Fact Checking Bogus ‘Patent Report Card’ Grade for Senator Cruz

Senator Ted Cruz (R-TX)

On March 15th Issie Lapowsky of Wired and Joe Mullin of Ars Technica published similar articles around the same time promoting the “tech report card” on the candidates published by Engine and Tusk Ventures. Lapowsky’s article in Wired was titled Here’s A Tech Report Card For Candidates. Guess Who Got An F and Mullin’s article in Ars Technica was titled When graded on tech issues, 2016 presidential candidates don’t do well. The original report card and these respective Wired and Ars Technica summaries have already worked their way into the fabric of the discusson about the candidates and their positions on a variety of tech issues.

After fact checking the report card it became clear that it was woefully inadequate, indeed quite inaccurate and extremely misleading, at least with respect to intellectual property. Perhaps the New Yorker may be right, in the age of the Internet what is fact may be coming to an end. Still, we would hope that isn’t the case.

Simply stated, Senator Ted Cruz (R-TX) did not deserve the F foisted on him by the Engine study or amplified by the reporting by Wired and Ars Technica. This erroneous grading has led to amplification of what can only be properly characterized as a misleading record by others including POLITICO and CNBC. We have also seen industry leaders, lobbyists and analysts sending summaries of the report card around to clients as if the report card represents a factual truth. Whether the inaccuracies of the report card were intentional or malicious is quite irrelevant. Much of what was said is wrong, but the report card is being treated as gospel.

While it is curious that Senator Cruz received an unearned failing grade, it is equally curious that Hillary Clinton, Donald Trump and Governor John Kasich (R-OH) each received a grade of incomplete. These grades have to make one wonder whether those giving the report card and writing about the report card are at all familiar with the patent and innovation positions and history of these candidates.

Although irrelevant now that he has suspended his campaign, it is perplexing and most concerning how Senator Rubio could have been given a B based on something that factually never happened and how Senator Sanders received a B despite the fact that he has little to no patent or IP history except for his position on drug prices that would necessarily curtail patent rights for life science companies.

We all have our opinions and biased perspectives on patent reform and other innovation issues, not to mention the various personalities of the candidates. This article here today is not intended to contest one side of the patent reform debate against the other. Engine and Tusk could have have done a better job with their research before releasing a “report card” that fundamentally misstates reality. We are thus left wondering if the scoring of this “report card” intentionally misleads the public and reinforces the stereotype that the tech community only likes Democrats.

Wrong on Rubio

The biggest error is made by Mullin when he says: “Rubio and Sanders both got a B for voting for the 2011 America Invents Act, an early version of patent reform that changed little, but which tech advocates still considered a step in the right direction.” It appears that Mullin just paraphrased this statement from the Engine study, which says: “Rubio and Sanders received a B grade for their support of the America Invents Act, a bill that represented an important, if not incomplete, first step to cleaning up a broken patent system.”

It could certainly be open for discussion whether support for the America Invents Act should result in a grade being elevated or lowered; viewpoints on that issue will no doubt differ and there can be legitimate disagreement. There can be no legitimate disagreement with respect to whether Senator Rubio voted for the America Invents Act. As IPWatchDog reported earlier this year, Senator Marco Rubio was not present for the final vote on the America Invents Act (AIA). His mother was ill and he did not attend the vote. In fact, Rubio sent a letter to the Senate explaining his absence and stating that he would have voted against the AIA because it did not resolve the diversion of user fees. Therefore, the grade provided to Rubio is based on something that never happened and deserves nothing short of 5 out of 5 Pinocchios.

How could Mullin and the Engine study make such a sloppy mistake? There may be some confusion given that Rubio did vote for S.23, the Patent Reform Act of 2011 on March 8, 2011.

The House of Representatives did not accept the Senate bill and instead voted on their own bill bill, H.R.1249. The House bill ended up passing and returning to the Senate in September, with the final vote on the patent reform bill took place in the Senate on September 8, 2011. Rubio was not present for that vote.

Had the House not altered the fee diversion provision from the language of S.23 perhaps Rubio would have voted for the final bill, but given that he was not present for the vote we will never know for sure what he may have done had he been present. What we do know beyond any shadow of a doubt is that Rubio did not vote for the AIA.

Bias Over Fact on Cruz Grade

The next error is an omission combined with a misdirection by Mullin and Engine. A “report card” backed up by a “study” should provide context and statements from the candidates relevant to specific decisions by Engine and Tusk to determine their grades. Unfortunately, bias trumps fact to reach an unfair and misleading grade for Senator Ted Cruz. Mullin wrote: “Cruz was one of only four senators on the Judiciary Committee to vote against the most recent patent reform bill, earning him a solid F.” Engine wrote: “Cruz received the lowest grade, as one of only four Judiciary Committee members who voted against a comprehensive patent reform bill in 201 5 that would have combatted the patent troll problem.”

