The Senate Judiciary Committee’s subcommittee on intellectual property heard from four witnesses on Tuesday on the topic “Protecting real innovations by improving the quality of patents.”

The subject has already been addressed by the Senate Intellectual Property Subcommittee and has been the subject of much debate in patent circles in general. Under the leadership of its new chairman, Senator Patrick Leahy (D-VT), the subcommittee now appears to be revisiting the conversation and looking for practical solutions.

The dangers described

Leahy opened the hearing by referring to an experience in Vermont in 2013, when state-owned companies targeted nonprofits and small businesses with letters alleging patent infringement that purported to describe inventions covering a typical office network with a server, computers running Outlook, and a scanner that allowed a document to be scanned directly to an employee’s email address. The letters called for a license fee of $ 1,000 per employee, which could be debilitating even for a small business. About 75 Vermont companies were targeted in total. As a result, Vermont ultimately passed legislation targeting bad faith patent claims.

Leahy also mentioned the “troubling history” of patents originally owned by Elizabeth Holmes of Theranos, which were sold to a holding company and ultimately claimed against “real inventors and innovators working on steps that can be taken to curb COVID-19, ”Leahy mentioned. He continued:

Here the whole world is scrambling to respond to a pandemic and the solution has been nearly blocked by patents for a bogus invention. When we think about the quality of patents, we must keep in mind that 52% of US patents are granted to foreign entities. But we don’t know how many patents are owned by foreign entities because the PTO doesn’t require the patent owner to tell the public that the patent has been sold. There is a real risk that companies will build shoddy patent portfolios to stifle American innovators.

COVID-19 lawsuit Leahy and witness Jorge Contreras of SJ Quinney College of Law, University of Utah, discussed between Fortress Investment Group / Labrador Diagnostics LLC and BioFire Diagnostics / Biomerieux for infringement of US Patent No. 8,283,155 and U.S. Patent No. 10,533,994, two of the 1,000 patents acquired by Fortress Investment Group from Theranos. Whether Leahy and Contreras’ characterization of this situation is accurate, or whether Labrador was pursuing patents unrelated to COVID, has been debated. But senators and panelists questioned whether patents for inventions that had never been practiced and found to be essentially fraudulent should have been granted in the first place, especially in the case of one of the patents, which was granted. two years after Holmes was charged. Contreras explained:

Theranos never finished developing the tests he sold to Walgreens and others for millions of dollars … Holmes, the lead inventor of the two patents, is currently facing federal indictment for de multiple counts of criminal conspiracy and fraud…. More than a small number of granted patents cover inventions that have never been made or at least never exploited… It seems that the dominant view, both in the PTO and among some patent attorneys, is that patents on nonexistent and impossible inventions are mere curiosities – unfortunate, but ultimately harmless. But the recent assertion of the Theranos patents offers glaring evidence to the contrary.

Contreras then provided examples of what can go wrong: a bad patent can act as anticipation; the patentee can assert the patent against others who are more successful in developing the technology; even if it is ultimately struck down by a court, litigation is costly and many will be resolved by leaving the wrong patent on the books etc.

Sweet solutions

To ward off bad patents, Contreras suggested the following solutions:

• Increase vigilance for unusable inventions. At the examination stage, the USPTO should be able to compare the names of inventors to lists of retracted documents, indictments, disciplinary proceedings, etc. likely to cast doubt. Examiners should also be able to showcase other questionable inventions, like miracle cures, cold fusion, and interstellar spaceships.
• Demonstrate reduction in practice. If reported, the USPTO should be able to obtain a third-party verification of the reduction in practice.
• Involve the public. The Peer to Patent program, which ran from 2007 to 2011, is expected to be relaunched and expanded.
• Increase penalties for fraud. Include both criminal penalties and substantial fines.

Other panelists focused more on improving and increasing the use of 35 USC Section 112 in the exam. “Section 112 rejections are generally considered insubstantial and not pushed at all during prosecution,” said Julio Garceran, chief intellectual property advisor at Cree, Inc., a semiconductor company. compounds based in Durham, North Carolina.

