Clarity Needed on the STRONGER Patents Act’s Approach to Validity Determinations

By Mark Deming
September 30, 2019

“Overwhelmingly, patent cases resolve in settlement and entry of agreed judgments, and it is not uncommon for such agreed judgments to include acknowledgments of patent validity. Would such cases operate to bar or terminate IPR or PGR under the STRONGER Patents Act?”

https://depositphotos.com/53967869/stock-photo-funny-retro-nerd.htmlThe “Support Technology and Research for Our Nation’s Growth and Economic Resilience Patents Act of 2019” or the “STRONGER Patents Act of 2019,” currently under consideration as Senate Bill 2082 and House Resolution 3666, poses questions about the types of decisions that would operate to bar inter partes review (IPR) and post-grant review (PGR) of patent claims.

The STRONGER Patents Act is an effort to cure some of the perceived infirmities in the U.S. patent system. While prior versions—introduced in 2015 and 2017—were more wide-ranging, the STRONGER Patents Act of 2019 primarily focuses on the availability of injunctive relief and the susceptibility of patents to IPR and PGR. Among other changes, the bill would effectively overrule the Supreme Court’s eBay v. MercExchange decision, require inter partes and post-grant review petitioners to prove invalidity by clear and convincing evidence, permit only one such review of any given patent claim, and purport to finally end the occasional practice of diverting some the USPTO fees from its operations.

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Sections 102(h) and 103(h)

While much can (and has) been written about the merits of such reforms, the present comment specifically considers the proposed “Priority of Federal Court Validity Determinations.”  In particular, sections 102(h) and 103(h) of the bill would provide as follows:

(c) Federal Court Validity Determinations.—

(1) INSTITUTION BARRED.—An inter partes [post-grant] review of a patent claim may not be instituted if, in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), a court has entered a final judgment—

(A) that decides the validity of the patent claim with respect to section 102 or 103; and

(B) from which an appeal under section 1295 of title 28 may be taken, or from which an appeal under section 1295 of title 28 was previously available but is no longer available.

(2) STAY OF PROCEEDINGS.—

(A) IN GENERAL.—If, in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), a court has entered a final judgment that decides the validity of a patent claim with respect to section 102 or 103 and from which an appeal under section 1295 of title 28 may be taken, the Patent Trial and Appeal Board shall stay any ongoing inter partes [post-grant] review of that patent claim pending a final decision.

(B) TERMINATION.—If the validity of a patent claim described in subparagraph (A) is finally upheld by a court or the International Trade Commission, as applicable, the Patent Trial and Appeal Board shall terminate the inter partes [post-grant] review.

What Constitutes “Decided”?

Setting aside whether “Federal Court” and International Trade Commission (ITC) decisions should preclude IPR or PGR, the bill as written poses questions as to the types of decisions that should be afforded such effect.

For example, IPR or PGR would be barred (or terminated) based on “a final judgment . . . that decides the validity of the patent claim with respect to section 102 or 103.”  It is unclear, however, what constitutes “deciding.”  Overwhelmingly, patent cases resolve in settlement and entry of agreed judgments, and it is not uncommon for such agreed judgments to include acknowledgments of patent validity. Would such cases operate to bar or terminate IPR or PGR, or would something more—an adjudication on the merits—be necessary?

Even if limited to merits decisions, in what circumstances is validity decided? Patents are presumed valid, and in litigation the burden is on challengers to prove invalidity. Judgments that challengers did not carry that burden—that they did not prove invalidity—stand for nothing more than that the patents are not invalid. They do not necessarily equate with conclusions that the patents are valid. Would affirmative findings of patent validity be necessary to invoke the provisions of sections 102(h) and 103(h)?

The bill also does not specify whether validity determinations would operate to bar or terminate proceedings only as to the grounds that were before the federal court / ITC. While other parts of the STRONGER Patents Act impose estoppel provisions based on any ground that was raised or could have been raised in prior proceedings before the Patent Office, sections 102(h) and 103(h) state only that they are applicable when there is a validity determination with respect to anticipation or obviousness. Perhaps the intent is to bar any subsequent IPRs or PGRs, regardless of ground, although such a result would seem incongruent, particularly in view of the fact that PGRs are not limited to anticipation and obviousness questions.

