Public comments responding to U.S. Patent and Trademark Office proposals have been posted on regulations.gov on a rolling basis. This analysis has been updated from the original version – July 23, 2023 – to reflect comments posted on regulations.gov as of August 22, 2023.
Before Congress in April, Director Vidal testified that the U.S. Patent and Trademark Office’s (USPTO) recent Advance Notice of Proposed Rulemaking (ANPRM) on the Patent Trial and Appeal Board “contains a myriad of options, and we want to hear from stakeholders not only on how those provisions might affect them, how we should evolve them, but whether we even have the authority to move forward with them.” And boy, did the public respond. The Office heard from more than 14,500 comments, the most on record for any administrative patent-related action in the USPTO’s long history.
The response was overwhelming, broad-based opposition to the ANPRM’s proposals. More than 95% of all public comments—and nearly 85% of unique comments—opposed the proposals, according to analysis by Unified Patents.
It should not be surprising that stakeholders oppose the ANPRM. New economic analysis found that over the next 10 years the proposals would result in a net decrease in U.S. business activity of -$482.1 million in gross product, a net decrease of -$230.4 million in personal income, a net decrease of -2,000 job-years of employment, and $202.9 million in additional costs to the federal government – between lost tax receipts and higher procurement costs.
As the comments emphasize, proposals that make it more difficult to challenge invalid patents—including new standing requirements for petitioners—would be a drag on the economy, slow innovation, and burden productive businesses with increased costs. The ANPRM feedback shows, rather, that stakeholders would like for the Patent Trial and Appeal Board (PTAB) to be a more accessible, more efficient alternative to litigation, as was provided for in the America Invents Act of 2011. Despite lobbying efforts to the contrary, the record is clear—the ANPRM was wrong-footed, could raise drug prices, would serve to embolden NPEs, and would be a drain on the productive American economy.
Indeed, Director Vidal has repeatedly emphasized the importance of stakeholder input throughout her tenure; the USPTO now needs to seriously grapple with the public’s concerns, and must question whether to proceed with any rulemaking process that does not roll back ill-advised moves like the NHK-Fintiv and Valve rules, unpopular moves that have only served to limit objective review and the public’s right to petition the government.
And the USPTO isn’t the only governing body that must heed this clarion call against these motivated “reform” efforts. Just days after the ANPRM’s comment window closed, Senator Thom Tillis (R-NC) and Senator Chris Coons (D-DE), ignoring the clamor, introduced the Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act, a rebranding of the perennial go-nowhere “STRONGER” Act that would institute many of the same unpopular changes included in the ANPRM.
It would be undemocratic for the USPTO or Congress to justify proceeding with new restrictions for PTAB review on the heels of such a significant and decisive public outcry from stakeholders across a diverse array of sectors and with a wide range of backgrounds. It would serve special interests over a documented and overwhelming opposition; it would raise drug prices, embolden patent trolls, and prevent the USPTO from correcting its own mistakes. And the PTO likely doesn’t have the authority to make good on most of their proposals. In short: it’s bad policy.
Recurring themes from the thousands of public comments in opposition to the changes are summarized below, and clearly demonstrate the problem with either the USPTO or particular Congressmen proposing them.
Patent Trolls are a Major Concern
The need to protect businesses of all sizes against predatory NPE or patent troll lawsuits is a consistent theme across a majority of the comments. The term “patent troll,” “NPE,” or “non-practicing entities” appears in over 10,500 submissions (more than 73% of all comments), with the overarching concern that, on balance, the proposed changes to PTAB review would benefit patent trolls at the expense of economic growth and innovation.
Congress originally established the PTAB, in part, as a response to the widely-recognized pattern of abusive patent litigation. Any changes that add new procedural hurdles will leave businesses more vulnerable to costly, bad-faith patent infringement assertions. Public input expressing concern about the new changes further enabling patent trolls includes:
“...Over the past few decades, businesses like hotels, restaurants, and retailers have found themselves the target of lawsuits from non-practicing entities (NPEs), sometimes called patent trolls. These NPEs will threaten businesses with claims of patent infringement on vague old patents, which frankly never should have been issued in the first place. The trolls know they have no case, but they’re relying on businesses to make the calculation that it’s cheaper to settle out of court than wage an expensive (even if successful) legal battle.
