Solutions for Inter Partes Review: Restoring patent rights and respect for the presumption of validity

By Neal Solomon
August 10, 2017

EDITORIAL NOTE: This is part 6 of a multi-part series by author Neal Solomon. If you have missed previous installments please see part 1: The Myth of Patent Quality; part 2: Patent Quality Relies on a Fictitious Narrative; part 3: The Problem of Reducing Patentability to Novelty; part 4: The Problem of Obviousness; and part 5: The Problem of Inter Partes Review (IPR). In this installment Solomon provides his solutions for Inter Partes Review, which start with restoring patent rights and respect for the presumption of validity.

In order to restore these patent rights and respect 35 U.S.C. § 282 (presumption of validity), consistent with i4i, the following steps are required to constrain the PTO review process in Inter Partes Review (IPR), Post-Grant Review (PGR) and Covered Business Method (CBM) Review. Collectively, these elements are intended to balance the rights between the patent owner and petitioner and to provide equilibrium in procedures between the Federal Courts and the PTAB.

  1. No more than one member of the PTAB review board that institutes the IPR, PGR or CBM can be included in the board that evaluates a patent in an IPR, PGR or CBM.
  2. Respecting the presumption of validity standard, the PTAB must apply the clear and convincing (C&C) standard, not the probability of prevailing or preponderance of the evidence standards, for institution of an IPR, PGR or CBM, particularly in cases in which the patent owner cannot amend claims.
  3. Patent holders that have IPRs, PGRs or CBMs instituted must be given the option to select two different claim interpretation standards. First, they can select the broadest reasonable interpretation (BRI) standard, which will allow claims to be amended with N auxiliary claim sets to enable the PTAB to select a preferred claim set. Second, they can select the narrower Phillips standard, applied in the U.S. District Courts, which are applied to refer to infringement analysis, by waiving the patent owner’s right to amend claims in the patent under review. IPRs are only useful if patents are amendable.
  4. Challenges to IPRs, PGRs and CBMs have one opportunity to challenge a patent according to the “could have” brought arguments clause of the AIA. Serial challenges and multiple challenges based on different, or parallel, review modes, are a harassment of patent holders and an abuse of the system.
  5. Since patent validity challenges are a proxy for litigation, to limit harassment, an infringer may be required to pay patent holder attorney fees if they lose an IPR, PGR or CBM, consistent with Octane Fitness, particularly in cases in which a serial infringer or hedge fund abuses the reexam system.
  6. The PTAB must address all challenged patent claims in a final determination of an IPR, PGR and CBM. Estoppel is applied to claims not addressed as well as claims addressed in any reexam institution. Claims not challenged in action are not subject to a follow-up review. However, this should not foreclose the opportunity to timely challenge all claims in multiple IPRs, PGRs or CBMs directed to different claims as long as the IPRs, PGRs or CBMs are filed within a time limit of each other – e.g., 3 months – to allow for consolidation of proceedings. This is not to foreclose other Petitioners from filing separate challenges but to “shepherd” all challenges by Petitioner A against Patent X.
  7. Challengers are limited to fifteen IPRs, PGRs or CBMs in a single year in order to limit abusive patent challenge practices of technology incumbents and hedge funds that are anti-competitive. Challengers must have standing to bring a patent review.
  8. Once a District Court decides to review a patent’s validity, further PTAB review is barred. Further, juries have a right to overturn a PTAB assessment of patent invalidity, reviewable for error.
  9. The Department of Commerce must institute a Policy Oversight Board (POB) to review PTO rule-making and fee-setting. The 7-member POB will include different stakeholders. PTO Director initiatives must be reviewed and approved by a majority of the POB. The GAO may also review PTO procedures and initiatives and make periodic recommendations to Congress about PTO activities.
  10. Review the standards for obviousness by interpreting prior art and limiting the combination of prior art references. Balanced, and consistent, standards need to be implemented.
  11. Eliminate the PTO politicized bias in favor of infringers, which tends to delegitimize PTO authority.

IPRs are a sort of blockage designed by infringers to attack the patent system on the mistaken belief that all patents are bad and weak. The illegitimate procedures embedded in IPRs at the PTAB show that the issue of patent quality driven by the big tech narrative is the source of many problems in the patent system. Ultimately, the costs increase dramatically for patent holders to defend a previously issued patent in the PTO, which provides a huge advantage for infringers to maintain their efficient infringement strategy of ignoring and infringing patents. The low barrier to attack patent validity undermines the incentive to invest in R&D, particularly for capital constrained market entrants, which is required for a healthy economy. Without major changes at the PTO on patent review that will introduce some semblance of due process, the IPR process will be illegitimate and inefficiently undermine the patent bargain.

CLICK HERE to CONTINUE READING… Up next is a discussion of the free-rider problem and high asymmetric cost for innovators to re-prove their patent validity in IPR, which impacts patent value.

The Author

Neal Solomon

Neal Solomon is CEO of Advanced System Technologies Inc. A prolific inventor of technologies involving semiconductors, communications, data management, imaging, robotics and healthcare, he holds degrees from Reed College and the University of Chicago.

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 5 Comments comments.

  1. Paul F. Morgan August 11, 2017 8:28 am

    If it were possible for the PTO to do this, it might become a case of being sorry to get what you asked for. Few patent owners in IPRs ever even attempt to amend claims, out of concern for sacrificing litigation infringement scope enforcement and intervening rights for the broader claims being substituted. But if In re Phillips claim construction was thus selected, it would no longer be possible for the patent owner to argue that its claim scope arguments in the IPR are not relevant to it’s patent enforcement because it was an argument for BRI claim scope.
    Also, if you look at the actual claim scope decision in the en banc In re Phillips decision, it was not the narrow claim construction being urged by one side. There has yet to be a study evidencing that there would have been a significant difference in outcomes in IPRs using an In re Phillips claim construction.

  2. Paul F. Morgan August 11, 2017 8:46 am

    BTW, I am not against your idea, just concerned as to the unintended consequences, and the absence of evidence that BRI is a significant reason for the difference between IPR [under APA] decisions and jury prior art invalidity decisions even in the relatively few lawsuits that get a jury trial contest on that issue. There are other, far more significant, differences.
    P.S. Line 4 should have read “..substituted by a narrower claim” for clarity, since that is the only claim amendment that can be made in an IPR.

  3. Chris Gallagher August 11, 2017 9:16 am

    Neal,
    Nicely done.

  4. Edward Heller August 11, 2017 6:08 pm

    Neal, why are you advocating the abandonment of a patent owner’s constitutional rights to a trial in an Article III court and to a jury?

    Moreover, the most essential due process problem is the lack of independence of the PTAB. Trying to dress up post-grant procedures to mock those of courts is in fact mocking the rights of patent owners as if they mean nothing.

  5. Edward Heller August 11, 2017 7:48 pm

    Further note, while the patina of due process might be applied to IPR, the people deciding remain in the Executive Branch which fundamentally operates on policy, not law. There is no formal insulation of the PTAB from the political. Indeed, the Director and other top PTO officials are members.

    The PTAB members are not required to be recruited from the examining corps. They are instead recruited from private industry and firms that are largely beholden to major US and foreign companies who, by and large, are presently hostile to patents, especially those held by smaller firms and inventors. They are not supervised to avoid conflicts of interest. There is no mechanism to challenge a panel for bias.

    Moreover, there is no mechanism to prohibit PTAB members from going back to work for big business and their firms.

    The whole system is devoid of the most fundamental aspect of due process, a completely independent trier of fact.