© 2013 Intellectual Property Today.
Originally appearing in Intellectual Property Today in April 2013.
Patents are becoming increasingly unpopular in some quarters due to the phenomenon of so-called “patent trolls”. Patent trolls, also known as non-practicing entities or patent assertion entities, are patent-holders who litigate and assert “bad” patents against seemingly everyone. A s the most susceptible, small companies facing current or potential litigation should know that there are alternative ways to defend against patent trolls. While a few options for challenging patents existed before, the American Invents Act (AIA) has created a number of additional options.
WHAT’S A BAD PATENT?
The “bad” patents asserted by trolls are perceived as invalid due to being overly broad in scope or obvious. For example, a patent troll may claim that an old patent may be broadly interpreted as encompassing new innovations that were not even contemplated at the time of the old patent. Alternatively, the patent troll may assert a patent claiming concepts that were obvious at the time of filing.
Recently, Mark Cuban (owner of the Dallas Mavericks), along with Markus “Notch” Persson (video game developer of “Minecraft”), has donated funds to the Electronic Frontier Foundation (EFF) to endow the “Mark Cuban Chair to Eliminate Stupid Patents.” The EFF is also known for their long-standing Patent Busting Project, as well as their newer Defend Innovation project.
In a TED talk titled “How I beat a patent troll,” Drew Curtis (founder of Fark.com) claimed “patent trolls have done more damage to the United States economy than any domestic or foreign terrorist organization in history, every year.” While perhaps overly hyperbolic, any company or individual who works with technology should be prepared to deal with patent law issues.
Tech industry giants are prepared for this. If they are accused of violating someone else’s patents, or if one of their core technologies is infringed, they can quickly deploy a small army of lawyers to defend their interests. In addition, they may have a massive patent stockpile ready to counterassert against litigants who may actually make something.
The weapons and advantages enjoyed by large companies give them options that are not usually available to small businesses or startups, who are particularly vulnerable to opportunistic patent-holders who aggressively attempt to extract licensing fees from smaller companies with the threat of costly legal action.
The cost of defending against a patent infringement suit regularly starts at $1 million (before trial) and may total in excess of $2 million. Given those figures, it’s easy to see why so many companies choose to settle rather than challenge patent trolls—even when they believe they have done nothing wrong.
The America Invents Act
The America Invents Act (AIA), which passed in 2011 and goes into full effect March 16, 2013, has given companies and individuals who want to stand up to patent trolls more options to defend themselves than ever before.
The AIA legislation brings about many significant changes to the U .S. patent Dealing with Patent Trolls system. It changes the U .S. patent system from a “first to invent” to a “first to file” system, it eliminates interference proceedings, and it creates a number of ways to challenge patents. T his last change means that the law expands the ways companies can challenge the patents being asserted by patent trolls.
It also allows industry experts—those most familiar with the state of the art—to participate more extensively and help the U.S. Patent Office evaluate the patentability
of subject matter purported to new and non-obvious. T his is very significant given the fact that the United States Patent and Trademark Office (USPTO) is reported to have a backlog of hundreds of thousands of unexamined patent applications.
So, what are the avenues—old and new—of challenging “bad” patents in the interest of invalidating them and making them unavailable for assertion by patent trolls?
Ex Parte Reexamination: Available since the 1980’s, ex parte reexamination of a patent by a U SPTO Examiner can be initiated by any member of the public that submits prior art and a statement describing how the prior art raises a substantive new question of patentability. Through such a proceeding, patent claims may possibly be cancelled or narrowed.
Inter Partes Review: Newly available under the A IA, inter partes review is a trial proceeding before the new Patent Trial and Appeal Board (PTAB) where a party may challenge the validity of a patent based on prior art. In effect as of September 16, 2012, the goal is for the PTAB to handle a proceeding and reach a final determination within 1 year.
Post Grant Review: Post grant review is another trial proceeding that is newly available under the AIA. In addition to prior art, this proceeding allows for patent challenges on bases such as lack of written description, enablement, indefiniteness, and whether the patentee was actually the first-inventor-to-file. Like the inter partes review, the PTAB expects to resolve a post grant review proceeding within 1 year.
Transitional Program for Business Methods: Y et another new proceeding conducted by the PTAB, the transitional proceedings for business methods are similar to post grant review. The petitioner (or its real party in interest) must have been sued or charged with infringement of a business method patent.
Derivation: Another new trial proceeding before the PTAB, a derivation proceeding determines whether an inventor of an earlier application derived the invention from another, later-filing inventor and was therefore unauthorized to file the earlier application. A petition to initiate such proceedings may only be filed within 1 year of publication of the earlier filed application.
Third Party Submission: Finally, under the A IA, third parties may participate in the review of pending patent applications by submitting prior art to patent examiners. The goal is to allow individuals and communities with deep, cutting-edge knowledge of technology to participate in examination and aid the Patent Office in determining whether an invention is actually novel. Third party submissions may be done anonymously, but must be filed before allowance.
The availability of such proceedings reflect the understanding that individuals and entities working in innovation industries may have knowledge and access to materials useful to the Patent Office in assessing patentability of pending patent applications, as well as ensuring that issued patents do indeed meet the standards for patentability (e.g., novelty, non-obviousness).
Such proceedings may provide speedier and less costly alternatives to litigation in federal district courts, as well as possibly staying litigation in some cases. A s such, a company or individual that faces current or potential litigation by a competitor or a nonpracticing entity with questionable patents now have more options to prepare for and to address such concerns.
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