A really experienced water balloon filler and tier can do about six, maybe seven, water balloons per minute if they’re really fast. I had for many years, many summers, filled and tied water balloons to play outside in Texas. It’s hot and when you get outside you need water and, so, I’ve got eight kids. They’re good sports, they’ll do their share, which is, you know, they filled and tied ten water balloons, come on Dad, let them play now. It’s a tedious, it’s a difficult task and most people don’t have the patience for it or the skill. I spent a lot of time year after year thinking about, “There’s got to be a better way to do this.” So then, I had this tube and this balloon and the other end of the tube I got to connect to the water supply. And so I thought, “Well if I get one of those caps that goes at the end of a garden hose and I put a hole in it, then I can attach the tube to it and so I did and then I looked at it — this little, teeny, skinny tube and this big end of the garden hose — I said, “There’s a lot of room for a lot more tubes in there. He needs some friends.” And so I went and drilled holes in the entire end of the cap, filled it up with tubes, balloons and o-rings at the end of each one, glued them in. At that point, I thought this looks like it solves the problem and maybe I need to commercialize this and see if I can take it to market. So, took my next round of prototypes, made them prettier, better for camera, and put together a video demonstrating the product and explained the product, put it on Kickstarter, and on July 22, 2014 we launched and started watching to see if anybody was going to support it. And they did. We hit $920,000, almost a million, with 21,000 backers that pledged. Four months later, it was December of the
same year, my wife received a text message from a friend who said, “I saw Josh’s invention on TV but it wasn’t Bunch O Balloons.” And I told my wife, “No, it’s not possible. She’s probably talking about some other device that fills water balloons.” Her friend wrote back, “No. It’s his invention.” And so, I go and I find the commercial and I look at it and it’s exactly my invention and it’s got someone else’s name on it. The patent did issue in June of 2015, so now summer hits, our product’s in the market, the knock off’s in the market. Tinnus, who owns the patent, it’s my company, along with ZURU who has the exclusive license, jointly filed a patent infringement suit in the eastern district of Texas. And, so, we went for it and we won and, so, the court granted the preliminary injunction. So, they had to stop selling this product. Of course, it took, you know, they sold millions of units before it went into effect because it takes, you know, most of a year to get through that process. But, the order issued and they were enjoined. Telebrands immediately went to the PTAB and filed a petition to invalidate Josh’s patents. The PTAB is an administrative proceeding, like a court. It was enacted to, essentially, offer a quicker, faster, cheaper alternative to litigation. So, instead of, you know, spending three years, why not just take it to the PTO, the experts on patentability, and have them do a quick proceeding, get it over in 18 months, and say, “Yes, this patent is valid” or “No, we made a mistake.” And, so, the theory is that they would be better at coming to the correct legal judgements because it’s so technical in nature, it’s infused with these technical facts, than a district court would. In Josh’s case, the evidence that they took to the PTAB, the evidence that Telebrands presented to the PTAB, was the exact same evidence that had been presented by Josh himself to the examiner. Was this idea obvious over the pre-existing prior art? The inventor will come back and say, “No, it wasn’t obvious at all. We were innovative The prior art doesn’t disclose this.” And then the petitioner will say, “No, this really was a rather obvious step to take. A person of ordinary skill in the art would have had a reasonable expectation of success and you shouldn’t get a patent for doing something that was obvious in light of the public knowledge.” Historically, that was, the validity of a patent really was up to a federal court, right? The U.S. district courts and then the Court of Appeals for the Federal Circuit. When you go to a court, they’re gonna say, “Look, this patent was issued by an agency. We assume as a legal matter that it’s valid. And that’s because PTO was considered to be an expert agency. Think about a piece of real estate, right? You want to think that it was granted properly. You want to presume that the scope is known. And, perhaps, you want to check on it once but you don’t want to keep making that check over and over again, right? The same thing was the thought with patents. Prior to the PTAB decision, the district court had said, “You know, I don’t think that this patent is invalid for indefiniteness.” Essentially the very same issue, the PTAB disagreed. Just like in a district court, Telebrands argued that the patent was invalid for indefiniteness under Section 112. The term used in the patent that when the balloons are substantially filled with water, they said that one of ordinary skill in the art cannot understand that term. It doesn’t meet the statutory requirements. And, so, of course, we said, “Well, your demonstration video that you put online shows you know when it’s substantially filled and your instructions for eight-year-old children know when it’s substantially filled.” Claim construction, which is where you look at the words that describe the invention. District courts apply a very narrow construction: basically the plain and ordinary meaning of the term. Whereas the PTO, through rulemaking, so it’s not statutory but a rulemaking decision, has decided it can apply a broader construction than what courts do. And when you apply a broader construction, there’s a larger chance that you can sweep in more art that would invalidate the patent. What the PTAB has done, what the Patent Office has done in creating the PTAB, is create a system that is too dissimilar from the courts, so that a patent that might survive in court will be invalidated in the Patent Office. It’s purely a question of legal quality at this point and the reason this legal right doesn’t survive a second review under the law is that we’re using different legal standards in the agency than we would in the courts. The Patent Office is just simply changing
its mind about, you know, they signed the patent, granted the property right, and then they’re saying, “No, we wouldn’t, we changed our mind,” without identifying any error, no fraud, no guilt. This is gonna be an eight to ten year battle of the whole patent family. It’s been to the federal circuit, we’ve had
eight cases at the federal circuit already. You have to have the resources to fight it and, because the patent’s just not straightforward to enforce.