Those familiar with the reality of what happened will appreciate that history is rather different than what Mullin and Engine would have you believe. Senator Cruz said at the Senate Judiciary Committee markup of S.1137, the PATENT Act, that he would like to support the bill and may do so if some changes are made. IPWatchDog reported last year and then again earlier this year on this very point of balance struck by Cruz and based on the actual words spoken by Cruz at the markup, a public event streamed live on the Internet and a part of the Congressional record. Cruz said:

Speaking without reading any notes, Senator Cruz told his colleagues:

There are legitimate and serious issues on both sides of the debate. There are legitimate and real concerns about litigation abuse. Litigation abuse is a problem that exists in many sectors, many industries, and certainly the world of intellectual property is one of those where we have seen an escalation in litigation abuse and I commend the bill authors for working in a bipartisan manner to address that. At the same time, I will say that I found Senator Durbin’s remarks quite powerful and persuasive. We have in our economy a particular obligation to protect inventors, to protect the little guy who is inventing the next great invention that will transform the world that we don’t know what it is, we don’t know where it might be going, and yet it represents a threat to the status quo, a threat to giant corporations of today because they are in their garage starting the company that will become the giant corporation of tomorrow. I recognize that the authors of this legislation have worked to balance those concerns, and in private practice before I was in the Senate I litigated cases on both sides of patent matters, both on behalf of defendants and on behalf of plaintiffs asserting intellectual property. At the end of the day, at least in Committee, I’m going to vote against this legislation, but I think it is a close call, and I may well be open to supporting it on the floor depending upon what amendments are considered, but I think we need to be particularly solicitous of protecting inventors, protecting the little guy, protecting those who are asserting the rights protected by the United States Constitution to develop new innovations and I fear that if we lean too far against the small patent holder that in turn will hamper innovation in our economy. I appreciate everyone’s productive discussion on this.

Simply giving Cruz an “F” because he voted against S.1137 in a committee markup is unfair and misleading. First, S.1137 will need to progress to the Senate floor and Cruz could vote in favor of the final bill depending on the amendments made. Perhaps Mullin and Engine are just assuming that Senate leadership will drive an unreasonable hard line and S. 1137 will be a “take it or leave it” floor show with no amendments. It is also unfair to give Cruz an F on patents for failure to vote for S. 1137 without pointing out that his concern was for inventors, startups, universities and innovators who desperately need patent protection. Yes, Engine and Tusk appear to advocate for the views of startups on patents, but in 2015 we saw the National Venture Capital Association and universities stand up publicly and express substantial concerns with S.1137 and H.R.9 as harmful to startups. Prominent VCs in Silicon Valley have shared there concerns directly with USPTO Director Michelle Lee during a roundtable discussion at the opening of the USPTO’s Silicon Valley Office. It would appear that for Mullin and Engine if you are pro-patent or pro-inventor that means you deserve an F for patents. It is frankly absurd to be so visibly lop-sided when one knows that the engine of economic growth, startups, are at the least divided on the patent issue and definitely not all on one side, speaking with one voice.

Truthfully, if you want to be honest and objective, Cruz deserves to receive a higher grade on the issue of patents than any other candidate in the race. Cruz has a rich experience with tough patent issues. While in private practice at Morgan Lewis and running for US Senate he won a case for a patent owner at the US Supreme Court. During oral argument Justice Elana Kagan, former Solicitor General for President Obama, seemed to agree with Cruz and his “willful blindness” theory of the case. Cruz won that case 8-1. Hard to get a patent case to the Court and to win it for the patent owner these days and it is perhaps harder to get the Court to rule so definitively in one’s favor with an increasingly divided court (although perhaps less so on business related cases like patents). So grading Cruz with an “F” seems, well, patently unfair.

Furthermore, the picture painted by Mullin and Engine of Cruz seems clearly intended to mislead. While Engine and Mullin do say that Cruz was one of four to vote against S.1137 at committee markup they do not bother to provide the information about these other dissenters. This context matters. Cruz, the often maligned can’t-get-along-with-anyone-in-DC-personality actually followed others in opposing S.1137 including Senators Dick Durbin (D-IL) and Chris Coons (D-DE), two people that vocally opposed the bill during hearings and the markup and amendment process. Indeed, during the markup hearing Cruz openly told his colleagues that he felt it was a close decision but that he was persuaded by Senator Durbin. Apparently this didn’t fit into the narrative Mullin or Engine wanted to tell about a Senator they seem to view as unacceptable given his pro-patent and pro-inventor tendencies. (The fourth nay vote belonged to Senator David Vitter (R-LA) who recently as Chairman of the Senate’s Committee on Small Business & Entrepreneurship questioned S.1137 and other pending patent litigation abuse reform legislation as well as the implementation of the AIA.)

