It’s Time to Address ‘Patent Mercenaries’—and the USPTO Already Has the Tools

“American innovation relies on the vitality of small businesses. The current IPR system as implemented has caused severe damage to an important segment of our innovation community…. It is time for the Director to reevaluate the effect of IPRs.”

USPTO - https://depositphotos.com/7784627/stock-photo-time-to-act-concept-clock.htmlIn response to intense lobbying for patent litigation reform, Congress was convinced that a substantial amount of district court patent litigation involved “poor quality” patents that were clearly invalid. Images of extortionist patent trolls were widely portrayed as a primary threat to U.S. innovation. The high cost of patent litigation, years to reach a judicial resolution and reliance on lay juries to determine highly technical issues were cited as evidence of a broken system. In response, Congress passed the Leahy-Smith America Invents Act (AIA) in 2011.

To address this district court litigation abuse, the AIA established the creation of the Patent Trial and Appeal Board (PTAB) within the United States Patent and Trademark Office (USPTO) and both Inter Partes Review (IPR) and Post-Grant Review (PGR) proceedings to challenge issued patents. Congress intended that these trial proceedings would provide a faster, lower cost alternative to district court litigation of patent validity.

The creation of the PTAB and its execution of trials over the last ten year have not been without controversies and judicial challenges. One ongoing area of concern is the high percentage of challenged patent claims that are invalidated by the PTAB. Several reasons have been cited for these unanticipated high invalidity results. The language of the AIA, and its implementing regulations, includes a lower burden of proof than required in district court, no presumption of validity, a heavy reliance on expert reports, a lack of live cross-examination, limited discovery, and allows multiple IPR challenges on a single patent.

Because of the high invalidity rate, IPR trials have been popular with companies accused of patent infringement, which in turn has created two areas that need to be addressed by the USPTO Director. The first problem is “patent mercenaries” attacking patents for the sole purpose of harassing patent owners to earn a profit from their funders. The second problem is the financial strain on small and medium sized patent owners defending IPR suits.

Lobbyists have been consistent that the subset of patent owners that don’t manufacture anything are the justification for IPR litigation. These non-practicing entities (NPEs), they argue, leverage the patent litigation system to harass manufacturing companies in district court. These same lobbyists, however, heap praise on patent mercenary companies attacking patent owners through IPRs, even though these mercenaries neither create nor manufacture anything.

Patent owners, especially inventors and small entities, have incurred high legal fees to defend the validity of their patents. A single IPR can cost well over $300,000 in legal fees for a patent owner. If multiple challenges are filed, the cost can easily exceed $1 million. For large multi-national corporations, these fees are insignificant and considered part of a litigation budget. For financially limited patent owners, these costs are unconscionable.

American innovation relies on the vitality of small businesses. The current IPR system as implemented has caused severe damage to an important segment of our innovation community. Congress instructed the USPTO Director, in 35 USC§ 316(b), to “consider the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter.” It is time for the Director to reevaluate the effect of IPRs.

No Statutes, Rules or Regulations Need to Change to Provide Small Entity Relief

The Director can provide immediate relief to inventors and small entities while maintaining the integrity of the patent system and the legislative purpose of the AIA. There is no question that the USPTO is well equipped to reexamine patents based on prior patents and printed publications. Under 37 CFR 1.520 the Director, at any time during the period of enforceability of a patent, may determine if a substantial new question of patentability is raised by patents or printed publications which have been brought to the Director’s attention, even though no request for reexamination has been filed. The USPTO’s patent organization includes a Central Reexamination Unit (CRU), staffed by experienced examiners, which oversees the examination of all post-grant patent proceedings, including ex parte reexaminations.

The Director is also granted full discretion under 35 U.S. Code § 315(d) to terminate an IPR if there is another proceeding before the USPTO, such as a reexamination, that involves the same patent. By instituting a reexamination based on the art cited in an IPR petition, therefore, the Director can terminate the IPR trial.

