Transcript
Patent Wars: Innovators, Revolutionaries, and the Race to Reform.
The following is a computer-generated transcript from the Patently Strategic Podcast. The results aren't always perfect, but we will continue working on improving the quality of the automation.
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G'day, and welcome to the Patently Strategic Podcast, where we discuss all things at the
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intersection of business, technology, and patents. This podcast
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is a monthly discussion amongst experts in the field of patenting. It is for inventors,
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founders and IP professionals alike, established or aspiring.
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And in this month's episode, we're talking about the patent reform solutions needed
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to save the innovation economy. Me with the revolutionaries who are leading the charge.
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Nearly two decades worth of Federal Circuit and Supreme Court rulings
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have thrown the patent system into disarray and weakened patent rights for inventors.
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Subject matter eligibility is a confused, chaotic mess, leaving even
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the Federal Circuit Chief Justice at a loss on how to determine eligibility.
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The muddied state of invention enablement puts at risk the software
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innovations fueling economic growth and the key life science innovations
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that can save lives. Court interventions on injunctions have made
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it all but impossible for patent owners to stop others from using their
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property rights without permission, turning predatory infringement into
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an efficient business model. This already perfect storm was compounded
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by an act of Congress a decade ago that inadvertently created a patent
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killing machine that has weaponized the Patent Office against inventors.
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This has all been bolstered domestically by the deep pocketed marketing and lobbying
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campaigns of a big tech industry that is now destroying the ladder
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it once climbed up on. It is being exploited internationally
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in an undeclared Cold War that has led to the greatest wealth transfer
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in human history and begs the existential question of who is
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going to develop the technologies of tomorrow? Over the course of the past couple of
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months, we've sat down with thought leaders across the patent world in an
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effort to understand the biggest problems plaguing patenting and
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how those problems impact the innovation economy that still very tightly
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depends on strong, predictable, and reliable patents.
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Building on that understanding, we work toward getting a more complete view of
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the legislative, judicial, and educational solutions
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needed to get back to the gold standard patent system. In doing
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so, we not only talk with our guests about their support for the proposed
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solutions on the table, but we also explore the strongest criticisms.
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I'm incredibly excited to share that we'll be doing so with the help of distinguished
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industry heavyweights who are currently deep in the trenches of these issues and working
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tirelessly towards their solutions. Our guests include Judge
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Paul Michel, former Chief Justice of the nation's top patent court,
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who stepped down from his position to be able to speak freely on these problems.
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Professor Adam Mossoff, law professor at George Mason, and simply one of the
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most brilliant minds in intellectual property law, whose research is regularly
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leaned on by Congress, the Federal Circuit, and even the Supreme Court
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on all things patent law and innovation policy. And Randy Landreneau,
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president of US. Inventor, the largest inventor advocacy group
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in the country, a group that has worked diligently to push through legislative
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and administrative changes to protect inventors and innovative startups.
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We couldn't be more excited about this opportunity or think of a more impactful way
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to use this podcast platform. The hosts and panelists you hear from
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monthly on here all either run or work for pet and boutiques that help inventors
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and early stage startups protect their inventions. We firmly
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believe that innovation is essential to a healthy economy, and empowered
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inventors are the key ingredient to the innovation ecosystem.
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We started this podcast to help inventors, founders and practitioners deal especially
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with the sharp corners of this world. We devote so much airtime to
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trying to help listeners navigate the world as it is, but discussions like the
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ones we're sharing today present an incredible opportunity to talk about
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the world as we'd like it to be. Our guests have been exceptionally generous
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with their time. We recorded over six and a half hours worth of interviews.
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Recognizing that we want to reach as many people with this as possible
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and time is always precious, we've woven highlights from these conversations
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together into a single episode. Typically, we only do one episode
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per month, but given the quality of these conversations and the value in the
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unique perspectives of each guest, following publication of this condensed
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episode, we'll be releasing the full length interviews and weekly installments
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for anyone who'd like to go deeper. Before jumping into the thick of this,
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I do have one quick announcement. If you'd like to help us navigate this complex
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world, get the word out about these critical issues, and help inventors
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in the most tangible way possible, I have great news.
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Aurora is now hiring for a part time biomedical sciences patent
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agent. This is a salaried, fully remote position with a flexible
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work week and benefits work where you want, when you want, with a great
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team on engaging subject matter, and even get the opportunity to join
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us on this podcast, learn more, and apply@aurorapatents.com
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careers. We'll also include that link in the show. Notes. Now back
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to the task at hand. We've been wanting to do a patent reform focused
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episode like this for a long time, particularly since we covered US.
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Inventors 2021 Decade of Stolen Dreams rallies with our American
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Inventor Horror Story episode. It was then that we truly witnessed
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firsthand just how devastating the American Invents Act and the Ptab
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have been for inventors. Flash forward a couple of years to the present,
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and the makers of a new documentary entitled The Innovation Race reached
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out to us to screen their film. The film's premise really resonated with
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us. I'm going to play a brief segment from the trailer. We have
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a great history of inventors in America who've done great things the
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Wright Brothers, Thomas Edison. We have
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a system that has encouraged people to be inventors to
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solve problems by providing them with the ownership
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of what they actually created and patented. How do we turn
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inventions into innovations? How do we turn an
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idea in a venture's head or something
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in a lab or the garage into a real world product or
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a real world service that other people can use and enjoy. And that's
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the key of the patent system. That's what patents as property rights
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do. A patent is a constitutionally
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created property right. It's something that our founders, our framers of our Constitution
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recognize. Our patent system used to be very strong
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and reliable. That's no longer the case. There's some big tech companies
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up here whispering in the ears of Congressmen,
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sliding campaign donations to them and saying,
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we want you to dilute the patent system even more.
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Patents haven't just played an important role in growing our economy.
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They played a key role in developing the technologies
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that have made our country safer.
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Xi Jinping and the Chinese Communist Party the last five years have made
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it abundantly clear that they intend to not just compete with the
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United States, they intend to surpass us and to be the world's
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leader in innovative technology.
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Innovation drives economic security and national security.
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We've lost sight of what it is to protect this nation.
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Those voices you heard are from bipartisan interviews with folks like Senator
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Chris Coons from Delaware and Representative Thomas Massey from Kentucky,
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combined with a myriad of inventors, judges, generals,
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law professors, and policy experts, several of whom you'll hear
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from today, you can find options for streaming and learn more@innovationracemovie.com.
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The end of the film, which touches on solutions, provides a launching
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point for our discussion today. We're going to start with one of the hotter topics
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because of its recent traction in Congress and the attention,
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or more appropriately, abuse, that it's been getting in the courts. And that's the
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problem of subject matter eligibility. Before being approved or rejected,
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this is the first gate a patent application must pass through an examination.
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Whoever invents or discovers any new and useful process, machine,
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manufacture, or composition of matter, or any new and useful improvement
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thereof, may obtain a patent. Therefore,
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section 101, as it's called, defines what kinds of things you
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can patent any new and useful process, machine, manufacture, or composition
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of matter. The gatekeeping function of this statute that's largely
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been unaltered since it was handwritten in 1790, has simply been
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intended to prevent the patenting of the fundamental building blocks
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of human ingenuity things like letters, numbers,
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equations, and gravity. This all work great, as Professor Adam Mossoff
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will explain, until a series of Supreme Court decisions that he not so
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affectionately refers to as the four horsemen of the Innovation Apocalypse.
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The Four Horsemen are the bilski Myriad, Mayo and Alice.
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Decisions in these cases resulted in judicially created exceptions
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for laws of nature, natural phenomena, and abstract ideas adding
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new classes of unpatentable subject matter listening.
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As Adam explains, the Supreme Court handed down a series of decisions,
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four decisions between 2009 and 2014
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on this idea of what counts as an actual invention that can be patented.
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So it's long been recognized that you can only patent inventions like invented
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processes or new machines, new molecules,
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or a molecule that you actually isolate in the lab,
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because molecules aren't isolated out in the world. They're part of living organisms
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and other things. And then that molecule
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becomes isolated, and then you put it into an innovative pill,
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and that becomes a new treatment for cancer or hepatitis.
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So you can patent those things, but you can't patent abstract
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ideas, like equals MC squared. That's the law of nature can't
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patent. Two plus two equals four. That's an abstract idea.
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You can't patent the things in nature themselves,
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like you can patent the molecule that you've isolated,
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which is, by the way, what almost all drugs were
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for 120 years before we started designing them from
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the protein up with biotech innovations. But we're just people going out and
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scooping up sludge from jungles
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and figuring out there's a molecule in there that actually works against
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bacteria.
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The sludge you can't patent. That's just a fact of nature.
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But that, you know, microscopic molecule that you've isolated
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from the sludge and figured out how to put into a pill to get it
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past the hydrochloric acid in your stomach and get absorbed through your intestinal walls
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and travel through your blood system and not get attacked by your own body's immune
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system, that's an invention.
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That's a discovery that's worth protecting, and it should be protected.
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So this is a very important distinction that has long
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existed. It's the root of all patent systems, starting in England and
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in the United States. But the United States
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supreme court, starting in 2009, really just
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threw a monkey wrench into the whole works of this doctrine.
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And a series of decisions vastly expanded the
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scope of what it means to have something count as an abstract
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idea or law of nature and really,
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for lack of a better term, just made a mess of the law.
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They created a two step framework that
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provides no guidance to courts.
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As lawyers like to say, it's totally indeterminate, and it's
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leaning to just willy nilly decisions by courts and
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led to willy nilly decisions by the ptab in
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invalidating patents. In an industry where words matter more than in most,
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the supreme court was unfortunately, light on details. They created
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these new categories of unpatentable subject matter, but without
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working definitions to apply them, leaving it up to the lower courts and
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the patent office to sort through the ambiguity here's. Randy Landrenau
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they put it in writing, and they didn't really describe, well, what does that mean
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exactly? And, of course, if the details aren't there,
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suddenly you have a whole new area where attorneys can
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do their thing right. And, of course, that's what they've done. And did they ever.
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The wide array of innovation domains these judicial exceptions were
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applied to as justification to evaluate patents,
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really stress tests, the bounds of reason to give you a sense of
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just how crazy it's become. So patents
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on oil drilling,
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processes for oil derings, patents on
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automatic garage door openers, patents on
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processes for making automobile axles.
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And in fact, just recently,
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the International Trade Commission, a special court, applied this doctrine
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to invalidate a patent on a drill bit that
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used diamonds in the bit in an innovative way,
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saying that this is just an abstract idea, by the way, so the courts
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tell you how crazy this is, right? An oil derrick,
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a garage door opener, an automobile axle,
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and a drill bit are all being referred to as abstract ideas
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or laws of nature. I mean, this is insane.
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These are classic industrial and 20th century inventions that have
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long been secured by patents, that have been upheld as valid as patentable inventions by
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courts going back 200 years. And now the courts are now saying,
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no, this is automatically excluded from the patent system. These are abstract
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ideas or laws of nature.
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And the fact that the judges are able to write these opinions and not just
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see the absurdity on the face of the opinion itself is
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just really surprising. And this is completely destabilized
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patent system because patents are no
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longer reliable and effective property rights.
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Imagine if I said, yeah, you can have a property right in your house,
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but it could be potentially invalidated as an abstract
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idea by a judge. If you sue someone for trespass down
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the road or you don't even have to sue someone from trespass. Someone just gets
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upset at you and can file a petition at an agency to have them review
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and cancel your deed in your house. Because your house is built on land
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and land is a fact of nature and you can't have title
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and facts of nature. This sounds absurd,
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and it sounds like that can't be because that's so crazy sounding.
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But that's actually effectively what's happening in the courts with respect to patents
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right now, and they've invalidated thousands of patents. Now, to appreciate
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where this inevitably goes, it's important to understand the historical significance
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of eligibility in US patent law and the profound impact it's had
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on shaping the economy. First, understand where
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we started from. The United States has always been
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a leader worldwide
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in terms of its willingness to provide protections to
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next stage innovations and
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cutting edge innovations. So this has been a key
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part of the US pad system from the very beginning.
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Just one small example. When we broke with England
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for the Founders, for the very first time, put patents in the Constitution.
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Never been done before in history as well. Another innovation when
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very first Congress in 1790, right? They're spending weeks debating
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about how do we refer to President Washington, do we call him His Excellency,
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do we call him Mr. President, do we call him the Excellency, the Presidency,
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because he was the analog to the British king. So they were kind of trying
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to figure out, what do we call him. While they're debating that for
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weeks, they immediately enact the 1790 pound act because
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they know that's important. We need to get the country
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going, and innovation and protecting innovation with property rights is
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the basis for doing that.
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But they broke from England in a lot of ways in creating
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our patent system. So it's very common for people as they are. Our patent system
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came from England, and that's certainly true. There's elements of our patent system that did.
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But there's also novel new elements in our patent system.
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Like we embraced a first to invent system.
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England was not a first to invent. So we embraced the idea
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that you are an inventor. So just like the farmer who labors over
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a year to till the soil and harvest
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the crops, eventually that the farmers engage in productive labor. And that's
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the basis for which we then justify legal protection in
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the fruits of the farmer's labors with property rights in the wheat,
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the inventor engages in productive, innovative labors. And that's
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the basis by which we secure and protect the inventor's
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fruits of his or her labors in their invention with a patent,
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a property right. But we also protected processes.
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So England never protected processes. So James
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Watt, who invents the first practical steam engine,
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the basis of the entire industrial revolution, he couldn't get
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a patent on the process of the steam engine. He could only get a process
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on the machine that he invented himself. But the United States
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said no. Processes are inventions themselves, too,
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and they are right. You don't go out into the world and find
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the process of how to make a drug or how to operate a
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steam engine. These have to be invented just as much as the machines and
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other things that you work on with the processes. And in fact, the very first
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patent that issued in the United States, samuel Hopkins,
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was a process on making potash. So that type of patent would
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have never been issued in England, and that's patent number one in the
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United States. So the United States has always been an
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innovative leader in recognizing that
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there are innovations that historically have not been protected
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or did not exist and couldn't be protected, or that aren't protected in other countries.
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But we are protecting them because these are legitimate new creations
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of innovators, and they should be protected as property rights like any
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other fruits of productive labors, such that people
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can then go out into the marketplace and benefit from them themselves
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and benefit consumers. And so this is why
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the chemical revolution starts in Germany in the 19th century. But the
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pharmaceutical revolution, which applies chemistry to
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drugs to help actual people's lives, shifts to the United States.
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It's why the Industrial Revolution starts in England but then shifts to the United
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States in the 19th century. And it's why then the computer
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revolution doesn't shift from anywhere. It starts in the United States in the 20th
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century, and it's why the biotech revolution started in the United States. We protected
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biotech innovation starting in the 1970s and 80s when
17:57.852 --> 18:01.286
other countries said, oh, no, this is
18:01.308 --> 18:04.646
protecting life, or this is going to lead to
18:04.668 --> 18:07.798
Frankenstein type concerns and things of this sort,
18:07.884 --> 18:10.630
and I say said, no, these are legitimate,
18:10.710 --> 18:14.726
actual innovations that scientists and biologists
18:14.758 --> 18:17.514
are coming up with. They will benefit people's lives,
18:17.632 --> 18:21.018
and these should be patented. And that's why the
18:21.024 --> 18:24.894
biotech revolution happens. That was
18:24.932 --> 18:28.346
the context of how amazing our patent system is, and it's why our patent
18:28.378 --> 18:32.266
system was referred to as the gold standard of global patent systems.
18:32.378 --> 18:36.050
Predictably, this shift in perspective on eligibility has already started
18:36.120 --> 18:40.206
a sea change in where investment, innovation, and economic activity
18:40.238 --> 18:44.066
are occurring globally. For added context, the study Adam will
18:44.088 --> 18:48.178
refer to involves 1700 patent applications on the same inventions
18:48.274 --> 18:52.018
filed in China, the European Union, and the United States. I published
18:52.034 --> 18:55.494
a short study with a colleague a few
18:55.532 --> 18:59.018
years ago that showed that not only are we invalidating patents and
18:59.024 --> 19:01.180
have destabilized the US. Patent system,
19:02.110 --> 19:04.460
but that other countries haven't done this.
19:06.430 --> 19:10.022
You actually can show that there are patent
19:10.086 --> 19:13.642
applications that are being rejected by the Patent Office for
19:13.696 --> 19:17.754
being an abstract idea or a law of nature under this patent eligibility doctrine,
19:17.882 --> 19:21.306
that those patents on the exact same inventions are now being granted
19:21.338 --> 19:25.598
in Europe and in China. And that is really significant
19:25.694 --> 19:29.646
because that means people are getting property rights
19:29.838 --> 19:32.850
in these inventions in Europe and in China.
19:33.750 --> 19:37.522
And so we've now flipped, right? So, 40 years ago, people were getting
19:37.576 --> 19:41.286
property rights and biotech innovations in the United States and not getting them in
19:41.308 --> 19:44.358
Europe, and of course, certainly not China at the time. They were totally communist at
19:44.364 --> 19:47.926
that time, but they weren't getting them in Europe. That's why
19:47.948 --> 19:52.054
the biotech revolution happens in the United States, because the property rights were being secured
19:52.102 --> 19:55.734
in the United States. So therefore the licensing was occurring here, the venture capital
19:55.782 --> 19:59.574
investment was occurring here, the manufacturing started to occur
19:59.622 --> 20:03.110
here. All of the economic activity that contributes to the
20:03.120 --> 20:06.986
growth of our innovation economy, creates jobs, creates these flourishing
20:07.098 --> 20:10.778
lives through the products that are being purchased by consumers, happens in the countries
20:10.874 --> 20:14.798
that secure the property rights. And so we've now flipped it where we're
20:14.814 --> 20:18.162
no longer securing those inventions, but other countries are.
20:18.216 --> 20:21.300
And these are cutting edge inventions. Josh, you mentioned it.
20:22.070 --> 20:25.246
This isn't just garage door
20:25.278 --> 20:29.094
openers and automobile axles. Those are just, I think, exemplify just
20:29.132 --> 20:32.962
how crazy the doctrine is. The patents that are being invalidated that we identified
20:33.026 --> 20:37.510
are patents in innovative new diagnostic tests for cancer
20:38.170 --> 20:41.846
treatments, for diabetes, cutting edge
20:41.878 --> 20:45.578
innovations that the United States historically has protected and and
20:45.664 --> 20:49.034
is no longer doing so. And so this
20:49.072 --> 20:53.078
is bad by itself, but it's even worse comparatively
20:53.094 --> 20:56.494
in the global context, given that people are getting patents in
20:56.532 --> 21:00.014
other countries like Europe, and in China. And so that's where then
21:00.052 --> 21:03.486
the venture capital is going to flow to. That's where the economic activity is going
21:03.508 --> 21:07.166
to occur. And if we're seeing evidence of that actually happening. Judge Michel
21:07.198 --> 21:10.322
echoed similar concerns about the chilling effects, in particular,
21:10.456 --> 21:14.050
of investments dropping off. Much invention, as you know,
21:14.120 --> 21:17.138
is very expensive and very slow to mature,
21:17.234 --> 21:21.890
and therefore it often depends on substantial continuing
21:22.050 --> 21:25.394
external funding, often by venture capitalists,
21:25.442 --> 21:29.062
but also by other sort of institutions.
21:29.206 --> 21:32.294
And that's where the patent system is so critical,
21:32.422 --> 21:35.610
because without the protection of patents,
21:36.190 --> 21:39.930
many investment decisions will be made in the negative.
21:40.450 --> 21:43.310
If we had a stronger patent system,
21:43.380 --> 21:47.230
as we did 20 years ago, or maybe even twelve
21:47.300 --> 21:50.814
years ago, we'd be way
21:50.852 --> 21:54.322
better off. But the incentive to make
21:54.376 --> 21:57.602
these large investments has dropped off,
21:57.656 --> 22:00.420
and now the investments are starting to drop off.
22:01.030 --> 22:04.766
And that's a terrible warning sign, an awful trend
22:04.798 --> 22:09.170
that the country needs to reverse as fast as it possibly
22:09.250 --> 22:12.882
can. And that's the thing people don't understand. Patents,
22:12.946 --> 22:16.818
in a way, are more about investors than about inventors.
22:16.914 --> 22:20.794
So my most important message to people is we have
22:20.832 --> 22:25.530
to incentivize the investment, or the cures
22:26.430 --> 22:29.898
are not going to get to patients, the products are not going
22:29.904 --> 22:34.442
to get to consumers. The technology needed to deter
22:34.506 --> 22:37.994
China from invading other countries won't get created.
22:38.042 --> 22:41.822
So these stakes are enormous. It's actually difficult
22:41.876 --> 22:45.402
to think of higher stakes than what's involved
22:45.466 --> 22:48.914
with the health of the patent system. He goes on to provide some insights into
22:48.952 --> 22:52.002
the best possible vector for a fix to the eligibility mess.
22:52.136 --> 22:54.994
This really gets to the heart of the matter, and I think this is especially
22:55.112 --> 22:59.218
pointed coming from someone who spent 22 years as a Federal Circuit judge.
22:59.314 --> 23:02.786
The problem with courts is they're so bound by precedent, they can't
23:02.818 --> 23:06.386
fix it once the Supreme Court has said something unhelpful,
23:06.498 --> 23:10.442
unwise, in my view, you can't fix
23:10.496 --> 23:13.626
it except by legislation. When you
23:13.648 --> 23:17.820
think about it, eligibility already
23:18.270 --> 23:22.118
is in the statute. Four classes are deemed eligible. It's right in
23:22.144 --> 23:26.014
the plain language of the current section 101. Along comes
23:26.052 --> 23:29.758
the court and rewrites the bill because they didn't like it. They thought
23:29.844 --> 23:33.120
other policy approaches were better.
23:33.730 --> 23:37.310
Well, number one, I don't think they're right. But more fundamentally,
23:37.390 --> 23:41.230
they aren't the right people to be deciding broad questions of national
23:41.310 --> 23:44.914
innovation policy. That's for the congress. The Congress has
23:44.952 --> 23:48.918
the skill to do it, and it has the lawful authority to do it.
23:49.004 --> 23:51.974
Unelected judges should not be making patent policy.
23:52.092 --> 23:56.370
Period. And so we turn to our first proposed solution. The Patent Eligibility
23:56.450 --> 24:00.454
Restoration Act seeks to put to an end these judicially created exceptions
24:00.502 --> 24:04.454
to patent eligibility, while also attempting to strike a balance in preventing
24:04.502 --> 24:08.074
the patenting of the fundamental building blocks. It hopes to do so
24:08.112 --> 24:12.030
by maintaining the existing statutory categories of eligible subject matter
24:12.180 --> 24:15.934
while explicitly enumerating a list of excluded subject matter,
24:16.052 --> 24:19.130
resolving legitimate concerns over patenting of mere ideas,
24:19.210 --> 24:23.194
the mere discovery of what already exists in nature and social and cultural
24:23.242 --> 24:26.322
content that is believed to be beyond the scope of the patent system.
24:26.456 --> 24:29.214
Senator Tom Tillis, a Republican from North Carolina,
24:29.342 --> 24:32.238
introduced the first draft of the bill last August,
24:32.334 --> 24:35.746
and Senator Chris Coons, Democrat from Delaware, announced that he has
24:35.768 --> 24:39.190
come on as a co sponsor. The bill has also received broad community
24:39.260 --> 24:42.658
support from industry pundits, PTO directors, former judges.
24:42.754 --> 24:46.114
And the Biden administration seems to support the idea of reform.
24:46.242 --> 24:49.766
But while widely supported in its intent and fueled for
24:49.788 --> 24:53.594
traction with bipartisan support, there are some pretty serious questions about
24:53.632 --> 24:57.386
a couple of aspects of this bill. There are three concerns we've seen come
24:57.408 --> 25:00.874
up a fair amount how it supplies to software, use of the word
25:00.912 --> 25:04.954
nontechnological and the potential reintroduction of pathogen patents.
25:05.082 --> 25:08.670
We'll take on each of these with our guests. We'll turn to the judge first
25:08.740 --> 25:12.142
to see if he thinks Congress is on the right track. You've said,
25:12.196 --> 25:15.338
and I love this quote because when the stakes are high, there's no time
25:15.364 --> 25:18.606
to pull punches. Quote the Supreme Court's decisions
25:18.638 --> 25:22.466
in the last decade have confused and distorted the law of eligibility. You want
25:22.488 --> 25:25.614
to say it's a mess, illogical, unpredictable, chaotic,
25:25.742 --> 25:29.094
bad policy for important innovation, including for promoting human
25:29.132 --> 25:32.594
health. Congress needs to rescue the innovation economy from the courts
25:32.642 --> 25:36.006
which have left it a disaster. Let's hope Congress rises to
25:36.028 --> 25:39.866
the need. End quote. Does this bill, as it's written, rise to
25:39.888 --> 25:43.706
the need? Well, I don't think the bill is perfect because
25:43.808 --> 25:47.866
it's still a work in progress at the
25:47.888 --> 25:51.758
time we speak. It's still being refined by
25:51.844 --> 25:55.274
small teams of lawyers. Secondly,
25:55.402 --> 25:58.682
its political viability is not yet really tested.
25:58.746 --> 26:01.760
There might have to be further changes to make it possible.
26:02.210 --> 26:05.634
So I don't say it's perfect, but I do think it's very, very good.
26:05.752 --> 26:09.470
And I give huge credit to Senator Tillis and Senator Coons
26:09.550 --> 26:13.554
for the hearings. They held over three days in 2019 with
26:13.592 --> 26:17.186
45 witnesses from enormously diverse
26:17.218 --> 26:19.350
group of stakeholders and experts.
26:21.210 --> 26:25.400
And I'm very hopeful that the bill
26:25.770 --> 26:29.258
that was introduced in the last
26:29.344 --> 26:33.078
Congress and is about to be reintroduced in this Congress
26:33.174 --> 26:36.726
will move forward and ultimately get passed.
26:36.838 --> 26:41.306
And it's a little immodest, but I
26:41.328 --> 26:44.302
had some hand in the shaping of that bill.
26:44.436 --> 26:47.966
So I think it's very good being as objective as I
26:47.988 --> 26:51.694
can. But I guess I'm partly subjective because I was part of
26:51.732 --> 26:54.590
the drafting effort.
26:55.250 --> 26:58.658
But it's a great start. It's a very good bill. It would make
26:58.744 --> 27:02.114
huge improvements in predictability. I've also
27:02.152 --> 27:05.794
read a lot of comments in patent media indicating that this bill would overrule the
27:05.832 --> 27:09.906
three or four, depending on how you're counting Supreme Court cases that have put patent
27:09.938 --> 27:13.058
eligibility into its present state of disarray.
27:13.234 --> 27:16.774
The bill doesn't include explicit language to that effect, so I ask
27:16.812 --> 27:20.954
the judge for clarification. Well, it certainly would overrule some
27:20.992 --> 27:24.582
of the careless statements the Supreme Court embedded
27:24.646 --> 27:28.026
in its opinion deciding the four cases. I say four
27:28.048 --> 27:31.902
because I'm going to add Bilski as the first in the quartet time
27:31.956 --> 27:35.374
wise. But you're right, the other three are more famous and
27:35.412 --> 27:36.960
more problematic still.
27:39.090 --> 27:42.634
It might not necessarily change the
27:42.692 --> 27:46.686
decision, but it would change the doctrine,
27:46.718 --> 27:50.482
which is very important because it's the doctrine that guards future
27:50.616 --> 27:54.334
cases. It's the language in the opinion, not just the outcome
27:54.462 --> 27:56.950
eligible or ineligible.
27:57.930 --> 28:01.494
So I think that what
28:01.532 --> 28:05.366
I would say is the bill overrules most
28:05.468 --> 28:09.434
of the four Supreme Court cases, but maybe not
28:09.552 --> 28:13.514
at the level of 100%. We also asked Adam if he thought
28:13.552 --> 28:16.982
the legislation as it's written, accomplishes its stated goals.
28:17.046 --> 28:20.426
Is the legislation perfect? No. Very rarely
28:20.458 --> 28:23.658
is any legislation perfect. One waits
28:23.674 --> 28:26.960
for perfect legislation. One is waiting for Godot, right?
28:31.410 --> 28:34.180
Is it really the perfect legislation? No.
28:36.870 --> 28:40.660
Ideally, legislation should be very basic, very simple.
28:41.270 --> 28:44.754
That was, by the way, why the US. Patent system also worked
28:44.792 --> 28:48.326
was because the patent statutes were very basic and simple for a
28:48.348 --> 28:52.006
very long time, up until the American Vents Act is the first really kind of
28:52.028 --> 28:55.990
excessively complicated patent statutes that are being enacted.
28:58.010 --> 29:01.382
The sections of the statutes are typically one, maybe two sentences
29:01.446 --> 29:05.130
at most. The sentences are not very long. They're understandable.
29:06.030 --> 29:09.626
And that's key to having a property rights system where it's just you have
29:09.648 --> 29:12.910
a basic, understandable foundation for which then people can go
29:12.980 --> 29:16.526
and take their exclusive rights, their property rights, into the
29:16.548 --> 29:20.394
marketplace. My preference is for us to continue that practice
29:20.442 --> 29:23.950
because it's shown economically and historically to be the key to
29:24.100 --> 29:28.530
successful legal foundations and property rights for driving economic growth.
29:28.870 --> 29:32.418
And so ideally, they really should just pass a statute that's just a
29:32.424 --> 29:36.566
couple of sentences that just says all of these Supreme Court decisions from 2009
29:36.588 --> 29:40.066
to 2014, they're overruled, they're abrogated.
29:40.178 --> 29:44.194
We, as Congress deemed these judicial
29:44.242 --> 29:47.926
opinions by the Supreme Court as mistaken interpretations of what
29:47.948 --> 29:51.366
we were trying to achieve when we enacted the patent statutes according
29:51.398 --> 29:55.386
to the authorization and Constitution for us to do so as Congress. But while
29:55.408 --> 29:59.430
not perfect, adam still thinks it's an important step in the right direction.
29:59.510 --> 30:02.560
The bill, as framed achieves a lot of really good,
30:03.330 --> 30:05.520
and it's never going to be perfect.
30:06.370 --> 30:10.110
Even the 1952 Patent Act wasn't perfect in every respect,
30:11.810 --> 30:15.342
and we should support it with an eye towards,
30:15.476 --> 30:18.706
okay, let's now support it and say something like this
30:18.728 --> 30:21.778
should be enacted, but maybe you should be some changes on the
30:21.784 --> 30:25.298
margins. But at core, it's a good thing. And we should be definitely
30:25.464 --> 30:28.886
saying that this is a discussion Congress should have. They should be
30:28.908 --> 30:32.870
moving this forward and working to correct
30:32.940 --> 30:36.694
the concerns and the problematic language on the margins. While that
30:36.732 --> 30:40.290
moves forward, the language in particular we should be looking at correcting
30:40.370 --> 30:43.626
is where I'd like to turn our attention next. Among those in the.
30:43.648 --> 30:47.338
Industry some concerns have been expressed that the bill tries to do too much
30:47.424 --> 30:51.082
and opens new doors for judicial uncertainty. In a US
30:51.136 --> 30:54.746
inventor piece on IP watchdog coauthors Paul Morinville,
30:54.778 --> 30:58.366
Randy Landrenau and Josh Malone argue that in its present state the
30:58.388 --> 31:02.106
bill is immature and that the most important words dangle undefined.
31:02.298 --> 31:05.738
In highlighting the associated risk they point to the problem that got
31:05.764 --> 31:09.534
us here in the first place. As we said earlier section 101 defines
31:09.582 --> 31:12.734
eligible subject matter as whoever invents or discovers
31:12.782 --> 31:16.494
any new and useful process, machine manufacture or composition
31:16.542 --> 31:20.162
of matter or any new and useful improvement thereof.
31:20.306 --> 31:24.278
The Supreme Court somehow found a way to create an exception to the word any.
31:24.444 --> 31:27.906
A word that the dictionary says is used to express a lack
31:27.938 --> 31:31.850
of restriction. They called this restriction to the word any
31:31.920 --> 31:35.014
an abstract idea but then also failed to define
31:35.062 --> 31:38.474
what an abstract idea is. And here we are. We asked
31:38.512 --> 31:39.740
Randy about this.
31:42.210 --> 31:46.170
The devil is in the details. It's like okay so it has to be technological.
31:46.250 --> 31:50.446
What the heck does that mean? And they didn't. Again when
31:50.468 --> 31:54.546
you don't have a very finely defined set
31:54.568 --> 31:58.098
of terms everything can go wrong.
31:58.184 --> 32:02.238
Everything can go wrong. That's where you get unintended consequence.
32:02.334 --> 32:07.642
I mean to me technological is anything that performs
32:07.726 --> 32:11.046
a function like a function well
32:11.068 --> 32:14.598
wait a minute that's my definition. But is that how a judge is going
32:14.604 --> 32:17.766
to see it? Is that how the certainly not.
32:17.788 --> 32:21.306
How the opposing attorney who's trying to invalidate the patent is going to see it.
32:21.488 --> 32:24.730
They're going to take every leeway they can to
32:24.880 --> 32:28.540
make an argument to destroy your patent and
32:29.310 --> 32:32.560
the law has to provide a way
32:33.330 --> 32:37.130
for you to have some type of prediction
32:37.210 --> 32:40.302
as to whether or not you're going to actually win
32:40.356 --> 32:43.738
or lose. And that prediction
32:43.834 --> 32:46.386
goes all the way back to do you file a patent for this thing or
32:46.408 --> 32:50.306
not? If you can't predict that your patent is
32:50.328 --> 32:54.114
going to stay valid you can't invest you
32:54.152 --> 32:57.302
can't spend your time and effort you can't devote your life to this thing.
32:57.356 --> 33:01.014
Investors can't come in. You have to have
33:01.052 --> 33:04.374
something that's predictable and I think that's where it falls down.
33:04.492 --> 33:07.846
Again simplicity is the answer.
33:07.948 --> 33:11.766
Simplicity. You heard Randy mention the word technological in addition
33:11.798 --> 33:15.206
to many wanting more explicit language about the forced GODIS decisions
33:15.238 --> 33:18.278
being overruled the risk of the ambiguity surrounding
33:18.374 --> 33:22.146
this word is one of three chief criticisms we frequently see arise
33:22.198 --> 33:25.566
around the language in the bill. The others include concerns that the bill could
33:25.588 --> 33:29.146
turn software into ineligible subject matter and potentially endanger
33:29.178 --> 33:32.154
global health by reintroducing pathogenic patents.
33:32.282 --> 33:35.914
If the concerns are valid those could all be catastrophic outcomes
33:35.962 --> 33:39.906
but it's worth unpacking each. First to Randy's point the bill would
33:39.928 --> 33:43.186
make ineligible any patent on quote a process that is
33:43.208 --> 33:45.918
a nontechnological economic, financial,
33:46.014 --> 33:48.902
business, social, cultural or artistic process.
33:49.036 --> 33:52.946
This means that only processes deemed technological would be patentable.
33:53.058 --> 33:56.358
The current bill provides no definition of what technological means
33:56.444 --> 33:59.894
and would leave this interpretation up to the courts. And even if the word were
33:59.932 --> 34:03.674
defined, the definition would have to encompass whatever innovations the future might
34:03.712 --> 34:07.306
hold, which we can't possibly know. Any use of this word ends up
34:07.328 --> 34:11.414
either undefined and ambiguous or defined and overly prescriptive
34:11.542 --> 34:14.990
onto software patents. The bill says any person
34:15.060 --> 34:18.506
may obtain a patent for a claimed invention that is a process described
34:18.538 --> 34:21.886
in such provision if that process is embodied in a machine or
34:21.908 --> 34:25.406
manufacturer. Unless that machine or manufacturer
34:25.438 --> 34:28.894
is recited in a patent claim without integrating beyond
34:28.942 --> 34:32.974
merely storing and executing the steps of the process that the machine
34:33.022 --> 34:36.834
or manufacturer perform. As someone who spent 20 years writing software,
34:36.962 --> 34:40.770
I suspect the goal here is excluding nontechnological inventions
34:40.850 --> 34:44.946
that are merely replicated but now performed on a computer. But that's
34:44.978 --> 34:48.438
not what it says. What is merely storing and executing the
34:48.444 --> 34:51.930
steps of the process mean all software does this.
34:52.000 --> 34:55.274
So how might future courts run wild with a phrase like this?
34:55.472 --> 34:59.622
We certainly don't want to trade the Alice decision, something that's made software patents
34:59.686 --> 35:03.274
difficult to get for something that bans software patents altogether.
35:03.402 --> 35:07.486
The third concern centers around pathogenic patents. It's been argued that
35:07.508 --> 35:11.434
had this legislation been in place, researchers could have patented naturally
35:11.482 --> 35:15.146
occurring viral RNA sequences, making it more difficult for others
35:15.188 --> 35:18.814
to develop COVID vaccines and drugs, and that the language should be modified
35:18.862 --> 35:22.446
to prevent the reintroduction of patents on naturally occurring genomic
35:22.478 --> 35:25.602
sequences that are isolated and purified in the lab.
35:25.736 --> 35:29.062
I ask Adam and Judge Michel about all of these concerns. Now,
35:29.116 --> 35:30.790
I am a little worried.
35:31.850 --> 35:36.102
I've heard the arguments about the concern about the
35:36.236 --> 35:39.106
invalidation of software patents.
35:39.298 --> 35:42.694
I'm also worried about the throwing business method patents
35:42.742 --> 35:46.410
also under the bus, because I think the protection of
35:46.480 --> 35:50.618
business methods are processes that have long been protected in our country. They're not new.
35:50.784 --> 35:53.100
Again, this is pure rhetoric that they're new.
35:54.270 --> 35:57.962
I highlighted on this day innovation history. Business method patents
35:58.106 --> 36:01.802
from the 19th century and other scholars have found extensive
36:01.866 --> 36:05.550
numbers of business method patents going back to the early 19th century.
36:07.330 --> 36:10.530
These are legitimate processes. The patent access you have to process.
36:10.600 --> 36:13.666
And a business method is a process. And so as long as it's novel and
36:13.688 --> 36:17.046
non obvious, then you should be able to get a patent on it. It's an
36:17.068 --> 36:20.326
invention. So I'm really concerned about that,
36:20.348 --> 36:24.102
that it does completely throw business
36:24.156 --> 36:28.766
methods under the bus. And given the fact that there's
36:28.818 --> 36:32.694
a kind of a conflation of business methods with computer software
36:32.742 --> 36:36.966
patents, that computer software
36:36.998 --> 36:39.850
patents will go down too. And I think this is what they're highlighting, is that
36:39.920 --> 36:43.158
the language in the statute is not clear on this. And given kind
36:43.184 --> 36:46.714
of the constant confusion by judges and lawyers,
36:46.842 --> 36:50.266
people should know better, but are nonetheless get confused about these matters.
36:50.458 --> 36:54.142
And the reason why they're confused is because there's massive confusion in the policy debates
36:54.206 --> 36:55.620
about these issues.
36:57.990 --> 37:03.874
And so that this could have the effect of being
37:03.912 --> 37:07.974
the basis for the invalidation not just the business method patents or
37:08.012 --> 37:11.430
the exclusion of business methods from wholesale from the patent system,
37:11.500 --> 37:15.062
but also the wholesale exclusion of computer
37:15.116 --> 37:18.346
software patents, which would be a disaster. And I'm concerned about
37:18.368 --> 37:22.554
the new terminology like technology that is
37:22.592 --> 37:24.700
used in it as well.
37:25.870 --> 37:29.686
I understand from the people who have drafted
37:29.718 --> 37:32.958
the legislation or supported it and been part of
37:32.964 --> 37:37.066
the process that they're
37:37.098 --> 37:40.974
hoping that there's a significant body of
37:41.012 --> 37:45.126
law in Europe that applies that term and that they're looking hopefully
37:45.178 --> 37:49.054
to incorporate that, which is a fairly determined,
37:49.182 --> 37:52.642
and from what I understand, pretty good area of law. I mean,
37:52.696 --> 37:56.206
they're more restrictive in it than we would be normally for the pathogen patent
37:56.238 --> 37:59.846
concern. We benefit from some extra context ashley provided in the
37:59.868 --> 38:03.234
interview. You can't patent something in nature,
38:03.282 --> 38:06.646
but if you isolate it, so if there's a virus and
38:06.668 --> 38:10.434
I isolate whatever capsid protein
38:10.482 --> 38:13.942
or something, the DNA for that, then I can patent
38:14.006 --> 38:17.770
that DNA, and now I can own any product
38:17.840 --> 38:22.794
stemming from that DNA and I just isolated it. Right. Which I'm
38:22.922 --> 38:27.194
coming from being a lab rat back in the day. A lot of isolation
38:27.242 --> 38:29.840
stuff is easy, right? It's not hard.
38:31.250 --> 38:34.654
We know the components that viruses have and things like that.
38:34.692 --> 38:39.614
And so does there need to be a little bit more buffering
38:39.662 --> 38:43.234
around? Yes. If you isolate something, that's great, but again,
38:43.272 --> 38:45.762
you have to take it to a useful end and that's what you protect,
38:45.816 --> 38:49.574
right? Oh, I've created diagnostic assay now that yes,
38:49.612 --> 38:52.866
I use this purified DNA sequence to do whatever with. I can't
38:52.898 --> 38:56.280
just protect that purified DNA sequence. Yeah,
38:56.730 --> 38:59.946
I know that third issue very well, and I think that that is not a
38:59.968 --> 39:06.186
real concern for
39:06.208 --> 39:08.940
a couple of reasons. So as a preliminary matter,
39:12.030 --> 39:16.250
ashley made it very clear in her description of the concern
39:16.330 --> 39:19.806
that she said, well, it's easy to do, right, or people already know
39:19.828 --> 39:23.374
how to do it. Well, that means that just
39:23.412 --> 39:26.206
because it's patent eligible doesn't mean you get a patent on it. You still have
39:26.228 --> 39:29.970
to meet novelty and nonobviousness and disclosure and enablement.
39:30.630 --> 39:33.474
And this is one of the problems with this debate, is that the people who
39:33.512 --> 39:36.914
are opposed to reform big tech,
39:37.112 --> 39:39.598
who love willy nilly decision making,
39:39.784 --> 39:41.670
invalidate lots of different patents,
39:43.050 --> 39:46.834
are more than happy to say, oh yeah, this will open the floodgates,
39:46.882 --> 39:50.594
and anyone can get a patent now. No, it's not. It's just one requirement.
39:50.642 --> 39:54.026
It's one hurdle of a very long race of
39:54.048 --> 39:57.446
many hurdles that patent applicants have to go through. And this is why patent
39:57.478 --> 40:02.560
application process, as you guys know, takes many years because
40:03.010 --> 40:06.090
it's multiple requirements. And each of these requirements is a necessary
40:06.170 --> 40:09.694
requirement, as I tell my students in teaching patent law.
40:09.732 --> 40:13.122
Right? This is why every defendant argues the entire
40:13.176 --> 40:16.466
kitchen sink about why the patent is invalid because all you need is one to
40:16.488 --> 40:19.220
stick and that's all.
40:20.470 --> 40:24.274
Just because an isolated molecule is
40:24.312 --> 40:27.954
patent eligible, given the isolation which now makes it not
40:27.992 --> 40:31.366
a natural fact, it's now a human creation in the lab,
40:31.548 --> 40:34.840
doesn't mean that it's necessarily novel or that it's non obvious.
40:35.370 --> 40:39.178
To the extent, in fact, to the extent that, for instance, the entire
40:39.264 --> 40:42.602
human genome has now been published. There,
40:42.656 --> 40:45.914
I think, is an entirely legitimate and very
40:45.952 --> 40:49.466
real argument that any
40:49.568 --> 40:54.000
classic kind of DNA patent of the type that issued in the 1990s
40:54.690 --> 40:58.030
at the turn of the century is just not novel anymore
40:58.770 --> 41:02.366
because it's already known. It's part of the prior art,
41:02.548 --> 41:06.322
the facetas know how to know about these things and know how to find them.
41:06.456 --> 41:09.394
And even if it's not novel, it's obvious because they know how to find them.
41:09.432 --> 41:11.700
It's really super easy, as Ashley said. Exactly.
41:13.270 --> 41:16.498
So you're still having to go through novelty, you're still having to go through non
41:16.514 --> 41:18.280
obviousness and things of that sort.
41:19.850 --> 41:25.186
But second of all, the isolation of molecules
41:25.218 --> 41:29.722
of DNA. This is the biotech revolution that
41:29.776 --> 41:33.370
is what drove the Innovations
41:35.070 --> 41:38.538
and it was the US willingness to say these are patentable inventions to which we
41:38.544 --> 41:42.010
are going to apply novelty and non obvious to figure out
41:42.080 --> 41:45.514
which was a key to creating kind of this foundation for stable
41:45.562 --> 41:49.050
and reliable property rights that drove venture capital investing
41:49.130 --> 41:52.334
and the creation of whole new companies like Genentech and
41:52.372 --> 41:52.960
others.
41:55.010 --> 41:58.500
I'm less worried about,
41:58.950 --> 42:02.482
oh, this is going to somehow blockade research and development because the actual
42:02.536 --> 42:06.226
historical practice is the exact opposite to the extent to which there
42:06.248 --> 42:10.186
was a massive explosion in biotech research and development
42:10.238 --> 42:14.614
innovation. When did that occur? In the 1980s and
42:14.652 --> 42:18.262
early aughts. And that's exactly when we were providing those
42:18.316 --> 42:22.246
exact protections to isolated molecules. And there's a lot of rhetoric
42:22.278 --> 42:25.738
here too, like, Ashley, I know you're not gracing rhetoric, you're the
42:25.744 --> 42:29.020
true geek. So you're like, I get the science, I know the technology.
42:29.390 --> 42:33.498
The arguments that are being made in the policy debates. There are literally op eds
42:33.514 --> 42:37.166
being published by law professors George Contreras and others saying, oh my
42:37.188 --> 42:40.442
God, if this legislation Reform Act is enacted, this Patent Eligibility
42:40.506 --> 42:43.818
Reform Act, they'll get patents on your genes and your
42:43.844 --> 42:47.202
bodies, and it's just like that's just not
42:47.256 --> 42:51.214
true. And it never was true. The judge
42:51.262 --> 42:54.894
also shared some insights with us and this comes from the perspective of personally
42:54.942 --> 42:57.606
being involved in the legislative drafting process.
42:57.788 --> 43:01.222
Active work, as I said, is being done right now on
43:01.276 --> 43:04.310
trying to strengthen, clarify, sharpen the language.
43:04.730 --> 43:08.878
Great attention is being paid to the word non technological
43:09.074 --> 43:13.050
and various substitutes are on the table being considered.
43:14.270 --> 43:18.134
Now, if you were to press me and say, well, can you assure
43:18.262 --> 43:22.110
certain people who are nervous that this bill is absolutely
43:22.180 --> 43:25.146
foolproof and there can never be any unintended consequences?
43:25.258 --> 43:29.040
No, of course I can't. No one can, because you can't predict the future.
43:29.410 --> 43:30.880
No bill is perfect.
43:32.390 --> 43:36.610
But are the risks ones that could
43:36.680 --> 43:40.514
prudently be accepted? Absolutely. In my opinion, the risks are quite
43:40.552 --> 43:44.942
small, and people should just get their courage up because
43:45.016 --> 43:48.726
we need reform so badly. We shouldn't let it
43:48.908 --> 43:52.470
fail because some people were overly nervous.
43:53.370 --> 43:58.326
Now, in terms of clarity of the exclusions,
43:58.438 --> 44:01.050
that's also being worked on very actively.
44:01.630 --> 44:06.202
And we've had on our drafting group people
44:06.256 --> 44:07.930
from all backgrounds,
44:09.150 --> 44:12.830
including independent inventors. This is not just a big company
44:12.980 --> 44:17.530
kind of thing at all. And we've had people from all different technologies,
44:17.610 --> 44:21.006
from what I'll call the computer world and the
44:21.028 --> 44:25.358
pharma world and so on. So everybody's
44:25.454 --> 44:29.362
viewpoints and risks and concerns have been taken
44:29.416 --> 44:33.342
into account. I myself don't see any appreciable
44:33.406 --> 44:37.974
chance that appropriate inventions in
44:38.012 --> 44:42.310
the computer technology arena
44:43.610 --> 44:47.490
will get fenced out. I think there's no serious risk
44:47.570 --> 44:50.726
of that. People are right to be concerned about it, but I don't think there's
44:50.758 --> 44:54.326
a serious risk about that. And if the risk
44:54.358 --> 44:57.722
can be further reduced from an already low level to a very low
44:57.776 --> 45:00.634
level by more tinkering with language,
45:00.682 --> 45:03.338
I'm all for it. I've been participating daily,
45:03.434 --> 45:05.440
hourly, even this week,
45:06.370 --> 45:09.854
in those kind of refinements. We have a group
45:09.892 --> 45:13.634
of extremely thoughtful experts working on
45:13.672 --> 45:16.990
this. And of course, it's also being vetted
45:17.070 --> 45:21.220
by people in the patent office and by
45:21.990 --> 45:26.642
people on the staffs of all the senators on the IP
45:26.706 --> 45:29.890
subcommittee. The membership just newly announced yesterday,
45:29.970 --> 45:32.840
as you know. No surprises, really,
45:33.450 --> 45:34.920
at least in my view.
45:35.930 --> 45:39.226
So I think the
45:39.248 --> 45:43.078
big risk that scares me is that it'll get bogged
45:43.094 --> 45:46.806
down and not pass. The risk that it will get passed
45:46.918 --> 45:50.618
and will hurt. Innovation is minuscule. Adam comes to a
45:50.624 --> 45:54.646
similar conclusion. As he said earlier, while there is a need for language correction,
45:54.758 --> 45:58.286
all in all, I think these are concerns on the margins. When bills like
45:58.308 --> 46:01.626
this introduced, it's really important. These are important first steps.
46:01.658 --> 46:03.550
It's a huge hurdle to overcome,
46:04.530 --> 46:07.698
and we have to be really careful about letting the perfect be the enemy of
46:07.704 --> 46:11.486
the good. Unintended consequences are a frequent phenomenon in DC,
46:11.598 --> 46:15.726
so there seems to be sufficient reason for two of the three concerns expressed.
46:15.838 --> 46:19.174
Like the judge says, this is a work in progress. So I'm at least
46:19.212 --> 46:22.834
hopeful that conversations like these can help to advocate for cleaner,
46:22.882 --> 46:26.614
simpler language with less potential for side effects. And with
46:26.652 --> 46:30.246
that, we move on to the other half of the distorted judicial puzzle and
46:30.268 --> 46:33.754
that's enablement. We're not going to spend a lot of time setting this one up
46:33.792 --> 46:37.354
because it was the entire focus of our last episode called SCOTUS and Focus,
46:37.472 --> 46:41.034
where we took a deep dive on the Amgen versus Santa Fe case. And its
46:41.072 --> 46:44.942
potential impact on the full scope of enablement for genus claims and
46:44.996 --> 46:48.426
the potential devastating impact, especially to life science and pharma
46:48.458 --> 46:51.246
patents. If it sounds like I just made up a bunch of words,
46:51.348 --> 46:55.086
go check out that episode. The Supreme Court is taking this case on, and by
46:55.108 --> 46:59.070
the time this episode publishes, opening arguments will have already begun.
46:59.230 --> 47:02.594
In response to my question as to whether or not this case is our best
47:02.632 --> 47:06.200
hope for clarity on the problem of enablement, the responses were
47:06.570 --> 47:08.230
less than optimistic.
47:11.290 --> 47:14.086
I'm sorry, Josh. When I laugh and you said, is this case our best hope
47:14.108 --> 47:17.446
for clarity? Because anyone who is
47:17.468 --> 47:18.620
a betting person,
47:20.510 --> 47:24.026
the last thing you would expect from the Supreme Court and patent law
47:24.048 --> 47:27.946
is clarity. I'm afraid that based on
47:28.048 --> 47:30.960
the Supreme Court's track record of the past 20 years,
47:32.290 --> 47:35.498
and the Supreme Court has really reengaged with patent laws at a level we haven't
47:35.514 --> 47:42.250
seen for about 100 years now, the majority of those decisions have
47:42.420 --> 47:47.518
muddied the doctrinal waters at best, and have eliminated
47:47.614 --> 47:51.486
or weakened patent rights at worst.
