“It is proven in this errant PTAB experiment…that it is impossible to thwart corruption when power is consolidated and controlled by a single person. This fact is not conservative or liberal, Democratic or Republican. It is fact of human nature.”
Joe Matal, the former Acting Director of the U.S. Patent and Trademark Office (USPTO), recently posed as a question to those sponsoring H.R. 5874, the Restoring America’s Leadership in Innovation Act (RALIA): “What is the ‘conservative’ position on patents and other intellectual property?”
It is an interesting question. What is it about property that makes it property? That’s not a liberal or conservative, or a Democratic or Republican question. Property rights are something everyone learns about early in life when your older sibling grabs your teddy bear and takes it away from you. Property rights are innate in humans. Just about everyone would proffer a similar definition: that’s mine and you can’t take it away – at least not without a fight.
Because fights turn into battles and battles into wars, we created a government to ensure that our property rights are protected from those who would unjustly take them. This, we hoped, would keep us from bludgeoning each other and keep foreign invaders from taking our stuff.
Matal’s question should be directed to how a government protects its citizen’s property rights.
Separate and Distribute Power
If you look at any low income country (LIC) and wonder if they will remain a LIC, look at their property rights system. If the dictator can grant you property and then take it away, nobody will invest in that property because nobody can know if the dictator will just take it back, resulting in all that was invested being lost.
In American government, the power over property rights is both separated and distributed. The executive branch grants the property right. A separate branch, the judicial branch, has the sole and exclusive power to take it away.
Further protecting property rights, judges are distributed across the many states and do not have a reporting hierarchy. Judges report to the Constitution only. Appeals courts can overrule them, but they can’t tell them what to do.
Your property rights are protected by this separation and distribution of power.
The PTAB is Like a Dictatorship
Matal argues that patents should be treated like any LIC treats their property rights. The Patent Trial and Appeal Board (PTAB) was created in the America Invents Act of 2011. Matal was the senior Senate Judiciary staffer at that time and a key player in its passage.
The PTAB is an administrative tribunal with the sole mission of invalidating patents. It is a division of the U.S. Patent and Trademark Office (USPTO) with the power to grant patents. In other words, the USPTO Director has the dictatorial power to both grant and take away patent rights, a personal property right under black letter law.
Just like dictatorships, the PTAB has the power to drive entire industries and to break up monopolies. This has brought incredible political pressure on the PTAB from Big Tech and Chinese Communist Party (CCP)-controlled multinationals.
Most patents challenged at the PTAB are challenged by Big Tech and CCP multinationals. Of the top ten challengers, Apple is on top (most of its manufacturing is in China) and three others are CCP controlled multinationals with total challenges of over 1,000 patents.
The PTAB invalidates an unbelievable 84% of the patents it fully adjudicates. Almost all are invalidated as obvious using multiple dubious prior art references. In one case, a Swiss Army Knife was used to invalidate an automatic door lock.
Molly Metz’s jump rope is another case where patents were unjustly invalidated as obvious. The infringer, Rogue Fitness, met with Metz and discussed licensing her jump rope. Rogue did not have a similar product on the market. In fact, they had not thought of a similar product until they saw Metz’s jump rope. Certainly, Metz’s jump rope is a commercially successful product, so if it was obvious before Metz invented it, why was Rogue not already selling it?
Matal makes the argument that PTAB Administrative Patent Judges (APJs) are experts in the technology that they review. He is mistaken. APJs have technical undergrad degrees, but a whopping 76% of APJs have two years or less of technical experience, and 60% have no technical experience at all. APJs are government lawyers; they know law, not technology.
Some APJs have come from Big Tech companies, taken cases where their former employer is a party, found for their former employer, and some have even gone back to work for their former employer, either as an employee or as outside counsel. There is no judicial code of conduct governing anything that they do.
It is proven in this errant PTAB experiment (as it is has been throughout all of human history) that it is impossible to thwart corruption when power is consolidated and controlled by a single person. This fact is not conservative or liberal, Democratic or Republican. It is fact of human nature.
H.R 5874 – the Restoring American Leadership in Innovation Act.
Matal argues that H.R. 5874 will ship manufacturing and jobs to China. He is mistaken here, too. For over 200 years, the U.S. patent system drove the United States to lead the world in virtually every area of technology.
This started to change in 2006, with eBay v. MercExchange, where the Supreme Court established a public interest test effectively eliminating injunctive relief. Under eBay, if they steal it, they keep it – even if they lose in court. This opened the floodgates to massive infringement on the patents of small entities by multinational corporations.
Then came the America Invents Act (AIA) with its creation of the PTAB (2011). As described above, if they steal it, they will likely invalidate the patent at the PTAB, thus cutting their costs of stealing it.
In Alice v. CLS Bank (2014), the Supreme Court again legislated public policy creating an exception to patentable subject matter called the “abstract idea.” Unfortunately, they did not define what that is and thereby released a demon into the patent system that effectively neuters most tech patents killing emerging competition to Big Tech and CCP- controlled multinationals.
These errant policy actions have enabled Big Tech to monopolize and destroyed early-stage investment into U.S. startups, moving that investment to China.
All H.R. 5874 does is return patent law back to what it was prior to 2006. It worked for over 200 years. It will work again. Matal is wrong.
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