The event titled Promoting Innovation, Investment and Job Growth by Fixing America’s Patent System was well attended by a who’s-who of power players within the IP community. The focus of the program was to explore the direct and essential role that strong and enforceable patents play in allowing investors and entrepreneurs to engage in the high-risk business of innovating. There is much to report from the three excellent panels, all with A+ caliber panelist. We will have much to report in the coming days and weeks, exploring the full gamut of the presentations and numerous points made. For today I will primarily focus on the third and final panel of the day, moderated by Rob Sterne (Sterne Kessler), and which included David Kappos (former USPTO Director), Todd Dickinson (former USPTO Director), Chief Judge Paul Michel (ret.), and Dean John Whealan (former USPTO Solicitor and currently at George Washington University Law School).
Discussion on PTAB
As discussion stayed on the PTAB and in particular the IPR process, Judge Michel pointed out that there are only two fixes that he can see that would require Congressional action: requiring standing and chancing the preponderance standard. Everything else could be changed through regulation. “I think it is astonishing it hasn’t been done two years ago,” Michel said. To this Dickinson pointed out that so far only a single Administration has administered the AIA. A new Director could change at least 50% of the process, Dickinson explained. “So who the next Director is really matters.” Sterne asked if the thumb of Silicon Valley were on the scales? Judge Michel said that he didn’t think it was particularly useful to ascribe blame or motivations. The system is broken and needs to be fixed, we know that and we need to get about fixing the system, period. Michel would also go on to criticize the PTAB procedures on a substantive level explaining that the goal of the PTAB was to be an alternative to district court litigation, which simply has not happened. “PTAB is not the alternative, they are the prelude.” After going through a litany of the problems with litigating in district court – the expense, the length of time it takes, how harassing it can be – Michel concluded: “After the AIA every one of those ills have gotten worse.”
“One thing that gets forgotten in this discussion is the role of moving the gold posts,” Kappos explained. “It comes back to we need some clarity, consistency and stability for the system. It is also time for the PTO to take time for the next round of improvements.” Kappos explained that the Office knew that they “engineered a system to allow them to get
[post grant challenges] done on time. But now it is time to come back, call it PTAB 2.0.”
“When you have a system that is issuing a thousand patents a day and then you have a system that when it looks at it a second time is invalidating two-thirds of them, and it’s the same system, most industries don’t work that way,” Whealan explained. “This is affecting more than just the [small number of patents reviewed by PTAB], it is affecting the integrity of the system.” Whealan then very succinctly put his finger on the precise problem: “If you take away the presumption that is why you are getting the type of results you are getting.”
Judge Michel continued to express astonishment with respect to PTAB statistics. “Since 80% of the IPRs are already in district court, these are patents the owners have already assessed, look strong, whether infringement can be proven, whether the defenses against invalidity can be defended,” Michel explained.
Conclusion
As the panel ended, Judge Michel in his final thoughts pointed out that economist all seem to agree that the U.S. does not have enough productivity gains year over year, the U.S. does not have enough GDP growth year over year, and the U.S. does not have the kind of technological breakthroughs we want and that we used to achieve. This is particularly concerning because most net new jobs come from innovative startups, most productivity gains come from innovative startups and those innovative startups are the companies that the patent system has burdened most. Judge Michel, referring to the conclusions of a recent Time magazine article, closed the panel by saying that the world is not prepared for the next pandemic. He explained that America is in danger because we have strangled our innovation system
