Hirono and Tillis Give Vidal One Month to Answer Questions on Abuse of PTAB Process

“These activities represent clear abuses of the IPR system. Yet, to date, it does not appear the USPTO has taken any steps to sanction those involved or otherwise act to deter future copycats.” – Senators Hirono and Tillis

Senators Mazie K. Hirono (D-HI) and Thom Tillis (R-NC) sent a letter yesterday to U.S. Patent and Trademark Office (USPTO) Director Kathi Vidal to express their concern over the Patent Trial and Appeal Board (PTAB) decisions to institute inter partes review (IPR) proceedings in OpenSky Industries, LLC v. VLSI Technology LLC and Patent Quality Assurance, LLC v. VLSI Technology LLC. “The facts and circumstances around these proceedings suggest petitioners OpenSky Industries, LLC (OpenSky) and Patent Quality Assurance, LLC (PQA) brought the proceedings to manipulate the U.S. Patent and Trademark Office (USPTO) for their own financial gain,” explains the letter.

VLSI has been successful in U.S. district court, including a jury finding that one of two asserted patents was not invalid for anticipation. However, the company has faced a total of 39 petitions for IPR proceedings at the PTAB. While most of those petitions were filed by Intel, the defendant in the district court infringement suit, other petitions have been filed by OpenSky and PQA, both of which were incorporated after the date of the infringement verdict against Intel and have no discernable business operations beyond challenging VLSI’s patent claims.

The American Intellectual Property Law Association (AIPLA) has reported that the average cost of IPR proceedings through a PTAB hearing is $300,000. Thus, if every IPR petitioned against VLSI were to reach a PTAB hearing, that would be nearly $12 million in costs just to defend against the IPRs. VLSI currently ranks 33rd among all patent owners for the number of AIA validity trials that it has faced at the PTAB.

The senators’ letter charges that the OpenSky and PQA challenges of U.S. Patent Nos. 7,523,373 and 7,725,759 are “an apparent attempt to extort money” from VLSI. They note five examples that suggest this was the motive:

The companies were formed shortly before filing their petitions.
The companies did not make, use, sell, or import any products, let alone any products that could subject them to claims of infringement.
The companies filed their petitions only after VLSI had secured a $2.2 billion infringement judgment against Intel.
And, most egregiously, the petitions filed by the companies were near “carbon copies” of petitions previously filed by Intel that had been rejected by the USPTO.

The letter also references a recent attempt by OpenSky attorneys in IPR2022-00645 to secretly come to an agreement with VLSI wherein OpenSky would refuse to pay their expert, guaranteeing that the expert would not appear for the scheduled deposition. After the expert did not appear, OpenSky would join the patent owner in a motion to dismiss, presumably based on the understanding that, without an expert, OpenSky would not prevail. See Paper 8, Exhibit 2029 (VLSI’s Opposition to OpenSky’s Motion for Joinder). The attorney then proposed cash payment in exchange for what IPWatchdog Founder and CEO Gene Quinn called “this sham manipulation of the PTAB process,” and the possibility of an additional payment if the PTAB were to nevertheless order joinder and the proceeding ultimately resulted in claims being affirmed.

Despite strides made to improve the balance needed at the PTAB, such as adopting the Phillips claim construction standard and the Fintiv factors, Tillis and Hirono express continued concern about the PTAB process and are asking Vidal to respond to the following five questions by no later than May 27, 2022:

Does the USPTO consider filing an IPR petition for the purpose of profiting from a resulting decrease in the price of the patent owner’s stock a proper use of the IPR system? Why or why not?
Does the USPTO consider filing an IPR petition for the purpose of extorting money from the patent owner a proper use of the IPR system? Why or why not?
The America Invents Act gives the Director of the USPTO discretionary authority to deny IPR petitions. Do you consider it a proper use of that discretion to (1) deny an IPR petition filed for the purpose of profiting from the resulting decrease in the price of the patent owner’s stock; or (2) deny an IPR petition filed for the purpose of extorting money from the patent owner? Why or why not?
What sanctions can the USPTO impose on parties that file IPR petitions in bad faith? Has the USPTO exercised this authority to date? If so, please describe the circumstances.
What additional authorities, if any, does the USPTO require to ensure that parties do not file IPR petitions in bad faith and for reasons outside the intent of the America Invents Act?