47:51.678 --> 47:55.138
The biggest concerns center around one, the ability for the court to
47:55.144 --> 47:58.786
adequately understand the science, and two, the hope that
47:58.808 --> 48:02.054
the court is not misled or doesn't buy into flimsy rhetoric around
48:02.092 --> 48:05.554
the history of genus claims in US patent law. And for added context,
48:05.602 --> 48:09.266
the Juno case the judge will refer to momentarily is a similar enablement
48:09.298 --> 48:12.966
case that he believes the Supreme Court should have taken up instead of Amgen.
48:13.078 --> 48:16.886
Now the question becomes, can they be helpful?
48:17.078 --> 48:20.830
Can they understand what's going on
48:20.900 --> 48:24.814
here? And I'm worried that they won't understand
48:24.932 --> 48:28.480
the scientific realities well enough to
48:29.330 --> 48:33.454
adjust the two doctrines, written description and enablement
48:33.502 --> 48:38.306
just to give them headline titles in
48:38.328 --> 48:41.940
a way that will work for the human health
48:42.630 --> 48:45.060
technologies and industries and companies.
48:46.010 --> 48:50.166
Why? Because you have to understand a lot about
48:50.268 --> 48:54.280
science in order to understand why
48:54.810 --> 48:58.226
genus claims have to be broad
48:58.338 --> 49:03.702
and why it's impossible to test
49:03.836 --> 49:09.510
and prove out every potential variant
49:10.450 --> 49:12.830
in the genus.
49:13.490 --> 49:17.646
Because in the Juno case, the record said there
49:17.668 --> 49:21.562
were millions of billions of antibody
49:21.626 --> 49:23.780
fragments that could be used.
49:25.590 --> 49:29.534
And so the company was essentially faulted because they didn't
49:29.582 --> 49:33.054
test millions and billions. Well, that's ridiculous. Would have taken forever,
49:33.102 --> 49:36.014
it would have taken a fortune, would have been totally meaningless.
49:36.142 --> 49:40.246
Because there were workable known antibody fragments that
49:40.268 --> 49:43.430
were old art, they were in the books, they were being used by everybody.
49:43.580 --> 49:46.610
So I'm worried now. Why am I so worried?
49:46.770 --> 49:51.260
When you look at the Myriad case, I think they basically didn't understand
49:51.950 --> 49:55.962
how genetic sequences work.
49:56.096 --> 49:59.654
I think the Myriad case is a warning sign that they're a little weak
49:59.702 --> 50:01.790
on certain areas of science.
50:02.850 --> 50:06.602
And to the extent that Myriad decision
50:06.666 --> 50:11.150
was influenced by shallow scientific understanding,
50:11.650 --> 50:15.230
that makes me worry that Amgen may similarly
50:15.390 --> 50:18.638
be affected like he did with eligibility.
50:18.734 --> 50:22.174
Adam also shares some helpful historical context around the allowance
50:22.222 --> 50:26.214
and application of genus claims. So I think based on its current track
50:26.252 --> 50:30.210
record, if one shouldn't
50:30.370 --> 50:34.358
be overly optimistic or
50:34.524 --> 50:38.186
Alan greenspan once said irrationally exuberant about what
50:38.208 --> 50:42.220
the Supreme Court might decide in the Amgen versus Sanofi case.
50:43.150 --> 50:47.034
The only hope is that the Supreme Court is
50:47.072 --> 50:51.086
not misled by the
50:51.108 --> 50:55.066
fear mongering and misrepresentation
50:55.098 --> 50:59.578
of the history and law of genus claims, especially by the amnesty
50:59.754 --> 51:02.110
that filed in support of Sanofi.
51:02.870 --> 51:06.846
And I just published an article on this in Westlaw
51:06.878 --> 51:10.114
today that's publicly accessible with
51:10.232 --> 51:14.130
Matthew Dowd, excellent attorney and
51:14.280 --> 51:18.486
former clerk of Chief Judge Paul Michel of
51:18.508 --> 51:22.786
the Federal Circuit on calling out the fear
51:22.818 --> 51:26.278
mongering and misrepresentation of the history of genus claims in
51:26.284 --> 51:28.280
the patent system in the case.
51:29.370 --> 51:32.682
There's a sense or this claim that genus claims are somehow new,
51:32.736 --> 51:36.122
that they're a creation of the Federal Circuit because it's always nice
51:36.176 --> 51:39.594
to claim the Federal Circuit did something new as a way
51:39.632 --> 51:43.280
to get the Supreme Court to rule against it.
51:43.810 --> 51:47.440
But in fact, genius claims have been around since the very beginning of our country.
51:49.330 --> 51:52.734
They didn't call them genus claims because they didn't have this terminology back
51:52.772 --> 51:56.754
then. But if you read the patent claims that is upheld by the US
51:56.792 --> 52:00.046
Supreme Court and O'Reilly v. Morris, claim one, it's a genus
52:00.078 --> 52:03.540
claim. We quoted in our article showing example of it.
52:05.030 --> 52:07.250
The Wright brothers had a genus claim.
52:08.310 --> 52:11.826
Charles Goodyear's patent on vulcanizing rubber was a genus
52:11.858 --> 52:15.510
claim. It covered a whole range of different species of different
52:15.580 --> 52:19.510
embodiments in which this process
52:19.580 --> 52:23.180
was applied for vulcanizing rubber. By that, Charles Goodyear figured out.
52:23.790 --> 52:27.274
So these are not some kind of new crazy thing that came about because
52:27.312 --> 52:30.310
of the biotech revolution of the past 20 years.
52:30.480 --> 52:35.226
These are long standing legal
52:35.418 --> 52:38.814
devices in patents to effectively and
52:38.852 --> 52:42.478
properly secure especially pioneering innovation, which is
52:42.484 --> 52:45.822
why we see them in the biotech innovation, because all of those innovations
52:45.886 --> 52:49.154
were pioneering inventions where they couldn't it was inconceivable to
52:49.192 --> 52:52.654
them how to identify and specify every single embodiment.
52:52.702 --> 52:56.786
They couldn't do it. And just like pioneering
52:56.818 --> 52:59.942
innovators in the biotech space today can't list out every
52:59.996 --> 53:02.950
conceivable single embodiment, it's impossible.
53:03.610 --> 53:07.314
So this is the proper and only legal
53:07.362 --> 53:10.794
way that you can do it, which is why they have existed and have
53:10.832 --> 53:14.486
been enforced and upheld by the US Supreme Court from the very beginning
53:14.518 --> 53:17.420
of our country. And so,
53:19.470 --> 53:23.822
unfortunately, I'm very pessimistic about what the court will do given
53:23.876 --> 53:27.866
its track record. So my hope is only that it's
53:27.898 --> 53:31.422
not misled and throws out genus claims. With biotech already
53:31.476 --> 53:35.294
reeling from the eligibility mess we've discussed and the entire business model being
53:35.332 --> 53:38.994
under attack, there's a lot on the line not only for the economy, but for
53:39.032 --> 53:42.322
advances in human health. That's what we're really talking about here.
53:42.376 --> 53:46.362
It's what's good for more technology advances
53:46.446 --> 53:49.702
and, you know, it's particularly important in the human health area.
53:49.836 --> 53:53.762
It's very clear to me that the human health scientists
53:53.826 --> 53:57.314
are right on the verge of huge breakthroughs
53:57.362 --> 54:01.074
in curing cancer incurring, alzheimer's incuring,
54:01.122 --> 54:04.714
diabetes incurring, this, that, and the other and coming
54:04.752 --> 54:09.094
up with preventions and diagnostic methods
54:09.142 --> 54:12.414
to early detect and on and on.
54:12.532 --> 54:16.506
So they're right on the cusp of these big breakthroughs, and we're strangling
54:16.618 --> 54:20.538
the industry with stupid decisions on written decision
54:20.714 --> 54:23.626
description, pardon me, and enablement.
54:23.738 --> 54:27.406
So talk about high stakes. I mean, again, the stakes couldn't
54:27.438 --> 54:30.798
be higher. Genetic medicine, personalized medicine,
54:30.974 --> 54:34.402
it's all up for grabs. And guess what? China is running
54:34.456 --> 54:38.182
wild with that. Now, they're advancing a mile a minute in these very
54:38.236 --> 54:42.870
technologies, and we're not, because we've strangled the
54:43.020 --> 54:46.566
ability of the patent system to support and protect them. So where does
54:46.588 --> 54:49.674
that leave us in terms of a solution? My hope is just that
54:49.712 --> 54:53.370
Supreme Court doesn't throw out genus claims,
54:54.030 --> 54:56.810
because that would be a mistake, a legal mistake.
54:57.150 --> 55:00.794
Would it be one more provision we'd have to add to the Rally Act?
55:00.992 --> 55:04.542
Rally? Now, that's another important legislative acronym to remember.
55:04.676 --> 55:08.234
But before we unpack that, I'd like to talk about a host of big ticket
55:08.282 --> 55:11.614
problems that it and its close cousin, the Stronger Patents Act,
55:11.652 --> 55:15.054
seek to address, while eligibility and enablement are presently getting most
55:15.092 --> 55:18.194
of the attention. When I asked our guests to prioritize the main
55:18.232 --> 55:22.462
threats faced by the patent system and the innovation economy, two concerns
55:22.526 --> 55:26.146
immediately came to mind for each. One. The PTAB or
55:26.168 --> 55:29.682
Patent Trial and Appeal Board. Aka. The patent death squad.
55:29.826 --> 55:33.126
And two, the Supreme Court born inability for patent owners to
55:33.148 --> 55:36.866
receive what's called Injunctive Relief to stop infringers the Patent
55:36.898 --> 55:40.294
Trial and Appeal Board. So this is this administrative court that was created by the
55:40.332 --> 55:43.766
America Invents Act 2011, the ironically named
55:43.798 --> 55:47.306
American Vents Act. Typical Congress that always says the
55:47.328 --> 55:51.226
exact opposite title of the statute, what it enacts. Prior to
55:51.248 --> 55:55.246
that, if someone was infringing your patent and
55:55.268 --> 55:59.150
you sued them for patent infringement, the battle would take place in a real court.
55:59.490 --> 56:03.354
A real court. You have a jury, you have a real judge who's lifetime
56:03.402 --> 56:06.786
appointed. You want a lifetime appointed judge. You want a jury, you want due process.
56:06.888 --> 56:09.858
That's what our court system, by the way,
56:09.864 --> 56:13.634
that's called an Article Three Court. For any of you out there who hear
56:13.672 --> 56:17.860
this term, Article Three Court, it's just a real court with a jury. In fact,
56:18.650 --> 56:22.594
the 7th Amendment says you are entitled to a trial
56:22.642 --> 56:26.550
by jury for any civil matter of greater than $25
56:26.620 --> 56:30.550
or something. They probably need to update that amount. But anyway,
56:30.700 --> 56:33.866
the point is, this is like a constitutional right as an American. And you
56:33.888 --> 56:36.986
know what? You don't have that right in a lot of other countries. A lot
56:37.008 --> 56:40.646
of other countries. You face three judges and they decide. And if they're
56:40.678 --> 56:44.134
biased, you're in big trouble. So this is a big part of America.
56:44.182 --> 56:47.614
So prior to 2011, your patent battles would take place
56:47.652 --> 56:51.194
in a real court. And you know what? It's not fast and it's not cheap,
56:51.242 --> 56:54.494
but it's fair. And the inventor didn't always win.
56:54.532 --> 56:57.620
But if they should win. They would. The argument was. Well,
56:58.310 --> 57:01.310
patent office isn't perfect. Every now and then they make a mistake.
57:01.470 --> 57:06.210
And if they make a mistake, there should be a cheaper, faster, more efficient
57:07.910 --> 57:11.334
way to solve it other than District Court. Oh, but it's got to be fair
57:11.532 --> 57:14.998
and, oh, yeah, and we're going to let the Patent Office take care of it.
57:15.084 --> 57:18.486
Now, that sounds pretty reasonable, right? Like, well,
57:18.508 --> 57:21.866
what could go wrong there? But there's a term in
57:21.888 --> 57:25.510
Washington, DC. That's a big term. It's unintended consequences,
57:25.590 --> 57:29.018
right? Oh, man. In unintended consequences. There were
57:29.104 --> 57:33.182
the whole point of creating the PTAB was, we want a
57:33.236 --> 57:38.718
faster, more, quote, efficient process
57:38.804 --> 57:42.960
for invalidating patents. I'll tell you.
57:43.510 --> 57:48.050
As I mentioned before, I was on the Hill speaking
57:48.120 --> 57:52.914
with staffers and other stakeholders in
57:52.952 --> 57:56.446
2010 in the debates and leading up to the AIA,
57:56.638 --> 58:00.038
where I always like to point out to them, there's an old classic maxim that
58:00.044 --> 58:03.174
you can do something fast or you can do something right, but you can't do
58:03.212 --> 58:06.920
both. And so I kept telling them that,
58:07.450 --> 58:10.986
yeah, you want a fast process to invalidate patents, it's not
58:11.008 --> 58:14.682
going to be a right process. This AIA introduced process was called
58:14.736 --> 58:18.246
Inter Parties Review, or IPR, in which the validity of granted
58:18.278 --> 58:22.282
patents can be challenged by any member of the public, offensively or
58:22.336 --> 58:25.646
defensively. One way these challenges can arise is when
58:25.668 --> 58:29.566
you attempt to stop a large competitor from infringing your patent or attempt to
58:29.588 --> 58:33.438
license it to them. They often instead try to use the Ptap to invalidate
58:33.454 --> 58:36.766
the patent using means and designed effects we'll
58:36.798 --> 58:40.814
cover shortly. This flawed invalidation process quickly became weaponized
58:40.862 --> 58:44.754
by large infringers to use someone else's technology royalty free
58:44.872 --> 58:48.086
and to prevent new disruptive technology from competing in the
58:48.108 --> 58:52.354
marketplace. And the Ptabs invalidation rates have been staggering.
58:52.482 --> 58:56.406
The Patent Office has various statistics they quote that don't sound as
58:56.428 --> 58:59.926
bad, but I will tell you, the actual number is if you look
58:59.948 --> 59:04.186
at the number of cases that have gone to a final written decision, 84% of
59:04.208 --> 59:07.546
those patents have been fully or partially invalidated. And we have the
59:07.568 --> 59:10.746
number. And you can quote statistics in all
59:10.768 --> 59:14.398
kinds of ways to make them look different, but that is a hard and fast
59:14.484 --> 59:18.494
fact. And by the way, partially invalidated usually
59:18.532 --> 59:21.646
means the claims that matter. He's absolutely right about that.
59:21.748 --> 59:24.586
Data published on Professor Dennis Crouch's patent, Leo,
59:24.698 --> 59:28.094
showed that most patents tangled up in IPRs are also involved
59:28.142 --> 59:31.986
in litigation or licensing. Patents involved in litigation or licensing are
59:32.008 --> 59:35.922
considered top tier patents and make up a very small percentage of all
59:35.976 --> 59:40.306
granted patents. The net effect has been a clear path to endorsed piracy
59:40.418 --> 59:44.370
using the same patent Office that granted a quality patent to an inventor
59:44.450 --> 59:47.654
to later schizophrenically take it away. So how could something
59:47.692 --> 59:51.486
like this happen? What on earth would have motivated Congress
59:51.538 --> 59:55.194
to pass a bill like this when others clearly predicted it would not
59:55.232 --> 59:58.794
end well, congress was sold a bill of goods. You can see this
59:58.832 --> 1:00:03.566
because in the legislative history, congress very clearly said this
1:00:03.588 --> 1:00:07.530
is intended to be, quote, an alternative
1:00:07.610 --> 1:00:11.246
to expensive court litigation. But why was this a
1:00:11.268 --> 1:00:14.786
need? What was the impetus for needing a supposedly new,
1:00:14.888 --> 1:00:18.574
faster, more efficient, less expensive path to invalidate
1:00:18.622 --> 1:00:21.758
patents? The answer was trolls,
1:00:21.854 --> 1:00:24.898
and not the kind with brightly colored hair you might have played with as a
1:00:24.904 --> 1:00:28.006
kid, or even the kind you find on Twitter. No,
1:00:28.108 --> 1:00:31.410
congress was told it needed to save the world from patent trolls.
1:00:31.490 --> 1:00:35.174
You talk about a brilliant program,
1:00:35.292 --> 1:00:38.600
marketing program, influence program by big tech.
1:00:40.670 --> 1:00:43.798
It's like this whole patent troll propaganda,
1:00:43.974 --> 1:00:47.526
man. Was it used? Was it sold? Was it hammered?
1:00:47.558 --> 1:00:51.478
In the halls of Congress, the resulting rhetoric that surrounded the patent troll
1:00:51.494 --> 1:00:55.466
narrative, which is phrases like, the patent system is broken and patents are attacks
1:00:55.498 --> 1:00:59.758
and innovation. These various phrases that were pushed into kind of the
1:00:59.844 --> 1:01:03.454
public discourse about patents and innovation, really what
1:01:03.492 --> 1:01:05.870
arose, especially in Washington, DC.
1:01:06.450 --> 1:01:09.438
Over the past ten or 15 years, is, for lack of a better term,
1:01:09.454 --> 1:01:11.986
a moral panic about the patent system. The sense of like, oh, my God,
1:01:12.008 --> 1:01:15.338
it's destroying the whole world, and it's just the exact opposite.
1:01:15.374 --> 1:01:19.026
Of course, there can be a very well crafted
1:01:19.138 --> 1:01:22.646
story that is so compelling, it's like you almost have
1:01:22.668 --> 1:01:25.926
to believe it. But there could
1:01:25.948 --> 1:01:29.606
be a whole nother side. I asked Randy to explain the narrative of the patent
1:01:29.638 --> 1:01:33.530
troll. We all know that there are some
1:01:33.600 --> 1:01:36.570
percentage of attorneys out there who aren't totally ethical.
1:01:37.150 --> 1:01:41.014
There's going to be some frivolous litigation. It's America. When you have freedom,
1:01:41.142 --> 1:01:44.670
you have things that are you don't hold
1:01:44.740 --> 1:01:48.366
everything down because part of it is being free and having free speech and all
1:01:48.388 --> 1:01:52.058
that. But here's the thing. They took a few cases,
1:01:52.154 --> 1:01:54.974
and they'll always come up with a few cases. I look at this one,
1:01:55.092 --> 1:01:58.162
I said, oh, you see, there's proof. Well, okay, that's one case
1:01:58.216 --> 1:02:01.486
out of the whole country. Does that mean you have to burn
1:02:01.518 --> 1:02:04.820
the whole system down? And that's kind of what they've done. They've taken
1:02:05.670 --> 1:02:09.350
a few cases, and they'll always point to a few different cases that all sound
1:02:09.420 --> 1:02:13.126
terrible, and that's why we have to destroy the
1:02:13.148 --> 1:02:16.358
ability of an inventor. Now, they don't put it
1:02:16.364 --> 1:02:19.382
this way, but what they say as well, we're handling frivolous litigation.
1:02:19.526 --> 1:02:22.986
Every narrative needs a convincing villain, and the bad guy has
1:02:23.008 --> 1:02:26.314
to be defeated. The patent troll became the basis for
1:02:26.352 --> 1:02:30.702
action. It was predicated upon a narrative that
1:02:30.756 --> 1:02:36.106
everyone knows now called the patent troll, which, like trolls,
1:02:36.298 --> 1:02:39.770
is a very compelling, dramatic,
1:02:39.850 --> 1:02:42.874
and vivid image.
1:02:42.922 --> 1:02:46.450
But like trolls, is just a myth. So, like Randy says, some time ago,
1:02:46.520 --> 1:02:50.418
there were a few bad actors that bought or licensed some lesser quality
1:02:50.504 --> 1:02:53.566
patents, and they weren't practicing the invention.
1:02:53.758 --> 1:02:56.946
These few bad companies started suing legitimate companies
1:02:57.048 --> 1:03:00.286
based on. These patents, these bad actors, are considered non
1:03:00.318 --> 1:03:04.098
practicing entities or NPES, and gave birth to the concept
1:03:04.114 --> 1:03:07.670
of the patent troll. Unfortunately for the direction this ends up going,
1:03:07.820 --> 1:03:11.446
most inventors are also considered non practicing entities
1:03:11.558 --> 1:03:15.226
and historically always have been, but operate not in
1:03:15.248 --> 1:03:18.522
this unethical manner, but in good faith and according to how the system
1:03:18.576 --> 1:03:22.094
was designed to work. Innovators require support
1:03:22.212 --> 1:03:25.742
that in division of labor. People who have the resources, the money,
1:03:25.796 --> 1:03:30.078
the capital, the infrastructure can
1:03:30.164 --> 1:03:34.030
link up with through contracts the
1:03:34.100 --> 1:03:37.422
nimble innovators who have the intellectual capital.
1:03:37.486 --> 1:03:41.038
And that from that, as Adam Smith explained, the wealthy nations,
1:03:41.134 --> 1:03:45.214
you get this incredible maximization of value and
1:03:45.272 --> 1:03:48.582
wealth creation. Patents have been
1:03:48.636 --> 1:03:52.374
historically this kind of private property bridge. It's how you get from
1:03:52.412 --> 1:03:55.910
the invention in the lab, the invention in the garage
1:03:58.570 --> 1:03:59.910
to the marketplace.
1:04:01.290 --> 1:04:04.758
Because the problem isn't invention. Humans have always been inventive. Humans have
1:04:04.764 --> 1:04:08.178
been inventing for thousands of years. Why haven't those inventions
1:04:08.274 --> 1:04:12.142
got into the marketplace? You know, the,
1:04:12.196 --> 1:04:16.154
the really fascinating, you know, hockey stick graph
1:04:16.202 --> 1:04:19.946
that really is the most revealing hockey stick graph that ever has existed
1:04:19.978 --> 1:04:24.126
is the one that shows economic development
1:04:24.158 --> 1:04:27.938
and levels of innovation over about from
1:04:28.024 --> 1:04:31.026
like, you know, over a 2000 year period from, you know,
1:04:31.048 --> 1:04:34.434
this, you know, started ad ad ad period to today.
1:04:34.552 --> 1:04:39.646
And it's almost entirely flat for
1:04:39.688 --> 1:04:43.366
1900 years. And then you get to the 19th century, and then
1:04:43.388 --> 1:04:46.440
it goes straight up.
1:04:47.850 --> 1:04:50.886
That just happens to correlate with rule of
1:04:50.908 --> 1:04:54.346
law, protection of rights of lifelibrian, property, limited government,
1:04:54.448 --> 1:04:57.430
the development of market, but also patents.
1:04:57.590 --> 1:05:00.698
But hey, no need to let facts and history get in the way of a
1:05:00.704 --> 1:05:04.506
good narrative. Big tech saw these few bad actors and initiated
1:05:04.538 --> 1:05:08.110
a nationwide campaign that suggested that the patent troll problem
1:05:08.180 --> 1:05:11.754
was real and huge, even though there were only a few bad actors,
1:05:11.802 --> 1:05:15.726
and it worked exceedingly well. It's been entirely
1:05:15.918 --> 1:05:19.890
a policy narrative for which millions of dollars were spent
1:05:20.550 --> 1:05:24.434
pushing it into the policy debates, into the popular press.
1:05:24.552 --> 1:05:28.098
I mean, earlier it was interesting. In a conversation,
1:05:28.194 --> 1:05:31.490
Ashley mentioned how, you know, you know, innovators and inventors
1:05:31.570 --> 1:05:34.680
doing startups, like, they don't know about patents, but yet, like,
1:05:35.130 --> 1:05:38.098
your grandmother or grandfather heard patent troll.
1:05:38.274 --> 1:05:41.898
I got questions from people like, what are these patent trolls they hear about?
1:05:42.064 --> 1:05:45.494
People don't even know anything about the patent system who are actually getting patents,
1:05:45.622 --> 1:05:48.874
but they've heard of patent trolls, which tells you that doesn't happen
1:05:48.912 --> 1:05:49.770
by accident.
1:05:52.110 --> 1:05:56.394
It's well documented that this was a coordinated campaign pushed
1:05:56.442 --> 1:06:00.510
by big tech, coordinated with academics,
1:06:01.010 --> 1:06:04.954
you know, writing articles and producing junk science empirical
1:06:05.002 --> 1:06:08.606
studies, like the claim that, you know, 20 trolls
1:06:08.638 --> 1:06:12.254
cost the economy $29 billion in 2011. It's a totally
1:06:12.302 --> 1:06:15.974
bogus junk science study that has
1:06:16.012 --> 1:06:19.574
been totally shredded by
1:06:19.612 --> 1:06:23.110
academics and scholars. And yet,
1:06:23.260 --> 1:06:26.806
like troll, it continues to be cited and referenced to the
1:06:26.828 --> 1:06:27.720
very day.
1:06:30.570 --> 1:06:34.222
And again, because it represents
1:06:34.306 --> 1:06:37.466
this narrative that has been proven very effective, very,
1:06:37.568 --> 1:06:40.922
very policy. People like to say sticky and just like
1:06:40.976 --> 1:06:45.162
that. And to this day, any entity that is not practicing their invention
1:06:45.226 --> 1:06:48.506
but holds a patent on it is labeled a patent troll.
1:06:48.618 --> 1:06:52.094
This includes solo inventors, universities, and the like.
1:06:52.212 --> 1:06:55.834
Just about anybody who sues someone for patent infringement
1:06:55.962 --> 1:06:59.026
can be called a patent troll because it's just
1:06:59.048 --> 1:07:03.038
so easy to label them. And I was at it back in 2015 when Paul
1:07:03.054 --> 1:07:05.780
and I were fighting the Fight against the Innovation Act.
1:07:06.390 --> 1:07:10.470
We ended up kind of accidentally being invited to a luncheon
1:07:11.050 --> 1:07:14.726
in the house. So basically, you have these lobbyists who will
1:07:14.748 --> 1:07:17.318
invite all these staff members, and they'll give them lunch, and I'll give them a
1:07:17.324 --> 1:07:19.594
bunch of propaganda while they're eating, right?
1:07:19.792 --> 1:07:22.140
And basically,
1:07:23.230 --> 1:07:26.300
I got invited because they didn't know who I was. So Paul and I went.
1:07:27.390 --> 1:07:31.206
The first thing this woman said was, oh, the first patent troll was Eli
1:07:31.238 --> 1:07:34.862
Whitney. Eli Whitney was a patent troll. So why would big tech
1:07:34.916 --> 1:07:38.282
propagate this? Apple, Google, Microsoft, et cetera,
1:07:38.426 --> 1:07:41.806
all the big players leveraged patents for their own success and for
1:07:41.828 --> 1:07:45.154
what they didn't invent in house, they would buy or license patents for new
1:07:45.192 --> 1:07:48.802
innovations, paying people for their inventions. This was the private property
1:07:48.856 --> 1:07:52.094
bridge from intellectual to real capital that Adam discussed
1:07:52.142 --> 1:07:56.190
earlier. But hey, dealing with licensing is a massive inconvenience,
1:07:56.270 --> 1:07:59.494
and it's easier and cheaper to steal than it is to respect the law or
1:07:59.532 --> 1:08:02.966
develop the technology yourself. So a weakened patent system was the
1:08:02.988 --> 1:08:06.770
goal. And this sort of crony corporatism isn't a new playbook.
1:08:06.930 --> 1:08:10.438
It turns out there's plenty of historic precedent for big companies trying to
1:08:10.444 --> 1:08:14.170
capture the regulatory state to create barriers to entry and protect
1:08:14.240 --> 1:08:17.738
market share. This just happens to be the first time that it worked.
1:08:17.824 --> 1:08:21.374
Big corporations have been trying to weaken our patent system since about
1:08:21.412 --> 1:08:25.598
1850. Now, I don't know. Here's someone else you might want to
1:08:25.684 --> 1:08:30.090
interview. Her name is Zarina Khan. She's a researcher,
1:08:30.250 --> 1:08:33.806
an academic, and she's written about how you go all
1:08:33.828 --> 1:08:37.700
the way back to 1850. Any new technology comes out,
1:08:38.630 --> 1:08:41.778
a new industry builds around it. In the early years, there are a lot of
1:08:41.784 --> 1:08:45.058
lawsuits, and the big companies being sued for patent infringement go to
1:08:45.064 --> 1:08:48.286
Washington, DC. And try to weaken the system. And you're
1:08:48.318 --> 1:08:51.906
talking about telephone. I mean, telegraph, telephone,
1:08:52.098 --> 1:08:56.214
locomotives, automobiles, all the way up to whatever the current key
1:08:56.252 --> 1:08:59.658
area of business is. That's where it's happening. And right
1:08:59.664 --> 1:09:00.780
now, it's big tech.
1:09:03.790 --> 1:09:07.194
Amazingly, our politicians held pretty firm until,
1:09:07.392 --> 1:09:10.698
I don't know, about ten years ago. And what happened was
1:09:10.784 --> 1:09:13.914
now it was big tech with all of their influence,
1:09:13.962 --> 1:09:17.326
all of their think about the airwaves they can control, think about the things they
1:09:17.348 --> 1:09:20.826
can put out that people see far and wide.
1:09:20.938 --> 1:09:24.394
The big tech's narrative sticks. Eli Whitney is a patent troll,
1:09:24.442 --> 1:09:28.766
and Congress rushes in to save the day by passing the AIA in 2011.
1:09:28.878 --> 1:09:32.398
Unleashing, the PTAB and its 84% kill rate. I alluded
1:09:32.414 --> 1:09:36.098
to two potential legislative solutions earlier the Rally Act and the
1:09:36.104 --> 1:09:39.778
Stronger Patents Act. In order to understand their key differences,
1:09:39.874 --> 1:09:44.242
it's important to lay out specifically why the PTAB has been such an effective WMD
1:09:44.306 --> 1:09:47.438
and what's absolutely necessary for any meaningful reform.
1:09:47.554 --> 1:09:51.434
The design defects in
1:09:51.472 --> 1:09:54.790
the relevant sections of the AIA were really serious.
1:09:54.870 --> 1:09:58.730
One portion of it, the part dealing with post
1:09:58.800 --> 1:10:02.602
grant reviews, was very badly designed,
1:10:02.746 --> 1:10:06.622
very naively designed by people who don't understand how
1:10:06.676 --> 1:10:10.286
litigation can. I guess the cliche nowadays is
1:10:10.468 --> 1:10:13.822
be weaponized to protect people who
1:10:13.876 --> 1:10:17.474
should have to pay or be enjoined rather than
1:10:17.512 --> 1:10:21.362
be protected. We could easily devote an entire episode to the weaponized design
1:10:21.416 --> 1:10:24.738
defects alone. And some of this can get a little technical on
1:10:24.744 --> 1:10:28.502
the legal side of things. So we're going to 30,000 foot this a little bit.
1:10:28.636 --> 1:10:32.594
Most of these defects come down to a difference in long held legal standards
1:10:32.642 --> 1:10:36.434
in traditional constitutionally defined Article Three courts versus
1:10:36.482 --> 1:10:40.250
the rules Congress established for the PTAB. Of course, the district court.
1:10:41.390 --> 1:10:45.206
Those are patent infringement actions where someone is asserting
1:10:45.238 --> 1:10:49.130
the invalidity of the patent as a defense, so the patent owner
1:10:50.430 --> 1:10:54.640
has the opportunity to win in a legitimate sense.
1:10:55.730 --> 1:10:59.178
The patent owner doesn't win in the PTAB. The PTAB sole
1:10:59.194 --> 1:11:02.702
function as an administrative tribunal is to invalidate a patent. The whole reason
1:11:02.756 --> 1:11:05.970
why it was created was to create something that wasn't a court.
1:11:06.470 --> 1:11:10.306
And there's a reason why courts function well because they follow the rule of law
1:11:10.328 --> 1:11:14.846
and due process. The PTAB doesn't operate under the same rules,
1:11:15.038 --> 1:11:18.866
procedurally or substantive, as courts. There's no summary judgment. There's no
1:11:18.888 --> 1:11:22.514
American hearing for interpreting the claims. There's no motions
1:11:22.562 --> 1:11:25.510
to dismiss. You don't even have a claim.
1:11:26.970 --> 1:11:30.342
There's no real discovery. Right, but that's just the beginning.
1:11:30.486 --> 1:11:33.898
The PTAB omits the standing requirement, has a lower burden of
1:11:33.904 --> 1:11:37.686
proof and a weakened presumption of validity when compared to legal standards
1:11:37.718 --> 1:11:41.018
used in courts. Recall earlier when I mentioned that in
1:11:41.024 --> 1:11:44.954
these proceedings of the PTAB, the validity of granted patents can be challenged
1:11:45.002 --> 1:11:48.462
by any member of the public. Anyone in the entire
1:11:48.516 --> 1:11:52.254
world, for any reason, can file a PTAB. People should not be allowed to
1:11:52.292 --> 1:11:55.694
challenge patents in the PTAB unless
1:11:55.742 --> 1:11:59.998
they're being charged with infringement or have actually been sued in court.
1:12:00.174 --> 1:12:03.522
Those people absolutely should have the chance to
1:12:03.576 --> 1:12:06.710
challenge the patent of PTAB, but not stock short
1:12:06.780 --> 1:12:10.018
sellers like Kyle Bass. Not troublemakers,
1:12:10.114 --> 1:12:13.206
not shills for defendants who get
1:12:13.228 --> 1:12:17.078
formed out of nowhere and have no business
1:12:17.164 --> 1:12:20.966
except to file petitions
1:12:20.998 --> 1:12:25.162
in the PTAB. So the most important thing is to do what courts have always
1:12:25.216 --> 1:12:29.066
done require what lawyers call standing. That would be reform number
1:12:29.088 --> 1:12:32.766
one. The worst example I know of, one of the bad examples, I know
1:12:32.788 --> 1:12:36.394
a guy, the company is Valancell it's in North Carolina.
1:12:36.442 --> 1:12:38.270
His name is Dr. Stephen Le. Buff.
1:12:39.570 --> 1:12:43.054
He's the one who was the first person who figured out
1:12:43.092 --> 1:12:46.590
how to make biometric sensing devices work on an active body.
1:12:46.660 --> 1:12:49.682
Prior to that, if you were in a coma, they could have something on you
1:12:49.816 --> 1:12:53.166
sensing your heart rate or whatever, but if you were moving around, it didn't
1:12:53.198 --> 1:12:56.594
work. He figured this out. He patented it a long,
1:12:56.632 --> 1:12:59.682
long time before an Apple Watch ever was in existence.
1:12:59.746 --> 1:13:03.350
Well, at some point, Apple Watch comes out, and of course,
1:13:03.420 --> 1:13:06.534
Dr. LeBuff has a very successful business or licensing this technology.
1:13:06.652 --> 1:13:09.686
Apple approaches them like they're going to license, but no,
1:13:09.708 --> 1:13:14.054
they just take it, and then he sues them over. The four patents are infringing.
1:13:14.182 --> 1:13:17.386
They then take him to the PTAB, not just for the
1:13:17.408 --> 1:13:21.146
four patents they're infringing, but for another eight patents that he happens to
1:13:21.168 --> 1:13:24.926
have. How about that? No one thought, well, what happens if
1:13:24.948 --> 1:13:28.686
you don't have to have standing? Well, what happens is they can do whatever they
1:13:28.708 --> 1:13:32.830
want. There was even the case of a disgruntled ex wife trying to
1:13:32.900 --> 1:13:36.298
just invalidate her ex husband's patents, and we're seeing
1:13:36.324 --> 1:13:39.506
people commit extortion. This is the reason why
1:13:39.528 --> 1:13:43.058
people can file 40 or 50 petitions against the same patent. And of
1:13:43.064 --> 1:13:47.046
course, there have also been cases of hedge fund guys try
1:13:47.068 --> 1:13:50.882
to publicly invalidate a valuable drug stock right after you've shorted
1:13:51.026 --> 1:13:53.510
the drug stock. Right. Unified Patents,
1:13:54.730 --> 1:13:58.546
they don't produce anything. They are a membership organization.
1:13:58.658 --> 1:14:02.138
Big tech and others pay them a fee to be a
1:14:02.144 --> 1:14:06.086
member of this organization. And what Unified Patents does is they seek
1:14:06.118 --> 1:14:09.434
out patents that their customers want the use
1:14:09.472 --> 1:14:13.158
of, and they simply attack those patents and try to invalidate them
1:14:13.184 --> 1:14:16.986
or get a zero dollar license agreement. And then there's the massive gulf surrounding
1:14:17.018 --> 1:14:20.478
the burden of proof required for invalidation and the presumption of
1:14:20.484 --> 1:14:23.966
validity for the property. Right? These are the rocks that a patent
1:14:23.998 --> 1:14:28.130
owner has to stand on. Reform number two at the PTAB,
1:14:28.630 --> 1:14:32.210
again, requiring legislative amendment of the terms in the
1:14:32.280 --> 1:14:36.158
AIA itself is to equalize the
1:14:36.184 --> 1:14:39.686
burden of proof to kill a patent. So it's the
1:14:39.708 --> 1:14:43.282
same in court and at the PTAB
1:14:43.426 --> 1:14:46.774
right now. It's a high standard in the court, as you
1:14:46.812 --> 1:14:50.614
know, clear and convincing evidence. In the Ptab,
1:14:50.662 --> 1:14:54.426
a significantly lower standard applies because that's what the
1:14:54.448 --> 1:14:58.422
Congress said. It goes by the name Preponderant
1:14:58.486 --> 1:15:02.560
Evidence for short. That has to change.
1:15:02.930 --> 1:15:06.922
The third thing that I think is fundamental, and it might require
1:15:06.986 --> 1:15:10.494
legislation, would be to make it
1:15:10.532 --> 1:15:14.350
clear that there's a significant
1:15:14.430 --> 1:15:18.030
burden of proof on the part of the challenger.
1:15:18.190 --> 1:15:21.746
Because all these patents were examined by experts before they were
1:15:21.768 --> 1:15:25.206
even issued, and often that examination took years and an
1:15:25.228 --> 1:15:29.570
enormous amount of work by technologically savvy lawyers
1:15:29.650 --> 1:15:33.314
and examiners. Yes, of course they make mistakes.
1:15:33.362 --> 1:15:36.882
All humans make mistakes. But all the serious
1:15:36.946 --> 1:15:40.454
efforts to evaluate whether examination
1:15:40.502 --> 1:15:43.722
mistakes are rampant and as
1:15:43.776 --> 1:15:47.094
common as good examinations have shown, the opposite
1:15:47.142 --> 1:15:50.574
they've all shown that vast majority of the time, the work
1:15:50.612 --> 1:15:53.360
done by examiners is quite sound.
1:15:54.450 --> 1:15:58.842
So it should be a very clear presumption
1:15:58.986 --> 1:16:02.398
of validity at the get go in
1:16:02.404 --> 1:16:05.634
the PTAB, just as it is in court. But what about
1:16:05.672 --> 1:16:08.942
the administrative officials presiding over the cases of the PTAB
1:16:09.006 --> 1:16:12.286
who get to make the decisions on validity? They are given the title
1:16:12.318 --> 1:16:15.650
of Administrative Patent Judges, or APJs for short.
1:16:15.800 --> 1:16:19.334
But they're not judges in any classical sense of the word. The problem
1:16:19.372 --> 1:16:22.994
is you have an administrative tribunal
1:16:23.042 --> 1:16:26.658
that is not constrained by any requirements of the rule of law of due
1:16:26.674 --> 1:16:30.102
process. Anything that Americans assume
1:16:30.166 --> 1:16:34.566
should occur when your rights, whether a property right or even a contract,
1:16:34.758 --> 1:16:38.566
had been challenged and you were called upon
1:16:38.598 --> 1:16:42.190
to defend your rights before a neutral administrator,
1:16:42.530 --> 1:16:45.674
a judge, there was a very interesting exchange.
1:16:45.802 --> 1:16:51.150
It's called Oil States, which was actually addressing whether the
1:16:51.300 --> 1:16:54.418
judges, the administrative patent judges at the
1:16:54.424 --> 1:16:58.994
PTAB, were constitutionally appointed or not, where the
1:16:59.032 --> 1:17:02.418
attorney defending the PTAB referred to
1:17:02.424 --> 1:17:06.034
them as judges. And Chief Justice Roberts said excuse me, what did you call
1:17:06.072 --> 1:17:09.480
them? And he says, Judges, your Honor. And he says, Where I'm from,
1:17:10.010 --> 1:17:13.526
we use a different term. Some things that could
1:17:13.548 --> 1:17:17.910
be changed in the Patent Office would be being more careful
1:17:18.670 --> 1:17:21.978
about who gets assigned to what cases. There ought to
1:17:21.984 --> 1:17:25.574
be a code of ethics requiring
1:17:25.622 --> 1:17:29.066
recusal of people who have a conflict of interest in
1:17:29.088 --> 1:17:32.030
the courts. We've had this forever, and it's quite strict.
1:17:32.450 --> 1:17:35.914
By contrast, at the PTAB, there is no code of ethics.
1:17:35.962 --> 1:17:40.014
There are no recusal rules at all that
1:17:40.052 --> 1:17:43.682
apply to the PTAB judges per se. That's a huge
1:17:43.736 --> 1:17:47.294
mistake that could be fixed by the Director,
1:17:47.422 --> 1:17:51.694
and it should be fixed by the Director. And if the Director doesn't
1:17:51.742 --> 1:17:55.730
fix it, then the Congress can and should. With regard
1:17:55.800 --> 1:17:59.490
to the rules of recusal applying to all the judges
1:17:59.570 --> 1:18:02.470
other than the Supreme Court, that's a whole separate problem.
1:18:02.540 --> 1:18:06.194
But all the other judges are bound by strict
1:18:06.242 --> 1:18:09.026
recusal rules that are in statute.
1:18:09.138 --> 1:18:13.050
So Congress can pass a statute. If the Patent Office
1:18:13.120 --> 1:18:15.866
doesn't fix this very fast on their own,
1:18:15.968 --> 1:18:19.850
that would get rid of these conflicts. If people own stock in a company,
1:18:19.920 --> 1:18:23.642
they should not be sitting on that company's
1:18:23.786 --> 1:18:27.434
patents, for example. And there's some other wrinkles
1:18:27.482 --> 1:18:31.630
that are a little more complicated, but that's the clearest cut example.
1:18:31.780 --> 1:18:35.522
And similarly, if somebody comes into the PTAB from,
1:18:35.576 --> 1:18:38.914
let's say, 20 years of private practice where they
1:18:38.952 --> 1:18:44.260
represented, I'll just pick a name out of the air
1:18:44.790 --> 1:18:48.990
apple for 20 years. They shouldn't be allowed to sit on apple cases.
1:18:49.150 --> 1:18:53.810
They have 270 of these judges. It's not like there won't be other judges
1:18:53.970 --> 1:18:57.046
who can sit on the panel and hear the case. The case will
1:18:57.068 --> 1:19:01.394
go ahead. It just shouldn't have people whose prior clientele
1:19:01.442 --> 1:19:04.906
or whose current stockholdings create a conflict. Let me tell you
1:19:04.928 --> 1:19:08.330
something. I never really thought about this until I got into this whole effort.
1:19:10.110 --> 1:19:13.978
A lifetime appointed judge is not trying to get a better job somewhere.
1:19:14.154 --> 1:19:18.074
They're kind of in for life. Whereas in an administrative
1:19:18.122 --> 1:19:21.034
court, you have judges who are like employees,
1:19:21.082 --> 1:19:24.702
who, for all you know, they're certainly not
1:19:24.836 --> 1:19:27.838
looking at going to work for you in the future, maybe for Google or Apple
1:19:27.854 --> 1:19:31.586
or one of those big guys. This problem, unfortunately, goes well beyond the concerns of
1:19:31.608 --> 1:19:35.090
any one APJ. They're panel stacking.
1:19:35.750 --> 1:19:39.634
They're stacking panels to reach preordained results that
1:19:39.672 --> 1:19:43.110
needs to end. I mean, that's a fundamental breach of the rule of law.
1:19:43.180 --> 1:19:47.014
I mean, we had a huge fight in our country over this in the 1930s
1:19:47.052 --> 1:19:51.020
over the packing of the US Supreme Court by President
1:19:51.630 --> 1:19:55.306
Roosevelt when he was upset about the court invalidating his
1:19:55.328 --> 1:19:59.066
New Deal programs. And everyone recognizes the
1:19:59.088 --> 1:20:01.310
reason why it's called the court packing dispute.
1:20:02.930 --> 1:20:06.938
And it still shocks me to this very day that lawyers,
1:20:07.034 --> 1:20:09.360
people who are trained in the law,
1:20:10.210 --> 1:20:14.042
are stacking panels and are participating in stacked panels
1:20:14.106 --> 1:20:17.266
and aren't thinking to themselves, isn't there something wrong with this?
1:20:17.368 --> 1:20:20.834
So what does this cost an inventor to defend their property rights in an
1:20:20.872 --> 1:20:24.334
administrative body that was sold as a faster and less expensive
1:20:24.462 --> 1:20:28.370
alternative to invalidating patents? So it has now become so expensive
1:20:28.450 --> 1:20:32.626
to enforce a patent. Let's assume a perfectly valid patent,
1:20:32.738 --> 1:20:36.178
I'm blatantly infringing it, I get sued,
1:20:36.274 --> 1:20:39.210
I file in the PTAB.
1:20:41.950 --> 1:20:45.766
The reality is that the total time frame
1:20:45.878 --> 1:20:49.226
could easily take five to ten years before I
1:20:49.248 --> 1:20:52.730
can get a final result out of the courts. And it could easily
1:20:52.810 --> 1:20:55.934
cost millions of dollars, even as
1:20:55.972 --> 1:20:59.390
high as five to ten millions of dollars. Now, most small
1:20:59.460 --> 1:21:03.098
companies can't afford that. So they're basically priced out
1:21:03.124 --> 1:21:06.686
of the US justice system because we've made it too expensive,
1:21:06.798 --> 1:21:10.894
unnecessarily expensive, and slow and cumbersome
1:21:10.942 --> 1:21:14.222
and burdensome and all the rest. It costs, on average,
1:21:14.286 --> 1:21:18.200
a half million dollars to defend at the PTAB per case.
1:21:18.650 --> 1:21:22.358
But surely, once a patent is found valid, that's it, right?
1:21:22.524 --> 1:21:26.278
We'd think so. In any balanced system, most are probably familiar with the
1:21:26.284 --> 1:21:30.202
legal concept of double jeopardy that prohibits a person from being tried more than once
1:21:30.256 --> 1:21:33.574
for the same matter after they have been acquitted or convicted.
1:21:33.702 --> 1:21:37.750
It is a long standing and important protection against government abuse
1:21:37.830 --> 1:21:40.934
and ensures that individuals are not subjected to repeated
1:21:40.982 --> 1:21:44.282
prosecutions. Not so in this kangaroo court.
1:21:44.426 --> 1:21:48.506
Senator Chris Coons from Delaware sponsors one of the bills we'll talk about shortly
1:21:48.618 --> 1:21:52.154
has said that big companies are using repeated challenges to just muscle
1:21:52.202 --> 1:21:55.854
their way over even the most valid patent by invalidating or weakening
1:21:55.902 --> 1:21:59.266
it through repeated challenges. Patent owner doesn't get anything out of
1:21:59.288 --> 1:22:02.210
the PTAB, choosing not to invalidate their patent.
1:22:02.550 --> 1:22:05.906
Petitioner gets everything. And the petitioner can keep filing petitions as
1:22:05.928 --> 1:22:09.302
well. In fact, they file repeated petitions, as people
1:22:09.356 --> 1:22:13.142
well know, or many people do now they're called
1:22:13.196 --> 1:22:16.358
serial petitioning. I'm not a particularly good fan of that because it
1:22:16.364 --> 1:22:19.370
sounds like we're talking about Cornflakes or Rice Krispies.
1:22:21.230 --> 1:22:25.382
So I like to make it clear that we're talking about companies like Samsung
1:22:25.446 --> 1:22:29.814
and Apple and others filing 30, 40 50 petitions
1:22:29.862 --> 1:22:33.102
against the exact same patent, making the exact same
1:22:33.156 --> 1:22:36.526
arguments. And why are they doing that? Because actually,
1:22:36.628 --> 1:22:40.362
studies have shown that their chances of a petition
1:22:40.426 --> 1:22:43.838
being granted go up even when the
1:22:43.844 --> 1:22:47.682
petition has been initially denied. They just refile the exact same
1:22:47.736 --> 1:22:50.878
petition. They change two sentences in it so it's a quote,
1:22:50.974 --> 1:22:54.174
different petition, and they refile
1:22:54.222 --> 1:22:57.686
it with the exact same arguments to the exact same evidence. And this has been
1:22:57.708 --> 1:23:01.426
confirmed now through empirical studies that the chance of that petition
1:23:01.458 --> 1:23:04.598
now being granted go up. That is not a
1:23:04.604 --> 1:23:08.422
system operated under the rule of law in any meaningful sense
1:23:08.476 --> 1:23:12.474
at the PTAB. Whereas I mentioned patent owner doesn't get anything out of it.
1:23:12.512 --> 1:23:15.606
And so it literally is a situation where patent owner has to pay to defend
1:23:15.638 --> 1:23:18.650
their patents constantly against 40 50 petitions,
1:23:18.990 --> 1:23:22.486
40 or 50 bytes at the exact same apple, where in court
1:23:22.518 --> 1:23:25.802
you get one bite. Speaking of double jeopardy, these challenges
1:23:25.866 --> 1:23:29.182
can also come after a patent is held valid in a court under
1:23:29.236 --> 1:23:33.002
statute grounds, not in the purview of a PTAB, josh Malone.
1:23:33.146 --> 1:23:36.494
So here he is. He comes out with his invention. It goes totally viral.
1:23:36.542 --> 1:23:40.340
Totally viral. You have no idea how what a seller this thing is.
1:23:40.790 --> 1:23:44.546
And it's being infringed heavily by TeleBrands. That's a
1:23:44.568 --> 1:23:47.160
big American company, big as seen on TV company.
1:23:47.530 --> 1:23:51.382
And he gets them in a real court before
1:23:51.436 --> 1:23:55.910
they get him to the PTAB, and he's fighting for a temporary injunction.
1:23:56.650 --> 1:24:00.874
And they come down with their MIT expert who argues that,
1:24:00.992 --> 1:24:04.550
well, we're not infringing because the patent is not valid,
1:24:04.630 --> 1:24:08.220
because it's unclear. Josh's patent says
1:24:09.230 --> 1:24:12.714
when the balloons are substantially filled with water, you shake the device and they fall
1:24:12.752 --> 1:24:16.746
off seal. Well, what does substantially filled with water mean? This is an unclear term.
1:24:16.858 --> 1:24:19.966
And come on, give me a break. Anyway, the judge did not go with their
1:24:19.988 --> 1:24:24.126
argument. Josh won. Then they appealed it. They appealed it to the
1:24:24.148 --> 1:24:27.266
next level. And again, and that judge actually laughed at them.
1:24:27.368 --> 1:24:31.570
And their attorneys ended up getting sanctioned for making a frivolous argument.
1:24:32.070 --> 1:24:35.438
So Josh was like mopping the floor with these guys in a real court,
1:24:35.534 --> 1:24:38.198
and he should have it should have been over. But no, they take it to
1:24:38.204 --> 1:24:41.506
the PTAB, make the same argument, and the PTAB says, you're right, it's unclear,
1:24:41.538 --> 1:24:45.400
and they invalidate the patent. Now, luckily, Josh had
1:24:45.850 --> 1:24:49.794
not just one patent, but many patents on this one invention,
1:24:49.842 --> 1:24:52.120
which that's something inventors. Oh, man.
1:24:52.970 --> 1:24:56.326
You file one and you do continuations, a whole bunch of continuations.
