“Congress did not intend for these parties to pursue their district court action unfettered while using a membership organization to make challenges at the PTAB…. These membership organizations should be required to fully disclose who they work for and who is funding them.”
A strong and predictable intellectual property system is crucial to protecting and promoting American innovation around the globe. It allows American businesses of any size to compete globally, creating millions of American jobs. Strong intellectual property rights provide a strong foundation for America’s role as the world’s innovation and technological leader, powering our world with the next generation of technology to help kids learn, to connect remote workers, provide better access to healthcare and help make our planet more sustainable. The role of innovation (from vaccines to communication technology, content creation, etc.) has never been more crucial than during the ongoing COVID-19 pandemic. The ability to protect what one creates or invents grows our economy and GDP, generates incentives to continue the innovation process, and makes our country safer and more secure from foreign adversaries.
However, our patent system is under attack from entities that have taken advantage of an unintended loophole in the America Invents Act (AIA) to undermine patents protecting American businesses. The rise of so-called patent membership organizations, which have been allowed to operate for nearly a decade, is wreaking havoc on our IP system. These membership organizations have used the Patent Trial and Appeal Board (PTAB) to file multiple petitions against targeted patents, without being required to disclose their funding or who they work for, including – potentially – foreign adversaries.
This is bad. The PTAB was created with the intention of serving as a faster, cheaper alternative to district court litigation to determine the validity of a patent. Both Big Tech and small inventors can benefit from such a system. However, membership organizations distort the balance away from small inventors. Now, working through these membership organizations, Big Tech can swamp inventors with even greater costs. In addition to bearing the cost of a patent infringement lawsuit, small inventors must now bear the cost of multiple challenges of the same patent in multiple venues by Big Tech and membership organizations, sometimes even before the patent has ever been asserted in court.
Full Disclosure Should Be Required
This is not what Congress intended. The PTAB was created to allow parties who were sued in district court the option to seek relief at the PTAB within one year, with consequences in the district court action for doing so. Congress did not intend for these parties to pursue their district court action unfettered while using a membership organization to make challenges at the PTAB. This would only drive up the costs and increase litigation at the expense of small inventors and innovation generally. These membership organizations should be required to fully disclose who they work for and who is funding them.
The USPTO has taken steps to address this growing problem and recently made some welcome, and frankly long-overdue, changes. In early December, the Board issued a precedential opinion in RPX Corp v. Applications in Internet Time, LLC, outlining a more thorough inquiry and flexible analysis by the Board as to what is considered a real party in interest with respect to membership organizations that will hopefully help to shine more light on the real affiliations of these groups. This comes on the heels of a decision by the Federal Circuit which clearly recognized an issue here when reviewing the record of the relationship between these membership organizations and their activity in filing petitions at the PTAB on behalf of their members, who would otherwise be barred by the one-year limit imposed by Congress to file a petition at the Board. In drafting the AIA, Congress thought a one-year time limit was appropriate to prevent multiple, frivolous attempts against the same patent. Congress could have opted to not include a time limit, but they declined to do so because they recognized the danger to innovation of multiple, unlimited challenges to a patent. This is key, because while Congress thought that establishing the PTAB was important to address concerns about instances of possible poorly-issued patents, its intent was never to create unlimited, coordinated challenges to patents that in the vast majority of cases are examples of significant R&D investment by companies that are now simply viewed as impediments to the profits of Big Tech.
Another interesting question to ask is whether these membership organizations have standing to sue in district court on behalf of their members? If not, then why are they allowed to litigate at the PTAB? What’s been clear over the past several years is that these member organizations have been using a loophole in the law to circumvent the intent of Congress to do the bidding of some well-funded Big Tech clients. This strategy, while profitable to a few, has resulted in the undermining of U.S. innovation, American jobs and trust in the patent system, which should be standing as a beacon to the world on the importance and strength of American creativity, R&D, and ingenuity. The best way to achieve that goal, is to provide for more transparency and openness at the PTAB by requiring these membership organizations to fully disclose who they work for and who is funding their efforts.
As a proud former public servant and steward of the patent system for over 30 years, including serving as a former Commissioner for Patents at the USPTO, I have been disheartened to see the ongoing attacks on an agency that has as its sole mission the protection of American creativity, innovation, and prosperity. Patents allow inventors and creators of any economic background, creed, race and gender the ability to compete with more well-funded competitors – both foreign and domestic. Patents foster and protect the American dream. It’s about time Congress and our administrative agencies recognize the value of America’s patent, trademark and copyright systems and preserve and enact further policies to protect them so that we can continue America’s global leadership in technology and innovation. Policymakers in Washington, D.C. must stand up and the fight now to protect American innovation.
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