It has come to our attention that supporters of the Patent Trial and Appeal Board (PTAB) are claiming that the facts and figures presented in various IPWatchdog.com articles are erroneous. That is not the case. In fact, the criticism of some borders on outright misrepresentation.
As the facts laid out in this article will show, the PTAB is substantially more likely to find patents to be defective than a Federal District Court, and in fact have found numerous patents to be defective even after patentability has been confirmed in federal courts. This reality presents a significant problem for patent owners, and should be a serious concern for anyone at all concerned with separation of powers.
Let’s begin with a summary of key statistics and major points:
- 69% of cases reaching a final written decision by the PTAB have all claims invalidated.
- 168 out of 220 patents found valid in Federal Court (76.5%) were found defective by PTAB.
- 58 patents found valid in Federal Court were found defective by PTAB despite PTAB considering the same grounds of invalidity as the Federal Court.
- 82.5% of patents reviewed by PTAB in a final written decision are found defective.
- A settlement is erroneously characterized as a win for the patent owner.
- While claims don’t change if patent owner disclaims, they are unenforceable, which occurs in 5% of all petitions.
Lex Machina Data 9/16/2012 through 12/21/2017
Lex Machina™ is a LexisNexis® Company that mines litigation data, including data relating to post grant challenges at the PTAB. The data mined by Lex Machina™ reveals insights that have been unavailable. Thanks to this comprehensive data set and research tools, we have a clear picture of what is actually happening at the PTAB.
- Only 17% of all petitions are denied institution.
- 16% of all petitions result in all claims invalidated in a final written decision.
- 3% of all petitions result in at least some claims invalidated in a final written decision.
- 23% of all petitions are settled (13% before institution & 10% after institution).
- 5% of all petitions result in the patent owner disclaiming challenged claims.
According to Lex Machina™ data, 1833 cases have reached a final written decision as of December 21st, 2017. Of those cases that have reached a final written decision on the merits, only 17.2% (316 out of 1833) have had all instituted claims upheld and determined patentable while 69.2% (1268 out of 1833) of cases reaching a final written decision on the merits have had all instituted claims invalidated and determined unpatentable. There has been a mixed result in 13.3% (243 out of 1833). This means that in 82.5% of petitions that reach a final written decision, one or more claims are determined invalid and unpatentable.
It is worth noting that these statistics are consistent with USPTO figures released in October 2017 including data through September 30, 2017 which showed that 65% of final written decisions result in all claims invalid and unpatentable, 16% of final written decisions with at least some claims invalid and unpatentable and 19% of final written decisions where all claims are confirmed as valid and patentable.
An 82.5% defect rate in issued patents should be considered extremely alarming for a variety of reasons. First, and most obvious, an 82.5% defect rate on its face is unacceptable and should signal very serious problems either with examination quality or with an aggressively overactive PTAB. Instead, the United States Patent and Trademark Office (USPTO) claims that its examiners are correct in 92.4% to 96.5% of actions taken (see 2017 annual report, page 53), but also continues to support the actions and quality of the PTAB. An 82.5% defect rate in contested patents seems completely incongruous with any rational definition of high-quality examination or patent applications.
Second, the patents that are being challenged at the PTAB are among the most thoroughly vetted patents. “Since 80% of the IPRs are already in district court, these are patents the owners have already assessed, looking at whether infringement can be proven, whether the defenses against invalidity can be defended,” Chief Judge Paul Michel (CAFC, ret.) explained at a conference on Capitol Hill in May 2017. “These are presumably the strongest patents… a two-thirds invalidation rate can’t be right for these pre-vetted patents.” Of course, the invalidation rate is higher than two-thirds. According to Lex Machina data, all claims are lost in an astonishing 69.2% of cases reaching a final written decision.
Third, with 69.2% of challenged patents reaching a final written decision where all challenged claims are lost, and an overall defect rate of 82.5% of patents reaching a final written decision, what must be the true quality of issued patents? The patents worth fighting for are the most commercially valuable patents issued by the USPTO. If there is such a high error rate for the patents that matter the most to patent owners and technology companies, the error rate would have to be astonishingly high when considering those un-vetted, not commercially relevant patents.
Of course, the alternative conclusion has to be that the PTAB is aggressively overactive and is invalidating patent claims that deserve to be adjudicated valid. As the next section shows, that is almost certainly the case given the extraordinary difference between invalidation rates at the PTAB and in federal district court.
Docket Navigator® Data
While Lex Machina™ data focuses on petitions, with Docket Navigator® it is possible to focus on patents. According to Docket Navigator® data there are 3,055 patents for which no final decision has been reached. There have been 1,582 patents that have been the subject of a final written decision by the PTAB and at least one claim has been found defective in 1,343 patents. That means the PTAB is finding that 85% of issued patents they review are defective to one extent or another (i.e., 1,343 out of 1,582).
Docket Navigator® also makes it possible to focus on those patents where there has been both a Federal District Court ruling on validity and a PTAB final written decision relating to validity.