Other Clarifications and Corrections

As for the rest of the Engine-Tusk “report card” there are some clarifications and corrections for the other candidates that need to be considered.

Hillary Clinton

Hillary Clinton was given an “incomplete” on intellectual property, which is very odd. On the campaign trail this cycle she said in Iowa that companies doing inversions could lose their patents. As Secretary of State she oversaw an agency actively involved in many IP issues including changes to patent terms in the controversial Trans Pacific Partnership Treaty and coordination with the USPTO and other agencies dealing with ongoing work on the substantive patent law treaty at WIPO and grappling with Obama administration positions on IP issues involving trade and America’s relations with foreign countries.

When Clinton was a US Senator representing the State of New York she said publicly in Scranton, PA, that she thought the pending patent reform legislation (which eventually became the AIA) was bad for manufacturers, implying she would vote against.

In fact, if you read her current campaign website she talks up the important role of patents, and in the same way:

“Manufacturing is critical to the U.S. economy. It is responsible for high-paying, high-skilled jobs, and a long-term driver of innovation that leads to new industries and the next generation of domestic jobs:

Strengthening manufacturing bolsters innovation for the long-term. While manufacturing accounts for only 12 percent of GDP, it accounts for 90 percent of patents issued, 70 percent of private-sector R&D spending, and 60 percent of the private R&D workforce. Manufacturers innovate at nearly twice the rate as other companies.”

Interestingly what Clinton says on manufacturing and patents seems similar to what Cruz said on bringing manufacturing jobs back to America during the recent GOP debate in Detroit when he said “…American ingenuity can beat anyone. But right now, the federal government isn’t giving us a level playing field.”

If Mullin and Engine were being intellectually honest and objective this Clinton statement should have provoked a grade of F, as voting against S. 1137 in Committee did for Cruz. So why did Clinton get off the hook with a grade of incomplete instead of an F? Did Mullin and Engine even know of Clinton’s statement regarding the precursor to the AIA? Of course, this is not to suggest that Clinton should have received an F for this statement. Like Cruz, being pro-patent or skeptical of reform legislation simply cannot be the basis of an F grade.

When Clinton was an attorney in private practice at the Rose Law Firm in Little Rock, Arkansas, she also apparently dealt with intellectual property issues for her corporate clients, having marketed herself as an intellectual property attorney for a time. As First Lady she told Commerce Secretary Ron Brown that independent inventors were very concerned about the proposed switch from first to invent to first to file. Also, while she was First Lady the World Trade Organization (WTO) was launched and included at the inception the TRIPS accord for broadening IP rights. There are other aspects to Hillary Clinton and her time in public service that may amplify her likely views on specific IP issues as a 2016 candidate.

Given all of this, an incomplete grade by Engine and Tusk thus seems disingenuous given the long and storied career of someone like Hillary Clinton. In fact an incomplete grade for her is patently ludicrous.

Bernie Sanders

Sanders was given a “B” on intellectual property. This seems to be a case of grade inflation. In August 1999 then U.S. Rep. Bernie Sanders (D-VT) voted “NAY” on H.R.1907, the American Inventors Protection Act (AIPA), the bi-partisan compromise bill that resolved six plus years of rancorous debate on patent reform. Senators Leahy (D-VT) and Hatch (R-UT) moved this House bill through the Senate and President Bill Clinton signed it into law in November 1999. The Senate vote involved several spending bills so who voted for the AIPA in the Senate and for what reasons are muddled in a sense. To be fair here Sanders may have voted against the AIPA because it failed to address the patent litigation abuse issues that he may have cared about. These reforms fell out of the various bills that led to the compromise bill that is the AIPA. But these reforms came off the cutting room floor and back into the Congressional debates on patent reform as early as 2004. Sanders left the U.S. House of Representatives at the end of his term in 2006 and joined the Senate in January 2007. Since then he has seemed to be deferential to the senior Senator of Vermont, Patrick Leahy, a widely recognized leader on intellectual property issues and co-author of the Leahy-Smith America Invents Act of 2011.

