A Senate committee approved a bipartisan bill on November 21 to help small businesses protect their patents from predatory, giant corporations. With the bill now up for a floor vote, lawmakers should do everything they can to pass it promptly.
The bill in question is the Promoting and Respecting Economically Vital American Innovation Leadership Act, or the PREVAIL Act. It seeks to reform the Patent Trial and Appeal Board, or PTAB, an agency for resolving patent validity disputes, which certain large companies have weaponized against innovative small businesses.
The PTAB was created by the 2011 America Invents Act as an alternative to the court system for challenging the validity of issued patents. Legislators reasoned that the PTAB would be able to decide such challenges more efficiently and cost-effectively than the court system, improving the courts for small companies and independent entrepreneurs, among others.
Their intentions were good: Patents, which grant companies a temporary and exclusive right to the inventions they create, are crucial to fostering innovation. An adjudicatory board that made defending patents quicker, cheaper and fairer would thus boost our innovation economy, at least in theory.
In practice, however, the PTAB has instead done tremendous damage to small businesses. Incentives to invest in their innovations have declined, as have the investments.
Since its inception, patent challenges at the PTAB have been overwhelmingly initiated by large companies, with Big Tech companies comprising nearly all of the board’s most frequent petitioners. Large companies can evade accountability for stealing patents by deluging their victims with PTAB petitions, forcing smaller companies to expend their limited financial resources defending their patents in duplicate proceedings in two tribunals.
As a former federal Circuit Court of Appeals judge, I know this is a far cry from what the PTAB was intended to be. The hobbling of small businesses poses a grave threat to our broader economy.
Small businesses create four of every 10 new technologies and two of every three new jobs. They are responsible for nearly half of America’s economic output. As it becomes more difficult for small companies to defend their intellectual property, investment in startups falters, job creation slows and fewer inventions reach the marketplace.
After 12 years of bad experiences, we need reform now. Fortunately, the PREVAIL Act offers a sound solution.
PREVAIL would eliminate the significant discrepancies between the PTAB and the court system that make the PTAB susceptible to abuse. It would prohibit petitioners from filing multiple and repeated challenges to the same patent. It would also prevent companies from filing petitions that duplicate existing court lawsuits. These changes would limit the ability of large companies to use the board as a tool for harassment.
The bill would also align the PTAB’s standard of proof with that of the courts. Currently, the standard at the PTAB is lower than in court, making duplicate proceedings especially unfair to patent owners, who have already had to prove their entitlement to a patent once to the patent office, often costing thousands of dollars. If the PTAB did not invalidate patents so reliably, Big Tech and other corporations would likely be less eager to appropriate others’ patented inventions, taking the risk that they will never be held accountable.
Critics of PREVAIL have claimed that PTAB reform is no longer necessary due to incremental rule changes the patent office has adopted over the years.
I disagree. This year, the PTAB has invalidated all challenged patent claims in 70 percent of its final decisions, its most lopsided invalidation rate in nearly a decade. And those most familiar with the PTAB —-including former congressman Lamar Smith, R-Texas, a co-author of the law that created it — have continued to speak out about the pressing need for change.
Small businesses help make America’s economy tick. They are responsible for most technological breakthroughs that allow us to protect our national security and compete with global rivals.
Passing the PREVAIL Act would help inventors and small businesses defend their rights — and show that, even after a divisive election, Democrats and Republicans can come together to make the system work better for ordinary Americans.
