​​Patently Strategic - Patent Strategy for Startups

American Inventor Horror Story: Ten Years of AIA and the PTAB

October 27, 2021 Aurora Patent Consulting | Ashley Sloat, Ph.D. Season 1 Episode 7
American Inventor Horror Story: Ten Years of AIA and the PTAB
​​Patently Strategic - Patent Strategy for Startups
Chapters
0:00
Intro
2:46
AIA History and Overview
3:31
AIA: First Inventor to File
4:22
AIA: Prior art types for public use and sale
4:55
AIA: Assignee Filing
5:23
AIA: Regional Patent Offices
5:33
AIA: Prioritized Examination (Track One)
5:46
AIA: USPTO revenue control
6:09
AIA: PTAB and IPRs
7:48
Dan Brown intro
8:08
Dan Brown on unintended consequences of AIA
8:46
PTAB invalidation rate
9:03
Top big tech infringers
9:21
Bob Schmidt intro
9:30
Bob Schmidt on why this is happening
10:02
Dan Brown on how infringers are abusing the patent system
10:29
Dan Brown on obviousness and bad patents
11:52
How the PTAB is being used to invalidate the top tier patents
12:32
The power of an IPR threat
13:03
Kip Azzoni Doyle intro
13:16
Kip's story
14:36
Financial impact of being IPRd
14:57
Josh Malone's infringement story and legal expenses
15:42
PTAB composition and comparison with Article III courts
16:25
Why the PTAB is seen as a more favorable venue
16:33
Burden of proof
16:56
Broader claim construction
17:05
Standing not required
17:15
PTAB judges (APJs): backgrounds and qualifications
18:17
The cost of inaction
18:45
Dan Brown on the best social system being a good job
19:16
Kip on impact to patent value and licensing
20:05
Bob Schmidt on patent devaluation
20:47
Louis Carbonneau on impact to patent value
22:10
Lost property rights and innovation's race to the bottom
22:41
Bob Schmidt on Constitutional origin of patent rights
23:21
Article 1, Section 8, Clause 8
24:06
IP Rights vs other property Rights
24:44
Louis Carbonneau compares with getting a land title
25:45
Exploring Solutions: Proposed legislative reforms
26:15
Bob Schmidt on meaningful legislative reform
30:40
Invalidation dissonance
31:36
Exploring Solutions: PTO examiner process
31:53
Inside the PTO perspective with Tariq Najee-ullah
32:19
Patent examination from 30,000 ft
35:36
Time spent on examination and prosecution
41:46
Examiner focus on prior art searching
45:18
How examiners look at patents vs. how judges look at patents
47:33
Exploring Solutions: Louis Carbonneau on legal system share of responsibility
49:47
Future proofing strategies for IPR success
52:32
Call to action
53:08
Outro
More Info
​​Patently Strategic - Patent Strategy for Startups
American Inventor Horror Story: Ten Years of AIA and the PTAB
Oct 27, 2021 Season 1 Episode 7
Aurora Patent Consulting | Ashley Sloat, Ph.D.

Listen in as we discuss the impact of the AIA and the PTAB with inventors gathered as part of the "Decade of Stolen Dreams" rallies, happening in front of regional USPTO offices all across the country, marking the 10 year anniversary of the passage of the America Invents Act – an event described by advocacy groups as the worst event in U.S. patent history.

The inventors and entrepreneurs at the rally we attended, all from diverse backgrounds with very different stories, have one thing in common and that is their shared belief that the AIA and the PTAB – with its eye-popping 84% invalidation rate – have crippled innovators and created a Decade of Stolen Dreams, ruining the lives of countless inventors and shutting down numerous start-ups, in favor of Big Tech and multinational corporations.

In this episode, we break down the AIA and PTAB through a wide array of personal perspectives from inventors, patent practitioners, and even a former USPTO patent examiner. We explore its origins, core problems, and proposed solutions. We also provide some very practical tips that inventors should consider now to help future-proof their patents, should they ever find themselves on the receiving end of an IPR.

Inventors are not only the real engine of our economy, but they’re also the reason we do what we do here at Aurora. This is a complex issue, with high stakes, involving the people who matter most to our business and what the world will look like for our kids, so we can’t think of a better use of a podcast episode than to lend a voice and hopefully shine a light on the key issues and some potential solutions.

I am joined today by an exceptional group of industry experts, founders, and inventors including:

* Ashley Sloat: President & Director of Patent Strategy at Aurora Consulting
* Dan Brown: Professor at Northwestern, owner of 40 utility patents, elected to the National Academy of Inventors, and serves as the inventor rep on the Patent Public Advisory Committee.
* Bob Schmidt: Founder, Chairman and CEO of 5 companies including Great Lakes NeuroTechnologies and Cleveland Medical Devices, Co-Chair of the Small Business Technology Council, and has 40 patents to his name
* Louis Carbonneau: Founder & CEO of Tangible IP, one of the largest patent brokers in the world
* Kip Azzoni Doyle: Inventor of the CardShark WalletSkin and the author of the upcoming book, “Blood in the Water, America’s Assault on Innovation”
* Tariq Najee-ullah: 10 year patent examiner, former NASA engineer, and current Principal at Patent Insider

***

Learn more: https://www.aurorapatents.com/blog/new-podcast-american-inventor-horror-story

** Follow Aurora Consulting **

*
Home: https://www.aurorapatents.com/

* Twitter: https://twitter.com/AuroraPatents

* LinkedIn: https://www.linkedin.com/company/aurora-cg/

* Facebook: https://www.facebook.com/aurorapatents/

* Instagram: https://www.instagram.com/aurorapatents/ 

And as always, thanks for listening! 

---
Note: The contents of this podcast do not constitute legal advice.

Attributions:
Music: They Come At

Show Notes Transcript Chapter Markers

Listen in as we discuss the impact of the AIA and the PTAB with inventors gathered as part of the "Decade of Stolen Dreams" rallies, happening in front of regional USPTO offices all across the country, marking the 10 year anniversary of the passage of the America Invents Act – an event described by advocacy groups as the worst event in U.S. patent history.

The inventors and entrepreneurs at the rally we attended, all from diverse backgrounds with very different stories, have one thing in common and that is their shared belief that the AIA and the PTAB – with its eye-popping 84% invalidation rate – have crippled innovators and created a Decade of Stolen Dreams, ruining the lives of countless inventors and shutting down numerous start-ups, in favor of Big Tech and multinational corporations.

In this episode, we break down the AIA and PTAB through a wide array of personal perspectives from inventors, patent practitioners, and even a former USPTO patent examiner. We explore its origins, core problems, and proposed solutions. We also provide some very practical tips that inventors should consider now to help future-proof their patents, should they ever find themselves on the receiving end of an IPR.

Inventors are not only the real engine of our economy, but they’re also the reason we do what we do here at Aurora. This is a complex issue, with high stakes, involving the people who matter most to our business and what the world will look like for our kids, so we can’t think of a better use of a podcast episode than to lend a voice and hopefully shine a light on the key issues and some potential solutions.

I am joined today by an exceptional group of industry experts, founders, and inventors including:

* Ashley Sloat: President & Director of Patent Strategy at Aurora Consulting
* Dan Brown: Professor at Northwestern, owner of 40 utility patents, elected to the National Academy of Inventors, and serves as the inventor rep on the Patent Public Advisory Committee.
* Bob Schmidt: Founder, Chairman and CEO of 5 companies including Great Lakes NeuroTechnologies and Cleveland Medical Devices, Co-Chair of the Small Business Technology Council, and has 40 patents to his name
* Louis Carbonneau: Founder & CEO of Tangible IP, one of the largest patent brokers in the world
* Kip Azzoni Doyle: Inventor of the CardShark WalletSkin and the author of the upcoming book, “Blood in the Water, America’s Assault on Innovation”
* Tariq Najee-ullah: 10 year patent examiner, former NASA engineer, and current Principal at Patent Insider

***

Learn more: https://www.aurorapatents.com/blog/new-podcast-american-inventor-horror-story

** Follow Aurora Consulting **

*
Home: https://www.aurorapatents.com/

* Twitter: https://twitter.com/AuroraPatents

* LinkedIn: https://www.linkedin.com/company/aurora-cg/

* Facebook: https://www.facebook.com/aurorapatents/

* Instagram: https://www.instagram.com/aurorapatents/ 

And as always, thanks for listening! 

---
Note: The contents of this podcast do not constitute legal advice.

Attributions:
Music: They Come At

WEBVTT

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Good day and welcome to the Patently Strategic Podcast, where we discuss all

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things at the intersection of business, technology and patents. This podcast

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is a monthly discussion amongst experts in the field of patenting. It is

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for inventors, founders and IP professionals alike,

00:19.130 --> 00:22.720
established or aspiring. And in this month's episode, we depart from

00:22.790 --> 00:26.200
our normal format into a deep dive style investigative documentary into

00:26.390 --> 00:32.070
why these good folks gathered

00:32.130 --> 00:35.600
to demonstrate in front of regional USPTO offices all across the country

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on the ten year anniversary of the passage of the America invents act. The voices

00:40.170 --> 00:43.650
you heard are those of inventors who, unfortunately found themselves on the receiving

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end of the unintended consequences of the America invents act and its

00:47.490 --> 00:50.910
most unfortunate progeny, the PTAB or Patent Trial and Appeal

00:51.030 --> 00:54.330
Board. It's eerily fitting that we're covering this topic in our Halloween episode.

