Bill Would Punish Patent Owners, Let Infringers Off the Hook

You’d suppose a substantive patent system issue doesn’t relate to the National Defense Authorization Act. And you’d be right.

You also might think that rushing half-baked legislation that significantly affects something as important and complex as the patent system, glommed onto unrelated or general end-of-session legislative packages, is unwise and shouldn’t be done. Again, you’d be right.

Sen. Pat Leahy, D-Vt., the author of much damaging patent legislation over the years and who is retiring, is attempting to hammer a few more nails in the coffin of the American patent system.

The legislation so unfriendly to inventors and patent owners includes the Patent Trial and Appeal Board (PTAB) Reform Act (S. 4417) (previously titled the Restoring the America Invents Act), the Patent Examination and Quality Improvement Act (S. 4704) and, the subject of this blog, the Pride in Patent Ownership Act (S. 2774 & S. 4543). (There’s also the detrimental Interagency Patent Coordination and Improvement Act (S. 4430), by a usual ally of inventors and good patent policy, Sen. Dick Durbin.)

The Pride in Patent Ownership Act would create a requirement that patent ownership be recorded and kept updated. This information would be made publicly available on a searchable database.

Any change in a patent’s ownership not recorded within 120 days would ding the patent owner with the loss of substantial monies in enhanced damages assessed against willful infringers. For the period of lagging recordation, willful infringers would only be liable for standard damages.

PPOA’s punishment far exceeds the error, like getting a 20-year prison sentence for a form-and-manner violation. With willful infringement, something that’s proven in a court of law, the patent infringer deliberately steals the use of someone’s patented invention.

Losing access to punitive damages for such malicious conduct means the infringed patent owner can’t get just, appropriate punishment applied to the infringer. It likely means the loss of millions, even billions of dollars that the infringer ought to owe.

PPOA has been called “one-sided nonsense.” Indeed, it is. The bill burdens the patent owner, who may not be aware of a given patent's transfer through a complex transaction for quite a while. PPOA does nothing to require the predatory infringer’s timely disclosure of real parties in interest on its side.

Rather, the burden on new owners rewards infringers by saving them discovery costs not alleviated for patent owners. This litigation savings advantage for infringers and costs on owners defending their patents would come into play not only in infringement court cases, but also in multiple challenges in federal court and in administrative "patent death squad" proceedings.

Suffice it to say, PPOA is consequential patent legislation. Yet, Sen. Leahy filed the utterly nongermane bill as an amendment to the NDAA. Tellingly, it isn’t contained in the Armed Services Committee’s NDAA manager’s amendment.

There’d been zero legislative action through normal channels except for an eleventh-hour, figleaf hearing Oct. 19, featuring a panel stacked 3-1 for the Infringers Lobby. Neither the Senate IP Subcommittee nor the Judiciary Committee moved PPOA through markup, where it might have been substantially amended or defeated. It certainly hasn’t been considered by the full Senate.

Further, it’s not like PPOA is some noncontroversial, consensus measure. Sen. Leahy’s colleagues at the hearing raised concerns. Some senators let Senate Armed Services leaders know of their concerns about putting PPOA in the NDAA. Rep. Bill Posey and several House colleagues weighed in with House leadership expressing similar concerns about PPOA’s recklessness.

Of all the changes that might be made to remediate the many harms Sen. Leahy, Congress, executive bodies and courts have done to U.S. patents and our private property rights-based patent system, a gratuitous proinfringer, antipatent recordation scheme isn’t one of them.

Property Rights on Midterm Ballot

Whether you realize it or not, property rights are on the ballot in the midterm elections. Taxes, redistribution of wealth, private property takings, due process.

The 117th Congress has enacted or allowed the Biden administration to initiate policies that jeopardize private property rights. The all-Democratic Congress and Democratic administration enjoy free rein in Washington.

They’ve yawned at checks and balances, fiscal restraint and the limits of laws’ plain language. The White House and Congress have paid no attention to solving the wealth-erasing woes on Americans’ minds.

For instance, Democrats passed the $1.9 trillion “American Rescue Plan” in early 2021. It stoked inflation, voters’ chief worry. This bill larded more megaspending less than a year after the Cares Act’s $2.3 trillion, after the economy was back in decent shape. The latter legislation was a timely response to the economic shocks of a global pandemic before there were vaccines.

With Build Back Better, Manchin-Schumer edition, Democrats spent another $1.2 trillion (with $700 billion in taxes) this August. It contains more climate zealotry. It sics the IRS on taxpayers, including low-income families, small businesses and the self-employed—these are easier to go after than real tax cheats. Here come government shakedowns amidst 40-year high inflation. Redistribution of wealth is never a good idea—certainly not repeatedly or at such inflationary orders of magnitude.

Now Pres. Biden is unilaterally cancelling $10,000-$20,000 of around 43 million student loans. This predominately benefits wealthy, woke snowflakes. It will cost taxpayers between $420 billion and $570 billion. The middle class, blue-collar workers and those who didn’t go to college or did so without debt will pay for the bailout.

House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer have set poor examples of comity and problem-solving. With the narrowest of majorities, these leaders have aided and abetted extreme partisan conduct unbefitting members of the U.S. Congress.

