system that enabled ordinary private citizens, even those without large financial resources, to innovate and publish their inventions in return for a patent grant, and denigrating any independent inventors as “patent trolls” for protecting their work product not only raises questions as to one’s motive, it’s anti-American.
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