What New Patent Legislation Portends for the Small Entity Patent Filer

NOTE: This article is written by Steven J. Moore and with the assistance of Alan Gardner and Marvin Wachs, also of the Kelley Drye & Warren Patent Department. 

At this time of year we often see many prognostications of what the future holds.  From the prospective of the small entity patentee we see big changes in store particularly as some in Congress seem hell-bent on amending the patent statutes once more.  These changes are being pushed through without any real consideration for the impact of the changes on patents held by universities, research institutes, small and medium sized companies, emerging companies, independent inventors and new entrepreneurs.

Our data analysis set forth in our article entitled America Invents Act – A Boon for David or Goliath, published as a two part series in iPWatchdog August 15, 2013,  and the data we supply herein in regard to who is bearing the brunt of IPR petitions and institutions, suggest small patent entities are presently facing a daunting task to enforce patents in  their patent portfolios against large competitors.  In the former article, we compared pre-AIA administrative challenge procedures with post-AIA administrative challenge procedures to show how much more the post-AIA procedures were being used against small entity patent filers, and how the new post-AIA procedures were being used far less by small entities than the prior pre-AIA challenge procedures.  We noted that the data did not allow one to subscribe this effect to more challenges against so-called NPEs post-AIA than pre-AIA.

Some have described this effect to collateral damage of the AIA necessary in order to control the so-called “patent trolls.”  However, our studies set forth in the five part series A Fractured Fairy Tale: Separating Fact From Fiction In Regard to NPE ‘Patent Trolls, July – August 2013 (finding in part, no difference in the litigation and/or reexamination resolution profile of challenges brought against NPE patent holders v. Practicing Entity patent holders), as well as numerous recent studies including those of  the GAO, August 2013, Professors Cotropia, Kesan & Schwarz (“Patent Assertion Entities (PAEs) Under the Microscope,” Illinois Public Law and Legal Theory, Research Paper No. 14-17 (November 2013) and Dr. Ron Katznelson (Questionable science will misguide patent policy, October 27 2013), are raising serious questions about much of the information that has been widely disseminated regarding the extent of “patent troll” problem, in particular  in regard to the assertion that NPEs as a group are causing a massive increase in patent litigation based on poor patents since the AIA and are having an inordinate adverse effect on the economy.

Irrespective of all these new studies, many of which have only recently become possible owing to new publicly available databases proffered by disinterested commercial parties, Congress seems ready to act based upon non-objective input from certain parties about their run-ins with patent asserters whom  they categorize as a “patent trolls,”  all the while blinding themselves from where the patent being asserted originated (which we find is often a practicing entity).   New legislation proposals to amend the patent statutes abound this year.  In each case, the proponent of such legislative proposals wrap themselves in the same mantle or flag as did the promoters of the so-called “America Invents Act” – i.e., the defenders of the small entities against the so-called “patent troll problem.”  The only problem is that the data available on the AIA procedures shows little impact on the patents being asserted by the purportedly evil NPEs with the overwhelming effect being felt by small entity patent owners.   One truly wonders what the rush to amend the patent laws again is all about?  Too bad the wish that inflicted the protagonist (played by Jim Carrey) in the movie Liar Liar, that is, to be unable to shade the truth, might not transcend upon some of our representatives!

Undoubtedly the newest changes that Congress is proposing to patent law will affect the ability of small parties to enforce the purported right-to-exclude that is said to be commensurate with the patent grant (except, of course, when courts adjudicate damages!).   Indeed Congress appears poised to ignore all of the warnings now being raised by the Association of American Universities (AAU), the American Council on Education (ACE), the American Association of Medical Colleges (AAMC), the Association of Public and Land-grant Universities (APLU), the Association of University Technology Managers (AUTM), BIO, the Council on Government Relations (COGR), the Pharmaceutical Research and Manufacturers of America (PhRMA), Former Chief Judge of the Federal Circuit Paul Michel, present Federal Circuit Chief Judge Rader, as well as numerous individual universities, research institutes, emerging companies, and host of small and medium sized companies, and pass any bill that they facedly can represent to the public as controlling the mythical creature known as the “patent troll”  which has been so frequently depicted in the popular press.