1:24:56.358 --> 1:24:58.666
So if they take out one patent, you can fight with another. If they take
1:24:58.688 --> 1:25:01.994
out that one, you can fight with another. But that was one of the things
1:25:02.032 --> 1:25:05.806
he did that helped him eventually win. And he eventually did win, but it
1:25:05.828 --> 1:25:09.454
cost $20 million, 20 million he and his investors had to spend
1:25:09.572 --> 1:25:12.798
to finally pull off a win. Who can do that? He's the one in
1:25:12.804 --> 1:25:14.740
a million that was able to pull it off,
1:25:15.830 --> 1:25:19.186
and everybody else just gets crushed. But it can also
1:25:19.208 --> 1:25:22.818
go the other direction, survive in court and then get dragged through the
1:25:22.824 --> 1:25:26.614
PTAB. But it's turned out not to be an alternative at
1:25:26.652 --> 1:25:30.102
all. It's turned out to be an
1:25:30.156 --> 1:25:34.054
upfront system, a prelude to
1:25:34.172 --> 1:25:37.394
court litigation. So first you have to survive
1:25:37.442 --> 1:25:41.850
in the PTAB, which takes two or three years, including appeals,
1:25:42.270 --> 1:25:45.770
and then you have to survive more challenges in the court
1:25:46.110 --> 1:25:49.494
on a broader array of legal subjects,
1:25:49.542 --> 1:25:54.142
invalidity grounds. So the
1:25:54.196 --> 1:25:58.126
Congress's expectation that this would be an alternative, they were told that.
1:25:58.228 --> 1:26:01.806
But the way it worked out, the truth was the opposite of what they
1:26:01.828 --> 1:26:05.282
were told. And so people talk about
1:26:05.336 --> 1:26:09.390
unintended consequences. I think there were unintended consequences
1:26:09.470 --> 1:26:13.234
here. The cynical part of me thinks a lot of the consequences were
1:26:13.272 --> 1:26:16.500
absolutely intended by the foes of
1:26:17.110 --> 1:26:21.238
vibrant patent system. And there are many. And they're large.
1:26:21.404 --> 1:26:24.966
Big tech is not at all shy about exploiting this type of weakness with its
1:26:24.988 --> 1:26:28.598
massive war chests. In a talk he gave at Columbia Law School in
1:26:28.604 --> 1:26:32.182
2019, bruce Sewell, former general counsel at Apple,
1:26:32.246 --> 1:26:35.654
explained that his $1 billion legal budget, that's billion
1:26:35.702 --> 1:26:39.306
with a B allowed him to, quote, use risk as a
1:26:39.328 --> 1:26:42.778
competitive advantage. And that Tim Cook told him, quote, I don't
1:26:42.794 --> 1:26:46.206
want you to stop pushing the envelope. And look, I'm not
1:26:46.228 --> 1:26:49.934
an apple hater. I'm recording this on a Mac and I love
1:26:49.972 --> 1:26:53.918
my iPhone, but this is gross. We're talking about going after
1:26:54.004 --> 1:26:57.166
the inventors who are the engine of our innovation economy.
1:26:57.278 --> 1:27:00.194
Good luck selling iPhones after burning the country down.
1:27:00.312 --> 1:27:04.114
Earlier, I mentioned that there was another concern that immediately came to mind for our
1:27:04.152 --> 1:27:07.474
guests right alongside the PTAB when prioritizing problems.
1:27:07.592 --> 1:27:10.978
That is, the issue of injunctive relief and the last pain point we'll
1:27:10.994 --> 1:27:14.466
cover before telling you about the two legislative solutions designed to tackle
1:27:14.498 --> 1:27:18.598
this and the PTAB. The infringement story unfortunately, gets even worse in
1:27:18.604 --> 1:27:22.238
the broader context of another Supreme Court patent decision that inverted
1:27:22.274 --> 1:27:25.962
the power dynamic between patent owners and infringers. Used to be.
1:27:26.016 --> 1:27:28.870
And to anybody who's new to this issue, this is going to be a shock.
1:27:28.950 --> 1:27:32.446
Used to be if you sued the infringer and you finally
1:27:32.548 --> 1:27:35.898
won the case, well, you could immediately stop the infringer.
1:27:35.994 --> 1:27:39.274
I mean, like, duh. Well, there was a big Supreme Court decision.
1:27:39.322 --> 1:27:42.906
Again, Supreme Court has not helped
1:27:42.938 --> 1:27:46.370
us. It was the ebay decision.
1:27:47.030 --> 1:27:50.126
The patent holder won, but the Supreme Court
1:27:50.158 --> 1:27:54.066
ruled that it was in the public interest of the infringer to keep producing the
1:27:54.088 --> 1:27:57.310
invention and the court would figure out what the inventor got out of it.
1:27:57.400 --> 1:28:00.934
And what that has turned into is if you win
1:28:00.972 --> 1:28:04.358
your case, of course, with all the obstacles now,
1:28:04.524 --> 1:28:08.440
you're one of these very few people that finally end up winning a case.
1:28:09.290 --> 1:28:13.226
You have to pass a public interest test to determine whether or not you
1:28:13.248 --> 1:28:16.678
can get injunctive relief. And that's a very hard thing to do if it's
1:28:16.694 --> 1:28:18.810
a startup versus a huge operation,
1:28:19.950 --> 1:28:23.146
in most cases, you're going to lose that. So the big infringer gets
1:28:23.168 --> 1:28:26.746
to keep the invention. And the court, as my buddy Paul
1:28:26.778 --> 1:28:30.142
would say, some english major in a robe tells you what you get if someone
1:28:30.196 --> 1:28:33.966
trespasses on your land, or someone comes and squats in your
1:28:33.988 --> 1:28:37.278
home, you can order them out of your house. That's what it means to
1:28:37.284 --> 1:28:40.514
have property, right? You can control how your property is used,
1:28:40.552 --> 1:28:43.938
your home or your bicycle, or your computer. And if someone's using it in
1:28:43.944 --> 1:28:47.074
a ways that you don't want them to, and they're not listening to you,
1:28:47.112 --> 1:28:49.874
you can get an order from a court to stop them. It's called an injunction.
1:28:49.922 --> 1:28:53.378
And since patents are property rights, and have been from the very beginning,
1:28:53.554 --> 1:28:57.318
they've been protected with these same types of injunctions. And this is important
1:28:57.404 --> 1:29:00.678
because this is what gives patent owners the ability to go into the market and
1:29:00.764 --> 1:29:04.554
to enter into contracts. Because if you can't say to people,
1:29:04.592 --> 1:29:07.606
no, you have to use it on my terms, and people aren't willing to negotiate
1:29:07.638 --> 1:29:11.260
with you. And the supreme court really
1:29:11.710 --> 1:29:15.354
undermined the ability of patent owners to obtain injunctions. So this is through judicial
1:29:15.402 --> 1:29:17.390
decisions. The courts,
1:29:18.770 --> 1:29:22.934
I think, unintentionally, unwittingly, and ignorantly
1:29:23.002 --> 1:29:27.262
about what the consequences would be have made injunctive
1:29:27.326 --> 1:29:30.430
relief for proven infringement of valid patents.
1:29:30.510 --> 1:29:34.210
Extremely difficult to get, almost impossible for many,
1:29:34.280 --> 1:29:38.054
many patent owners and patent owning companies
1:29:38.252 --> 1:29:42.274
to get without an injunction. There's no incentive
1:29:42.402 --> 1:29:46.102
for the proven infringer to settle or
1:29:46.156 --> 1:29:49.050
to pay a reasonable royalty.
1:29:49.630 --> 1:29:52.858
So the leverage that used to drive
1:29:52.944 --> 1:29:56.886
the system is now mostly gone. And that's because injunctions
1:29:56.918 --> 1:30:00.658
have been largely taken off the table. And big tech knows
1:30:00.694 --> 1:30:05.390
this, and so it's very much part of their practice of predatory infringement,
1:30:06.130 --> 1:30:09.598
is that they know that you can't stop them.
1:30:09.764 --> 1:30:13.422
At most, you'll get damages, and the damages will barely cover
1:30:13.476 --> 1:30:16.914
the cost of your lawyers after litigating for ten or 15 years.
1:30:17.112 --> 1:30:20.594
If you've got the patent, you should have the exclusive right
1:30:20.632 --> 1:30:24.494
to it, and you should be able to stop the infringer in a regular court
1:30:24.542 --> 1:30:28.120
case. You should have your day in court. If you win,
1:30:28.970 --> 1:30:32.680
they shouldn't be able to keep selling or producing it or using it.
1:30:34.410 --> 1:30:37.926
And that's what we had for a couple
1:30:37.948 --> 1:30:41.378
of hundred years that worked so well. This has
1:30:41.484 --> 1:30:45.334
really undermined and crippled the foundation
1:30:45.382 --> 1:30:48.774
of patents as property rights, as drivers of economic
1:30:48.822 --> 1:30:51.974
activity, of the ability of inventors
1:30:52.022 --> 1:30:55.486
to be able to receive renumeration property, renumeration in the
1:30:55.508 --> 1:30:58.010
marketplace through contracts and licenses.
1:30:58.170 --> 1:31:01.566
And in the same way that you sell your house and you can sell your
1:31:01.588 --> 1:31:04.558
house because someone just can't come and sit in it and say, I'm just going
1:31:04.564 --> 1:31:07.438
to be here, and here's the money I'm going to pay you for sitting in
1:31:07.444 --> 1:31:10.078
your house. And you're going to say, no, this is my house, and if you
1:31:10.084 --> 1:31:12.510
want to buy it, here's what it costs.
1:31:13.410 --> 1:31:16.550
Patent owners used to have that ability, and they don't anymore.
1:31:17.610 --> 1:31:20.978
It's really important to restore injunctions to patents.
1:31:21.074 --> 1:31:25.314
How are you going to have the next great American startup if the large infringer
1:31:25.442 --> 1:31:29.046
has stolen the technology and has flooded the market with it, and they get
1:31:29.068 --> 1:31:32.666
to keep it? I think it's impossible to overstate the significance of the
1:31:32.688 --> 1:31:36.870
impact that policies like these will have on long term economic viability
1:31:36.950 --> 1:31:40.474
for the country and the impact it will have on almost everyone if
1:31:40.512 --> 1:31:43.806
something doesn't change. You can't keep inflicting this kind
1:31:43.828 --> 1:31:47.422
of pain on the backbone of the American economy. Not when
1:31:47.476 --> 1:31:50.826
small businesses have accounted for two thirds of net job creation
1:31:50.858 --> 1:31:54.878
over the past 20 years and employ half of the private sector workforce.
1:31:54.974 --> 1:31:57.474
Any small company,
1:31:57.672 --> 1:32:01.186
university, individual inventor, startup. They don't have
1:32:01.208 --> 1:32:04.610
ten or 15 years to sit around and go through millions of dollars of
1:32:04.680 --> 1:32:08.850
legal fees and multiple levels of lawsuits and appeals
1:32:09.010 --> 1:32:12.626
and just to be ground down through the excessive legal
1:32:12.658 --> 1:32:16.146
process that we have in our country and to be put through the PTAB
1:32:16.338 --> 1:32:20.620
multiple times as well. So we need to
1:32:22.510 --> 1:32:26.522
rebalance the patent system so that it's fair and practical for
1:32:26.576 --> 1:32:30.730
small companies and even individual inventors, solo inventors,
1:32:31.250 --> 1:32:35.114
because they're so important, because they're number one more numerous.
1:32:35.242 --> 1:32:38.318
And historically, the smaller companies,
1:32:38.484 --> 1:32:42.142
smaller, innovative companies, have actually had the most big
1:32:42.196 --> 1:32:45.978
technological breakthroughs, more than the big companies. So we
1:32:46.004 --> 1:32:49.714
need them even more than we need the big companies. And yet we're treating them,
1:32:49.832 --> 1:32:53.426
I think, very poorly. And that has to change. We have
1:32:53.448 --> 1:32:57.026
to rebalance the system. There are, fortunately, two pieces of
1:32:57.048 --> 1:33:00.550
bipartisan legislation that have been designed to take on that needed
1:33:00.620 --> 1:33:04.226
change, tackling the problems of the PTAB and injunctive relief
1:33:04.258 --> 1:33:08.054
head on, but in their own unique ways. We're going to talk first about
1:33:08.092 --> 1:33:11.606
the Stronger Patents Act. This patent reform bill was last introduced
1:33:11.638 --> 1:33:14.854
by Senator Chris Coons, Democrat from Delaware, and Tom Cotton,
1:33:14.902 --> 1:33:18.326
Republican from Arkansas, in mid 2019. The Stronger
1:33:18.358 --> 1:33:21.534
Patent Act proposes various reforms of the type we were just
1:33:21.572 --> 1:33:25.086
talking about. Not all
1:33:25.108 --> 1:33:28.890
of the reforms you're talking about, but a lot of them. The Stronger Patents
1:33:28.970 --> 1:33:32.726
Act solved the problem quite well, in my opinion,
1:33:32.858 --> 1:33:37.170
of both injunctions and
1:33:37.240 --> 1:33:40.786
PTAB standards in the AIA. It would have
1:33:40.808 --> 1:33:44.366
amended the AIA. It addresses the problems surrounding injunctive
1:33:44.398 --> 1:33:48.354
relief and incentivized efficient infringement by abrogating
1:33:48.402 --> 1:33:51.874
or repealing the Supreme Court's 2006 ebay versus
1:33:51.922 --> 1:33:56.006
Merck Exchange decision that we discussed. This restores the long held principle of
1:33:56.028 --> 1:33:59.138
treating patents as private property. Rights by restoring
1:33:59.154 --> 1:34:03.062
the presumption of injunctive relief upon a finding that a patent is valid
1:34:03.126 --> 1:34:06.186
and has been infringed. Simply put, if you sue an
1:34:06.208 --> 1:34:09.766
infringer and win the case, you'd once again be able to stop the infringer
1:34:09.798 --> 1:34:13.846
from selling, producing, and using your invention. How it deals with the Ptab
1:34:13.878 --> 1:34:17.102
is where this philosophically differs with the next one we'll talk about,
1:34:17.236 --> 1:34:21.226
and that difference comes down to a perspective on the AIA. The Patent Trial
1:34:21.258 --> 1:34:24.846
and Appeal Board, in my opinion, has an appropriate
1:34:24.878 --> 1:34:28.670
place, but it hasn't been well designed
1:34:28.750 --> 1:34:32.062
and it hasn't been implemented in a balanced
1:34:32.126 --> 1:34:36.226
way. I don't think the American
1:34:36.328 --> 1:34:39.954
Ventst Act was a big mistake. I think on balance,
1:34:40.002 --> 1:34:43.334
it did a lot of good and needed things. We've talked about those
1:34:43.372 --> 1:34:46.614
aspects the judge is referring to in prior episodes, but this is where
1:34:46.652 --> 1:34:50.194
solutions diverge a bit. The Stronger Patents Act seeks to reform
1:34:50.242 --> 1:34:53.514
the Ptab as opposed to abolishing it. One of the main ways
1:34:53.552 --> 1:34:56.694
it accomplishes this is by aligning the disparities we discussed
1:34:56.742 --> 1:35:00.538
regarding district court appeal standards compared to the tilted rules of the
1:35:00.544 --> 1:35:04.506
Ptab. If enacted, the bill would require standing in the Ptab,
1:35:04.618 --> 1:35:07.918
ensuring that a petitioner has a business or financial reason to
1:35:07.924 --> 1:35:10.922
challenge the validity of a patent, so the hedge fund managers,
1:35:10.986 --> 1:35:14.522
jilted, ex spouses, and more importantly, big tech alliance groups
1:35:14.586 --> 1:35:17.474
can't just decide to attack a patent or harass a business.
1:35:17.592 --> 1:35:21.566
It would also raise the burden of proof standards for the evidence needed to invalidate
1:35:21.598 --> 1:35:25.102
a patent, harmonizing it with district courts. This standard raises
1:35:25.166 --> 1:35:28.726
the presumption of validity in the Ptab by giving appropriate deference to
1:35:28.748 --> 1:35:31.846
the USPTO's. Initial expert examination and issuance of
1:35:31.868 --> 1:35:34.962
a patent, which has since been relied upon by inventors,
1:35:35.026 --> 1:35:38.946
patent owners, and investors. The bill also has provisions to eliminate
1:35:38.978 --> 1:35:42.442
the use of repeat challenges that are all too often being used to beat down
1:35:42.496 --> 1:35:44.854
and invalidate even the most valid patents.
1:35:44.982 --> 1:35:48.774
Petitioners would only be allowed to file one petition to challenge a patent unless
1:35:48.822 --> 1:35:52.654
they are later charged with infringement of additional claims. The bill would
1:35:52.692 --> 1:35:55.998
similarly establish that any entity financially contributing to a
1:35:56.004 --> 1:35:59.486
Ptab validity challenge is a real party in interest who
1:35:59.508 --> 1:36:02.814
cannot bring future challenges, ensuring that no entity can make
1:36:02.852 --> 1:36:06.626
multiple Ptab challenges as a silent financial contributor, much of
1:36:06.648 --> 1:36:10.798
the double jeopardy concern would also be addressed by eliminating redundancy with district
1:36:10.814 --> 1:36:14.814
courts. If an IPR is instituted, the petitioner cannot bring validity
1:36:14.862 --> 1:36:18.338
challenges of the same type in district court. While in spirit
1:36:18.354 --> 1:36:21.798
everyone agrees that these are desirable outcomes, some contend that the
1:36:21.804 --> 1:36:24.886
Ptab is fundamentally flawed at its core and must be
1:36:24.908 --> 1:36:28.246
eliminated entirely. Yeah, you change things like that and blah, blah,
1:36:28.278 --> 1:36:31.914
blah. I don't know that
1:36:31.952 --> 1:36:35.786
that would make that much of a difference, because if
1:36:35.808 --> 1:36:39.500
the judges if the system is already biased as it is,
1:36:40.430 --> 1:36:44.174
I just don't know, because what you're dealing with is people.
1:36:44.292 --> 1:36:47.534
It's kind of like that's a subjective thing to a high
1:36:47.572 --> 1:36:51.120
degree. And part of the problem you have is
1:36:53.090 --> 1:36:57.294
you have these judges. They're called APJs,
1:36:57.342 --> 1:37:01.342
Administrative Patent Judges. Recall. These are the officials who preside
1:37:01.406 --> 1:37:04.946
over the cases and decide whether or not a patent is valid. You know,
1:37:04.968 --> 1:37:08.242
the ones looking for a better job, who have no code of conduct on ethics
1:37:08.306 --> 1:37:10.360
or recusals for conflict of interest.
1:37:11.210 --> 1:37:14.994
There are conflicts. There was a guy named Matt
1:37:15.042 --> 1:37:23.002
Clements. He was an attorney working basically
1:37:23.136 --> 1:37:27.462
helping Apple fight patent infringement cases. Right. He was their attorney,
1:37:27.606 --> 1:37:31.226
Matt Clemens, he then becomes a Ptab judge in 24,
1:37:31.328 --> 1:37:35.370
I think maybe 23 or 24 cases where he is a Ptab judge
1:37:35.450 --> 1:37:38.574
hearing Apple cases where they're trying to invalidate a patent. They win,
1:37:38.612 --> 1:37:43.070
of course. And my colleague Josh Malone
1:37:43.490 --> 1:37:46.882
was at a Ptab trial where one of our
1:37:46.936 --> 1:37:50.786
members, an inventor we know, was being having his patent attacked by
1:37:50.808 --> 1:37:54.322
Apple. And there was Matt Clements again on the other side of the aisle working
1:37:54.376 --> 1:37:57.586
for Apple as an attorney. Now, how the hell can this go
1:37:57.608 --> 1:38:00.566
on? You couldn't do that as a real judge. But even if you squared some
1:38:00.588 --> 1:38:03.846
of that up to eliminate the egregious issues, randy says that
1:38:03.868 --> 1:38:07.206
this problem is deeply institutionalized. So here, Google and
1:38:07.228 --> 1:38:10.430
big tech are helping get this law passed using a lot of influence, a lot
1:38:10.440 --> 1:38:13.734
of lobbying, a lot of propaganda get the law passed. And of course,
1:38:13.772 --> 1:38:15.686
this thing's going to be run by the patent office. It's going to be set
1:38:15.708 --> 1:38:18.914
up by the director of the Patent office. Well, next thing you know, the former
1:38:18.962 --> 1:38:22.586
head of patent strategy, Google, is appointed as the director of our patent
1:38:22.618 --> 1:38:26.282
office. How about that? Talk about capture of an agency.
1:38:26.426 --> 1:38:30.654
Wow. Her name was Michelle Lee. Look it up. Michelle Lee, former head
1:38:30.692 --> 1:38:34.266
of Patent Strategy at Google, was appointed as the director of our patent
1:38:34.298 --> 1:38:37.706
office. Now, of course, she set the court
1:38:37.738 --> 1:38:40.862
up, the administrative court. She hired the judges, made the rules,
1:38:41.006 --> 1:38:44.866
weaponized it, turned it into a patent killing machine. Randy also
1:38:44.888 --> 1:38:48.250
makes the argument for simplicity and that any reform that keeps the Ptab
1:38:48.270 --> 1:38:52.710
alive is just adding complexity to complexity. And it's not the solution.
1:38:53.050 --> 1:38:56.566
The solution is we want our day in court. You could make a
1:38:56.588 --> 1:39:02.698
bunch of changes to the Ptab theoretically, and maybe it
1:39:02.704 --> 1:39:05.100
would be more fair. Certainly it would be more fair.
1:39:05.870 --> 1:39:09.226
But here's my argument. Would it still protect the
1:39:09.248 --> 1:39:13.434
little guy? I know that those changes in that bill would
1:39:13.472 --> 1:39:17.134
help larger players who care about Pats, but what
1:39:17.172 --> 1:39:20.494
about the small player who doesn't have money, who may
1:39:20.532 --> 1:39:24.298
not have but one or two patents, doesn't have a bunch
1:39:24.314 --> 1:39:28.034
of attorneys? I think that person needs
1:39:28.152 --> 1:39:31.634
their day in court with a jury and to be able to do it on
1:39:31.672 --> 1:39:35.474
contingency. So we really need to get back to where you
1:39:35.512 --> 1:39:39.282
have your rights, you have your day in court. It's a simplicity.
1:39:39.346 --> 1:39:42.130
We need to get back to Adam offers us a bridge.
1:39:42.210 --> 1:39:46.550
Ideally, the Ptab should be abrogated and eliminated.
1:39:47.130 --> 1:39:48.890
That's not going to happen tomorrow,
1:39:52.510 --> 1:39:55.990
but we can move and start moving in that direction
1:39:56.070 --> 1:39:59.020
and at least limit the damage that's being done now.
1:40:00.050 --> 1:40:03.870
A lot of lawyers, we understand law moves incrementally.
1:40:07.010 --> 1:40:10.858
It doesn't move in kind of huge radical fashions.
1:40:11.034 --> 1:40:14.850
When it does, I shouldn't say it doesn't, it does
1:40:14.920 --> 1:40:18.386
move in huge radical fashions at times, but those are
1:40:18.408 --> 1:40:22.050
the rarer events. Most of the time it's incremental development.
1:40:23.670 --> 1:40:27.126
And I think we should move towards the long term goal of
1:40:27.148 --> 1:40:28.630
getting rid of the Ptab,
1:40:30.730 --> 1:40:34.194
but it's not going to happen tomorrow or next year. And in the meantime,
1:40:34.242 --> 1:40:38.746
we can limit some of the damage and we can show
1:40:38.928 --> 1:40:42.186
that, use the
1:40:42.208 --> 1:40:45.878
damage that's causing as evidence for why we need to reform it and eliminate
1:40:45.894 --> 1:40:49.242
it at the same time. So I
1:40:49.296 --> 1:40:52.842
100% agree that we should support efforts to reform
1:40:52.906 --> 1:40:56.846
it, to impose rule of law constraints on it. These things need
1:40:56.868 --> 1:41:00.880
to stop. It would staunch some of
1:41:01.410 --> 1:41:04.686
the bleeding that we are having and some of the extreme damage
1:41:04.718 --> 1:41:08.740
that's being caused to the innovation economy and to innovators right now.
1:41:10.950 --> 1:41:14.066
But we should always keep the eye on the prize and on the
1:41:14.088 --> 1:41:17.538
target, which is that at the end of the
1:41:17.544 --> 1:41:21.186
day, this is fundamentally an institution that can't
1:41:21.218 --> 1:41:24.886
be reformed to work well. Which brings us to a legislative solution that would
1:41:24.908 --> 1:41:28.194
eliminate the Ptab, give inventors their day in court, and restore
1:41:28.242 --> 1:41:32.140
the rule of law and due process. I think the real answer is
1:41:32.510 --> 1:41:34.806
we really want to get back to where we have our day in court,
1:41:34.838 --> 1:41:38.666
in a real court, and we want
1:41:38.688 --> 1:41:42.030
to get back to what America had that was so valuable
1:41:42.530 --> 1:41:45.710
in incentivizing innovation. There is a bill
1:41:45.780 --> 1:41:49.146
last Congress that would do that and has not been reintroduced
1:41:49.178 --> 1:41:53.098
yet. That was Thomas Massey's. Bill the Restoring Leadership
1:41:53.194 --> 1:41:55.754
restoring America's Leadership and Innovation act HR.
1:41:55.802 --> 1:41:59.346
5874. This patent reform bill, also known for short as
1:41:59.368 --> 1:42:03.346
the Rally Act, was last introduced by Representative Thomas Massey, republican from
1:42:03.368 --> 1:42:06.894
Kentucky in late 2021. It is worth noting that Representative
1:42:06.942 --> 1:42:10.598
Massey is an MIT engineer, inventor, and holder of 29 of
1:42:10.604 --> 1:42:13.926
his own patents. Simplicity. Get rid of the Ptab. This is what
1:42:13.948 --> 1:42:17.346
Massey's bill would do get rid of the abstract idea exception.
1:42:17.378 --> 1:42:21.494
And of course, the third big area is injunctive
1:42:21.542 --> 1:42:24.966
relief. This bill is by far the widest sweeping, most inventor
1:42:24.998 --> 1:42:28.774
and patent owner friendly legislation on the table. The bill's one pager
1:42:28.822 --> 1:42:32.846
states that it restores patent protection for inventors and mitigates a generation of
1:42:32.868 --> 1:42:35.934
laws, regulations, and court decisions that have
1:42:35.972 --> 1:42:39.834
discouraged innovation by failing to secure to inventors the exclusive
1:42:39.882 --> 1:42:43.006
rights to their discoveries. First and foremost, rather than
1:42:43.028 --> 1:42:46.474
attempting to reform like the Stronger Patents Act, it abolishes
1:42:46.522 --> 1:42:50.174
the Ptab and its 84% kill rate for the over 3000 patents
1:42:50.222 --> 1:42:54.226
reviewed since 2011. It does so with the justification that
1:42:54.248 --> 1:42:57.854
the ptab is proven to be a failed experiment in practice.
1:42:57.902 --> 1:43:00.962
It is not faster nor cheaper nor an alternative to regular
1:43:01.026 --> 1:43:04.534
district court. It has not mitigated patent trolls, but has
1:43:04.572 --> 1:43:08.578
only made it harder for legitimate small businesses to compete. Accused infringers
1:43:08.594 --> 1:43:11.946
would still have the right to challenge patent validity in a regular court of law,
1:43:12.048 --> 1:43:16.122
which is how the US patent system has worked for our 1st 190 years.
1:43:16.256 --> 1:43:20.006
Second, the bill strikes down the judicially created eligibility tests
1:43:20.118 --> 1:43:23.742
going farther than the Eligibility Restoration Act. It would restore us.
1:43:23.796 --> 1:43:27.850
Code section 101 to the broad threshold question, as Congress intended,
1:43:27.930 --> 1:43:31.114
allowing eligible patents for any new and useful process, machine,
1:43:31.162 --> 1:43:34.886
manufacture, or composition of matter, leaving the other gates to catch patents
1:43:34.938 --> 1:43:38.526
that would block and not promote progress of science and useful arts.
1:43:38.638 --> 1:43:41.794
Explicit bill language states that it would effectively abrogate the four
1:43:41.832 --> 1:43:44.894
horsemen of the innovation Apocalypse. The Bilski,
1:43:44.942 --> 1:43:48.946
Alice Myriad and Mayo SCOTUS decisions we discussed earlier created
1:43:48.978 --> 1:43:52.550
the confused and chaotic mess around eligibility. It does so
1:43:52.620 --> 1:43:56.194
to ensure that life science discoveries, computer software,
1:43:56.242 --> 1:43:59.654
and similar inventions and discoveries are patentable and that those
1:43:59.692 --> 1:44:03.338
patents are enforceable. Third, and like the stronger Patents Act,
1:44:03.424 --> 1:44:07.114
the bill restores much needed injunctive relief on a finding of
1:44:07.152 --> 1:44:11.226
infringement of a patent. The court would have to presume that any further infringement of
1:44:11.248 --> 1:44:15.066
the patent would cause the patent owner irreparable harm, a presumption
1:44:15.098 --> 1:44:19.066
that could only be overcome by the infringers showing clear and convincing evidence
1:44:19.098 --> 1:44:22.286
to the contrary. The bill also explicitly abrogates the
1:44:22.308 --> 1:44:25.774
Supreme Court's ebay ruling in the subsequent lower court interpretations
1:44:25.822 --> 1:44:29.726
that have made it almost impossible to stop infringers from making, using and selling
1:44:29.758 --> 1:44:33.438
pirated inventions. What that will do is cause large entities
1:44:33.534 --> 1:44:36.934
to not just steal technology, they'll actually work with you,
1:44:36.972 --> 1:44:40.486
they'll license it, and it won't cost them much.
1:44:40.668 --> 1:44:45.720
It'll be such a small amount of their
1:44:46.410 --> 1:44:49.606
profits will simply go to licensing a technology
1:44:49.708 --> 1:44:53.226
here and there that's really valuable. And here and there you'll have
1:44:53.248 --> 1:44:56.538
an inventor with a startup that'll make a huge difference because the
1:44:56.544 --> 1:45:00.640
big guys can't steal it. And you'll have the incentive to have
1:45:01.090 --> 1:45:04.602
garage inventors doing things that are really valuable,
1:45:04.746 --> 1:45:09.066
which we need and which will help improve
1:45:09.098 --> 1:45:13.038
our economy, help monopolies not take over as much,
1:45:13.204 --> 1:45:16.674
and help America stay ahead of the rest of the world and stay
1:45:16.712 --> 1:45:20.286
more secure. There are some significant concerns, however, about the bill's.
1:45:20.318 --> 1:45:23.826
Viability professor Dennis Crouch of Patently O said of
1:45:23.848 --> 1:45:27.986
the 2018 version that, quote this proposal has a 0% likelihood
1:45:28.018 --> 1:45:32.006
of passing, but it has been introduced and offers an interesting discussion point.
1:45:32.108 --> 1:45:35.766
IP Watchdog founder and CEO Gene Quinn, strong advocate of
1:45:35.788 --> 1:45:39.126
Congressman Massey's, has written that abolishing the Ptab at this
1:45:39.148 --> 1:45:41.974
point simply will not happen and called it a, quote,
1:45:42.022 --> 1:45:46.006
politically infeasible and impossible demand at the expense of other available solutions
1:45:46.038 --> 1:45:48.954
to improve the Ptab. You know, I mean, look,
1:45:49.152 --> 1:45:53.114
maybe a valid thing to say, it's ambitious,
1:45:53.242 --> 1:45:56.846
it's an ambitious bill. But even if not passed, at a minimum, it can do
1:45:56.868 --> 1:46:00.826
a lot for shaping the conversation, for potentially influencing administrative
1:46:00.858 --> 1:46:04.334
and judicial decision making. And it doesn't have to be incompatible
1:46:04.382 --> 1:46:07.986
with the path that could be forged first by the Stronger Patents Act.
1:46:08.088 --> 1:46:12.020
Certainly Massey's bill being the
1:46:12.710 --> 1:46:16.520
end all solution, it does create a lot of
1:46:17.050 --> 1:46:20.774
discussion, right? It's a great discussion point and
1:46:20.812 --> 1:46:24.438
we certainly would like to see it passed. So it's a
1:46:24.444 --> 1:46:27.866
great piece of legislation and it should be
1:46:27.888 --> 1:46:30.700
on the table. But it is a practical matter.
1:46:31.390 --> 1:46:35.290
There's not enough support for it because
1:46:35.360 --> 1:46:39.146
it's a very radical proposal. It proposes to
1:46:39.168 --> 1:46:44.974
do a lot right in
1:46:45.012 --> 1:46:49.486
two respects. It's important. One is that by
1:46:49.508 --> 1:46:52.786
just being proposed and being supported by a lot of
1:46:52.808 --> 1:46:55.570
Congressmen has a lot of co sponsors,
1:46:56.790 --> 1:47:00.514
it sets the range of discussion. It makes these
1:47:00.552 --> 1:47:04.478
topics appropriate policy discussions,
1:47:04.654 --> 1:47:08.486
topics, policy discussion in DC. Which is really significant and important because
1:47:08.508 --> 1:47:12.806
they need to be. It's an important part of the policy process in
1:47:12.828 --> 1:47:16.694
terms of making issues. Now, topics of policy debate that
1:47:16.732 --> 1:47:20.410
weren't being debated before. It's an important part of the process
1:47:20.480 --> 1:47:24.810
in terms of also not just making issues, part of the policy debate
1:47:26.430 --> 1:47:30.098
on the Capitol and in Congress, but it's
1:47:30.134 --> 1:47:34.302
an important signal to the courts and to the agencies also,
1:47:34.356 --> 1:47:36.720
that these are important, relevant issues.
1:47:37.570 --> 1:47:41.534
There's significant evidence that the bills that
1:47:41.572 --> 1:47:42.798
were introduced starting in 2006,
1:47:42.804 --> 1:47:46.426
a lot of those bills
1:47:46.538 --> 1:47:50.642
focused on topics of remedies. And those topics were slowly coming
1:47:50.696 --> 1:47:54.082
out of the bills over the years as the Supreme Court kept granting cert
1:47:54.136 --> 1:47:58.342
in cases and remedies cases like Ebay and
1:47:58.396 --> 1:48:01.654
in others and in the Federal Circuit as well.
1:48:01.852 --> 1:48:05.430
I think there's a lot of evidence, not direct evidence, but evidence that
1:48:05.500 --> 1:48:09.222
the courts were getting the message that this is an important issue,
1:48:09.276 --> 1:48:11.820
this is an important topic, and we can fix this.
1:48:13.230 --> 1:48:17.254
In fact, it's within our domain to fix it as a court and remedies
1:48:17.382 --> 1:48:20.946
as remedies matter. So we should do so. And they did. So those topics
1:48:20.998 --> 1:48:24.670
came out of the bills as the courts ruled
1:48:25.330 --> 1:48:28.586
on the topics and in favor of the legislation. So it's
1:48:28.618 --> 1:48:32.414
important signal to other government actors that you can
1:48:32.452 --> 1:48:36.340
fix this or you should fix this if you have the power to do so.
1:48:38.550 --> 1:48:42.078
And it becomes potentially the basis for actual legislation
1:48:42.174 --> 1:48:45.474
down the road as you go through that process of
1:48:45.592 --> 1:48:48.886
having the policy debate, of educating people about these issues.
1:48:48.988 --> 1:48:51.880
Yes, I'm a strong supporter of the Stronger Patent Act.
1:48:52.410 --> 1:48:55.766
And I'm also a supporter of the Rally Act. I don't think the
1:48:55.788 --> 1:49:00.250
two are not mutually exclusive. Both should be on the table as active
1:49:00.910 --> 1:49:04.154
pieces of legislation that we should be debating and talking
1:49:04.192 --> 1:49:07.770
about right now politically.
1:49:08.590 --> 1:49:12.606
And just as a practical matter, the Stronger Ban Act, if and
1:49:12.628 --> 1:49:15.774
when it gets reintroduced in the new Congress, has a very strong
1:49:15.812 --> 1:49:19.438
chance of being axed upon and voted on.
1:49:19.524 --> 1:49:21.920
And I think we should take advantage of that.
1:49:22.690 --> 1:49:26.126
I know some people are worried, oh, by reforming the Ptab,
1:49:26.158 --> 1:49:30.062
you impliedly can see that it can work or worse.
1:49:30.126 --> 1:49:33.474
And by reforming the Ptab, you'll reduce the damage and reduce the
1:49:33.512 --> 1:49:36.430
reasons for why it should be eliminated.
1:49:36.590 --> 1:49:39.814
But there's always going to be
1:49:39.852 --> 1:49:43.366
some damage because the whole point of this is to be
1:49:43.388 --> 1:49:47.154
an agency that does things that courts don't do. We shouldn't worry
1:49:47.202 --> 1:49:51.046
that we're going to be papering over covering
1:49:51.078 --> 1:49:54.586
up any of the fundamental problems. They'll still be there just that
1:49:54.688 --> 1:49:58.540
we can actually do some good and save some innovators now
1:49:59.150 --> 1:50:03.206
with the Stronger Patent Act, and that's why I support it. Yeah, another foothold
1:50:03.238 --> 1:50:05.758
on the up the side of the mountain. Yeah. I know that there are a
1:50:05.764 --> 1:50:09.134
lot of congressmen and senators now who are now educated about
1:50:09.172 --> 1:50:12.870
these issues, who were completely oblivious
1:50:12.970 --> 1:50:16.674
to the destruction that has been wrought on our patent system and
1:50:16.712 --> 1:50:21.540
on our innovation economy. Five six years ago or
1:50:21.910 --> 1:50:25.902
worse, five, six years ago, thought, oh, yeah, patent holes
1:50:25.966 --> 1:50:29.858
and all these issues that this is we really have to get rid of patents.
1:50:29.954 --> 1:50:33.494
And, you know, and they've done a complete 180, some of them,
1:50:33.532 --> 1:50:36.870
I think, because of because of the efforts of people like
1:50:37.020 --> 1:50:40.726
Senator Coons and Congressman Massey and
1:50:40.828 --> 1:50:44.506
the work of a lot of other people who have been supporting them
1:50:44.688 --> 1:50:49.002
in their policy efforts, like the two of you and many others.
1:50:49.136 --> 1:50:53.046
Grassroots education. It's a big part of why we do this podcast.
1:50:53.238 --> 1:50:56.222
And we're going to get back to that in just a bit because it's absolutely
1:50:56.356 --> 1:51:00.106
one of the most actionable things we can discuss in the arena of solutions.
1:51:00.218 --> 1:51:03.658
But first, I wanted to ask our guests a question that I haven't been able
1:51:03.684 --> 1:51:07.726
to shake since researching both Ptab and District Court invalidation rates
1:51:07.758 --> 1:51:11.762
while preparing for our American Inventor Horror Story episode. I got two
1:51:11.816 --> 1:51:15.506
very different but equally enlightening answers. Judge, my next question
1:51:15.528 --> 1:51:18.690
is, it's a little bit more in the abstract,
1:51:18.770 --> 1:51:22.678
so feel free to push back on this one. But in
1:51:22.684 --> 1:51:26.134
our business, in our life, we look at things and sometimes we feel
1:51:26.172 --> 1:51:29.206
like we're fighting 100 different problems. Sometimes we try
1:51:29.228 --> 1:51:33.194
to zoom out and say, like, okay, are we fundamentally solving the right problem here?
1:51:33.392 --> 1:51:36.586
Is there a bigger issue that we could solve to make
1:51:36.688 --> 1:51:40.726
these 100 smaller problems go away? And that's
1:51:40.758 --> 1:51:42.560
the basis for this next question.
1:51:44.610 --> 1:51:48.138
One of the places we've often wondered if there's not a solution buried
1:51:48.234 --> 1:51:51.802
in all of this is with the role of the PTO
1:51:51.866 --> 1:51:55.566
and its weight, or apparent lack
1:51:55.598 --> 1:51:58.910
thereof, in ultimate patent validity,
1:51:58.990 --> 1:52:02.606
right? So patent is a constitutionally created
1:52:02.718 --> 1:52:06.594
property, right. A lot of times you see them compared to
1:52:06.712 --> 1:52:09.974
things like title deeds, like we might have on our home or another
1:52:10.012 --> 1:52:12.920
piece of property, right. But at the present,
1:52:13.530 --> 1:52:17.394
it feels like it's sort of a broken metaphor, right? You got the expert
1:52:17.442 --> 1:52:20.966
agency that's the PTO, they grant a piece of intellectual
1:52:20.998 --> 1:52:24.150
property that an inventor builds upon and leverages,
1:52:24.310 --> 1:52:28.326
much like somebody would leverage a piece of property cleared
1:52:28.358 --> 1:52:31.510
by a title company. But that's where things kind of start to
1:52:31.520 --> 1:52:35.066
break down, right. The Ptab is invalidating patents at a clip
1:52:35.098 --> 1:52:38.254
of 84%. That's according to us.
1:52:38.292 --> 1:52:41.674
Inventor. But studies have shown that even district courts
1:52:41.722 --> 1:52:45.086
are invalidating patents or claims at an alarming
1:52:45.118 --> 1:52:48.306
rate of about 40% still. So, you know,
1:52:48.328 --> 1:52:51.934
any any reform that we have that's related to post grant proceedings
1:52:51.982 --> 1:52:54.980
is potentially missing a bigger issue.
1:52:55.750 --> 1:52:59.430
Post grant proceedings could be incredibly rare in a world where the
1:52:59.500 --> 1:53:02.690
PTO decisions were more binding than they presently
1:53:02.770 --> 1:53:06.418
are. So I don't get a maybe certificate from the title
1:53:06.434 --> 1:53:10.262
company when I buy a home. In a more ideal
1:53:10.326 --> 1:53:13.514
world, it seems like we should get to the point where the
1:53:13.552 --> 1:53:17.130
determination made by the PTO was closer to something
1:53:17.200 --> 1:53:20.382
binding, with invalidations being an
1:53:20.436 --> 1:53:24.382
extremely rare exception. Any other system
1:53:24.436 --> 1:53:28.062
essentially leaves you with a patent pending indefinitely right,
1:53:28.196 --> 1:53:31.150
until it's tested by the courts.
1:53:31.570 --> 1:53:35.002
So, again, kind of an out of the box, more abstract question,
1:53:35.076 --> 1:53:38.974
but if you had the power to change the system where the PTO decision
1:53:39.022 --> 1:53:41.620
would be more binding, like that of a title company,
1:53:42.790 --> 1:53:45.570
how would you do it? Well,
1:53:45.720 --> 1:53:49.606
David Capos and I have talked about this a lot, and we both
1:53:49.788 --> 1:53:53.794
believe in the concept of what some people call a gold plated
1:53:53.922 --> 1:53:57.854
patent. A patent that would be extremely difficult to invalidate
1:53:57.922 --> 1:54:00.410
because it was so carefully vetted.
1:54:02.030 --> 1:54:05.370
One way to do this perhaps there are other ways,
1:54:05.440 --> 1:54:09.414
but one way to do this would be to give the applicant
1:54:09.462 --> 1:54:12.682
the option of getting an ordinary patent
1:54:12.826 --> 1:54:16.046
just through examination. But if you want
1:54:16.068 --> 1:54:19.566
to get a gold plated patent, you have to go an
1:54:19.588 --> 1:54:23.006
additional step, and it has to be further vetted by the
1:54:23.028 --> 1:54:26.566
Central Reexam Unit, but under a time limit.
1:54:26.618 --> 1:54:30.114
The problem with the reexam system in days of old was
1:54:30.152 --> 1:54:33.954
it went on forever and ever. That's part of the reason why there's this hard
1:54:33.992 --> 1:54:38.374
stop one year deadline for the Ptab that was to overcome the problem of
1:54:38.572 --> 1:54:42.786
endless reexaminations. But if the reexam unit
1:54:42.818 --> 1:54:46.854
was adequately staffed and properly guided, I believe it
1:54:46.892 --> 1:54:51.020
could gold plate patents within a year.
1:54:51.710 --> 1:54:55.526
And if it's the choice of the inventor or the inventive
1:54:55.638 --> 1:54:58.970
entity whether to ask for the extra
1:54:59.120 --> 1:55:02.426
step, who can complain? If you want to get an ordinary patent and
1:55:02.448 --> 1:55:05.806
take your risks at the Ptab of the court later on,
1:55:05.908 --> 1:55:09.360
fine, you take that pathway, that fork in the road.
1:55:10.290 --> 1:55:13.780
But if you want a gold plated patent, you got to go an extra step,
1:55:14.150 --> 1:55:17.934
and then it's going to be extremely difficult. I think you probably couldn't
1:55:17.982 --> 1:55:23.454
make it utterly inviolate,
1:55:23.502 --> 1:55:26.946
but you can make it extremely difficult to invalidate,
1:55:27.058 --> 1:55:31.026
and you should. So I'm, for exploring
1:55:31.138 --> 1:55:34.962
that option. I think the reality is that Congress
1:55:35.026 --> 1:55:38.586
will never give the patent office the money they would need for the
1:55:38.608 --> 1:55:42.346
examiner to get it right. In 99% of
1:55:42.368 --> 1:55:45.494
the cases in an ordinary examination,
1:55:45.622 --> 1:55:50.326
they have something like 9000 examiners
1:55:50.358 --> 1:55:55.358
there. They would need 90,000 or 150,000
1:55:55.444 --> 1:55:58.910
or 300,000. Who knows what they would actually need?
1:55:58.980 --> 1:56:02.174
The cost would be prohibitive, the fees would go
1:56:02.212 --> 1:56:06.034
up. It's never going to happen. So what you have
1:56:06.072 --> 1:56:09.442
to do is make the ordinary examination system as
1:56:09.496 --> 1:56:12.660
good as it can be as a practical matter,
1:56:13.190 --> 1:56:16.520
given limited time, limited money,
1:56:18.010 --> 1:56:21.778
and younger examiners,
1:56:21.874 --> 1:56:26.050
and also inadequate prior art searching capabilities
1:56:26.130 --> 1:56:29.562
and old computer systems and other things that can
1:56:29.616 --> 1:56:33.066
and should be improved rapidly. But I
1:56:33.088 --> 1:56:36.954
am convinced that a gold plated patent system would
1:56:36.992 --> 1:56:40.814
be the best single solution to get over the problem of
1:56:40.852 --> 1:56:43.946
patents being undependable. As long as patents
1:56:44.138 --> 1:56:47.742
are seen as undependable, the investment we need
1:56:47.796 --> 1:56:51.566
will not get made. It's that simple. Yeah, that's a really
1:56:51.588 --> 1:56:54.626
great question and there's a lot in there. So let me unpack it a little
1:56:54.648 --> 1:56:57.762
bit. And I'm going to start
1:56:57.816 --> 1:57:01.300
by throwing perhaps a curveball, which is that
1:57:03.750 --> 1:57:07.430
I am not unhappy or disturbed by the 40%
1:57:07.500 --> 1:57:09.590
invalidation rate in district court.
1:57:10.170 --> 1:57:14.054
And so let me explain that now because
1:57:14.092 --> 1:57:17.320
a lot of people say, what do you mean? How can that be the case?
1:57:17.850 --> 1:57:21.818
But however you identify it,
1:57:21.904 --> 1:57:25.498
whether 70% up to 100% in some of
1:57:25.504 --> 1:57:29.014
the programs at the Ptab, that is a problem. That's an institution
1:57:29.062 --> 1:57:32.266
that is clearly out of balance. Then as I'm sure you're wondering,
1:57:32.298 --> 1:57:36.110
but why is he not upset about the 40% invalidation rates at the district court?
1:57:36.850 --> 1:57:40.094
Exactly. Those are invalidation rates that you
1:57:40.132 --> 1:57:44.100
are seeing at final decisions. And so what you have
1:57:44.870 --> 1:57:48.482
in these cases is something that economists and statisticians refer
1:57:48.536 --> 1:57:51.714
to as selection effects, which means that
1:57:51.912 --> 1:57:55.366
people are making decisions about whether to continue to
1:57:55.388 --> 1:57:58.946
file a lawsuit, whether to continue to prosecute
1:57:58.978 --> 1:58:02.920
or pursue the lawsuit, whether to settle based upon information
1:58:03.530 --> 1:58:07.334
that they have at each point of the process. And at
1:58:07.372 --> 1:58:11.494
a certain point, sometimes at the very beginning, sometimes later, you realize
1:58:11.622 --> 1:58:15.946
I'm going to lose or I'm going to win. It becomes clear.
1:58:16.048 --> 1:58:18.730
And so you settle.
1:58:19.870 --> 1:58:23.962
And in fact, this is what you see. In fact, most lawsuits
1:58:24.106 --> 1:58:26.110
don't even make it to trial.
1:58:27.090 --> 1:58:30.506
And by the way, most disputes don't even result in lawsuits
1:58:30.538 --> 1:58:34.974
being filed. And so at each point you get a smaller and smaller
1:58:35.102 --> 1:58:39.266
subset of the
1:58:39.368 --> 1:58:43.394
rights at issue. And so by the time you actually get to court and actually
1:58:43.432 --> 1:58:47.030
get to a final court decision, those are the true
1:58:47.100 --> 1:58:51.222
what we refer to as borderline cases. Those are the cases where you
1:58:51.276 --> 1:58:55.254
actually have significant colorable arguments on
1:58:55.292 --> 1:58:59.106
both sides as to the legitimacy
1:58:59.138 --> 1:59:03.242
of their positions. So this explains why the
1:59:03.296 --> 1:59:06.774
invalidation rates around 40%. And by the way, this isn't unusual
1:59:06.822 --> 1:59:09.910
in patent law. This is a phenomenon one sees in the entire
1:59:10.000 --> 1:59:13.534
US court system. And in fact this was studied by
1:59:13.572 --> 1:59:18.554
some economists back in the has come to refer to as the Priest
1:59:18.602 --> 1:59:20.190
Klein hypothesis,
1:59:22.050 --> 1:59:25.954
which is priest Klein posited that in
1:59:25.992 --> 1:59:29.582
any adversarial institution you're going to see decision
1:59:29.646 --> 1:59:33.650
rates around the 50%. Mark point was really about
1:59:33.720 --> 1:59:37.062
what I just referred to earlier, about selection effects, about how
1:59:37.196 --> 1:59:40.854
there's information that people are acquiring through the
1:59:40.892 --> 1:59:44.166
process that they're then selecting what to do based on that information.
1:59:44.268 --> 1:59:48.454
And that includes settling or dismissing or
1:59:48.492 --> 1:59:52.298
the judge dismisses the lawsuit or summary judgment and things of that sort as
1:59:52.304 --> 1:59:55.882
well. By the time
1:59:55.936 --> 1:59:59.180
you get to a court decision and even a court appeal in particular.
2:00:00.430 --> 2:00:03.550
So appellate decisions up to the pellet courts,
2:00:04.930 --> 2:00:08.222
you are at a point on the margin where
2:00:08.356 --> 2:00:11.834
someone is making a mistake. There's an information asymmetry
2:00:11.962 --> 2:00:15.826
that has not been accounted for and so you're roughly going
2:00:15.848 --> 2:00:20.130
to have a 50 50 divide and so you're filtering
2:00:20.470 --> 2:00:24.334
thousands and thousands of dispute of patent disputes out thousands of patents
2:00:24.382 --> 2:00:27.518
out of the system. Exactly what by the way, this is exactly what's
2:00:27.534 --> 2:00:30.982
supposed to happen such that by the time you get to the court decision those
2:00:31.036 --> 2:00:34.790
are the true cases where it's an open question
2:00:34.860 --> 2:00:38.006
as to whether this is a really valid patent or not or whether infringement has
2:00:38.028 --> 2:00:41.254
actually happened or not. I mean that's why there needs to be a court decision.
2:00:41.302 --> 2:00:44.694
And by the way, so what that tells me is a 40% invalidity
2:00:44.742 --> 2:00:48.634
rate is actually good, actually tells you that wow,
2:00:48.672 --> 2:00:52.586
our patents are really working. And I suspect what that 10% variance
2:00:52.618 --> 2:00:56.430
is because you would expect it to be 50%, is probably
2:00:56.500 --> 2:01:00.126
the presumption of validity at work. Is that kind of thumb on
2:01:00.148 --> 2:01:04.062
the scale that should exist for patents that have
2:01:04.116 --> 2:01:07.666
gone through the examination process and our property rights and should
2:01:07.688 --> 2:01:11.246
therefore should be construed in favor of the title
2:01:11.278 --> 2:01:14.802
deed owner, which is a principle that was first adopted in US
2:01:14.856 --> 2:01:18.226
courts long before the examination system was created. Because they adopted
2:01:18.258 --> 2:01:22.274
it actually formed the canons of interpretation
2:01:22.322 --> 2:01:25.702
for title deeds which the rule was at common
2:01:25.756 --> 2:01:29.302
law, if there's an ambiguity in a title deed it's to be construed in favor
2:01:29.356 --> 2:01:33.350
of the property owner. And the US courts
2:01:33.430 --> 2:01:36.906
incorporated and applied that to patents in the early 19th century when
2:01:36.928 --> 2:01:40.106
we didn't even have an examination system yet. They said patents are title deeds so
2:01:40.128 --> 2:01:43.486
we're going to adopt this. It was known as a canon of
2:01:43.508 --> 2:01:48.206
liberal construction in favor of the patent owner and
2:01:48.228 --> 2:01:51.902
then the 1836 that when we adopted the examination system that
2:01:51.956 --> 2:01:55.438
reinforced what becomes known as the presumption of
2:01:55.444 --> 2:01:59.006
validity based on the examination process as well. So my mistake,
2:01:59.118 --> 2:02:02.974
comparing a Ptab invalidation rate of 84% to a court invalidation
2:02:03.022 --> 2:02:06.402
rate is not an apples to apples comparison. Any given
2:02:06.456 --> 2:02:09.958
patent has an 84% chance of being viewed as invalid in the eyes of
2:02:09.964 --> 2:02:13.814
the Ptab, but any given patent doesn't have a 40% chance of being
2:02:13.852 --> 2:02:17.414
viewed is invalid in the eyes of the court. Not the same thing.
