Posts Tagged: "PTAB"

Only Article III courts can provide a fair, neutral and unbiased forum for assessment of patent validity. For over two hundred years, patent validity, patent infringement and patent damages have been consolidated to be heard in federal district courts. Federal courts supply impartial judges that are immune from influence by the executive or legislative branches. Furthermore, federal courts supply jury trials that enable a fair application of due process rights in the hearing of a patent dispute. Patent validity review is only a single component of patent infringement cases and it is efficient to have this component of the matter reviewed in a single matter.

Many district courts have interpreted Alice as authorizing invalidation of issued patents as “abstract” based solely on the pleadings. They have done so even where the invalidation rests on resolution of a disputed issue of fact or of claim construction or scope. In short, since Alice, the Federal Circuit has done nothing to clear up the district courts’ confusion, but instead has affirmed pleading invalidations more than 90 percent of the time. Nothing in Alice, or Mayo for that matter, authorized these “pleadings invalidations.” Whether you agree with the decisions or not, both Alice and Mayo, were decided on summary judgment.

The industry reaction to Aqua Products v. Matal has been swift. In IPWatchdog’s Industry Roundup blog post, there was broad acclaim. However, for those involved with post-grant proceedings before the AIA, however, Aqua Products at most means a return to the amending regime allowed under the previous inter partes post-grant procedure, inter partes reexaminations. Given that IPRs were explicitly designed to extend and amend the previous inter partes reexamination procedures, a comparison of amendment practice under the two procedures makes a number of lessons clear.

The PTO systematically administers a collection of procedures in IPRs to unduly harm patent holders and benefit big tech company infringers. The data show that the plain result of PTAB procedures appears to benefit infringers with a clear bias against patent holders. PTAB cancels challenged claims in 76% of instituted patent reviews, a rate that is 2 ½ times greater than in the federal district courts. The reason is that PTAB employs a set of procedures that stacks the deck against patent holders. There is clear bias at every step of the process of reviewing patent validity. However, there are several components of PTAB procedures that are particularly onerous and problematic and that go to the heart of the due process issues that infect IPRs.

Although patent litigation levels through the first nine months of 2017 have largely remained consistent with patterns from recent years, it does appear that the number of patent suits filed in U.S. district courts has been on a slow decline in recent years. There were a total of 995 patent lawsuits filed in district court during 2017’s third quarter, an 8.4 percent decline when compared to totals from 2016’s third quarter. Year-over-year declines in patent suit filing were also seen in the first and second quarters of 2016 as well. As Lex Machina data scientist Brian Howard notes, 2017 continued a trend in which patent suit filings tend to drop in the first quarter of the year, rise during the second quarter and then fall again during the third quarter. “Historically, that’s a pattern that we’ve seen pretty consistently in the past few years,” Howard said.

The PTAB invalidation procedure violates due process because it drags patent owners into endless assaults by patent infringers and patent thieves. Due process requires compliance with standard notions of fair play and justice, which is lacking at the PTAB. The PTAB invalidation process does not afford due process because it allows an unlimited number of infringers and patent thieves to shoot down a patent in a never ending series of challenges. If one challenge misses the target, the second and the third challenge will hit it, or ultimately it will be hit by the Nth challenger. When patents can be attacked repeatedly in such a bizarre way, the patent reward of an exclusive right is a meaningless promise.

In Owens Corning v. Fast Felt Corp, Fast Felt sued Owens Corning for infringement, and Owens Corning filed a petition with the PTO seeking inter partes review of claims 1, 2, 4, 6, and 7. All of the challenged claims contain the term “roofing or building cover material.” Owens Corning argued that the claims are obvious over Lassiter, Hefele, and Eaton. The Board concluded that Owens Corning failed to show obviousness of any of the challenged claims… While the preferred embodiment of a claim might focus on a particular element of the claim, this is not enough to narrow the claim scope of the IPR. The Board must still give the claim its broadest reasonable interpretation in light of the specification. Where the record and a correct claim construction support only one result, reversal is warranted, without need for remand.

Due process is an essential condition for a fair proceeding involving a matter in which property rights are in dispute. Unfortunately, there is no interpretation of PTAB procedures under which due process applies. PTAB omits due process and is fundamentally unfair. As a consequence, the PTAB conclusions, and the structure and process of PTAB determinations, are unconstitutional.

The U.S. patent promise of exclusivity has become nothing more than lip service with no credibility for more than half a century. A patent system maintained by offering lip service must fail over time. The American inventor population is vanishing rapidly as a result of the changed laws and anti-patent movement. If the patent reward fails, both those who are inventors and those who would be inventors will be influenced not to pursue innovating and society will see an era of slow progress. Bad policy advice has misled Congress into belief that inventing without the participation of inventors will be fine. Reality will soon prove it was a fatal mistake that the U.S. should not have made.

The argument that patents are private rights is supported by over two centuries of jurisprudence. Patent rights derive from Article I, section 8, clause 8 of the U.S. Constitution, which empowers Congress to promote progress by creating laws involving patents and copyrights. The patent bargain exchanges disclosure of new and useful inventions for a limited term exclusive right. The public benefits from the patent bargain in two ways. First, the disclosure enables others to build on the invention. Second, after a twenty year period, the public receives the benefits of the invention for free as the rights flow to the public domain. The patent bargain stimulates incentives to invent, to invest in innovation and to take ex ante risks.

On Thursday, October 12th, a pair of letters addressed to the bipartisan leadership of the Senate Judiciary Committee were delivered in an attempt to inform Senators on that committee of various issues in play regarding the recent patent deal between multinational pharmaceutical firm Allergan and the sovereign St. Regis Mohawk Tribe. The two groups sending the letters represent stakeholders in the U.S. patent system coming from very different backgrounds who realize that there are fundamental flaws in the system created by inter partes review (IPR) proceedings which are carried out at the Patent Trial and Appeal Board (PTAB).

Mr. Matal opened his discussion stating his belief that independent inventors are the lifeblood of American innovation. He said that a patent is a property right and that whether an inventor actually manufactures the invention or seeks to license it, the rights provided by the patent should be the same. Having said this, he still believes that the PTAB should be able to invalidate a patent, but he did say that it is definitely time to look at the PTAB closely and see what can be done to make it operate more fairly. While he reiterated several times he is only acting and a permanent replacement has been nominated, he said that he would be surprised if this didn’t happen.

After a panel of the Federal Circuit affirmed the Board’s decision, in Aqua Products v. Matal, Aqua requested an en banc rehearing. The USPTO Director Joseph Matal joined the appeal on behalf of the USPTO. At issue was whether the Board could place the burden of proof for patentability of amended claims on the patent owner in an IPR, and the Board’s underlying interpretation of the relevant statutes, specifically § 316(d) governing claim amendments and 35 U.S.C. § 316(e) allocating the burden of proof in an IPR… With respect to the burden of proof, the burden of persuasion for patentability of amended claims in an IPR proceeding is placed on the petitioner, not the patent owner. However, considering Judge Reyna’s concurrence, patent owners might still have the burden of production; depending on future cases.

Native American tribal sovereign immunity thwarts both of these dilatory infringer tactics and repositions the negotiation to where it needs to be – outside of the courthouse. The tribe can inform detailed information to the infringer of their infringement and offer to enter into licensing negotiations without fear of being subjected to a DJ Action. Thus, the tribe can inform the infringer of their infringement and unless the tribe sues the infringer, the infringer will not be able to play the litigious gamesmanship or file the unending and procedurally unfair PTAB procedures. In sum, sovereign immunity equalizes the bargaining power between the inventor and the infringer and sets the negotiation table fairly.