September 22, 2019 Profiles in IP Law

An Interview with David Jones, Executive Director of the High Tech Inventors Alliance (HTIA)

Eli Mazour

©2019. Published in Landslide, Vol. 12, No. 1, September/October 2019, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

Before the 2016 election, all three branches of government were largely driven by the “patent troll” narrative when it came to patent issues. This was largely due to the successful efforts of “big tech” and their non-tech allies that thought they were being unfairly targeted by patent owners. The U.S. Supreme Court’s decision in Alice, which restricted patent eligibility, and the passage of the America Invents Act (AIA), which created new post-grant proceedings for challenging patents, were in many ways the last, major rewards of those efforts.

After the 2016 election, GOP Congressman Darrell Issa—who was then the chairman of the subcommittee handling intellectual property (IP) issues—publicly urged President Donald Trump to keep Obama’s head of the U.S. Patent and Trademark Office (USPTO). Instead, Trump nominated Director Andrei Iancu. Since his confirmation, Iancu has publicly bemoaned the “patent troll” narrative and has taken steps to soften some of the impact of Alice and the AIA. In Congress, Issa—along with House Judiciary Chairman Bob Goodlatte and Senator Orrin Hatch—continued to push new “patent reform” efforts to deal with the patent troll problem. However, the efforts went nowhere and all three announced that they would not run for reelection during the midterms.

After the midterm elections, the Senate’s biggest proponents of strengthening patent rights—Senators Thom Tillis and Chris Coons—were named as the leaders of the reconstituted Senate Judiciary Subcommittee on Intellectual Property. A longtime proponent of strengthening patent rights—Representative Doug Collins—replaced Goodlatte as the top Republican on the House Judiciary Committee. Instead of patent reform legislation, Tillis, Coons, and Collins are considering legislation to undo the impact of Alice by clarifying § 101 of the Patent Act. During hearings related to the legislation, Tillis noted that “big tech” companies were invited to testify but chose not to do so individually. Instead, David Jones of HTIA and representatives of two other tech trade associations represented the views of the tech industry.

After working for Senator Hatch on Capitol Hill and as assistant general counsel for IP policy at Microsoft, Dave became the head of HTIA earlier this year. HTIA represents nine of the largest technology companies in America. Most of those companies were previously members of the Coalition for Patent Fairness, which successfully lobbied in support of the AIA. During the interview, Dave explained that although the companies are very different in some ways, “there are a lot of connections between these companies, at a personal level. The chief patent counsels all know each other, get along well, and share very similar views on the patent system.”

I sat down with Dave to discuss HTIA, whether there was a shift in Washington with regard to patent issues, and the attitudes of “big tech” companies toward these developments. Dave was in good spirits, happy to talk about any subject, and generous with his time—in other words, not what one would expect from a representative of a group that is supposedly in retreat on patent issues.

What are some of the disagreements that HTIA member companies have on patent issues?

There’s nothing major. I mean, there are no big fights. I guess the biggest set of disagreements are actually not disagreements about substance, they’re disagreements about priorities. For some of my members, I think their number one priority is preserving effective post-grant proceedings, and probably their number two priority is § 101. Whereas for some members probably, their top priority is § 101. And everyone cares about improving patent quality, but the companies prioritize this a bit differently. So, the member companies generally have very similar views, and any disagreements are pretty minor and usually not about the position to take, but more a question of where we should put time and resources in order to satisfy everyone’s priorities.

What do your member companies think is the role of patents in America?

We believe the role of the patent system—which is constitutionally defined—is to promote the progress of the useful arts, which I think is almost universally agreed translates into advancing technology. So, the purpose of the patent system is to encourage technological progress, which is why we’re concerned about proposed § 101 legislation, which we think would allow for patenting outside of the kind of technological innovations we believe are appropriate.

Do your member companies think patents are necessary for innovation?

No, or at least not always or for all types of innovation. Advances in areas other than technology and some technological innovation as well don’t depend on patents. There’s evidence that nontechnical innovation on, for example, business practices and strategies doesn’t require patents and that business method patents may actually reduce R&D spending. For some types of innovation and creativity, other forms of IP—like copyright—are better suited. And some probably don’t depend on IP protection at all. That’s why we think it’s important the patent system remain focused on technological advances.

