Fixing the Damage That’s Been Done to the American Patent System

President Joe Biden’s nomination of a new director of the U.S. Patent and Trademark Office presents a unique opportunity for his administration to fix the problems in our patent system that are holding back innovators and entrepreneurs of all sizes.

Right now, the very heart of American innovation is under siege, dimming the opportunity for stronger American competitiveness globally. Innovators and entrepreneurs across our country are under fire from wealthy investor groups known as “patent trolls.” These groups don’t build or create things. They don’t invest in research and development. And they don’t create good-paying jobs.

Instead, patent trolls purchase low-quality patents that are often at the end of their shelf life and weaponize them against legitimate innovators — from keystone American manufacturers to community-based small businesses — by threatening litigation in the hopes of extracting settlements or winning massive judgments in court.

Here at Intel, where we take pride in attracting some of the world’s best engineers, technologists and innovators, we’ve been on the receiving end of these abusive patent litigation efforts more often than most. So too have farmers, startups and American manufacturers of all shapes and sizes.

If this sounds like déjà vu, that’s because it is. Ten years ago, Congress passed the America Invents Act to help rein in patent trolls. The law provided innovators and entrepreneurs an alternative to costly litigation before judges and juries who are not experts in patent law. Under the new system, those targeted by patent trolls could request something called “inter partes review”, a hearing before experts in patent law who serve on the Patent Trial and Appeal Board at the USPTO.

The IPR system was a badly needed reform that came after two decades during which patent trolls extracted roughly a half trillion dollars from American companies, including an average of more than $80 billion annually during the four years prior to the law’s passage.

And it worked. By 2018, thanks to IPR, abusive patent litigation had dropped significantly. But today, the problem is once again worsening. Hedge funds and foreign entities have joined the fray — weaponizing our patent system to drive their profits (and fill their lawyers’ pockets) at the expense of innovators, manufacturers and workers in critical industries. Since 2018, abusive patent litigation has increased by 35 percent.

An often-overlooked rule is at the root of this spike. The former director of the USPTO instituted what is known as the NHK-Fintiv rule, tilting the playing field in favor of patent trolls. The rule does not follow the text or intention of the America Invents Act, but instead directs PTAB to use a six-factor test to decide whether to conduct an IPR hearing. These six factors boil down to one thing: whether there is litigation related to the patent infringement suit already in progress.

Because of the NHK-Fintiv rule, legitimate review requests are denied in the very situations that the AIA established IPR to address. These so-called “discretionary denials” have become commonplace at PTAB, with worthy IPR petitions submitted in compliance with the AIA’s requirements being denied left and right.

This is not what Congress intended when it passed the AIA. When PTAB issues a discretionary denial, it gives patent trolls an opportunity to profit. Innovators and entrepreneurs are told they will have to take their chances before a judge and jury who may lack the expertise to reach a sound decision. It stacks the deck against job creators and increases patent trolls’ leverage to force settlements, particularly from small companies and startups that cannot afford to defend themselves in court.

It is discouraging that an agency rule created outside the clear intention of the law has exposed innovative employers and companies to increased risk. When guideposts are established in law, we expect government agencies to follow them. Folks may disagree with the law, but those are the rules of the road.

That’s why when Biden’s nominee comes before the Senate for her confirmation hearings, she must commit to restoring the IPR process and ensuring the USPTO enforces the America Invents Act as Congress intended. In addition, Congress can further restore confidence in the American patent system by taking up the Restoring the America Invents Act — a bipartisan bill that will cut down on discretionary denials and make sure that patent disputes receive fair and transparent review. These two steps will go a long way towards fixing what’s broken today.

American innovators should not be held back by a broken patent system, nor by easily addressed abuses of that system. It’s critical that the Biden administration immediately rescind the unlawful NHK-Fintiv rule, and Congress must quickly pass the RAIA. Taking these steps will fix what is broken and help ensure our patent system once again works for the innovators and entrepreneurs whose creativity and ingenuity are the lifeblood of our economy.


Steven R. Rodgers is executive vice president and general counsel of Intel Corp., where he serves on the senior executive team and oversees the company’s legal, government and trade groups.

Morning Consult welcomes op-ed submissions on policy, politics and business strategy in our coverage areas. Updated submission guidelines can be found here.

Morning Consult