OPINION:
Cryptocurrency has quickly gone from a fringe tech product to an asset owned by millions of Americans. As the first member of Congress to disclose owning crypto, I am encouraged to see how far digital asset adoption has come. After years of regulations that threatened to push innovation overseas, the Trump administration is reclaiming American cryptocurrency leadership.
Milestones such as the first White House Digital Assets Summit, enacting stablecoin legislation and establishing a Strategic Bitcoin Reserve and U.S. Digital Asset Stockpile put us on the right track.
Now, a federal agency has gone rogue. The U.S. Patent and Trademark Office proposed a set of rules in October that would hold up new advancements and cutting-edge technology adoption. Patent and Trademark Office Director John Squires should withdraw the proposal before it jeopardizes further growth in the crypto industry.
When technologies have a meteoric rise, no one wants to be left behind. Some of the attention is positive, such as injections of new capital, but there are also those who want to profit from others’ work. Shell companies called patent trolls fit squarely into the latter category. As cryptocurrency’s star has brightened, patent trolls have targeted blockchain technologies undergirding the entire industry for lawsuits.
The patent troll playbook is simple. Instead of investing years of time and resources to create something new, they wait for others to do the heavy lifting before accumulating nonspecific patents in that technology area, which they then claim apply to a broad spectrum of products.
Next comes litigation. The trolls seek licensing fees from companies that create products and offer services, knowing that giving in to their demand will be less expensive than battling it out in court. For startups and other companies in emerging technology areas, capitulating to patent trolls can be worth removing the threat of litigation.
Patent troll lawsuits are pervasive, accounting for almost 60% of all patent litigation. The accumulated costs are considerable, stunting the growth of smaller companies, delaying new innovations while disputes are litigated, and draining financial resources through legal fees and settlements.
Coinbase, the largest U.S.-based cryptocurrency exchange, has promoted its own playbook for fighting patent trolls, emphasizing: “No company, large or small, should have to live in fear of a frivolous lawsuit filed by a patent troll. And no troll should be able to stall progress just because it usually costs more to defend a case than to settle it.”
The patent trolling problem is not new. In fact, in 2011, Congress established deterrents to patent troll harassment at the patent office. The Patent Trial and Appeal Board was established to create panels of expert administrative judges to determine whether previously issued patents are valid or whether the agency erred in granting the patent. The board is a tremendous resource for companies battling trolls, as it provides a less expensive alternative to litigating or settling.
Once the Patent Trial and Appeal Board reviews and invalidates a patent troll’s wrongfully issued patent, it can no longer be used in litigation, clearing the way for all companies present and future that wish to productively contribute to the industry.
This resource is under fire. Earlier this year, interim leadership at the patent office decided to defang its own review process. In a series of unilateral, arguably illegal, actions, the acting director implemented sweeping changes that have made it much more difficult for emerging industries to access review.
Now, Mr. Squires has released a rulemaking proposal that amounts to rewriting the law entirely and eliminating Patent Trial and Appeal Board review as an option for defendants where it’s most needed. The rules would block reviews when related litigation is in process, force defendants to surrender certain legal arguments for a review to proceed, and bind board petitioners to determinations in separate lawsuits that do not involve them. This bureaucratic lawmaking is self-sabotage of a resource that is actively protecting crypto companies from exploitation.
The threat patent trolls pose to crypto innovation is not lost on key members of the industry. In October 2024, the Cryptocurrency Open Patent Alliance, a nonprofit organization comprising members from the cryptocurrency community, announced a partnership aimed at protecting the technology sector from patent troll abuses. However, the initiative is dependent in part on using the Patent Trial and Appeal Board to challenge low-quality blockchain patents being weaponized in litigation before they can be used to stall advancements and wider adoption.
All those committed to promoting U.S. cryptocurrency leadership are counting on Mr. Squires to make the Patent Trial and Appeal Board accessible to all stakeholders in the crypto industry. This means withdrawing the patent office’s most recent rulemaking proposal so the board continues serving as a reliable, accurate deterrent to predatory lawsuits.
• Bob Goodlatte represented Virginia’s 6th Congressional District from 1993 to 2019 and served as chair of the House Judiciary Committee.
Please read our comment policy before commenting.