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There has been a lot going on in Washington lately, so you could be forgiven if you did not notice the recent confirmation of the next director of the United States Patent and Trademark Office, Andrei Iancu. However, this is bigger news than many may think: The next leader of the PTO will have the opportunity to strengthen patent quality and combat frivolous and abusive patent litigation. This has substantial implications for American small-business creation, economic growth, job creation and innovation that will be felt throughout our economy for years to come.
Iancu has a long and respected track record as a patent litigator who has represented everyone from high-tech companies to biotechnology clients throughout his career. Now, as PTO director, he has the opportunity to create a positive and important change to reduce patent litigation abuse and return billions of dollars to productive use, particularly for small businesses and entrepreneurs.
To do this, he must make patent quality a cornerstone of his agenda as Director. During his confirmation hearing, Iancu acknowledged this importance himself, stating that “We must continue to improve patent quality in order to foster further invention and growth. A reliable, predictable, high-quality patent system gives, in the words of Thomas Jefferson, ‘a spring to invention beyond my conception.’”
One of the most significant tools to achieve this end is the inter partes review process, or IPR. Established with bipartisan support by Congress in 2011, IPR allows the PTO to examine questionable patents to determine whether they should have been granted in the first place. Essentially, it gives the PTO a second chance, allowing it to reconsider its own past mistakes in granting patents for ordinary, unremarkable technologies, such as those covering basic, well-known processes like sending an email alert when a new real estate listing is posted or the price changed. It also gives the agency a tool to fight back against patent trolls, or entities that often use low-quality patents to fuel abusive litigation and win extortionate settlements from productive American companies.
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Since it was established, a significant beneficiary of the IPR process has been small businesses, including many small- and medium-sized real estate companies like those run by our members. Due to the high costs of patent litigation, trolls know that small companies with fewer legal and financial resources are less likely and able to fight back. The IPR process benefits businesses by helping toss bad patents – and frivolous suits – before they lead to years of disruptive litigation and tens or hundreds of thousands of dollars in legal fees. At the same time, IPR has built-in safeguards that make sure legitimate patent owners – and the value their inventions provide – are protected.
If Iancu wants to see the positive effects of IPR, he doesn’t need to look any further than the small-business survivors of abusive litigation. A number of our members have been targeted by patent trolls, and we have helped many of them fight back using the IPR process to challenge patents we believed weren’t eligible for patent protection. Often, trolls know that their weak patents will not withstand an IPR challenge. In one case, we achieved a settlement that guarantees that the patent owner may not enforce its patent against any business in the real estate industry, and in another case, one of our constituents won a ruling invalidating a patent that was being asserted against a number of real estate firms. Our members have benefited greatly from IPR, and we know it is critical to the survival of countless other small businesses across the country who may fall victim to the extortive tactics of patent trolls.
Iancu has the opportunity during his first days in office to send a strong signal that protecting patent quality and maintaining the IPR process will be central pillars of his agenda as PTO director. A high-quality, well-functioning patent system means that holders of valid patents can be secure and confident in their intellectual property, and that small businesses targeted by invalid patents do not have to risk bankruptcy to defend themselves. As a result, the United States can remain a thriving innovative hub, ensuring that companies are free to innovate and grow and that real estate firms and other small businesses around the country create jobs and drive growth for years to come.
Elizabeth Mendenhall is president of the National Association of REALTORS®, America’s largest trade association.
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