Posts Tagged: "Patent Trial and Appeal Board"

Earlier today the Saint Regis Mohawk Tribe filed a Motion to Dismiss in six separate inter partes review (IPR) proceedings relating to the Allergan drug RESTASIS®. The RESTASIS® patents were recently all assigned by Allergan to the Tribe, with the Tribe granting back to Allergan an exclusive license… As the Motion to Dismiss points out, the petitioners can have an opportunity to challenge these RESTASIS® patents in federal district court. “The Tribe will not assert sovereign immunity in the Eastern District of Texas case,” the Motion to Dismiss reads. ” So dismissing this case does not deprive the Petitioners of an adequate remedy; it only deprives them of multiple bites at the same apple.”

Those now familiar with IPR proceedings will already have recognized how little resemblance current IPR proceedings have to what most supporters of the AIA envisioned upon its passage. In current practice, the role of the Director as an independent IPR gatekeeper never materialized because the USPTO’s implementing rules bypass the Director altogether, assigning the institution function to the PTAB, which in turn routinely assigns both the institution and final decisions to the same three judge panel. As a result, most of the safeguards against patent owner harassment were lost…. By failing to adopt the implementing rules needed to carry out the intent of the AIA, and by adopting other rules and procedures that are plainly skewed towards petitioners, the PTAB has intentionally tilted its IPR proceedings against patent owners. While this has been good for the PTAB, which has quadrupled in size, it was neither Congress’s intent nor that of most of AIA’s supporters to create an unfair IPR patent “killing field.”

The numbers are stark. As recently as 1990, individual inventors were granted 17 percent of all patents. By 2000, they received 12 percent and only 6.8 percent in 2010. In 2015, individual inventors were granted only 5.8 percent of all patents. In sum, if there is any example of a nation squandering its technological seed corn, this systematic weakening of U.S. patent protections for some “guy in the garage” is it. The great irony is that most of the people behind the screen in all this got their start in that same “garage.” They know this all too well, which is why they’re relieved to see the garage all but Closed for Business.

The Court found that the Board did not provide an adequate explanation for finding that the “30%” limitation was inherent in the reference, as a predicate for its holding of obviousness. Nevertheless, the Board “made the necessary underlying factual findings to support an obviousness determination.”  Specifically, the reference disclosed the same process for manufacturing electric cables, the steps did not differ in any material way, and there were no unexpected results. The Court also pointed to precedent that shifts the burden to the patentee. “[W]here all process limitations are expressly disclosed by the prior art reference, except for the functionally expressed limitation at issue, the PTO can require an applicant to prove that the subject matter shown to be in the prior art does not possess the characteristic relied on.”

I want to believe Congress ultimately sought to strengthen the U.S. patent system with the AIA by providing a mechanism to more easily remove a small percentage of granted patents that were being inappropriately used in litigation. Specifically, patents that were being asserted with claim constructions not contemplated when the patent was examined. After all, Congress had been heavily lobbied with the narrative that NPE’s had been stretching patents well beyond the four corners of the granted patent and hurting the integrity of the patent system.

Whether one celebrates or decries the PTAB, there can be little doubt that it has worked a profound effect on the value of American patents—and, concomitantly, on incentives to invest in research and development… Compared to their judicial counterparts, PTAB judges are biased in favor of invalidity. Personnel differences also explain a more disturbing phenomenon, mainly, that the Patent and Trademark Office seems to be at war with itself. Frequently, the PTAB invalidates claims based on prior art that examiners considered during initial prosecution. The only explanation for such discordant outcomes is that PTO examiners take a more pro-patent view of validity than the judges who make up the PTAB.

The PTO has increased the number of Board decisions as being precedential (so as to serve as a binding authority) by 36% within the last two years. With respect to the increase in precedential decisions: while a 36% increase is substantial, that translates into only an additional 10 precedential decisions – 2 ex parte appeals and 8 IPRs. The current total number of precedential decisions is 38, broken down into 27 ex parte appeals, 2 interferences, 8 IPRs and 1 CBM. Compare these numbers to the number of ex parte appeals and AIA petitions received in 2017 alone (10165 ex parte appeals, 1853 IPR petitions, 54 CBM petitions, and 40 post-grant review petitions).

