by Dennis Crouch
Rep. Danny Davis (D-Il) and Paul Gosar (R-Az) have introduced the Inventor Rights Act. H.R.5478 that creates a set of rights and privileges associated with inventor-owned patents. These are patents owned by their respective inventors or owned by an entities controlled by the inventors. In addition to ownership, the inventor must hold “all substantial rights.”
Big Four:
- No Involuntary Post-Issuance Proceedings against inventor-owned patents. No IPR, Post-Grant Review, or reexamination, or any other “determination about the validity” without “consent of the patentee.”
- Injunctions would now be likely against infringers of inventor-owned patents. The Bill would create a presumption of both irreparable harm and inadequate remedy at law for infringement of an inventor-owned patent.
- Broadened Venue for filing of infringement lawsuits. Here, the proposal does not recapture all of the venue “lost” in TC Heartland.
- Damages law would offer a new option: Profit disgorgement + attorney fees + treble damages for willfulness when inventor-owned patents are infringed.
Inventor Rights Act 2019. These are all major changes. Although all of the provisions have historic roots.
Currently, only a rather small fraction of patents would qualify as “inventor-owned patents” under the statute. However, the Bill would tend to both (1) encourage individual inventorship and (2) encourage patent holding situations that take advantage of the inventor-owner rights. Tech company founders would likely keep ownership of their patents, although I suspect that large companies would remain wary of allowing regular employees to retain “all substantial rights” in the patent.
Folks at US Inventor, including Josh Malone and Paul Morinville, have lobbied for the proposal and have included substantial discussion on their website: https://www.usinventor.org/inventor-rights-act/.
One of the legislative findings (6(A) in the proposed text) asserts that “ the Patent Trial and Appeal Board institutes trials in over 60 percent of cases… .” Does anyone know to what this refers?
Does this mean that 60% of petitions result in institutions (not true)? Or that 60% of district court patent cases feature a corresponding PTAB institution (where does that assertion find corroboration?)? Or something else?
Slide 6 at link to uspto.gov
Slide 7 caught my eye — with its rather odd (and far too limited) groupings (putting mechanical with business methods…?)
Thanks, that is helpful to understand what finding 6(A) means. Regrettably, the bill is purporting to find as fact something that simply is not true. The USPTO statistics you linked are calculating “institution rate” in a manner that does not support the assertion (as it is phrased) in finding 6(A).
Finding 6(A) asserts that “the Patent Trial and Appeal Board institutes trials in over 60 percent of cases,” but the USPTO presentation calculates “institution rate” by ” by dividing petitions instituted by… [the sum of] petitions instituted plus petitions denied… .” This leaves out a rather large number of petitions that are withdrawn by the petitioner before an institution decision (e.g., following settlement, following a dismissal for failure to observe formalities, etc). Those withdrawn petitions are “cases” just as much as the ones instituted or denied. Once the total number of petitions are considered in the denominator, the institution rate is nearer to ~50% than “over 60%.”
“This leaves out a rather large number of petitions that are withdrawn by the petitioner before an institution decision”
Aside from any anecdotes that you may have as to this being a “rather larger number,” Greg, do you have any actual data as to that size?
Also, if I understand the slides correctly, the settlement numbers ARE accounted for…
One should also consider petitions that were considered but not filed because the patent was considered too strong or otherwise inadvisable. There is no way to measure all such no-petition decisions, but are there any stats on patent infringement suits where an IPR was theoretically available but not filed?
Also, evaluation of these statistics presumes the existence of some knowable “correct” percentage. Otherwise, one cannot determine whether 60% (or some other number) is too high or too low.
Those are worth considerations, to be sure, but rather go beyond any point that I was hoping to make. My point was that—as a plain, prosaic fact—when one divides [petitions instituted] by [total petitions lodged] (see URL below), the quotient is ~0.5, not >0.6 as finding 6(A) proposes. This is unassailable arithmetic, setting aside worthy but harder-to-establish considerations of what is the “correct” institution rate.
link to ipwatchdog.com
Well, math isn’t really a strong suit for these people unless they are calculating the number of rubes out there waiting to be conned.
