Posts Tagged ‘patent reform’

« Older Entries

US Inventor Conference Was an Amazing Success!

Tuesday, November 14th, 2023

US Inventor’s First Annual Conference was held on October 19th and 20th at the U.S. Patent office facility in Alexandria, VA to celebrate 10 years of work to achieve its mission “to restore the patent system to what it once was and to empower inventors to succeed.”  About 150 people attended all or part of the two-day event.  It was a resounding success and truly a remarkable event!

I had the pleasure of attending this event because I have been a board member of the San Diego Inventors Forum since 2014 and have been the liaison between our club and US Inventor, which is the only organization representing small inventors, businesses, and startups to enact change that supports inventors.

The conference was preceded by a day at the Capital where about 30 of us broke up into small groups to meet with the staff of Congressional Representatives in Congress to discuss how to fix the broken patent system. The afternoon included a networking event held in the Rayburn building Gold Room to which Congressional staffers were invited to see the new documentary, Innovation Race, directed by Luke Livingston.  Mr. Livingston attended the whole USI conference and handled the live streaming and recording of the event.

US Inventor founder, Paul Morinville, began the conference Friday morning by saying that he started walking the halls of Congress to advocate for Inventor Rights in 2013 after his aspirations of achieving both the Inventor’s Dream and the American Dream were cut short by the America Invents Act of 2011 (AIA) and establishment of the Patent Trial and Appeal Board (PTAB). He was joined by Randy Landreneau in January 2014.  Paul incorporated US Inventor as a 501(c)(4) non-profit corporation on March 17, 2015 to put a stop to H.R. 9, the Innovation Act. After visiting the offices of every senator, the Innovation Act died in committee in  2016 during the 114th Congress (2015-2016). When Josh Malone joined them in 2017, it greatly helped their efforts.

Space doesn’t permit me to give a full recap of the conference, so I am providing highlights from my notes.  The panels both days were interspersed by the stories of inventors who have had their patents infringed or invalidated by the PTAB.  These stores were heartbreaking, and I could mot do justice to them in writing; you had to hear the stories to get the full impact. 

Next, former USPTO Director, Andrei Iancu, discussed “The Importance of Innovation”, saying in part that “patents and inventions ae part of the American fabric. We should stop and think what the world was like before the U.S. patent system…Every change that we use today was backed by a patent…Patents and the right to have patens are incorporated in the Constitution in Article 1, Section 8. He added that “without the patent system, it is very difficult to raise the money needed to produce and market new products.  There is an inextricable link between IP and innovation and without a secure patent system, innovation is stagnating…Inventors have always been the backbone of the American economy and American dream.”

Paul discussed “Where Did our Patent System Go?” He explained that even before the American Invents Act AIA) was passed in 2011, the Supreme Court decision of “Ebay vs. Merexchange” in 2006 “changed Intellectual property from a personal property to a ‘tort’ or “public franchise” and created a “public interest test’ in order for inventors to receive injunctive relief from infringement.” Injunctive Relief stops an infringer from making selling, or using a patent, but it has become difficult for an inventor to pass the “public interest test” against a large corporation that has saturated the market with the product based on the patent they infringed.

The AIA created the Patent Trial and Appeal Board (PTAB). It is a nonjudicial administrative tribunal within the USPTO. A panel of lawyers are appointed “Administrative Patent Judges” and granted bonuses to revoke patents.  There is no jury and no due process of law.  The PTAB is funded by fees of the petitioner (usually a large corporation that is infringing the patent they are challenging for review).  Currently, the PTAB is invalidating 84% of the patents they review.  

A panel discussion of “PTAB vs. Federal Court:  Comparing the Two Forums” followed that was moderated by Warren Tuttle.  Panelists were Rob Sterne, Adam Mosoff, and Molly Metz. A few comments were:

Adam Mosoff – “The PTAB hasn’t lived up to its expectations. I had told people that the ‘first to file’ vs. ‘first to invent’ and PTAB would be problematic. The PTAB didn’t put in any protections for inventor’s rights. PTAB was characterized as easier for people and faster, but they set up a system that was ultimately faster to lose rights.

Molly Metz – “I spent over $400,000 and it took four years, so it wasn’t cheaper or faster.” (Molly had share he heartbreaking story of her patent infringement and invalidation after Paul’s introduction.)

Rob Sterne – “We need a system that is really faster and fair for people.  The way PTAB law is applied isn’t anything like the way it was supposed to be.  It has put a real damper on investment and innovation in this country.”

The Friday afternoon session included a discussion of “Bleeding You Dry:  The Court’s Misuse of Injunctive” by Thomas Woolsten, founder of Mercexchange and main inventor of 30 patents. He said, “The current system provides strong incentives for patent infringement.  No patent of importance is going to get to the injunctive stage.”

The highlight of the afternoon was “The Great Debate: PREVAIL, PERA, and New Legislation.” Moderated by Paul Morinville.  The panelists were:  Judge Paul Michel, Scott McKeown, Rudy Fink, and Steve Daniels. Judge Michel said, “About 50% of American venture capital is now going overseas to China and other countries…The anti-patent lobby is very large and well-funded.” He supports PERA because “it takes the courts out of the issue of eligibility and solves 80-85% of the problems with patents.”

S. 2140: Patent Eligibility Restoration Act of 2023 (PERA) introduced by Senators Thomas Tillis (R-NC) and Christopher Coons (D-DE) on 6/22/2023 was discussed in my article “Inventor Rights Still Being Threatened.”

S. 2220: PREVAIL Act was introduced on Jul 10, 2023 by Senator Christopher Coons (D-DE) – “A bill to amend title 35, United States Code, to invest in inventors in the United States, maintain the United States as the leading innovation economy in the world, and protect the property rights of the inventors that grow the economy of the United States, and for other purposes.”

Friday’s event concluded with remarks from Judge Pauline Newman, followed by a networking cocktail reception.

There isn’t enough space in this article to permit a recap of the topics covered at the Saturday event. The following topics were discussed:

“Does ‘Any” mean ‘Any’? Ask Alice” presented by Robert Greenspoon.

Why and How 97% of IP Portfolio Owners Destroy Most of their Portfolios” discussed by panelists Evan Langdon, Jack Lu, and Russ Genet and moderated by Steve Taylor

“How to Survive the Patent System” discussed by Jeff Hardin, Josh Malone and Paul Bartkowski that was moderated by Eli Mazour.

“New Solutions for New Problems:  Freezing Assets of Online Infringers on Amazon, YouTube, Facebook, and the Internet” presented by Joel Rothman.

The afternoon concluded with a discussion of “Advocating for a Stronger Patent System” by panelists Paul Morinville, Molly Metz, Cliff Maloney, Justin Greiss, and Randy Landreneau.

An awards ceremony and dinner took place that evening at the Holiday Inn Carlyle in Alexandria, VA where attendees stayed. Awards presented were:  Michael Kintner: The Inventor; Molly Metz: The Advocate; John Murray: The Warrior; Jeff Hardin: The Veteran.

In closing, Paul said, “We are honored to have such a significant turnout for our first event and incredibly grateful to our members, speakers, and sponsors for making this event possible. We have so much work to do, and I hope the event, discussions, panels, and presentations allowed USI members to feel empowered and motivated to enact change.”

Tags:, ,
Posted in Inellectual Property, Innovation, Legislation, Patent Reform | No Comments »

Inventor Rights Still Being Threatened

Tuesday, September 5th, 2023

During the 117th Congress (2021-2022), several bills were introduced with the purported purpose of restoring inventors’ rights and fixing some of the problems generated by that Act Leahy–Smith America Invents Act (AIA) of 2011. None of these bills were passed by both the House and Senate, and most didn’t even get out of committee for a vote. A few of these bills would have actually made matters worse, so it was a good thing they didn’t pass. Only one bill was supported by the top inventors’ group, US Inventor.

The bills not supported by US Inventor were:

S.2774 – Pride in Patent Ownership Act was introduced by Senator Patrick Leahy (D-VT) on  09/21/2021.  This bill looked good for either being passed by the Senate separately before Congress recesses for the holidays or passed by being attached to the National Defense Authorization Act (NDAA). The NDAA is “must pass” legislation funding the military at a time when there are credible threats of wars around the world. Attaching the Pride in Patent Ownership Act to the NDAA means it would certainly have become law. Fortunately, neither of these predictions came true.

S. 2891, The Restoring the America Invents Act, introduced by and Patrick Leahy (D-VT) into the Senate on September 29 2021 and referred to the Committee on the Judiciary, but was not voted on by the Senate before the end of the 117th Congress.

HR 5902, The Clear Patents Act, introduced by Representative Darrell Issa (R-CA) on 11/05/21 to the House. This bill was also referred to the Committee on the Judiciary, but was not voted on by the House before the final recess at the end of 2022.

S.4734 – Patent Eligibility Restoration Act of 2022  was introduced by Senator Thomas Tillis (R-NC) on 08/02/2022.  This bill was referred to the Committee on the Judiciary, but was not voted on by the Senate before the end of the 117th Congress.

