Introduction and Background

As I discussed in Apple AR Patent Clutter and Hiding AR Patents, Apple has very few of what I would consider “serious” AR patent applications. Of the very few interesting patent applications they have filed, almost all of them can be traced to companies they have acquired.

With other major AR efforts, such as Magic Leap and Microsoft’s Hololens, there is a significant patent application trail. This trail is a direct result of the America Invents Act (AIA) passed in 2012 with the backing of Google and other big tech companies, including Apple. This blog discussed using Magic Leap’s patent trail and the AIA to figure out what Magic Leap was doing almost 2 years before the Magic Leap One was available (see below for a comparison).

Apple, however, is not leaving much in the way of patent application trails due to their pursuit of a different patent strategy. I talked to someone that closely follows the US patent system about why I couldn’t find many AR patent application filed directly by Apple.   I asked if Apple wasn’t taking a significant risk, not filing patents, and having someone else file first? His response was rather shocking, “What risk? Apple has a track record of using the PTAB [Patent Trial and Appeal Board] to invalidate patents that could cause them trouble.”

Google and Friends Destruction of the US Patent System

The America Invents Act, like many laws, does the exact opposite of what the nice-sounding title implies. Plain and simple, the purpose of the AIA is to kill patents in the US. For a good summary of the effects of the AIA, I highly recommend the IPWatchdog.com 2018 article How Google and Big Tech Killed the U.S. Patent System. 

Google was a relatively late entrant to the cell phone market, bought Android in 2005 and announced it in 2007. Being a late, but very cash-rich entrant in the patent heavy cell phone technology business, they became a target for companies to assert patents against them. Google lost billions of dollars in lawsuits, which resulted in Google buying Motorola’s cell phone business in 2011 for over $12B.

Quoting How Google and Big Tech Killed the U.S. Patent System :

Google understood its precarious position as to new and emerging technologies, so it did what any Banana Republic Elite would do–it set out to destroy what it perceived as the real threat: the United States patent system.

Sadly, very little of the AIA provisions seriously address the tactics used by “trolls” (a subject for another article). Rather than surgically addressing the trolls abuses, only a part of Google’s problem, Google and it allies used the “evil trolls” as a strawman to carpet bomb the US patent system. Destroying innovative companies was not just collateral damage; it was the plan. In a world with unenforceable patents, the biggest companies can take the inventions of others. 

Through lobbying, Google not only got the AIA through congress, but they also got their former lead Patent Lawyer, Michelle Lee, installed at Director of the PTO. Ms. Lee then dutifully appointed anti-patent “judges” to the PTAB. Google also lobbied and got anti-patent judges appointed to the federal circuit where patent appeal cases are heard. Google also financed research papers and professors to argue against patents (see as just some examples: How Google Tries to Buy Government and Google discloses paid bloggers and journalists, says Stanford professor Mark Lemley is outside counsel).

Apple was not the main driving force undermining the US patent system with the AIA, that dubious honor goes to Google. Apple did help fund the lobbying effort and has been leveraging the provisions fo the AIA to its advantage. To understand Apple’s patent-related behavior, it helps to understand how the AIA changed the patent system.

One-Two Killer Punch of the AIA – First to File and PTAB

There are two provisions of the AIA that sound “fair” but undermind the whole US patent system. These provisions were “first to file” and the setting up the Patent Trial and Appeal Board (PTAB).

The US used to have a first to invent systems, which meant if you could prove you invented something first (such as signed witnesses in inventors notebooks), you could get a patent in spite of someone filing first. With first to file, it is simply the person/company that files first. I don’t have a problem with first to file on its own, but when coupled with the fact that 18 months after you first file, assuming you end up filing a non-provisional application, the application is published to the public.

You have zero patent rights with an application, but 18 months after filing, you have told the world how your invention works. If you hurry to the patent office soon after inventing to be “first to invent,” your invention is easily known by every potential competitor, perhaps years before you can perfect your invention and produce a product (as I was able to do with Magic Leap). A well-funded company can even get a product based on your invention in the market before you and before you get a patent.

If your company’s name is Apple, there are web sites dedicated to watching your even move. But even if you are some non-name startup, with a combination of “Patent Risk Mitigation Companies” (PRMCs), hired (often overseas) searchers, and AI software (or just some blogger), your application is being watched.

So let’s say after one to three years after filing and typically $10K to $50K in legal cost you at patent. The better the patent, the more it makes you a target for the AIA’s other major provision, the PTAB. The PTAB has been described as “the place were good patents go to die.” About 90% of all patents that make it to the PTAB will be killed after one or more challenges.

Following the AIA, many Patent Risk Management Companies were formed, many of them funded by big-tech companies including Google and Apple. And there is no limit to the number of challenges that can be made to a single patent. It costs only $23K to file an inter partes review (IPR) and that cost can be shared by multiple companies, but for the inventing company, it will typically face well over $100,000 in legal costs per IPR. If you have a very good invention/patent, you could be facing legal bills totaling millions of dollars with less than a 10% chance of success. As can be seen in the table below, Apple is one of, if not the largest, filers of IPRs.

Thanks to the AIA, a whole industry of “Patent Risk Management” organizations/companies have sprung up to provide “protection.” You pay into their pools and they supposedly will take care of patents that may threaten you. Many of these operations are “non-profits” (oh good, they even give a tax writeoff). And like Al Capone supporting soup kitchens in Chicago in the early 1930s to provide cover for his various nefarious activities and sow goodwill, they will occasionally provide free support of small companies against “trolls.” These operations know if they want to keep getting “donations” and “investments” they need to please the companies that support them.