00:54.870 --> 00:58.400
The PTAB has another name among the inventor community and is far

00:58.530 --> 01:02.010
less affectionately referred to as is a patent death squad. The mere

01:02.250 --> 01:05.190
mention of it will send chills down the spines of most inventors.

01:05.790 --> 01:09.450
It should come accompanied by a compulsory maniacal laugh backed

01:09.630 --> 01:15.840
by an ominous thunderclap with

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an estimated patent and validation rate of 84%. This group

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delivers far more tricks than treats for unsuspecting inventors. You heard

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that right? No need to rewind. According to US inventor,

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84% of granted patents, patents that once went

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through a rigorous process of examination that come up for challenge

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in front of the PTAB are invalidated invalidated by

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the sibling division of the same patent office that previously issued the

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patent. The inventors and entrepreneurs at the rally we attended and countless

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others like them in cities all across the country, all from diverse backgrounds

01:50.350 --> 01:53.770
with different stories, all have one thing in common, and that is their shared

01:53.950 --> 01:57.250
belief that the AIA has crippled innovators and created a decade

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of stolen dreams, ruining the lives of countless inventors and shutting

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down numerous startups in favor of big tech and multinational corporations.

02:05.770 --> 02:08.760
Inventors are not only the real engine of our economy, but they are also the

02:08.890 --> 02:11.760
reason why we do what we do here at Aurora. This is a complex issue

02:12.010 --> 02:15.480
with high stakes involving the people who matter most to our business and what the

02:15.550 --> 02:18.240
world will look like for our kids. So we can't think of a better use

02:18.430 --> 02:21.780
of a podcast episode than to lend a voice and hopefully shine a

02:21.790 --> 02:25.260
light on the key issues and some potential solutions. We're going to break this

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down and look at it through a wide array of personal perspectives from inventors,

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patent practitioners, and even a former USPTO patent examiner.

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In researching this topic and talking with so many impacted individuals,

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it became clear that there's a very big picture missing from all of its coverage,

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and that picture only comes into focus when you bring these perspectives together.

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In addition to perspective, we first need some context before we

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dig more into the PTAB in these rallies, it's important to Zoom out, travel back

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in time to 2011. Take a moment to first understand broadly what

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the AIA introduced. Perhaps for better and for worse for

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that, I sat down with Ashley Sloat, President and director of patent strategy here at

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Aurora. So, Ashley, I know this could be a huge topic of its own,

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but could you, at a high level lightning around fashion, explain what the AIA is,

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what its goal was, and how it changed patent Law On September 16,

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2011, the Lahesmith America and Vents Act, also known

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as AA, or the Patent Reform Act of 2011,

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was signed into law with the stated goal of modernizing America's

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patent laws and harmonizing the US with the rest of the world. It's certainly one

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of the biggest changes to US patent law in the past half century.

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So the biggest change, probably, I guess, in the minds of many listeners,

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is that the AIA switched the US patent system from a first to

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invent system to a first inventor to file system, which largely

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aligns United States with the rest of the world. Under this new system,

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the date the patent application is filed with the patent office instead of

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the actual date of invention in your notebook determines who wins the race

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to patent the invention. This means that the practice of mailing your invention,

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which I know many of you did to yourself, so it has a postmark date

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to prove invention date. This practice no longer applies as

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a result of AIA becoming the law of the land. We heavily encourage vendors

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to file early, and often you can do a provisional patent application, which only

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pens for one year, and that application can then later be converted

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to a full US Patent Application or International Patent application.

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Another item that changed was Prior Art Types Forum, Public Uses,

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or Sales. The AIA also redefined the types of activities that may

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be used to reject a patent application. For example, under pre

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AIA law, a public user sale of a claimed invention prior

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to patent application filing was only considered problematic

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activity if it occurred in the United States, and then this activity could

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be used to reject your patent application. However, under the AIA,

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public use or sale anywhere in the world, not just the US could

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prevent later patenting. Another provision that changed with AIA was assignee

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filing. Under pre AIA, only inventors could apply

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for a patent under the AIA. An applicant,

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for example, a company as the owner or assignee of an invention may

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file a patent application on behalf of the inventors. During the

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patent application process, an inventor is still required to execute a declaration indicating

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that she indeed was an inventor, but this can be bypassed by

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the applicant in various situations. Furthermore, regional patent

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offices are now open as a result of AIA. These regional offices

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include places such as Dallas, Denver, Detroit, and San Jose.

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Prioritized examination was also made available as a result of AIA prioritized

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examination, also known as Track one, allows inventors

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to accelerate the examination of selected patent applications

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through payment of an extra fee to the Patent Office. Another change that

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was brought about by AIA was that the PTO is now

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in charge of its revenue, so the AIA gave

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the PTO the ability to set its own fees and create an operating reserve.

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We should all breathe a big sigh of relief since the USPTO is finally able

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to invest in much needed information technology upgrades, hire more

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examiners, and provide additional examiner training. And lastly,

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and of course, a significant subject of discussion for

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this podcast is that it also brought about the PTAB and

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IPRs, which enables granted patents to be challenged

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by members of the public. This gave birth to the Patent Trial and

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Appeal Board, or the P Tab, to oversee all postgrant proceedings,

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replacing its predecessor, the Board of Patent Appeals and Interferences.

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Okay, so definitely some positives and need to change them there.

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But PTAB there's that word again,

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the PTAB was created with the goals of providing a faster and less costly

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alternative to court based patent infringement suits, weeding out patents that shouldn't have

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been issued in the first place and reducing the amount of patent litigation brought on

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by patent troll syndrome. This was to be accomplished via an AIA introduced process

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called Inter Parties Review, or IPR, in which granted patents

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can be challenged by any member of the public, most likely coming from a patent

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owner's competitor or defensively by someone being sued for infringement. In theory,

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this all sounds constructive, but as they say, the difference between in practice

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and in theory is often far greater in practice than in theory.

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So why do inventor advocacy groups refer to the passage of the AIA is

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the worst event in history for American inventors? According to Josh

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Malone, policy director at US Inventor, the organ that sponsors these

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rallies, quote, the PTAB was sold to Congress as an easier,

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faster and fair alternative to litigation for patent disputes. However, what it

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became instead was a powerful tool that a large infringer could use to challenge

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the validity of any small inventor's patent in order to use the inventor's

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technology royaltyfree or to prevent the inventor's disruptive technology from

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competing in the marketplace. We spoke with Dan Brown about this at the rally in

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Detroit. Every space shuttle that's ever gone up his use of technology process he created.

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Dan is the owner of 40 utility patents, including the Bionic wrench,

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was elected to the National Academy of Inventors and is serving as the inventor rep

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on the Patent Public Advisory Council, working with the Patent Office,

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suffice it to say Dan has some skin in the game. I think fundamentally,

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the AIA had a number of things in there harmonizing the 20 years,

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there were a lot of things that the Patent Office put into place. But the

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biggest problem is the PTAB and the lack of due process. With the PTAB and

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the David Goliath situation, we have in this predatory infringement

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process where the PTAB was supposedly supposed to make it easier

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and less costly to litigate. For small inventors. It gave the

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infringers more arrows in their quiver to go after them. And so it's

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totally unintended consequences. And people recognize that now. So Congress

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has to stop this infringement business model.

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This is all happening with great lethal efficiency. According to

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US inventor. As of June 24 this year, the PTAB

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has invalidated 84% of the 3105 challenged

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patents that it has received. The PTAB has become a powerful anticompetitive

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tool for large companies. The same companies that is small,

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innovative startups use the patent system to change the world.

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Companies like Apple, Google and Microsoft topped the list of

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PTAB challengers. These companies have massive political

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clout, and whether intended or not, AIA is being wielded with the

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effect of a deeply a protectionist law. We spoke with Bob Schmidt about

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this. Bob is the cochair of the Small Business Technology Council.

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He's built five companies and has 40 patents to his name.

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This is very simple. These are the lessons that one learns in

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elementary school. The reason you build your clubhouse up

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in a tree is you can have the rope ladder that you can pull it

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up so the little kids and the girls can't come up. And that's

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what the America Invents Act is all about. It's big tech that went through this

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themselves protected themselves with the patent, but now

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they want to make sure nobody else comes along and boots them out.

