In the next few weeks, President Joe Biden is expected to choose a new director for the US Patent and Trademark Office. In recent days, I've talked to a dozen people who are deeply involved in the patent system. During these conversations, three names came up over and over again as leading candidates.
One is patent lawyer Ellisen Turner. Over an 18-year career, Turner has represented a wide range of clients, from big tech companies to companies that do little more than collect patent-licensing revenue. Included in this latter category is a firm that might sound familiar to longtime Ars readers: Intellectual Ventures. Back in 2014, my colleague Joe Mullin described Intellectual Ventures as the "world's biggest troll." Instead of developing products to sell to customers, Intellectual Ventures has mostly focused on accumulating a massive patent portfolio and then threatening to sue companies that refuse to license its patents.
Another leading candidate is Jannie Lau, a patent attorney who spent 11 years as the general counsel (and before that, associate general counsel) at InterDigital. This is another company that makes almost all its money from patent-licensing fees—97 percent in 2020. While some critics have labeled InterDigital a patent troll, a spokesman for the company told me that the label doesn't fit. He said the firm employs hundreds of engineers who have helped to develop some key technical standards, especially in the wireless industry.
The third frontrunner, Colleen Chien, offers a sharp contrast to the others. After practicing patent law for several years, Chien became a law professor at Santa Clara University in 2007. From 2013 to 2015, she advised the Obama administration on patent reform. Chien's academic writing makes it clear that she's concerned about problems with low-quality patents and the way non-practicing entities can abuse the patent system.
Turner and Lau don't have much of a paper trail, but it seems likely that they have a more benign view of non-practicing entities like their former employers (in Lau's case) or clients (in Turner's).
I don't know if these are the only names under consideration by the Biden administration. It's possible that the president will choose to go in a different direction altogether. But these names illustrate the wide range of perspectives inside the Democratic camp. Unlike a lot of issues, patent concerns don't break down cleanly along partisan lines, which means that a lot rides on Biden's choice.
Obama created “death squads” for bad patents
The Obama years were not good for the owners of low-quality patents. In 2011, Barack Obama signed the America Invents Act, an ambitious overhaul of patent law. The law made many changes to the patent system, but one of the most important was the creation of a process called Inter Partes Review (IPR) that allows the validity of a patent to be challenged after it has been issued.
Before the creation of the IPR process, a defendant in a patent case usually had to prove a patent was invalid in court. This process could take years and cost millions of dollars in legal fees. The IPR process is faster and simpler, and as a result, it generally costs "only" a few hundred thousands dollars to get a bad patent invalidated. This not only helped defendants that used the process, it also strengthened the hands of all patent defendants because patent owners had to worry about their patent being destroyed by the IPR process.
Advocates of strong patents hate the IPR process. Take Randal Rader, the former head of the Federal Circuit Appeals Court, a court that hears all appeals in patent cases and is known for its pro-patent slant. In a 2013 speech, Rader complained that the Patent Office personnel in charge of the IPR process were "acting as death squads, kind of killing property rights."
When Donald Trump took office, he chose a lawyer named Andrei Iancu to head the USPTO. His selection was cheered by patent hawks like Gene Quinn of IP Watchdog. Quinn pointed out that Iancu and his firm, Irell and Manella, had helped TiVo obtain more than $1.6 billion from Verizon, Microsoft, Cisco, and others in the early 2010s.
"The fact that Iancu represented TiVo, a patent owner, against big tech in Silicon Valley will undoubtedly lead to a warm reception in certain patent owner segments of the patent community," Quinn wrote. "Iancu and his firm have a reputation for suing big tech while representing patent owners."
The Trump administration was good for patent owners
Iancu made a number of changes to Patent Office procedures that shifted the playing field back in their favor.
For example, the law gives the director of the Patent Office discretion to decide whether to allow a patent to be challenged under the IPR process. Often, a defendant in a patent lawsuit will file an IPR challenge with the Patent Office and then ask the judge to put the lawsuit on hold until the Patent Office makes its ruling. That's good for defendants because it means they aren't racking up legal bills in court during the IPR process.
Under Obama, judges would usually agree to stay the lawsuit until the IPR process was complete. But in 2018, Trump appointed patent lawyer Alan Albright to be a judge in the Western District of Texas. Judge Albright quickly established himself as one of the most pro-patent judges in the country. Patent holders began filing lawsuits in his district, supplanting Delaware and the Eastern District of Texas as the most popular venue for patent litigation.
One way Albright helped patent owners was by refusing to stay patent lawsuits during IPR proceedings. And in response, the Patent Office under Iancu has frequently refused to start IPR proceedings for patents that were connected to cases in Judge Albright's court.
