House Subcommittee Discusses Section 101 and Fraudulent Trademarks
June 4, 2019
The House subcommittee on intellectual property convened a meeting to oversee the U.S. Patent and Trademark Office. Among two of the most important discussions were Section 101 regarding patent eligibility and registration of fraudulent trademarks.
35 USC 101 establishes who is and is not eligible for a patent under U.S. law. In other words, Section 101 establishes what kinds of innovations are patentable. Under Section 101, in order for an invention to be patentable, it must meet four criteria. Those are:
No similar patent has been issued before (one patent per invention);
The patented technology must serve some useful function;
Patents are reserved for processes, machines, methods of manufacture, or composition of matter;
The patent can only be sought by the individual or corporation that invents or discovers the patentable object.
According to Hank Johnson (D-GA), recent Supreme Court decisions threaten specific industries by refusing to distribute patents for certain inventions. Notably, he argued, innovations in medical diagnostics would be imperiled if Section 101 were not clarified.
IPR Proceedings Among Key Discussions
Martha Roby (R-AL) discussed inter partes review. One key concern was whether or not IPR proceedings made it too easy to invalidate a patent. The IPR was intended to streamline the process of contesting a patent, but there is concern that patents are invalidated all too frequently at IPR hearings. She cited a high invalidation rate in cases that raise serious concerns that the agency is invalidating patents too casually.
Can Small Businesses Compete Against Corporate Behemoths?
One of the main areas of concern was whether or not large multinational corporations could compete against startup businesses that were looking to patent a new invention. If it becomes cheaper and more effective to simply invalidate the patent, would that not be the more fiscally viable solution?
Again, this comes down to refining and reworking the patent eligibility test that governs the granting of patents.
Fraudulent Chinese Trademarks
Multiple representatives discussed a notable increase in trademark filings from China. Andy Biggs (R-AZ) discussed the “12-fold” increase in trademark applications from China that outpaced the combined number of applications coming from Canada, the UK, and Germany. USPTO Andrei Iancu said that steps had been taken to report suspicious activity but only about 60 reports had been filed. Iancu further claimed that fraudulent trademark specimens that had been altered by photoshop were difficult to detect using current methods. According to at least one representative’s statistics, the number of trademark applications from China had increased from 6,000 in 2014 to 58,000 in 2018.
Accordingly, there is some indication that the Chinese government is paying Chinese citizens to register trademarks in the U.S. and offering $800 (USD) for the effort. After costs, this turns a profit of about $525 per trademark. Since the median Chinese income per month is around $1000, a Chinese citizen can earn an average living by registering two trademarks in a month.
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