09:56.750 --> 09:59.920
The net effect is a clear path to endorse piracy by

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using the patent office against inventors. We have this cannibalistic system that

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as soon as a competitive advantage arises from one of our designs,

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the pirate sweep in and steal

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your pattern and put you into a meat grinder that requires

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a tremendous amount of money because it's a David and Goliath battle, and it's

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just not fair at all. There's no justice in the justice system. So what

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about the stated legislative goal of weeding out bad patents that shouldn't have been

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issued in the first place? The reality is we have this concept of

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obviousness that kills patents. And I believe right

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now the obviousness at the patent office to get a patent,

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which is tough. It's not easy to get a patent. I've been going back and

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forth for years, and those examiners are tough that

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same process to get it once you get it is a different one that's

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being used when they take them away. Now, that doesn't make

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any sense to me. We have this hypocrisy or this schizophrenic

10:59.990 --> 11:04.010
organization that's giving patents and taking them away. Now the PTAB was created

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to get out away from patents that were bad patents. And I'll tell you,

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there are some bad patents out there. We would be foolish not to acknowledge it,

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but the system has been gained so that they're using

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that same system to take good caps away for

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me to get in the weeds on intellectual property. Grain factors

11:23.450 --> 11:26.740
are secondary considerations for obviousness you get a product in the

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market and it has success, I think, by definition, that was not

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obvious because it would have been in the marketplace before. But now

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at the PTAB, they're creating these obvious objections by

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going back and finding other art. And it's called hindsight reconstruction

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bias. Making these arguments that you should lose it, even though these products have

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gone in the market and competed and won makes no sense

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to me, and we need to reconcile it. We'll tackle the difficulty of getting

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a patent in just a bit, but it's worth underscoring that in practice,

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hurt thinning is not what's happening. Instead, IPRs in the PTAB

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are being used to invalidate some of the best US patents. The answer of why

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this is happening is simple economics. The cost to file and prosecute an

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IPR is averaging around a half million dollars. What company could possibly afford

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or justify that cost for anything but against a significant competitive

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threat. Data published on Professor Dennis Crouch's patent Leo shows

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that most patents tangled up in IPRs are also involved in litigation

12:25.070 --> 12:28.970
or licensing. Patents involved in litigation or licensing are considered top tier patents

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and make up only a very small percentage of granted patents back

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to our inventors. While in Detroit, we also learned that the power

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and leverage of the PTAB extends well beyond just the decisions of its

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judges more on them. In a bit, the mere threat of being IPRR and

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the crushing costs that come with it are enough to extinguish the licensing

12:47.810 --> 12:50.920
dreams and patent assertion rights of many inventors. Because,

12:51.110 --> 12:54.650
like Bob says, Why pay for it? You can just steal it. And so that's

12:54.710 --> 12:58.540
what they do when you attempt to stop a large Corporation from infringing your

12:58.670 --> 13:01.900
patent or attempt to license it to them. They often instead try to use the

13:01.970 --> 13:05.330
PTAP to invalidate the patent. We also had the pleasure of speaking with Kip.

13:05.450 --> 13:08.870
Izzoni Doyle at the Detroit rally. Kip is the inventor of the card shark wallet,

13:09.050 --> 13:12.640
skin and the author of the upcoming book Blood in the Water. America's Assault on

13:12.770 --> 13:15.400
Innovation. Listen in as Kip shares her chilling experience.

13:16.370 --> 13:20.140
So for me, I was on the sideline watching

13:20.390 --> 13:24.590
my own parade go by. All these infringers have been infringing blatantly

13:25.310 --> 13:29.380
or efficiently my patent. So every

13:29.690 --> 13:33.040
single time I find an infringer, I have to alert my team,

13:33.290 --> 13:37.130
and then we have to do a very delicate dance of cease

13:37.310 --> 13:41.200
and desist so that we don't get IPRED because the minute that happens,

13:41.450 --> 13:44.810
it's over. And so it's

13:44.930 --> 13:48.530
affected me terribly. I've left hundreds of thousands,

13:48.710 --> 13:52.250
if not millions, on the table because I've been told if you pursue

13:52.490 --> 13:56.020
me, if you pursue our company, we'll IPR you because we'll never spend the money

13:56.210 --> 13:58.370
on a license from you little inventor.

13:59.870 --> 14:01.960
We'll spend the money on the IPR so that you're out of the game.

14:02.930 --> 14:06.220
Do you have any direct experience with the PTAB, or has

14:06.350 --> 14:09.770
it been largely trying to avoid it? For me, it's been largely trying to avoid

14:09.890 --> 14:13.250
it. However, I've had every form of threat you can imagine.

14:14.210 --> 14:17.270
I was threatened with an IPR by a very powerful

14:17.570 --> 14:20.380
guy who was his wife owned the company.

14:21.230 --> 14:24.640
He is a big head of a studio out in La,

14:25.910 --> 14:29.440
and he just has all the money in the world. And he just said,

14:29.510 --> 14:33.830
oh, no. He came over and ripped my Pat and said, I will IPR

14:34.310 --> 14:36.280
you before I spend a day on.

14:37.370 --> 14:40.720
Let's talk for a second about the financial impact of being on the receiving end

14:40.790 --> 14:44.090
of an IPR. According to the American Institute of Patent Law Association,

14:44.510 --> 14:48.220
a patent defense at the PTAB will cost from 4000 $800,000.

14:48.650 --> 14:52.310
This is still less expensive than the district courtbased journey, but unfortunately,

14:52.730 --> 14:56.500
a single patent can have many IPR styled against it, each costing that

14:56.630 --> 15:00.160
amount. We mentioned Josh Malone earlier before helping to lead the charge at

15:00.290 --> 15:03.530
US inventor. He invented a bunch of balloons. His Kickstarter campaign

15:03.770 --> 15:07.310
went viral and made him a large target for infringement. Not long after becoming

15:07.430 --> 15:10.910
a summer toy hit, Josh found out his invention was being ripped off and sold

15:11.030 --> 15:14.750
by a serial infringer. After obtaining multiple injunctions against the infringer,

15:14.990 --> 15:19.070
the infringer changed course and decided to file an IPR against Josh. With the PTAB

15:19.370 --> 15:22.960
without due process, Josh's patents were revoked. His patent rights were

15:23.030 --> 15:26.620
invalidated at the hands of the company, stealing and profiting from his idea.

15:27.050 --> 15:30.530
Fortunately for Josh, he filed suit one, and his rights were restored.

15:30.710 --> 15:33.950
But along the way, he spent millions in legal fees having to raise

15:34.130 --> 15:37.840
and spend $75,000 every week hiring six different law

15:37.970 --> 15:41.390
firms, three different technical experts, and 29 different attorneys.

15:42.110 --> 15:45.340
In fully understanding the scope of the problem, it's important to take a closer look

15:45.410 --> 15:48.640
at the PTAB itself, much like we'll do with the examination process in a bit,

15:48.830 --> 15:52.600
we want to Peel the curtain back on the PTAB, discuss its composition and how

15:52.730 --> 15:56.150
it differs with traditional court base litigation. The PTAB tribunal

15:56.390 --> 15:59.690
consists of a panel of administrative petant judges or APJs.

15:59.990 --> 16:03.770
Once an IPR is granted, the judges are required to submit an opinion and validity

16:03.950 --> 16:07.850
within one year. This requirement aims to fulfill AIA's promise of an expedited

16:08.150 --> 16:11.980
alternative to the courts. Prior to AIA. Patent validity issues within the

16:12.050 --> 16:16.070
context of infringement, suits were settled exclusively by Article three federal courts.

16:16.370 --> 16:19.720
It's now possible to have disputes flow through either or both. That said,

16:19.970 --> 16:23.860
the PTAB is now seen as a more favorable venue to challenging patents for

16:23.930 --> 16:27.530
a handful of reasons. First, there's probability there's a widely held

16:27.650 --> 16:31.240
belief backed up by an everincreasing data set that PTAB judges are

16:31.430 --> 16:35.450
far more likely to invalidate patents than juries. Second, there's a significantly

16:35.630 --> 16:39.470
reduced burden of proof in district courts. Patents are assumed valid, and challengers

16:39.590 --> 16:43.610
must prove that each claim is Invalid using clear and convincing evidence.

16:43.910 --> 16:47.620
This requires the challenger to present the highest possible burden of proof in

16:47.750 --> 16:50.920
civil litigation. This presumption of validity does not exist in the

16:50.990 --> 16:55.060
PTAB, and challengers must only establish that it is more likely than not that

16:55.190 --> 16:58.480
the claims are unpatinable. Third, PTAB claim construction is

16:58.610 --> 17:02.260
broader. This allows PTAB cases to sweep in more prior art, leading to

17:02.330 --> 17:06.160
increased invalidation decisions based on obviousness. Fourth, standing is

17:06.290 --> 17:10.000
not required to file an IPR. In Article three district courts. A party must

17:10.130 --> 17:13.660
have sufficient standing to bring about a suit with the PTAB. Any member of

17:13.730 --> 17:16.600
the public may initiate an IPR, and then there are the judges themselves.

17:17.210 --> 17:21.230
For the most part, the APJs are attorneys with legal backgrounds, often lacking

17:21.470 --> 17:25.250
education and experience around the scientific and technical matters they're ruling

17:25.370 --> 17:28.720
on. According to US, inventor, 60% of APJs have zero

17:29.150 --> 17:32.440
technical experience, and 76% have less than three years

17:32.570 --> 17:36.220
of technical experience. Despite having tremendous power and authority. They are also

17:36.590 --> 17:40.070
far less experienced, on average, than their federal surrogate counterparts.

