
Patent Review System Upheld by U.S. Supreme Court - jackfoxy
https://www.bloomberg.com/news/articles/2018-04-24/patent-death-squad-system-upheld-by-u-s-supreme-court
======
grellas
With this case, the Supreme Court continues its trend of gradually scaling
back on the idea that patents can be freely and loosely granted to such a
bilious degree that the very idea of what a legitimate patent is supposed to
do (promote the progress of science and useful arts) is undercut.

This one does not involve the question of patentable subject matter but
instead a question of process: in layman's terms, if Congress has set up a
relatively quick and painless process by which junk patents can be sent
packing without the pain, turmoil, and delays of going to court, can this
process be shot down as being unconstitutional because patent validity, "from
its nature," _must_ be decided by a court? In answering this question no, the
Court upheld the power of Congress to better police junk patents and rid the
world of them with dispatch.

In short, this decision upholds the lawfulness of the process known as inter
partes review, by which the PTO can reconsider and reverse the validity of
dubious patents that it previously had granted.

Score this as a victory for those who support patents but who do not want the
currency cheapened, so to speak, by junky ones that only serve to undercut
what a legitimate patent even means.

The legal reasoning here (both in the majority and the dissent) is refined,
principled, and arcane, dealing with the nature of a patent right, how it
evolved under English law through the 18th century, and what this meant for
the definition of the judicial power under Article III of the U.S.
Constitution when it was adopted in 1789
([https://www.supremecourt.gov/opinions/17pdf/16-712_87ad.pdf](https://www.supremecourt.gov/opinions/17pdf/16-712_87ad.pdf)).

All justices agreed (as the Constitution says) that the federal judicial power
vests exclusively in the Supreme Court and the federal courts as established
by Congress and that, if inter partes review is an exercise of such federal
judicial power, it is unconstitutional.

In deciding that this sort of review is not an exercise of federal judicial
power, the majority held that the grant of a patent is a "public franchise"
that essentially can be determined in the reasonable discretion of the
granting authority (the government) without need of a judicial determination.
So, just as Congress (legislative) set up the PTO (executive) to grant or deny
patents based on criteria defined by Congress via statutes (legislative),
Congress could also set up procedures (inter partes review) based on criteria
that it defined (invalidity if patent failed novelty and non-obviousness tests
in light of prior art) by which the same executive branch (PTO) can reconsider
and invalidate the previously granted patent. Yes, Article III vests the
exclusive judicial power of the United States in the Supreme Court and in the
inferior courts established by Congress but inter partes review is not a
judicial power given that a patent is a public franchise that can be shaped
and altered by the government without regard to the courts. In dissent,
Gorsuch argued that a patent grant is not a public franchise but a vested
private property interest that could be abrogated under the U.S. Constitution
only by an exercise of judicial power and not by the PTO acting extra-
judicially.

Both the majority and the dissent are basically originalist justices and so
the disagreement between them is, I think, not as large as may appear. For the
majority, Justice Thomas went out of his way to emphasize how _exceedingly_
narrow his holding was (ruling does not involve infringement claim, is tied to
the idea that there is ultimate judicial review after the process is complete,
does not address any constitutional challenge such as retroactive application
not raised by the party filing the appeal). Based on this, I would suspect
that, in other contexts, these justices would all agree that patents do
involve significant elements of private-property protection. But, for this
case, and in upholding a hugely helpful procedure for ridding the world of
_junk_ patents, the majority was willing to say, in effect, "nothing at all
wrong with that, have at it." The decision is a correct one and continues a
welcome trend toward reestablishing sanity in the patent world.

~~~
banku_brougham
This is amazingly well written, opinionated by reasonable commentary! Thank
you for putting in the effort.

------
rayiner
I don’t understand how you write an article on a case without linking to the
opinion:
[https://www.supremecourt.gov/opinions/17pdf/16-712_87ad.pdf](https://www.supremecourt.gov/opinions/17pdf/16-712_87ad.pdf)

The mix is interesting: Thomas wrote the majority opinion and Gorsuch and
Roberts dissented. The gist of the majority is that patents are “public
rights” (like entitlement to social security payments) that can be adjudicated
in the first instance by agencies so long as there is the possibility of
judicial review.

EDIT: the link is under the word "voting." Because I'm petty, I went to the
wayback machine version to confirm it was not there originally:
[https://web.archive.org/web/20180424150011/https://www.bloom...](https://web.archive.org/web/20180424150011/https://www.bloomberg.com/news/articles/2018-04-24/patent-
death-squad-system-upheld-by-u-s-supreme-court).

