Curing the PTAB: How 3 Fixes Will Make a Better, Fairer Process

By John White
December 20, 2016

CureWhen the America Invents Act (AIA) was being formulated, from about 2005 – 2011, nothing was more subject to change bill-to-bill than the proposed “1st look” and “2nd look” procedures for issued US patents. Should the U.S. have a regular opposition procedure, or should existing inter partes reexam just be tweaked? The AIA final result is the universally dis-liked post grant troika known as PGR, IPR, and CBM. I could be rhetorically creative, like personalized license plates, and come up with (likely obscene) words to match the feelings I have for each post-grant acronym. But, since this is a “polite” policy and debate publication, I will refrain. Instead, I will leave those words and invective and associated rhetorical license for a forthcoming article on Supreme Court 101 jurisprudence. Stay tuned!

For today I will confine my remarks (and associated fixes) to three truly bad ideas that in practice have played out as particularly egregious. More specifically: (1) the lack of standing required for inter partes review (IPR) challenges; (2) the lack of any real ability to amend claims during a post grant proceeding; and (3) the trivially low threshold (i.e., reasonable likelihood) that initiates an IPR. I realize that myriad other failings, i.e., lopsided rules favoring requesters, for example, pervade PTAB proceedings, but these 3 issues are at the top of my list. If these three problems could be fixed, and they can be fixed, most of the other problems would sort themselves out.

IPR Standing

It seems to me that in order for a procedure to replace an aspect of litigation, the same standing requirement ought to be in place in the substitute venue. In essence, if you cannot file a Declaratory Judgment (DJ) action in Federal Court to challenge patent validity, then you ought not to be able to run to the PTO and do, more-or-less, the same thing. The reasoning is simply that a property right should not be subject to the whim of those who find it a philosophical inconvenience.

Worse, IPR has made a mockery of all that was Hatch-Waxman. Why wait? Why do any real research? Why invest? Sit tight, wait for others to precede you in all the heavy lifting. The literally decades of effort that come at a price tag of billions – sometimes many billions – of dollars. Then, why not just file an IPR and see what sticks? Once you lose, ride the coat-tails of another’s subsequent IPR who has learned from your mistakes. At some point the patent dam bursts. This is a real problem for drug developers, and these challenges are not just being filed by hedge fund billionaires either. IPR represents a serious threat to drug development. Sure, no one will cry about multinational giants losing a patent here or there, but innovation in this space, like in all areas, overwhelmingly happens in small entities and in university labs.

But what is the alternative to a patent? If you are a pharma company with an approved drug, you don’t have a patent, you have a target on your back. The more success you have as a pharma patent owner, the more likely someone, literally anyone, including short sellers, comes gunning for your patent. Your own success has made it all the more likely! This is idiotic, and plainly beyond anything contemplated or debated or even imagined during the conjuring of AIA. It needs fixing. The only way to an IPR should be through an initially filed DJ in District Court. The filer, subject to Rule 11 sanctions in the event of a frivolous or harassing filing, and all the other sanction teeth a Federal Judge can muster, could then elect to have validity decided in the Courthouse or at the Patent Office. The only issues remaining for the Courthouse, once the IPR is finished, are the ones the PTO could not decide, i.e., on sale bar, public use, insufficient spec/claim, 101, etc. This fix requires legislation, and would make IPR similar to CBM in that a District Court gatekeeper would determine standing.

Amending Claims

The second issue on my list relates to the inability to amend the claims during any PTAB proceeding. This lack of amendment was certainly not what was debated during AIA. It was thought, then, that by including the possibility of amendment, the patent owner would have a leveled playing field and, through such amendment, be able to survive an onslaught against poorly written or overbroad claims with respect to an otherwise worthy invention. Not so! Instead, in the system as implemented by the righteous PTAB, the claims are framed, targeted, and invalidated. Period. No second chance. Manifestly, this is not balanced between the requester and the owner. It all favors the requester. The requester can lavish on lawyers and arguments and prior art in an “ambush” setting, the patent owner completely unaware of what lies in wait. Then, once filed, an IPR becomes a 12 month coal chute to invalidity. The patent owner facing all manner of procedural legerdemain.

Fortunately, the fix is easy and does not require legislation. The PTO has complete rule making authority to allow for a Reissue off-ramp for the patent owner. (see 35 USC 315(d)). Within 3 months of filing, the patent owner should be able to file for a reissue, which would auto stay any post grant challenge, whether an IPR, a Post Grant Review (PGR) or Covered Business Method (CBM) review. Any District Court filing, necessary to establish standing, as per my first suggestion above, would be auto dismissed without prejudice. In this way, intervening rights can be assessed if any threat reappears for the requester later on, and the patent owner is afforded a relatively inexpensive, elective timeline (i.e., with extensions) and low anxiety mechanism to retrieve their patent. The same examiners would review the reissue upon the same standard as it was originally. Presto, rejuvenated patent. Challenger/Requester in the clear, and patent saved. Saving patents where proper was, after all, what Congress says in the Legislative History of the AIA was the goal.

