The PTAB Desperately Needs Reform, Not Preservation

“It is foolish and illogical to believe that the PTAB, which, as initially created, allowed for unending serial challenges of patents, is or ever was ‘just right.’” Patent Trial and Appeal Board (PTAB), created by the America Invents Act (AIA) just over 10 years ago, is the most electrifying lightning rod in the industry. As explained repeatedly by Members of Congress at the time the AIA was enacted, the purpose was to create a streamlined, less expensive, alternative administrative means to challenge the invalidity of issued patents. Sadly, with that being the stated purpose, the creation of the PTAB can be objectively characterized as nothing other than an abysmal failure. What has evolved is anything but streamlined, and certainly not inexpensive, even compared with district court litigation.

Not ‘Just Right’

Perhaps the best way to characterize the PTAB is by analogizing to the story of Goldilocks and the Three Bears. Those familiar with the famous children’s story know that Goldilocks finds a cabin in the woods owned by three bears, who are not home when she enters uninvited. For starters, Goldilocks is variously unsatisfied with porridge left on the kitchen table, with one bowl being too hot, then another being too cold, before ultimately being satisfied, finally, by a bowl of porridge that is just right. Subsequently, Goldilocks proceeds in search of a seat—the first two chairs were not appropriate, being too large for her small frame, but ultimately one was just right for her stature. Finally, Goldilocks happens upon three beds, the first of which is too hard, the second of which is too soft, the third of which is just right.

It was unrealistic to believe the PTAB would be created without need of some tinkering. The Kappos-era United States Patent and Trademark Office (USPTO) was required to rush the regulations to create three entirely new challenges, as well as an entire code of civil procedure to go along with these new challenges. Ultimately, Director Kappos left the Office soon after the first challenges were filed in September 2012, and while he knew well and explained that changes would be inevitable, no substantive changes occurred until the Iancu era, and now if Senator Patrick Leahy (D-VT) has his way, most, if not all, of those changes will be erased. That would leave us stuck with the same rules that were rushed into being in less than a year to create an entirely new regime to challenge patents. So, Senator Leahy and those supporting the roll back of the Iancu PTAB reforms must believe that the PTAB is not only “just right” but has been “just right” since its inception. Counterfactual, foolish and illogical, but in the world of politics that doesn’t mean the view won’t win the day.

It is foolish and illogical to believe that the PTAB, which, as initially created, allowed for unending serial challenges of patents, is or ever was “just right”. Of course, no serious observer can likewise realistically believe the PTAB will be abolished simply because the PTAB is not now and never has been “just right.”

The PTAB needs serious reform, and it is legitimate to wonder how it is possible that we are a decade into this experiment and the PTAB continues to be a litmus test issue.

If patents are worthwhile and the USPTO is going to continue to issue them, then why at some point don’t challenges cease? What is the value in a right, or government franchise, if it never settles and can be challenged right up until the last day it exists? Does that feel “just right” to anyone? No honest broker or thoughtful observer can possibly think a system that forces a patent owner to win every challenge indefinitely until the last day is “just right”.

Size, Quantity and Conflict Problems

As the old saying goes, when you are a hammer the world looks like a nail, and the PTAB is a mighty sledgehammer to rival that of Thor’s hammer Mjölnir itself. Worse, this hammer has been wielded against patent owners for the last decade by some 270 Administrative Patent Judges (APJs), which is roughly triple the size of what the Board of Patent Appeals and Interferences was (the immediate predecessor to the PTAB). The size of the PTAB creates its own, self-fulfilling problem.

It is worth remembering that when the USPTO was creating the rules that would govern trial practice at the PTAB, the Office predicted that there would be approximately 420 inter partes review petitions filed in the first year the PTAB could accept challenges in 2013, and then 500 post grant challenges filed a year by 2015. These estimates were off by a factor of 3.5x.

As the chart above shows, by fiscal year 2015, 1,737 IPR petitions were filed, with the peak reaching 1,812 in 2017. In each fiscal year since 2014, there have been over 1,308 IPR petitions filed, which is 2.6x the predicted number of filings. Given the hiring frenzy by the USPTO, it is hardly surprising that the number of IPRs has been dramatically higher than the predictions. This is particularly unsurprising when there is not a central office or panel responsible for deciding whether to initiate IPR proceedings, but instead the decision whether to institute is left to the panel that will ultimately be responsible for deciding any instituted case on the merits. An obvious conflict even if it isn’t a constitutional violation.