Lastly, the legislation appears to be internally inconsistent with respect to the finality that is necessary to bar institutions. While subparagraphs (c)(2) would have pending IPRs or PGRs stayed pending the appeal of validity decisions, and terminated only if they were upheld, subparagraph (c)(1)(B) would appear to bar institutions regardless of the appellate posture. If the intent is to give effect to decisions that have been affirmed, or that could have been appealed but for which the time to appeal has run, further clarification may be appropriate.

A Closer Look May Be Needed

Regardless of whether the reforms contemplated by the STRONGER Patents Act are well advised—and there are many interesting proposals, from splitting institution panels from decision panels, to giving the Federal Trade Commission power to police “bad trolls,” and the aforementioned changes to the availability of injunctive relief, the susceptibility of patents to “serial” challenges, and the burden of proof in PTAB proceedings—the current version of the “Federal Court Validity Determinations” provisions could benefit from closer consideration.

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The Author

Mark Deming

Mark Deming is a Shareholder with Polsinelli. Mark is an intellectual property attorney who regularly advises large and small companies throughout the country, particularly in the Northern District of Illinois, Eastern District of Texas, and District of Delaware. He practices in patent, trademark, and trade dress areas. Mark maintains a particular focus in Hatch-Waxman pharmaceutical patent litigation with experience representing both brand-side and generic-side companies, including in first-filer cases. These cases have involved several types of drug products, including ophthalmic, solid oral, controlled release, transdermal, and topical dosage forms. Mark leads all aspects of case development, from initial assessment through discovery, motions practice, claim construction, expert witnesses, trial, and appeal. Mark is also a registered patent attorney.

For more information or to contact Mark, please visit his Firm Profile Page.

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 21 Comments comments. Join the discussion.

  1. Pro Say September 30, 2019 10:04 pm

    So, given the above (thanks Mark):

    The bad news: The STRONGER Act isn’t perfect.

    The good news: Because American innovation can’t afford to wait any longer for “perfect,” the Act needs to — and will — be passed in its current form.

    “Cleanup” legislation can be utilized — if truly needed — down the road.

    Congress isn’t going anywhere.

    This legislation has been floating around Congress for going on three years now.

    It’s time to nail it down.

    Now.

    The desire for perfect must not be the enemy of the good.

    In the case of the STRONGER Act, the very good.

  2. TFCFM October 1, 2019 9:51 am

    MD: “…it is not uncommon for such agreed judgments to include acknowledgments of patent validity. Would such cases operate to bar or terminate IPR or PGR under the STRONGER Patents Act?

    If agreements between private parties were available to bar IPR and PGR challenges to a patent, then this seems to me analogous to the “pay-for-delay” abuse which has been so derided for generic drug patents.

    Assume an industry (e.g., cell phones) with two big competitors (e.g., Apple and Samsung) and a host of smaller competitors. Should one of the big boys obtain a patent, a smaller competitor should race to sue-or-be-sued, the better to agree to a “settlement” that results in the smaller competitor being granted a license to practice (or a lump sum) and an “acknowledgement of validity,” while ensuring the big boy’s patent immunity to all other IPR and PGR challengers.

    Such a provision seems to me foolish at best, and disastrous to small inventors at worst.

  3. TFCFM October 1, 2019 9:57 am

    MD: “Among other changes, the bill would effectively overrule the Supreme Court’s eBay v. MercExchange decision.

    I haven’t looked at the bill’s particular provision, but if it does nothing more than say “this case is hereby overruled,” then I wonder if that effects any change at all.

    Other than several appellate court judges mistakenly saying, “I thought we always granted injunctions in patent cases…,” there seems to be no authority for the proposition that all successful patent infringement plaintiffs are entitled to an injunction.

    Does the bill propose to create an automatic entitlement to an injunction?

  4. Concerned October 1, 2019 10:02 am

    Moving the IPR/PGR institution standard to “clear and convincing”, and ideally getting the institution rate down to < 5% (which was the intent of Congress in the AIA) – might be the most realistic path forward for legislation…

  5. anonymous October 1, 2019 11:44 am

    I think “decided” is clear. If I was to settle a case, I’d also include the following for the court’s order dismissing the case.

    “The parties have entered into a Settlement Agreement.

    The parties stipulate that the asserted patents are presumed valid and remain valid. Defendant has agreed that it has not presented, nor intends to present, clear and convincing evidence to invalidate any claim. This Court decides and Orders that the asserted patents are and remain valid, having met all statutory requirements for patentability and patent eligibility.

    It is hereby ORDERED that this case is dismissed, with prejudice.”

