Big Companies' Latest Attack on the Little Guy

Imagine inventing something, patenting it, building a successful company around it — and then seeing a much larger rival steal your idea.

For too many inventors and entrepreneurs, that's not a hypothetical. It's a nightmare they have lived through.

These days, instead of responsibly buying out smaller inventors or licensing their patents, some large companies find it more economical to simply copy the underlying technologies and fend off patent infringement claims in court by expanding and extending costly litigation — a bully tactic designed to overwhelm and outlast less well-funded innovators. 

I served on the U.S. Court of Appeals for the Federal Circuit in Washington, D.C., which hears cases related to patent law. Both on the court and in consulting since retiring in 2010, I've seen examples of this "efficient infringement."

And in particular, I've seen how wealthy companies have used the Patent Trial and Appeal Board, an administrative law body that hears challenges within the U.S. Patent and Trademark Office, to aid and abet their infringement. Ever since PTAB was created in 2011, these behemoths have filed repeat challenges at PTAB, asking the board to invalidate as improperly granted the very patents they are accused of or judged as willfully infringing.  

This strategy has worked well for powerful corporations. These companies have the resources to scour the world for any invention with similarity to the patent under review — and then argue before the PTAB that the patent in question is overly broad, indistinct, and should never have been issued.

That can be all they need to get a trial and possibly prevail. According to one analysis, around one-third of patents challenged on petition at PTAB are found totally or partially invalid. Of those petitions going to final result at trial, two-thirds are. These are surprising figures given the USPTO's strict standards for expert examiners to issue a patent in the first place.

PTAB challenges are concentrated among a surprisingly small number of giant companies. The top 10 PTAB petitioners — which include Samsung, Apple, Intel, and Google — are responsible for nearly a quarter of all petitions. These challenges always add to the owner's costs and usually delay the progress of their court suit.

To curb this abuse, in 2020, the USPTO put in place a procedure for determining whether a PTAB review should go forward. The so-called Fintiv factors allow PTAB judges to decline to review a patent when the same patent is already subject to a challenge in federal district court and is approaching earlier resolution there. The Fintiv factors worked to deter many redundant requests for review.

Unfortunately, the USPTO Director Katherine Vidal issued new guidance last year that severely restricted PTAB's ability to apply the Finitv factors. The new rules prohibit PTAB from letting the Fintiv factors prevent them from hearing patent validity challenges that are otherwise "compelling."

Unsurprisingly, PTAB has accepted significantly more patent challenges since Director Vidal's new guidance took effect. The Board now grants reviews for around 73% of the challenges that come before it, a significant jump from 56% in 2020, the year the Fintiv factors were established. In other words, PTAB is increasingly being forced to duplicate the work of the courts.

So it comes as no shock these same corporate giants are now pushing hard to permanently eliminate PTAB's Fintiv authority to decline a review. They're lobbying Washington lawmakers to legislatively repeal Fintiv, claiming that the repeal will help small businesses fend off baseless infringement lawsuits from "patent trolls" that allege infringement and go to court, in the hopes of getting a quick settlement to go away. 

This argument is a red herring. It's these big corporations filing the bulk of challenges at PTAB — not small companies seeking relief from abusive suits by trolls. 

Inventors skilled enough to develop something of real market value should be able to reap the full economic benefits of their creation. To have to defend one's hard-earned intellectual property against theft is burdensome enough. Restoring the ability of huge companies to efficiently infringe upon smaller ones by forcing owners needlessly to defend their patents simultaneously in the PTAB and in court — and win in both — would be a perversion of justice. 

Paul Michel served on the United States Court of Appeals for the Federal Circuit from 1988 to his retirement in 2010, and as its chief judge from 2004 to 2010. He currently serves on the board of the Council for Innovation Promotion.