~~~
adrianmonk
The traditional media (newspapers, TV news, etc.) seems to have the idea that
they shouldn't provide links. Linking would be the natural thing to do, so it
seems like they are going out of their way not to do it.

I'm not exactly sure why this happens, but I have two theories:

1\. Their mindset is to see their web site as a sort of port of their existing
media product to a different platform. And not a native port. (A newspaper
sees an online article as an electronic copy of a print article. TV news sees
an online article as a replay of a video segment.) Since they wouldn't put a
link in the original non-web media, they don't have one in the web version.

2\. They are used to controlling the flow of information. The relationship
they expect is that you come to them first for your news, and you keep coming
back regularly. They don't want to encourage you to go directly to the other
sources because then they wouldn't be involved.

~~~
neves
I've talked to a couple of editors and the 2. is the correct answer. It is
really annoying when the article is about something that happens in the web,
like a web site, and they don't link it.

I believe they think their value is to "explain" things to the mindless
reader, but it also perverse that they use it to impose their point of view.

~~~
Spooky23
That’s a cynical interpretation.

The logic is that a newspaper article is an atomic unit. You can pick up a
digitized NY Times article from 1890 and have the same facts (albeit without
the same context) as a contemporary reader.

Linking to sources, even primary sources, encourages laziness on the part of
the writer and an implicit expectation that the reader has that knowledge. As
a layperson, I want a story, I don’t somebody directing me to read Supreme
Court opinions.

Most internet focused reporting is sort of a hybrid of news magazine and TV.
99% of links are dead in five years. It’s one of the many ways that the
disruption and destruction of newspapers is an objectively bad thing for
society.

~~~
Zak
A good hybrid approach would be to write as if there will be no links, but add
them at the end.

------
blackrock
Patents have reached the level of stupidity.

For example, the recent patent granted to Samsung, to use an emoji-like
representation of your face.

[https://www.androidauthority.com/samsung-ar-emoji-video-
call...](https://www.androidauthority.com/samsung-ar-emoji-video-call-858303/)

I had the exact same idea for this, but I thought it was just a cute little
feature. I didn't think to patent this. And I'm sure thousands of other people
had the same idea too.

But since Samsung was the first to patent it, now, if you make a little
program that uses this same idea too, then you are liable for patent
infringement. And you will be sued by Samsung.

Patents were originally devised as a means to protect the small players, from
being dominated by the larger and richer players. In the 1700s to 1900s, the
American patent system may have had the original idea to protect their small
inventors, against the richer inventors in Europe. This was to help give them
a fighting chance.

But today, with all the patents being filed by the large and dominant Fortune
500 companies, the purpose of the patent protections to help the smaller
players, are now largely irrelevant.

Nowadays, the purpose of patents is for nationalism, to protect against other
countries.

The other egregious patent that was granted, was the Swipe Left and Swipe
Right, that was granted to Tinder.

~~~
s73v3r_
Did you actually implement it?

~~~
gohbgl
Having an implementation is not a requirement for getting a patent.

~~~
s73v3r_
Maybe not, but coming into a thread complaining that you "thought of the idea
first" when talking about something fairly new, it's a reasonable question to
ask. I "thought of" eBay before they started up, too.

~~~
tabtab
Since the 5th grade, I and others have turned fellow students and teachers
into cartoon characters on paper. Automating it shouldn't make the very act of
cartoon-ifying a person itself patent-able. Slapping "via computer" or "via
the web" on a process should NOT be a means for legitimate patents on acts,
but this does keep happening in various forms. Patent a SPECIFIC algorithm,
okay, but not the mere act of achieving something.

------
majewsky
Can someone explain in simple words what this is about? I've read the article,
but I think I'm missing some context about these review boards and stuff.

~~~
laveur
In simple terms before the new law you had to go to court to get a patent
reviewed. Now you can file a request with the patent office and skip court.
Which makes it cheaper and easier to fight bad patents.

~~~
perpetualpatzer
That's a fair summary of the finding (and I would contend, the major issue in
this case).

The counter-argument that might lead one to disagree with this decision is
that the Patent Office reports to the President, so it is subject to the
political motives of that branch.

For example, let's say, a major democratic donor receives a software patent on
a novel ML algorithm useful for predicting voting behavior. Under inter partes
review, the President (or his subordinates) could invalidate that person's
patent if challenged regardless of the evidence. If inter partes review were
found unconstitutional, they would need to convince a jury that the algorithm
was, in fact, inappropriately granted.