Before leaving this suggestion it is worth pointing out that the Federal Circuit has recently heard oral arguments in In re Aqua Products, which will among other things address PTAB amendment practice. If the Court does what they seem to be contemplating, which is to make it easier to amend in post grant proceedings, the PTO will need to figure out how. A Reissue off-ramp could be, and should be, the PTO solution.

Threshold to Initiate

The third item I feel needs addressing is the trivially low standard the PTAB uses to initiate IPRs. The present standard of initiation is: “reasonable likelihood of success”. Good grief, this is a preservation standard for maintaining “status quo” for a short period while a Temporary Restraining Order (“TRO”) is in place awaiting a full preliminary injunction hearing (with a much higher threshold to obtain!). The reason is it a low threshold at the TRO stage is that the very subject matter in dispute, i.e., an historic building, a grove of trees, a pristine river, etc., may otherwise be destroyed. This low standard was never, and would never be, intended as a threshold for granting an IPR to destroy or take property! Talk about a “lack of due process”, this total disregard for property rights, as implemented by the PTAB, transcends that little due process observation and arrives at an idiotic Alice in Wonderland reversal of legal rationale. Insane.

Remember the debate in AIA as to the various thresholds to begin PTO patent validity challenging procedures? Another PTO patent challenging procedure threshold standard was also discussed and adjusted by AIA, to wit: inter partes reexam. A “substantial new question” (SNQ) of patentability, was considered too low a threshold for Inter Partes reexamination. This low threshold was thought to unfairly favor the requester. Too many inter partes reexaminations were being granted at too low a threshold. Hence, for the last 12 months of Inter partes reexamination (9/16/11 – 9/16/12), it simply couldn’t wait; the threshold was raised to “reasonable likelihood of success”! What about SNQ, the now lower threshold for ex parte reexamination post AIA? Where was that on the scale? Well it was certainly higher than what the PTO had applied during initial examination, the “more-likely-than-not” or “preponderance of evidence” standard.

Under SNQ, you cannot simply re-plow the same ground using an ex parte reexamination as the examiner did in original prosecution. It had to be substantial and new. This old initiating threshold of SNQ for both inter parte and ex parte reexamination, was then raised to “reasonable likelihood” for inter parte. Get it: Raised! Yet. Somehow, the PTAB has lowered this threshold to literally almost no threshold at all for IPR initiation. How many IPRs have been refused? Very few. Yes, I realize the institution rate has decreased, but from the patent owner perspective what does the institution rate matter when a challenge has been refused five times and then granted on the sixth petition based on the same arguments and same prior art? And, once started, we all know the outcome: invalidity. Even better, the institution decision is, so far, not appealable. No due process – at all. Property snatched. Patent owner harassed in the process.

If this threshold test is not changed to the appropriate standard, we have the perverse situation wherein the status of a patent as being subject to a post grant challenge weakens with age. This happens to be inverse to its likely value! Initial examination and PGR are held at the more-likely-than not (preponderance of evidence) threshold, then once PGR is out of range and for the balance of the term of the patent, the threshold is presently lowered by the PTAB to the reasonable likelihood standard. That is, prior art that would not raise a question during initial examination and PGR, becomes a Sword of Damocles thereafter. Lunacy without a due process check.

The threshold scale for initiation, from lowest to highest should be: (1) preponderance of evidence (more-likely-than-not) – initial examination at PTO and PGR and CBM initiation, and the threshold subsequent to initiation of any PTO proceeding; (2) Substantial New Question (SNQ) (ex parte reexam only); and (3) Reasonable likelihood of prevailing (rename it “substantial likelihood” if necessary) for IPRs.

The Author

John White

John White is a Director at Soryn IP, a patent advisory and finance firm that, among a host of patent-centric offerings, assists parties in identifying and acquiring patent portfolios that satisfy strategic and business needs. Mr. White is also a US patent attorney and a principal lecturer/author of the PLI Patent Bar Review Course. Since John began teaching patent bar review courses in 1995, he has personally taught nearly 50% of all practicing patent attorneys and patent agents how to successfully become admitted to the Patent Bar. has also taught numerous US Patent Examiners at the United States Patent & Trademark Office (USPTO) in the “Law and Evidence Course” necessary for them to advance to Partial Negotiation authority as Examiners. John serves as an expert witness in litigations and is regarded as a leading authority on patent practice and procedure. For more information please see his profile page.