The USPTO should start a pilot program to shift some patent validity challenges from the PTAB to the CRU. This program would not ignore the art cited in the IPR petition but would substantially reduce the cost of reconsideration of the patent claims while the inventor returns to a familiar setting before USPTO examiners. As part of the pilot program, the USPTO can create a fast-track reexamination path to reduce the time differential between an IPR trial and a traditional reexam. The results can be fast enough for consideration in any parallel district court proceedings. For example, the timing for a first office action from the CRU could be provided within 90 days of the institution of the reexamination. The patent owner would also be held to stricter timelines for responding to the USPTO.

Addressing Congressional Concerns

Some members of Congress remain concerned that NPEs continue to abuse the litigation process to extort settlements from manufacturing companies and small businesses using invalid patent claims. The Director can address these concerns by limiting the reexamination pilot program to the most adversely affected classes of patent owners.

1.              Small Entities

The USPTO treats different classes of applicants differently. Specifically, 37 C.F.R. 1.27 defines small entities as either a person, small business concern, or nonprofit organization. The Director can limit reexamination institution to patents that are owned by a person(s) under 37 C.F.R. 1.27 (a)(1), a manufacturing Small Business Concern under 37 C.F.R. 1.27 (a)(2) or a domestic Nonprofit Organization under 37 C.F.R. 1.27 (a)(2) (“manufacturing” should be tailored to exclude a generally accepted definition of a non-practicing entity [if consensus can be reached]).

2.              No Threat of District Court Litigation

Congress intended the PTAB proceedings to reduce costly litigation by shifting some of the burden from district courts to the USPTO. An unintended consequence of PTAB trials is the creation of patent mercenaries that attack and harass patent owners. This practice costs patent owners millions of dollars to defend their patents with no direct reduction in parallel district court proceedings. Mercenaries claim that by invalidating patents for the good of the system it reduces litigation. But that assertion is speculative at best and wastes valuable USPTO resources. “No patents means no litigation” does not appear to be a solid IP policy for the United States.

The Director can address the patent mercenary problem by allowing any patent owner to participate in the pilot program when attached by a mercenary. To address Congressional concerns of district court litigation, a Director initiated reexamination would only be granted to a patent owner where the owner issues a covenant not to sue the petitioner for infringement of the challenged patent. This should not be a problem since the non-practicing mercenaries maintain that they are independent from their sources of funding.

3.             Request for Director Instituted Reexamination

Not all qualifying patent owners may wish to participate in the pilot program but choose to litigate the IPR. A patent owner, therefore, should be required to file a petition requesting participation in a Director instituted reexamination and corresponding termination of an IPR. The petition should include a certification that the owner qualifies for participation in the pilot program based on their circumstance.

A Simpler Fix

The USPTO can provide needed financial relief to inventors and small businesses while remaining committed to addressing the Congressional desires for the Agency to examine patents that may be invalid in view of newly identified printed publications. By reexamining challenged patents within the CRU, questions of patentability can be evaluated by skilled examiners, reduce costs to patent owners and have a fair patent system that promotes U.S. innovation. No legislative changes are needed, the system would be more predictable and the current concerns of politically appointed Directors unduly influencing discretionary denials should be alleviated. Finally, Congress should allow the USPTO to operate this pilot program before changing the AIA.

Image Source: Deposit Photos
Image ID:7784627
Copyright:donscarpo 

Share

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.

Join the Discussion

41 comments so far.

  • [Avatar for LazyCubicleMonkey]
    LazyCubicleMonkey
    November 9, 2021 10:22 pm

    @bart

    Seemed to have missed your response to my second point. My apologies. I wouldn’t blame the USPTO for not finding some obscure reference in a product manual somewhere – my issue would be the potential “infringers” getting beaten over the head with expensive litigation in such cases.

    However, it in the case that a solution may have already widely known/used within the industry prior to the patent being granted, then it’s easier to blame the USPTO. In either case, it’s legal headaches for the “infringers” that’s my concern in those cases where the patent shouldn’t have been granted in the first place.

