Misleading PTO statistics hide a hopelessly broken PTAB

“[I]nstitution of IPR challenges is far more likely when there are multiple petitions filed against the same patent because it makes it easier for PTAB judges to meet their production quota.”

the bike has rich big wheels in the form of currency, the bike has poor brick instead of wheelsThe America Invents Act (AIA) is a horribly misnamed piece of legislation that no doubt leads the masses to believe that the AIA has been good for innovation, perhaps even supported by inventors. The truth of the matter is that when the AIA was being debated in Congress independent inventors were not even given a seat at the table or invited to testify at any hearings. Inventors were ignored.

Perhaps the most insidious piece of the AIA was the creation of three new post grant procedures capable of stripping patent rights from patent owners. These patent rights being lost are statutorily recognized to be property rights (see 35 U.S.C. 261). Nevertheless, these property rights are being stripped by an arm of the Executive Branch of government instead of an Article III federal court. Making matters worse, these property rights are being stripped by the same agency that examined the patents in the first place – the United States Patent and Trademark Office. Indeed, the Patent Office has become a bit like an arms dealer, selling patent rights to innovators who struggle for many years and pay tens of thousands of dollars to get the patents, only to turn around and for tens of thousands of dollars more sell the right to challengers to take out those patent rights.

These post grant procedures radically favor large multinational infringers by shifting the burden to the party least able to withstand that burden. For example, the most common of these procedures, inter partes review (IPR), initially left fewer than 5% of claims unscathed.

While the Patent Office likes to tout statistics that assert most patent claims challenged in IPR are not invalidated, those statistics are simply not credible. When reporting its statistics the Patent Office ignores the reality that once an IPR is actually instituted few claims are actually adjudicated to be patentable. The Office is also grossly misleading when they characterize claims not subject to a final written decision as “remaining patentable.”

IPR statistics as of July 31, 2016.

IPR statistics from the USPTO. Data as of July 31, 2016.

The USPTO and those who say IPR isn’t all that bad seem to like to use this graphic shown to the right (see slide 12). The red shows the number of claims found unpatentable in a final written IPR decision, the orange shows the number of claims canceled or disclaimed by the patent owner and the green, which is a tiny fraction of the overall number of claims, are those patent claims that were actually adjudicated to be patentable by the Patent Trial and Appeal Board (PTAB). The Office conveniently includes the large purple chunk of claims and refers to them as “claims remaining patentable and not subject to a final written decision.” The Office can do this because the PTAB doesn’t have to issue decisions that address all claims they agree to consider. Technically those claims remain patentable, but those claims have NOT been determined to be patentable by the PTAB in an IPR. The PTAB simply ignored those claims when they wrote their final IPR decision, which astonishingly is something they are allowed to do and do quite frequently. It is hardly a ringing endorsement of the continued viability of those claims moving forward, particularly given that the PTAB leaves standing an initiation decision that determined that those claims are likely invalid. Thus, it is rather disingenuous to rely on those ignored claims to suggest IPR outcomes are not devastating to patent owners.

It is obviously impossible to license or enforce claims declared invalid by the PTAB, but it should be equally obvious that it is impossible to license or enforce a patent claim that was initially declared to be likely invalid and then later ignored by the PTAB in a final written decision. If those creating the Patent Office statistics don’t understand just how completely and thoroughly compromised those initiated and ignored claims are they should spend half a minute in the real world shoes of patent owners. Walking a mile in the shoes of the patent owner would do the PTAB apologists immeasurable good.

Another problem with the Patent Office statistics is that they do not keep stats patent by patent, but rather offer statistics claim by claim. If the Office collected data based on the patents effected it would be close to the 90% range, or higher. At issue here is the fact that every patent has multiple claims, some with 20+ claims being challenged in each IPR. So if only one key claim were knocked out and declared invalid by the PTAB that would be counted as an overwhelming patent owner success, when in fact it could be a disastrous loss.

Let’s use an example to illustrate the ridiculous nature of USPTO statistics. Let’s say the patent in question has 20 claims, with 3 being independent and 17 being dependent. An IPR is filed challenging all 20 claims. The PTAB decides to institute on 17 of those claims and declines institution on the 3 narrowest claims, which are not particularly useful anyway for licensing or enforcement. Let’s further say that the PTAB ruled only the three independent claim to be unpatentable. Finally, let’s say the PTAB didn’t even address the other 14 dependent claims that were instituted.

The Patent Office would score this as a massive victory for the Patent Owner. Losing only 3 claims means that only 15% of the claims were declared unpatentable, while 85% of the patent claims remained patentable. The story that isn’t told, however, is that 15% of the claims are deemed commercially non-viable, and 70% of the claims were initially determined to be likely unpatentable. That doesn’t sound like a victory of any kind for the patent owner, does it?