17:40.370 --> 17:43.250
Based on a study conducted by Jean Quinn of IP Watchdog,

17:43.610 --> 17:47.140
for example, the study found that many judges were appointed to the PTAB at

17:47.210 --> 17:50.270
a time when they were still associates or even junior associates,

17:50.570 --> 17:53.740
and that there were zero federal district court judges appointed with ten years

17:53.990 --> 17:57.460
or less experience, while 47% of PTAB judges were

17:57.590 --> 18:01.670
appointed with ten years experience or less. So there you have it. Inexperienced lawyers

18:02.030 --> 18:05.260
with little technical background or returning patents that may have gone through

18:05.450 --> 18:08.810
years of rigorous examination by individuals with relevant backgrounds.

18:09.050 --> 18:12.530
How could this possibly go wrong? The first step is always admitting

18:12.710 --> 18:16.120
you have a problem. That box has been firmly checked. But before we

18:16.190 --> 18:19.840
pivot into possible solutions, it's important to consider the cost of

18:19.970 --> 18:23.380
doing nothing for this. We return to some of our inventor friends in

18:23.450 --> 18:26.750
Detroit. Unfortunately, it's been a decade, and that's plenty

18:26.870 --> 18:30.280
of time to see measurable effect. What matters? Well,

18:30.590 --> 18:33.950
what matters is, since the American Events Act passed,

18:34.430 --> 18:37.900
we went from number one in innovation to number eleven in innovation in

18:38.030 --> 18:41.200
the world. So America is just plummeted and

18:41.450 --> 18:44.920
keeps falling. And this, of course, creates ripple effects throughout the entire

18:45.290 --> 18:48.350
economy. I do this because I believe inventors

18:48.590 --> 18:51.940
create jobs, and I believe the best social system is a good job.

18:52.910 --> 18:56.330
And from that perspective, that we don't have a patent

18:56.510 --> 19:00.050
system where people can count on the value of their patents and they can raise

19:00.290 --> 19:04.300
money, bring products to market. No one's going to bring products out to States because

19:04.550 --> 19:08.320
you end up just getting slain. And there's no

19:09.050 --> 19:13.010
government program that saves you after you've lost all the money you invested.

19:13.790 --> 19:17.500
And how about the impact on the value of patents? So I just

19:18.230 --> 19:22.010
came up with this idea, kept quiet and managed to get some patents

19:22.310 --> 19:25.610
around it. But I stepped into this world right when the AIA,

19:26.030 --> 19:28.480
the American Men's Act became a thing.

19:29.330 --> 19:32.500
And so it stripped the value of the

19:32.630 --> 19:35.800
patents. I had these patents, and I was all excited to go out. And first

19:35.930 --> 19:39.160
of all, spend every penny I had to get the patents thinking, okay,

19:39.350 --> 19:43.240
now I can either sell my portfolio. I had three, which is very

19:43.430 --> 19:46.660
small, but there were three patents in a specific space. So I

19:46.790 --> 19:49.610
thought, Well, I'm going to go sell it to a company that can really knock

19:49.850 --> 19:53.980
this out of the park. But unfortunately, it was at the time when these

19:54.230 --> 19:58.310
changes were occurring, so nobody was interested in buying patents.

19:58.970 --> 20:01.960
Nobody was interested in even licensing them,

20:02.870 --> 20:06.410
which, of course, has a measured effect of its own for the Chicago

20:06.530 --> 20:10.070
ones. Here how many of you have heard of Ocean Tomo? Anybody from Chicago?

20:10.850 --> 20:14.320
A couple of these. So these are the big

20:14.510 --> 20:18.040
name guys that do the reports on what patents are worth.

20:18.290 --> 20:22.190
And they've shown the American invent sac cut the value of a patent

20:22.370 --> 20:26.300
by two thirds. So ten

20:26.430 --> 20:29.780
years ago, a patent, typically the rule of thumb, stick up their thumb. It's worth

20:29.970 --> 20:33.560
a million Bucks. That could be off by an order of magnitude either way,

20:34.950 --> 20:38.960
but roughly a million Bucks. And so now it's a

20:39.030 --> 20:42.800
third of that. And in case you missed it, Louis Carbonate weighed in on

20:42.870 --> 20:46.410
this from a patent brokerage perspective. In last month's episode on Monetization.

20:47.430 --> 20:50.120
If you look back about 1012 years ago,

20:51.690 --> 20:55.170
you had a lot of demand for patents. It was considered

20:55.230 --> 20:58.940
to be the next kind of commercial weapon that was kind of the Golden Age

20:59.250 --> 21:03.150
or gold era of patent monetization. And unfortunately,

21:03.390 --> 21:06.920
that's when I started. So I missed the

21:07.110 --> 21:10.890
five years before. That had been great for anyone who was buying or selling patents.

21:11.610 --> 21:15.090
Then after 2012, it came to a screeching

21:15.330 --> 21:18.680
halt. Essentially, I think people realized that they

21:18.750 --> 21:22.160
were overpaying for assets that were sometimes not

21:22.410 --> 21:26.120
that clear in terms of what they meant or what

21:26.250 --> 21:29.780
the income passed. And then the case law

21:29.970 --> 21:33.090
changed. We had Bilski,

21:33.450 --> 21:36.800
and we had Alice. We're still living with the

21:36.930 --> 21:40.520
aftermath of Alice, and it's progeny we

21:40.650 --> 21:40.700
have,

21:45.510 --> 21:49.110
which really threw monkey Ranch

21:49.230 --> 21:52.830
and the gears because suddenly people discover

21:53.190 --> 21:57.390
that IPRs were the new way to invalidate

21:57.690 --> 22:00.500
patents, and it kind of took on the life of its own.

22:01.770 --> 22:05.120
So all these things contributed to a very

22:05.310 --> 22:08.960
different marketplace today than what we had 7810

22:09.150 --> 22:12.620
years ago. Analysis of patent transaction data shows

22:12.990 --> 22:16.410
that the combined effect of this devaluation comes at over a trillion

22:16.650 --> 22:20.000
dollar cost to the overall US economy. The ultimate cost,

22:20.250 --> 22:24.090
however, is far greater than purely financial. A country's greatest assets

22:24.330 --> 22:27.560
are its people and their ideas. When the accepted consensus is that you

22:27.630 --> 22:31.050
can no longer protect your ideas and investments from theft, then who's

22:31.170 --> 22:34.230
going to innovate the best you can hope for at this point is a copycat

22:34.410 --> 22:37.940
race to the bottom. This is a fundamental question about property rights, and as many

22:38.070 --> 22:41.420
inventors will tell you, those rights are among the oldest and most important.

22:42.090 --> 22:45.560
One of the things that we want to talk about is

22:45.750 --> 22:48.560
the Article One, section eight, clause eight,

22:49.830 --> 22:52.770
giving rights to authors and adventures.

22:53.550 --> 22:57.930
How many times is the word right used in the Constitution? Who knows there's

22:58.050 --> 23:01.530
an answer that's right once, and it's capitalized.

23:03.450 --> 23:07.280
And the only time the word right is used is with regard to

23:07.770 --> 23:11.610
inventors and authors predated

23:13.770 --> 23:17.480
guns, religion, freedom to assemble all of the

23:17.550 --> 23:20.900
other rights in the Bill of Rights by three years.

23:21.810 --> 23:26.070
So what exactly is Article One, section eight? The notion of intellectual property rights

23:26.190 --> 23:29.600
in America is as old as well America. Those rights are

23:29.670 --> 23:32.970
spelled out in Article One, section Eight, clause Eight, of the US Constitution,

23:33.510 --> 23:36.990
ratified on September 17, 1787. This clause

23:37.290 --> 23:40.640
grants Congress the power to promote the progress of science and

23:40.770 --> 23:44.490
useful arts by securing for a limited time to authors and inventors

23:44.910 --> 23:48.210
the exclusive right to their respective writings and discoveries.

23:48.630 --> 23:51.810
The Framers believed in the importance of protecting intellectual property rights.

23:52.110 --> 23:55.580
And for a couple hundred years the US has led the world an innovation in

23:55.710 --> 23:59.480
large part due to the protections provided to inventors and their investments through

23:59.610 --> 24:03.620
our patent system. The integrity of the system and the fulfillment of its promise are

24:03.690 --> 24:07.100
essential ingredients to the American dream. An IPR is basically a

24:07.170 --> 24:10.350
request for the Patent Office to admit they made a mistake in issuing a patent.

24:10.770 --> 24:13.890
A property right based on faith in the initial decision and perceived

24:14.070 --> 24:17.480
ownership of that property. The inventor since relied on that original decision to

24:17.550 --> 24:20.790
build a business, take investment, and initiate licensing discussions.

24:21.150 --> 24:24.750
The inventor paid for that property up front and continued to pay maintenance fees

24:24.930 --> 24:28.760
to retain ownership. And then the decision is reversed by the PTAB and the

24:28.950 --> 24:33.270
property right upon which everything else was built. Poof vanishes

24:33.570 --> 24:37.280
from underneath. The way we currently deal with intellectual property rights has become so

24:37.410 --> 24:40.830
far disconnected from how we think about other property rights. Louis Carbono

24:41.070 --> 24:43.700
really drove this point home in last month's episode as well.

