Tag: IPR

Categories
Patents

New CPIP Policy Brief: Barnett on the End of Patent Groupthink

a hand reaching for a shining key hanging among dull keysIn a new CPIP policy brief entitled The End of Patent Groupthink, CPIP Senior Fellow for Innovation Policy Jonathan Barnett highlights some cracks that have emerged in the recent policy consensus that the U.S. patent system is “broken” and it is necessary to “fix” it. Policymakers have long operated on the basis of mostly unquestioned assumptions about the supposed explosion of low quality patents and the concomitant patent litigation that purportedly threaten the foundation of the innovation ecosystem. These assumptions have led to real-world policy actions that have weakened patent rights. But as Prof. Barnett discusses in the policy brief, that “groupthink” is now eroding as empirical evidence shows that the rhetoric doesn’t quite match up to the reality. This has translated into incremental but significant movements away from the patent-skeptical trajectory that has prevailed at the Supreme Court, the USPTO, and the federal antitrust agencies.

Prof. Barnett first looks at how, for the past decade or so, the groupthink about “royalty stacking” and “patent holdup” has led to efforts by the FTC and DOJ Antitrust to limit the enforceability and licensing of standard-essential patents (SEPs) that underlie the global smartphone market. However, this past December, the DOJ and USPTO changed course, saying now that SEP owners should be treated just like any other patent owner and instead expressing concerns about the possibility of “patent holdout” by well-resourced infringers. As Prof. Barnett explains, the theories and stylized models that influenced these federal agencies are now being displaced by empirical data and real-world models that better reflect how the smartphone market actually operates.

Turning to the Supreme Court, Prof. Barnett discusses the overlooked dissent in Oil States by Justice Gorsuch, which was joined by Chief Justice Roberts, in 2018. On the one hand, the Oil States majority continued the Court’s recent spate of cases reflecting the groupthink skepticism towards patents. Justice Gorsuch’s dissent, on the other hand, perhaps reflects a nascent movement among some members of the Court to revisit this conventional wisdom. Prof. Barnett points out other underdiscussed examples of this growing phenomenon within the Court, from cabining the powers of the PTAB in SAS Institute, to questioning the PTAB’s immunization from judicial review in Cuozzo, to finding that federal agencies lack standing to invoke AIA challenges in Return Mail.

Finally, Prof. Barnett addresses the current move away from the old groupthink at the USPTO, where the current leadership has expressed its support of robust patent protection. For starters, empirical evidence has discredited the widely-repeated view that the USPTO is a “rubber stamp” that approves almost all patent applications. As to inter partes reviews (IPRs), Prof. Barnett notes that, early on, institutions and invalidations were the common outcome. While this could support the conclusion that “bad” patents were being struck down, the data is also consistent with the conclusion that the process is sometimes being used opportunistically to invalidate “good” patents. Responding to this concern, recent changes in the examination process, such as the narrower claim construction standard and broader claim amendment opportunities, may enable patentees to survive unjustified validity challenges at the PTAB.

Moving forward, Prof. Barnett suggests that the tide may be turning in the patent policy world as widely shared assumptions behind patent-skeptical groupthink are subjected to rigorous empirical scrutiny. The inescapable truth is that the U.S. innovation economy has flourished while commentators have suggested it should have languished under the supposed burdens of strong patent protection. Prof. Barnett points out that skeptics may have failed to appreciate how robust patents support private incentives to bear the high costs and risks of innovation and commercialization. Current signs of a “redirect” from the old groupthink are a welcome change for preserving the intricate infrastructure that supports a vigorous innovation ecosystem.

To read the policy brief, please click here.

Categories
Innovation

U.S. Rise in International IP Index Signals Progress in Ongoing Effort to Restore Faith in the Patent System

dictionary entry for the word "innovate"Last week, the U.S. Chamber of Commerce, Global Innovation Policy Center (GIPC) released the seventh edition of the International IP Index for 2019, Inspiring Tomorrow. The report provides some long sought good news for the innovation community, as the U.S. rose from 12th to 2nd in the patent system rankings. But while the move signals an IP and economic transformation stemming from inspired IP leadership and a sensible approach to domestic and international IP policy, more work must be done to fully restore the global leadership position of the United States.