IPR is a tool in businesses’ arsenal when it comes to defending against trolls. The program, which was created as part of the 2011 America Invents Act (AIA) allows anyone to file a challenge on an old patent to have it reviewed by the PTAB. Evidence from the first decade of the program shows that it works – 40 percent of patents challenged via IPR are ruled invalid, demonstrating that there is a robust need for a post grant review process at the PTAB.
Unfortunately, the recent ANPRM threatens to significantly weaken the IPR process, putting businesses like our members at risk. The proposed rules would make changes to a variety of elements of the IPR process, including who can file an IPR, how long they have to file it, and what the standard for instituting an IPR is. All of these proposed changes create uncertainty for small businesses across the county, many of whom now have to worry about emboldened trolls coming after them.” – I. Diaz, Tweedy Mile Association (Nonprofit organization focused on the downtown revitalization of the city of South Gate in Los Angeles County)
“...NPEs and PAEs (so called ‘patent trolls’) justify their practices by claiming to be the champion of the small, independent rights-holder. They claim that they give rights-holders the ability to assert their IP against large entities that would otherwise be able to violate at-will, relying on fixed cost staff attorneys and lengthy, costly litigation.
I don't dispute these claims. NPEs and PAEs can serve an important function.
The IPR process, however, has proven to be a successful counterbalance to the incentives that have driven some of these companies into unethical territory and damaged the ability of US companies to innovate and compete.
It would be a mistake to eliminate or reduce the effectiveness of the IPR.
We should be moving in the other direction and expanding this program, which has a decade of proven success.” – Ratio Software, LLC (Software design and development company)
“...From COVID precautions, to supply chain issues, to rising inflation rates, to chronic labor shortages, our members have overcome tough odds to continue to provide goods and services to the people of the Granite State. At a time when some of our members are just beginning to see the light at the end of the tunnel, weakening the IPR process will signal to non-practicing entities (NPEs, sometimes known as “patent trolls”) that it is open season on small businesses.
As you know, there are some bad actors out there who want to abuse the patent system – buying up old, vague patents from the earliest days of the internet, and using them to threaten or sue small businesses for alleged “infringement.” While most of these cases would easily fail in a real legal challenge, for small businesses it is significantly less expensive to settle out of court with a troll than it would be to go through an expensive trial. NPEs count on this, and can use the same old patent to extort thousands and thousands of dollars from retailers and other Main Street companies.” – NH Retail Association (Association representing more than 700 New Hampshire retailers)
PTAB Standing Requirements Would Harm Small- and Medium-sized Entities (SMEs)
Related to the more general patent trolling concern, many comments specifically raised objections to proposals in the ANPRM that would add new standing requirements for who is allowed to petition for PTAB review. More than 1,500 comments contain the specific phrase “standing requirement” and there are many additional comments that describe the same concept in different ways. Similar standing requirement measures are included in the PREVAIL Act, which would limit review to those who have been sued or are threatened with lawsuits.
New standing requirements would remove the option of petitioning for PTAB review in many situations where a party has a legitimate interest in challenging an invalid patent. In particular, standing requirements seem to target third parties, like Unified Patents, the Texas Association of Realtors, I-MAK, or the Electronic Frontier Foundation, entities that deter abuse by challenging invalid patents. Third-party organizations are oftentimes uniquely positioned to constrain the most abusive patent troll campaigns and protect SMEs, which are most vulnerable to exploitation.
The USPTO and Congress have both expressed a desire to make changes that serve the best interests of SMEs, small inventors, and under-resourced entities. As the public comments make clear, any new standing requirements that restrict access to the PTAB would have the opposite effect.
