Posts Tagged: "patent troll"

My company, Chestnut Hill Sound Inc. (ChillSound), has been victimized by a U.S. patent system that for nearly a decade has been in a sorry state. Changes wrought by the America Invents Act (AIA) in 2011 and other recent developments cost my company, its investors and inventors millions of dollars. These changes have allowed a large company to reap great profits at our expense. Even more unfortunately, our story is too typical of many other inventors and small companies. Small businesses are the backbone of our economy and need to be cultivated, as they are the most dynamic source of new jobs and competitive products and technologies. There have always been reports of large corporations stealing inventions from small businesses, but it used to be possible via the courts to vindicate the patent rights of owners and obtain ultimate redress.  The AIA—sold by the “efficient infringers” lobby as a measure to protect big business from the expense and nuisance of so-called “patent trolls”—has turned into a weapon of deep-pocketed big businesses that enables them to steal with impunity inventions from small businesses and independent inventors. The AIA brought with it the Patent Trial and Appeal Board (PTAB) and Inter Partes Review (IPRs), a post-grant adversarial proceeding at the United States Patent and Trademark Office (USPTO). As has been amply discussed here on IPWatchdog, the Court of Appeals for the Federal Circuit (CAFC) recently opined that the so-called Administrative Patent Judges (APJs) were unconstitutionally appointed from the beginning. Yet these unconstitutionally appointed APJs continue to kill patents, especially when the patent owner is a small company that has sued a large company for infringement, as was the case with ChillSound.

Since inventors are rarely allowed to participate in patent discussions in Congress, I would like to submit my testimony here. In Arthrex, the Federal Circuit in effect decided that our rights are subordinate to the government, so the government has the authority to giveth them to us or taketh them away. I would like to remind the Federal Circuit, the Supreme Court, and Congress that you are tasked with the honor, privilege and duty to defend our rights. That is the very basis on which you are employed, and you have no function other than that. Our rights preexist you, supersede you, and come from sources that are above your pay grade. They exist as a matter of our birth. You have no legitimate authority to take those rights just because it is inconvenient for the huge multinational corporations that have to now deal with the illegitimate position of owning our rights because so-called judges unconstitutionally took them from us and gave them to those huge corporations.   

Two days ago, TechCrunch published an article touting an important victory by Cloudflare against an evil patent troll—Blackbird Technologies. In the article there is no mention of any inappropriate tactics used by Blackbird, and there is nothing to suggest that Cloudflare was not infringing the patents they were accused to have infringed. In fact, that article seems to practically admit that Cloudflare was infringing on the patents because the defense tactic used by Cloudflare was not to argue that they were not infringing, but instead to argue that the patent claims asserted were invalid. Indeed, on November 4, Cloudflare published a description of their strategy, which does not mention anything about demonstrating that they were not infringing the patents issued by the United States Patent and Trademark Office (USPTO). Instead, the strategy was to: (1) not settle; (2) make a public cry for help and seek the submission of prior art that might invalidate the patent claims they were facing; and (3) file ethics complaints against the attorneys representing Blackbird. In this case, the Blackbird patent claims were found invalid. Cheering for Cloudflare, who had no reason to know that at the time they recklessly infringed those claims, is beyond the pale and speaks volumes as to why innovators are leaving America and heading to Europe, China and elsewhere around the world.

On Tuesday, I attended a panel discussion on the National Security Implications of Patents along with my siblings, Madeline and Gideon Malone, and we were informed that inventors like the Wright brothers pose a threat to innovation. We were joined by approximately 50 attendees at the Capitol event moderated by Charles Duan from R Street Institute, along with panelists Abby Rives from Engine, Daniel Takash from Niskanen Center, and Ian Wallace from New America. They argued that patents harm innovation, and government subsidies are a better alternative to incentivize innovation. In order for R Street (a free-market think tank) to justify these blatantly anti-free-market claims, they focused on the problems with “bad patents” and how patent monopolies prevent competition. To top it all off, their example of a “bad patent” was the one granted to the Wright brothers, which the panelists felt unreasonably excluded their competitors from making improved versions of their airplane.