  • [Avatar for LazyCubicleMonkey]
    LazyCubicleMonkey
    November 9, 2021 10:17 pm

    @Russ & @bart

    I probably should emphasized the **multiple** in multiple parties. I can’t give an exact number (as different industries have various numbers of competitors), it would be far more than 2 or 3.

    If parties are already coming up with such solutions independently (and yes, I mean truly independently, without a quick peak into the patent office), then what does the patent actually besides a barrier to competition (& resulting higher prices)?

    Noticed you guys didn’t address my second example. So we all agree on that one?

  • [Avatar for Anon]
    Anon
    November 5, 2021 08:07 pm

    Mr. Ambwani reminds me of Mr. Trump, in the view that any ‘talking about’ is at least ‘talking about.’

  • [Avatar for Shawn Ambwani]
    Shawn Ambwani
    November 5, 2021 03:24 pm

    wait, wait. i get it. maybe companies are not innovators or inventors because all companies with products do is get crappy patents….:)
    but certainly the smaller individual inventors who don’t make anything get better ones. I mean those are the guys who really know what they are doing…. 🙂

    If only there was a way to measure this….naw… let’s just go with hyperbole.

  • [Avatar for Shawn Ambwani]
    Shawn Ambwani
    November 5, 2021 03:20 pm

    i love that “inventors” or “innovators” is always defined as entities which make no successful products. 🙂 I guess they don’t include any of the largest patent holders or issuers like IBM, Samsung, and Canon. I mean they can’t be an innovator… can they since that would hurt the narrative.

    As for the more you file on a patent they more likely it is to be instituted. Of course if it is additive. If I shoot something and the measure is do the chances increase I will hit it one time if i shoot it more… duh. The measure should be conditional probability with replacement, not without. Take a stats course!

  • [Avatar for Shawn Ambwani]
    Shawn Ambwani
    November 5, 2021 01:00 pm

    “I won’t do the “you guys lose credibility” thing with you, as it would be unfair given your employer and clients.” Thanks Josh. I appreciate the free advertising. 🙂

    BTW, you can see all the PTAB filings and results on our portal for free. only place unless you want to use the PTO site which is not easily searchable. Enjoy everyone.

    https://portal.unifiedpatents.com/ptab/caselist?sort=-filing_date

  • [Avatar for bart]
    bart
    November 5, 2021 12:52 pm

    By the way, the “R&D” mentioned by LazyCubicleMonkey @31 must be a bunch of lazy cubicle monkeys, because innate in their job description is, wait for it, research. Perhaps they should research the patent system better, because the last I checked, the patent system is publicly available to all to research. That is why we have a patent system–for public disclosure and the sharing of ideas. So, for a published patent, there is no such thing as “inadvertent violation”, rather, there is a different term for it. It is called “patent infringement”. Q.E.D.

  • [Avatar for Russ Slifer]
    Russ Slifer
    November 5, 2021 11:54 am

    @LazyCubicleMonkey: Your first example of low quality would fundamentally eliminate patents. There is always competition for the next invention (Edison, Tesla, Wright brothers). You are saying that the first to invent is only entitled to a patent if another cannot inadvertently independently invent it in the future. I am not sure how the USPTO could exam a patent application under that criteria. Almost every invention, given time, would be invented in the future. The patent system was intended to speed that process.

    Your second example (non-patented examples, public use, perhaps non-patent literature) is based on harder to identify prior art. Again, if we are judging the output quality of the USPTO, this is the most difficult area to search. BTW, most of it is excluded from use in IPR’s (limited to printed publications). Please don’t judge the USPTO as issuing a low quality patent by citing to an obscure product manual.

  • [Avatar for bart]
    bart
    November 4, 2021 07:05 pm

    @LazyCubicleMonkey:

    There is either something missing, or a flaw, in your rationale.

    By your standards, multiple parties could inadvertently violate a “low quality patent” by coming up with the same solution independently as part of their business process/R&D/etc. See your comment @31.