The only bill supported by US Inventor was:

HR 5874, Restoring America’s Leadership in Innovation Act of 2021 (RALIA), was introduced into the House by Representative Thomas Massie (R-KY) on 11/04/2021 and referred to the Subcommittee on Courts, Intellectual Property, and the Internet. US Inventor supported this bill because it was “designed to restore to Americans a patent system “as the Constitution of the United States originally envisioned it.”

Representative Massie’s press release stated, “The RALIA legislation restores to Americans a patent system as the Constitution of the United States originally envisioned it,” said Congressman Massie. “In Article 1, Section 8 of the Constitution, the Founding Fathers gave Congress the authority to protect the discoveries of inventors. Specifically, they created a patent system to ‘promote the Progress of Science and useful Arts, by securing for limited times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.’  I am sad to say that this bill was also not voted on by the House before the end of the 117th Congress.

The above bills introduced in 2021 were discussed in more detail in my blog article, “Inventors Rights Must be Restored” published by Made in America Movement in January 2022.

What many people do not realize is that bills not passed by the end of the Congressional session, in this case the 117th, are considered “dead” and must be reintroduced in the session of the next Congress, which is now the 118th Congress (2023-2024).

Thus far, none of these bills have been reintroduced by their sponsors, but one of the bills introduced in the 117th Congress has been re-introduced recently.

S. 2140: Patent Eligibility Restoration Act of 2023  was introduced by Senators Thomas Tillis (R-NC) and Christopher Coons (D-DE) on 6/22/2023. The brief description states, “To amend title 35, United States Code, to address matters relating to patent subject matter eligibility, and for other purposes.”

The need for this bill was provided in the “Findings” section:

  1. “patent eligibility jurisprudence interpreting section 101 of title 35, United States Code, requires significant modification and clarification….
  • the Supreme Court of the United States and other courts created judicial exceptions to the wording of that section, thereby rendering an increasing number of inventions ineligible for patent protection…
  • Efforts by judges of district courts and courts of appeals of the United States to apply the exceptions described in paragraph (2) to specific circumstances have led to extensive confusion and a lack of consistency— throughout the judicial branch of the Federal Government and Federal agencies; and among patent practitioners…
  • Many judges of the United States Court of Appeals for the Federal Circuit and of various district courts of the United States have explicitly expressed the need for more guidance with respect to the meaning of section 101 of title 35…”

“Under this Act, and the amendments made by this Act, the state of the law shall be as follows:

(A) All judicial exceptions to patent eligibility are eliminated.

(B) Any invention or discovery that can be claimed as a useful process, machine, manufacture, or composition of matter, or any useful improvement thereof, is eligible for patent protection, except as explicitly provided in section 101 of title 35, United States Code, as amended by this Act, as described in subparagraphs (D) and (E) of this paragraph.”

The statements describing what the bill will do sound good at first reading, but the “devil is in the details” of subparagraphs (D) and (E), as well as the amendments to Section 3 of the bill – Patent Eligibility.

This bill was reviewed in detail during weekly Zoom meetings held by US Inventor for several weeks after the bill was introduced in June.  These reviewers included retired judges, patent attorneys, and inventors.  As a result of this intensive review, US Inventor released a policy paper, titled “PERA Starts by Making Nearly All Inventions Implemented in Software Patent Ineligible:” 

“PERA abrogates all judge-made exceptions, including the abstract idea in its preamble (however,

not in the law), yet it introduces new exceptions disqualifying entire swaths of technology as ineligible for patent protection. An invention is ineligible if:

‘‘(B)(i) Subject to clause (ii), a process that is substantially economic, financial, business, social, cultural, or artistic, even though not less than 1 step in the process refers to a machine or manufacture.’

Nearly any invention can be categorized as economic, financial, business, social, cultural, or artistic. Most inventions implemented in software are claimed as a process. This extraordinarily broad language means that inventions implemented in software are ineligible for patent protection right from the starting gate.” 

According to the U S Inventors end of the year report, “The Patent Trial and Appeal Board (PTAB) has cancelled claims in 84% of the 2,500+ patents reviewed since 2011 and most inventors do not have a half a million dollars necessary to fund a legal defense.”

This is why US Inventor policy paper states, “PERA Must Remain a Vehicle for Section 101 Debate.

Judge-made law regarding Section 101 eligibility is severely restricting U.S. innovation, allowing our adversaries like China as well as others to take the lead in global innovation. This is severely damaging U.S. national and economic security.

Congress must fix Section 101 correctly. The influence of powerful lobbies must be leveled by arguing the merits of the legislation openly and transparently in Congress.

The authors of PERA must provide a clear and sound public policy justification for making such huge swaths of technologies ineligible for patent protection where there are no similar restrictions in other countries.

Once Congress agrees to a public policy position on Section 101, then the words of PERA must be precisely defined to ensure that the policy is effectuated in legislation, leaving no ambiguity for judge-made law to override it.”

The paper concludes, “For the foregoing reasons, US Inventor opposes PERA as written, but PERA should not die. It presents a valuable opportunity to initiate open and transparent debate in Congress so that the U.S. public policy regarding patent eligibility can be properly formed, and legislation can be crafted to effectuate that public policy.”

If you support patent rights you can sign the Inventors’ rights Resolution here.  You can also join US. Inventors as a supporting member here.  If you have the time, you can also attend US Inventor’s first annual conference in Washington, D.C. on October 19-21, 2023 to celebrate years 10 years of work.  There are over twenty confirmed speakers, and the plan is to bring you an event full of presentations, panel discussions, and plenty of networking opportunities. The tickets include access to all presentations, discussions, and informative opportunities, as well as access to event receptions, breakfasts, and dinner.  More Details and Register: www.usinventor.org/usi-conference

Tags:, ,
Posted in Inellectual Property, Legislation, Patent Reform | No Comments »

Inventors’ Rights Must Be Restored

Tuesday, January 11th, 2022

Ever since the Leahy–Smith America Invents Act (AIA) was passed in 2011, there have been bills introduced in Congress with the purported purpose of restoring inventors’ rights and fixing some of the problems generated by that Act. None of these bills were passed by both the House and Senate, and most didn’t even get out of committee for a vote. A few of these bills would have actually made matters worse, so it was a good thing they didn’t pass.

Besides changing our patent system from a “first to invent” to a “first to file,” the America Invents Act also created the Patent Trial and Review Board (PTAB) that has nearly destroyed inventors’ rights.  According to the U S Inventors end of the year report, “The Patent Trial and Appeal Board (PTAB) has cancelled claims in 84% of the 2,500+ patents reviewed since 2011 and most inventors do not have a half a million dollars necessary to fund a legal defense.”

In the 117th Congress, three new bills have been introduced with the purported purpose of again fixing the problems. These bills are:

HR 5902, The Clear Patents Act, introduced by Representative Darrell Issa (R-CA) on 11/05/21 to the House. The stated purpose is “To amend title 35, United States Code, to clarify the relation of Inter Partes Review proceedings and Post-Grant Review proceedings to other administrative proceedings, and for other purposes.” Since Rep. Issa was an original co-sponsor of the America Invents Act, bills related to patents that he introduces are not beneficial to inventors. This bill would amend Section 315, by adding at the end the following:

“(f) Relation to other administrative proceedings

If the Director institutes an inter partes review of a patent, any proceeding before a Federal agency (as that term is defined in section 201) that would be materially affected by one or more of the claims of the patent being cancelled under such review shall be stayed until a final written decision by the Board is issued under such review or such review is otherwise terminated. “

As an example of this type of action, U S Inventors commented, “The ITC can be effectively used to stop infringing products from coming into America. Issa’s bill allows any ITC action underway to be stopped if a PTAB action is instituted, and only continued after the PTAB action is concluded (if the patent remains intact).”

S. 2891, The Restoring the America Invents Act, introduced by Senators John Cornyn and Patrick Leahy into the Senate on September 29 2021. After the introduction, Sen. Mike Crapo  (R-ID), Sen. Amy Klobuchar (D-MN), Sen. Richard Blumenthal (D-CT), and Sen. James Risch, (R-ID)  have signed on as co-sponsors. This bill would also “amend title 35, United States Code, to address matters relating to the Patent Trial and Appeal Board of the United States Patent and Trademark Office, and for other purposes.” 

This bill is too complicated to quote any of the clauses, but basically it changes many of the procedures and rules of inter partes reviews and PTAB cases.

U S Inventor comments that “Leahy’s new bill greatly expands the grounds available for Big Tech/Big Corp to engage in IPR proceedings against the lesser financed small inventor or startup.”  It would basically strengthen the PTAB – one provision explicitly allows government agencies to use the PTAB to invalidate patents!

It is my opinion that the above bills are bad legislation and would be harmful to inventors’ rights. 

I was a mentor for San Diego’s CONNECT Springboard accelerator program from 2015 – 2018 and am a director on the board of the San Diego Inventors Forum. I work with inventors designing new products or break-through technologies to help them select the best processes and sources for their new products.

Inventors in the San Diego region have the opportunity to compete in the San Diego Inventors Forum annual invention contest for best new consumer product or best new technology. All contestants must have applied for at least a provisional patent before they can participate. The future success of their product or technology is contingent upon their having a patent they can protect from infringement. Their ability to raise the financial investment they need to bring their product to the marketplace depends upon their being able to protect their patent.