Garceran testified that “low quality patents are a business” and said that the high cost of patent litigation can create an incentive to place increased expense on the competitor that could be better spent on R&D. He suggested that:

• USPTO revenue should be kept in USPTO to fund improvements in review force and infrastructure (end of fee diversion).
• Increase the use of 35USC Section 112 in patent examination.
• Correct the examiners’ prompts. The current system based on counting seems to favor quantity over quality.

Troy Lester of Acushnet agreed with Garceran on improving 112 examination practices, and explained that “litigation abuse only solves half the problem of overly broad patents.” Often bad patents stifle innovation without ever being claimed because they create barriers. “We recently canceled a multi-million dollar order from another US manufacturer due to an invalid patent issue,” Lester said. For his part, he said the following steps can be taken to tackle bad patents:

• Resources should be set aside for further review by the examiner.
• Examiner training and schedules currently focus on quantity rather than quality to reduce backlogs, but this should be better balanced.
• Improvements to section 112 are imperative. The USPTO should require that the claims use the same languages ​​as the specification.

Bridget Asay, an associate at Stris & Maher in Vermont who previously worked with the Vermont attorney general’s office, testified about the litigation abuses described by Leahy in her introduction. She said transparency would go a long way in solving the problem, as it was not easy even for the attorney general’s office to know the status of the patents claimed or the identity of the patent owners.

So seven years ago

Senators Chris Coons (D-DE) and Mazie Hirono (D-HI) have expressed concerns that the problem of patent trolls has been exaggerated to the detriment of legitimate patent holders. “I want to make sure that the pursuit of patent quality as such is not used as an excuse to weaken patent enforcement protections for all patent holders,” Coons explained. He also asked Asay if she was aware of an issue with the letter of formal notice practice today, as opposed to 7-8 years ago when the incident took place in Vermont. She gave a recent example in which the Washington Attorney General is suing a patent troll for violating the state’s Patent Troll Protection Act, but had no other direct experiences to share. “I too heard a lot about it 7-8 years ago, but I think there have been significant changes and changes in law and practice that have largely resolved it,” said Coons.

Hirono raised the specter of the Patent Trial and Appeal Board (PTAB), preferring its comments by saying that “too often efforts to deal with bad patent claims weaken patent rights.” She asked the patent attorneys on the panel about their experience with PTAB, as she heard from many small inventors who “leave the patent system” for this reason. Lester and Garceran both said they believed the PTAB was working now, and Lester felt that serial inter partes review (IPR) petitions stem from serial litigation: IPRs filed against them. If they file a single case, they’re going to end up with only one IPR – and if the patent is valid, it will outlive the IPR. It might not even start, and I think that’s how the system was supposed to work.

Hirono also asked if legislation would be needed to implement changes in the USPTO Section 112 examination standards. Lester and Garceran agreed that while more explicit guidelines are needed, the Bureau has the capacity to do so. “It just has to be part of their process,” Lester said.

IP Subcommittee Ranking Member Senator Thom Tillis (R-NC) also focused his solutions on improving Section 112 review practices. “There are just too many patents too many. generals being issued, especially in the areas of software and financial services, ”Tillis said. He also suggested eliminating tax evasion and the introduction of a so-called gold-plated patent, which “would undergo a more rigorous and costly review process to ensure that it is truly new, innovative and properly. defined ”, but in return would be“ practically impossible to challenge ”.

Eileen McDermott is the editor-in-chief of IPWatchdog.com. Eileen is an experienced intellectual and legal property journalist, and no stranger to the world of intellectual property, having held editorial and management positions in several publications and industry organizations. She acted as an editorial consultant for the International Trademark Association (INTA), mainly overseeing the editorial process of the Association’s bimonthly newsletter, the INTA Bulletin. Eileen was also a freelance writer for the World Intellectual Property Organization (WIPO); as consultant editor for the Intellectual Property Owners Association (IPO) from 2015 to 2017; as Editor-in-Chief and Editor-in-Chief of INTA from 2013 to 2016; and was editor-in-chief for the Americas of Managing Intellectual Property magazine from 2007 to 2013.