There are numerous problems with the United States patent system, extraordinary good could come from undoing several pivotal decisions. If Congress wants to resurrect the U.S. patent system these three decisions would be overturned. As long as these decisions remain in force the U.S. patent system will continue to suffer. If and when these three issues are address there will be reason to celebrate the U.S. patent system. I don’t expect that will be anytime soon, but we do need to remember that we’ve seen America’s patent system in near complete collapse before. In the 1960s and 1970s the Supreme Court never saw a patent that was valid, which lead to the creation of the United States Court of Appeals for the Federal Circuit. In the 1970s and early 1980s there was great concern that Japan would win the technology future and America would become an also-ran in the burgeoning technological revolution, but that never happened.
Recently we came across the top three reasons for America’s Patent system to decline, which basically were followings:
1. eBay v. MercExchange (2006)
Starting late in the morning on May 15, 2006, the day the Supreme Court issued its decision, in order to receive a permanent injunction in a patent litigation the victorious plaintiff needs to demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.
The eBay decision largely removes the possibility of an injunction, which turns the patent system into a compulsory licensing regime, at best. The infringer bears no risk of being told to stop infringing. This significantly tilted negotiating power, value, and minimized opportunity for settlement and maximized the likelihood that patent owners would have to sue. Most patent professionals point to this decision as the single most harmful event, and the one that most needs to be overturned.
2. Mayo v. Prometheus (2012)
The root of the patent eligibility evil lies with the Supreme Court’s decision in Mayo v. Prometheus. The real mischief of Mayo is found in the fact that the Supreme Court intentionally chooses not to apply 35 U.S.C. 102 (novelty), 35 U.S.C. 103 (obviousness) and 35 U.S.C. 112 to evaluate the claims. The Solicitor General of the United States specifically argued that the Supreme Court should look to those other sections of the statute as the Court itself commanded be done in Diamond v. Diehr, for example. Justice Breyer refused what he called the invitation of the government to allow the claims to be properly analyzed under 102, 103 and 112. It wasn’t an invitation, rather it is what the Patent Act required. In Diehr, then Associate Justice William Rehnquist explained why considering newness under 101 was inappropriate. Now newness (or novelty) is considered in a patent eligibility inquiry, but this newness is considered without any prior art being applied. That makes the question of newness under 101 purely subjective and untethered to any scientific or technical reality.
3. Post Grant Administrative Trials (2012)
Without a doubt the biggest change brought into being by the America Invents Act (AIA), and why the AIA has been an unmitigated disaster, is the creation of three new procedural challenges to issued patents. These post grant challenges – inter partes review (IPR), post grant review (PGR), and covered business method (CBM) review – give those who don’t like patents fresh new opportunities to seek the invalidation of property rights issued by the Patent Office. These new procedures are added to challenges already available in federal district court, as well as reexamination, which continue to be available at the Patent Office.
These post grant proceedings have been so horribly one-sided that it is almost impossible to believe they are being carried out within an American system of any kind. The statute gives patent owners the right to amend patent claims, but the PTAB denies virtually all motions to amend because the PTAB interprets the statute that gives the right to amend as merely a right to file a motion to amend, which they nearly universally deny. Patent owners are also harassed and subject to petitioners ganging up on their patents. Despite the AIA giving the Director the ability to protect patent owners against harassment the Director continues to refuse to exercise this authority.
If and when these three issues are address there will be reason to celebrate the U.S. patent system. I don’t expect that will be anytime soon, but we do need to remember that we’ve seen America’s patent system in near complete collapse before. In the 1960s and 1970s the Supreme Court never saw a patent that was valid, which lead to the creation of the United States Court of Appeals for the Federal Circuit.
Reagon’s Contribution to USPTO
President Ronald Reagan, conservative icon, was a supporter America’s patent system. It was President Reagan who demanded a buildup of the USPTO as part of his overall strategy to make America great again and compete with the Japanese for technology dominance. It was President Reagan that demanded the Patent Office push down unacceptably high pendency rates, getting the average pendency down to 18 months. President Reagan accomplished this goal by reaching a compromise with Congress. As a result of the shifting technological dominance to Asia by the end of the 1970s, particularly to Japan, President Reagan also appointed a Presidential Commission on Industrial Competitiveness to determine why America was losing its competitive edge. That Commission was headed by John Young, then CEO of Hewlett Packard, and included numerous leaders of American businesses.
“Since technological innovation requires large investments of both time and money… Research and development are always risky. If the developers of a new technology cannot be assured of gaining adequate financial benefits from its commercialization, they have few incentives to make the huge investments required. Today, the need to protect intellectual property is greater than ever. A wave of commercial counterfeiting, copyright and design infringement, technology pirating, and other erosions of intellectual property rights is seriously weakening America’s comparative advantage in innovation.”- Commision Report said.
Future of American Patent System
Summarizing future of USPTO we can draw out certain conclusions based on the above limitations as below :
• The problem today, however, is two-fold: (1) The Federal Circuit, which was created in order to bring stability to patent law, is among those that are destabilizing patent law; and (2) President Donald Trump has yet to announce any clear vision that acknowledges the need for government to promote innovator friendly policies.
• The entire reason the Federal Circuit was created was to harmonize patent laws If the Federal Circuit does not recognize that patents are important property rights that must be presumed to be valid and adjudicated to be valid in all but the most extraordinary cases, then the Federal Circuit has become no different than the Supreme Court and other federal courts from the 1960s and 1970s, which is a real concern.
• The problem associated with an absence of leadership from President Donald Trump on the issue of patents and innovation policy is difficult to understand. For reasons that are unknown, President Trump has allowed Obama Administration USPTO Director Michelle Lee to continue as Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. While it is very difficult to get high-caliber candidates interested to serve at the end of a second Presidential term given the limited amount of time there would be to accomplish anything meaningful, we are at the beginning of a new term now where there has been a tremendous optimism associated with the possibility of a new, pro-inventor, pro-innovation policy coming from the Administration.
