In the world of intellectual property, inventors and innovators have long relied on the protection of patents to safeguard their creations. However, in recent years, the Patent Trial and Appeal Board (PTAB) has become a contentious battleground where patents are challenged and, in some cases, invalidated. Market Institute President Charles Sauer’s new article delves into the pressing issue of PTAB’s functionality, its impact on inventors, and the proposed solutions to restore fairness to the patent system.
“Patents are a piece of the fabric that makes America different from other countries. Sure, others have them, but the United States was one of the first to award patents to the inventor instead of the social hierarchy. That difference put America on an economic rocket ship that left other countries figuring out how to keep up.
And, while other countries have begun to figure it out – we are still an economy that is largely driven by innovation.
The problem, as I have written about before, is that patents and success drive jealousy. This jealousy rears its head in different ways, but the most harmful over the last several decades has been an attempt to leverage cronyism to put the thumb of government on the heads of inventors. These cronies have attempted to make it harder to get, defend, and keep a patent. They have put down innovators, given them derogatory nicknames, and questioned their benefit to the economy. The problem is that with so much negativity many Americans have started believing these narratives and have started demeaning innovation as well.
However, the benefits of innovation are everywhere, the arguments for innovation are well founded, and proving that the crony narrative lacks common sense is easy.
A recent article by former Senator Patrick Leahy provides an instructive example. Leahy has long been on the wrong side of patents, but there was always hope that retirement would allow common sense to re-enter his worldview. Unfortunately, that isn’t the case.
For instance, in his article he writes,
“New limits on multiple challenges have the potential to backfire on the little guy. If patent reviews are a one-and-done proposition, patent trolls will be incentivized to target smaller, under-resourced businesses first, which may not be in the best position to make the strongest arguments against the claims, before moving on to larger businesses.”
Now patent law is wonky, but this statement falls apart before we even get to the meat of the argument. There is no company – small or large – that is hurt from only being exposed to one challenge vs multiple. Not one company would say, “Yes, I would like a system where endless challenges could be brought against my company.” But that is what the former Senator is claiming.
What the Senator goes on to claim is wrong, but it is also sad because it shows that he doesn’t understand the market implications of a bill that he sponsored and helped pass and get signed into law.
Senator Leahy goes onto claim that “Patent Trolls” (one of the crony constructs to attack inventors) would use the new proposal – to limit challenges to only one – to go after small businesses first. This is wrong on so many levels that is hard to take apart. First, the term “Troll” is used to refer to a patent holder, and its derogatory meaning implies that the patent holder is a scam artist. But, worse, the challenges that the Senator is referring to are challenges at the Patent Trial and Appeal Board – a kangaroo court that his bill helped create and is used by more foreign corporations than small businesses. That said, a patent holder isn’t going to take an infringer to PTAB because there are only three possible outcomes from a PTAB proceeding – the patent is validated, amended, or stricken down completely. So, the best possible outcome for an inventor is a null outcome (the patent was considered good before PTAB), which means that the “Troll” would just be spending money – and the inventor would still be open to challenges in the future.
That is beyond any measure of common sense.
What we need are rules that make PTAB function better for inventors. In fact, PTAB going away completely would be the best option. However, since PTAB going away for good is unlikely – the least that could be done is to codify the rules so that changing administrations can’t bend the rules to further run over inventors. For instance, under President Obama – panel stacking in opposition was the norm.
There is currently a bill in Congress to fix these problems (the one that Leahy was attacking), the PREVAIL Act which would bring order to the PTAB. PREVAIL limits the amount of cases that small inventors can be subjected to. It makes the rules more similar to the court system. And, doesn’t allow the director of the USPTO to treat the PTAB like a kangaroo court that they can make do whatever they want.
If PTAB is going to exist – it needs to work in a way that quiets title – not in a way that makes inventors fearful to invent.”