PTAB Invalidation Affected by Random Errors, Legal Uncertainties and Judicial Bias

By Jianqing Wu, Ph.D.
October 22, 2017

Trial & ErrorIn this article, I will show how random errors, legal uncertainties, judicial bias, and application of multiple rules and doctrines affect the probabilities of PTAB invalidation of patents. I will use several simple models to show how those factors work against patent owners in a multiple-challenge environment.

1. Random Errors Work Against Patent Owners

A patent, which is assumed to have marginal merit, would be invalidated or survive by an equal chance of 0.5. Final results of the challenges would depend upon a large number of random errors such as attorney’s strategic errors, clerical errors, citation error, judge’s ruling errors, omission of required statements, missing deadline, and more. It is assumed that the administrative judges are impartial and all parties work within the bounds. I will estimate the probability for each of the challenges and the cumulative probabilities of invalidating the patent. In any single proceeding, those errors work in both ways: any of them may help the patent survive or kill the patent. However, the errors are aggregated in a total different way when there are multiple challenges running independently. To survive, the patent owner needs to beat the odds in each of the challenges. However, to kill the patent, the challenger only needs to make one single fatal-strike. The following table shows how probabilities look like:

Table 1. The cumulative effects of random errors in multiple challenges on the probabilities of invalidating a patent

Note: I use 0.5/0.5 probabilities solely for convenience, a result with similar treads could be shown by using 0.4/0.6 probabilities.

This table shows that errors in favor of invalidating the patent accumulate. The first challenge may be fair, but in the second, third, and Nth challenges infringers will eventually take the patent out. The bias caused by error accumulation is the reason why double jeopardy is prohibited under the U.S. Constitution. If we have a large set of data for patents with marginal merit, the data would show that patent owner might screw up in one or more of potentially thousands of things from filing a wrong paper or perhaps to mistake in fee payment. It is possible some patent owners just give up.

2.  Legal Uncertainty Works Against Patent Owners

The following table shows how legal uncertainty works against patent owners. It is assumed that the legal theory has created a probability uncertainty. For a patent with marginal merit, it could be invalidated or saved. However, due to the desire to invalidate the patent, administrative judges may take advantage of the legal uncertainty in invalidating the patent. Table 2 below shows how this element might affect the probabilities of invalidating the patent in different challenges.

Table 2. Cumulative Effects Of Legal Uncertainty On Invalidating A Patent And The Probability Of Invalidating The Patent In Each Of Multiple Challenges

Note: R is the change in probability attributable to legal uncertainties.  It is an arbitrary number, but 0.2 is a reasonable number to show legal uncertainty. Any value would be used to show the same trend.

P and Q are hypothetical probabilities for survival or invalidation. R is a change in the probability attributable to legal uncertainties (a reduction in probability to survive).  A patent could be invalidated at a higher probability if judges resolve each legal uncertainty against the patent owner. To some extent, this is a subtle bias that is restricted by existing law and case facts, but the judges still work within the bounds of law. Patent owners cannot successfully challenge such bias. When all legal uncertainties in different proceedings are resolved against the patent owner, the probability of invalidating the patent will increase. The probability of invalidating the patent will rapidly increase with the number of challenges.

I made an assumption that all proceedings are not related. However, different proceedings may involve the use of same reference, same judges, and same case law. Despite the lack of independence, the table accurately predicts how this factor might work against the patent owner.

One problem is the abuse of broadest reasonable interpretation standard. The Patent Office does not provide general guideline on how to find equivalents for claimed elements. The PTAB can use one or two words in a claim limitation to find claimed elements. This gives them great margins to exercise discretion against patent owners.

3.  Bias of Administrative Judges Works Against Patent Owners

It is known that the Patent Office selects administrative judges who are willing to invalidate patents. Since they can and do manipulate panels to achieve invalidating results, the impacts of their intentional conduct cannot be studied by any probability model. They can achieve whatever they want. However, I still use a simply model solely to show the boundaries of the impacts of their intentional conduct. Their conduct is limited by office rules and precedents which can prevent them from entering completely arbitrary decisions.

The real problem is the combination of using the broadest reasonable interpretation standard and worldwide prior art in a Section 103 challenge. This combination could kill most patents. Deciding patent validity under this combination is impossible in practice. No one can ever exhaust prior art if he or she is determined to find prior art. If a sufficiently large reward is offered, prior art reference could be found anywhere in the world in any language. Then, no body can prove or disprove the existence of such a reference.

Table 3. The Impacts of Biased Administrative Judges and Acts of Improper Conduct of Challengers on Probabilities of Invalidating a Patent

Note: S is a change of probability attributable to the bias of administrative judges or the improper conduct of the challenger.

