Give Inventors a Chance: The PTAB Must Be Regulated

Recently, the U.S. Patent and Trademark Office (USPTO) published a Request for Comments on Discretion To Institute Trials Before the Patent Trial and Appeal Board (PTAB), seeking “focused public comments, on appropriate considerations for instituting America Invents Act (AIA) trials.” Comments are due on November 19. US Inventor provides a streamlined tool for submitting comments here.

This is a big deal for inventors. We desperately need help. We simply cannot participate in the patent system until the PTAB is regulated to provide predictability with respect to the validity of our issued patents. Director Iancu has made a valiant effort to restore balance, but it has failed thus far. As it stands, we cannot use our issued patents because it is utterly impossible to predict whether or not they survive the PTAB – no matter how carefully we follow the existing laws and procedures.

I am not speaking for myself – I was able to fund a $20 million litigation, topple the cabal at the USPTO, and economically overpower the infringer. Instead I am speaking for the hundreds of inventors with meritorious patents who have been destroyed by the PTAB due to lack of funding, representation, and influence. Plus, the tens of thousands of inventors who will never license or fund their invention because their PTAB-vulnerable patents do not qualify as collateral.

PTAB Failure Persists

The practical reality is that nothing has changed at the PTAB – from 2012 when regulations delegated discretion to the PTAB without any constraints, to the “death squad” of 2014 overseen by Head of Patents for Google, to the patent burning of 2017, to the present 2020. For its entire eight-year existence, the PTAB has permitted multiple petitions against each patent, instituted trials on previously considered prior art, interfered with jury trials, and enabled large corporations to impose unbearable cost and delays on much smaller competitors. From 2015 to 2020 the institution rate hovers between 65-70% of challenged patents, with 84% of patents partially or wholly invalidated in final decisions rendered.

The PTAB was supposed to be a faster, less expensive alternative to district court. Instead, it has proven to be the complete opposite on all counts. Proper regulation of the institution decision could solve many of the problems and mitigate most of the unintended consequences.

NHK/Fintiv Precedential Opinions Are Unreliable

Precedential decisions NHK and Fintiv have not translated to predictability. Both decisions provide “non-exclusive” factors that are to be “weighed” as a part of a “balanced assessment”. What does this mean? No one knows. How is a factor to be scored and how much weight does each get and what score will assure or prevent denial of institution? It is unknown. In fact, a few weeks following the precedential designation of Fintiv, APJ Scott Weidenfeller stacked the panel in Sand Revolution to institute review of a patent with the exact same circumstances as Fintiv, a decision that went on to be designated informative. Thus, we have the “informative” decision Sand Revolution (rendered by a stacked panel) in direct contradiction of the “precedential” decision Fintiv. In another example IPR2020-00235 the PTAB instituted review where a parallel trial was scheduled for 9 months prior a PTAB final written decision. Parties have no idea whether or not a petition will be denied under the NHK/Fintiv framework.  As inventor/entrepreneur Tom Pierson observed in the five-star documentary INVALIDATED, “a much better process would be, as soon as a patent is issued, somebody at the patent office flips a coin: heads, the patent is good; tails, it’s no good.”

Serial and Parallel Petitions Still the Norm

The same can be said for the so-called “guidance” on multiple petitions. The penalty for filing multiple petitions against the same patent is that the PTAB will institute on one…or sometimes two… or perhaps three trials. In other words, there is no penalty and a huge upside for petitioners to continue this abusive practice. Inventors have no idea how many petitions are allowed, how many costly preliminary responses must be filed, or how may millions of dollars must be raised for eventual trials. Filing of multiple petitions remains a very effective strategy for savvy petitioners. For example, the PTAB instituted trial on three of the six parallel petitions filed by Intel against Teva’s U.S. Patent No. 10,186,523, a valuable invention that enables high density and low power semiconductor chips. I recently re-ran the calculations to find that in FY2020 the PTAB granted 61 of 91 serial petitions, a 71% institution rate.

Despite Director Iancu’s positive rhetoric in support of inventors and reliable patents, his efforts to date have failed to deliver, leaving serious inventors on the sidelines.

Two Stages of PTAB Trials

The AIA establishes a bifurcated system for reviewing patents – the institution stage and the trial stage.

