Patently unjust

By Former Sen. Birch Bayh (D-Ind.) - 07/11/11 11:39 AM ET


Let’s say you have city permission to host a farmer’s market on your property between two national grocery chains. How would you feel if those large competitors stopped you by wrongly claiming you don’t own the land?

Now let’s say you spend four years and vast sums in legal costs to persuade the city that in fact you do own the land. Should you be allowed to sue the grocery stores for damages if it turns out their claims were bogus and solely intended to delay competition from your business?

This is the situation facing my friend Larry Lockwood who owns a different kind of property – pioneering patents in electronic commerce granted by the U.S. Patent and Trade Office.


Lockwood recently won his patent challenges while losing four valuable years of his 20-year patent life and millions of dollars in legal expenses and forgone licensing fees. Mr. Lockwood filed a lawsuit in California against the law firm that sought the re-examination of his patents, contending the law firm’s petition was a sham. The court ruled he had no right to even make his case because the federal patent law I co-authored in 1980 preempted any action in state courts. That ruling was upheld by a the U.S. Court of Appeals for the Federal Circuit earlier this year and Mr. Lockwood is now appealing that decision to the U.S. Supreme Court.

When Senator Bob Dole and I joined to pass ground-breaking legislation on patents, the U.S. Patent and Trademark Laws Act, we never intended for it to allow malicious attacks on patents or to create an incredibly uneven playing field for small inventors. Like most Americans, I abhor injustice against the underdog.

In effect, powerful unscrupulous players have court-approved legal immunity to abuse a patent reexamination system already showing signs of strain. Sen. Jon Kyl (R-Ariz.) observed recently that mere fact of re-examination, regardless of its outcome, can be "a death sentence for a patent."

Big companies armed with savvy lawyers can now use the reexamination process as a way of quashing smaller companies; it costs little to file a re-exam petition and a lot to defend a patent. In the past four years, the number of re-exams filed with the U.S. Patent and Trademark Office has increased dramatically, and most of those requests are routinely granted. This trend has placed huge demands on a patent office that is underfunded and under-resourced.

When I raised these concerns with Under Secretary David J. Kappos, director of the patent office, he sent me a letter stating that his agency is “particularly concerned whenever a patent owner is subjected to a fraudulent reexamination or some other form of harassment.” He also confirmed that the patent office has no authority to compensate patent holders for abusive reexamination tactics.

The implications of this case are breathtaking and have gone largely unnoticed. The court rulings bear on the soundness of the patent system and suggest immunity for anyone who wants to abuse federal administrative processes against competitors – essentially gutting states rights in such matters.

It may be too late for Lockwood to get his day in court but we can fix, or at least improve, the situation for future inventors. For example, Congress could support a Supreme Court review of the Lockwood case or could amend the existing patent law to make it clear that it was not intended to preempt state laws.

America’s greatness over 235 years stems in some large part from the rule of law and the protection of property rights even when small business is pitted against large. Our commitment to intellectual property rights in particular has driven decades of innovation and entrepreneurism that rank among our nation’s defining characteristics.

At a time when countries such as China and India are racing forward to strengthen their patent laws to attract entrepreneurs and venture capitalists, we cannot afford to let this threat to our innovation economy go unchallenged.

Senator Bayh represented the State of Indiana for 18 years in the U.S. Senate where he co-authored historic patent legislation. He is a partner at Venable LLP and has advised Larry Lockwood on patent legislation

http://thehill.com/blogs/congress-blog/labor/170659-patently-unjust