Posts Tagged: "IPR"

The stark reality of how government operates leaves us with a patent system that will be perpetually on the brink. Giant corporations have become effectively insulated from any consequences associated with stealing patented innovations, yet they continually want more and more help from Congress, which they dress up and roll out as “reform.” Even if they fail this time these companies will return, with more lobbyists and special interest groups demagoguing innovators as inherently evil, Satan practically. Rather than recognize the critical role patents play in the innovation ecosystem and in the U.S. economy, Congress is poised to flush the patent system down the drain because there are a handful of giant tech corporations that believe they would benefit.

I will moderate what should be a lively discussion on the PTAB and inter partes review. I will be joined by Erich Spangenberg, advisor to Kyle Bass and the person some have described as “the most notorious patent troll in America.” Also joining me will be Q. Todd Dickinson, former Director of the United States Patent and Trademark Office and current partner at Novak, Druce. Among other things we will discuss: (1) What will become of the Kyle Bass IPR petitions? (2) USPTO proposed rule changes and pilot programs (3)
Is Congress likely to legislatively reform IPRs?

The Federal Circuit held that the Board correctly placed the burden on Dynamic to prove that Raymond was entitled to the filing date of its provisional application under § 119(e)(1). As the petitioner, Dynamic had the ultimate burden of persuasion to prove unpatentability by a preponderance of the evidence. As for the burden of production, Dynamic satisfied its initial burden by arguing that the claims were anticipated by Raymond under § 102(e)(2). However, this burden then shifted back to Dynamic when the patent owner provided evidence that the claimed invention was reduced to practice before Raymond’s filing date. The burden was then on Dynamic to prove that Raymond was entitled to an earlier effective date.

The PTAB said that the full pilot study had not been made of record, which apparently also meant to the Board that the available description of the pilot study (described in the Kappos reference) was somehow not prior art. This reasoning, if you can call it that given that it was provided in only two short sentences, is extremely troubling. Clearly, the publication of a description of the pilot study would in and of itself be a publication that could be relied upon even if the entirety of the report was not available. Frankly, not considering a published description to be prior art flies in the face of volumes of Federal Circuit decisions on what it means to be a publication. The Kappos reference was a publication and to pretend that something described in that publication is not prior art is unbecoming the dignity of the Board.

In siding with the patent owner the PTAB explained that the petitioner insufficiently made a case that the claimed invention was obvious. A proper obviousness argument must articulate some rational underpinning to support a legal conclusion of obviousness. Unfortunately for Volkswagen, the PTAB saw only conclusions and impermissible hindsight in the IPR Petition. Ultimately, the PTAB was not persuaded that the Petition demonstrated a reasonable likelihood that Petitioner would prevail.

Presently the USPTO has a panel of three APJs decide whether to institute a trial, and then normally has the same three-APJ panel conduct the trial, if instituted. Under the proposed pilot program the single APJ making the IPR institution decision would be on the panel conducting the IPR trial, joined by two other APJs not associated with the IPR institution decision. Regardless of efficiencies, having a single APJ make institution determinations is fraught with due process concerns because decision whether to institute an inter partes review is not appealable.

The USPTO declined to initiate an inter partes review of two patents owned by Acorda Therapeutics, Inc. Acorda patents were challenged by the Coalition for Affordable Drugs, LLC, the entity formed by billionaire hedge fund manager Kyle Bass. I have to wonder whether this decision represents a shift in the worldview of the PTAB or whether they sought out a reason to deny the petition because it was filed by Kyle Bass. Unfortunately, I suspect these two denials have everything to do with who was behind the challenge and little to do with the merits of the challenge.

USPTO proposed rule changes would amend the existing rules relating to trial practice for inter partes review (IPR), post-grant review (PGR), the transitional program for covered business method patents (CBM), and derivation proceedings. By in large, the Office decided to stick with BRI, but not when the challenged patent will soon expire. The USPTO also adopted the comments from those who expressed satisfaction with the Board’s current rules and practices for motions to amend, which means there will be a right to file a motion to amend but no right to amend if these proposed rules go final.

According to Celgene, the Kyle Bass strategy of shorting a stock and filing an inter partes review challenge is an abuse of the process and not what post grant procedures were designed to accomplish. In a filing seeking sanctions filed with the Patent Trial and Appeal Board (PTAB) at the United States Patent and Trademark Office (USPTO), Celgene argues that the financial motivation for the IPR filing makes the filings by Bass’ Coalition for Affordable Drugs sanctionable. Bass calls this theory “curious,” pointing out that “at the heart of nearly every patent and nearly every IPR, the motivation is profit.”

Innovation is the lifeblood of a prosperous economy. Sound patent policy, which encourages the nexus between risk and ideas (especially for small entrepreneurs), makes invention profitable. The U.S. patent system enables that dream by protecting the market an invention creates long enough for the inventor to gain a toehold against competition, and by creating a property right capable of attracting critical investment to bring the invention to market and grow the business. Don’t let H.R. 9 or S.1137 kill this can do American spirit of innovation.

The controversy swirling around the Trans-Pacific Partnership (TPP) Trade Agreement sheds light on two critically important but divisive issues: international trade and intellectual property protection for pharmaceuticals. One of the most significant sticking points in the negotiations is the issue of intellectual property protection for pharmaceuticals, specifically data exclusivity. Data exclusivity is a means of correcting a free-riding market failure, providing the innovative firms with a limited period of time in which data from clinical trials and other required testing cannot be used by competing firms to secure market access.

Greenwood and Castellani will have two major problems as they seek relief. First, the IPR provisions do not include a standing requirement, which means that anyone can bring an IPR for any reason. The second problem is potentially more challenging. An IPR fix would create a so-called scoring problem with the Congressional Budget Office (CBO). What this means is that if this relief were provided for the biotech and pharmaceutical industries, as desired by Goodlatte and Castellani, it will cost the federal government money and increase the deficit unless it is offset.

Everybody has to be careful because you’re right if we undermine our patent system that is the only thing that allows America to remain strong competitively because China they just have labor rates that are a fraction of ours. We couldn’t possibly make products as cheaply as China. We need to make sure that Congress isn’t hearing so much about how bad the patent system is that they without intention undermine it in significant part and then hurt our competitive advantage against China. I mean that’s all possible. I agree. I share that concern. Are we going too far?

In three related decisions (most recently including a denial of rehearing en banc by a badly divided 6-5 decision issued concurrently with reissuance of the earlier panel decision) titled In re Cuozzo Speed Technologies, the Federal Circuit has held: (1) claim construction in IPR proceedings is governed by the prosecution standard of “broadest reasonable interpretation,” rather than the adjudicatory standard applied in the district courts (i.e., claim terms have their “ordinary and customary meaning” per the 2004 Federal Circuit decision of Phillips v. AHW Corp.); and (2) the Federal Circuit lacks appellate jurisdiction to review the PTAB’s decision to institute an IPR proceeding. Whether the AIA permits appellate review of improperly instituted IPR proceedings, the Administrative Procedures Act clearly permits such appellate review.

Bill Cosby quipped ‘I brought you in this world, and I can take you out.’ The Patent Office makes similar arguments in court defending inter partes review. In a filing by the United States Patent and Trademark Office on June 26, 2015, in my clients’ case asserting the unconstitutionality of inter partes review, the Patent Office writes: “Because Congress may authorize the PTO to issue patents in the first instance, Congress may equally authorize the PTO to reconsider its patentability decisions and to correct its mistakes.”