No Quiet Title for Innovators

The injustice Centripetal Networks has found itself facing at the Patent Trial and Appeal Board—AKA patent death squad—proves several things about PTAB. Clearly, with PTAB lurking, there will never be “quiet title” for any patent.

Quiet title is essential to property rights—whether you’re talking about land where the Environmental Protection Agency asserts unconstitutionally broad “navigable waters” regulations or by unfair eminent domain without just compensation, financial assets unduly taxed (again) at death or taken without due process through civil asset forfeiture.

With any property, including patents and copyrights, quiet title, access to justice, due process and just compensation are hallmarks of meaningful property rights.

PTAB is a quasijudicial administrative body that runs unbridled, adversarial proceedings that “efficient infringers” weaponize on a regular basis. Sold as a faster, cheaper alternative to judicial litigation, PTAB epitomizes unsecure property rights.

Centripetal is an innovator of highly valuable, highly effective cyber protection technology. The innovator has seen its patents willfully infringed, their validity repeatedly challenged in multiple forums and the very nature of PTAB’s threat to quiet title and property rights.

Cisco feigned interest in legitimately using Centripetal’s cybersecurity technology, then used the proprietary knowledge it obtained to infringe Centripetal’s patents. Cisco challenged patent validity in PTAB and federal court.

The district court considered and upheld the Centripetal patent’s validity and ruled willful infringement against Cisco. Cisco did not contest the court’s validity ruling, which evidences patent validity.

After the court ruled for Centripetal, Palo Alto Networks sought PTAB challenge of the patent. PAN was not a party in Cisco’s court litigation, and Centripetal hadn’t asserted its patent against PAN.

PAN appeared intent on gaining leverage against Centripetal in separate litigation. But Cisco would also benefit if PTAB wipes out Centripetal’s patent on which willful infringement was found.

Such third-party gamesmanship and harassment is standard fare for owners of proven valid and infringed patents. That’s because PTAB invalidates 84 percent of patent claims before it.

Next, the threat to secure rights really got ugly. The nearly $3 billion judgment got thrown out on a technicality. The trial judge’s wife held less than $5,000 in Cisco stock, which the judge learned just as the case was concluding with the opinion practically written. The Federal Circuit Court of Appeals ruled that the stock should have been sold instead of placed in a blind trust.

Administrative patent judge Brian McNamara, on the panel voting to grant PAN its bite at the already bitten apple, owns around $15,000 in Cisco stock and collects payments from his old law firm, which is also Cisco’s firm. McNamara has gone to bat for Cisco, sitting “on every single panel deciding the fourteen IPR [interpartes review] petitions Cisco filed against Centripetal” in 2018 alone.

Given the potential bias, Centripetal asked that McNamara recuse himself and PTAB vacate the decision giving PAN its IPR. McNamara and company denied Centripetal’s request contesting PAN’s IPR grant. Cisco and Keysight—both past their time allowed for PTAB challenge—were joined with PAN—like letting expelled players rejoin the game.

The PTAB board circled wagons around their conflicted colleague. It threatened Centripetal for raising issues about potential conflict of interest and partiality.

Instead of safeguarding its integrity, PTAB assaulted Centripetal’s motion as “frivolous,” “glaringly deficient,” “lacking in substance,” lacking “competent, good faith argument,” and “highly inappropriate.” PTAB then denied Centripetal its lawyer. After the damage was done, McNamara and another PTAB judge exited the case.

Centripetal sought relief from the Federal Circuit, asking for expedited consideration, but the appellate court has allowed PAN’s parallel patent challenge to proceed while Centripetal awaits a new trial in real court.

There’s also the fact PTAB “judges” are held to the same standard of ethics and conflict of interest as other bureaucrats—basically, a standard that something questionable doesn’t trigger criminal liability.

There’s a rule that adjudicatory executive officials recuse themselves when the appearance of partiality exists. That’s what PTAB scoffed at and the Federal Circuit let the PTAB clowns off the hook of in ignoring Centripetal’s mandamus request.