HTIA companies are spending huge amounts of money on R&D—over $60 billion annually, resulting in more than 115,000 patents. That’s a lot. I mean, some of the biggest patent owners in the world are HTIA members, as are, I think, the two largest corporate funders of R&D. So, HTIA members believe that patents are important. But a lot of times they innovate due to customer desires, or competitive pressures, or some strategic objective. Sometimes it’s the promise of patent protection, but sometimes it’s not. As with many things, there’s no single answer about what drives innovation in all situations.

You mentioned that preserving effective post-issuance proceedings is a priority. What are your goals on this?

Basically, our main goal is to ensure that Patent Trial and Appeal Board (PTAB) proceedings continue to be an effective mechanism for challenging invalid patents. There have been a number of changes—both regulatory and as a result of judicial decisions—that have reduced the effectiveness of these proceedings for challengers. In particular, discretionary denials of petitions seem to be increasing, which is a potential concern. Despite the changes, these proceedings continue to be a very important tool for dealing with invalid patents. But, it’s important to remember that fairly small changes can have a big impact on the effectiveness of post-issuance proceedings. The changes made by the AIA were not major ones, but they had a big impact. By the same token, fairly small changes—many of which could be made without legislation—could take us back to something closer to the old inter partes reexamination (IPR) proceedings, which were not very useful in most cases. Our goal is to make sure this doesn’t happen.

There are also some things that we think could be done to improve the existing IPR process, such as expanding invalidity grounds to § 112 and maybe even § 101 issues, further clarifying or limiting estoppel, and fixing some issues with the time bar for filing petitions.

If your member companies had to choose to go back to a system that was in place before the AIA and Alice or get rid of patents altogether, which one would they prefer?

I don’t know. These companies are actually more pro-patent and more invested in the patent system than you or your readers might think. I don’t think that HTIA member companies would choose to have no patent system. Although, we definitely would prefer to have the patent system that we believe is the optimal one for our member companies, and also for technological advancement.

Why do HTIA members obtain patents?

I actually don’t think it’s any different than the reasons most large companies obtain patents. There’s no one reason. And, it varies from company to company, technology to technology, and market to market. Virtually all large tech companies are engaging in really sophisticated portfolio development. They’re developing a portfolio, and looking at it as a basket of rights. They’re trying to achieve multiple, often interrelated, objectives through their portfolio development.

Just like other big companies, HTIA members are patenting in part to establish some exclusivity, in part to preserve freedom of operation, and in part to achieve other strategic objectives. Just like in other industries, tech companies sometimes get patents because they actually want exclusivity. You want to protect the R&D investment you’ve made. Several of our companies—people don’t focus on this—have actually asserted patents in the fairly recent past. So, tech companies get patents for the same reasons as everyone else. The only difference is that ensuring freedom of operation, rather than exclusivity, is the goal more often than in other industries.

What do you think is the most effective way to influence IP policy in Washington, D.C.?

I wish I knew. I think it really depends on the issue and the context, and I don’t think there’s a single answer. What I appreciated when I was a staffer on the Hill and was on the other side of this was when people just told me the truth and engaged substantively, so that’s what I try to do. For example, I’ve been very clear with staffers on both sides of the Hill that we have deep concerns and are unlikely ever to provide full-throat support for § 101 reforms because it seems they have different goals than what we have. But, despite these concerns, HTIA and its members have tried very hard to engage in a substantive and helpful way. We’ve been happy to provide feedback, provide comments on drafts, testify, attend roundtables, and engage in substantive discussions.

On these types of nonpartisan issues at least, I hope this is the most effective approach. It would be really depressing if the counter-approach, which you also see on Capitol Hill, were more effective. Some folks hide the ball, intentionally mischaracterize facts, and refuse to genuinely engage on the substance. If that’s more effective, then that’s a sad commentary on government.

So is it really about just forming relationships with the staffers, and the members on the Hill, who are actually involved in dealing with IP issues?

That’s part of it, but hopefully substance also counts. I think being right on the substance and having data to back up your arguments is critical. I think just advocating in a sensible way and knowing your audience is important. There are definitely different ways you might advocate in a Republican versus a Democratic office, or with a member from the rural West versus one from a more urban area in the Northeast. It’s not so much that you’re making different arguments with different members, but you need to be able to explain things in terms of what each member cares about. Being aware of member priorities is important, and obviously not every member has the same priorities.

