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`How the U.S. Patent Office Got So
`Screwed Up
`Once a haven for innovation, over the last two decades the U.S. Patent
`and Trademark Office has been rocked by the velocity of technological
`change and roiled by "patent trolls." Could it be that the biggest
`impediment that innovators now face is the very system that was created
`to protect them?
`
`By Scott Eden Jun 21, 2016
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`1.3k
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`Voip-Pal Ex. 2088
`IPR2016-01198 and IPR2016-01201
`1/12/2018
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`Prior-art searchers go through the USPTO's nearly ten million patents, looking for
`anything that can be used against an inventor.
`RICHARD BARNES
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`Troy Norred was on his way home for Thanksgiving in 1998 when he had his
`flash of genius. It was the middle of the night, his wife was driving the family
`car, and his four children were asleep in the back. He'd just finished his shift at
`the hospital, where his workweek often exceeded a hundred hours. Two days
`shy of thirty-one, Norred was a fellow in the cardiology program at the
`University of Missouri. For more than a year he'd been stewing over an idea,
`and so powerful was his sudden insight now—surface area in the aortic root!
`—that he told his wife to pull over. He made a sketch on a napkin. That sketch
`would become the breakthrough that led to U.S. Patent No. 6,482,228,
`"Percutaneous Aortic Valve Replacement," granted in November 2002 by the
`United States Patent and Trademark Office. It would also become the basis for
`an idea that Norred would spend the next four years failing to interest anyone in
`financing the development of—not his superiors in the cardiology department at
`Missouri, not the venture- capital firm that flew him to Boston to hear his pitch,
`not the cutting-edge innovation guru at Stanford who initially encouraged him
`but then ended the conversation, not the product-development people he signed
`non-disclosure agreements with at Medtronic, Edwards Lifesciences, Johnson &
`Johnson, Guidant, and others. The idea was for a collapsible prosthetic aortic
`valve that could be fished up through an artery with a catheter and implanted in
`the hearts of patients who suffered from failing aortic valves.
`
`By September 2003, Norred had all but given up on his dream when he and a
`colleague were strolling the exhibition hall at an important cardiology congress
`held annually in Washington, D.C. They came upon a booth occupied by a
`California startup called CoreValve. With increasing alarm, Norred studied the
`materials at the booth. He turned to his colleague: "That's my valve!"
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`According to documents filed in a legal case that lasted more than three years
`and wound its way through multiple federal courts, Norred tried unsuccessfully
`to discuss a licensing deal with CoreValve. He says he reached out to the
`startup's then-chief executive, a Belgian Congo–born medical-devices
`entrepreneur and investor named Robrecht Michiels, who told him that a license
`would need to wait until after CoreValve had grown out of the startup phase.
`(Michiels denies saying any such thing.) Norred tried to follow up with
`CoreValve, but his calls and letters went unanswered. Years passed. Norred
`settled into private practice and then, in 2009, he saw the news online:
`CoreValve had sold itself to Medtronic for $775 million in cash and future
`payments. Today, collapsible prosthetic valves fished up through an artery with
`a catheter and implanted in the aorta are well on their way to becoming the
`standard method of replacing worn-out heart valves. The annual market has
`already surpassed $1.5 billion and is expected to grow in the coming years by
`orders of magnitude.
`
`When Norred first saw CoreValve's version of his patented invention, he did
`not know that the U.S. patent system had entered an era of drastic change.
`Starting in the early 2000s, the rights and protections conferred by a U.S. patent
`have eroded to the point that they are weaker today than at any time since the
`Great Depression. A series of Supreme Court decisions and then the most
`important patent-reform legislation in sixty years, signed into law in 2011, have
`made it so. The stated purpose of the reform has been to exterminate so-called
`patent trolls—those entities that own patents (sometimes many thousands of
`them) and engage in no business other than suing companies for patent
`infringement. The reforms have had their desired effect. It has become harder
`for trolls to sue. But they've made it harder for people with legitimate cases,
`people like Norred, to sue, too.
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`Dr. Troy Norred filed for a patent for a replacement aortic valve in 2000. Despite
`versions of his invention accounting for billions in sales, he has not profited.