5th-anniversary-200In effect, what the Patent Office makes seem like a resounding victory for the patent owner becomes a complete and total loss for the patent owner when the lens of the real world is applied. The useful claims have been lost and 70% of the claims have a negative patentability initiation decision hanging over their head that remains unresolved. This patent is now dead. It has been defeated regardless of the parlor tricks and phony statistics reported by the Patent Office.

But wait, things are worse than they initially seem. While technically those 17 claims that remain patentable (i.e., the 14 claims ignored by the PTAB in their final written decision plus the 3 not instituted), they remain patentable as being subject to challenge without any estoppel. That means those claims, even if one or more of them were commercially useful, could be challenged again and again and again until there is a final written decision. Only with a final written decision would there be any estoppel that could be applied to prevent harassment of the patent owner, and then it would only apply to the party that lost and those in privy with the party that lost. In other words, patent owners are subjected to repeated post grant challenges on the same prior art against the same patents and claims within those patents.

If we are going to be perfectly honest and not rely on accounting tricks to make IPR seem to be something it clearly is not, IPR kill rates are devastating. Calling the PTAB a “death squad” is today as appropriate as it was when that moniker was first given by then Chief Judge Rader, and warmly embraced by then PTAB Chief Judge Smith, who admitted that if the PTAB were not acting as a death squad they would not be doing their job. Astonishing he would say that given PTAB judges are Administrative Patent Judges, the Patent Office equivalent of an Administrative Law Judge or ALJ. Judges are supposed to be neutral, but that has never seemed to be the PTAB approach. Indeed, recently I’ve heard a story told by a former PTAB judge who explained that institution of IPR challenges is far more likely when there are multiple petitions filed against the same patent because it makes it easier for PTAB judges to meet their production quota. If that is not proof of a hopelessly broken PTAB I don’t know what is.

I don’t know what the proper name for the legislation is, but it certainly isn’t the America Invents Act. All the AIA does is make it harder for innovators, weakens the patent system and pushes inventors to keep their inventions as trade secrets hidden away from society. The AIA has been and will continue to be a disaster of our own making until it is either repealed or significantly revised to the point where it bears little resemblance to the bill that was actually signed into law by President Obama some five years ago this September.


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Join the Discussion

16 comments so far.

  • [Avatar for WT]
    September 19, 2016 03:28 pm

    Gene, I’m following up on an earlier comment/question (#7) I made because I don’t think it was answered. You said: “The PTAB simply ignored those claims when they wrote their final IPR decision, which astonishingly is something they are allowed to do and do quite frequently.”

    I’ve never seen this happen–where the PTAB “simply ignored” some claims in a final written decision. I very well may have missed it, which is why I’m so interested in seeing an example. you give us an example where you’ve seen this?

  • [Avatar for Prizzi's Glory]
    Prizzi’s Glory
    September 12, 2016 02:56 pm

    @Anon#11. Of course, I consider the AIA a total disaster, but I see the use to which the AIA has been put as symptomatic of a much deeper corruption within the USPTO.

  • [Avatar for Anon]
    September 12, 2016 06:00 am

    There is simply no merit to the argument that the solution is to improve the original examination process

    Quite in fact, Mr. Runner, that is THE ONLY PLACE that has merit.

    Otherwise, why bother at all with ANY examination (at the cost of Billions directly from innovators – yes, with a “B”) and simply move to a registration system?

  • [Avatar for Gene Quinn]
    Gene Quinn
    September 10, 2016 08:32 pm


    Obviously, you don’t know anything about what you are talking about.

    You say: “The production quota for examiners heavily favors allowances…”

    That is a lie and either you know it or you are clueless. Production quotas for examiners universally favor rejections. Examiners are disproportionately reviewed for wrongful allowances NOT for wrongful rejections.

    Despite the fact that your comment lacks substance and understanding of the issues, I’ll just point out that while you claim I’m a shill and then attempt to set the record straight to get to the truth of the matter, you don’t actually dispute anything written in the article. The reason, of course, is that everything in the article is correct. The USPTO statistics are misleading… likely intentionally misleading… to portray IPR as something that it is not.

    So, Lode_Runner, if you can’t understand that what I’m saying in this article is perfectly accurate then it is clear that you are the shill. And a nameless shill at that. What a stand-up guy!


  • [Avatar for Lode_Runner]
    September 10, 2016 04:02 pm

    Gene, you sound like a shill for patent holding and enforcement entities.

    The truth of the matter is that, even among people of your viewpoint, there is no denying that the ex parte examination process results in thousands of junk patents that could be invalidated by a ten-minute Google search by someone who knew what they were doing. The production quota for examiners heavily favors allowances (after a first b.s. rejection, of course), so you end up with a lot of junk patents. And as the number of applications increases, the patent landscape starts to look more and more like a post-apocalyptic wasteland.