The thing I don’t understand is why, when the government goes to great lengths to defend its interests and work for years and even decades, the government doesn’t defend its own work in the issuance of a patent. It isn’t the inventor who should be defending the basics of the patent, it is the patent and trademark office that should be defending their own work.
Kelly,
You post has even more pertinence in the post Oil States era, given that some have clamored for the government to have a continued “finger in the pie” post-grant and have re-imagined the personal property right to be a public franchise right (but “conveniently” do not want to carry the consequence that that same ‘finger in the pie’ makes the government a FranchisER with inherent duties to its FranchisEEs.
If the government wants that Quid Pro Quo recalibrated, maybe that recalibration should not stop at the ability to denigrate what the innovators still hold. Maybe enforcement costs should be entirely shifted as well to the FranchisER…
There is this “free pass” given to the PTO in the sense that the assumption that the government’s portion of patent prosecution was incompetent. Having been through many of these as an inventor and corporate assignee, I can tell you that they were very thorough and careful. The idea that government is frequently incompetent is a vast overstatement; as we see in the deployment of “Troll” as a metaphor for inventors and their helpers.
“ as we see in the deployment of “Troll” as a metaphor for inventors and their helpers.”
It is ALWAYS helpful to remember exactly who pushed the “patent Tr011” narrative so heavily — and why.
Hint: it was NOT for the benefit of Joe Consumer.
The thing I don’t understand is why,… it is[n’t] the patent and trademark office that should be defending their own work.
This is a good point. I consider the IPR system to be an improvement over the status quo ante, but that does not mean that it is perfect. It could be better.
Doctrinally (at least), IPRs would sit more soundly in our constitutional scheme if they worked more precisely like the writ scire facias from which they are derived. In such a system, IPRs would be adjudicated in an Art. III court instead of the PTO, and they would involve the petitioner suing the PTO to have the patent claims canceled. The patent owner could (and in most instances likely would) intervene to defend the patent validity, but even if the owner did not, then the PTO would still be there to defend the grant (on the taxpayers’ dime).
I think that this would be a better way of running the IPR system. The present way of running it, however, is still better than the alternative of not having an IPR system at all.
You had me until “the PTO would still be there to defend the grant (on the taxpayers’ dime).” Why should taxpayers pay?
It is the PTO being sued, so it would be the SG’s office (where the patentee does not intervene) responsible for the defense. The SG is funded by the taxpayers, so it is the taxpayers’ dime. It is simply in the nature of the government that taxpayers pay for its upkeep and continued operation.
I’m trying to learn (no irony, really). I didn’t ask why would, but why should? Yes. Justice is funded by the taxpayers but the PTO has been user-fee funded for about a generation. You are re-designing the system. So, why put the burden on unsuspecting taxpayers? Wouldn’t most folks (non-patent attorneys) object to paying to defend PTO suits in Federal Court if they were asked? Democracy?
I didn’t ask why would, but why should?
Ah, very good. Honestly, this point is kind of orthogonal to any details about which I actually care. If there were a consensus about reorganization of the IPR process to make it more like the writ scire facias, and the funding source of the PTO lawyers proved a sticking point, I would hope that the bill’s sponsors would just change that aspect however necessary to get the needed votes.
The only reason I said “taxpayer” is because that is how it works presently. People sue the PTO today, and when they do, the SG defends the PTO on the taxpayers’ dime. I assume that when people sue the PTO in the future, it will work the same way. If Congress were to think it sensible to change that arrangement, however, it is nothing to me.
Greg “Dozens” is precisely the person that wants to glom onto patents being a public Franchise Right, and yet finds it “orthogonal” to details that he cares about when it comes to the meaning of Franchise and the inherent consequences of FranchisOR and FranchisEE.
He tends to only be present in conversations when his point is being discussed (and tends to disappear otherwise).
Would it be a specialized Art III court or any District Court?
The essential point of the IPR scheme was to deal with the fact that litigation expense has become disproportionate to the interests being protected. Two million in legal fees to adjudicate a $500K infringement means both the patentee and alleged infringer are starting off in a terrible spot. An IP system with no economically practicable enforcement has a big systemic problem.
Cost has to be taken out of the system to reach conclusions in lower dollar and easier cases. IPR’s accomplish that now, somewhat. Retiring the IPR system would require a replacement.