`RICHARD BARNES
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`According to many inventors, entrepreneurs, legal scholars, judges, and former
`and current USPTO officials, the altered patent system harms the independent,
`entrepreneurial, garage-and-basement inventors, who loom as large in our
`national mythology as the pilgrim and the pioneer. In the words of Greg Raleigh,
`a Stanford-educated engineer who came up with some of the key standards that
`make 4G networks possible, "It has become questionable whether a small
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`company or startup can protect an invention, especially if the invention turns out
`to be important." Some call it collateral damage. Others maintain it was the
`express purpose of the large corporations to harm inventors. But, in the end, the
`result is the same. The Davids have been handicapped in favor of the Goliaths.
`Those who believe that innovation's richest sources lie as much in garages as
`in corporate R&D labs have grown fearful. "We clearly had the world's best
`patent system, based on the results," says Palo Alto venture capitalist Gary
`Lauder. "And that is going away."
`
`As a resident at the University of Oklahoma Health Sciences Center in the mid-
`1990s, Troy Norred saw an elderly male patient who was in all ways healthy
`except for a failing valve in his aorta. At the time the only way to treat that
`condition was to open up the man's chest, stop his heart, bypass it, carve out
`the old valve and suture in a rigid artificial one. The patient was too old for such
`a procedure. He died. "Why can't we replace his valve in a way that would not
`create such havoc on his system?" Norred asked himself. "What would such a
`replacement look like?" Most important, he realized, the valve would need to
`withstand the tremendous pressure of blood pumping constantly through it.
`
`On that Thanksgiving drive, he thought he had figured it out. His idea involved
`the surface area of the tubular aortic root and an expandable nitinol stent, also
`tubular, with a pig valve attached to it. The stent would expand against the
`tissue wall of the ascending aorta, anchoring the new valve in place and
`creating a seal without the need for barbs or staples or sutures, which tend to
`break over time. The surface area was the key. The more area the stent could
`expand against, the stronger it would adhere and the better it would keep the
`valve in place.
`
`"WE CLEARLY HAD THE WORLD'S BEST PATENT SYSTEM,
`BASED ON THE RESULTS. AND THAT IS GOING AWAY."
`
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`The insight invigorated him. He went to a local slaughterhouse and had the
`packers chainsaw-cut the hearts out of pig carcasses. He dropped the
`hearts—famously similar to human ones—into vats of liquid nitrogen. He stored
`them at home in the fridge, exasperating his wife. He talked his way into a cold
`lab at the university's agricultural engineering department and made epoxy
`models of pig hearts and pig aortas and pig aortic valves. He built proto type
`artificial valves and inserted them into the models. With the help of a materials
`engineer, he mathematically modeled his invention. The key to the math turned
`out to be a load-bearing equation.
`
`All that work, however, was for naught. For his fellowship research project, he
`proposed a set of experiments that would further test his invention. The
`estimated cost was high: $70,000. The proposal was rejected, and would
`continue to be, in other venues and by other entities, until Norred eventually
`gave up.
`
`The term "patent troll" was invented at Intel in 1999. This was the heyday of
`the PC- computing era, and Intel's office of general counsel was constantly
`receiving threats from people who wanted to sue for patent infringement. Some
`were established competitors angling for cross-licensing deals. Some appeared
`to be failed startups trying to wring something from their last remaining assets:
`their patents. Others were lone-wolf inventors no one had ever heard of. And
`still others were groups of lawyers who'd accumulated patent "portfolios" and
`were now seeking a return on their investments.
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`None of these plaintiffs were looking to create and sell products based on the
`inventions described in the patents. They were "nonpracticing entities," or
`NPEs, and their main goal was to use the menace of a lawsuit to pry a licensing
`fee from the company.
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`Although the archive has since been digitized for improved searchability, the USPTO
`retains paper copies of every patent filed.
`RICHARD BARNES
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`Intel's legal department wanted to come up with a term that would suitably vilify
`these new irritants. Citing the "Three Billy Goats Gruff" folktale and its
`avaricious goblin crouched underneath the bridge, an underling on the Intel
`legal team had an idea. Patent troll. Everyone loved it. "Make no mistake," says
`Ron Epstein, a lawyer in Intel's patent and licensing department at the time, "it
`was a pejorative term consciously created to make people feel bad about
`asserting their own patents."
