“Confidence degrades, and incentives to enter the patent system diminish, when an appeals court takes away via collateral estoppel an aggrieved small innovator’s day in federal district court by applying a standard that is inapplicable in that federal judicial forum.” – Fair Inventing Fund
Three amici filed briefs last week in Jump Rope System’s petition asking the U.S. Supreme Court to review a U.S. Court of Appeals for the Federal Circuit (CAFC) decision upholding a Patent Trial and Appeal Board (PTAB) finding of unpatentability. Eagle Forum Education and Legal Defense Fund and the Fair Inventing Fund filed briefs in support of the jump rope company while DivX filed in support of neither party .
Jump Rope Systems, the inventor of a novel jump rope system, is petitioning the Supreme Court to clarify “whether, as a matter of federal patent law, a determination of unpatentability by the Patent Trial and Appeal Board in an inter partes review proceeding, affirmed by the Federal Circuit, has a collateral estoppel effect on patent validity in a patent infringement lawsuit in federal district court.”
The company is arguing that a 2018 CAFC decision conflicts with the Supreme Court decisions in B&B Hardware, Inc. v. Hargis Indus., 575 U.S. 138 (2015); Medtronic, Inc. v. Mirowski Family Ventures, LLC, 571 U.S. 191 (2014); and Grogan v. Garner, 498 U.S. 279 (1991).
Molly Metz, the Colorado inventor behind Jump Rope Systems, told IPWatchdog in June of this year about her precision speed jump rope handle and her experience with the PTAB invalidating her patents.
Both Eagle Forum and Fair Inventing Fund argued in their briefs that the CAFC’s ruling in Metz’s case is detrimental to American innovation and patent rights.
In Eagle Forum’s brief, they wrote, “this case presents a separation-of-powers violation that further erodes patent rights, and thereby decreases the incentives for innovation on which the United States economy depends for continued prosperity.”
In 2018, Metz filed a patent infringement suit against Rogue Fitness. However, after Rogue filed a petition for inter partes review (IPR), the PTAB invalidated Metz’s jump rope handle patent. The CAFC upheld the PTAB’s ruling and now the case is being heard in front of the Supreme Court.
While it may seem like an isolated case involving fitness equipment, the two organizations filing briefs in support of Metz and Jump Rope Systems argued the case has far-reaching consequences.
Eagle Forum argued, “the loss is not merely to this inventor but to all future American inventors whose creative genius is thereby discouraged.”
Likewise, Fair Inventing Fund agreed with Metz that the case is “of nationwide importance in patent infringement litigation, as it affects countless patent disputes all over the country.”
Furthermore, Fair Inventing Fund made the case that the benefits of the patent system are not enjoyed equally, and smaller businesses, including those run by “women, minorities, and veterans,” face the brunt of this inequality.
Later in the brief, they quoted the SUCCESS Act, passed in 2018 by Congress, which stated, “the United States has the responsibility to work with the private sector to close the gap in the number of patents applied for and obtained by women and minorities to harness the maximum innovative potential and continue to promote United States leadership in the global economy.”
The brief laid out the situation inventors are facing:
“Fair Inventing files this amicus brief to draw to the Court’s attention the unfair results that multiply from the Federal Circuit’s incorrect decision to apply collateral estoppel in patent cases after [the PTAB] decides that a patent is unpatentable: the Board does so under the scant preponderance of the evidence standard; the Federal Circuit affirms that determination, reviewing facts under the very high abuse of discretion standard; and then collateral estoppel prevents the patentee from litigating in federal district court, even though the burden on a potential infringer for invalidating a patent in federal court requires application of the presumption of validity and the higher clear and convincing standard.”
“Confidence degrades, and incentives to enter the patent system diminish, when an appeals court takes away via collateral estoppel an aggrieved small innovator’s day in federal district court by applying a standard that is inapplicable in that federal judicial forum,” added the brief.
Such rulings can serve to discourage small businesses that are attempting to profit from their innovation due to a lack of access to the capital needed to uphold the patent in court.
Metz wrote in IPWatchdog, “what happened to me is happening to others like me. Each week I get to hear from other inventors and their experience with PTAB. This system is broken and is ruining small businesses and the morale of U.S. innovators.”
Losing an Edge?
Another argument presented in the supporting briefs is that the United States is losing its edge against other nations in terms of innovation due to weak patent laws.
Eagle Forum said in its brief that PTAB’s high invalidation rate discourages American innovators, while on other hand the Chinese government is actively encouraging patent applications. In large part due to the Chinese government’s active role in promoting patent applications, China leads the world in patent filings since 2011 and accounted for 43.4% of the world’s patent filings in 2018 and 2019, according to a 2020 report from the World Intellectual Property Organization.
“Today, China issues and protects more patents in imitation of the traditional American patent system, while the lobbyist-driven administrative state in D.C. goes in the opposite direction in denigration of traditional patent rights and our economy,” argued the Eagle Forum in their brief.
According to Visual Capitalist, the U.S. Patent and Trademark Office (USPTO) granted a total of 327,798 utility patents in 2021, a 7% decrease from the previous year, noted the brief.
Both Eagle Forum and Fair Inventing Fund set forth the case that current standards applied by the PTAB are heavily detrimental to American innovation and are contributing to the United States’ struggle to keep up with technological innovations in other countries.
The third brief submitted by DivX supported neither party, but it called on the Supreme Court to “provide needed guidance on common-law preclusion in patent cases in which different tribunals, applying different standards, address the same patent rights.”
DivX argued that current patent litigation can be difficult for patent holders, as they are less sure of their rights in advance of potential lawsuits and litigation. Eagle Forum and Fair Inventing Fund cited this lack of certainty as a disincentive for American innovators that stifles further technological advancement.