For much of this year, Congress has been grappling with how to update the nation's patent laws. On one side of the battle are tech companies and retail businesses whose owners argue that they're getting killed by abusive patent lawsuits. On the other side are research universities and life-sciences companies that view patents, and defending patents against infringement, as a key part of their business model.
With Congress currently on vacation, it'll be September before lawmakers pick up their legislation on patents once more. But the U.S. Patent and Trademark Office isn't waiting until then to set the terms of debate. It's already signaling that it's got one controversial part of the patent system under control — and any congressional attempts to tinker with it won't be welcome.
If lawmakers wind up taking the USPTO's hint, the resulting legislation could hand tech companies a win and disappoint the groups that have been trying to tilt the legislation in their favor. In turn, that could have powerful implications for the nation's intellectual property system and the way we reward future innovation and investment in this country.
At the heart of this debate is something called inter partes review. The dry name belies an increasingly controversial tool at the patent office: It's basically a process anyone can use to try to get an existing patent invalidated.
It's easy to see why the IPR process is a huge deal: Companies facing abusive lawsuits alleging infringement can, and have, used IPR to defeat so-called patent trolls who simply want a cash settlement so that they can pocket the money. But some argue that IPR makes it way too easy to have a patent overturned — and that threatens the interests of legitimate patent holders. These folks have asked Congress to put limits on IPR, and it's this idea that has the USPTO saying that, actually, everything is fine and lawmakers shouldn't muck about in it.
The USPTO's latest data show that the IPR process is tremendously successful at getting patents invalidated: Of all patent claims to be challenged so far under IPR, nearly a quarter have been ruled unpatentable by the patent office. What you make of this figure depends on whose interests you represent: The manufacturing, biotech and pharmaceutical industries find it alarmingly high and a potential risk to future technological advances. By contrast, many in Silicon Valley view it as evidence that the patent office approved way too many "bad" patents in the past that should never have made it out the door. And now, these patent claims are being swept off the table, reducing ammunition for patent trolls.
In a blog post proposing changes to the IPR process, the USPTO last week said its review decisions have been upheld by a federal appeals court at "a very high rate" — suggesting that they've made the right calls in each IPR case.
Biotech and pharmaceutical patents also account for a tiny share — about 9 percent — of all the petitions made under IPR and similar mechanisms. The vast majority are in the "electrical/computer technology" sector, about 63 percent.
"We recognize that, while we believe the proceedings are working well, there are improvements that could be made based on our and the public’s experiences with the proceedings," USPTO Director Michelle Lee wrote in a blog post last week.
The proposed changes give patent holders some new benefits (such as the ability to respond to a request for review with their own evidence arguing against an investigation).
On Tuesday, the USPTO also announced a request for public comments on a proposal to switch up how IPR proceedings are initiated. The current system has a three-judge panel at the agency decide whether to start a review, then uses the same judges to conduct it. Under the proposed change, only one judge would be responsible for launching the process. That judge would then be joined by two fresh judges who weren't involved in the initial decision.
These changes, if approved, could alter how the IPR process works. But more importantly, some tech industry officials say, it sends the message that the USPTO is capable of making decisions to improve the IPR process on its own, and that it doesn't need Congress to write new rules laying out how IPR should work.
"This is the PTO saying, 'There's really no reason to make any changes to the IPR system. There's no reason to do it other than a bunch of rumors' " about how it's being abused to eliminate patents, said Dana Rao, vice president of intellectual property and litigation at Adobe.
A patent office spokesperson declined to comment. But what Rao's saying is plausible: Lee has previously met with lawmakers and Hill staffers to talk up the IPR process in response to calls by industry officials to change the USPTO's appeals system. Although the congressional legislation was initially aimed at curbing bogus patent lawsuits, critics of the bill have been pressuring lawmakers for concessions in return. Basically, these folks want to trade new limits on patent litigation for a tougher IPR process.
It's unclear how Congress will receive this message. Rep. Bob Goodlatte (R-Va.), who chairs a key committee charged with writing the patent legislation, declined to comment.