The failure to ensure accountability by and oversight of the Biden administration has enabled its twisting the Antiquities Act, which it recently did to tie up a quarter-million acres in Colorado from productive use.

The Federal Trade Commission counted “zombie votes” by former FTC Commissioner Rohit Chopra two months after he’d left the agency to head the Consumer Financial Protection Bureau.

The Justice Department is treating parents who want a say in their children’s schooling and prolife activists like criminals, while robberies and assaults are on the rise, crime’s a top public concern and woke prosecutors refuse to prosecute real criminals.

The Biden Securities and Exchange Commission proposed a rule amounting to the SEC regulating independent contracting. The SEC, the FTC and other agencies are pushing ESG—environmental, woke social and woke governance—criteria.

The Federal Highway Administration’s “guidelines” for states seeking infrastructure construction funds set de facto policy. They require states to deal with climate change, transportation equity and nonmotorized transportation with funds to build and repair highways.

What do American voters think of the state of affairs? Nearly 7 out of 10 think the country’s on the wrong track. Fifty-four percent disapprove of Pres. Biden’s job performance. Most Hispanic voters—72 percent—dislike the direction Democrats are taking the country on inflation, the economy, crime, their woke agenda.

Then there’s history: The party in the White House usually loses congressional seats in midterms.

Midterm elections give Americans an opportunity to do something about their concerns. A Republican Congress, even if the GOP controls both the Senate and the House, couldn’t enact much legislation. But it clearly could apply the brakes to a runaway, reckless White House.

Republicans have a good shot at taking the House. Controlling the House would be huge for America and addressing Americans’ top worries.

But the Senate is critically important because only it confirms or rejects Biden appointees—foremost judges, secondly executive political appointees. And a GOP Senate would preserve the filibuster and rebuff court-packing.

Shifting the Democrat-controlled Senate from 50-50 to 51-49 Republican or better would ensure scrutiny. A Sen. Herschel Walker of Georgia would vote against bad Biden nominees. So would a Sen. Don Bolduc of New Hampshire, Alan Laxalt of Nevada, Blake Masters of Arizona and Mehmet Oz of Pennsylvania.

Notably, their political opponents are rubber stamps for Biden’s ideological picks and policies—as Pennsylvania Democrat John Fetterman would be.

These elections are about protecting private property rights from Biden-Pelosi-Schumer all-fronts assaults, not about candidate personalities. Which Senate candidate will vote against Biden’s leftist excesses?

Property Rights on SCOTUS Docket

On the first Monday this October, the opening day of the U.S. Supreme Court’s next session, the high court will hear oral argument in Sackett v. Environmental Protection Agency. It’s 15 years coming—a long time for unelected, unbridled bureaucrats to have denied private property owners from using their own property.

EPA bureaucrats have asserted that the Clean Water Act’s “navigable waters” and “waters of the United States” (WOTUS) regulations that EPA bureaucrats wrote give them the power to take private property without just compensation.

Thus, the Sacketts haven’t been free to develop, build on or use their plot of dry land in Idaho because the EPA decreed it to be a wetland—despite the absence of surface water. Instead, they’ve been at the mercy of one of the many police-prosecutor-judge-and-jury tentacles of the Administrative State.

CPR wrote about this case this past spring, and we joined the Atlantic Legal Foundation’s amicus brief in support of the Sacketts’ case.

The land owners have fought the EPA and its partner in regulatory overreach, the Army Corps of Engineers. The owners even won in the U.S. Supreme Court in 2012. But that didn’t stop the theft by regulation-run-amok.

The court will consider “the fundamental question . . . whether Mike and Chantell Sackett need permission from the EPA to build their family home.” Their case is being argued by the Pacific Legal Foundation.

This isn’t a rare situation. Government regulatory agencies, such as the EPA and Army Corps, routinely “take” private property by regulatory fiat. Such federal agencies appear in violation of the Fifth Amendment, which prohibits the government from taking property without compensating the owners of that property at a “just” level.

Even more nefarious is that these bureaucratic fiefdoms impose their wills in ways that deprive property owners of due process and from both using their property and enjoying the fruits of their labors as well as from obtaining compensation for the effective loss of their property to the government for its “public” purposes. And what about all the lost time and lost economic gains?

There’s reason for hope that the Sacketts will reclaim the property rights to the property the EPA has unjustly taken from them. Earlier this year, the Supreme Court ruled in West Virginia v. EPA that the same agency overstepped its statutory authority under the Clean Air Act.

Many regard that opinion as a logical precursor to further restraints against federal agencies’ acting beyond the plain authority in statute. Sackett v. EPA looks comparable in terms of regulatory action that exceeds the Clean Water Act.

A favorable decision that effectively strengthens private property rights by constraining regulatory conduct here could be a game-changer in other areas of law and other agencies’ jurisdictions.

Lord willing and the creek don’t rise, the Sacketts will receive a semblance of justice and, at last, the use of their undeveloped plot of land that’s currently off limits by government diktat. And all of America gets relief from arbitrary, capricious regulatory tyranny.