There have been 220 patents that were found to be valid in various Federal District Courts that were also reviewed by the PTAB. Of those, 52 patents were determined to have valid claims by the PTAB whereas 168 patents had claims, which were determined invalid by the PTAB. This means that 76.4% of those 220 patents found valid in Federal District Court were found defective by the PTAB.
A claim has been made by some that using Docket Navigator® data for this purpose yields unreliable statistics because in Federal District Court challenges to validity can be made on the basis of 35 U.S.C. § 101, § 102, § 103 and § 112, while at the PTAB only challenges based on § 102 and § 103 maybe be made in an inter partes review (IPR). That criticism is disingenuous to say the least. With more opportunities and theories to invalidate patent claims in Federal District Court, one would expect the invalidity rate to be higher, not lower, in Federal District Court. Only being able to apply § 102 and § 103 (and not § 101 and § 112), the PTAB still found 76.4% of the 220 patents found valid in Federal District Court to be defective.
Notwithstanding, critics have argued that this is not an apples-to-apples comparison because it is possible for claims to have been upheld in Federal District Court without a District Court Judge ever considering § 102 or § 103. Apparently, the argument goes like this: The patent owner may prevail on § 101 and/or on § 112, and that might provoke the defendants to settle, so we will never know whether the claims would have survived challenge under § 102 and/or § 103 in Federal District Court. Such an argument is flawed on its face. Apparently the critics would have us believe that defendants thought they had winning arguments based on prior art but settled anyway in Federal District Court after receiving an adverse decision on § 101 or § 112? Anyone familiar with patent litigation would easily understand that in the pervasively anti-patent environment of the moment that a defendant would not settle in Federal District Court despite believing they had winning arguments on validity. To suggest otherwise is a fantasy; it is simply counter-factual.
Regardless of the twisted logic that suggests defendants settle in Federal District Court despite the fact that they believe they would prevail on § 102 and/or § 103, we know with absolute certainty that there are numerous examples where there is a stark difference between what has occurred in Federal District Court compared to what has happened at the PTAB. Of those 168 patents found valid in Federal District Court but later invalidated by the PTAB we found an interesting subset of 58 patents. In this subset the Federal District Court specifically addressed validity challenges under § 102 and/or § 103, confirming that the claims were valid. Notwithstanding the fact that these patents had the challenged claims adjudicated to be valid in Federal District Court, the PTAB found the claims of those 58 patents to be invalid on the same grounds previously litigated.
Far more telling than any statistics are the specific instances where the PTAB has effectively overruled the rulings of Article III federal courts. Consider the following:
- Uniloc’s U.S. Patent No. 5,490,216 had been asserted in 65 cases filed in U.S. district court going back to September 2003, without claims ever being found invalid. After adopting a previous claim construction from the District Court the PTAB still found the challenged claims invalid.
- VirnetX patents had been awarded nearly $1.1 billion in damages, not including sums paid to settle disputes prior to a final decision in Federal District Court. All of VirnetX patents survived every challenge of invalidity in Federal District Court. Furthermore, the United States Court of Appeals for the Federal Circuit itself had previously confirmed the validity of the ‘135 and ‘151 patents. Notwithstanding, after multiple IPR petitions at the PTAB, the PTAB invalidated claims to the ‘151 patent, the ‘135 patent, the ‘504 patent and the ‘211 patents.
- The International Trade Commission issued a final determination finding a Section 337 violation by Arista relating to infringement of Cisco’s ‘577 and ‘668 patents. Not finding any of the invalidity defenses persuasive, and infringement ongoing, the ITC issued a limited exclusion order and cease-and-desist order against Arista. The PTAB declared claims of both the ‘557 and ‘668 patents invalid.
- Imperium IP Holdings’ U.S. Patent No. 7,092,029 survived 35 U.S.C. § 103 challenges for obviousness made by Samsung in a district court trial where enhanced damages were awarded by the court both for willful infringement as well as the presentation of demonstrably false testimony at trial. A jury decided that Samsung had not demonstrated obviousness of the ‘029 patent. Samsung then took its Section 103 challenge to the PTAB and the PTAB invalidated the patent on obviousness.
- Eight patents owned by Wisconsin-based Ultratec were twice upheld as not invalid in district court, once on summary judgment after a challenge on 35 U.S.C. § 102 grounds for anticipation and another time on Section 103 obviousness grounds in the jury verdict entered in the case. The defendants in that case, Sorenson Communications and CaptionCall, then moved on to the PTAB and had all challenged claims from the eight Ultratec patents asserted at district court invalid under Sections 102 and 103.
- Jazz Pharmaceuticals asserted 18 patents in district court in response to abbreviated new drug applications (ANDAs) filed with the U.S. Food and Drug Administration (FDA) for generic versions of Jazz’s Xyrem narcolepsy drug. The ANDA, filed by Amneal, included a Paragraph IV certification alleging invalidity of Jazz’s patents on multiple statutory grounds. One defendant in the case, Wockhardt Bio, entered into a consent judgment where they agreed that the generic drug would infringe Jazz’s patents and stipulated to an injunction against producing the generic. Wockhardt, Amneal and other defendants in the case then turned to the PTAB to invalidate six Jazz patents after defenses of patent invalidity didn’t work at the district court.