Why is this important? Because most new technologies, especially break-through or disruptive technologies, come from individual inventors who either start a company or license their technology to companies that are more able to take them to the market. Inventors must have the assurance that their invention will be protected by a patent because no investor will take the risk of investing in a product or technology that cannot be protected.  

Fortunately, there is one bill that would benefit inventors and restore America’s patent system to what it was before the passage of the America Invents Act.

HR 5874, the “Restoring America’s Leadership in Innovation Act of 2021” (RALIA), was introduced into the House by Representative Thomas Massie on 11/04/2021 and referred to the Committee on the Judiciary. Original cosponsors of RALIA include Rep. Louie Gohmert (R-TX), Rep. Paul Gosar (R-AZ), and Rep. Tom McClintock (R-CA).  Rep. Massie’s Press Release announced “the introduction of patent reform legislation designed to restore to Americans a patent system “as the Constitution of the United States originally envisioned it.”

“The RALIA legislation restores to Americans a patent system as the Constitution of the United States originally envisioned it,” said Congressman Massie. “In Article 1, Section 8 of the Constitution, the Founding Fathers gave Congress the authority to protect the discoveries of inventors. Specifically, they created a patent system to ‘promote the Progress of Science and useful Arts, by securing for limited times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.’ Regrettably, Congress’s 2011 enactment of the Leahy-Smith ‘America Invents Act’ has worked in concert with several Supreme Court decisions to erode this protection’s strength and value.”

“As the Constitution intends, RALIA restores patent protection to inventors by awarding patents on a ‘first to invent’ basis rather than the more recently adopted ‘first to file’ standard,” Congressman Massie continued. “A return to a ‘first to invent’ patent protection system ensures that inventors and the investors who back them can be confident that their innovative work and ideas will be safeguarded. Patents should protect those who innovate, not those who win the race to the patent office.”

U S Inventors supports Congressman Massie’s RALIA legislation, along with “organizations including the American Business Defense Council, American Conservative Union, Americans for Limited Government/Americans for Limited Government Foundation, Conservatives for Property Rights, Eagle Forum Education & Legal Defense Fund, Let Freedom Ring, 60 Plus, the Small Business Technology Council, U.S. Business & Industry Council, U.S. Inventor, and Vote America First.”

I join U S Inventors in urging inventors, entrepreneurs, and anyone concerned about rebuilding American manufacturing to call the Congressional switchboard number, 202-224-3121andask to be connected to their Representative and Senators. Then, tell the office staff that you want your Representative to support and co-sponsor the HR 5874, the “Restoring America’s Leadership in Innovation Act of 2021, because this bill is important for his or her constituents and for America. Tell the staff you are opposed to HR 5902, the “Clear Patents Act,” because it will harm inventors and American innovation by allowing China to continue flooding our market with pirated products. Tell the staff of your Senators that you are opposed to S. 2891,” The Restoring the America Invents Act.” 

Lastly, please sign the Inventor Rights Resolution — together we can help restore patent protection for inventors.

Tags:, ,
Posted in General | No Comments »

U S. Inventors Continue Fight to Restore Patent Rights

Tuesday, August 24th, 2021

September 16, 2021 marks the 10th anniversary of the America Invents Act (AIA) at the Decade of Stolen Dreams Inventor Rally organized by US Inventor, Inc., a non-profit association of inventors devoted to protecting the intellectual property of individuals and small companies. It represents its 13,000 inventor and small business members by promoting strong intellectual property rights and a predictable U.S. patent system through education, advocacy and reform.

There are six locations across the U.S. where inventors plan to make their voices heard about the consequences of the AIA and the Patent Trial and Appeal Board (PTAB) — Alexandria, VA • Burlington, VT • Dallas, TX • Denver, CO • Detroit, MI • San Jose, CA. Join US. Inventor Inc. on September 16th at a rally near you, and unite against the injustice of the America Invents Act and the PTAB.

The USI website states: “today, inventors are discouraged from pursuing research, development, and commercialization of inventions due to the implementation of the Patent Trial and Appeal Board (PTAB) under the America Invents Act of 2011 (AIA). Rather than helping small businesses as intended, the PTAB is often weaponized by large corporations to block competition from those who created superior technology. PTAB uncertainty, risk, and expense has become an overwhelming burden for entrepreneurs, stifling our ability to innovate and compete.

Having invalidated 84% of the 3,000 patents they have reviewed and destroyed the hopes and dreams of hundreds of inventors – the PTAB is still going strong. Even Chinese companies like Huawei, ZTE, HTC, and TikTok are regularly utilizing the PTAB to invalidate patents of U.S. inventors.”

For those new to the issue of inventors having lost the ability to stop large corporations from just taking valuable, patented technologies, here’s a quick rundown:

1. Patent Trial and Appeal Board (PTAB): The America Invents Act of 2011 (AIA) created an easier way to invalidate (revoke) an issued patent. The PTAB is an administrative court with no jury and much less due process than a real court. Rather than a lifetime-appointed judge, a PTAB trial typically has three attorneys who are called Administrative Patent Judges (APJs).

2. Injunctive Relief (the ability to stop an infringer after you have won your case): The U.S. Supreme Court decided that it was in the “public interest” for a proven infringer to continue infringing because it could serve the market better than a startup (Ebay, 2006). As a result, even if you win your case, you will have to pass a “public interest” test before an injunction can be issued to stop the infringer.

3. Abstract Idea: The U.S. Supreme Court’s Alice decision (2014), put into law that an “abstract idea” cannot be patented, but did not define this term. The result is that a sharp attorney can often convince a judge, who may have little tech experience, that a patent should have not been issued.

Article I, § 8, Clause 8 of the Constitution grants Congress the enumerated power “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” In my opinion, this makes the invalidating of patents by the PTAB unconstitutional.

A U.S. Patent is supposed to provide the inventor with the exclusive right to his or her invention. Inventors should be able to legally stop any infringer, no matter how large or powerful. They should be able to create a disruptive startup or license their invention at a market rate. This is what provided the incentive to invent that enabled America to lead the world in innovation for over 200 years. This is the right that US Inventor Inc. is fighting to restore.

Josh Malone, Policy Director for US Inventor, Inc. told me that in the 116th Congress (2019-2020) 35 representatives sponsored a bill to end the PTAB – H.R.4792 – Cyber Shield Act of 2019, but it was referred to the Subcommittee on Consumer Protection and Commerce and never got out of committee.

Also, on December 18, 2019, “H.R. 5478 – Inventor Rights Act was introduced by introduced by Representatives Danny K. Davis (D-IL) and Paul A. Gosar, D.D.S. (R-AZ), and on January 28, 2020, it was referred to the Subcommittee on Courts, Intellectual Property, and the Internet. This Act that would “restore patent protection for inventors and mitigate a generation of laws, regulations, and court decisions discouraging innovation by failing to secure to inventors the exclusive rights to their discoveries.”

The text of the Act stated “Recent changes to patent laws and procedures and Supreme Court decisions have adversely affected inventors such that the promise of Article 1, section 8 of the Constitution of ‘securing for limited times to inventors the exclusive right to their discoveries’ is no longer attainable.”

The Act stated that “Inventors are denied the fundamental right to ‘exclude others’ by the Supreme Court’s 2006 decision in eBay Inc. v. MercExchange, LLC.” Thus, inventors have lost their injunctive rights granted by the Constitution.  It also states that “Inventors were stripped of the right to file suit in their own judicial district by the Supreme Court’s 2017 decision in TC Heartland LLC v. Kraft Foods Group Brands LLC.”

Unfortunately, H.R. 5478 also never got out of committee to be voted on by the House. US Inventors is working to have the Inventor Rights Act reintroduced in Congress this year.

On February 8, 2021, US Inventor, Inc. filed suit against the US Patent Office (USPTO) “to stop patent validity challenges at the Patent Trial and Appeal Board (PTAB) until the required, official rulemaking regarding the procedure has been done. The America Invents Act of 2011 (AIA) created an administrative court, the PTAB, for patent validity challenges. Prior to this, an inventor would defend his or her patent in a real court with a jury, lifetime-appointed judge, and a lot of due process. The PTAB has no jury, much less due process, and a panel of attorneys called Administrative Patent Judges (APJs) who have invalidated (revoked) 84% of the patents that have gone through the process. The AIA said that the USPTO Director “shall” involve stakeholders in notice and comment rulemaking that takes into account things like the economic impact of the law and its effect on the reputation of the Patent Office. After ten years, this rulemaking has still not been done, and US Inventor believes this is unlawful as well as unfair and very bad for American inventors and the future of American innovation. A number of inventors were present at the hearing in Marshall, TX on July 1st, 2021.”

US Inventor President, Randy Landreneau stated, “”Our patent system is supposed to enable patent-based startups to compete with entrenched interests. It did this pretty well for 200 years, and America’s leadership in worldwide innovation is the proof. But in recent years, our lawmakers and officials have listened to Big Tech rather than inventors and patent-based startups. The result is the loss of the ability to stop a large corporation from taking a significant, patented invention, which is why American innovation is declining, Big Tech faces little competition and China threatens to take the lead in future technologies. The purpose of this lawsuit was to make our voices heard through the rulemaking process that has been avoided for ten years. The judge decided that we don’t have standing and dismissed our suit. We are appealing, but regardless of the outcome of this suit, US Inventor will continue to fight on many fronts to restore the rights of inventors in America.”

