Judge Paul Michel: Look to Congress, Not Courts, to Fix the U.S. Patent System

By Eileen McDermott
April 4, 2019

“If we don’t quickly right the ship, we’re going to find that China will dominate the world economy within five years and the United States will be an economic backwater.”

Judge Paul Michel

During a break at IPWatchdog’s recent Patent Masters™ Symposium, former Federal Circuit Chief Judge Paul Michel went on record to express his grave concerns about the U.S. patent system and where he believes it’s headed. Like many of the Patent Masters, Michel’s view was decidedly grim, but he did express optimism about the new IP leadership in Congress.

Following are Judge Michel’s remarks in full.

What are you most worried about with respect to the state of the U.S. patent system?

My big concern about the current American patent system is that it has ceased to function efficiently and effectively. It is plagued by massive uncertainty and unpredictability. Patents have become unreliable, therefore investments aren’t being made, inventions aren’t being conceived and perfected, and the fundamental problem is that the Supreme Court has treated patent law much the way it treats constitutional case law, such as freedom of religion or freedom of speech, under the First Amendment. Patent law is part of commercial law, and 99% of the decisions that have to be made are made outside of court and require clear lines and clear rules and high reliability. The courts have taken that away, particularly the Supreme Court, and it has made the system dysfunctional. The system has to work for the people who need to use it, it’s not about making it some philosophically perfect ideal in the eyes of nine justices on the Supreme Court.

If the nine Justices of the Supreme Court can’t get it right, do you think legislators or the Federal Circuit can?

The Federal Circuit is trapped by the Supreme Court. They have to follow all of the Court’s holdings and implications, and to some extent even the loose language of the Court’s decisions. Their freedom of action is very limited now, for example, in the area of patent eligibility. I think they could do somewhat more than they’ve done, but still it’s quite a limited zone where they could improve clarity.

The Supreme Court has made it clear that they have no interest in clarity at all. Every single review of the Federal Circuit in the last decade and a half has cut against clarity. They’re putting all of the priority on this idea of perfect justice and no priority on clarity, predictability, reliability, or stability, and those seem to me to be the urgent needs of the system. The Supreme Court has the Federal Circuit and lower courts trapped, and to an extent they have the USPTO trapped, and they’re making broad policy involving innovation and invention and economics way beyond their area of expertise and without the kind of record that only the Congress can amass through years of hearings with hundreds of witnesses and thousands of written submissions.

As imperfect or even dysfunctional, in the view of some, as the Congress might seem, it is the right branch of the government to be making these hugely important national decisions that are going to decide job creation, global competitiveness, national security, economic growth, and productivity growth. Even if they make decisions I might disagree with, it’s still better for the decisions to be made by the duly elected representatives of the citizenry, not by black robed lawyers at any level, including the Supreme Court. I’m of the view that Congress can learn what it needs to learn, as it does all the time, to make rational, logical decisions on behalf of the country and, unlike the courts, if it works badly in practice they can come back and change it. The Supreme Court is focused on precedents, so once set it’s very hard to ever get around them. When Congress initiates a new law, it only applies in the future; when the Supreme Court or Federal Circuit decides a case, they’re often deciding that something done 10 or 20 years ago now has to be invalidated. The retroactive reach of judicial decisions is hugely problematic in our society.

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But didn’t we end up where we are today in part because of Congress’ short-sightedness on the America Invents Act (AIA)?

I agree that some of the AIA provisions were poorly thought out and poorly drafted. I particularly think that the three types of patent office review created in the AIA were badly designed, but the answer to that is that Congress should double back and change the design and improve it. In the case of tax law, for example, almost every single year they go back and revise the law they passed the year before because they discover problems in it; the problem here is that the AIA was passed almost nine years ago and they haven’t gone back yet, but they should, and I hope they do it promptly.

Are you optimistic about the activity there has been recently on patent reform?