While the Sanders 2016 campaign website does not seem to have anything explicit on intellectual property it is important to note that he has been pretty clear about his views on drug prices. It would be hard, if not practically impossible, to enact reforms on drug prices without significant changes to patent rights for innovators in the biotechnology and pharmaceutical industries. Clues to how he may approach the issue could come from the Medical Innovation Prize Act of 2007, submitted by Sanders. See Bernie Sanders and the end of drug patent exclusivity.

If you are pro-patent you would have to significantly mark Sanders down for what will necessarily negatively impact patents in the life sciences area. If you are anti-patent there should be a heavy burden to demonstrate that the same level of pharmaceutical and biotech innovation can take place absent strong patent rights. Given that there is no meaningful innovation community in countries without strong patent rights an erosion of patent rights should carry with it a strong presumption of a negative patent grade. Thus, the Sander’s B seems clearly inflated.

John Kasich

Kasich was also given an incomplete. As IPWatchDog reported earlier this year Kasich has a record of working across the aisle to divert user fees from the USPTO to the general Treasury. How can Engine and Tusk give Rubio a “B” when he would have voted against the AIA in 2011 because it did not solve the problem Kasich helped to create? Perhaps their thinking here for ranking both Kasich and Rubio may change once they update and correct their understanding of Rubio’s actual record. Yes, Rubio on March 15, the same date as the Engine-Tusk study and the articles by Wired and Ars Technica, ended his presidential campaign. So perhaps this is a bit moot. But Kasich, the self-described “Prince of Light” and advocate for moving power back to the states and away from the federal government may benefit from some further examination to determine a complete and fair grade.

Way back during the Reagan administration Kasich backed a bill to extend patent terms. And during his time in Washington he too, like Hillary Clinton, saw the benefits of TRIPS and other developments that enabled the growth of intellectual property as a job creator and wealth generator. Some, like Trump, however, point out that Kasich’s claims to balancing the budget in Ohio came on the back of diverting revenues from cities and now they have to cut or raise taxes and fees. Given the decreasing revenues at the USPTO and the announced hike in user fees perhaps Rubio is right to focus on fixing the finances of the patent office. If past is prologue does Kasich deserve an “F” here due to the gravity of this one issue? Fee diversion was identified by former Republican and Democrat Directors of the Patent Office as the single biggest challenge facing the Office. Fee diversion also nearly killed the AIA in the House in 2011 when the Senate sent their bill over with a provision to end fee diversion. House Budget Chairman Paul Ryan (R-WI), now Speaker of the House, and House Appropriations Chairman Harold Rogers (R-KY), sternly warned House Judiciary Chairman Lamar Smith (R-TX) that fee diversion could not be ended (see here and here).

Perhaps Speaker Ryan as EMCEE of the GOP convention in July in Cleveland, Ohio, may have a sidebar chat with Ohio Governor John Kasich. (Small world: The National Inventors Hall of Fame was founded in Ohio.)

Donald Trump

And last but not least is the headliner for the Wired article: Donald J. Trump. Trump is graded with an incomplete, as was Clinton and Kasich. Trump receiving an incomplete is rather odd since the Trump campaign official website has some explicit statements on intellectual property, which are made in the context of China, an issue that he has been pretty loud about on the campaign trail. The Trump website says:

“The Trump Plan Will Achieve The Following Goals:

Protect American ingenuity and investment by forcing China to uphold intellectual property laws and stop their unfair and unlawful practice of forcing U.S. companies to share proprietary technology with Chinese competitors as a condition of entry to China’s market.

End China’s Intellectual Property Violations

China’s ongoing theft of intellectual property may be the greatest transfer of wealth in history. This theft costs the U.S. over $300 billion and millions of jobs each year. China’s government ignores this rampant cybercrime and, in other cases, actively encourages or even sponsors it –without any real consequences. China’s cyber lawlessness threatens our prosperity, privacy and national security. We will enforce stronger protections against Chinese hackers and counterfeit goods and our responses to Chinese theft will be swift, robust, and unequivocal.

The Chinese government also forces American companies like Boeing, GE, and Intel to transfer proprietary technologies to Chinese competitors as a condition of entry into the Chinese market. Such de facto intellectual property theft represents a brazen violation of WTO and international rules. China’s forced technology transfer policy is absolutely ridiculous. Going forward, we will adopt a zero tolerance policy on intellectual property theft and forced technology transfer. If China wants to trade with America, they must agree to stop stealing and to play by the rules.”

If Bernie Sanders is going to receive a grade of B with virtually no record on patents or intellectual property it would seem only fair that Trump would receive at least a B for focusing on one of the largest issues in the intellectual property community, which is the theft of intellectual property, trade secrets and proprietary technologies by Chinese companies.

If Trump were running Condé Nast he might say the other “F” word he made famous mentoring businesspeople on TV.