Issues & Insights

OMB Should Move To Strengthen Patent Rights

U.S. Patent Office building, main atrium. Photo: Picasa, ShareAlike 4.0 International License

The Office of Management and Budget, which reviews all federal agencies’ proposed rules and regulations, has before it a proposal to make U.S. patents more reliable and predictable. 

But OMB has gotten sandbagged by Big Tech companies and special interests that prefer weak patents, weak patent rights and unreliable patents. 

The Trump administration’s Patent and Trademark Office (PTO) leadership has made several improvements to our patent system.  However, there remains much damage to repair because of the weak-patents lobby, Congress, courts and the previous administration. 

Congress shares blame for enacting legislative changes that undermine our patent system.  Among other destructive measures, the 2011 America Invents Act (AIA) created the Patent Trial and Appeal Board (PTAB).  Anti-patent special interests worked overtime to make the AIA a radical bill and to get it signed into law.

They succeeded.

The AIA and PTAB directly diminish longstanding intellectual property rights, such as the right to a jury trial and de novo review in federal court.  PTAB conducts adversarial administrative challenges to patent validity, which end-run the fairness and due process that federal court affords.  

Google alumna Michelle Lee, President Obama’s PTO director, implemented PTAB in the most unfriendly manner toward inventors’ property rights  She stacked PTAB panels to get the case outcomes she wanted and weaponized PTAB through a biased set of standards, procedures and pliable “rules.”  

Frequent PTAB filers, led by Apple, Google, Samsung and Microsoft, love PTAB because their lobbying investments have resulted in an 84% patent invalidation rate, while tying up patent owners in expensive, protracted legal battles.  This facilitates challengers’ practice of “efficient infringement” — where the benefits of infringing patents outweigh the legal costs of patent litigation. 

PTO Director Andrei Iancu set out to reverse course, in alignment with President Trump’s deregulatory agenda and his regulatory fairness and due process initiatives.  

Iancu told the Senate Intellectual Property Subcommittee at his confirmation hearing in 2017 and subsequently to others that his goal is restoring patent reliability and certainty.  The proposed rule languishing at OMB would move PTAB further toward administrative fairness and due process and hence foster patent reliability and predictability. 

Mr. Iancu’s proposal would advance constructive PTAB reforms.  The proposed “Amendments to the Rules of Practice for Trials Before the Patent Trial and Appeal Board” is said to consolidate several precedential decisions denying PTAB proceedings when patent challenges targeting the same patents are before federal courts.  Administrative quasi-judicial bodies should of course defer to Article III courts! 

The proposed rulemaking builds on Mr. Iancu’s improvements.  One rule changed PTAB’s and PTO’s patent claim construction standard from the interpretation used during initial patent examination to that used by federal courts and the International Trade Commission once a patent has been issued. 

Recent guidance clarified patent-eligible subject matter throughout PTO.  This has increased consistency and patent reliability.  Rejections based on patentability have fallen since the guidance. 

In response to the Supreme Court’s ruling in SAS v. Iancu, PTO has proposed a constructive rule on PTAB institution decisions.  In keeping with the SAS opinion, the rule requires PTAB proceedings to be granted on all challenged patent claims instead of only some of them, or else deny the request.  It also removes some of PTAB’s pro-challenger biases. 

The proposed rulemaking now at CBO would continue bringing some balance to PTAB, in the interest of ownership rights, the rule of law, due process and fairness.  These attempts by the very special interests that wrote the AIA, created PTAB, tilted the PTAB playing field, frequent PTAB and game it to enable “efficient infringement” stink to high heaven. 

These special interests like having open access to a biased bureaucracy that serves their weak-patents purposes.  They’re trying to slow-walk proposed improvements till after the election, when they anticipate a Biden administration withdrawing Mr. Iancu’s proposal. 

OMB should note that Mr. Iancu’s proposed reform aligns with the White House’s, the administration’s, and OMB’s deregulatory initiatives and regulatory fairness reforms, including Executive Order 13892 mandating transparency through notice-and-comment rulemaking. 

The bottom line is PTAB still needs reform, especially by requiring its deference to federal courts over administrative proceedings on the same patents.  The proposed reforms and rulemaking are part and parcel of the president’s return to the due process and fairness of the Administrative Procedure Act and the rule of law. 

OMB shouldn’t allow itself to get played by bullies that game the system and disrespect the efforts the White House, OMB and PTO have made.  This rulemaking should proceed without further delay. 

James Edwards, Ph.D., is executive director of Conservatives for Property Rights (@4PropertyRights) and patent policy advisor to Eagle Forum Education & Legal Defense Fund.  The views expressed are his own. 

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Issues & Insights is run by the seasoned journalists behind the legendary IBD Editorials page. Our goal is to bring our decades of combined journalism experience to help readers understand the top issues of the day. We’re doing this on a voluntary basis, because we believe the nation needs the kind of cogent, rational, data-driven, fact-based commentary that we can provide. 

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