Posts Tagged: "IPR"

In late June, the Support Technology and Research for Our Nation’s Growth and Economic Resilience (STRONGER) Patents Act of 2017 was introduced into the U.S. Senate by co-sponsors Sen. Chris Coons (D-DE), Sen. Tom Cotton (R-AZ), Sen. Dick Durbin (D-IL) and Sen. Mazie Hirono (D-HI). The bill’s purpose is “to strengthen the position of the United States as the world’s leading innovator by amending title 35, United States Code, to protect the property rights of the inventors that grow the country’s economy.”

So obviously the patent claims VirnetX has used to pursue infringers such as Apple and Microsoft are not the weak patents that opponents of the patent system claim are the scourge of the system. Well — not so fast! Just because an Article III federal district court confirms the validity of a patent doesn’t mean anything anymore. Indeed, federal courts have become subordinate to the PTAB, which is as ridiculous as it sounds but sadly true. A patent is not valid until an Article I executive tribunal says so, and absolutely no deference is paid to Article III judges of the United States federal courts.

Partial institutions lessen the value of estoppel because the petitioner avoids estoppel on claims that were challenged but not instituted. The PTAB never issues a final written decision for these challenged-but-not-instituted claims. And because estoppel only applies to claims receiving a final written decision, these non-instituted claims escape the estoppel statute See, e.g., Shaw Industries Group v. Automated Creed Systems, 817 F.3d 1293, 1300 (Fed. Cir. 2016). In effect, the PTAB’s current practice saves a petitioner from estoppel on claims it had little chance of invalidating. Thus, under the current practice, a petitioner currently only risks estoppel on claims that it stands a good chance of invalidating. But if the Supreme Court decides as expected, estoppel will attach to all challenged claims of an instituted IPR. Final written decisions will more often include claims found valid, and a petitioner will no longer be able to avoid estoppel for some claims by relying on the PTAB to sort strong challenges from weak ones at the institution stage.

Outdry appealed from a Board determination that its patent directed to waterproofing leather was invalid as obvious in an inter partes review (IPR) proceeding. Outdry challenged the Board’s claim construction and motivation to combine findings. The Federal Circuit affirmed.

The Court warned that by holding that EmeraChem did not have adequate notice or opportunity to respond, it was not holding that the Board is constricted in its final written decision to citing only the portions of a reference cited in its Institution Decision. “[W]ord-for-word parity between the institution and final written decisions” is not required; the question is whether the Board provided adequate notice and opportunity to respond… The Board must give a patent owner sufficient notice and opportunity to respond to its reliance on a particular use of prior art against particular claims. A general statement that lists all challenged claims and all asserted prior art is not sufficient notice of any and all specific combinations thereof which may arise.

More than six months have passed since the en banc rehearing in Aqua Products without a decision from the Federal Circuit. It could be an indication that the court is working on handing down a ruling that would greatly alter PTAB practices relating to motions to amend. In the alternative, it could be an indication that there’s a split in opinion and Federal Circuit is still making up its mind on the matter with multiple separate opinions being prepared and circulated. Interestingly, an article on In re: Aqua Products published last August by The National Law Review noted that, in its decision to grant Aqua’s petition for en banc rehearing, the Federal Circuit asked an additional question of law: who holds the burden for persuading PTAB or producing evidence to challenge the patentability of claims amended by a patent owner. That by itself could be an indication that Federal Circuit is interested in ruling in favor of patent owners in this case.

Howard further explained, however, that it is a mistake to think that characterizing IPR settlements as a “win” is the only way to look at it… In many of these settlements there will already be a finding by the PTAB that the claims are likely invalid, and even with a settlement that finding will linger long past the life of the proceeding. Furthermore, a patent remaining valid and therefore the case being won from the patent practitioner perspective is very different than how it would be perceived from the patent owner perspective. A patent owner who must give a no-cost license to infringers to keep a wounded patent which has been found to have claims that are likely infringed is not a win. Therefore, any objective thinking, sane, rational person should appreciate that IPR settlements are not a win from the patent owner perspective, which is exactly what we’ve said all along.

