VOLUNTARY PTAB ARBITRATION FOR ISSUED PATENTS

LEGISLATIVE PROPOSAL (May 17, 2021)

An issued patent shall be exempt from PTAB review if the patent owner requests exemption on the basis that—

(A) the right to exclude is controlled by one or more inventors named on the patent;

(B) the patent owner qualifies as a small business concern as defined under section 3 of the Small Business Act, and has actually reduced to practice one or more of the challenged claims;

(C) the patent owner or its exclusive licensee commercially practices one or more of the challenged claims; or

(D) a patented article is marked with the patent number pursuant to subsection (a) of section 287.

INTRODUCTION

Society needs inventors. Yet in the United States, inventors are discouraged from pursuing research, development, and commercialization of inventions due to the implementation of the Patent Trial and Appeal Board (PTAB) under the 2011 America Invents Act. Rather than helping small businesses as intended, the PTAB is often weaponized by large corporations to block competition from entrepreneurs with superior technology. PTAB uncertainty, risk, and expense has become an overwhelming burden for entrepreneurs, stifling their ability to innovate and compete.

BACKGROUND

• The 10 year anniversary of the PTAB is September 16, 2021
• The PTAB has invalidated 84% of the 3,000 patents they have reviewed
• The PTAB is a division within the USPTO compromising about 250 administrative patent judges
• The PTAB often overrules examiners, judges, and juries that have upheld validity of the same patent
• 83% of challenges at the PTAB are filed by large corporations
• 2% of challenges at the PTAB are filed by small businesses against non-practicing entities (i.e. “patent trolls”)
• PTAB primarily helps large corporations with hundreds of millions of dollars
• PTAB does not help small businesses with limited resources
• Most PTAB judges have no technical experience
• PTAB judges have less than half as much experience as regular judges
• PTAB permits multiple challenges – up to at least 27 – against each patent
• PTAB permits challenges on the same prior art considered in examination and reexamination
• PTAB permits duplicate challenges to patents that are pending or completed trial in a regular court
• PTAB increases the length of patent litigation by almost 3 years
• PTAB increases the cost of patent litigation by about half a million dollars per case

From 1836 to 1980 the USPTO would only review an issued patent at the request of the patent owner. Inventors would often file for reissue or certificate of correction.

From 1980 to 2011 patent owners would often initiate or consent to a reexamination. When threatened with prior art or invalidity contentions, we would go to the USPTO to recertify or clarify our patents.

Since 2011 and the implementation of the America Invents Act inventors have lost confidence in the ability for the USPTO to provide a fair and impartial review of their previously approved patents.

If the PTAB is a faster and less expensive alternative to district court, then there is absolutely no reason to compel us to go there. We will be first in line. We don’t want to assert invalid patents. We don’t want to litigate. If we are forced into litigation to defend our rights, we will voluntarily choose the venue that is fast, affordable, and fair.

EXPLANATION

Explanation for the proposed language:

A patent shall be exempt from inter partes review if the patent owner requests exemption on the basis that—

This provision would allow any patent owner to consent to an IPR, which opens up scrutiny as to why a patent owner would not consent. Historically inventors have voluntarily submitted to reissues and reexaminations to confirm or correct an issued patent. By requiring consent, the PTAB will be held accountable to provide a cost effective, expedient, and fair adjudication. There should be no need to compel patent owners in the listed categories.

(A) the right to exclude is controlled by one or more inventors named on the patent;

This circumvents most objections to non-practicing entities (NPEs) because they are almost never controlled by the inventor. Some inventors are accused of being patent trolls, but 1) it is a small number, 2) it is not very plausible, and 3) very few have the resources to carry out a significant litigation campaign.

The term “controlled” answers the objection that an inventor might hold title to a patent while having assigned control to an NPE. There is clear case law to determine the line when an inventor has assigned or licensed control of the patent to another.

The Constitution and the Patent Act explicitly grant the right to exclude to the inventor. While there is good policy and history to support fully alienable patents, the text does not require it.

Individual and small teams of inventors are an important source of innovation and commerce, yet are most handicapped by PTAB uncertainty. It is truly an existential threat. Others may be harmed, but can usually cope. We should obtain relief wherever possible as soon as possible, even if we cannot obtain immediate relief for all patent owners.

(B) the patent owner qualifies as a small business concern as defined under section 3 of the Small Business Act, and has actually reduced to practice one or more of the challenged claims;

This provides an exemption for a small business that at least made a prototype. This allows inventors to sell or assign their rights to a small business, such as an employer or jointly held company. The small business will have confidence to develop and commercialize the technology without the threat of revocation by the USPTO. Requiring actual reduction to practice distinguishes from ordinary NPEs, because there is no political support for giving them a PTAB exemption (which would be equivalent to abolishing the PTAB).

(C) the patent owner or its exclusive licensee commercially practices one or more of the challenged claims; or

This is again distinguishes from NPEs which are the primary target of the AIA/PTAB. Also, operating companies don’t want to risk business or waste money on litigation, so they can be expected to choose the venue that will most fairly and expeditiously resolve the dispute.

The infringers have also been pushing PTAB as balancing “implementers” vs. “innovators”. Here the patent owner is both, eroding the justification for compelled PTAB review.

This also broadens our base of support for reform. Many medium sized and innovative companies and their industry associations would support this.

(D) a patented article is marked with the patent number pursuant to subsection (a) of section 287.

This largely overlaps with the previous category. It makes the determination easier to prove. It also is equitable because patent owners are often penalized for NOT marking their products, thus there should be a benefit for when they do.

ENDORSEMENTS

The following organizations support this proposal:

• Americans for a Balanced Budget
• Center for Innovation and Free Enterprise
• Conservatives for Property Rights
• Fair Inventing Fund
• Native American Intellectual Property Council
• Small Business Technology Council
• United Inventors Association
• U.S. Business and Industry Council
• US Inventor

MORE INFO

Contact josh@usinventor.org
Inventor Rights Resolution
Inventor Stories
Amicus Brief by 39 Inventors
PTAB Myths and Facts
INVALIDATED Documentary
Amicus Brief by Joshua Malone
AIPLA Speech by House IP Subcommittee Chairman Hank Johnson
Republican Study Committee PTAB Backgrounder