10 Jun

After $31 million award inventor swaps East Texas for Washington and takes his PTAB fight to Congress

Of all the small inventors who have become involved in the fight to reform the patent system over the last few years, Josh Malone’s story has arguably become the highest profile. And, thanks to a recent $31 million settlement after a multi-year infringement fight, it comes with a happy ending.

Malone is the former Texas Instruments engineer who invented a toy for simultaneously filling multiple balloons with water. It was a runaway success and attracted plenty of media attention. But, unfortunately, he also came up against a determined infringer in the shape of the company Telebrands, which brought a copy of Malone’s product onto the market.

Telebrands’ infringement led to what has become a familiar tale for many patent owners: district court litigation and a string of challenges at the Patent Trial and Appeal Board (PTAB). In the process Malone’s story even became the subject of a documentary on the impact of the PTAB on patent rights.

The settlement deal, which Malone says represents one year of infringing sales, gives him the kind of financial stability that few small inventors enjoy. But he is not resting on his laurels, taking his money and riding into the sunset to forget about the vagaries of post-issuance reviews and the pitfalls of being a patent owner in the US.

Instead, a little over a week ago he upped sticks from Plano in East Texas and moved with his wife and kids (he has eight, five of whom are still in school) and moved to Alexandria in Northern Virginia. In his new digs he is just a five-minute drive from USPTO headquarters and across the Potomac river from Washington DC and the halls of Congress.

The move was really borne out of necessity. For the last couple of years Malone has spent about one third of his time at home, one third inside the Beltway advocating on behalf of small inventors and the rest of his time travelling to other parts of the US to meet with and try to help others who are struggling to get a return from their discoveries. By moving to Alexandria, he says, “at least I’ll be home two thirds of the time”.

He also has plans to turn a small part of his house into a unit where he can put up other inventors who are travelling to Washington to tell their story to legislators and other interested parties.

Thanks to the years of seemingly endless litigation he says he doesn’t have the creativity for inventing anymore; but with the success of Bunch O Balloons he doesn’t need to be looking for the next blockbuster. “That puts me in a small elite class among inventors,” Malone says. It has prompted him to turn from inventing to advocacy. “If I can give ownership of inventions to inventors and help drive private capital their way, that’s a much bigger cause,” he comments.

His settlement has prompted many messages of support: “They say, “well congratulations you won”, and I say “well, yes but I was paying my lawyers $75,000 a week.” Unusually in the current climate it was the accused infringer who ultimately balked at the prospect of adding millions more to their legal bills and agreed to settle.

In relative terms, Malone concedes that his case was a lot more clearcut than the complex cases that characterise much of the patent litigation landscape. “This wasn’t some method patent buried inside a smartphone, their entire product was a knock off,” he states. But even then, he points out, his case became bogged down in legal arguments over apportionment and lost profits, as well as plenty of trips to the PTAB (in the course of their fight Telebrands filed eight post-grant reviews against six of Malone’s patents).

As arguments over reforming 101 percolate in Congress and the USPTO under Director Andrei Iancu continues to implement a series of changes to the PTAB, Malone is in a unique position to lobby for a significant but at times under-represented chunk of the IP-owning world.

Mr Malone goes to Washington

It was Malone’s wife who suggested that he take his fight to Congress. So a few years ago he pitched up in the lobby of the USPTO, demanded a meeting with the Commissioner for Patents and then waited three days to get his sit down with Drew Hirshfeld. It was clear, Malone says now, that Hirshfeld sympathised with his plight. But it was also clear that there wasn’t much he could do.   

This led the inventor to make the rounds in Congress. There he was told he needed to focus his efforts on the members of the Judiciary Committees in the House of Representatives and the Senate. So he cornered Congressman Bob Goodlatte, the then head of the House Judiciary Committee, and spoke with Senator Chuck Grassley, Goodlatte’s equivalent in the Senate. Malone summarises Grassley’s response to his plight as simply: “What can I do about it?”

The feedback from Congressional staffers was that his story was not what they had become used to hearing. “For most of them it went completely against what they had been told and worked on and believed for the last 10 years, and they didn’t know what to do with me,” he recalls. “They all thought that patents inhibit innovation and that inventors are patent trolls. They had never considered a legitimate inventor.”

He was, he admits, very naïve, assuming that by simply telling his story legislators would be forced into action. Through his advocacy efforts Malone became involved with US Inventor, the group that has become increasingly prominent in patent reform circles as it pushes to represent the interests of the small inventor. Last week the group’s co-founder Paul Morinville testified at one of the Senate hearings on patentable subject matter.  

Malone is relatively realistic on what he and his fellow small inventors can achieve. He knows that the America Invents Act, the bill which overhauled the post-issuance review processes and created the PTAB, is not about to be swept away; but he still hankers after a pre-AIA world.

There are, Malone insists, reforms that are possible. “The PTAB should be voluntary—if there’s a problem with our patents then we’ll go for a re-exam or we’ll go to the PTAB if it’s a faster, cheaper alternative to district court,” he asserts. “But we’re not going to a kangaroo court to review our patents. If you make it fair and you make it fast and you make it cheap then we’re going to beat down the door to go to the PTAB.”        

He concedes that they can’t push for abolition because “too many people believe there are bad patents and that the patent office can’t get it right and that juries can’t get it right and that litigation is too expensive”.

He then adds: “I think we’d be much better off if we maintained our separation of powers and we had Article III courts and juries decide property rights; that would be a much better system.”

As he and his family settle into their new home in the Washington area, Malone insists he has come well prepared. “I have my hip waders on,” he chuckles. “I’m prepared for the swamp.”

Richard Lloyd

Author | Editor

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