Obviously a big improvement in Subject Matter Eligibility would be a chunk play, but more is needed to take apart the value chain and streamline expert testimony, discovery, issue preclusion, etc. Even the ability to send technical patent matters quasi-mandamus style to a replay booth in Washington mid-litigation would then be under the direct control of an Article III judge.
The actual problem is making justice accessible for all parties. If something better than IPR can be made, and it obviously can be, it should be.
Would it be a specialized Art III court or any District Court?
As I conceive of it, it would be a specialized Art. III court. I think that there should be a set of Art. III district courts set aside specifically for adjudicating patent validity challenges—and nothing else. Infringement would still be handled in the local venue,* but if a validity challenge were raised in that infringement case, it would be hived off to the specialty court and the infringement case stayed until the validity issues are resolved.
The judges appointed to this specialty court should be required to have at least and undergraduate degree in a STEM field. There would be no juries for these trials, as the trials would be styled as a suit against the PTO, whose sovereign immunity is not obliged by the VII amendment to try a case to a jury. The FRCP would be amended to have special discovery provisions applicable only to these courts, to provide essentially the same degree of discovery as presently available in an IPR/PGR. Just as in IPRs/PGRs, there would be a one-year limit to the time of the proceedings, with a six-month pre-trial conference and motions period (much like the present IPR/PGR arrangement) during which time the parties would negotiate which issues are to be tried. The court’s goal would be to reduce the number of grounds of asserted invalidity to the one or two strongest grounds, and the rest simply to be left on the cutting room floor.
In other words, the whole thing would operate much like the present PTAB, but with the judicial independence afforded by Art. III structure, and thus without the potential for political interference inherent (if only latently so far) in the present IPR/PGR structure. It should not be more costly or time consuming than the current IPR/PGR regime, but with perhaps a slightly more unassailable appearance of being neutral and fair.
Whoops, I added that * to include the following footnote: If folks want to put infringement in front of these tribunals as well, I really have no objection to that idea. I am simply trying to make as few changes as possible to the status quo, on the logic that big changes attract big opposition.
I have discussed the scire facias action proposed at 8.1.1.1 (under the name try claim validity) with several federal and trial court judges.
The judges were of the opinion that most of the initial case work would be left to a competent magistrate, who would produce a reasonable Report & Recommendation that unlike the final written report of a PTAB panel would be rational. The typical scire facias/try claim validity action would be disposed at the motioning phase.
The 8.1.1.1 proposal provides a mechanism for any person to petition for a writ of scire facias and thus has some aspects of the EPO opposition.
After all claim validity issues in Article III courts are put under the same statutory basis and under supervision of the same appellate court, the patent system should become more predictable and uniform.
Then it only remains to undo the nonsense that scientifically illiterate SCOTUS unfamiliar with the original intent and meaning of the founders with respect to the patent system have with the assistance of poor arguments from many patent attorneys wracked in Title 35 and other areas of the Federal Civil Code.
IPRs have not taken the cost out of the system. They ADD cost. Average of $450,000 per IPR.
Multi-billion dollar corporations don’t need cheaper litigation. The richest companies in the world are the main benificiaries of the PTAB.
It has not improved the economics at all for small businesses.
It has provided no benefit except for giant corporations that didn’t need it.
It does not need to be replaced.
IPRs have not taken the cost out of the system. They ADD cost. Average of $450,000 per IPR.
Median litigation costs for a patent case with $1 million to $10 million in damages have declined from $3.2 million to $1.7 million. Adding a $450K IPR phase to the process in order to save $1.5 million overall in total litigation costs still leaves one more than a million dollars to the good.
Meanwhile, median total litigation costs for patent cases with <$1 million in damages at stake have declined less, but have still declined. The numbers do not lie. The advent of the IPR/PGR system is reducing total litigation costs, thus freeing up resources in the overall innovation economy for more productive uses than litigation.
The claim of “the numbers do not ___” (selective screens are still in place) is not accurate as Greg confuses cause and correlation – and does so without taking other possible variables into effect (two of which were the already downward litigation trend numbers, and the fact that at least one part of the AIA (non-joinder change) is known to have actually increased litigation levels.
Greg DeLassus misunderstands the scire facias proceeding used to revoke a patent. The defendant was not an entity of the sovereign.