For further information on the patent crisis, you may watch the trailer for the documentary Invalidated: The Shredding of the U.S. Patent System  The full version is available on Amazon and iTunes.

You can help the efforts of US Inventors by signing the Inventor Rights Resolution “to restore patent protection for inventors and mitigate a generation of laws, regulations, and court decisions that have discouraged innovation by failing to secure to inventors the exclusive right to their discoveries.”  Click here to sign.

Tags:, ,
Posted in General | 2 Comments »

Would H.R.3666 – STRONGER Patents Act of 2019 be Beneficial to Inventors?

Tuesday, March 10th, 2020

On July 10, 2019, H.R. 3666, the “STRONGER Patents Act of 2019,” was introduced in Congress and referred to the Committee on the Judiciary and the Committee on Energy and Commerce. The purpose of the Act is “To strengthen the position of the United States as the world’s leading innovator by amending title 35, United States Code, to protect the property rights of the inventors that grow the country’s economy.”

This bill is a reintroduction of the Stronger Patents Act of 2017 that never got out of committee.  It has a long list of bi-partisan co-sponsors:  Rep. Stivers (R-OH), Rep. Mr. Foster (D-IL), Rep. McClintock (R-CA), Rep. Velázquez (D-NY), Rep. Babin (R-TX), Rep. Burgess (R-TX), Rep. Hill (R-AK), Rep. Huizenga (R-MI), Rep. Joyce (R-OH), Rep. King (R-NY), Rep. Norman (R-SC), Rep. Watson Coleman (D-NJ), Rep. Suozzi (D-NY), Rep. Peters (D-CA), Rep. Gosar (R-AZ), and Rep. Davidson (R-OH).

The “Findings of Congress” in the Act make several points similar to those made in the “Findings of Congress” for H.R. 5478, the Inventor Rights Act, regarding the importance of patents as “the foundation for the exceptional innovation environment in the United States” and “an essential part of the country’s economic success.” It includes reference to the fact that “strong patent protection improves the chances of success for small companies and increases their chances of securing financing from investors.”

Of particular note, the “Findings” state that “unintended consequences of the comprehensive 2011 [America Invents Act] reform of patent laws are continuing to become evident, including the strategic filing of post-grant review proceedings to depress stock prices and extort settlements, the filing of repetitive petitions for inter partes and post-grant reviews that have the effect of harassing patent owners, and the unnecessary duplication of work by the district courts of the United States and the Patent Trial and Appeal Board;”

This “Finding” refers to the abuse of invalidating patents by the Patent Trial and Appeal Board mentioned in my blog article of February 12th about the Inventor Rights Act.

In addition, the “Findings” point out that “efforts by Congress to reform the patent system without careful scrutiny create a serious risk of making it more costly and difficult for legitimate innovators to protect their patents from infringement, thereby weakening United States companies and the United States economy.”

The Stronger Patents Act of 2019 is much more complex that the simple one-page bill for the Inventor Rights Act.  Since I am not a lawyer, I do not have the legal expertise to analyze each of the specific clauses of the Act.  However, I will highlight certain sections that are particularly beneficial to inventor rights and attempt to correct specific problems created by the America Invents Act of 2011.

For example, in “SEC. 102. Inter partes review,” the proposed amendments would help reduce the invalidation of patents that is now occurring in PTAB cases. The bill states:

“(A) each challenged claim of a patent, or claim proposed in a motion to amend, shall be construed as the claim would be construed under section 282(b) in an action to invalidate a patent, including by construing each such claim in accordance with—

(i) the ordinary and customary meaning of the claim as understood by a person having ordinary skill in the art to which the claimed invention pertains; and

(ii) the prosecution history pertaining to the patent; and

(B) if a court has previously construed a challenged claim of a patent or a challenged claim term in a civil action to which the patent owner was a party, the Office shall consider that claim construction.”

The “Burden of proof.—Section 316(e) of title 35, United States Code, is amended to read as follows:

(1) PRESUMPTION OF VALIDITY.—The presumption of validity under section 282(a) shall apply to a previously issued claim that is challenged during an inter partes review under this chapter.

(2) BURDEN OF PROOF.—In an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability of a previously issued claim by clear and convincing evidence.”

One of the important amendments in Sec. 103. Post Grant Review, adds the following new subsection: “(d) Persons that may petition.—

(2) NECESSARY CONDITIONS.—A person may not file with the Office a petition to institute a post-grant review of a patent unless the person, or a real party in interest or privy of the person, demonstrates—

(A) a reasonable possibility of being—

(i) sued for infringement of the patent; or

(ii) charged with infringement under the patent; or

(B) a competitive harm related to the validity of the patent.”

Two of the amendments to SEC. 104. Composition of post-grant review and inter partes review panels, amend Section 6(c) of title 35, United States Code as follows:

“(1) IN GENERAL.—Each appeal, derivation proceeding, post-grant review, and inter partes review shall be heard by at least 3 members of the Patent Trial and Appeal Board, who shall be designated by the Director.

(2) INELIGIBILITY TO HEAR REVIEW.—A member of the Patent Trial and Appeal Board who participates in the decision to institute a post-grant review or an inter partes review of a patent shall be ineligible to hear the review.”

SEC. 105. Reexamination of patents amends the process of requesting a reexamination, while SEC. 106. Restoration of patents as property rights states is amended to provide injunctive relief stating:

“(b) Injunction.—Upon a finding by a court of infringement of a patent not proven invalid or unenforceable, the court shall presume that—

(1) further infringement of the patent would cause irreparable injury; and

(2) remedies available at law are inadequate to compensate for that injury.”

One of the problems that this Act addresses is the diversion of fees paid to the USPTO. Currently funds can be diverted to fund other agencies and cover other government expenses.  By this Act, SEC. 107. Elimination of USPTO fee diversion, clause regarding  (a) Funding.—Section 42 of title 35, United States Code, is amended as follows:

“(1) IN GENERAL.—Fees authorized in this title or any other Act to be charged or established by the Director shall be collected by the Director and shall be available to the Director until expended to carry out the activities of the Patent and Trademark Office.”

Item “(2) ESTABLISHMENT.—There is established in the Treasury a revolving fund to be known as the ‘United States Patent and Trademark Office Innovation Promotion Fund’.”

I particularly support the addition of SEC. 109. Assisting small businesses in the U.S. patent system, which states in part:

“(b) Small Business Administration report.—Not later than 1 year after the date of the enactment of this Act, the Small Business Administration, using existing resources, shall submit to the Committee on Small Business and Entrepreneurship of the Senate and the Committee on Small Business of the House of Representatives a report analyzing the impact of—

(1) patent ownership by small business concerns; and

(2) civil actions against small business concerns arising under title 35, United States Code, relating to patent infringement.

(c) Expansion of patent pilot program in certain district courts.—

(1) IN GENERAL.—Not later than 180 days after the date of the enactment of this Act, the Director of the Administrative Office of the United States Courts shall designate not fewer than 6 of the district courts of the United States that are participating in the patent cases pilot program established under section 1 of Public Law 111–349 (28 U.S.C. 137 note) for the purpose of expanding that program to address special issues raised in patent infringement suits against individuals or small business concerns.

(2) PROCEDURES FOR SMALL BUSINESSES.—Not later than 2 years after the date of the enactment of this Act, each district court designated under paragraph (1) shall develop procedures for expediting cases in which an individual or small business concern is accused of patent infringement.

While this bill addresses many of the problems caused for the America Invents Act of 2011, it does not address the most egregious provision of that Act; namely, changing our patent system from a “first to invent” to a “first to file” system.  This change has done the most damage to the individual inventor or small business entity.  While a provisional patent that is good for one year is relatively inexpensive, it is expensive and time consuming to pursue obtaining a non-provisional patent (3-5 years average).  Individual inventors have to be extremely cautious not to reveal information on their technology to prevent others from being first to file a patent for the technology they invented. 

Because of the complexity of this bill, I don’t think it has any greater chance of getting out of committee to be voted on by the whole of Congress this year than the Stronger patent Act of 2017. In fact, it may have less chance in the Democrat-controlled House with many more Republican than Democrat co-sponsors. In my opinion, I think the simple, one-page Inventor Rights Act has a much better chance of being brought to the House floor for a vote this year, and it will restore the rights of inventor to their patents.

Tags:, ,
Posted in Inellectual Property, Legislation, Patent Reform | No Comments »

Congress Must Protect Inventor Rights

Tuesday, April 2nd, 2019

Ever since the Leahy-Smith America Invents Act was passed by the 112th Congress in 2011, inventors have been discouraged to innovate by failing to secure the exclusive rights to their inventions through a patent.