- Twice, Novartis AG’s U.S. Patent No. 6335031 was upheld as not invalid in district court after defendant Noven Pharmaceuticals challenged the patent’s validity on grounds of obviousness, once in a trial opinion from August 2015 and then again in a final judgment issuing from the court a few weeks later. Noven and fellow pharmaceutical firm Mylan then teamed up at the PTAB to have the ‘031 patent deveined of seven of the patent’s original 20 claims after the PTAB invalidated them for obviousness.
- Four patents owned by American firms Paice and The Abell Foundation were asserted in a case against Korean automakers Hyundai and Kia where those giant auto manufacturers were found guilty of willfully infringing the patents-in-suit. In a jury verdict issued in October 2015, none of Paice’s asserted patents were found invalid in light of Hyundai and Kia’s anticipation and obviousness arguments. The reasonable royalty awarded in the case was nearly $29 million, and that was prior to any enhanced damages for willfulness. And then Hyundai and Kia got by with a lot of help from their friends, including Ford and Volkswagen, at the PTAB, where those four patents were invalidated as obvious. One of these patents, U.S. Patent No. 7237634, had 26 PTAB trials petitioned against it, nearly 9 times the number of district court cases where that patent was asserted. In 13 PTAB cases, including four petitioned by Hyundai and Kia, the patent owner settled prior to institution. In the other 13 PTAB trials, each of which was petitioned by Ford, the PTAB found all challenged claims invalid on obviousness grounds.
- Two patents, U.S. Patent Nos. 8023580 and 8457228, were found valid and infringed in a jury verdict entered in district court in February 2015 against Samsung; the verdict also awarded $15.7 million in reasonable royalty damages to patent owner Rembrandt Wireless. Samsung had raised invalidity of the ‘580 and ‘228 patents on multiple statutes as affirmative defenses in the district court case. Although these patents were only asserted in one district court case, seven IPRs were filed against the ‘228 patent and another six petitioned to challenge the ‘580 patent, and Samsung was the petitioner in each of those cases. In three separate IPRs, the ‘228 patent was found invalid as obvious. Two of the six IPRs petitioned against the ‘580 patent also invalidated claims on grounds of obviousness.
Obviously, the PTAB is substantially more likely to find patents to be defective than a Federal District Court. This reality is a significant problem for patent owners, and should be a serious concern for anyone at all concerned with separation of powers. Even after prevailing in Federal District Court, and even after prevailing at the Federal Circuit as VirnetX had done, the PTAB can still invalidate claims already adjudicated as valid by an Article III tribunal. If patents are to be considered any kind of property right (as the statute says) title must at some point quiet, and an Article I administrative tribunal simply cannot have the power to overrule an Article III tribunal.
If patent owners cannot have full faith and confidence in the patent granted by the Federal Government, and they similarly cannot have full faith and confidence in a final adjudication by the federal courts, how can they be expected to invest the millions, and sometimes billions, required to bring technology to the marketplace?
Rebutting USPTO Statistics
Some have criticized IPWatchdog statistics by pointing to a USPTO power point presentation that is purported to show that 58% of patents survive IPR. That figure should cause anyone with vague familiarity with the IPR process and the PTAB to pause because that does not comport with practice realities. Upon a closer review, what is being cited is a USPTO power point presentation that discloses the results of a Multiple Petition Study conducted by the USPTO. According to the USPTO, 16% of petitions are filed after a decision on institution. First and foremost, this Multiple Petition Study confirms that petitioners are in fact ganging up on patent owners in a meaningful percentage of cases, which has been denied as fantasy by supporters of the PTAB.
Second, the Multiple Petition Study allegedly concludes that 58% of patents survive unchanged at the end of AIA proceedings, and that 69% of petitions result in a patent being unchanged. In order to get to numbers that high one must include in the “unchanged” category all settlements (23%), all denials of institution (17%), patent owners who disclaim (but do not change) the claims (3.5%), and those petitions that are procedurally dismissed before or after institution (9%). Based on Lex Machina™ data, including all of those categories of claims that remain “unchanged” results in 52.5% of petitions.
Of course, claiming that 52.5% of petitions result in patent claims unchanged fails to tell the entire story, and actually creates a false narrative that is divorced from reality. The PTAB does not include claims not instituted in a final written decision, which means the 17% of petitions not instituted do not end the story for the patent owner. In a number of situations patent owners have faced repeated challenges on the same claims after prevailing at institution. Similarly, when institution is granted the PTAB does not include those claims not instituted in a final written decision, which means no estoppel applies when there is no institution, but no estoppel also applies when there is institution but not to those claims the PTAB does not review.
Second, it is important to acknowledge that a patent owner disclaiming challenged claims is not a win for the patent owner because the patent owner has effectively invalidated those claims by giving them up, even if they technically remain unchanged. A disclaimer makes the claims unenforceable, which is the practical equivalent to invalidation.