~~~
pkilgore
Hi. This is legally incorrect.

All inter partes review decisions are subject to judicial review by the
Federal Circuit. The standard applied by the Courts is called "substantial
evidence." To dumb down the standard (it is only slightly higher than this):
The board cannot simply make shit up on the way to its decision.

Your hypothetical would probably fail under even more deferential standards of
review. God fucking knows it would not survive the Federal Circuit--I'm happy
to link plenty of cases where they told the board that its invalidity decision
was not supported by substantial evidence.

~~~
perpetualpatzer
Yes, sorry. My goal was to lay out the parade of horribles on the other side
of the case to illustrate why the question was being asked at all.

You're right that IPR is judicially reviewable and I'd agree that my example
would probably not hold up to review if clearly politically motivated and
contrary to evidence.

Someone who's worried about this might argue with you that to have a patent
invalidated, then the invalidation subsequently overturned is not the same
thing as not having a patent invalidated in the first place, if only in the
eyes of the market. I don't think it's a meritless argument, though it's not
one that sways me personally.

~~~
pkilgore
Fair enough. You'd be surprised how well this stuff is priced in on the
merits. Plenty of ex IP attorneys like me working in and for financial
institutions evaluating these petitions. Not all patents are good. Not all are
bad. But do this long enough you can decently handicap arguments, especially
in IPRs where all the petitioners' evidence theoretically on the table from
the start.

------
claytongulick
While I agree with the decision, I developed a whole new respect for Gorsuch
after reading his dissent. It was brilliantly written, clear, plain english
and was an amazingly principled approach - i.e. he agreed that inter partes
review was effective and convenient, but argues that convenience isn't a
measure of constitutionality. I also appreciated his arguments about the non-
independence of the review board and the ability of the director to apply
political bias/policy to decisions (which has already been done multiple
times). If it weren't for the ability to appeal the board's decision to a real
court, even though I like the inter partes review process, I think I'd have to
agree with Gorsuch on this one.

~~~
wahern
It's not principled, it's purely based on a vein of economic and patent
scholarship that seeks to strengthen patents by equivocating them with
property rights in land and thus subject to the most stringent demands of due
process. This scholarship presupposes that patents are a necessary and
efficient mechanism for capital allocation, almost completely discounts the
economic and social costs of granting a monopoly franchise that restrains
liberty, and ignores the practicality of accurately assessing novelty, non-
obviousness, etc--ironic given that in almost every other aspect of regulation
it's almost a given that government bureaucrats suck at divining these things.
And as a general matter this scholarship is a form of ideological
reductionism, and fundamentally radical.

All the handwaving about the change of perspective regarding utility patents
in the latter part of the 18th century is an attempt to support his policy-
based argument. You know it doesn't clearly reflect the law because he uses
weasel words like "virtually", and spends much of the time explaining away the
actual precedent.

He says that the very existence and wording of the Patent Clause is evidence
of this change in perspective regarding the legal framework of patents. But
the Patent Clause exists first and foremost because without it--long before
modern Commerce Clause powers existed--the Federal government would have
lacked the power to establish and regulate patents altogether. In other words,
it exists primarily for the purposes of national consistency. The wording
about the promoting progress merely evidences that the Founders believed the
powers for granting particular public franchises to the Federal government
were given because national policies might best promote social welfare, as
opposed to a patchwork of state-granted patents. It's a huge stretch to argue
it reflects a change in the _law_ regarding whether patents were a species of
public franchise.

For a man who claims to hew closely to the original intent and original
meaning of the Constitution, and who believes in judicial restraint, his
argument is remarkably unprincipled. Absent clear and unequivocal language
either in the Constitution or contemporary laws regarding the nature of the
patent right, in light of the clear and concise grant of power to _Congress_ ,
lacking any solid _legal_ precedent for this argument, and without even a
clear injustice suffered at the hands of a capricious government in the
instant case, he should give way to legislative and executive prerogative. But
he doesn't. And he doesn't because he very clearly subscribes to the
scholarship I mentioned above.

It is well written, I'll grant you that. But like Scalia before him,
principled it is not. Principles should lead to consistency and predictability
in the _substance_ of decisions, not the _form_. Looking at his opinions as a
whole, Scalia's were neither consistent nor predictable in substance (relative
to other justices), and Gorsuch's appear to be going down the same road,
notwithstanding that both are excellent lawyers who play the persuasion game
well. Their opinions are consistent and predictable only in form, in that they
attempt to reduce every problem to a small handful of preferred talking points
and policies. Thus, for Gorsuch this case isn't about the exceedingly complex
realities of patent monopolies and administrative processes that attempt to
balance costs and benefits, but about politically appointed hacks having power
to arbitrarily take away your private property. To get from point A to point B
he has to take you along for a ride, hoping you don't realize that he changes
the premises along the way.

By contrast, the majority opinion is squarely rooted in the law and in
judicial restraint. I'm not one who believes SCOTUS should be shy about
crafting new law--in substance if not in name. I actually appreciate Gorsuch's
concern with safe-guarding property rights. I just think 1) they're misguided
and wrong from a policy perspective (among other restraints, the law making
powers of courts should be based on clear, consistent, public policy, and one
of the most clear is the common law rule that disfavors monopolies), and 2) a
great example of how a judge can go about making new law all the while
claiming to hew closely to precedent and history. Moreover, I can't fault a
court for not seizing the opportunity to craft law.

