PIPLI to Senate: Listen to Small Businesses!
At its recent hearing on "The Patent Trial and Appeal Board: Examining Proposals to Address Predictability, Certainty, and Fairness,” the Senate Judiciary Committee’s Subcommittee on Intellectual Property heard from four witnesses—none of whom work for or represent people who are most vulnerable to low quality patents: independent technology developers, sole proprietors, and small business owners. Instead, they heard from a semiconductor company incorporated in the Cayman Islands (GlobalFoundries), a massive company dependent on patent licensing revenue (Qualcomm), a big software company (SAS Institute), and a law professor (Jonas Anderson). Shockingly, when asked about the Patent and Trial Appeal Board’s impact on small businesses, Qualcomm’s representative chimed in, as if a company that brags about owning “over 140,000 granted and pending patents across more than 100 countries and jurisdictions,” could somehow qualify.
We submitted a letter describing the experiences that actual small businesses have had with the patent system, including some of those PIPLI has helped fend off demands and litigation threats from owners of low quality patents. Because defending against infringement accusations—however meritless—costs hundreds of thousands of dollars, patents give their owners the power to demand huge licensing fees which are less than the cost of mounting a defense but more than many people can afford. When that happens, those who are wrongly accused have next to no good choices.
That’s why the America Invents Act (AIA) created proceedings for challenging a patent’s validity that were supposed to be cheaper and faster than litigation in federal courts. Unfortunately, those proceedings are still unaffordable and inaccessible for many: Patent Office fees alone are over $40,000, thanks to changes made by the last Director of the Patent Office, Andrei Iancu. Even if these proceedings remain out of reach for many small businesses, their availability helps level the playing field, gives patent owners a reason to think twice before going to court, and empowers individuals to band together to challenge invalid patents. The public needs a way to challenge invalid patents outside of federal court, and the AIA created the best and only mechanism we have.
We are glad that Senators Leahy, Cornyn, and Tillis have introduced a bill to make AIA proceedings fairer for everyone. Among other things, the bill prohibits the Patent Office from denying requests for review based on pending proceedings at the International Trade Commission (ITC). This should be obvious: the ITC, unlike the Patent Office or a federal district court, cannot invalidate patents. Nevertheless, former Director Iancu authorized the Patent Office to deny review requests because of ITC proceedings involving the same patent.
That change has made the patent system more unfair, inefficient, and needly expensive for litigants and the public alike. For example, Nintendo tried to challenge a patent after it was sued at the ITC. The Patent and Trial Appeal Board (PTAB) denied the petition, not on the merits, but because the ITC proceeding was ongoing. The ITC found the patent not infringed and not valid, but because it cannot conclusively invalidate patents, the patent owner continued with a lawsuit against Nintendo in district court, which is still ongoing. Because taxpayers pay for ITC and federal court proceedings, we are footing the bill twice because the PTAB refused to do its job once. Who’s better off? The patent owner—and their lawyers.
When the patent system encourages litigation and enriches lawyers at the expense of the public and innovative businesses, the patent system is not doing its job. We commend Senators Leahy, Cornyn, and Tillis for taking steps to undo harmful changes made by the last Patent Office Director in order to make the patent system more fair, accessible, and effective for all.