“The USPTO and Department of Commerce refusing to answer questions about who was running the USPTO in January, February and March 2017 was Monty Python-esque. Sadly, the politicization of the patent system is real.”
As we explained in Part I of this series yesterday, this December marks the end of a decade as well as 2019. In reflecting on the top 10 patent stories from 2010 to 2019, we acknowledge that there will undoubtedly be disagreements and mentioned yesterday that some big cases, like Mayo v. Prometheus and TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), and others did not make the cut (although Mayo was addressed as part of the Sequenom debacle). This is the top 10 patent stories of the decade according to me alone—and now without further ado, here are stories 6-10. Let the debate begin!
Apple v. Samsung (2016)
This list would be woefully inadequate without mention of the epic patent battle of the decade: Apple v. Samsung. Still, was there any single event, case or decision that rises to the level of being worthy for this list? That is debatable, although I’d tend to say that the answer is no. Still, given the magnitude of the all-out war between these tech giants, and the unusual global nature of the grudge match, the totality of the patent battle certainly qualifies for top story of the decade status.
That being the case, the easy event to point to is the December 2016 Supreme Court decision in Samsung Electronics Co. v. Apple, which found by a unanimous 8-0 vote that a damages award for design patent infringement may be limited to revenues attributable to a component of an article of manufacture and not the entire article itself. The SCOTUS decision overturned a judgment reached in May 2015 at the U.S. Court of Appeals for the Federal Circuit, which would have awarded nearly $400 million in damages to Apple Inc. for the infringement of three design patents by mobile devices marketed by Samsung Electronics. The Supreme Court concluded that the term “article of manufacture is broad enough to encompass both a product sold to a consumer as well as a component of that product.”
Of course, the real story is the relative worthlessness of the Apple patent portfolio. With tens of thousands of patents covering its iPhone from countless different angles and perspectives, the only patents that were found infringed were the design patents and those design patents continued to become worth less and less with each passing decision. As Samsung produced smartphones that looked exactly like Apple products the Apple patent portfolio was completely incapable of providing exclusivity and wound up providing very little by way of patent damages either. One is left to wonder the potential value of this case for Apple had software patents not become completely devalued and the Patent Trial and Appeal Board not become weaponized.
Michelle Lee Remained USPTO Director (2017)
Those who believed Friday, January 20, 2017 would be the last day for USPTO Director Michelle Lee received a big surprise.
On January 18, 2017, just two days before President Trump’s inauguration, we learned that Lee was either refusing to resign or perhaps attempting to revoke her letter of resignation. Shortly thereafter we learned that senior Obama officials were upset with what was happening at the Patent Office and that Lee had “gone rogue.” And thus began a crazy story that saw the USPTO and Department of Commerce refusing to acknowledge whether Michelle Lee remained as Director or had left the USPTO (see here, here, here and here). The USPTO even postponed addressing my FOIA request pertaining to the matter citing unusual circumstances.
“Unusual circumstances” was an understatement. Lee remained Director of the USPTO without any official statement on her status until March 10, 2017, when the USPTO finally confirmed she was the Director of the USPTO. After all of this, apparently without giving anyone at the USPTO any advance notice, Lee resigned as Director on June 6, 2017, by sending an all-employee e-mail.
This story represented a most bizarre series of events, but it makes the top stories of the decade not only because of how unusual it was for an agency of the federal government to refuse to identify who was in charge for many weeks, but because it is an example of the lack of transparency that has unfortunately become the USPTO. This saga was particularly bizarre, but even the most direct, easy, straight forward questions are often met with complete silence. For example, we’ve recently tried on several occasions to find out how many Administrative Patent Judges (APJs) are currently employed by the USPTO. Obviously, someone has that number and it cannot be a state secret, yet no answer has been or likely will be provided. And if you submit a Freedom of Information Act (FOIA) request to the USPTO you will be met with delay after delay after delay, and then ultimately get very little useful, with many (if not most) pages completely redacted.
The USPTO and Department of Commerce refusing to answer questions about who was running the USPTO in January, February and March 2017 was Monty Python-esque. Sadly, the politicization of the patent system is real.
U.S. Patent System Falls from 1st Place (2017 et seq.)
Each year, the U.S. Chamber of Commerce ranks the top economies around the world in terms of favorability for the intellectual property ecosystem. In 2017, the United States was once again the top ranked country in the annual Global IP Index for 2017, but the rankings were closer than ever before. The closeness of the rankings was no doubt in significant part due to the fact that the United States tumbled to 10th overall for patents. According to the Chamber report, the omnipresent threats of more patent reform, a Supreme Court that has created unprecedented uncertainty surrounding what is patent eligible, and a hostile PTAB contributed to the U.S. fall from 1st place to 10th place.
