More Bites at the Apple?

Conversations with practitioners and inside patent counsels about PTAB have unveiled some concerns. While the USPTO claims that sequential challenges are not the problem that they have been made out to be, the drumbeat about weak estoppels after a final decision at the PTAB are echoing in the patent-holder community.

Below is a case in point.

TCL Communications (TCL), a Chinese smartphone developer and manufacturer filed 3 IPRs against Ericsson US Patent No. 7,149,510 (or the‘510 patent). The patent survived the challenges at the PTAB. In December of 2017, a court found that TCL Communications willfully infringed that patent and awarded Ericsson $75M in damages (the award was subsequently enhanced to $100M).

In October of 2017, 18% of the shares of TCL were transferred to Unisplendour Technology Venture Capital which is a subsidiary of Tsinhua Unigroup. Spreadtrum Communications is also a subsidiary of Tsinghua Unigroup and is a shareholder in Shanghai Lunion Information Technologies (SLIT). On April 30, 2018 SLIT filed another IPR on the ‘510 patent. SLIT is a Chinese consortium of integrated circuit design and manufacturing companies. SLIT runs the Mobile China Association, a business association for the mobile phone industries in China. TCL is also a member of the Mobile China Association.

What a dizzying web!

After TCL lost its IPRs against Ericsson in a written decision at PTAB, it was barred from filing subsequent IPRs against the ‘510 patent. TCL was then hit with a very large verdict for infringement of the patent in court. Then, four months after the verdict the same patent is challenged at the PTAB again by a consortium that has some relationships to TCL.

The USPTO has been touting the fact that the percentage of subsequent filings of IPRs is relatively low as follow-on petitions in IPRs are only permitted by the same petitioner when there was no written decision in a previous case. The Office claims that “gang tackling” of patents is not occurring at the rates patent owners argue that it is happening. Recent statistics show that 67% of the patents challenged at PTAB have only one petition. Another 20% of the patents facing challenges have two petitions, leaving only 13% challenged by 3 or more petitions. But it does seem that some are trying to find ways around the estoppel.

Section 314 of the Patent Act does provide discretion to the USPTO to deny follow-on attacks, but sometimes a subsequent petition is not clearly from the same entity. And section 325(d) addresses same arguments and evidence, but not different evidence.

It is the patents that seem to have some value, like those that are likely to be deemed valid and infringed in court that may be the victim of some gamesmanship on the challenger’s side.

With the very limited discovery permitted in the PTAB, it is sometimes difficult for the patent holder to determine who has the interest when the entity filing the petition is so complex.

Perhaps we need to permit more discovery of the “real party of interest” early in the case or to tighten estoppel.

But we need to make sure this gets fixed.

Image Source: Deposit Photos.

Robert Stoll Robert Stoll is a Partner and Co-Chair of the IP Practice Group at Faegre Drinker Biddle and Reath and a former United States Patent and Trademark Office (USPTO) patent commissioner [...see more]

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Join the Discussion

5 comments so far.

Scott McQuarrie
July 24, 2018 08:14 pm
“What a dizzying web!” Indeed!

“But we need to make sure this gets fixed.” Are we to believe the author, when providing input to what was to become the AIA, thought this widespread abuse of IPRs at PTAB was unforeseeable?

Now that, 7 years later, CAFC has finally seen the light and ruled in WiFi enbanc that institution decisions are appealable (pesky little thing, that Due Process), and now that at least judges O’Malley, Reyna and Hughes (in Applications in Internet Time v. RPX, July 9, 2018) have informed USPTO how “real party in interest” and “privity” issues must be approached and decided (including that a “deep consideration of the facts is required”), who has the burden of proof, etc., the 315(b) time bar avoidance scam at USPTO should be up.

Those now leading USPTO should, as the author admits, “fix” this. Here’s an idea that would work rather quickly and effectively.

FRCP 11(b) states that by signing and presenting a pleading, an attorney or unrepresented party makes representations regarding its content, including reasonable investigation and the existence or expectation of evidentiary support for its content. Rule 11(c) provides sanctions for violations.

USPTO should adopt a similar rule for practice before it (if it does not already have one) and further providing that any attorney (and law firm) that fails to disclose any real party in interest (as is expressly required by section 312(b)(2)) in an IPR petition will be subject to sanctions and, upon a finding at a show cause hearing that such omission was knowing or intentional, or the result of inadequate investigation, will result in the law firm’s suspension for three years from practice before USPTO.

It’s time for lawyers to begin living up to their ethical obligations to serve the public honestly, and for USPTO leaders to require it.
SVI
July 23, 2018 05:36 pm
SOCIALISM
You have 2 cows. The State takes one and gives it to your neighbor who doesn’t have a field to put it in.

COMMUNISM
You have 2 cows. The State takes both and gives you some milk. Then the cows die due to neglect.

CAPITALISM
You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows, increasing revenues to the State. You sell the herd and retire on the income.

AIA-ISM
You have two cows but the State incentivizes foreign competitors to invalidate their udders. You and the State go bankrupt as the competitors swim in milk.
Tiburon
July 23, 2018 04:45 pm
> “But we need to make sure this gets fixed.”

Echo meet chamber.

For those with an open mind – what really needs to be fixed is:
1) Innovative software companies getting taken to the cleaners by parasites. Without software innovators, America will succumb to foreign competition.
2) Treble damages incentivizing NOT looking at patents. Hang for treason both the person(s) who came up with that idea and the person(s) who pushed it through.
Bemused
July 23, 2018 11:46 am
Message to the Efficient Infringer Lobby: You reap what you sow, morons.

For years now, many of us have said that the Chinese would end up using the PTAB to try to knock out US patents paving the way for Chinese companies to come into this country and gain (steal) market share with infringing products.

Mark this case as Exhibit I.
Night Writer
July 23, 2018 11:24 am
>> Recent statistics show that 67% of the patents challenged at PTAB have only one petition. Another 20% of the patents facing challenges have two petitions, leaving only 13% challenged by 3 or more petitions. But it does seem that some are trying to find ways around the estoppel.

But are the 67% all invalidated. The 20 percent invalidated with two IPRs. And the 13% invalidated with 3 or more petitions?

Are they just filing enough to invalidate any claim asserted against them?