    There is simply no merit to the argument that the solution is to improve the original examination process. It is broken, and the lack of involvement by anyone but an examiner (who is too stupid to work as an engineer for a real company) makes any attempt to improve that end of the process ultimately useless.

    Now enter the AIA. By any measure, post-grant challenges account for an infinitesimally small percentage of issued patents. And it should come as no surprise that the claims get invalidated in AIA procedures; it’s a self-selection process, those patents that are problematic, vulnerable, and being asserted, are the ones that are challenged. You have a motivated opponent and, for the first time, a real prior art test against the patent. It’s not surprising that so many patents fall under this system, as many of them were prosecuted when no IPR process existed, so you could wave the “presumption of validity” in front of any court and demand respect for even the most junky patent. I suspect you will see IPR challenges start to fail as IPR starts incentivizing people start prosecuting new applications with a view toward getting something that’s actually defensible, rather than the process of getting broadest possible claim, even if it reads directly back on the prior art.

    And despite your claims of a “broken” system, PTAB decisions invalidating claims are overwhelmingly affirmed by the Federal Circuit (which, as anyone would agree, is a fairly patentee-friendly court).

  • [Avatar for Anon]
    September 10, 2016 06:53 am

    Prizzi’s Glory (mistakenly) states: “The issue of unaccounted examiner time seems like a calculated distraction from the real problems.

    First, the plain fact is that there are multiple problems – and that there thus must be multiple solutions (just because this is not your own personal number one problem does not mean that it is any less of a problem).

    Second, if you think this far lesser report is a “distraction,” then you must be absolutely apoplectic about the ENTIRE AIA, which was passed off as “fixing” the patent system when clearly, it has made the patent system much much worse (I for one brought this very point up during the legislative process, both here and with my representatives).

  • [Avatar for Prizzi's Glory]
    Prizzi’s Glory
    September 9, 2016 04:48 pm

    The late Roman Republic was suffering a serious problem of wealth concentration to which the Romans had no solution and which contributed to igniting Social War (91-88 BCE).

    From https://en.wikipedia.org/wiki/Social_War_(91%E2%80%9388_BC).

    The Romans’ policy of land distribution had led to great inequality of land-ownership and wealth.[2] This led to the “Italic people declining little by little into pauperism and paucity of numbers without any hope of remedy.”[3]

  • [Avatar for Edward Heller]
    Edward Heller
    September 9, 2016 03:06 pm

    Premise: “Wealth concentration tends to lead to collapse or to rebellion.”

    Is this true in fact?

    I think the problem is more closely linked to lack of political freedom or attempts by one powerful faction to eliminate another. I was thinking here about the late Roman Republic (Cicero, Caesar, Pompey) where attempts by Cicero to have Caesar arrested, when he should have been feted, led to the civil war.

    But it is certainly true that independent invention has been the primary source of true new, replacement-type technology for a very long time. Big companies have every incentive to deny patent protection to the startup to prevent such competition.

  • [Avatar for Prizzi's Glory]
    Prizzi’s Glory
    September 9, 2016 02:40 pm

    It certainly does seem as if the US patent system is actively being destroyed.

    This destruction seems partially orchestrated and partially evolved since the cross-over from the pre-GATT to the post-GATT system.

    I don’t fully understand all the details, but the ideological basis for ruining the patent system seems to be a sort of vulgar Schumpeterism.

    Schumpeter is often credited with developing the concept of economic technological “creative destruction.” Sombart is probably the true author of the idea, but Schumpeter developed the associated theory more expansively. He viewed technological innovation as the source of cyclical economic instability and growth.

    Economic planning advocates whether Republican or Democrat want to minimize the instability while they maximize the growth. The wannabe economic planners have no concept of the means to achieve such a goal. (No one does.) The Republicans and Democrats seem to differ most on appropriate beneficiary of the growth cycles.

    At some point since 1995 (when SAWS and similar programs began to be instituted at the USPTO), some theorists probably funded by big capital, big corporations, and other potential wannabe IP poachers, began to hypothesize that the US patent system is harming the US economy.

    The vulgar Schumpeterians try to minimize presumptively destabilizing invention owned by small businesses and lone inventors while they want to maximize presumtively stabilizing technological innovation owned by large corporations and big capital.

    Today senior USPTO officials like Michelle Lee openly talk about legitimate versus illegitimate patent rights.

    In point of fact, human economic systems are inherently unstable because as fair games they tend to concentrate wealth. (An unfair game would be worse.) Wealth concentration tends to lead to collapse or to rebellion. The wealth deconcentration created by patents provides temporary minor economic resets that help stabilize the economic system.