    Subsequent litigants can challenge validity in district court, before a jury, just not via IPR. This is good, because the STRONGER Patents Act says the AIA had “unintended consequences” and was “making it more costly and difficult for legitimate innovators to protect their patents from infringement, thereby weakening United States companies and the United States economy.” Fixing this is a perfectly clear and laudable goal.

    The STRONGER Patents Act should pass with no further delay.

  6. anonymous October 1, 2019 12:40 pm

    @3 TFCFM

    https://www.congress.gov/bill/116th-congress/house-bill/3666/text

    SEC. 106. RESTORATION OF PATENTS AS PROPERTY RIGHTS.

    Section 283 of title 35, United States Code, is amended–
    (1) by striking “The several courts” and inserting the
    following:
    “(a) In General.–The several courts”; and
    (2) by adding at the end the following:
    “(b) Injunction.–Upon a finding by a court of infringement of a
    patent not proven invalid or unenforceable, the court shall presume
    that–
    “(1) further infringement of the patent would cause
    irreparable injury; and
    “(2) remedies available at law are inadequate to
    compensate for that injury.”.

  7. TFCFM October 1, 2019 1:53 pm

    Thank you, Anon.

    It seems to me indefensible to create even a “presumption” of irreparable harm (especially in situations does not actually exist) for patents only, and not for all rights that are potentially remediable by injunctive relief.

    Similarly, it seems to me indefensible to create even a “presumption” that legal remedies are insufficient (especially when they are) for patents only.

    The plain intent of these sections seem to be to enhance the ability of patentees to extract higher licensing fees (i.e., money – a legal remedy) from infringers, whether those infringers be deliberate infringers or accidental ones.

    I question, too, whether this proposed change in the law would amount to any real change in decisions. Where no evidence of irreparable harm or the insufficiency of legal remedies exists, even the slightest evidence of either would ‘tip the balance’ and cause a court to rule identically to how it would in the absence of the proposed change. Perhaps in the very closest of cases, it might make a difference.

    It furthermore seems to me foreseeable that if this first “special case” is created for injunctive relief standards for one small interest group, then every other interest group is going to begin lobbying to have its own “special case” also excepted. It seems to me unlikely that Congress, with its political inputs, is better able to judge the balance of the equities in all patent (or other) cases collectively than individual judges are in each particular case.

  8. Anon October 1, 2019 4:38 pm

    TFCFM,

    Perhaps part of the reason why you feel that sense of “indefensible” is that you have not as of yet come to understand the foundational nature of what the patent right IS.

  9. TFCFM October 1, 2019 5:19 pm

    @Anon: “Perhaps part of the reason why you feel that sense of “indefensible” is that you have not as of yet come to understand the foundational nature of what the patent right IS.”

    That’s possible.

    Also possible is that you and I disagree about how much patent enforcement should be permitted to resemble a protection racket.

    (“Dat’s a nice product youse gots dere. It’d be a shame if someone wid a trivial patent and a dumb (or no) jury happened to it.“)

    Trivial patents deserve trivial remedies. More meaningful patents (only) deserve more robust remedies.

  10. Anon October 1, 2019 6:47 pm

    “Resemble a protection racket” is nothing more than mindless as hominem.

  11. Anon October 1, 2019 6:49 pm

    Anptemt either meets or does not meet the legal requirement for grant.

    In that sense there is no such thing as “trivial” patent.

    You (again) are doing boring but injecting your feelings.

  12. staff October 1, 2019 7:45 pm

    ‘Would such cases operate to bar or terminate IPR or PGR under the STRONGER Patents Act?’

    We believe any bill which continues the practice of post issue administrative review of issued patents is fundamentally flawed. All those proceedings do is deprive inventors of their right to a trial by jury in a Constitutionally compliant tribunal. WE believe all such proceedings are repugnant to the clear word and intent of the founders and our inalienable rights to our inventions which those proceedings deprive us of. Our bill will end them and together with our other measures will restore our patent system to where inventors will once again have a realistic expectation we will once again be able to commercialize our inventions.

    We welcome the participation of and offer our assistance to all our friends in Congress and all stakeholders who accept all our rights as we would theirs.

    For our position and the changes we advocate (the rest of the truth) to restore the patent system, or to join our effort, please visit us at https://aminventorsforjustice.wordpress.com/category/our-position/
    or, contact us at aifj@mail.com

  13. Anon October 2, 2019 11:28 am

    Egads, “Anptemt” == “A patent”

  14. TFCFM October 2, 2019 1:27 pm

    @Anon: “A patent either meets or does not meet the legal requirement for grant.

