The patent system in this country is broken.
Why do we have Patents?
We as a society desire progress. Patents were created as a way and means to foster innovation. The idea was – essentially – to encourage people to make new and innovative things that have never been done before. Whether it be a technological improvement, social, or anything else. How do we achieve progress? By encouraging people to innovate. But why would the people – common (wo)man innovate? So, the government in its wisdom came up with a mechanism to reward this common man for innovation i.e., to create things that are new, unique and non-obvious. How did they achieve this reward? By telling the common man: create something new; disclose and teach it to our society; and in exchange: you can get a patent. Hereon, if anyone uses your teachings, then they owe you a royalty. Simple.
What is a Patent?
A patent is a right given by the (United States) government that excludes anyone else from making, selling, or profiting off of your teachings.
What’s the problem then?
The problem however is that if one cannot actually profit of an invention, why invent?
The Story of Joe Inventor
Let’s say my friend: Joe Inventor devises a teleportation device that allows one to go from San Francisco to New York in an instant – I’m thinking “energize,” or “beam me up, Scotty.” Joe goes ahead and teaches the world how to do this. Joe goes to the United States Patent and Trademark Office (USPTO) and they grant him a patent (As per the Association of American IP Lawyers the average cost of obtaining a patent is $56,525; more on that another day.) But Joe is the mad scientist, and doesn’t actually know how to commercialize his invention. Joe discloses what it takes to build this device, but lacks the skills to actually commercialize his invention. Joe doesn’t have the ability, or the money required to mass-produce the device. He will likely need millions of dollars in order to bring the costs down. And then Joe will also need some capital to go ahead and create awareness in the world and the industry around that such a device has been created. It also might take some marketing dollars and muscle to convince you to allow yourself to be tele-ported; e.g., some people are still not convinced/willing to take the Covid-19 vaccine despite billions of dollars of research, marketing, and data to support that the vaccine is safe.
Now along comes the BooeingX Co. They see that this teleportation device has been invented. What do you think they are going to do? They make the same device – now that they know how-to. The device works. With the resources available to BooeingX, BooeingX decides to mass-produce, market, sell and commercialize this device: raking in billions of dollars. But BooeingX is unscrupulous and does not approach Joe to get a license, or pay royalties. In fact, they don’t even acknowledge the existence of Joe Inventor. (When Joe was granted his patent by the USPTO, he was required to disclose in full and great detail how to make this teleportation device. His know-how was published and made publicly available for one and all to read, consume, understand, and rebuild!)
Do you think that Joe can go to the police? To the USPTO? To anyone, and report this theft? No. There. Is. No. Recourse. For. Joe. The only thing that Joe can do is file a lawsuit himself. (Many estimates put the cost of patent litigation in the range of 5 million U.S. dollars.)
The Patent Troll
The way the industry is setup today, Joe needs to hire attorneys and file a lawsuit against BooeingX. (As you will realize further in this article, there is essentially no incentive for a for-profit-entity like BooeingX to buy a license and play fair.) I am not aware of any reward-based metrics to incentivize any entity to pay for a license, so they all become patent pirates. And with recent changes in patent law, Joe must file the lawsuit in the home jurisdiction of BooeingX. Now, if Joe happens to live in Chicago, but BooeingX does not have offices in Chicago then Joe needs to go – to say Seattle, where BooeingX is located. And all the hearings, proceedings, court appearances… will take place in the courts in Seattle: requiring Joe to take time off from work, and for him and his attorneys to travel – pay for flights, hotels, cars, food etc. None of which comes cheap.
The moment Joe files his lawsuit, he is what-you-have-heard before: a patent troll. Yes, ladies and gentlemen this brilliant inventor is called a ‘troll.’ Large corporations have repeatedly made the narrative that anyone who asks for a license fee for a patent that s/he holds is a “patent troll.” Y’know if you repeat a lie enough times, it becomes the truth! (Case in point #stopTheSteal!) In fact, Joe is also – in the parlance – called an NPE, non-practising entity. The narrative is that Joe is the ‘bad guy’ who is not practising the commercialization of his invention and is just out to get money from the-good-people at BooeingX who actually created this cool teleportation device and brought it to market: for you and me to use.