What is the hardest part of your job?

Breaking through on Capitol Hill. There are a lot of different priorities. Patents—for at least 98 out of the 100 members in the Senate (and perhaps all 100)—are probably not the number one priority. You’re fighting for mindshare with staffers and members who have radically different priorities and where patent issues aren’t near the top of the list for most of them. You have to explain your arguments really, really quickly and concisely, which means sometimes a lot can be lost in translation. That’s not my forte, so it’s a skill I’m still trying to develop.

Apart from HTIA, who do you think has been most effective in influencing on these issues?

There’s really no good answer to this. It varies a lot from context to context who’s going to be persuasive and influential. And, it’s not always who you might assume from what you see on the surface or based on public perception.

Think about the § 101 issue. In the Senate, there were 45 witnesses at three hearings, plus statements for the record and follow-up letters from people who did not testify. I think that Senators Tillis and Coons and their staffs are genuinely trying to take all of those different opinions into consideration. So, in terms of who is influential, I often think it’s not so much a question of who is speaking. Hopefully, it’s at least in part having good arguments on your side that makes you influential.

It’s also about being able to articulate the impact on what members of Congress care about. Most of them genuinely care about serving their constituents. So, if that’s their number one priority, then it’s critical to show that a particular policy is going to benefit their constituents through economic growth, or by creating additional jobs, or by lowering the cost of services and products, or by accelerating innovation. That’s really what’s going to motivate them. When I worked for Senator Hatch, it generally didn’t matter all that much that a big company—or even an entire industry—advocated a particular policy unless they employed people in Utah, or contributed to the Utah economy, or could demonstrate some impact on the people of Utah. It was not a close call. Constituent interests would almost always win over other types of influence.

Most of the coverage regarding the new § 101 legislation has focused on Senators Tillis and Coons, and to a lesser degree Representative Collins. But who on Capitol Hill do you think will have the most impact on whether this legislation gets passed or not?

There’s actually no good answer to that question either. Obviously, the subcommittee chairman [Tillis] and ranking member [Coons] are going to have significant influence in terms of setting the priorities, the baseline, and the starting point for legislation. From there, they’ve got to get something actually enacted. You have to go through full committee markup, which means the committee chairman and ranking member, as well as all the other members of the committee, have an opportunity to have significant influence. Then, you have to get the bill across the Senate floor, which historically typically happened by unanimous consent, which means every single senator in the Senate, all 100 of them, if they want to influence the bill, have the opportunity to do so. They can object and extract some concession on the floor. And, it’s a similar picture in the House, although the committee and floor leadership are likely to play a larger role there.

I’m not sure the metaphor is entirely accurate, but people talk about the pendulum swinging back and forth on patent rights. Is the pendulum swinging back?

I guess I’d have to say yes, but I think it’s more complicated than that. There definitely have been a number of regulatory changes and court decisions that are more favorable to plaintiffs than defendants over the last few years. The Berkheimer decision, for example, has significant potential to tamp down some of the concerns about § 101 being used at the motion to dismiss stage, which would be a huge change if that happens. The § 101 guidance has created a sea change at the USPTO. Seagate being overruled is also big deal. Tech companies are back to getting opinion letters, spending millions of dollars on infringement analyses from firms, which is good for law firms, but not great for companies.

Taking the courts out of it, do you think that attitudes, at least in the administration and on Congress, have changed since the 2016 election? And if so, were you surprised by that change?

Yes, I suppose I’ve been a little surprised at how much the conversation—and perhaps some attitudes—have shifted. That being said, I think it’s unclear what people actually believe other than the handful of players who are actively engaged on patent issues. At this point, we all probably have a pretty good sense of the views of the leadership of the IP Subcommittee, the Director of the USPTO, and a handful of members of Congress who have been vocal on these issues. Clearly, the positions of this group are a bit different from the previous Director of the USPTO and the members who were most active on patent issues in prior Congresses. But we haven’t seen much beyond this relatively small group, so I don’t know how much their views tell you about what Congress as a whole or the administration as a whole thinks about patents.

Do you think it’s just a coincidence?