One of the biggest mistakes the USPTO and proponents of the PTAB make is with respect to characterization of a settlement, which they characterize as a win for the patent owner because claims remain unchanged. Simply stated, a settlement is no win for the patent owner.
For example, according to Unified Patents (via their website), they only settle challenges with a no-cost license (i.e., they say they never pay to settle). Unified Patents has many member clients that gain the benefit of any such no-cost license settlement, which means the patent owner has capitulated and settled only to put an end to the costs associated with fighting. The patent owner receives nothing, and worse, there has been an initial determination that the challenged claims were invalid. So while the claims technically survive unchanged, a heavy cloud hangs over those claims the PTAB determined as likely invalid. Further, to the extent those claims remain at all viable in the real world, they have been effectively licensed to numerous companies having received a no-cost license.
Unreliable USPTO Statistics – Zond
Finally, it is also critical to understand that PTAB statistics provided by the USPTO are of questionable veracity.
The best illustration that demonstrates the highly unreliable nature of USPTO statistics relative to PTAB proceedings come from the petitions filed against patent owner Zond. Before the AIA they owned 371 claims. By the end of the 125 IPRs filed against them (yes, 125 separate challenges) they owned 0 claims (i.e., all claims lost as invalid), which obviously corresponds to a 0% survival.
Every claim Zond owned ended up invalidated, yet according to the USPTO the institution rate against Zond was 88.6%. How can Zond have lost 100% of their claims and the statistics reported by the USPTO correspond with an 88.6% institution rate?
Due to the multiple challenges filed against Zond, 1,220 claims were instituted out of 1,377 claims challenged. These are not misprints or mistakes. Zond had 371 unique patent claims, but because of the multiple IPR petitions filed against all of their patents those 371 claims were challenged a total of 1,377 times, but instituted only 1,220 times. Thus, the number of claims that were instituted is more than three times the number of unique claims Zond owned. In other words, the institution rate shouldn’t have been 88.6%, it should have been closer to 329%!
The Zond example is dramatic evidence of questionable PTAB statistics provided by the USPTO. This is why it is essential to look to non-biased, independent, outside sources of data for a complete picture. The highly unreliable nature of USPTO statistics is exactly why Lex Machina™ and Docket Navigator® data must be considered in order to get a real picture.
Join the Discussion
40 comments so far.
Aaron FillerMay 8, 2018 04:21 am
I’m an inventor who was successful – overall – through the PTAB process on an ex parte (US 5,560,360). The patent has two sets of claims, the first 35 deal with the first and only method for imaging nerves on MRI (neurography), and the remaining 30 claims are for the invention of DTI (Diffusion Tensor Imaging & tractography) which is revolutionizing neurological medicine and personal injury law – because it is the only method to allow visualization of concussion injuries – and is the subject of nearly 20,000 peer reviewed medical publications. A petition from one infringer was rejected. An identical petition from a second infringer was allowed to go forward. Although the entire process only slightly impacted the patent (leaving it “gold plated”), it did cost over a million dollars. We were forced to settle that underlying district court case because of insufficient funds to continue the litigation. Thus a careless incompetent petition (it has to be pretty bad to get kicked by the PTAB after all) filed twice, was successful in the “win by losing” strategy against us. The PTAB attacks diverted our funds and energies so that the infringer could cheaply escape justice. Was this what Congress was trying to achieve? Obama really did hate patents. I have the MD, the PhD from Harvard and the JD, I’m also past president and now general counsel for the Society for Brain Mapping and Therapeutics. I understand that academics who have no patents don’t believe in patents. They reason that they are smart and creative but never invented anything themselves – therefore (since they know they themselves are great) they conclude that patents are nonsense. This is the logic behind the AIA and the PTAB. The Supreme Court needs to shut it down. The PTAB is an attack on innovation, it is an attack on property, and these two attitudes don’t bode well for the coming commercial and inventive storm arising in China. When I lecture in China – the feedback is clear – they are more than happy to take US IP since it is convincing when they show that the US is anti-inventor and anti-IP.
PTO-IndenturedApril 8, 2018 10:32 am
Personally I wouldn’t focus so much on Congress that the role the PTO itself played in the PTO’s continuing nosedive is not taken into account. It was within the bounds of PTO administration for there to have been course corrections made since AIA 2012, that could have significantly reigned in patent ‘death squad’ excesses, but weren’t (not helped some/many would say, by Google’s Ms. Lee being installed at the PTO helm).
Since AIA, the PTO has been so out of touch with its own self-destruct modes that no degree of demise or unprecedented peerformance to date, sufficed to justify an ‘on the books’ PTO correction. Not plunging from a 1st ranked patent system in the world to an unbelievable 12th ranked (and still falling). Not nearly one out of three independent inventors being patent filers pre-AIA, to around one in twenty now. Not investors abandoning U.S. IP that is most-often invalidated in the U.S. when challenged (and startups unable to build on such) to instead invest outside the U.S. in those countries that DO defend their patents. Numb to such dying (or at least self-destruct) pangs and the pain radiating therefrom, decision makers / stewards appear to have remained completely void of any empathy, not only for their own system but for the thousands of U.S. patents ousted along the way. Apparently unable to put themselves in the shoes of those whose property (once issued by the PTO) is rendered worthless.