Reputation Risk & Character Assassination
Once Joe Inventor files a lawsuit for patent infringement, he is immediately painted out to be a Patent Troll. An orchestrated effort of attack to his reputation is routinely embarked upon. The narrative created by the large corporations is: that Joe is a litigious entity, he is suing companies, he just wants to make money. He is opportunistic, and dealing with Joe is asking for a headache. In fact, there are now entities in existence that have been funded with hundreds of millions of dollars (yes, you guessed it – funded by the large corporations), and the entire reason for their existence is to protect the large corporations from patent infringement – by any combination of defaming the inventor, labeling his actions as frivolous, and filing Inter Partes Review (IPR) to kill his patent(s). And of course, by a media & Public Relations campaign of maligning Joe Inventor. These entities are nothing short of large corporations ganging up against small inventors, and then using their collective clout to altogether eliminate patents from the marketplace.
America Invents Act (AIA)
In 2011, Congress passed the America Invents Act – sounds good eh? You know why? It was designed to! The large corporations of the world (especially Big Tech) spent millions, and billions of dollars on lobbying and got this nice-sounding legislature passed. The large corporations worked tirelessly to get this HUGE WIN.
Filing a lawsuit for patent infringement, and seeing it through, costs millions of dollars – just in legal fees. I’m willing to bet that less than 0.01% of inventors have the millions needed to spend on a lawsuit with no guarantees of recovery. In a minute, I will share more on why that is not guaranteed.
Thanks to the changes in the AIA, all that a large corporation like BooeingX has to do – is file an inter partes review with the USPTO. What that means in plain English is that, BooeingX now claims that the patent granted to Joe Inventor is invalid. This application is reviewed by the Patent Trial and Appeal Board (PTAB) at the USPTO made up of ‘judges’ (more on that another time). The judges are judicial officers with training in law. These judges then rule on whether the patent is valid or not.
When Joe’s patent application was initially examined by the USPTO for the grant of a patent, it was looked at by Patent Examiners. Examiners are trained professionals with degrees – often advanced and graduate degrees – in the subject area that they are examining patent applications for. So, Joe’s application was likely studied by someone who had a Masters/PhD degree in BioMedical Engineering: more likely than not maybe a bio-scientist (who understands what it means to take a human body apart molecule by molecule and put it back together), possibly a doctor or a material scientist. You get the idea – someone who understands at a very deep level what it takes to build this teleportation device.
Before granting Joe this patent, the Examiner studied Joe’s patent-application to make sure that Joe had taught his invention in detail so that a Person-Of-Ordinary-Skill-In-The-Art (POSITA) could look at what Joe had taught and build the exact same device successfully.
In fact, the Examiner studied the application to make sure that the device disclosed by Joe was unique and non-obvious. The Examiner actually scoured databases from all over the world to make sure that this device had not been disclosed anywhere in the world – not even by the no-name PhD student in a remote town of Norway.
After having done all this diligence, the USPTO grants Joe his patent (more about that process yet another day).
Coming back to the challenge on validity made by BooeingX regarding Joe’s patent. The PTAB at the USPTO has invalidated 84% of issued patents?! In 2013 (pre-AIA patents in the pipeline) U.S. topped the world rankings of the most innovative countries, Bloomberg reports that today, we are not even in the top 10. China is beating us on patents today.
How do we fix this?
- Is the USPTO too liberal in granting patents? After all the due-diligence, and expert work put into a patent, how can it possibly be invalidated so easily? When a patent is challenged at the PTAB, the defense of the validity falls upon the inventor. What I have not yet shared with the reader is that this is a legal proceeding, and the inventor now needs to hire attorneys to defend his already-issued-patent. Unfortunately, there is no ‘Public Defender’ to help poor Joe.
- Shouldn’t we have the patent examiner defend a patent that s/he approved & granted? The Examiner is actually part of an Art Unit, so even if that Examiner has since moved on, someone else from that Art Unit should have the onus of defending the patent that was approved, granted and issued by them. (Art Units are groups of Patent Examiners with specific subject matter expertise, all reporting into a Supervisory Patent Examiner. Broadly speaking an Art Unit will have 15 to 20 subject matter experts. The USPTO has actually done an ‘ok job’ of hiring an army of experts in almost all subject matters.)
- Shouldn’t the validity of a patent be examined by subject matter experts, and not legal professionals? When the validity of a patent is challenged at the USPTO via an IPR – there are as many bites at the proverbial apple as one likes that can be taken. Not only can BooeingX file an IPR, so can AeroBus, and Blue Rising, and AmeriCann Air, and DellTa, and Xpeedia, and Ubare, and TraVelloCitty… anyone, and any number of challenges can be filed. If this cool invention of Joe takes-off (pun intended!) it could disrupt the airlines industry, the travel industry, the logistics industry and so on and so forth… they may all end up owing a royalty to Joe, so it’s best to kill the patent! In fact, if the folks at BooeingX lose the IPR, no big deal, they can ask their friends at AeroBus, or Blue Rising, or anyone else for that matter to file an IPR. (The PTAB does have some discretionary power to reject these IPRs but for an individual inventor without financial resources, that is one heckuva onerous war. It’s a war, not a battle!)
