Stakeholders Speak: Leahy Bill to ‘Restore the AIA’ is Too Unbalanced to Pass

By Eileen McDermott
September 30, 2021

https://depositphotos.com/76939119/stock-photo-be-heard-words-on-a.htmlLast night, Senators Patrick Leahy (D-VT) and John Cornyn (R-TX) released the text of the “Restoring America Invents Act”, which is meant to “support American innovation and reduce litigation,” according to the headline of the senators’ joint statement on the legislation. Many in the patent community, however, are not as optimistic. As reported previously, the bill would essentially end discretionary denial practice under precedential Patent Trial and Appeal Board (PTAB) cases such as Apple Inc. v. Fintiv, Inc. and limit denial to petitions where “the same or substantially the same prior art or arguments previously were presented to the Office,” among other changes.

The statement released late last night by Leahy and Cornyn references a situation from 2013 in which small businesses in the senators’ states and around the country were targeted by patent trolls. “[T]he tool that ultimately ensured that those patents would not be abused again in the future was this PTO review process,” the statement explained.

Leahy added: “Fundamentally, we need to address why the PTO issues invalid patents in the first place. But when these invalid patents have already been issued, they need to be addressed on the back end.” And Cornyn said that the bill “would improve the ability of our system to maintain the quality of American patents by improving the mechanism for challenging them.”

But many of the commenters below would disagree. While some did feel the “knee-jerk”, sky-is-falling response is overblown, others characterized the text as “one-sided” and either antithetical to or dismissive of patent owner concerns. Here is what a handful of stakeholders who have had a chance to review the bill had to say so far.

Jeff Hardin, Inventor

These attempts to “fool me twice” after the America Invents Act (AIA) disaster are grim.

The Unleashing bill purports to increase underrepresented inventor participation, but it fails to address what over 75% of underrepresented inventors said in the SUCCESS Act—the inability to enforce a patent is a barrier to participating in the patent system in the first place. Pride becomes lost in patent ownership. The ironically-named Pride bill purports transparency, but it increases inventor burden to disclose ownership interests (strangely enabling legal infringement during failure to disclose—with no relationship to the merits), and it lacks language bringing transparency regarding parties funding and benefiting from Patent Trial and Appeal Board (PTAB) challenges—the new subscriber business model the AIA inadvertently created that challenges patents without estoppel.

Now we have the Restoring AIA bill, overruling Fintiv by limiting the Director’s discretion to deny inter partes review (IPR) institution to instances where “the same or substantially the same prior art or arguments previously were presented to the Office,” and mandating courts how they “shall decide whether to stay” a case, enabling duplicative procedures and increasing costs. This enables even more predatory behavior to occur at the PTAB, with a lowered standard of Preponderant Evidence at that. What about the AIA’s original intent of Congress, which “includes protecting the rights of small businesses and inventors from predatory behavior”?

To knowledgeable inventors/investors, patent trust is lost. These measures replace the ladder the AIA pulled up 10 years ago with a gasoline-soaked rope and give a box of harassment matches to Big Tech. Antitrust, anyone?

Christopher E. Loh, Venable

The Restoring America Invents Act (RAIA) comprises a set of amendments that address certain procedural issues that have arisen in post-grant proceedings since the passage of the AIA in 2012. Most of the amendments favor IPR petitioners over patent owners, and several amendments directly contradict recent Supreme Court, Federal Circuit and Patent Trial and Appeal Board (PTAB) decisions. Given the general one-sidedness of the changes, I think that the bill is unlikely to pass in its current form.

Arguably the most significant of the RAIA amendments is the limitation on the Director’s discretion to deny institution of IPRs when parallel litigation on the same patent is pending. That amendment effectively nullifies the PTAB’s precedential 2020 Fintiv decision. The PTAB presumably designated the Fintiv decision precedential in order to conserve its resources in circumstances where it reasonably believed that a district court could more economically and expeditiously address overlapping validity issues. Preventing discretionary denials in those circumstances thus is likely to increase the PTAB’s workload, which may in turn negatively affect the quality of IPR decisions.

Another RAIA amendment would expand the grounds for IPRs and PGRs to include “admissions in the patent specification, drawings, or claims.” The amendment, however, doesn’t explain what constitutes an “admission.” If this amendment passes in its current form, I foresee a lot of fights over what portions of the specification, drawings or claims qualify as “admissions.”