In Credit Acceptance Corp. v. Westlake Servs. the Federal Circuit affirmed a decision of the Patent Trial and Appeal Board (“Board”) in a Covered Business Method (“CBM”) review proceeding, agreeing with the Board that petitioner Westlake was not estopped from maintaining a CBM review of the challenged claims and confirming that the challenged claims are unpatentable under 35 U.S.C. § 101… Dissenting-in-part, Judge Mayer would have held that the Court does not have jurisdiction to review a decision by the Board regarding a motion to terminate a post-grant review proceeding as barred by § 325(e)(1).

Unified Patents challenges patents by filing inter partes review proceedings. They tout on their website that they are “the only entity that challenges bad patents and never pays.” They also explain that they do settle post grant challenges provided the settlement will remain confidential and further provided the patent owner agrees to provide a no-cost license… How is a no-cost license given to an IPR petitioner anything other than complete and total capitulation? Complete and total capitulation in the real world is not a victory for the patent owner; it is an unequivocal loss.

At least 84 percent of patents reaching a final written decision in a PTAB validity challenge are adjudicated to have at least one invalid claim (usually many more than one claim), with 69 percent having all claims invalid. Add settlements, which are virtually certain to be unfavorable to patent owners (especially post-institution, when the petitioner has much more leverage), and at least 92 percent of patents challenged are defective. Given that these are also patents which have been pre-vetted by owners for licensing and enforcement purposes, that suggests that either PTAB APJs are being too aggressive in invalidating patents or that the examiners are producing incredibly poor quality patents through extremely poor quality patent prosecution.

Russ: Slifer: ”Clearly the Supreme Court is not done with its intellectual property obsession. By granting certiorari in Oil States vs. Greene’s Energy Group, et al. the Court has agreed to address the questions of constitutionality of post grant reviews, the amendment process implemented by the USPTO, and how the USPTO applies the broadest reasonable interpretation to claims. Some commentators believe that this is a good sign for patent owners and the end of IPR’s. I don’t anticipate, however, that the Court will shift in a pro-patent direction and gut a cornerstone of the AIA. This will most likely be one of the rare cases where the Supreme Court substantially affirms the CAFC.”

The Supreme Court granted certiorari only on the first question, whether inter partes review violates the U.S. Constitution by extinguishing private property rights through a non-Article III forum without a jury… The grant of certiorari in this case is particularly noteworthy given that the United States was asked by the Supreme Court for its views and opined in its brief that the petition should be denied… Over the last several years 8 of the 9 Supreme Court Justices have signed on to an opinion that has recognized that a patent confers either an exclusive or valuable property right.

The website link provided by the USPTO contains no rules of judicial conduct or codes of judicial conduct, which means that the USPTO has indirectly confirmed that there are no rules or codes of judicial conduct that apply to Administrative Patent Judges (APJs) of the Patent Trial and Appeal Board (PTAB). To call this revelation by the USPTO shocking is an understatement. 37 CFR 11.803 clearly contemplates the existence of rules of judicial conduct applicable to APJs, which obviously do not exist. The lack of any judicial rules of conduct or ethical rules specifically tailored for judges on the PTAB is highly informative, and explains why it was possible for at least two PTAB judges to decide post grant challenges filed by former patent defense clients.

Under the current PTAB system, irreparable harm is occurring to patent holders. Conversely, virtually no harm will be done to petitioners by putting on the brakes. Charging ahead in light of the conflict between examination and post grant review will only continue to damage patent holders. The probability of substantial error is extremely high under the circumstances. Improperly cancelled claims will be very difficult to correct, but delaying adjudication by a few months carries no risk… The USPTO should suspend all PTAB proceedings immediately. This can be accomplished by the USPTO invoking §316(a)(11) and §326(a)(11) to extend all pending proceedings by 6 months, which will allow time necessary for the government to implement procedural reforms to stabilize the system.

The nation’s highest court will once again address issues surrounding the controversial Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO). The case it will decide is SAS Institute, Inc. v. Lee, which will be argued during the October 2017 term, and which will force the Court to again look at how the USPTO, and more specifically the PTAB, is implementing the post-grant patent validity trials created when Congressional passed of the America Invents Act (AIA) of 2011… As SAS Institute’s petition notes, the track record of the PTAB is clear. The PTAB believes that final written decisions need only to address certain challenged claims, not every challenged claim.