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Wednesday, January 19, 2022

Millions of inventors at stake fighting the US patent system

The US patent law system once rewarded inventors for the telephone, the light bulb, and the airplane. But now some inventors say the same system has backfired on them.

The problems started with the Inventions of America Act of 2011 (AIA), they said. Under this law, it is cheaper to sue an inventor in a patent court to invalidate an inventor’s patent than to pay an inventor to use his work.

If an inventor creates a valuable new product or technology, this law encourages companies to steal his idea and sue the patent office to have the patent cancelled.

Emmy Award-winning inventor Glenn Sanders said, “It’s become a tool for big businesses to revoke small companies’ patents so they can use their inventions without paying them to do it.”

For inventors, who often spend years and tens of thousands of dollars to obtain a patent, the consequences of this action have been devastating, according to inventor David Furry.

“It was a $60,000 game,” Furry said, referring to his patent. “If it didn’t work, it didn’t cost anything.”

Inventors protest in front of the Chamber of Patent Review and Review on August 11, 2017. (Courtesy of US Inventor)

Furry knows the patent industry from the inside. He created a camera designed to detect tiny low temperature gas leaks.

To defend his idea, he spent about two years obtaining a patent. Most patents cost between $7,000 and $20,000.

“We have a very, very tough examiner,” Furry said. “It’s kind of lucky.”

But there are good reasons for inventors to endure the patenting process. Patents give inventors a legal monopoly on their inventions for a limited time. During this time, no one can make their invention without paying them. If the invention is useful, a patent can earn the inventor millions.

Gas leak detection is a multi-million dollar industry and no visual device on the market has been able to detect small gas leaks that Furry’s camera could. He was ready to reap the fruits of his labor. Exxon Mobile has used his camera to detect gas leaks around the world.

Then FLIR, the company that Furry had previously worked with, began making his camera without paying him to do so. When Furry sued them for patent infringement, FLIR responded by stating in the Patent Review and Review Board (PTAB) that the camera was not a breakthrough and did not merit a patent.

PTAB was created through AIA. It evaluates patents and decides if there were good reasons for granting them.

Among the inventors, PTAB has the nickname “patent killer”.

Approximately 84 percent of the time, PTAB decides to invalidate patents. By comparison, civil lawsuits favor the person filing the claim only 56% of the time.

The Appeal Commission disputes these figures. His own statistics show that inventors have a win rate of about 59 percent.

The Epoch Times Photos
Josh Malone’s invention, Bunch-o-Balloons, allows someone to fill 100 water balloons at once (courtesy of US inventor)

But the reality is quite different, according to Josh Malone, a colleague at US Inventor.

According to him, PTAB counts won and lost lawsuits, while US Inventor counts actually lost patents. If an inventor contests his patent three times and loses the third time, it doesn’t matter if he won the first two.

US Inventor also treats the settlement as a loss to patent holders, as patent holders forfeit their share of the profits.

According to Paul Morenville, founder of US Inventor, inventors sometimes face an ongoing barrage of lawsuits.

In one case, Zond held 10 patents but faced 120 different invalidation petitions, Morenville said. He ended up losing them all due to this legal bombardment.

“We believe 10 patents are 100% invalid,” Morenville said. “But PTAB believes less than 10 percent are invalid.”

According to patent attorney James Young, it’s cheaper to use PTAB to invalidate a patent than to pay an inventor for patent infringement.

In addition, patent holders cannot file infringement counterclaims with PTAB and are only able to defend themselves.

When Furry’s case went to patent court, his patent was invalidated for a shocking reason. The court said its patent idea was not original because there was already a camera designed to detect jet engine exhaust, which often reaches thousands of degrees.

Furry said it didn’t make sense.

“They compared the leaks I find to about half the gas coming out of a lighter to the gas coming out of an F-15 jet engine. They said they were the same,” he said.

As FLIR continued to infringe on his patent, Furry saw his own sales drop. Furry said the loss of the patent likely cost him $48 million.

“It hurts, but I’m not going to stop there,” Furry said. “If the Lord intended for this to happen, it would happen.”

The Epoch Times Photos
Glenn Sanders (center) and Howard Stark (right) of Zaxcom pose with their Emmy Award at the US Patent Office in August 2019 (Courtesy of American Inventor)

Many inventors have stories similar to Furry’s.

Glenn Sanders invented a small microphone that both recorded and transmitted sound. For actors and film producers, this device was a welcome solution to wireless connection problems.

