A Reply to the Critics
“America’s leading chipmaker is being sued by undisclosed foreign interests based on demonstrably weak patents, and yet we are preventing that chipmaker from defending itself in USPTO proceedings.”
Paul Morinville, Founder of US Inventor, recently published a response to my column criticizing the Restoring America’s Leadership in Innovation Act of 2021 (RALIA), a bill in Congress that would abolish the Patent Trial and Appeal Board (PTAB). I offer a few observations in reply.
I argued in “The Made in China Act,” November 16, 2022, that juries are not an effective or reliable check on patent validity and that eliminating contested validity reviews at the United States Patent and Trademark Office (USPTO) would be a disaster for U.S. manufacturing.
The Assault on U.S. Chipmakers
As if determined to prove my point, the VLSI patent-assertion group recently obtained yet another monster infringement verdict against Intel based on a patent that probably shouldn’t have issued.
The patent in question, no. 7,606,983, claims a system of assigning the order in which multiple processors request access to computer memory.
Bear with me; even if you never obtained a Ph.D in electrical engineering, you should be able to understand this case.
The patent’s claimed advance is that the rules defining an order of access to memory are identified in the access request itself. In the words of the ’983 patent, “each access request includes an indication of whether [and how]” it “is to be performed in a sequential order among other occurrences of the access request.”
After it was sued, Intel conducted its own prior art search and identified the Khare reference. Khare is a published patent application that also describes a system of regulating order of access to computer memory, and it was filed three years before the ’983 patent.
Khare’s system also discloses (see paragraph 40) that “each transaction request” includes “ordering semantics [that] may define, for example, rules by which a transaction or request is allowed to be processed or completed before another transaction.”
The wording of Khare isn’t identical to that of the ’983 patent, but the concept is the same: when requesting access to memory, include in the request either an indication whether it “is to be performed in a sequential order” (’983 patent); or the “rules by which a request is allowed to be processed.” (Khare)
Intel developed a strong case that the claims of the ’983 patent would have been obvious. But when it tried to present this challenge to the USPTO, Intel was denied a hearing on the merits because of the Fintiv policy.
Two years later, the case went to trial in the Western District of Texas. The result: the jury rejected all validity challenges, found the patent infringed, and awarded damages of nearly $1 billion.
Why did the jury reject Intel’s prior-art challenges to the ’983 patent? Here is the jury’s explanation of its decision. Your guess as to its reasoning is as good as mine.
We do know that juries often will not understand or engage with a patents-and-printed-publications obviousness analysis of advanced technologies. We also know that the courts in the patent magnet jurisdictions will exclude evidence of the plaintiff’s identity, allowing even a foreign patent-assertion fund to pass itself off as a domestic start-up company. We also know that in another recent VLSI case that resulted in a multi-billion dollar verdict, jurors posted “funny” memes comparing Intel to a supervillain in a comic-book series.
RALIA: A Strategy for Undermining America
This is an absurd way to run an intellectual property system, particularly when critical technologies are at stake. If our system allows patents as weak as the ’983 patent to command billion-dollar damages awards, we eventually won’t have much of a semiconductor industry left in the United States.
Intel’s founders were among the original inventors of the integrated circuit. The company remains America’s leading-edge chip manufacturer. It is the only U.S. company, for example, that is on track to build next-generation “5-nanometer” chips.
But past performance is no guarantee of future success. Semiconductor design and manufacturing is a fiercely competitive industry. Several foreign companies are working hard to displace Intel, some of which have the active support of their own governments. And there are many examples throughout U.S. history of technologies that were originally invented in this country, and which were once primarily manufactured here, but which have since been ceded to foreign countries.
Nor is chip design and manufacturing merely an economic concern—it is a national-security issue as well. Weapons systems such as fighter aircraft and strategic bombers, radars and communications systems, missiles, and naval platforms all rely on advanced microprocessors. Maintaining a lead in this technology is critical to modern warfare. Just ask the Russian Federation how its reliance on Soviet-era systems is working out in its war against Ukraine. And if the United States finds itself in another military conflict with China, we won’t be able to rely on a supply chain that runs through Shenzhen.
Nor can we count on VLSI to fill the gap. Don’t be fooled by its appropriation of the name of a former U.S. chipmaker: the current “VLSI” is unrelated to the VLSI of the 1980s and 90s, nor does it make or design chips (or anything else). It is simply the patent-assertion arm of Fortress Investment’s litigation fund. VLSI acquired its semiconductor patents from a foreign company that apparently decided to unload the weaker parts of its portfolio.
Fortress itself is owned by a foreign conglomerate, and no one knows who is funding the litigation campaign against Intel. VLSI refuses to disclose who its owners and investors are, other than unspecified “high net worth individuals” and “sovereign wealth funds.” For all we know, China’s government itself may be among the investors that are on track to extract billions of dollars from Intel.
