Posts Tagged: "post grant proceedings"

All of the post grant challenges ushered in by the America Invents Act (AIA) were a bad idea. They never should have been created in the first place. All the post grant proceedings have done is make infringing patents a more economical choice, while making it more costly for innovators to obtain and keep the protection they need to make innovating a worthwhile endeavor. It was all too predictable that a new tribunal would over assert its own jurisdiction, but the breadth of just how arbitrary, capricious and fundamentally unfair the process would be was simply not predictable.

Unfortunately, Mr. President, after five years I cannot report back that the AIA has yet ”improve[d] patent quality and help[ed] give entrepreneurs the protection and the confidence they need to attract investment, to grow their businesses, and to hire more workers.” The current implementation of PTO post issuance proceedings is undermining confidence in our patent system, chilling innovation at its roots, and, in eyes of some, giving the AIA a bad name.

If Congress, nevertheless, is unmoved by the constitutional arguments for reforming the IPR process, it should weigh the strong economic policy arguments supporting IPR reform, which are outlined in various amicus curiae briefs supporting certiorari. As pointed out in a brief filed on behalf of the Houston Inventors Association, the IPR system “has a great attraction to ‘patent pirates’, companies who [sic] infringe patents and then deny liability, because the IPR has a high rate of success for ‘patent pirates’ to invalidate patents.” In other words, the IPR system facilitates infringers who want to free ride on the fruits of patentees’ labors, thereby ineluctably diminishing marginal incentives for investment in patentable innovations. As a brief filed on behalf of the University of New Mexico explains, the threat of IPR (in particular its anti-patent “death star” reputation), and inconsistencies between PTAB and federal district court patent validity standards, devalue and harm university patents.

While the PTAB statistics demonstrate the profound effect that the AIA trials have had on issued patents, it seems to have the greatest impact on non-manufacturing patent assertion entities (PAE). With the increased tendency of district courts showing a willingness to grant stays of the concurrent litigation, the AIA trials have become an effective weapon against PAE. However, nevertheless, it is not surprising that with any dynamic system we have seen a settling process where institution rates have been dropping and the information provided by the PTAB in its publication of informational and precedential decisions has served to provide clarity to those practicing before the PTAB in administrative trials.

The enumerated problems with the post grant procedures could be bettered by both the courts and the USPTO. The courts have had an opportunity to change the standard for claim construction in the post grant procedures but have declined. However, the USPTO can ameliorate the problem itself by providing for more liberal leave to amend. The rationale for BRI at the USPTO is that patentee can amend at the Office but not in court. The Office can more easily allow for claims that are further limiting and this would greatly reduce the problem.

IPRs offer many improvements compared to inter partes reexamination[12]. However, the statistics reveal that IPRs are no more of a true alternative for litigation than the challenge proceeding which they replaced and supposedly improved upon – at least not yet, but with all of the publicity about the high rate of invalidation it is hard to imagine that patent challengers just need more time to gain confidence in IPRs. These statistics combined with the relationship between IPR behavior and the increasing phenomenon of efficient infringement suggest that the post grant challenge proceedings as currently implemented are not a substitute for litigation and may, unfortunately, instead actually promote litigation.

While the Patent Office likes to tout statistics that assert most patent claims challenged in IPR are not invalidated, those statistics are simply not credible. When reporting its statistics the Patent Office ignores the reality that once an IPR is actually instituted few claims are actually adjudicated to be patentable. The Office is also grossly misleads when they characterize claims not subject to a final written decision as “remaining patentable.”… Recently I’ve heard a story from a former PTAB judge who explained that institution of IPR challenges is far more likely when there are multiple petitions filed against the same patent because it makes it easier for PTAB judges to meet their production quota. If that is not proof that the PTAB is hopelessly broken I don’t know what is.

At exactly 11:42am on September 16, 2011, President Barak Obama signed the America Invents Act into law. As President Obama put his pen down he said: “All right guys, congratulations, the bill is signed.” It was at this precise moment that U.S. patent laws dramatically changed forever. With this in mind, over the next two weeks we will be examining the AIA in great detail in a special AIA 5th Anniversary series. I’ve invited a number of guests to comment, discuss and/or editorialize about the AIA. Below is a sneak peak of some of the contributions already received. As articles are published this preview article will be updated with links to the entire series.