24:44.610 --> 24:48.020
It's as basic as that is that try to

24:48.150 --> 24:51.980
buy some land. If you're not sure that you actually have the right to

24:52.170 --> 24:56.120
build something on it, and the city can tell

24:56.190 --> 24:59.420
you, they'll say, well, build something and we'll tell you if we can issue a

24:59.490 --> 25:03.380
permit, but you have to build first. That's a little bit the kind of

25:03.510 --> 25:08.000
irony we have with patents. You have to get them first pay.

25:08.850 --> 25:12.560
I don't know. The average, I think, is 50 $60,000, according to

25:12.690 --> 25:16.410
the latest surveys I've seen for a single patent overall,

25:16.650 --> 25:20.060
including maintenance fees and all this just to get

25:20.190 --> 25:23.370
a patent. And then you have to pay another quarter million dollars for the PTA

25:23.550 --> 25:26.900
to tell you whether it was crap from day one or it was

25:27.090 --> 25:30.740
actually valid, which if you think about it and

25:30.810 --> 25:34.100
you stop for a second. What industry could survive with a

25:34.170 --> 25:37.400
business model like this where you have to buy the thing and then you have

25:37.470 --> 25:41.360
to pay five times more than you paid for the first time, just to

25:41.490 --> 25:44.540
be told whether you can use it or not. Okay, so now what can we

25:44.670 --> 25:48.870
do about it? The default instinct around legislative problems tends to be more legislation.

25:49.230 --> 25:53.190
The stronger Patents Act seems to get dusted off every few years. US inventor

25:53.370 --> 25:56.850
helped introduce the Inventor Rights Act of 2019, and there's a new legislative

25:57.090 --> 26:01.170
proposal on US inventor. Right now. Senators Leahy and Cornyn recently introduced

26:01.410 --> 26:04.520
the Restoring the America Invents Act patently. Oh,

26:04.650 --> 26:08.490
describes as a quote, wish list for patent killers seeking to cancel

26:08.730 --> 26:11.960
patent rights via inter parties review. That's clearly not the answer.

26:12.330 --> 26:14.720
But what would meaningful reform truly look like?

26:15.750 --> 26:19.040
Sure. Throw out American Events Act. Throw out all of the cases from the

26:19.170 --> 26:22.820
Supreme Court and go back to where we were 20 years

26:23.010 --> 26:26.300
ago. That's what true meaningful reform would be.

26:26.370 --> 26:31.640
And that's what built America. We had all of these 226

26:31.890 --> 26:35.600
years or whatever it is now of

26:35.850 --> 26:39.740
using the Constitution and building

26:40.050 --> 26:43.820
on patents and creating innovation in America. And now

26:43.890 --> 26:47.850
all of a sudden we don't because we're just not protecting

26:47.970 --> 26:51.510
or helping inventors. Yeah. So just even repealing AIA

26:51.870 --> 26:55.400
would be a really good start. That would be a good start. But that's not

26:55.530 --> 26:58.580
going to happen. This is big tech, big money,

26:59.370 --> 27:02.900
and it's not going to happen. So it's got to be in tiny little

27:03.090 --> 27:06.860
bits of just a small step here

27:07.170 --> 27:10.170
a small step there over a decade.

27:11.550 --> 27:15.030
That's what we're going to see. What would be the one to three most meaningful

27:15.630 --> 27:19.770
steps. Well, I think Director Ianku did wonderful

27:20.070 --> 27:23.970
work at the patent office, and so the Biden

27:24.690 --> 27:27.020
choice of who's going to be the patent director is going to be huge.

27:28.050 --> 27:32.720
Is he going to get a Michelle Lee or Andre Ayanku to

27:32.790 --> 27:36.150
be the next leader? And Michelle

27:36.270 --> 27:40.290
did everything she could to make sure that little companies can't

27:40.530 --> 27:43.890
survive or don't survive, whereas was really helping

27:44.070 --> 27:48.080
us. And so be able to do

27:48.330 --> 27:52.400
that to be able to limit the scope of the PTAB of

27:52.890 --> 27:57.030
how do you make sure they don't initiate programs unless

27:57.270 --> 28:01.100
it's really needed, and then to make sure that

28:01.230 --> 28:04.520
it's validated with what they do to take away the

28:04.710 --> 28:08.600
bonuses for people and the incentives for PTAP judges to

28:08.730 --> 28:12.150
be able to throw all these cases out. I mean, that's just horrible.

28:13.710 --> 28:18.270
And I think we're mostly beyond what Michelle

28:18.390 --> 28:23.910
Lee was doing of stacking

28:24.030 --> 28:27.390
the court, if you will. First, there were three, and she didn't like the decision.

28:27.750 --> 28:31.400
So she added several others and then others and others until finally she got

28:31.530 --> 28:35.310
a decision she wanted, and that's

28:35.430 --> 28:38.600
not American. So we got to

28:38.730 --> 28:42.380
improve that. Now. One thing I hear

28:42.570 --> 28:45.980
floating around a lot. It doesn't seem like it's getting a lot of traction and

28:45.990 --> 28:50.000
it seems like there have been end versions of these things that kind

28:50.070 --> 28:53.610
of pop up and dive pop up and dive is the stronger pattern.

28:56.490 --> 29:00.740
What's the high level synopsis on that? Do we believe that's a good thing in

29:00.930 --> 29:04.820
whatever most recent flavor is? Well, it hasn't changed a

29:04.830 --> 29:08.960
lot for the last four years, and it's just for right

29:09.150 --> 29:13.040
now, it's nonexistent because there is no stronger Patents Act.

29:13.890 --> 29:17.420
We lost divers who took it up in the House a couple

29:17.550 --> 29:20.720
of years ago, and he decided to get out of the House and

29:20.850 --> 29:23.610
go run the Chamber of Commerce in Ohio.

29:25.110 --> 29:28.350
So there's nobody there that's picked it up in the House. And I think Koons

29:28.530 --> 29:32.250
has looked at this, and he's been our hero. Senator Coons

29:32.550 --> 29:35.790
and Senator Herrono have just been wonderful

29:36.930 --> 29:40.940
for us, but there just wasn't enough boats to

29:41.070 --> 29:44.550
be able to get it on. And now, with Darrellisa

29:44.670 --> 29:48.320
coming back in the House, that's not helping, because he

29:48.390 --> 29:52.410
was one of the major proponents of the American Events Act. So he's

29:52.590 --> 29:56.060
not been helpful until we can

29:56.190 --> 29:59.960
change those people's minds of the fact that this has been a

30:00.090 --> 30:04.280
disaster. And eventually big tech will understand that

30:04.470 --> 30:08.000
this is not in their best interest. It's in their short term interest

30:08.730 --> 30:12.080
for protecting their bonus for a number of years. But what

30:12.210 --> 30:16.040
happens when America can't compete anymore? And the

30:16.230 --> 30:20.240
Americans aren't using the Googles and the apples of

30:20.310 --> 30:25.340
the world? But we're going on and using the Chinese products instead because

30:26.190 --> 30:29.960
Americans don't have the money to do it now. We're still

30:30.630 --> 30:34.100
more than a decade, probably two decades or more away from

30:34.290 --> 30:37.640
that happening. But eventually it will happen. But the problem is,

30:38.250 --> 30:41.660
how do they turn it around at that point? Despite all the talk around

30:41.910 --> 30:45.210
legislative fixes for the AIA, there was one stat I just couldn't

30:45.450 --> 30:49.280
shake. Even district courts invalidate patents at a rate of about 40%

30:49.890 --> 30:53.850
that's not near the fatality rate dealt by the PTAB, but it's still a surprisingly

30:54.090 --> 30:57.330
large number. Put another way, when challenged at a district court,

30:57.690 --> 31:01.110
a little less than half of what comes out of the PTO is later reversed.

31:01.410 --> 31:05.130
Many of the proposed legislative solutions don't appear to hit the problem at its root,

31:05.430 --> 31:08.720
which is ultimately invalidation. Any reform related to

31:08.790 --> 31:12.380
postgrant proceedings is missing the bigger issue. Postgrant proceedings could

31:12.450 --> 31:16.230
be incredibly rare in a world where PTO examiner decisions were more binding

31:16.350 --> 31:20.000
than they presently are. In a more ideal world, it seems like we should

31:20.070 --> 31:23.180
get to a point where the determination made by the examiner was closer to something

31:23.490 --> 31:27.560
binding, with invalidations being an extreme exception versus 40% in

31:27.690 --> 31:32.130
district courts and 84% in the P tab. Any other system essentially leaves

31:32.190 --> 31:36.860
you with a patent pending indefinitely until expired or tested by courts at

31:37.050 --> 31:40.400
some level of scale. Are patents getting through the patent office? That shouldn't be?