    However, that patent could be considered not obvious due to secondary considerations. For example, multiple parties could experience failure during their R&D or even after product launch, and then once they discover the solution (suppose it actually was an inadvertent violation), these parties then copy each other in the industry. The invention might even be used by a large majority of the market. Their initial failure, subsequent copying, and industry acceptance all indicate non-obviousness.

    Thus, despite the “inadvertent violation”, this would not be a low quality patent, but a valid and strong patent, given the industry adoption and them missing the opportunity at the outset.

    Accordingly, I find it best that you reassess your definition of “low quality patent”. “Inadvertent violations” have no place in this analysis.

    Cheers.

  • [Avatar for LazyCubicleMonkey]
    LazyCubicleMonkey
    November 4, 2021 02:52 pm

    @Russ Slifer

    A low quality patent is one that multiple parties inadvertently violate by coming up with the same solution independently as part of their business process/R&D/etc.

    Another type of low quality patent is one which has plenty of prior art/examples but because those instances/examples were never patented, a patent reviewer never picked up on it/knew that it existed/was obvious by experts in the field.

  • [Avatar for Greg DeLassus]
    Greg DeLassus
    November 4, 2021 09:04 am

    <[I] ask readers who care about truth and justice to check into [the PTAB] for themselves, and learn…

    On this much we agree. Fair minded individuals should study the PTAB numbers for themselves to determine whether US Inventor or its critics have the more rational analysis here.

  • [Avatar for Josh Malone]
    Josh Malone
    November 4, 2021 08:40 am

    Greg, you would put 7,834,586 in the denominator.

    I would not put 7,834,586 in the denominator, rather I would exclude it as having undetermined validity.

    I think we have both stated our reasons.

    How about patent 10,000,000?

    Numerator, denominator, or excluded? I would exclude it for the reasons stated above. How about you?

  • [Avatar for Josh Malone]
    Josh Malone
    November 4, 2021 08:23 am

    To close out the illustration above, patent 7,834,586 which was denied institution twice in 2018, was instituted in 2021. That is the reason we only report invalidation rates on patents that have been fully reviewed.

    This is just one recent example. The validity of a patent that is unchallenged, unininstituted, or settled is undetermined.

    Any patent can be instituted at any time, regardless of past history. In fact, the more times a patent is challenged the more likely it is to be instituted.

    I don’t expect cheerleaders for the PTAB to stop attacking my credibility. But i ask readers who care about truth and justice to check into it for themselves, and learn why inventors fear the PTAB while infringers and their mercenaries love it. I am confident you will find that it is much easier to invalidate a patent at the PTAB, as the author has observed and I have experienced.

  • [Avatar for Greg DeLassus]
    Greg DeLassus
    November 4, 2021 01:31 am

    Greg, please don’t use… conclusory characterizations like “diminution of…credibility”.

    There is nothing in the leastwise “conclusory” about the methodological complaints that I list in #21. They are identified with specificity and established with details. I notice that you do not choose actually to defend any of these methodological flaws, but instead seek to change the subject. Fair enough. I enjoy games, so I will play along.

    Just stick to debating the facts and let the intelligent readers here make their own determinations.

    Gladly.

    Do you believe [US 7,834,586] should be included in the denominator as “not invalid”?

    There are two methodologically defensible ways to make this analysis: per patent; or per petition. I am indifferent as between them, except to say that whichever approach one takes when assessing the PTAB, one must also apply when assessing the district courts.

    Under the “per petition” approach, the two previous failed attempts at IPR need to go into the denominator. Because the third petition was instituted, but a final decision has not been reached yet, an analysis run today should exclude that third petition from the denominator (although an analysis run later—when the final decision has arrived—would include all 3 petitions in the denominator).

    Under the “per patent” approach, US 7,834,586 should definitely be included in the denominator. Because no claims have yet been ruled invalid, US 7,834,586 should not go into the numerator of the invalidity rate calculation (although, once again, that might change in a subsequent analysis, if the final decision goes against the patent).

    The source that I cited up-thread makes its comparisons on the “per petition” basis, and finds that both district courts and the PTAB invalidate in ~40% of petitions. I have never seen anyone run the district court numbers on a “per patent” basis, so I do not know what that analysis would show.