2:02:17.532 --> 2:02:20.726
Most of what we've discussed so far are threats from within a
2:02:20.748 --> 2:02:24.378
system void of any competition, can operate however it wants, and sometimes
2:02:24.464 --> 2:02:27.334
still end up okay. Many experts are beginning to argue,
2:02:27.382 --> 2:02:31.174
however, that there's a real sense of urgency in addressing these internal
2:02:31.222 --> 2:02:34.506
problems because of the rapidly escalating external threat
2:02:34.538 --> 2:02:38.654
that is China's undeclared Cold War. It is impossible to sincerely talk about
2:02:38.692 --> 2:02:42.026
these issues without confronting the existential threat they pose
2:02:42.058 --> 2:02:45.902
from their adversarial exploitation. But before diving into the specifics,
2:02:45.966 --> 2:02:50.286
we want to echo democrat Congressman Hank Johnson's and Republican Congressman Darryl
2:02:50.318 --> 2:02:53.554
Isa's recent House subcommittee comments that none of this
2:02:53.592 --> 2:02:57.286
conversation should be misconstrued as antiasian sentiment in the wake of
2:02:57.308 --> 2:03:00.806
a rise in harassment against Asian Americans. When we
2:03:00.828 --> 2:03:05.266
talk about China, we are referring to the Chinese government and its present authoritarian
2:03:05.298 --> 2:03:08.674
regime led by Xi Jinping. Senators, representatives,
2:03:08.722 --> 2:03:11.606
presidents, retired generals, retired judges,
2:03:11.718 --> 2:03:15.270
and the Justice Department contend that this issue is twofold.
2:03:15.350 --> 2:03:18.794
There is the well documented historic problem of IP theft that most
2:03:18.832 --> 2:03:22.346
are probably aware of, but there's also an evolving problem of
2:03:22.368 --> 2:03:26.586
going from a country that steals technology to a country that is successfully replicating
2:03:26.618 --> 2:03:29.978
the parts of the US. System that works so well for centuries,
2:03:30.074 --> 2:03:33.434
but that Congress and the courts are now throwing under the bus. The Justice
2:03:33.482 --> 2:03:37.042
Department has valued China's annual theft of intellectual property at
2:03:37.096 --> 2:03:40.626
four to $600 billion per year,
2:03:40.728 --> 2:03:44.290
which amounts to a post tax share of four to $6,000
2:03:44.360 --> 2:03:47.586
per American family of four. FBI Director Chris Wray has
2:03:47.608 --> 2:03:51.318
said that this is the largest transfer of wealth in human history.
2:03:51.484 --> 2:03:55.286
Some of this is attributable to outright theft, but much is now coming from
2:03:55.308 --> 2:03:59.286
bad faith manipulation of international rule of law. Listen into comments
2:03:59.318 --> 2:04:02.874
from Judiciary Committee Ranking Member Jerry Nadler, Democrat from
2:04:02.912 --> 2:04:06.342
New York, from a recent House subcommittee hearing on courts,
2:04:06.406 --> 2:04:10.486
intellectual property and the Internet. On the economic front, China's entry
2:04:10.518 --> 2:04:14.394
into the free market system has failed to encourage the PRC
2:04:14.442 --> 2:04:18.158
to obey the rules and customs that govern the international economic order.
2:04:18.324 --> 2:04:21.614
Rather, it has simply enabled the Chinese government to manipulate those
2:04:21.652 --> 2:04:25.434
rules to its advantage. For example, a requirement
2:04:25.482 --> 2:04:29.390
that in certain high tech sectors, US. Companies work with a Chinese counterpart
2:04:29.470 --> 2:04:33.314
has become one of many vehicles that the PRC has used
2:04:33.432 --> 2:04:36.258
to force technology transfer to their nation.
2:04:36.434 --> 2:04:40.342
This sometimes means requiring us. Companies to disclose key
2:04:40.396 --> 2:04:44.294
aspects of their technology in order to obtain licenses to operate within
2:04:44.332 --> 2:04:47.658
the PRC, among others. Unfortunately, there are
2:04:47.664 --> 2:04:51.414
also many documented instances of the PRC using outright illegal
2:04:51.462 --> 2:04:55.174
means to access US. Technology, including cyber
2:04:55.222 --> 2:04:58.598
espionage and trade secret theft. In sum,
2:04:58.694 --> 2:05:02.278
while the PRC was welcomed into the free market system, it has failed
2:05:02.294 --> 2:05:05.482
to honor many of the hallmarks of good global citizenship.
2:05:05.626 --> 2:05:09.134
This is a serious. Challenge to a system that has historically relied in large
2:05:09.172 --> 2:05:12.858
part on assumptions that the players will act in good faith.
2:05:13.034 --> 2:05:16.750
But with the announcement of a series of national policies aimed at making China
2:05:16.830 --> 2:05:20.670
a technological leader in all important emerging areas of innovation,
2:05:20.830 --> 2:05:24.834
we cannot afford to be blind to the illicit and questionable means
2:05:24.952 --> 2:05:28.626
that the PRC is. Using to leafrog the rest of the world and
2:05:28.648 --> 2:05:32.454
others. The success China is having for adopting features of our patent system before
2:05:32.492 --> 2:05:35.782
it got weakened. They have improved their patent system,
2:05:35.836 --> 2:05:39.286
and there are startups starting up
2:05:39.308 --> 2:05:42.906
in China based on Chinese patents, on key technologies that should be
2:05:42.928 --> 2:05:46.314
starting up in America. But you can't invest in them because you'll lose your money,
2:05:46.352 --> 2:05:50.422
because the patent can be invalidated. And so China is building the next Silicon Valley.
2:05:50.486 --> 2:05:53.698
A lot of people don't understand, and it sounds like a paradox, like they're stealing
2:05:53.734 --> 2:05:57.706
our IP, but then they also create this robust patent
2:05:57.738 --> 2:06:00.926
system. So they're like, well, which is it? And they don't recognize it. That's actually
2:06:01.028 --> 2:06:04.974
a unified part of an overall domestic
2:06:05.022 --> 2:06:09.406
industrial policy agenda of theirs, right? So notice
2:06:09.598 --> 2:06:12.558
it's not that they disrespect IP,
2:06:12.654 --> 2:06:16.486
it's that they want to grow their economy. They want to take as much technology
2:06:16.588 --> 2:06:20.646
from us as possible and create their own technology. So they steal technology
2:06:20.748 --> 2:06:26.178
from us, and they're trying to promote their own citizens
2:06:26.274 --> 2:06:30.598
to produce their own innovation. So they're
2:06:30.694 --> 2:06:34.538
part and parcel of a unified policy of
2:06:34.544 --> 2:06:38.554
a country that's trying to become a type
2:06:38.592 --> 2:06:42.314
of an innovation economy by leapfrogging
2:06:42.362 --> 2:06:45.278
ahead in this kind of this two pronged attack.
2:06:45.364 --> 2:06:49.440
Steal technology from foreign innovators, develop your own domestic technology,
2:06:51.250 --> 2:06:54.710
and it's been very effective for them. As Adam noted earlier in his analysis
2:06:54.730 --> 2:06:58.370
of patent applications in the US. Europe and China for the exact
2:06:58.440 --> 2:07:02.226
same inventions, applications are being rejected and invalidated in
2:07:02.248 --> 2:07:06.066
the US that are sailing through in China. This is no coincidence when
2:07:06.088 --> 2:07:09.026
you consider the recent congressional testimony of Mark Cohen,
2:07:09.138 --> 2:07:12.786
senior fellow and director of the Asia IP project, the Berkeley
2:07:12.818 --> 2:07:16.674
Center for Law and Technology. He noted that as, quote, someone who observes
2:07:16.722 --> 2:07:20.370
IP developments on both sides of the Pacific. It was interesting
2:07:20.460 --> 2:07:24.134
to see that at the same time that cases like Myriad and Bilski were decided
2:07:24.182 --> 2:07:27.926
by the Supreme Court, china amended its examination guidelines
2:07:27.958 --> 2:07:31.754
to permit the very same subject matter, now ineligible
2:07:31.802 --> 2:07:35.882
patents in the US to be granted in China. So our greatest international
2:07:35.946 --> 2:07:39.578
competitor has no eligibility mess to untangle, no PTAB
2:07:39.594 --> 2:07:43.166
to deal with, makes injunctions widely available and I'm going
2:07:43.188 --> 2:07:46.706
out on a limb here, but is also probably slightly less obsessed with
2:07:46.728 --> 2:07:50.098
troll mythology. And as Judge Michel noted, if the
2:07:50.104 --> 2:07:53.778
patents go there, the investment dollars go there. And if the investment dollars
2:07:53.864 --> 2:07:56.918
go there, so does the ensuing growth and control of
2:07:56.924 --> 2:08:00.726
the technology. One of the things that we take for granted is how when
2:08:00.748 --> 2:08:04.022
you're out innovating your adversaries, you are Very
2:08:04.076 --> 2:08:07.822
Secure. And when your adversaries
2:08:07.906 --> 2:08:11.482
are threatening to out innovate you, man, you are
2:08:11.536 --> 2:08:14.998
very insecure. Your security is absolutely threatened.
2:08:15.094 --> 2:08:18.950
This begs the fundamental question who do we want developing the technologies
2:08:19.030 --> 2:08:22.986
of tomorrow? More from Congressman Nadler's opening remarks.
2:08:23.098 --> 2:08:26.858
Today we see a government in China that has become increasingly authoritarian,
2:08:27.034 --> 2:08:31.034
using a vast array of technology to track its citizens and subjecting
2:08:31.082 --> 2:08:35.226
many of its people, most notably the Uyghur population,
2:08:35.338 --> 2:08:38.658
to shocking human rights abuses. I asked our guests if the
2:08:38.664 --> 2:08:42.366
best possible solution is just getting our house in order, doing the reforms
2:08:42.398 --> 2:08:45.362
needed to get back to the gold standard, and maybe the rest of the problem
2:08:45.416 --> 2:08:48.914
will take care of itself. Or was there something more we should be focused
2:08:48.962 --> 2:08:53.014
on? There actually have been some responses and
2:08:53.052 --> 2:08:57.174
positive developments in the space in the past couple of years because people
2:08:57.212 --> 2:09:00.746
haven't recognized, I think, that China has been in an
2:09:00.768 --> 2:09:04.300
undeclared Cold War with us for a very long time,
2:09:06.270 --> 2:09:10.606
and they're waking up to it now. They're realizing that
2:09:10.628 --> 2:09:13.230
this is a country that is not an ally of ours.
2:09:14.930 --> 2:09:18.734
But of course, we've now intertwined with them. So much of our
2:09:18.932 --> 2:09:22.430
global supply chain manufacturing. Apple,
2:09:22.770 --> 2:09:25.918
up until starting a year ago, had 100% of all of
2:09:25.924 --> 2:09:28.866
its products made in china, and now it's only down to, like,
2:09:28.888 --> 2:09:32.334
95%. I think it's so intertwined
2:09:32.382 --> 2:09:36.070
with that country. They're going to have a really hard time disentangling themselves
2:09:36.140 --> 2:09:40.694
from that country. So it's a real problem because
2:09:40.732 --> 2:09:45.206
we never became economically intertwined with the Soviet Union during
2:09:45.388 --> 2:09:46.840
the last Cold War.
2:09:48.810 --> 2:09:51.378
It's a real problem. People are waking up to it, and people are taking some
2:09:51.404 --> 2:09:55.958
actions. The tide may change And I think a lot of the reason is China.
2:09:56.054 --> 2:09:59.642
A lot of people are suddenly waking up to the fact that China is
2:09:59.696 --> 2:10:03.658
posing a huge economic and strategic threat
2:10:03.674 --> 2:10:06.830
to the United States. And a technology threat.
2:10:07.250 --> 2:10:11.066
So that sort of changed the thinking of a lot of people on Capitol
2:10:11.098 --> 2:10:15.070
Hill. And there have been recognition now and I believe,
2:10:15.140 --> 2:10:19.038
legislation or at least regulatory action taken about the disclosure of certain types
2:10:19.054 --> 2:10:22.820
of technologies to China and restrictions on certain trade issues,
2:10:23.350 --> 2:10:26.210
especially with respect to chips, for instance.
2:10:26.870 --> 2:10:31.670
And other things. Because chips can be used in jets and tanks
2:10:32.010 --> 2:10:36.002
and are used by jets and tanks. Because there isn't a division between the military
2:10:36.146 --> 2:10:39.340
and the civilian economy in China the way we have in the United States.
2:10:41.470 --> 2:10:44.490
Some positive actions I believe are being taken.
2:10:44.640 --> 2:10:48.374
Congress does seem more focused on this issue. Now, in addition to the hearings
2:10:48.422 --> 2:10:52.426
we've referenced here, the House also recently voted overwhelmingly to
2:10:52.448 --> 2:10:56.094
pass a resolution to create a select committee focused on us. Competition with
2:10:56.132 --> 2:11:00.234
China. The resolution passed in a 365 to 65 vote.
2:11:00.282 --> 2:11:03.754
But as Adam will explain, entangled manufacturing dependencies
2:11:03.802 --> 2:11:07.154
and the global need for standards collaboration further complicate this
2:11:07.192 --> 2:11:11.746
matter. But as I said, it's a complicated issue. Now. Because so
2:11:11.768 --> 2:11:15.826
many us Companies rushed to China in the 1990s
2:11:16.008 --> 2:11:19.670
at the turn of the century, especially companies like Apple.
2:11:20.970 --> 2:11:24.274
And to disentangle us from them in that respect
2:11:24.322 --> 2:11:27.922
is going to be very hard. And we have to walk carefully
2:11:27.986 --> 2:11:32.214
because we need to make sure that we don't disrupt positive aspects
2:11:32.262 --> 2:11:35.626
of the global innovation economy. So, for instance, there are these
2:11:35.648 --> 2:11:38.842
private organizations called standard development organizations that
2:11:38.976 --> 2:11:41.550
develop our technologies.
2:11:41.890 --> 2:11:44.430
So 5G WiFi,
2:11:45.090 --> 2:11:48.698
but all things are standardized. The depths
2:11:48.714 --> 2:11:52.666
of the grooves and screws are byproduct of standard development organizations
2:11:52.698 --> 2:11:55.338
because everyone has because you have to know when you go to Home Depot or
2:11:55.364 --> 2:11:58.402
Lowe's, you're going to get the same screw to use. It'll fit in the same
2:11:58.456 --> 2:12:02.190
hole that you have. So shipping containers
2:12:02.270 --> 2:12:05.250
are standardized according to standard building organizations.
2:12:06.150 --> 2:12:09.060
Of course, it's really important in technology like five G,
2:12:09.930 --> 2:12:13.586
four G, and three G. And there was a period
2:12:13.618 --> 2:12:17.302
where the US. Government said, oh, yeah, so the US. Innovators can't even talk
2:12:17.356 --> 2:12:21.206
with or participate with
2:12:21.228 --> 2:12:24.794
any organization or institution as Huawei, as a member, it's like, well, those are standard
2:12:24.832 --> 2:12:28.026
development organizations. So if there was a brief period there where the US. Government was
2:12:28.048 --> 2:12:32.054
making noise about prohibiting US. Innovators who created
2:12:32.102 --> 2:12:35.674
5G, like Qualcomm, which created 5G, from actually participating
2:12:35.722 --> 2:12:39.838
in the standard development organizations that agree to 5G,
2:12:39.924 --> 2:12:43.246
because Huawei is also a participant and a member of those organizations.
2:12:43.278 --> 2:12:45.220
So we can't do that.
2:12:47.990 --> 2:12:51.134
In fact, if we do that China
2:12:51.182 --> 2:12:54.974
is engaging in various strategies to take over standard development organizations
2:12:55.102 --> 2:12:58.486
and we are conceding the field to them, then if we prohibit American
2:12:58.588 --> 2:13:01.702
companies like Qualcomm and Interdigital to
2:13:01.756 --> 2:13:05.830
participate in these organizations, then we just basically are turning over to China
2:13:07.290 --> 2:13:10.954
the ability to control the future of these technologies and to ensure they're based
2:13:10.992 --> 2:13:14.534
on Chinese tech. And they will then incorporate
2:13:14.582 --> 2:13:19.206
into those technologies chinese norms of governance,
2:13:19.398 --> 2:13:23.434
which is, as we all well know, it's an authoritarian
2:13:23.482 --> 2:13:24.190
regime.
2:13:27.490 --> 2:13:31.326
We saw that with the lockdowns in China in response to the COVID the
2:13:31.348 --> 2:13:34.720
extreme lockdowns that made our lockdowns look like
2:13:35.810 --> 2:13:39.666
child's play. I mean, people were literally starving and
2:13:39.688 --> 2:13:43.550
jumping out of their apartments because they weren't even allowed to leave their apartments.
2:13:43.710 --> 2:13:47.222
Tanks rolling in the streets bolted into apartments. I mean, it was it got crazy.
2:13:47.276 --> 2:13:50.354
Yeah, people had people had their apartment doors wired shut
2:13:50.482 --> 2:13:54.038
so they couldn't leave their apartments. Can you
2:13:54.044 --> 2:13:57.718
imagine the
2:13:57.724 --> 2:14:00.838
country and I always like to point out to this is a country that's actively
2:14:00.854 --> 2:14:04.346
running concentration camps, I mean, the Uyghurs in the western portion of
2:14:04.368 --> 2:14:07.866
that country. This is not a friendly regime that
2:14:07.968 --> 2:14:11.274
it respects the rights of its citizens or respects the rights of other people around
2:14:11.312 --> 2:14:14.766
the globe. And we should recognize that for the vast majority of us,
2:14:14.868 --> 2:14:18.266
these issues and their ultimate solutions are largely out of our immediate
2:14:18.298 --> 2:14:21.454
control. One thing that literally everyone can help with
2:14:21.492 --> 2:14:24.738
is awareness and education. It's the only way the needle is
2:14:24.744 --> 2:14:28.306
going to move. Another problem, and this is not so much on
2:14:28.328 --> 2:14:31.906
the part of Congress but of the general public and the
2:14:31.928 --> 2:14:35.374
general media, is that they think patents
2:14:35.422 --> 2:14:39.334
are some nerdy little corner of the world that nobody needs
2:14:39.372 --> 2:14:43.394
to really worry about. It's only for geeks and patent lawyers.
2:14:43.522 --> 2:14:46.914
But the reality is the whole economy is undergirded
2:14:46.962 --> 2:14:50.742
by innovation, and most of the innovation is heavily
2:14:50.806 --> 2:14:54.214
promoted by strong patents. So if you have weak
2:14:54.262 --> 2:14:58.054
patents, you get less innovation. That means less economic
2:14:58.102 --> 2:15:01.294
growth. So this is the kind of set
2:15:01.332 --> 2:15:03.360
of messages I'm trying to get across.
2:15:04.050 --> 2:15:07.418
Yeah, I mean, the patent system is really essential
2:15:07.594 --> 2:15:11.326
infrastructure for innovation in
2:15:11.348 --> 2:15:14.446
the country. I heard others refer to it as the backbone
2:15:14.478 --> 2:15:16.340
of the economic engine.
2:15:17.670 --> 2:15:20.846
Getting the awareness out there around that, getting folks
2:15:20.878 --> 2:15:22.850
to sort of reconnect those dots,
2:15:24.630 --> 2:15:28.162
is huge. Education is a huge part of our mission and why we invest
2:15:28.216 --> 2:15:31.890
in this podcast. And that brings us to our Final Solution.
2:15:32.050 --> 2:15:35.170
We chatted with each of our guests about their educational efforts,
2:15:35.250 --> 2:15:38.518
starting with Judge Michel, who retired from his position as Chief Justice of
2:15:38.524 --> 2:15:41.926
the US. Court of Appeals for the Federal Circuit, the top seat in the nation's
2:15:41.958 --> 2:15:45.414
patent appeals court, so that he could speak freely and publicly
2:15:45.462 --> 2:15:49.046
about the state of the IP system. Well, throughout the decade
2:15:49.078 --> 2:15:52.218
ending in 2010, when I chose to retire,
2:15:52.394 --> 2:15:56.014
there was a steady campaign to weaken the
2:15:56.052 --> 2:15:59.102
patent system. Also other intellectual property
2:15:59.156 --> 2:16:02.946
rights, but particularly the patent system. And as it
2:16:03.048 --> 2:16:06.638
gained power, I got more and more concerned that it was going to hurt
2:16:06.654 --> 2:16:10.062
the country and the economy, even compromised
2:16:10.126 --> 2:16:12.130
national security, potentially.
2:16:13.030 --> 2:16:16.402
And because I was on a court and I loved the work,
2:16:16.456 --> 2:16:19.942
I thought I would stay there until I was ready
2:16:19.996 --> 2:16:23.142
to be carried out in a pine box. The colleagues were great.
2:16:23.196 --> 2:16:26.754
The cases were fascinating, they were important, the lawyers
2:16:26.802 --> 2:16:30.038
were very good. But all that got washed
2:16:30.054 --> 2:16:33.500
away by my concern for the future of the country.
2:16:33.870 --> 2:16:37.882
And sitting judges, quite properly, I think, are quite
2:16:37.936 --> 2:16:42.160
restricted in what they're allowed to say on political issues,
2:16:42.610 --> 2:16:46.858
broad public policy questions and battles
2:16:46.954 --> 2:16:50.160
among different industries and things of that sort.
2:16:50.770 --> 2:16:54.030
And I didn't want to press those boundaries. So I decided,
2:16:54.110 --> 2:16:57.442
well, if I retire, then I'm completely free to speak.
2:16:57.496 --> 2:17:01.220
So I went from highly constrained to completely free
2:17:01.590 --> 2:17:04.274
and started out right away,
2:17:04.472 --> 2:17:07.810
speaking just about anywhere I was invited
2:17:07.890 --> 2:17:11.446
many different conferences and writing articles and so on.
2:17:11.548 --> 2:17:15.782
And that gained steam in the years since May 2010
2:17:15.836 --> 2:17:19.030
when I stepped down from the bench.
2:17:19.610 --> 2:17:23.494
And looking back on it, I have no doubt
2:17:23.542 --> 2:17:26.506
that I made the right choice, at least for me. Maybe it wouldn't have been
2:17:26.528 --> 2:17:29.926
the right choice for anybody and everybody, but it was for me.
2:17:30.048 --> 2:17:33.854
And I'll tell you a quick story about that
2:17:33.892 --> 2:17:38.062
kind of thinking. I once was at a conference and
2:17:38.116 --> 2:17:42.570
seated at lunch table next to justice
2:17:42.650 --> 2:17:45.794
O'Connor. And at that point, she had retired. She had
2:17:45.832 --> 2:17:49.442
stepped down from the supreme court, and she was
2:17:49.496 --> 2:17:53.726
very engaged in trying to revive civics teaching in the schools
2:17:53.758 --> 2:17:56.950
and the culture all around the country. Very busy with that.
2:17:57.100 --> 2:18:00.326
And she told me, I really enjoyed being on the
2:18:00.348 --> 2:18:04.360
supreme court. It was interesting work. I think it was very important,
2:18:05.690 --> 2:18:09.606
but I think what I'm doing now is even more important for the
2:18:09.628 --> 2:18:13.446
country. Just last fall, the judge also joined forces with some other heavyweights
2:18:13.478 --> 2:18:16.714
in this space to form the council for innovation promotion, or c four
2:18:16.752 --> 2:18:20.446
IP. This is a group of companies that
2:18:20.468 --> 2:18:24.320
are extremely concerned with the health and strength of the patent system,
2:18:25.250 --> 2:18:29.790
and they've come together to provide a coordinated
2:18:30.210 --> 2:18:34.110
campaign to try to revive the patent system in America,
2:18:34.270 --> 2:18:37.778
and they've put up some money in order
2:18:37.864 --> 2:18:41.140
to make that as effective as possible.
2:18:42.630 --> 2:18:46.182
It has a small board of directors. I'm one of the four
2:18:46.236 --> 2:18:50.274
members on the board of directors, along with former PTO
2:18:50.322 --> 2:18:54.610
heads Yanku and capos, and also fellow
2:18:54.690 --> 2:18:58.854
retired federal circuit judge Kathleen O'Malley. I'm allied
2:18:58.902 --> 2:19:02.554
with anybody and everybody that I can be allied with to
2:19:02.592 --> 2:19:04.540
try to work on,
2:19:05.870 --> 2:19:09.858
promoting and assuring the future of the country and our economy
2:19:09.974 --> 2:19:13.546
and employment and good paying jobs
2:19:13.578 --> 2:19:17.742
and technological leadership and
2:19:17.796 --> 2:19:21.374
all the rest, as I say, including even national security.
2:19:21.492 --> 2:19:25.550
Because the weakness of the patent system is not only hurting employment
2:19:25.710 --> 2:19:29.602
compared to what it otherwise could be, should be and
2:19:29.656 --> 2:19:33.794
not only hurting industrial technology
2:19:33.912 --> 2:19:37.282
leadership, but even things critical
2:19:37.346 --> 2:19:41.122
to national security are flagging, in my opinion,
2:19:41.266 --> 2:19:44.694
because the patent system has become so weak and
2:19:44.732 --> 2:19:48.470
I think people don't understand why the weakness matters. As the president
2:19:48.540 --> 2:19:51.798
of an organization that is dedicated to the restoration of the rights
2:19:51.814 --> 2:19:54.486
of inventors and innovative small businesses,
2:19:54.598 --> 2:19:57.866
education is a big focus for Randy. Awareness is so
2:19:57.888 --> 2:20:00.790
important. I remember talking to a guy at a Starbucks.
2:20:00.870 --> 2:20:03.280
I was wearing the US inventor t shirt, right?
2:20:04.930 --> 2:20:08.126
When the word patent comes up with this guy, the first thing he
2:20:08.148 --> 2:20:10.990
thinks of is drug companies and high prices.
2:20:11.330 --> 2:20:14.802
Now, what about an inventor doing something
2:20:14.856 --> 2:20:18.610
valuable, right? So there's all this propaganda out there,
2:20:18.680 --> 2:20:22.366
and we just have to fight, fight it through and keep informing.
2:20:22.398 --> 2:20:26.370
And to all of your listeners, help us get the word out.
2:20:26.520 --> 2:20:30.326
Help us get the word out. This is a key, key issue for this country.
2:20:30.428 --> 2:20:33.634
In a recent Forbes article on five strategies of strength in the innovation
2:20:33.682 --> 2:20:37.346
economy, adam's twitter account was mentioned when talking about bringing intellectual
2:20:37.378 --> 2:20:40.786
property down to earth. In addition to it just being refreshing to know that twitter
2:20:40.818 --> 2:20:43.942
can actually be used for down to earth, constructive conversation,
2:20:44.086 --> 2:20:47.478
we discussed with Adam how he's using twitter to educate about patents.
2:20:47.574 --> 2:20:51.120
One of the things that I really wanted to use twitter for was to
2:20:52.530 --> 2:20:56.366
make clear to people, actually how fundamental the
2:20:56.388 --> 2:20:59.738
patent system has been to everything in our society.
2:20:59.834 --> 2:21:03.182
And there's a real sense in which the patent system
2:21:03.236 --> 2:21:07.662
is a victim of its own success. It has been so successful in driving innovation,
2:21:07.806 --> 2:21:11.506
in being the basis of so many products and services that make
2:21:11.528 --> 2:21:14.802
up our modern life, that people come to think of it now,
2:21:14.856 --> 2:21:18.434
people don't recognize anymore. They think of it like the air we breathe and trees
2:21:18.482 --> 2:21:22.290
we see. I really wanted to try to emphasize
2:21:22.370 --> 2:21:25.926
and show no, that you shouldn't take anything for
2:21:25.948 --> 2:21:29.686
granted. From our toothbrushes to our toothpaste tubes to our raggedy
2:21:29.718 --> 2:21:33.402
and dolls to our board games like Monopoly, that all of these were
2:21:33.456 --> 2:21:38.058
patented inventions that were then deployed into the marketplace through
2:21:38.224 --> 2:21:42.498
licensing and other types of really innovative commercial mechanisms
2:21:42.534 --> 2:21:45.850
that were themselves invented by patent owners and business persons.
2:21:46.010 --> 2:21:49.422
And so on Twitter, I do on this date, innovation history.
2:21:49.556 --> 2:21:54.174
It's what I've kind of become known for, where I highlight the
2:21:54.212 --> 2:21:57.438
anniversary of a patent issuing historically.
2:21:57.534 --> 2:22:01.362
On the day we spoke, Adam's tweet was about Alfred Crail's 1897
2:22:01.416 --> 2:22:05.378
invention of the modern ice cream scoop. His invention again too.
2:22:05.544 --> 2:22:08.374
You may not think of it as a great invention in terms of, like,
2:22:08.412 --> 2:22:12.006
it's not the smartphone, it's not an
2:22:12.028 --> 2:22:15.890
antibiotic or one of these incredible innovations,
2:22:15.970 --> 2:22:19.446
but it is what our patent system drives, which is it's all.
2:22:19.468 --> 2:22:23.210
Of these small little innovations and innovations that create
2:22:23.280 --> 2:22:27.674
all of these little inefficiencies in our lives that add up to the
2:22:27.712 --> 2:22:30.566
modern life that we have now, where we have so much free time and it's
2:22:30.598 --> 2:22:34.190
so easy to do things. And it's a veritable miracle
2:22:34.770 --> 2:22:37.646
how we live today by any historical standard.
2:22:37.748 --> 2:22:41.166
In talking with all of our guests, I couldn't help but be inspired by their
2:22:41.188 --> 2:22:44.954
infectious optimism, passion, and unfettered determination
2:22:45.082 --> 2:22:48.446
to fight for a stronger patent system, no matter the odds.
2:22:48.638 --> 2:22:52.354
Randy went broke in his fight against the AIA. As an individual.
2:22:52.552 --> 2:22:55.810
Judge Michel stepped down from arguably the most powerful judicial position
2:22:55.880 --> 2:22:59.826
in patent law to fight for its reform. Adam works tirelessly
2:22:59.858 --> 2:23:03.350
and continuously in preparing countless briefs, studies, and policy
2:23:03.420 --> 2:23:07.062
memos that help to shape the fight and dialogue in these key issues
2:23:07.116 --> 2:23:10.422
around patents as private property rights. They roll this very large
2:23:10.476 --> 2:23:13.658
boulder up a very steep hill. In all of this,
2:23:13.744 --> 2:23:17.082
in the face of the seemingly insurmountable odds of large,
2:23:17.216 --> 2:23:21.162
very powerful, well funded opposition trillion dollar companies
2:23:21.296 --> 2:23:24.702
with an outsized thumb on the scale, dead set against every
2:23:24.756 --> 2:23:28.906
square inch of every possible solution? Hundreds. Of millions spent
2:23:28.938 --> 2:23:32.442
in lobbying and strategic litigation campaigns to get results from judges,
2:23:32.506 --> 2:23:36.398
regulators and elected officials the political realities of reelection
2:23:36.494 --> 2:23:39.698
and the background influence of PACs funded by opponents of a
2:23:39.704 --> 2:23:43.694
fair and strong patent system. Mass media that's underinformed
2:23:43.742 --> 2:23:46.938
and overinfluenced all compounded by the churn
2:23:46.974 --> 2:23:50.326
of congressional leadership changes, the unintended casualties of
2:23:50.348 --> 2:23:54.274
compromise and a waning interest of the public. It's daunting
2:23:54.322 --> 2:23:57.634
to think about let alone engage. But hope is far from lost
2:23:57.682 --> 2:24:01.258
when you have tenacity care and grit on your side. There was
2:24:01.264 --> 2:24:04.454
an interesting common theme that started rising up in these conversations.
2:24:04.582 --> 2:24:08.566
In discussing not getting worn down by these challenges with Judge Michel, he offered
2:24:08.598 --> 2:24:11.710
this perspective. So that's a formidable
2:24:12.450 --> 2:24:15.786
opposition force fighting
2:24:15.818 --> 2:24:20.110
against us, a little bit like Ukrainians fighting against a Russian army. They got 300,000
2:24:20.180 --> 2:24:23.466
people in your country, they have a much bigger
2:24:23.498 --> 2:24:27.618
army than you do and they're close to home and you're one little country
2:24:27.784 --> 2:24:31.074
trying to survive. That's a tough task to take
2:24:31.112 --> 2:24:34.290
on. And that's a little bit the way I sometimes feel. I don't mean to
2:24:34.440 --> 2:24:38.166
be too self indulgent, but it's a
2:24:38.188 --> 2:24:41.762
very tough fight because of the adamant
2:24:41.826 --> 2:24:45.446
opposition of certain very powerful forces. Then we
2:24:45.468 --> 2:24:49.290
were talking with Randy and he compared what this battle felt like to being something
2:24:49.360 --> 2:24:52.586
almost like the second American Revolution. So before it
2:24:52.608 --> 2:24:55.930
was the colonist versus the suppressive
2:24:57.310 --> 2:25:00.734
English rule and now it's the innovators and
2:25:00.772 --> 2:25:04.622
startups, the real innovators versus the huge
2:25:04.756 --> 2:25:08.190
multinational corporations that are trying to stop
2:25:08.260 --> 2:25:13.854
them and to keep them down. And I
2:25:13.892 --> 2:25:17.150
feel that it's very similar in a way to the American Revolution.
2:25:17.230 --> 2:25:20.386
And it's so important. It's so important.
2:25:20.488 --> 2:25:23.330
And if history is any indicator, when you have a small,
2:25:23.400 --> 2:25:26.614
not well funded scrappy and nimble group that cares about
2:25:26.652 --> 2:25:30.662
fighting and protecting their homeland and these fundamental values and principles going
2:25:30.716 --> 2:25:34.594
up against a well funded, technologically superior, well established
2:25:34.642 --> 2:25:38.294
empire that's just fighting for better profit margins, well, that's how
2:25:38.332 --> 2:25:41.538
revolutions are fought and won. It's that level of give a damn
2:25:41.554 --> 2:25:44.666
that can make the difference. We have no choice. We have to do everything we
2:25:44.688 --> 2:25:48.426
can. Someone like the Ukrainians, as you say. And when
2:25:48.448 --> 2:25:52.814
you go back to the foundation of the country in
2:25:52.852 --> 2:25:56.800
the Revolutionary War, we lost almost every big battle. That's right.
2:25:57.570 --> 2:26:00.602
And our troops were underfed,
2:26:00.666 --> 2:26:04.882
under equipped, short term and
2:26:04.936 --> 2:26:08.980
had many other handicaps. In the end,
2:26:09.430 --> 2:26:12.738
what made the difference? Of course, the French alliance and
2:26:12.744 --> 2:26:16.458
the French fleet helped a lot and some French soldiers and places like Dortown.
2:26:16.494 --> 2:26:21.654
So there are a lot of complexities. But the overall thing was the
2:26:21.692 --> 2:26:24.806
Continental Army refused to give
2:26:24.908 --> 2:26:28.198
up. They kept fighting. It went on for
2:26:28.284 --> 2:26:32.106
eight years before it was all completely over and there
2:26:32.128 --> 2:26:35.434
was a peace treaty. The people who want to have
2:26:35.472 --> 2:26:39.014
a viable patent system need to have the same attitude.
2:26:39.062 --> 2:26:42.686
We just can't give up. We have to keep going no
2:26:42.708 --> 2:26:46.222
matter what. And eventually we will win. For the same reason
2:26:46.356 --> 2:26:50.126
you said, because for the big tech people,
2:26:50.228 --> 2:26:54.290
it's 1000th of 1% more profit.
2:26:55.510 --> 2:26:59.406
Not life threatening to them, but it is life threatening
2:26:59.438 --> 2:27:02.814
to the small businesses, the startups,
2:27:02.862 --> 2:27:06.206
the research universities and many other patent
2:27:06.238 --> 2:27:09.910
holders. So we just have to keep fighting. I appreciate what you're doing.
2:27:09.980 --> 2:27:13.286
I'm trying to do what I'm doing. And I have to
2:27:13.308 --> 2:27:16.614
say it's not all self sacrifice. I'm really enjoying this.
2:27:16.652 --> 2:27:20.314
It really feels very good. I think you feel the same way. I can see
2:27:20.352 --> 2:27:23.782
that in your smile and your energy and your tone of voice.
2:27:23.846 --> 2:27:27.706
Our patent system was designed for the little guy. It was for
2:27:27.728 --> 2:27:28.700
the little guy.
2:27:31.230 --> 2:27:35.022
You probably know this 200 years ago. Think about this.
2:27:35.076 --> 2:27:38.346
Women didn't have a lot of rights 200 years ago. The Patent
2:27:38.378 --> 2:27:41.934
Act of 1790, and it described inventors as he,
2:27:41.972 --> 2:27:45.214
she, or they giving women all the rights of men when it came to patents
2:27:45.262 --> 2:27:48.754
and copyright. And the first black owner of a patent was
2:27:48.792 --> 2:27:52.420
Thomas Jennings in 1821, well before the Civil War,
2:27:53.350 --> 2:27:56.706
and he was a black guy in New York, taylor,
2:27:56.818 --> 2:28:00.918
who invented the first version of dry cleaning and did very well with it
2:28:01.004 --> 2:28:05.014
and used his wealth to help
2:28:05.052 --> 2:28:08.806
the abolitionist movement and to help get relatives out
2:28:08.828 --> 2:28:12.490
of slavery. And the point is, our system was not
2:28:12.560 --> 2:28:14.620
supposed to be just for the big guys,
2:28:15.630 --> 2:28:18.906
and that's what it's turned into. And we have to
2:28:18.928 --> 2:28:22.366
take it back to where it's for the little guy. Big guys can
2:28:22.388 --> 2:28:26.782
use it too, but you cannot exclude the little guys and
2:28:26.836 --> 2:28:30.670
gals. That is our fight,
2:28:30.820 --> 2:28:34.834
and we will not give up. And Adam reiterated the importance of the message and
2:28:34.872 --> 2:28:40.066
fighting on behalf of the fact you're part and parcel of our
2:28:40.088 --> 2:28:44.018
little ragtag group of rebels taking
2:28:44.104 --> 2:28:47.750
on a technologically superior
2:28:51.290 --> 2:28:54.790
big tech does appear like the Death Star, but it has its weaknesses.
2:28:57.530 --> 2:29:00.280
You're right. And at the end of the day,
2:29:01.930 --> 2:29:04.620
I'm always have been a believer that facts went out.
2:29:05.710 --> 2:29:09.882
You stick to the facts. You stick to making
2:29:09.936 --> 2:29:13.966
very clear what the message is, and in the long run,
2:29:14.148 --> 2:29:17.354
that's what moves people. The same thing was true in the American Revolution.
2:29:17.402 --> 2:29:20.350
Not all Americans were in favor of the revolution. I mean,
2:29:20.500 --> 2:29:24.010
250 years later, a lot
2:29:24.020 --> 2:29:28.274
of us have lost that kind of perspective, that it was a hotly contested issue.
2:29:28.472 --> 2:29:31.858
There were even were founders at both
2:29:31.944 --> 2:29:35.486
the First Continental Congress and the Second Continental Congress, like Dickinson,
2:29:35.518 --> 2:29:38.898
who are incredibly bright and brilliant people and committed
2:29:38.914 --> 2:29:42.582
to liberty, who were very much opposed to us
2:29:42.636 --> 2:29:46.310
breaking, who thought that, no, we should work very hard at trying
2:29:46.380 --> 2:29:49.714
to make amends with the mother
2:29:49.762 --> 2:29:52.934
country. And in fact,
2:29:52.972 --> 2:29:56.502
Dickinson, one of his arguments was,
2:29:56.556 --> 2:29:57.910
we're going to be crushed.
2:29:59.970 --> 2:30:02.938
I'm not. I mean, he literally said, we're just we're great. We're gonna be we're
2:30:02.954 --> 2:30:06.558
just a little colony. I mean, you guys really think he said in
2:30:06.564 --> 2:30:08.894
the second kind of thing, he said, you guys really think that you can take
2:30:08.932 --> 2:30:12.960
on the largest, most successful navy and army in the entire world at the moment?
2:30:14.310 --> 2:30:17.298
This is crazy. He's like, maybe even if we're right,
2:30:17.464 --> 2:30:18.900
we're not going to win this.
2:30:21.430 --> 2:30:24.114
But they won out, right? Because, as you said,
2:30:24.152 --> 2:30:27.578
tenacity. It's the tenacity, and it's the belief
2:30:27.694 --> 2:30:30.626
in the rightness of the cause based on the thing that you're fighting on behalf
2:30:30.658 --> 2:30:34.086
of facts, you know? Yeah. And what and what's right, given those
2:30:34.108 --> 2:30:37.994
facts. One of my favorite Benjamin Franklin quotes about
2:30:38.032 --> 2:30:41.350
this was, we must all hang together, or most assuredly,
2:30:41.430 --> 2:30:43.210
we shall all hang separately.
2:30:47.230 --> 2:30:50.746
And he was also the one who said that the
2:30:50.768 --> 2:30:54.446
price of liberty is eternal vigilance because
2:30:54.468 --> 2:30:58.206
they knew of which they spoke. I'm confident there's no shortage of that.
2:30:58.388 --> 2:31:01.866
Didn't know what to expect going into these conversations. These individuals
2:31:01.898 --> 2:31:05.034
live and breathe this topic on a daily basis.
2:31:05.162 --> 2:31:08.082
And I know sometimes I get sick of hearing myself say the same things,
2:31:08.136 --> 2:31:11.934
but there was so much genuine optimism and sincerity.
2:31:12.062 --> 2:31:14.980
I have been fighting this fight, and it's like,
2:31:16.410 --> 2:31:20.520
for whatever reason, I don't know,
2:31:21.290 --> 2:31:25.478
it's so important. I was so outraged from the very beginning of
2:31:25.644 --> 2:31:28.234
what they were trying to do to our system and to the little guy,
2:31:28.272 --> 2:31:31.962
to this key part of America, and that outrage has kept me
2:31:32.096 --> 2:31:32.780
going.
2:31:36.750 --> 2:31:40.006
I have a positive outlook on this, and we are gaining ground.
2:31:40.038 --> 2:31:43.454
We're absolutely gaining ground. We're making headway. We're making the issue
2:31:43.492 --> 2:31:46.778
more known, and we are so committed
2:31:46.794 --> 2:31:49.966
to this. If you'd like to join forces with this ragtag group of
2:31:49.988 --> 2:31:53.610
rebels or just learn more, you can follow Adam on Twitter
2:31:53.690 --> 2:31:57.346
at A-D-A-M-M-O-S-S-O-F-F where
2:31:57.368 --> 2:32:00.322
he posts regularly on patent and innovation policy,
2:32:00.456 --> 2:32:03.822
including his excellent this Day and Innovation History Tweet.
2:32:03.886 --> 2:32:08.110
To learn more about or support US. Inventor, you can find them@usinventor.org
2:32:08.190 --> 2:32:11.798
where you can sign their Inventor Rights Resolution and get on their email list to
2:32:11.804 --> 2:32:14.674
be notified about calls to action. For legislators,
2:32:14.802 --> 2:32:19.282
they're also a 501 C Four. If you're interested in helping to support them financially,
2:32:19.426 --> 2:32:22.566
this is a great organization and they live and die on donations.
2:32:22.678 --> 2:32:26.234
If you'd like to learn more about Judge Michel and the important bipartisan work being
2:32:26.272 --> 2:32:30.870
done by the Council for Innovation Promotion, please visit C Fourip.org.
2:32:30.950 --> 2:32:33.998
And of course, check out the documentary we mentioned at the top by going to
2:32:34.004 --> 2:32:37.886
Innovationracemovie.com. It's also important to note that as
2:32:37.908 --> 2:32:41.578
long as this is the world we live in as inventors and practitioners,
2:32:41.674 --> 2:32:45.758
we cannot settle for anything less than quality when it comes to our patents.
2:32:45.934 --> 2:32:49.506
We have to focus on minimizing surface area for these sorts of
2:32:49.528 --> 2:32:53.218
challenges. What's not in our control is what the courts in
2:32:53.224 --> 2:32:56.806
Congress are up to. What is in our control is creating the
2:32:56.828 --> 2:33:00.834
highest quality patents we can under the circumstances. In practice,
2:33:00.962 --> 2:33:04.774
this means being very intentional about things like not publicly disclosing before you
2:33:04.812 --> 2:33:08.534
file conducting thorough prior art searches crafting
2:33:08.582 --> 2:33:12.246
claims with clear boundaries, performing design around exercises
2:33:12.278 --> 2:33:15.974
to draft around infringement vectors writing enabling disclosures
2:33:16.022 --> 2:33:19.958
with limited functional language, understanding case law and aligning
2:33:19.974 --> 2:33:23.406
as closely as possible with both congressional statute as
2:33:23.428 --> 2:33:26.762
well as court precedent and remembering to keep patent families
2:33:26.826 --> 2:33:30.686
open with continuations. Sometimes the best offense is
2:33:30.708 --> 2:33:33.998
a great defense, patent wisely, and have a
2:33:34.004 --> 2:33:37.540
good 1. May the Force be with you, my friend. You as well.
2:33:37.910 --> 2:33:41.186
All right, that's all for today, folks. Thanks for listening. And remember to check
2:33:41.208 --> 2:33:44.174
us out@aurorapatents.com for more great podcasts,
2:33:44.222 --> 2:33:47.746
blogs, and videos covering all things patent strategy. And if you're an
2:33:47.768 --> 2:33:50.706
agent or attorney and would like to be part of the discussion or an inventor
2:33:50.738 --> 2:33:55.574
with a topic you'd like to hear discussed, email us at podcast@aurorapatents.com.
2:33:55.692 --> 2:33:59.146
Do remember that this podcast does not constitute legal advice. And until next
2:33:59.168 --> 2:34:10.634
time, keep calm and patent on Star
2:34:10.672 --> 2:34:14.526
Wars. A little bit of patent law get into some Star Wars stuff,
2:34:14.548 --> 2:34:17.918
too. Exactly why the Jedi really should have
2:34:17.924 --> 2:34:21.726
patented lightsabers then. It could
2:34:21.748 --> 2:34:24.480
have stopped the Sith from getting it right.
2:34:25.730 --> 2:34:27.870
Could have saved the Sits for patent infringement.
2:34:30.530 --> 2:34:34.494
I'm pretty sure that the Emperor would have come up with the PTAB at
2:34:34.532 --> 2:34:36.500
some point. He would have for precisely that reason.
00:00.410 --> 00:08.798
G'day, and welcome to the Patently Strategic Podcast, where we discuss all things at the
00:08.804 --> 00:12.234
intersection of business, technology, and patents. This podcast
00:12.282 --> 00:16.282
is a monthly discussion amongst experts in the field of patenting. It is for inventors,
00:16.346 --> 00:19.690
founders and IP professionals alike, established or aspiring.
00:19.770 --> 00:23.614
And in this month's episode, we're talking about the patent reform solutions needed
00:23.652 --> 00:27.682
to save the innovation economy. Me with the revolutionaries who are leading the charge.
00:27.826 --> 00:31.202
Nearly two decades worth of Federal Circuit and Supreme Court rulings
00:31.266 --> 00:35.474
have thrown the patent system into disarray and weakened patent rights for inventors.
00:35.602 --> 00:39.014
Subject matter eligibility is a confused, chaotic mess, leaving even
00:39.052 --> 00:42.934
the Federal Circuit Chief Justice at a loss on how to determine eligibility.
00:43.062 --> 00:46.246
The muddied state of invention enablement puts at risk the software
00:46.278 --> 00:50.054
innovations fueling economic growth and the key life science innovations
00:50.102 --> 00:53.898
that can save lives. Court interventions on injunctions have made
00:53.904 --> 00:57.134
it all but impossible for patent owners to stop others from using their
00:57.172 --> 01:00.702
property rights without permission, turning predatory infringement into
01:00.756 --> 01:04.554
an efficient business model. This already perfect storm was compounded
01:04.602 --> 01:08.366
by an act of Congress a decade ago that inadvertently created a patent
01:08.398 --> 01:12.206
killing machine that has weaponized the Patent Office against inventors.
01:12.318 --> 01:16.446
This has all been bolstered domestically by the deep pocketed marketing and lobbying
01:16.478 --> 01:19.666
campaigns of a big tech industry that is now destroying the ladder
01:19.698 --> 01:23.122
it once climbed up on. It is being exploited internationally
01:23.186 --> 01:26.838
in an undeclared Cold War that has led to the greatest wealth transfer
01:26.924 --> 01:30.806
in human history and begs the existential question of who is
01:30.828 --> 01:34.266
going to develop the technologies of tomorrow? Over the course of the past couple of
01:34.288 --> 01:37.706
months, we've sat down with thought leaders across the patent world in an
01:37.728 --> 01:40.954
effort to understand the biggest problems plaguing patenting and
01:40.992 --> 01:44.794
how those problems impact the innovation economy that still very tightly
01:44.842 --> 01:48.154
depends on strong, predictable, and reliable patents.
01:48.282 --> 01:52.046
Building on that understanding, we work toward getting a more complete view of
01:52.068 --> 01:55.114
the legislative, judicial, and educational solutions
01:55.162 --> 01:58.642
needed to get back to the gold standard patent system. In doing
01:58.696 --> 02:02.382
so, we not only talk with our guests about their support for the proposed
02:02.446 --> 02:06.190
solutions on the table, but we also explore the strongest criticisms.
02:06.270 --> 02:09.586
I'm incredibly excited to share that we'll be doing so with the help of distinguished
02:09.618 --> 02:13.302
industry heavyweights who are currently deep in the trenches of these issues and working
02:13.356 --> 02:17.026
tirelessly towards their solutions. Our guests include Judge
02:17.058 --> 02:20.354
Paul Michel, former Chief Justice of the nation's top patent court,
02:20.402 --> 02:23.722
who stepped down from his position to be able to speak freely on these problems.
02:23.856 --> 02:27.226
Professor Adam Mossoff, law professor at George Mason, and simply one of the
02:27.248 --> 02:31.046
most brilliant minds in intellectual property law, whose research is regularly
02:31.078 --> 02:34.474
leaned on by Congress, the Federal Circuit, and even the Supreme Court
02:34.522 --> 02:38.362
on all things patent law and innovation policy. And Randy Landreneau,
02:38.426 --> 02:41.614
president of US. Inventor, the largest inventor advocacy group
02:41.652 --> 02:45.594
in the country, a group that has worked diligently to push through legislative
02:45.642 --> 02:49.358
and administrative changes to protect inventors and innovative startups.
02:49.454 --> 02:52.866
We couldn't be more excited about this opportunity or think of a more impactful way
02:52.888 --> 02:56.194
to use this podcast platform. The hosts and panelists you hear from
02:56.232 --> 02:59.906
monthly on here all either run or work for pet and boutiques that help inventors
02:59.938 --> 03:03.234
and early stage startups protect their inventions. We firmly
03:03.282 --> 03:07.074
believe that innovation is essential to a healthy economy, and empowered
03:07.122 --> 03:10.466
inventors are the key ingredient to the innovation ecosystem.
