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Bipartisan sense on Patent Office bias

Guest Column

The Patent and Trademark Office, the federal agency charged with securing certain intellectual property, has become an enemy of America’s inventors.

How is it that an office charged with protecting innovation is subverting it?

In 2011, Congress passed the America Invents Act.

The abuse of this system has reached epidemic proportions. It’s time for Congress to restore integrity to the patent system. The new administrative process for challenges to existing patents, known as inter partes review, centers on a review by the Patent Trial and Appeal Board, which proponents sold as a faster, cheaper alternative than taking patent challenges to court. The trouble is that PTAB proceedings are wildly unbalanced in favor of patent challengers.

Federal court procedures provide a balanced, fair process and operate on a presumption that the patent, having been duly granted after review by the PTO, is valid. Yet the IPR procedures at PTAB, as one commenter put it, “are plagued by what in any other forum would be considered to be ‘procedural irregularity.’”

First, anybody may file a PTAB challenge. This has enabled speculators, such as hedge funds with no interest in the patent or invention, to short the stock of a patent owner, then file for review simply to make a profit on the devalued stock. Second, PTAB sets a low standard of proof, so petitioners can easily wipe out property rights. This differs from the tougher standards in federal courts.

Finally, there’s no protection of a challenged patent from “double jeopardy.” At PTAB, a patent may be challenged again and again. Thus, a patent owner may face a never-ending battle.

The same patent can face a challenge in both the PTAB and federal district court. A federal court’s decision to uphold a patent doesn’t preclude PTAB from instituting a proceeding on the same patent -- or even from overruling the court. Should the patent owner prevail, the victory consists entirely of the right to keep the patent -- no damages or expenses. Only now, precious time has been lost on the patent term

What has the PTAB regime led to, besides a clear and present danger to secure private property rights? More than one in three patents hauled into IPR has faced more than one request for review. Companies whose business centers on intellectual property frequently find themselves facing one or several IPR actions each time they seek to defend their patent rights.

The IPR process invalidates an incredible 76 percent of the patent claims challenged. In contrast, district courts toss out 30 percent of challenged claims. Such uncertainty has devalued patents by two-thirds since the AIA became law.

Thankfully, bipartisan legislation would address many of the excesses of the PTAB regime. The STRONGER Patents Act brings the balance and fairness of the federal courts to administrative challenges to patents.

Nobody but lawyers likes expensive litigation. But if something entails high stakes — for example, billions of R&D dollars, years of trial and error, and the potential revocation of someone’s property rights — the proceedings making the determination between disputing parties must be fair. As it currently operates, PTAB isn’t.

James Edwards is executive director of Conservatives for Property Rights and advises Eagle Forum Education and Legal Defense Fund on patent issues.