These are not signs / denials typical of unhealth, they’re more the signs of an insidious addiction.
Night WriterJanuary 12, 2018 05:40 pm
It is a national disgrace that the SCOTUS has referenced vanity article that Lemley has published that contain number ethical violations.
angry dudeJanuary 12, 2018 10:58 am
Eric [email protected]
Don’t expect any drastic IP-related actions from the current administration:
they want to appease Wall Street, Dow Jones and Nasdaq
Making IP playing field more level will bring some of those blue-chip stocks (Google, Apple, Amazon etc) down considerably
Big Tech stocks are artificially pumped up in large part because of stolen IP
– they simply take what they want from smaller companies, thus – record profits
Stinking Google and Amazon stock means more to those in power (and to lemmings in the general population) than the future of this country.
AnonJanuary 11, 2018 07:58 am
That is exactly the take-away that the Efficient Infringers want to see.
Eric BerendJanuary 11, 2018 07:16 am
Far too late.
This is all, merely akin to rearranging the deck chairs on an already sinking ‘Titanic’.
The current Executive branch of the U.S. government, having been actively opposed by “Big Tech”, etc.during the 2016 national election campaign, should – if anything – have reviewed and probably changed the U.S. government’s position as to IP influencing special interests and their standing, when they came into power at the beginning of 2017. After all, they weren’t getting visited by an overlord “handler” every three days, as had been Google’s practice with former President Obama.
Yet: this Administration continued the policies and actions of the former one, without even demanding the fun and prizes required by the Obama White House. This, from a supposedly “Republican” regime.
When the U.S. inventor is treated like a criminal pariah by both socialist “Democrats” and so-called “capitalist” Republicans, there is nowhere to turn for an opportunity to have their Constitutional standing respected.
NONE of the current quibbling or machinations will soon restore even a modicum of respectability nor property rights for inventors; therefore, why do you all persist in such delusion? Admit the smashing success of the inventor-haters and exploiters; and be wise enough to concentrate on the next generation.
CuriousJanuary 10, 2018 12:43 pm
AnonJanuary 10, 2018 12:34 pm
I will have to disagree with you.
While indeed stern, the slapdown by the PTAB appears to be fully supported by the level of control given to the PTAB by Congress in order to conduct trials before the Board.
I “get” the making of a statement by the St. Regis Tribe, but the response appears to be well within the known procedural parameters of the Board.
EGJanuary 10, 2018 10:30 am
PTAB has truly “run amok.” Check out this post by Kevin Noonan on Patent Docs in the St. Regis Mohawk Tribe: http://www.patentdocs.org/2018/01/the-ptab-strikes-back-issues-order-prohibiting-st-regis-mohawk-tribe-from-filing-any-additional-pape.html . The order issued by PTAB in this matter is “over-the-top” and outrageous, including threatening St. Regis with sanctions, as well as their attorneys with disciplinary action. PTAB is completely rogue, and needs to be disbanded ASAP.
Night WriterJanuary 10, 2018 10:26 am
>> I usually find the EPO examiner to be more arrogant than a USPTO one.
That is my experience too. I have been getting claims allowed at the EPO that I haven’t been able to get allowed at the USPTO. The PTO has a lot of really good examiners. There are also about 20 percent that are just either bad or not ethical. The EPO examiners get better searches performed for them.
AnonJanuary 10, 2018 08:10 am
“ I have mentioned before if the problem is with bad patents being issued, then fix the examiners.”
Anyone who has had real world experience at an appropriate management level can attest to the fact that the type of “the horse has already left the barn” approach of post-grant review with NO tie to the front end processes is an exercise in futility as far as the claimed “let’s have better quality” smokescreen calls for.
One simply cannot “inspect in” quality in that manner.
Long have I (as well) attempted to point out that the focus of legislative corrections have been aimed at the wrong things. This goes back to the days (even) of Tafas and the (desired) self-anointing power that the Office attempted to grab to “fix” their “problem.”
Until the proper problem is made the focus (mirroring my “you must ask the right questions” mantra), ALL “solutions” are merely band-aids.
(another “real world” aspect here: the 5 Why’s approach of identifying the real problem should be applied with any suggested corrective actions)
Lost In NorwayJanuary 10, 2018 01:57 am
It really seems like there is an attitude at PTAB that if a petition is granted, then then must be SOMETHING wrong with the patent. I have mentioned before if the problem is with bad patents being issued, then fix the examiners. If PTAB has a much higher invalidation rate than the EPO, then something is wrong.
Maybe the USPTO examiners are worse, but THAT much worse? I sure hope not. In my experience with the EPO and USPTO I have ran into both unreasonable and reasonable examiners. I usually find the EPO examiner to be more arrogant than a USPTO one. But I doubt that arrogance is a good measurement of skill.
