The ‘Restoring America Invents Act’ Would Open the Floodgates for Patent Owner Harassment

“The amendments offered by Senator Leahy…would overrule Fintiv, which opens the floodgates for fresh, new rounds of patent owner harassment by challengers and without any consideration for whether another judicial officer has or will soon consider the same issue.”

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The much discussed, but previously unreleased, Restoring America Invents Act has finally been made public. The bill was submitted by Senator Patrick Leahy (D-VT) in what he described late last week as an attempt to reverse the reforms of the Patent Trial and Appeal Board (PTAB) made by former USPTO Director Andrei Iancu. Leahy promised to take aim at discretionary denials of inter partes review (IPR) and post grant review (PGR) challenges, which he did, among many other things.

Goodbye Fintiv, Hello Harassment

While there will be much more analysis over the next several days, weeks and even months, here is a quick summary of some of the portions of the bill that are sure to be of interest.

The bill, if passed, would amend 35 U.S.C. 324(a) as follows:

The Director may not authorize a post-grant review to be instituted unless Subject only to the discretion of the Director under 325(d)(4), a petition filed under section 321 that meets the requirements of this chapter shall be instituted if the Director determines that the information presented in the petition filed under section 321, if such information is not rebutted, would demonstrate that it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable.

Similarly, the bill, if passed, would amend 35 U.S.C. 314(a) as follows:

The Director may not authorize an inter partes review to be instituted unless Subject only to the discretion of the Director under section 325(d)(4), a petition that meets the requirements of this chapter shall be instituted if the Director determines that the information presented in the petition filed under section 311 and any response filed under section 313 shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.

With emphasis, the citation to 325(d)(4) appears to refer to what would become the future 325(d) after this bill would become enacted. The future 325(d)(4) is today 35 U.S.C. 325(d), which is only one paragraph, and reads:

Notwithstanding sections 135(a), 251, and 252, and chapter 30, during the pendency of any post- grant review under this chapter, if another proceeding or matter involving the patent is before the Office, the Director may determine the manner in which the post-grant review or other proceeding or matter may proceed, including providing for the stay, transfer, consolidation, or termination of any such matter or proceeding. In determining whether to institute or order a proceeding under this chapter, chapter 30 or chapter 31, the Director may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office.

Therefore, the amendments offered by Senator Leahy would force the discretion of the USPTO Director to deny institution to be limited to the scenario where “the same or substantially the same prior art or arguments previously were presented to the Office.” This would overrule Fintiv, which opens the floodgates for fresh, new rounds of patent owner harassment by challengers and without any consideration for whether another judicial officer has or will soon consider the same issue.

It is mismanagement and dereliction for the USPTO Director not to consider USPTO resources when considering whether to institute a post grant challenge. And it is nearly incomprehensible that Congress would forbid the Director from considering whether there is already a looming trial date in district court to consider the same issue. Why would the USPTO expend its resources to race to beat an Article III judge where there has already been substantial investment in the parallel proceeding in a federal district court?

Preventing the USPTO from considering what is happening in federal district court prior to deciding whether to institute can only make sense if the PTAB is intended to supplant federal district court patent litigation. Was that really the intent of the America Invents Act? Because at the time, the USPTO only predicted there would be approximately 420 inter partes review petitions filed in the first year the PTAB could accept challenges, and then 500 post grant challenges filed a year by 2015.  But in 2012 there were over 5,000 patent infringement lawsuits. Obviously, the PTAB was never predicted to be a replacement for district court proceedings.

The blatant misuse and misallocation of judicial resources, and the lack of any appreciation that it is even a problem, is why observers can say with such great confidence that the patent system is set up for the purpose of continued harassment of patent owners. Sadly, it continues to be adjusted in ways that only ensure continued harassment of patent owners. If anyone were truly interested in creating a better system they would streamline the various challenges, which would start with having the same standards of review in place, rules and laws that foster arms-length negotiations, instead of forcing patent owners into litigation as the option of only resort, and rules that prevent duplication of judicial effort. 

Code of Conduct: About Time

Unrelated, but from the “it’s about time” category, someone is finally recognizing that the judges on the PTAB should be required to follow some kind of Code of Conduct, which is something we at IPWatchdog have been writing about for many years. The bill would add a section that would prohibit the type of deliberative ex parte communications seen between PTAB panel members and supervisors that we know happened in the RESTASIS IPRs, thanks to Freedom of Information Act (FOIA) requests. This section of the bill adds the following provision:

An officer who has review authority, supervisory authority, or disciplinary authority with respect to an administrative patent judge of the Patent Trial and Appeal Board (or a delegate of such an officer, and who is not a member of a panel described in section 6(c), shall refrain from ex parte communication with such a judge who is a member of that panel concerning any pending matter before that panel, except as allowed under the Code of Conduct for United States Judges.

While a great first step, and something that is hard to imagine even needed to be written down, this obviously does not go far enough. If those on the PTAB are judges, they must have a Judicial Code of Conduct. Just recently, we’ve seen an expose from the Wall Street Journal describing a comprehensive analysis showing violations in the Code of Judicial Conduct by numerous district court judges who violated recusal requirements. Ethics matter, and that PTAB judges continue to have no specific Code of Conduct and are only governed by the same ethics policy that every other employee of the Department of Commerce must follow is astonishing.

