The Board cancelled 95.2% of all claims for which trial was instituted, and cancelled 82.9% of all claims that were initially challenged by the petitioner… These bleak statistics have lead Federal Circuit Chief Judge Randall Rader to at the AIPLA annual meeting in October 2013 call the PTAB “death squads killing property rights.” Then again on Friday, March 21, 2014, at a conference hosted by the George Mason University School of Law, Chief Judge Rader said he was “troubled” by the many differences between proceedings at the PTAB and in the district courts, particularly pointing to the disparities in the treatment of the same evidence concerning the same claims. Rader mentioned that his recent comments about the Board being a “death squad” for patents in contested proceedings may be more accurate than some originally thought, considering the dismal track record for survivability of challenged claims in the first wave of final written decisions.
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?”
All of this has to make you wonder whether any new patent legislation is necessary at this time. The House of Representatives has already passed new patent legislation that focuses on patent litigation and the perceived abuses. Reasonable minds can perhaps differ about whether the measures being discussed are good, bad or would do anything to address the manipulation of the judicial process by nefarious actors. The facts suggest, however, that patent litigation is declining and the administrative trials are increasing beyond expectations. This is significant because the administrative trials were created in order to offer defendants a better, cheaper avenue to challenge patents outside of litigation. So why not allow the reforms of the AIA time to work before once again tinkering with the patent laws and potentially upsetting the incentive to innovate?
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.
2013 turned out to be a very big year for IP, and especially patents, and the year took a course that few would have predicted this time last year. At that time, the senior team at the PTO was primarily focused on the imminent departure of our then-boss, David Kappos, and the end of what had clearly been an extraordinarily active and successful tenure. The AIA had been almost entirely implemented, the new Patent Trial and Appeal Board was up and running, and most of us expected 2013 to be focused on implementation and execution of the AIA and the other initiatives that had been set in motion under Director Kappos.
There are several varieties of a stay. With post grant proceedings we’re talking mostly about discretionary stay. Every district court has inherent right to do this. Judges are generally favorable to granting stays with more being granted than not. “All a judge has to do is get burned once by not granting a stay, going to trial to the end, and then having claims invalidated by the Board and then having to have an appeal,” says John J. Marshall, law professor at Villanova University School of Law, previously Of Counsel at Drinker Biddle. The initial stay before a petition is granted is short. Then after the petition is granted, the district court judges are more likely to grant a stay, because IPR will simplify issues that might be important to the district court judge. That quick timeline is one of the factors that helps you get a stay for concurrent litigation and getting ammunition for use in district court claim construction. In fact, you may find that these factors are so persuasive that if a defendant in district court case files a petition for IPR, and you, as another defendant, can’t join because you are past the one month joinder cutoff, you still may be asked to stay your case until other defendant’s IPR concludes. As of October 2013, contested stay motions pending IPR petitions have a 68.5 percent grant rate and those pending CBM petitions have an 83 percent grant rate, according to a Finnegan infographic based on the published PTO AIA statistics. Those are really good rates. It’s something to consider even in districts like Delaware or East Texas.
A goal of nearly every defendant is to lower the total cost of resolution of any legal issue. As counsel for the defendant, you have to weigh the settlement and licensing costs of a patent dispute against the total defense cost and how long it takes to resolve the dispute with certainty. Today, CBM, IPR, and PGR are the lowest possible cost options. Speed is one of the biggest benefits. The statute requires that a PGC proceeding must be completed in 12 months after institution, and in rare cases this extends to 18 months if the PTAB exercises a good cause exception. APJs are motivated to stay on deadline.
