When I finally had my day in federal court, it was bright and sunny in San Francisco.
After three long years, I was going to get to defend my patent rights.
When someone infringes on your intellectual property, you become quite emotional.
My packaging innovation was on a number-one hit toy that was selling around the world. I saw it on television and in every toy store. It drove me out of my mind!
I remember how I felt walking up the steps of the courthouse to defend my IP against one of the largest toy companies in the world: Like David… as in David versus Goliath! Reading the name of my company on the courtroom door was unforgettable.
What ensued was like a fistfight, but instead of using their hands, our attorneys used words. The judge, I felt, was neutral. He was the referee. We ended up settling two weeks before trial.
Because I was able to defend my patent rights, I went on to license the same technology — for which I ultimately received more than 20 patents — to other companies. The system worked for me. My patents helped me level the playing field. In hindsight, I think I let my emotions get the best of me. How it all unfolded was an eye-opening experience… that I now think could have been avoided.
But it also confirmed what I had always felt: That as an independent inventor living in the United States, I could defend my ownership of my ideas against any company using intellectual property.
That was in the spring of 2003. A lot has changed since then. Today, I doubt I would be able to achieve the same outcome.
From the passage of the America Invents Act in 2011 to Supreme Court cases like Oil States v. Green Energy — which ruled that patents are a government franchise and not a property right just last week — the landscape has severely changed.
At the U.S. Chamber of Commerce a month ago, the new director of the United States Patent & Trademark Office — Andrei Iancu — spoke forcefully about how the American patent system has suffered as of late.
“For more than just a few years, our system has been pushed and pulled, poked and prodded. The cumulative result is a system in which the patent grant is less reliable today than it should be. This onslaught has come from all directions. There has been major reform legislation, and proposed legislation. There have been massive changes brought about by major court cases. And the USPTO itself has taken a variety of actions in an effort to implement these changes.
Plus, importantly, the rhetoric surrounding the patent system has focused relentlessly on certain faults in, or abuses of, the system—instead of the incredible benefits the system brings to our nation.”
The United States fell further, to tie for 12th, on the Global Innovation Policy Center’s patent protection index this year. We used to be number one.
Simply put, it is more difficult for independent inventors and small business owners to assert their rights to their ideas today for many reasons, including the following.
- No home court advantage. I was able to defend myself on my own turf. The laws concerning litigation venue have shifted. Today, there is not as much consideration for the small entity inventors – the laws focus more on the potential defendant, including their place of incorporation and where they do business. The result for the patent owner is increased time, travel, and ultimately expense. If five companies are infringing on your patents, you typically will find yourself in five different courts across the entire country. Further, cases can no longer be joined together, per the AIA – causing additional expenses for the inventor.
- No help. In 2003, my attorneys at Carr & Ferrell agreed to help defend me. There is no way I could have moved forward had they not agreed to take my case on contingency. That’s become nearly impossible. Britten Sessions, a principal attorney at Zilka-Kotab PC in Silicon Valley, has advised on hundreds of patent enforcement, acquisition, licensing, and other monetization transactions. “Before the past five to 10 years, many law firms throughout the country would offer contingency plus expenses paid for patent related cases,” Sessions told me. “Today, less than likely a dozen law firms across the country offer such conditions — and even then, there are prerequisites and terms that must be agreed to beforehand. The path therefore to assert rights to a patent has significantly diminished, especially for the common small inventors and business owners of America.”
- No likelihood of injunctive relief. Before, the threat of having to stop shipping product motivated companies to head to the negotiation table. Today, however, Sessions indicated that patent owners are restricted in their ability to get injunctive relief. This is in stark contrast to the statutory benefits of a patent, including a “right to exclude”. Without the ability to effectively exclude others, inventors and small business owners are at a disadvantage. Temporary injunctions may still be obtained.
- The threat of post-grant trials. The AIA established procedures for overturning issued patents. At the time, the patent troll narrative dominated. This was a way to weed out bad patents — patents that should have never been issued. In reality, challenging a patent (for example, using the inter-partes review process) has become cheaper than the cost of doing business, or even the cost of defending in federal court. Why agree to license a technology when you could file a relatively inexpensive challenge with the Patent Trial and Appeal Board (PTAB) instead? The threat of pursuing a post-grant trial can be enough to facilitate settlement, Sessions said.
In reference to the high number of patents that meet their end, Federal Circuit Chief Judge Randall Rader infamously described the Patent Trial and Appeal Board as “death squads killing property rights.”
I wouldn’t wish the experience on anyone, but inventors and small business owners should be able to have their day in court.
Why would anyone, including large drug companies let alone startups, invest millions of dollars to create life-changing inventions when they cannot defend assets against competitors?
That was the question I found myself asking last month at the National Academy of Inventors conference at The Mayflower Hotel in Washington. Listening to academic inventors describe the amount of time, effort, and money required to solve problems with global implications left an impression on me. (Think patents don’t lead to economic growth? According to the NAI, its 912 fellows hold more than 32,000 issued U.S. patents, generating more than 9,400 licensed technologies and companies, 1.3 million jobs, and $137 billion dollars in revenue.)
The writing is on the wall.
Chinese inventors are filing more patent applications in the United States. According to the World Intellectual Property Organization, China received more patent applications than the United States, Japan, South Korea, and the European Patent Office combined in 2016. Currently, Tsinghua University in Beijing has an exhibit of antique American patent models on display. Venture capitalist investment from Asia is skyrocketing, the Wall Street Journal revealed recently. I wonder why?
(Miniature patent models on display at the Smithsonian American Art Museum during the National Academy of Inventors April 2018 gala.)
What’s happened to our patent system?
Don’t get me wrong. Most products these days have a short lifespan. Most inventors will never end up in court. Not everyone is affected, in other words.
But I’m concerned. And you should be too. America is synonymous with innovation. The Founding Fathers built the concept of intellectual property into our very foundation.
Section 8 of the Constitution reads: “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”
We have a problem — let’s fix it.
Originally published on Forbes.com May 4th 2018.