I’m partly encouraged by the fact that the Senate Judiciary Committee, for the first time in 15 years, has reconstituted a subcommittee that will focus on patents and related matters. Secondly, it is chaired by a very knowledgeable Senator, Thom Tillis, who worked at Wang Laboratories, IBM, and PricewaterhouseCoopers, so he has broad understanding of the patent system, and his bipartisan partner is Senator Chris Coons. The two of them are working in perfect harmony and providing great leadership to this committee, and I’m sure every issue they take up will be very thoughtfully treated, because they’re interested, knowledgeable, have studied this, and have met with lots of people. This is the first time we’ve seen this. Those driving the AIA were not very knowledgeable about the patent system. And on the House side, the new chairman, Hank Johnson, is a former judge who is quite knowledgeable and interested in patents. When I testified in front of the House IP Subcommittee twice in July, 2017, he asked extremely thoughtful questions that showed preparation and that he’d done his homework and had a sense of the real issues. So, suddenly we have leadership that we didn’t have before. We’re in a completely new era just this year compared to the last year.

What do you think the future holds if these issues aren’t resolved?

Well, patent eligibility is one of the terribly harmful problems in patent law and practice, and I have alluded to defects in inter partes review—partly because of the way the statute was written, but it was made even worse by the USPTO in the rules and practices they adopted to implement it—but the biggest problem of all is the complete unavailability of injunctions. They are routine in Germany, Britain, and most jurisdictions in Asia, and when an injunction is issued, after a party is proven in court to have infringed, the parties almost always immediately settle. In America, this doesn’t happen anymore because there are hardly any injunctions issued. So, when you take all three of these gigantic problems together, their combined effect is to pretty much wreck the whole system. So, investments are going overseas because the incentives elsewhere are now much better. If we don’t quickly right the ship, we’re going to find that China will dominate the world economy within five years and the United States will be an economic backwater. This is a completely self-inflicted wound. We don’t need to go down this road; we ought to get on a better road, and the sooner the better.

 

The Author

Eileen McDermott

Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at several publications and industry organizations. She has acted as editorial consultant for the International Trademark Association (INTA), chiefly overseeing the editorial process for the Association’s twice-monthly newsletter, the INTA Bulletin. Eileen has also served as a freelance editor for the World Intellectual Property Organization (WIPO); as senior consulting editor for the Intellectual Property Owners Association (IPO) from 2015 to 2017; as Managing Editor and Editor-in-Chief at INTA from 2013 to 2016; and was Americas Editor for Managing Intellectual Property magazine from 2007 to 2013.

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 19 Comments comments.

  1. litig8or April 4, 2019 4:40 pm

    China will dominate “in five years” and the USA will be a “backwater” if we don’t amend Section 101? BLHAHAHAHAH.

  2. Anon April 4, 2019 5:04 pm

    WOW – and this from a man with intimate insider’s knowledge.

  3. Mike April 4, 2019 9:04 pm

    “When Congress initiates a new law, it only applies in the future; when the Supreme Court or Federal Circuit decides a case, they’re often deciding that something done 10 or 20 years ago now has to be invalidated. The retroactive reach of judicial decisions is hugely problematic in our society.”

    FALSE. The AIA was applied retroactively and thus an IPR can be instituted on a patent having a preAIA priority date — a patent bargain contained in the new AIA law in which no PreAIA inventor agreed, and this is a direct violation of the Constitution’s 5th amendment Takings, Due Process, and Ex Post Facto clauses. I’ve been saying this over and over since the Oil States ruling.

  4. Paul Morinville April 5, 2019 4:28 am

    litig8tor @1. “China will dominate “in five years” and the USA will be a “backwater” if we don’t amend Section 101?”

    Um. Yeah… But the PTAB and injunctive relief also play a role.

    The proof slaps you in the face, but the density of the material between your ears makes you either ignorant of it or you willfully ignore it. Early stage funding for artificial intelligence, quantum computing, block chain, wireless technologies, and many other important tech fields is already leaving the US and going to China as a direct result of 101, PTAB and no injunctions coupled with China strengthening their patent system.

    These are the most important technologies to the future of production, military, economic growth, etc. The foundation of China’s national plan is controlling these technologies, and they are taking very strong and specific actions to accomplish it.

    If you think we will compete just because we are America and we have been sprinkled with magic pixey dust, you are a true idiot. The reason America became the economic and tech powerhouse is because we turned ideas into property rights that could attract investment. That investment propelled the commercialization of new technologies. That is now gone due to 101, PTAB and eBay.

    Michel is absolutely right.

  5. Litig8or April 5, 2019 8:25 am

    Do you have any evidence for your argument? The DJIA was at 11.000 when eBay was decided.

    BLAHAHAHA!! Troll.