Indeed, there appears to be a strange urgency among some of our Congressmen to get a bill passed before any significant opposition, based on truly objective data, can be raised in regard to the adverse effects which small patent entities, that cannot count themselves among the largest capitalized companies in the world, may suffer after passage of the many legislative proposals.  In short, Congress imminently appears to be positioned to pass any legislation to control the so-called “troll” problem without waiting for any further objective studies on the problem, where the patents so-called “trolls” come from, or on how small patent entities are weathering Congress’ last changes to the patent law, that is the so-called “America Invents Act.”  Congress appears to be entirely ignoring the warning of the writer Chinua Achebe who urged that: “The damage done in one year can sometimes take ten or twenty years to repair.”

Before going into our study related to how the small entity is faring in Inter Partes Review (IPR) proceedings versus large entities, we thought it of interest to look at where the small entity patentee will almost assuredly find itself in the near future.   In this regard, we borrowed the technology of Doc Brown in the 1980s sequel films “Back to the Future,” to find a small entity patent owner who navigated for some time the patent sea that is presently being fabricated by our Congress.  When our DeLorean got us there, we found the oldest practicing small entity patent mariner we could find, and asked him to tell us his tale of trying to assert and maintain patents in the patent regimen that all small patent entities are clearly going to be facing in the near future.  Our small patent owner decided to tell us his tale in an adaptation of the copyright-lapsed poem of Samuel Taylor Coleridge (1798) “The Rime of the Ancient Mariner” (yes, it is “Rime” not “Rhyme”).   We set it forth below:


The Rime of the Future Small Entity Patent Mariner
(adapted from “The Rime of the Ancient Mariner”, Samuel Taylor Coleridge (1798))
(Illustrations from the original Poem – Illustrations by Gustave Dore)


It is an ancient small patent entity,

And he stoppeth one of three.

‘By thy long grey beard and glittering eye,

Now wherefore stopp’st thou me?

The Patent came up upon the left,

Out of the PTO came he!

The Invention shone bright, and on the right

Went into the issuance sea.

A large entity hulk alongside did come to see the patent that had been spawn,

And I could see thereon large mariners casting dice until the dawn;

Whistling to the PTO, one exclaimed ‘The game is done! I’ve won! I’ve won!’;

Quoth it, “you will see, it is mine — your day of pride is surely done”.

And now the STORM-BLAST of PGRs, IPRs, and Ex Parte Reexams came,

And they were tyrannous and strong:

They struck with the o’ertaking wings,

And chased every dollar of mine along.

And now came, so they said for the benefit of all told,

costs, joinder, and sanctions for asserting a patent reaching to the sky,

And the air for judicial assertion  by small entities became very cold;

And soon large blocks of legislative ice, mast-high, came floating by,

Keeping the small from asserting their rights no matter how hard they try.

The ice was here, the ice was there,

The ice was all around:

It cracked away for the large, yet roared and howled against the small,

Like noises in a swound!

‘God save thee, ancient small patent entity!

From the fiends, that plague thee thus!—

Why look’st thou so?’—With my filing

I caused the Patent ALBATROSS.

Claims, claims, everywhere,

And yet none of the large entities would shrink;

Claims, claims, everywhere,

Yet none were found fit to provide even a drop to drink.

Ah! well a-day! what evil looks

Had I from old and young!

Instead of the cross, the Patent Albatross

About my neck was hung. 

Alone, alone, all, all alone,

Alone on a wide, wide, inter partes and ex partes sea!

And never a saint took pity on

My soul in agony.

I looked upon the IPR rotting claims and the judicial risks at play,

And found myself compelled to turn my eyes away;

I looked upon the rotting opinions of the PTAB I tried to sway,

And saw where the loss of all my money and time lay.

A USPTO administrative review curse would drag to hell

A spirit from on high;

But oh! more horrible than that

Is the curse of trying to maintain a Patent Albatross that once soared the sky!

Days, lights, I saw that curse,

And yet I found myself unable to let it die.

Yet one moment I found I could pray to be rid of it;

And from my neck so free

The Patent Albatross fell off, and sank

Like lead into the sea.


The former small patent entity went like one that hath been stunned,

And is of sense forlorn:

A sadder and a wiser man,

He rose the morrow morn. 



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