Posts Tagged: "IPR"

KUNIN: ”But what is the one thing that can be a break the bank issue? What if the patent owner asserts eight patents against you in a litigation. Can you pick and choose which are the best patents among the eight to challenge? Or are you going to have to file and pay for eight IPRs? At what particular point does it actually become a financial burden for you to go after every asserted patent against you in that litigation in separate IPRs? Either you can try to strategically determine which are the patents which are most harmful to you and most vulnerable and go after them in IPRs, or try to go after all of them in IPRs. But if you go after all of them, you already explained how expensive it is, all right? So let’s assume for argument sake it’s a fairly complex proceeding and it’s costing $300,000 per IPR. So $300,000 times eight is the total cost. What’s the cost of the litigation in defending against all the asserted patents?”

Over the past few months, a groundswell of voices in the U.S. business community and U.S. Government has arisen to express frustration with India’s IPR policies. In May, USTR’s annual Special 301 Report highlighted India for the 24th consecutive year, citing growing challenges to IPR protection which raise “serious questions regarding the future condition of the innovation climate in India across multiple sectors and disciplines.” In June, the Alliance for Fair Trade with India was launched by over a dozen leading U.S. business associations, including the National Association of Manufacturers and the U.S. Chamber of Commerce’s Global Intellectual Property Center, to bring attention to India’s discriminatory trade practices, including the erosion of IPR in India. In July, Vice President Joe Biden cited IPR protection as an obstacle to expanded U.S.-India trade. Following a hearing on how India’s industrial policies are hurting U.S. companies, House Energy & Commerce Trade Subcommittee Chair Lee Terry (R-NE) introduced legislation in September to block duty-free access to U.S. markets for countries without adequate protection for intellectual property.

When a patent is challenged by an IPR the challenge must be taken very seriously. Patent Office statistics for FY 2013 and FY 2014 through January 31, 2014, show that there have been a total of 361 decisions on IPR petitions, with 288 trials instituted. There have been 11 cases that have been joined and only 62 petitions denied, which corresponds with an 82.8% IPR petition grant rate. Having said this, the IPR grant rate during FY 2013 was 87.2%, while so far during FY 2014 the IPR grate rate has been 77.2%. This drop in IPR granting rate, while statistically relevant, should not lull patent owners into a false sense of security.

The “new normal” created by the PTAB has drastically altered the patent assertion landscape. Simply stated, when a patent owner is notified that a patent they own is being brought into a post grant proceeding the statistics, if not the gravity of the threat, suggest that it must be taken seriously immediately and competent representation must be obtained quickly. The burdens are different at the PTAB than they would be in the Federal District Court. Specifically, the PTAB will employ the standard USPTO technique of giving patent claims their broadest reasonable interpretation, which will make it easier for a claim to be determined to overlap with the prior art. Furthermore, in litigation patent claims are presumed valid and the defendant must prove by clear and convincing evidence that a claim is invalid for one or more reasons.

There is a time limit for preventing certain petitioners from initiating an IPR proceeding against a patent, and there is currently a petition for writ of mandamus to the Federal Circuit as to the scope of petitioners covered by the time bar. This issue arises because 35 U.S.C. §§ 315(b). 35 U.S.C. §§ 315(b) states that “[a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” Unfortunately, the critical question regarding who exactly is covered by “privy of the petitioner” is not defined by the statute and is subject to great debate.

South Africa currently faces a stark choice between protecting and incentivizing innovation and stymying life-saving therapeutic breakthroughs. Policymakers must choose between shoring up the protections that encourage the development of medicines that enhance and extend life, or sabotaging innovation through the weakening of the patent system. South Africa is purported to have the highest number of people living with HIV in the world, people who have the most to gain from breakthrough therapies. Innovative medicines have contributed to the 85 percent decline in the death rate from HIV/AIDS since 1995. The benefits of future medicines will become a reality only if these medicines are incentivized and developed. Strong, effective IP protection is essential to that process.

Nearly 44% of all patents on which petitions were filed against are patents being held by large entities. While this is a significant increase from the earliest days of IPR where nearly 90% of all patent challenges were waged against patent owned by small entities, small entities are still carrying a massively disproportionate load of the challenges particularly when one takes into account that at any time they comprise only 20% of all the patents in force… the increase in IPR’s against patents held by large entities appears to be almost entirely due to large entities challenging other large entities, with little increased participation by small entities in the IPR process being noted.

