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. 

_________________________________

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

Unified Patent Court question illustrates complexity of Brexit, Europe & the EU

Rare are the times that intellectual property questions sneak into the conversation of a major Brookings Institution, who were discussing, “Europe and the U.S.: The old order faces a new world,” in front of a live audience and the nation, via C-SPAN, were hit with a very specific, “in the weeds” type question from one audience member. “When can we expect to see the [European] Uniform Patent Court treaty ratified and why is Germany holding up the process?” The panel of experts made a good faith attempt at an answer, but admitted their knowledge in this particular area was limited. After the question was addressed, a sea of diplomats, lawyers, academics, and scholars in the audience could be seen googling “Uniform Patent Court.”

European Patent 0080627B1
Opening & closing for retractable fountain pen nib
25 Feb. 1987 European Patent Office

Washington think tank. Experts at the

The UPC may not be sexy like Brexit, Russia, or China in terms of US – European wonk talk, but the entangled mess is worthy of analysis, because it is directly related to Brexit, domestic state parochialism, harmonization of patents, and a developing a more integrated EU.

In June 2017, a complaint was submitted to Germany’s Constitutional Court, asking the court for an einstweilige Anordnung, to temporarily enjoin the ratification of the German Unified Patent Court Agreement Act. At the request of the court, the Office of the Federal President agreed to suspend the ratification process until a decision on the merits has been rendered by the court.

The complaint was submitted by Düsseldorf IP lawyer Ingve Björn Stjerna, and alleges a violation of the right to democracy, "democratic deficits and deficits in rule of law with regard to the regulatory powers of the organs of the UPC", "perceived lack of an independent judiciary under the UPC", and non-conformance of the UPC with EU law.

At the end of August 2017, the Federal Constitutional Court “invited the German Government, the German Bar Association and the European Patent Lawyers' Association to provide observations in response,” according to Lexology.

As of 15 September 2017, there is still no indication on a timeline for resolving the stay of ratification. Germany is an essential element for the UPC to come into force, as the treaty requires at least 13 EU states ratify the UPC under their domestic constitutional framework, plus the three largest patent filing states at the time of adoption. Those three states, as of 19 February 2013, were France, Germany, and the UK.

Courts for resolving patent disputes will be in France, Germany, and the UK, along with regional courts in other states. The registry and court of appeals will be located in Luxembourg.

In contrast to Germany, the UK did ratify acts which pave the way for the UPC to come into force, however, in navigating its exit from the EU, the UK has to make the case that the Unified Patent Court is the product of an independent treaty and not an EU institution. According to BNA, the May Government has said Brexit will end the Court of Justice of the European Union’s “direct legal authority” over the UK. On 23 August 2017, the UK government released a position paper which emphasised that parties to international treaties commonly agree to submit disputes to a non-state court.

The future of the European Patent Court is an analogy for the future of Europe; a complex web of rules, state sovereignty, Brexit, pressure from international business, and a general lack of leadership to define a future and pursue it. The experts at Brookings should rest assured that the question they were posed is one that even constitutional judges in Germany are having a difficult time answering.