As Judge Newman pointed out capably in her dissent in Mobility Workx, LLC v. Unified Patents, LLC, having the same people that will decide the merits decide institution creates a perception of bias, which is as corrosive as actual bias itself. There were real issues of structural bias raised by Mobility, which were disregarded by the majority. These very same concerns were raised by numerous organizations and commentators when the USPTO sought comments, as pointed out by Judge Newman, yet we are supposed to believe that human nature cannot possibly allow its way into even unconscious bias when an APJ will receive the benefit of having reviewed a petition for institution prior to the merits stage and that same APJ faces a work production quota.

Anyone with any common sense, which admittedly isn’t many anymore, must understand it is human nature to make sure you have enough work to justify your job. Here the people who can make sure they have enough work are the very people who will be doing the work! And somehow no one ever asks why all those bright people who created the PTAB in the first place were so wrong about the number of petitioners – by a multiple of 3.5x?

Bait and Switch

Are we really supposed to believe that APJs would reduce the number of IPRs instituted to the point where their services would be unnecessary? Must we live in a “Monty Python world” at all times where the bizarrely idiotic must be accepted as if it is true without question?

And for goodness sakes, if there isn’t enough time to conduct a real hearing with real life witnesses and tangible evidence, then why would you continue to institute cases? Half measures and partial consideration of rights that the statute likens to property and patent examiners have already reviewed is practically malfeasance. If you don’t have enough time to conduct a property proceeding, then focus on the most egregious cases and institute fewer challenges so appropriate time can be devoted to each case. After all, that is what the industry was told you would do before the great PTAB bait and switch.

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Join the Discussion

16 comments so far.

  • [Avatar for erfinder]
    December 9, 2021 07:49 pm

    IMHO the PTAB was created to steal IP independent inventors. And it has lived up to that goal. So independent inventors are opting out, and the public loses out.

  • [Avatar for Josh Malone]
    Josh Malone
    December 7, 2021 12:42 pm

    If the PTAB is a faster and less expensive alternative to district court, why don’t they make it voluntary?

    Up until 2011, inventors would frequently initiate or consent to a reissue or reexamination.

    Why does it have to be compulsory all of sudden?

  • [Avatar for Josh Malone]
    Josh Malone
    December 7, 2021 11:12 am

    @Paul Morgan, you are correct, there is one scenario wherein the PTAB is faster and cheaper: when a deep-pocketed major PTO customer succeeds in annihilating a small competitor the PTAB is faster and cheaper for everyone.

    Big corp v. Small Biz: PTAB increases expense and delay, except when the Small Biz surrenders or is annihilated
    Big corp v. NPE: PTAB increases expense and delay
    Mercenary v. NPE: PTAB increases expense and delay
    Small Biz v. NPE: PTAB increases expense and delay
    Small Biz v. Small Biz: PTAB increases expense and delay

    And you know there is no practical estoppel. Every infringer raises an invalidity defense in district court, regardless of whether they previously lost at the PTAB.

    PTAB serves no legitimate purpose. It only helps big corporations steal IP by increasing cost, delay, and risk for patent holders.

  • [Avatar for sarah mcpherson]
    sarah mcpherson
    December 7, 2021 07:11 am

    You call it morale?

  • [Avatar for Night Writer]
    Night Writer
    December 7, 2021 05:35 am

    I don’t think it can be underestimated that PTAB patent judges evaluate whether to institute and then the same judge adjudicate the outcome. And the PTAB judges rely on a point system and need to keep the number of instituted IPRs high and that the amount of work to adjudicate a case after spending the time to figure out whether to institute it is low.

    Plus there are very heavy incentives not to dissent.

    The net result is a system that is heavily biased towards instituting and then invalidating the claims. (Get that once you institute you have already evaluated all the issues and come to the conclusion that it is more likely than not the claims are invalid. There isn’t much else after institution that goes on. Affidavits and depositions are not hard to read through and may be used to merely confirm the initial impression that the claims are likely invalid.)

    The reforms would be to restructure the system so that the patent judges don’t have an incentive to invalidate the claims.