It is incredible that we are allowing this to happen. America’s leading chipmaker is being sued by undisclosed foreign interests based on demonstrably weak patents, and yet we are preventing that chipmaker from defending itself in USPTO proceedings. It would be hard to think of a policy more clearly designed to undermine the United States.
And RALIA would expand and institutionalize this disaster. VLSI’s litigation campaign so far has relied on a dozen Fintiv denials to obtain $3.2 billion in damages awards against Intel. But under RALIA, every patent would be immune from validity review at the PTAB. It would effectively become open season on U.S. technology manufacturers.
The PTAB is Doing High-Quality Work
I promised you a reply to Paul Morinville, but when it comes down to it, he and I don’t disagree on many specifics. He does not contest my conclusion that VLSI’s other asserted patents—which resulted in a $2.2 billion award against Intel in March 2021—are also probably invalid(we should have a final decision from the USPTO on those patents early next year).
Nor does he challenge my conclusion that the Leak Surveys patent, which US Inventor cites on its website, clearly was obvious in view of prior art.
Mr. Morinville does disagree with me about the Coulter Ventures jump-rope patent, asserting that it was “unjustly invalidated.” You be the judge. The ’809 patent claims a jump rope whose cable is attached to a “ball element pivotally coupled” to a shaft that is “rotatably journaled” inside the jump-rope handle, allowing the cable to swivel and pivot with respect to the handle.
Prior-art patent applications from the 1970s, however, already disclosed jump ropes with rotating handles (a “jump rope” with “a shaft that is supported in the handle in rotary fashion”) and the use of a “swivel joint” that allows the rope to “externally oscillate.”
The ’809 patent claimed these same features for the same functions. The Patent Trial and Appeal Board (PTAB) considered the arguments from both sides and, in a carefully reasoned decision, concluded that all the claims’ limitation were met by the prior art.
It is hard to see how the Board could have found otherwise. Indeed, had it ignored the evidence before it, the Board would have been reversed by the Federal Circuit.
Unlike a jury, the PTAB is subject to the Administrative Procedure Act. Thus, unlike a jury, the Board cannot hand in a verdict form that looks like an a la carte menu. It is required to analyze the evidence before it and explain its reasoning (I should know—as an agency lawyer, I lost cases on appeal when the Board was less than clear in explaining its findings).
Yet despite the Board’s being subject to this more exacting review standard, the PTAB’s patentability findings are more likely to be upheld when they are reviewed on appeal. A recent academic study found that “the PTAB is affirmed notably more often than district courts on [patent] validity issues”—and that “the most straightforward conclusion” is that the Board judges’ technical expertise has “aided decision-making on the thorny scientific questions endemic to patent law.”
Interestingly, the same study also found that when the Board is reversed on appeal, it is more frequently overturned for failing to find that a claim is unpatentable than for holding that a claim is unpatentable. So much for the infamous “death squad” slander.
The Path to Reliable Patent Rights
Mr. Morinville concludes by arguing that RALIA would take us back in time to a patent system that existed earlier in U.S. history. This is not accurate.
For most of our nation’s history, patent cases were tried before a judge—as recently as 1978, over 90% of patent trials were bench trials.
The current chaos is the product of two factors. First, a pair of Warren-era decisions allowed plaintiffs to demand jury trials in complex civil cases, including patent infringement actions. The other factor is the rise of the patent magnet jurisdictions, in which judges advertise for patent cases and recruit plaintiffs to file before them. This combination, along with a routine disregard for Rule 702, has made it possible to seek outsized awards for invalid patents.
What has kept the system in balance in recent years is the development of post-issuance review at the USPTO. In many cases, this alone provides a meaningful check on assertions of invalid patents. By proposing to abolish such review, RALIA would create a legal nightmare that has no precedent in U.S. history.
If US Inventor wants to go back to a time of a better patent system, it should support the USPTO’s current initiative to develop more rigorous examination procedures. We also need to reform the culture of patent prosecution. During the last two decades, the fees for preparing patent applications have gone down in real terms.
We need to return to a system in which experienced attorneys have adequate time to review an application, and in which a prior-art search is a routine part of prosecution. Under the USPTO’s policies, if the relevant art was considered during examination, the patent is largely insulated against that art in later PTAB proceedings. This is the proper path to creating gold-plated patents.
Of all the patents with invalidated claims that U.S. Inventor cites on its website, how many had the relevant prior art presented to the examiner during prosecution? I would bet few if any.
What US Inventor is advocating in RALIA would not create strong patents—it would simply insulate invalid patents from scrutiny. In doing so, it would hobble U.S. chipmakers and other manufacturers and make the United States technologically dependent on China and other foreign countries.
RALIA is not a path to restoring past glory. It is a prescription for economic suicide.