    Certainly. It is possible to satisfy those requirements with either a trivial invention (e.g., the design for the *precise* shape of an on/off button) or an important invention (e.g., a newly-made molecule which treats a major, previously-untreatable disease).

    Likewise, patents are neither inherently detrimental to society nor inherently beneficial — like a weapon, their detriment/benefit depends entirely upon what is done with them.

    Just as we should be hesitant to sell armor-piercing bullets to any and all comers (limiting them only to they who genuinely need them for a beneficial purpose), so too should we hesitate to enact an every-patent-gets-an-injunction-in-all-circumstances rule. Given that injunctions are already available to they who genuinely need them for a beneficial purpose (i.e., when the balance-of-equities test indicates), the any-and-all-comers rule seems unwise to me.

  15. Anon October 2, 2019 2:55 pm

    Your insistence on “trivial” in the face of the objective view of law is an unhelpful emotional intrusion.

    As to “Likewise, patents are neither inherently detrimental to society nor inherently beneficial” I have to entirely disagree.

    Patents — in and of themselves (and quite distinct from ANY third party’s emotional feelings) are a benefit to society. The very reason WHY we have a patent system is a benefit to society, and each and every patent that advances the Quid Pro Quo — no matter any single person’s emotional evaluation — is thus an advance FOR society.

    What is “done with them” — as you attempt to spin — only (again) shows that you just do not comprehend their nature of being a negative right and the nature of the actual Quid Pro Quo involved.

    You seem stuck on some positive action aspect BEYOND the Quid Pro Quo.

    Your misperceptions continue to limit your understanding of the fundamentals.

  16. TFCFM October 2, 2019 6:30 pm

    Anon: “Your misperceptions continue to limit your understanding of the fundamentals.

    Let’s make a deal: Should we ever be involved on opposite sides of a patent dispute, you promise to argue “fundamentals” to the court, and I’ll promise to argue statutes and case law. The chips will fall where they will.

  17. Anon October 2, 2019 7:27 pm

    Yet again, my slippery foe you have mischaracterized our discussion point.

    The fundamentals that I speak of ARE the Law (statutes and the case law that is properly interpreting the statutes).

    You have not yet begun to argue the statutes that are on point — and in fact, your back-peddling is in direct relation to many (not just me) that have pointed out where you have obfuscated in your “statutes” positions.

    I cannot fathom why you think that your continued ploy of ASSuming that your position must be correct, coupled with a fallacious spin of my position would fool anyone.

    Al that this does is cement the fact that you are inte11ectually DIShonest.

  18. TFCFM October 2, 2019 9:32 pm

    Yeah, you’re fooling all of us. One guess why you resort to gibberish without exception.

    Spare us.

  19. Fox October 2, 2019 9:42 pm

    Clarity is not needed on The STRONGER Patents Bill what is needed is a loophole, you see it’s ok to fix 101 but another door must be opened, and will happen as Mr. Tillis is working out the details with Big Tech. Patents are worthless just like the politicians that made them weak.

  20. Concerned October 3, 2019 9:02 am

    My patent application has been trivialized. A lot of memos, case law, evidence, etc had to be side stepped and not acknowledged to reach the alleged point of trival.

    Ironically, many in the legal profession (disability attorneys) could not solve the problem for decades. The examiner admits in writing my process solved a problem.

    A lot of questionable effort for an alleged trival situation.

  21. Anon October 3, 2019 9:34 am

    TFCFM,

    You are the one resorting to name calling while evading the points directly put to you.

    Fooling all of us…? Where the H is this coming from? Who is this “all?” Are you attempting to make your view into some “all” view — a rather pathetic attempt to NOT apply critical thinking and to (again) presuppose that your feelings somehow must be correct. Further, you again attempt the fallacious move of reversing the actor and the action. My comment was about YOU doing the fooling, and you blandly (and with no support) merely attempt to switch the actor/action away from you to the person challenging you.

    This is a fallacy of the first order.

    What exactly does your entreaty of “spare us” mean in this context? That you want to be able to get on your soapbox and pontificate with no one to be able to provide counter points or challenge your errant views?

    It just be “nice” to claim that you are willing to talk about substantive points, but then turn around and by fiat declare that any challenge to your view is not a substantive point.

    Here’s a hint for you: no one invited you to be King and ALL of your positions are susceptible to critical comment.

    And (yet again) when you do no like that critical commenting, it is NOT within your power to rewrite reality to fit your feelings.

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