Despite the turmoil surround software patent eligibility I believe with great certainty that software will remain patent eligible in the United States. The extreme decisions of the PTAB and viewpoints of those on the Federal Circuit opposed to computer implemented methods will not prevail because they are inconsistent with the Patent Act and long-standing patent law jurisprudence. After all, the Supreme Court itself explicitly found software patent eligible in Diamond v. Diehr. In the meantime, while we wait for the dust to settle, we need to engage in a variety of claiming techniques (i.e., methods, computer readable medium, systems claims, means-plus-function claims and straight device claims). Thus, if you are interested in moving forward with a patent application it will be advisable to file the application with more claims than would have been suggested even a few months ago. Patent attorneys also must spend increased time describing the invention from various viewpoints, which means specifications should increase in size. This all means that there is no such thing as a quick, cheap and easy software patent application – at least if you want to have any hope of obtaining a patent in this climate.
Under what authority does the PTAB ignore specifically recited structure? The authority that the PTAB seems to be relying on to ignore claim terms is unclear and not explained in the opinion in any satisfactory way. It does, however, seem that the fact that the invention can be implemented in any type of computer system or processing environment lead the PTAB to treat the method as one that could be performed on a “general purpose computer,” rather than a specific purpose computer. Thus, the PTAB picks up on the arbitrary and erroneous distinctions between general purpose computer and specific purpose computer without as much as a thought and wholly without factual explanation.
Kappos explained that the PTAB has started and will continue, in at least some cases, to issue shorter per curiam decisions, which will allow them to decide more cases and move through the backlog. Co-Chair of the program, Rob Sterne, asked Kappos whether this would present problems for those who might want to appeal to the Federal Circuit. Given the standards applied by the Federal Circuit will it be possible for an applicant ever be able to satisfy the standards? Kappos acknowledged that is a concern and why we will see hundreds of shorter per curiam decisions rather than thousands. Kappos explained that the USPTO wants these types of decisions issued only when the record is extremely clear, making a detailed decision of the Board less necessary.
A new addition to the program just announced today is David Kappos, who is the immediate former Director of the United States Patent and Trademark Office. Kappos, a life-long employee of IBM prior to taking charge of the USPTO, is now with Cravath, Swaine & Moore LLP in New York City. Kappos will discuss the Patent Trial and Appeal Board, specifically discussing ex parte reexamination, the remaining legacy inter partes reexamination cases, inter partes review and the transitional program relating to covered business method patents. His segment will run from 9:15 am to 10:15 am. In addition to being presented live in New York City the program will also be webcast.
The final rules on patent fees will publish in the Federal Register on Friday, January 18, 2013. Fees are going up for most, but not as much as feared. It will be more expensive to file a utility patent application, except for micro-entity applicants (see Utility Filing Fees Table), but it will be less to pay the issue fee once you get a Notice of Allowance (see Issue Fee Table). It will cost 29% more to file the first RCE for large and small entities (see First RCE Fees Table), and 83% more for subsequent RCE filings for large and small entities (see Subsequent RCE Fees Table). The ex parte reexaminations fees are much lower, down 32% and 66% respectively for large and small entities (see Reexam Fees Table), but are still much higher compared to where they were prior to them being raised over 600% recently. Of course, cutting ex parte reexamination fees means the overall cost is still roughly 250% higher for small entities and 500% higher for large entities than this time last year.
Do patent applicants appealing a rejection of their claims from the Patent Trial and Appeals Board have a chance of success at the Court of Appeals for the Federal Circuit? What about patentees appealing to the CAFC from rejections in reexamination proceedings? The candid answer is not much of a chance. Of course, every case is different and needs to be considered on its own merits. Yet, the standards for review of Board decisions, followed by the CAFC, significantly favor affirmance of those decisions.
The unfortunate thing is that all of these individuals were getting this question incorrect and anyone who relied on this information moving forward would get the question incorrect. The MPEP section that points to one answer as correct cites an old version of the Rule. The Rule was modified in a Federal Register Notice, which is a testable document and supersedes the MPEP. The new language of the Rule has not yet made it into the MPEP section. The moral of the story is that you have to be very careful when you rely on these forum sites and take advice from someone who is either studying or just passed the exam. They may be giving you good information, but they may be leading you astray.