  • [Avatar for Paul F Morgan]
    Paul F Morgan
    December 6, 2021 10:16 pm

    Re: “IPRs are not a substitute for district court litigation. They are additive. They add an average $450K per IPR and 34 months per dispute.”
    Obviously there is no district court suit even left if the claims in suit are removed by the IPR, which almost always occurs well before trial. Often, other than in Waco, litigation is stayed for the IPR before any significant litigation costs. Not additive.
    If the claims in suit are not removed by the IPR proceeding the lawsuit defendant is estopped from contesting validity with that or any other prior art patent or publication that could have reasonably been found and raised in the IPR.

  • [Avatar for Pro Say]
    Pro Say
    December 6, 2021 04:06 pm

    To h.e.l.l. with innovation:

    Bait. Switch. Kill.

    And kill. And kill.

    And kill some more.

  • [Avatar for PTO-Indentured]
    December 6, 2021 03:01 pm

    Here the people who can make sure they have enough work are the very people who will be doing the work! err… the very people who are paid thousands more when they invalidate their employer’s patents.

    Tally this up over a year or so for an APJ and you’ve got a down-payment on a new, 2nd, 3rd home — bringing a whole new meaning to ‘Just Say No’.

    AIA is the foundation on which Efficient Infringement relies and thrives (read: theft of US patents) and nothing, over the entire history of the PTO has perpetuated a US patent Caste System more than the glaringly double-standard America Infringes ‘Act’.

    What is just and fair, manifests what is just and fair.

    AIA and its PTAB are manifesting the opposite.

    Meanwhile: The beatings of any and all meaningful US IP (wrought by mere ‘patentee peons’) will continue, until the morale improves.

  • [Avatar for Josh Malone]
    Josh Malone
    December 6, 2021 02:22 pm

    @Paul Morgan – IPRs are not a substitute for district court litigation. They are additive. They add an average $450K per IPR and 34 months per dispute.

  • [Avatar for B]
    December 6, 2021 11:50 am

    @ PPO “The worst PTAB abuses occurred DURING the Iancu years under his watchful eye until just a year or so ago!”

    We can disagree on “worst” as, under Iancu, TC 2100 and TC 2400 stopped with the Alice-Mayo rejections which the PTAB affirmed at >80%.

    TC 3600, however, went on undeterred.

    Thus, you are correct that the PTAB engaged in some serious abuses under Iancu. I suspect, however, that the Director can’t just tell the PTAB how to hold on a case. FWIW, I talked to a PTO mucky-muck some years ago – he expressed some great frustration with certain APJs on their capriciousness.

  • [Avatar for Paul F Morgan]
    Paul F Morgan
    December 6, 2021 11:21 am

    Although IPRs have already had several changes made to it, and could be further improved, to say that “What has evolved is anything but streamlined, and certainly not inexpensive, even compared with district court litigation” without any factual support ignores the statutory time limits for IPRs that are typically exceeded by actual D.C. trial dates, the AIPLA published respective cost statistics, and the vastly smaller factual and legal issues involved, Litigation document discovery production costs alone, or even one week of extensive pre-trial depositions these days can cost more than an entire IPR.

  • [Avatar for Anon]
    December 6, 2021 09:22 am

    First point that would need be admitted to: The America invents Act was a result of ‘agency capture.’

    As I look around, I do NOT see even close to a general acceptance of this.

  • [Avatar for Anonymous]
    December 5, 2021 04:00 pm

    Assuming arguendo that the PTAB will always exist in some form (though I see nowhere in the Constitution where exercising a right to invent waives a right to a jury trial), the best straightforward reform is to create a time bar, making a patent’s validity incontestable at the PTO after a time certain. I’ve proposed three years after issuance (and also leaving in place the present 1-year time bar if the patent has been asserted in district court). I’ve not heard one principled argument why this would be a bad thing, if we’re really looking to expeditiously remove erroneously issued patents. If we don’t do something like this, we’re accepting undue political influence and outright corruption of the PTO as an institution by the Apple’s and Google’s of the world.

  • [Avatar for Particularly Pointing Out]
    Particularly Pointing Out
    December 5, 2021 03:12 pm

    Why are you letting Iancu off the hook, Gene? Iancu was no ‘Great Reformer’. The worst PTAB abuses occurred DURING the Iancu years under his watchful eye until just a year or so ago!