Burman York (Bud) Mathis IIIBud Mathis, Sole Practitioner

Upon review, although the bill itself is facially difficult in figuring out how all the little pieces fit together, it appears to be reasonable. The real problems will be in the implementation. For example, the top of page 14 of the bill reads:

‘‘CLAIM AMENDMENT.—For any substitute claim proposed under subsection (d) [‘Review of Director’]

(A) the patent owner shall have the burden of proving patentability, including under sections 101, 102, 103, and 112, by a preponderance of the evidence[.]” (emphasis added)

Anyone who has been in the patent game for a few years knows that the “preponderance of evidence” standard is a myth. Winning at the PTAB means there better be zero evidence, because if the evidence is only 99.9% in the patentee’s favor, the Federal Circuit will affirm the PTAB under the substantial evidence standard of § 706 of the Administrative Procedure Act. Further, if the PTAB issues a Section 101 rejection under Alice-Mayo, the patentee’s position is hopeless as the Federal Circuit has never reversed an Alice-Mayo rejection from the U.S. Patent and Trademark Office (USPTO) regardless of a complete lack of evidence against the patentee.

Eugene T. Perez, Birch, Stewart, Kolasch & Birch, LLP

I think if you ask a petitioner about the “Restoring the America Invents Act,” that petitioner would say that the amended law is true to the spirit of the original AIA. However, I would think that patent owners would find many of these changes as being pro-petitioner and even unfair. It is one thing to codify In re Aqua Products to say the burden is on the patent owner to prove the patentability of any substitute claim (modified §316(e)), or codify patent owner estoppel of the USPTO’s Rule 42.73(d)(3) (modified §315(e)). But eliminating the Director/PTAB discretion in Section 314, and thus eliminating the Fintiv precedential decision, can restore the Petitioner’s ability to attack the same patent claim twice. Using a printed publication in an IPR is one thing, but then using a different version of that prior art (e.g., commercial sale of a product corresponding to the printed publication) means that the patent owner has to be victorious twice. It is also unclear as to how multiple petitions for the same patent claim are going to be handled since the modified Section 314 states that if the petition meets the requirements, trial “shall be instituted”. Perhaps the institution rate will jump closer to the rates of the early years of when the AIA was implemented. Finally, the inclusion of double patenting as a ground for an IPR (modified §311) gives a petitioner another avenue of attack, which likely will reduce the number of ex parte reexamination requests for the same patent.

Mike Renaud and James Thomson, Mintz Levin

The proposed bill codifies Arthrex by giving the USPTO Director discretion to review Administrative Patent Judges’ (APJs) decisions and to modify or set aside those decisions. The bill would require the Director to promulgate rules, within 18 months of the bill’s enactment, setting forth a timeline for requesting review, the subsequent briefing schedule, and the content and bases for any request. Outside of lending legitimacy to APJ decisions, this procedure would give parties—unhappy with the PTAB’s decision—a chance for a second bite at the apple.

More controversial, however, is that the bill would effectively do away with the current Fintiv factors and change the landscape for discretionary denials by the PTAB.  The proposed changes limit discretionary denial to the situation in which the “the same or substantially the same prior art or arguments previously were presented to the Office.” This change is likely to greatly reduce the number of discretionary denials and impact potential litigants’ decisions on the timing of IPR petitions and prior art strategies between district court and IPR proceedings.

From a challenger’s perspective, this may be seen as a way to knock out bad patents more efficiently and economically. From a patent owner’s perspective, however, this is unwanted change that will force patentees to fend off more IPRs. More broadly, this bill, if passed, would further the trend of adding more ways to challenge U.S. patents, and is ultimately likely to create less stability in U.S. IP rights.

Russ Slifer, Black Hills IP and Schwegman Lundberg & Woesner

If the purpose of the proposed legislation is to restore the AIA to its intended purpose, perhaps we should start with the goals of the original statute. Congress believed that the USPTO could be a faster, more expert, venue to address invalidity challenges under 35 USC 102 and 103. Congress also believed that the USPTO Director should have the discretion to ensure that the system did not become abusive to patent owners.

Since IPRs did become abusive (multiple petitions, serial petitions, paid mercenaries filing IPR petitions), it is understandable that the USPTO responded by trying to set some guardrails. If Senator Leahy really wants to promote innovation and reduce some district courts’ dockets while creating a predictable adjudication process, I propose a few additions to his Bill.

