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Patents Under The Trump Administration

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Patents Under The Trump Administration

By Russell Binns, Allied Security Trust

Law360, New York (January 27, 2017, 3:29 PM EST) --

The biggest news of 2016, the presidential election, has become the biggest topic of speculation for early 2017 — what to expect under a Trump administration, and the intellectual property sector is no different. Trump had no stated patent policy during the election and no one really knows what will occur, but IP will probably be a low priority and it may be years before any legislative changes. Probably the top four priorities will be a U.S. Supreme Court appointment, confirmation of cabinet appointments, Immigration reform and health care. The top three IP issues, when they come up, will be patent-eligible subject matter under Section 101, the Patent Trial Appeal Board, and litigation reform. That, however, hasn’t stopped everyone from trying to read the tea leaves and figure out what may occur under the Trump administration regarding patents and discuss what they think could occur or what they would like to see occur.
At each of the conferences I’ve attended since the election and in many of my discussions with financing, legal, licensing and nonpracticing entity executives since, it is clear that everyone is trying to figure what IP policy may look like under the new administration. What sorts of appointees will he put in place? Will Trump find ways to stimulate innovation? Will he seek to create a more stable U.S. patent system, which many believe has been weakened under the Obama administration? The following is my latest thinking on the topic.

At a high level, what we know about the Trump administration that may be relevant to IP policy is the following:

• Trump thinks brands are very important;
• He wants China to pay for IP piracy and wants to name a trade enforcement czar to address trade abuses;
• He had a grandfather who was a decorated inventor;
• The Trump administration will give many public policies a fresh look;
• Independent inventors may get more attention, as they are the steel workers of the IP industry;
• The tech industry is out of favor (but Trump must make reconciliation with tech as it makes up so much of the economy); and
• Trump, who comes from a real property background, would most likely view intellectual property with more of a property rights view.

All of this indicates to the pundits and experts we should expect a patent system where it is harder to invalidate patents and easier to enforce patents, consequently leading to more litigation.
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Patent Reform

Patent reform will most likely be a low priority for the new administration. The Innovation Act (H.R. 9) was intended to address runaway lawsuits, attorney fee shifting, and stays. These issues have been addressed by court decisions recently, and no one expects H.R. 9 to go anywhere in the next Congress.

The Strong Act from the Senate, which addressed the presumption of validity in the PTAB, may have more appeal in the coming Congress, but will also be a low priority. Though Sen. Chris Coons, D-Del., is expected to resubmit it next year.
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The patent litigation landscape:
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There has been an emergence of China as a patent litigation forum. As of now, the success rate for foreign patent owners in enforcement actions is 100 percent! There is thinking that Chinese patent litigation may influence Trump, especially if a Chinese company enforces patents against a U.S. company and enjoins them from shipping products out of China.
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IP Investors and Strength of the U.S. Patent Market

A number of IP investors I have spoken with believe that patent rights are the most inefficiently priced asset in the market, and that higher prices for patents would fuel innovations. The inefficient valuation is likely due to a lack of reasonable, predictable damages based on economic contribution. Patent valuations are down by 66 percent since 2011. There is concern that innovators are avoiding standard-essential patents leading to possibly less interoperability, and standard-setting bodies are suffering from it. It is believed that the U.S. is conceding its patent leadership to other countries and that makes non-U.S. patents excellent leverage for better settlements, particularly where injunctions are available, such as in Germany.

It is my belief, and many IP investors I’ve recently spoken with agree, that the pendulum is swinging back to more valuable patents going forward. Public NPE values have increased post-election and performance is improving, particularly for the largest public intellectual property companies.

It should be noted that among Federal Circuit judges, 11 have voted for patent eligibility in software cases. However, Judge Haldane Robert Mayer has expressed his anti-patent bias, and the stocks drop of public patentees that find Judge Mayer on their panel.

IP investors, particularly litigation finance outfits are finding strong demand from more large operating companies that want to take litigation expense off their books and finance it. Should interest rates continue to rise beyond the recent December rate increase, there may be more companies looking to litigation finance rather than relying on lines of credit.
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https://www.law360.com/articles/885572/patents-under-the-trump-administration