Yesterday, the Federal Circuit once again breached a fundamental boundary of our American system of law. This particular transgression has occurred only a handful of times, but each is more ominous than the last. If this is allowed to stand, we can no longer be considered a democratic republic, but will have become a banana republic. What is rapidly becoming routine to the patent litigation industry will create shockwaves throughout the other 12 circuit courts, upend the rule of law, and damage our nation. In Chrimar Systems, Inc. v. Ale USA, Inc. FKA Alcatel-Lucent Enterprise USA, Inc. (Fed. Circ. Case No. 18-2420), the Federal Circuit allowed the Patent Trial and Appeal Board (PTAB) to overrule an Article III court and jury. That is, the Executive Branch of government directly and unequivocally has overruled the Judicial Branch, including a jury.

On the afternoon of Wednesday, September 11, the Senate Judiciary Committee’s Subcommittee on Intellectual Property convened a hearing titled Innovation in America: How Congress Can Make Our Patent System STRONGER. The hearing focused on the STRONGER Patents Act, a piece of legislation that has been reintroduced into both houses of Congress, the Senate portion of which has been co-sponsored by the Senate IP Subcommittee’s Ranking Member, Senator Chris Coons (D-DE), fellow Subcommittee members Mazie Hirono (D-HI) and Dick Durbin (D-IL), Judiciary Committee member John Kennedy (R-LA) and Senators Tom Cotton (R-AR) and Kevin Cramer (R-ND). Sources at IPWatchdog’s Patent Masters Symposium this week said that the bill still faces many obstacles to passage. However, according to Senator Coons’ Office, the bill has wide bipartisan support in the House as well. The panel for the hearing was evenly split between supporters and detractors of the proposed law, and most of the discussion focused on the injunctive relief and inter partes review (IPR) provisions of the bill.

On August 16, the Supreme Court of New Hampshire issued an opinion in Automated Transactions, LLC v. American Bankers Association affirming a lower court’s decision to grant a motion to dismiss claims of defamation alleged by an inventor whose legitimate patent licensing business was decimated by a collection of entities and individuals deriding that inventor as a “patent troll.” The decision is certainly unwelcome news to any inventor concerned by the prospect that large entities could infringe upon their intellectual property and escape any chance of facing justice simply by hurling the “patent troll” epithet.

Too often, engineering companies are in such a race to come up with the next big thing that they forget to consider the crucial step following their grand discoveries or inventions: patent protection. If a business is willing to spend years developing products and a considerable amount of money marketing, then it only makes sense to follow through and protect the accomplishment. Yet, many (unintentionally) don’t. Below are five risky ways tech companies often jeopardize their intellectual property rights, sometimes even before a product has been developed.

The first of three scheduled hearings in which the Senate IP Subcommittee will hear testimony from a total of 45 witnesses on the subject of patent eligibility law raised many questions. While some read the proposed draft bill released by Congress last month as clearly overturning AMP v. Myriad, for example, Senator Chris Coons (D-DE), Ranking Member of the Senate IP Subcommittee, said today that was not his intention. In his opening statement, Coons pushed back against an article published on Monday by The Washington Post, which indicated that the proposed draft bill to revise Section 101 would enable the patenting of genes. Coons called the article “significantly misleading” and noted that “our proposal would not change the law to allow a company to patent a gene as it exists in the human body. I believe I speak for the Chairman and myself when I say we do not intend to overrule that holding of the 2013 Myriad decision.” The concerns leading to the Washington Post article arose in recent days, after the American Civil Liberties Union (ACLU) released a statement and held a phone briefing for Congressional staffers claiming that the proposed draft bill would enable the patenting of genes. Sherry Knowles, Principal of Knowles Intellectual Property Strategies and one of the witnesses at today’s hearing, penned a rebuttal of the ACLU’s position that IPWatchdog published on Monday. Knowles spoke in the second panel of today’s hearing and said she hopes the proposed bill would in fact overturn the Myriad decision because “there’s been a dead stop in research in the United States on isolated natural products. The highest public interest is life itself and that has to be the goal of this statute.”

