Is the IPR tide about to turn at the Patent Trial and Appeal Board?

By Gene Quinn
January 31, 2016

SCOTUS-Supreme-Court_335copyStarting on September 16, 2012, on the first anniversary of the signing of the America Invents Act, the Patent Trial and Appeal Board (PTAB) was born. The jurisdiction of the PTAB is greatly expanded compared to the previous Board of Patent Appeals and Interferences (BPAI). Most specifically, the PTAB now conducts administrative trials within the patent office.

These trials are required by the new procedures ushered in by the AIA, namely Inter Partes Review (IPR), Post-Grant Review (PGR) and Covered Business Method (CBM) Review. These three new varieties of patent challenge allow a petitioner to challenge the propriety of one or more issued patent claims once they have been granted by the Patent Office. For a variety of reasons, the most popular post grant proceeding by far has been IPR. In short this is because PGR is available only to challenge issued patents that were examined under AIA 102, which given the backlog of patent applications means exceptionally few patents can at this point be challenged in PGR. CBM is likewise not particularly popular simply because it is limited to business method patents that lack a technological component.

According to the statute, “[a] person who is not the owner of a patent may file a petition to institute an inter partes review of the patent.” 35 U.S.C. 311(a). This simple statute and the enabling regulations have lead to a great deal of consternation throughout the patent community. While post grant proceedings may have had the best intentions, which were to provide a cheaper, faster alternative to district court litigation to resolve issues of patent validity, there have been numerous challenges to the procedures.

Despite the fact that 35 U.S.C. 282 promises a presumption of validity for issued patents, in proceedings at the PTAB patent owners are given no presumption of validity. Further, despite the fact that patents are property rights, as confirmed by a long line of Supreme Court cases that equate patents to property rights in land and 35 U.S.C. 261 which says patents have the attributes of personal property, an Article II executive tribunal is stripping rights while certain decisions remain unreviewable by an Article III tribunal ever. These and many other procedural matters, including the inability to amend claims despite the right to amend embodied in 35 U.S.C. 316(d) and the exceptionally low threshold required to institute an IPR proceeding, have lead commentators to question the fairness of the proceedings and whether due process is being afforded to patent owners.

But the tide may be about to turn. Recently the United States Supreme Court added several cases to its docket for this term, with one of those cases being Cuozzo Speed Technologies v. Lee, a case that will require the Supreme Court to address two critically important questions associated with inter partes review (IPR) proceedings. The first question dealing with the proper claim construction standard and the second dealing with whether a decision to institute an IPR is insulated from judicial review. See Supreme Court accepts Cuozzo.

Normally the Supreme Court does not take a Federal Circuit appeal to compliment the Court on how well they have resolved a particular matter, so it seems safe to bet that the Federal Circuit will be reversed on one or both of the issues take. At the very least the Supreme Court can be expected to make broad statements of law and principle and remand the case for further consideration. In either event patent owners would welcome the outcome. In the meantime as we wait for a decision it will also be interesting to watch and see if the PTAB begins to moderate and whether the Federal Circuit shifts their jurisprudence, as they have been known to do from time to time while awaiting a decision from the Supreme Court.

Subsequently to the Supreme Court taking Cuozzo, a petition for certiorari was filed with the Supreme Court challenging the decision of the Fourth Circuit in Cooper v. Lee. This latest challenge to the post grant proceedings at the USPTO raises a constitutional question about whether an Article II tribunal can declare an issued patent claim invalid. The petition for certiorari cites a long line of Supreme Court cases that says that only a federal district court may invalidate an issued patent, and which further equates patents to real property that cannot be taken without just compensation.

Meanwhile, the Federal Circuit continues to issue decisions relating to inter partes review. While it occurred before the two previous events mentioned, on December 31, 2015, finding in Redline Detection, LLC v. Star Environtech, Inc. that a timely filed motion containing supplemental information, which is authorized both by statute and rule, can be refused by the PTAB. See Timely filed supplemental information not considered by PTAB. Patent owners have struggled for some time knowing that despite what the statute says the PTAB does not recognize a right to amend patent claims in an IPR, rather the PTAB interprets 35 U.S.C. 316(d) as merely giving the patent owner the right to file a motion to amend, which the PTAB can reject.