As evidenced by the numbers above, the Board takes as many cases as they reasonably can within the statute. If there’s a good case to be made that a case could be litigated in PTAB, it’s usually accepted. As of last month, the office has instituted 192 trials and denied 32 trials for an overall institution rate of 85.7 percent, according to a statistics report compiled by the PTO. One example of this is Intellectual Venture Management, LLC v. XILINX, Inc., IPR2012-00018, Paper 12 (P.T.A.B. Jan. 24, 2013). Here, XILINX argued that IVM’s petition should be denied, because IVM failed to identify all the real parties in interest as required by 37 C.F.R. § 42.8(b)(1). XILINX pointed to another case in California where IVM was listed with 5 other defendants in a suit that had 63 entities as evidence of IVM’s failure. The Board ruled in IVM’s favor, saying that XINLINX had not given any argument for why the civil local rules of the Northern District of California are analogous to the Board’s rule on real parties in interest or for specifically why any of the 63 entities were real parties of interest.

There is a battle cry against abusive litigants in the patent industry. Among the tactics suggested is a “loser pays” system to try to mirror Europe, where this type of abuse is minimal. The Congressional Research Service presents that 92% of companies who assert but do not make products (over broadly and derisively called “trolls”) lose litigation that reaches judgment on the merits… Defendants can call upon the PTO to trigger up front fee shifting for the patent owner and an accelerated PTO determination on the validity, even potentially before the court analyzes it. But there’s more. IPRs and CBMs can be used to drive settlement, either before or after filing. Pre-filing, a drafted petition can be shown to the patent owner as a basis to settle.

Innovation provides new therapies and breakthrough treatments that extend and enhance life. The scientific and financial resources required for these advances are an investment worth making and an important precedent for global health. Patents encourage those innovations, making cutting-edge treatments a reality. Patents give innovation life. Current efforts to amend existing intellectual property legislation to “fix” the patent system will only undermine the incentives that encourage innovation. All innovation, both breakthrough discoveries and incremental improvements, is valuable and should be protected and rewarded. India, Brazil, South Africa and other emerging economies should take note. Their proposed changes, aimed at weakening intellectual property rights protections, are misguided and potentially very damaging to public health.

In a recent article in the New England Journal of Medicine, Amy Kapczynski argues that the Supreme Court of India’s strict interpretation of the country’s new patent law provides a model to be followed by other countries. Kapczynski applauds this “Patent Law 2.0” and argues that it will enhance access to medicines and may improve pharmaceutical innovation. Unfortunately she is wrong on both counts. Section 3(d) of the Indian Patent Act forbids the patenting of new forms of known drugs unless the new form significantly enhances efficacy and yields therapeutic benefits. Accordingly, much of the incremental innovation that is done on existing treatments will no longer be patentable under the so-called Patent Law 2.0. These are not issues considered by Kapczynski. Astonishingly, she interprets the impact of this law as follows, “Provisions like Section 3(d) can help reverse this effect [prioritizing incremental innovation over breakthrough drug discovery] and encourage companies to undertake the riskier and more expensive research that is required to generate breakthrough drugs.” Her analysis is strikingly naïve. It is laughable to think that weaker intellectual property rights (IPR) protection will incentivize innovative pharmaceutical firms to expend more resources and take on greater risk.

“You’re going to get a claim construction early from the PTAB. In fact, one of the interesting results with the respect to a review of the decisions to initiate inter parted review or covered business method challenges is that the PTAB lays out for you its claim construction findings and its reasons. This may have a tremendous influence on the concurrent litigation and its claim construction. Obviously, the patent owner’s going to say certain things with respect to how the claims should be construed in its patent owner response, but nevertheless such statements may result in a clear disavowel of claim scope. Such admissions will have an impact on the concurrent litigation. Conceptually there are many strategic and tactical issues that are of general applicability to both the litigation and administrative trial.”

During a recent trip organized by AIPLA’s Special Committee on Intellectual Property Practice in Israel, I had the pleasure of meeting the enthusiastic and tireless Asa Kling, who is the Director of the Israel Patent Office and Commissioner of Patents, Trademarks & Designs. Since stepping into the role in 2011, he has focused on ensuring that Israel’s patent office matches Israel’s status as one of the world’s foremost technological innovators. After the trip, I had the honor of asking Commissioner Kling a few questions over the phone.

In a 1972 court decision, United States Supreme Court Justice Stewart wrote: “Property does not have rights. People have rights.” Accordingly, Blacks must be diligent in making sure that they are aware of their intellectual property rights, like any other civil right, and seek IP legal counsel to secure and enforce these rights for economic gain, the avoidance of economic exploitation and the creation of wealth in the new millennium and beyond. That will only be achieved with the help of those (of all races and other categories that divide us) who work within the IP community. Until then, in a society where innovation is the key to individual wealth and national economic prosperity and where IP attorneys who represent innovators should be the “next generation civil rights lawyer,” I (and many like me) will have failed to live up to my mother’s dream.