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Gil Hyatt has gotten many rewards from his days as an inventor. In 1990, he received a fundamental but controversial patent on what he called the first microprocessor, or computer on a chip. It was 22 years late, but he nosed out rivals such as Intel in being the first to file for a patent application in 1968. He then licensed that patent and 22 of his 69 other patents to Philips Electronics, which then began enforcing them on the rest of the electronics industry and collecting royalties.
Philips’ efforts netted Hyatt more than $150 million, though the state of California would try for 24 years to take a big chunk of that money for taxes. It argued that Hyatt pretended to move to Las Vegas in 1991, but in 2017, he finally prevailed in convincing the tax board that he really did move. But at 80 years old, Hyatt still isn’t resting on the rewards he got. In fact, he’s still in a bitter battle with the U.S. Patent and Trademark Office.
He claims the office is sitting on his remaining applications, and is waiting for him to die. Hyatt sued to get the patent office to issue his remaining patent applications. The patent office declined to comment, citing the litigation.
And what he’s discovered in that legal fight is pretty alarming for all individual inventors, Hyatt said in an interview last week with me. I interviewed Hyatt back in 2014, and multiple times decades ago when I was at the Los Angeles Times and he was still living in La Palma, California, in Orange County. Back in 1990, we talked about his dispute with electronics companies like Intel, which claimed its employees Federico Faggin, Stan Mazor, and Ted Hoff invented the microprocessor in 1971.
Hyatt knows he was never much loved in Silicon Valley, as he was viewed as one of the worst cases of a “submarine patent,” filing continuation after continuation until the industry grew to a huge size and he eventually got his patent — allowing for a huge payday from royalties. Patent law gives inventors 17 years of royalties, based on the issue date.
Hyatt claims he has waiting for more than 40 years for the patent office to rule on two applications he filed in the 1970s. The typical wait time is now 18 months. Hyatt hasn’t disclosed how much he made from his deal with Philips, but he noted you can see which products cited his patent numbers in product materials. Sony alone built millions of products that cited Hyatt’s patents.
And the state of California went after him for a tax bill for more than $10 million, and so that tells you his royalties were huge. (Hyatt won that case in 2017, after 24 years).
Four years ago, Hyatt told me he wanted “justice.” But during discovery in his ongoing litigation, he was further outraged to find that the patent office had a special way of flagging potentially controversial patents. Those flagged applications went all the way to the leadership of the patent office, and they were often never granted by the office. The U.S. Patent and Trademark Office called this the Sensitive Applications Warning System (or SAWS), and it operated in secret for decades, based on the results of 31 Freedom of Information Act requests and court discovery unearthed by Hyatt and his nonprofit American Center of Equitable Treatment.
“The patent office has delayed and delayed. I’m finally hoping to get to the board of appeals and to the courts to stop the delays and get my patents issued,” Hyatt said in our interview.
He alleges that the SAWS program, which was started in 1994 not long after Hyatt’s case generated huge publicity, disproportionately targeted individual inventors or small businesses. The SAWS program came to light in late 2014, and Hyatt and his attorneys allege that patent office officials used the program to secretly exercise powers with which they were never vested by law, allowing them to choose winners and losers in controversial patent cases.
A patent with the SAWS designation could not be issued without approval from higher ups, and Hyatt found that his applications were designated as such. Patent examiners were instructed not to tell applicants that their applications had the SAWS flag. After getting 75 patents, Hyatt did not get another one since the 1990s, and for a long time he didn’t know why.
“They were down on independent inventors and I was a prominent independent inventor,” Hyatt said. “For the past 25 years I’ve been trying to overcome that illegal rule that they had, and in fact I have a major case now filed in federal court, a mandamus case to order them to properly examine my patent applications.”
Hyatt put two and two together after word of SAWS surfaced in 2014, and discovery revealed emails that showed SAWS was targeted at submarine patents, which typically generated a lot of bad publicity for the patent office. Evidence in the case showed the patent “office shall not notify applicant or any other party that any particular application has been identified as a SAWS application.”
Another SAWS case
Hyatt said that other inventors have been affected by SAWS, but most never knew to inquire about it.
Another Minneapolis inventor, Corliss “Cob” Burandt, told me in an interview that he discovered SAWS by accident in 2011. His application for a new automobile engine belt (with variable timing) had been flagged under SAWS. In denying the issuance of the patent, the patent examiner told Burandt (without having the permission to do so) that his application had the SAWS designation, and so it could not be issued even though it had been technically approved. Only high-level officials could remove the SAWS designation, court papers show.
“It’s hard to believe the government would favor the big companies over the individual inventors,” said George McDonald, a patent attorney who has been working with Burandt in his spare time for decades, in an interview. He said the application was really Burandt’s only remaining asset that could still change his life. The case has generated 4,000 pages of discovery.
Since the application has been pending since 1988, Burandt said he has suffered huge mental anguish. Burandt said, “You have to have a sense of humor. If you don’t, you would be crying on the phone.”
After hearing about Hyatt’s case, Burandt joined together to talk about being victimized by the SAWS program. They’re still fighting the case. In March 2015, a few months after SAWS became public, the patent office announced it was “retiring” the program, saying “only a small number of applications examined over the last twenty years were ever referred to the SAWS program.”
McDonald didn’t know why the case had a SAWS flag, except for the fact that big car companies would have had to pay Burandt royalties if he won the case. At this point, because of filing rules, Burandt can only capture about 2.5 years of royalties if he wins. But that would make a huge difference in his life, Burandt said.
The scarlet letter of SAWS
Hyatt found one of his applications had a SAWS designation and had been approved on several of its claims by the patent office’s appeal board. But the patent office has not issued the patent, despite more than a 15-year wait. When Hyatt sued, the office started the examination of that patent all over again.
On another Hyatt patent, discovery revealed that an examiner approved the patent for issuance in 2002. The examiner wrote, “We are done with the case, it is ready for issue complete with that most ancient form of allowance a blue slip. … I have been waiting for a resolution concerning whether it is cleared for issue by ‘the powers to be’ who have been holding up the issue for the past several years. … If you know anything more please let me know I’d love to get the thing out of the office.”
The patent office never issued that patent.
“Once a SAWS flag is put on a patent application, we know now that you can never take it off,” Hyatt said. “That patent application is essentially dead.”
Hyatt’s patent applications are still in patent purgatory.
“I have an enormous amount of evidence. I had an appeal to the federal court, the judge allowed us to take discovery, and we got thousands of pages of very incriminating evidence from the patent office and the depositions we were permitted to take,” Hyatt said. “We have a very significant bad faith case against them. We’ve articulated many of these things briefly in the complaint we filed about three months ago. It’s now pending in the federal court of the eastern district of Virginia.”
At 80, Hyatt said he is aware the patent office may very well be trying to wait him out. He said he is healthy.
But he has set up a foundation that could still collect money if the case results in a legal victory, and the foundation could reap the rewards if Hyatt is awarded more money. Hyatt believes that the patent office leaders set themselves up as a “Star Chamber,” the name for a corrupt extra-judicial and secret court. And while SAWS has been retired, Hyatt believes the essential elements of it are still in operation.
“The truth of the matter is, they’ll outlast me,” Hyatt said. “But the other side of the coin is, will they have to issue my patents while I’m still around? I’m planning on creating a foundation to exploit them for human rights purposes. I’d like to be around while that’s in effect.”
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