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`The plan worked beyond anyone's imagining. Perhaps no figure is more reviled
`in Silicon Valley today than the patent troll. Often that disdain seems to cross
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`into a loathing for patents themselves. According to Terry Rae, a former deputy
`director of the USPTO, "There's an anti-patent feel" in Silicon Valley. "It's almost
`religious." The attitude is perhaps most typified by Elon Musk, who has declared
`the ideas contained inside Tesla's patents free to anyone for the taking.
`Echoing Henry Ford, who openly pined for the abolition of the patent system,
`Musk has described patents as "intellectual property land mines" that inhibit
`progress.
`
`That attitude has spread, like technology itself, from the West Coast to the rest
`of the country. A largely collaborative project evolved among Silicon Valley's
`giants to lobby Washington. They formed Beltway pressure groups with names
`like the Coalition for Patent Fairness. Their message was clear: Something
`must be done to combat the scourge of the troll. Those pressure groups funded
`studies, including one conducted by legal scholars at Boston University in 2011
`that proclaimed lawsuits by trolls to be "associated with half a trillion dollars of
`lost wealth to defendants from 1990 through 2010, mostly from technology
`companies"—assertions that have been undermined by subsequent studies.
`Even so, a report from the President's Council of Economic Advisors in 2013
`repeated those same claims.
`
`But according to Epstein and other Silicon Valley insiders, the real goal of these
`lobbying efforts wasn't to kill trolls or even to curtail patent litigation. Though big
`tech corporations still spend many billions a year on R&D, the outlay has shifted
`from the R to the D—that is, the developmental work of bringing to market that
`which has already been invented. This means that big companies increasingly
`obtain their innovations not from their own efforts, but by acquiring them from
`startups, small inventors, and universities.
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`One way to make those acquisitions cheaper is by weakening patent protection.
`You make it harder to sue. If a patent no longer protects an invention as
`strongly as it once did, a big tech company is in a much better position to
`negotiate a lower price for licensing a patented invention.
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`WHENEVER AN INDEPENDENT INVENTOR SUES FOR
`INFRINGEMENT TODAY, AN IMMEDIATE SUSPICION ATTACHES
`TO THE CASE.
`
`After CoreValve was sold to Medtronic in 2009, Norred's attorney, James
`Kernell, sent a letter to the company, seeking a license. Norred and Kernell
`were optimistic. After all, in April 2010, Medtronic had lost in spectacular fashion
`an infringement lawsuit brought by its archrival, Edwards Lifesciences. Edwards
`had asserted a patent for a catheter- implanted replacement aortic valve that
`was much less similar to Core Valve's device than was Norred's. (Medtronic
`would eventually pay Edwards close to $1 billion.) A yearlong back and forth
`between Norred and Medtronic ensued. Early on things looked promising,
`especially when, Kernell says, he verbally floated a figure of $40 million that a
`Medtronic attorney indicated was in the ballpark. "I thought we pretty much had
`a deal in place," Kernell says. Norred was ecstatic. But then communication
`began to slow, and in December it stopped entirely. Calls and emails went
`unreturned. Medtronic had gone dark.
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`Just a few weeks later, in January 2011, a new bill was introduced in the U.S.
`Senate. This was the America Invents Act, the jauntily named patent-reform law
`that was the culmination of years of lobbying by many large companies led by
`those in the technology sector. On its way to the White House, the bill received
`more bipartisan support than any piece of legislation yet voted on during the
`Obama administration. It was designed to undermine the business model of the
`patent troll, and it contained a potent new mechanism for voiding nettlesome
`patents. But it also had an unintended consequence: The new bill drastically
`handicapped inventors in favor of big companies. Inventors like Norred.
`
`Medtronic, it turns out, was one of the bill's many corporate proponents.
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`The National Inventors Hall of Fame sits off the soaring atrium lobby of the USPTO.
`There are museum exhibits and a gift shop.
`RICHARD BARNES
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`Norred wasn't a troll, and the decision to sue did not come easily for him. His
`lawyer told him that the cost to litigate could exceed half a million dollars.
`Norred did not have half a million dollars. He considered letting it drop and
`moving on with his life, but in the end he couldn't. "It's hard to give up on
`something you've worked so hard on," he said. His attorney agreed to work on a
`contingency basis. On February 6, 2013, Norred asserted his patent.