It was bad enough that the Act changed patent law from a “first to invent” to “a first to file” for patents. It also created new and easier ways to invalidate an existing patent. Prior to this, to invalidate a patent required going to a judicial court with a jury and its various protections offered to the holder of a property right. The Act created procedures for an administrative court, the PTAB (Patent Trial and Appeals Board), that does not have the same protections.  PTAB has become a nightmare for inventors because it allows infringers to challenge the validity of patents in the PTAB. Some inventors have faced hundreds of thousands of dollars in legal expense and annihilation of their patent rights in unlimited third-party patent validity challenges. Serial petitions are common with valuable patents suffering a dozen or more attacks with costs typically being in excess of $350,000 for each PTAB defense.

Some inventors have endured up to a decade and spent tens of millions of dollars in legal expense to obtain a final judgment in court against infringers of their patent.  Even then, inventors have not been not compensated fairly or sufficiently to prevent infringement of their patent rights.

For example, in the Amazon documentary, Invalidated: The Shredding of the U.S. Patent System,  Josh Malone, the inventor of Bunch O Balloons, stated that his court case against Telebrands has cost over $20M.  It also documented how Dan Phillips, inventor of the Bionic Wrench, has been fighting Sears in court since 2012. A judge recently tossed out the jury verdict that held Sears liable because of their bankruptcy. I understand his appeal process will take several more years. (Note:  The full version is available now on Amazon and iTunes)

It’s not just China that is stealing our technology; it is U.S.-based corporations stealing technology from inventors right and left. Google, Apple, Amazon, Telebrands and other big corporations are getting away with profiting from pirated product. Why should large corporations be allowed to steal inventions and block access to the legal system for private inventors and small businesses? How can a small business survive if it takes a decade and millions of dollars in legal expense to protect intellectual property rights? 

According to Randy Landreneau, President of US Inventor, Inc., “Current policies and case law focus instead on patents as monetary assets held by corporations, injecting extremely high cost and risk to enforcing any single patent and making patent enforcement a ‘game of kings.’ Big corporations play the game by hiring dozens of lawyers, hoarding hundreds of patents, and pouring millions of dollars into litigation. Inventors cannot play that game and need a viable path to enforce their patent rights because PTAB rulings have canceled claims in 85% of issued patents. This is disheartening and discouraging to inventors and startups in our community.”

He added, “In the rare instance that the PTAB permits an inventor to keep his patent, there is no monetary recovery. This means the inventor has nothing to offer a law firm to take the case on a contingency basis. Pro bono defense is not available either. Inventors with valuable inventions have virtually no chance of keeping their patents in the PTAB.”

Last year three bills were introduced to Congress to protect inventors rights, but these bills never got out of committee for a vote on the House floor:

H.R.6557, Inventor Protection Act – “To amend title 35, United States Code, to restore patent rights to inventors, and for other purposes.” It was designed to restore patent protection for inventors by reversing a generation of laws and regulations. 

S.1390, Stronger Patents Act of 2017 – A bill to strengthen the position of the United States as the world’s leading innovator by amending title 35, United States Code, to protect the property rights of the inventors that grow the country’s economy.

H.R.6264 – Restoring America’s Leadership in Innovation Act of 2018 – A bill “to promote the leadership of the United States in global innovation by establishing a robust patent system that restores and protects the right of inventors to own and enforce private property rights in inventions and discoveries, and for other purposes.”


In order to foster the development of American manufacturing, Article I, Section 8, Clause 8 of the Constitution states that the Congress shall have the power “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

This enabled America to become the world leader in innovation, driven largely by this simple yet profound promise to inventors of the exclusive right to their discoveries. Without secure patent rights, inventors are starved of time and capital required to explore and develop new technologies. Today, the United States faces an escalating innovation crisis as we are forced to rely on outdated or imported technologies. Congress must act quickly to restore reliable patent rights for inventors.

As a mentor for San Diego’s CONNECT Springboard accelerator program for a few years and a director on the board of the San Diego Inventors Forum, I work with inventors designing new products or break-through technologies. Local inventors have the opportunity to compete in the San Diego Inventors Forum annual invention contest for best new consumer product or best new technology. All contestants must have applied for at least a provisional patent before they can participate. The future success of their product or technology is contingent upon their having a patent they can protect from infringement. Their ability to raise the financial investment they need to bring their product to the marketplace depends upon their being able to protect their patent.

Why is this important? Because most new technologies, especially break-through or disruptive technologies, come from individual inventors who either start a company or license their technology to companies that are more able to take them to the market. It is critical for inventors to be able to have some assurance that the rights to their patents will be reviewed in a consistent manner so that they will be able to secure investors and get their product into the marketplace.

Inventors must be equipped and motivated to apply their knowledge and creativity to solving problems.  In order to encourage inventors to share their discovery in exchange for a time-limited exclusive right, patents owned by the original inventor must be protected from the policies that target assets held and traded by non-inventors.

The United States must retake the lead in the next wave of technological innovation in areas like quantum computing, artificial intelligence, and medical diagnostics. Protection for discoveries is these fields is the absolute best way to promote progress in science and useful arts in our modern day.

US Inventors started off The Inventor’s Project in February by co-hosting an open house on Capitol Hill with the Congressional Inventions Caucus. A bipartisan group of Congressional members and staff attended. As a result, the Inventions Caucus will continue to grow and support the mission of educating Congress on the importance of innovation and small inventors and promote the Inventor Rights Resolution.

SUMMARY OF THE RESOLUTION

Our patent system is in crisis. Recent changes to patent laws and Supreme Court decisions have adversely affected inventors such that the requirement in Article I, Section 8 of the Constitution of “securing for limited times to inventors the exclusive right to their discoveries” is no longer achieved. It is nearly impossible to stop an infringer from using an invention without permission, or to make them to pay for the damage caused when they do. The undersigned inventors call on Congress to pass legislation to address these critical issues.

PTAB

The USPTO Must Stop Taking Back Patents from Inventors

INJUNCTIONS

Courts must prohibit the use of a patented invention without permission

PROFITS

Infringers must not profit by using an invention without permission

We must stop the America Invents Act from gradually destroying the American Patent System. We need to encourage our own Congressional Representative to co-sponsor or support an Inventor Rights Act to restore our rights as inventors in this Congress and reinvigorate the famous American innovation system.  Join us by signing the Inventor Rights Resolution

Tags:,
Posted in Inellectual Property, Legislation, Patent Reform | No Comments »

Innovative Products Featured at San Diego Inventors Forum Invention Contest

Tuesday, November 6th, 2018

This year’s invention contest held on October 11, 2018 by the San Diego Inventors Forum was incredible. I’ve been attending the contests for nine years, and this year, there were so many unique, useful inventions that it was very difficult to vote for my favorite invention.

The mission of the San Diego Inventors Forum is to help inventors to become entrepreneurs to create new companies and jobs here in San Diego. Monthly meetings have been held on the 2nd Thursday of each month. Meetings are held at AMN Healthcare, 12400 High Bluff Drive, San Diego, CA 92130.The next meeting will be this Thursday, November 8, 2018.  Networking starts at 6:30 pm, and the meeting starts at 7:00 pm.

At the monthly meetings, inventors meet other successful, local inventors in many different fields and learn how they developed their marketable products. The give inventors the opportunity to network with fellow creative people and get guidance and encouragement to take their first or next steps necessary to turn their ideas into a reality.

At the beginning of each meeting, new attendees are able to introduce themselves and ask financing, business, licensing, marketing, legal and engineering questions.  They can present their ideas to private individuals or for focus group review.  They also get to ask for particular resources they are looking for so their needs can be matched.  During the “Who Needs Who?” portion of the meeting, service providers can personally introduce their services.

Inventors can pay $100 for a one-year membership or pay $10 for each meeting they attend. During the course of the year, program topics cover everything subject you need to know from capturing the concept to getting investors to marketing your product.

The 2018 contestants were:

  • Andrew Bataller,  iPad Case  
  • Gerry Klassen, New Painting Tool
  • Phillip Perez for his Impact Tool shovel
  • Eric Robinson for his Green Launch orbital launch service
  • Michael Rodgers, The One-Handed Hamper
  • Dave Schmoyer, Pill or Parts Pal
  • Scott Swaaley, MAKESafe Power Tool Brake
  • Greg Wawrzyniak, Super Dooper Cord Looper
  • Chris Wzysoczanski, T-Shots – Disposable Reactive Target
  • Ruth Young-Loaeza for her hybrid sheet collection

  The First Prize of $1000 was won by Phillip Perez for his Impact Tool shovel. Second place was Ruth Young-Loaeza for her hybrid sheet collection, and third place was Eric Robinson for his Green Launch orbital launch service.

At the end of the meeting, SDIF Chairman Adrian Pelkus said “good-bye” to attendees after 13 years of leading the group.  He said, “I’ve been privileged to meet hundreds of my fellow inventors over the years and mentored so many here in San Diego.  I’ve been delighted to see many of your ideas get to market and honored to have assisted some of you along the way.  I am indeed sad to leave the local community. My plans are to accomplish a lot more for mankind and the environment by working on my large backlog of such projects.

I am especially proud to have play a part in bringing together over 40 inventor clubs around the county into the newly formed organization of inventor club leaders and to have been part of our first meeting with Andrei Iancu, the new director of the USPTO, and participate in meetings with Congressional Representatives in Washington, D. C. to educate them about how the America Invents Act and PTABs are hurting inventors.”