The brief of AMICI CURIAE ALLIACENSE LIMITED LLC IN SUPPORT OF PETITIONER (Oil States) describes the proceeding in England. Scire facias actions were filed on the law side of Chancery and tried at King’s Bench. In many such actions the King (Rex) was the formal plaintiff while the patent holder was the defendant.
I proposed a modern statutory version of the scire facias action in the comment at 8.1.1.1.
I made the public the plaintiff because in the USA nowadays the people is theoretically the sovereign.
Greg DeLassus misunderstands the scire facias proceeding used to revoke a patent. The defendant was not an entity of the sovereign.
You are, of course correct that in the old scire facias, the attorney general was the plaintiff, not the defendant. I would like to make clear, however, that I was never proposing to make a system exactly like scire facias. You will note that I say above that “IPRs would sit more soundly in our constitutional scheme if they worked more precisely like the writ scire facias from which they are derived” (emphasis added). “More,” not “exactly.”
To my mind, there are three reasons why it would not be a good idea to replace IPRs with an exact replication of the old scire facias. First, it is not clear if the government would (except in a few instances involving work by a government contractor) have standing under U.S. Art. III to bring such a suit. Second, to make the government the plaintiff would deprive aggrieved parties of a right to make such a challenge, which means that the IPR would cease to serve its function as a cheaper, faster alternative to a DJ action. Finally, the way I contrive the process (with the government as a defendant instead of a plaintiff obviates any considerations of a VII amendment jury trial. This allows the IPR to function with the efficiency and reduced cost that is the whole point of the IPR.
In other words, what I am proposing was never meant to be an exact replica of scire facias, so it is pointless to criticize by noting that it is not exactly identical. Rather, what I am proposing is meant to be better than scire facias, but also better than the IPR status quo, insofar as it is more like the writ scire facias.
Yet another patent bill lacking comprise. It’ll go into the circular file until you guys figure out that sometimes you have to give something to get something.
Serious questions for you Ben (and I don’t even like this legislation, albeit for markedly different reasons):
What exactly is it that you think needs to have a “compromise” made?
With whom do you think this compromise needs to be made with?
Do you understand the baseline Quid Pro Quo which guides ALL notions of “compromise?”
The word is “comprise.” Look it up.
Hmm, I bet my view is more correct, and that our friend Ben had a simple typo.
But hey, your game is afoot and here you just mouth off without even trying to be on point.
Sorry Shifty, yet another instance of no “gotcha” for you.
Gotcha. Again.
Except not, Shifty.
But that’s a really weak attempt at covering your faux pa.
Snowflake, the phrase is “faux pas.” Gotcha. [Sigh] Yet, again.
I don’t think that you get the concept…
(Even as I give you an “s”)
Yeah, Snowflake, I get the “concept.” [Sigh] But you need to be extra special careful when you’re “correcting” somebody.
Lol – heed your own advice — given as the gift that Ben mentions is YOUR error when you attempted a “correction” with snark and totally missed the point.
Extra special careful? Heck, let’s aim for just being on point with normal care of a blog (cue Prof. Crouch retort on typos)…
No, Snowflake, I no longer get your “concept.” [Sigh]
Shouldn’t you be better at this by now?
A snarky correction guilty of the same typo intended to be corrected? That is a fine holiday gift! Thanks.
Ben,
Snark that backfires is Shifty’s signature move.
Aside from his (unintended) mirth, did you have any answers to my questions?
Thanks,
… note as well how “joyous” Shifty gets at a missed “s,” while I take your typo in stride (it’s a blog after all, and Prof. Crouch had a great one liner when someone pointed out one of his typos awhile back), and I look to advance the conversation with meaningful and on point questions to you.
Have you had a chance to think about those questions?
The AIA was introduced in several consecutive sessions of Congress before it eventually passed in the 112th. By the final iteration, it had six cosponsors in the House. This bill currently has two cosponsors.
In other words, I think that you are correct that this text has a way to go before it will be at all likely to advance. It will need changes to attract enough support to move anywhere.
I agree that the rights of patent owners should be strengthened, but identity-based schemes are a terrible idea. The high tech lobby has been trying to split off pharma into different rules for a long time so high tech can have its way in the patent world without branded pharma’s objections –which have saved patentees on many issues.