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`Whenever an independent inventor sues for infringement today, an immediate
`suspicion attaches to the case. The anti-patent feeling is such that to assert one
`is to become stigmatized as a troll or, worse, a con artist or a quack. But there's
`another way to look at these litigants. It could be that an inventor- plaintiff is a
`modern-day Bob Kearns, the Michigan engineer who spent decades fighting the
`global automobile manufacturing industry over the intermittent windshield wiper.
`They made a movie about it called Flash of Genius.
`
`Though individual inventors such as Norred are the plaintiffs in less than 10
`percent of the total number of patent infringement suits filed in the U.S., they
`are, like Kearns, tenacious—even more so than conventional patent trolls, or
`even the huge companies that sue and countersue and make headlines (Apple
`v. Samsung v. Apple). That 10 percent figure comes from a study led by a legal
`scholar at the University of Illinois named Jay Kesan. It would appear that most
`inventors who sue believe they're in the right to such a degree that they're
`willing to battle until the bitter end, Kesan says. There's an obvious reason why.
`"They have so much of their personal selves bound up in their inventions."
`
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`Norred Currently lives with his wife and teenage son—three other children are
`away at college—in rural Ada, Oklahoma, where he's had his cardiology
`practice since 2002. Aside from his McMansion of a house, Norred's twenty-
`acre property contains a complex of outbuildings: a garage, a chicken coop, a
`barn, and a workshop, where he spends most of his time when not seeing
`patients.
`
`To get to the workshop you walk past a swimming pool and, nearby on the
`patio, a large wood-burning oven that resembles a stone igloo. (Norred
`designed the oven. He once tried to heat the pool with it.) An exercise room with
`mirrors on the walls occupies one of the outbuildings. Equations scrawled in
`grease pen cover the mirrors as Norred works out a problem involving
`"anaerobic thresholds" and "capillary density" related to another of his
`inventions—an exercise contraption that would combine an elliptical with a
`lateral pull-down machine. His wide-open workshop has smooth, gray, poured-
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`concrete floors. There are drill presses, a miter saw, a lathe, a table saw, a MIG
`welder, a massive workbench. Various brands of nitinol stent are laid out on the
`workbench; Norred has been systematically subjecting them to stress tests. A
`cabinet contains drawers full of cardio medical devices that he brought in here
`and deconstructed. A bench press sits in the middle of the shop. ("I've got an
`idea for a new type of bench press," he says.) An enormously heavy lead vat
`turns out to be a nuclear processing station, with which Norred once made his
`own nuclear isotopes. Somewhere in storage he has an entire cath lab that he
`acquired from a clinic in Georgia. He wanted to use it to conduct tests on his
`valve. A cardiologist friend of Norred's said, "He has a tendency to get to talking
`about something and you look at him and think: You're out of your mind."
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`The United States Patent and Trademark Office in Alexandria, Virginia, issues more
`than 150,000 patents each year.
`RICHARD BARNES
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`In October 2013, eight months after filing his lawsuit against Medtronic, Norred
`got word of a troubling development. His patent had been IPR'd. The letters
`stand for inter partes review, which refers to a sort of extrajudicial system that
`exists inside the USPTO. Any party can petition a special tribunal within the
`Patent Office to challenge the validity of any already granted patent. The
`petitioner effectively says: This patent is junk, and here's why, forcing the
`patent's owner to defend it in a trial before a panel of three administrative
`judges—people with both technical and patent-law backgrounds, often former
`patent examiners. For a patented invention, an IPR is an existential test. To
`lose is to vanish from the system as an invention. Most of the time the entity
`making the IPR challenge is a company that's been sued for patent
`infringement. The motivation is obvious: Get the patent invalidated and the
`lawsuit disintegrates. So that's what Medtronic tried to do.
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`IPRs were established with the America Invents Act in 2011. A large portion of
`the AIA addresses the issue of so-called patent quality. During the '90s and
`early 2000s, amid the blossoming of so much groundbreaking technology, it is
`widely understood that the USPTO granted a raft of patents it shouldn't have.
