Proposed U.S. Patent Office rule threatens gains made in fighting ‘patent trolls’

Small businesses could face new surge in challenges if changes are made
Debra Altschiller

Debra Altschiller

Manufacturing, information technology and artificial intelligence are among the 10 fastest-growing industries in New Hampshire. Unfortunately, at a time when these businesses are looking to grow, some are being stymied by an unexpected threat: demand letters from so-called “patent trolls.” Even more concerningly, recent rules proposed by the U.S. Patent Trial and Appeal Board threaten to make the problem worse.

Patent trolls, also known as “non-practicing entities” (NPEs), are companies that buy up old, unused patents from the earliest days of the internet and use them to go after small businesses. Often, the patent these NPEs claim to own is absurd and never should have been issued in the first place. NPEs have threatened small businesses just for having a shopping cart logo on their website, or for using a scanner to scan documents. These claims would fall apart in court, but for many small businesses, it’s less expensive to pay several thousand dollars to settle with a troll than to go to trial.

As an elected official, I know how important it is to listen to my constituents. Congress was doing just that in 2011 when it passed the historic Leahy Smith America Invents Act. The landmark legislation helped small businesses fight back against patent trolls. One of the key elements of the bill was the creation of the Patent Trial and Appeal Board (PTAB).

Under the law, anyone can request that the PTAB institute an Inter partes review (IPR), and get the patent office to take another look at an old patent.

IPR reaffirms and upholds high-quality patents, while identifying and eliminating vague patents that never should have been issued in the first place.

The impact of this legislation has been significant for everyday businesses. While 99.8 percent of active patents have never faced an IPR, more than 40 percent of patents reviewed via IPR have been found to be invalid. The program has cumulatively saved litigants $2 billion in legal fees. The PTAB review process has added $3 billion to the economy, while shrinking the number of lawsuits from patent trolls. This has allowed American businesses to invest more in job growth and business expansion.

Now, over a decade after the passage of the America Invents Act, the U.S. Patent and Trademark Office has issued an Advanced Notice of Proposed Rulemaking that threatens to undermine the IPR process – going explicitly against Congress’s intent.

The proposed rules would make it more difficult to file an IPR. They would impose restrictions on who can submit an application and shorten the time allotted to do so. They would also raise the standard for instituting an IPR, changing it from the standard set by Congress. Such limitations would impede the ability of small businesses to defend themselves against lawsuits from patent trolls.

All in all, these changes would make it more challenging for small businesses to fight back against predatory patent litigation, jeopardizing their ability to innovate and grow in a competitive global market.

This isn’t the first time the IPR process has been threatened. In 2015, Congress considered legislation that would limit PTAB review before ultimately deciding against moving forward with the legislation. During their discussions, the Congressional Budget Office released a report that found the bill would have saddled American businesses with $1 billion in new costs. With families already facing higher expenses for essential items, it is vital we prevent any further financial burdens that may arise as a result of the USPTO’s proposal.

New Hampshire’s families and businesses have been through the wringer over the last few years. After the struggles of a global pandemic and rising inflation rates, our community needs this busy summer season. Our growing businesses and entrepreneurs should be focused on serving our community – not responding to demand letters from out of state trolls. If the Patent Office moves forward with these proposed rules, businesses in our state will face greater threats. I hope the patent office reconsiders these proposed rules.

Democrat Debra Altschiller represents District 24 in the NH Senate.

Categories: Law, Opinion, Technology