What the new administration should be doing with patents

It’s 2017, there’s a new Congress and a new administration. What should they be doing with respect to patents? It seems likely that with the big changeover, patents might not get a lot of attention in the first half of the year. Still, there are some things the new government can do, or not do, going forward.

Continue to Fight Patent Trolls

{mosads}It is true that patent troll litigation dropped in 2016, but according to a recent RPX report, nearly all of that drop is due to fewer lawsuits against very large, well-funded companies. Patent trolls seem to be shifting their focus to smaller businesses that can’t afford to defend themselves effectively. Trolls’ venue of choice continues to be the Eastern District of Texas, as I’ve written about a number of times.

A new paper by Brian Love and James Yoon confirms why this is true: patent trolls use the Eastern District of Texas (EDTX) because its procedures increase costs for defendants quickly. In fact, 90 percent of cases there are filed by patent assertion entities. The paper also shows that only 18 percent of EDTX cases have any local link to the original inventor, original patent owner, or the first named defendant. By comparison, nearly 88 percent of the cases filed in the Northern District of California (which includes Silicon Valley) have such a link to the district.

The reality is that we need venue reform. Congress needs to fix the patent venue statute so that patent owners can’t sue a company virtually anywhere. The evidence is simply undeniable that patent trolls are taking advantage of a court with overly friendly rules in order to extort money, and there’s no reason to allow this to continue any longer.

Do No Harm on Patentable Subject Matter

With recent Supreme Court decisions, there has been a lot of handwringing about the patentability of software, diagnostic methods, and certain biotech inventions. There have even been proposals to do away with the patent-eligibility requirement altogether.

Congress needs to let the law develop slowly. The courts are gradually coming to some reasonable interpretations based on previous case law, and that’s as it should be. There are a lot of stakeholders with competing interests, and the best way to develop this law is a bit at a time. Yes, it’s painfully slow, but it’s the way our legal system works.

While it’s understandable that patent owners who find they’re holding now-ineligible patents would be upset and frustrated, it can’t be the case that absolutely anything you can dream up is patentable. That’s not what the patent system was designed for. It’s designed to protect inventions, not undeveloped or overly vague descriptions.

There’s a huge risk of unintended consequences here, so caution is appropriate.

Let the USPTO Continue to Move Forward

The USPTO has made enormous progress towards improving patent quality in recent years. The Government Accountability Office issued a pair of reports last summer that made strong recommendations on improving quality and consistency in patent examination.

It’s pretty clear that the USPTO is doing a better job. Back in 2009, only 27 percent of patent applicants rated patent examination quality as “good” or “excellent,” while 25 percent rated it as “poor” or “very poor.” In the third quarter of 2016 (the latest quarter for which numbers are available), 50 percent of patent applicants rated patent examination quality as “good” or “excellent,” while only 10 percent rated it as “poor” or “very poor.”

Of course, there’s plenty of room for improvement, but the direction is right.

Another program at the USPTO that has proven itself is inter partes review, or IPR. IPRs allow someone to challenge a patent at the Patent Trial and Appeals Board (PTAB), instead of in court. The IPR program has been extremely popular, and its decisions have been completely affirmed by the Federal Circuit nearly 80 percent of the time.

Attempts to weaken the IPR procedure, primarily led by the pharmaceutical industry, have ranged from major procedural changes to exempting certain industries (including pharmaceuticals) altogether. But the reality is that IPRs work to help get rid of bad patents in a less expensive way than in a court. IPR should be allowed to continue working as it has.

The best thing the administration and Congress can do is to let USPTO continue on this course. As director of the USPTO, Michelle Lee has done a great job according to nearly everyone, but she is a political appointee from the soon-to-be previous administration. Assuming she doesn’t stay on, who should be the new director?

The USPTO faces some major IT challenges, so it would be nice to have someone with experience dealing with large, successful IT overhauls. It’s tempting to argue for someone from a particular industry, but I think that what’s needed is a good manager more than any one area of subject-matter expertise.

2017 promises to be an interesting year in patents. While most of the action will probably be in the courts and at the USPTO, Congress should seize the opportunity to tackle the patent troll problem through legislation that addresses venue abuse.

Matt Levy is Patent Counsel at the Computer and Communications Industry Association.