    In order to minimize the allegedly destabilizing ownership of inventions by small businesses and lone inventors, programs like SAWS clearly persist as some sort of patent/patent application star chamber in violation of the APA even if the specific SAWS program has been retired.

    Such behavior is not a problem merely for inventors but harms the US economic, political, and legal system in general. Killing the patent system threatens economic and political inclusiveness.

    The USPTO is corrupting the legal system because senior USPTO officials are willing to violate federal criminal and not merely administrative civil law in order to kill patents and patent applications. These criminal violations appear in PTAB decisions as has been pointed out previously in the context of the 07,773,161 Application. If government officials are immune to prosecution for federal criminal violations, US democracy is lost. There is nothing more corrosive of the US political system. Because CAFC judges defer the PTAB, the criminal corruption of the USPTO spreads into the federal judiciary.

    To save the patent system requires a multifront strategy that includes:

    (1) dealing with the outrages that are taking place within the patent prosecution and PTAB processes and that Gene Quinn and others have been addressing,

    (2) fixing the problems within the federal judiciary that is improperly deferring to a USPTO that is casually violating civil and criminal law,

    (3) campaigning to rework 101 rationally to put the breaks on judicial activism that has resulting in logical inconsistency of patent related case law.

    Logically inconsistent case law makes it easy fot anti-patent USPTO officials to kill patents and patent applications because in a logically inconsistent system any conclusion can be reached from starting premises.

    The issue of unaccounted examiner time seems like a calculated distraction from the real problems.

  • [Avatar for WT]
    September 8, 2016 03:09 pm

    Question: Is the PTAB really *ignoring* some of the claims it instituted trial in final written decisions? I haven’t seen a final decision yet that addressed only a subset of the claims that were instituted. I’ve seen many cases where trial was instituted on a number of claims, the parties settled, and the PTAB terminated the trial *without* a final written decision–thus leaving the claims in the basically the “limbo” you describe. And I’ve always assumed those (many) settlements accounted for the big purple gap. Can you point me to a decision where a final written decision did not address every claim that had been instituted for trial?

  • [Avatar for UnhappyPracticioner]
    September 7, 2016 01:13 pm

    Great article Gene, but as you pointed out in other articles, the problems go deeper than this. For example, the PTAB routinely ignores 101 so the Examiner can freely take the case back and steal a win on appeal away from the Applicant with a new 101 rejection. Rendering a decision on invalidity/obviousness without considering if the invention is actually subject matter eligible feels like a fraud.

  • [Avatar for DoctorH]
    September 7, 2016 09:50 am

    There was only one catch, and that was Catch-Title-35, which specified that a paid-for patent examination was what a prospective patent holder needed in order to obtain a valid and enforceable patent, but also that the very same paid-for patent examination probably wasn’t any good. Under Catch-Title-35, the United States Patent and Trademark Office would accept a substantial amount of money from a patent applicant, and following an examination, would issue a patent that would be presumed valid except in the face of clear and convincing evidence. But actually enforcing many such valid patents was deemed to be against the public interest, so the very same United States Patent and Trademark Office would also accept a substantial fee from a challenger and ask that the patent claims be canceled, and then the presumption of validity would vanish as if by magic. So, the USPTO had examined millions of patent claims and determined them to be perfectly valid and enforceable. But all a challenger had to do was pony up some more money and ask the USPTO to take another look; and as soon as he did, those same patent claims became, as a practical matter, unenforceable. That’s some catch, that Catch-Title-35.

  • [Avatar for John White]
    John White
    September 6, 2016 07:21 pm

    Excellent article, Gene. The PTO is the Judge, Jury, and Executioner of patents. Even better, we get to pay for it all! The patent system has been taken out and, effectively, shot by the AIA, S.Ct., and this Admin’s implementation of the post grant procedures. I guess the good ole US of A don’t need no innovatin no more! Turn the lights off when its over. Good grief – Isn’t there at least one representative left who is not bought and paid for by the anti-patent crowd? Anyone…..

  • [Avatar for Bemused]
    September 6, 2016 01:26 pm


    It would be a fruitful exercise for an IP academic to actually drill down into those numbers. For example, comparing the claims asserted in litigation versus the claims killed in an IPR(s). I suspect the actual percentage of valuable claims (i.e. those asserted in litigation) would be extraordinarily high.

  • [Avatar for Edward Heller]
    Edward Heller
    September 6, 2016 12:13 pm

    Good post Gene.

    It is time for Kappos to say a few words about IPRs.

  • [Avatar for EG]
    September 6, 2016 11:52 am

    Hey Gene,

    As I’ve called the AIA, it’s the Abominable Inane Act.

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