At the end of June, Rep. Thomas Massie (R-KY) introduced the “Restoring America’s Leadership in Innovation Act of 2018,” H.R. 6264 (RALIA). RALIA, rather than restoring American innovation, aims to overturn the advances in American patent law that help protect innovation. Last week, I addressed Rep. Rohrabacher’s ‘Inventor Protection Act’ (IPA) , and I’ve previously covered the STRONGER Patents Act. Now we can turn to the third member of this group of anti-innovation bills, RALIA.
Here’s the gist of it. The AIA? Gone. Decades of court decisions fine-tuning the balance between the patent reward and the impacts of the government-granted monopoly that a patent represents? Gone. RALIA even gets rid of the 18 month publication rule, which makes no sense if you want to promote progress—it only matters when it comes to promoting patents, a fact the bill actually admits.
Let’s take a look in more detail.
IPR Works—So Let’s Get Rid Of It
The inter partes review (IPR) system—and the associated post-grant review (PGR) system—have been effective in reducing the cost of patent litigation and providing a quick and effective alternative to challenging the validity of a patent in court.
I’ve estimated that IPR has saved over $2 billion just in legal fees in its first five years. And the AIPLA survey of patent lawyers has estimated that the cost of patent litigation has fallen significantly, primarily due to the availability of IPR. That’s money that companies can spend on actual research, rather than researching patent law.
So, of course, RALIA gets rid of IPR and PGR.
RALIA claims that IPR results in many serial challenges and invalidates patents at an unreasonably high rate, claims that I’ve repeatedly shown are misleading or just plain untrue. Patents which face more than one review are extremely low in number and the invalidation rate at the PTAB is only slightly higher than the invalidation rate in courts, a difference which is unsurprising given that defendants determine whether to challenge validity at the PTAB. Rep. Massie is an engineer by training; it’s unfortunate that the bill doesn’t seem to reflect an engineer’s use of numerical evidence in making these claims.
Creating Eternal Patents
IPR isn’t the only validity challenge RALIA eliminates. Another provision of RALIA would severely reduce the number of validity challenges made in district court as well.
Tolling Terms Is An Incentive Not To Assert Invalidity
RALIA adds a provision that would toll patent term during a validity challenge, meaning that if you spend two years in court challenging the validity of a patent, the patent gets an extra two years of lifetime. That’s an extra two years in which you’re going to have to pay royalties. In many cases, that means that defendants will forgo their right to challenge a patent as invalid and focus only on infringement in order to minimize the cost of a loss. That then results in greater numbers of invalid patents being used to prevent people from innovating.
Tolling Terms Hurts Third Parties, Including Licensees
It’s not just defendants who will be harmed, though. The patent term extension provided by RALIA’s § 11(b) extends the patent owner’s ability to prevent everyone from practicing the claimed invention, not just the party challenging validity. RALIA doesn’t seem to care about the fairness of extending the term of a patent against a third party who wasn’t involved in the challenge. A licensee who has agreed to pay royalties for the life of the patent, for example, could be forced to pay for years of additional royalties—even though they never challenged the patent.
This Isn’t ‘For Limited Times’
That leads to the worst aspect of this provision. I hope this isn’t Massie’s intent, given that he seems to believe in limited terms for copyright, but this provision would actually provide patent owners with a route to infinitely extend their patent terms.
Because RALIA extends the term against everyone, not just the challenger, a patent owner who wants to extend the term of its patent forever can do so just by making sure someone’s always challenging its patent’s validity. For example, the patent owner could use a service which takes fees from a variety of patent owners and then files weak challenges to the validity of their subscribers’ significant patents.
That kind of service might not make sense for a small inventor, but for a large drug company making hundreds of millions of dollars on a patented drug? Spending a little money to indirectly fund weak challenges to your own patents in order to extend their term forever makes sense.
“First-To-File” Still Requires That You Invented It
That’s not the only part of the AIA that RALIA eliminates. It also gets rid of the ‘first-to-file’ system implemented by the AIA.
The reality is that there’s almost no difference in practice between first-to-file, as implemented in the U.S., and the older first-to-invent system. If you file a patent on something someone else invented, you still won’t get your patent—you have to have invented it yourself. The two systems only differ in which of two essentially simultaneous inventors they award the patent to in a few situations—and they only differ in which inventor would win in a handful of cases per year. Essentially simultaneous inventors were expected from the beginning of our patent system—James Madison noted that inventions “grow so much out of preceding ones that there is the less merit in the authors” and thus, “for the same reason, the discovery might be expected in a short time from other hands.” Given that, there’s no reason to think that there’s any Constitutional preference for the first to conceive over the first to file, as long as the person filing for the patent actually invented what they filed an application for.
