Comprehensive Study of Patent Trial and Appeal Board Decisions

By Fitzpatrick Cella
April 10, 2015

Research. Wordcloud Concept.A comprehensive study of decisions issued by the Patent Trial and Appeal Board (PTAB) lends needed perspective to the dramatic warnings of many about the impact of the newly created judicial body. The comprehensive study, conducted by the law firm Fitzpatrick, Cella, Harper & Scinto LLP, is based on a review of all final decisions in Inter Partes Review (IPR) and the Transitional Program for Covered Business Method Patents (CBM) proceedings issued by the PTAB through 2014.

Widely noted comments suggested that the PTAB would be acting as “death squads” by invalidating an overwhelming percentage of the patents under review.

IPR and CBM proceedings, which offer parties contesting patent rights a more expedient alternative to traditional federal litigation, have become increasingly popular. In 2014, parties filed a total of 1,494 petitions with the PTAB; in the preceding 16 months, by contrast, parties filed just 588 petitions. Part of the reason for this growth has been the belief that the PTAB is a challenger-friendly venue for invalidating patents.

Fitzpatrick undertook its study, the USPTO Contested Proceedings Report, to offer an objective measure of the results of review proceedings before the PTAB. Among its central findings, the study determined that 73.5% of the challenged claims did not survive review in IPR proceedings that reached a final decision on the merits. However, many of those claims that did not survive were cancelled by the patent owner. Specifically, patent owners cancelled about 16% of the claims analyzed.

Fitzpatrick’s study reveals that, while the PTAB may be a forum amenable to challenges, the success rate for claim invalidation in review proceedings does not justify the death squad moniker. In fact, when compared with the rate of successful invalidity challenges before the district courts, the results are surprising.

The report shows that, in final decisions from the PTAB, 37.5% of the claims initially challenged were found unpatentable under 35 U.S.C. § 102 (anticipation), while 57.6% of the claims were found unpatentable under 35 U.S.C. § 103 (obviousness). (Some claims were found unpatentable under both grounds.) In a recent study of patent decisions in district court cases, the district courts invalidated claims under Section 102 at a rate of 31.1% and under Section 103 at a rate of 27.8%. See John R. Allison, Mark A. Lemley, & David L. Schwartz, Understanding the Realities of Modern Patent Litigation, 92 Texas L. Rev. 1769, Fig. 4 (2014). Thus, the PTAB and district courts have similar records on Section 102 challenges (arguably the most objective analysis), while the PTAB appears to be much more amenable to Section 103 challenges than district courts. This suggests a much more nuanced distinction between the forums for challenging patent validity than the death squad prediction had otherwise suggested.

While CBM proceedings provide a much smaller sample size, the comparisons are also illuminative. CBM proceedings are only available for qualifying business method patents. However, CBM proceedings allow for additional statutory grounds of invalidity as compared to IPR proceedings. In CBM final decisions from the PTAB, originally challenged claims were invalidated at the following rates: Section 102 – 51.4%; Section 103 – 54.8%; Section 101 (subject matter eligibility) – 74.6%; and Section 112 (indefiniteness/written description) – 57.5%. The overall rate of invalidation (or cancellation) for challenged claims in CBM proceedings that reached final decisions was 91.4%. Plainly, challengers would be wise to consider the high success rate in CBM proceedings. In contrast, in district court cases, the overall rate of invalidation across various statutory grounds in decisions on the merits was 42.4%.

However, there are some important distinctions between the CBM and district court data sets. For example, the district court decisions were primarily issued from 2009 through 2013. In 2013, the Supreme Court issued significant decisions that made Section 101 challenges easier. Also, the CBM decisions pertain only to qualifying business patents, whereas the analyzed district court cases involve a variety of technology areas. It is difficult to say how much changes in the law or the subject matter of the claims affected rates of invalidation.

“Knowing which venue will give you the best shot at invalidating a patent is paramount, and it depends on what your best grounds of invalidity are and which venue provides the best chance of success for those grounds,” noted Justin Oliver, partner at Fitzpatrick and head of the firm’s PTO Contested Proceedings practice. “Choosing between venues for invalidity challenges is much more nuanced of an analysis than most currently appreciate.”

Additional findings from the report include:

  • In 77% of IPR cases with final decisions, there was concurrent litigation.
  • Less than 5% of motions to amend the claims were granted by the PTAB.
  • The electrical/computer and data processing fields accounted for about 59% of all final decisions.

