It’s specifically key to SME’s.

PTAB Standing Requirements Would Harm Small- and Medium-sized Entities (SMEs)

Related to the more general patent trolling concern, many comments specifically raised objections to proposals in the ANPRM that would add new standing requirements for who is allowed to petition for PTAB review. More than 1,500 comments contain the specific phrase “standing requirement” and there are many additional comments that describe the same concept in different ways. Similar standing requirement measures are included in the PREVAIL Act, which would limit review to those who have been sued or are threatened with lawsuits.

New standing requirements would remove the option of petitioning for PTAB review in many situations where a party has a legitimate interest in challenging an invalid patent. In particular, standing requirements seem to target third parties, like Unified Patents, the Texas Association of Realtors, I-MAK, or the Electronic Frontier Foundation, entities that deter abuse by challenging invalid patents. Third-party organizations are oftentimes uniquely positioned to constrain the most abusive patent troll campaigns and protect SMEs, which are most vulnerable to exploitation.

The USPTO and Congress have both expressed a desire to make changes that serve the best interests of SMEs, small inventors, and under-resourced entities. As the public comments make clear, any new standing requirements that restrict access to the PTAB would have the opposite effect.

The following comments emphasize the threat that standing requirements pose to SMEs:

“...As you likely know, patent trolls base their business off of purchasing old patents and using them to attack small businesses for alleged “infringement” for things as simple as using a scanner. While these baseless claims have no legal standing, small businesses like mine often end up having to negotiate settlement terms with patent trolls out of court because we cannot afford to fight a prolonged battle in court…

…As patent troll cases have continued to rise over the years, federal lawmakers looked to take action against them by enacting the Leahy-Smith America Invents Act (AIA) in 2011. This initiated the Inter Partes Review (IPR) process, which has to been pivotal for small businesses help fight back against frivolous patent infringement cases. Because the AIA did not include a “standing” requirement to file an IPR, larger companies have also been able to file IPRs on patents being used to sue their smaller clients.

However, I fear that the recently introduced USPTO rules would seek to undermine IPR. Specifically, the agency has proposed allowing for less time to file an IPR, changing who can file an IPR, and rewriting the standard for instituting a review from “reasonable likelihood” to “compelling merits.” Not only would these changes directly oppose the purpose of the AIA and overstep Congress, but also empower patent trolls to expand their aggressive attacks against businesses like my own…” – M. Feldman, Roof Off Entertainment (Entertainment booking company)

“...The restriction on IPR challenges by nonmarket competitors will eliminate an important pathway for invalidating patents asserted against Main Street companies in NPE hold-up campaigns. Despite Congress’s considered decision that patent quality and integrity would be best served by allowing any member of the public to file an IPR, the proposed rules seek to limit who can file a petition. This will be especially injurious to UFPR’s Main Street members and companies like them who have benefited greatly from IPRs brought by others, including trade associations, patent-challenge organizations, and public interest groups. There are many examples of sweeping campaigns by NPEs seeking hold-up nuisance settlements based on invalid patents being stopped by IPR challenges brought by the types of organizations this proposal seeks to derail…” – United for Patent Reform (Business coalition representing over 90 million U.S. employees)

“...These petitioning organizations, including Unified Patents and Askeladden, overcome a collective action problem that bedevils patent litigation: when the plaintiff offers to settle for an amount far below the high cost of litigation, no defendant has an incentive to challenge the patent. Some patent assertion entities have filed lawsuits on the same patent over a hundred times—often targeting small business, which are even more likely to settle—before the patent’s claims were finally canceled in a challenge brought by a petitioning organization. If these organizations were prevented from operating, as the ANPRM proposes, these same assertion campaigns would no doubt have continued, repeatedly extracting small but substantial amounts from small businesses and other operating companies based on a patent that never should have issued…” – U.S. Manufacturers Association for Development and Enterprise (Nonprofit association representing companies manufacturing diverse goods in the United States)