  6. Moon Bay April 5, 2019 9:16 am

    There are no consequences, ramifications or even a deterrence to prevent someone to steal someone’s patent, they even have the nerve to call you a derogatory term when they take your IP with out paying. It’s crimal what large could mpanies like Apple, Google have done to patent holders. Apple has over $200billion in cash in America and has even more sitting in tax shelters in banks all over the world. Its criminal what Apple has done to VirnetX, it’s way long over due they fix this mess and include injunctions scrap EBay and Alice, they should get rid of the PTAB and scrap TC Heartland. Hope the new committee gets it right, if they don’t inventors will be filling for patents over seas.

  7. mike April 5, 2019 11:54 am

    litig8tor@5:

    The stock market index is hardly an indicator of the totality of commerce for a nation. But for the sake of argument, let’s assume that it is. You said “The DJIA was 11,000 when eBay was decided.”

    Actually, in May 2006, the month eBay was decided, the DJIA was 13938. As of 2019-04-04, it is 26300. Growth: 189%.

    In May 2006, the Shanghai Composite Index was 1440. As of 2019-04-04, it is 3247. Growth: 225%.

    The premises in your argument reach a different conclusion that what you claim.

    BLAHAHAHA!! Troll? > No.
    You? Fail.

    Silly litigator.

  8. B April 5, 2019 1:10 pm

    “My big concern about the current American patent system is that it has ceased to function efficiently and effectively. It is plagued by massive uncertainty and unpredictability. Patents have become unreliable, . . . .”

    “As imperfect or even dysfunctional, in the view of some, as the Congress might seem, it is the right branch of the government to be making these hugely important national decisions that are going to decide job creation, global competitiveness, national security, economic growth, and productivity growth. Even if they make decisions I might disagree with, it’s still better for the decisions to be made by the duly elected representatives of the citizenry, not by black robed lawyers at any level, including the Supreme Court. . . .”

    I’m using these quotes in my SCOTUS reply as they reflect my opening petition recently filed.

    Judge Michel, I owe you a beer come this summer. Think I can get a six-pack passed security on Madison Place?

  9. Night Writer April 5, 2019 1:34 pm

    There are lots of comments that essentially say prove that we need a patent system. I think these are good comments and think we do need to figure out a way to prove that the patent system is a positive force.

  10. anonymous April 5, 2019 5:35 pm

    “it’s still better for the decisions to be made by the duly elected representatives of the citizenry, not by black robed lawyers at any level, including the Supreme Court. . . .”

    Should read: “it is CONSTITUTIONAL ONLY WHEN these decisions are made by the duly elected representatives of the citizenry, not by black robed lawyers at any level, including the Supreme Court. . . .”

    I understood Judge Michel to be diplomatic, but let’s collectively stop pretending SCOTUS has any constitutional authority to add exceptions to a statute because it feels like it.

  11. concerned April 6, 2019 4:14 am

    Litig8or:

    You probably have a 401k account where you contribute dollars from employment. After years of labor, the sum of your 401k amounts to a nice total. You wake up and find the entire amount gone. There is no enforceable court action that will help you. A faceless person or persons stole it all, yet you were lead to believe investing in your 401k was a proper thing to do.

    Please explain how the above situation is different from a patent holder, who invest his money and labor, just to be ripped off without an enforceable court action for recovery of assets. The patent holder, like the 401k participant, is also lead to believe that innovation protected by law was a proper thing to also do, the great bargain.

    Your views on this article and other postings are hard to take sincerely because you would find the above 2 situations as different, unless you do not mind sending me your 401k in full. I imagine that guy at the chop shop would also rationalize why having my car is perfectly acceptable.

    Congress, not 9 judges, make the laws and the language within. When Congress adds significant more, routine, well understood, conventional, abstract, etc. to s101, not 9 judges, then you may have an argument grounded in law.

    Frankly, I have no problem if Congress did add that language. Then we could all stop pretending, stop inventing and get on with our lives.

  12. Litig8or April 6, 2019 9:40 am

    The difference is that the law allows for invalidation of patents. You also have to prove infringement. You don’t get $ just because of a patent. If that’s what you thought, you thought wrong.

    It has been the law for over 100 years that you can’t patent abstract ideas. Congress was fully aware of this when they amended the Patent Act in 1952 and 2011. They could have abrogated those court decisions, but did not do so. The

  13. concerned April 6, 2019 11:43 am

    “If that’s what you thought, you thought wrong.” No, that is not my belief.

