Their evidence is biased and filled with support from corporate lobbyists. Congressional action fails because of perverse incentives that are baked into the board.

Representative Deborah Ross exposed the real problem with one simple question. She rightly pointed out the irony that if the PTAB were fair to inventors, they would not need TPLF. Then she asked why the IP Subcommittee is focused on TPLF and not focused on making the PTAB fair?

Ross is the lead sponsor of the PREVAIL Act, which she said would lower invalidation rates at the PTAB. Ross is certainly on the right track; the PTAB’s invalidation rate must be lowered if it is ever going to be fair. I believe Ross genuinely wants to fix this mess.

But PREVAIL’s corporate lobbyists have misled Ross. PREVAIL cannot fix the lower invalidation rate or fix anything else at the PTAB. The bias is baked into the PTAB’s rules on so many levels that it is impossible to address all the bad rules.

Corporate Lobbyists Are Misleading Congress

The problem is the incentives that drive the PTAB to invalidate patents at a much higher rate than the federal courts just so it can stay in business. If Congress legislatively fixes the bad rules to bring the invalidation rate down, these perverse incentives will force the PTAB to change different rules to bring the invalidation rate back up. Then, Congress will need to pass more legislation. This will happen again and again and likely can never fix the problem.

The second part of the problem is huge corporations like the PTAB exactly the way it is. They can pluck whatever inventions they want, and if the inventor puts up a fight, they can engage the PTAB to destroy the inventor financially and emotionally.

These huge corporations know that Congress is going to fix the PTAB. This threatens them with competition from startups brandishing better technology. So, they seek to keep the PTAB killing field as long as they can.

To accomplish this, their corporate lobbyists are misleading everyone on what PREVAIL actually fixes. If they succeed, they will have another ten years before Congress reopens the PTAB to legislation, and U.S. innovation will continue its decline.

The Truth About PREVAIL

The corporate lobbyists correctly explain that PREVAIL changes the standard of evidence to the same standard as the federal court. But they incorrectly tell us that this change will lower the invalidation rate.

The standard of evidence will not change the invalidation rate because the standard is applied to a highly subjective test for obviousness. Under this test, two people can come to opposite conclusions, and nobody can say who is wrong. It just doesn’t matter what standard of evidence is applied because the answer is in the eye of the beholder.

The corporate lobbyists also tell us that PREVAIL establishes a standing requirement that is the same as that of the federal court. That is not at all true.

Standing in federal court means that you have been sued or threatened to be sued, and therefore, only you can bring a case to federal court. Third parties do not have standing in federal court. But, PREVAIL’s standing requirement allows third-party standing if someone with federal court standing pays them.

To understand the severity of the national security risk, one needs to look no further than Unified Patents. Unified Patents petitions the PTAB as a third-party front for its 3000 plus subscribers, many of which are likely Chinese Communist Party (CCP) controlled multinationals. Any settlement made with Unified Patents includes a patent license that applies to all Unified Patents’ subscribers, including the concealed CCP-controlled entities.

This puts U.S. economic and national security at risk because Unified Patents effectively clears the market of patents that block CCP-controlled multinationals from entering U.S. markets while the CCP-controlled multinationals, in Goodlatte’s words, “operate in the shadows free from public scrutiny.”

Under PREVAIL, Unified Patents will be required to name only one real party in interest, not all. Thus, PREVAIL preserves Unified ’Patents’ shadowy business model of concealing CCP-controlled multinationals and its consequent U.S. national security risks.

Congress Must Wake Up

The same corporate lobbyists who destroyed U.S. innovation now tell us they know how to fix it. They would eliminate third-party funding for little guys, making it virtually impossible to defend their rights because of their own proffered unknown and probably insignificant threats to national security. And on the other hand, they would allow third parties to use the PTAB to clear the U.S. market by invalidating little guy patents while the identities of their CCP multinational beneficiaries are concealed. In both cases, their legislative compass points only to favor huge predatory infringers and CCP multinationals while damaging U.S. economic growth, national security, and little guys.

Ross is right – Issa’s IP subcommittee priorities are backward. It ignores the PTAB and focuses on TPLF reform even though fixing the PTAB will reopen patent litigation to contingent fee attorneys, making TPLF reform unnecessary. In the haze of this confusion, China now leads the world in 37 of 44 critical technologies. PREVAIL is misrepresented; it will not fix the PTAB. And we do not have another ten years to figure out that out.

The corporate lobby has shown its colors; its expertise is misleading Congress, and it cannot be trusted with patent law.

Congress must investigate what is slowing U.S. innovation, with a particular focus on the broken patent system. The only legislation that stops PTAB damage is the bipartisan Balancing Incentive Act, led by Macy Kaptur and Thomas Massie and cosponsored by Donald Davis and Richard McCormick, and the Restoring America’s Leadership in Innovation Act (RALIA), also led by Massie and Kaptur.