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Author: Devon
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Eileen McDermott Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at [...see more]

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Join the Discussion

24 comments so far.

Concerned
May 5, 2022 05:51 pm
Moreover, the PTAB said I met the everyday language of the law, but not the legal definition of the law.

As B stated, the Asst. Solicitor did not offer what that legal definition would be and the CAFC did not ask the Asst. Solicitor to give one.

One of the CAFC judges did ask B shouldn’t this question be asked of SCOTUS and B said rule accordingly and we will be there.
B
May 5, 2022 04:51 pm
“One of the judges did say we are in a two step world, perceived to be out of frustration.”

No one – not the Ass’t Solicitor or a single judge on the Panel (Taranto, Chen, Clevenger) challenged the notion that: “inventive concept” and “significantly more” are totally capricious,

Anyone remember when I bet the CCAFC panel would never ask the Solicitor about these terms
Concerned
May 5, 2022 02:28 pm
Oral arguments at CAFC were today. Solicitor and court argued that they consistently argued/ruled mental steps are not patentable.

The Solicitor argued the CAFC cannot just aside all the case law to accommodate my case.

Our counter argument was that we agree that abstract ideas with mental concepts are not patentable.

However, not the case here as process is not abstract per Alice/Mayo (not routine, not conventional and not well understood). The 55 documents prove as much as no end user has ever used my process, either the steps individually or collectively (not in disputed).

B did an excellent job and B challenged court to remand back to USPTO or send up to SCOTUS to define significantly more or inventive concept. And is abstract evidenced based or not? Can something be abstract if never done before per the evidence, claimed steps individually or collectively?

One of the judges did say we are in a two step world, perceived to be out of frustration. B suggested this was perfect case to solve matter.

My hope is CAFC focuses on the fact nobody has proved process abstract to even get to mental steps and remands back to USPTO.
concerned
May 1, 2022 09:10 am
I had property at one time and faced the same environmental judge a few times on housing code violations. I never won a case because I was guilty every time.

I see this judge outside the court room every blue moon and I tell him he was the best judge I ever had, yet I never won a single case. This judge was just and fair.

The patent system is hard to respect. It is hard to have any respect for it.

I will have respect if I lose my case in front of CAFC if I lose on the law and I lose on the evidence.

However, never addressing evidence and telling me I met the law as passed by Congress, but not their undefined law and not their body of unspecified case law will not give me any respect of the patent system.

Neither has the rejection reasons changing like the wind until I cannot overcome one eventually or until I just go away lend any respect to this process.
B
April 30, 2022 11:41 pm
@ Pro Se

FYI, in the state of Maryland, the Rules of Evidence are written by the Court of Appeals. The Court of Appeals (the highest court in MD) literally wrote out the equivalent of FRE 201(e) for appellate courts. “This Rule governs only judicial notice of adjudicative facts. Sections (d), (e), and (g) of this Rule do not apply in the Court of Special Appeals or the Court of Appeals.” https://casetext.com/rule/maryland-court-rules/title-5-maryland-rules-of-evidence/chapter-200-judicial-notice/rule-5-201-judicial-notice-of-adjudicative-facts

Violations of due process are an institution in Maryland state appellate courts.

Could the Maryland state courts be any more sleazy? The answer is “yes,” but that’s another story.

Anyway, there’s a reason I’m a *YUGE* fan of classically liberal attorneys like Alan Dershowitz, Barry Sheck, and Jon Turley.
B
April 30, 2022 11:26 pm
@ Pro Se ” Because in the lawyer world, “sanctions” is kinda a taboo thing to do to another lawyer.. and who are all APJs? Lawyers granted judge powers under the USPTO.”

Whenever a lawyer lies in court and a judge says nothing – you know your client is screwed. Whenever a judge (APJ or Art III) lies, you’re know you client is really screwed.

