Innovation is at the heart of the American spirit, and advances in technology are sparking breakthroughs across every sector of the economy. Unfortunately, low-quality patents continue to be a scourge on our country’s growth, stifling innovation and hurting small and large businesses alike. Take a recent example of a particularly frivolous patent claim. Earlier this year, Micoba LLC filed nearly a dozen cases in the Eastern District of Texas, suing companies for allegedly infringing on a patent that asserted it owned the idea of storing electronic files in folders on a computer. This might seem funny — indeed the claim is laughable — but instances like these cost actual innovators billions of dollars in legal fees every year.
Bad actors like Micoba are known as patent trolls. Patent trolls target overly vague patents to make frivolous claims in court and shake down innovators through lawsuits. These patent trolls give businesses — most of which are small businesses — “an offer they can’t refuse.” Businesses can either face an expensive, risky legal battle that could bankrupt them or a give trolls a smaller payout to “license” their bad patent.
Fortunately, Congress recognized this problem and took action to combat these tactics and rid low-quality patents from the ecosystem. This month, on Sept. 16, we celebrated the fifth anniversary of the Patent Trial and Appeal Board and the inter partes review process. IPR provides a more effective way to review patent claims that should’ve never been granted in the first place, balancing the rights of patent holders and those challenging low-quality patents.
Only five years after inception, data indisputably show that IPR is working as Congress intended and protecting the interests of all stakeholders. Of 2.5 million active patents, only about 4,700 have been challenged through the review process. That’s less than .2 percent of patents. Challengers must meet a high bar to have a full review granted and prove that it is more likely than not that a claim is invalid before PTAB will institute the process.
And there’s no evidence that PTAB poses a threat to legitimate patents. Only 23 percent of the 4,700 PTAB challenges resulted in final decisions holding claims unpatentable. PTAB is effectively doing its job by finding and eliminating patent trolls while protecting the strength and effectiveness of the patent system. If less than a quarter of the 0.2 percent of patents challenged through PTAB are thrown out, it can hardly be the bogeyman opponents are making it out to be.
In other words, opponents who frame PTAB as a death squad for patents simply ignore the facts.
What’s more, once PTAB does institute a review, its decisions have proven to be fair and high-quality. Since the inception of the IPR process in 2012 through Sept. 1, 2016, the Federal Circuit has reversed only 7 percent of PTAB’s decisions. In 2016, the Supreme Court found that PTAB’s standards of review for patent claims is proper and “helps to protect the public” in the Cuozzo Speed Technologies, LLC v. Lee case.
IPR is serving its purpose and protecting the public interest in promoting a strong innovation economy and upholding the integrity of the patent system.
Strong patents are critical to continued growth and prosperity of the internet industry and the U.S. and global economy. But there are still too many bad actors taking advantage of shortcomings in the current system, preying on businesses and extorting money at will. Robust IPR procedures are as critical today as when Congress passed the America Invents Act, and both Congress and the administration must support the ability of post-grant review procedures to address low-quality patents.
Michael Beckerman is president and CEO of Internet Association, which represents America’s leading internet companies.
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