Article III judges abide by a higher ethical standard that clearly doesn’t operate at PTAB. Yet, PTO Director Kathi Vidal told Congress, “When I perform that role [of director review], I hold myself to the same standard of any Article III judge.”

Soon before the Federal Circuit ignored the facts so thoroughly, Centripetal’s attorney brought Vidal’s assertion to the court’s attention. “The Director’s representation to a coordinate branch is wholly inconsistent with the PTO’s position here that the ethical considerations at play in proceedings before APJs are ‘just different’ from the standards for Article III courts. . . . The PTO should not be assuaging Congress’s concerns about politics and ‘ex parte contacts,’ while telling patent holders something quite different.”

In short, Centripetal’s situation well illustrates the vast uncertainty overshadowing patents and patent rights. With PTAB, there is no quiet title for patents. Ever.

World IP Day Points to IP’s Role in Competitiveness

World Intellectual Property Day for 2023 is April 26. The forms of private property rights most closely connected with innovation deserve honor throughout the year, especially on this occasion.

The U.S. Chamber of Commerce’s Global Innovation Policy Center annual rankings illustrate IP’s importance and the degree to which various nations secure IP property rights. These rankings show how each country compares with others in terms of their respective IP protections.

Overall, GIPC’s 2023 rankings have the United States in 1st place. China ranks 24th.

The United States leads all nations for strength on copyrights. For trademark, the United States and the United Kingdom tie for 1st place. America ranks 1st on IP enforcement, ties six other nations for 2nd place in IP systemic efficiency, places 3rd on IP commercialization and lands in a 10-way 1st place tie for international treaties that protect IP.

On patents, our country trails Singapore in strength of patent system in a 4-way tie for 2nd with Japan, South Korea and Switzerland. On trade secret protection, the United States is tied for 7th place with Italy. We’re 16th for design protection.

The rest of the box score for China: It ranks 15th in IP system efficiency, 17th on patent system strength, is tied 4 ways for 13th place on trademark, holds 24th place in trade secret protection, ties Kenya for 26th place on copyright, ties with Mexico for 30th in international IP treaty ratification, is 36th in IP enforcement, 40th in IP commercialization, and in a 6-way tie for 45th place for design rights protection.

Americans should keep in mind that while the U.S. IP system stacks up well versus most other countries on copyright, trademark and IP enforcement, on patents, the U.S. system remains respectable, relatively speaking. However, compared with the private property rights basis of U.S. patents that extended through the 19th century and through the 1980s, our robust patent regime that produced the iconic American inventor has lost ground.

Congress, courts and administrative bodies have steadily weakened U.S. patents and destroyed patent rights over the past 30-plus years. The ironically named America Invents Act. The Supreme Court in, inter alia, Oil States, eBay, Alice and Mayo. The patent death panel known as PTAB.

To be sure, U.S. competitiveness with China involves more than just IP strength. Still, patents and IP are a key part of the equation. The fact is, China is steadily improving its IP system. Its patent system has steadily risen while the U.S. patent system is weaker than it was 20 or 30 years ago. For instance, China has mimicked our Bayh-Dole Act for IP-based technology transfer for commercialization, and China provides infringed patent owners injunctive relief. (Following the eBay ruling, injunctive relief is readily available for copyrights and trademarks, but typically denied to patent owners.)

Competitor nations weaponize their laws and agencies. China, South Korea and other nations favor domestic companies and disadvantage U.S. companies. They deny nondomestic parties access to evidence, give short notice of adjudicatory and regulatory proceedings, and preclude crossexamination of witnesses. Their courts issue extraterritorial antisuit injunctions. They hammer Western companies by abuse and unequal application of things like “competition” laws.

Meanwhile, much U.S. action—supporting the TRIPS waiver, an executive order with 70-plus aggressive antitrust directives of which several tilt against patent rights, imposing government price controls on pharmaceutical innovations, undermining standard-essential patent licensing, threatening the U.S. International Trade Commission’s exclusion of IP-infringing imports, initiating abuse of Bayh-Dole’s march-in provisions as product price controls, doing Big Tech and foreign infringers’ bidding to make U.S. patent rights weaker and less secure—only makes matters worse for U.S. companies doing business abroad and harms American competitiveness.