I do not show cumulative invalidating probabilities because each challenge could have near unity for invalidation and a patent cannot be invalidated twice or multiple times. The product rule used in Table 3 is still applicable as the patent survival depends upon the product of survival probabilities. However, when bias is a factor, one challenge most probably would take the patent out. To see how multiple challenges affect the patent, imagine that the patent is challenged in multiple secret proceedings, after all proceedings are over, and then see results. Chances are that the patent might have been invalidated multiple times.

4.  Application of Multiple Rules Against Patent Owners

Contrary to the trend to reject, disuse, abolish, and reform the common law adjudication model in the world, the patent office has made its rules more and more complex with endless technicalities. Its proceeding is run like a common law court. Therefore, I would like to examine the cumulative impacts of applying multiple motions, multiple doctrines, multiple rules, or their combinations in an invalidation determination.

The foundering fathers of the nation did NOT use a court as the agency for issuing patents even though court was then the body that issued patents in states such as Massachusetts. They must have anticipated that if a patent would be issued by a court, the patent system would not thrive. They knew that Britain had an equity movement to address the well known injustice that was often seen in common law courts. Despite such well known lessons, the Patent Office (at the behest of Congress) created the whole version of court-like proceedings for the PTAB.

To see the serious bias in PTAB procedural designs, one should note how the adjudication model was developed. The model was developed in England before the probability theory was known (The first recorded evidence of probability theory can be found in 1550 in the work of Cardan). The common law model in its current state is inherently bias against plaintiffs. This is not what the designer could understand at that time. Assuming that a plaintiff must pass four motion challenges, and, for each of the challenges, the plaintiff has a 0.5 chance to survive, the final chance for the plaintiff to survive all challenges would be 0.5*0.5*0.5*0.5=0.0625 (assuming that each challenge is based on procedural facts unrelated to other challenges). In other words, the chance of success for the plaintiff is much lower than a hypothetical probability based upon case merit. When a defendant keeps trying to throw out a case, it will hit a lottery at some point. When the system has this built-in bias against plaintiffs, the judge’s bias, however slight, can greatly affect case outcomes. While patent owners are defendants but not plaintiffs, the PTAB procedure actually puts them in a similar unfavorable position because the purpose is to invalidate challenged patents. The procedure is designed with all adverse actions for default, mistakes, failure to appear, etc. against patent owners.

One big problem in PTAB procedure is using multiple rules, doctrines, and holdings in invalidating the patent. The successive applications of multiple rules or doctrines in a proceeding result in a great bias. Application of multiple rules were frequently used in all common law courts. This practice is still common in courts in a few nations. For example, a rule or doctrine may decide what law is used, which precedent controls, what evidence is admissible, and how an issue should be decided. Those rules or doctrines were developed in ancient society where the ability to find truth was very limited. Many rules are accepted in a majority of jurisdictions because they are most PROBABLY right. Whenever, an issue is controlled by such a rule, the issue in a case would be decided by the rule directly. In other words, the outcome of the case would depend upon the analysis whether the rule should be applied or not. This analysis would hinge on a small number of factors unrelated to case merit.

Errors inherent in such rules impair the court’s ability to deliver justice. However, a much bigger problem occurs if multiple rules and doctrines are used in one ruling. All errors can accumulate. A plaintiff loses his or her case if he loses one, two, or all of the issues. Most plaintiffs would be denied of justice due to accumulated errors.

This error-accumulating problem is very serious in patent cases because the patent is supposed to have exclusive right for about 17 years (with about three years used as prosecution time). A challenged patent may be invalidated if any of the three issues decided under the rules or doctrines is against the patent owner. If each rule introduces 0.4 error probability, the accumulated error probability by three time applications would be 1- (1-0.4)^3=0.784. This can be viewed as the probability for the patent owner to lose due to accumulated errors in all three rules. The patent may be invalidated due to the errors inherent in those rules and doctrines.  The PTAB procedure would have a similar bias.

5.  Combination Impacts of Errors, Bias, Legal Uncertainty, and Rules

The PTAB procedure has all of those attributes that are discussed in the models. That is why the PTAB can invalidate 70% or more of challenged patents. Those four factors work in some kind of cumulative way. If a patent is challenged once, the patent owner suffers a great threat attributable to normal errors and errors inherent in all majority rules and doctrines. If judges are required to invalidate the patent by using whatever legal uncertain they can use, the chance for invalidating the patent will be further high. If administrative judges are bias, they can use incorrect precedents, rewrite case facts, re-invent prior art, call an apple an orange, and cite arbitrary citations. There is no chance for this patent to survive. So, many of challenged patents would be invalidated by random errors; and many of them are invalidated by legal uncertainty, and some of them are invalided due to the bias of administrative judges. While patents are invalidated only once, many of them could be invalided many times for difference reasons.