Industry Reacts

A few comments have begun to roll in from industry organizations, both for and against the bill. The Innovation Alliance said the bill “would take us in the wrong direction,” and “reestablish PTAB trials as a parallel avenue, as opposed to an alternative to district court trials.” The statement explained that, before the USPTO made updates to the post-grant system that would be rolled back under this bill, “more than 85% of PTAB reviews were filed in parallel to district court litigation, forcing inventors to defend their patents in simultaneous and duplicative proceedings.” The Innovation Alliance added that the bill would give more power to the same Big Tech companies being targeted by Congress in other areas right now. A recent Senate Subcommittee grilled Facebook and Google about their privacy and competition practices, for instance.

And James Edwards, Executive Director of Conservatives for Property Rights, called the bill “the exact opposite of what needs to be done in patent policy.” He added:

Mr. Iancu’s changes started to mitigate PTAB’s biases somewhat for patent owners. They ensure that those defending their issued patents don’t face one legal standard in court and a different one at PTAB. His reforms began the process of bringing more certainty and stability to patent validity challenges. Sen. Leahy’s bill would return uncertainty, unreliability, unfairness and undermining of the property rights of countless inventors in order to benefit Big Tech companies that want to use others’ patented technologies, while paying as little as possible.

On the other hand, US*MADE (the US Manufacturers Association for Development and Enterprise) welcomed the legislation. The organization explained that it has been active at the USPTO and in the courts supporting efforts to roll back discretionary denial practice. “Senator Leahy and Cornyn’s patent bill introduced today will restore the intent of the AIA, improve patent quality and protect American manufacturers and the jobs they create from abuse of the patent litigation system,” said Beau Phillips, US*MADE Executive Director.

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Join the Discussion

8 comments so far.

  • [Avatar for Particularly Pointing Out]
    Particularly Pointing Out
    October 2, 2021 06:07 pm

    ipguy is right. Patent prosecutors, not patent litigators, have the best mindset for representing clients before the PTAB.
    Patent litigators bring with them the baggage and habits from district court litigation. It’s no wonder PTAB proceedings have become the mess they are with patent litigators setting the tone.

  • [Avatar for B]
    September 30, 2021 03:24 pm

    The problem isn’t in the language of the bill itself, imho. The problem is in how the USPTO will implement the bill. As Gene states above, “the judges on the PTAB should be required to follow some kind of Code of Conduct.”

    Good luck with that.

    Further, most of the bill is just barely moving around the furniture with a few “may” this-es and “may” that-es based on whatever the Director determines at whatever the Director’s discretion is at a given time of day.

    Thus, in my opinion, the bill is generally benign in its language, but it solves nothing except for the ex parte communication problem. But think about the mind-frame of an APJ who would engage in such behavior in the first place, or of an administrative agency that would allow judicial independence to be so compromised.

  • [Avatar for Correct Info]
    Correct Info
    September 30, 2021 01:00 pm

    Ipguy is wrong.

    Any registered practitioner can appear before the PTAB. To the extent he is referring to agents only, the same holds true. Of course, no one is hiring agents for matters such as this given the overlap with litigation and the appeals to the CAFC.

  • [Avatar for Anon]
    September 30, 2021 10:10 am

    ipguy – I cannot agree with your attempt to constrain the practice of law in such a way.

    Prosecution and litigation are simply different animals calling for different proclivities and different strengths.

  • [Avatar for Curious]
    September 30, 2021 09:33 am

    The dear Professor Crouch — rarely a huge proponent to patent owners in his writings — put it aptly on an article in his website regarding the same topic:
    The proposal is basically a wish list of patent-killers seeking to cancel patent rights via inter partes review.

  • [Avatar for MaxDrei]
    September 30, 2021 09:24 am

    What an interesting comment from ipguy. Here at the EPO, post-grant disputed proceedings are to an extent of perhaps 90% handled by persons on the Register of European Patent Attorneys. Litigators hardly get a look in. Clients are of course free to choose instead a litigator to represent them at the EPO but, generally, they don’t.

    Perhaps that’s because in Europe there are two different professions, each of comparable professional standing and reputation. Entry to the patent attorney profession is open to those with a science or engineering degree but the written exams to get on the EPO’s EPA Register are specific to the skills of a patent attorney. It is fiendishly hard to satisfy the Examiners in the disciplines of patent drafting, patent application prosecution and patent opposition prosecution. Each subject is examined in a day-long written examination (which is not in a multiple choice answer format).

    It seems that clients appreciate the strictness with which the basic skills of a patent attorney (such as claim drafting) are examined in Europe as a test of competence to go on the Register.

  • [Avatar for Pro Say]
    Pro Say
    September 30, 2021 09:22 am

    “Restoring American Invents Act?”

    No; it’s actually the CIA: Crippling Innovation Act

    Truth in advertising Patrick.

    Truth. In. Advertising.

  • [Avatar for ipguy]
    September 29, 2021 08:54 pm

    The real reform would have been allowing only patent prosecutors (i.e., those with reg. nos.) who have filed at least 50 patent applications to represent parties in post-grant proceedings.