Bad, overly broad patents are harmful to U.S. manufacturing companies and are antithetical to their intended purpose of fostering and protecting innovation. Simply stated, poor quality patents disincentivize U.S. manufacturing and strain well-paying manufacturing jobs.
I recently testified at a hearing before the U.S. Senate Judiciary Subcommittee on Intellectual Property about how critically important it is to improve patent quality. Overly broad patents can create substantial roadblocks to innovation and stifle the widespread use of an idea that benefits the population. That phenomenon is most problematic where patents claim substantially beyond what was invented or claim technology already available.
These patents are often used by non-practicing entities, or “patent trolls,” to extort payments from manufacturing companies, which can add significantly to the cost of doing business and indirectly disincentivize products to be “Made in America.” In 2013, then Chief Judge Randall Rader of the U.S. Court of Appeals for the Federal Circuit recognized the problem of asserting bad patents against smaller companies with limited means, demanding a “license fee” that is far less than the expense of litigation defense, and called it litigation abuse. The defendants of these cases are faced with a Hobson’s choice: litigate and be vindicated after spending significant resources or pay the extortion fee to avoid the exorbitant costs of litigation.
Massachusetts-based Acushnet, the steward of golf brands Titleist and Footjoy, has been the target of many patent trolls. For example, Eclipse IP LLC alleged infringement of their patents because they ordered a golf club online and received an email about the club’s shipment. Innovatio IP Ventures alleged infringement simply because Acushnet used Wi-Fi. Helfrich Patent Licensing LLC alleged infringement of its patents because Acushnet sent tweets to its followers. Were these entities abusing the patent system? Absolutely! Another bad actor, Landmark Technologies, recently sent over 1,800 demand letters seeking $65,000 extortion fees. Contrary to popular belief, it is American manufacturers in the crosshairs more than any other sector due to abusive patent litigation. More than half of all troll lawsuits in the first quarter of 2021 were filed against American manufacturing companies of all sizes, up 20% from the year before.
Bad patents can also stifle innovation without ever being asserted because they impose barriers to the creation of products. Companies often avoid implementing technology in the presence of a weak patent because they know that juries can be unpredictable, particularly when faced with a claim of invalidity. Juries do not consist of people who are skilled in the highly technical and specialized areas that patents cover, nor are they familiar with patent law, so they can easily be confused in patent cases. Thus, companies will simply avoid deployment of many technologies and innovations, even though patent claims are clearly invalid. It is often substantially easier and less expensive to avoid a technology altogether than to prove patent invalidity to a jury.
Thankfully, there are solutions to reduce the problem. We need the U.S. Patent and Trademark Office to put forth the resources to stop bad patents from being granted, and we need legal tools like the inter partes review to be readily accessible so the Patent Office can remove bad patents that never should have been issued in the first place. The Patent Office understands its objective to provide patent protection to inventions, but it also recognizes that invalid patents can be granted even after a thorough examination if “prior art,” or information on what already exists, is unavailable to the Patent Office.
Valid patents, which stand up to scrutiny and encourage and protect innovation, are critical to our economy. Overly broad patents, in contrast, are detrimental to the economy, stifling innovations and employment. Litigation abuse is clearly the most visible way that bad patents harm companies, but bad patents also create roadblocks that prevent prudent companies from innovating and making products that would be appealing to and appreciated by consumers.
Stopping bad patents is critical to America’s economy and to incentivizing innovation. We need to get it right.
Troy R. Lester is chief patent counsel at Massachusetts-based Acushnet Co., manufacturer of golf brands including Titleist and FootJoy.