The failure rate at PTAB is no accident. The so-called “judges” are political appointments via lobbyists and there are no Rules of Judicial Conduct for PTAB Judges. The big tech companies have used lobbyists to stacked the PTAB with anti-patent “judges,” many of which did work for these same companies.

All the discussion today about China and IP in trade talks is just rearranging the deck chairs on the Titanic. High-tech patents are being destroyed as they issue in the good old USA’s PTAB.

Apple Uses the PTAB to Kill Patents From Others

Apple has been active in using the PTAB to kill patents it doesn’t like. Apple files “serial and duplicative petitions at PTAB” to kill patents.

Worse yet, a former Apple patent lawyer, acted as a judge in IPRs brought by Apple. (see: Are conflicts of interest at the PTAB leading to preferential decisions for Apple?

Even worse, that same Apple Judge Lawer when back to working for Apple!!! Quoting from A Story of Ethics and Optics: Former PTAB Judge Matt Clements Now Works for Apple, April 17, 2019:

“Clements represented Apple, Inc. as patent infringement defense counsel up to his appointment as an APJ in March 2013. Clements then proceeded to preside over several dozen post-grant challenges brought by Apple. Not surprisingly, Apple did extraordinarily well in those challenges, leading Brachmann to conclude that having Clements on the panel for an Apple petition was a lethal cocktail for patent owners.”

Thanks to the AIA, Apple Does Not Need to File Patents

If Apple does not get you directly, Patent Risk Management operations (some funded by Apple) or even Apple’s competitors will destroy the patent. For minimal cost to Apple, but at huge legal fees to the patent filer, Apple can use the PTAB to destroy any patents it doesn’t like.

Thanks to the AID and PTAB, Apple is taking little risk of a patent getting filed before them and causing trouble in the future. And since Apple can win by virtue of its size and position, there really is no need for Apple to file patents that could themselves be challenged.

Apple Using Trade Secrets that Favor Established Companies – And Also Acting as a Non-Competes for Employees

It is not an accident that at about the same time the AIA was passed, the “Theft of Trade Secrets Clarification Act” was also passed. Senator Patrick Leahy sponsored both this act and the AIA. While the AIA undermines patents, the Theft of Trade Secrets Act strengthens trade secrets. A provision of the act strengthens enforcement of trade secrets domestically, including improving the ability of companies to involve the FBI.

In Choosing Between Patents and Trade Secrets, A Discussion Worth Revisiting in 2017, James Pooley writes:

“The first of these was a series of court rulings that collectively have narrowed the scope of patentable subject matter and have made patents more difficult to enforce. The second was the America Invents Act of 2011 (the “AIA”) [signed in 2012], which effectively eliminated or reduced certain risks of choosing secrecy while providing new ways to challenge patents in administrative proceedings.  Considered together, these forces require innovators to reconsider their cost/benefit models for evaluating protection mechanisms.”

Fortune magazine, in How to stop rivals from raiding your talent (using fair means or foul), discusses how this act has been used to keep people from changing companies. And how they work as an alternative to Non-Competes, which can’t be enforced in some states (particularly California).

Trade secrets tend to favor established companies that can administer them for decades or longer. Trade secrets don’t have the sharing the concepts that occur with published patents and so competitors can’t make improvements. Worse yet for the employee whose secrecy obligation for a patent’s contents ends when the patent application is published, trade secrets can last forever. Thus trade secrets can and have been used as an alternative to non-competes.

Summary and Conclusions

Large multinational (mostly US-based) tech companies led by Google. The wholesale destruction of the value of U.S. patents caused by the AIA and its provisions dwarfs any IP issues with China, yet is rarely discussed. Rather than working to solve the abuse of the legal systems by “Patent Trolls,” they chose the far less expensive and faster route of using the pollical system to undermine the whole US patent system.

1. Because of the AIA and “first to file” having such a short time window between filing and its publication, it opens Apple to too much scrutiny, particularly with web sites dedicated to following Apple’s patents.
2. With the PTAB and other recent court rulings, patents are so weakened that Apple is willing to risk others filing patents before them as they can destroy the patents later if it becomes necessary and some other entity does successfully use the PTAB first.
3. With patents so weakened, it makes it less expensive to acquire companies that would have had patents adding to their value.
4. Instead of patents, they are going the route of trade secrets (see Patent and Trade Secrets Revisited)
5. Thanks to the AIA and the PTAB, Apple has low risk in “going bare” on patents resulting in someone filing a patent on the same things that they are developing. Apple can just tie companies up with repeated filings in the PTAB. They can get judges favorable to them installed in the PTAB (see: from Are conflicts of interest at the PTAB leading to preferential decisions for Apple? and A Story of Ethics and Optics: Former PTAB Judge Matt Clements Now Works for Apple, April 17, 2019
6. Former employees are more hamstrung by keeping a technology a trade secret than by pursuing a patent for the technology.
7. A weakened patent system means that Apple, with its size, can theoretically run roughshod over any other company’s IP. If they need the know-how, the weakening of patents could also help Apple buy them out at a cheaper price.
8. At the same time, the AIA undermined the US patent system, the Theft of Trade Secrets Clarification Act strengthen the domestic use of Trade Secrets which benefits primarily big companies like Apple.  

All the evidence supports the idea that Apple is “going bare” in terms of patents directly related to their serious work in AR. Only a relatively few AR-related patents from companies Apple has acquired and some far-out ideas are being filed with Apple’s name on them. With the help of the PTAB, then can run roughshod over new entrants.