“When Congress enacted the America Invents Act it was so singularly focused on killing patent rights that it set up a two-tiered system for challenging patents…. Patents are presumed valid in federal district court, while patents are not presumed valid at the PTAB.”
It is time to recognize the elephant in the room. The Patent Trial and Appeal Board (PTAB) is broken. And, if we want to be perfectly fair and reasonable in our assessment of the reasons that the PTAB is failing, the blame must trace all the way back to Congress. The creation of three new ways to invalidate patent rights was at best ill-conceived. The manner in which it was done clearly put the finger of infringers on the scale of justice. The creation of an open-ended second window for patents to endlessly be challenged without title ever quieting and ownership ever settling is making a mockery of patent ownership.
Not Faster or Cheaper, Just Unfair
When Congress created inter partes review (IPR), post grant review (PGR) and covered business method (CBM) review, the purpose was to provide yet another opportunity for challengers to invalidate patent claims. These processes were pitched as leading to a faster and cheaper resolution, which has simply not turned out to be the case.
“Some 85% of patents contested at the PTAB are involved in parallel litigation,” USPTO Director Iancu explained during his keynote presentation at the AIPLA annual meeting in October 2018.
On top of the 85% of patents at the PTAB that are involved in parallel proceedings, we know that patent owners with strong patents are required to run a gauntlet at the PTAB, challenged over and over again. Witness Finjan, Inc. They have defended the same nine patents successfully in 80 IPRs, with dozens more pending on those same nine patents, all of which have been thoroughly and successfully adjudicated as being valid in federal court on numerous occasions.
This presents two problems. First, at what point in time will the PTAB ever say enough is enough? How many times are they willing to accept challenges on the same claims in the same patents in an effort to find a different result? Second, how did a group of executive branch employees become superior to Article III district court judges?
With respect to the first point, the answer, we know, is that there is no limit, which is truly astonishing given that when the Federal Circuit determines claims unpatentable as the result of an IPR appeal, that decision has “an immediate issue-preclusive effect on any pending or co-pending actions involving the patent[s].” XY, LLC v. Trans Ova Genetics, 890 F.3d 1282, 1294 (Fed. Cir. 2018).
The same cannot be said, however, when the patent owner prevails. If the patent owner prevails against Mega Giant, Inc. and there is a decision from the Federal Circuit confirming patentability of all patent claims, that decision has absolutely no preclusive effect or force for a subsequent challenge on the same patent claims in the same patent when brought by Giant Mega Corporation. In other words, challengers need to win once, while the patent owner needs to win every time.
With respect to the second issue, these Administrative Patent Judges have become the most important, influential and all-powerful judicial body in the patent world. The system of constitutional checks and balances that have been in place since Marbury v. Madison, 5 U.S. 137 (1803) has required an independent federal judiciary made up of independent constitutional officers with life tenure to exercise independent review over the functions, laws and regulations of the legislative and executive branches of government.
It is antithetical to our constitutional form of government for executive branch employees to effectively treat the decisions of Article III federal judges as merely advisory in nature. Constitutional law 101 mandates that the federal judiciary does not issue decisions that are advisory in nature, yet that is in effect what happens. A validity trial in federal court is merely a dress rehearsal.
All the evidence one needs of an agency grown too big and powerful is on display every day at the PTAB. It is well past time for Congress to fix its mess and bring sanity, and constitutional rationality back to the system for challenging the validity of patents.
Time to Correct the America Invents Act
How did this happen? This question leads us back to the root cause – Congress. When Congress enacted the America Invents Act (AIA) it was so singularly focused on killing patent rights that it set up a two-tiered system for challenging patents. The evidence required to challenge a patent successfully and find the claims invalid in district court is much higher than the evidence required to successfully challenge and prevail at the PTAB. Patents are presumed valid in federal district court, while patents are not presumed valid at the PTAB.
The Senate IP Subcommittee is now considering the STRONGER Patents Act, which among other things would bring much needed balance – and sanity – back to patent challenges. The STRONGER Patents Act of 2019, now in its third incarnation, would harmonize the burden of proof required to invalid patent claims between federal district courts and the PTAB. It would also eliminate the repetitive, harassing proceedings patent owners face, and it would separate the decision to institute from decisions on the merits, which is important because PTAB judges are compensated in part based on clearing cases and have a perverse incentive to institute once they have put in the time and effort to consider a petition.
It is long past time to fix the system. District courts should not be inferior to executive branch employees. That is not how the constitution envisions the role of the judiciary, at least not since Marbury v. Madison. And, the repeated decisions where patents are upheld as valid in federal court only to fall at the PTAB must come to an end if the U.S. is going to maintain a functioning patent system. Constitutional judicial officers must have the final say, not executive branch employees.
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