The model results unequivocally speak the truth about how errors and bias are aggregated in one way to hurt patent owners in multiple challenges the PTAB procedure most probably violates the Fifth Amendment of the U.S. Constitution.

The U.S. Constitution, Fifth Amendment reads: “No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

The PTAB invalidation procedure violates due process because it drags patent owners into endless assaults by patent infringers and patent thieves. Due process requires compliance with standard notions of fair play and justice, which is lacking at the PTAB. The PTAB invalidation process does not afford due process because it allows an unlimited number of infringers and patent thieves to shoot down a patent in a never ending series of challenges. If one challenge misses the target, the second and the third challenge will hit it, or ultimately it will be hit by the Nth challenger. When patents can be attacked repeatedly in such a bizarre way, the patent reward of an exclusive right is a meaningless promise.

The same clause baring double jeopardy in Article III courts must make such unlimited jeopardy in PTAB proceedings unlawful.

 

The Author

Jianqing Wu, Ph.D.

Jianqing Wu, Ph.D. (John Wu), Ph.D., is a registered patent attorney and an independent inventor having 8 U.S. patents in legal process, file storage security, open public computing systems, and online databases for the consumer market. His research interests touched sciences, engineering, law, and medicine. He earned B.S. in China, and received M.S. and Ph.D. (in Physical Chemistry) from North Carolina State University. He did postdoctoral research in Medicinal Chemistry in University of Illinois at Chicago and the National Institutes of Health. He learned methods and knowledge for characterizing whole complex systems. After he acquired J.D., he systematically studied the performance of the common law model and its adverse impacts on productivity. Being able to access multiple cultures, he conveniently used first-hand data in evaluating trade performance for different production cultures. Recently, he has developed a new interest in preventive medicine with his focuses on methods for preventing heart diseases, stroke and cancer. He was a member of four honorary societies: Phi Lambda Upsilon, Sigma Xi, Phi Tau Sigma, and Gamma Sigma Delta.

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Discuss this

There are currently 14 Comments comments. Join the discussion.

  1. Tim October 23, 2017 6:49 am

    Look no further than Vringo vs IP Internet. Google, AOL, Target & Gannett played the stalling game in this infringement case. I believe that they went to the USPTO and had the patents pulled/examined like 5 times. Vringo came out on the winning edge. 12-man court under Judge Jackson decided 12-0 (unanimous) on all 14 charges. “However, it was strange that Google said, “we got this”, and took it to the Appeals Ct, to have 2 judges “toss the case”, as the only qualified judge, who was the former head of the Patent Office, “Judge Chen”, highly dissented against Mayer and Wallach. Vringo went all the way to the Supreme Ct with Atty David Buies, and the court refused to see the case. Vringo stock tumbled, did a reverse split, and is now known as File Holdings, and around $1.30 a share. This is what happened when King Obama put Google agents throughout our government and courts.

  2. Night Writer October 23, 2017 8:37 am

    There are lots of cases of multiple IPRs being filed.

  3. Night Writer October 23, 2017 8:38 am

    >>King Obama put Google agents throughout our government and courts.

    This is exactly right. The CAFC is now dominated by judges selected by Google.

  4. Anon October 23, 2017 8:57 am

    Gene recently quipped about “luck of the draw” when it comes to any one case and the particular panel makeup at the CAFC.

    I have seen no one (else) mentioned how this “luck” is further stacked against patent holders due to the laxity of the Chief Judge to enforce any type of panel to panel consistency (a panel decision is supposed to be binding on other panels and only changed by an en banc ensemble).

    I could envision the Chief Judge allowing this as some type of “percolation” effect, but instead of bolstering confidence that the law is coalescing to stability, the opposite effect of instability and lack of respect for the CAFC continues to grow.

    The slim hope that Congress awakens from its slumber (and breaks away from its own “capture” effects) is just that: slim.

  5. Ratphlem October 23, 2017 11:06 am

    At some point it should (must) become obvious that the idea was not obvious.

  6. Valuationguy October 23, 2017 11:13 am

    Anon,
    You mention that the Chief Judge is lax in enforcing panel-to-panel consistency.

    I assume you mean Prost….who by my count sits on MORE PTAB cases than any other judge on the CAFC….trying to enforce her Google-trained view on her colleagues. This is the same Chief Justice which has IGNORED legal precedence to screw patent holders time and again….

    The problem is more that the better judges on the CAFC….who followed the rules about using precedence have had 4 years of her and Dyk creating an ABSOLUTE MESS of interpreting the patent laws…and, supported by the increasing attention the SCOTUS is putting on the mess Prost has create, they are pushing back by using the same tactics Prost did….using minor details to say THIS case is different from precedence (or outright forcing an en banc to correct bad precedence from being cemented). Since the CAFC is nearly evenly split in its views toward patents…Prost can’t dictate to her opposition.

