Issa Will Argue to the Supreme Court to Weaken Property Rights.

In the June 13th House Judiciary Subcommittee hearing on the effects of TC Heartland, Chairman Darrell Issa showed his hostility to American property rights.  Issa opened the hearing uttering the words: “The rule of law is key to preserving property rights and nowhere is this more true than with respect to intellectual property. …”   This should be good news because the Republican Party Platform states “Private property includes not only physical property such as lands and homes, but also intellectual property like… patents”, and that “Protecting intellectual property is also a national security issue.” 

However, in direct contradiction to that opening, Issa closed the hearing saying he will argue in the Supreme Court that property rights can be invalidated by an administrative tribunal without a jury and without due process. Anyone remotely familiar with America’s hugely successful property right system should not miss this glaring and dangerous contradiction. The right to a jury and due process are the very foundation of America property rights. It is pretty simple – Issa cannot support American property rights and at the same time argue to eliminate juries and due process in property right disputes. Yet, this is exactly what he is doing.

Unfortunately, Issa was a sponsor and a primary driver of the America Invents Act of 2011 (AIA), the single most damning legislation to property rights in American History. The AIA created administrative tribunals called the Patent Trial and Appeal Board (PTAB) that eliminated both juries and due process for patent rights. Stripping these protections ends in stripping property from the owner. Issa’s PTAB is now stripping property rights at a rate of more than 90% of the patents it evaluates. 

The extremely high invalidation rate is not surprising given how Issa’s AIA set up the PTAB administrative tribunals. The Federal Circuit has reprimanded the PTAB for acting arbitrary and capricious, and also for completely ignoring the statute and creating their own standards. The PTAB can and does refuse to consider timely-submitted evidence, and there is no right to amend. PTAB administrative judges do not have a code of conduct and more than one Administrative Patent Judge was even hearing cases and writing decisions favoring a former client he represented in patent infringement matters just a few years ago. The PTAB has saturated the patent system in chaos.

Issa’s PTAB treats American property rights like a public entitlement similar to food stamps or a driver’s license, and this treatment is exceptionally damaging to small entities. Inventors and startups (and their investors) can no longer defend their patent rights because if you attempt to sue a multinational corporation like Google (not so coincidentally, Issa’s biggest contributor) for patent infringement, your patent will probably be invalidated by the PTAB. 

Most small entities do not have millions of dollars available to defend patents, so contingent fee attorneys and investors are absolutely needed by most. With the odds so stacked in favor of huge multinational corporations, contingent fee attorneys and investors have left the patent market. 

If a patent cannot be defended, it is opened for theft by huge multinationals. And today, that theft is rampant and destroying our startup ecosystem. If you are an early stage investor and you invest in a startup that is heavily reliant of patents to protect its products, those patents cannot be defended. This means that if the invested company is successful, it will be knocked off by a larger competitor and you will probably never get your investment returned. This effect is moving money to places where patents can be defended, like China.

The AIA was enacted into law in 2011. Not so coincidentally, China began significantly strengthening their own patent system the same year. And the effects are now clear. In 2015, nearly twice as many patents were filed in China (1,101,864) than in the U.S (589,410). Venture capital is fleeing to China. In the U.S., “Nationwide, the number of angel and seed stage funding rounds… dropped 62 percent in the first quarter of 2017...” Not surprisingly, the number of startups in China are growing at a very high rate.  While U.S. startups are at a near 40 year low. Entire new fields of technology are becoming controlled by Chinese firms. Clearly, venture capital, startups, new technologies and jobs are moving to China and that movement directly maps to the destruction of the U.S. patent system in the AIA and China’s response of strengthening their own patent system.

Just a few days before this hearing, a case called Oil States was taken up by the Supreme Court. Oil States goes to the heart of American property rights by asking whether the PTAB violates the Constitution “by extinguishing private property rights through a non-Article III forum without a jury.”

In a stunning contradiction to his opening statement, Issa’s closing statement shows that he will continue to drive the weakening of the property rights. “Lastly, I’m very interested in the case they just took up [meaning Oil States]. I’m a strong believer that for decades we have had ex parte PTO reexamination that invalidated all or some of the claims. So I will be submitting an amicus in that case without a doubt…”  Issa is going to argue to the Supreme Court that it is perfectly okay in America to invalidate property rights without a jury and without due process.   

Issa obviously defines a property right as a public entitlement. Issa clearly believes that property rights are granted by the government, and whatever is granted by the government can be taken by the government without due process and without a jury. I pray that his misguided and dangerous thinking does not bleed into other rights like freedom of speech, assembly, religion, bearing arms, etc. Issa’s actions have been extremely damaging to the American startup ecosystem and extremely helpful the Chinese. 

His hypocrisy is so blatant, so obvious and so up front that I’m not sure he even understands his own contradictions. It is dangerous to our rights and our country for Republican Leadership to grant Darrell Issa the kind of power he has been granted in Congress. Issa is untethered to the Constitution and conflicted on its foundational view of property rights and presumably other rights as well.

Issa must be defeated in the next election.