Big tech games PTAB for profit – aggressively opposes stronger IP

[(Paul, 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.) “Big Tech Has a Patent Violation Problem.”, Harvard Business Review, 8-5-22, https://hbr.org/2022/08/big-tech-has-a-patent-violation-problem]//LR

For example, in January, the United States International Trade Commission, a quasi-judicial body that oversees trade enforcement matters, found that Google infringed on multiple patents held by the speaker maker Sonos. The commission gave Google 60 days to implement software updates to remove the stolen technology or else face a ban from importing a range of its products — including its Google Home smart speakers and Pixel phone — and selling them here in America. Google complied, at the cost of removing features and reducing the functionality of the products. This was just one in a string of similar legal defeats that Google has suffered. In February, a jury in Texas ruled that Google’s Nest Thermostat infringed on a patent held by EcoFactor, and ordered Google to pay $20 million. In a $26 million verdict from November 2021, a federal jury found Google’s YouTube platform in violation of a patent held by VideoShare LLC. Google isn’t alone, however. Other Big Tech firms have infringed on smaller competitors’ technologies in recent years, and have also faced reprimands and hefty financial penalties from courts and the International Trade Commission. In August of 2021, a jury ordered Apple to pay $300 million in damages to Optis Wireless Technology for infringing on that firm’s patents. Apple similarly owes VirnetX, an internet security software firm, over $570 million for infringement. And Cisco and Centripetal Networks, a Herndon, Virginia, startup, will return to the district court to litigate whether Cisco infringed Centripetal cybersecurity patents. Cisco previously owed nearly $2 billion to Centripetal for infringement, only for that ruling to be tossed due to a judge’s minor conflict. These judgements have shown Big Tech that infringement doesn’t come without legal consequences — but this solution might not have teeth for much longer. Instead of simply stopping their infringement and licensing rivals’ technologies fairly, major tech firms — including Apple and Google — are now pursuing a legal workaround. They’re trying to make it easier to invalidate rivals’ patents by pushing for legislation that would weaken IP protections. After all, if there are no patents, there can be no infringement. Business as Usual For years, executives at major tech firms have seen these legal judgments as just a cost of doing business. Damages for lost cases, even when stretching into the hundreds of millions, are a drop in the bucket for companies like Apple, which reported $365.8 billion in revenue in 2021. Patent theft, sadly, is a rational strategy for corporate behemoths seeking to entrench their own dominance and neutralize a threat from an emerging startup. After all, it’s cheaper to steal than to license smaller firms’ technologies. Just over a decade ago, this strategy became even more viable. In 2011 — in part due to the urging of tech lobbyists — Congress created a tribunal within the U.S. Patent and Trademark Office (USPTO) called the Patent Trial and Appeal Board (PTAB), which was ostensibly created to provide a faster, less expensive way to settle patent disputes outside of the courts. Instead, it opened up a new avenue for Big Tech gamesmanship of the patent system. Now, deep-pocketed tech firms could simultaneously challenge smaller rivals’ patents in two arenas — in the courts and at the PTAB, where, in addition, they could file multiple and serial challenges against the same patent. This gave major tech companies a major advantage. In many cases, after being sued by smaller rivals, large tech companies petitioned the PTAB to strike down patents that courts would potentially uphold and find tech behemoths guilty of infringing. Often the PTAB would do just that: It has at least partially invalidated 84% of the patents it has adjudicated in a final written decision. There are three main reasons for this: 1) the Board’s evidentiary standard is lower than in court, 2) repeat challenges are allowed — by the defendant, of course, but also by anyone who wants to challenge the validity of the patent for any reason — and 3) patent owners are burdened with about $500,000 per challenge, which Big Tech companies can afford, but startups often cannot.