Almost every civilization since the Renaissance has sought to incentivize individuals to invent technologies that ameliorate the current problems facing them and advance their posterity. This goal is so important that America’s Founding Fathers explicitly put the protection of intellectual property in Article I of our Constitution. Indeed, Article I gives Congress 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 . . . .”
Using this constitutional authority, Congress created patent rights to entice inventors to create new products and expeditiously bring them to market. And for more than 230 years, patents have done just that. From the development of airplanes to the creation of mobile phones to the advancement of autonomous vehicles, patents have played an essential role in promoting U.S. technological leadership.
But that doesn’t mean that our patent system is without its pitfalls. Since its inception, large companies have tried to misuse the patent system to stifle their competition. RCA used it to kill the early versions of the television; Procter & Gamble used it to shut down new competitors to its hygiene products; and Apple uses it to maintain its extraordinary market dominance in the mobile ecosystem.
Driven by concerns that the patent system stifled smaller innovators, Congress in 2011 passed the America Invents Act (AIA), which created the Patent Trial and Appeal Board (PTAB) at the U.S. Patent Office. The quasi-judicial PTAB was billed as a cost-effective venue for small businesses to resolve patent claims without having to go to federal court. Ironically, large companies, particularly in the tech sector, have repeatedly availed themselves of the PTAB to invalidate the patents of smaller competitors. Practically, success at the PTAB means that those large companies can use others’ inventions without paying licensing fees.
And the PTAB has proven to be a more effective venue for large companies than federal court. According to one analysis, 84% of patents challenged at the PTAB were partially or wholly invalidated, compared with 30% of patents challenged in federal court. In 2023 alone, the PTAB considered challenges to 508 claims and invalidated nearly 70% of the patents it considered. Former Federal Circuit Chief Judge Randall Rader described the PTAB as a “death squad killing property rights.”
Large tech companies accounted for a significant amount of PTAB petitions in 2021. Apple alone filed “hundreds of petitions” with the PTAB; 56% of which were “duplicative.” Mincing no words, Professor Adam Mossoff concluded in a report that the tech industry uses the PTAB as “a key tool in predatory infringement strategies by which these companies steal patented technologies from American inventors.”
A tool Congress created in part to assist small businesses has become Big Tech’s tool to drag smaller companies into an impossible regulatory and legal quagmire. Furthermore, there’s nothing in the AIA that stops parties from challenging patents both at the PTAB and in federal court. This means inventors must fight a two-front war: one at the PTAB that can costs hundreds of thousands of dollars, and the other in front of a federal judge that can cost in the millions. Facing these expensive-to-fight challenges to their patents, many smaller companies simply get tired of fighting and eventually acquiesce.
A bipartisan and bicameral group of congressional members has introduced the Promoting and Respecting Economically Vital American Innovation Leadership Act (PREVAIL Act) to address this concern. In general, the PREVAIL Act would adopt procedural reforms aimed at ensuring the PTAB is used in the way it was originally intended—to protect small innovators. As Philip Nelson described the legislation in January, it has provisions to harmonize legal standards between the PTAB and federal court to prevent contradictory legal results and would prevent parties from filing multiple petitions against the same patent. The version of the act that will likely get a vote in the coming weeks doesn’t appear to deviate from what Nelson outlined.
Whether the PREVAIL Act . . . well, prevails, is up to Congress. But even if it doesn’t, it is becoming clearer that the PTAB is in serious need of reforms given existing statutory loopholes.
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