The stated rationale is that it's a waste of resources to have two parallel proceedings to consider the validity of the same patents. But the practical impact is to lock defendants out of the IPR process. And Stanford legal scholar Mark Lemley says that tilts the process against defendants. It costs much more to take a patent case to trial than to complete the IPR process, so this gives plaintiffs more leverage in settlement negotiations.
This chart from Unified Patents shows the impact of this shift.
This chart shows how the Patent Office responded when asked to begin the IPR process on a patent. In 2016, the Patent Office granted 944 requests and denied 467, with more than 80 percent of denials focused on the merits of the request (not all of those 944 requests led to a patent being invalidated—this is just about whether to start the review process).
In 2020, the Patent Office granted only 681 requests while rejecting 520. And significantly, almost half of the denials were procedural; in 228 cases, the Patent Office refused to even consider the merits of the petition before rejecting it. In most cases, these were defendants who will be forced to make their argument in court—at a much higher cost.
Iancu also helped patent holders by watering down the Patent Office rules related to software patents. The Supreme Court's landmark CLS Bank v. Alice ruling made it much harder to get patents that claim commonplace activities (like using an intermediary to mitigate risk in a transaction) implemented on a computer. Examiners at the Patent Office are supposed to take rulings like Alice into consideration when they decide whether to grant a patent.
In 2019, the Patent Office published new guidelines for examiners on applying the Alice ruling. Lemley tells Ars that the new guidelines "caused examiners to grant lots more questionable software patents." Theoretically, these patents can still be invalidated in future lawsuits—but only after defendants spend hundreds of thousands of dollars in legal fees.
Ellisen Turner worked with Iancu
From 2003 to 2019, Ellisen Turner worked at Iancu's law firm, Irell and Manella—the firm Gene Quinn described as having a "reputation for suing big tech while representing patent owners." Indeed, Iancu and Turner worked on some of the same TiVo cases.
It wouldn't be fair to describe TiVo as a patent troll—especially not when Turner and Iancu were representing them in the early 2010s. TiVo was a genuine innovator in the 1990s, and by 2010 the firm still had a substantial number of customers. But the company was clearly in decline by that point—largely because more and more customers were using the set-top boxes supplied by their cable providers.
With its position in the marketplace weakening, TiVo turned to patent litigation as an alternative source of revenue. TiVo had received early, broad patents related to video storage and playback, and the company argued that most video-on-demand services were infringing these patents.
TiVo won a $500 million settlement against DISH and EchoStar in 2011. The next year, TiVo won a $250 million settlement from Verizon and a $215 million settlement from AT&T. The year after that, Google, Cisco, and Time Warner agreed to pay TiVo $490 million. The Google settlement covered claims against Motorola's set-top box division, which Google acquired in 2011 but then sold to Arris. A legal battle with Microsoft ended in a draw.
Turner and Iancu both represented TiVo in legal battles with Verizon, Motorola, AT&T, and Microsoft.
Turner made suing telecom companies something of a specialty. Another major client was the Rockstar Consortium, a patent-holding company backed by Apple, BlackBerry, Ericsson, Microsoft, and Sony. In 2011, these companies put up $4.5 billion to acquire patents from the bankrupt telecom equipment provider Nortel. Then they demanded licensing fees from a wide range of cable providers and equipment makers.
Turner is listed as an attorney for Rockstar in 2013 lawsuits against Time Warner and Windstream. Turner was also involved in legal battles with Charter and with equipment-makers Cisco and Arris.
Another Turner specialty was enforcing semiconductor patents. One of Turner's major clients was the semiconductor company Tessera. Like TiVo and Nortel, Tessera used to have viable products but had fallen on hard times by the 2010s. In 2010, the company made 80 percent of its revenues from patent licensing. By 2015, it had ceased most of its manufacturing activities and was generating almost 100 percent of its revenue—some $200 million per year—from its patent portfolio.
Turner helped Tessera generate that revenue. Turner represented Tessera in legal battles with Micron, AMD, Hitachi, and other companies.
Turner's focus on semiconductors also explains how he wound up representing Intellectual Ventures. In 2011, Intellectual Ventures sued Hynix, Acer, Asus, Dell, Hewlett-Packard, Logitech, Best Buy, and other companies for infringing five patents related to DRAM memory technology. Intellectual Ventures acquired four of the patents from Cirrus Logic, a small semiconductor firm that's still in business. The fifth came from Enhanced Memory Systems, a firm that doesn't seem to be around anymore.
