A little over a month into his term as Director of the United States Patent and Trademark Office, new USPTO Director Andrei Iancu, has signaled he is taking potentially significant steps to reconsider and reenvision post grant proceedings conducted by the Patent Trial and Appeal Board (PTAB).
We have chronicled the legal battles between Josh Malone, the inventor of Bunch-o-Balloons, and Telebrands Corporation, the power behind As Seen on TV. Malone, through his company Tinnus Enterprises, has created one of the most popular new toys on the market in years. Using Malone’s innovation it is possible to fill 100 water balloons in under 60 seconds. The invention works like a charm, and it flies off the shelves of big-box retailers like Costco, who during the warm weather months prominently display Bunch-o-Balloons at the entrance.
Telebrands, a company with a reputation within the industry for making knock-offs of successful products without regard to the existence of proprietary rights, has lost repeatedly in federal district court to Tinnus, and has lost at the United States Court of Appeals for the Federal Circuit. Indeed, every judge and every jury that has decided cases in this ongoing battle have ruled for Tinnus.
Not surprisingly, when not in front of federal judges and juries, Telebrands has faired better (i.e., at the Patent Trial and Appeal Board). Notwithstanding Telebrands successes at the PTAB, this week the PTAB published final written decisions (here and here) upholding claims from two of Tinnus’ patents — U.S. Patent No. 9,242,749 and U.S. Patent No. 9,315,282 — the same patents that a federal jury found infringed and which lead to an awarded of $12.4 million in damages last November. These decisions represent a rare case where the PTAB agreed with a jury, which ought to really give Telebrands pause.
But what really ought to give Telebrands pause is the fact that they have lost the support of the USPTO at the United States Court of Appeals for the Federal Circuit.
On August 29, 2017, the United States Patent and Trademark Office filed a brief at the Federal Circuit as an Intervenor in PGR2015-00018, arguing on the side of the PGR petitioner Telebrands. While it was disappointing to see the USPTO side with an entity with a reputation for making money knocking-off proprietary products, it was not particularly surprising given how the USPTO has since at least 2012 favored those challenging patents rather than standing behind the patents that have been duly issued by patent examiners.
Notwithstanding, earlier today USPTO Solicitor Nathan Kelley filed a motion with the Federal Circuit seeking to withdraw from the appeal in PGR2015-00018. Substantively the motion reads:
The Director of the U.S. Patent and Trademark Office (“USPTO”) respectfully requests to withdraw as an Intervenor in this appeal and further requests that the brief filed by the Director in this appeal be withdrawn. The USPTO stands by the position that the indefiniteness approach advocated in our brief is correct in the context of examination. But because the PTAB’s approach to claim construction and indefiniteness during post-issuance proceedings under the America Invents Act is something the agency is actively considering, the Director has decided not to advocate for a particular approach in this appeal.
The approach to indefiniteness mentioned above is a reference to the fact that the USPTO does not follow the Supreme Court’s most recent pronouncement on determining indefiniteness in Nautilus, Inc. v. Biosig Instruments, Inc. Instead, the PTAB explained that they believed that the proper test for indefiniteness remained the test outlined by the Federal Circuit in In re Packard, which was decided prior to the Supreme Court’s Nautilus decision. The PTAB has also issued a precedential decision in Ex parte McAward, which explains that the USPTO does not follow the Nautilus decision, but rather believes Nauitilus is the proper standard during litigation, not examination.
Director Iancu is known to be engaging in something that might be called a listening tour, speaking with various interested parties and groups as he attempts to formulate his own strategies and anticipated rulemaking efforts. It is widely expected by insiders that Iancu will bring change to PTAB proceedings in an effort to realize a more balanced procedure; perhaps even sweeping change. That the USPTO is now openly announcing that they are actively reconsidering the PTAB’s approach to claim construction and indefiniteness should be welcome news to all inventors.
How far will Director Iancu go to reconstitute PTAB proceedings? Time will tell. Nevertheless, it is worth noting that up to this point the America Invents Act (AIA), which created the PTAB and post grant administrative trials, has only been administered and interpreted under a single Administration — the Obama Administration. With Director Iancu in place it will be interesting to see what the patent system will become as it begins to be molded by President Trump’s point man on innovation policy. I’m betting we see something rather different than experienced during the Obama Administration, specifically something quite different from the patent system that evolved during President Obama’s second term.