Now in Redline the petitioner gets a taste of that swift PTAB justice (or lack thereof).  The AIA authorizes the filing of supplemental information with the PTAB during the course of an IPR, see 35 U.S.C. § 316(a)(3), and the USPTO promulgated regulations pursuant to that authority. In particular, see 37 CFR 42.123(a) allows for supplemental information to be submitted within one month of the institution. Nevertheless, the PTAB said, and the Federal Circuit agreed, that they do not have to accept and consider timely filed supplemental information without an explanation as to why it wasn’t filed earlier. One problem for the PTAB and Federal Circuit is that neither the statute nor regulations require such an explanation in order for the petitioner to exercise the right to submit supplemental information.

The Redline case, like so many others, shows just how much of a wild west inter partes review is at the Patent Office. PTAB judges do not implement the rules and laws uniformly, and joke is being made out of due process. Why? Because these proceedings need to be completed within 12 months, so the PTAB cuts corners and simply doesn’t believe they can offer the process that patent owners, and increasingly petitioners, deserve. This is making post grant proceedings seem more like a kangaroo court or some hang ’em high court right out of a Clint Eastwood western.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

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 20 Comments comments.

  1. Steve Stites February 1, 2016 11:31 am

    I think that Patent Trial and Appeal Board is an unconstitutional court within the executive branch of the U.S. government. The U.S.Court of Appeals for the Federal Circuit has accepted at least one appeal from the Patent Trial and Appeal Board without the case first going through a district court. That violates the separation of powers doctrine in the constitution. Also there are legal squabbles over the fact that the rules in the Patent Trial and Appeal Board are different than the rules in the district courts. These differences are another point that indicates that the Patent Trial and Appeal Board is unconstitutional.

    I also agree that patents should have the presumption of validity in court cases.

    The problem is that under current case law there are tens of thousands of invalid software patents ( according to Judge Moore of the Court of Appeals for the Federal Circuit). In order to clear out the huge backlog of invalid software patents the PTAB has to rush cases by dropping the presumption of validity and streamlining the rules, both of which are unfair to litigants.

    I suggest that we solve this mess by both abolishing software patents and abolishing the PTAB.

    ———————————-
    Steve Stites

  2. Edward Heller February 1, 2016 2:53 pm

    Does Congress have the power to protect inventions with anything other than exclusive rights?

    The answer to this question may determine whether patents are property or public rights?

  3. Anon February 1, 2016 3:20 pm

    I disagree Mr. Heller.

    Congress has the power to protect inventions with anything that they want to.

    They can do this with with Article I Section 8, or under a different section.

    However, those other forms of protection would yield something other than what we call patents.

    Patents are what they are – and importantly here to the disagreement that I have with your proposition is that they remain what they are regardless of what else Congress can – or may – do.

    Perhaps you are aiming for a different question. Perhaps something along the lines of “Can Congress turn patents into something else, and still be acting under the explicit patent clause?

    Your thrust, if I may be so bold, under this different question yields a firm “no.”

  4. Edward Heller February 1, 2016 3:44 pm

    Huh?

    Anon, if patents were state rights, even state statutory rights, then Congress would have the power to regulate patent rights as part of interstate commerce. However, I do not understand Congress to having power to protect inventions in any other power except Article I, Section 8 patent and copyright clause.

    This is important because if Congress can grant one a gold star instead of an exclusive right, then one would not have a constitutional right to a day in court before his patent was invalidated.

  5. Anon February 1, 2016 4:43 pm

    Invention is not necessarily synonymous with patents, Mr. Heller.

    You made that assumption a key part of your statement and I am simply reminding you that is is but an assumption – nothing more.

    Yes we DO have patents and yes patents are anchored in Article I Section 8.

    But that is not the end of the story, nor is it the proper take-away from your (misguided) first question. The bottom line is that there is nothing stopping Congress from setting up an alternative “reward” system – not a patent system – that does grant your “gold stars.”

    But do NOT confuse gold stars for patents as they would be expressly different things.

    Your conclusion at post 3 STILL makes the mistake that you are mixing a different item with the patent item. If Congress did make a different system (gold star), then THAT system would NOT be the patent system (and quite possibly would be then one would not have a constitutional right to a day in court for that gold star).

  6. Edward Heller February 1, 2016 5:29 pm

    Ugh! Anon, I daresay that Congress cannot do that which it does not have the power to do. Your assumption is that it has infinite police power. It does not.

  7. Edward Heller February 1, 2016 5:46 pm

    But back to the point, can Congress protect inventions under the Patents clause with anything other than exclusive rights.