I once had a judge dismiss a case based on collateral estoppel citing a previous decision in a first case while trying taking judicial notice of things that happened in the first case – the problem being that those
“things” that happened actually occurred years later. Judge refused to consider my motions under FRE201(e) and (c)(2) even though (c)(2) is a “must take judicial notice.” Judges use judicial notice all the time to violate due process, and refuse to obey the FREs whenever it pleases them.

The 4th Cir. upheld the dismissal under different and idiotic grounds that no one ever briefed in a non-published opinion. That’s how appeals courts lie and get away with it.

Appeals judges are 100% allowed to violate due process on a whim. I dare you to find one SCOTUS case admonishing an appeals court for violating due process.

Terrorists pulled off the battlefields of Afghanistan have more due process rights (Hamdi v. Rumsfeld) than an American who had an appellate court notoriously violate his/her due process rights.
Pro Se
April 30, 2022 10:39 pm
Excuse mobile typos below.
Pro Se
April 30, 2022 10:38 pm
@B in a dream perhaps. If the PTAB just respect and use 37 CFR § 42.12 during the pre-Institution state, allow a patented in less than 3 pages point out the 37 CFR § 42.12 violation(s) in the petition (using the trials email to all parties) – I feel the biggest issue with the PTAB AIA practice is fixed.

There’s legitimate patent invalidation arguments that are presented to the board based on accurate facts of the prior art. I feel it’s most of the cases that does get instituted.

The non-instituted cases mostly are fatal at the argument level in the petition. But the “abuse” is the $300k in work that a patent owner must produce to answer frivolous petitions under clear violations to 37 CFR § 42.12 – the statute is there.. but the PTAB never invoked it.. why? Because in the lawyer world, “sanctions” is kinda a taboo thing to do to another lawyer.. and who are all APJs? Lawyers granted judge powers under the USPTO.

So for the patentee, we get lawyers looking out for lawyers with the taboo against sanctions. This is no different that the silent wall of silence law enforcement individuals give each other.. fraternal level affinity.

Patentees are being cheated out of their right to terminate a petition under clear misconduct under 37 CFR § 42.12.

Fix the patentee’s rights to relief under 37 CFR § 42.12 pre-institution fixes all of the issues associated with legit PTAB AIA reviews.

If they never correct the APJs willful shun of 37 CFR § 42.12 because they’re holding on to lawyer level loyalties and not acting like true judges that would respect ethics violations enforcement during the pleading stage (A DC judge will throw out fraudulent misrepresentations of facts in filed argument inclusive papers).

ThenPTAB brokenness in my humble observation is simply the refusal to invoke 37 CFR § 42.12 against fellow street practicing lawyers.
B
April 30, 2022 08:30 pm
@Pro Se “I am a professional solutions finder, problem solver.. and with the PTAB, its simply their blind eye to 37 CFR § 42.12.”

Has the PTAB ever voluntarily fixed itself?
Pro Se
April 30, 2022 07:09 pm
Here’s the “silent” hustle with AIA reviews: though the PTAB says they have a ipr ptab 37 CFR § 42.12 (sanction against misleading or frivolous arguments) – This abuse is exactly what the PTAB turns a blind eye to and this is the most damaging part of the PTAB and AIA reviews.

Every PGR/IPR I’ve faced have all relied on these misleading and frivolous arguments. Even when the PTAB board has to waste time and resources on denying institutions on these harassing petitions, there’s never any discipline for attempting to deceive the board as per ipr ptab 37 CFR § 42.12.

So harassment and frivolous misstatements, outright lying about facts clearly laid out in the prior art disclosures… skipping around prior art to “puzzle” together self-serving arguments are all mostly ignored by the PTAB and the clear violation of 37 CFR § 42.12 is never invoked. You can’t find any PTAB rulings or even District Court rulings on record that address the mass harassment going on in the PTAB under 37 CFR § 42.12.

I am a professional solutions finder, problem solver.. and with the PTAB, its simply their blind eye to 37 CFR § 42.12.