CuriousJanuary 9, 2018 10:34 pm
I just think it’s unfair to level criticism at the PTAB for doing exactly what Congress instructed it to do
I think there is plenty of criticism to go around for all the parties involved — PTAB, Congress, and the Courts. Congress set up the framework of the PTAB — but only the framework. The PTAB, however, filled in that framework and in just about every instance in which they could have been pro-patentee or anti-patentee, they went the anti-patentee route. As such, the PTAB can be blamed for their part in setting up the Rules and Congress can be blamed for the discretion and framework with which the PTAB was allowed to operate.
As for the Courts, they were just sitting around doing nothing as the US patent system was getting reamed.
AnonJanuary 9, 2018 07:54 pm
Sadly, what “should” runs smack and directly into what “is” (and as I have noted: “what has long been“). Indeed, I take no joy in being correct on these matters.
The structure of the administrative agency known as the Patent Office has been known for quite some time. Congress acted recklessly and those who “championed” the capture of Congress must have already known this.
This is part and parcel of the “administrative state,” and becomes serious when life, liberty and property are at stake.
Hence, the attempts to “declassify” patents as “public rights” goes hand in hand with the debauchery of an unbridled power concentration (and for administrative agencies, an agency already known to have one of the lowest – if not the lowest – separations between the agency’s judicial and political functions.
JamesJanuary 9, 2018 07:21 pm
To be clear, while I don’t think the AIA was the most well-written piece of legislation I have ever read, I perhaps don’t see it as the disaster that many on here do. (Of course, if I were made patent king, I would do things quite differently, but that’s a story for another day.)
I just think it’s unfair to level criticism at the PTAB for doing exactly what Congress instructed it to do, which was to re-look at the validity of patents under a standard that seems designed to make it easier to invalidate patents.
Gene QuinnJanuary 9, 2018 06:56 pm
You say: “PTAB IS instructed (in a sense) through the level of discretion that Congress granted the executive branch administrative agency.”
That is true. And I also agree the fault remains in large measure with Congress.
I wrote that comment earlier today as I was working on an upcoming article. As much fault as rests with Congress I do think it would be reasonable to anticipate that administrative judges would exercise independence as required under the APA (which isn’t happening) and that they wouldn’t re-litigate previously adjudicated (and confirmed) patents. But Congress allowed this mess. I’m not absolving them, but if they want to be called “judges” they should apply discretion and come to this even handed, which I don’t think many on the patent owner side feel they are doing.
AnonJanuary 9, 2018 05:47 pm
Respectfully, your statement of “Nothing in the AIA instructed the PTAB to get rid of those patents, but that is what we see.” is a bit of fallacy, as the PTAB IS instructed (in a sense) through the level of discretion that Congress granted the executive branch administrative agency.
The fault remains with Congress for its known lax “guidance” and provision of discretion out of whack with the known lack of separation between judicial and political functions within the target administrative agency.
Let’s remember: the structure of the administrative agency vis a vis the separation between the political and the judicial elements of the patent office were not changed with the AIA and ALL of the “judicial” infirmities were already there in the administrative agency’s structure.
SteveJanuary 9, 2018 05:25 pm
As noted the percentage of claims being invalidated is alarming, it should also be noted how many more invalidations take place each month under the PTAB system. The figures to follow were gleaned from the Choate, Maginnis article that appeared in IP Watchdog on September 17th, 2017.
Re Examinations – Percent rate where all claims are canceled
Ex Parte – July 81 till Sept 2016 (1.85 /month) 12%
Post AIA- 9/15/12 till May 2017 (22.4 /month) 65 %
BemusedJanuary 9, 2018 05:07 pm
[email protected]: I wasn’t picking on just the PTAB although Gene’s point is very valid and the PTAB does share in the blame given its zealousness to invalidate patents that have already been battled-tested in reexam, district court proceedings, CAFC appeals or even other PTAB panels in previously adjudicated IPRs.
Add to that your and Anon’s point about blaming Congress for passing a poorly drafted piece of garbage legislation.
Capped off by the CAFC which abdicated its responsibility to provide any real oversight when presented with evidence of the PTAB’s transgressions.
in other words, its a perfect sh*t storm of bought politicians passing infringer-friendly legislation; PTAB panels seeing their primary role as patent death-squads and asleep-at-the-switch appellate court judges who turned a blind eye to administrative agency gross overreach.
BrianJanuary 9, 2018 04:47 pm
Circle Jerk happening on 27th Jan in Denver.
Mark Lemley, Michael Holden and Suzanne Michel (Google)
Will tell and pontificate to the Supreme court that they should rule for the infringer like Goggle and rule IPR constitutional.
I don’t think there will be an opposite viewpoint at that supposed conference.
Gene QuinnJanuary 9, 2018 04:39 pm
You say: “Congress specifically set up IPR to work this way.”
That is absolutely true.
You ask: “Why blame the PTAB then?”
