As expected, once some ideas to deal with patent trolls were proposed by the President, the concern trolls came out in force to express “concern” about “uncertainty” and a possible, unexplained, negative effect on innovation. In short, the concern trolls tell us inventors will stop inventing, technology will stagnate, society will collapse, and Two and a Half Men will be renewed for another 12 seasons.
The reform that is generating the most worry is the expansion of the Covered Business Method (CBM) reviewA covered business method review is an adversarial procedure created by the AIA for challenging patents, similar to an IPR. Like an IPR, the parties argue before an Administrative Patent Judge, not a patent examiner and the challenger must show a reasonable likelihood of successfully invalidating one claim before the PTAB will agree to grant a petition for review. Unlike an IPR, a CBM can More program, which we wrote about last week.
Is It Unfair to Give Troll Targets a Way to Defend Themselves?
Here’s self-described “notorious patent trollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms.” IPNav:
We oppose [expanding CBM review], because it is unfair to patent owners. A patent can be challenged over and over at both the patent office and in court, and as a result a patent owner with a valid patent can be forced to spend a lot of money defending the same patent in different venues, and the day when the infringer has to pay is pushed out. Companies challenging patents should get one shot: at the patent office, or in court, but not both.
The expansion of CBM review only applies to existing patents that have been asserted against someone, either with a demand letter or a lawsuit. And if the patent is valid, it will come out of review intact. How is that unfair?
Let’s unpack IPNav’s reasoning. Why would a patent owner be “forced to spend a lot of money defending the same patent in different venues”? Because the patent owner has sued on the same patent in different venues. CBM review offers targets of trolls like IPNav a more reasonably priced (although hardly cheap, with a filing fee of $30,000) way to defend themselves; and the fact is that any argument you raise at the PTOPatent and Trademark Office, informally used interchangeably with USPTO. is an argument you can’t raise in district court. In other words, a company does only get one shot, not two as IPNav claims.
The reality is that IPNav is complaining because defendants might get to fight back instead of being forced by financial pressure to cave. My response to IPNav goes something like this:
Are We Risking Innovation?
Here’s another example, this time from the Business Software Alliance:
[Senior Vice President for external affairs of BSA, Matt] Reid said a proposal to expand the patent office’s program allowing for special review of computer-related patents “could inadvertently put at risk innovation for many industries that rely on software, from manufacturing to biotech.” Changing measures that have been in effect for less than a year “before we see the results doesn’t make sense,” he said.
“Put at risk innovation”? How might that work? Suppose a company has an innovative product and asserts a related patent against a competitor. If the competitor requests CBM review of the patent and wins, the original company still has an innovative product; the difference is that now it might have a competitor in the marketplace.
That’s actually a good thing. Now we have two companies with innovative products instead of just one. And the competitor is allowed to keep making its product, which might be even better than the original company’s.
It’s true that the first company doesn’t get the monopoly it wanted, but patent policy is supposed to benefit competition. It’s hardly putting innovation “at risk” to prevent a company from monopolizing a market with an invalid patent. It’s actually protecting innovation by protecting companies from lawsuits that assert invalid patents.
Don’t Worry, Be Happy [About Covered Business Method Review]
As I’ve written before, expanding CBM review is a crucial part of patent reform. So don’t let the concern trolls make you nervous.