GIPC notes:

With this 7th edition, the U.S. Chamber International IP Index: Inspiring Tomorrow shows how intellectual property (IP) systems have been a driving force behind this transformation. Effective IP protections create a climate that drives the world’s innovators and creators to pursue a better tomorrow. Indeed, IP-driven innovation and creativity have ensured that our standards continue to rise.

The U.S. is ranked number one with the highest overall economy score; it is also ranked number one with respect to copyrights. As noted above, the U.S. moved to 2nd place in the annual patent rankings, up from 12th place last year (it is tied for the second place ranking with a number of E.U. nations and Japan). Yet, this is mixed news overall, and more work remains. The trend over the past several years has been downward for the U.S. patent system. The U.S. fell from first place in patents three years ago and was at 10th place in 2017.

The move upward is a result of ongoing efforts by top U.S. IP officials to improve domestic policies and international trade. The GIPC report explains the U.S.’s strong overall rating is based on its framework for legal protections for copyrights, patents, trade secrets, and its recent IP trade policies. The United States-Mexico-Canada Agreement (USMCA) is praised as raising the bar to set the new global standard for international IP protection.

Further, the report commends the USPTO leadership for addressing uncertainty around patent rights by recent reforms of its opposition system (e.g., through the Patent Trial and Appeal Board (PTAB) and inter partes review (IPR)). In his first year, USPTO Director Andrei Iancu launched several initiatives to address long-standing issues hampering U.S. innovation, including issuing new patent eligibility review guidelines for patent examiners and overhauling the PTAB review invalidation proceedings that can create uncertainty for parties. The report explains that these reforms will “creat[e] greater certainty around the inter partes review (IPR) process [and] reduce unpredictability in the patent opposition system.”

Historically, the U.S. has been a front-runner in worldwide innovation; just last year, the USPTO unveiled its 10 millionth U.S. patent. But misguided policies from courts and Congress have resulted in uncertainty for patent owners over the past 15 years (e.g., the systemically ill-advised PTAB opinions spurring our #FixPTAB posts). The GIPC report is a welcome reminder that sensible leadership and even modest reforms can return us to our historic front-runner position in innovation.

Despite more clarity and the recent USPTO reforms, patent owners require additional certainty and reform to ensure ongoing inventive activity, such as building new venture start-ups. CPIP and its network of scholars will continue to study how the new patent guidance and judicial jurisprudence can restore America’s global innovation leadership for the future. Hopefully, the U.S. can soon once again claim the unqualified number one spot.

To see the 2019 rankings, please click here.

To read GIPC’s 2019 Report, please click here.

Categories
Legislation Patent Law Uncategorized

Rep. Massie Introduces New Legislation to Restore America’s Patent System

dictionary entry for the word "legislation"Yesterday, Representative Thomas Massie introduced the Restoring America’s Leadership in Innovation Act of 2018 (H.R. 6264). This legislation would reverse many of the harms that have been caused by recent changes to the patent laws from all three branches of government. Patents are an important part of our innovation economy, providing an incentive for inventors to invent and protecting those creations for commercialization and investment.

Unfortunately, the past decade has witnessed the gradual weakening of our patent system. The America Invents Act (AIA) created new post-issuance methods for reviewing patent validity on top of the review that already occurred in federal courts. The Supreme Court has handed down case after case weakening patents and excluding broad swaths of innovation from the patent system entirely. The USPTO, through the Patent Trial and Appeal Board (PTAB), has been systematically invalidating worthwhile patents based on flawed procedures that are easily abused. Together, these changes have done substantial damage to our innovation economy.,

This new bill will reverse many of these recent changes. Although some of the proposals are new, most are merely the codification of what had long been the law for the patent system. The following provides a breakdown of the most important sections of this legislation:

