Patent Office Rulemaking Can Curb Abuses via America Invents Act

Congress is not infallible, and lawmakers know that—they lay out their policy intentions as clearly as possible and give executive-branch agencies the authority to write follow-on rules.

Even before the ink of the president’s signature on new legislation is dry, lawyers for interested parties are scouring it for loopholes and other ways to work it to their advantage.

More than a decade ago, the America Invents Act made sweeping changes to the US patent system. Without meaning to, the AIA, like all other legislation, contained opportunities for abuse. Over three administrations, the US Patent and Trademark Office has been working to identify and address them.

Now, the USPTO has published an “advance notice” seeking comment on what the priorities should be in an upcoming round of agency rulemaking. It’s a great opportunity to bring stability and clarity to a policy area at the heart of American innovation.

The biggest reform the AIA introduced was the establishment of the Patent Trial and Appeal Board, an administrative law body within USPTO for reviewing challenges to patents. Patrick Leahy, a coauthor of the bill in the US Senate, recently wrote that PTAB was to “serve as an expert, more efficient, and less costly alternative to district court litigation” over patent challenges.

Unfortunately, this goal of providing an “alternative” has fallen prey to well-funded and creative trial attorneys. PTAB reviews have been less an alternative than an additional weapon to attack patent owners in parallel to district court litigation.

When patent owners believe their rights have been infringed, they can bring suit in federal court seeking damages and other relief. Often in response, parties accused of infringement file a challenge to the validity of the patent at the PTAB. In many cases, the PTAB and court proceedings involve exactly the same parties and issues.

The PTAB review in such cases is essentially a duplicative proceeding, not an alternative. And in these cases, the patent owner is often a much smaller entity than the party accused of infringement. Yet the little guy must defend its patent two times over, at considerable expense, especially relative to the deep pockets of its adversary. The top users of the PTAB review process are the world’s largest technology companies—Apple, Samsung and Google are the top three—and their petitions are almost always duplicative of court proceedings.

The AIA also brought forth the creation of patent mercenary companies whose sole reason for existence is to attack patent owners through the PTAB on behalf of corporate financiers. These entities, which neither create nor manufacture anything, often work in expectation of rewards from big tech companies for winning invalidation at PTAB of patents the big players have been making free use of.

Recognizing these various forms of abuse, the USPTO implemented procedures to rein in duplicative cases by declining PTAB review under certain specified circumstances. This is precisely what the agency needs to do more of.

Clearly, parallel trials that may lead to conflicting decisions on the validity of a patent both diminish the integrity of our patent system and constitute an inefficient use of USPTO resources. The director’s deference to active litigation before district court judges and juries is a commonsense use of discretion.

Unfortunately, Sen. Leahy doesn’t think so. Now retired, he echoes the talking points of lobbyists for corporations with cumulative market valuation of trillions of dollars. These notorious infringers complain about supposed “patent trolls” filing bogus infringement claims and hampering US innovation.

While patent litigation abuse is real, like other abuses of our judicial system, Leahy should recognize that the infringers are at least as guilty, and they rob American inventors in the process. In any event, any abuse of court proceedings should be addressed by the courts themselves—not by empowering mercenaries in parallel administrative proceedings.

The announcement by the current USPTO director, Kathi Vidal, that the agency is getting ready to draft proposed rules to bring clarity to all these matters is welcome.

Any proposed rules should promote predictable results and foster efficient and fair proceedings. To achieve that, USPTO needs a transparent discretionary process for denying PTAB review to avoid duplication and serial harassment of patent owners. And petitioners without a direct stake in the proceedings should be required to disclose their financiers. Such information would be helpful should Congress wisely decide to establish a “standing” requirement for PTAB challenges.

Solid and stable patent protection is the foundation of American innovation. This upcoming round of USPTO rulemaking is an excellent opportunity to shore it up.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Russell Slifer is a former Deputy Under Secretary of Commerce for Intellectual Property and Deputy Director of the United States Patent and Trademark Office.

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