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 8 Comments comments.

  1. Inventor Woes December 20, 2016 9:02 am

    I think the changes in the AIA were good and accomplished a lot.

  2. Anon December 20, 2016 10:11 am

    Well written article John, evidencing some serious and critical thinking.

    Bravo.

  3. EG December 20, 2016 10:33 am

    Hey John,

    As you always do, a nicely written and very readable article, but also very thoughtful as well. BTW, I can’t wait for your upcoming “Supreme Court 101 jurisprudence” article! Sounds very “juicy” and delectable.

  4. Bemused December 20, 2016 11:33 am

    John, excellent article. One question: Although I wholeheartedly agree with your proposals, is there anything being done on a legislative level to introduce any of these fixes? I wish it weren’t so but I’m not aware of any effort to revisit and/or amend the AIA.

    I think it would be easier politically to abolish the AIA in its entirety than to fix it. Of course, the same goal could be accomplished if SCOTUS actually understood patent law and patent property rights and had granted cert in MCM, et al but that’s another story altogether.

    B

  5. Edward Heller December 20, 2016 4:57 pm

    John, if it begins in court, it should return there. The standard of proof should be changed to clear and convincing — which means that reasonable doubts are resolved in favor of the patent holder.

    Thus the action begins as a DJ, but either party may move the court to invoke the expertise of the patent office to give its advisory opinion on validity not unlike a special master in court. On return to court, the action proceeds, like all other DJ actions, with a right to summary judgment or a trial to a jury with the opinion of the PTAB only advisory. As well, counterclaims for infringement would be compulsory.

    The PTAB would have to adopt a formal claim construction procedure.

    If the PTAB has done its job well, especially on claim construction, then most courts would simply enter summary judgment of invalidity or not invalid unless the patent owner or petitioner has substantial new evidence that was not available before the PTAB.

    No new claims should be permitted. The patent owner may, at his discretion, file for a reissue who proceeding should be expedited as best possible.

  6. Ramesh C. Dhawan December 20, 2016 11:20 pm

    Excellent article. It is unreasonable that the Patent owner is not allowed to amend claims. Many patent jurisdictions including India allow the same. The Patent owner should be allowed to apply for reissue in response to any attack and Patent law should be amended accordingly. (The views expressed herein are personal)

  7. Prizzi's Glory December 22, 2016 4:22 am

    It’s not exactly that problem on which John was focusing, but 35 USC 141 & 145 should be modified to allow an applicant to take his application to the CAFC or to the E. District of Virginia if prosecution is reopened after the PTAB reverses Examiner rejection.

    In the current situation (especially in TC3600), the USPTO can churn an application forever, and the USPTO has taken the opportunity to set policy ultra vires.

    The evidence indicates that before the SAWS procedures became public, the SAWS database was used to instruct APJs to uphold the Examiner despite the merits of the Applicant’s case. In upholding the Examiner the APJs would lie a the behest of senior USPTO officials in criminal violation of 18 USC 1001 and 18 USC 371. After the SAWS procedures became public, the corrupt USPTO officials seem to have changed the procedure to allow the APJs to judge on the merits. If the APJs reversed the Examiner, the TC director seems to have been ordered to reopen prosecution on new and bogus rejections.

    Obviously, a Congressional Commission comparable to the New York City Knapp Commission needs to be set up to investigate corruption at the USPTO and to find out exactly what has been happening and why.

    The USPTO won’t be fixed until a good number of APJs and senior USPTO officials go to prison and are fined. In addition, one can reasonably expect that the establishment of a USPTO Corruption Commission would create an atmosphere in which Examiners and APJs can say no when senior USPTO officials order them to commit criminal acts.

  8. Paul F. Morgan December 29, 2016 2:21 pm

    Prizzi, if the PTO is really “churning an application forever” by giving new and different serial rejections to serial Board examiner reversals, the applicant CAN go to the D.C., and should – under the APA. That is one of the things the APA is for.
    Author, serious suggestions for IPR improvements are appreciated. However, note that a “standing” requirement would require legislation. If that legislation would bar public interest groups from challenging invalid patents that are impacting large numbers of small purchasers it will face tough sledding.
    As to raising the threshold level for IPR institution, note that the percentage of IPR institution decisions [petitions denied] has already desirably substantially increased. Also, if a high percentage of IPR institution decisions were really baseless there would be a much higher percentage of final decisions, including Fed. Cir. reversals, against petitioners than there has been.