31:40.710 --> 31:44.010
Or is there some other disconnect in the Schizophrenic system that is both granting

31:44.250 --> 31:48.210
and later taking away. One theory often stated is that examiners simply

31:48.330 --> 31:51.680
aren't granted enough time to adequately search prior art or understand the

31:51.750 --> 31:55.280
domain of the depth required to get an inside the PTO perspective on

31:55.350 --> 31:59.780
this theory. We sat down with former examiner and current practitioner Tariq Najilla during

31:59.970 --> 32:03.500
his ten years as a patent examiner at the USPTO. Tariq specialized in

32:03.690 --> 32:07.590
electrical engineering technologies, including telecommunications, digital communications,

32:08.130 --> 32:11.250
computer networking, cryptography and storage area networks.

32:12.390 --> 32:16.170
Okay, trick. So first question from the outside. The examination

32:16.410 --> 32:20.180
process feels like a bit of a black box. So at

32:20.250 --> 32:23.730
a very high level, could you walk me through the process of examination?

32:24.450 --> 32:27.870
Once an application leaves an inventor's hands and gets submitted to the PTO,

32:29.430 --> 32:32.010
if you're looking at 30,000 foot level patent examination,

32:33.450 --> 32:37.650
it follows the manual patent examining procedure

32:38.970 --> 32:42.030
100%. So application is submitted,

32:42.630 --> 32:46.100
it goes to the receiving office or to the application

32:46.590 --> 32:50.060
processing unit, where all the let's say the

32:50.190 --> 32:53.060
formalities of submissions are checked over.

32:53.670 --> 32:57.980
If you've ever gotten a notice of incomplete application

32:58.650 --> 33:01.770
or missing parts that's not done by an examiner

33:01.890 --> 33:05.250
that's done by the application receiving officer processing unit,

33:05.910 --> 33:09.030
they're going to check over the formalities. Once you meet the formalities, then it's docketed.

33:09.990 --> 33:13.050
It'll go to a master docket to be assigned,

33:13.410 --> 33:16.590
usually through some type of algorithm to a art unit

33:16.830 --> 33:19.230
or technology center, then an art unit,

33:20.670 --> 33:25.530
and then at some point in the future, if it's prioritized

33:25.710 --> 33:28.530
examination is almost instant, you get assigned an examiner.

33:29.250 --> 33:33.750
If it's not prioritized and you're looking at whenever

33:34.110 --> 33:36.870
it comes up from the time of its entry,

33:37.650 --> 33:41.070
you'll get a sign an examiner. Once you're signed an examiner,

33:41.970 --> 33:45.510
it goes in the examiner's docket examiner docket.

33:46.170 --> 33:48.620
And when it comes up for time,

33:49.650 --> 33:53.180
they will search the they'll read

33:53.310 --> 33:55.650
the disclosure again, as per the MPE,

33:56.550 --> 33:59.960
the manual pattern procedure, they will read the disclosure, read the

34:00.030 --> 34:04.100
claims, understand the invention. Once they have an understanding of the invention and

34:04.230 --> 34:07.460
they can kind of diagram the claims to understand how

34:07.530 --> 34:11.420
the claims relate to the invention, they will

34:12.210 --> 34:14.960
do a prior art search. If they need help with their search, they reach out

34:15.090 --> 34:17.420
to additional resources in the patent office to get help.

34:18.810 --> 34:22.590
Then once they have done an exhaustive

34:22.770 --> 34:26.670
search, they'll draft the office action.

34:29.070 --> 34:33.210
If they're a junior examiner, they'll submit their office action to be reviewed

34:33.390 --> 34:37.110
by their primary or supervisor patent examiner

34:41.070 --> 34:46.760
approved. If they're not a junior examiner, they just sign it and send

34:46.890 --> 34:51.090
it out to go on the mail. You receive an office action or allowance,

34:51.390 --> 34:54.090
whatever it's rendered.

34:54.570 --> 34:58.700
So the first thing is to do the prior search and then apply

34:58.890 --> 35:02.610
the statutes as well. While they're doing the reading of the claims and reading

35:02.790 --> 35:06.800
of the disclosure, they're applying the statutes at

35:06.990 --> 35:11.360
minimum, one on one, one, 1112, one on two, one on three at

35:11.490 --> 35:15.260
a minimum, but usually as many more statutes in that they have

35:15.330 --> 35:17.180
to apply. But they go through that entire process,

35:19.110 --> 35:22.820
examine the application and then render the office action. And that

35:23.010 --> 35:26.840
continues to process until the prosecution go back

35:26.910 --> 35:30.270
and forth to arrive at some kind of outcome. With this allowance,

35:30.570 --> 35:33.920
abandonment, appeal, whatever the outcome is,

35:34.170 --> 35:37.460
petition any type of outcome, that's what happens.

35:38.670 --> 35:42.020
So it can take two years or more to get a

35:42.450 --> 35:46.640
granted patent. But from the time that the patent application hits your

35:46.770 --> 35:50.780
desk as an examiner to the point of being issued or a

35:50.850 --> 35:53.850
final rejection, on average,

35:54.930 --> 35:58.520
how many hours is the application actually your focus

35:59.370 --> 36:02.840
just really want to try to give folks a sense of I hear a lot

36:02.970 --> 36:06.380
about, oh, they had my patent application for

36:06.870 --> 36:11.670
two years. Well, no, it's sad file

36:12.810 --> 36:16.340
like digital or otherwise for two years. But that's not how long it was

36:16.470 --> 36:20.070
actually looked at. There's queue time and there's actual examination

36:20.370 --> 36:23.660
time. What's the actual examination time?

36:24.450 --> 36:28.230
So there's queue time and that's waiting.

36:28.650 --> 36:31.770
The average queue time is 24 months, according to the Patent Office statistics,

36:32.790 --> 36:35.550
the average time for patent.

36:37.050 --> 36:40.530
Once you come up in the queue, it's usually about twelve to 18

36:40.770 --> 36:44.240
months. So once you actually start working on it now,

36:44.490 --> 36:47.900
most of that time, too, is back and forth. So when

36:48.030 --> 36:50.960
they pull you up, they examine it and give you the office action or get

36:51.030 --> 36:52.230
a restriction. Whatever you get in the beginning,

36:54.510 --> 36:58.105
let's say they're spending whatever allotted time is, say four to 20

36:58.115 --> 37:01.580
hours, something like that, depending on what type of art it is

37:02.070 --> 37:04.880
because they're experts and they see the same type of applications every day.

37:05.430 --> 37:08.960
They're just looking for the nuances. Is this novel or not? Is this

37:09.150 --> 37:13.220
obvious or not? Trustive examiner is looking at the same. They're looking at 100

37:13.410 --> 37:16.100
applications a year, and they're all in the same technology.

37:17.310 --> 37:19.700
They can look at your application and say, okay, let me read this. Okay.

37:19.830 --> 37:23.610
I got it. I've seen this before because I just did this last week yesterday,

37:24.210 --> 37:27.380
so they don't have to spend 40 hours on

37:27.390 --> 37:30.500
your application to understand it, because they're doing the same thing over and over again.

37:31.350 --> 37:34.590
So they are experts of the process and hopefully

37:34.890 --> 37:38.420
experts of your technology area in terms of what's patentable they

37:38.490 --> 37:41.670
may not be experts in the system expert as an inventor,

37:42.510 --> 37:44.490
but in terms of processing what's novel?

37:52.270 --> 37:55.630
Let's say between four and 30 hours on an office action.

37:55.990 --> 37:59.620
Right. That all

37:59.750 --> 38:03.160
section goes out. You have three months to respond. You can extend it up

38:03.230 --> 38:06.400
to three months. So that process, that waiting time can be

38:06.530 --> 38:10.120
three to six months. If you shorten that waiting time to

38:10.670 --> 38:14.740
one month, then we're at a different kind of you

38:14.870 --> 38:18.230
can compact the time. It's called compact prosecutions make no much faster.

38:19.250 --> 38:22.300
So that happens.

38:22.970 --> 38:26.380
Let's say two rounds. So they send the

38:26.510 --> 38:29.860
office. Actually, you have three to six months you

38:29.990 --> 38:33.700
send back to them. They have three to six months. Pretty much

38:34.610 --> 38:38.380
it goes round Robin back and forth until you get to either

38:39.410 --> 38:43.000
disposition or RC or whatever it is that you're looking for. So if

38:43.130 --> 38:47.780
we did compress out all

38:47.850 --> 38:51.380
the back and forth time and instead looked at just the amount of

38:51.510 --> 38:55.350
time you spent working on a particular invention,

38:55.710 --> 38:59.840
a particular application over the course of the time from hit

39:00.030 --> 39:03.320
your desk until final issues to rejection. And I know that's going to be

39:03.630 --> 39:07.460
highly situationally dependent, any broad sense of a range of

39:07.530 --> 39:10.290
the amount of time you might spend with any given invention.

39:12.850 --> 39:16.260
Also, that varies by examiner. Like in my art

39:16.390 --> 39:19.140
unit, I had 20 plus hours to work on an application.