It is the PTAB that has been overactive in their zeal to rid the system of both good and bad patents. While Congress set up the regime to get rid of bad patents, the discretion of the “judges” on the PTAB should be exercised to not get rid of both good and bad patents.
Patents that have been thoroughly litigated for many years and always confirmed valid have to fall in the category of good patents. Nothing in the AIA instructed the PTAB to get rid of those patents, but that is what we see.
AnonJanuary 9, 2018 04:26 pm
James is correct – in a sense.
As I too have provided in many threads past, the real “culprit,” and the entity that needs to be targeted (the “asking the right questions” as I have previously put it) is Congress, rather than the PTAB.
The AIA itself needs to be held for the contradictory and plainly awfully written mess that it is.
JamesJanuary 9, 2018 03:11 pm
Obviously there’s not going to be a perfect analogy. But picking at differences in the analogy again just misses the entire point–to which I have yet to see a response. The point I’ve repeatedly made is that Congress specifically set up IPR to work this way. Why blame the PTAB then?
step backJanuary 9, 2018 01:36 pm
Couldn’t it also be that examiners/ALJs at uspto see work product of only all the super smart people out there, not the ordinary artisans; and after such exposure everything becomes obvious and nonpatentable?
(ALJ = PTAB Administrative Law Judge)
step backJanuary 9, 2018 01:31 pm
In the title of this post, second “an” should be –a–.
Correction not required. 🙂
BobbyJanuary 9, 2018 12:25 pm
The AIA Act was created by the Silicon Valley’s oligarchy the Google, Amazon, Apple Ect. It was created so they could take from the poor inventor and become even stronger. They created they boogeyman “Patent Troll” so they did not have to pay patent royalties. It worked. Now the question is will they fix it?
Gene QuinnJanuary 9, 2018 12:20 pm
I suppose those “mouth breathers” that you so arrogantly and condescendingly berate are only wrong when the patent owner wins, right? I mean after all a “mouth breather” must be an insightful genius when the defendant prevails, right?
Your comment speaks volumes about the infringer community. Thanks for sharing and giving us a true insight into the pitiful and pathetic mind of an infringer.
Tim2January 9, 2018 12:05 pm
Couldn’t the other, not discussed, aspect of all this be that the mouth breathers on the jury only found out about “pattons” the day they went through voir dire and are in no way qualified to make determinations in this field? In the Zond case it’d be highly surprising if ANY of the jurors understood PECVD vs PVC (yes, that’s a joke), so why can’t it simply be the case that neither the ptab or dc are wrong, but the pop cultured brain stems on the jury have no idea about any of this?
Gene QuinnJanuary 9, 2018 11:29 am
I appreciate your comment and what you are saying, but I find this hard to believe for several reasons.
First, there is probably a lot of merit to what you say if we focus on the true troll cases. Those who are only going to seek $5,000 or $10,000 to settle a patent infringement lawsuit probably do assert the most broad claims against the most naive defendants. Or at least in their scare letters they make mention of the broadest claims. Unfortunately, it seems that these dubious patents being raised by dubious patent owners are not among the ones that ever get challenged. These post grant challenges were supposed to deal with those low quality patents in the hands of true trolls, but they don’t. Take a look here:
To the main point, what passes for “patentable” in many art units is very difficult to understand. In a lot of Art Units the thresholds are very high (too high in my opinion) but there are certainly a lot of Art Units where even a modicum of difference is sufficient. I scratch my head sometimes when I read patents and wonder how. So the corpus of non-litigated patents is, at least in my opinion, of highly questionable quality.
Given that the true trolls never seem to be challenged in IPR, the cases we see are ones where the patent owner is willing to spend $500,000 to $1,000,000 or more just to get through a single IPR. Given the climate we live in today I find it hard to imagine that a patent owner would spend that kind of money litigating a dubious patent. Indeed, I know for those who seek financing or contingency representation there is a lot of due diligence that goes on.
It would be an interesting question to confirm. I’m not really sure how you confirm it though. Would be impossible to rely on USPTO data. They somehow seem to convince themselves that even with 82.5% of patents having a defect (plus those disclaimed and settled) the IPR process does nothing to call into question patent examiner quality.
TimJanuary 9, 2018 08:00 am
Just look at Infringemnt case Vringo won with 12-person jury on all 14 counts against Google, AOL, Target & Gannett, (Vringo vs IP Internet). Over $1Billion with damages & royalties. “However” Appeals Ct judges didn’t see it as 2 of them, Mayer & Wallach, tossed the case. Former USPTO head, Judge Chen highly dissented. Vringo went to Enbanc, and were dissed. Atty David Buies took the case to the Supreme Ct, where Court decided not to see the case. All this in a Google/Obama stacked field. Vringo stock went to pennies and did a 10-1 reverse split, changed name to Form Holdings. And just yesterday, became XPRESS SPA, symbol: XSPA. Stock climbed to $1.80 before falling back to $1.32. Thank’s to Judges Mayer & Wallach who tossed the case at the Appeals Ct. Obama hated patents, as much as he hated this country.