He added, “Thanks to my dear friends that helped me keep SDIF going all these years. Especial thanks to long-time supporters and fellow board members:  Leslie Wagner, David Waller, Sidney Wildesmith, Ben Gage, Judith Balian, Jennifer Joe, and Michele Nash-Hoff.”

Several of the above, including me, gave heartfelt testimonials to Adrian for his brilliant leadership of the group for these many years and wished him continued success with his own inventions.

Adrian announced that he was also dropping off the board of directors for U. S. Inventors and the United Inventors of America, but he urged everyone to continue to support patent reform.  He reminded everyone that we need strong intellectual property laws to defend their innovations.  He said, “The patent laws have become so weak that the independent inventor can no longer count on an issued patent to protect his right to profit from the labors of their mind. This strikes at the heart of what our founding fathers knew was the way to make the country great and made a foundation Article in the US constitution. We American Independent Inventors must stand and demand our rights be restored. Our nation needs us to create the new ideas and subsequent new jobs to continue to grow and thrive. The present patent laws must be revised to bring back the confidence a patent brings to both the inventor and investor.”

He encouraged everyone to see the movie Invalidated: The Shredding of the US Patent System, if they didn’t attend the SDIF viewing in August. The movie raises public awareness of the problems inventors are having with the patent system. (Note: You can also see the documentary on Amazon, free with Amazon Prime subscription, or $2 otherwise.)

In this session of Congress, there have been bills introduced to the House of Representatives and Senate to protect inventors’ patent rights, such as the STRONGER Patents Act 2017 (S. 1390), introduced by Senator Christopher A Coons  (D-DE), and the Inventor Protection Act  (H. R. 6557), sponsored by Rep. Dana Rohrabacher (R-CA). The most comprehensive BILL is the Restoring American Leadership in Innovation Act of 2018 (H.R. 6264)introduced by Congressman Thomas Massie (R-KY), an award-winning inventor and successful entrepreneur himself. It is co-sponsored by Congresswoman Marcy Kaptur (D-OH) and Congressman Dana Rohrabacher (R-CA). Its goal is to roll back some of the “worst parts” of the America Invents Act of 2011 and reverts patents back to first to invent, not the first inventor to file. All three bills are stuck in the Judiciary Committee.

I encourage you to contact your Congressional Representative to urge them to become a co-sponsor of one or all of the bills mentioned above. These bills must not languish in committee for the rest of this session.  We must pass legislation to restore our once great American patent system that was the envy of the world. Right now, inventors in China have more protection for their patents than inventors in the U.S.  We cannot let China become the innovation leader of the world.

.

Tags:, ,
Posted in Inellectual Property, Innovation, Legislation, Patent Reform, Technology | No Comments »

How Trade Policies Led to the Decline of American Manufacturing

Wednesday, January 24th, 2018

Many people think that the decline in American manufacturing started with American manufacturers sourcing manufacturing offshore in order to achieve lower labor costs, avoid regulations, and pay lower taxes. While the decline accelerated after China was granted the status of Permanent Normal Trade Relations (PNTR) and was allowed to join the World Trade Organization, it actually began decades earlier.

PNTR is a legal designation in the U. S. for free trade with a foreign nation and was called Most-Favored-Nation (MFN) until the name was changed in 1998. Thefreedictionary.com defines it as “A method of establishing equality of trading opportunity among states by guaranteeing that if one country is given better trade terms by another, then all other states must get the same terms.”

Thus, it is a method to prevent discriminatory treatment among members of an international trading organization. It provides trade equality among trading partners by ensuring that an importing country will not discriminate against another country’s goods in favor of those from a third. Once a country grants any type of concession to a third-party country, this concession must be given to all other countries.

At the end of World War II, the United States was the dominant manufacturing country of the world.  The American manufacturing base had enabled the U. S. to win the war with Germany and Japan by outproducing these two countries in implements of war from ships to tanks to weapons.

Over the next 20 years, American manufacturing became synonymous with quality and inventiveness.  Companies like Ford, General Motors, General Electric, Hewlett Packard, and Levi Straus became household names.

One of the main reasons why the United States became the dominant manufacturing country in the world was that for over 150 years, our government protected and fostered the growth of American industry through tariffs. The first tariff law passed by the Congress, was the Tariff of 1789.  The purpose was to generate revenue to fund the federal government, pay down the debt of the government, and also act as a protective barrier for domestic industries from imports from England and France in particular.

Tariffs played a key role in our country’s foreign trade policy and were the main source of revenue for the federal government from 1789 to 1914, the year after income taxes went into effect in 1913.  During this long period of time, tariffs averaged about 20% on foreign imports, and at times, tariff revenue approached 95% of federal revenue.

During the Truman Administration (1945-52), foreign trade policies began to focus on liberalizing trade through moving from protective tariffs to free trade. The instructions given from Congress to the U. S. Trade Representative were:  Remove barriers to trade. A key concept of the liberalization of trade was reciprocal tariffs and low tariff rates. Two of the main reasons for this change in trade policy were to help Europe and Japan rebuild after the war and engender closer relations with the U. S. as a deterrent to the spread of communism. This ended the use of tariffs as a significant source of Federal revenue and began the increase of corporate and personal income taxes.

In 1948, the General Agreement on Tariffs and Trade (GATT) treaty “was signed by 23 nations in Geneva on October 30, 1947, and took effect on January 1, 1948. It remained in effect until the signature by 123 nations in Marrakesh on April 14, 1994, of the Uruguay Round Agreements, which established the World Trade Organization (WTO) on January 1, 1995. The WTO is in some ways a successor to GATT, and the original GATT text (GATT 1947) is still in effect under the WTO framework, subject to the modifications of GATT 1994. GATT, and its successor WTO, have successfully reduced tariffs. The average tariff levels for the major GATT participants were about 22% in 1947, but were 5% after the Uruguay Round in 1999.”

GATT requires that exports of all countries that are party to the treaty should be treated alike by other countries that are party to the treaty, and each member is granted Most Favored Nation status. Since GATT was first signed, MFN (now PNTR) status has been granted to about 180 countries. Only a handful of communist countries have been denied MFN status.

For over 20 years, American manufacturers experienced little competition from foreign exports, but in the 1970’s Japanese and German products began to significantly penetrate the U. S. market. Due to the focus on demilitarization and decentralization in the U. S.- directed rebuilding of the Japanese and German economies, producing consumers goods was the focus.

Japan focused on audio/stereo products, cameras, pianos/keyboards, and TVs, as well as low cost automobiles and motorcycles. Companies such as Panasonic, Sony, Sanyo, Yamaha, Toyota, Mitsubishi, and Datsun (now Nissan) became the new household names in America. Mitsubishi had produced aircraft in Japan before and during WWII, including the infamous fighter plane, the Zero. Nakajima was another aircraft manufacturer that was reformed as Fuji Heavy Industries after the war and began to produce the Subaru vehicles.

Germany started focusing on automobiles such as the Volkswagen “Bug” and bus, BMWs, and then Mercedes vehicles.  They expanded into manufacturing equipment, machine tools, and scientific and laboratory instruments and equipment. Volkswagen was instrumental in Germany’s industrial recovery as their plants have escaped damage from bombing. The Volkswagen plant had been offered to England after the war as reparations, but England turned it down. Without Volkswagen being able to start manufacturing autos in 1946 after the war, the reindustrialization of Germany would have been delayed considerably.

It didn’t take long for the increased imports from Japan and Germanys to take their toll on the U. S. trade balance.  As the below chart shows, the last year we had a positive trade balance in goods was 1975:

Source:  Coalition for a Prosperous America

As a developing country, imports from China didn’t become a significant factor until the beginning of the 21st Century. The development and growth of China’s manufacturing industry was essentially funded through American companies setting up manufacturing plants in China starting in the 1990s and transferring manufacturing to Chinese contract manufacturers. Foxconn, Apple’s contract manufacturer for the iPhone and iPad, is the only Chinese manufacturer to become well known in the U.S. While Foxconn has plants in mainland China, it is actually owned by Hon Hai Precision Industry Co., Ltd., a Taiwanese multinational electronics contract manufacturing company headquartered in Tucheng, New Taipei, Taiwan.

“In article titled “The Death of American Manufacturing,” published in the February 2006 Trumpet Print Edition, Robert Morley wrote: “Manufacturing loss is occurring because of globalization and outsourcing. Globalization is the increased mobility of goods, services, labor, technology and capital throughout the world; outsourcing is the performance of a production activity in another country that was previously done by a domestic firm or plant.

At the dawn of globalization, the elimination of trade barriers opened up access to foreign markets for American manufacturers in return for building factories abroad. In due course, more and more manufacturers set up shop overseas, producing goods to be sold to Americans.”

According to Yashen Huang author of Capitalism with Chinese Characteristics, China’s “indigenous private sector is conspicuously small.” The majority of urban companies are still State-Owned Enterprises (SOE’s). Other companies are privately owned, but the owner(s) are government employees, so they are still essentially government controlled.

