To patent, or not to patent. . .

For most of us on the Western Slope, the topic of patents is pretty dull.

Yet, from the iPhone to e-cigarettes; aspirin to airplanes, all these great inventions we love and loath are the product of inventors, innovators, and entrepreneurs, who, in exchange for sharing the technology with the public, are granted a monopoly (patent) over the invention for a limited number of years, usually twenty.

Patents allow inventors to recoup the cost of research and development and to be able to make a profit from their hard work. Strong patents rights also have a consumer benefit. When competitors are blocked from copying and flooding the market with cheap knock-offs, it means real innovation has to occur in order to avoid infringement. If a copycat is merely tweaking, society’s knowledge base isn’t being expanded.

US Supreme Court hear 90 minutes of arguments in
Oil States v. Greene on Nov. 27, 2017. Matt Soper photo.

On Monday, Nov. 27th, the U.S. Supreme Court heard oral arguments in Oil States Energy v. Greene's Energy, a case which could drastically change whether an inventor opts to patent new technology, or, like the Coca-Cola recipe, keep it as a trade secret.

The legal question is fairly simple: whether patents are property rights, like land or cars, or whether they are public rights, similar to a marriage licence, driver’s licence, or licence to practice medicine.

If patents are held to be property rights, then only a Federal Court has the power to take that property away from its owner. If the Supreme Court decides patents are akin to licences, then the U.S. Patent & Trademark Office (PTO), as an administrative agency, may invalidate the patent at any time after its been issued.

Let’s say you have spent thousands of dollars and hours researching and developing an invention, then several thousands more in attorney and PTO fees, and then, after a cumbersome multi-year process of examination against prior art, the PTO finally issues you a patent. With this patent you build a business and hopefully are successful. At this point in time, you aren’t going to take too kindly to the Patent Trial and Appeals Board within the PTO accepting a petition to review the validity of your patent, especially since the Board doesn’t afford parties the same due process and procedural protections as courts.

The America Invents Act 2011, among other reforms, created the Inter Partes Review (IPR) process for administratively reviewing the validity of issued patents.

Congress created IPR on the presumption that the PTO had issued too many bad or weak patents over the years. Patent trolls take these “bad patents” and assert frivolous lawsuits with the goal of scaring the end user into a settlement. IPR was designed to make challenging bad patents cheaper and faster. However, as of Jan. 2018, it will cost a petitioner $30,500 to initiate an IPR and the patent owner will spend at least $300,000 defending the patent.

Instead of juries determining whether a patent was nonobvious or novel, Congress moved this determining process to the PTO – an executive agency. Such a change also meant patents were no longer treated as property and presumed valid, unless proven otherwise, but instead, IPR treats issued patents as if they are still in the application process.

Currently, roughly 75% of patents subjected to the IPR process are declared invalid. The losing party may appeal to the D.C.-based Court of Appeals for the Federal Circuit (CAFC). However, CAFC has only reversed 10% of the PTO’s IPR decisions.

The Court's liberal justices appeared to voiced support for IPR. Justice Sonia Sotomayor noted during oral arguments that the ability to appeal “saved” the IPR system.

Colorado’s-own Justice Neil Gorsuch questioned the fairness of a system that could allow a government agency to take property after it had been granted.

Conservatives on the Court seemed concerned about the government’s ability to void patents too easily.

The fact that an overwhelming majority of patents subjected to IPR are revoked and CAFC acts as a rubber stamp for the PTO means small businesses and micro inventors are discouraged from pursuing and developing patented technology.

This author believes issued patents are vested rights that should only be taken away through a court of law and not via an administrative board.

A decision is expected in June 2018.

* Matt Soper, a legal scholar, is a CMU alumnus and resident of Delta, Colo. He holds law degrees from the Universities of Edinburgh and New Hampshire. Contact him at matt.soper@alumni.law.unh.edu. 

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Matthew Soper, "To patent, or not to patent." Grand Junction Daily Sentinel (Dec. 3, 2017) p. B5.