`Historically, this is not uncommon. Whenever explosions of technology have
`occurred in the past, the Patent Office has struggled to keep up with the
`resulting surge in applications. The fuel trolls feed on is the vague, too broad,
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`illegitimately issued patent. A company couldn't launch a new product, it
`seemed, without potentially infringing scores of other patents. IPR tribunals
`were seen as a way to clear the system.
`
`But they also have had an unfortunate side effect. IPR tribunals make it easier
`for sophisticated defendants to kill patents held by legitimate inventors. The first
`IPR challenges started rolling in to the USPTO in September 2012, and the first
`decisions were handed down a little more than a year after that. By July 2014,
`in the middle of Norred's IPR ordeal, the tribunals were invalidating 70 percent
`of the claims in the patents that went to trial. Randall Rader, at the time the
`chief judge of the Federal Circuit—which is, among other things, the nation's
`appeals court for infringement suits—has called the tribunals "patent death
`squads." Not surprisingly, large corporations have a different view. As
`Medtronic's chief patent counsel said publicly at a Washington event last year,
`"We love the IPR system."
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`The term "trial" in the IPR context is more figurative than literal. Both sides
`present evidence and the testimony of witnesses. But all of it is done through
`deposition and digitally filed documents, with the exception of a single physical
`hearing at which both sides' attorneys give oral arguments. Still, it can get
`expensive. The IPR alone ended up costing Norred more than $100,000.
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`An image from Norred's patent application. Unlike previous valves, Norred's stent
`disperses the force needed to hold it in place against the aorta's walls, requiring no
`sutures.
`
`
`
`On October 8, 2014, Norred was deposed at one of his lawyers' offices in
`Kansas City. From the get-go, the encounter was tense. It became clear that a
`major pillar in the company's argument would be that Norred's valve was an
`amalgamation of already invented technology and hence not a patentable idea.
`In a very real sense Norred was now required, for a second time, to prove that
`his invention was a real invention.
`
`Title 35 of the United States Code contains a sequence of conceptual tests an
`idea must pass before it can be deemed patentable. The idea must not be a
`naturally occurring thing or a scientific principle. The idea must be "novel." And
`the idea must not be "obvious" "to a person having ordinary skill in the art." That
`is, your idea—if, say, it's for a prosthetic heart valve— cannot be an amalgam of
`bits and pieces of already invented technology, what's called "prior art," whose
`combination would be obvious to an authority in prosthetic heart-valve design.
`
`Back in 2000, when Norred first submitted his patent application, he didn't
`realize that someone had already patented an idea for an aortic valve that could
`be implanted without surgery. Dr. Henning Rud Andersen, a Danish cardiologist,
`has said that the idea for a "transcutaneous" valve first came to him in 1989.
`The lead patent examiner working Norred's case indicated that Andersen's
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`patent represented major "prior art" that Norred and his patent attorney had to
`contend with in order to have the patent approved. At first Norred freaked. He'd
`been scooped. But as he read through the Andersen patent, he grew calmer.
`His valve was different in a fundamental way. Andersen's valve is anchored to
`the aortic wall by a kind of "brute force," Norred says, like a suspension rod.
`"Whereas I rely upon dispersing that force over a larger surface area. The
`reason that's important biologically—you're talking about tissue that's not rigid,
`and the more force you put on it, the more likely you are to tear it." The USPTO
`agreed. Patent granted. (Dr. Andersen eventually licensed his patent to
`Edwards Lifesciences, which then used it to sue Medtronic-CoreValve for patent
`infringement, extracting that $1 billion payout.)
`
`Now Norred was being forced to go through the process all over again. Only
`this time Medtronic was hurling prior art at him that he either had never seen
`before or had considered irrelevant. Taking those inventions together,
`Medtronic argued, Norred's valve was obvious.
`
`In many ways, there was nothing new about Medtronic's tactics. Arguing that a
`patent is invalid is the oldest and most fundamental of patent-infringement
`defenses. When sued, big companies unleash swarms of high-paid lawyers,
`who hire still other people tasked with searching the planet for any lethal prior
`art that might assassinate a patent. There are those who specialize in this. It is
`an actual profession: prior-art searcher.
