Edwards: Shooting Ourselves in the Innovation Foot
America is contending with China in a consequential contest to lead the world in innovation. Unfortunately, U.S. competitiveness in this vital area suffers from self-inflicted wounds.
China is making big strides toward overtaking America as the global innovation leader. It has adopted former features of the U.S. patent system that courts, Congress, and administrative agencies have hollowed.
Secure private property rights are vital to winning the competitiveness race through innovation. But, among other things, the Patent Trial and Appeal Board (PTAB) has upended quiet title for patents.
The 2011 America Invents Act created PTAB. Proponents spun it as a faster, cheaper alternative to resolving patent disputes in court, claiming “weak” patents needed clearing out. That was the pretext by predatory infringers.
This rogue tribunal grants proceedings against 70 percent of challenged patents, and an astounding 84 percent of patents that PTAB reviews are invalidated entirely or in part. Federal courts on the other hand only invalidated about 30 percent of challenged patent claims.
These differences in outcomes stem from sound procedures, fairness, and due process in real courts, compared to bias, unfair rules, and nearly unlimited access at PTAB.
PTAB doesn’t require standing to bring a challenge. It uses a low evidentiary standard, preponderance of the evidence. Courts require parties to have a dog in the fight and apply a high standard of proof.
About three-fourths of patents reviewed by PTAB fight simultaneous challenges in federal court. Serial and parallel challenges throw quiet title out the window.
For instance, VLSI Technology won a jury trial, proving patent validity and Intel’s infringing of its patent. A court awarded VLSI an infringement verdict of $2.2 billion. Newly founded OpenSky and Patent Quality Assurance successfully challenged the same patents at PTAB, allegedly to extract payments.
Also, a court found Cisco willfully infringing Centripetal Networks’s patents, awarding punitive damages. A party in separate litigation with Centripetal, Palo Alto Networks, challenged Centripetal’s patents in PTAB, which granted PAN’s request. Centripetal appealed the decision as tantamount to harassment.
PTAB enables abuse, says one observer: “The first problem is ‘patent mercenaries’ attacking patents for the sole purpose of harassing patent owners to earn a profit from their funders. The second problem is the financial strain on small and medium-sized patent owners defending [PTAB] suits.”
Big Tech and Chinese-subsidized companies use PTAB to practice predatory infringement. They cancel innovative inventions and valuable patents. This weaponization of PTAB undermines U.S. technological leadership and industrial competitiveness against surging China.
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James Edwards is executive director of Conservatives for Property Rights (@4PropertyRights) and patent policy advisor to Eagle Forum Education & Legal Defense Fund. Edwards is also featured in the new documentary Innovation Race. More information on Innovation Race can be found at www.innovationracemovie.com.
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