Congress made an enormous mistake with passage of the America Invents Act (AIA). Special interest groups convinced pretty much everyone on Capitol Hill that sweeping new procedures were necessary to challenge already issued patents. Post grant review (PGR), inter partes review (IPR) and covered business method (CBM) review were created based on the promise that they would be faster, cheaper alternatives to riding the system of dubious patents that should never have issued in the first place. By any objective measure these procedures have failed miserably.
So far speed has been obtained thanks to systematic and purposeful denial of procedural due process to patent owners, and so many technology companies continue to scream that the patent troll problem simply has not subsided. In fact, so bad is the patent troll problem – apparently – that companies are continually forced to settle bad cases where weak, low quality patents are being asserted by bad actors (i.e., patent trolls). If you listen to the narrative of America’s elite technology companies you are led to the inescapable conclusion that the Patent Trial and Appeal Board (PTAB) and the aforementioned three new procedural challenges to issued patents are an abysmal failure.
We were promised the PTAB and post grant procedures would put an end to patent trolls using bad, weak, low quality patents. But that just hasn’t happened. In a sane world that would mean after 54 months of experience we would be talking about making wholesale changes, particularly given that the PTAB and these new post grant proceedings have so dramatically impacted the value of all patents in an extraordinarily negative way.
While it remains a mystery as to why technology companies continue to pay patent trolls to settle bad cases rather than use the tools Congress provided, we do know some things with great certainty. It is absolutely certain that at least some patent owners are constantly being harassed with multiple post grant challenges on pretty much every patent of consequence they own. In some cases there are multiple challenges against the same patent filed on the same day by the same challenger. In other cases, challenges are filed repeatedly and even when they are not instituted by the PTAB the same or very similar challenge is filed again, then refilled and filed yet again, and again, until finally a PTAB panel relents and institutes the challenge. These serial challenges that ultimately do get instituted is one reason why it is very hard, if not thoroughly impossible, to take the Patent Office statistics seriously when they show a decrease in the institution rate.
What exactly is the institution rate on a patent that has been challenged four times and not instituted four times, but then challenged a fifth time and instituted on that fifth request? Is that a 20% institution rate? To call this a 20% institution rate is laughably ridiculous. From the patent owners perspective this is worse than a 100% institution rate. The Patent Office in concert with the challenger forced the patent owner to successfully defend four petitions and then still instituted on the fifth request. Calculating this as anything less than 100% institution is misleading if not completely bogus. Why USPTO Director Michelle Lee allows these types of repeated challenges to be filed over and over again is a mystery. Lee has the statutory authority to protect patent owners from exactly this harassment, but she has never once used it despite the legislative history being very clear that Congress specifically wanted the Director to be able to step in and stop these types of serial, harassing challenges.
How the Patent Office reports statistics relative to institution rates, as intriguing as it may be, misses the real problem though. The real evil of the post grant challenge system is that a patent can be challenged repeatedly and at any time. Title to a patent never quiets, and for that reason a patent is not a property right like any other.
What other property right must the owner fight repeatedly and in multiple jurisdictions and venues to preserve? What property right can be challenged by Party A for X reason, and then after X reason is found unpersuasive the property right can be again challenged by Party B for X reason again? The statute says patents are supposed to have the characteristics of property. The modern U.S. patent is the most bizarre property right I’ve ever seen. So bizarre is the modern U.S. patent that it is hardly fair or accurate to call it a property right at all. At best the modern U.S. patent is an illusory right that only fools owners into hoping and believing they have some property right. But a property right that never settles isn’t a property right at all, which would be obvious if the principles of modern patent law were applied to real or personal property.
While there are many fixes that need to happen to bring about even a modicum of fairness and justice to the PTAB processes, the most important fix that must occur is a change to the law that recognizes a quieting of title for patents. Serial challenges against the same patent must end, period.
Don’t listen to the critics for a moment, there absolutely could be changes made to the patent laws that would lead to a quiet title for patents. We know how to do this for property, and in fact it happens literally every day in courtrooms all across the country. For example, when real property is used to secure a loan and the loan is not paid the property will be sold, but anyone with rights is notified before a sale can take place. In fact, the law in every jurisdiction on what notice is required is well established, whether it be the notice due so that a lien can be place on a property, or the notice due prior to a sale. There are also detailed notice provisions for matters of zoning and planning when adjacent properties will be impacted. And if actual direct notice cannot be given there are provisions that allow publication of such notice in newspapers and via other means. The same or similar also happens in bankruptcy courts every day.
So, in other words, we know very well how to both legally notify interested parties in ways that have been thoroughly vetted for constitutionality, and we know very well how to legally extinguish the rights of interested parties who choose not to participate in proceedings for one reason or another. So anyone who says that it is not feasible to quiet title in a patent once and for all and extinguish any and all challenges moving forward is either unfamiliar with American jurisprudence, or has an agenda that finds the quieting of patent rights unappealing.
As you’ve probably surmised, the fix to the law that is so desperately needed is one that would make any post grant challenge a single event. If a party challenges a patent in a post grant proceeding notice should be provided to the industry, such as through the Patent Office Gazette and/or other mechanisms, providing any and all interested parties the ability to similarly file a challenge against the same patent with a certain number of days – perhaps 90 days or maybe 120 days. Then once the time period for challenges has run the PTAB can determine which claims to institute, if any, and the case can proceed.
This proposal puts an end to the serial, never-ending, harassing challenges that patent owners face. Once a challenge is brought to the patent speak now or forever lose your right to seek redress through the PTAB.
This one and done approach to post grant challenges is hardly a radical idea, although you can expect critics will no doubt portray it as such. But since when is significantly streamlining a dispute resolution system so that it more efficiently and effectively utilizes precious resources radical? One and done challenges to patents are a fiscally conservative and responsible approach to government, and the only legitimate way to treat what the Patent Act tells us is supposed to be a property right – by at some point settling title of the patent at least insofar as challenges at the United States Patent and Trademark Office are concerned.