39:20.050 --> 39:24.180
I spent 20 plus hours on every application every time. So if

39:24.370 --> 39:30.700
we did four rounds of prosecution, that's two

39:30.830 --> 39:34.780
office actions, RCE, another two

39:34.970 --> 39:38.810
office actions, interviews in between. There that's more time. So let's

39:38.870 --> 39:44.020
say it's 25. Maybe they filed after final on

39:44.150 --> 39:48.530
each one. And I call for an examiner's amendment that's

39:48.710 --> 39:51.700
easily 100 hours, plus that I spent on an application.

39:56.010 --> 39:59.120
That's me. I know other examiners that were very

39:59.310 --> 40:03.020
efficient and had different ways. They did things that they

40:03.270 --> 40:06.380
really spent that much time on the application. But it doesn't mean that they were

40:06.570 --> 40:09.800
spending. It was less quality. They could have been better than me. They could have

40:09.870 --> 40:13.170
been getting more allowances, and it could have been faster. So what I'm

40:13.290 --> 40:16.530
dealing with is you're dealing with aptitude.

40:16.710 --> 40:19.770
You're dealing with comprehension,

40:20.370 --> 40:24.930
speed of comprehensive, complex information processing,

40:26.010 --> 40:28.710
doing comparisons and analysis.

40:30.750 --> 40:33.680
There's no one metric that I could give that would say, this is how much

40:33.810 --> 40:36.740
time is given, even given that kind of metric is not fair.

40:37.890 --> 40:41.540
I would just say that know that you have had

40:43.050 --> 40:47.060
very focused, dedicated amounts of time given

40:47.310 --> 40:49.760
to your application at each and every stage of the process.

40:50.550 --> 40:53.900
That's all I could say. I couldn't say what the number is. I don't know.

40:54.270 --> 40:57.320
But, I mean, if you spend 100 hours total on one,

40:57.870 --> 41:01.460
nobody's breathing down your neck and saying, you got to move these along.

41:02.490 --> 41:06.090
No, it never happened. There was never hurry

41:06.330 --> 41:09.620
along just to get it done because

41:09.810 --> 41:14.360
it always comes back to you. You never escape. It like you

41:14.430 --> 41:18.260
can't do an application. Office action is trash, and it all comes back

41:18.390 --> 41:20.300
to you. It's going to come back to you in a write up. It's going

41:20.310 --> 41:23.430
to come back to you in extra trainings

41:23.550 --> 41:27.570
because you have errors, warnings for messing

41:27.750 --> 41:31.580
up. You're not applying statutes, they come back in complaints, then have

41:31.650 --> 41:34.110
the inventors or call the director.

41:35.010 --> 41:37.760
I understand that these are all things that examiners experience and happen.

41:41.050 --> 41:43.080
Just say, just go ahead and hurry up along. We just need to get these

41:43.330 --> 41:47.340
out. That's not part of it. No talking

41:47.530 --> 41:50.640
a little bit about prior art. What percentage of your time

41:50.770 --> 41:53.170
would you say was spent on prior art searches?

41:55.630 --> 41:59.880
Majority majority. Was there ever any

42:00.070 --> 42:03.240
pressure to spend less or more time on prior search.

42:05.410 --> 42:05.460
No,

42:09.050 --> 42:11.860
I think that's really what the job of the examiner is. Like. I said,

42:11.930 --> 42:15.880
we're preserving looking at the law to

42:16.010 --> 42:19.130
preserve useful arts.

42:19.430 --> 42:22.540
You do that by making sure that this is something that's novel and non obvious.

42:23.750 --> 42:27.050
That's the practical way. The statues. That's where the statues are applying.

42:27.530 --> 42:30.400
I mean, the formal statues of one on one. Let the course litigate that we

42:30.470 --> 42:34.010
don't really care. We follow the checklist. You say it's statutory.

42:34.190 --> 42:37.240
We say, okay, we follow the checklist if it says yes and yes,

42:37.790 --> 42:40.490
it says no, we say no. We put the boilerplate language in there. We don't

42:40.550 --> 42:43.480
really have any decision on that. We just apply what the law says.

42:44.210 --> 42:47.740
112 is a very specific. We apply those based on

42:48.410 --> 42:51.700
what the law says. Those are checklists and things we have to go through if

42:51.770 --> 42:55.720
we go through them and they result in a rejection. That's because this

42:55.910 --> 42:59.450
language is here. It says, taste this rejection. What we're

42:59.510 --> 43:03.160
really there to interpret what we really need to understand is understand

43:03.410 --> 43:06.640
the invention and apply one or two or one or

43:06.710 --> 43:10.120
three. That's really where the meat of it. Is that's what you care about?

43:11.990 --> 43:15.280
Are you infringing somebody or is somebody infringing you? That's what you

43:15.410 --> 43:19.310
want to know. That's what the search. That's why the primary job examination

43:19.550 --> 43:23.080
search. At least when

43:23.150 --> 43:25.120
I was there for the ten years I was there, that was a fundamental focus

43:25.310 --> 43:29.550
of what we did. I've heard claims

43:29.790 --> 43:33.080
that the search tools that are available within

43:33.270 --> 43:36.740
the PTO are heavily US specific and

43:36.930 --> 43:39.750
might not necessarily include access to academic journals.

43:41.070 --> 43:44.130
True, false urban Legends, false false urban Legends.

43:45.150 --> 43:48.750
Okay, there's multiple tools

43:49.470 --> 43:53.240
now, the tools that we use in Patent Office you can't use that

43:53.430 --> 43:56.660
is true. When I was at Patent Office,

43:56.970 --> 43:59.850
I can search unpublished patents.

44:00.810 --> 44:05.070
So I have access to unexamined

44:06.150 --> 44:09.020
things that are in the queue. But I can search them.

44:09.330 --> 44:12.740
They're part of my search. They're not part of your search because I

44:12.810 --> 44:15.330
can search provisions. You can't search provisions.

44:18.670 --> 44:22.080
So I have more swathes of data. And within

44:22.450 --> 44:24.310
there those databases include foreign patents.

44:26.710 --> 44:30.550
Plus, we have other software that focus specifically on foreign patents.

44:33.370 --> 44:37.930
There's patent search software. There's also academic

44:38.110 --> 44:40.140
search software with their patent office has its own.

44:42.250 --> 44:45.010
I was in computing, so we had AAA.

44:47.770 --> 44:51.120
I can't think of all of them right now. We have tons of databases of

44:51.310 --> 44:54.660
all the engineering and science journals, and we had to search all this stuff.

44:55.930 --> 44:58.680
You can't just search the patents. You have to search everything.

45:05.570 --> 45:08.860
You can have a bad examiner that they probably get fired. They don't search

45:09.470 --> 45:12.820
outside of patents, but, yeah,

45:16.430 --> 45:19.720
there's no real truth to that. All right. District courts are

45:19.970 --> 45:22.300
invalidating patents at about a rate of 40%.

45:23.210 --> 45:26.990
There's clearly some disconnect between issuance and ultimate

45:27.110 --> 45:31.250
validity. In the eyes of the court mentioned earlier

45:31.430 --> 45:34.910
that one theory around this was that examiners simply weren't granted

45:35.330 --> 45:38.560
enough time to adequately search prior art

45:39.170 --> 45:43.250
or fully get their heads wrapped around the domain. I'm not necessarily

45:43.550 --> 45:47.140
hearing that you think that's the case based on

45:47.870 --> 45:51.760
your experience. So if not, then why

45:52.970 --> 45:57.170
this big disconnect between Issuance and ultimate

45:57.650 --> 46:01.240
validity? What's driving that?

46:01.790 --> 46:05.920
Most judges have never been examiners. Most judges are

46:06.110 --> 46:09.220
not engineers. They're judges. They went to law school.

46:10.430 --> 46:14.270
They know how to deal with arguments. I think patent

46:14.450 --> 46:18.590
law is very unique in the sense that it's

46:18.890 --> 46:22.780
unlike criminal law or business law, where you

46:22.850 --> 46:25.850
can look at a lot of the case law because that's one thing. As examiners,

46:26.570 --> 46:30.460
we had to read case law all the time. As I

46:30.530 --> 46:33.710
got some more seniors and examiner, we were required.

46:33.950 --> 46:37.600
We were given hours of time to read case law, which let

46:37.670 --> 46:41.980
me read all these cases. And sometimes

46:42.890 --> 46:46.600
when I would read the case law, I would see over simplification of

46:47.090 --> 46:51.170
the technology. They're making associations

46:51.470 --> 46:54.590
that we're not allowed to make an example because of the statues.

46:56.630 --> 47:00.350
We can't make those associations, but they're making associations because they're not governed

47:00.410 --> 47:04.250
by the same standard. When they're doing these cases,

47:04.370 --> 47:08.140
they're not looking at one on 1121 or 3112.

47:08.750 --> 47:12.290
They are not governed by the manuals of Patent examining procedure. They're governed

47:12.410 --> 47:14.560
by federal law.