The following comments emphasize the threat that standing requirements pose to SMEs:
“...As you likely know, patent trolls base their business off of purchasing old patents and using them to attack small businesses for alleged “infringement” for things as simple as using a scanner. While these baseless claims have no legal standing, small businesses like mine often end up having to negotiate settlement terms with patent trolls out of court because we cannot afford to fight a prolonged battle in court…
…As patent troll cases have continued to rise over the years, federal lawmakers looked to take action against them by enacting the Leahy-Smith America Invents Act (AIA) in 2011. This initiated the Inter Partes Review (IPR) process, which has been pivotal for small businesses to help fight back against frivolous patent infringement cases. Because the AIA did not include a “standing” requirement to file an IPR, larger companies have also been able to file IPRs on patents being used to sue their smaller clients.
However, I fear that the recently introduced USPTO rules would seek to undermine IPR. Specifically, the agency has proposed allowing for less time to file an IPR, changing who can file an IPR, and rewriting the standard for instituting a review from “reasonable likelihood” to “compelling merits.” Not only would these changes directly oppose the purpose of the AIA and overstep Congress, but also empower patent trolls to expand their aggressive attacks against businesses like my own…” – M. Feldman, Roof Off Entertainment (Entertainment booking company)
“...The restriction on IPR challenges by nonmarket competitors will eliminate an important pathway for invalidating patents asserted against Main Street companies in NPE hold-up campaigns. Despite Congress’s considered decision that patent quality and integrity would be best served by allowing any member of the public to file an IPR, the proposed rules seek to limit who can file a petition. This will be especially injurious to UFPR’s Main Street members and companies like them who have benefited greatly from IPRs brought by others, including trade associations, patent-challenge organizations, and public interest groups. There are many examples of sweeping campaigns by NPEs seeking hold-up nuisance settlements based on invalid patents being stopped by IPR challenges brought by the types of organizations this proposal seeks to derail…” – United for Patent Reform (Business coalition representing over 90 million U.S. employees)
“...These petitioning organizations, including Unified Patents and Askeladden, overcome a collective action problem that bedevils patent litigation: when the plaintiff offers to settle for an amount far below the high cost of litigation, no defendant has an incentive to challenge the patent. Some patent assertion entities have filed lawsuits on the same patent over a hundred times—often targeting small business, which are even more likely to settle—before the patent’s claims were finally canceled in a challenge brought by a petitioning organization. If these organizations were prevented from operating, as the ANPRM proposes, these same assertion campaigns would no doubt have continued, repeatedly extracting small but substantial amounts from small businesses and other operating companies based on a patent that never should have issued…” – U.S. Manufacturers Association for Development and Enterprise (Nonprofit association representing companies manufacturing diverse goods in the United States)
The Open-source Community Weighed In Heavily
More than 500 comments referenced “open source” or “open-source,” almost all of which highlighted the extent to which the proposed changes to post-grant would harm open-source software development. Software patents are a frequent point of contention in subject matter eligibility conversations, since it is an area ripe for overly-broad, abstract patents. This also means that low-quality software patents are valuable tools for patent trolls. Open-source developers and those that use their products are prime targets.
Comments submitted by the open-source community highlight the need for accessible PTAB review in order to promote new, accessible software innovation:
“...Open source projects and their maintainers are uniquely vulnerable to attack by hostile parties such as patent trolls (sometimes called “non-practicing entities”) and companies rent-seeking over so-called standard-essential patents. The projects and their non-profit fiduciary hosts are not of a scale to be able to manage the usual defenses of large corporations, while the individuals themselves may seem worthwhile targets for avaricious litigators. When a project faces a patent attack, it is thus frequently defended by others as a matter of civic duty.