First, eliminate Section 322 (a)(3)(B) by prohibiting the use of “affidavits or declarations of supporting evidence and opinions” in IPR’s.  If there is good prior art in the petition, the USPTO can evaluate it without a paid “expert” explaining it to them. Between the petition and the USPTO’s 9,000+ examiners, the USPTO can evaluate printed art. That is what they do every day!

Next, amend Section 326(e) [the evidentiary standard for post-grant review proceedings] to match district court. There is no reason to lower the bar for revoking a patent just because it is before the USPTO. A clear and convincing evidence standard would make the process uniform across both venues.

If the real goal is to reduce litigation issues by using the USPTO’s expertise, then strengthen the estoppel language so that a petitioner cannot assert Sections 102 or 103 using any printed publication in district court if an IPR was instituted.

Finally, acknowledge that paid mercenaries are a stain on the system by either dismissing their petitions or shifting their petitions to ex parte reexamination.

Bob Stoll

Bob Stoll, Faegre Drinker Biddle and Reath

The newly introduced “Restoring the America Invents Act” has some provisions that will be very controversial in the patent community. It will limit the Director’s discretion to deny institution when there are multiple proceedings, and lawsuits that are dismissed will no longer start the clock on filing an IPR. It will expand the basis for an IPR to include both statutory or obviousness-type double patenting. The provisions seem to promote stays and permit quick appeals of those decisions. Petitioners who lack standing to appeal won’t be estopped from further challenges after an adverse written decision.

The bill also permits the U.S. government to file an IPR. Also, anyone at the USPTO in the chain of command is prevented from communicating with a judge on a panel about a case before the judge. And the patent owner has the burden of showing that amended claims meet all statutory requirements.

While there are some interesting provisions included in this bill, I note that many of the complaints about the process arising from the patent holders, like the presumption of validity, are not addressed. I am doubtful that the bill will be enacted as currently configured.

 

Jonathan Stroud, Unified Patents

If you actually read the bill—which I encourage everyone to do before the inevitable kneejerk reactions start—I think you’ll be struck by a few things.  One is just how limited and reasonable many of the suggestions are (though that certainly won’t be what others say, particularly in the pages of this blog). Two is just how many of the points addressed stem from interpretations from the courts, administrative officials, and other legislators trying to interpret the original bill’s intent. Whereas, here, you have the original proponents of the bill itself attempting to clarify and strengthen the provisions Congress originally intended—and many of those changes could be made through regulatory or judicial revision. It sends the message that what Congress wanted then hasn’t changed, and that, just maybe, some of the interpretations formed in the past ten years have misread what Congress intended, and have rolled back some of the changes that have saved the U.S. economy so much money to date.

John WhiteJohn White, PCT Learning Center

The Leahy-proposed legislation is akin to rearranging the deck chairs on the Titanic after the iceberg has been struck. The AIA was, and remains, an abomination, except for the first to file aspect, which is just poorly written, especially Section 102(b), which is darn near indecipherable. The PTAB has been an unforeseen disaster for patent owners of all stripes. No one at the time of AIA implementation knew how badly it would turn out for patent holders. Well, now we know. Hence, the position of the “deck chairs” is not really the problem that needs “fixing”; I suggest it is and remains the iceberg, i.e, the PTAB. Eliminating the iceberg would’ve helped the Titanic— deck chair position, not so much.

The current proposals add weapons to the infringer’s already loaded quiver; gratuitously charges for amendment review(!); and removes discretion from district judges as to the appropriate administration of justice in their courtroom. Who won that round? Not the patent owner.

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The Author

Eileen McDermott

Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at several publications and industry organizations. She has acted as editorial consultant for the International Trademark Association (INTA), chiefly overseeing the editorial process for the Association’s twice-monthly newsletter, the INTA Bulletin. Eileen has also served as a freelance editor for the World Intellectual Property Organization (WIPO); as senior consulting editor for the Intellectual Property Owners Association (IPO) from 2015 to 2017; as Managing Editor and Editor-in-Chief at INTA from 2013 to 2016; and was Americas Editor for Managing Intellectual Property magazine from 2007 to 2013.

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 as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 15 Comments comments. Join the discussion.

  1. B September 30, 2021 5:37 pm

    @ John White “The PTAB has been an unforeseen disaster for patent owners of all stripes.”

    John White – speaking truth to power.

    The PTAB’s job isn’t to correct errors although that happens from time to time. The PTAB is more likely to burn the goalposts and bury the ashes in an unknown location.

