“If the future cost of stealing patented technology is only what one would pay for a license today, it is a breach of a CEO’s fiduciary duty not to steal patented inventions because the company may never have to pay it.”
The Pride in Patent Ownership Act, S.2774, is currently being attached to the National Defense Authorization Act (NDAA). The NDAA is “must pass” legislation funding the military at a time when wars are brewing around the world, some with credible threats of nuclear war. Attaching the Pride in Patent Ownership Act to the NDAA means it will certainly become law.
The Pride in Patent Ownership Act requires those who acquire patents to publicly register their ownership assignments with the U.S. Patent and Trademark Office (USPTO) within 120 days. Thus, it serves to identify potential patent infringement plaintiffs.
If the patent holder misses the 120-day deadline, an extremely harsh penalty of losing treble damages for willful infringement, the sole remaining deterrent to willful infringement, is applied.
Patent infringement is about stealing technology protected by a patent – it is not about who owns the patent. Because patent applications are made public by the USPTO, fair notice is given to would-be-thieves that an invention is protected by a patent.
The patent holder is irrelevant to an infringer’s decision to steal an invention, so identifying the owner can only lead to gamesmanship, especially if the patent holder is too small to defend themselves.
So why is Congress pushing the Pride in Patent Ownership Act through by attaching it to the NDAA?
The Purpose of the Pride in Patent Ownership Act
Since eBay v MercExchange, if someone steals a patented invention, they are likely to keep it. Treble damages (tripling a damages award if infringement is proven willful) is the sole remaining penalty for willfully stealing someone else’s invention. Big Tech lobbying power in Washington D.C. is truly impressive, and that power brings us the Pride in Patent Ownership Act so it can eliminate treble damages with the bonus of making it far more difficult to bring patent infringement cases against them.
Already, invalidation rates are high due to the “abstract idea” construct created in Alice v. CLS Bank. Add to that the 84% kill rate at the PTAB and only patent portfolios large enough to statistically get through the damage with a few remaining patents can make it to trial. It’s a game of big numbers.
Since most small entities only have a handful of patents, they must band together pooling their patents into a portfolio large enough to survive the litigation gamut just to get some small part of their investment and hard work returned. But building a portfolio takes time to negotiate because there may be dozens of small inventors contributing their patents to the portfolio.
If patents assigned to the portfolio are registered at the USPTO, Big Tech infringers will be alerted that a portfolio is being built. Once alerted, and before the portfolio is large enough to withstand litigation, Big Tech will start filing PTAB reviews. This will divert resources from building the portfolio to defending it, effectively denying small inventors the last remaining way to get their day in court.
Identifying future plaintiffs and gaming the system so Big Tech can steal patented inventions unfettered is the real reason behind the Pride in Patent Ownership Act.
Willful Infringement is a Fiduciary Duty of Big Tech CEOs
What really matters to Big Tech incumbents is that a well-placed invention can disrupt their multibillion dollar markets and that disruption is a threat to their relevance in that market. A little guy with a big idea can truly threaten the very existence of their monopolies. Think back to Google and how their patented search algorithm sent the search icons of the day, Yahoo and Alta Vista, into the dustbin of history.
eBay v. MercExchange opened the floodgates to willful infringement by effectively eliminating injunctive relief – the ability to take the invention away from an infringer. In eBay’s public interest test, a patent holder must prove that they have a product on the market and the ability to distribute the product at the level of the infringer.
But if Big Tech steals the invention and, by leveraging their huge customer base, existing infrastructure, and endlessly deep pockets, massively commercializes the invention, no small entity will be able to pass the eBay test.
Treble damages stand as the only remaining deterrent to willful infringement. But the Pride in Patent Ownership Act will eliminate treble damages if you make an administrative error.
If the future cost of stealing patented technology is only what one would pay for a license today, it is a breach of a CEO’s fiduciary duty not to steal patented inventions because the company may never have to pay it.
A perfect example of this, and the most egregious situation in recent memory, is the case involving ParkerVision versus several Big Tech companies.
ParkerVision’s patented technology for cellphone chips was revolutionary. RF receivers convert radio waves into digital signals so that your cellphone can read them, but ParkerVision’s patented RF receiver inventions produced a superior digital signal with greater range, faster data, and improved signal quality, and it used much less power so batteries could last longer. This technology made possible the miniaturization of cellphone chipsets, which freed up the space needed to become the smartphone of today.
Evidence uncovered in ParkerVision’s patent infringement cases against Big Tech shows how Qualcomm, Infineon and Intel all made conscious decisions to willfully infringe ParkerVision’s patents. In each case, emails between accused infringer executives discuss of the value of ParkerVision’s technology even as the same emails press ParkerVision to continue talking after the same executives decided privately not to license it from ParkerVision.
Fair Notice is Given by USPTO Publication of Patents
The deal that the U.S. government makes with inventors is a trade of public disclosure of an invention in exchange for patent protection for a limited time. That public disclosure enables market incumbents to identify technologies that could affect their business and creates an opportunity to design around it or to license the patent.
This is fair notice that a new technology has been invented, how it works, and that patent protection is being pursued. Market incumbents hire research firms to identify threats based on USPTO patent publications. Here is a perfect example of that.
In 2011, Patent Board, a corporate research company specializing in patent portfolios, positioned ParkerVision’s patented RF receiver technology near the top of the industry in its Industry Impact report, rating it at 9.16 – six times greater than Qualcomm, which had a rating of 1.5.
In Patent Board’s ratings of Science Strength and Research Intensity, ParkerVision technology was rated in the number one position—more than twice Qualcomm’s rating. The industry knew that ParkerVision had the most significant patented inventions.
Qualcomm obviously knew. In one email shortly after ParkerVision first met with Qualcomm, an executive referred to ParkerVision’s invention as the “holy grail” of RF receiver design. Other emails show that executives and engineers believed they needed ParkerVision’s technology and that they were not going to pay ParkerVision’s asking price.
Infineon (later acquired by Intel) knew it too and they played ParkerVision. According to ParkerVision’s Third Amended Complaint, internal emails between Infineon executives show that after they had decided not to do a deal with ParkerVision, they continued to pretend to be interested in an apparent effort to understand ParkerVision’s technology so they could take it as their own.
Prior to the acquisition of Infineon RF business by Intel, Intel had possession of a Skyworks research paper (Skyworks is also a corporate research firm) that identified 74 ParkerVision patents as the dominant patents in RF technology (paragraph 63 of Amended Complaint).
Market incumbents are the experts in their industry, and their executives ensure that the company is prepared for market changes. Read any annual report in tech and it will list patented inventions as one of the top competitive threats. As a matter of practice, market incumbents hire research firms to identify patented technologies disclosed on the USPTO website that could threaten their business.
All infringement is willful infringement.
More of the Same from Congress
Since 2004, when the Patent Act (which passed as the America Invents Act of 2011) was first discussed in Congress, virtually all legislation has been one sided in favor of huge infringers and destructive to the startups that disrupt their markets. This has harmed American innovation, enabled Big Tech to monopolize, and pushed early-stage funding to the new Silicon Valley in Shenzhen, China.
At some point, this must stop if we are going to take our technological lead back. But for now, that message is obviously not getting through as Congress continues to push legislation like the Pride in Patent Ownership Act, which harms small entities for the benefit of huge infringers.