The rule changes that the Patent and Trademark Office propose would greatly limit the ability of open source projects to be defended by these third parties. This would both chill the innovation and progress arising from open source software - which contributes billions to GDP - as well as embolden malicious litigators seeking reward where they have no claim simply because their victim is unable to defend themselves…” – Open Source Initiative (Public charity advocating for and enabling the benefits of Open Source)
“I am from the Linux Foundation and I support the collaborative development of software under free and open source licenses. A sad reality is that non-practicing entities (NPEs) have been targeting users of open source software and open source foundations with patent litigation…
…I am deeply concerned about the impact of the proposed changes on the open source software community that relies on third-party entities to protect the openly developed commons of technology that we are all dependent upon. There are seemingly political motivations at play here. The ANPRM's proposed expansion of discretionary denials and de facto standing requirements will leave invalid patents in force to be asserted in litigation against open source foundations and companies like ours.” – J. Bonner, Linux Foundation (Linux Foundation provides a neutral, trusted hub for developers to code, manage, and scale open technology projects.)
“Nearly all of the rules you proposed will make it harder to challenge poor-quality patents. If implemented, these rules will make it harder to defend open source software against bad patents in the hands of patent trolls. OSS is a pillar of the entire US tech economy, and misguided intellectual property rules like this will hurt growth in the US economy as a whole.” – Gluu Inc. (Gluu curates and commercializes a distribution of the world’s best open-source digital identity infrastructure projects)
Pharmaceutical, Health Tech, and Other Health Care Organizations Spoke out in Opposition
A number of organizations in the pharmaceutical and health industries submitted comments in opposition to the substance of the ANPRM proposals, including Mylan Pharmaceuticals, Fresenius Kabi, Association for Accessible Medicines, Edwards Lifesciences, I-MAK, and Generation Patient.
A core theme in these comments is that weak patents are frequently used to delay medical progress and competition – increasing costs for patients and reducing access to potentially life-saving medicines and technologies. These organizations all align on the importance of protecting existing PTAB processes, so that PTAB review can continue being used as a tool to challenge questionable patents and therefore promote medical innovation.
“...In the life sciences industry, weak patents that do not actually claim a novel, innovative invention, can nonetheless delay generic or biosimilar competition for many years. To combat those delays, Mylan has filed well over 100 inter partes reviews (“IPRs”), taking advantage of Patent Trial and Appeal Board’s (“PTAB”) efficient and streamlined process to challenge weak patents that would otherwise delay patient access to life-saving medicines. Those patent challenges have allowed patients to benefit from earlier access to competition for more than $35 billion in annual brand costs…” – Mylan Pharmaceuticals (A global healthcare company that provides critical access to quality lifesaving medicines)
“...Inter partes review (“IPR”) and post grant review (“PGR”) each play a critical role in tackling the root cause of inappropriate delays to low-cost competition in the pharmaceutical industry. Fresenius Kabi opposes the proposed ANPRM modifications because they would so significantly undermine such challenges as to actively discourage them. By extension, the ANPRM as currently proposed would delay access to more affordable generics and biosimilars. As a general matter, unfettered access to the PTAB is particularly important in the generic drug and biosimilar industries. Each generic or biosimilar manufacturer should be free to make its best invalidity case to the Office and not risk forfeiting its right to meaningful PTAB review or other remedies available under current law…” – Fresenius Kabi (Specializes in bringing affordable, off-patent medicines to patients with critical and chronic conditions)
“...When it is more difficult to challenge patents, especially in the pharmaceutical field, there is more potential harm to Americans when it comes to their ability to access lower cost generics/biosimilars. This leads to an overall impact on the health of Americans and the economy….” – I-Mak (Nonpartisan, not-for-profit, and non-governmental organization working to address structural inequities in how medicines are developed and distributed)
“...By creating heightened barriers, these rules stifle competition and unjustifiably drive up prices, particularly for crucial medical treatments we rely on as patients. Moreover, inter partes review fosters innovation by ensuring that patents do not impede future research and development. When invalid patents are challenged, it paves the way for others to build upon existing knowledge and create new, innovative treatments. This promotes a more dynamic and competitive pharmaceutical industry, leading to the development of new medicines and improved healthcare options...” – Generation Patient (A young adult patient led organization that increases the health literacy, confidence, self-management skills, public policy knowledge, and advocacy strategies of young adult patients)
The Proposals Will Drive-up Costs and Hurt the Economy
The specific points of opposition in individual comments vary, but in many cases the overarching sentiment is consistent. Restricting access to the PTAB, as proposed in the ANPRM and PREVAIL Act, will increase costs and directly harm productive participants in the economy. Congress intended for the PTAB to be an open, more efficient alternative to costly litigation and settlements. Rolling back access will be a drag on the economy and a burden for businesses, small and large.