- If a patent granted by the US Govt. is found to be invalid by the US Govt., shouldn’t there be reparation for the inventor? That is really a defect in title that was issued by the US Govt and is limited to the jurisdiction of the United States exclusively. At least for the costs borne in defending title to what s/he was told was his property? Not to forget reparations for emotional trauma, and ~20 years of struggles.
Even if Joe’s patent is amongst the 16% that survives the IPR, and the patent is held valid, it’s faaar from over.
Remember Joe Inventor who had a filed a lawsuit on his own because his invention had been stolen? Well guess what? In the Court systems, BooeingX again has the ability to attack the validity of Joe’s patent for a plethora of different reasons, yes you read that right a plethora! Typically, a large corporation like BooeingX attacks the validity using a battery of legal maneuvers available to them:
- One of the foundations of a patent is that it is Non-Obvious. But the way patent law is written besides just using common sense and/or subject matter expertise, it can be argued that the Examiner made a mistake e.g., the high-powered attorneys of a large corporation like BooeingX tend to contend to the Court that some patent, let’s say Patent# 1,234,567 teaches that a device can be created, and that Patent # 2,345,678 teaches that one can travel from San Francisco to New York. Thus, the argument is that a combination of the two patents teaches that a device can be created that allows one to travel from San Francisco to New York. Therefore, the patent issued to Joe should be held as invalid as it was “obvious.” Much to the chagrin of the inventor that the actual expertise to build such a device – and that too by teleportation – is often lost in the legal mire. Notwithstanding the fact that an airplane is a device that allows such travel, this then becomes a judicial argument that is decided (er, ruled upon!) by someone with no subject matter expertise – a judge!
- Another strategy that is being adopted is an army of Mechanical Turks (freelancers from around the world who are happy to work for less than $5/hour) is unleashed and let loose to go-find-prior-art. Their job is to scour the remote corners of the world and web to find any reference (such as another PhD student in Iceland or Japan, or Korea, or wherever who might have said/written anything that could be used as ‘prior art’ to invalidate Joe Inventor’s patent. These large corporations with millions of dollars even run contests that pay $1,000 to $2,500 to unearth any and all such references. These references, or some combination thereof is then presented to the USPTO as ‘evidence’ of invalidity/obviousness/anticipation/unpatentability of the patent being asserted. In fact, there is no limit to the number of prior art references that can be combined to argue that an invention is obvious. I know of instances where as many as 58 references have been cited. In simple speak that means: it was argued that if one were to combine what was taught in 58 distinct publications, then one could likely get to the claimed invention, and therefore it is “obvious” and the patent not valid.
- In 2014 there was a landmark ruling by the Supreme Court, commonly referred to as ‘Alice’ whereby the courts said that a patent cannot be directed to an abstract idea. This applies more to software patents, although is not directed only to software (more on this too another time!)
- As if this were not enough, there are a multitude of other ‘legal’ challenges that deal purely with legislative formalities and filings etc. that are brought up to question the validity of Joe’s patent.
Besides the attacks on the validity of the patent, there are also judicial hearings on Claim Construction (aka Markman hearings). For instance, Joe’s patent covers a device for teleportation; BooeingX might argue that it requires 2 devices – one for sending the human from San Francisco, and another to receive the human at New York – and therefore BooeingX does not infringe on Joe’s patent. These are all legal battles with no jury of one’s peers to inject sense into the process. The determination of what each word in a patent (claim) means is decided upon by a judge with no subject matter expertise other than testimony from hired Expert Witnesses. And as you can imagine, given enough money it is not hard to get an Expert to say whatever you want them to say. That my friends: is the harsh reality.
As you read through this, think about Joe – the mad scientist. Think about the hurdles that Joe has to overcome (especially as an individual inventor). Not to talk about the years that Joe likely invested in creating this teleportation device, he spends 2 to 5 years in order to get the patent issued. And years fighting IPR challenges at the PTAB. Add to that years in litigation. Even IF Joe prevails, in all these battles, BeoingX then go into appeals. So, the entire process could easily take ~20 years before Joe could collect a penny. It is entirely possible that by then BooeingX could find other ways to weasel out of paying, and then he has to enforce any judgments he may have won! Oh wait, remember all those other infringers? Yes, he has to sue each one of them – rinse and repeat.