    Prost knows her term as Chief Judge is limited and is trying to do as many favors for infringers as she can before she loses her pulpit to another.

  7. Confused Pharmacist October 23, 2017 3:34 pm

    People who complain that their patents have been invalidated remind me of this Louis CK skit: https://youtu.be/qyZms1YIfYM

  8. PTO-Indentured October 23, 2017 4:04 pm

    A PTO-Stewarded American-Inventor ‘Cleansing’

    I believe Dr. Wu has taken the time in a previous IPW article to explain that individual American inventors prior to AIA/PTAB and a PTO-stewarded patent-death mandating, were filing about 30% of U.S. patents (close to one in three), whereas today, only several years later, it’s 5% (one in twenty).

    If anything near a six-fold decrease has occurred, then PTO rule-making has already achieved American-Inventor ‘Cleansing’ — Or dare I say figuratively(?) an American-Inventor genocide.

    To an extent that my recollection (above) is true and accurate (or adjusted to be so) this horrible nosedive should put into a simple, telling and powerful graph and blazened on the IPW website and any and all pro-patent venues still holding some ground (counter to controlling U.S. Big Tech Corps.)

  9. Roger Heath October 23, 2017 8:05 pm

    Given the arbitrary nature of the PTAB proceedings I (regretfully) suggest an illustration of the defective nature of the same.

    If “boiler plate” forms are available for patent applications, perhaps the same can be provided for PTAB challenges. The cost born by individuals researching and filing their own challenges vs. defense fees could be astronomical.

    Imagine if everyone (despising?) the likes of Google sat down and researched their most recent (few thousand?) patents and files against the one(s) they most felt they could defeat at minimal personal (or group) cost.

    A few hundred or thousand such challenges might get someone’s attention.

    I recommend “Go Fund Me” as an avenue as well.

    What say you?

  10. Night Writer October 23, 2017 11:01 pm

    @9 Roger interesting idea. It does illustrate that allowing challenges to patents without standing creates all sorts of possibility for abuse.

    I suspect many of small companies have felt the threat of a large corporation filing 10’s of IPRs to trash their patent portfolio.

  11. Confused Pharmacist October 24, 2017 10:00 am

    Lots of “patent genocide” claims these days, not unlike the white nationalists claiming “white genocide.” Sad state of affairs…

  12. Anon October 24, 2017 12:05 pm

    Confused Pharmacist,

    Your attempt (not the first one) of aligning a view that you do not agree with, with white nationalists is a bit of racist on your end.

    There is ZERO need or justification for attempting to insert a race card into the discussion.

    Please pause and think a bit more critically before you offer such comments. Not only are they NOT helpful, but they are offensive to those of us that understand patent law and are fighting for a return to a strong patent system that accompanied the time that this nation was considered the MOST innovative nation in the world.

  13. PTO-Indentured October 25, 2017 9:54 am

    Dear Gene, and Friends of the Pre-AIA US Patent System (10x better than now),

    Roger (@9) has suggested an interesting pro-active approach to dealing with PTAB unfairness. An additional, complementary way concrete ideas for rebutting PTAB arguments — that I think IPWatchdog would be an ideal vehicle for — would be to feature a kind of IPW-reader ‘crowd-sourced’ area in the blog, where any potentially effective and/or best-practice(d) approach, e.g., in view of case law, can be posted and ranked by IPW readers (prefaced with a sensible disclaimer that such postings in IPW, and made by submitters, are not to be taken as ‘legal advise’). Postings could be rated e.g., by a 1-5 star-rating with the current number of ‘raters’ indicated.

    Example:

    Help Fight PTAB Unfair Practices

    PTAB Cherry-Picking

    In instances where the PTAB, contrary to law, cherry picks a portion of a sentence in a specification (e.g., to assert a claim construction), while ignoring a remainder portion thereof and/or additional disclosure which clearly is contrary to the PTAB’s asserted position, review In RE Smith Int’l (linked to one or more IPW articles discussing the case) and indicate concisely how the PTAB’s position in ‘inconsistent with the specification’.

  14. PTO-Indentured October 25, 2017 10:16 am

    Confused Pharmacist (@11),

    You have missed the main point being made @8: the figurative ‘genocide’ refers to the ‘Cleansing’ of the individual American-Inventor (‘AI’) from the US patent system (under PTO/AIA rules ‘influenced’ by, and thus favoring, a PTO/Tech-Corps Aristocracy). Wherein: US patent filings by AIs, pre-AIA/PTAB, were nearly 1 in 3, but now (only several years later) only about 1 in 20.

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