Fighting Abusive Patent Litigation During a Year of Health Crisis: 2020 Year In Review

The coronavirus dominated the news cycles, and our personal lives, in 2020. Scientists around the world raced forward to create a vaccine. Alongside that massive effort to create a critical new invention, we saw a renewed debate about patents and their role in helping, or hindering, innovation.  

At EFF, we’ve been the watchdog for years when patent owners abuse their monopolies. Unfortunately but predictably, some patent owners actually saw the rise of the COVID-19 health emergency as a business opportunity. 

Shortly after the outbreak of the novel coronavirus, a patent troll called Labrador Diagnostics used patents to sue a company that makes COVID-19 tests. Even worse: Labrador used two patents that were originally issued to Theranos, the defunct blood-testing company whose former CEO is now facing criminal fraud charges. Following the public outcry around its patent threats, Labrador agreed to grant royalty-free licenses to those working on COVID-19 tests.  

Labrador wasn’t the only example of a patent owner misbehaving this year. Lawsuits by patent trolls went up during 2020. By mid-year, they were 20% higher than last year [pdf], and 30% higher than 2018. In May, we wrote about a patent troll called Swirlate IP that sued five different companies, including ResMed, a company that makes ventilators. Swirlate, a limited liability company based in a “Pack and Mail Shoppe” in a strip mall in Plano, Texas, is linked to IP Edge, a large patent assertion company owned by three IP lawyers. 

In an emergency situation, policymakers should have taken big steps to protect the innovators who were coming up with low-cost COVID tests from patent threats that would stifle their life-saving efforts. In March, we wrote about one of the most potentially powerful strategies: using 28 U.S.C. § 1498, a law that allows the government to use or authorize others to use patented technology and make itself, rather than private entities, the defendant in a related patent infringement lawsuit – along with limiting damages to reasonable compensation. Policymakers also could have embraced something like the Open COVID Pledge, to make sure that IP doesn’t become an obstacle to the creation and distribution of treatments for the disease.  

Unfortunately, that’s not the direction Congress went in. Pro-patent lobbyists and lawyers went back to work, suggesting the same old “solutions” they pushed before the crisis: even more patents. Some patent-system insiders are seeking to change the law to patent things that the Supreme Court has already said aren’t eligible, like tests that measure biological facts of what’s present in a human body. 

So lawmakers dabbled with ideas that would make the patent system worse, not better. This year, we advocated against a bill that would have actually extended the terms of some patents by 10 years, and a bill that would have authorized customs agents to seize products at the border based on design patents. Another bad bill, the “Inventor Rights Act,” would have created a special class of patents deemed by the government to be “inventor-owned,” then given them special privileges that make it easier to sue people and more harmful when they do. For instance, “inventor-owned” patents, which many patent trolls would qualify for, would have been able to avoid review processes at the U.S. Patent and Trademark Office (PTO) designed to filter out bad patents, as well as critical venue rules created by the U.S. Supreme Court to prevent patent plaintiffs from taking advantage of especially patent-friendly judicial districts.  

Two Wins for Transparency

Even though we were often on the defense this year, it isn’t all bleak. One bright spot: we won a major victory in our Uniloc case, which went up to the Federal Circuit.  

Uniloc is one of the most prolific patent trolls, having filed more than 170 patent infringement lawsuits in 2018 alone. In a case it filed against Apple, an important issue came up—did Uniloc even have the right to sue anyone? The documents were likely to shed light on Uniloc’s relationship with its litigation funder, Fortress Investment Group. Fortress was the same group that assisted with the Labrador lawsuits over Theranos’ old patents.

In July, the Federal Circuit upheld Judge William Alsup’s decision that Uniloc’s sealing request had been “grossly excessive.” The case continues, with a narrower dispute remaining over third-party confidentiality in a smaller set of documents, such as the identification of companies that have patent licenses from Uniloc. 

When it comes to transparency in patent litigation, the Uniloc case led unexpectedly to another victory, as well. Because oral arguments in the Federal Circuit appeal took place in April, during the coronavirus outbreak, the court held that it would have to be done remotely. We filed a motion asking for full public and media access to the telephonic hearing. The Federal Circuit embraced our request, providing real-time audio access to the public for the first time.  

Protecting Patent Reviews at the U.S. Patent and Trademark Office

Users and technologists have been harassed for years by patent trolls—typically, shell companies whose business boils down to patent threats and lawsuits, rather than creating any goods or services of their own. Patent trolling is a business that hurts small companies, is a drag on innovation, and can even harm our free speech rights. 

One of a few tools that make a small but noticeable dent in the harmful business of patent trolls is a process called inter partes review, or IPR. This process allows for specialized judges at the Patent Trial and Appeal Board to take a second look at patents, to see if they should have been granted in the first place. Through the IPR process, the office has canceled all claims on more than 2,000 patents in recent years, including many software patents asserted by litigious patent trolls. 

This year, the Patent and Trademark Office has reversed course. They’ve stopped instituting many IPR petitions for bureaucratic and procedural reasons, rather than carrying out the job as Congress intended. That’s why, together with several other groups supporting patent reform, we’ve asked senior Congressional representatives in both parties to apply more oversight to the PTO, and insist that it do the job it was told to do—perform inter partes reviews efficiently and according to the rules. 

The all-out attempt to wreck IPRs hasn’t stopped. In the final days of the Trump administration, PTO director Andrew Iancu is trying to push through rule changes that would weaken IPRs even further. Hundreds of you have spoken out against that proposal, which we hope will be set aside. 

In 2021, we’ll be on guard to safeguard elements of patent law, like IPRs and transparency in patent litigation, that have made the patent system a bit more fair for small business and technology users.  

This article is part of our Year in Review series. Read other articles about the fight for digital rights in 2020.