As long as 37 CFR § 42.12 is ignored and petitioners are allowed to make stark misstatements, mis-construment of clear prior art disclosed facts, and hiding factual lies with constructive cropping of prior art disclosure padded with legal argument… THIS is the problem with the slanted PTAB practice…

It’s pretty much a Wild Wild West with no policing of 37 CFR § 42.12.

The lawmakers silently know this and the mass issue with 37 CFR § 42.12 doesn’t get addressed because they want to be able to “veto” a successful patent at will by accepting one of these 37 CFR § 42.12 violating arguments.
concerned
April 30, 2022 04:45 pm
B:

I hope the CAFC will not dodge both the definitions and the evidence arguments.

If you think the CAFC is dodging you on both issues, you could offer the CAFC an easy fallback solution:

Remand back to USPTO to address the mental step issue like the PTAB suggested, without conceding the mental step doctrine is even relevant on Alice, etc.

We could have easily done that PTAB recommendation if the evidence on record would ever be acknowledged by the USPTO, it required an order by the CAFC demanding the same. And of course, the evidence shows the process is not routine, not conventional and not well understood.

It is a shame the CAFC even had to get this matter. USPTO just look at the evidence and follow the law you said I met. That is what the first examiner wanted to do before he got replaced internally.
B
April 30, 2022 03:11 pm
@concerned

We know 100% the CAFC can’t provide definitions.

I’m wondering if oral argument will be such a sham as to ignore the issue during oral argument
Paul F Morgan
April 30, 2022 10:28 am
As a partial fix, if the actual defendants in patent suits were not blocked by Fintiv denials of their own IPR petitions, IPR trolls would not be able to cut and paste those petitions and file them to get settlement payoffs or stock manipulations.
Concerned
April 30, 2022 06:59 am
The CAFC probably will not define “inventive concept” and “significantly more” as there is no possible definition that will continue to allow capricious rejections.

However, we have destroyed every USPTO rejection from the two examiners so the PTAB switched theories to mental steps. And the PTAB asked for us to go back and duke it out with the examiner on mental steps and provide evidence.

This PTAB call for evidence is exactly the same 55 separate documents of evidence the USPTO has refused to acknowledge. The evidence (two university studies and other documents) shows the prior art could not physically solve the problem, the problem the USPTO/PTAB said I solved, how can my process be mental steps?

Even if we get no definitions from CAFC, there is due process violations if the evidence is not recognized, the very evidence the PTAB requested which was already on the Official Record. And B hammered them on refusing to address the evidence after the PTAB acknowledged evidence matters.

In my layperson opinion, this evidence argument allows the CAFC to punt the ball back to the USPTO, while side stepping the definitions question.

Really how many patent applications have evidence from every possible end user? The CAFC may never see another case like mine to even sweat the definitions argument in conjunction with an evidence argument.

So I am hoping for a remand back, B gets a victory, and I can get on with helping people with disabilities with the hope of never coming back to Crazyville, USA (patent world.)
B
April 29, 2022 07:40 pm
@Pro Say “If B can’t convince the panel to do the right thing, no one can.”

Thanks for that bit of pressure – sheeez. I’m giving this my best, buuut . . . do you expect the CAFC to openly admit that they’ve spent the last decade cluelessly violating due process?

I’ll have an article written (hopefully published) soon after oral hearing – assuming I’m not hiding in my closet in the fetal position

BTW, I mocked the Solicitor endlessly in my Blue Brief saying they couldn’t define “inventive concept” or give a single limiting principle as to what “significantly more” means – and I mocked them again in my Reply Brief after the Solicitor refused to touch those issues. Beyond predictable, as I told concerned months beforehand.

That said, without doubt the CAFC would rather hold steaming hot smelly poo (from monkeys on a high-protein diet) in their bare hands while dancing to Klezmer than answer these questions. It
s a government thing.

Here’s my questions to everyone seeing this, and please let all my best critics and my worst critics answer:

1) What is the likelihood that a single CAFC judge will ask the Solicitor to define these terms during oral argument?