This World IP Day should bolster America’s resolve to restore critical, lost elements of our once-dominant patent system. IP can and should be our “secret sauce” for maintaining and widening the delta of a competitive advantage as global innovation leader. It remains so in some respects: The United States enjoys a trade surplus in IP licensing revenue. That’s a start. Now we can do more.

Congress, Supreme Court One-Two Punch for WOTUS, Admin State

In the latest round of Administrative State ping-pong, Congress has taken the first step toward disapproving an Obama-Biden-era EPA rule that turns puddles into “navigable waters”—at least in nefarious government regulations.

The Biden administration recycled the repealed Waters of the United States, or WOTUS, rule. With a Republican majority in the U.S. House, a resolution of disapproval, H.J.Res. 27, has now passed that body, 227-198.

The Trump administration withdrew the Obama WOTUS rule and replaced it with a Navigable Waters Protection Rule. The Navigable Waters Protection Rule curbed the excesses of Obama-Biden’s overbroad WOTUS rule and set a more rational, balanced rule. The NWPR respected private property rights while preserving the statutory intent of the Clean Water Act.

The Environmental Protection Agency announced in 2021 its intent to revoke the Navigable Waters Protection Rule and again to inflate the definition of “waters of the United States.” Biden’s WOTUS rule promises to sweep more than 60 percent of the nation’s streams and millions of acres of wetlands into federal jurisdiction as “navigable waters” on paper.

Last year, the EPA moved to pull the NWPR and replace it with the Obama-Biden WOTUS retread.

Members of the U.S. Congress who are at least a little familiar with the U.S. Constitution, along with land owners across the country who get caught in the crossfire of the Administrative State’s regulatory ping-pong match, are sick and tired of the back and forth regulation-deregulation swings from one presidential administration to the next.

This situation renders impossible any semblance of certainty and predictability for property owners. It’s untenable for the many innocent property owners who suffer the painful, expensive consequences of such a ludicrous, dysfunctional state of the regulatory state.

Ah, there’s a twist. The U.S. Supreme Court recently ruled against the EPA’s overreach and its stretching a statute way beyond what its words say, in West Virginia v. EPA. And SCOTUS appears game to continue reining in the runaway Administrative State’s regulatory overreach.

Awaiting the high court’s decision are Michael and Chantell Sackett, property owners whom the EPA has wrapped in red tape since 2007, on WOTUS regulation-related grounds, blocking them from building a house right beside an existing house in a developed neighborhood. (CPR supported the Sacketts’ successful SCOTUS petition.)

Talk about poster children for victims of the abuses of power and bureaucratic theft of private property by the Administrative State run amok. That’s the Sacketts.

The very first day of the Supreme Court’s fall term this past October, SCOTUS heard arguments in Sackett v. EPA.

Across First Street, the resolutions expressing Congress’s disapproval of bureaucracy-empowering regulations operate under the Congressional Review Act. The CRA provides an expedited process for Congress to disapprove of a recent rule or regulation.

Of course, President Biden is expected to veto the CRA measure—but the point will have been made, with probable judicial action constraining EPA bureaucrats on this very piece of regulatory territory.

Conservatives for Property Rights numbers among the 100-plus organizations supporting Congress’s CRA disapproval. CPR observed: “This [latest Biden] rule would compound the regulatory vagueness and expand the EPA’s and the [Army Engineers] Corps’s discretion far beyond what is reasonable. It is tantamount to a wholesale taking of private property without just compensation.”

Next stop for the CRA is the U.S. Senate. There, Sen. Shelley Moore Capito leads the companion resolution, which all Republican senators have cosponsored. Stay tuned! Maybe not all of the 23 Senate Democrats standing for re-election are entirely empty-headed.