    ——————-

    @ Christopher E. Loh “Given the general one-sidedness of the changes, I think that the bill is unlikely to pass in its current form.”

    Dear Mr. Loh – Have you met our congress?

  2. Capt Obvious September 30, 2021 5:43 pm

    Short of outlawing the PTAB I wouldn’t expect the vast majority of these guys to be in favor of any other legislation. Hardly representative of “stakeholders” LOL

  3. B September 30, 2021 5:58 pm

    “Capt Obvious” may be the best IP Moniker ever

  4. Anon September 30, 2021 7:27 pm

    Stroud — you have lost any credibility that you may have had with your comments here.

  5. mike September 30, 2021 11:06 pm

    @ Capt Obvious:
    Perhaps Congress should follow the consensus.

  6. Pro Say September 30, 2021 11:16 pm

    Hey folks. See those strings attached to the backs of these two puppet Senators?

    Guess who’s hands they lead up to?

    Yup — that be the dirty, go-to-h.e.l.l.-America hands of Google, Facebook, Apple, and the other members of the Big Tech cabal.

    Strings on their backs . . . plus dirty dollars in their pockets . . . with lies spewing from their up-is-down, down-is-up mouths.

    Welcome to the United States of Big Tech.

    Now repeat after Leahy and Cornyn: “We pledge allegiance to the flag . . . of the United States of Big Tech . . .”

  7. Dmitry Karshtedt October 1, 2021 7:52 am

    This bill is contrary to a core administrative law principle, which is that an agency should have the power to manage its priorities and recources by refusing to institute a proceeding – particularly an expensive and time-consuming trial. An agency is not a court, which must take on every dispute that comes its way. While a 325(d)-type limitation is a no brainer, required by estoppel principles, it is not enough.

  8. Eileen McDermott October 1, 2021 8:41 am

    Please feel free to send names/ contacts of people you’d like to hear from to editors@ipwatchdog.com, Capt Obvious.

  9. B October 1, 2021 11:38 am

    @ Anon

    Stroud isn’t wrong. The bill appears reasonable – all sunshine and biscuits. I thought the same thing at first glance with the exception of the initial burden of proof apparently being put the patentee – but even that issue becomes a moot point in the usual wars of evidence in an adversarial setting.

    It’s only when you consider the PTAB’s past behavior that the appearance of reasonableness falls apart and you see the enablement of more PTAB misconduct.

    As to Fintiv – I do no IPR work and cannot competently comment.

  10. jacek October 1, 2021 12:19 pm

    Weasel is still working on how to abuse fellow citizens.

    How long do you think is going to take before the message: “Do not attempt to apply for the US patent. Do not create liability problems for yourself ” BECAME COMMON KNOWLEDGE?

    The PR disaster is brewing, and it will have far-reaching consequences beyond the inventor’s community.

    Same time China is again strengthening its patent laws.
    They have no idiots proposing their policy.

  11. Curious October 1, 2021 1:58 pm

    One is just how limited and reasonable many of the suggestions are (though that certainly won’t be what others say, particularly in the pages of this blog).
    This from a guy whose company is dedicated to killing patents.

  12. CharlieSeattle October 2, 2021 3:05 pm

    “Last night, Senators Patrick Leahy (D-VT) and John Cornyn (R-TX) released the text of the “Restoring America Invents Act”, which is meant to “support American innovation and reduce litigation,”

    …”reduce litigation” is code for, Deny Due Process.

    PTAB was created expressly to, Deny Due Process

  13. Particularly Pointing Out October 2, 2021 6:04 pm

    @8

    Thank you. The viewpoints expressed seem to come from the same limited political bandwidth.

  14. jacek October 4, 2021 2:13 pm

    “The viewpoints expressed seem to come from the same limited political bandwidth.”????

    What fundamental right to own fruits of my labor/ Invention has to do with POLITICS?

    Unless you want to change the US into the Soviet Union, the Supreme Court seems to attempt by taking inventions ownership from its maker and turning it into the franchise…
    Exactly the same “Franchise” BS I have heard for years living in countries under Soviet Influence. Everything was GOVERNMENT PROPERTY.
    Am I SLAVE that fruit of my LABOR is taken from me with no compensation?

  15. PTO-indentured October 7, 2021 8:59 am

    Thank you John White for telling it like it is.

    AIA with its poster child efficient infringement islike the iceberg that sank the titanic: 10% you can see, and 90% — not in view — does all the damage.

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