For his work, Sanders’ Zaxcom received an Engineering Emmy Award for Wireless Innovation.

“We have what is effectively the Nobel Prize in the industry, which is the Academy Award,” Sanders said.

But competitor Lectrosonics used the technology in violation of Sanders’ patent. When Zaxcom filed a lawsuit in response, Lectrosonics asked PTAB to revoke Sanders’ patent.

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According to Sanders, PTAB ignored the reward Zaxcom received for innovation and terminated the patent. He compared his device to a previous invention, a large backpack that performed a similar function but was too large for the actor.

Sanders’ patent was specifically for small hidden devices.

“We were given a patent that basically said that the patent was only valid if the transmitter was easy to hide, hidden and to the point where an actor could use it,” he said.

Creating a transmitter the size of a pack of cigarettes required new technology, Sanders said.

“It was a lot of electronics, a lot of software, a lot of miniaturization,” he said. “There are a number of things that needed to be worked out to make it work. It’s a big deal.”

Another inventor, Rod Pinkston, has created a new wild pig trap that uses cameras and mobile phone activation to allow hunters to capture an entire herd of pigs at once.

A third inventor, Roy Smith, created a new type of children’s shoe with a light that glows under their fabric rather than the hard plastic.

Each of these inventors found competitors copying their patent without paying them, sued competitors for infringement, and watched competitors complain to PTAB rather than pay for patent infringement.

The Epoch Times Photos
Phone-controlled feral pig trap by Rod Pinkston, 2019. (Jager Pro)

Google, Microsoft, Apple, and other big tech companies often infringe patents and then use PTAB to avoid paying for intellectual property theft, Malone said. Apple alone has about 700 patent disputes to its name.

“They get good rates from their attorneys because they handle that much volume,” Malone said. “So for about $100,000 you can get a patent that could be worth tens of millions of dollars.”

China is also participating in the action. Spy drone maker Shenzhen DJI, Chinese social media company TikTok and Chinese telephone company Huawei have used PTAB to destroy patents through lawsuits.

The big tech companies that kill most patents also have a lot of former PTAB employees, Malone said, adding that big tech attorneys often become PTAB judges and then rule in favor of their former employers.

“Their lawyers applied for jobs at PTAB and then became high-ranking judges and set policy,” he said. “One of them ruled in favor of Apple in 23 out of 24 cases. And then they come back and work at Apple for huge salaries and bonuses.”

The Biden administration has now appointed lawyer Cathy Vidal as director of PTAB. Vidal has worked for Apple, Microsoft, and other companies that have filed a total of 2,381 PTAB patent revocation claims.

Right now, she is an official attorney in 14 pending PTAB cases on behalf of companies trying to revoke patents.

In one case, the United States Patent Office (USPTO) informed federal judge Gary Taranto that it was electing administrative patent judges with the intention of ensuring that the decision desired by the director of the patent office was reached.

“The director is trying to ensure that her political position is respected by the boards,” a spokesman for the USPTO told the judge.

The inventors also say that PTAB judges have a financial interest in judging against them. Studies have shown that PTAB judges make more money when they judge against inventors.

One analysis found that judges receive an average award of $255 per decision to grant institution, but only an average of $208 per decision to deny institution. They also received an average of $314 for canceling patent claims and an average of $2 for maintaining all patent claims.

However, federal district courts have dismissed PTAB’s bias claims.

In response to these criticisms, a spokesman for PTAB stated that the bonus structure mentioned in this study no longer exists and that administrative patent judges have never received bonuses based on the outcome of the decision.

“Our Administrative Patent Judges are technical experts in various areas of patent law who work tirelessly to uphold America’s Invention Act standards set by Congress and maintain our world-class innovation system,” he said.

But inventors no longer seem to believe that their patents will be protected.

Furry, who owned millions of dollars of the patent before the PTAB invalidated it, said he now advises inventors to spend money on advertising rather than patents.

“What I would do is try to keep as many secrets as possible to myself and try to make as much money as possible from it before a competitor appears,” he said. “It’s not worth it”.

Jackson Elliott

To follow

Jackson Elliot writes a story about small town America for The Epoch Times. He learned to write and seek truth at Northwestern University. He believes that the most important things are small and that, as Dostoevsky says, everyone is responsible for everyone and everything. When he is not writing, he enjoys running, reading and spending time with friends. Contact Jackson at [email protected]

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