Posts Tagged: "IPR"

This year our panel has a diverse variety of wishes. We see the usual wishes relating to patent eligibility and the abstract idea exception, with a reference to a Moody Blue’s song to make the point. We also see wishes relating to inter partes review (IPR) and the biotech industry, and a wish for uniformity at the Federal Circuit. There is a wish for federal trade secret legislation to finally pass, and a reminder that elections matter, even for us in the intellectual property space, a topic that we will return to quite a lot during 2016 here at IPWatchdog.com. We also see several exasperated wishes, hoping for solutions to the real problems facing the industry rather than the same old tired cries for “reform” that would benefit only a handful of large entities while harming practically everyone else.

It is that time once again when we look back on the previous year in preparation to close the final chapter in order move fresh into the year ahead. 2015 was a busy year in the patent world, although change was not as cataclysmic as it was in 2013 when the United States became a first to file country or in 2014 when the Supreme Court issued the Alice v. CLS Bank decision. It was still an interesting year nevertheless. As I close out 2015, I’ve reviewed my patent articles and have come up with my own top 10 patent moments for 2015. They appear in chronological order as they happened throughout the year.

The Federal Circuit affirmed a patentee’s burden included showing patentability over prior art from the patent’s original prosecution history. Prolitec failed to show that its amended claim would still be patentable (non-obvious) over the combination of an original prior art reference and Benalikhoudja. Accordingly, the Court affirmed the Board’s finding of anticipation and obviousness. In her dissent, Judge Newman argued that the PTAB erred in denying Prolitec’s motion to amend, explaining the motion should have been granted because refusing to enter a proposed amendment that would resolve a dispositive aspect of claim breadth contradicted the America Invents Act.

The Patent Trial and Appeal Board (Board) cancelled the claims of the patent, finding them anticipated or obvious over several references. The Board construed “is connected” to mean that the computer be “active and online at registration,” even if the connection server’s database record was inaccurate, and the computer was no longer online. The Court reversed this construction, holding that the plain and ordinary meaning of the term “is connected” requires that the computer be connected to the network at the time the query is sent. The term “is” has a plain meaning, which requires concurrency. Where the claim language has a plain meaning that leaves no uncertainty, the specification generally cannot be used to infer a different meaning, absent clear redefinition or disavowal.

The Federal Circuit held that the written description requirement is met for negative claim limitations where the specification simply describes alternatives. In other words, the “reason to exclude” required by Santarus can be met without discussion of advantages of exclusion or disadvantages of inclusion. Further, alternative elements need not be explicitly described as alternatives, so long as the specification conveys to a person of skill in the art that those elements are, in fact, alternative or optional. Negative limitations are only unsupported where the specification provides no examples or suggestions that such limitations are alternative or optional.

Abraham Lincoln once called the patent system one of the three greatest advances in human history, along with the discovery of America and the printing press… The result is a patent system in crisis, which threatens our economic future. Small businesses received 30 percent of U.S. patents in 2000. Last year the number plummeted to 19.5 percent. Small companies undertake the risk and expense of developing breakthrough technologies that made us the most prosperous nation in history. When they lose confidence in the patent system the country will suffer.

The PTAB has seen more than triple the number of inter partes review (IPR) petitions—now the preferred way for a company accused of infringement in court to challenge a patent’s validity—than it projected when the challenge first became available in 2012. But the fact that proceedings can run simultaneously presents challenges.

Phil Johnson on IPR: “I think with hindsight we might say they made the mistake of relying on the Patent Office to promulgate regulations for fair proceedings for both patent owners and to challengers. And they expected, for example, that the same claim instruction standards would be used in IPRs are as used in the courts. They expected that when the law said that a patent owner could file a reply in the institution phase that it wouldn’t be told oh, no, you can’t include new evidence for that reply. They expected that other burdensome presumptions, including things like consideration of objective indicia of nonobvious would be treated the way it is in the courts, and so on. So in the end they expected that the outcome in IPRs would be approximately the same as in the courts and what we have seen is that that absolutely is not the case and, therefore, it’s not that — necessarily that the law was wrong, it’s that I don’t think pharma decisions and bio decisions have been promulgated properly.”

