IP Market Updates
March 31, 2017
The USPTO must be taking cues from the Trump White House and its love for a daily dose of drama. We just learned from a few well-connected sources (now I sound just like the New York Times) that the new Commerce Secretary, Wilbur Ross, has been quietly interviewing candidates to replace current Director, Michelle Lee, who has been in and out of the job so many times since January that we stopped keeping score.
Apparently, the leading candidates are still the same individuals that we reported on a few months ago, i.e. Phil Johnson, former VP IP Strategy at J&J, and former IPO president, as well as former Chief justice of the Federal Circuit, Randall Rader. Both are well regarded in the IP community and proponents of a strong patent system to support innovations and investment. Each would be a breath of fresh air to an agency that has gone from a patent issuing to a patent killing machine over the last years. Invalidation rates still hover at 70%+ for patents challenged via the PTAB. We will keep you posted as this story unfolds, but this is undoubtedly a positive development if you are an inventor or patent owner. It also comes on the heels of an announcement a few days earlier that Director Lee was forming a “working group” on regulatory reform. Under a new director, this group could now become a conduit to seriously revisit the entire post-grant review (like IPRs) mess that the America Invents Act has created.
Meanwhile, the US Supreme Court heard another patent case, this time dealing with patent venue (i.e. the court district in which a Plaintiff is entitled to bring its law suit). As we discussed last week, the current rule has given the Eastern District of Texas a prominent role in hearing patent cases over the last two decades. It is considered much faster (hence its nickname as the “rocket docket”), and has a more pro-patentee slant than other districts like North California, where large tech companies are located and generally on the receiving end of those law suits. Not surprisingly, those defendants want the battle to be on their own turf where they feel they have the home field advantage and they have lobbied pretty hard to change that rule. Judges had harsh questions for both sides, but many pundits predict that the rule favoring a broader choice of venue may prevail. This may seem like a fairly trivial case, but a reversal of the status quo would have a significant impact on the ability for patent owners to successfully bring their cases to trial and would throw one more obstacle into what already feels like a 3000-meter steeplechase course. SCOTUS must release it decision before its summer recess in June.
Abroad, despite assurances that it is business as usual, many are wondering what the official “kick off” of the Brexit period this week will mean to the European Unified Patent System. Only time will tell.
We have been telling you for a while that the action was now going to be in China which, now that it has a local tech industry to defend, has fully embraced the ideal of a strong IP system. This week, it reached an important milestone, with a Chinese Court issuing the very first injunction barring a company from practicing a standard essential patent (SEP). This is big. You can imagine if hundreds of companies implementing, say a Bluetooth standard, are now being told, by a court, that they can no longer sell their product without removing that functionality? Furthermore, the Chinese court, in a rare display of transparency, issued a press release stating that it has 20 other SEP cases in the works. Watch out! For companies manufacturing infringing goods in China, or wanting to sell in China, this could be a major game changer.
For those who think that China will only favor local companies, this week’s events showed that might not be the case. Apple was able to reverse a lower court decision and successfully quashed a previous injunction that momentarily prevented the tech giant from selling the iPhone 6 in the territory.
Finally, a recent study by Lex Machina showcases a few of the metrics supporting what we have been saying for quite a while… Germany has now become the venue of choice for NPEs to assert their patents. There are a couple reasons including the relatively low costs of litigation, the threat of an injunctive relief and a more predictable patent court, that has no philosophical problems treating all patent owners equally whether they happen to be the original inventors or not.
The 2 tables below say it all:
The IP community is simply doing what most people do when the environment they were operating under has become less favorable; it is voting with its feet. Many years from now, when the dust has settled, the downside to this phenomenon will be measured in trillions of lost growth within the US economy. The shortsighted, lobby-sensitive approach to innovation has essentially resulted in the exportation of our coveted patent system to other countries. It is so sad!
Other relevant news below.
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