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Patent Trolls Are Losing More. Will America's Supreme Court Change That? (nytimes.com)
jespada writes:
New York Times has an article warning that the Patent Appeal and Trial Board is being challenged on the basis that patents represent real property and that a government agency is not empowered to take real property.
Here's a quotes from the Times article. (Non-paywalled version here): In the five years since it began its work -- a result of the America Invents Act of 2011 -- the Patent Trial and Appeal Board has saved companies more than $2 billion in legal fees alone, according to Joshua Landau, patent counsel at the Computer and Communications Industry Association, offering an expeditious and relatively cheap avenue to challenge patents of doubtful validity. The benefits of stopping bad patents from snaking their way through the economy have been even greater. Companies no longer have to pay ransom so the threat of lawsuits over dubious royalty payments -- filed by aggressive litigants known as trolls -- will go away... But for all the benefits of culling faulty intellectual-property rights, the board is under existential threat. Next week, the Supreme Court will hear a challenge that the patent office's new procedure is unconstitutional...
Here's a quotes from the Times article. (Non-paywalled version here): In the five years since it began its work -- a result of the America Invents Act of 2011 -- the Patent Trial and Appeal Board has saved companies more than $2 billion in legal fees alone, according to Joshua Landau, patent counsel at the Computer and Communications Industry Association, offering an expeditious and relatively cheap avenue to challenge patents of doubtful validity. The benefits of stopping bad patents from snaking their way through the economy have been even greater. Companies no longer have to pay ransom so the threat of lawsuits over dubious royalty payments -- filed by aggressive litigants known as trolls -- will go away... But for all the benefits of culling faulty intellectual-property rights, the board is under existential threat. Next week, the Supreme Court will hear a challenge that the patent office's new procedure is unconstitutional...
I don’t want to hear a damn thing from a patent holding company until they show tax returns demonstrating that they’re paying their fair share to maintain the legal system they disproportionately consume.
Dewey, what part of this looks like authorities should be involved?
I'll accept that logic as soon as they also acknowledge that "a government agency is not empowered to create real property," meaning all patents are invalid, and we can shut down the PATB due to it no longer being needed.
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And even if the Supreme Court hears the case and decides in favor of the patent holder, it could decide that a refund of fees paid to the USPTO for granting an invalid patent constitutes "just compensation" pursuant to the Fifth Amendment.
The entire reason we have any protections against trolls is completely because the big companies get sued by trolls. That's why patent apologists are always making the BS claim that patent reform is just to allow the big guys to rip off the little guys. These reforms are enough to hinder trolls, but not enough to make their massive warchests useless.
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I'm a lawyer. I work in this field and have been following this case. It's very unlikely to overturn PTAB trials (known as IPRs).
The apellant's argument about "real property" is weak. The Supreme Court has held many times that patents are in essence a public right, or at most quasi-private. They haven't ruled on that question explicitly, but that's consistent with all their recent patent rulings (past 30+ years). A ruling against would also upset settled administrative law precedent in many other agencies that have nothing to do with patents. I expect a decision that's 9-0 or 8-1 in favor of PTAB. Not even close.
The S Ct likely took this case not to overturn the law but to settle the question once and for all. Many patent holders who lose at PTAB appeal to federal court on Constitutional grounds, among other things. This case should finally put those appeals to rest and quit clogging up the lower courts.
FWIW the best interpretation I've heard is that while the rights to exploit a patent are private property, the scope of the patent itself is a public right. That means the scope is properly subject to administrative adjudication by competent federal agencies such as PTO, while the right to exercise that patent is not. That view is entirely consistent with both the appellant's position that patents are real property (at least in part) and that PTAB trials are constitutional. However I don't expect the S Ct will adopt such a clean distinction, given their lack of expertise in this area.
Democracy is two wolves and a sheep voting on lunch.
If the patent trolls have retreated under their bridges and judges and juries are more awake about patent abuse and IP extortion then I think we all owe a great dept of thanks to pj and Groklaw - http://www.groklaw.net/
Way back in 2003, Darl McBride thought that his company SCO (pretending to be the defunct Santa Cruz Operation) decided on a scan to monetize Linux, through some disputed Novell IP.
pj, a paralegal, aided by a growing cohort of assistants, tracked down and followed every slimy twist and turn of the multiple cases brought by SCO against Novell, IBM and several others. They dug up so much forgotten information, case-law and witnesses that even the lawyers admitted to using Groklaw as a source.
Eventually it was decided that Novell did in fact own the IP in question, and "millions of lines of :copied code" turned out to be a couple of headers of no consequence.
Finally Darl's dreams of wealth beyond belief collapsed and SCO went into bankruptcy.
The whole saga, and SCO's ultimate ignominious collapse, was a big wake-up call for patent/IP trolls and Groklaw played no small part in it.
Groklaw stopped in 2013 because their messenger anonymizer was forced to close, but their archives are still online.
We owe a big dept of thanks to pj and Groklaw
Mac
You're right, the guy complaining doesn't pay an annual tax on most of his property. In many states businesses DO pay an annual tax on objects they own, which is an expensive pain in the ass which generates little revenue compared to the expense. Individuals are MUCH better off in this regard. As a business owner, I pay annual taxes on my desk, my stapler, my printer, etc.
The observers supporting the patent review board in this case mostly seem to be coming from the perspective of "stopping bad patents as easily as possible is good". I'd certainly agree with that!
The issue on the other side is that the Constitution has two things to say about the matter. The federal government *Constitutionally* can't take things without due process of law (opportunity for a trial), and the seventh amendment guarantees the right to a *jury* trial for "controversies".
This tension between the efficiency of an administrative decision by the executive branch and Constitutional right to a jury trial has been successfully overcome with respect to decisions by IRS, FCC, FAA, etc. The key is to write the law in such a way that an administrative decision (faster and cheaper) can be appealed to a court (Constitutionally required) and the court will take due notice of the administrative body's decision and the reasoning behind that decision. That way you get the best of both worlds.
To use the IRS as an example, if a revenue or collections officer makes a decision you disagree with, you can first appeal to an separate appeals board using a Collections Due Process request. To maintain Independence, appeals employees generally aren't even allowed to talk to collections and revenue officers (with some minor exceptions). If you don't like the outcome of the appeals hearing / discussion, you can then appeal to the federal courts. The court will take notice of the IRS decision, so MOST of the time, if someone lost their argument with the Collections office and lost against with the appeals office, they have a weak argument and will lose in court. But they CAN go to court if they want to, and that preserves their rights.
Most issues are handled fairly efficiently - even if the revenue officer is wrong, the appeals office can correct it. That in no way limits someone's right to go to court, though. A similar process is supposed to be there for patent appeals decisions. If you think the patent appeals board got it wrong, you should be able to go to court. Because the court will read the appeals board decision and if it makes sense the court will uphold it, the board decision should be a strong predictor of how a court will decide. In other words, once the board decides, it's not likely that the court will reverse it unless the board is clearly wrong. That should, and apparently does, discourage patent trolls from pursuing a court action if the board rules their patent invalid.
Plaintiffs in this case say that the exact procedure allowed for appealing to the court doesn't meet the Constitutional imperative. They may be right. If so, the process will simply need to be adjusted to be more like the process uses to appeal IRS decisions, which has been held Constitutional.
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