03:10.578 --> 03:14.730
We started this podcast to help inventors, founders and practitioners deal especially
03:14.880 --> 03:18.346
with the sharp corners of this world. We devote so much airtime to
03:18.368 --> 03:21.658
trying to help listeners navigate the world as it is, but discussions like the
03:21.664 --> 03:25.246
ones we're sharing today present an incredible opportunity to talk about
03:25.268 --> 03:28.794
the world as we'd like it to be. Our guests have been exceptionally generous
03:28.842 --> 03:32.682
with their time. We recorded over six and a half hours worth of interviews.
03:32.826 --> 03:36.146
Recognizing that we want to reach as many people with this as possible
03:36.328 --> 03:40.142
and time is always precious, we've woven highlights from these conversations
03:40.206 --> 03:43.374
together into a single episode. Typically, we only do one episode
03:43.422 --> 03:47.058
per month, but given the quality of these conversations and the value in the
03:47.064 --> 03:50.866
unique perspectives of each guest, following publication of this condensed
03:50.898 --> 03:54.434
episode, we'll be releasing the full length interviews and weekly installments
03:54.482 --> 03:57.654
for anyone who'd like to go deeper. Before jumping into the thick of this,
03:57.692 --> 04:01.190
I do have one quick announcement. If you'd like to help us navigate this complex
04:01.270 --> 04:05.142
world, get the word out about these critical issues, and help inventors
04:05.206 --> 04:08.202
in the most tangible way possible, I have great news.
04:08.336 --> 04:12.022
Aurora is now hiring for a part time biomedical sciences patent
04:12.086 --> 04:15.562
agent. This is a salaried, fully remote position with a flexible
04:15.626 --> 04:19.214
work week and benefits work where you want, when you want, with a great
04:19.252 --> 04:22.938
team on engaging subject matter, and even get the opportunity to join
04:22.954 --> 04:27.314
us on this podcast, learn more, and apply@aurorapatents.com
04:27.512 --> 04:31.106
careers. We'll also include that link in the show. Notes. Now back
04:31.128 --> 04:34.286
to the task at hand. We've been wanting to do a patent reform focused
04:34.318 --> 04:37.966
episode like this for a long time, particularly since we covered US.
04:38.008 --> 04:41.830
Inventors 2021 Decade of Stolen Dreams rallies with our American
04:41.900 --> 04:45.394
Inventor Horror Story episode. It was then that we truly witnessed
04:45.442 --> 04:49.346
firsthand just how devastating the American Invents Act and the Ptab
04:49.378 --> 04:52.650
have been for inventors. Flash forward a couple of years to the present,
04:52.720 --> 04:56.486
and the makers of a new documentary entitled The Innovation Race reached
04:56.518 --> 05:00.234
out to us to screen their film. The film's premise really resonated with
05:00.272 --> 05:03.486
us. I'm going to play a brief segment from the trailer. We have
05:03.508 --> 05:07.214
a great history of inventors in America who've done great things the
05:07.252 --> 05:10.574
Wright Brothers, Thomas Edison. We have
05:10.612 --> 05:14.114
a system that has encouraged people to be inventors to
05:14.152 --> 05:17.454
solve problems by providing them with the ownership
05:17.502 --> 05:20.802
of what they actually created and patented. How do we turn
05:20.856 --> 05:24.514
inventions into innovations? How do we turn an
05:24.552 --> 05:27.682
idea in a venture's head or something
05:27.736 --> 05:31.526
in a lab or the garage into a real world product or
05:31.548 --> 05:35.426
a real world service that other people can use and enjoy. And that's
05:35.458 --> 05:39.046
the key of the patent system. That's what patents as property rights
05:39.078 --> 05:43.430
do. A patent is a constitutionally
05:43.510 --> 05:47.878
created property right. It's something that our founders, our framers of our Constitution
05:47.974 --> 05:51.434
recognize. Our patent system used to be very strong
05:51.472 --> 05:55.198
and reliable. That's no longer the case. There's some big tech companies
05:55.284 --> 05:58.346
up here whispering in the ears of Congressmen,
05:58.458 --> 06:01.518
sliding campaign donations to them and saying,
06:01.604 --> 06:04.994
we want you to dilute the patent system even more.
06:05.192 --> 06:09.086
Patents haven't just played an important role in growing our economy.
06:09.198 --> 06:12.654
They played a key role in developing the technologies
06:12.782 --> 06:14.610
that have made our country safer.
06:16.390 --> 06:20.486
Xi Jinping and the Chinese Communist Party the last five years have made
06:20.508 --> 06:24.086
it abundantly clear that they intend to not just compete with the
06:24.108 --> 06:27.846
United States, they intend to surpass us and to be the world's
06:27.878 --> 06:29.900
leader in innovative technology.
06:30.830 --> 06:34.266
Innovation drives economic security and national security.
06:34.368 --> 06:38.010
We've lost sight of what it is to protect this nation.
06:38.590 --> 06:42.506
Those voices you heard are from bipartisan interviews with folks like Senator
06:42.538 --> 06:45.946
Chris Coons from Delaware and Representative Thomas Massey from Kentucky,
06:46.058 --> 06:48.874
combined with a myriad of inventors, judges, generals,
06:48.922 --> 06:52.606
law professors, and policy experts, several of whom you'll hear
06:52.628 --> 06:57.778
from today, you can find options for streaming and learn more@innovationracemovie.com.
06:57.944 --> 07:01.406
The end of the film, which touches on solutions, provides a launching
07:01.438 --> 07:04.974
point for our discussion today. We're going to start with one of the hotter topics
07:05.022 --> 07:07.726
because of its recent traction in Congress and the attention,
07:07.838 --> 07:11.558
or more appropriately, abuse, that it's been getting in the courts. And that's the
07:11.564 --> 07:15.378
problem of subject matter eligibility. Before being approved or rejected,
07:15.474 --> 07:19.526
this is the first gate a patent application must pass through an examination.
07:19.718 --> 07:23.430
Whoever invents or discovers any new and useful process, machine,
07:23.510 --> 07:27.574
manufacture, or composition of matter, or any new and useful improvement
07:27.622 --> 07:30.490
thereof, may obtain a patent. Therefore,
07:30.990 --> 07:34.558
section 101, as it's called, defines what kinds of things you
07:34.564 --> 07:38.826
can patent any new and useful process, machine, manufacture, or composition
07:38.858 --> 07:42.426
of matter. The gatekeeping function of this statute that's largely
07:42.458 --> 07:46.514
been unaltered since it was handwritten in 1790, has simply been
07:46.552 --> 07:49.966
intended to prevent the patenting of the fundamental building blocks
07:49.998 --> 07:52.818
of human ingenuity things like letters, numbers,
07:52.904 --> 07:56.766
equations, and gravity. This all work great, as Professor Adam Mossoff
07:56.798 --> 08:00.534
will explain, until a series of Supreme Court decisions that he not so
08:00.572 --> 08:04.930
affectionately refers to as the four horsemen of the Innovation Apocalypse.
08:05.010 --> 08:08.114
The Four Horsemen are the bilski Myriad, Mayo and Alice.
08:08.162 --> 08:11.574
Decisions in these cases resulted in judicially created exceptions
08:11.622 --> 08:15.494
for laws of nature, natural phenomena, and abstract ideas adding
08:15.542 --> 08:18.518
new classes of unpatentable subject matter listening.
08:18.534 --> 08:22.374
As Adam explains, the Supreme Court handed down a series of decisions,
08:22.422 --> 08:25.802
four decisions between 2009 and 2014
08:25.866 --> 08:29.274
on this idea of what counts as an actual invention that can be patented.
08:29.322 --> 08:32.554
So it's long been recognized that you can only patent inventions like invented
08:32.602 --> 08:35.886
processes or new machines, new molecules,
08:35.918 --> 08:39.554
or a molecule that you actually isolate in the lab,
08:39.672 --> 08:43.614
because molecules aren't isolated out in the world. They're part of living organisms
08:43.742 --> 08:47.134
and other things. And then that molecule
08:47.182 --> 08:50.706
becomes isolated, and then you put it into an innovative pill,
08:50.738 --> 08:53.830
and that becomes a new treatment for cancer or hepatitis.
08:54.570 --> 08:58.742
So you can patent those things, but you can't patent abstract
08:58.806 --> 09:03.046
ideas, like equals MC squared. That's the law of nature can't
09:03.078 --> 09:06.540
patent. Two plus two equals four. That's an abstract idea.
09:07.310 --> 09:10.682
You can't patent the things in nature themselves,
09:10.816 --> 09:14.138
like you can patent the molecule that you've isolated,
09:14.314 --> 09:18.078
which is, by the way, what almost all drugs were
09:18.164 --> 09:21.326
for 120 years before we started designing them from
09:21.348 --> 09:25.346
the protein up with biotech innovations. But we're just people going out and
09:25.368 --> 09:28.846
scooping up sludge from jungles
09:28.958 --> 09:32.980
and figuring out there's a molecule in there that actually works against
09:33.590 --> 09:34.690
bacteria.
09:38.390 --> 09:41.362
The sludge you can't patent. That's just a fact of nature.
09:41.426 --> 09:44.834
But that, you know, microscopic molecule that you've isolated
09:44.882 --> 09:47.478
from the sludge and figured out how to put into a pill to get it
09:47.484 --> 09:51.158
past the hydrochloric acid in your stomach and get absorbed through your intestinal walls
09:51.254 --> 09:54.646
and travel through your blood system and not get attacked by your own body's immune
09:54.678 --> 09:56.730
system, that's an invention.
09:57.630 --> 10:01.702
That's a discovery that's worth protecting, and it should be protected.
10:01.766 --> 10:05.262
So this is a very important distinction that has long
10:05.316 --> 10:09.006
existed. It's the root of all patent systems, starting in England and
10:09.028 --> 10:12.846
in the United States. But the United States
10:12.868 --> 10:16.226
supreme court, starting in 2009, really just
10:16.248 --> 10:19.970
threw a monkey wrench into the whole works of this doctrine.
10:20.390 --> 10:24.226
And a series of decisions vastly expanded the
10:24.248 --> 10:28.002
scope of what it means to have something count as an abstract
10:28.066 --> 10:31.000
idea or law of nature and really,
10:32.330 --> 10:36.280
for lack of a better term, just made a mess of the law.
10:36.970 --> 10:40.890
They created a two step framework that
10:40.960 --> 10:42.970
provides no guidance to courts.
10:44.350 --> 10:48.486
As lawyers like to say, it's totally indeterminate, and it's
10:48.518 --> 10:52.410
leaning to just willy nilly decisions by courts and
10:52.480 --> 10:56.222
led to willy nilly decisions by the ptab in
10:56.276 --> 11:00.238
invalidating patents. In an industry where words matter more than in most,
11:00.324 --> 11:04.106
the supreme court was unfortunately, light on details. They created
11:04.138 --> 11:07.362
these new categories of unpatentable subject matter, but without
11:07.416 --> 11:10.898
working definitions to apply them, leaving it up to the lower courts and
11:10.904 --> 11:14.766
the patent office to sort through the ambiguity here's. Randy Landrenau
11:14.878 --> 11:17.806
they put it in writing, and they didn't really describe, well, what does that mean
11:17.848 --> 11:21.142
exactly? And, of course, if the details aren't there,
11:21.196 --> 11:24.680
suddenly you have a whole new area where attorneys can
11:25.050 --> 11:28.438
do their thing right. And, of course, that's what they've done. And did they ever.
11:28.524 --> 11:31.754
The wide array of innovation domains these judicial exceptions were
11:31.792 --> 11:34.502
applied to as justification to evaluate patents,
11:34.646 --> 11:38.330
really stress tests, the bounds of reason to give you a sense of
11:38.400 --> 11:42.150
just how crazy it's become. So patents
11:42.230 --> 11:46.634
on oil drilling,
11:46.762 --> 11:50.480
processes for oil derings, patents on
11:51.490 --> 11:55.378
automatic garage door openers, patents on
11:55.544 --> 11:58.370
processes for making automobile axles.
11:59.030 --> 12:02.814
And in fact, just recently,
12:02.942 --> 12:06.494
the International Trade Commission, a special court, applied this doctrine
12:06.542 --> 12:10.214
to invalidate a patent on a drill bit that
12:10.252 --> 12:13.160
used diamonds in the bit in an innovative way,
12:13.850 --> 12:17.522
saying that this is just an abstract idea, by the way, so the courts
12:17.666 --> 12:21.990
tell you how crazy this is, right? An oil derrick,
12:23.550 --> 12:27.734
a garage door opener, an automobile axle,
12:27.782 --> 12:30.998
and a drill bit are all being referred to as abstract ideas
12:31.174 --> 12:34.454
or laws of nature. I mean, this is insane.
12:34.502 --> 12:38.334
These are classic industrial and 20th century inventions that have
12:38.372 --> 12:42.526
long been secured by patents, that have been upheld as valid as patentable inventions by
12:42.548 --> 12:45.826
courts going back 200 years. And now the courts are now saying,
12:45.848 --> 12:49.262
no, this is automatically excluded from the patent system. These are abstract
12:49.326 --> 12:51.010
ideas or laws of nature.
12:52.630 --> 12:56.294
And the fact that the judges are able to write these opinions and not just
12:56.332 --> 12:59.414
see the absurdity on the face of the opinion itself is
12:59.452 --> 13:03.506
just really surprising. And this is completely destabilized
13:03.538 --> 13:06.806
patent system because patents are no
13:06.828 --> 13:09.850
longer reliable and effective property rights.
13:11.070 --> 13:14.042
Imagine if I said, yeah, you can have a property right in your house,
13:14.096 --> 13:18.182
but it could be potentially invalidated as an abstract
13:18.246 --> 13:21.706
idea by a judge. If you sue someone for trespass down
13:21.728 --> 13:25.078
the road or you don't even have to sue someone from trespass. Someone just gets
13:25.104 --> 13:28.462
upset at you and can file a petition at an agency to have them review
13:28.516 --> 13:32.334
and cancel your deed in your house. Because your house is built on land
13:32.372 --> 13:36.030
and land is a fact of nature and you can't have title
13:36.110 --> 13:39.806
and facts of nature. This sounds absurd,
13:39.838 --> 13:43.326
and it sounds like that can't be because that's so crazy sounding.
13:43.358 --> 13:46.974
But that's actually effectively what's happening in the courts with respect to patents
13:47.022 --> 13:50.514
right now, and they've invalidated thousands of patents. Now, to appreciate
13:50.562 --> 13:54.194
where this inevitably goes, it's important to understand the historical significance
13:54.242 --> 13:57.994
of eligibility in US patent law and the profound impact it's had
13:58.032 --> 14:02.682
on shaping the economy. First, understand where
14:02.736 --> 14:06.940
we started from. The United States has always been
14:08.590 --> 14:12.522
a leader worldwide
14:12.586 --> 14:16.798
in terms of its willingness to provide protections to
14:16.964 --> 14:21.166
next stage innovations and
14:21.268 --> 14:24.942
cutting edge innovations. So this has been a key
14:24.996 --> 14:27.410
part of the US pad system from the very beginning.
14:28.950 --> 14:32.610
Just one small example. When we broke with England
14:33.110 --> 14:36.386
for the Founders, for the very first time, put patents in the Constitution.
14:36.498 --> 14:42.278
Never been done before in history as well. Another innovation when
14:42.444 --> 14:45.682
very first Congress in 1790, right? They're spending weeks debating
14:45.746 --> 14:49.330
about how do we refer to President Washington, do we call him His Excellency,
14:49.410 --> 14:53.190
do we call him Mr. President, do we call him the Excellency, the Presidency,
14:53.550 --> 14:56.154
because he was the analog to the British king. So they were kind of trying
14:56.192 --> 14:59.626
to figure out, what do we call him. While they're debating that for
14:59.648 --> 15:03.486
weeks, they immediately enact the 1790 pound act because
15:03.508 --> 15:06.542
they know that's important. We need to get the country
15:06.596 --> 15:10.126
going, and innovation and protecting innovation with property rights is
15:10.148 --> 15:11.600
the basis for doing that.
15:13.010 --> 15:16.506
But they broke from England in a lot of ways in creating
15:16.538 --> 15:19.282
our patent system. So it's very common for people as they are. Our patent system
15:19.336 --> 15:23.058
came from England, and that's certainly true. There's elements of our patent system that did.
15:23.144 --> 15:26.034
But there's also novel new elements in our patent system.
15:26.072 --> 15:28.678
Like we embraced a first to invent system.
15:28.764 --> 15:31.942
England was not a first to invent. So we embraced the idea
15:31.996 --> 15:35.894
that you are an inventor. So just like the farmer who labors over
15:35.932 --> 15:39.106
a year to till the soil and harvest
15:39.138 --> 15:42.726
the crops, eventually that the farmers engage in productive labor. And that's
15:42.758 --> 15:46.746
the basis for which we then justify legal protection in
15:46.768 --> 15:50.090
the fruits of the farmer's labors with property rights in the wheat,
15:50.830 --> 15:54.586
the inventor engages in productive, innovative labors. And that's
15:54.618 --> 15:58.350
the basis by which we secure and protect the inventor's
15:58.690 --> 16:02.074
fruits of his or her labors in their invention with a patent,
16:02.122 --> 16:05.710
a property right. But we also protected processes.
16:05.870 --> 16:09.774
So England never protected processes. So James
16:09.822 --> 16:13.540
Watt, who invents the first practical steam engine,
16:13.910 --> 16:17.746
the basis of the entire industrial revolution, he couldn't get
16:17.768 --> 16:20.342
a patent on the process of the steam engine. He could only get a process
16:20.396 --> 16:23.526
on the machine that he invented himself. But the United States
16:23.548 --> 16:26.360
said no. Processes are inventions themselves, too,
16:26.810 --> 16:30.326
and they are right. You don't go out into the world and find
16:30.508 --> 16:33.818
the process of how to make a drug or how to operate a
16:33.824 --> 16:38.714
steam engine. These have to be invented just as much as the machines and
16:38.752 --> 16:41.962
other things that you work on with the processes. And in fact, the very first
16:42.016 --> 16:45.034
patent that issued in the United States, samuel Hopkins,
16:45.082 --> 16:48.718
was a process on making potash. So that type of patent would
16:48.724 --> 16:52.286
have never been issued in England, and that's patent number one in the
16:52.308 --> 16:56.274
United States. So the United States has always been an
16:56.312 --> 16:59.842
innovative leader in recognizing that
16:59.896 --> 17:03.998
there are innovations that historically have not been protected
17:04.174 --> 17:07.394
or did not exist and couldn't be protected, or that aren't protected in other countries.
17:07.442 --> 17:11.282
But we are protecting them because these are legitimate new creations
17:11.346 --> 17:14.774
of innovators, and they should be protected as property rights like any
17:14.812 --> 17:18.522
other fruits of productive labors, such that people
17:18.576 --> 17:21.690
can then go out into the marketplace and benefit from them themselves
17:21.760 --> 17:26.060
and benefit consumers. And so this is why
17:27.390 --> 17:31.146
the chemical revolution starts in Germany in the 19th century. But the
17:31.168 --> 17:34.560
pharmaceutical revolution, which applies chemistry to
17:35.490 --> 17:39.022
drugs to help actual people's lives, shifts to the United States.
17:39.076 --> 17:42.462
It's why the Industrial Revolution starts in England but then shifts to the United
17:42.516 --> 17:46.202
States in the 19th century. And it's why then the computer
17:46.276 --> 17:49.906
revolution doesn't shift from anywhere. It starts in the United States in the 20th
17:49.928 --> 17:54.126
century, and it's why the biotech revolution started in the United States. We protected
17:54.158 --> 17:57.814
biotech innovation starting in the 1970s and 80s when
17:57.852 --> 18:01.286
other countries said, oh, no, this is
18:01.308 --> 18:04.646
protecting life, or this is going to lead to
18:04.668 --> 18:07.798
Frankenstein type concerns and things of this sort,
18:07.884 --> 18:10.630
and I say said, no, these are legitimate,
18:10.710 --> 18:14.726
actual innovations that scientists and biologists
18:14.758 --> 18:17.514
are coming up with. They will benefit people's lives,
18:17.632 --> 18:21.018
and these should be patented. And that's why the
18:21.024 --> 18:24.894
biotech revolution happens. That was
18:24.932 --> 18:28.346
the context of how amazing our patent system is, and it's why our patent
18:28.378 --> 18:32.266
system was referred to as the gold standard of global patent systems.
18:32.378 --> 18:36.050
Predictably, this shift in perspective on eligibility has already started
18:36.120 --> 18:40.206
a sea change in where investment, innovation, and economic activity
18:40.238 --> 18:44.066
are occurring globally. For added context, the study Adam will
18:44.088 --> 18:48.178
refer to involves 1700 patent applications on the same inventions
18:48.274 --> 18:52.018
filed in China, the European Union, and the United States. I published
18:52.034 --> 18:55.494
a short study with a colleague a few
18:55.532 --> 18:59.018
years ago that showed that not only are we invalidating patents and
18:59.024 --> 19:01.180
have destabilized the US. Patent system,
19:02.110 --> 19:04.460
but that other countries haven't done this.
19:06.430 --> 19:10.022
You actually can show that there are patent
19:10.086 --> 19:13.642
applications that are being rejected by the Patent Office for
19:13.696 --> 19:17.754
being an abstract idea or a law of nature under this patent eligibility doctrine,
19:17.882 --> 19:21.306
that those patents on the exact same inventions are now being granted
19:21.338 --> 19:25.598
in Europe and in China. And that is really significant
19:25.694 --> 19:29.646
because that means people are getting property rights
19:29.838 --> 19:32.850
in these inventions in Europe and in China.
19:33.750 --> 19:37.522
And so we've now flipped, right? So, 40 years ago, people were getting
19:37.576 --> 19:41.286
property rights and biotech innovations in the United States and not getting them in
19:41.308 --> 19:44.358
Europe, and of course, certainly not China at the time. They were totally communist at
19:44.364 --> 19:47.926
that time, but they weren't getting them in Europe. That's why
19:47.948 --> 19:52.054
the biotech revolution happens in the United States, because the property rights were being secured
19:52.102 --> 19:55.734
in the United States. So therefore the licensing was occurring here, the venture capital
19:55.782 --> 19:59.574
investment was occurring here, the manufacturing started to occur
19:59.622 --> 20:03.110
here. All of the economic activity that contributes to the
20:03.120 --> 20:06.986
growth of our innovation economy, creates jobs, creates these flourishing
20:07.098 --> 20:10.778
lives through the products that are being purchased by consumers, happens in the countries
20:10.874 --> 20:14.798
that secure the property rights. And so we've now flipped it where we're
20:14.814 --> 20:18.162
no longer securing those inventions, but other countries are.
20:18.216 --> 20:21.300
And these are cutting edge inventions. Josh, you mentioned it.
20:22.070 --> 20:25.246
This isn't just garage door
20:25.278 --> 20:29.094
openers and automobile axles. Those are just, I think, exemplify just
20:29.132 --> 20:32.962
how crazy the doctrine is. The patents that are being invalidated that we identified
20:33.026 --> 20:37.510
are patents in innovative new diagnostic tests for cancer
20:38.170 --> 20:41.846
treatments, for diabetes, cutting edge
20:41.878 --> 20:45.578
innovations that the United States historically has protected and and
20:45.664 --> 20:49.034
is no longer doing so. And so this
20:49.072 --> 20:53.078
is bad by itself, but it's even worse comparatively
20:53.094 --> 20:56.494
in the global context, given that people are getting patents in
20:56.532 --> 21:00.014
other countries like Europe, and in China. And so that's where then
21:00.052 --> 21:03.486
the venture capital is going to flow to. That's where the economic activity is going
21:03.508 --> 21:07.166
to occur. And if we're seeing evidence of that actually happening. Judge Michel
21:07.198 --> 21:10.322
echoed similar concerns about the chilling effects, in particular,
21:10.456 --> 21:14.050
of investments dropping off. Much invention, as you know,
21:14.120 --> 21:17.138
is very expensive and very slow to mature,
21:17.234 --> 21:21.890
and therefore it often depends on substantial continuing
21:22.050 --> 21:25.394
external funding, often by venture capitalists,
21:25.442 --> 21:29.062
but also by other sort of institutions.
21:29.206 --> 21:32.294
And that's where the patent system is so critical,
21:32.422 --> 21:35.610
because without the protection of patents,
21:36.190 --> 21:39.930
many investment decisions will be made in the negative.
21:40.450 --> 21:43.310
If we had a stronger patent system,
21:43.380 --> 21:47.230
as we did 20 years ago, or maybe even twelve
21:47.300 --> 21:50.814
years ago, we'd be way
21:50.852 --> 21:54.322
better off. But the incentive to make
21:54.376 --> 21:57.602
these large investments has dropped off,
21:57.656 --> 22:00.420
and now the investments are starting to drop off.
22:01.030 --> 22:04.766
And that's a terrible warning sign, an awful trend
22:04.798 --> 22:09.170
that the country needs to reverse as fast as it possibly
22:09.250 --> 22:12.882
can. And that's the thing people don't understand. Patents,
22:12.946 --> 22:16.818
in a way, are more about investors than about inventors.
22:16.914 --> 22:20.794
So my most important message to people is we have
22:20.832 --> 22:25.530
to incentivize the investment, or the cures
22:26.430 --> 22:29.898
are not going to get to patients, the products are not going
22:29.904 --> 22:34.442
to get to consumers. The technology needed to deter
22:34.506 --> 22:37.994
China from invading other countries won't get created.
22:38.042 --> 22:41.822
So these stakes are enormous. It's actually difficult
22:41.876 --> 22:45.402
to think of higher stakes than what's involved
22:45.466 --> 22:48.914
with the health of the patent system. He goes on to provide some insights into
22:48.952 --> 22:52.002
the best possible vector for a fix to the eligibility mess.
22:52.136 --> 22:54.994
This really gets to the heart of the matter, and I think this is especially
22:55.112 --> 22:59.218
pointed coming from someone who spent 22 years as a Federal Circuit judge.
22:59.314 --> 23:02.786
The problem with courts is they're so bound by precedent, they can't
23:02.818 --> 23:06.386
fix it once the Supreme Court has said something unhelpful,
23:06.498 --> 23:10.442
unwise, in my view, you can't fix
23:10.496 --> 23:13.626
it except by legislation. When you
23:13.648 --> 23:17.820
think about it, eligibility already
23:18.270 --> 23:22.118
is in the statute. Four classes are deemed eligible. It's right in
23:22.144 --> 23:26.014
the plain language of the current section 101. Along comes
23:26.052 --> 23:29.758
the court and rewrites the bill because they didn't like it. They thought
23:29.844 --> 23:33.120
other policy approaches were better.
23:33.730 --> 23:37.310
Well, number one, I don't think they're right. But more fundamentally,
23:37.390 --> 23:41.230
they aren't the right people to be deciding broad questions of national
23:41.310 --> 23:44.914
innovation policy. That's for the congress. The Congress has
23:44.952 --> 23:48.918
the skill to do it, and it has the lawful authority to do it.
23:49.004 --> 23:51.974
Unelected judges should not be making patent policy.
23:52.092 --> 23:56.370
Period. And so we turn to our first proposed solution. The Patent Eligibility
23:56.450 --> 24:00.454
Restoration Act seeks to put to an end these judicially created exceptions
24:00.502 --> 24:04.454
to patent eligibility, while also attempting to strike a balance in preventing
24:04.502 --> 24:08.074
the patenting of the fundamental building blocks. It hopes to do so
24:08.112 --> 24:12.030
by maintaining the existing statutory categories of eligible subject matter
24:12.180 --> 24:15.934
while explicitly enumerating a list of excluded subject matter,
24:16.052 --> 24:19.130
resolving legitimate concerns over patenting of mere ideas,
24:19.210 --> 24:23.194
the mere discovery of what already exists in nature and social and cultural
24:23.242 --> 24:26.322
content that is believed to be beyond the scope of the patent system.
24:26.456 --> 24:29.214
Senator Tom Tillis, a Republican from North Carolina,
24:29.342 --> 24:32.238
introduced the first draft of the bill last August,
24:32.334 --> 24:35.746
and Senator Chris Coons, Democrat from Delaware, announced that he has
24:35.768 --> 24:39.190
come on as a co sponsor. The bill has also received broad community
24:39.260 --> 24:42.658
support from industry pundits, PTO directors, former judges.
24:42.754 --> 24:46.114
And the Biden administration seems to support the idea of reform.
24:46.242 --> 24:49.766
But while widely supported in its intent and fueled for
24:49.788 --> 24:53.594
traction with bipartisan support, there are some pretty serious questions about
24:53.632 --> 24:57.386
a couple of aspects of this bill. There are three concerns we've seen come
24:57.408 --> 25:00.874
up a fair amount how it supplies to software, use of the word
25:00.912 --> 25:04.954
nontechnological and the potential reintroduction of pathogen patents.
25:05.082 --> 25:08.670
We'll take on each of these with our guests. We'll turn to the judge first
25:08.740 --> 25:12.142
to see if he thinks Congress is on the right track. You've said,
25:12.196 --> 25:15.338
and I love this quote because when the stakes are high, there's no time
25:15.364 --> 25:18.606
to pull punches. Quote the Supreme Court's decisions
25:18.638 --> 25:22.466
in the last decade have confused and distorted the law of eligibility. You want
25:22.488 --> 25:25.614
to say it's a mess, illogical, unpredictable, chaotic,
25:25.742 --> 25:29.094
bad policy for important innovation, including for promoting human
25:29.132 --> 25:32.594
health. Congress needs to rescue the innovation economy from the courts
25:32.642 --> 25:36.006
which have left it a disaster. Let's hope Congress rises to
25:36.028 --> 25:39.866
the need. End quote. Does this bill, as it's written, rise to
25:39.888 --> 25:43.706
the need? Well, I don't think the bill is perfect because
25:43.808 --> 25:47.866
it's still a work in progress at the
25:47.888 --> 25:51.758
time we speak. It's still being refined by
25:51.844 --> 25:55.274
small teams of lawyers. Secondly,
25:55.402 --> 25:58.682
its political viability is not yet really tested.
25:58.746 --> 26:01.760
There might have to be further changes to make it possible.
26:02.210 --> 26:05.634
So I don't say it's perfect, but I do think it's very, very good.
26:05.752 --> 26:09.470
And I give huge credit to Senator Tillis and Senator Coons
26:09.550 --> 26:13.554
for the hearings. They held over three days in 2019 with
26:13.592 --> 26:17.186
45 witnesses from enormously diverse
26:17.218 --> 26:19.350
group of stakeholders and experts.
26:21.210 --> 26:25.400
And I'm very hopeful that the bill
26:25.770 --> 26:29.258
that was introduced in the last
26:29.344 --> 26:33.078
Congress and is about to be reintroduced in this Congress
26:33.174 --> 26:36.726
will move forward and ultimately get passed.
26:36.838 --> 26:41.306
And it's a little immodest, but I
26:41.328 --> 26:44.302
had some hand in the shaping of that bill.
26:44.436 --> 26:47.966
So I think it's very good being as objective as I
26:47.988 --> 26:51.694
can. But I guess I'm partly subjective because I was part of
26:51.732 --> 26:54.590
the drafting effort.
26:55.250 --> 26:58.658
But it's a great start. It's a very good bill. It would make
26:58.744 --> 27:02.114
huge improvements in predictability. I've also
27:02.152 --> 27:05.794
read a lot of comments in patent media indicating that this bill would overrule the
27:05.832 --> 27:09.906
three or four, depending on how you're counting Supreme Court cases that have put patent
27:09.938 --> 27:13.058
eligibility into its present state of disarray.
27:13.234 --> 27:16.774
The bill doesn't include explicit language to that effect, so I ask
27:16.812 --> 27:20.954
the judge for clarification. Well, it certainly would overrule some
27:20.992 --> 27:24.582
of the careless statements the Supreme Court embedded
27:24.646 --> 27:28.026
in its opinion deciding the four cases. I say four
27:28.048 --> 27:31.902
because I'm going to add Bilski as the first in the quartet time
27:31.956 --> 27:35.374
wise. But you're right, the other three are more famous and
27:35.412 --> 27:36.960
more problematic still.
27:39.090 --> 27:42.634
It might not necessarily change the
27:42.692 --> 27:46.686
decision, but it would change the doctrine,
27:46.718 --> 27:50.482
which is very important because it's the doctrine that guards future
27:50.616 --> 27:54.334
cases. It's the language in the opinion, not just the outcome
27:54.462 --> 27:56.950
eligible or ineligible.
27:57.930 --> 28:01.494
So I think that what
28:01.532 --> 28:05.366
I would say is the bill overrules most
28:05.468 --> 28:09.434
of the four Supreme Court cases, but maybe not
28:09.552 --> 28:13.514
at the level of 100%. We also asked Adam if he thought
28:13.552 --> 28:16.982
the legislation as it's written, accomplishes its stated goals.
28:17.046 --> 28:20.426
Is the legislation perfect? No. Very rarely
28:20.458 --> 28:23.658
is any legislation perfect. One waits
28:23.674 --> 28:26.960
for perfect legislation. One is waiting for Godot, right?
28:31.410 --> 28:34.180
Is it really the perfect legislation? No.
28:36.870 --> 28:40.660
Ideally, legislation should be very basic, very simple.
28:41.270 --> 28:44.754
That was, by the way, why the US. Patent system also worked
28:44.792 --> 28:48.326
was because the patent statutes were very basic and simple for a
28:48.348 --> 28:52.006
very long time, up until the American Vents Act is the first really kind of
28:52.028 --> 28:55.990
excessively complicated patent statutes that are being enacted.
28:58.010 --> 29:01.382
The sections of the statutes are typically one, maybe two sentences
29:01.446 --> 29:05.130
at most. The sentences are not very long. They're understandable.
29:06.030 --> 29:09.626
And that's key to having a property rights system where it's just you have
29:09.648 --> 29:12.910
a basic, understandable foundation for which then people can go
29:12.980 --> 29:16.526
and take their exclusive rights, their property rights, into the
29:16.548 --> 29:20.394
marketplace. My preference is for us to continue that practice
29:20.442 --> 29:23.950
because it's shown economically and historically to be the key to
29:24.100 --> 29:28.530
successful legal foundations and property rights for driving economic growth.
29:28.870 --> 29:32.418
And so ideally, they really should just pass a statute that's just a
29:32.424 --> 29:36.566
couple of sentences that just says all of these Supreme Court decisions from 2009
29:36.588 --> 29:40.066
to 2014, they're overruled, they're abrogated.
29:40.178 --> 29:44.194
We, as Congress deemed these judicial
29:44.242 --> 29:47.926
opinions by the Supreme Court as mistaken interpretations of what
29:47.948 --> 29:51.366
we were trying to achieve when we enacted the patent statutes according
29:51.398 --> 29:55.386
to the authorization and Constitution for us to do so as Congress. But while
29:55.408 --> 29:59.430
not perfect, adam still thinks it's an important step in the right direction.
29:59.510 --> 30:02.560
The bill, as framed achieves a lot of really good,
30:03.330 --> 30:05.520
and it's never going to be perfect.
30:06.370 --> 30:10.110
Even the 1952 Patent Act wasn't perfect in every respect,
30:11.810 --> 30:15.342
and we should support it with an eye towards,
30:15.476 --> 30:18.706
okay, let's now support it and say something like this
30:18.728 --> 30:21.778
should be enacted, but maybe you should be some changes on the
30:21.784 --> 30:25.298
margins. But at core, it's a good thing. And we should be definitely
30:25.464 --> 30:28.886
saying that this is a discussion Congress should have. They should be
30:28.908 --> 30:32.870
moving this forward and working to correct
30:32.940 --> 30:36.694
the concerns and the problematic language on the margins. While that
30:36.732 --> 30:40.290
moves forward, the language in particular we should be looking at correcting
30:40.370 --> 30:43.626
is where I'd like to turn our attention next. Among those in the.
30:43.648 --> 30:47.338
Industry some concerns have been expressed that the bill tries to do too much
30:47.424 --> 30:51.082
and opens new doors for judicial uncertainty. In a US
30:51.136 --> 30:54.746
inventor piece on IP watchdog coauthors Paul Morinville,
30:54.778 --> 30:58.366
Randy Landrenau and Josh Malone argue that in its present state the
30:58.388 --> 31:02.106
bill is immature and that the most important words dangle undefined.
31:02.298 --> 31:05.738
In highlighting the associated risk they point to the problem that got
31:05.764 --> 31:09.534
us here in the first place. As we said earlier section 101 defines
31:09.582 --> 31:12.734
eligible subject matter as whoever invents or discovers
31:12.782 --> 31:16.494
any new and useful process, machine manufacture or composition
31:16.542 --> 31:20.162
of matter or any new and useful improvement thereof.
31:20.306 --> 31:24.278
The Supreme Court somehow found a way to create an exception to the word any.
31:24.444 --> 31:27.906
A word that the dictionary says is used to express a lack
31:27.938 --> 31:31.850
of restriction. They called this restriction to the word any
31:31.920 --> 31:35.014
an abstract idea but then also failed to define
31:35.062 --> 31:38.474
what an abstract idea is. And here we are. We asked
31:38.512 --> 31:39.740
Randy about this.
31:42.210 --> 31:46.170
The devil is in the details. It's like okay so it has to be technological.
31:46.250 --> 31:50.446
What the heck does that mean? And they didn't. Again when
31:50.468 --> 31:54.546
you don't have a very finely defined set
31:54.568 --> 31:58.098
of terms everything can go wrong.
31:58.184 --> 32:02.238
Everything can go wrong. That's where you get unintended consequence.
32:02.334 --> 32:07.642
I mean to me technological is anything that performs
32:07.726 --> 32:11.046
a function like a function well
32:11.068 --> 32:14.598
wait a minute that's my definition. But is that how a judge is going
32:14.604 --> 32:17.766
to see it? Is that how the certainly not.
32:17.788 --> 32:21.306
How the opposing attorney who's trying to invalidate the patent is going to see it.
32:21.488 --> 32:24.730
They're going to take every leeway they can to
32:24.880 --> 32:28.540
make an argument to destroy your patent and
32:29.310 --> 32:32.560
the law has to provide a way
32:33.330 --> 32:37.130
for you to have some type of prediction
32:37.210 --> 32:40.302
as to whether or not you're going to actually win
32:40.356 --> 32:43.738
or lose. And that prediction
32:43.834 --> 32:46.386
goes all the way back to do you file a patent for this thing or
32:46.408 --> 32:50.306
not? If you can't predict that your patent is
32:50.328 --> 32:54.114
going to stay valid you can't invest you
32:54.152 --> 32:57.302
can't spend your time and effort you can't devote your life to this thing.
32:57.356 --> 33:01.014
Investors can't come in. You have to have
33:01.052 --> 33:04.374
something that's predictable and I think that's where it falls down.
33:04.492 --> 33:07.846
Again simplicity is the answer.
33:07.948 --> 33:11.766
Simplicity. You heard Randy mention the word technological in addition
33:11.798 --> 33:15.206
to many wanting more explicit language about the forced GODIS decisions
33:15.238 --> 33:18.278
being overruled the risk of the ambiguity surrounding
33:18.374 --> 33:22.146
this word is one of three chief criticisms we frequently see arise
33:22.198 --> 33:25.566
around the language in the bill. The others include concerns that the bill could
33:25.588 --> 33:29.146
turn software into ineligible subject matter and potentially endanger
33:29.178 --> 33:32.154
global health by reintroducing pathogenic patents.
33:32.282 --> 33:35.914
If the concerns are valid those could all be catastrophic outcomes
33:35.962 --> 33:39.906
but it's worth unpacking each. First to Randy's point the bill would
33:39.928 --> 33:43.186
make ineligible any patent on quote a process that is
33:43.208 --> 33:45.918
a nontechnological economic, financial,
33:46.014 --> 33:48.902
business, social, cultural or artistic process.
33:49.036 --> 33:52.946
This means that only processes deemed technological would be patentable.
33:53.058 --> 33:56.358
The current bill provides no definition of what technological means
33:56.444 --> 33:59.894
and would leave this interpretation up to the courts. And even if the word were
33:59.932 --> 34:03.674
defined, the definition would have to encompass whatever innovations the future might
34:03.712 --> 34:07.306
hold, which we can't possibly know. Any use of this word ends up
34:07.328 --> 34:11.414
either undefined and ambiguous or defined and overly prescriptive
34:11.542 --> 34:14.990
onto software patents. The bill says any person
34:15.060 --> 34:18.506
may obtain a patent for a claimed invention that is a process described
34:18.538 --> 34:21.886
in such provision if that process is embodied in a machine or
34:21.908 --> 34:25.406
manufacturer. Unless that machine or manufacturer
34:25.438 --> 34:28.894
is recited in a patent claim without integrating beyond
34:28.942 --> 34:32.974
merely storing and executing the steps of the process that the machine
34:33.022 --> 34:36.834
or manufacturer perform. As someone who spent 20 years writing software,
34:36.962 --> 34:40.770
I suspect the goal here is excluding nontechnological inventions
34:40.850 --> 34:44.946
that are merely replicated but now performed on a computer. But that's
34:44.978 --> 34:48.438
not what it says. What is merely storing and executing the
34:48.444 --> 34:51.930
steps of the process mean all software does this.
34:52.000 --> 34:55.274
So how might future courts run wild with a phrase like this?
34:55.472 --> 34:59.622
We certainly don't want to trade the Alice decision, something that's made software patents
34:59.686 --> 35:03.274
difficult to get for something that bans software patents altogether.
35:03.402 --> 35:07.486
The third concern centers around pathogenic patents. It's been argued that
35:07.508 --> 35:11.434
had this legislation been in place, researchers could have patented naturally
35:11.482 --> 35:15.146
occurring viral RNA sequences, making it more difficult for others
35:15.188 --> 35:18.814
to develop COVID vaccines and drugs, and that the language should be modified
35:18.862 --> 35:22.446
to prevent the reintroduction of patents on naturally occurring genomic
35:22.478 --> 35:25.602
sequences that are isolated and purified in the lab.
35:25.736 --> 35:29.062
I ask Adam and Judge Michel about all of these concerns. Now,
35:29.116 --> 35:30.790
I am a little worried.
35:31.850 --> 35:36.102
I've heard the arguments about the concern about the
35:36.236 --> 35:39.106
invalidation of software patents.
35:39.298 --> 35:42.694
I'm also worried about the throwing business method patents
35:42.742 --> 35:46.410
also under the bus, because I think the protection of
35:46.480 --> 35:50.618
business methods are processes that have long been protected in our country. They're not new.
35:50.784 --> 35:53.100
Again, this is pure rhetoric that they're new.
35:54.270 --> 35:57.962
I highlighted on this day innovation history. Business method patents
35:58.106 --> 36:01.802
from the 19th century and other scholars have found extensive
36:01.866 --> 36:05.550
numbers of business method patents going back to the early 19th century.
36:07.330 --> 36:10.530
These are legitimate processes. The patent access you have to process.
36:10.600 --> 36:13.666
And a business method is a process. And so as long as it's novel and
36:13.688 --> 36:17.046
non obvious, then you should be able to get a patent on it. It's an
36:17.068 --> 36:20.326
invention. So I'm really concerned about that,
36:20.348 --> 36:24.102
that it does completely throw business
36:24.156 --> 36:28.766
methods under the bus. And given the fact that there's
36:28.818 --> 36:32.694
a kind of a conflation of business methods with computer software
36:32.742 --> 36:36.966
patents, that computer software
36:36.998 --> 36:39.850
patents will go down too. And I think this is what they're highlighting, is that
36:39.920 --> 36:43.158
the language in the statute is not clear on this. And given kind
36:43.184 --> 36:46.714
of the constant confusion by judges and lawyers,
36:46.842 --> 36:50.266
people should know better, but are nonetheless get confused about these matters.
36:50.458 --> 36:54.142
And the reason why they're confused is because there's massive confusion in the policy debates
36:54.206 --> 36:55.620
about these issues.
36:57.990 --> 37:03.874
And so that this could have the effect of being
37:03.912 --> 37:07.974
the basis for the invalidation not just the business method patents or
37:08.012 --> 37:11.430
the exclusion of business methods from wholesale from the patent system,
37:11.500 --> 37:15.062
but also the wholesale exclusion of computer
37:15.116 --> 37:18.346
software patents, which would be a disaster. And I'm concerned about
37:18.368 --> 37:22.554
the new terminology like technology that is
37:22.592 --> 37:24.700
used in it as well.
37:25.870 --> 37:29.686
I understand from the people who have drafted
37:29.718 --> 37:32.958
the legislation or supported it and been part of
37:32.964 --> 37:37.066
the process that they're
37:37.098 --> 37:40.974
hoping that there's a significant body of
37:41.012 --> 37:45.126
law in Europe that applies that term and that they're looking hopefully
37:45.178 --> 37:49.054
to incorporate that, which is a fairly determined,
37:49.182 --> 37:52.642
and from what I understand, pretty good area of law. I mean,
37:52.696 --> 37:56.206
they're more restrictive in it than we would be normally for the pathogen patent
37:56.238 --> 37:59.846
concern. We benefit from some extra context ashley provided in the
37:59.868 --> 38:03.234
interview. You can't patent something in nature,
38:03.282 --> 38:06.646
but if you isolate it, so if there's a virus and
38:06.668 --> 38:10.434
I isolate whatever capsid protein
38:10.482 --> 38:13.942
or something, the DNA for that, then I can patent
38:14.006 --> 38:17.770
that DNA, and now I can own any product
38:17.840 --> 38:22.794
stemming from that DNA and I just isolated it. Right. Which I'm
38:22.922 --> 38:27.194
coming from being a lab rat back in the day. A lot of isolation
38:27.242 --> 38:29.840
stuff is easy, right? It's not hard.
38:31.250 --> 38:34.654
We know the components that viruses have and things like that.
38:34.692 --> 38:39.614
And so does there need to be a little bit more buffering
38:39.662 --> 38:43.234
around? Yes. If you isolate something, that's great, but again,
38:43.272 --> 38:45.762
you have to take it to a useful end and that's what you protect,
38:45.816 --> 38:49.574
right? Oh, I've created diagnostic assay now that yes,
38:49.612 --> 38:52.866
I use this purified DNA sequence to do whatever with. I can't
38:52.898 --> 38:56.280
just protect that purified DNA sequence. Yeah,
38:56.730 --> 38:59.946
I know that third issue very well, and I think that that is not a
38:59.968 --> 39:06.186
real concern for
39:06.208 --> 39:08.940
a couple of reasons. So as a preliminary matter,
39:12.030 --> 39:16.250
ashley made it very clear in her description of the concern
39:16.330 --> 39:19.806
that she said, well, it's easy to do, right, or people already know
39:19.828 --> 39:23.374
how to do it. Well, that means that just
39:23.412 --> 39:26.206
because it's patent eligible doesn't mean you get a patent on it. You still have
39:26.228 --> 39:29.970
to meet novelty and nonobviousness and disclosure and enablement.
39:30.630 --> 39:33.474
And this is one of the problems with this debate, is that the people who
39:33.512 --> 39:36.914
are opposed to reform big tech,
39:37.112 --> 39:39.598
who love willy nilly decision making,
39:39.784 --> 39:41.670
invalidate lots of different patents,
39:43.050 --> 39:46.834
are more than happy to say, oh yeah, this will open the floodgates,
39:46.882 --> 39:50.594
and anyone can get a patent now. No, it's not. It's just one requirement.
39:50.642 --> 39:54.026
It's one hurdle of a very long race of
39:54.048 --> 39:57.446
many hurdles that patent applicants have to go through. And this is why patent
39:57.478 --> 40:02.560
application process, as you guys know, takes many years because
40:03.010 --> 40:06.090
it's multiple requirements. And each of these requirements is a necessary
40:06.170 --> 40:09.694
requirement, as I tell my students in teaching patent law.
40:09.732 --> 40:13.122
Right? This is why every defendant argues the entire
40:13.176 --> 40:16.466
kitchen sink about why the patent is invalid because all you need is one to
40:16.488 --> 40:19.220
stick and that's all.
40:20.470 --> 40:24.274
Just because an isolated molecule is
40:24.312 --> 40:27.954
patent eligible, given the isolation which now makes it not
40:27.992 --> 40:31.366
a natural fact, it's now a human creation in the lab,
40:31.548 --> 40:34.840
doesn't mean that it's necessarily novel or that it's non obvious.
40:35.370 --> 40:39.178
To the extent, in fact, to the extent that, for instance, the entire
40:39.264 --> 40:42.602
human genome has now been published. There,
40:42.656 --> 40:45.914
I think, is an entirely legitimate and very
40:45.952 --> 40:49.466
real argument that any
40:49.568 --> 40:54.000
classic kind of DNA patent of the type that issued in the 1990s
40:54.690 --> 40:58.030
at the turn of the century is just not novel anymore
40:58.770 --> 41:02.366
because it's already known. It's part of the prior art,
41:02.548 --> 41:06.322
the facetas know how to know about these things and know how to find them.
41:06.456 --> 41:09.394
And even if it's not novel, it's obvious because they know how to find them.
41:09.432 --> 41:11.700
It's really super easy, as Ashley said. Exactly.
41:13.270 --> 41:16.498
So you're still having to go through novelty, you're still having to go through non
41:16.514 --> 41:18.280
obviousness and things of that sort.
41:19.850 --> 41:25.186
But second of all, the isolation of molecules
41:25.218 --> 41:29.722
of DNA. This is the biotech revolution that
41:29.776 --> 41:33.370
is what drove the Innovations
41:35.070 --> 41:38.538
and it was the US willingness to say these are patentable inventions to which we
41:38.544 --> 41:42.010
are going to apply novelty and non obvious to figure out
41:42.080 --> 41:45.514
which was a key to creating kind of this foundation for stable
41:45.562 --> 41:49.050
and reliable property rights that drove venture capital investing
41:49.130 --> 41:52.334
and the creation of whole new companies like Genentech and
41:52.372 --> 41:52.960
others.
41:55.010 --> 41:58.500
I'm less worried about,
41:58.950 --> 42:02.482
oh, this is going to somehow blockade research and development because the actual
42:02.536 --> 42:06.226
historical practice is the exact opposite to the extent to which there
42:06.248 --> 42:10.186
was a massive explosion in biotech research and development
42:10.238 --> 42:14.614
innovation. When did that occur? In the 1980s and
42:14.652 --> 42:18.262
early aughts. And that's exactly when we were providing those
42:18.316 --> 42:22.246
exact protections to isolated molecules. And there's a lot of rhetoric
42:22.278 --> 42:25.738
here too, like, Ashley, I know you're not gracing rhetoric, you're the
42:25.744 --> 42:29.020
true geek. So you're like, I get the science, I know the technology.
42:29.390 --> 42:33.498
The arguments that are being made in the policy debates. There are literally op eds
42:33.514 --> 42:37.166
being published by law professors George Contreras and others saying, oh my
42:37.188 --> 42:40.442
God, if this legislation Reform Act is enacted, this Patent Eligibility
42:40.506 --> 42:43.818
Reform Act, they'll get patents on your genes and your
42:43.844 --> 42:47.202
bodies, and it's just like that's just not
42:47.256 --> 42:51.214
true. And it never was true. The judge
42:51.262 --> 42:54.894
also shared some insights with us and this comes from the perspective of personally
42:54.942 --> 42:57.606
being involved in the legislative drafting process.
42:57.788 --> 43:01.222
Active work, as I said, is being done right now on
43:01.276 --> 43:04.310
trying to strengthen, clarify, sharpen the language.
43:04.730 --> 43:08.878
Great attention is being paid to the word non technological
43:09.074 --> 43:13.050
and various substitutes are on the table being considered.
43:14.270 --> 43:18.134
Now, if you were to press me and say, well, can you assure
43:18.262 --> 43:22.110
certain people who are nervous that this bill is absolutely
43:22.180 --> 43:25.146
foolproof and there can never be any unintended consequences?
43:25.258 --> 43:29.040
No, of course I can't. No one can, because you can't predict the future.
43:29.410 --> 43:30.880
No bill is perfect.
43:32.390 --> 43:36.610
But are the risks ones that could
43:36.680 --> 43:40.514
prudently be accepted? Absolutely. In my opinion, the risks are quite
43:40.552 --> 43:44.942
small, and people should just get their courage up because
43:45.016 --> 43:48.726
we need reform so badly. We shouldn't let it
43:48.908 --> 43:52.470
fail because some people were overly nervous.
43:53.370 --> 43:58.326
Now, in terms of clarity of the exclusions,
43:58.438 --> 44:01.050
that's also being worked on very actively.
