08.06.18
Gemini version available ♊︎Agenda and Lies From Watchtroll Make It Into the Bill of Rohrabacher, the “Inventor Protection Act”
Summary: The Patent Trial and Appeal Board (PTAB) is being demonised using falsehoods or patently false numbers, which are pushed into various news feeds by the anti-PTAB lobby (representing the interests of patent trolls and aggressors as well as their lawyers)
THE LOBBYING fronts of patent maximalists, those who attack judges and USPTO officials, seem to have accomplished something.
According to Josh Landau (CCIA), lies from Watchtroll are making it into legislation efforts, in the same ways that lies from IAM make it into the EPO‘s Web site. So a villainous site that acts as a front group of patent extremists ended up being used by dishonest politicians whom patent extremists use to perturb the law. To quote Landau:
The Rohrabacher bill appears to be relying upon IP Watchdog’s numbers here. (This isn’t the first time incorrect numbers from IP Watchdog have made it to Congress.) The PTAB is not invalidating 85% of patents challenged in post-grant reviews. In calculating the rate at which patents are invalidated in post-grant reviews, IP Watchdog excludes the significant number of patents where the PTAB said that not only is this patent valid, but it is so clearly valid that the petitioner hasn’t even been able to show a reasonable likelihood of invalidity—the roughly 35% of patents where the PTAB doesn’t institute a review at all.
Once those patents are included, what’s the real answer?
The Patent Trial and Appeal Board declares around 45% of challenged patents to be invalid. Given that challengers pick and choose which patents they want to challenge based on the likelihood of success, that number isn’t surprising at all—the patents where validity isn’t really in question never get challenged in the first place.
Claiming that the PTAB invalidates 85% of granted patents it reviews is simply false.
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Another error in the proposed findings is that “most inventors cannot afford the costs of defending a patent challenged in a single post-grant review, as these costs can reach hundreds of thousands of dollars.”
First off, this ignores that roughly 80% of patents are invented at large companies. Those inventors and their companies can afford the costs of defending a patent challenge. The findings claim to be about inventors, but exclude the vast majority of American inventors.
It is correct that the cost of a post-grant review can reach hundreds of thousands of dollars. AIPLA’s survey estimates a median price of around $250,000 to defend a patent in a post-grant review.
But you can’t look at that in a vacuum. Post-grant reviews are almost always filed against patents that are being litigated—85% of post-grant challenges have related district court litigation (and many of the other 15% are related to litigations more indirectly). And litigation costs far, far more—even an inexpensive litigation can easily run into seven figures. In reality, the availability of IPR and other post-grant reviews has actually saved patent owners more than $1 billion in legal fees since it was made available by reducing the cost of litigating patents overall.
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The bill also states that “Inventors are denied the fundamental right to ‘exclude others’.” This finding is made despite recent decisions like Tinnus v. Telebrands in which an inventor was not only granted an injunction but a preliminary injunction. In reality, inventors can exclude others in the same circumstances that they can do so in every area of law—when they meet the traditional common law test for an injunction.
Far from restoring a fundamental right, Rohrabacher’s bill criticizes the long-standing principle that injunctions issue when appropriate, not whenever they’re asked for.
Landau continued in the second part the following day. Some relevant portion:
The next provision is by far the most concerning in the entire bill. Normally there’s a bit of hyperbole involved when someone says “this bill would destroy the incentive to innovate.” In the case of Rohrabacher’s bill, that’s not hyperbole—it’s simple math.
That’s because, if the Inventor Protection Act passes, inventors would be entitled to the greater of total profits or 25 percent of gross sales revenue attributable to the patent.
As a little history lesson, utility patents used to allow a total profits remedy. Congress abolished that in 1946, after realizing that a total profits rule was unworkable with the complex technology of the time. Technology has gotten more complicated since 1946, which makes it unclear why reviving the total profits rule is a good idea now.