If the system is fair, it should be applied to all equally.
If the system is not fair, the answer is not to exclude some preferred class and screw everyone else; the answer it to make it fair.
Absolutely.
Joshie and Paulie: please share with us all your net worth, including the value of any real estate holdings, and an estimate of the licensing fees you collected over the last two years so we can all see how oppressed you both are.
I have 8 patents. Per the many different attorneys I have visited and the claims charts that have been created, my patents are currently being infringed. Unfortunately, and because of the state of today’s patent law and PTAB, the attorneys will not take my case on contingency. There is no financial upside to winning at the PTAB, and they will not foot the bill of $450K when the chance of losing is 84%.
My net worth: $300K. Remember, a patent doesn’t give anyone the right to produce anything. It it meant to exclude others so I can have a fair shake. However, my competition already owns the market, and they decided to infringe rather than license. So I have to sit on my hands, let them infringe, and continue to out pace me, but now, using my technology! My patents will expire in 10 years.
A patent today offers no protection for small inventors and only serves to inform the public and the competiton of one’s invention.
I will no longer invent in the United States.
The Inventor Rights Act rights the ship for the small guy. Neither the USPTO nor patent practitioners will like it because the PTAB is a money making machine for them. Nevermind the small guy.
Congress represents the people. So that’s where we will go.
Neither the USPTO nor patent practitioners will like [The Inventor Rights Act] because the PTAB is a money making machine for them.
Actually, the USPTO consciously chooses to run the IPR system at a loss. USPTO senior management consider that “[s]etting [IPR/PGR] fees at full cost recovery reduces access to these proceedings, which works against the policy factor of providing options for post-prosecution actions.” In other words, the IPR system is a money-loser for the USPTO, not a money-maker.
How do they fund the deficit?
If you read the link that I provided, you will see that the PTO has decided that examination fees, IPR/PGR fees, appeal fees, and RCE fees should all cover less than cost, while maintenance annuities should cover more than cost. In other words, the PTO loses money on examination and adjudication, and makes up the loss based on maintenance annuities for granted patents.
If anything, that makes IPRs even more of a money loser. No one is likely to pay the third maintenance annuity on a patent for which the most valuable claims have already been tanked. The PTO are not running the post-grant system for the financial incentives.
Everything out of the USPTO is a Zero-Sum game — by law.
There is NO “running at a loss” in the aggregate, and any intonation of such “losses” must be looked at with the entire budget apparatus in mind.
Otherwise, you will end up with assertions that simply do not pan out.
So you are saying that the USPTO is using our maintenance fees to subsidize the salaries of the APJs to cancel our patents? Which pages in the link you provided substantiate this?
Josh,
I recommend that you investigate the bigger picture of how the USPTO budget is set up.
That way, you will see that the USPTO (being entirely funded by innovators choosing to use the patent system) is a “Zero Sum” game — neither a profit generator (supposedly**) or a loss center.
** Being a “profit generator” DOES happen every time Congress siphons off or diverts funds collected from innovators and turns that money over to the general treasury.
Ok. Then it is an employment mechanism for unconstitutionally appointed judges and a money maker for them, and still a big money maker for patent attorneys and agents.
And while doing do, it adds to the stupidity of unnecessary government spending. Correcting their mistakes and making the Inventor pay for it.
If the goverment loses money from this, then why not keep going and pay all fees for the Inventor to correct the government’s mistake?
PTAB. Pitched as being cheaper and faster. Cheaper and faster for whom? — THAT is the question. Because if WHOM is the Inventor, the intent misses the mark.
Ok. Then it is… still a big money maker for patent attorneys and agents.
Hm, maybe this is true, maybe not. I would be interested to know if anyone has actually done a rigorous study to investigate this point.
The total cost (to both plaintiff and defendant) to bring a patent infringement suit has gone way down since the advent of the AIA. This represents a huge loss to patent attorneys, who make much more contesting validity in an Art. III court than in front of the PTAB.
On the other hand, there are surely validity challenges that get brought now that would never have been brought in the pre-AIA era because the costs would have been considered to outweigh the benefits. This is a monetary gain to patent attorneys.
It is an open question (at least to my knowledge) whether—on net—the loss outpaces the gain or the gain outpaces the loss. It is not clear to me that anyone is really making money off of the IPR system on net.