`
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`Off the lobby of the main USPTO building in Alexandria, Virginia, is the Public
`Search Facility. If the country's patent archive could be said to have a home,
`this is it. On its way to accepting its ten millionth patent, the digital archive is
`immense and getting only bigger—a kind of Borgesian library of civilization's
`creep. Finding prior art is therefore both difficult and easy. There is so much to
`sift through yet so much to choose from. Late in the afternoon on almost any
`weekday, sitting at the cubicles and staring at the computer screens in the
`search facility's large main room, the prior-art searchers are there. They can
`charge more than $100 an hour.
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`THE TERM "PATENT TROLL" WAS INVENTED AT INTEL IN 1999.
`
`The oral hearing for Medtronic v. Norred took place on an afternoon in late
`January 2015. Inventors themselves almost never attend oral hearings, and
`neither did Norred. It's just lawyers and their documents and their words.
`Typically each side gets about an hour to present its case, including rebuttals.
`Judges often telecommute to these things, so the lawyers at the podium end up
`addressing their arguments to flat-screen TVs outfitted with videoconferencing
`systems that sometimes go on the fritz.
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`To an outsider, an IPR hearing can seem almost totally incomprehensible. You
`understand the individual words coming out of the lawyers' mouths, but any
`larger unit of meaning fails to find cognitive purchase on your mind. Partly that's
`because of the highly technical nature of the inventions, and partly it's because
`of the nature of patent law itself. A patent is made up of a set of claims, and the
`claims are chunks of prose that are meant to describe the parts of an invention.
`When the claims of a patent overlap with those of a prior one, the claims are
`said to "read" on the prior art. And so an IPR hearing becomes a painstaking
`interpretive exercise in linguistic analysis, with one set of lawyers trying to pick
`a patent's language apart, and the other desperately trying to defend the words
`as they stand in the original. "The IPR isn't an effort to figure out whether an
`inventor invented something," says Ron Epstein, the former Intel attorney. "It
`has turned into a process where you use every i-dot and t-cross in the law to try
`to blow up patents." He adds, "There isn't a patent that doesn't have some
`potential area of ambiguity. If you set up the office so that no ambiguity is
`allowed, no patents will survive."
`
`At the oral hearing, Norred's attorneys argued that the prior art cited by
`Medtronic was irrelevant. One of those pieces of art, a valve patented by an
`inventor named DiMatteo, wasn't designed for use in aortas. Though the words
`"aortic valve" do appear in the DiMatteo patent, the invention, which has not
`been developed into a commercial device, is actually designed to replace the
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`venous valve. And the other prior art describes surgically implanted valves, not
`ones that would go in with a catheter, as Norred designed his valve to do.
`
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`
`Three months later, in April 2015, the tribunal ruled: "Petitioner has shown, by a
`preponderance of the evidence," that DiMatteo was lethal to three of the twenty-
`four claims in Norred's patent. Unfortunately for Norred, those three claims were
`the core of the invention. Without them, his patent collapsed into
`meaninglessness and Medtronic was immune to his challenge. Norred's
`attorneys immediately appealed the tribunal's decision. In May 2016, the
`appeals court ruled against him. It was over.
`
`Back in Ada, Norred was of course dejected. It was as if he had been wiped
`clean from history. It was as though he had never invented anything at all. The
`notion galled him. Around the time of the IPR decision, Norred was working
`extra hours at a hospital outside Pittsburgh in order to pay for his legal costs.
`One of the other cardiologists there mentioned to Norred that he wanted to train
`in transcutaneous aortic valve replacement. Norred couldn't resist mentioning
`his invention. The doctor gave him a look of disbelief. "I've never heard of you,"
`he said.
`
`*This article origionally appeared in the July/August 2016 issue of Popular
`Mechanics.
`
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`MORE F ROM
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`Can the Patent System Be Saved?
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`Page 19 of 21
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`WPA3 Internet Standards Will
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`CES 2018: Popular Mechanics
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`CES 2018's Hot New Trend: The
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`Page 20 of 21
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`What If Your Next Laptop Was
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`How Space Mountain Keeps Its
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`Take a Look at This Huge
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`Can the Patent System Be Saved?
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`Page 21 of 21
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`BOEING PATENTS AN UPRIGHT SLEEPING SYSTEM FOR PLANES
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`PATENT TROLL
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