(It’s especially ironic to see the desire to go back to first-to-invent, given the concern that the U.S. is being passed by the European patent systems—jurisdictions that all use first-to-file, and a more strict form of it than the U.S. employs.)
Reshaping § 101 To Benefit Only Those Who Own Patents
RALIA includes an amendment to § 101 as well. This amendment appears to be based on the IPO and AIPLA proposals, which Patent Progress has covered in the past.. The basic idea? Let’s make everything patentable, no matter if it would prevent anyone from accessing a basic scientific building block or represents nothing more than an abstract idea stripped of any structure.
These proposals come from interest groups that claim that § 101 “is not meant to provide the standard for deciding whether a particular technical advance should receive patent protection.” But that statement is wrong—that’s exactly what § 101 is for. And I’m not alone in this view. Back in June, USPTO Director Andrei Iancu agreed, describing § 101 as a determination of “what specifically, as a country, do we want to exclude from patenting.” There’s active discussion on what falls into that category, but it simply isn’t serious for AIPLA to suggest that § 101 isn’t intended to prevent certain types of patents.
As Patent Progress stated when these proposals first came out, they don’t promote progress, just patents that will block basic research and overbroad patents that claim an abstract idea. The only beneficiaries will be those who assert low-quality patents; it certainly won’t benefit progress of the useful arts.
Automatic (Inequitable) Injunctions
RALIA, much like STRONGER and the IPA, contains a provision addressing injunctive relief. RALIA would provide effectively automatic injunctions, employing a different rule for patent law than we employ essentially everywhere else in law. Like the Rohrabacher bill, RALIA would effectively eliminate any weighing of equities in favor of ensuring that injunctions issue. This automatic injunction rule allows patent owners to use the threat of an injunction to extract more than their invention is actually worth from defendants.
As I wrote back when STRONGER Patents was first introduced, that gives us a world where a patent on a lug nut can allow the patent owner to get an injunction on the entire car. Our lug nut patentee can then force the car manufacturer to either redesign and reorganize their manufacturing process to use a different lug nut design, unable to sell or manufacture any cars in the interim, or just pay the troll more than the lug nut’s technical value justifies in order to avoid being unable to sell cars. That’s not promoting progress—it’s the opposite.
Hide Knowledge Away By Ending Publication
RALIA also ends automatic publication of patent applications. Right now, patent applications publish 18 months after their earliest priority date. This ensures that—even if a patent applicant decides to abandon their applications—the world as a whole is made aware of the idea they came up with, providing knowledge to the world and promoting progress.
RALIA would eliminate this 18 month publication requirement. That means that patent applicants could file an application and then, if they decide the patent isn’t worth spending money to pursue, abandon it without ever actually making their idea available to the public. The public would never become aware of this idea. The idea would remain buried in files at the Patent Office, of no benefit to anyone, and no progress would be made.
RALIA justifies this by claiming that pre-grant publication creates prior art that prevents a patent owner from applying for a patent on the same invention if a patent does not issue. But this simply isn’t necessary—applicants can already file continuations, and many do. The only thing applicants can’t do now that RALIA would allow them to do is apply for a patent, drop their application, and then re-apply for a patent after an industry develops around that idea. This benefits patent owners, but it certainly doesn’t benefit progress.
RALIA also ignores the simple fact that we live in a global world. Inventors frequently apply for patents in multiple countries, and other countries publish applications. Even if RALIA passed, the patent owner will still be prevented from applying for a patent on the same invention because it’ll be published overseas.
There’s just no benefit here, and real harms to the Patent Office’s role as a public repository of technical information.
Restoring the Constitutional Vision
I’ll end at the beginning of the bill. As part of the findings, RALIA declares that the act “restores the patent system as envisioned by the Constitution of the United States.”
That’s nonsense. The Constitution envisions nothing more than that Congress will create a patent system that promotes progress. RALIA tries to claim that patents are a private property right that exist prior to their grant, and that the grant of a patent only “secures” the pre-existing right. That’s contrary to the vision of the Founders as well—for example, Jefferson wrote that inventions “cannot, in nature, be a subject of property.”
This bill won’t promote progress, just patents, and that’s the furthest thing possible from what the Founders envisioned.