Fixing the PTAB: 10 Things the USPTO Can Do to Improve the PTAB | IPWatchdog Unleashed

This week on IPWatchdog Unleashed, I speak with my long-time friend Jim Carmichael, who is a former Administrative Patent Judge and the founder of Carmichael IP. Jim was on the Board of Patent Appeals and Interferences at the United States Patent and Trademark Office (USPTO), which was the predecessor to the Patent Trial and Appeal Board (PTAB). Today, Jim and his firm exclusively represent patent owners in post-grant proceedings, including inter partes review (IPR), post grant review (PGR) and reexamination proceedings. In fact, year in and year out, Carmichael IP ranks first or second in terms of win-rate on behalf of patent owners at the PTAB.

Over the years we have had many conversations about the patent system, about patent litigation, and of course about the PTAB, which is Jim’s particular area of interest and specialization. The purpose of this conversation was to attempt to capture these conversations and, in light of where the industry is today, to create a list of things that we think the Patent Office can and should do to create a better, fairer PTAB process.

In this extended 75-minute conversation, Carmichael discusses ten ways the USPTO could and should fix the PTAB.

1. Fully reclaim institution authority. The USPTO has recently decided to bifurcate the IPR and PGR institution decision between discretionary denial considerations and the merits (i.e., patentability). The relevant statutes give the Director the authority to decide whether to institute or not, and while Acting Director Coke Stewart has clawed back the authority to make decisions regarding whether to exercise discretion to deny petitions, Carmichael says the entirety of the institution decision should reside with the Director, not the PTAB panel that will ultimately decide the case on the merits if the challenges are instituted.
2. Eliminate expert witnesses. The statute says that IPR and PGR are to be decided based on patents and printed publications, but the PTAB heavily relies on expert witnesses with respect to both institution decisions and decisions on the merits. In some cases, the PTAB has allowed more than a dozen experts to testify for a petitioner in a single proceeding. If the PTAB believes an expert would be helpful, it would make more sense to consult with an experienced patent examiner in the field of the invention rather than a paid consultant, or a dozen paid consultants.
3. Eliminate supplemental preliminary briefing. According to the U.S. Supreme Court, the IPR petition or the PGR petition is supposed to set the boundaries for the challenge. But petitioners are routinely granted permission to file supplemental briefs to bolster weak or inadequate petitions. This practice needs to stop.
4. Presume nexus for secondary considerations. The PTAB is largely an obviousness tribunal, with more than 90% of decisions turning on the question of whether the claimed invention is obvious. One of the four factors that must be considered when making an obviousness determination is whether there is objective indicia of non-obviousness, which is otherwise known as secondary considerations. If petitioners have the burden, which they do based on the explicit statutory language, why should the PTAB require patent owners to prove the existence of secondary considerations? Petitioners rarely, if ever, address secondary considerations in their petitions and instead wait until the patent owner has raised the issue in a response. Petitioners are then given supplemental briefing to address the issue, which they ignored previously. If petitioners ignore secondary considerations in the petition, why should they be able to argue the lack of secondary considerations later? Why should an element the petitioners ignore ever be weighed in favor of the petitioner? The patent is presumed valid and patent owners do not bear the burden.
5. When evaluating 325(d), the Office should credit 1449 and 892 forms. If the examiner considered a reference that makes up the foundation for an IPR or PGR challenge, that is supposed to weigh against institution. But oddly, the Office has never properly interpreted what it means for an examiner to “consider” prior art. Even prior art actually found by the examiner in a pre-examination search is not all treated as “considered” by the PTAB. The PTAB requires an examiner to have used the prior art for it to be “considered”, but it is well established as a matter of both law and fact that examiners consider far more than they actually use to reject claims. In fact, examiners often consider a multitude of references and discount them as being not material to patentability. These irrelevant references and patents are not used by the examiner, but they are most certainly considered by the examiner. The Office can and should easily fix what it means to be “considered.”
6. Terminate VLSI v. OpenSky. This case was a real mess. In a fight over the validity of claims of U.S. Patent No. 7,523,373, attorneys for OpenSky offered in writing to secretly throw an IPR so the patent owner would win—if they were paid off. To accomplish this, OpenSky proposed they would refuse to pay their expert, which would guarantee that the expert does not appear for the scheduled deposition. After the expert was a no-show for the deposition, OpenSky would join the patent owner in a motion to dismiss, presumably based on the understanding that without an expert, OpenSky could not prevail. Director Vidal sanctioned OpenSky but allowed the IPR to continue. Intel, who was time-barred from filing their own IPR was allowed to proceed in the place of OpenSky. The proper remedy for this egregious and unethical behavior was the termination of the IPR altogether. The case is currently on appeal at the Federal Circuit and the USPTO should either (1) unilaterally terminate the IPR; or (2) confess to the Federal Circuit that Director Vidal was mistaken when she allowed the case to continue.
7. Eliminate reliance on common knowledge. The statute requires only patents and printed publications to be the basis for invalidating claims in an IPR or PGR. Common knowledge known to the person of ordinary skill in the art is not a patent or printed publication, but the PTAB relies on this amorphous, non-statutory rationale for invalidating claims all the time. This is inappropriate.
8. Real party in interest. When a membership organization, such as RPX or Unified Patents, files an IPR or PGR they should be required to disclose their membership. The statute says that parties who lose are prevented from challenging claims again at the USPTO or in another proceeding in another tribunal. The PTAB requires petitioners to assert that they are not estopped from challenging, but petitioners are not required to provide any evidence to corroborate the lack of estoppel. This is particularly ironic given these membership organizations and their members demand transparency with respect to patent litigation funding while carefully hiding the names of their members.
9. Require petitioners to justify multiple petitions and/or reexams. Currently, a petitioner must justify multiple or serial petitions filed by the same party. The USPTO should expand this requirement to (1) reexams and (2) other parties. Acting Director Stewart added other parties to discretionary denial factors but so far has not required petitioners to file a justification paper and did not include reexams. The use of reexaminations after the PTAB has already ruled in favor of a patent owner is a growing and concerning problem and warrants special justification.
10. Settled expectations should mean explaining late challenges. When Acting Director Coke Stewart brought the discretionary denial decision-making back to the Director’s Office, one of the factors she announced the Office would consider are the settled expectations of the parties. One of the things this factor should consider is whether the petitioner could have reasonably located the references relied upon in the petition to submit to the examiner by way of third-party submission before the patent issues, or in the nine months immediately after the patent was granted (making a PGR possible). If a petitioner knew or could have earlier found the references relied upon in an IPR petition, the petitioner should have to explain why a late challenge to the patent is appropriate.

In addition to these ten fixes the Office can itself undertake, Carmichael also mentions several things Congress can do, and why it is important for the Trump Administration to appoint judges to the Federal Circuit who will show respect to granted patents and patent owners.

You can listen to my conversation with Jim Carmichael by downloading the podcast wherever you normally access podcasts, or by visiting IPWatchdog Unleashed on Buzzsprout.

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