  8. Anon February 1, 2016 7:14 pm

    No such assumption (infinite police powers) is required Mr. Heller.

    Believe me, there are plenty of places that Congress can “pin” a “gold star award” to. While sill in Section 8, either the general welfare or commerce clauses would do. Again another vehicle not being a patent is entirely plausible. It does not take any imagination whatsoever to consider a trademark type of “gold star.”

    You are trying to dodge the point on a rather odd peculiarity.

    Further, I see that you have indeed rephrased your original question, now tying directly to the Patents clause – and I have already answered that question at post 2.

    My point still (very much) remains: patents are not the only way to reward inventions. Please stop assuming that such is necessarily the case, as it just is not.

  9. Edward Heller February 1, 2016 7:25 pm

    anon, why do we remain diverted?

    The Supreme Court has said that the Patents clause is both an authorization and a limit. The question remains, under this section, can Congress grant anything other than exclusive rights? The answer is important.

  10. Anon February 1, 2016 8:57 pm

    Again, your rephrased question has already been answered.

    We remain divided (rather than diverted), because your first impression and your first argument reveals a logical weakness.

    Congress can create an alternative to patents, and patents are not the only mechanism available to Congress to reward invention. These other things (not on the books) can take any number of forms, and have any number of limitations. You seem unwilling (or unable) to recognize this, and I am not sure why you fight this so much.

    We are in agreement on two things (I think).
    1) These “other things,” were they come to pass, would not be patents.
    2) Congress is limited as to what they can change patents into (and still call them patents and trace the authority to the patent clause).

    I would further posit that since the very beginning of the US patent system (there was a great award-winning historical article over at Dr. Noonan’s PatentDocs awhile back), patents were meant to be fully alienable items.

    Such a nature of the items in our system – from the start – aligns the object with property (and this is beyond the words that Congress added in 35 USC 261).

    It is not so much as the answer is important, as it is that the question is less so.

  11. Edward Heller February 2, 2016 8:41 pm

    Arrgh!

    We are talking here about Article I, Sec. 8, the Patent Clause only.

    Under that clause, can Congress grant an inventor anything other than exclusive rights?

    Regarding “property,” a legal right is property. Alienability is a side issue. Most legal rights are assignable. English land titles historically were not.

  12. Edward Heller February 2, 2016 8:47 pm

    Steve, disputed issues of law and fact regarding the validity of a patent were exclusively tried in the common law courts of England, and to a jury, prior to 1792. Regardless of abstract theories about where cases and controversies regarding wholly new rights and remedies created by Congress might be tried, it remains that the Seventh Amendment guarantees a patent owner a right to trial by jury in a court of law and to a jury.

  13. Anon February 2, 2016 9:38 pm

    With all due respect, Mr. Heller, no, we are not limited to the Patent Clause.

    Clearly, outside of the patent clause, Congress can create the “gold star” and conversely, within the patent clause, Congress cannot create something other than a patent.

    Further, alienability may be a side issue to your own personal case, but that is only because you did not make that aspect into an argument. It is no more a side issue than any other aspect of the thing that we call patents.

    Lastly, your note to Steve at 12 includes a return to this something new “wholly new rights and remedies,” but again, and clearly so, where you tie this authority is definitive. If within the patent clause, then you are NOT talking about a “wholly” new thing at all (your initial question then does not make sense), and if outside of the patent clause, then Congress has free reign (and your initial question suffers for lack of completeness).

    It’s almost as if you want to force an artificially constrained question where it will not fit. The mismatch is jarring from a legal logic point of view.

  14. Edward Heller February 3, 2016 2:36 pm

    OK, anon, I agree that patents are not new. They are also only Federal because Congress has chosen to preempt state laws granting similar rights.

    We seem to agree that Congress does not have the power to grant patents outside of the Patents Clause. What I am asking, is that can Congress grant anything else but patent in exercising its powers under that clause.

  15. Gene Quinn February 3, 2016 3:22 pm

    Edward-

    You ask whether Congress can grant anything other than exclusive rights under Article I, Sec. 8.

    While the text of the Constitution suggests the answer is no, the way that copyright law has developed over the generations suggests that the answer is clearly (and sadly) yes. A copyright is hardly an exclusive right given all the statutorily forced sharing. Whether that is a good thing or a bad thing at this point is meaningless. Copyright owners are forced to share in a great number of ways that without question fundamentally erode the exclusive nature of the right.