Besides the millions of dollars “invested” in protecting, enforcing, and asserting his intellectual property, Joe still has himself, and likely a family to feed. The system as we have it in these United States of America is thus clearly and unequivocally setup to discourage people from “becoming inventors.” The way it is today: it is simply a battle of Goliaths. Unknowingly the USPTO and Congress have set us up to make inventions solely the bailiwick of large corporations, and completely disenfranchised the individual inventor. It’s damn-near-impossible for an individual inventor to make any money from his/her invention.
Litigation Finance & Contingency
Given the capitalist society we live in, an obscure and nascent industry has grown that will be willing to invest the millions of dollars needed to fight these Goliaths in exchange for a portion of the winnings. Obviously, the risk associated with these litigations is very high, and therefore the cost of such finance is proportionately and exorbitantly astronomical. I get ahead of myself, raising litigation financing is the subject for another day, as is the option for non-recourse and Contingency litigation.
The large corporations treat the individual inventor(s) with disdain and disgust. I can almost guarantee that if and when an individual inventor approaches a large corporation to sell them a license to his invention that the large corporation is already infringing upon: 9 out of 10 times, he simply gets ignored. The one time that he may get a response, the typical response is contending that they are not infringing. Patent Pirates.
The Modern-day Inventor is Lost
Names like Thomas Edison, the Wright brothers… are household names. But who are the inventors today? Who invented the Internet, Al Gore? 😉 No, ladies and gentlemen we have likely seen more technological innovation in the last 50 years than in the preceding 500 years – but we do not know the names of any of the inventors. Elon Musk is not the inventor of the electric car – that was invented in 1832, in fact he is not even the founder of Tesla, but I digress… the inventors are not only unsung, but they are vilified as “trolls.” This narrative must change in order to bring innovation back to these great United States of America.
The quality of patents issued by the USPTO needs to better – so much so that once the USPTO grants a patent, the USPTO should be held accountable for the validity (or lack thereof!) of the patent.
We need an active system of policing Intellectual Property: a governmental agency to whom the theft of patents can be reported. Really an IP Police. Just as – if a private citizen is a victim of a theft/break-in of a tangible asset, so there should be a mechanism/agency that will protect private citizens from the theft of intellectual property. After all, if someone comes into my house and starts living there, we can call the police: they verify my ownership, and throw out the trespassers/squatters/bandits, and criminally prosecute them. Why can’t we have that for our intellectual property? In fact, such a system could actually be a massive revenue center, bringing in billions of dollars for the US Govt. (More on this too another day).
And in the absence of such an entity, we need a system akin to the ‘District Attorney’ that individual inventors can go to, and who can help prosecute the theft.
Categorically: almost all infringers of patents have a couldn’t-care-less attitude, at least until they get sued. I’d challenge the large corporations to disclose statistics around patents that they have willingly and directly licensed (if any!) without threat of litigation. Once sued, the attitude still is that they will contest the validity. We need a judicial system with more teeth that can instill the-fear-of-god amongst infringers – right now theft of intellectual property is practised with utter impunity: knowing that ultimately a large corporation can tire out any individual inventor! Ultimately only the patent rights of corporations – with deep pockets – are all that the existing system protects. 🙁
For you, and me, it is time to change the narrative: a “patent troll” is not an evil entity, rather a righteous inventor – more likely a geek, a nerd, an engineer, or perhaps a mad scientist. S/he might look like you, your neighbor or a member of your friends, and family – but in no means looks like a “troll.”
Just like we are changing the narrative and getting rid of terms like blacklist, chairman, master bedroom, grandfather clause… I submit to you that we all need to make a conscious and individual effort: do not accept the use of the term “patent troll.” When used in your presence, call it out, reject it.
The time has come to take back inventions from being the purview of large corporations to that of the people. Let’s have Americans innovate and reward them for it. Let us have, we the people invent!
Please share your comments below, and do share this with your friends who are in tech, or are entrepreneurs.
About the author:
Rohit Chandra is a Silicon Valley based serial entrepreneur, engineer, and inventor with a dozen issued US patents, and many more pending. His first US patent for the personalized URL (#6,085,242) has been used by virtually anyone who has ever been on the Internet. He has numerous other inventions in the domains of Search technologies, Social Networks, Highlighting, Widgets, Content Curation etc. Rohit has prosecuted the majority of his patents himself (pro se).