44:01.630 --> 44:06.202
And we've had on our drafting group people
44:06.256 --> 44:07.930
from all backgrounds,
44:09.150 --> 44:12.830
including independent inventors. This is not just a big company
44:12.980 --> 44:17.530
kind of thing at all. And we've had people from all different technologies,
44:17.610 --> 44:21.006
from what I'll call the computer world and the
44:21.028 --> 44:25.358
pharma world and so on. So everybody's
44:25.454 --> 44:29.362
viewpoints and risks and concerns have been taken
44:29.416 --> 44:33.342
into account. I myself don't see any appreciable
44:33.406 --> 44:37.974
chance that appropriate inventions in
44:38.012 --> 44:42.310
the computer technology arena
44:43.610 --> 44:47.490
will get fenced out. I think there's no serious risk
44:47.570 --> 44:50.726
of that. People are right to be concerned about it, but I don't think there's
44:50.758 --> 44:54.326
a serious risk about that. And if the risk
44:54.358 --> 44:57.722
can be further reduced from an already low level to a very low
44:57.776 --> 45:00.634
level by more tinkering with language,
45:00.682 --> 45:03.338
I'm all for it. I've been participating daily,
45:03.434 --> 45:05.440
hourly, even this week,
45:06.370 --> 45:09.854
in those kind of refinements. We have a group
45:09.892 --> 45:13.634
of extremely thoughtful experts working on
45:13.672 --> 45:16.990
this. And of course, it's also being vetted
45:17.070 --> 45:21.220
by people in the patent office and by
45:21.990 --> 45:26.642
people on the staffs of all the senators on the IP
45:26.706 --> 45:29.890
subcommittee. The membership just newly announced yesterday,
45:29.970 --> 45:32.840
as you know. No surprises, really,
45:33.450 --> 45:34.920
at least in my view.
45:35.930 --> 45:39.226
So I think the
45:39.248 --> 45:43.078
big risk that scares me is that it'll get bogged
45:43.094 --> 45:46.806
down and not pass. The risk that it will get passed
45:46.918 --> 45:50.618
and will hurt. Innovation is minuscule. Adam comes to a
45:50.624 --> 45:54.646
similar conclusion. As he said earlier, while there is a need for language correction,
45:54.758 --> 45:58.286
all in all, I think these are concerns on the margins. When bills like
45:58.308 --> 46:01.626
this introduced, it's really important. These are important first steps.
46:01.658 --> 46:03.550
It's a huge hurdle to overcome,
46:04.530 --> 46:07.698
and we have to be really careful about letting the perfect be the enemy of
46:07.704 --> 46:11.486
the good. Unintended consequences are a frequent phenomenon in DC,
46:11.598 --> 46:15.726
so there seems to be sufficient reason for two of the three concerns expressed.
46:15.838 --> 46:19.174
Like the judge says, this is a work in progress. So I'm at least
46:19.212 --> 46:22.834
hopeful that conversations like these can help to advocate for cleaner,
46:22.882 --> 46:26.614
simpler language with less potential for side effects. And with
46:26.652 --> 46:30.246
that, we move on to the other half of the distorted judicial puzzle and
46:30.268 --> 46:33.754
that's enablement. We're not going to spend a lot of time setting this one up
46:33.792 --> 46:37.354
because it was the entire focus of our last episode called SCOTUS and Focus,
46:37.472 --> 46:41.034
where we took a deep dive on the Amgen versus Santa Fe case. And its
46:41.072 --> 46:44.942
potential impact on the full scope of enablement for genus claims and
46:44.996 --> 46:48.426
the potential devastating impact, especially to life science and pharma
46:48.458 --> 46:51.246
patents. If it sounds like I just made up a bunch of words,
46:51.348 --> 46:55.086
go check out that episode. The Supreme Court is taking this case on, and by
46:55.108 --> 46:59.070
the time this episode publishes, opening arguments will have already begun.
46:59.230 --> 47:02.594
In response to my question as to whether or not this case is our best
47:02.632 --> 47:06.200
hope for clarity on the problem of enablement, the responses were
47:06.570 --> 47:08.230
less than optimistic.
47:11.290 --> 47:14.086
I'm sorry, Josh. When I laugh and you said, is this case our best hope
47:14.108 --> 47:17.446
for clarity? Because anyone who is
47:17.468 --> 47:18.620
a betting person,
47:20.510 --> 47:24.026
the last thing you would expect from the Supreme Court and patent law
47:24.048 --> 47:27.946
is clarity. I'm afraid that based on
47:28.048 --> 47:30.960
the Supreme Court's track record of the past 20 years,
47:32.290 --> 47:35.498
and the Supreme Court has really reengaged with patent laws at a level we haven't
47:35.514 --> 47:42.250
seen for about 100 years now, the majority of those decisions have
47:42.420 --> 47:47.518
muddied the doctrinal waters at best, and have eliminated
47:47.614 --> 47:51.486
or weakened patent rights at worst.
47:51.678 --> 47:55.138
The biggest concerns center around one, the ability for the court to
47:55.144 --> 47:58.786
adequately understand the science, and two, the hope that
47:58.808 --> 48:02.054
the court is not misled or doesn't buy into flimsy rhetoric around
48:02.092 --> 48:05.554
the history of genus claims in US patent law. And for added context,
48:05.602 --> 48:09.266
the Juno case the judge will refer to momentarily is a similar enablement
48:09.298 --> 48:12.966
case that he believes the Supreme Court should have taken up instead of Amgen.
48:13.078 --> 48:16.886
Now the question becomes, can they be helpful?
48:17.078 --> 48:20.830
Can they understand what's going on
48:20.900 --> 48:24.814
here? And I'm worried that they won't understand
48:24.932 --> 48:28.480
the scientific realities well enough to
48:29.330 --> 48:33.454
adjust the two doctrines, written description and enablement
48:33.502 --> 48:38.306
just to give them headline titles in
48:38.328 --> 48:41.940
a way that will work for the human health
48:42.630 --> 48:45.060
technologies and industries and companies.
48:46.010 --> 48:50.166
Why? Because you have to understand a lot about
48:50.268 --> 48:54.280
science in order to understand why
48:54.810 --> 48:58.226
genus claims have to be broad
48:58.338 --> 49:03.702
and why it's impossible to test
49:03.836 --> 49:09.510
and prove out every potential variant
49:10.450 --> 49:12.830
in the genus.
49:13.490 --> 49:17.646
Because in the Juno case, the record said there
49:17.668 --> 49:21.562
were millions of billions of antibody
49:21.626 --> 49:23.780
fragments that could be used.
49:25.590 --> 49:29.534
And so the company was essentially faulted because they didn't
49:29.582 --> 49:33.054
test millions and billions. Well, that's ridiculous. Would have taken forever,
49:33.102 --> 49:36.014
it would have taken a fortune, would have been totally meaningless.
49:36.142 --> 49:40.246
Because there were workable known antibody fragments that
49:40.268 --> 49:43.430
were old art, they were in the books, they were being used by everybody.
49:43.580 --> 49:46.610
So I'm worried now. Why am I so worried?
49:46.770 --> 49:51.260
When you look at the Myriad case, I think they basically didn't understand
49:51.950 --> 49:55.962
how genetic sequences work.
49:56.096 --> 49:59.654
I think the Myriad case is a warning sign that they're a little weak
49:59.702 --> 50:01.790
on certain areas of science.
50:02.850 --> 50:06.602
And to the extent that Myriad decision
50:06.666 --> 50:11.150
was influenced by shallow scientific understanding,
50:11.650 --> 50:15.230
that makes me worry that Amgen may similarly
50:15.390 --> 50:18.638
be affected like he did with eligibility.
50:18.734 --> 50:22.174
Adam also shares some helpful historical context around the allowance
50:22.222 --> 50:26.214
and application of genus claims. So I think based on its current track
50:26.252 --> 50:30.210
record, if one shouldn't
50:30.370 --> 50:34.358
be overly optimistic or
50:34.524 --> 50:38.186
Alan greenspan once said irrationally exuberant about what
50:38.208 --> 50:42.220
the Supreme Court might decide in the Amgen versus Sanofi case.
50:43.150 --> 50:47.034
The only hope is that the Supreme Court is
50:47.072 --> 50:51.086
not misled by the
50:51.108 --> 50:55.066
fear mongering and misrepresentation
50:55.098 --> 50:59.578
of the history and law of genus claims, especially by the amnesty
50:59.754 --> 51:02.110
that filed in support of Sanofi.
51:02.870 --> 51:06.846
And I just published an article on this in Westlaw
51:06.878 --> 51:10.114
today that's publicly accessible with
51:10.232 --> 51:14.130
Matthew Dowd, excellent attorney and
51:14.280 --> 51:18.486
former clerk of Chief Judge Paul Michel of
51:18.508 --> 51:22.786
the Federal Circuit on calling out the fear
51:22.818 --> 51:26.278
mongering and misrepresentation of the history of genus claims in
51:26.284 --> 51:28.280
the patent system in the case.
51:29.370 --> 51:32.682
There's a sense or this claim that genus claims are somehow new,
51:32.736 --> 51:36.122
that they're a creation of the Federal Circuit because it's always nice
51:36.176 --> 51:39.594
to claim the Federal Circuit did something new as a way
51:39.632 --> 51:43.280
to get the Supreme Court to rule against it.
51:43.810 --> 51:47.440
But in fact, genius claims have been around since the very beginning of our country.
51:49.330 --> 51:52.734
They didn't call them genus claims because they didn't have this terminology back
51:52.772 --> 51:56.754
then. But if you read the patent claims that is upheld by the US
51:56.792 --> 52:00.046
Supreme Court and O'Reilly v. Morris, claim one, it's a genus
52:00.078 --> 52:03.540
claim. We quoted in our article showing example of it.
52:05.030 --> 52:07.250
The Wright brothers had a genus claim.
52:08.310 --> 52:11.826
Charles Goodyear's patent on vulcanizing rubber was a genus
52:11.858 --> 52:15.510
claim. It covered a whole range of different species of different
52:15.580 --> 52:19.510
embodiments in which this process
52:19.580 --> 52:23.180
was applied for vulcanizing rubber. By that, Charles Goodyear figured out.
52:23.790 --> 52:27.274
So these are not some kind of new crazy thing that came about because
52:27.312 --> 52:30.310
of the biotech revolution of the past 20 years.
52:30.480 --> 52:35.226
These are long standing legal
52:35.418 --> 52:38.814
devices in patents to effectively and
52:38.852 --> 52:42.478
properly secure especially pioneering innovation, which is
52:42.484 --> 52:45.822
why we see them in the biotech innovation, because all of those innovations
52:45.886 --> 52:49.154
were pioneering inventions where they couldn't it was inconceivable to
52:49.192 --> 52:52.654
them how to identify and specify every single embodiment.
52:52.702 --> 52:56.786
They couldn't do it. And just like pioneering
52:56.818 --> 52:59.942
innovators in the biotech space today can't list out every
52:59.996 --> 53:02.950
conceivable single embodiment, it's impossible.
53:03.610 --> 53:07.314
So this is the proper and only legal
53:07.362 --> 53:10.794
way that you can do it, which is why they have existed and have
53:10.832 --> 53:14.486
been enforced and upheld by the US Supreme Court from the very beginning
53:14.518 --> 53:17.420
of our country. And so,
53:19.470 --> 53:23.822
unfortunately, I'm very pessimistic about what the court will do given
53:23.876 --> 53:27.866
its track record. So my hope is only that it's
53:27.898 --> 53:31.422
not misled and throws out genus claims. With biotech already
53:31.476 --> 53:35.294
reeling from the eligibility mess we've discussed and the entire business model being
53:35.332 --> 53:38.994
under attack, there's a lot on the line not only for the economy, but for
53:39.032 --> 53:42.322
advances in human health. That's what we're really talking about here.
53:42.376 --> 53:46.362
It's what's good for more technology advances
53:46.446 --> 53:49.702
and, you know, it's particularly important in the human health area.
53:49.836 --> 53:53.762
It's very clear to me that the human health scientists
53:53.826 --> 53:57.314
are right on the verge of huge breakthroughs
53:57.362 --> 54:01.074
in curing cancer incurring, alzheimer's incuring,
54:01.122 --> 54:04.714
diabetes incurring, this, that, and the other and coming
54:04.752 --> 54:09.094
up with preventions and diagnostic methods
54:09.142 --> 54:12.414
to early detect and on and on.
54:12.532 --> 54:16.506
So they're right on the cusp of these big breakthroughs, and we're strangling
54:16.618 --> 54:20.538
the industry with stupid decisions on written decision
54:20.714 --> 54:23.626
description, pardon me, and enablement.
54:23.738 --> 54:27.406
So talk about high stakes. I mean, again, the stakes couldn't
54:27.438 --> 54:30.798
be higher. Genetic medicine, personalized medicine,
54:30.974 --> 54:34.402
it's all up for grabs. And guess what? China is running
54:34.456 --> 54:38.182
wild with that. Now, they're advancing a mile a minute in these very
54:38.236 --> 54:42.870
technologies, and we're not, because we've strangled the
54:43.020 --> 54:46.566
ability of the patent system to support and protect them. So where does
54:46.588 --> 54:49.674
that leave us in terms of a solution? My hope is just that
54:49.712 --> 54:53.370
Supreme Court doesn't throw out genus claims,
54:54.030 --> 54:56.810
because that would be a mistake, a legal mistake.
54:57.150 --> 55:00.794
Would it be one more provision we'd have to add to the Rally Act?
55:00.992 --> 55:04.542
Rally? Now, that's another important legislative acronym to remember.
55:04.676 --> 55:08.234
But before we unpack that, I'd like to talk about a host of big ticket
55:08.282 --> 55:11.614
problems that it and its close cousin, the Stronger Patents Act,
55:11.652 --> 55:15.054
seek to address, while eligibility and enablement are presently getting most
55:15.092 --> 55:18.194
of the attention. When I asked our guests to prioritize the main
55:18.232 --> 55:22.462
threats faced by the patent system and the innovation economy, two concerns
55:22.526 --> 55:26.146
immediately came to mind for each. One. The PTAB or
55:26.168 --> 55:29.682
Patent Trial and Appeal Board. Aka. The patent death squad.
55:29.826 --> 55:33.126
And two, the Supreme Court born inability for patent owners to
55:33.148 --> 55:36.866
receive what's called Injunctive Relief to stop infringers the Patent
55:36.898 --> 55:40.294
Trial and Appeal Board. So this is this administrative court that was created by the
55:40.332 --> 55:43.766
America Invents Act 2011, the ironically named
55:43.798 --> 55:47.306
American Vents Act. Typical Congress that always says the
55:47.328 --> 55:51.226
exact opposite title of the statute, what it enacts. Prior to
55:51.248 --> 55:55.246
that, if someone was infringing your patent and
55:55.268 --> 55:59.150
you sued them for patent infringement, the battle would take place in a real court.
55:59.490 --> 56:03.354
A real court. You have a jury, you have a real judge who's lifetime
56:03.402 --> 56:06.786
appointed. You want a lifetime appointed judge. You want a jury, you want due process.
56:06.888 --> 56:09.858
That's what our court system, by the way,
56:09.864 --> 56:13.634
that's called an Article Three Court. For any of you out there who hear
56:13.672 --> 56:17.860
this term, Article Three Court, it's just a real court with a jury. In fact,
56:18.650 --> 56:22.594
the 7th Amendment says you are entitled to a trial
56:22.642 --> 56:26.550
by jury for any civil matter of greater than $25
56:26.620 --> 56:30.550
or something. They probably need to update that amount. But anyway,
56:30.700 --> 56:33.866
the point is, this is like a constitutional right as an American. And you
56:33.888 --> 56:36.986
know what? You don't have that right in a lot of other countries. A lot
56:37.008 --> 56:40.646
of other countries. You face three judges and they decide. And if they're
56:40.678 --> 56:44.134
biased, you're in big trouble. So this is a big part of America.
56:44.182 --> 56:47.614
So prior to 2011, your patent battles would take place
56:47.652 --> 56:51.194
in a real court. And you know what? It's not fast and it's not cheap,
56:51.242 --> 56:54.494
but it's fair. And the inventor didn't always win.
56:54.532 --> 56:57.620
But if they should win. They would. The argument was. Well,
56:58.310 --> 57:01.310
patent office isn't perfect. Every now and then they make a mistake.
57:01.470 --> 57:06.210
And if they make a mistake, there should be a cheaper, faster, more efficient
57:07.910 --> 57:11.334
way to solve it other than District Court. Oh, but it's got to be fair
57:11.532 --> 57:14.998
and, oh, yeah, and we're going to let the Patent Office take care of it.
57:15.084 --> 57:18.486
Now, that sounds pretty reasonable, right? Like, well,
57:18.508 --> 57:21.866
what could go wrong there? But there's a term in
57:21.888 --> 57:25.510
Washington, DC. That's a big term. It's unintended consequences,
57:25.590 --> 57:29.018
right? Oh, man. In unintended consequences. There were
57:29.104 --> 57:33.182
the whole point of creating the PTAB was, we want a
57:33.236 --> 57:38.718
faster, more, quote, efficient process
57:38.804 --> 57:42.960
for invalidating patents. I'll tell you.
57:43.510 --> 57:48.050
As I mentioned before, I was on the Hill speaking
57:48.120 --> 57:52.914
with staffers and other stakeholders in
57:52.952 --> 57:56.446
2010 in the debates and leading up to the AIA,
57:56.638 --> 58:00.038
where I always like to point out to them, there's an old classic maxim that
58:00.044 --> 58:03.174
you can do something fast or you can do something right, but you can't do
58:03.212 --> 58:06.920
both. And so I kept telling them that,
58:07.450 --> 58:10.986
yeah, you want a fast process to invalidate patents, it's not
58:11.008 --> 58:14.682
going to be a right process. This AIA introduced process was called
58:14.736 --> 58:18.246
Inter Parties Review, or IPR, in which the validity of granted
58:18.278 --> 58:22.282
patents can be challenged by any member of the public, offensively or
58:22.336 --> 58:25.646
defensively. One way these challenges can arise is when
58:25.668 --> 58:29.566
you attempt to stop a large competitor from infringing your patent or attempt to
58:29.588 --> 58:33.438
license it to them. They often instead try to use the Ptap to invalidate
58:33.454 --> 58:36.766
the patent using means and designed effects we'll
58:36.798 --> 58:40.814
cover shortly. This flawed invalidation process quickly became weaponized
58:40.862 --> 58:44.754
by large infringers to use someone else's technology royalty free
58:44.872 --> 58:48.086
and to prevent new disruptive technology from competing in the
58:48.108 --> 58:52.354
marketplace. And the Ptabs invalidation rates have been staggering.
58:52.482 --> 58:56.406
The Patent Office has various statistics they quote that don't sound as
58:56.428 --> 58:59.926
bad, but I will tell you, the actual number is if you look
58:59.948 --> 59:04.186
at the number of cases that have gone to a final written decision, 84% of
59:04.208 --> 59:07.546
those patents have been fully or partially invalidated. And we have the
59:07.568 --> 59:10.746
number. And you can quote statistics in all
59:10.768 --> 59:14.398
kinds of ways to make them look different, but that is a hard and fast
59:14.484 --> 59:18.494
fact. And by the way, partially invalidated usually
59:18.532 --> 59:21.646
means the claims that matter. He's absolutely right about that.
59:21.748 --> 59:24.586
Data published on Professor Dennis Crouch's patent, Leo,
59:24.698 --> 59:28.094
showed that most patents tangled up in IPRs are also involved
59:28.142 --> 59:31.986
in litigation or licensing. Patents involved in litigation or licensing are
59:32.008 --> 59:35.922
considered top tier patents and make up a very small percentage of all
59:35.976 --> 59:40.306
granted patents. The net effect has been a clear path to endorsed piracy
59:40.418 --> 59:44.370
using the same patent Office that granted a quality patent to an inventor
59:44.450 --> 59:47.654
to later schizophrenically take it away. So how could something
59:47.692 --> 59:51.486
like this happen? What on earth would have motivated Congress
59:51.538 --> 59:55.194
to pass a bill like this when others clearly predicted it would not
59:55.232 --> 59:58.794
end well, congress was sold a bill of goods. You can see this
59:58.832 --> 1:00:03.566
because in the legislative history, congress very clearly said this
1:00:03.588 --> 1:00:07.530
is intended to be, quote, an alternative
1:00:07.610 --> 1:00:11.246
to expensive court litigation. But why was this a
1:00:11.268 --> 1:00:14.786
need? What was the impetus for needing a supposedly new,
1:00:14.888 --> 1:00:18.574
faster, more efficient, less expensive path to invalidate
1:00:18.622 --> 1:00:21.758
patents? The answer was trolls,
1:00:21.854 --> 1:00:24.898
and not the kind with brightly colored hair you might have played with as a
1:00:24.904 --> 1:00:28.006
kid, or even the kind you find on Twitter. No,
1:00:28.108 --> 1:00:31.410
congress was told it needed to save the world from patent trolls.
1:00:31.490 --> 1:00:35.174
You talk about a brilliant program,
1:00:35.292 --> 1:00:38.600
marketing program, influence program by big tech.
1:00:40.670 --> 1:00:43.798
It's like this whole patent troll propaganda,
1:00:43.974 --> 1:00:47.526
man. Was it used? Was it sold? Was it hammered?
1:00:47.558 --> 1:00:51.478
In the halls of Congress, the resulting rhetoric that surrounded the patent troll
1:00:51.494 --> 1:00:55.466
narrative, which is phrases like, the patent system is broken and patents are attacks
1:00:55.498 --> 1:00:59.758
and innovation. These various phrases that were pushed into kind of the
1:00:59.844 --> 1:01:03.454
public discourse about patents and innovation, really what
1:01:03.492 --> 1:01:05.870
arose, especially in Washington, DC.
1:01:06.450 --> 1:01:09.438
Over the past ten or 15 years, is, for lack of a better term,
1:01:09.454 --> 1:01:11.986
a moral panic about the patent system. The sense of like, oh, my God,
1:01:12.008 --> 1:01:15.338
it's destroying the whole world, and it's just the exact opposite.
1:01:15.374 --> 1:01:19.026
Of course, there can be a very well crafted
1:01:19.138 --> 1:01:22.646
story that is so compelling, it's like you almost have
1:01:22.668 --> 1:01:25.926
to believe it. But there could
1:01:25.948 --> 1:01:29.606
be a whole nother side. I asked Randy to explain the narrative of the patent
1:01:29.638 --> 1:01:33.530
troll. We all know that there are some
1:01:33.600 --> 1:01:36.570
percentage of attorneys out there who aren't totally ethical.
1:01:37.150 --> 1:01:41.014
There's going to be some frivolous litigation. It's America. When you have freedom,
1:01:41.142 --> 1:01:44.670
you have things that are you don't hold
1:01:44.740 --> 1:01:48.366
everything down because part of it is being free and having free speech and all
1:01:48.388 --> 1:01:52.058
that. But here's the thing. They took a few cases,
1:01:52.154 --> 1:01:54.974
and they'll always come up with a few cases. I look at this one,
1:01:55.092 --> 1:01:58.162
I said, oh, you see, there's proof. Well, okay, that's one case
1:01:58.216 --> 1:02:01.486
out of the whole country. Does that mean you have to burn
1:02:01.518 --> 1:02:04.820
the whole system down? And that's kind of what they've done. They've taken
1:02:05.670 --> 1:02:09.350
a few cases, and they'll always point to a few different cases that all sound
1:02:09.420 --> 1:02:13.126
terrible, and that's why we have to destroy the
1:02:13.148 --> 1:02:16.358
ability of an inventor. Now, they don't put it
1:02:16.364 --> 1:02:19.382
this way, but what they say as well, we're handling frivolous litigation.
1:02:19.526 --> 1:02:22.986
Every narrative needs a convincing villain, and the bad guy has
1:02:23.008 --> 1:02:26.314
to be defeated. The patent troll became the basis for
1:02:26.352 --> 1:02:30.702
action. It was predicated upon a narrative that
1:02:30.756 --> 1:02:36.106
everyone knows now called the patent troll, which, like trolls,
1:02:36.298 --> 1:02:39.770
is a very compelling, dramatic,
1:02:39.850 --> 1:02:42.874
and vivid image.
1:02:42.922 --> 1:02:46.450
But like trolls, is just a myth. So, like Randy says, some time ago,
1:02:46.520 --> 1:02:50.418
there were a few bad actors that bought or licensed some lesser quality
1:02:50.504 --> 1:02:53.566
patents, and they weren't practicing the invention.
1:02:53.758 --> 1:02:56.946
These few bad companies started suing legitimate companies
1:02:57.048 --> 1:03:00.286
based on. These patents, these bad actors, are considered non
1:03:00.318 --> 1:03:04.098
practicing entities or NPES, and gave birth to the concept
1:03:04.114 --> 1:03:07.670
of the patent troll. Unfortunately for the direction this ends up going,
1:03:07.820 --> 1:03:11.446
most inventors are also considered non practicing entities
1:03:11.558 --> 1:03:15.226
and historically always have been, but operate not in
1:03:15.248 --> 1:03:18.522
this unethical manner, but in good faith and according to how the system
1:03:18.576 --> 1:03:22.094
was designed to work. Innovators require support
1:03:22.212 --> 1:03:25.742
that in division of labor. People who have the resources, the money,
1:03:25.796 --> 1:03:30.078
the capital, the infrastructure can
1:03:30.164 --> 1:03:34.030
link up with through contracts the
1:03:34.100 --> 1:03:37.422
nimble innovators who have the intellectual capital.
1:03:37.486 --> 1:03:41.038
And that from that, as Adam Smith explained, the wealthy nations,
1:03:41.134 --> 1:03:45.214
you get this incredible maximization of value and
1:03:45.272 --> 1:03:48.582
wealth creation. Patents have been
1:03:48.636 --> 1:03:52.374
historically this kind of private property bridge. It's how you get from
1:03:52.412 --> 1:03:55.910
the invention in the lab, the invention in the garage
1:03:58.570 --> 1:03:59.910
to the marketplace.
1:04:01.290 --> 1:04:04.758
Because the problem isn't invention. Humans have always been inventive. Humans have
1:04:04.764 --> 1:04:08.178
been inventing for thousands of years. Why haven't those inventions
1:04:08.274 --> 1:04:12.142
got into the marketplace? You know, the,
1:04:12.196 --> 1:04:16.154
the really fascinating, you know, hockey stick graph
1:04:16.202 --> 1:04:19.946
that really is the most revealing hockey stick graph that ever has existed
1:04:19.978 --> 1:04:24.126
is the one that shows economic development
1:04:24.158 --> 1:04:27.938
and levels of innovation over about from
1:04:28.024 --> 1:04:31.026
like, you know, over a 2000 year period from, you know,
1:04:31.048 --> 1:04:34.434
this, you know, started ad ad ad period to today.
1:04:34.552 --> 1:04:39.646
And it's almost entirely flat for
1:04:39.688 --> 1:04:43.366
1900 years. And then you get to the 19th century, and then
1:04:43.388 --> 1:04:46.440
it goes straight up.
1:04:47.850 --> 1:04:50.886
That just happens to correlate with rule of
1:04:50.908 --> 1:04:54.346
law, protection of rights of lifelibrian, property, limited government,
1:04:54.448 --> 1:04:57.430
the development of market, but also patents.
1:04:57.590 --> 1:05:00.698
But hey, no need to let facts and history get in the way of a
1:05:00.704 --> 1:05:04.506
good narrative. Big tech saw these few bad actors and initiated
1:05:04.538 --> 1:05:08.110
a nationwide campaign that suggested that the patent troll problem
1:05:08.180 --> 1:05:11.754
was real and huge, even though there were only a few bad actors,
1:05:11.802 --> 1:05:15.726
and it worked exceedingly well. It's been entirely
1:05:15.918 --> 1:05:19.890
a policy narrative for which millions of dollars were spent
1:05:20.550 --> 1:05:24.434
pushing it into the policy debates, into the popular press.
1:05:24.552 --> 1:05:28.098
I mean, earlier it was interesting. In a conversation,
1:05:28.194 --> 1:05:31.490
Ashley mentioned how, you know, you know, innovators and inventors
1:05:31.570 --> 1:05:34.680
doing startups, like, they don't know about patents, but yet, like,
1:05:35.130 --> 1:05:38.098
your grandmother or grandfather heard patent troll.
1:05:38.274 --> 1:05:41.898
I got questions from people like, what are these patent trolls they hear about?
1:05:42.064 --> 1:05:45.494
People don't even know anything about the patent system who are actually getting patents,
1:05:45.622 --> 1:05:48.874
but they've heard of patent trolls, which tells you that doesn't happen
1:05:48.912 --> 1:05:49.770
by accident.
1:05:52.110 --> 1:05:56.394
It's well documented that this was a coordinated campaign pushed
1:05:56.442 --> 1:06:00.510
by big tech, coordinated with academics,
1:06:01.010 --> 1:06:04.954
you know, writing articles and producing junk science empirical
1:06:05.002 --> 1:06:08.606
studies, like the claim that, you know, 20 trolls
1:06:08.638 --> 1:06:12.254
cost the economy $29 billion in 2011. It's a totally
1:06:12.302 --> 1:06:15.974
bogus junk science study that has
1:06:16.012 --> 1:06:19.574
been totally shredded by
1:06:19.612 --> 1:06:23.110
academics and scholars. And yet,
1:06:23.260 --> 1:06:26.806
like troll, it continues to be cited and referenced to the
1:06:26.828 --> 1:06:27.720
very day.
1:06:30.570 --> 1:06:34.222
And again, because it represents
1:06:34.306 --> 1:06:37.466
this narrative that has been proven very effective, very,
1:06:37.568 --> 1:06:40.922
very policy. People like to say sticky and just like
1:06:40.976 --> 1:06:45.162
that. And to this day, any entity that is not practicing their invention
1:06:45.226 --> 1:06:48.506
but holds a patent on it is labeled a patent troll.
1:06:48.618 --> 1:06:52.094
This includes solo inventors, universities, and the like.
1:06:52.212 --> 1:06:55.834
Just about anybody who sues someone for patent infringement
1:06:55.962 --> 1:06:59.026
can be called a patent troll because it's just
1:06:59.048 --> 1:07:03.038
so easy to label them. And I was at it back in 2015 when Paul
1:07:03.054 --> 1:07:05.780
and I were fighting the Fight against the Innovation Act.
1:07:06.390 --> 1:07:10.470
We ended up kind of accidentally being invited to a luncheon
1:07:11.050 --> 1:07:14.726
in the house. So basically, you have these lobbyists who will
1:07:14.748 --> 1:07:17.318
invite all these staff members, and they'll give them lunch, and I'll give them a
1:07:17.324 --> 1:07:19.594
bunch of propaganda while they're eating, right?
1:07:19.792 --> 1:07:22.140
And basically,
1:07:23.230 --> 1:07:26.300
I got invited because they didn't know who I was. So Paul and I went.
1:07:27.390 --> 1:07:31.206
The first thing this woman said was, oh, the first patent troll was Eli
1:07:31.238 --> 1:07:34.862
Whitney. Eli Whitney was a patent troll. So why would big tech
1:07:34.916 --> 1:07:38.282
propagate this? Apple, Google, Microsoft, et cetera,
1:07:38.426 --> 1:07:41.806
all the big players leveraged patents for their own success and for
1:07:41.828 --> 1:07:45.154
what they didn't invent in house, they would buy or license patents for new
1:07:45.192 --> 1:07:48.802
innovations, paying people for their inventions. This was the private property
1:07:48.856 --> 1:07:52.094
bridge from intellectual to real capital that Adam discussed
1:07:52.142 --> 1:07:56.190
earlier. But hey, dealing with licensing is a massive inconvenience,
1:07:56.270 --> 1:07:59.494
and it's easier and cheaper to steal than it is to respect the law or
1:07:59.532 --> 1:08:02.966
develop the technology yourself. So a weakened patent system was the
1:08:02.988 --> 1:08:06.770
goal. And this sort of crony corporatism isn't a new playbook.
1:08:06.930 --> 1:08:10.438
It turns out there's plenty of historic precedent for big companies trying to
1:08:10.444 --> 1:08:14.170
capture the regulatory state to create barriers to entry and protect
1:08:14.240 --> 1:08:17.738
market share. This just happens to be the first time that it worked.
1:08:17.824 --> 1:08:21.374
Big corporations have been trying to weaken our patent system since about
1:08:21.412 --> 1:08:25.598
1850. Now, I don't know. Here's someone else you might want to
1:08:25.684 --> 1:08:30.090
interview. Her name is Zarina Khan. She's a researcher,
1:08:30.250 --> 1:08:33.806
an academic, and she's written about how you go all
1:08:33.828 --> 1:08:37.700
the way back to 1850. Any new technology comes out,
1:08:38.630 --> 1:08:41.778
a new industry builds around it. In the early years, there are a lot of
1:08:41.784 --> 1:08:45.058
lawsuits, and the big companies being sued for patent infringement go to
1:08:45.064 --> 1:08:48.286
Washington, DC. And try to weaken the system. And you're
1:08:48.318 --> 1:08:51.906
talking about telephone. I mean, telegraph, telephone,
1:08:52.098 --> 1:08:56.214
locomotives, automobiles, all the way up to whatever the current key
1:08:56.252 --> 1:08:59.658
area of business is. That's where it's happening. And right
1:08:59.664 --> 1:09:00.780
now, it's big tech.
1:09:03.790 --> 1:09:07.194
Amazingly, our politicians held pretty firm until,
1:09:07.392 --> 1:09:10.698
I don't know, about ten years ago. And what happened was
1:09:10.784 --> 1:09:13.914
now it was big tech with all of their influence,
1:09:13.962 --> 1:09:17.326
all of their think about the airwaves they can control, think about the things they
1:09:17.348 --> 1:09:20.826
can put out that people see far and wide.
1:09:20.938 --> 1:09:24.394
The big tech's narrative sticks. Eli Whitney is a patent troll,
1:09:24.442 --> 1:09:28.766
and Congress rushes in to save the day by passing the AIA in 2011.
1:09:28.878 --> 1:09:32.398
Unleashing, the PTAB and its 84% kill rate. I alluded
1:09:32.414 --> 1:09:36.098
to two potential legislative solutions earlier the Rally Act and the
1:09:36.104 --> 1:09:39.778
Stronger Patents Act. In order to understand their key differences,
1:09:39.874 --> 1:09:44.242
it's important to lay out specifically why the PTAB has been such an effective WMD
1:09:44.306 --> 1:09:47.438
and what's absolutely necessary for any meaningful reform.
1:09:47.554 --> 1:09:51.434
The design defects in
1:09:51.472 --> 1:09:54.790
the relevant sections of the AIA were really serious.
1:09:54.870 --> 1:09:58.730
One portion of it, the part dealing with post
1:09:58.800 --> 1:10:02.602
grant reviews, was very badly designed,
1:10:02.746 --> 1:10:06.622
very naively designed by people who don't understand how
1:10:06.676 --> 1:10:10.286
litigation can. I guess the cliche nowadays is
1:10:10.468 --> 1:10:13.822
be weaponized to protect people who
1:10:13.876 --> 1:10:17.474
should have to pay or be enjoined rather than
1:10:17.512 --> 1:10:21.362
be protected. We could easily devote an entire episode to the weaponized design
1:10:21.416 --> 1:10:24.738
defects alone. And some of this can get a little technical on
1:10:24.744 --> 1:10:28.502
the legal side of things. So we're going to 30,000 foot this a little bit.
1:10:28.636 --> 1:10:32.594
Most of these defects come down to a difference in long held legal standards
1:10:32.642 --> 1:10:36.434
in traditional constitutionally defined Article Three courts versus
1:10:36.482 --> 1:10:40.250
the rules Congress established for the PTAB. Of course, the district court.
1:10:41.390 --> 1:10:45.206
Those are patent infringement actions where someone is asserting
1:10:45.238 --> 1:10:49.130
the invalidity of the patent as a defense, so the patent owner
1:10:50.430 --> 1:10:54.640
has the opportunity to win in a legitimate sense.
1:10:55.730 --> 1:10:59.178
The patent owner doesn't win in the PTAB. The PTAB sole
1:10:59.194 --> 1:11:02.702
function as an administrative tribunal is to invalidate a patent. The whole reason
1:11:02.756 --> 1:11:05.970
why it was created was to create something that wasn't a court.
1:11:06.470 --> 1:11:10.306
And there's a reason why courts function well because they follow the rule of law
1:11:10.328 --> 1:11:14.846
and due process. The PTAB doesn't operate under the same rules,
1:11:15.038 --> 1:11:18.866
procedurally or substantive, as courts. There's no summary judgment. There's no
1:11:18.888 --> 1:11:22.514
American hearing for interpreting the claims. There's no motions
1:11:22.562 --> 1:11:25.510
to dismiss. You don't even have a claim.
1:11:26.970 --> 1:11:30.342
There's no real discovery. Right, but that's just the beginning.
1:11:30.486 --> 1:11:33.898
The PTAB omits the standing requirement, has a lower burden of
1:11:33.904 --> 1:11:37.686
proof and a weakened presumption of validity when compared to legal standards
1:11:37.718 --> 1:11:41.018
used in courts. Recall earlier when I mentioned that in
1:11:41.024 --> 1:11:44.954
these proceedings of the PTAB, the validity of granted patents can be challenged
1:11:45.002 --> 1:11:48.462
by any member of the public. Anyone in the entire
1:11:48.516 --> 1:11:52.254
world, for any reason, can file a PTAB. People should not be allowed to
1:11:52.292 --> 1:11:55.694
challenge patents in the PTAB unless
1:11:55.742 --> 1:11:59.998
they're being charged with infringement or have actually been sued in court.
1:12:00.174 --> 1:12:03.522
Those people absolutely should have the chance to
1:12:03.576 --> 1:12:06.710
challenge the patent of PTAB, but not stock short
1:12:06.780 --> 1:12:10.018
sellers like Kyle Bass. Not troublemakers,
1:12:10.114 --> 1:12:13.206
not shills for defendants who get
1:12:13.228 --> 1:12:17.078
formed out of nowhere and have no business
1:12:17.164 --> 1:12:20.966
except to file petitions
1:12:20.998 --> 1:12:25.162
in the PTAB. So the most important thing is to do what courts have always
1:12:25.216 --> 1:12:29.066
done require what lawyers call standing. That would be reform number
1:12:29.088 --> 1:12:32.766
one. The worst example I know of, one of the bad examples, I know
1:12:32.788 --> 1:12:36.394
a guy, the company is Valancell it's in North Carolina.
1:12:36.442 --> 1:12:38.270
His name is Dr. Stephen Le. Buff.
1:12:39.570 --> 1:12:43.054
He's the one who was the first person who figured out
1:12:43.092 --> 1:12:46.590
how to make biometric sensing devices work on an active body.
1:12:46.660 --> 1:12:49.682
Prior to that, if you were in a coma, they could have something on you
1:12:49.816 --> 1:12:53.166
sensing your heart rate or whatever, but if you were moving around, it didn't
1:12:53.198 --> 1:12:56.594
work. He figured this out. He patented it a long,
1:12:56.632 --> 1:12:59.682
long time before an Apple Watch ever was in existence.
1:12:59.746 --> 1:13:03.350
Well, at some point, Apple Watch comes out, and of course,
1:13:03.420 --> 1:13:06.534
Dr. LeBuff has a very successful business or licensing this technology.
1:13:06.652 --> 1:13:09.686
Apple approaches them like they're going to license, but no,
1:13:09.708 --> 1:13:14.054
they just take it, and then he sues them over. The four patents are infringing.
1:13:14.182 --> 1:13:17.386
They then take him to the PTAB, not just for the
1:13:17.408 --> 1:13:21.146
four patents they're infringing, but for another eight patents that he happens to
1:13:21.168 --> 1:13:24.926
have. How about that? No one thought, well, what happens if
1:13:24.948 --> 1:13:28.686
you don't have to have standing? Well, what happens is they can do whatever they
1:13:28.708 --> 1:13:32.830
want. There was even the case of a disgruntled ex wife trying to
1:13:32.900 --> 1:13:36.298
just invalidate her ex husband's patents, and we're seeing
1:13:36.324 --> 1:13:39.506
people commit extortion. This is the reason why
1:13:39.528 --> 1:13:43.058
people can file 40 or 50 petitions against the same patent. And of
1:13:43.064 --> 1:13:47.046
course, there have also been cases of hedge fund guys try
1:13:47.068 --> 1:13:50.882
to publicly invalidate a valuable drug stock right after you've shorted
1:13:51.026 --> 1:13:53.510
the drug stock. Right. Unified Patents,
1:13:54.730 --> 1:13:58.546
they don't produce anything. They are a membership organization.
1:13:58.658 --> 1:14:02.138
Big tech and others pay them a fee to be a
1:14:02.144 --> 1:14:06.086
member of this organization. And what Unified Patents does is they seek
1:14:06.118 --> 1:14:09.434
out patents that their customers want the use
1:14:09.472 --> 1:14:13.158
of, and they simply attack those patents and try to invalidate them
1:14:13.184 --> 1:14:16.986
or get a zero dollar license agreement. And then there's the massive gulf surrounding
1:14:17.018 --> 1:14:20.478
the burden of proof required for invalidation and the presumption of
1:14:20.484 --> 1:14:23.966
validity for the property. Right? These are the rocks that a patent
1:14:23.998 --> 1:14:28.130
owner has to stand on. Reform number two at the PTAB,
1:14:28.630 --> 1:14:32.210
again, requiring legislative amendment of the terms in the
1:14:32.280 --> 1:14:36.158
AIA itself is to equalize the
1:14:36.184 --> 1:14:39.686
burden of proof to kill a patent. So it's the
1:14:39.708 --> 1:14:43.282
same in court and at the PTAB
1:14:43.426 --> 1:14:46.774
right now. It's a high standard in the court, as you
1:14:46.812 --> 1:14:50.614
know, clear and convincing evidence. In the Ptab,
1:14:50.662 --> 1:14:54.426
a significantly lower standard applies because that's what the
1:14:54.448 --> 1:14:58.422
Congress said. It goes by the name Preponderant
1:14:58.486 --> 1:15:02.560
Evidence for short. That has to change.
1:15:02.930 --> 1:15:06.922
The third thing that I think is fundamental, and it might require
1:15:06.986 --> 1:15:10.494
legislation, would be to make it
1:15:10.532 --> 1:15:14.350
clear that there's a significant
1:15:14.430 --> 1:15:18.030
burden of proof on the part of the challenger.
1:15:18.190 --> 1:15:21.746
Because all these patents were examined by experts before they were
1:15:21.768 --> 1:15:25.206
even issued, and often that examination took years and an
1:15:25.228 --> 1:15:29.570
enormous amount of work by technologically savvy lawyers
1:15:29.650 --> 1:15:33.314
and examiners. Yes, of course they make mistakes.
1:15:33.362 --> 1:15:36.882
All humans make mistakes. But all the serious
1:15:36.946 --> 1:15:40.454
efforts to evaluate whether examination
1:15:40.502 --> 1:15:43.722
mistakes are rampant and as
1:15:43.776 --> 1:15:47.094
common as good examinations have shown, the opposite
1:15:47.142 --> 1:15:50.574
they've all shown that vast majority of the time, the work
1:15:50.612 --> 1:15:53.360
done by examiners is quite sound.
1:15:54.450 --> 1:15:58.842
So it should be a very clear presumption
1:15:58.986 --> 1:16:02.398
of validity at the get go in
1:16:02.404 --> 1:16:05.634
the PTAB, just as it is in court. But what about
1:16:05.672 --> 1:16:08.942
the administrative officials presiding over the cases of the PTAB
1:16:09.006 --> 1:16:12.286
who get to make the decisions on validity? They are given the title
1:16:12.318 --> 1:16:15.650
of Administrative Patent Judges, or APJs for short.
1:16:15.800 --> 1:16:19.334
But they're not judges in any classical sense of the word. The problem
1:16:19.372 --> 1:16:22.994
is you have an administrative tribunal
1:16:23.042 --> 1:16:26.658
that is not constrained by any requirements of the rule of law of due
1:16:26.674 --> 1:16:30.102
process. Anything that Americans assume
1:16:30.166 --> 1:16:34.566
should occur when your rights, whether a property right or even a contract,
1:16:34.758 --> 1:16:38.566
had been challenged and you were called upon
1:16:38.598 --> 1:16:42.190
to defend your rights before a neutral administrator,
1:16:42.530 --> 1:16:45.674
a judge, there was a very interesting exchange.
1:16:45.802 --> 1:16:51.150
It's called Oil States, which was actually addressing whether the
1:16:51.300 --> 1:16:54.418
judges, the administrative patent judges at the
1:16:54.424 --> 1:16:58.994
PTAB, were constitutionally appointed or not, where the
1:16:59.032 --> 1:17:02.418
attorney defending the PTAB referred to
1:17:02.424 --> 1:17:06.034
them as judges. And Chief Justice Roberts said excuse me, what did you call
1:17:06.072 --> 1:17:09.480
them? And he says, Judges, your Honor. And he says, Where I'm from,
1:17:10.010 --> 1:17:13.526
we use a different term. Some things that could
1:17:13.548 --> 1:17:17.910
be changed in the Patent Office would be being more careful
1:17:18.670 --> 1:17:21.978
about who gets assigned to what cases. There ought to
1:17:21.984 --> 1:17:25.574
be a code of ethics requiring
1:17:25.622 --> 1:17:29.066
recusal of people who have a conflict of interest in
1:17:29.088 --> 1:17:32.030
the courts. We've had this forever, and it's quite strict.
1:17:32.450 --> 1:17:35.914
By contrast, at the PTAB, there is no code of ethics.
1:17:35.962 --> 1:17:40.014
There are no recusal rules at all that
1:17:40.052 --> 1:17:43.682
apply to the PTAB judges per se. That's a huge
1:17:43.736 --> 1:17:47.294
mistake that could be fixed by the Director,
1:17:47.422 --> 1:17:51.694
and it should be fixed by the Director. And if the Director doesn't
1:17:51.742 --> 1:17:55.730
fix it, then the Congress can and should. With regard
1:17:55.800 --> 1:17:59.490
to the rules of recusal applying to all the judges
1:17:59.570 --> 1:18:02.470
other than the Supreme Court, that's a whole separate problem.
1:18:02.540 --> 1:18:06.194
But all the other judges are bound by strict
1:18:06.242 --> 1:18:09.026
recusal rules that are in statute.
1:18:09.138 --> 1:18:13.050
So Congress can pass a statute. If the Patent Office
1:18:13.120 --> 1:18:15.866
doesn't fix this very fast on their own,
1:18:15.968 --> 1:18:19.850
that would get rid of these conflicts. If people own stock in a company,
1:18:19.920 --> 1:18:23.642
they should not be sitting on that company's
1:18:23.786 --> 1:18:27.434
patents, for example. And there's some other wrinkles
1:18:27.482 --> 1:18:31.630
that are a little more complicated, but that's the clearest cut example.
1:18:31.780 --> 1:18:35.522
And similarly, if somebody comes into the PTAB from,
1:18:35.576 --> 1:18:38.914
let's say, 20 years of private practice where they
1:18:38.952 --> 1:18:44.260
represented, I'll just pick a name out of the air
1:18:44.790 --> 1:18:48.990
apple for 20 years. They shouldn't be allowed to sit on apple cases.
1:18:49.150 --> 1:18:53.810
They have 270 of these judges. It's not like there won't be other judges
1:18:53.970 --> 1:18:57.046
who can sit on the panel and hear the case. The case will
1:18:57.068 --> 1:19:01.394
go ahead. It just shouldn't have people whose prior clientele
1:19:01.442 --> 1:19:04.906
or whose current stockholdings create a conflict. Let me tell you
1:19:04.928 --> 1:19:08.330
something. I never really thought about this until I got into this whole effort.
1:19:10.110 --> 1:19:13.978
A lifetime appointed judge is not trying to get a better job somewhere.
1:19:14.154 --> 1:19:18.074
They're kind of in for life. Whereas in an administrative
1:19:18.122 --> 1:19:21.034
court, you have judges who are like employees,
1:19:21.082 --> 1:19:24.702
who, for all you know, they're certainly not
1:19:24.836 --> 1:19:27.838
looking at going to work for you in the future, maybe for Google or Apple
1:19:27.854 --> 1:19:31.586
or one of those big guys. This problem, unfortunately, goes well beyond the concerns of
1:19:31.608 --> 1:19:35.090
any one APJ. They're panel stacking.
1:19:35.750 --> 1:19:39.634
They're stacking panels to reach preordained results that
1:19:39.672 --> 1:19:43.110
needs to end. I mean, that's a fundamental breach of the rule of law.
1:19:43.180 --> 1:19:47.014
I mean, we had a huge fight in our country over this in the 1930s
1:19:47.052 --> 1:19:51.020
over the packing of the US Supreme Court by President
1:19:51.630 --> 1:19:55.306
Roosevelt when he was upset about the court invalidating his
1:19:55.328 --> 1:19:59.066
New Deal programs. And everyone recognizes the
1:19:59.088 --> 1:20:01.310
reason why it's called the court packing dispute.
1:20:02.930 --> 1:20:06.938
And it still shocks me to this very day that lawyers,
1:20:07.034 --> 1:20:09.360
people who are trained in the law,
1:20:10.210 --> 1:20:14.042
are stacking panels and are participating in stacked panels
1:20:14.106 --> 1:20:17.266
and aren't thinking to themselves, isn't there something wrong with this?
1:20:17.368 --> 1:20:20.834
So what does this cost an inventor to defend their property rights in an
1:20:20.872 --> 1:20:24.334
administrative body that was sold as a faster and less expensive
1:20:24.462 --> 1:20:28.370
alternative to invalidating patents? So it has now become so expensive
1:20:28.450 --> 1:20:32.626
to enforce a patent. Let's assume a perfectly valid patent,
1:20:32.738 --> 1:20:36.178
I'm blatantly infringing it, I get sued,
1:20:36.274 --> 1:20:39.210
I file in the PTAB.
1:20:41.950 --> 1:20:45.766
The reality is that the total time frame
1:20:45.878 --> 1:20:49.226
could easily take five to ten years before I
1:20:49.248 --> 1:20:52.730
can get a final result out of the courts. And it could easily
1:20:52.810 --> 1:20:55.934
cost millions of dollars, even as
1:20:55.972 --> 1:20:59.390
high as five to ten millions of dollars. Now, most small
1:20:59.460 --> 1:21:03.098
companies can't afford that. So they're basically priced out
1:21:03.124 --> 1:21:06.686
of the US justice system because we've made it too expensive,
1:21:06.798 --> 1:21:10.894
unnecessarily expensive, and slow and cumbersome
1:21:10.942 --> 1:21:14.222
and burdensome and all the rest. It costs, on average,
1:21:14.286 --> 1:21:18.200
a half million dollars to defend at the PTAB per case.
1:21:18.650 --> 1:21:22.358
But surely, once a patent is found valid, that's it, right?
1:21:22.524 --> 1:21:26.278
We'd think so. In any balanced system, most are probably familiar with the
1:21:26.284 --> 1:21:30.202
legal concept of double jeopardy that prohibits a person from being tried more than once
1:21:30.256 --> 1:21:33.574
for the same matter after they have been acquitted or convicted.
1:21:33.702 --> 1:21:37.750
It is a long standing and important protection against government abuse
1:21:37.830 --> 1:21:40.934
and ensures that individuals are not subjected to repeated
1:21:40.982 --> 1:21:44.282
prosecutions. Not so in this kangaroo court.
1:21:44.426 --> 1:21:48.506
Senator Chris Coons from Delaware sponsors one of the bills we'll talk about shortly
1:21:48.618 --> 1:21:52.154
has said that big companies are using repeated challenges to just muscle
1:21:52.202 --> 1:21:55.854
their way over even the most valid patent by invalidating or weakening
1:21:55.902 --> 1:21:59.266
it through repeated challenges. Patent owner doesn't get anything out of
1:21:59.288 --> 1:22:02.210
the PTAB, choosing not to invalidate their patent.
1:22:02.550 --> 1:22:05.906
Petitioner gets everything. And the petitioner can keep filing petitions as
1:22:05.928 --> 1:22:09.302
well. In fact, they file repeated petitions, as people
1:22:09.356 --> 1:22:13.142
well know, or many people do now they're called
1:22:13.196 --> 1:22:16.358
serial petitioning. I'm not a particularly good fan of that because it
1:22:16.364 --> 1:22:19.370
sounds like we're talking about Cornflakes or Rice Krispies.