I don’t think it’s a coincidence. I think what probably drove it was a feeling that one side lost out in certain court cases and in the AIA. Those who feel like they lost the last round have been very active and very vocal. And folks who were naturally inclined to be sympathetic to that side of the debate are now motivated to try to push things back toward the other side. I think it’s that simple.

So do you think the other side has been more complacent?

Yes, after the AIA and some of the Supreme Court decisions, things improved somewhat for the folks who had been arguing for reform. And my sense is that the coalition that most strongly supported the AIA quite reasonably focused less on patent issues. There are currently antitrust, privacy, and cybersecurity issues that more directly and more significantly affect some tech companies’ ability to operate and to generate profits, and some of the policy focus has naturally shifted to those issues. That’s not at all unusual though. In any policy debate, those who want a change are almost always going to be more active and energized than those who are okay with the status quo.

Are “big tech” companies more reluctant to take public positions on patent issues because of these other priorities?

No. At least for HTIA, we’ve been very clear and straightforward about our positions. So, I don’t think there’s a reluctance to take positions. That being said, HTIA members are large companies that have a lot of different interests and priorities, and a lot of different things going on in Congress. So, I think they try to deal with the patent issues as efficiently as they can. And sometimes that means they’ll prefer to have me represent them in a meeting or as a witness at a hearing. I suppose that, if anything, HTIA deciding to bring me on board indicates an increased interest in engaging publicly rather than any kind of reluctance.

They’re not afraid of making new enemies on the IP front?

No, I don’t think so. Although that’s always a consideration. Pretty much all big companies are going to have a number of issues before Congress or even before the Judiciary Committees, whether they’re interested in antitrust, or in privacy, or in criminal law, or in immigration, or something else. As a company, you have to balance these interests. That’s nothing new and certainly not unique to tech. I have yet to encounter a big company in any industry that is actively looking to make enemies in Congress.

Are there any changes you think need to take place with regard to § 101?

In the tech space, eligibility evolved pretty quickly after Alice into something that approximates an effective technology test. I understand why those on the life sciences side may have concerns, but for the tech industry the impact of Alice has been quite positive. If you look at the Federal Circuit case law, in a lot of the cases—McRO v. Bandai is a great example—the court has indicated that the Mayo/Alice test will generally be satisfied if the invention represents an advance in technology. The Supreme Court opened the door to this in Alice. Justice Thomas’s opinion suggested that part of the reason the patent at issue there was invalid was because it didn’t even purport to represent an advance in any field of technology.

HTIA believes that is the right scope for eligibility. The test for eligibility really should be whether the claimed invention represents an advance or improvement in a technological field. We think that’s what the Constitution dictates. If the goal is to promote the progress of the useful arts, which people understand to mean technology, then patent protection should only extend to things that embody some sort of advancement or improvement in the useful arts. It’s that simple for us. Mayo may not be the most intellectually satisfying test or the easiest to apply, but, in terms of its practical impact and application, I think it’s actually been very beneficial—at least for tech.

But do you think there is a lack of predictability?

There isn’t a lack of predictability. Look at the data. Look at affirmance rates for the most recent court term. Section 101 decisions were affirmed 71 percent of the time compared to 67 percent for anticipation, 66 percent for obviousness, and 67 percent for § 112 appeals. So, of the four major statutory requirements that are usually the basis for challenging validity in litigation, § 101 actually has the highest affirmance rate—significantly higher than all the others. At a minimum, that means that district court judges and Federal Circuit judges agree as to how the law applies in most cases, and that district courts are usually able to predict how the Federal Circuit would rule. Otherwise, you can’t get that kind of affirmance rate, especially on an issue of law that is reviewed de novo. It’s just not possible. I think most any patent attorney, if they’re talking to you honestly, will say, “Yeah, you can predict how a court will come out with pretty high accuracy,” at least better than obviousness, or anticipation, or § 112. So, I don’t buy the unpredictability argument. I think people are really objecting to the fact that they feel the line has moved, not that the line is unclear.

So you don’t even buy the premise that Federal Circuit judges have disagreements about how to apply § 101?