The early “death squad” hysteria persisted just long enough to catch the interest of hedge funds. The hedge funds saw an opportunity to utilize the PTAB to spook financial markets to their gain. The game plan involved establishing “short” positions in publically traded stocks that have their valuation closely tied to patents, as is the case in the Bio/Pharma sector. Given the PTAB’s early infamy, the bet was that the mere filing of an IPR would spook investors enough to move a stock price to the negative (i.e., quick profit for a short seller). Yet, as hedge funds targeting Bio/Pharma patents have quickly learned, gambling on patent challenges in the unpredictable arts is not a viable, long-term business model.

The NYIPLA asks the Court to grant the petition in order to make clear that judicial review is available when the PTO institutes an IPR proceeding and invalidates patent claims in violation of its statutory authority, and to determine the claim construction standard that the PTO should apply to determine patent validity. The NYIPLA explains that the Supreme Court’s review of both questions is critical at this juncture since to a large and increasing extent, IPRs are supplanting district court litigation as the forum for resolving issues of patent validity based on the prior art, and in proceedings below the Panel was split 2-1 with a vigorous dissent on both issues, and the Federal Circuit then split 6-5 in denying a petition for rehearing en banc.

I think it’s interesting to see how people present this as a bipartisan issue but that covers up the fact that actually there are some very clear splits within the parties themselves. A number of the conservative think tanks and interest groups have come out and come out very strongly against broad-based patent reform. But, if you look at some of the Republicans in the House and Senate who support legislation they have not really addressed that property right piece and have focused more on litigation reform and things like fee shifting which they feel need to be part of any strong reform package. So the politics is quite split and is actually quite nuanced which I’m not sure people always appreciate.

I understand that patent owners are upset at having the playing field leveled somewhat. They must feel like the rules of the game have changed, and, to be fair, they have to some extent. But a patent is not real property and it’s not an entitlement. It’s a temporary grant of exclusivity by the government in exchange for sharing one’s invention with the public, assuming that the invention is novel and non-obvious. If it turns out that the original patent issuance was wrong, i.e., someone else came up with the invention first, you have to give up that grant.

Covenant Not to Challenge clauses are common in patent licenses, including licenses that are part of post-litigation settlements. clause is seen as a benefit bargained for under a license agreement and constitutes part of the consideration obtained by the licensor for the license. The intended effect of such a clause is to allow the licensor to make an estoppel argument in the event that licensee does challenge the patent, in spite of its agreement not to do so. However, the PTAB thus concluded that without an express grant from Congress, it did not have the authority to recognize contractual estoppel as a bar to an inter partes review.

The ownership of ideas and creations are among the most valuable assets to any company. Businesses invest in these ideas and rights and use the value they create to help promote and grow business for years to come. Printer manufacturers, for example, invest heavily in new ink and toner technologies and realize a return over the life of the device through the sale of supplies and consumables. When third-party supplies manufacturers, particularly manufacturers of new build ‘cloned products’, violate IP rights and take products to market, they are effectively stealing from the original equipment manufacturer (OEM) – reducing the ability of the OEM to realize the full potential of their investment and, through their sale, securing financial benefit from the OEM who receives no compensation for this lost revenue. These organizations effectively take a ‘free ride’.

The first bit of good news for Bass came with respect to his IPR petition against Celgene Corporation. Celgene Corporation filed a motion for sanctions against the Coalition for Affordable Drugs on July 28, 2015. On September 25, 2015, the PTAB, in a decision authored by Administrative Patent Judge Michael Tierney, explained that the purpose of the America Invents Act (AIA) was to “encourage the filing of meritorious patentability challenges, by any person who is not the patent owner, in an effort to improve patent quality.” Given that Bass and the Coalition for Affordable Drugs did not own the patent in question the law allows these types of challenges. The PTAB also shot down the argument that financial motivation is at all relevant, explaining on some level financial motivation is what drives all IPR challenges.