The United States was once again the top ranked country in overall score in the Annual Global IP Index for 2018, but the rankings were even closer than in 2017. The United States edged out the United Kingdom by a mere .01 points on the Chamber scale. The U.S. position was helped by improved scores relating to copyrights and trademarks but was dragged down for the sixth consecutive year as the result of a patent climate that the Chamber characterizes as causing “considerable uncertainty for innovators.” In 2018, the U.S. patent system fell to 12th place overall.
Earlier this year, the Annual Global IP Index for 2019 showed an improved U.S. ranking in patent rights—moving from its twelfth-place ranking in 2018 to a tie for second place this year. This jump in rankings, attributable to the Iancu effect (i.e., the arrival of Andrei Iancu as Director of the USPTO and his willingness to advocate for strong patent rights) is certainly welcome news but the nation’s patents and related rights score is 7.5—only 0.25 points ahead of thirteenth-place Italy and putting the country’s patent ranking in a seemingly tenuous position.
As we end the decade, many countries continue to pursue pro-innovator patent policies while the Federal Circuit continues to find more and more software to be patent ineligible, virtually all medical diagnostics to be patent ineligible, and says they are not bound and will not follow the patent eligibility guidance issued by the USPTO in January 2019. With Congress unable to reach an agreement to even get anything to a Committee vote and the Supreme Court AWOL, it is hard to imagine the U.S. patent score rising when the Chamber releases the Annual Global IP Index for 2020.
Conflicts of Interest at the PTAB (2017 et seq)
In May 2017 we wrote several times (here, here, here and here) about a Patent Trial and Appeal Board (PTAB) situation that, in my opinion, symbolizes everything that is wrong with a tribunal that is out of touch with reality. Prior to being hired in March 2013 by the U.S. Department of Commerce to become an Administrative Patent Judge (APJ) on the PTAB, Matthew R. Clements represented Apple as patent infringement defense counsel while working for Ropes & Gray. Beginning in September 2014, APJ Clements was assigned to numerous CBM and IPR petitions filed by Apple. Not surprisingly, Apple did remarkably well in those challenges decided by APJ Clements.
Upon this story breaking, the USPTO removed Clements from his Apple assigned caseload, changing the entire panel assigned in each case altogether. Sometime thereafter Clements left the USPTO and in a twist that almost defies belief was hired as in-house counsel by Apple.
On Thursday, May 11, 2017, we submitted a Freedom of Information Act (FOIA) request to the United States Patent and Trademark Office (USPTO). Our FOIA request sought a copy of any and all rules of judicial conduct, ethical policies and/or codes of professional or judicial conduct that apply to Administrative Patent Judges (APJs) of the Patent Trial and Appeal Board (PTAB). On May 31, 2017, we received a response confirming that there is no code of judicial conduct or ethics rules that apply to APJs on the PTAB. The judges of the PTAB are governed by the same ethics policy that applies to all USPTO employees, which requires only a 1-year disqualification period.
No federal court judge would be able to decide a case involving a former employer after as little as 1 year, and indeed would be disqualified from cases involving former employers and clients indefinitely. Similarly, patent attorneys and patent agents could never represent a competitor of a former client without express permission from that former client. It seems federal judges and the patent bar are held to a significantly higher ethical standard than PTAB judges (See here and here).
Oil States Energy v. Greene’s Energy Group (2018)
On April 24, 2018, the United States Supreme Court issued its decision in Oil States Energy v. Greene’s Energy Group, 138 S.Ct. 1365 (2018), which asked the Court to consider whether post-grant challenges to issued patents at the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) are constitutional under Article III and the Seventh Amendment of the U.S. Constitution. As anticipated by many, in a 7-2 decision, the Court found that post-grant challenges, specifically inter partes review (IPR) challenges, are constitutional.
While the Supreme Court attempted to leave open the faint possibility that they were not foreclosing the possibility that patents are no longer property rights, the Supreme Court’s decision in Oil States did state that patents are a government franchise.
Justice Thomas, writing for the majority, said that all inter partes review involves is “reconsideration of the Government’s decision to grant a public franchise.” Thus, patents are not considered property rights by the Supreme Court despite the Patent Act saying that patents are to be considered to be property, and despite what the Supreme Court themselves have ruled to the contrary previously. Of course, in true Supreme Court fashion, none of its previous rulings stating that patents are property rights were overruled.
Here’s looking forward to more exciting patent stories for the next decade!
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