2) What is the likelihood that the CAFC will address these terms in a written decision?

———————

Fast forward to the year 10191 A.G.

RMGHM: “Many men have tried to get useful answers from the CAFC”
PA, esq: “They tried and failed?”
RMGHM: “They tried and were Rule-36’ed”
RMGHM: “Now stick your hand in the box”
PA, esq: “What’s in the box?”
RMGHM: “Icy cold beer”
PA, esq: “Beer!?! Why beer?”
RMGHM: “You’re going to need beer after oral argument. Trust me!”
PA, esq: “I see the truth of it.”
Anonymous
April 29, 2022 02:29 pm
If defendents in lawsuits in W.D. TX were not being denied the right to hAVE their own IPRs by Fintiv refusals there would be far less such IPR Petitions for such IPR Trolls to copy and file themselves to get settlement payoffs, stock price changes, or whatever.
concerned
April 29, 2022 12:17 pm
Pro Say:

Thank you for your well wishes! And I agree about “B”‘s ability, proud to have him!

Rule 36- An entry stating that all the legal issues were addressed when none of the issues were addressed. The inventor’s evidence never addressed, no evidence offered by PTAB/USPTO, the definitions for added words to law never defined, the case law never specified, or how a solution that cannot be done physically by experts can somehow be done mentally.

The fact you even mentioned a Rule 36, and that the same is even possible, speaks volumes of how the patent system is in serious jeopardy.
Pro Say
April 29, 2022 10:40 am
concerned — your battle is honorable, your cause is just.

One of two results are likely: Either the CAFC does the good and right thing by overturning the PTAB Death Squad’s wrong-headed, factually-and-legally-off-the-rails decision, or — with the shameful support of the Solicitor who knows only too well the PTAB got it wrong (and therefore should have refused support it) — will bail out and issue yet another unjustified, shameful, justice-be-damned Rule 36 affirmance.

If B can’t convince the panel to do the right thing, no one can.

Best wishes my friend.
concerned
April 29, 2022 06:03 am
Does the PTAB even read the Official Record? The PTAB injected their own new rejection of “mental steps” on my prosecution.

The two examiners I had did not bring forth such a ridiculous rejection of “mental steps” as the examiners knew the Official Record which included two university studies. If experts with 25 years and 35 years of on-hands experience could not make the prior art solve the problem in their university studies, how can my alleged “mental steps” solve the problem that the USPTO and PTAB conceded I solved? And the PTAB conceded I solved the problem with the words passed by Congress in their everyday meaning. However, code words and unspecified case law are their rejection arguments.

This coming Thursday are my CAFC oral arguments, which I can view via YouTube. I want to watch the Solicitor keep a straight face advancing their arguments that applicant’s 55 separate documents of evidence does not matter, the PTAB and USPTO need no evidence (not even one iota of evidence) and undefined words may be added to the law using unspecified cases.

It is going to take Director Vidal more than a month to explain the actions of the PTAB, which the preceding statement are my code words.
Pro Say
April 28, 2022 09:12 pm
Thank you for taking this innovation-critical matter up Senators.

The law needs to be changed to no standing / haven’t been sued = no IPR or PGR for you.

These interlopers (including other bad actors like Unified Patents) need to be stopped.
Josh Malone
April 28, 2022 05:31 pm
Still crickets from USPTO and U.S. Senate on large corporations weaponizing PTAB to steal technology from small inventors. It’s like we don’t even exist. The “stakeholders” include NPEs, big tech, big pharma, and big law — but not inventors.

usinventor.org/inventors
Anon
April 28, 2022 02:53 pm
IpAdvocate, but your point would make it seem like Congress not requiring standing to file an IPR was an oversight.

It most definitely was NOT so.
IpAdvocate
April 28, 2022 12:33 pm
All nonsense and shenanigans resulting from Congress not requiring standing to file an IPR.
Anon
April 28, 2022 10:44 am
Tillis and Hirono would be better advised to “look within” as opposed to leaning on the patent office.

It is Congress that has the power to do anything of lasting substance.