    This is why patent owners really need to wake up and stand up against those who want to dismantle the patent system and claim that patents are not property rights. They are by law property rights and that has to mean something. It may already be too late given the compulsory licensing nature of eBay, for example, but if patent rights erode any further it won’t be long before there is fair use and patents won’t be worth owning. We will be left with a trade secret economy that benefits no one.

    -Gene

  16. Anon February 3, 2016 3:25 pm

    Mr. Heller,

    Once again, your question is a spurious one.

    The immediate answer is that under the patent clause, only patents may be granted. Bu this I answered way back at post 3.

    By “spurious,” I mean that the intent of your question leads to a false sense of “confidence.”

    Congress can eliminate patents (or alternatively, keep them in place, and add in addition) and have “gold stars.”

    If Congress did put in play this different animal called “gold stars”, then preemption (for the different animal) would likely remain (I am not certain why you would even introduce the concept of preemption here).

    Further, this “gold stars” could supplant (or supplement) patents – and here is the point that you still do not acknowledge – to reward and protect invention, and not be constrained by the patent clause. There is simply NO “exclusiveness” to ONLY the patent clause for a government system to reward and protect invention.

  17. Anon February 3, 2016 3:34 pm

    Mr. Quinn,

    Copyright is not a direct analogue for the simple fact that what is protected (expression) already has ameliorating protections in place in the selfsame Constitution (think First Amendment).

    Patents, protecting utility rather than expression, are just not so constrained in the original document.

    Further the intent of the differences in protection for copyright (shallow, but far longer – and nigh effectively unlimited time [for the current generation] and patent (deeper, but much more strictly limited in time) play into the legal differences.

    Further, I will disagree with your words (but I gather your intent is slightly different) that “a Trade Secret economy benefits no one.” It very much benefits some one(s): the guild masters. That this benefit comes at the expense of everyone, including the larger society, and may be strictly short term, makes no appreciable difference when one remembers the Keynesian joke: “In the long term, we are all dead.”

  18. Edward Heller February 3, 2016 3:39 pm

    Gene, “They are by law property rights and that has to mean something.”

    Under Marbury, a legal right for a fixed term is property. That is exactly what the Constitution authorizes Congress to grant to authors and inventors, a legal right to exclude for a fixed term.

    Now, as to Copyrights, Congress authorizes compulsory licenses at the rates a commission determines. The compensation aspect does respect the exclusive right, but it also respects the power of the government with respect to eminent domain.

    But that does not mean that congress can wholly take a patent or copyright without compensation, nor deny a patent owner a right to trial by jury regarding validity that patent owner had at common law before their patents were revoked.

    You are aware of the writ scire facias? That writ was returnable either at Kings Bench, or on the common law side of Chancery. If it was filed in Chancery, the trial of validity nevertheless took place in the common law courts of England – to a jury, where the jury decided validity. The common law judge entered judgment based upon the verdict, and if the verdict was that the patent was invalid, the judgment of the common law court was filed with the clerk of the Pety Bag, where it was recorded against the record of the patent thereby canceling it. The signature of the judge in Chancery was a mere formality.

    If one does not doubt that one has a right to a jury trial before his patent is canceled or revoked, then the patent office cannot cancel the claims of an issued patent against the will of the patent owner. He has a right to a trial by jury first.

  19. Ely February 4, 2016 5:00 am

    “Normally the Supreme Court does not take a Federal Circuit appeal to compliment the Court on how well they have resolved a particular matter…”

    In order to prove its not the norm you need to cite at least one example!

    🙂

  20. Gene Quinn February 4, 2016 9:43 am

    Ely-

    You must be new to the patent scene. This statement is well understood to be true by everyone knowledgeable in the industry. The Supreme Court overrules the Federal Circuit in virtually every case they take. Notwithstanding, I invite you to take a look at Bilski v. Kappos, AMP v. Myriad, Mayo v. Prometheus, Limelight Networks v. Akamai, Nautilus v. Biosig, Commil v. Cisco, Teva v. Sandoz — all of which have happened within the last 6 years. If you want to go back a little farther you can also take a look at KSR v. Teleflex and eBay v. MercExchange. I’m sure there are other examples over the last decade as well. These and many other cases all prove the point and are discussed on IPWatchdog.com. I invite you to read more about them. If you do it will be clear that the Supreme Court has become more active in the patent space because they feel the Federal Circuit is run amok.

    -Gene