47:17.970 --> 47:23.220
Ptab is different. Ptab is within part

47:23.350 --> 47:27.610
of PTAB is within the manuals patent examination procedure, so it's following

47:27.970 --> 47:31.620
a certain standard. That's what makes PTAP so atrocious in terms of how it

47:32.530 --> 47:36.420
has been used. The legal system itself bears some responsibility in the

47:36.490 --> 47:39.840
arena of solutions as well. Listen in as Louis shares some insights on

47:40.030 --> 47:43.440
conflict of interest and honest conversations that should be happening between

47:43.750 --> 47:47.100
inventors and their practitioners. If the answer is,

47:48.370 --> 47:50.710
you don't have an invention, you're right. It already exists.

47:52.690 --> 47:56.040
That's the issue. This is not a good business model for you guys

47:56.290 --> 47:59.590
to tell the client this is crap. You don't need to file a petlman

47:59.770 --> 48:03.480
that already exists. So nobody wants to say that. But frankly, that would

48:03.550 --> 48:06.610
be the honest answer. In many cases, when you look at a part that don't

48:06.790 --> 48:10.980
spend your money on this, it already exists or it's so

48:11.710 --> 48:15.420
incremental that it's not worth it. And the day people do

48:15.670 --> 48:18.780
that, you're going to have a lot less patents that are invalidated because

48:20.050 --> 48:23.580
essentially, they weren't valid in the first place. I see

48:23.710 --> 48:27.300
a lot of those. I'm not joking. We see so much volume. I can tell

48:27.430 --> 48:31.570
you it's not just bad patent attorneys.

48:31.750 --> 48:35.350
It's just the business incentives are misaligned.

48:35.770 --> 48:39.360
And that's what's creating a lot of these patterns to be issued because

48:39.670 --> 48:42.840
your metric is not the same as the client, but the client doesn't know it.

48:43.930 --> 48:48.180
The client thinks that you have the same metric and the same goal. And you

48:48.310 --> 48:51.960
don't actually, because we will do some

48:52.150 --> 48:55.140
prior search and we'll find something and we'll tell the client, look,

48:55.270 --> 48:59.460
we can't take this on the brokerage because you didn't invent anything you

48:59.590 --> 49:02.340
should have done a prior search prior to filing, and you would have saved yourself,

49:03.130 --> 49:06.360
especially when there's portfolio with five to ten patents. You would have saved yourself

49:06.730 --> 49:10.560
half a million dollars, probably in cheese if you have

49:10.690 --> 49:14.350
only spent $2,000 in reach and search originally.

49:14.890 --> 49:18.640
So I'm part

49:18.770 --> 49:22.790
of the patent part, but I just don't like the fact that the business incentives

49:23.390 --> 49:26.920
are not properly aligned with what the client needs to get a

49:27.050 --> 49:30.880
meaningful pattern at the end, because it reflects in the marketplace today

49:31.550 --> 49:34.720
because we can see all the bad things

49:34.850 --> 49:38.200
we want to say about the PTAB about it being biased and all this.

49:38.390 --> 49:40.550
But the reality is, in a lot of cases,

49:42.050 --> 49:45.230
there was some relevant priority that made some of these patterns

49:45.410 --> 49:48.520
and valid the way they were drafted outside of the present state

49:49.130 --> 49:52.420
of all of this ever changing in a meaningful way. And we assume that the

49:52.490 --> 49:55.480
AIA and Pete have, as we know them today, remain the law of the land.

49:55.850 --> 49:59.620
In addition to having hard and honest conversations with practitioners, what can

49:59.750 --> 50:03.160
inventors do now to increase their odds of success? Should they end

50:03.290 --> 50:06.760
up facing an IPR some time down the road for an answer to this question,

50:07.010 --> 50:10.360
I once again sat down with Ashley, so I think the best way to future

50:10.670 --> 50:14.380
proof yourself is a few different things. One would be to make

50:14.450 --> 50:18.460
sure you're doing priorit searching don't rely on the patent office

50:18.710 --> 50:22.120
to do to find all the relevant are they do have limited time, and so

50:22.190 --> 50:25.780
I would definitely engage with a practice such as Aurora or

50:25.910 --> 50:29.630
another practice to do prior art searching before you file

50:29.690 --> 50:32.740
your pen application, or at least before you convert it to a full utility application.

50:33.710 --> 50:36.950
I would also ensure or try to ensure that your claims capture

50:37.250 --> 50:40.370
one infringer trying to avoid divided infringement,

50:40.550 --> 50:44.810
and your practitioner shouldn't know what this means, but from your practical

50:45.110 --> 50:48.940
viewpoint, making sure that one entity would be doing all

50:49.010 --> 50:52.300
the steps of your claim. So if you can possibly think that two entities would

50:52.430 --> 50:55.960
have to work together to do your claim to

50:56.090 --> 50:59.450
process or to make your device, then the claim should be rewarded

50:59.630 --> 51:03.580
to make it. So it's just one party. I would also recommend that you

51:03.890 --> 51:07.060
always file continuation pet applications. What this means in

51:07.250 --> 51:11.020
practice in the United States is that when you are about to get

51:11.090 --> 51:14.390
an issue patent or any time during your patent application pendancy,

51:14.990 --> 51:18.460
you can file additional claim sets that are based on

51:18.530 --> 51:21.590
the original patent application disclosure, the original specification.

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But these claim sets can pursue other types

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of inventions in your application. It can pursue broader or more narrow views

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of your invention, and by doing that, it allows you to always

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have a pending and open patent application family. So if

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one issued patent is challenged and your patent application is still pending, you can

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now still pursue additional claim sets that would hopefully avoid any prior art

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that was brought about in the IPR proceeding in the challenge proceeding.

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And so I think these three things are very critical. And then lastly,

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think about how potential competitors are going to overcome

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your claims. What are the design around? And not that this is going to prevent

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any kind of IPR challenge, but it could help with an infringement proceeding where

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somehow somebody avoids your claims by doing some minor modifications.

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And so prior art searching, ensuring the claims capture

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one infringer always have continuation applications pending,

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and then trying to think about how competitors may design around

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your claims. I think those are four critical areas to

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just consider as you're working with practitioners and making sure you really own

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those decisions in your patent portfolio strategy. Thank Ashley.

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That's a wrap. For now. We hope this has been one part illuminating

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and at least two parts motivational. As we said at the opening,

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this is a very complex, highstakes issue with many perspectives,

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and it's only with the benefit of a wide angle lens that we can hope

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to start chipping away at the problem with the most impactful solutions. And hopefully

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this motivates you to take some action. Call your congressional reps.

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Join an adventure advocacy group. Have the tough conversations with your

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practitioner. Draft more robust patents. Spend the time to search prior art,

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and most importantly, do what you can to lend a voice to the issues that

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will define the innovation landscape for the next generation of inventors.

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All right, thanks for listening. And remember to check us out at aurorapattens.

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Com for more great podcasts, blogs and videos covering all things patent strategy.

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And if you're an agent or attorney and would like to be part of the

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discussion or an inventor with a topic you'd like to hear discussed, email us at

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podcast at aurorapatins. Com. Do remember that this podcast does

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not constitute legal advice, and until next time, keep calm and patent on.

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So do you suppose you took the whole evil laugh and thunderclap thing a little

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too far? No, not at all.

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He's supposed to PTAB out loud. Is anything like Candyman?

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Or if you stay in the mirror five times you lose a patent.

Intro
AIA History and Overview
AIA: First Inventor to File
AIA: Prior art types for public use and sale
AIA: Assignee Filing
AIA: Regional Patent Offices
AIA: Prioritized Examination (Track One)
AIA: USPTO revenue control
AIA: PTAB and IPRs
Dan Brown intro
Dan Brown on unintended consequences of AIA
PTAB invalidation rate
Top big tech infringers
Bob Schmidt intro
Bob Schmidt on why this is happening
Dan Brown on how infringers are abusing the patent system
Dan Brown on obviousness and bad patents
How the PTAB is being used to invalidate the top tier patents
The power of an IPR threat
Kip Azzoni Doyle intro
Kip's story
Financial impact of being IPRd
Josh Malone's infringement story and legal expenses
PTAB composition and comparison with Article III courts
Why the PTAB is seen as a more favorable venue
Burden of proof
Broader claim construction
Standing not required
PTAB judges (APJs): backgrounds and qualifications
The cost of inaction
Dan Brown on the best social system being a good job
Kip on impact to patent value and licensing
Bob Schmidt on patent devaluation
Louis Carbonneau on impact to patent value
Lost property rights and innovation's race to the bottom
Bob Schmidt on Constitutional origin of patent rights
Article 1, Section 8, Clause 8
IP Rights vs other property Rights
Louis Carbonneau compares with getting a land title
Exploring Solutions: Proposed legislative reforms
Bob Schmidt on meaningful legislative reform
Invalidation dissonance
Exploring Solutions: PTO examiner process
Inside the PTO perspective with Tariq Najee-ullah
Patent examination from 30,000 ft
Time spent on examination and prosecution
Examiner focus on prior art searching
How examiners look at patents vs. how judges look at patents
Exploring Solutions: Louis Carbonneau on legal system share of responsibility
Future proofing strategies for IPR success
Call to action
Outro