But total profits isn’t the worst part of this provision. The worst part is entitling inventors to “25 percent of sales.” That means that, if a product infringed 4 patents, the manufacturer could be liable for every dollar they had ever received in sales.1
To put that in perspective, Apple lost a patent lawsuit a few months ago. They were ordered to pay $500 million dollars to VirnetX for their use of 4 patents, covering FaceTime, iMessage, and VPN on Demand. That’s a big verdict.
But if the inventors had owned those patents at the time of suit, Apple might instead have had to pay over $200 billion dollars. I don’t think anyone would call that the right outcome.
While the inventors had transferred their patents by that point, VirnetX could easily have sought out the inventors and sold them their patents back with the promise of a delayed payment back to VirnetX if the inventors won the lawsuit. Similar tactics have been used before in what’s known as “privateering,” and VirnetX may itself be the result of a privateering arrangement. In addition, VirnetX could have transferred the patents but funded the litigation, with the inventors agreeing to pay VirnetX back with interest or with a percentage of their winnings—another common arrangement called litigation finance.
Given the ease with which an NPE could take advantage of these benefits that were designed to accrue to inventors, there’s every reason to think they would do exactly that.
And when 4 patents can wipe out not just every bit of profit you made but actually eliminate every last bit of revenue? There’s no reason to create anything new in the U.S. anymore. If you’re worried about competition from China, the last thing you want to do is create a rule that ensures that creating complex technology in the U.S. is almost guaranteed to be unprofitable.
There’s also something of relevance to this in Patent Docs, a PTAB-hostile site. James Korenchan and this patent maximalists’ site explore the possibility of disguising software patents as “GUI” to bypass the law and patent software anyway (post-Alice/Section 101). Nitpicking an examiner-level ‘case’ (it’s not even a case), Korenchan wrote:
Navigating the post-Alice patent-eligibility landscape with graphical user interface (GUI) claims can be trying, particularly when fighting to maintain desirable breadth. As with all software-related claims, limitations must raise GUI claims (and other types of UI claims, for that matter) beyond fundamental designs and implementations, root the invention in computer technology, and provide a specific, innovative solution to a technological problem. In the past four years, the Federal Circuit has provided some guidance for GUI claims, perhaps most notable being the recent Core Wireless decision. In Core Wireless, the Court essentially stated that, to overcome the scrutiny of 35 U.S.C. § 101, a GUI claim should describe the specific functionality and/or layout of the GUI, and in addition, the patent’s specification should describe in detail the advantages of the GUI functionality and/or layout over existing methods and designs.
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But the Board concluded that the Examiner’s characterization was proper because “different levels of abstraction” can be applied in an Alice step-one analysis. Unfortunately, the Appellants’ arguments with regard to step two were relatively lacking, and the Board concluded that the Appellants did not identify or provide supporting explanation for additional elements that amount to significantly more than an abstract idea. Instead, the Appellants restated the above-noted improvements to the field of documenting and billing medical procedures, and then proceeded to unsuccessfully argue that the claimed features are not well understood, routine, and conventional because there was no prior art rejection of claim 1. The Board very quickly dismissed these arguments. Had the Appellants cited to the specification in step two and tied described advantages to particular claim limitations, they might have set themselves off on a better foot with the Board (and possibly with the Examiner), though it is difficult to say whether this would have been persuasive.
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In rejecting this claim, the Examiner argued that the claims were directed to an abstract idea of “determining the acceptability of a determined sample score that is based on determined document scores of audited medical documents.” In response, the Appellants contended that the claims recite specific UI elements (e.g., a GUI wizard and an X-bar chart analysis) that define a specific user experience. Analogizing to the claims in Core Wireless, the Board sided with the Appellants, finding the claim to be directed to an improved GUI wizard and specifically identifying steps [2], [5], [6], and [11] of the claim as sufficiently inventive features. Notably, the Board emphasized how these and other claimed steps are described in detail in the specification along with details as to how the steps, as well as the GUI layout, help a user audit coded medical documents. The Board stopped its analysis after step one, concluded that the claims are patent eligible, and reversed the Examiner’s rejection.
The anti-PTAB lobby is quite well funded and it will do whatever it can to work around PTAB, knowing that the SCOTUS supports PTAB and the Federal Circuit almost always agrees with PTAB. █
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