If you perceive the motives behind the IPR system to be lucre, I think that you are misapprehending. There are more things that motivate people than just money.
“There are more things that motivate people than just money.”
While in and of itself, the statement may be true, in the present context, it is quite meaningless.
ROTFLMAO
You gotta love it when the truth leaks out.
LOLOLOL
Your snark overpowers the point that you may have been attempting to make.
What was that point that you were trying to make?
Does it depend on your cognitive dissonance, or your feelings that making money is somehow a “bad” thing?
Let’s see your point, Malcolm.
Let’s see the patents, Mike.
I will happily share my patent numbers, but only once I have secured representation for PTAB challenges. Given that anyone can challenge a patent in our AIA patent system, only a fool would show his cards if he doesn’t have the financial resources to defend his patent if challenged.
This points out yet again how the AIA created an unbalanced system. What the framers of the AIA failed to recall — a patent is an exclusionary right; it does not give an inventor the right to produce anything. Thus, one cannot assume that a patent holder of a valuable patent will readily have the financial reaources to defend his patent once challenged at the PTAB. This is another example of how the AIA threw small inventors under the bus.
Mike,
MM (Malcolm) was not sincere in his post to you. He really does NOT care about your patents.
Likely, there are but two reasons for his post as such.
1) Malcolm thinks that your patents are in the “wrong bucket” or type of innovation, and he would denigrate you for trying to protect innovation that he feels should not be protected with patents; or
2) Malcolm is trying to “out” you as if somehow that would scare you away from you trying to engage on merits in this blog setting. He really did not want to engage on any merits.
Malcolm is what you might call a “drive-by Monologuist.”
He has no actual interest in a dialogue that may expose that all that he does here (all that he ever does here) is engage in a propaganda Monologuing “dump” of his feelings and views.
Very interesting to see how the legislation is already doing its job – exposing how patent attorneys hate inventors. These comment screenshots of lawyers calling inventors trolls is really helping our cause with ordinary citizens.
You realize that the more “ordinary citizens” know about you and Paulie, the more they loathe you.
It’s people like you that compelled normal people to pass the AIA so you could “s-ck on it”, as they say.
Just sit inside your gated community and cry your entitled greedy behind off and leave the rest of us alone. Thanks.
MM – if you actually believe that “normal people” had even an iota of input (or even a desire) to pass the AIA you must be living in Mars.
For all of your railing against what you view as an entitled inventor class trying to unfairly tilt the playing field in their favor, you are remarkably mum on the fact that a much larger, and far more entitled “big tech” lobbied heavily for this law (the AIA) in order to unfairly tilt the playing field in their favor.
“Normal people” (I.e. anyone who is not an inventor, patent holder, or patent attorney) did not pay any attention to the details of the AIA back then, nor will they pay any attention to the details of the new Inventor Rights Bill.
Two brief thoughts in response:
(1) It is rarely worthwhile taking the time to respond to MM.
(2) You are surely correct, however, in the supposition that “anyone who is not an inventor, patent holder, or patent attorney… did not pay any attention to the details of the AIA back then, nor will they pay any attention to the details of the new Inventor Rights Bill.” It is a curious misnomer, too common to these parts, that things that interest us must surely hold a fascination to the wider public. I wonder if immigration attorneys, or trusts-&-estates attorneys, or international trade attorneys (in other words, practitioners of similarly specialized fields in which non-lawyers do not daily engage) are similarly given to the self-deception that the larger world cares especially about developments in these specialized fields.
Pretty easy to see that patent attorneys pander to their big corporate owners by repeating the fiction they created to ensure their monopolies are unchallengable. Patent attorneys know which side their bread is buttered. You are right Josh. This is useful. But not only in the public square. It is useful in Congress as well. So MM, Paul Morgan and others, keep attacking the defenseless. It provides our defense.
Paul, contrary to your baseless speculation [which does not add to your credibility here] I am a retired patent attorney and do not work for any corporate owners or representatives. I engage solely in pro bono comments here. Over many years I had experienced and observed multiple patent assertions by individual inventors who were FAR from “defenseless”[as you put it], and became extremely wealthy at it, including, and not limited to, Lemeslson and Hyatt.