    What is so hard about Congress adding the word “abstract” if that is Congressional intent? Then at least we would be in agreement.

    There will be another re-write of 101 post Alice. Probably not as soon as I would like. We shall see what happens with a post Alice re-write of 101. I doubt it will have words abstract, well understood, routine or conventional. I suspect 102, 103, 112 will be given their rightful role.

  14. B April 6, 2019 1:16 pm

    @ litig8or “It has been the law for over 100 years that you can’t patent abstract ideas. Congress was fully aware of this when they amended the Patent Act in 1952 and 2011. They could have abrogated those court decisions, but did not do so.”

    Respectfully, you show a great ignorance of the 1952 Patent Act and of the history of the word “abstract.”

    The 1952 Patent Act was brought about to bring the courts’ idiotic anti-patent attitude in line with Congressional intent, and to that end removed “invention” from consideration ad replaced it with nonobviousness. Alice Corp. blew through that who exercise in legislative authority

    As to the freaking morons who changed the word “abstract” to mean anything they wanted it to mean, that happened post AIA.

    Now look at the recent ChargePoint decision. The CAFC officially declared that, while additional claim limitations must be well-understood, routine and conventional, in the very next sentence they declared adding new and non-routine limitations isn’t enough b/c Alice Corp.

    Some of these CAFC judges should be judging produce at most

  15. B April 6, 2019 1:18 pm

    @ concerned “What is so hard about Congress adding the word “abstract” if that is Congressional intent? Then at least we would be in agreement.”

    Because the word is post-Alice officially meaningless. I’m not slighting you, but it would be like re-introducing “invention”

  16. Benny April 7, 2019 2:30 am

    Concerned: In reply to your request “Please explain how the above situation is different from a patent holder, who invest his money and labor, just to be ripped off without an enforceable court action for recovery of assets”:
    a) Owning patent rights is no guarantee of monetization (over 90% of granted patents have no direct financial ROI).
    b) Even if ripped off, the patent holder still has the right to full use of the invention, including profiting from it (if the patent holder doesn’t transfer all of the profit to their lawyers).
    So, while your argument against lack of injunctive relief has merit, your comparison with pension fund fraud is way off base.

  17. concerned April 7, 2019 5:56 am

    Benny/Ligit8or:

    Sorry for the lack of clarification.

    Assumption is that the patent is monetized and the infringer is capitalizing on the invention. Likewise with the 401k situation (i.e. that the 401k still had assets-was not all in company stock and company goes bankrupt). A dollar for dollar equal loss comparison.

    My invention is government contracts. Would not be 2 contracts, therefore, I would lose use of the invention if the contractor could not be barred by injunction or a compulsory licensing via 28 U.S.C. § 1498(a).

  18. Concerned II April 8, 2019 8:11 pm

    Inter partes proceedings in the PTAB is not an effective way to address the purported problem of too many invalid patents. IPRs enable well-funded parties to hijack patents asserted in US district court infringement proceedings, derail the case for at least a year, and force the patent owners to defend their asserted patents at considerable additional expense in a remote forum before a tribunal with a myopic perspective that uses procedures and standards more likely to invalidate their patents than those used by the district courts. This is simply not a fair or even-handed way to deal with the alleged problem.

    Plus, I sincerely believe the Supreme Court erred in its Oil States decision. An issued US patent is simply not a “public” right or franchise. If this misapprehension persists, it is likely to end up destroying the greatest impetus for technological advancement the world has ever seen.

    The solution is to better equip the USPTO to substantively examine patent applications and to better equip district courts to adjudicate all aspects of patent cases.

  19. chrisw April 11, 2019 2:43 pm

    That’s brilliant Mr. Judge, lets put Maxine, Ocasio-Cortez, Feinstein, Graham, Nancy, and the whole cackling caboodle of them in charge of a task that in the Judiciary bailiwick, that one or two wise judges could have smacked long ago. We went 60+ years with section 101 in its current form, which is a single sentence that any 3rd grader can quickly fathom. Nobody is fooled, and you all have totally pi**ed off 99% if the patent lawyers in the country, and have done great dis-service to all American and some foreign inventors. Shame on the courts, shame shame shame on you.