China had lost its status as MFN through suspension in 1951 after the Communists took over control of the government in 1949. It was “restored in 1980 and was continued in effect through subsequent annual Presidential extensions. Following the massacre of pro-democracy demonstrators in Tiananmen Square in 1989, the annual renewal of China’s MFN status became a source of considerable debate in the Congress…Congress agreed to permanent normal trade relations (PNTR) status in P.L. 106-286, President Clinton signed into law on October 10, 2000.  PNTR paved the way for China’s accession to the WTO in December 2000…;”

  1. S. trade with China began to be measured in 1985 by the U. S. Census Bureau, and we had only a small deficit of $6 million. The trade deficit grew to $83.8 billion by the year 2000. However, after China was granted PNTR and became a member of the WTO, the trade deficit started to escalate. It doubled to $162.3 in 2002 and doubled again by 2014 to $344.8 billion. The 2016 trade deficit was $347 billion, down from $367 billion in 2015.  In 2016, China represented 38% of our overall trade deficit of $654.5 billion.

As a result of the escalated trade deficits from 2001 to 2010, the U.S. lost 5.8 million manufacturing jobs and 57,000 manufacturing firms closed. Where do all the jobs go?  Well, the U.S. Department of Commerce shows that “U.S. multinational corporations… cut their work forces in the U.S. by 2.9 million during the 2000s while increasing employment overseas by 2.4 million.” So, we lost about half to offshoring of manufacturing to China and other parts of Asia.

The real story is even worse than this data. In an article by Terence P. Jeffrey published on www.CBSNews.com on May 12, 2015, “The number of jobs in manufacturing has declined by 7,231,000–or 37 percent–since employment in manufacturing peaked in the United States in 1979, according to data published by the Bureau of Labor Statistics.

As a result of more and more American manufacturers setting up plants in China, our domestic supply chain was weakened. From 2001 to 2010:  The U. S. textile industry lost 63% of jobs since 2001. Communication equipment industry lost 47% of its jobs. Motor vehicles and parts industry lost 43% of its jobs. U. S. machine tool industry consumption fell 78% in 2008 and another 60% in 2009. U. S. printed circuit board industry has shrunk by 74% since 2000.  We even lost whole industries, such as:  fabless chips, compact fluorescent lighting, LCDs for monitors, TVs and handheld devices like mobile phones displays, Lithium ion, lithium polymer and NiMH batteries, low-end servers, hard-disk drives, and many others.

After over 40 years of trade policies that foster offshoring, it’s time to have a new goal for trade policies.  Instead of “remove barriers to trade,” we need to have a goal of “eliminating the trade deficit.”  The Coalition for a Prosperous America has recommended this goal for years, and on March, Representatives Brooks and Lipinski introduced House Congressional Resolution 37 for Congress to set a national goal to eliminate the trade deficit.  It is only one sentence long:  “Expressing the sense of Congress that Congress and the President should prioritize the reduction and elimination, over a reasonable period of time, of the overall trade deficit of the United States.”

As soon as the tax reform bill is signed by President Trump, Congress needs to pass this Resolution before the end of the year, so we can start 2018 on a new track.

Tags:, , , ,
Posted in Economy, Jobs, Manufacturing, Trade Policy | No Comments »

Threat to the American Patent System and Inventors’ Rights

Tuesday, October 10th, 2017

On August 11, 2017, a group of inventors went to the United States Patent Office to make a statement and give testimony against new patent laws that promote the theft of our intellectual property instead of protecting it. Afterward, the inventors demonstrated in front of the Patent Office, and several burned their patents.  Michael Caputo, Managing Director of Zeppelin Communications, stated, “Patents have become worthless.”  The C-Span video of the protest can be viewed here.

Why is the American patent system and inventors’ rights being threatened?  In September 2011, Congress passed and the president signed the Leahy-Smith America Invents Act (AIA) that changed the U.S. patent system to the party “first to file” instead of the “first to invent to bring the U.S. in line with other countries who adopted first to file patent systems years ago, supposedly to simplify the patent process for companies that file applications in multiple countries. Its central provisions went into effect on September 16, 2012 and on March 16, 2013.

At the time, supporters said it would improve patent quality by creating a new process for reviewing patents after they have been issued and allow third parties to provide information on other parties’ applications.

Opponents argued that there was no reason to change the U.S. system, and inventors and small businesses complained that switching to a “first to file” system would give large companies an advantage and hurt individual inventors.

To find out what has happened to the American Patent System and Inventors’ Rights since 2011, I requested information from Randy Landreneau, Founder Independent Inventors of America, Paul Morinville, Founder US Inventor, and Adrian Pelkus, President of San Diego Inventors Forum.

Randy Landreneau: “America has been the most innovative country on earth from the start. A key reason for this is the revolutionary patent system created by our Founders that provided intellectual property rights to any man or woman, rich or poor. The rest of the world had systems that were for the aristocracy and those favored by the powerful…America maintained a superior system in protecting the intellectual property rights of inventors until …the passage of The America Invents Act in 2011…While it is hard to quantify the effect of changing to First-to-File, this change does place a disadvantage on the independent inventor relative to the large corporation. But another change has had very measurable negative effects.

The America Invents Act created new and easier ways to invalidate an existing patent. Prior to this, to invalidate a patent required going to a judicial court with its various protections offered to the holder of a property right. The America Invents Act created procedures for an administrative court, the PTAB (Patent Trial and Appeals Board), that does not have the same protections. Approximately 70% of the patents that companies try to invalidate using the PTAB get invalidated.

There are efforts underway to get the PTAB procedures ruled unconstitutional or at least reigned in and similar to the procedures of a Judicial court. Certainly, the PTAB procedures are doing great harm to American innovation.”

A more recent bill was even worse – The Innovation Act (H.R. 9), which passed the House in December of 2013. But, the Senate version (PATENT Act, S.1137) was fought effectively and did not pass the Senate.  However, these bills were reintroduced in subsequent sessions of Congress until the summer of 2016, when it became clear these bills were not moving forward.

Hundreds of millions of dollars have been spent pushing a false narrative that nefarious entities called “patent trolls” are using frivolous litigation to make companies pay them unfairly. More often, in actuality, an inventor has a patent that is being infringed by large corporation that he cannot afford to fight in court. So, he sells his patent to a company that does have the wherewithal to fight in court (a non-practicing entity or NPE), and the infringer loses because he is guilty.

One element of the Innovation Act was ‘Loser Pays.’ If an inventor sues a corporation for patent infringement and does not win, he could be liable for the infringer’s legal costs. This could be more than $5,000,000. This liability would also be a personal liability to an investor with an interest in the patent (piercing the corporate veil and placing personal assets at risk).

There are still efforts underway by multinational corporations to get a similar bill passed in the future. Currently, there is the threat that something similar to the Innovation Act will come back.

But, the more current threat is how the courts have been moving toward not considering a patent as the property right that it has been for 200 years. A three-judge panel actually ruled that a patent is a public right. If the courts start to widely regard patents as not being property rights, as some feel they are already doing, this will greatly harm American innovation. If a court does not respect the rights of an inventor, court procedures end up being applied in ways that work against him. Recently, there have been numerous cases where judges ruled that a patent was too abstract, and the inventor was not given the normal due process of providing witnesses, testimony, or otherwise fighting to retain his intellectual property.

There is an effort underway to get the U. S. Supreme Court to take up this issue and rule in the favor of patents being property rights. If this effort succeeds, we will have, at least temporarily, stopped the erosion of inventor rights that are so important to this great nation. I and others are involved in fighting to maintain the rights of inventors, and to expand them where they have been reduced in recent years.”

Paul Morinville wrote his opinion in a paper titled, “We’ve Been Googled,” when H.R. 9 looked like it would pass in which he stated that “H.R.9 creates a Patent System without Inventors. Over the last decade, Google and others have spent hundreds of millions of dollars to lobby Congress and produce an ingenious ‘patent troll’ narrative, which distorts the reality of invention in America. In this decade long war on inventors, H.R.9 is the Google lobby’s latest accomplishment. Not surprisingly, H.R.9 is not directed to fixing the fictional problem of ‘patent trolls.’ Instead, H.R.9 mounts its considerable damage on the patent system in general, specifically harming inventors and small patent-based businesses.”

Morinville explained, “If this bill becomes law, inventors will not be able to enforce their patent rights against moneyed corporations like Google. However, moneyed corporations like Google will still be able to enforce their patents against small businesses with even more devastating consequences to those small businesses. Patent litigation is about risk and cost versus reward. If risk or cost is too high in relation to reward, a patent cannot be enforced.”

Adrian Pelkus: “I’m an inventor named on 14 issued patents and have made my life as a serial entrepreneur doing new product development for over 30 years. Along the way I have created many startups and raised millions of dollars on the back of IP. I have coached inventors and startups every Thursday since 1985 and have run one of the larger inventor clubs in the U. S. since 2005, the San Diego Inventors Forum (www.sdinventors.org.)

He said, “What is most absurd about the America Invents Act to American inventors is the fact that with PTABs we can lose our ISSUED PATENTS… A company challenging a patent wins 90% of the time. The cost to defend is so expensive that inventors give up and are unable to afford achieving their dreams.”