~~~
billbrown
Can you explain either a) what you mean by principled or b) how Gorsuch's
arguments aren't principled, please? My definition of "principled" is akin to
integrity but for words rather than actions: applying your beliefs
consistently and consciously. (It says nothing about whether you agree with
his principles.)

You say that it follows from previous scholarship, which doesn't make it
unprincipled. (You also suggest that that previous scholarship proceeds from a
utilitarian foundation, which Gorsuch explicitly rejects.)

For that matter, you say he "handwaves" because he says "virtually" once when
dismissing consideration of the three cases decided by the King's Privy
Council that seem germane but aren't. He then discusses the actual relevant
Privy Council revocations, the last of which was in 1746. (After 1753, it
shared revocation power with the courts and only acted on it in 1779 because
the patentee twice refused to use the courts.) It's a great point and
exemplary use of the history that would've been contemporaneous with the
Founders.)

Regarding his unwillingness to yield Article III powers, this is exactly what
his past judgements would suggest he'd do. Wasn't he billed as the guy who
would go against chevron deference? This seems like the height of principle.
And that's something you can say even if you disagree with everything he
believes.

I think you don't like the way the modern patent system operates and see
Gorsuch as a defender of that system. There's no need to smear him as
unprincipled because of that, though.

------
pascalxus
Well, I'm glad to see that we're heading in the right direction on patents for
once. Finally, all that consolidated tech monopoly power is being used as a
force for good. Hopefully this sets a precedent for dismantling other
frivolous patents as well.

------
peter_retief
The patent system was designed to protect small inventors but it has
transformed into a system that protects large monopolies and law firms. For me
the big question is, how to get a system that does protect small innovators
and inventors? Possibly open source or creative commons? Its really difficult
to find the right balance and patents are becoming less relevant to small
inventors (Like me)

~~~
prbuckley
I very much agree. The ptab is not a bad idea in principle but unfortunately
it operates in a way that favors large companies who can use IPR to out spend
small inventors instead of paying a fair license. I am experiencing this first
hand with a company that approched me to license a patent that I had. I also
had a small company making and selling products with our patented technology.
Our company was ~1/100th the size of company licensing our patent. A year into
our contract the big company decide it wanted out of the license and has been
using the IPR process as a threat and leverage point to try and not pay the
agreed royalty. It could cost me 300 to 500k to defend my patents through the
IPR process, money I don't have but large company does.

One big problem that never seems to be discussed when talking about the PTAB
and IPRs is the collateral damage it causes for small business and small
inventors. The big tech companies lobbied to set the rules in their favor.
"Patent Trolls" are not the problem they are a symptom of a different more
fundamental problem. If you are a small business owner or small inventor the
patent system is to expensive for you to use on an even footing with large
companies, so you can be put into a situation where you have to work with a
"patent troll" just to have the legal resources to play the game. By the way
my company built it's own factory to build our products in the USA. We have
since had to close our factory down and let all our employees go becuase we
have been unable to protect the unique IP of our product, I know of at least
100 companies using the IP we created, and have 3 patents coveeing. As a small
business entrepreneur the patent system and the IPR/ptab system has utterly
failed me so far.

Edited for spelling.

------
bsbechtel
Who holds the review board accountable for making bad decisions vs the
accountability of the courts? I think this question is just as important.
Aside from that, I imagine it's far easier for a lobbyist to get someone who
is industry friendly appointed to the review board vs appointed as a judge,
which is concerning.