These examples illustrate that the line between an ordinary operating company and a patent troll isn't all that clearcut in practice. None of Turner's clients were the type of bottom-feeding patent trolls that send demand letters to small businesses for using common technology products. At the time that Turner represented TiVo, it was still a viable, if struggling, electronics manufacturer. The Rockstar consortium didn't make any products itself, but its backers—Apple, Microsoft, Sony, etc.—were some of the biggest technology companies in the world. Tessera wasn't a patent troll when Turner started representing the company, but it relied more heavily on patent revenues as its non-patent businesses declined.
Turner has also represented a number of defendants in patent cases. This has been especially true in the last two years since he moved to the law firm of Kirkland and Ellis. Since the move, he has defended clients like Intel and Facebook against patent infringement lawsuits.
Still, Turner has spent much of his career helping clients enforce their patents—often through aggressive litigation. There's nothing illegal or unethical about that. But it does suggest that—like his former colleague Iancu—he's likely to see things from the perspective of patent holders.
Turner declined to comment for this story.
Jannie Lau spent a decade representing InterDigital
Lau has an inspiring personal story. Her mother is from Taiwan, and her father is from Hong Kong. Both of their families fled mainland China in the wake of the communist takeover. Lau came to the United States in high school and became a US citizen in 2010.
She joined InterDigital as associate general counsel in 2008 and rose to be general counsel in 2012. In that role, she oversaw a large team of lawyers—including a lot of patent lawyers—who dealt with a wide range of legal issues.
Lau declined to comment for this story, but I did talk to InterDigital spokesman Patrick Van de Wille. He told Ars that critics were wrong to label InterDigital a patent troll.
"We have a relatively large R&D team, somewhere between 250 and 300 engineers," he said. They do fundamental research that goes into technical standards—especially wireless standards like 3G and 4G cellular communication. "We are typically one of the top four or five companies alongside companies like Ericsson, Nokia, and Qualcomm" in contributing patents to wireless standards, Van de Wille told me.
Of course, Nokia, Ericsson, and Qualcomm also produce chips and telecommunications equipment based on those standards. By contrast, InterDigital's business model relies almost entirely on patents. According to a recent SEC filing, 97 percent of InterDigital's revenue—$366 million—came from patent royalties in 2020.
Again, there's nothing illegal or even unethical about this. But her time at InterDigital likely influenced her views of patent policy.
"Litigators often develop interests in policy based on the work they've done," said Bahrad Sokhansanj, an attorney who mostly worked on the plaintiff's side in patent cases. "As an attorney, you gradually take their point of view."
The patent system works well for firms like InterDigital. It would be surprising if Lau didn't develop a strongly pro-patent worldview after spending a decade there.
Colleen Chien could roll back Trump’s policies
While Lau and Turner have spent the last decade helping patent holders extract maximum value from their portfolios, Chien has done academic work highlighting the harms created by low-quality patents and frivolous patent litigation. She also has substantial experience in the policy world, having advised the Obama administration on patent policy from 2013 to 2015. She served on the Biden transition team after the 2020 election.
Chien has done important research documenting the harmful impacts of patent trolls—especially on the technology sector. A 2009 paper found that such "non-practicing entities" were responsible for 36 percent of patent lawsuits in high-tech industries—up from 22 percent at the start of the 2000s. In a 2012 paper, Chien found that patent trolls tended to hurt startups more than large companies. A 2013 followup crunched the numbers and found that patent-assertion entities were now responsible for 62 percent of patent lawsuits. Chien presented her findings at a 2012 hearing held by the Department of Justice and the Federal Trade Commission.
A 2019 paper she penned with two co-authors focuses on the inter partes review process that's so unpopular with patent hawks. Chien has a more positive take on the system.
"A well-functioning post-grant patent review process is an important component of a healthy patent system," Chien wrote. "The public benefits when an improperly issued patent is invalidated. For this reason, patent invalidation can be thought of as a public good that is at risk of underproduction."
She didn't rant about patent death squads.
At the same time, Chien isn't an anti-patent radical. I've long believed that the software industry would be better without patents, but Chien doesn't share my view. In a 2017 paper, Chien argued that software patents function as a currency of innovation—not a tax on innovative activity.
Chien didn't respond to a request for comment for this story, so I can't say what policies she would implement as USPTO director. But it seems pretty clear that she would take the patent system in a different direction than Lau or Turner. The latter candidates seem likely to share Iancu's belief in the importance of strong patent protection and may deliver a fair amount of continuity with the Trump administration.
Chien, by contrast, seems more likely to return to the dovish policies of the Obama years. She could reverse Iancu's changes to the IPR process to make it easier to invalidate bad patents. She could issue new guidance that raises the bar on software patents. More broadly, we can expect her to be sensitive to the ways that overly broad patent rights could harm innovation rather than promote it.