The trial stage is largely governed by the statute: it is adversarial; decisions are made by administrative judges; evidence is limited; strict deadlines are imposed; and the burden of proof is low. The high invalidation rates are largely a result of these statutory provisions, which would require an act of Congress to fix.

The institution stage is (supposed to be) governed by agency regulations prescribed by the Director. In particular the Director has discretion to deny institution for reasons related to: 1) previously considered prior art and arguments; 2) the effect on the economy; 3) the integrity of the patent system; and 4) the efficient administration of the patent office.

In prescribing regulations…the Director shall consider the effect…on the economy, the integrity of the patent system, the efficient administration of the Office – 35 U.S.C §316(b)

With the AIA in place, the only viable approach to “securing to inventors the exclusive right to their discoveries” as required by the U.S. Constitution is to screen patents at the institution stage. Institution must play a gatekeeping role to control which patents are sent to the “death squad” that is an AIA trial. Absent robust screening, patents are not reliable instruments to attract capital and advance progress in the useful arts. This screening function can and must be done via regulation.

The Director shall prescribe regulations…setting forth the standards for the showing of sufficient grounds to institute a review – 35 U.S.C §316(a)(2)

We Need Bright-Line Rules

In the October 20 RFC, the Director asks for input on whether the Office should adopt “bright-line” rules, or stick with the “case-specific analysis [that] is part of a balanced assessment of all relevant circumstances in the case, including the merits.”

I believe this question is responsive to our concerns. It started in 2017 with the patent burning – where I joined others in petitioned the government for redress of grievances under the First Amendment. Specifically, the PTAB:

• instituted review of my patents on the exact same art considered by the examiner
• permitted more than one petition per patent
• instituted despite a jury verdict coming out prior to the PTAB final decision
• permitted a notorious infringer to abuse the process, multiply costs, delay justice, and reduce their liability for blatant IP theft

Then in 2018, 258 inventors and supporters sent a letter to newly confirmed Director Iancu asking him to promulgate notice-and-comment rules to address these very issues (see Point 7 and 11 at the link above).

More recently, US Inventor submitted a formal petition for rulemaking on these issues and intervened in a lawsuit against the USPTO, alleging that rulemaking is required by both the AIA and the APA.

The short answer to the RFC is yes – WE MUST HAVE BRIGHT-LINE RULES!

Should Director Iancu proceed to codify the existing framework, the entire effort will have been a waste. We will be left without clear guidance on which patents are eligible for PTAB review and which ones are not. The U.S. will continue to fall behind technologically for lack of participation by independent inventors and small businesses.

If we are to encourage broad participation in innovation and robust investment in high risk R&D, then we need reliable patents. Regulations must provide clear, consistent, and reliable guidance on how to keep them OUT of a PTAB trial. This requires bright-line rules.

Public Comments Means Your Comments

We all must come together to support inventors here. US Inventor has provided an easy-to-use interface for filing effective comments – in less than two minutes.

Patent practitioners – your clients need reliable patents in the event they have to use them some day. Please file comments so that your good work cannot be easily negated by the PTAB. Imagine if a first office action determined with finality all the rights to the invention – that is what happens at the PTAB. Years of prosecution, prior art analysis, careful claim drafting all go up in smoke. You have to do more for your clients than get them a patent – you have to get them a patent that will work when they need it. That means the PTAB must be regulated. File your own comments and pass this along to your clients – they need to participate in this process. Their big competitors are!

Patent litigators – it is not enough to represent patent owners while accepting the current framework. One of my lawyers told me I had to go to Congress if I didn’t like the PTAB. He was wrong. The PTAB has been set up and run on behalf of infringers – with help from their lawyers. Your clients need and deserve effective representation. Rather than filing responses to 6 petitions against the same patent, you can help them eliminate the five excess petitions from the outset! You don’t have to go on the record – just encourage and assist your patent owner clients to file their comments. Don’t settle for being a good counsel – become a great advocate instead.

Influencers – please help. I can’t imagine any of you intended or expected the PTAB to function like this. It is time to cure the unintended consequences. One and done. Stop confounding jury trials. End the handouts to trillion-dollar corporations. We need your endorsement – privately if not publicly. Tell your bar associations, committees, organizations, and colleagues that those US Inventor guys are on the right track here and are worthy of support. Give inventors a chance.

Image Source: Deposit Photos
Copyright: gstockstudioAuthor gstockstudio
Image ID: 57216291