Business and labor groups, and patent policy experts, submitted comments emphasizing the economic damage and higher costs that the changes to PTAB review would catalyze:
“...The proposed changes could have a considerable impact on our economy and the ability of businesses to defend themselves against attacks from patent trolls.
Our members are on the forefront of the construction and energy industries in New Hampshire, and around the country. But at a time when the construction industry is only beginning to rebound from the events of 2020, companies are under threat from non-practicing entities. Instead of investing in wages and jobs, companies are spending thousands of dollars settling frivolous lawsuits out of court. These problems will only get worse under the recently proposed rules.
A diverse range of industries rely on the Patent Trials and Appeal Board (PTAB) review process as a means to combat low-quality patents, and protect themselves from patent trolls by targeting the bad patents these companies use to go after main street businesses. Unfortunately, the USPTO’s Advanced Notice of Proposed Rulemaking (ANPRM) published on April 20 is poised to undermine this effective instrument by making it harder for businesses to use the Inter Partes Review (IPR) process to defend themselves from unfounded patent lawsuits. Doing so will force businesses to endure costly and prolonged court litigation, draining their limited resources – and putting jobs at risk.” - D. Spechuilli, Laborers Local 976 (Laborers’ International Union chapter based out of Portsmouth, New Hampshire)
“Our association is made up of over 1,100 businesses across the South Placer region, including restaurants, retailers, realtors, hospitality and event services, finance and insurance companies, and more. Our members rely on the Patent Trials and Appeal Board (PTAB)’s review process to invalidate patents that never should have been issued in the first place. The recently proposed rules would significantly curtail companies’ abilities to seek PTAB review in many cases when they are sued on invalid patents. Rather than being able to rely on the Inter Partes Review (IPR) system to invalidate bad patents, companies will be forced to go to litigation – spending valuable time and money on expensive lawsuits…
…With these proposed rules, the USPTO will make it much harder to institute an IPR, and will hurt American businesses and consumers. The changes the ANPRM proposes include shortening the filing deadline for an IPR from the deadline created by the AIA, raising the standard for instituting a review, and even changing who is allowed to file an IPR.
Businesses relies on the PTAB and the IPR process to help protect them from the high costs associated with frivolous patent litigation. We ask that you reconsider the proposed rules.” – R. Ghadban, Roseville Area Chamber of Commerce (An association made up of over 1,100 businesses across the South Placer region in California)
“I strongly oppose any effort to limit the sorts of patents that can be challenged via IPR. The IPR process has proven to work extraordinarily well. It has lowered the cost of resolving the validity of disputed patents by an order of magnitude, without changing the statistics about who wins validity disputes.
That is a good thing for everyone involved in the system, with one exception: patent trolls who depend on the high cost of litigation to leverage their settlements. Exempting small entities (which includes many large patent litigation farms, in part because of fraudulent concealment of ownership) will eliminate the lowest cost mechanism of resolving patent validity. True small patent owners should welcome a 90% reduction in costs. Only companies whose business model depends on high cost and uncertainty tend to oppose it.” – M. Lemley, William H. Neukom Professor, Stanford Law School (Director, Stanford Program in Law, Science, and Technology)
* Analysis applies to comments that were posted on regulations.gov by August 22, 2023. Comments that were critical of non-practicing entities (NPEs) or patent trolls were categorized as opposing the proposed rules. Taken as a whole, the ANPRM’s provisions would restrict access to Patent Trial and Appeal Board review and make it more difficult to petition for review of patents held by NPEs.