~~~
billbrown
That's one of the reasons for Gorsuch's dissent. I suggest you read it: it's
quite clear and principled.

I think the Court's opinion is that the remedy to the courts is still
available even after the board's decision, so it's fine. (I think this is good
but an unfavorable board decision reversed by the courts later is going to
have very bad effects on the businesses affected. Property rights need to be
secure and uncertain property rights are _punished_ mightily by the market.)

~~~
mtgx
Intellectual "Property" is an intentional misnomer used by IP holders as
propaganda to support the idea that IP is "just like property."

It's not, because unlike property you can't establish that 100% of a project
were your ideas and your ideas only. Every new project is a recombination of
ideas. It's not 100% original.

If copyright and patents would be enforced _perfectly_ and automatically,
there would no longer be any new inventions.

More on this here:

[https://www.theguardian.com/technology/2008/feb/21/intellect...](https://www.theguardian.com/technology/2008/feb/21/intellectual.property)

[https://mises.org/library/intellectual-property-not-true-
pro...](https://mises.org/library/intellectual-property-not-true-property)

[https://www.everythingisaremix.info/watch-the-
series/](https://www.everythingisaremix.info/watch-the-series/)

------
rossdavidh
From the end of the opinion:

"THOMAS,J.,delivered the opinion of the Court, in which KENNEDY, GINSBURG,
BREYER, ALITO, SOTOMAYOR, and KAGAN,JJ.,joined. BREYER,J.,filed a concurring
opinion, in which GINSBURG and SOTOMAYOR,JJ.,joined. GORSUCH,J.,filed a
dissenting opinion, in which ROBERTS,C. J., joined."

If you lost with Thomas, Kennedy, and Sotomayor, you lost left, right, and
center. You are not one new Supreme Court Justice away from winning. You lost
by a lot.

~~~
oh_sigh
Who exactly are you referring to with "you"?

~~~
sah2ed
I think what the parent said essentially was that: "there is not much variety
in the opinions held by SCOTUS justices so don't count on the appointment of a
new justice to inject (much needed?) variety into the range of existing
opinions that could lead to a policy shift."

------
nkkollaw
Might be slightly unrelates, but does this help with stopping companies from
patenting living organisms?

That's my main worry regarding patents: that a patented crop will disperse its
seeds and mix with non-patented crops and all of a sudden people can't grow
wheat without paying a fee.

~~~
nojvek
That's already being done by Monsanto seeds right?

The U.S patent system, like the S&P 500 rating agencies let almost everything
pass through with an AAA rating, because they make a ton of money if people
keep on filing patents. $5k-$15k on a single patent.

It's a billion dollar revenue business.

"You can't make someone understand something, when their livelihood is based
on not understanding it"

------
johnhenry
Leaving out the "Death Squad" part made me think that this was going to be the
opposite of what it was about.

------
laveur
I would like to note Bloombergs choice of words for the title. I find it
interesting they went with that nickname instead of its formal name. To me
they only want to strengthen the opinion of the general public that the new
patent review process is bad.

~~~
csours
And what a title it is. Trying to parse it before reading the article, I
thought someone had patented Death Squads, and I was trying to figure out if
that was a technical system or a mercenary system.

Edit: Try Dr. Moriarty's Patent Death Squad System Today!

~~~
Bartweiss
Yeah, I very much had to reread the headline to see if it was a death squad
for patents or a patent on death squads.

I'm a bit surprised at Bloomberg, because they had as much space as they
wanted. Normally this happens with things like the BBC app, where full
headlines are truncated down to a few words. That's how we get winners like "
_New powers over death considered_ ".

------
jimrandomh
Gorsuch's dissent is the first opinion of his that I've read, and I'm
extremely unimpressed. It reads more like a newspaper editorial than an
opinion of the Supreme Court; it's overtly political; and it doesn't mention
the facts of the case at all, even as background. This does not bode well.

~~~
billbrown
Reads like a newspaper editorial? Maybe the first paragraph but he quickly
goes into the relevant case law and Constitutional support.

I've read enough Supreme Court opinions to see that his is a very different
style but I'm not sure that that's a bad thing. It is remarkably clear, gets
to the core constitutional issue, and sticks to principles. (In a footnote, he
even chides the concurring opinion for its utilitarianism.)

I'm quite impressed.

