When Patent Trolls Attack: True Stories from the Frontlines

On April 5, 2024, the Public Interest Patent Law Institute (PIPLI) held a discussion with innovators, entrepreneurs, and attorneys who have directly encountered patent assertion entities, commonly known as patent trolls, and seen their detrimental impact firsthand. The discussion focused on their individual experiences, the patent system’s vulnerability to abuse, and the importance of mechanisms for challenging invalid and ineligible patents.

Panelists included Austin Meyer, an inventor and entrepreneur, Michael Lewis, an inventor and founder, and Ricardo Bonilla, an attorney whose work primarily involves defending individuals and businesses targeted by patent trolls. The moderator was Alex Moss, PIPLI’s Executive Director.

Some highlights are summarized below, but you can watch a recording of the full webinar on YouTube.

Panelist Accounts

1.     Austin Meyer: Austin, the creator of X-Plane, a flight simulator, battled a patent lawsuit from Uniloc, a prolific patent assertion entity. With great expense and effort, Austin successfully used Inter Partes Review (IPR) to overturn the patent, highlighting the crucial role of IPR in defending against baseless lawsuits.

2.     Michael Lewis: Michael, a named inventor on 20 patents, faced patent troll aggerssion as the CEO of Mycroft AI, a company seeking to build a privacy-respecting, open-source voice assistant. Despite invalidating the patent through IPR, the legal ordeal deterred investors and drained Mycroft’s limited resources, ultimately leading to its closure. Michael stressed the importance of IPR access for innovative small businesses.

3.     Ricardo Bonilla: An IP litigator, Ricardo (Riqui) discussed the high costs of defending patent lawsuits and the value of IPR proceedings and patent eligibility limits in countering patent abuse. Riqui highlighted the disparity between the cost of filing a lawsuit, the cost of going to trial, and the cost of challenging a patent in IPR proceedings. He also emphasized the importance of IPR and patent eligibility limits for small businesses that would otherwise be far more vulnerable to abusive patent assertion practices.

Q&A Highlights

1.     Question: Are there specific industries or technologies that are more vulnerable to patent assertion entities?

Riqui: Any business with a website can be vulnerable to patent trolls. This vulnerability isn't limited to any one field or technology. For example, a bakery selling brownies online faced demands from two different patent assertion entities.

2.     Question: Is the US Patent and Trademark Office (USPTO) issuing fewer invalid patents now, especially in light of the Supreme Court's decision in Alice v. CLS Bank in 2014?

Alex: Initially, it seemed that the USPTO would issue fewer invalid patents following the Alice v. CLS Bank decision based on its initial post-decision guidance. However, the situation changed when the former USPTO director, Andrei Iancu, issued new guidance that effectively prevented examiners from applying the Alice decision correctly. That means the USPTO is issuing more patents that claim basic ideas—like birdwatching—combined with generic computers, and therefore do not comply with patent eligibility requirements.

3.     Question: Can you discuss how allegations of patent infringement and having a lawsuit pending during the IPR process affected investors, specifically in the context of Mycroft?

Michael: From a venture capital perspective, investors are extremely selective, with thousands of applications for every investment. A company with a pending patent infringement lawsuit or a demand letter falls into a high-risk category, making it unattractive to investors, regardless of their potential or the quality of their ideas. In terms of investment, the shadow of the patent dispute made it impossible for Mycroft to secure funding. Investors were interested in the product but were deterred by the legal risks involved.

4.     Question: How effective are other administrative challenges like Post-Grant Review (PGR) and ex parte reexamination in challenging patents?

Alex: An ex parte reexamination is not very useful for challenging invalid patents. A third party can request reexam, but the proceeding is entirely between an examiner and the patent owner. During reexam, the patent owner can and often does re-write their patent claims to get around the specific issues raised in the request, even if the re-written claims raise new issues.

Riqui: Unless a party is actively monitoring every patent that’s issued, the narrow nine-month window for PGR means it’s not going to be very useful. PGRs and ex parte reexaminations are of such extremely limited utility that I have never filed either one of those in more than ten years of doing this work. They are not nearly as helpful as challenging a patent’s eligibility in district court or using prior art to invalidate it in an IPR proceeding.