To kick off the month in which Alice v. CLS Bank will turn five, the Senate Judiciary Committee’s Subcommittee on Intellectual Property will hold its first two hearings on “The State of Patent Eligibility in America.” The hearings are scheduled for Tuesday, June 4 and Wednesday June 5, both at 2:30 PM in the Dirksen Senate Office Building, and the Subcommittee has now published the rosters for both hearings. As mentioned in a Senate press release last week, there will be three hearings held in total, on June 4, 5 and 11, featuring three panels of five witnesses each, for a total of 45 witnesses over three days. Overall, it is quite balanced between those who will argue for and against reform. This is quite a change in and of itself; congressional hearings on patent legislation over the past decade have largely favored those arguing against pro-patent reforms. IPWatchdog will cover these hearings, and several of the witnesses testifying next week — Chief Judge Paul Michel, Sherry Knowles and Phil Johnson —will be speaking later in the month at our Patent Masters™ Symposium titled Alice Five Years Later. 

On Wednesday, the USPTO held the first of three scheduled hearings prompted by the Study of Underrepresented Classes Chasing Engineering and Science (SUCCESS) Act, which requires the USPTO Director to provide Congress with a report on publicly available patent data on women, minorities, and veterans, and to provide recommendations on how to promote their participation in the patent system. The hearing featured emotional testimony from five inventors, one of whom has recently joined Debtors Anonymous as a result of her patent being invalidated in the Southern District of New York. The SUCCESS Act was signed into law by President Trump on October 31, 2018 and gave the USPTO a one-year period to study representation of women, minorities, and veterans groups in patents. The Office released a report in February which showed that the number of women named as inventors had not been increasing at the same rate as the number of women who were now in STEM professions. Deputy USPTO Director Laura Peter said at the hearing on Wednesday that the Office is seeking input from industry, lawyers, and academics at the public forums, the next two of which are scheduled in Detroit on May 16 and San Jose on June 3. “We’re looking for concrete ideas and action plans to increase the numbers of these groups applying,” Peter said, before explaining that she would be unable to stay for the remainder of the hearing.

This week in IP news: the CASE Act, which would create a small claims system for copyright claims, is reintroduced in both houses of Congress; Qualcomm earns a massive $4.5 billion payment from its settlement with Apple; the U.S. Supreme Court seeks input from the Solicitor General on Oracle v. Google; and China amends its trademark law, increases copyright actions, and earns more than one-third of all 5G SEPs.

This week in other IP news, recently released data shows that worldwide revenues for music copyright exceeded $28 billion in 2017, up $2 billion over 2016; reports surface about the  “reverse patent trolling” issue in China; Google retains Williams & Connolly for Supreme Court battle with Oracle despite Shanmugam exit; the Copyright Office holds roundtable discussions on detecting online copyright infringement; Twitter takes down a tweet from President Donald Trump after a copyright complaint; “KINKEDIN” trademark for computer dating site successfully opposed in the UK by LinkedIn; EU antitrust regulators are petitioned to look into Nokia patent licensing practices; and loss of patent exclusivity leads to major job cuts at Gilead Sciences. 

Over the last 15 years, Congress, the courts and the USPTO have gutted the patent system. Fortunately, USPTO Director Andrei Iancu has been taking important steps to reverse some of the damage, with revised 101 guidance and changes in the Patent Trial and Appeal Board (PTAB). But the most important thing Iancu is doing is silencing the big tech “patent troll” narrative. False political narratives condense complicated issues into an object and then villainize the object. Once a villain is created, its evil can be expanded to encompass anything you don’t like. When you have pushed enough bad stuff into the moniker, you can simply state its evil name, add a few campaign contributions, and Congress will magically pass laws in your favor to kill the villain. The “patent troll” narrative has been valuable to big tech. It bought the laws they needed to perpetuate their monopolies. With Iancu silencing the “patent troll” narrative, big tech created a new one: “bad patents”.

Apple made headlines with its recent decision to close its stores in Frisco and my home town of Plano, Texas. The rumor is that Apple was afraid of the dreaded “patent troll.” However, Apple is not afraid of patent trolls. They are afraid of inventors. Whenever you hear the term patent troll, think of inventors. Inventors like my friend Bob Short, who solved an important technical problem in 1998 with his invention—a protocol that encrypts real-time audio and video transmissions. Apple wanted his technology for their FaceTime app, so they took it. Bob’s company, VirnetX, has spent six years trying to stop them and make them pay. Meanwhile Apple, Google, and other tech titans have spread propaganda and paid lawyers, academics, lobbyists, and politicians to destroy the U.S. patent system.