Now, issued patents guaranteed as a Property Right in the constitution are being challenged. A business that infringes would just pay a royalty to the inventor if found guilty hence ‘efficient infringement.’ The biggest incentives to create new ideas and businesses are weakened because the guarantee that an issued patent will protect your IP interests and investments is gone. Patents can now become liabilities. The proposed bills to penalize an inventor with loser pays and threatens to make their investors pay was beyond absurd; it would be economic and intellectual suicide. The end of our rights and hopes as inventors is in plain sight.”

Adrian became connected to Randy Landreneau and Paul Morinville when they reached out to other inventor groups, and he was invited to join the fly-in to Washington, D.C. to fight H.R.9 in April 2015. After that fly-in to Washington, D.C. he became focused on fighting against bills that would destroy our patent system and joined the board of US Inventor in August 2016. He was already on the board of the United Inventors Association and had been working to unite the inventor clubs and groups nationwide.

In January, 2017, the Policy Panel of US Inventors authored a USI Policy Section 101 paper and in February, it was determined that they had to “get as many inventors as possible calling Congress and writing about the threat of a new bill.” 

Adrian said, “I sent out my first call to action to all the clubs and sent a second one the next week and every week since. I discussed the plan to unite the groups and clubs with Stephen Key of Invent Right and Louis Foreman of Edison Nation, who asked how they could help. With their help, we have united 24 inventor groups nationwide to fight the threat to our American patent system and protect inventors’ rights.

I established a bimonthly phone conference with the heads of the biggest organizations in the inventor community, inventor clubs, and individual inventors in an effort to create a coalition that would support a petition that reflects our concerns about and suggestions to change the America Invents Act. This coalition is a historic cooperation that will unite the inventor community and bring a voice to Washington, D.C. they need to hear!

We now have a petition that we believe will help make America great again by making it a great place for American Inventors again. This petition represents concerned citizens, inventors, entrepreneurs, and businesses from coast to coast. I’m proud to contribute my efforts to help America by restoring its patent system.” 

I agree with Landreneau, Morinville, and Pelkus that the America Invents Act is gradually destroying the American Patent System. If a bill similar to H. R. 9 passes Congress, it would the final nail in its coffin.

Why is this important? Because most new technologies, especially break-through or disruptive technologies, come from individual inventors who either start a company or license their technology to companies that are more able to take them to the market.

As a mentor for San Diego’s CONNECT Springboard accelerator program and fellow director on the board of the San Diego Inventors Forum with Adrian Pelkus, I work with inventors designing new products or break-through technologies. Local inventors have the opportunity to compete in the San Diego Inventors Forum annual invention contest for best new consumer product or best new technology. All contestants must have applied for at least a Provisional patent before they can participate. The future success of their product or technology is contingent upon their having a patent they can protect from infringement. Their ability to raise the financial investment they need to bring their product to the marketplace depends upon their being able to protect their patent. No investor will take the risk of investing in a product or technology that cannot be protected.

Please join the American inventors coalition formed by Adrian Pelkus, Randy Landreneau, Paul Morinville, and others to save American inventors by signing the petition at http://www.usinventor.org/petition.

 

Tags:, ,
Posted in Inellectual Property, Innovation, Patent Reform | No Comments »

Patented Technology is Key to RoadLoK’s Success

Tuesday, July 14th, 2015

There is no lack of ingenuity and innovation in the U. S. today. Each year, thousands of new products are invented, and but most are never produced. Knowing how to use technology to create a product doesn’t mean you know how to manufacture it and get it to market. Obtaining a patent is a key factor in achieving success, but you also need to recognize the limitation of your knowledge and expertise and utilize experts in fields you need, such as product design/engineering, patent/licensing, material/process selection for prototyping and production manufacturing, and marketing.

I recently had the opportunity to interview Adam Xavier, founder and CEO of New Hampton Technologies dba RoadLoK Security, who is an example of an inventor and entrepreneur who successfully got his product patented and into the marketplace.

His company distributes products worldwide under the brand name RoadLoK. The company specializes in the design and production of model-specific vehicle locking systems for motorcycles, scooters and off-road power sports vehicles. The RoadLoK is the only locking system that safely and effectively prevents rollaway theft. The system is designed to be permanently mounted on a motorcycle, thereby eliminating the need for storing the lock while riding. The system’s permanent mounting eliminates all momentum, making it virtually impossible to damage calipers and fenders. This is accomplished while also protecting the rider, should the rider forget to unlock the system before attempting to ride off.

I asked how he got the idea for his product, and Adam said, “My twin brother Eric and I were sitting in the outside seating area of a bar the summer after we graduated from college and saw a man forget to take off his lock and tip over his motorcycle. We started talking about a better idea for a lock and drew a sketch on a napkin. The next day, we searched to see if there was a lock similar to our idea, but didn’t find one. We took our sketch to a CAD designer to turn our idea into a design that could be manufactured. A friend from college, Matt Tomosivitch, who had become a machinist, made our first prototype. Matt is now the chief engineer of our company.

Continuing, Adam said, “We made a video of our lock that showed how it worked. We wrote a comprehensive 60-page business plan. We filed for a provisional patent in July 2005. Then, we sent our video to local investor network group in New York and were kicked down to the group in our area, Orange County. The director contacted us, and we gave our pitch in December 2005. We got our first investment check from the Orange County Capital Development Group on February 16, 2006. This investment was enough to get us to our first trade show in March, the International Motorcycle Show in Atlanta, GA.

Adam said that they set up their first office in Middleton, NY and later moved to Newburgh, NY. They spent two years of R&D to finalize the design and raised another $3 million over three years to get into full production. They used 3D printing to make new prototypes as they improved the design. They received a lot of mentoring and hands-on help from their angel investors.

Their first utility patent was granted on December 23, 2008 after their third attempt at an “office action” at the patent office. They got their second patent in 2010.

When they started the company, Adam said that they wanted to keep everything made in the U. S. They used www.thomasnet.com to find all of their vendors. They have seven major vendors for all of the different parts of their product, and they are located in Illinois, North Carolina, New York, and Texas. Their mission is to produce a high quality product, so all of their vendors are ISO 9001-2008 certified to meet the exacting requirements of their customers.

They later moved to California because they needed to have face-to-face communication with their two biggest customers, one located in Murrieta and one in Corona, CA. California also has the biggest population of motorcycle riders.

The executive offices are now located in Santa Monica, CA, but their product is manufactured in Salisbury, North Carolina and assembled to order at their plant in Torrance, CA. Since the RoadLoK is produced to order, production is not automated and does not utilize any robots. They are looking at doing more vertical integration of parts manufacturing. Their screw-machining vendor in Chicago makes two parts, and the patented design of their locking pin has 5 components made by three different vendors.

They started to implement lean principles in 2009 and changed one component from a square rod to an extrusion, which reduced material waste by 62%. They have been working towards reducing other material waste and time since then.

Their original plan was to focus on after-market sales of the product for the first two years and then license the product to motorcycle manufacturers on a non-exclusive basis similar to how the airbag is licensed to car manufacturers. Now in its 9th year of operations, RoadLoK’s largest customers are KTM Sportmotorcycle and Ducati with others to be announced within the next year.

When asked how his company has been impacted by competition from offshore in Asia, Adam said, “We don’t have any direct competitors offshore, just cheaper substitute locking mechanisms. We are selling in Australia, Japan, and China and recently selected a company to partner with to produce parts in China to sell to the Chinese market. We have started the process to file a patent in China. We need to have manufacturing plant in China to sell to the Chinese market because of the high import duties. Brazil is another county we are looking at to set up a manufacturing plant because of the high import duties. There would be a win/win benefit of jobs to the community and provide a much-needed product for the people.”

I naturally asked how the recession affected his company when they were only a little over two years old when it started in late 2008. Adam said that they were spending about 85% of their time setting up a distributor network and program to sell to dealers utilizing direct sales persons. But, motorcycles are purchased with discretionary income, which dried up during the recession as people lost their jobs. So, their direct sales to motorcycle riders through distributors/dealers dropped drastically. To survive and grow, Adam said, “We had to reduce our direct sales staff and reduce our travel costs. We changed our sales model to online retail sales and direct sales to motorcycle manufacturers. This model has helped us grow and succeed. We have also started R&D on the next generation of vehicle immobilizers to other two or more wheeled vehicles that do not have a transmission.”

Adam had read my article on “Which Patent Reform Bill Doesn’t Destroy the American Patent System?” and said, “Our having a patent pending was key to getting investors and having a patented product has been the key ingredient to our success as a company. Investors want the protection of a patent, but they wouldn’t take the risk of being made personally liable. There is no way that we could have gotten investors if our investors had been personally liable for defending our patent in a patent infringement lawsuit.” Note: Adam was referring to the “Loser Pay’s provision of H. R. 9 and S.1137.

If we want to have more successful companies manufacturing products in America, then we need to protect our American Patent System and stop H.R. 9 and S. 1137 from being passed. Instead, we need to pass the Strong Patents Act of 2015, S. 632, which will “Enact balanced reforms to reduce abuse while sustaining American leadership in innovation.”

 

Tags:, , , , ,
Posted in Innovation, Manufacturing, Patent Reform, Technology | No Comments »

« Older Entries