BemusedJanuary 9, 2018 07:41 am
[email protected]: Your analogy re different standards of proof for liability in criminal/civil fora doesn’t work in the context of district court/PTAB proceedings. In the former, the consequences are vastly different (loss of freedom versus a pecuniary liability). In the latter, the consequences are exactly the SAME (loss of patent rights).
In criminal cases, where the standard of proof is the same (beyond a reasonable doubt) and the consequences are the same (loss of freedom), the law says the government gets one chance to prove its case (double jeopardy).
How much of an outcry would there be if an individual accused of a crime was tried in state court under a beyond a reasonable doubt standard was not convicted but was subsequently tried in federal court for the same crime under a more likely than not standard and was then convicted?
That is what patent owners face every day under the AIA which created different standards of proof between district court and the PTAB.
ScottJanuary 8, 2018 11:44 pm
Nice article. I want to question just one point. You stated that “the error rate would have to be astonishingly high when considering those un-vetted, not commercially relevant patents.” Perhaps this is not the case. Litigators often choose the broadest claims for assertion. Other, narrower, patents are passed over. Thus, it may be the case that the pool of unasserted patents has a lower defect rate.
DavidJanuary 8, 2018 09:03 pm
The Justices will figure that out. And when they do, it will impact both reexamination and IPR, whether constitutional or unconstitutional.
AnonJanuary 8, 2018 09:01 pm
It takes one instance of unconstitutionality to “ruin” everything, while to maintain constitutionality, all facets must be Constitutional.
Your post appears to not reflect this. Instead you appear to make that issue into a type of “meh, coin flip.”
JamesJanuary 8, 2018 08:59 pm
Are you asking? I’m placing my bets on Oil States being an affirm.
DavidJanuary 8, 2018 08:49 pm
Reexamination is unconstitutional for many of the same reasons IPR is unconstitutional.
Reexamination is constitutional for many of the same reasons IPR is constitutional.
JamesJanuary 8, 2018 07:07 pm
I absolutely agree that ex parte reexam is, of course, different than IPR in many respects. But ex parte reexam is not different than IPR in that it uses a completely different standard for unpatentability and claim construction than in district court. That is exactly what the CAFC said about ex parte reexam (and for those very reasons).
Your whole argument about “adjudicatory” vs “examinational” is a non-sequitur. Congress set the standard for proving invalidity in district court. Congress set a different standard for demonstrating unpatentability at the PTAB. If Congress had intended that PTAB findings always reach the same conclusion as in district court, it could have set the same standard. Yet it didn’t. The point I was making is the fact that the PTAB is finding patent claims unpatentable that may have been upheld in district court is a feature not a glitch.
Nor is it that unusual in our justice system. For example, someone found to be not guilty for murder can still be sued (and liable) for wrongful death. The justice system has no problem with this, nor is anyone really shouting about “inconsistent” results. The basic fact of the matter is that IPR is by design very different than district court, and thus it is wholly unsurprising that the PTAB would come to a different conclusion than a district court.
Gene QuinnJanuary 8, 2018 06:44 pm
Ex parte reexaminations are conducted in an application/examination procedure. In an ex parte reexamination the applicant has an absolute right to amend and can (and frequently will) leave reexamination with more patent claims. Comparing reexamination to any of the post grant challenge procedures is comparing apples to oranges. A post grant challenge is adjudicatory in nature and fundamentally different than any examination (or reexamination) procedure.
You say: “The PTAB is simply doing as Congress intended–killing off bad patents…”
That is the precise problem. The PTAB is not killing off bad patents, they are killing off patent claims and entire patents that district courts have found to be valid. Valid = not bad.
JamesJanuary 8, 2018 06:34 pm
Isn’t this by design? After all, Congress set the burden of proof during IPRs to be significantly lower than what is required in a district court, and IPR uses a claim construction standard that is designed to capture more prior art within the scope of the claims. I really don’t understand why people find it upsetting or surprising that a Federal Court would find a patent not to be proved invalid (which is all that is found in a district court–there is no finding of “validity”), but that later the PTAB would find claims unpatentable under a completely different standard.
This has been the case for years with ex parte reexaminations, and the CAFC has said there is absolutely nothing wrong with it. As the CAFC explained, “a prior holding of validity is not necessarily inconsistent with a subsequent holding of invalidity and is not binding on subsequent litigation or PTO reexaminations.” In re Swanson, 540 F.3d 1368, 1377 (Fed. Cir. 2008) (internal quotation marks and citations omitted). “To hold otherwise would allow a civil litigant’s failure to overcome the statutory presumption of validity to thwart Congress’ purpose of allowing for a reexamination procedure to correct examiner errors, without which the presumption of validity never would have arisen.” Id. at 1378.
It seems that if you have a problem with how IPR is working, your issue is with Congress, not the PTAB. The PTAB is simply doing as Congress intended–killing off bad patents in a shorter, easier, cheaper process.
Night WriterJanuary 8, 2018 02:03 pm
Rader was right calling the PTAB a death squad.