One reason the PTAB is convenient for reaching reverse payment deals is that there is no direct antitrust oversight, since its judges are administrators with very narrow legal authority. Further, while there is a statute requiring agreements between Hatch-Waxman firms to be submitted to the Federal Trade Commission (FTC) for antitrust review, the parties may attempt to evade it. The statute requires submission of agreements that relate to the manufacture or sale of either firm’s drug. The parties might therefore feel justified (rightly or wrongly) in not submitting a consent decree stating that the patent is valid and would be infringed by the proposed generic, since this does not expressly address manufacture or sales. Alternatively, it could be that the parties submit a district court consent decree (which includes no reverse payment), but not the PTAB settlement (which could include a reverse payment). After all, a PTAB settlement simply says that the parties agree to terminate the IPR – it need not declare the patent valid – and this arguably does not relate to manufacture or sales.

While the Supreme Court spoke clearly and unanimously on the issue in Cuozzo, this hardly means the standard to be applied to claim construction in IPRs has been settled. Rather, it means only that the solution to the problem lies outside the courts. Because the Patent Office has adopted, by regulation, an unsatisfactory standard, Congress should step in. In the context of IPR proceedings, the Patent Trial and Appeal Board (PTAB) should be instructed to give claim terms their plain and ordinary meaning to one of skill in the art, just as the courts are instructed to do.

“This is obviously a victory for some who challenge a patent’s validity in IPR proceedings since broadly construed claims are more vulnerable to attack than narrowly construed claims” remarked Scott Daniels, partner at Westerman Hattori Daniels & Adrian, LLP. “Still, the great majority of IPR decisions do not turn on claim construction and for those cases Cuozzo simply makes no difference.”… Levy, who was similarly dead on accurate with his predictions, raises an important point that so many in the patent community who were rooting for Cuozzo failed to keep in mind. Those challenging the action of an agency face a substantial uphill battle when they seek a judicial determination overriding agency rulemaking and statutory implementation.

In a unanimous decision delivered by Justice Breyer in Cuozzo Speed Technologies, LLC v. Lee, the United States Supreme Court upheld the United States Patent Office’s regulation requiring the Patent Trial and Appeal Board to apply the broadest reasonable interpretation (BRI) standard in Inter Partes Review (IPR) proceedings. The Supreme Court also held that the Patent Office’s decision to institute an IPR proceeding is not appealable to the Federal courts.

Amici agree with Petitioner that this procedure was beyond Congress’s power to impose, and its underpinning rationale—that patents are a matter of administrative largesse, rather than the constitutionally protected property right—is constitutionally infirm. Amici write separately because this case presents an issue of enormous significance with far-reaching consequences for inventors, investors, and small-business owners. The institution of IPR review has made patents more expensive to obtain and defend, and has introduced uncertainty in patent rights that makes patents less valuable to their holders, less attractive to inventors, and less safe for investors. This devaluation of patent rights has measurably diminished the value of all patents.

This case presents an important constitutional question which the court below decided based on an incomplete analysis of the Supreme Court’s jurisprudence. In the case below, a three-judge panel of the U.S. Court of Appeals for the Federal Circuit decided that a patent is a “public right,” and that these Article I trial proceedings are not unconstitutional. Significantly, the Federal Circuit reached its conclusion without considering more than a century of precedent by this Court recognizing that an issued patent is a property right, at least for purposes of determining if a “taking” has happened. James v. Campbell, 104 U.S. 356, 358 (1882); see also Horne v. Dep’t of Agric., 135 S. Ct. 2419, 2427 (2015) (quoting with approval James).

Earlier today the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) declined to institute a covered business method (CBM) review of U.S. Patent No. 6,006,227, which is owned by Mirror World Technologies, LLC. The decision is significant not only because the PTAB refused to institute a covered business method review, but because the panel — Administrative Patent Judges Thomas Giannetti, David McKone, and Barbara Parvis — cited the Federal Circuit’s recent decision in Enfish v. Microsoft when they found that the challenged claims of the ‘227 patent were not abstract.