1:22:21.230 --> 1:22:25.382
So I like to make it clear that we're talking about companies like Samsung
1:22:25.446 --> 1:22:29.814
and Apple and others filing 30, 40 50 petitions
1:22:29.862 --> 1:22:33.102
against the exact same patent, making the exact same
1:22:33.156 --> 1:22:36.526
arguments. And why are they doing that? Because actually,
1:22:36.628 --> 1:22:40.362
studies have shown that their chances of a petition
1:22:40.426 --> 1:22:43.838
being granted go up even when the
1:22:43.844 --> 1:22:47.682
petition has been initially denied. They just refile the exact same
1:22:47.736 --> 1:22:50.878
petition. They change two sentences in it so it's a quote,
1:22:50.974 --> 1:22:54.174
different petition, and they refile
1:22:54.222 --> 1:22:57.686
it with the exact same arguments to the exact same evidence. And this has been
1:22:57.708 --> 1:23:01.426
confirmed now through empirical studies that the chance of that petition
1:23:01.458 --> 1:23:04.598
now being granted go up. That is not a
1:23:04.604 --> 1:23:08.422
system operated under the rule of law in any meaningful sense
1:23:08.476 --> 1:23:12.474
at the PTAB. Whereas I mentioned patent owner doesn't get anything out of it.
1:23:12.512 --> 1:23:15.606
And so it literally is a situation where patent owner has to pay to defend
1:23:15.638 --> 1:23:18.650
their patents constantly against 40 50 petitions,
1:23:18.990 --> 1:23:22.486
40 or 50 bytes at the exact same apple, where in court
1:23:22.518 --> 1:23:25.802
you get one bite. Speaking of double jeopardy, these challenges
1:23:25.866 --> 1:23:29.182
can also come after a patent is held valid in a court under
1:23:29.236 --> 1:23:33.002
statute grounds, not in the purview of a PTAB, josh Malone.
1:23:33.146 --> 1:23:36.494
So here he is. He comes out with his invention. It goes totally viral.
1:23:36.542 --> 1:23:40.340
Totally viral. You have no idea how what a seller this thing is.
1:23:40.790 --> 1:23:44.546
And it's being infringed heavily by TeleBrands. That's a
1:23:44.568 --> 1:23:47.160
big American company, big as seen on TV company.
1:23:47.530 --> 1:23:51.382
And he gets them in a real court before
1:23:51.436 --> 1:23:55.910
they get him to the PTAB, and he's fighting for a temporary injunction.
1:23:56.650 --> 1:24:00.874
And they come down with their MIT expert who argues that,
1:24:00.992 --> 1:24:04.550
well, we're not infringing because the patent is not valid,
1:24:04.630 --> 1:24:08.220
because it's unclear. Josh's patent says
1:24:09.230 --> 1:24:12.714
when the balloons are substantially filled with water, you shake the device and they fall
1:24:12.752 --> 1:24:16.746
off seal. Well, what does substantially filled with water mean? This is an unclear term.
1:24:16.858 --> 1:24:19.966
And come on, give me a break. Anyway, the judge did not go with their
1:24:19.988 --> 1:24:24.126
argument. Josh won. Then they appealed it. They appealed it to the
1:24:24.148 --> 1:24:27.266
next level. And again, and that judge actually laughed at them.
1:24:27.368 --> 1:24:31.570
And their attorneys ended up getting sanctioned for making a frivolous argument.
1:24:32.070 --> 1:24:35.438
So Josh was like mopping the floor with these guys in a real court,
1:24:35.534 --> 1:24:38.198
and he should have it should have been over. But no, they take it to
1:24:38.204 --> 1:24:41.506
the PTAB, make the same argument, and the PTAB says, you're right, it's unclear,
1:24:41.538 --> 1:24:45.400
and they invalidate the patent. Now, luckily, Josh had
1:24:45.850 --> 1:24:49.794
not just one patent, but many patents on this one invention,
1:24:49.842 --> 1:24:52.120
which that's something inventors. Oh, man.
1:24:52.970 --> 1:24:56.326
You file one and you do continuations, a whole bunch of continuations.
1:24:56.358 --> 1:24:58.666
So if they take out one patent, you can fight with another. If they take
1:24:58.688 --> 1:25:01.994
out that one, you can fight with another. But that was one of the things
1:25:02.032 --> 1:25:05.806
he did that helped him eventually win. And he eventually did win, but it
1:25:05.828 --> 1:25:09.454
cost $20 million, 20 million he and his investors had to spend
1:25:09.572 --> 1:25:12.798
to finally pull off a win. Who can do that? He's the one in
1:25:12.804 --> 1:25:14.740
a million that was able to pull it off,
1:25:15.830 --> 1:25:19.186
and everybody else just gets crushed. But it can also
1:25:19.208 --> 1:25:22.818
go the other direction, survive in court and then get dragged through the
1:25:22.824 --> 1:25:26.614
PTAB. But it's turned out not to be an alternative at
1:25:26.652 --> 1:25:30.102
all. It's turned out to be an
1:25:30.156 --> 1:25:34.054
upfront system, a prelude to
1:25:34.172 --> 1:25:37.394
court litigation. So first you have to survive
1:25:37.442 --> 1:25:41.850
in the PTAB, which takes two or three years, including appeals,
1:25:42.270 --> 1:25:45.770
and then you have to survive more challenges in the court
1:25:46.110 --> 1:25:49.494
on a broader array of legal subjects,
1:25:49.542 --> 1:25:54.142
invalidity grounds. So the
1:25:54.196 --> 1:25:58.126
Congress's expectation that this would be an alternative, they were told that.
1:25:58.228 --> 1:26:01.806
But the way it worked out, the truth was the opposite of what they
1:26:01.828 --> 1:26:05.282
were told. And so people talk about
1:26:05.336 --> 1:26:09.390
unintended consequences. I think there were unintended consequences
1:26:09.470 --> 1:26:13.234
here. The cynical part of me thinks a lot of the consequences were
1:26:13.272 --> 1:26:16.500
absolutely intended by the foes of
1:26:17.110 --> 1:26:21.238
vibrant patent system. And there are many. And they're large.
1:26:21.404 --> 1:26:24.966
Big tech is not at all shy about exploiting this type of weakness with its
1:26:24.988 --> 1:26:28.598
massive war chests. In a talk he gave at Columbia Law School in
1:26:28.604 --> 1:26:32.182
2019, bruce Sewell, former general counsel at Apple,
1:26:32.246 --> 1:26:35.654
explained that his $1 billion legal budget, that's billion
1:26:35.702 --> 1:26:39.306
with a B allowed him to, quote, use risk as a
1:26:39.328 --> 1:26:42.778
competitive advantage. And that Tim Cook told him, quote, I don't
1:26:42.794 --> 1:26:46.206
want you to stop pushing the envelope. And look, I'm not
1:26:46.228 --> 1:26:49.934
an apple hater. I'm recording this on a Mac and I love
1:26:49.972 --> 1:26:53.918
my iPhone, but this is gross. We're talking about going after
1:26:54.004 --> 1:26:57.166
the inventors who are the engine of our innovation economy.
1:26:57.278 --> 1:27:00.194
Good luck selling iPhones after burning the country down.
1:27:00.312 --> 1:27:04.114
Earlier, I mentioned that there was another concern that immediately came to mind for our
1:27:04.152 --> 1:27:07.474
guests right alongside the PTAB when prioritizing problems.
1:27:07.592 --> 1:27:10.978
That is, the issue of injunctive relief and the last pain point we'll
1:27:10.994 --> 1:27:14.466
cover before telling you about the two legislative solutions designed to tackle
1:27:14.498 --> 1:27:18.598
this and the PTAB. The infringement story unfortunately, gets even worse in
1:27:18.604 --> 1:27:22.238
the broader context of another Supreme Court patent decision that inverted
1:27:22.274 --> 1:27:25.962
the power dynamic between patent owners and infringers. Used to be.
1:27:26.016 --> 1:27:28.870
And to anybody who's new to this issue, this is going to be a shock.
1:27:28.950 --> 1:27:32.446
Used to be if you sued the infringer and you finally
1:27:32.548 --> 1:27:35.898
won the case, well, you could immediately stop the infringer.
1:27:35.994 --> 1:27:39.274
I mean, like, duh. Well, there was a big Supreme Court decision.
1:27:39.322 --> 1:27:42.906
Again, Supreme Court has not helped
1:27:42.938 --> 1:27:46.370
us. It was the ebay decision.
1:27:47.030 --> 1:27:50.126
The patent holder won, but the Supreme Court
1:27:50.158 --> 1:27:54.066
ruled that it was in the public interest of the infringer to keep producing the
1:27:54.088 --> 1:27:57.310
invention and the court would figure out what the inventor got out of it.
1:27:57.400 --> 1:28:00.934
And what that has turned into is if you win
1:28:00.972 --> 1:28:04.358
your case, of course, with all the obstacles now,
1:28:04.524 --> 1:28:08.440
you're one of these very few people that finally end up winning a case.
1:28:09.290 --> 1:28:13.226
You have to pass a public interest test to determine whether or not you
1:28:13.248 --> 1:28:16.678
can get injunctive relief. And that's a very hard thing to do if it's
1:28:16.694 --> 1:28:18.810
a startup versus a huge operation,
1:28:19.950 --> 1:28:23.146
in most cases, you're going to lose that. So the big infringer gets
1:28:23.168 --> 1:28:26.746
to keep the invention. And the court, as my buddy Paul
1:28:26.778 --> 1:28:30.142
would say, some english major in a robe tells you what you get if someone
1:28:30.196 --> 1:28:33.966
trespasses on your land, or someone comes and squats in your
1:28:33.988 --> 1:28:37.278
home, you can order them out of your house. That's what it means to
1:28:37.284 --> 1:28:40.514
have property, right? You can control how your property is used,
1:28:40.552 --> 1:28:43.938
your home or your bicycle, or your computer. And if someone's using it in
1:28:43.944 --> 1:28:47.074
a ways that you don't want them to, and they're not listening to you,
1:28:47.112 --> 1:28:49.874
you can get an order from a court to stop them. It's called an injunction.
1:28:49.922 --> 1:28:53.378
And since patents are property rights, and have been from the very beginning,
1:28:53.554 --> 1:28:57.318
they've been protected with these same types of injunctions. And this is important
1:28:57.404 --> 1:29:00.678
because this is what gives patent owners the ability to go into the market and
1:29:00.764 --> 1:29:04.554
to enter into contracts. Because if you can't say to people,
1:29:04.592 --> 1:29:07.606
no, you have to use it on my terms, and people aren't willing to negotiate
1:29:07.638 --> 1:29:11.260
with you. And the supreme court really
1:29:11.710 --> 1:29:15.354
undermined the ability of patent owners to obtain injunctions. So this is through judicial
1:29:15.402 --> 1:29:17.390
decisions. The courts,
1:29:18.770 --> 1:29:22.934
I think, unintentionally, unwittingly, and ignorantly
1:29:23.002 --> 1:29:27.262
about what the consequences would be have made injunctive
1:29:27.326 --> 1:29:30.430
relief for proven infringement of valid patents.
1:29:30.510 --> 1:29:34.210
Extremely difficult to get, almost impossible for many,
1:29:34.280 --> 1:29:38.054
many patent owners and patent owning companies
1:29:38.252 --> 1:29:42.274
to get without an injunction. There's no incentive
1:29:42.402 --> 1:29:46.102
for the proven infringer to settle or
1:29:46.156 --> 1:29:49.050
to pay a reasonable royalty.
1:29:49.630 --> 1:29:52.858
So the leverage that used to drive
1:29:52.944 --> 1:29:56.886
the system is now mostly gone. And that's because injunctions
1:29:56.918 --> 1:30:00.658
have been largely taken off the table. And big tech knows
1:30:00.694 --> 1:30:05.390
this, and so it's very much part of their practice of predatory infringement,
1:30:06.130 --> 1:30:09.598
is that they know that you can't stop them.
1:30:09.764 --> 1:30:13.422
At most, you'll get damages, and the damages will barely cover
1:30:13.476 --> 1:30:16.914
the cost of your lawyers after litigating for ten or 15 years.
1:30:17.112 --> 1:30:20.594
If you've got the patent, you should have the exclusive right
1:30:20.632 --> 1:30:24.494
to it, and you should be able to stop the infringer in a regular court
1:30:24.542 --> 1:30:28.120
case. You should have your day in court. If you win,
1:30:28.970 --> 1:30:32.680
they shouldn't be able to keep selling or producing it or using it.
1:30:34.410 --> 1:30:37.926
And that's what we had for a couple
1:30:37.948 --> 1:30:41.378
of hundred years that worked so well. This has
1:30:41.484 --> 1:30:45.334
really undermined and crippled the foundation
1:30:45.382 --> 1:30:48.774
of patents as property rights, as drivers of economic
1:30:48.822 --> 1:30:51.974
activity, of the ability of inventors
1:30:52.022 --> 1:30:55.486
to be able to receive renumeration property, renumeration in the
1:30:55.508 --> 1:30:58.010
marketplace through contracts and licenses.
1:30:58.170 --> 1:31:01.566
And in the same way that you sell your house and you can sell your
1:31:01.588 --> 1:31:04.558
house because someone just can't come and sit in it and say, I'm just going
1:31:04.564 --> 1:31:07.438
to be here, and here's the money I'm going to pay you for sitting in
1:31:07.444 --> 1:31:10.078
your house. And you're going to say, no, this is my house, and if you
1:31:10.084 --> 1:31:12.510
want to buy it, here's what it costs.
1:31:13.410 --> 1:31:16.550
Patent owners used to have that ability, and they don't anymore.
1:31:17.610 --> 1:31:20.978
It's really important to restore injunctions to patents.
1:31:21.074 --> 1:31:25.314
How are you going to have the next great American startup if the large infringer
1:31:25.442 --> 1:31:29.046
has stolen the technology and has flooded the market with it, and they get
1:31:29.068 --> 1:31:32.666
to keep it? I think it's impossible to overstate the significance of the
1:31:32.688 --> 1:31:36.870
impact that policies like these will have on long term economic viability
1:31:36.950 --> 1:31:40.474
for the country and the impact it will have on almost everyone if
1:31:40.512 --> 1:31:43.806
something doesn't change. You can't keep inflicting this kind
1:31:43.828 --> 1:31:47.422
of pain on the backbone of the American economy. Not when
1:31:47.476 --> 1:31:50.826
small businesses have accounted for two thirds of net job creation
1:31:50.858 --> 1:31:54.878
over the past 20 years and employ half of the private sector workforce.
1:31:54.974 --> 1:31:57.474
Any small company,
1:31:57.672 --> 1:32:01.186
university, individual inventor, startup. They don't have
1:32:01.208 --> 1:32:04.610
ten or 15 years to sit around and go through millions of dollars of
1:32:04.680 --> 1:32:08.850
legal fees and multiple levels of lawsuits and appeals
1:32:09.010 --> 1:32:12.626
and just to be ground down through the excessive legal
1:32:12.658 --> 1:32:16.146
process that we have in our country and to be put through the PTAB
1:32:16.338 --> 1:32:20.620
multiple times as well. So we need to
1:32:22.510 --> 1:32:26.522
rebalance the patent system so that it's fair and practical for
1:32:26.576 --> 1:32:30.730
small companies and even individual inventors, solo inventors,
1:32:31.250 --> 1:32:35.114
because they're so important, because they're number one more numerous.
1:32:35.242 --> 1:32:38.318
And historically, the smaller companies,
1:32:38.484 --> 1:32:42.142
smaller, innovative companies, have actually had the most big
1:32:42.196 --> 1:32:45.978
technological breakthroughs, more than the big companies. So we
1:32:46.004 --> 1:32:49.714
need them even more than we need the big companies. And yet we're treating them,
1:32:49.832 --> 1:32:53.426
I think, very poorly. And that has to change. We have
1:32:53.448 --> 1:32:57.026
to rebalance the system. There are, fortunately, two pieces of
1:32:57.048 --> 1:33:00.550
bipartisan legislation that have been designed to take on that needed
1:33:00.620 --> 1:33:04.226
change, tackling the problems of the PTAB and injunctive relief
1:33:04.258 --> 1:33:08.054
head on, but in their own unique ways. We're going to talk first about
1:33:08.092 --> 1:33:11.606
the Stronger Patents Act. This patent reform bill was last introduced
1:33:11.638 --> 1:33:14.854
by Senator Chris Coons, Democrat from Delaware, and Tom Cotton,
1:33:14.902 --> 1:33:18.326
Republican from Arkansas, in mid 2019. The Stronger
1:33:18.358 --> 1:33:21.534
Patent Act proposes various reforms of the type we were just
1:33:21.572 --> 1:33:25.086
talking about. Not all
1:33:25.108 --> 1:33:28.890
of the reforms you're talking about, but a lot of them. The Stronger Patents
1:33:28.970 --> 1:33:32.726
Act solved the problem quite well, in my opinion,
1:33:32.858 --> 1:33:37.170
of both injunctions and
1:33:37.240 --> 1:33:40.786
PTAB standards in the AIA. It would have
1:33:40.808 --> 1:33:44.366
amended the AIA. It addresses the problems surrounding injunctive
1:33:44.398 --> 1:33:48.354
relief and incentivized efficient infringement by abrogating
1:33:48.402 --> 1:33:51.874
or repealing the Supreme Court's 2006 ebay versus
1:33:51.922 --> 1:33:56.006
Merck Exchange decision that we discussed. This restores the long held principle of
1:33:56.028 --> 1:33:59.138
treating patents as private property. Rights by restoring
1:33:59.154 --> 1:34:03.062
the presumption of injunctive relief upon a finding that a patent is valid
1:34:03.126 --> 1:34:06.186
and has been infringed. Simply put, if you sue an
1:34:06.208 --> 1:34:09.766
infringer and win the case, you'd once again be able to stop the infringer
1:34:09.798 --> 1:34:13.846
from selling, producing, and using your invention. How it deals with the Ptab
1:34:13.878 --> 1:34:17.102
is where this philosophically differs with the next one we'll talk about,
1:34:17.236 --> 1:34:21.226
and that difference comes down to a perspective on the AIA. The Patent Trial
1:34:21.258 --> 1:34:24.846
and Appeal Board, in my opinion, has an appropriate
1:34:24.878 --> 1:34:28.670
place, but it hasn't been well designed
1:34:28.750 --> 1:34:32.062
and it hasn't been implemented in a balanced
1:34:32.126 --> 1:34:36.226
way. I don't think the American
1:34:36.328 --> 1:34:39.954
Ventst Act was a big mistake. I think on balance,
1:34:40.002 --> 1:34:43.334
it did a lot of good and needed things. We've talked about those
1:34:43.372 --> 1:34:46.614
aspects the judge is referring to in prior episodes, but this is where
1:34:46.652 --> 1:34:50.194
solutions diverge a bit. The Stronger Patents Act seeks to reform
1:34:50.242 --> 1:34:53.514
the Ptab as opposed to abolishing it. One of the main ways
1:34:53.552 --> 1:34:56.694
it accomplishes this is by aligning the disparities we discussed
1:34:56.742 --> 1:35:00.538
regarding district court appeal standards compared to the tilted rules of the
1:35:00.544 --> 1:35:04.506
Ptab. If enacted, the bill would require standing in the Ptab,
1:35:04.618 --> 1:35:07.918
ensuring that a petitioner has a business or financial reason to
1:35:07.924 --> 1:35:10.922
challenge the validity of a patent, so the hedge fund managers,
1:35:10.986 --> 1:35:14.522
jilted, ex spouses, and more importantly, big tech alliance groups
1:35:14.586 --> 1:35:17.474
can't just decide to attack a patent or harass a business.
1:35:17.592 --> 1:35:21.566
It would also raise the burden of proof standards for the evidence needed to invalidate
1:35:21.598 --> 1:35:25.102
a patent, harmonizing it with district courts. This standard raises
1:35:25.166 --> 1:35:28.726
the presumption of validity in the Ptab by giving appropriate deference to
1:35:28.748 --> 1:35:31.846
the USPTO's. Initial expert examination and issuance of
1:35:31.868 --> 1:35:34.962
a patent, which has since been relied upon by inventors,
1:35:35.026 --> 1:35:38.946
patent owners, and investors. The bill also has provisions to eliminate
1:35:38.978 --> 1:35:42.442
the use of repeat challenges that are all too often being used to beat down
1:35:42.496 --> 1:35:44.854
and invalidate even the most valid patents.
1:35:44.982 --> 1:35:48.774
Petitioners would only be allowed to file one petition to challenge a patent unless
1:35:48.822 --> 1:35:52.654
they are later charged with infringement of additional claims. The bill would
1:35:52.692 --> 1:35:55.998
similarly establish that any entity financially contributing to a
1:35:56.004 --> 1:35:59.486
Ptab validity challenge is a real party in interest who
1:35:59.508 --> 1:36:02.814
cannot bring future challenges, ensuring that no entity can make
1:36:02.852 --> 1:36:06.626
multiple Ptab challenges as a silent financial contributor, much of
1:36:06.648 --> 1:36:10.798
the double jeopardy concern would also be addressed by eliminating redundancy with district
1:36:10.814 --> 1:36:14.814
courts. If an IPR is instituted, the petitioner cannot bring validity
1:36:14.862 --> 1:36:18.338
challenges of the same type in district court. While in spirit
1:36:18.354 --> 1:36:21.798
everyone agrees that these are desirable outcomes, some contend that the
1:36:21.804 --> 1:36:24.886
Ptab is fundamentally flawed at its core and must be
1:36:24.908 --> 1:36:28.246
eliminated entirely. Yeah, you change things like that and blah, blah,
1:36:28.278 --> 1:36:31.914
blah. I don't know that
1:36:31.952 --> 1:36:35.786
that would make that much of a difference, because if
1:36:35.808 --> 1:36:39.500
the judges if the system is already biased as it is,
1:36:40.430 --> 1:36:44.174
I just don't know, because what you're dealing with is people.
1:36:44.292 --> 1:36:47.534
It's kind of like that's a subjective thing to a high
1:36:47.572 --> 1:36:51.120
degree. And part of the problem you have is
1:36:53.090 --> 1:36:57.294
you have these judges. They're called APJs,
1:36:57.342 --> 1:37:01.342
Administrative Patent Judges. Recall. These are the officials who preside
1:37:01.406 --> 1:37:04.946
over the cases and decide whether or not a patent is valid. You know,
1:37:04.968 --> 1:37:08.242
the ones looking for a better job, who have no code of conduct on ethics
1:37:08.306 --> 1:37:10.360
or recusals for conflict of interest.
1:37:11.210 --> 1:37:14.994
There are conflicts. There was a guy named Matt
1:37:15.042 --> 1:37:23.002
Clements. He was an attorney working basically
1:37:23.136 --> 1:37:27.462
helping Apple fight patent infringement cases. Right. He was their attorney,
1:37:27.606 --> 1:37:31.226
Matt Clemens, he then becomes a Ptab judge in 24,
1:37:31.328 --> 1:37:35.370
I think maybe 23 or 24 cases where he is a Ptab judge
1:37:35.450 --> 1:37:38.574
hearing Apple cases where they're trying to invalidate a patent. They win,
1:37:38.612 --> 1:37:43.070
of course. And my colleague Josh Malone
1:37:43.490 --> 1:37:46.882
was at a Ptab trial where one of our
1:37:46.936 --> 1:37:50.786
members, an inventor we know, was being having his patent attacked by
1:37:50.808 --> 1:37:54.322
Apple. And there was Matt Clements again on the other side of the aisle working
1:37:54.376 --> 1:37:57.586
for Apple as an attorney. Now, how the hell can this go
1:37:57.608 --> 1:38:00.566
on? You couldn't do that as a real judge. But even if you squared some
1:38:00.588 --> 1:38:03.846
of that up to eliminate the egregious issues, randy says that
1:38:03.868 --> 1:38:07.206
this problem is deeply institutionalized. So here, Google and
1:38:07.228 --> 1:38:10.430
big tech are helping get this law passed using a lot of influence, a lot
1:38:10.440 --> 1:38:13.734
of lobbying, a lot of propaganda get the law passed. And of course,
1:38:13.772 --> 1:38:15.686
this thing's going to be run by the patent office. It's going to be set
1:38:15.708 --> 1:38:18.914
up by the director of the Patent office. Well, next thing you know, the former
1:38:18.962 --> 1:38:22.586
head of patent strategy, Google, is appointed as the director of our patent
1:38:22.618 --> 1:38:26.282
office. How about that? Talk about capture of an agency.
1:38:26.426 --> 1:38:30.654
Wow. Her name was Michelle Lee. Look it up. Michelle Lee, former head
1:38:30.692 --> 1:38:34.266
of Patent Strategy at Google, was appointed as the director of our patent
1:38:34.298 --> 1:38:37.706
office. Now, of course, she set the court
1:38:37.738 --> 1:38:40.862
up, the administrative court. She hired the judges, made the rules,
1:38:41.006 --> 1:38:44.866
weaponized it, turned it into a patent killing machine. Randy also
1:38:44.888 --> 1:38:48.250
makes the argument for simplicity and that any reform that keeps the Ptab
1:38:48.270 --> 1:38:52.710
alive is just adding complexity to complexity. And it's not the solution.
1:38:53.050 --> 1:38:56.566
The solution is we want our day in court. You could make a
1:38:56.588 --> 1:39:02.698
bunch of changes to the Ptab theoretically, and maybe it
1:39:02.704 --> 1:39:05.100
would be more fair. Certainly it would be more fair.
1:39:05.870 --> 1:39:09.226
But here's my argument. Would it still protect the
1:39:09.248 --> 1:39:13.434
little guy? I know that those changes in that bill would
1:39:13.472 --> 1:39:17.134
help larger players who care about Pats, but what
1:39:17.172 --> 1:39:20.494
about the small player who doesn't have money, who may
1:39:20.532 --> 1:39:24.298
not have but one or two patents, doesn't have a bunch
1:39:24.314 --> 1:39:28.034
of attorneys? I think that person needs
1:39:28.152 --> 1:39:31.634
their day in court with a jury and to be able to do it on
1:39:31.672 --> 1:39:35.474
contingency. So we really need to get back to where you
1:39:35.512 --> 1:39:39.282
have your rights, you have your day in court. It's a simplicity.
1:39:39.346 --> 1:39:42.130
We need to get back to Adam offers us a bridge.
1:39:42.210 --> 1:39:46.550
Ideally, the Ptab should be abrogated and eliminated.
1:39:47.130 --> 1:39:48.890
That's not going to happen tomorrow,
1:39:52.510 --> 1:39:55.990
but we can move and start moving in that direction
1:39:56.070 --> 1:39:59.020
and at least limit the damage that's being done now.
1:40:00.050 --> 1:40:03.870
A lot of lawyers, we understand law moves incrementally.
1:40:07.010 --> 1:40:10.858
It doesn't move in kind of huge radical fashions.
1:40:11.034 --> 1:40:14.850
When it does, I shouldn't say it doesn't, it does
1:40:14.920 --> 1:40:18.386
move in huge radical fashions at times, but those are
1:40:18.408 --> 1:40:22.050
the rarer events. Most of the time it's incremental development.
1:40:23.670 --> 1:40:27.126
And I think we should move towards the long term goal of
1:40:27.148 --> 1:40:28.630
getting rid of the Ptab,
1:40:30.730 --> 1:40:34.194
but it's not going to happen tomorrow or next year. And in the meantime,
1:40:34.242 --> 1:40:38.746
we can limit some of the damage and we can show
1:40:38.928 --> 1:40:42.186
that, use the
1:40:42.208 --> 1:40:45.878
damage that's causing as evidence for why we need to reform it and eliminate
1:40:45.894 --> 1:40:49.242
it at the same time. So I
1:40:49.296 --> 1:40:52.842
100% agree that we should support efforts to reform
1:40:52.906 --> 1:40:56.846
it, to impose rule of law constraints on it. These things need
1:40:56.868 --> 1:41:00.880
to stop. It would staunch some of
1:41:01.410 --> 1:41:04.686
the bleeding that we are having and some of the extreme damage
1:41:04.718 --> 1:41:08.740
that's being caused to the innovation economy and to innovators right now.
1:41:10.950 --> 1:41:14.066
But we should always keep the eye on the prize and on the
1:41:14.088 --> 1:41:17.538
target, which is that at the end of the
1:41:17.544 --> 1:41:21.186
day, this is fundamentally an institution that can't
1:41:21.218 --> 1:41:24.886
be reformed to work well. Which brings us to a legislative solution that would
1:41:24.908 --> 1:41:28.194
eliminate the Ptab, give inventors their day in court, and restore
1:41:28.242 --> 1:41:32.140
the rule of law and due process. I think the real answer is
1:41:32.510 --> 1:41:34.806
we really want to get back to where we have our day in court,
1:41:34.838 --> 1:41:38.666
in a real court, and we want
1:41:38.688 --> 1:41:42.030
to get back to what America had that was so valuable
1:41:42.530 --> 1:41:45.710
in incentivizing innovation. There is a bill
1:41:45.780 --> 1:41:49.146
last Congress that would do that and has not been reintroduced
1:41:49.178 --> 1:41:53.098
yet. That was Thomas Massey's. Bill the Restoring Leadership
1:41:53.194 --> 1:41:55.754
restoring America's Leadership and Innovation act HR.
1:41:55.802 --> 1:41:59.346
5874. This patent reform bill, also known for short as
1:41:59.368 --> 1:42:03.346
the Rally Act, was last introduced by Representative Thomas Massey, republican from
1:42:03.368 --> 1:42:06.894
Kentucky in late 2021. It is worth noting that Representative
1:42:06.942 --> 1:42:10.598
Massey is an MIT engineer, inventor, and holder of 29 of
1:42:10.604 --> 1:42:13.926
his own patents. Simplicity. Get rid of the Ptab. This is what
1:42:13.948 --> 1:42:17.346
Massey's bill would do get rid of the abstract idea exception.
1:42:17.378 --> 1:42:21.494
And of course, the third big area is injunctive
1:42:21.542 --> 1:42:24.966
relief. This bill is by far the widest sweeping, most inventor
1:42:24.998 --> 1:42:28.774
and patent owner friendly legislation on the table. The bill's one pager
1:42:28.822 --> 1:42:32.846
states that it restores patent protection for inventors and mitigates a generation of
1:42:32.868 --> 1:42:35.934
laws, regulations, and court decisions that have
1:42:35.972 --> 1:42:39.834
discouraged innovation by failing to secure to inventors the exclusive
1:42:39.882 --> 1:42:43.006
rights to their discoveries. First and foremost, rather than
1:42:43.028 --> 1:42:46.474
attempting to reform like the Stronger Patents Act, it abolishes
1:42:46.522 --> 1:42:50.174
the Ptab and its 84% kill rate for the over 3000 patents
1:42:50.222 --> 1:42:54.226
reviewed since 2011. It does so with the justification that
1:42:54.248 --> 1:42:57.854
the ptab is proven to be a failed experiment in practice.
1:42:57.902 --> 1:43:00.962
It is not faster nor cheaper nor an alternative to regular
1:43:01.026 --> 1:43:04.534
district court. It has not mitigated patent trolls, but has
1:43:04.572 --> 1:43:08.578
only made it harder for legitimate small businesses to compete. Accused infringers
1:43:08.594 --> 1:43:11.946
would still have the right to challenge patent validity in a regular court of law,
1:43:12.048 --> 1:43:16.122
which is how the US patent system has worked for our 1st 190 years.
1:43:16.256 --> 1:43:20.006
Second, the bill strikes down the judicially created eligibility tests
1:43:20.118 --> 1:43:23.742
going farther than the Eligibility Restoration Act. It would restore us.
1:43:23.796 --> 1:43:27.850
Code section 101 to the broad threshold question, as Congress intended,
1:43:27.930 --> 1:43:31.114
allowing eligible patents for any new and useful process, machine,
1:43:31.162 --> 1:43:34.886
manufacture, or composition of matter, leaving the other gates to catch patents
1:43:34.938 --> 1:43:38.526
that would block and not promote progress of science and useful arts.
1:43:38.638 --> 1:43:41.794
Explicit bill language states that it would effectively abrogate the four
1:43:41.832 --> 1:43:44.894
horsemen of the innovation Apocalypse. The Bilski,
1:43:44.942 --> 1:43:48.946
Alice Myriad and Mayo SCOTUS decisions we discussed earlier created
1:43:48.978 --> 1:43:52.550
the confused and chaotic mess around eligibility. It does so
1:43:52.620 --> 1:43:56.194
to ensure that life science discoveries, computer software,
1:43:56.242 --> 1:43:59.654
and similar inventions and discoveries are patentable and that those
1:43:59.692 --> 1:44:03.338
patents are enforceable. Third, and like the stronger Patents Act,
1:44:03.424 --> 1:44:07.114
the bill restores much needed injunctive relief on a finding of
1:44:07.152 --> 1:44:11.226
infringement of a patent. The court would have to presume that any further infringement of
1:44:11.248 --> 1:44:15.066
the patent would cause the patent owner irreparable harm, a presumption
1:44:15.098 --> 1:44:19.066
that could only be overcome by the infringers showing clear and convincing evidence
1:44:19.098 --> 1:44:22.286
to the contrary. The bill also explicitly abrogates the
1:44:22.308 --> 1:44:25.774
Supreme Court's ebay ruling in the subsequent lower court interpretations
1:44:25.822 --> 1:44:29.726
that have made it almost impossible to stop infringers from making, using and selling
1:44:29.758 --> 1:44:33.438
pirated inventions. What that will do is cause large entities
1:44:33.534 --> 1:44:36.934
to not just steal technology, they'll actually work with you,
1:44:36.972 --> 1:44:40.486
they'll license it, and it won't cost them much.
1:44:40.668 --> 1:44:45.720
It'll be such a small amount of their
1:44:46.410 --> 1:44:49.606
profits will simply go to licensing a technology
1:44:49.708 --> 1:44:53.226
here and there that's really valuable. And here and there you'll have
1:44:53.248 --> 1:44:56.538
an inventor with a startup that'll make a huge difference because the
1:44:56.544 --> 1:45:00.640
big guys can't steal it. And you'll have the incentive to have
1:45:01.090 --> 1:45:04.602
garage inventors doing things that are really valuable,
1:45:04.746 --> 1:45:09.066
which we need and which will help improve
1:45:09.098 --> 1:45:13.038
our economy, help monopolies not take over as much,
1:45:13.204 --> 1:45:16.674
and help America stay ahead of the rest of the world and stay
1:45:16.712 --> 1:45:20.286
more secure. There are some significant concerns, however, about the bill's.
1:45:20.318 --> 1:45:23.826
Viability professor Dennis Crouch of Patently O said of
1:45:23.848 --> 1:45:27.986
the 2018 version that, quote this proposal has a 0% likelihood
1:45:28.018 --> 1:45:32.006
of passing, but it has been introduced and offers an interesting discussion point.
1:45:32.108 --> 1:45:35.766
IP Watchdog founder and CEO Gene Quinn, strong advocate of
1:45:35.788 --> 1:45:39.126
Congressman Massey's, has written that abolishing the Ptab at this
1:45:39.148 --> 1:45:41.974
point simply will not happen and called it a, quote,
1:45:42.022 --> 1:45:46.006
politically infeasible and impossible demand at the expense of other available solutions
1:45:46.038 --> 1:45:48.954
to improve the Ptab. You know, I mean, look,
1:45:49.152 --> 1:45:53.114
maybe a valid thing to say, it's ambitious,
1:45:53.242 --> 1:45:56.846
it's an ambitious bill. But even if not passed, at a minimum, it can do
1:45:56.868 --> 1:46:00.826
a lot for shaping the conversation, for potentially influencing administrative
1:46:00.858 --> 1:46:04.334
and judicial decision making. And it doesn't have to be incompatible
1:46:04.382 --> 1:46:07.986
with the path that could be forged first by the Stronger Patents Act.
1:46:08.088 --> 1:46:12.020
Certainly Massey's bill being the
1:46:12.710 --> 1:46:16.520
end all solution, it does create a lot of
1:46:17.050 --> 1:46:20.774
discussion, right? It's a great discussion point and
1:46:20.812 --> 1:46:24.438
we certainly would like to see it passed. So it's a
1:46:24.444 --> 1:46:27.866
great piece of legislation and it should be
1:46:27.888 --> 1:46:30.700
on the table. But it is a practical matter.
1:46:31.390 --> 1:46:35.290
There's not enough support for it because
1:46:35.360 --> 1:46:39.146
it's a very radical proposal. It proposes to
1:46:39.168 --> 1:46:44.974
do a lot right in
1:46:45.012 --> 1:46:49.486
two respects. It's important. One is that by
1:46:49.508 --> 1:46:52.786
just being proposed and being supported by a lot of
1:46:52.808 --> 1:46:55.570
Congressmen has a lot of co sponsors,
1:46:56.790 --> 1:47:00.514
it sets the range of discussion. It makes these
1:47:00.552 --> 1:47:04.478
topics appropriate policy discussions,
1:47:04.654 --> 1:47:08.486
topics, policy discussion in DC. Which is really significant and important because
1:47:08.508 --> 1:47:12.806
they need to be. It's an important part of the policy process in
1:47:12.828 --> 1:47:16.694
terms of making issues. Now, topics of policy debate that
1:47:16.732 --> 1:47:20.410
weren't being debated before. It's an important part of the process
1:47:20.480 --> 1:47:24.810
in terms of also not just making issues, part of the policy debate
1:47:26.430 --> 1:47:30.098
on the Capitol and in Congress, but it's
1:47:30.134 --> 1:47:34.302
an important signal to the courts and to the agencies also,
1:47:34.356 --> 1:47:36.720
that these are important, relevant issues.
1:47:37.570 --> 1:47:41.534
There's significant evidence that the bills that
1:47:41.572 --> 1:47:42.798
were introduced starting in 2006,
1:47:42.804 --> 1:47:46.426
a lot of those bills
1:47:46.538 --> 1:47:50.642
focused on topics of remedies. And those topics were slowly coming
1:47:50.696 --> 1:47:54.082
out of the bills over the years as the Supreme Court kept granting cert
1:47:54.136 --> 1:47:58.342
in cases and remedies cases like Ebay and
1:47:58.396 --> 1:48:01.654
in others and in the Federal Circuit as well.
1:48:01.852 --> 1:48:05.430
I think there's a lot of evidence, not direct evidence, but evidence that
1:48:05.500 --> 1:48:09.222
the courts were getting the message that this is an important issue,
1:48:09.276 --> 1:48:11.820
this is an important topic, and we can fix this.
1:48:13.230 --> 1:48:17.254
In fact, it's within our domain to fix it as a court and remedies
1:48:17.382 --> 1:48:20.946
as remedies matter. So we should do so. And they did. So those topics
1:48:20.998 --> 1:48:24.670
came out of the bills as the courts ruled
1:48:25.330 --> 1:48:28.586
on the topics and in favor of the legislation. So it's
1:48:28.618 --> 1:48:32.414
important signal to other government actors that you can
1:48:32.452 --> 1:48:36.340
fix this or you should fix this if you have the power to do so.
1:48:38.550 --> 1:48:42.078
And it becomes potentially the basis for actual legislation
1:48:42.174 --> 1:48:45.474
down the road as you go through that process of
1:48:45.592 --> 1:48:48.886
having the policy debate, of educating people about these issues.
1:48:48.988 --> 1:48:51.880
Yes, I'm a strong supporter of the Stronger Patent Act.
1:48:52.410 --> 1:48:55.766
And I'm also a supporter of the Rally Act. I don't think the
1:48:55.788 --> 1:49:00.250
two are not mutually exclusive. Both should be on the table as active
1:49:00.910 --> 1:49:04.154
pieces of legislation that we should be debating and talking
1:49:04.192 --> 1:49:07.770
about right now politically.
1:49:08.590 --> 1:49:12.606
And just as a practical matter, the Stronger Ban Act, if and
1:49:12.628 --> 1:49:15.774
when it gets reintroduced in the new Congress, has a very strong
1:49:15.812 --> 1:49:19.438
chance of being axed upon and voted on.
1:49:19.524 --> 1:49:21.920
And I think we should take advantage of that.
1:49:22.690 --> 1:49:26.126
I know some people are worried, oh, by reforming the Ptab,
1:49:26.158 --> 1:49:30.062
you impliedly can see that it can work or worse.
1:49:30.126 --> 1:49:33.474
And by reforming the Ptab, you'll reduce the damage and reduce the
1:49:33.512 --> 1:49:36.430
reasons for why it should be eliminated.
1:49:36.590 --> 1:49:39.814
But there's always going to be
1:49:39.852 --> 1:49:43.366
some damage because the whole point of this is to be
1:49:43.388 --> 1:49:47.154
an agency that does things that courts don't do. We shouldn't worry
1:49:47.202 --> 1:49:51.046
that we're going to be papering over covering
1:49:51.078 --> 1:49:54.586
up any of the fundamental problems. They'll still be there just that
1:49:54.688 --> 1:49:58.540
we can actually do some good and save some innovators now
1:49:59.150 --> 1:50:03.206
with the Stronger Patent Act, and that's why I support it. Yeah, another foothold
1:50:03.238 --> 1:50:05.758
on the up the side of the mountain. Yeah. I know that there are a
1:50:05.764 --> 1:50:09.134
lot of congressmen and senators now who are now educated about
1:50:09.172 --> 1:50:12.870
these issues, who were completely oblivious
1:50:12.970 --> 1:50:16.674
to the destruction that has been wrought on our patent system and
1:50:16.712 --> 1:50:21.540
on our innovation economy. Five six years ago or
1:50:21.910 --> 1:50:25.902
worse, five, six years ago, thought, oh, yeah, patent holes
1:50:25.966 --> 1:50:29.858
and all these issues that this is we really have to get rid of patents.
1:50:29.954 --> 1:50:33.494
And, you know, and they've done a complete 180, some of them,
1:50:33.532 --> 1:50:36.870
I think, because of because of the efforts of people like
1:50:37.020 --> 1:50:40.726
Senator Coons and Congressman Massey and
1:50:40.828 --> 1:50:44.506
the work of a lot of other people who have been supporting them
1:50:44.688 --> 1:50:49.002
in their policy efforts, like the two of you and many others.
1:50:49.136 --> 1:50:53.046
Grassroots education. It's a big part of why we do this podcast.
1:50:53.238 --> 1:50:56.222
And we're going to get back to that in just a bit because it's absolutely
1:50:56.356 --> 1:51:00.106
one of the most actionable things we can discuss in the arena of solutions.
1:51:00.218 --> 1:51:03.658
But first, I wanted to ask our guests a question that I haven't been able
1:51:03.684 --> 1:51:07.726
to shake since researching both Ptab and District Court invalidation rates
1:51:07.758 --> 1:51:11.762
while preparing for our American Inventor Horror Story episode. I got two
1:51:11.816 --> 1:51:15.506
very different but equally enlightening answers. Judge, my next question
1:51:15.528 --> 1:51:18.690
is, it's a little bit more in the abstract,
1:51:18.770 --> 1:51:22.678
so feel free to push back on this one. But in
1:51:22.684 --> 1:51:26.134
our business, in our life, we look at things and sometimes we feel
1:51:26.172 --> 1:51:29.206
like we're fighting 100 different problems. Sometimes we try
1:51:29.228 --> 1:51:33.194
to zoom out and say, like, okay, are we fundamentally solving the right problem here?
1:51:33.392 --> 1:51:36.586
Is there a bigger issue that we could solve to make
1:51:36.688 --> 1:51:40.726
these 100 smaller problems go away? And that's
1:51:40.758 --> 1:51:42.560
the basis for this next question.
1:51:44.610 --> 1:51:48.138
One of the places we've often wondered if there's not a solution buried
1:51:48.234 --> 1:51:51.802
in all of this is with the role of the PTO
1:51:51.866 --> 1:51:55.566
and its weight, or apparent lack
1:51:55.598 --> 1:51:58.910
thereof, in ultimate patent validity,
1:51:58.990 --> 1:52:02.606
right? So patent is a constitutionally created
1:52:02.718 --> 1:52:06.594
property, right. A lot of times you see them compared to
1:52:06.712 --> 1:52:09.974
things like title deeds, like we might have on our home or another
1:52:10.012 --> 1:52:12.920
piece of property, right. But at the present,
1:52:13.530 --> 1:52:17.394
it feels like it's sort of a broken metaphor, right? You got the expert
1:52:17.442 --> 1:52:20.966
agency that's the PTO, they grant a piece of intellectual
1:52:20.998 --> 1:52:24.150
property that an inventor builds upon and leverages,
1:52:24.310 --> 1:52:28.326
much like somebody would leverage a piece of property cleared
1:52:28.358 --> 1:52:31.510
by a title company. But that's where things kind of start to
1:52:31.520 --> 1:52:35.066
break down, right. The Ptab is invalidating patents at a clip
1:52:35.098 --> 1:52:38.254
of 84%. That's according to us.
1:52:38.292 --> 1:52:41.674
Inventor. But studies have shown that even district courts
1:52:41.722 --> 1:52:45.086
are invalidating patents or claims at an alarming
1:52:45.118 --> 1:52:48.306
rate of about 40% still. So, you know,
1:52:48.328 --> 1:52:51.934
any any reform that we have that's related to post grant proceedings
1:52:51.982 --> 1:52:54.980
is potentially missing a bigger issue.
1:52:55.750 --> 1:52:59.430
Post grant proceedings could be incredibly rare in a world where the
1:52:59.500 --> 1:53:02.690
PTO decisions were more binding than they presently
1:53:02.770 --> 1:53:06.418
are. So I don't get a maybe certificate from the title
1:53:06.434 --> 1:53:10.262
company when I buy a home. In a more ideal
1:53:10.326 --> 1:53:13.514
world, it seems like we should get to the point where the
1:53:13.552 --> 1:53:17.130
determination made by the PTO was closer to something
1:53:17.200 --> 1:53:20.382
binding, with invalidations being an
1:53:20.436 --> 1:53:24.382
extremely rare exception. Any other system
1:53:24.436 --> 1:53:28.062
essentially leaves you with a patent pending indefinitely right,
1:53:28.196 --> 1:53:31.150
until it's tested by the courts.
1:53:31.570 --> 1:53:35.002
So, again, kind of an out of the box, more abstract question,
1:53:35.076 --> 1:53:38.974
but if you had the power to change the system where the PTO decision
1:53:39.022 --> 1:53:41.620
would be more binding, like that of a title company,
1:53:42.790 --> 1:53:45.570
how would you do it? Well,
1:53:45.720 --> 1:53:49.606
David Capos and I have talked about this a lot, and we both
1:53:49.788 --> 1:53:53.794
believe in the concept of what some people call a gold plated
1:53:53.922 --> 1:53:57.854
patent. A patent that would be extremely difficult to invalidate
1:53:57.922 --> 1:54:00.410
because it was so carefully vetted.
1:54:02.030 --> 1:54:05.370
One way to do this perhaps there are other ways,
1:54:05.440 --> 1:54:09.414
but one way to do this would be to give the applicant
1:54:09.462 --> 1:54:12.682
the option of getting an ordinary patent
1:54:12.826 --> 1:54:16.046
just through examination. But if you want
1:54:16.068 --> 1:54:19.566
to get a gold plated patent, you have to go an
1:54:19.588 --> 1:54:23.006
additional step, and it has to be further vetted by the
1:54:23.028 --> 1:54:26.566
Central Reexam Unit, but under a time limit.
1:54:26.618 --> 1:54:30.114
The problem with the reexam system in days of old was
1:54:30.152 --> 1:54:33.954
it went on forever and ever. That's part of the reason why there's this hard
1:54:33.992 --> 1:54:38.374
stop one year deadline for the Ptab that was to overcome the problem of
1:54:38.572 --> 1:54:42.786
endless reexaminations. But if the reexam unit
1:54:42.818 --> 1:54:46.854
was adequately staffed and properly guided, I believe it
1:54:46.892 --> 1:54:51.020
could gold plate patents within a year.
1:54:51.710 --> 1:54:55.526
And if it's the choice of the inventor or the inventive
1:54:55.638 --> 1:54:58.970
entity whether to ask for the extra
1:54:59.120 --> 1:55:02.426
step, who can complain? If you want to get an ordinary patent and
1:55:02.448 --> 1:55:05.806
take your risks at the Ptab of the court later on,
1:55:05.908 --> 1:55:09.360
fine, you take that pathway, that fork in the road.
1:55:10.290 --> 1:55:13.780
But if you want a gold plated patent, you got to go an extra step,
1:55:14.150 --> 1:55:17.934
and then it's going to be extremely difficult. I think you probably couldn't
1:55:17.982 --> 1:55:23.454
make it utterly inviolate,
1:55:23.502 --> 1:55:26.946
but you can make it extremely difficult to invalidate,
1:55:27.058 --> 1:55:31.026
and you should. So I'm, for exploring
1:55:31.138 --> 1:55:34.962
that option. I think the reality is that Congress
1:55:35.026 --> 1:55:38.586
will never give the patent office the money they would need for the
1:55:38.608 --> 1:55:42.346
examiner to get it right. In 99% of
1:55:42.368 --> 1:55:45.494
the cases in an ordinary examination,
1:55:45.622 --> 1:55:50.326
they have something like 9000 examiners
1:55:50.358 --> 1:55:55.358
there. They would need 90,000 or 150,000
1:55:55.444 --> 1:55:58.910
or 300,000. Who knows what they would actually need?
1:55:58.980 --> 1:56:02.174
The cost would be prohibitive, the fees would go
1:56:02.212 --> 1:56:06.034
up. It's never going to happen. So what you have
1:56:06.072 --> 1:56:09.442
to do is make the ordinary examination system as
1:56:09.496 --> 1:56:12.660
good as it can be as a practical matter,
1:56:13.190 --> 1:56:16.520
given limited time, limited money,
1:56:18.010 --> 1:56:21.778
and younger examiners,
1:56:21.874 --> 1:56:26.050
and also inadequate prior art searching capabilities
1:56:26.130 --> 1:56:29.562
and old computer systems and other things that can
1:56:29.616 --> 1:56:33.066
and should be improved rapidly. But I
1:56:33.088 --> 1:56:36.954
am convinced that a gold plated patent system would
1:56:36.992 --> 1:56:40.814
be the best single solution to get over the problem of
1:56:40.852 --> 1:56:43.946
patents being undependable. As long as patents
1:56:44.138 --> 1:56:47.742
are seen as undependable, the investment we need
1:56:47.796 --> 1:56:51.566
will not get made. It's that simple. Yeah, that's a really
1:56:51.588 --> 1:56:54.626
great question and there's a lot in there. So let me unpack it a little
1:56:54.648 --> 1:56:57.762
bit. And I'm going to start
1:56:57.816 --> 1:57:01.300
by throwing perhaps a curveball, which is that
1:57:03.750 --> 1:57:07.430
I am not unhappy or disturbed by the 40%
1:57:07.500 --> 1:57:09.590
invalidation rate in district court.
1:57:10.170 --> 1:57:14.054
And so let me explain that now because
1:57:14.092 --> 1:57:17.320
a lot of people say, what do you mean? How can that be the case?
1:57:17.850 --> 1:57:21.818
But however you identify it,
1:57:21.904 --> 1:57:25.498
whether 70% up to 100% in some of
1:57:25.504 --> 1:57:29.014
the programs at the Ptab, that is a problem. That's an institution
1:57:29.062 --> 1:57:32.266
that is clearly out of balance. Then as I'm sure you're wondering,
1:57:32.298 --> 1:57:36.110
but why is he not upset about the 40% invalidation rates at the district court?
1:57:36.850 --> 1:57:40.094
Exactly. Those are invalidation rates that you
1:57:40.132 --> 1:57:44.100
are seeing at final decisions. And so what you have
1:57:44.870 --> 1:57:48.482
in these cases is something that economists and statisticians refer
1:57:48.536 --> 1:57:51.714
to as selection effects, which means that
1:57:51.912 --> 1:57:55.366
people are making decisions about whether to continue to
1:57:55.388 --> 1:57:58.946
file a lawsuit, whether to continue to prosecute
1:57:58.978 --> 1:58:02.920
or pursue the lawsuit, whether to settle based upon information
1:58:03.530 --> 1:58:07.334
that they have at each point of the process. And at
1:58:07.372 --> 1:58:11.494
a certain point, sometimes at the very beginning, sometimes later, you realize
1:58:11.622 --> 1:58:15.946
I'm going to lose or I'm going to win. It becomes clear.
