Patent Trial and Appeal Board – What Does it Mean for Inventors
The article listed at the end of this post was originally posted on the Washington Free Beacon. There are many articles like this on the Internet, but the question is the Patent Trial and Appeal Board bad for inventors, as these articles claim, or are inventors not really affected negatively. I spent 40 years in industry, primarily as a business developed person and marketer before becoming a patent agent, and I can see both sites of the issue. But the new patent and Appeal board as it currently is set up definitely could use some adjustment.
A Little Background
The problem the patent office always has had is that its examiners have incomplete information. They know about previous patents and applications, and often about foreign patents, but they do not know about other prior art, which has not entered the patent arena, which could be people testing a new idea, solutions that have been tried and then dropped, small and large product entrepreneurs who have introduced products without patents. Prior art, or activity that happened before an application was filed can be anywhere in the world. It only needs to be disclosed to the public.
Also the one year to after disclosure only applies to the patent applicant. Prior art from others does not have a one year grace period, it counts immediately against subsequent patents.
In my opinion, when the patent office issues a patent, it is not now, or never has been, a guarantee that the patent holder truly has patent rights. The courts have not only ruled against patent rights in many cases, but the question of who is infringing on a patent has also been settled by courts. In reality patents have always been subject to subsequent review by courts.
But in practice, there have been other issues. For example a manufacturer might be served with a cease and desist letter from a patent holder. That company can respond simply by showing that it had done testing or work on a similar idea and that they weren’t infringing on the patent, as they had prior art. That company served with cease and desist might go right on selling the product, and the patent holder might continue to send out cease and desist letters to other companies. So two companies in effect have patent rights and other companies are unfairly denied the right to enter the market.
The issue here is that patent law suits are expensive for everyone. Patent holders often afford to enforce their patents, and in almost all patent there is plenty of prior art people can reference that possibly cause a patent to be unenforceable.
So the high expense of court action resulted in a situation was bad for inventors, and not great for companies who had large patent lawsuit expenses.
Patent Trial and Appeal Board
The patent office latest decision was to have a Patent Trial and Appeals Board, which is not a court, but a internal patent office function to hear appeals from companies or individuals who feel a patent was granted without properly accounting for all prior art. The fees can range from $200 to $22,000. https://www.uspto.gov/learning-and-resources/fees-and-payment/uspto-fee-schedule. To the patent office, this is a way to ensure the patents it issues have a better chance of not being subsequently affected by prior art. To the patent holder however, this process subjects inventors to increased costs, and possibly greatly increased costs.
Worse for inventors is that people or companies can challenge patent applications that are published. Here is an example of how that worked out poorly for one inventor from a story I wrote for Inventor’s Digest in June of 2016. .
Creating Knockoffs for Your Own Product
Donna Ramere was excited in 2010 when she attended the Toy Fair in New York and received orders for over four containers of the Pumponator, a product created by her granddaughter Lexi Glenn that to quickly fill water balloons. But only two months after the Toy Fair a company with a knockoff of the Pumponator was on the shelf of Walmart in Canada. Ramere’s Pumponator patent pending status didn’t stop the knockoff, and her patent never issued after someone filed protests under the Patent Office’s third party submission program before the patent issued. All is not doom and gloom however, Ramere’s company Pumponator Fun, Inc sells over $1 million per year to over 2000 accounts. But by Ramere’s count the original knockoff company, and a second who entered the market in 2012, have sold $31 million of Pumponator knockoffs since 2010. Sales Ramere would certainly like to have had.
Attending the Trade Show
The Pumponator had a great sales at the show, selling four containers of product, and setting up the success that has the Pumponator sold today in 15 -20 middle mass market stores such as Nordstrom’s and Urban Outfitters among a total of over 2000 accounts. But the show created interest that had some troubling consequences. Early in the show a man came to the booth and introduced himself to Ramere and then according to Ramere he told her that “he was going to be her worst nightmare because he was going to knock her product off.” Two months later he had the product in Walmart in Canada and before long in Walmart stores across the US. Two years later a second knockoff appeared and the two knockoff suppliers dominated the low cost retailers like Walmart and Family Dollar.
What about that patent pending status? Ramere didn’t realize it but patent pending status doesn’t offer an inventor any rights to sue someone selling a product that infringes on her design. Only an issued patent does that. Even worse for Ramere was the fact that the Patent Office has a third party submission program http://www.uspto.gov/patent/initiatives/third-party-preissuance-submissions which allows anonymous comments from individuals or companies challenging a patent application. Ramere’s application received third party submission comments, one which claimed that the patent didn’t even cover her product’s current nozzle design. Ramere has never been able to get a patent and has given up trying.
Today Ramere and granddaughter Glenn are working on a new product. Sales still march on. But Ramere can’t help being a little bitter about what might have been. Today when she consults other inventors she always tells wait till you have a patent before going out.
Personally I feel the patent office needs a way to address the issue that examiners have incomplete information, and they always will have incomplete information. So patents may not meet the prior art criteria, even if they have been issued. I’m not sure the Patent Trial and Appeal Board is the best solution. I’d rather see the following changes.
- All patent applications must be published in six months.
- Patents should not be issued till 12 months after publication
- An alerts system should be established so people can register to receive alerts when an application relevant to them.
- People should be allowed to submit comments and reviews, with documented evidence, regarding patent applications.
- The USPTO should set up an ombudsman program to help patent applicants know how to respond to challenges or comments.
The Supreme Court has ruled in favor of the bill, which large companies lobbied extensively for, in the Oil States Case, so I don’t think anything will change, but perhaps the inventor community can work with the USPTO so the law’s implementation isn’t quite so onerous for inventors.
SCOTUS (Supreme Court of the United States) Comes Down Against Inventors in Oil States Case
Gorsuch decries retreat of judiciary in dissenting opinion
Originally published April 24, 2018 3:50 pm The Washington Free Beacon
Inventors’ rights can be revoked through a controversial administrative process, the Supreme Court ruled by a seven-to-two margin on Tuesday, a move that promises to continue the trend of invalidation of hundreds of existing patents.
The case, Oil States v. Greene’s Energy, concerns an administrative tribunal called the Patent Trial and Appeal oard (PTAB). As the Free Beacon has previously reported, the PTAB is responsible for reviewing patents whose validity have been challenged. The PTAB runs on a host of procedures alien to federal court proceedings: lower evidentiary standards, the ability of anyone to challenge a patent right, and a broad interpretative standard for PTAB administrative judges.
Because of these procedures, the PTAB has a track record of striking down more or less every patent that passes in front of it: A former federal judge once called PTAB tribunals “patent death squads.”
Oil States argued in its brief, and in oral arguments last November, that in practice the PTAB was actively depriving American inventors of their property rights, an institution normally held sacrosanct under the Constitution. Furthermore, they argued, those property rights were being deprived by administrative courts. These are importantly not under the federal court system, to which the Constitution explicitly reserves the “judicial power.” In other words: Americans losing their property rights without due process in a real court of law.