Double checking patents puts exploitative trolls on notice

On Friday, a group claiming to represent the nation’s small inventors will demonstrate at the Patent and Trademark Office (PTO) building.  They will call for an end to the PTO’s Inter Partes Review (IPR) process, a procedure for taking a second look at the validity of patents. Some of the speakers will be genuine small inventors. But behind those little guys will be the big dollars of the biggest big-guy exploiters of the PTO’s missteps and mistakes.

For the sake of our innovation-dependent economy, here are questions that the demonstrators should answer:

• Should a way to fold a diaper be patentable?
• Should basic, long-established credit card technology be awarded a patent?
• Should serialized radio episodes be patented if given a new name, “podcasting”?

I ask because the PTO has granted a patent on each of these very unpatentable “inventions.” The patents went to large operations. Much smaller parties challenged them in the IPR. Without those challenges, the giants — two of them so-called patent trolls — would have unfairly stopped the little guys from competing, or demanded money. Each time, the little guy won.

{mosads}”Even Homer nods,” but in this age of ever more exotic software inventions, the overworked, understaffed PTO sometimes seems to be suffering from extreme sleep deprivation. It is the inevitable under-the-best-of circumstances stumbles that make the IPR so essential to America’s real inventors, large and small, and to those whom not-so-real inventors would harass with mistaken claims of privilege.

The IPR was established in the 2011 bipartisan America Invents Act to restore integrity to what had become a too-often-broken patent system. The Act’s goal was to improve patent quality. It established an inexpensive, easy-to-access route for challenging patents that should never have been granted. The cost and slowness of always going to court had made appeal of bad patents too unreliable. The IPR was to fix that. Today, six years later, it is clear that it has worked.

Consider these facts. Almost 70 percent of this year’s challenged patents are in “high tech,” that is software, hardware and networking technologies. High tech is widely acknowledged to suffer from patent quality problems.

Then, too, a majority of those challenged high tech patents are owned by what are called “non-practicing entities,” otherwise known as patent trolls. These are companies that do not actually try to take patented ideas to market. They may acquire unused patents or they may patent general or obvious ideas — like the basic credit card and podcast patents that I mentioned — and use them to shakedown those who inadvertently stumbled into their unjustifiably patented territory, patent traps.

In reviewing these patents, the Patent Trials and Appeal Board (PTAB) has repeatedly demonstrated its ability to identify invalid claims and its willingness to uphold valid ones. For instance, the Board grants petitions challenging high-tech patents much more frequently than it does petitions challenging the historically far more reliable biotech and pharmaceutical patents. Moreover, it upholds biotech and pharmaceutical patents nearly three times as often as it upholds electrical and computer patents and almost four times as often as it upholds mechanical and business method patents, categories that trolls often use to establish patent traps.

The success of the IPR procedure can also be measured in what the PTAB is not doing. It is not overturning patents promiscuously and it is not focusing undo effort in areas not considered troubled. Just the opposite.

Over 99.8 percent of all active patents and 82 percent of litigated patents never face an IPR.  In all IPR petitions decided through March 2017, the Board began a review of only 47 percent of challenged claims and invalidated only 24 percent. When the Board has handed down a decision on the merits, it has upheld some or all of the challenged claims 65 percent of the time. Furthermore, patentees win before the PTAB on validity issues more often than they do in federal court.

Even when a panel of the Board starts an IPR proceeding, it frequently upholds the patent following a closer review.  For decisions issued during this past May, over half of all reviewed patents survived. Furthermore, biotech and pharmaceutical patents have fared well in IPR. The PTAB has overturned only 16 percent of challenged pharmaceutical patents.

The patent system depends on the public’s confidence in it. Having a reasonable and simple way to fix inevitable mistakes builds that confidence. It is too bad that Friday’s demonstrators do not see that getting their way would undermine all that they claim they want to protect.

John Thorne is general counsel of the High Tech Inventors Alliance, a coalition of top technology companies supporting balanced patent policy and collectively holding more than 115,000 patents.

The views expressed by contributors are their own and not the views of The Hill.