In 2012, the American Invents Act established three new administrative procedures: post grant review (PGR), inter-partes review (IPR), and covered business method patent (CBM) review. In each of these proceedings, anyone may file a petition challenging the validity of an issued patent. Patent practitioners have long been trained to draft patents that survive litigation. It is no secret that most asserted patents now end up before the PTAB, and the PTAB tends to use different rules that favor the challenger. As we approach the five year anniversary of the PTAB, patent practitioners should reconsider long-held strategies. BRI and evidence standards adopted by the PTAB make surviving post-grant proceedings especially challenging. Pursue a narrowly-focused patent with clear and unambiguous terms, to avoid post-grant proceedings or survive them when instituted. A robust prosecution that addresses a range of issues, corrects Examiner’s errors, and places evidence on the record helps achieve the same goals.

As the challenge proceedings and the Patent Trial and Appeal Board mark their fifth anniversary, we should reflect on whether they have achieved their intended purpose. About a year ago I explained how inter partes review proceedings are no more a true alternative for litigation than the inter partes reexamination proceeding which they replaced and supposedly improved upon – nothing has happened since to change that view. Furthermore, a buffet of other meaty issues remains with respect to the post-grant challenge proceedings… I continue to support the original goals of the challenge proceedings and while changes in some areas are required, a wholesale restructuring of the procedures is not necessarily required. But I do look forward to changes that improve the balance between patentees and challengers.

A few dozen amici briefs have been filed in the case, including one filed on August 30th by 39 patent owners affected by PTAB activities in support of the petitioner Oil States. These patent owners have either already or are currently faced PTAB validity trials challenging their patents through inter partes review (IPR) or other post grant review (PGR) proceedings. The amici argue that the affected patent owners are in a unique position to provide perspective to the Supreme Court on the question of extinguishing patent rights through a non-Article III forum.

The tribe is raising a sovereign immunity defense in the case as the tribe is a sovereign entity which is not amenable to a suit unless it consents or Congress abrogates its immunity. Shore argued that the sovereign immunity defense is based on binding Supreme Court precedent. “It would frankly be unprecedented for the board to deny the tribe the right to seek a dismissal before conducting the hearing on the merits,” Shore said… On seven occasions during the call, Torczon called the sale of the patents to the St. Regis tribe a “sham” transaction, arguing that the tribe didn’t purchase the patents but rather were paid to take them. Torczon drew parallels between the patent sale and racketeering cases in the context of lending fraud. “So facially this transaction is a sham.

Post grant procedures can be an effective and efficient way of promoting patent quality by invalidating weak, inappropriately granted patents. What we need now is thoughtful review and assessment, based upon five years of experience about what is working and what needs to be done to improve the system. The above issues need to be watched and analyzed, and, if appropriate, modifications need to be suggested and tried. Many improvements can be made by the USPTO itself through transparent rule-making. Some may need legislative intervention. But there is no need to throw out the entire process. We should learn from what has happened before and be willing to improve the system for the benefit of innovation in our country and the continued growth of our economy.

As we mark the fifth anniversary of the effective date of Patent Trial and Appeal Board trials on September 16, we find that the early years of the practice have been a learning experience both for the PTAB and for PTAB practitioners.  Reflecting on the past five years, three key lessons emerge for practitioners, from practice and directly from the APJs presiding over these cases when they have spoken on topic: Follow the rules, including those that are explicit and those that are unspoken, know your audience, and focus on the facts.  

Hiring senior associates to be Administrative Patent Judges was a mistake, hiring so many senior associates from the same firm was an even bigger mistake. Making it clear that their job was to kill patents at all costs was inexcusable. Interpreting the rules at every turn to be disadvantageous to patent owners is un-American, violates fundamental notions of fairness of procedure, and tilts the balance so heavily toward challengers that it has become more feared by patent owners than any government agency or body. In short, the PTAB has destroyed the U.S. patent system and the value of U.S. patents. In my opinion, the only solution for the very serious transgressions of the PTAB is to disband this runaway tribunal.