“There is nothing black-and-white about patent litigation or PTO contested proceedings,” said Jonathan Berschadsky, partner at the firm and Chair of the Telecommunications and Networks practice group. “Assessments need to be made throughout both as to the strengths and weaknesses of the invalidity positions, and, if needed, non-infringement positions. You also need to consider minimizing any tension between the contested proceeding and litigation positions.”

The full report, which includes additional analysis of IPR and CBM decisions, is available here.

For additional insight, please visit Fitzpatrick’s contested proceedings information hub, the Post Grant HQ.

The Author

Fitzpatrick Cella

Fitzpatrick Cella , founded in 1971, is a leading national intellectual property law firm of nearly 150 lawyers with offices in New York, Costa Mesa, California and Washington, D.C. The Firm’s practice covers the spectrum of intellectual property services, including applying for patent and trademark protection, litigation, appeals, interferences, alternative dispute resolution, licensing, opinions, corporate transactions, and due diligence. Fitzpatrick represents an international client base from Fortune 500 companies to start-up companies. Visit the firm's website for more information.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 6 Comments comments.

  1. JNG April 10, 2015 12:09 pm

    I’m not sure I understand the comparison here. There is a significant % of D Ct cases where 102/103 is never raised on SJ, which is what the Allison paper uses as a signal:

    http://www.texaslrev.com/wp-content/uploads/AllisonEtAl-92-7.pdf

    See page 1785; out of 946 cases, an invalidity SJ motion was filed only 303 times, meaning less than a THIRD

    Then you multiply the 1/3 by the figures cited, and you get REAL invalidation rates of about 10% (102) and 9% (103)

    So your chances of getting your patent invalidated in a Court proceedings are 19% (assuming independent odds) or about 1/4 of that in the PTAB, whose only purpose, of course, is to kill patents at cheap cost for infringers

    It is again very dishonest, IMO, for defenders of the IPR kangaroo court to be suggesting that it is just behaving like everyone else, when it plainly is NOT. This is just using artificial data and comparisons to try and fool the public, media, etc.

  2. Gene Quinn April 10, 2015 4:57 pm

    JNG-

    If you listen to the PTAB themselves they see their role as being told to kill patents. The Chief has said that if they aren’t doing some death-squading they wouldn’t be doing what Congress asked them to do. I think that is probably an accurate statement, although very unfortunate at the same time.

    I’m not sure that the figures here show that the PTAB is friendly to patent owners, particularly given that virtually no amendments are allowed. But the one thing that really caught my attention is the difference between district courts using 103 and the PTAB using 103. I have some theories about why that is, but would like to hear what you and others think explains that statistically relevant difference.

    -Gene

  3. Jabroni Mahoney April 10, 2015 5:15 pm

    If these are the statistics spun in the “best” light, I’d really hate to see the worst light.

  4. Ron Hilton April 11, 2015 11:20 am

    Do we have any data regarding what percentage are invalidated based on new facts (e.g. prior art references) and what percentage are invalidated based on how the law is being applied?

  5. JNG April 12, 2015 2:01 pm

    Gene: your description of the PTAB’s self-image is absolutely correct. They believe themselves now (and hold themselves out) to be the weapon of choice to kill patents. Only in a perverse universe can you have an organization that charges patent owners a few $k in fees to birth a patent, while simultaneously offering to kill that same offspring the next day to the highest bidder later on at 10x. And they don’t even do the work, they let deep pocketed defendants subsidize the research, prepare the papers with the arguments all nicely sewn up, and then rubber stamp the result.

    We now have a system in patents that mirrors a lot of the rest of the country: the best justice money can buy. If you have infinite resources to pay lawyers you won’t be paying any penalties. Or better yet, buy yourself a politician: look at the “get out of patent jail free” card our buddy C Schumer gave to the banks a few years back. I’m sure the tech industry would love to have similar blanket immunity, and they’re almost there.

    This trend will continue until, as we see now in the IPR front, the patent (de)formers realize that they rigged the game with unintended consequences, and not the gun is pointed at THEM. That and cheap Chinese knockoffs of every device and piece of SW code should see a return to some balance (just as it did in the 70s in response to Japanese threats ,and 80s in response to Korean threats).

  6. Ron Hilton April 12, 2015 2:51 pm

    Even if the PTAB relies on the petitioners to do the heavy lifting, I would still like to know what the grounds for invalidation tend to be (factual vs. legal), and what it implies regarding the quality of the examination process. I think a tiered patent system could accomplished the same winnowing of low-quality patents (if that is indeed what is needed) much more efficiently at the examination stage.