    • Section 3 (the first substantive section), returns the United States to a first to invent patent system. As noted by CPIP Founder Adam Mossoff, giving patents to the first inventor rewards the intellectual labor that results in the invention. This conception of patents as private property rights protecting the innovator’s creation is arguably required by the Patent Clause of the Constitution, and thus, this Act will bring patent laws back within constitutional limits. Conversely, a first to file system merely rewards those who can win a race to the Patent Office.
    • Section 4 abolishes Inter Partes Review (IPR) and Post-Grant Review (PGR). In addition to covered business method review, which was created with a sunset provision, these procedures allow the Patent Office to cancel at patent it has previously issued. Numerous scholars have identified the substantial harms caused by the PTAB. The problems have been so extensive that other legislation focused on trying to fix these procedures has been introduced. This bill goes the necessary next step. Because these procedures fundamentally undermine the status of patents as private property, the bill eliminates IPR and PGR entirely.
    • Section 5 abolishes the PTAB. The PTAB is a terrible example of regulatory overreach. In light of the elimination of IPR and PGR and the return to a first to file system, the creation of the PTAB by the AIA to administer these systems serves no purpose. The legislation instead recreates the Board of Patent Appeals and Interferences, which existed prior to the AIA and handled the administrative appeals and trials that occurred under the prior system. This change also overrules the holding of Oil States v. Greene’s Energy and accomplishes legislatively the outcome of a CPIP led amicus brief in that case.
    • Section 6 eliminates fee diversion and provides for full funding of the USPTO. Innovators and the public alike count on the USPTO to perform timely, quality examinations of patent applications in the first instance. Ensuring that adequate resources are available for this purpose is essential, particularly given that applicants pay fees to the USPTO for precisely this purpose.
    • Section 8 is mainly technical to assure that the restored § 102 retains the one-year grace period and that certain disclosures by the inventor do not become prior art.
    • Section 9 reestablishes the previously long-held status of patents as a property right. The Constitution secures a patent as a property right and many scholars have noted the important implications of treating patents as property. This section not only states that a patent is a property right, but confirms that a patent may only be revoked in a judicial proceeding, which has substantial benefits, unless the patent owner consents to another procedure. This reverses the broad reasoning in Oil States. The parts of this section returning to patent owners the right to control their property also largely overturn Impression Products v. Lexmark International, now allowing patent owners to exclude unlicensed users from their supply chains.
    • Section 10 ends the automatic publication of patent applications. This change will allow applicants to keep their inventions secret until they have the security that comes with an issued patent.
    • Section 11 codifies the details of the presumption of validity and available defenses to patent infringement. For the first time, this will enshrine in statute that the “clear and convincing standard” must be used to invalidate a patent. Additionally, this section provides for tolling of the patent term during litigation challenging the patent’s validity.
    • Section 12 confirms that injunctions are available to protect the patent property. Although not explicit, the new statutory presumption that infringement of patent causes irreparable harm largely abrogates the Supreme Court’s decision in eBay, which dramatically limited the availability of injunctions. Furthermore, having this rule placed into the statute will limit the inter-court variability that has led to inconsistent outcomes.
    • Section 13 restores the possibility of invalidating a patent for failure to comply with the best mode requirement.
Categories
Innovation Patent Law

U.S. Innovation Economy Falls Even Further in Latest GIPC Patent Rankings

hand under a lightbulb drawn on a chalkboardThe Global Innovation Policy Center (GIPC) at the U.S. Chamber of Commerce has just released the sixth edition of its International IP Index. Unfortunately, the report finds that the United States is now tied for 12th place in its patent rankings. This is down from 10th place last year, and it’s down from 1st place just two years ago. The recent downward trend of the U.S. innovation economy is rather alarming, and it is further evidence that the U.S. is quickly abandoning its gold standard patent system.

GIPC notes that the U.S. patent system has faltered due to two key indicators: patentability requirements and patent opposition. As to the former, the report cites the Supreme Court’s recent Section 101 jurisprudence, which has created much uncertainty for innovators about what even constitutes a patent-eligible invention. These findings comport with the newly-published paper by CPIP’s Adam Mossoff & Kevin Madigan highlighting the Court’s troublesome approach to patent eligibility and its profound effect on our innovation economy. As to patent opposition, GIPC cites the ease of challenging patents that have already been issued through mechanisms such as inter partes review (IPR). Indeed, several CPIP scholars authored a recent white paper detailing how these IPR proceedings have become an existential threat to the very patent system they were meant to promote.

U.S. falls to 12th place in ranking of patent system strength. 2018 Chamber index marks further from for U.S. Category 1: Patents, Related Rights, and Limitations. 1. Singapore; 2. France; 3. Germany; 4. Ireland; 5. Japan; 6. Netherlands; 7. South Korea; 8. Spain; 9. Sweden; 10. Switzerland; 11. UK; 12. United States / Italy. ("Create," Global Innovation Policy Center, U.S. Chamber International IP Index, Sixth Edition, February 2018))

To read GIPC’s International IP Index, please click here.