Quite understandably, the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB) causes strong emotional responses among many stakeholders in the U.S. patent systems. Among patent owners, a trip to PTAB often involves them relinquishing claims from a Constitutionally-protected property right, an unfortunate fate that befalls more than 90 percent of patents challenged at PTAB.
On the other end, there are those who zealously defend the workings of the PTAB as a way for alleged infringers to legally challenge the validity of the patent asserted against them. So-called “patent litigation insurance provider” Unified Patents is one such participant in the patent system. Unified COO and co-founder Shawn Ambwani rushes to the defense of the PTAB whenever we publish statistics about many patents the PTAB finds defective, or true stories about the patents and patent owners that are harassed by challengers on what is an increasingly routine basis. Indeed, Ambwani has appeared in the comments section of multiple articles published on this site in failed attempts to refute data we provide on PTAB activity.
One point of recent contention surrounds our use of Lex Machina data to question whether 90 percent of patents are having claims invalidated at PTAB. Ambwani has specifically attempted to poke a hole in our decision to include data on settlements. Of course, many knowledgeable participants in the system will readily understand that IPR settlements are not wins for the patent owner. Even Unified’s own website explains that IPR settlements are not a win for patent owners because the only IPR settlements they will enter into, for example, are no-cost licenses that the patent owner agrees to provide to all Unified clients. Still, despite the obvious reality and admissions on Unified’s website, Ambwani argues that the data graphic used shows the same blue color for both settlements and final written decisions with all claims upheld, which is says means that according to Lex Machina an IPR settlement is a win for the patent owners.
Simply stated, Ambwani is wrong.
A recent conversation with Lex Machina data scientist Brian Howard on Lex Machina’s 2017 PTAB Report resulted in some interesting observations on the data we’ve used to arrive at our conclusions. For example, Howard noted that Lex Machina presents its data from the viewpoint not of patent owners themselves but from the viewpoint of legal practitioners that might represent either patent owners or petitioners. “The question or test that our site uses is, at the conclusion of PTAB, is the patent still valid?” Howard said, noting that if a lawyer helps a patent owner reach a settlement that doesn’t completely invalidate the patent, Lex Machina counts that as a win for the practitioner, not a win from the view of the patent owner.
Howard explained that the reason they color code IPR settlements so that they appear as a “win” is simply due to the fact that they chose years ago to characterize their PTAB stats so they could be used quickly by users to determine whether a patent remains in force with valid claims. Howard further explained, however, that it is a mistake to think that characterizing IPR settlements as a “win” is the only way to look at it. “Don’t think it’s the only reasonable way of looking at it,” Howard explained. “The coloring we show isn’t binding on anybody, you can count [settlements] however you would like.”
Getting useful information on whether a patent has claims that remain in force is no doubt useful information, as Howard explains, but the Lex Machina characterization of an IPR settlement as a win because the patent remains valid is meaningless insofar as the patent owner is concerned. In many of these settlements there will already be a finding by the PTAB that the claims are likely invalid, and even with a settlement that finding will linger long past the life of the proceeding. Furthermore, a patent remaining valid and therefore the case being won from the patent practitioner perspective is very different than how it would be perceived from the patent owner perspective. A patent owner who must give a no-cost license to infringers to keep a wounded patent which has been found to have claims that are likely infringed is not a win. Therefore, any objective thinking, sane, rational person should appreciate that IPR settlements are not a win from the patent owner perspective, which is exactly what we’ve said all along.
Anyone with a true knowledge of how the PTAB works will realize that extreme pressure is placed on the patent owner to settle on terms favorable to the petitioner. The petitioner holds all the leverage, there is no risk of estoppel ever attaching because the PTAB refuses to include non-instituted claims in their final written decision, so petitioners have nothing to lose and everything to gain. And while an IPR settlement that temporarily staves off a finding of invalidity at the hand of the death squad known at the PTAB may be considered a victory for the attorney representing the patent owner, it is nothing more than a pyrrhic victory.
When an entity like Unified demands a no-cost license to be given to its clients in order to settle an IPR proceeding that is a loss for the patent owner, and anyone who says otherwise is just lying to themselves.