1:58:16.048 --> 1:58:18.730
And so you settle.
1:58:19.870 --> 1:58:23.962
And in fact, this is what you see. In fact, most lawsuits
1:58:24.106 --> 1:58:26.110
don't even make it to trial.
1:58:27.090 --> 1:58:30.506
And by the way, most disputes don't even result in lawsuits
1:58:30.538 --> 1:58:34.974
being filed. And so at each point you get a smaller and smaller
1:58:35.102 --> 1:58:39.266
subset of the
1:58:39.368 --> 1:58:43.394
rights at issue. And so by the time you actually get to court and actually
1:58:43.432 --> 1:58:47.030
get to a final court decision, those are the true
1:58:47.100 --> 1:58:51.222
what we refer to as borderline cases. Those are the cases where you
1:58:51.276 --> 1:58:55.254
actually have significant colorable arguments on
1:58:55.292 --> 1:58:59.106
both sides as to the legitimacy
1:58:59.138 --> 1:59:03.242
of their positions. So this explains why the
1:59:03.296 --> 1:59:06.774
invalidation rates around 40%. And by the way, this isn't unusual
1:59:06.822 --> 1:59:09.910
in patent law. This is a phenomenon one sees in the entire
1:59:10.000 --> 1:59:13.534
US court system. And in fact this was studied by
1:59:13.572 --> 1:59:18.554
some economists back in the has come to refer to as the Priest
1:59:18.602 --> 1:59:20.190
Klein hypothesis,
1:59:22.050 --> 1:59:25.954
which is priest Klein posited that in
1:59:25.992 --> 1:59:29.582
any adversarial institution you're going to see decision
1:59:29.646 --> 1:59:33.650
rates around the 50%. Mark point was really about
1:59:33.720 --> 1:59:37.062
what I just referred to earlier, about selection effects, about how
1:59:37.196 --> 1:59:40.854
there's information that people are acquiring through the
1:59:40.892 --> 1:59:44.166
process that they're then selecting what to do based on that information.
1:59:44.268 --> 1:59:48.454
And that includes settling or dismissing or
1:59:48.492 --> 1:59:52.298
the judge dismisses the lawsuit or summary judgment and things of that sort as
1:59:52.304 --> 1:59:55.882
well. By the time
1:59:55.936 --> 1:59:59.180
you get to a court decision and even a court appeal in particular.
2:00:00.430 --> 2:00:03.550
So appellate decisions up to the pellet courts,
2:00:04.930 --> 2:00:08.222
you are at a point on the margin where
2:00:08.356 --> 2:00:11.834
someone is making a mistake. There's an information asymmetry
2:00:11.962 --> 2:00:15.826
that has not been accounted for and so you're roughly going
2:00:15.848 --> 2:00:20.130
to have a 50 50 divide and so you're filtering
2:00:20.470 --> 2:00:24.334
thousands and thousands of dispute of patent disputes out thousands of patents
2:00:24.382 --> 2:00:27.518
out of the system. Exactly what by the way, this is exactly what's
2:00:27.534 --> 2:00:30.982
supposed to happen such that by the time you get to the court decision those
2:00:31.036 --> 2:00:34.790
are the true cases where it's an open question
2:00:34.860 --> 2:00:38.006
as to whether this is a really valid patent or not or whether infringement has
2:00:38.028 --> 2:00:41.254
actually happened or not. I mean that's why there needs to be a court decision.
2:00:41.302 --> 2:00:44.694
And by the way, so what that tells me is a 40% invalidity
2:00:44.742 --> 2:00:48.634
rate is actually good, actually tells you that wow,
2:00:48.672 --> 2:00:52.586
our patents are really working. And I suspect what that 10% variance
2:00:52.618 --> 2:00:56.430
is because you would expect it to be 50%, is probably
2:00:56.500 --> 2:01:00.126
the presumption of validity at work. Is that kind of thumb on
2:01:00.148 --> 2:01:04.062
the scale that should exist for patents that have
2:01:04.116 --> 2:01:07.666
gone through the examination process and our property rights and should
2:01:07.688 --> 2:01:11.246
therefore should be construed in favor of the title
2:01:11.278 --> 2:01:14.802
deed owner, which is a principle that was first adopted in US
2:01:14.856 --> 2:01:18.226
courts long before the examination system was created. Because they adopted
2:01:18.258 --> 2:01:22.274
it actually formed the canons of interpretation
2:01:22.322 --> 2:01:25.702
for title deeds which the rule was at common
2:01:25.756 --> 2:01:29.302
law, if there's an ambiguity in a title deed it's to be construed in favor
2:01:29.356 --> 2:01:33.350
of the property owner. And the US courts
2:01:33.430 --> 2:01:36.906
incorporated and applied that to patents in the early 19th century when
2:01:36.928 --> 2:01:40.106
we didn't even have an examination system yet. They said patents are title deeds so
2:01:40.128 --> 2:01:43.486
we're going to adopt this. It was known as a canon of
2:01:43.508 --> 2:01:48.206
liberal construction in favor of the patent owner and
2:01:48.228 --> 2:01:51.902
then the 1836 that when we adopted the examination system that
2:01:51.956 --> 2:01:55.438
reinforced what becomes known as the presumption of
2:01:55.444 --> 2:01:59.006
validity based on the examination process as well. So my mistake,
2:01:59.118 --> 2:02:02.974
comparing a Ptab invalidation rate of 84% to a court invalidation
2:02:03.022 --> 2:02:06.402
rate is not an apples to apples comparison. Any given
2:02:06.456 --> 2:02:09.958
patent has an 84% chance of being viewed as invalid in the eyes of
2:02:09.964 --> 2:02:13.814
the Ptab, but any given patent doesn't have a 40% chance of being
2:02:13.852 --> 2:02:17.414
viewed is invalid in the eyes of the court. Not the same thing.
2:02:17.532 --> 2:02:20.726
Most of what we've discussed so far are threats from within a
2:02:20.748 --> 2:02:24.378
system void of any competition, can operate however it wants, and sometimes
2:02:24.464 --> 2:02:27.334
still end up okay. Many experts are beginning to argue,
2:02:27.382 --> 2:02:31.174
however, that there's a real sense of urgency in addressing these internal
2:02:31.222 --> 2:02:34.506
problems because of the rapidly escalating external threat
2:02:34.538 --> 2:02:38.654
that is China's undeclared Cold War. It is impossible to sincerely talk about
2:02:38.692 --> 2:02:42.026
these issues without confronting the existential threat they pose
2:02:42.058 --> 2:02:45.902
from their adversarial exploitation. But before diving into the specifics,
2:02:45.966 --> 2:02:50.286
we want to echo democrat Congressman Hank Johnson's and Republican Congressman Darryl
2:02:50.318 --> 2:02:53.554
Isa's recent House subcommittee comments that none of this
2:02:53.592 --> 2:02:57.286
conversation should be misconstrued as antiasian sentiment in the wake of
2:02:57.308 --> 2:03:00.806
a rise in harassment against Asian Americans. When we
2:03:00.828 --> 2:03:05.266
talk about China, we are referring to the Chinese government and its present authoritarian
2:03:05.298 --> 2:03:08.674
regime led by Xi Jinping. Senators, representatives,
2:03:08.722 --> 2:03:11.606
presidents, retired generals, retired judges,
2:03:11.718 --> 2:03:15.270
and the Justice Department contend that this issue is twofold.
2:03:15.350 --> 2:03:18.794
There is the well documented historic problem of IP theft that most
2:03:18.832 --> 2:03:22.346
are probably aware of, but there's also an evolving problem of
2:03:22.368 --> 2:03:26.586
going from a country that steals technology to a country that is successfully replicating
2:03:26.618 --> 2:03:29.978
the parts of the US. System that works so well for centuries,
2:03:30.074 --> 2:03:33.434
but that Congress and the courts are now throwing under the bus. The Justice
2:03:33.482 --> 2:03:37.042
Department has valued China's annual theft of intellectual property at
2:03:37.096 --> 2:03:40.626
four to $600 billion per year,
2:03:40.728 --> 2:03:44.290
which amounts to a post tax share of four to $6,000
2:03:44.360 --> 2:03:47.586
per American family of four. FBI Director Chris Wray has
2:03:47.608 --> 2:03:51.318
said that this is the largest transfer of wealth in human history.
2:03:51.484 --> 2:03:55.286
Some of this is attributable to outright theft, but much is now coming from
2:03:55.308 --> 2:03:59.286
bad faith manipulation of international rule of law. Listen into comments
2:03:59.318 --> 2:04:02.874
from Judiciary Committee Ranking Member Jerry Nadler, Democrat from
2:04:02.912 --> 2:04:06.342
New York, from a recent House subcommittee hearing on courts,
2:04:06.406 --> 2:04:10.486
intellectual property and the Internet. On the economic front, China's entry
2:04:10.518 --> 2:04:14.394
into the free market system has failed to encourage the PRC
2:04:14.442 --> 2:04:18.158
to obey the rules and customs that govern the international economic order.
2:04:18.324 --> 2:04:21.614
Rather, it has simply enabled the Chinese government to manipulate those
2:04:21.652 --> 2:04:25.434
rules to its advantage. For example, a requirement
2:04:25.482 --> 2:04:29.390
that in certain high tech sectors, US. Companies work with a Chinese counterpart
2:04:29.470 --> 2:04:33.314
has become one of many vehicles that the PRC has used
2:04:33.432 --> 2:04:36.258
to force technology transfer to their nation.
2:04:36.434 --> 2:04:40.342
This sometimes means requiring us. Companies to disclose key
2:04:40.396 --> 2:04:44.294
aspects of their technology in order to obtain licenses to operate within
2:04:44.332 --> 2:04:47.658
the PRC, among others. Unfortunately, there are
2:04:47.664 --> 2:04:51.414
also many documented instances of the PRC using outright illegal
2:04:51.462 --> 2:04:55.174
means to access US. Technology, including cyber
2:04:55.222 --> 2:04:58.598
espionage and trade secret theft. In sum,
2:04:58.694 --> 2:05:02.278
while the PRC was welcomed into the free market system, it has failed
2:05:02.294 --> 2:05:05.482
to honor many of the hallmarks of good global citizenship.
2:05:05.626 --> 2:05:09.134
This is a serious. Challenge to a system that has historically relied in large
2:05:09.172 --> 2:05:12.858
part on assumptions that the players will act in good faith.
2:05:13.034 --> 2:05:16.750
But with the announcement of a series of national policies aimed at making China
2:05:16.830 --> 2:05:20.670
a technological leader in all important emerging areas of innovation,
2:05:20.830 --> 2:05:24.834
we cannot afford to be blind to the illicit and questionable means
2:05:24.952 --> 2:05:28.626
that the PRC is. Using to leafrog the rest of the world and
2:05:28.648 --> 2:05:32.454
others. The success China is having for adopting features of our patent system before
2:05:32.492 --> 2:05:35.782
it got weakened. They have improved their patent system,
2:05:35.836 --> 2:05:39.286
and there are startups starting up
2:05:39.308 --> 2:05:42.906
in China based on Chinese patents, on key technologies that should be
2:05:42.928 --> 2:05:46.314
starting up in America. But you can't invest in them because you'll lose your money,
2:05:46.352 --> 2:05:50.422
because the patent can be invalidated. And so China is building the next Silicon Valley.
2:05:50.486 --> 2:05:53.698
A lot of people don't understand, and it sounds like a paradox, like they're stealing
2:05:53.734 --> 2:05:57.706
our IP, but then they also create this robust patent
2:05:57.738 --> 2:06:00.926
system. So they're like, well, which is it? And they don't recognize it. That's actually
2:06:01.028 --> 2:06:04.974
a unified part of an overall domestic
2:06:05.022 --> 2:06:09.406
industrial policy agenda of theirs, right? So notice
2:06:09.598 --> 2:06:12.558
it's not that they disrespect IP,
2:06:12.654 --> 2:06:16.486
it's that they want to grow their economy. They want to take as much technology
2:06:16.588 --> 2:06:20.646
from us as possible and create their own technology. So they steal technology
2:06:20.748 --> 2:06:26.178
from us, and they're trying to promote their own citizens
2:06:26.274 --> 2:06:30.598
to produce their own innovation. So they're
2:06:30.694 --> 2:06:34.538
part and parcel of a unified policy of
2:06:34.544 --> 2:06:38.554
a country that's trying to become a type
2:06:38.592 --> 2:06:42.314
of an innovation economy by leapfrogging
2:06:42.362 --> 2:06:45.278
ahead in this kind of this two pronged attack.
2:06:45.364 --> 2:06:49.440
Steal technology from foreign innovators, develop your own domestic technology,
2:06:51.250 --> 2:06:54.710
and it's been very effective for them. As Adam noted earlier in his analysis
2:06:54.730 --> 2:06:58.370
of patent applications in the US. Europe and China for the exact
2:06:58.440 --> 2:07:02.226
same inventions, applications are being rejected and invalidated in
2:07:02.248 --> 2:07:06.066
the US that are sailing through in China. This is no coincidence when
2:07:06.088 --> 2:07:09.026
you consider the recent congressional testimony of Mark Cohen,
2:07:09.138 --> 2:07:12.786
senior fellow and director of the Asia IP project, the Berkeley
2:07:12.818 --> 2:07:16.674
Center for Law and Technology. He noted that as, quote, someone who observes
2:07:16.722 --> 2:07:20.370
IP developments on both sides of the Pacific. It was interesting
2:07:20.460 --> 2:07:24.134
to see that at the same time that cases like Myriad and Bilski were decided
2:07:24.182 --> 2:07:27.926
by the Supreme Court, china amended its examination guidelines
2:07:27.958 --> 2:07:31.754
to permit the very same subject matter, now ineligible
2:07:31.802 --> 2:07:35.882
patents in the US to be granted in China. So our greatest international
2:07:35.946 --> 2:07:39.578
competitor has no eligibility mess to untangle, no PTAB
2:07:39.594 --> 2:07:43.166
to deal with, makes injunctions widely available and I'm going
2:07:43.188 --> 2:07:46.706
out on a limb here, but is also probably slightly less obsessed with
2:07:46.728 --> 2:07:50.098
troll mythology. And as Judge Michel noted, if the
2:07:50.104 --> 2:07:53.778
patents go there, the investment dollars go there. And if the investment dollars
2:07:53.864 --> 2:07:56.918
go there, so does the ensuing growth and control of
2:07:56.924 --> 2:08:00.726
the technology. One of the things that we take for granted is how when
2:08:00.748 --> 2:08:04.022
you're out innovating your adversaries, you are Very
2:08:04.076 --> 2:08:07.822
Secure. And when your adversaries
2:08:07.906 --> 2:08:11.482
are threatening to out innovate you, man, you are
2:08:11.536 --> 2:08:14.998
very insecure. Your security is absolutely threatened.
2:08:15.094 --> 2:08:18.950
This begs the fundamental question who do we want developing the technologies
2:08:19.030 --> 2:08:22.986
of tomorrow? More from Congressman Nadler's opening remarks.
2:08:23.098 --> 2:08:26.858
Today we see a government in China that has become increasingly authoritarian,
2:08:27.034 --> 2:08:31.034
using a vast array of technology to track its citizens and subjecting
2:08:31.082 --> 2:08:35.226
many of its people, most notably the Uyghur population,
2:08:35.338 --> 2:08:38.658
to shocking human rights abuses. I asked our guests if the
2:08:38.664 --> 2:08:42.366
best possible solution is just getting our house in order, doing the reforms
2:08:42.398 --> 2:08:45.362
needed to get back to the gold standard, and maybe the rest of the problem
2:08:45.416 --> 2:08:48.914
will take care of itself. Or was there something more we should be focused
2:08:48.962 --> 2:08:53.014
on? There actually have been some responses and
2:08:53.052 --> 2:08:57.174
positive developments in the space in the past couple of years because people
2:08:57.212 --> 2:09:00.746
haven't recognized, I think, that China has been in an
2:09:00.768 --> 2:09:04.300
undeclared Cold War with us for a very long time,
2:09:06.270 --> 2:09:10.606
and they're waking up to it now. They're realizing that
2:09:10.628 --> 2:09:13.230
this is a country that is not an ally of ours.
2:09:14.930 --> 2:09:18.734
But of course, we've now intertwined with them. So much of our
2:09:18.932 --> 2:09:22.430
global supply chain manufacturing. Apple,
2:09:22.770 --> 2:09:25.918
up until starting a year ago, had 100% of all of
2:09:25.924 --> 2:09:28.866
its products made in china, and now it's only down to, like,
2:09:28.888 --> 2:09:32.334
95%. I think it's so intertwined
2:09:32.382 --> 2:09:36.070
with that country. They're going to have a really hard time disentangling themselves
2:09:36.140 --> 2:09:40.694
from that country. So it's a real problem because
2:09:40.732 --> 2:09:45.206
we never became economically intertwined with the Soviet Union during
2:09:45.388 --> 2:09:46.840
the last Cold War.
2:09:48.810 --> 2:09:51.378
It's a real problem. People are waking up to it, and people are taking some
2:09:51.404 --> 2:09:55.958
actions. The tide may change And I think a lot of the reason is China.
2:09:56.054 --> 2:09:59.642
A lot of people are suddenly waking up to the fact that China is
2:09:59.696 --> 2:10:03.658
posing a huge economic and strategic threat
2:10:03.674 --> 2:10:06.830
to the United States. And a technology threat.
2:10:07.250 --> 2:10:11.066
So that sort of changed the thinking of a lot of people on Capitol
2:10:11.098 --> 2:10:15.070
Hill. And there have been recognition now and I believe,
2:10:15.140 --> 2:10:19.038
legislation or at least regulatory action taken about the disclosure of certain types
2:10:19.054 --> 2:10:22.820
of technologies to China and restrictions on certain trade issues,
2:10:23.350 --> 2:10:26.210
especially with respect to chips, for instance.
2:10:26.870 --> 2:10:31.670
And other things. Because chips can be used in jets and tanks
2:10:32.010 --> 2:10:36.002
and are used by jets and tanks. Because there isn't a division between the military
2:10:36.146 --> 2:10:39.340
and the civilian economy in China the way we have in the United States.
2:10:41.470 --> 2:10:44.490
Some positive actions I believe are being taken.
2:10:44.640 --> 2:10:48.374
Congress does seem more focused on this issue. Now, in addition to the hearings
2:10:48.422 --> 2:10:52.426
we've referenced here, the House also recently voted overwhelmingly to
2:10:52.448 --> 2:10:56.094
pass a resolution to create a select committee focused on us. Competition with
2:10:56.132 --> 2:11:00.234
China. The resolution passed in a 365 to 65 vote.
2:11:00.282 --> 2:11:03.754
But as Adam will explain, entangled manufacturing dependencies
2:11:03.802 --> 2:11:07.154
and the global need for standards collaboration further complicate this
2:11:07.192 --> 2:11:11.746
matter. But as I said, it's a complicated issue. Now. Because so
2:11:11.768 --> 2:11:15.826
many us Companies rushed to China in the 1990s
2:11:16.008 --> 2:11:19.670
at the turn of the century, especially companies like Apple.
2:11:20.970 --> 2:11:24.274
And to disentangle us from them in that respect
2:11:24.322 --> 2:11:27.922
is going to be very hard. And we have to walk carefully
2:11:27.986 --> 2:11:32.214
because we need to make sure that we don't disrupt positive aspects
2:11:32.262 --> 2:11:35.626
of the global innovation economy. So, for instance, there are these
2:11:35.648 --> 2:11:38.842
private organizations called standard development organizations that
2:11:38.976 --> 2:11:41.550
develop our technologies.
2:11:41.890 --> 2:11:44.430
So 5G WiFi,
2:11:45.090 --> 2:11:48.698
but all things are standardized. The depths
2:11:48.714 --> 2:11:52.666
of the grooves and screws are byproduct of standard development organizations
2:11:52.698 --> 2:11:55.338
because everyone has because you have to know when you go to Home Depot or
2:11:55.364 --> 2:11:58.402
Lowe's, you're going to get the same screw to use. It'll fit in the same
2:11:58.456 --> 2:12:02.190
hole that you have. So shipping containers
2:12:02.270 --> 2:12:05.250
are standardized according to standard building organizations.
2:12:06.150 --> 2:12:09.060
Of course, it's really important in technology like five G,
2:12:09.930 --> 2:12:13.586
four G, and three G. And there was a period
2:12:13.618 --> 2:12:17.302
where the US. Government said, oh, yeah, so the US. Innovators can't even talk
2:12:17.356 --> 2:12:21.206
with or participate with
2:12:21.228 --> 2:12:24.794
any organization or institution as Huawei, as a member, it's like, well, those are standard
2:12:24.832 --> 2:12:28.026
development organizations. So if there was a brief period there where the US. Government was
2:12:28.048 --> 2:12:32.054
making noise about prohibiting US. Innovators who created
2:12:32.102 --> 2:12:35.674
5G, like Qualcomm, which created 5G, from actually participating
2:12:35.722 --> 2:12:39.838
in the standard development organizations that agree to 5G,
2:12:39.924 --> 2:12:43.246
because Huawei is also a participant and a member of those organizations.
2:12:43.278 --> 2:12:45.220
So we can't do that.
2:12:47.990 --> 2:12:51.134
In fact, if we do that China
2:12:51.182 --> 2:12:54.974
is engaging in various strategies to take over standard development organizations
2:12:55.102 --> 2:12:58.486
and we are conceding the field to them, then if we prohibit American
2:12:58.588 --> 2:13:01.702
companies like Qualcomm and Interdigital to
2:13:01.756 --> 2:13:05.830
participate in these organizations, then we just basically are turning over to China
2:13:07.290 --> 2:13:10.954
the ability to control the future of these technologies and to ensure they're based
2:13:10.992 --> 2:13:14.534
on Chinese tech. And they will then incorporate
2:13:14.582 --> 2:13:19.206
into those technologies chinese norms of governance,
2:13:19.398 --> 2:13:23.434
which is, as we all well know, it's an authoritarian
2:13:23.482 --> 2:13:24.190
regime.
2:13:27.490 --> 2:13:31.326
We saw that with the lockdowns in China in response to the COVID the
2:13:31.348 --> 2:13:34.720
extreme lockdowns that made our lockdowns look like
2:13:35.810 --> 2:13:39.666
child's play. I mean, people were literally starving and
2:13:39.688 --> 2:13:43.550
jumping out of their apartments because they weren't even allowed to leave their apartments.
2:13:43.710 --> 2:13:47.222
Tanks rolling in the streets bolted into apartments. I mean, it was it got crazy.
2:13:47.276 --> 2:13:50.354
Yeah, people had people had their apartment doors wired shut
2:13:50.482 --> 2:13:54.038
so they couldn't leave their apartments. Can you
2:13:54.044 --> 2:13:57.718
imagine the
2:13:57.724 --> 2:14:00.838
country and I always like to point out to this is a country that's actively
2:14:00.854 --> 2:14:04.346
running concentration camps, I mean, the Uyghurs in the western portion of
2:14:04.368 --> 2:14:07.866
that country. This is not a friendly regime that
2:14:07.968 --> 2:14:11.274
it respects the rights of its citizens or respects the rights of other people around
2:14:11.312 --> 2:14:14.766
the globe. And we should recognize that for the vast majority of us,
2:14:14.868 --> 2:14:18.266
these issues and their ultimate solutions are largely out of our immediate
2:14:18.298 --> 2:14:21.454
control. One thing that literally everyone can help with
2:14:21.492 --> 2:14:24.738
is awareness and education. It's the only way the needle is
2:14:24.744 --> 2:14:28.306
going to move. Another problem, and this is not so much on
2:14:28.328 --> 2:14:31.906
the part of Congress but of the general public and the
2:14:31.928 --> 2:14:35.374
general media, is that they think patents
2:14:35.422 --> 2:14:39.334
are some nerdy little corner of the world that nobody needs
2:14:39.372 --> 2:14:43.394
to really worry about. It's only for geeks and patent lawyers.
2:14:43.522 --> 2:14:46.914
But the reality is the whole economy is undergirded
2:14:46.962 --> 2:14:50.742
by innovation, and most of the innovation is heavily
2:14:50.806 --> 2:14:54.214
promoted by strong patents. So if you have weak
2:14:54.262 --> 2:14:58.054
patents, you get less innovation. That means less economic
2:14:58.102 --> 2:15:01.294
growth. So this is the kind of set
2:15:01.332 --> 2:15:03.360
of messages I'm trying to get across.
2:15:04.050 --> 2:15:07.418
Yeah, I mean, the patent system is really essential
2:15:07.594 --> 2:15:11.326
infrastructure for innovation in
2:15:11.348 --> 2:15:14.446
the country. I heard others refer to it as the backbone
2:15:14.478 --> 2:15:16.340
of the economic engine.
2:15:17.670 --> 2:15:20.846
Getting the awareness out there around that, getting folks
2:15:20.878 --> 2:15:22.850
to sort of reconnect those dots,
2:15:24.630 --> 2:15:28.162
is huge. Education is a huge part of our mission and why we invest
2:15:28.216 --> 2:15:31.890
in this podcast. And that brings us to our Final Solution.
2:15:32.050 --> 2:15:35.170
We chatted with each of our guests about their educational efforts,
2:15:35.250 --> 2:15:38.518
starting with Judge Michel, who retired from his position as Chief Justice of
2:15:38.524 --> 2:15:41.926
the US. Court of Appeals for the Federal Circuit, the top seat in the nation's
2:15:41.958 --> 2:15:45.414
patent appeals court, so that he could speak freely and publicly
2:15:45.462 --> 2:15:49.046
about the state of the IP system. Well, throughout the decade
2:15:49.078 --> 2:15:52.218
ending in 2010, when I chose to retire,
2:15:52.394 --> 2:15:56.014
there was a steady campaign to weaken the
2:15:56.052 --> 2:15:59.102
patent system. Also other intellectual property
2:15:59.156 --> 2:16:02.946
rights, but particularly the patent system. And as it
2:16:03.048 --> 2:16:06.638
gained power, I got more and more concerned that it was going to hurt
2:16:06.654 --> 2:16:10.062
the country and the economy, even compromised
2:16:10.126 --> 2:16:12.130
national security, potentially.
2:16:13.030 --> 2:16:16.402
And because I was on a court and I loved the work,
2:16:16.456 --> 2:16:19.942
I thought I would stay there until I was ready
2:16:19.996 --> 2:16:23.142
to be carried out in a pine box. The colleagues were great.
2:16:23.196 --> 2:16:26.754
The cases were fascinating, they were important, the lawyers
2:16:26.802 --> 2:16:30.038
were very good. But all that got washed
2:16:30.054 --> 2:16:33.500
away by my concern for the future of the country.
2:16:33.870 --> 2:16:37.882
And sitting judges, quite properly, I think, are quite
2:16:37.936 --> 2:16:42.160
restricted in what they're allowed to say on political issues,
2:16:42.610 --> 2:16:46.858
broad public policy questions and battles
2:16:46.954 --> 2:16:50.160
among different industries and things of that sort.
2:16:50.770 --> 2:16:54.030
And I didn't want to press those boundaries. So I decided,
2:16:54.110 --> 2:16:57.442
well, if I retire, then I'm completely free to speak.
2:16:57.496 --> 2:17:01.220
So I went from highly constrained to completely free
2:17:01.590 --> 2:17:04.274
and started out right away,
2:17:04.472 --> 2:17:07.810
speaking just about anywhere I was invited
2:17:07.890 --> 2:17:11.446
many different conferences and writing articles and so on.
2:17:11.548 --> 2:17:15.782
And that gained steam in the years since May 2010
2:17:15.836 --> 2:17:19.030
when I stepped down from the bench.
2:17:19.610 --> 2:17:23.494
And looking back on it, I have no doubt
2:17:23.542 --> 2:17:26.506
that I made the right choice, at least for me. Maybe it wouldn't have been
2:17:26.528 --> 2:17:29.926
the right choice for anybody and everybody, but it was for me.
2:17:30.048 --> 2:17:33.854
And I'll tell you a quick story about that
2:17:33.892 --> 2:17:38.062
kind of thinking. I once was at a conference and
2:17:38.116 --> 2:17:42.570
seated at lunch table next to justice
2:17:42.650 --> 2:17:45.794
O'Connor. And at that point, she had retired. She had
2:17:45.832 --> 2:17:49.442
stepped down from the supreme court, and she was
2:17:49.496 --> 2:17:53.726
very engaged in trying to revive civics teaching in the schools
2:17:53.758 --> 2:17:56.950
and the culture all around the country. Very busy with that.
2:17:57.100 --> 2:18:00.326
And she told me, I really enjoyed being on the
2:18:00.348 --> 2:18:04.360
supreme court. It was interesting work. I think it was very important,
2:18:05.690 --> 2:18:09.606
but I think what I'm doing now is even more important for the
2:18:09.628 --> 2:18:13.446
country. Just last fall, the judge also joined forces with some other heavyweights
2:18:13.478 --> 2:18:16.714
in this space to form the council for innovation promotion, or c four
2:18:16.752 --> 2:18:20.446
IP. This is a group of companies that
2:18:20.468 --> 2:18:24.320
are extremely concerned with the health and strength of the patent system,
2:18:25.250 --> 2:18:29.790
and they've come together to provide a coordinated
2:18:30.210 --> 2:18:34.110
campaign to try to revive the patent system in America,
2:18:34.270 --> 2:18:37.778
and they've put up some money in order
2:18:37.864 --> 2:18:41.140
to make that as effective as possible.
2:18:42.630 --> 2:18:46.182
It has a small board of directors. I'm one of the four
2:18:46.236 --> 2:18:50.274
members on the board of directors, along with former PTO
2:18:50.322 --> 2:18:54.610
heads Yanku and capos, and also fellow
2:18:54.690 --> 2:18:58.854
retired federal circuit judge Kathleen O'Malley. I'm allied
2:18:58.902 --> 2:19:02.554
with anybody and everybody that I can be allied with to
2:19:02.592 --> 2:19:04.540
try to work on,
2:19:05.870 --> 2:19:09.858
promoting and assuring the future of the country and our economy
2:19:09.974 --> 2:19:13.546
and employment and good paying jobs
2:19:13.578 --> 2:19:17.742
and technological leadership and
2:19:17.796 --> 2:19:21.374
all the rest, as I say, including even national security.
2:19:21.492 --> 2:19:25.550
Because the weakness of the patent system is not only hurting employment
2:19:25.710 --> 2:19:29.602
compared to what it otherwise could be, should be and
2:19:29.656 --> 2:19:33.794
not only hurting industrial technology
2:19:33.912 --> 2:19:37.282
leadership, but even things critical
2:19:37.346 --> 2:19:41.122
to national security are flagging, in my opinion,
2:19:41.266 --> 2:19:44.694
because the patent system has become so weak and
2:19:44.732 --> 2:19:48.470
I think people don't understand why the weakness matters. As the president
2:19:48.540 --> 2:19:51.798
of an organization that is dedicated to the restoration of the rights
2:19:51.814 --> 2:19:54.486
of inventors and innovative small businesses,
2:19:54.598 --> 2:19:57.866
education is a big focus for Randy. Awareness is so
2:19:57.888 --> 2:20:00.790
important. I remember talking to a guy at a Starbucks.
2:20:00.870 --> 2:20:03.280
I was wearing the US inventor t shirt, right?
2:20:04.930 --> 2:20:08.126
When the word patent comes up with this guy, the first thing he
2:20:08.148 --> 2:20:10.990
thinks of is drug companies and high prices.
2:20:11.330 --> 2:20:14.802
Now, what about an inventor doing something
2:20:14.856 --> 2:20:18.610
valuable, right? So there's all this propaganda out there,
2:20:18.680 --> 2:20:22.366
and we just have to fight, fight it through and keep informing.
2:20:22.398 --> 2:20:26.370
And to all of your listeners, help us get the word out.
2:20:26.520 --> 2:20:30.326
Help us get the word out. This is a key, key issue for this country.
2:20:30.428 --> 2:20:33.634
In a recent Forbes article on five strategies of strength in the innovation
2:20:33.682 --> 2:20:37.346
economy, adam's twitter account was mentioned when talking about bringing intellectual
2:20:37.378 --> 2:20:40.786
property down to earth. In addition to it just being refreshing to know that twitter
2:20:40.818 --> 2:20:43.942
can actually be used for down to earth, constructive conversation,
2:20:44.086 --> 2:20:47.478
we discussed with Adam how he's using twitter to educate about patents.
2:20:47.574 --> 2:20:51.120
One of the things that I really wanted to use twitter for was to
2:20:52.530 --> 2:20:56.366
make clear to people, actually how fundamental the
2:20:56.388 --> 2:20:59.738
patent system has been to everything in our society.
2:20:59.834 --> 2:21:03.182
And there's a real sense in which the patent system
2:21:03.236 --> 2:21:07.662
is a victim of its own success. It has been so successful in driving innovation,
2:21:07.806 --> 2:21:11.506
in being the basis of so many products and services that make
2:21:11.528 --> 2:21:14.802
up our modern life, that people come to think of it now,
2:21:14.856 --> 2:21:18.434
people don't recognize anymore. They think of it like the air we breathe and trees
2:21:18.482 --> 2:21:22.290
we see. I really wanted to try to emphasize
2:21:22.370 --> 2:21:25.926
and show no, that you shouldn't take anything for
2:21:25.948 --> 2:21:29.686
granted. From our toothbrushes to our toothpaste tubes to our raggedy
2:21:29.718 --> 2:21:33.402
and dolls to our board games like Monopoly, that all of these were
2:21:33.456 --> 2:21:38.058
patented inventions that were then deployed into the marketplace through
2:21:38.224 --> 2:21:42.498
licensing and other types of really innovative commercial mechanisms
2:21:42.534 --> 2:21:45.850
that were themselves invented by patent owners and business persons.
2:21:46.010 --> 2:21:49.422
And so on Twitter, I do on this date, innovation history.
2:21:49.556 --> 2:21:54.174
It's what I've kind of become known for, where I highlight the
2:21:54.212 --> 2:21:57.438
anniversary of a patent issuing historically.
2:21:57.534 --> 2:22:01.362
On the day we spoke, Adam's tweet was about Alfred Crail's 1897
2:22:01.416 --> 2:22:05.378
invention of the modern ice cream scoop. His invention again too.
2:22:05.544 --> 2:22:08.374
You may not think of it as a great invention in terms of, like,
2:22:08.412 --> 2:22:12.006
it's not the smartphone, it's not an
2:22:12.028 --> 2:22:15.890
antibiotic or one of these incredible innovations,
2:22:15.970 --> 2:22:19.446
but it is what our patent system drives, which is it's all.
2:22:19.468 --> 2:22:23.210
Of these small little innovations and innovations that create
2:22:23.280 --> 2:22:27.674
all of these little inefficiencies in our lives that add up to the
2:22:27.712 --> 2:22:30.566
modern life that we have now, where we have so much free time and it's
2:22:30.598 --> 2:22:34.190
so easy to do things. And it's a veritable miracle
2:22:34.770 --> 2:22:37.646
how we live today by any historical standard.
2:22:37.748 --> 2:22:41.166
In talking with all of our guests, I couldn't help but be inspired by their
2:22:41.188 --> 2:22:44.954
infectious optimism, passion, and unfettered determination
2:22:45.082 --> 2:22:48.446
to fight for a stronger patent system, no matter the odds.
2:22:48.638 --> 2:22:52.354
Randy went broke in his fight against the AIA. As an individual.
2:22:52.552 --> 2:22:55.810
Judge Michel stepped down from arguably the most powerful judicial position
2:22:55.880 --> 2:22:59.826
in patent law to fight for its reform. Adam works tirelessly
2:22:59.858 --> 2:23:03.350
and continuously in preparing countless briefs, studies, and policy
2:23:03.420 --> 2:23:07.062
memos that help to shape the fight and dialogue in these key issues
2:23:07.116 --> 2:23:10.422
around patents as private property rights. They roll this very large
2:23:10.476 --> 2:23:13.658
boulder up a very steep hill. In all of this,
2:23:13.744 --> 2:23:17.082
in the face of the seemingly insurmountable odds of large,
2:23:17.216 --> 2:23:21.162
very powerful, well funded opposition trillion dollar companies
2:23:21.296 --> 2:23:24.702
with an outsized thumb on the scale, dead set against every
2:23:24.756 --> 2:23:28.906
square inch of every possible solution? Hundreds. Of millions spent
2:23:28.938 --> 2:23:32.442
in lobbying and strategic litigation campaigns to get results from judges,
2:23:32.506 --> 2:23:36.398
regulators and elected officials the political realities of reelection
2:23:36.494 --> 2:23:39.698
and the background influence of PACs funded by opponents of a
2:23:39.704 --> 2:23:43.694
fair and strong patent system. Mass media that's underinformed
2:23:43.742 --> 2:23:46.938
and overinfluenced all compounded by the churn
2:23:46.974 --> 2:23:50.326
of congressional leadership changes, the unintended casualties of
2:23:50.348 --> 2:23:54.274
compromise and a waning interest of the public. It's daunting
2:23:54.322 --> 2:23:57.634
to think about let alone engage. But hope is far from lost
2:23:57.682 --> 2:24:01.258
when you have tenacity care and grit on your side. There was
2:24:01.264 --> 2:24:04.454
an interesting common theme that started rising up in these conversations.
2:24:04.582 --> 2:24:08.566
In discussing not getting worn down by these challenges with Judge Michel, he offered
2:24:08.598 --> 2:24:11.710
this perspective. So that's a formidable
2:24:12.450 --> 2:24:15.786
opposition force fighting
2:24:15.818 --> 2:24:20.110
against us, a little bit like Ukrainians fighting against a Russian army. They got 300,000
2:24:20.180 --> 2:24:23.466
people in your country, they have a much bigger
2:24:23.498 --> 2:24:27.618
army than you do and they're close to home and you're one little country
2:24:27.784 --> 2:24:31.074
trying to survive. That's a tough task to take
2:24:31.112 --> 2:24:34.290
on. And that's a little bit the way I sometimes feel. I don't mean to
2:24:34.440 --> 2:24:38.166
be too self indulgent, but it's a
2:24:38.188 --> 2:24:41.762
very tough fight because of the adamant
2:24:41.826 --> 2:24:45.446
opposition of certain very powerful forces. Then we
2:24:45.468 --> 2:24:49.290
were talking with Randy and he compared what this battle felt like to being something
2:24:49.360 --> 2:24:52.586
almost like the second American Revolution. So before it
2:24:52.608 --> 2:24:55.930
was the colonist versus the suppressive
2:24:57.310 --> 2:25:00.734
English rule and now it's the innovators and
2:25:00.772 --> 2:25:04.622
startups, the real innovators versus the huge
2:25:04.756 --> 2:25:08.190
multinational corporations that are trying to stop
2:25:08.260 --> 2:25:13.854
them and to keep them down. And I
2:25:13.892 --> 2:25:17.150
feel that it's very similar in a way to the American Revolution.
2:25:17.230 --> 2:25:20.386
And it's so important. It's so important.
2:25:20.488 --> 2:25:23.330
And if history is any indicator, when you have a small,
2:25:23.400 --> 2:25:26.614
not well funded scrappy and nimble group that cares about
2:25:26.652 --> 2:25:30.662
fighting and protecting their homeland and these fundamental values and principles going
2:25:30.716 --> 2:25:34.594
up against a well funded, technologically superior, well established
2:25:34.642 --> 2:25:38.294
empire that's just fighting for better profit margins, well, that's how
2:25:38.332 --> 2:25:41.538
revolutions are fought and won. It's that level of give a damn
2:25:41.554 --> 2:25:44.666
that can make the difference. We have no choice. We have to do everything we
2:25:44.688 --> 2:25:48.426
can. Someone like the Ukrainians, as you say. And when
2:25:48.448 --> 2:25:52.814
you go back to the foundation of the country in
2:25:52.852 --> 2:25:56.800
the Revolutionary War, we lost almost every big battle. That's right.
2:25:57.570 --> 2:26:00.602
And our troops were underfed,
2:26:00.666 --> 2:26:04.882
under equipped, short term and
2:26:04.936 --> 2:26:08.980
had many other handicaps. In the end,
2:26:09.430 --> 2:26:12.738
what made the difference? Of course, the French alliance and
2:26:12.744 --> 2:26:16.458
the French fleet helped a lot and some French soldiers and places like Dortown.
2:26:16.494 --> 2:26:21.654
So there are a lot of complexities. But the overall thing was the
2:26:21.692 --> 2:26:24.806
Continental Army refused to give
2:26:24.908 --> 2:26:28.198
up. They kept fighting. It went on for
2:26:28.284 --> 2:26:32.106
eight years before it was all completely over and there
2:26:32.128 --> 2:26:35.434
was a peace treaty. The people who want to have
2:26:35.472 --> 2:26:39.014
a viable patent system need to have the same attitude.
2:26:39.062 --> 2:26:42.686
We just can't give up. We have to keep going no
2:26:42.708 --> 2:26:46.222
matter what. And eventually we will win. For the same reason
2:26:46.356 --> 2:26:50.126
you said, because for the big tech people,
2:26:50.228 --> 2:26:54.290
it's 1000th of 1% more profit.
2:26:55.510 --> 2:26:59.406
Not life threatening to them, but it is life threatening
2:26:59.438 --> 2:27:02.814
to the small businesses, the startups,
2:27:02.862 --> 2:27:06.206
the research universities and many other patent
2:27:06.238 --> 2:27:09.910
holders. So we just have to keep fighting. I appreciate what you're doing.
2:27:09.980 --> 2:27:13.286
I'm trying to do what I'm doing. And I have to
2:27:13.308 --> 2:27:16.614
say it's not all self sacrifice. I'm really enjoying this.
2:27:16.652 --> 2:27:20.314
It really feels very good. I think you feel the same way. I can see
2:27:20.352 --> 2:27:23.782
that in your smile and your energy and your tone of voice.
2:27:23.846 --> 2:27:27.706
Our patent system was designed for the little guy. It was for
2:27:27.728 --> 2:27:28.700
the little guy.
2:27:31.230 --> 2:27:35.022
You probably know this 200 years ago. Think about this.
2:27:35.076 --> 2:27:38.346
Women didn't have a lot of rights 200 years ago. The Patent
2:27:38.378 --> 2:27:41.934
Act of 1790, and it described inventors as he,
2:27:41.972 --> 2:27:45.214
she, or they giving women all the rights of men when it came to patents
2:27:45.262 --> 2:27:48.754
and copyright. And the first black owner of a patent was
2:27:48.792 --> 2:27:52.420
Thomas Jennings in 1821, well before the Civil War,
2:27:53.350 --> 2:27:56.706
and he was a black guy in New York, taylor,
2:27:56.818 --> 2:28:00.918
who invented the first version of dry cleaning and did very well with it
2:28:01.004 --> 2:28:05.014
and used his wealth to help
2:28:05.052 --> 2:28:08.806
the abolitionist movement and to help get relatives out
2:28:08.828 --> 2:28:12.490
of slavery. And the point is, our system was not
2:28:12.560 --> 2:28:14.620
supposed to be just for the big guys,
2:28:15.630 --> 2:28:18.906
and that's what it's turned into. And we have to
2:28:18.928 --> 2:28:22.366
take it back to where it's for the little guy. Big guys can
2:28:22.388 --> 2:28:26.782
use it too, but you cannot exclude the little guys and
2:28:26.836 --> 2:28:30.670
gals. That is our fight,
2:28:30.820 --> 2:28:34.834
and we will not give up. And Adam reiterated the importance of the message and
2:28:34.872 --> 2:28:40.066
fighting on behalf of the fact you're part and parcel of our
2:28:40.088 --> 2:28:44.018
little ragtag group of rebels taking
2:28:44.104 --> 2:28:47.750
on a technologically superior
2:28:51.290 --> 2:28:54.790
big tech does appear like the Death Star, but it has its weaknesses.
2:28:57.530 --> 2:29:00.280
You're right. And at the end of the day,
2:29:01.930 --> 2:29:04.620
I'm always have been a believer that facts went out.
2:29:05.710 --> 2:29:09.882
You stick to the facts. You stick to making
2:29:09.936 --> 2:29:13.966
very clear what the message is, and in the long run,
2:29:14.148 --> 2:29:17.354
that's what moves people. The same thing was true in the American Revolution.
2:29:17.402 --> 2:29:20.350
Not all Americans were in favor of the revolution. I mean,
2:29:20.500 --> 2:29:24.010
250 years later, a lot
2:29:24.020 --> 2:29:28.274
of us have lost that kind of perspective, that it was a hotly contested issue.
2:29:28.472 --> 2:29:31.858
There were even were founders at both
2:29:31.944 --> 2:29:35.486
the First Continental Congress and the Second Continental Congress, like Dickinson,
2:29:35.518 --> 2:29:38.898
who are incredibly bright and brilliant people and committed
2:29:38.914 --> 2:29:42.582
to liberty, who were very much opposed to us
2:29:42.636 --> 2:29:46.310
breaking, who thought that, no, we should work very hard at trying
2:29:46.380 --> 2:29:49.714
to make amends with the mother
2:29:49.762 --> 2:29:52.934
country. And in fact,
2:29:52.972 --> 2:29:56.502
Dickinson, one of his arguments was,
2:29:56.556 --> 2:29:57.910
we're going to be crushed.
2:29:59.970 --> 2:30:02.938
I'm not. I mean, he literally said, we're just we're great. We're gonna be we're
2:30:02.954 --> 2:30:06.558
just a little colony. I mean, you guys really think he said in
2:30:06.564 --> 2:30:08.894
the second kind of thing, he said, you guys really think that you can take
2:30:08.932 --> 2:30:12.960
on the largest, most successful navy and army in the entire world at the moment?
2:30:14.310 --> 2:30:17.298
This is crazy. He's like, maybe even if we're right,
2:30:17.464 --> 2:30:18.900
we're not going to win this.
2:30:21.430 --> 2:30:24.114
But they won out, right? Because, as you said,
2:30:24.152 --> 2:30:27.578
tenacity. It's the tenacity, and it's the belief
2:30:27.694 --> 2:30:30.626
in the rightness of the cause based on the thing that you're fighting on behalf
2:30:30.658 --> 2:30:34.086
of facts, you know? Yeah. And what and what's right, given those
2:30:34.108 --> 2:30:37.994
facts. One of my favorite Benjamin Franklin quotes about
2:30:38.032 --> 2:30:41.350
this was, we must all hang together, or most assuredly,
2:30:41.430 --> 2:30:43.210
we shall all hang separately.
2:30:47.230 --> 2:30:50.746
And he was also the one who said that the
2:30:50.768 --> 2:30:54.446
price of liberty is eternal vigilance because
2:30:54.468 --> 2:30:58.206
they knew of which they spoke. I'm confident there's no shortage of that.
2:30:58.388 --> 2:31:01.866
Didn't know what to expect going into these conversations. These individuals
2:31:01.898 --> 2:31:05.034
live and breathe this topic on a daily basis.
2:31:05.162 --> 2:31:08.082
And I know sometimes I get sick of hearing myself say the same things,
2:31:08.136 --> 2:31:11.934
but there was so much genuine optimism and sincerity.
2:31:12.062 --> 2:31:14.980
I have been fighting this fight, and it's like,
2:31:16.410 --> 2:31:20.520
for whatever reason, I don't know,
2:31:21.290 --> 2:31:25.478
it's so important. I was so outraged from the very beginning of
2:31:25.644 --> 2:31:28.234
what they were trying to do to our system and to the little guy,
2:31:28.272 --> 2:31:31.962
to this key part of America, and that outrage has kept me
2:31:32.096 --> 2:31:32.780
going.
2:31:36.750 --> 2:31:40.006
I have a positive outlook on this, and we are gaining ground.
2:31:40.038 --> 2:31:43.454
We're absolutely gaining ground. We're making headway. We're making the issue
2:31:43.492 --> 2:31:46.778
more known, and we are so committed
2:31:46.794 --> 2:31:49.966
to this. If you'd like to join forces with this ragtag group of
2:31:49.988 --> 2:31:53.610
rebels or just learn more, you can follow Adam on Twitter
2:31:53.690 --> 2:31:57.346
at A-D-A-M-M-O-S-S-O-F-F where
2:31:57.368 --> 2:32:00.322
he posts regularly on patent and innovation policy,
2:32:00.456 --> 2:32:03.822
including his excellent this Day and Innovation History Tweet.
2:32:03.886 --> 2:32:08.110
To learn more about or support US. Inventor, you can find them@usinventor.org
2:32:08.190 --> 2:32:11.798
where you can sign their Inventor Rights Resolution and get on their email list to
2:32:11.804 --> 2:32:14.674
be notified about calls to action. For legislators,
2:32:14.802 --> 2:32:19.282
they're also a 501 C Four. If you're interested in helping to support them financially,
2:32:19.426 --> 2:32:22.566
this is a great organization and they live and die on donations.
2:32:22.678 --> 2:32:26.234
If you'd like to learn more about Judge Michel and the important bipartisan work being
2:32:26.272 --> 2:32:30.870
done by the Council for Innovation Promotion, please visit C Fourip.org.
2:32:30.950 --> 2:32:33.998
And of course, check out the documentary we mentioned at the top by going to
2:32:34.004 --> 2:32:37.886
Innovationracemovie.com. It's also important to note that as
2:32:37.908 --> 2:32:41.578
long as this is the world we live in as inventors and practitioners,
2:32:41.674 --> 2:32:45.758
we cannot settle for anything less than quality when it comes to our patents.
2:32:45.934 --> 2:32:49.506
We have to focus on minimizing surface area for these sorts of
2:32:49.528 --> 2:32:53.218
challenges. What's not in our control is what the courts in
2:32:53.224 --> 2:32:56.806
Congress are up to. What is in our control is creating the
2:32:56.828 --> 2:33:00.834
highest quality patents we can under the circumstances. In practice,
2:33:00.962 --> 2:33:04.774
this means being very intentional about things like not publicly disclosing before you
2:33:04.812 --> 2:33:08.534
file conducting thorough prior art searches crafting
2:33:08.582 --> 2:33:12.246
claims with clear boundaries, performing design around exercises
2:33:12.278 --> 2:33:15.974
to draft around infringement vectors writing enabling disclosures
2:33:16.022 --> 2:33:19.958
with limited functional language, understanding case law and aligning
2:33:19.974 --> 2:33:23.406
as closely as possible with both congressional statute as
2:33:23.428 --> 2:33:26.762
well as court precedent and remembering to keep patent families
2:33:26.826 --> 2:33:30.686
open with continuations. Sometimes the best offense is
2:33:30.708 --> 2:33:33.998
a great defense, patent wisely, and have a
2:33:34.004 --> 2:33:37.540
good 1. May the Force be with you, my friend. You as well.
2:33:37.910 --> 2:33:41.186
All right, that's all for today, folks. Thanks for listening. And remember to check
2:33:41.208 --> 2:33:44.174
us out@aurorapatents.com for more great podcasts,
2:33:44.222 --> 2:33:47.746
blogs, and videos covering all things patent strategy. And if you're an
2:33:47.768 --> 2:33:50.706
agent or attorney and would like to be part of the discussion or an inventor
2:33:50.738 --> 2:33:55.574
with a topic you'd like to hear discussed, email us at podcast@aurorapatents.com.
2:33:55.692 --> 2:33:59.146
Do remember that this podcast does not constitute legal advice. And until next
2:33:59.168 --> 2:34:10.634
time, keep calm and patent on Star
2:34:10.672 --> 2:34:14.526
Wars. A little bit of patent law get into some Star Wars stuff,
2:34:14.548 --> 2:34:17.918
too. Exactly why the Jedi really should have
2:34:17.924 --> 2:34:21.726
patented lightsabers then. It could
2:34:21.748 --> 2:34:24.480
have stopped the Sith from getting it right.
2:34:25.730 --> 2:34:27.870
Could have saved the Sits for patent infringement.
2:34:30.530 --> 2:34:34.494
I'm pretty sure that the Emperor would have come up with the PTAB at
2:34:34.532 --> 2:34:36.500
some point. He would have for precisely that reason.