I think some of them may have indicated that they have concerns about predictability, but—in other cases—Federal Circuit judges have expressed discomfort with the fact that they believe they are bound to reach an outcome they don’t like, which cuts the other way. If the Supreme Court’s test requires particular outcomes in specific cases, then it can’t be completely unclear or unpredictable. Again, I don’t think that it’s predictability that is really driving the controversy around § 101. It’s that many don’t agree with the result of applying the test, especially in some of the life sciences cases.

There’s a theory out there that the outcome of a decision for § 101 issues is panel dependent.

I don’t think that’s true for the vast majority of cases. If § 101 issues really were panel dependent, there’s no way you could have such a high affirmance rate given that appeals are randomly assigned to panels. In close cases, panel composition might have an effect, but this is not a new phenomenon and not limited to eligibility issues. If anything, I think there’s less panel dependence on the Federal Circuit today than there was five or 10 years ago. And my view is that outcomes in § 101 appeals aren’t any more panel dependent than issues like obviousness or remedies, which is consistent with what we see in the affirmance rates. So, I respect some of the people who are saying that the eligibility test is unpredictable or panel dependent, but I honestly just disagree. I don’t see evidence that this is the case.

Tell me where I’m wrong here. I mean, you do prep and pros, am I wrong that high affirmance rates and the fact that attorneys can predict the outcomes means it’s not unpredictable?

From what I see from dealing with examiners, the application of § 101 is often arbitrary.

So the examination process is a really hard problem because you have eight or nine thousand, mostly nonattorney, examiners who have to apply the test. So, I think there were some challenges in the early days right after Alice. What I will say is that when you look at the USPTO rejection data, § 101 rejections in most areas other than business methods have not skyrocketed. In many areas, they’re lower than they were pre-Alice. And with the § 101 guidance promulgated at the beginning of this year, I would expect that in almost every area, they’re going to be lower than they were pre-Alice.

If you could make one change to improve America’s patent system, what would it be?

To have a functioning patent system that actually achieves its ends in an efficient way, you have to do something about patent quality. You have to have a much higher percentage of the claims issued that would ultimately be held valid. But right now what you see on the tech side is that a high proportion of claims that issue are invalid. And a lot of the time there’s not a problem under § 101. It’s mostly § 102 and § 103, and sometimes § 112. For the system to work well, I think patent quality needs to go up. For people to rely on patents, they have to be a secure property right.

The problem is that we have a system where the rights are not secure because lots of them are improvidently granted, which necessitates things like PTAB proceedings where you have a relatively cheap, fast way of taking those rights off the board. But if those rights had never been issued, you wouldn’t need all these PTAB challenges. You wouldn’t have all these § 101 issues in courts. You wouldn’t have nearly the litigation you have today. And you would have almost none of the kind of strike suits and nuisance settlements that we’ve seen in the past decade or so. You’d have fewer patents granted, but your patents would be much more secure. The presumption of validity would be much more warranted. And you’d have much lower risk of invalidation post-issuance than you do today, which means that you could rely on the patent rights to make investments, and to head toward commercialization. And potential infringers wouldn’t have to wait for litigation to find out what claims meant and whether they were valid.

So the one thing I would change is having the patent system actually work like a property rights system where claims are valid and their scope is clear. When a relatively high percentage of the claims granted would ultimately be held valid in litigation, it becomes really hard to see how the patent system would be all that effective.

Do you want to share any idea about how patent quality could be improved?

Unfortunately, achieving anything close to perfect quality is probably an impossible problem. There’s not a country that has significantly better patent quality. There are some who’d say the European Patent Office might be slightly ahead of the USPTO, but not by much. If you look at the invalidation rates in their administrative proceedings, they are similar. The same with Japan.

Honestly, there’s not a silver bullet that would result in substantially increased validity rates. Certainly, giving examiners more time to examine each patent would be helpful. Better prior art searching and search tools would be helpful, as would more complete prior art databases. Better international coordination on search and examination, which is happening, would be helpful. Much better enforcement of § 112 would be helpful. So, it’s a really hard problem. I think there’s room for significant improvement, but we’re never going to reach anything close to 100 percent accuracy.

Entity:
Topic:

Eli Mazour is the host of the Clause8 Podcast (clause8.co) and is counsel at Harrity & Harrity LLP. He leads the firm’s patent prosecution team and specializes in helping technology companies build valuable, high-quality patent portfolios in an efficient manner.