The Honeymoon is Over: Time for Iancu to Take Action on PTAB Harassment of Patent Owners

Just over 18 months ago, Andrei Iancu assumed control of the United States Patent and Trademark Office (USPTO). As the Director of the USPTO, Iancu has changed the tone of the conversation over patents in America. During President Obama’s second term the USPTO became aggressively anti-patent and anti-innovator. The speeches, policies and inaction of Director Michelle Lee led innovators and observers to correctly claim that the Obama Administration had come to champion the viewpoints of infringers, not the technology innovators. Director Iancu changed that almost overnight.

Almost immediately, Director Iancu began speaking of the important role patents play for innovators. He also spoke in glowing terms of historically revered innovators like the Wright Brothers, who during the Obama years at the height of the patent troll narratives, had become vilified as examples of those who did nothing particularly important or useful, but demanded a tax or toll be paid merely because they held a piece of paper. As asinine as that sounds, the inventors of controlled, manned flight were becoming public enemy No. 1 with history being rewritten. Iancu changed that as he, in speech after speech, spoke of them and other champions of innovation from the past in laudatory terms as the inspiration and example of what is possible because of a strong and functioning patent system.

At times, Director Iancu has been criticized for doing too much; things that are not within the province of the Director of the USPTO. For example, is it the prerogative of the USPTO to issue guidance on what the proper test is for patent eligibility, or should the USPTO merely follow the Article III courts? Well, when the Article III courts have made a mockery of the law to the point where the cases are entirely inconsistent and wholly irreconcilable, someone needs to step in and figure out how to make sense of the mess so that 8,000+ patent examiners, most of whom are not attorneys, can objectively (or as nearly objectively as possible) apply a repeatable and fair test that fits within the jurisprudence of the Article III courts. Iancu did this by pointing out the obvious: Alice and Mayo are very narrow decisions and, if you strictly follow exactly what the Supreme Court said, that does not render software or biotech innovations patent-ineligible regardless of what the random, inconsistent panels of the Federal Circuit say. And since the Supreme Court is supposed to be the final word, the USPTO following the Supreme Court very strictly just makes sense both politically and within our system of jurisprudence and justice.

The PTAB Problem

Where Director Iancu has failed, however, is with respect to the Patent Trial and Appeal Board (PTAB). With great fanfare, Director Iancu created a Precedential Opinion Panel (POP) that we were told would result in more decisions of the PTAB being declared precedential on the entire PTAB. There was hope that the POP would address the most important issues, such as serial challenges to the same patent over and over again, the use of the same prior art over and over again, and once and for all require the PTAB to apply the Federal Circuit view of what it means to be a real party and interest. Unfortunately, real reform of the PTAB has not happened despite tinkering with the Trial Guide. In important ways, the PTAB is worse, and the efforts that have been undertaken incorrectly form the appearance of reform. Sure, it is nice that the same party may have a more difficult time of getting serial petitions challenged, but why should any patent ever be subjected to the drip, drip, drip of multiple challenges that can be brought throughout the entire lifetime of the patent?

While it is true that the PTAB institution rate has decreased, that statistic is entirely misleading. For example, Apple recently filed six challenges on the same patent. The PTAB denied five and instituted one. As far as the PTAB is concerned, that corresponds to an institution rate of 1 for 6. As far as the patent owner is concerned the institution rate is worse than 1 for 1. The patent owner had to respond to six separate petitions on the same patent, which was ultimately instituted anyway. Under the current system, the patent owner has to win every single time and the fight is not over until the patent owner loses. Worse yet, those claims not instituted can and no doubt will be challenged again, and again, and again until they ultimately are instituted. Because, while the USPTO claims serial institution is not a problem, it is.

Look at Finjan. They have a portfolio of approximately 30 patents and have already fought and won 80+ times at the PTAB, not including the petitions they have fought off that were not instituted. All total they have lost just a few claims, with every other claim either never being instituted or withstanding challenge. Yet, their patents—about eight of the most important ones to be exact—are challenged repeatedly. Where is Director Iancu? He has the power to stop this from happening but does nothing to exercise this power.

The power to stop harassing petitions was specifically given to the USPTO Director as part of the America Invents Act. Why isn’t Director Iancu using that power? How many times does a company like Finjan need to win before the USPTO says enough is enough? They have won multiple dozens of times at the PTAB, they have won in every district court litigation they have fought, and they have won at the Federal Circuit. If the Finjan portfolio can be challenged over and over and over again, obviously the power to stop harassing challenges is one that will never be used by any USPTO Director. The Finjan portfolio is as thoroughly litigated as anyone can possibly imagine, yet challenges continue to be instituted. Why? It looks like they are being persecuted.

Sadly, Finjan is not the only such company to be harassed, but because their portfolio is so strong, and they have the funds to fight, they have become the posterchild for IPR abuse. Most patent owners don’t have the funding to fight and win 80+ times like Finjan has. They are forced to give up, which means technology implementers get to use innovations they did not create without paying for them. It is no wonder early stage funding and Venture Capital is moving to Europe and China.

Sources have also confirmed that some PTAB judges are gaming their quota. The reason you see so many large companies file multiple challenges is because when they do, they are more likely to have cases instituted, and they know that to be true. This is because some judges are more likely to institute when multiple challenges are filed on the same patent because they are able to review a single patent and handle two or more challenges relatively quickly based on the same patent and much of the same prior art. So, in order to game the system and make it easier for them to reach their work production quota, those Administrative Patent Judges that game the system institute multiple cases for their own benefit. This is precisely why there needs to be a bifurcation between those deciding to institute and those deciding a case on the merits.

Director Iancu has done much good in many aspects, but enough time has now passed to conclude that his efforts relative to the PTAB have been too few and extremely disappointing. PTAB harassment of patent owner continues, and must end.

A “D” for Doing Nothing

While Iancu probably doesn’t deserve an F for his PTAB efforts, but given that Congress delegated the Director all the authority and discretion in the world necessary to institute petitions and run the PTAB, he easily deserves a D, with a downward sloping track heading toward a failing grade. The buck stops with him and him alone on the PTAB. There are things he could do later today by decree to fix the PTAB. He knows what they are. Why isn’t he doing those things?

The honeymoon needs to be over and it is time to acknowledge that, while Director Iancu has been on the front lines with respect to patent eligibility, he has failed to live up to the promise of his hype with respect to the PTAB.

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