    [D]o you agree with me that it must be excluded as a null result?

    Not only do I not agree with you on this point, even you do not agree with you. You do not apply this approach of hyperbolic doubt when running the district court numbers. You only bring this “who can know?” uncertainty into the analysis when you run the PTAB numbers. This rather gives away the game, that you are not actually trying to find the dispassionate answer to the question, but are rather skewing the analysis at multiple methodological points to reach a suitably awful sounding figure.

  • [Avatar for Josh Malone]
    Josh Malone
    November 3, 2021 10:51 pm

    Shawn, same question as I posed to Greg. I won’t do the “you guys lose credibility” thing with you, as it would be unfair given your employer and clients.

  • [Avatar for Josh Malone]
    Josh Malone
    November 3, 2021 10:44 pm

    Greg, please don’t use inflammatory rhetoric like “shoddy” and “laughable” and conclusory characterizations like “diminution of…credibility”. Just stick to debating the facts and let the intelligent readers here make their own determinations.

    On that condition, I am willing to continue to debate whether 84% invalidation of reviewed patents is a proper/accurate/precise metric.

    In our metric, we exclude (for example) from our analysis patent number 7,834,586 for Multifunctional Charger System and Method. It was challenged by Huawei and LG in 2018 in separate IPRs, and in both cases was denied. Do you believe this patent should be included in the denominator as “not invalid”? Or do you agree with me that it must be excluded as a null result?

    More specifically claims 8 and 9 were challenged by both parties in 2018 and in both cases the IPRs were denied (for now we must stipulate that our 84% refers to defective patents, having at least one claim invalidated – you’ll have to reserve your objections to that criteria for a separate thread).

    How should this outcome be reckoned? Valid, invalid, or null? I look forward to your response.

  • [Avatar for Anon]
    Anon
    November 3, 2021 06:12 pm

    Mr. Slifer,

    With only a slight tongue in cheek, I offer: a low-quality patent is any patent asserted against you.

  • [Avatar for Russ Slifer]
    Russ Slifer
    November 3, 2021 04:43 pm

    Lazy Monkey, I’ll take the bait. What is a low-quality patent to you? I’ll start: A patent with all of its independent claims invalid under 102 by an easily located printed publication, based on clear and convincing evidence.

  • [Avatar for Particularly Pointing Out]
    Particularly Pointing Out
    November 3, 2021 03:17 pm

    Like someone once said, get rid of the patent litigators in IPRs and you’ll see costs and time go down. Patent prosecutors want to close matters at the PTO as fast as possible while patent litigators have the financial incentive to drag things out as long as possible. Let’s face it, patent litigators are not as astute about claim language as patent prosecutors. Get rid of the litigators!

  • [Avatar for Greg DeLassus]
    Greg DeLassus
    November 3, 2021 12:31 pm

    You guys lose credibility every time you use that as your rallying cry.

    The diminution of US Inventor’s credibility goes farther than that. Take a look at the “methodology” of their “research” in the linked brief and see if you have enough detail to reproduce his work. Then compare it to the “methods” section of the paper that I linked. Does US Inventor’s “study” have even enough detail to survive a Daubert challenge?

    Similarly, notice that their figures for district court invalidity rates include (1) 7 years of pre-KSR data, while the PTAB rates are calculated entirely post-KSR; (2) 12 years of pre-Mayo data for the district courts, while the PTAB numbers are all post-Mayo; and (3) 14 years of pre-Nautilus data for the district courts while the PTAB numbers are all post-Nautilus. This is not even an “apples to oranges” comparison, but rather more like “apples to orangutans.”

    It is laughably shoddy work, because it is made in service of a laughably shoddy argument. US Inventor did not look at the data and then draw a conclusion, but instead started with a conclusion and asked themselves “what wildly indefensible methodological choices are necessary to gin up data to support our pre-specified conclusion?”. Whether those data might appear “credible” was evidently not a consideration.

  • [Avatar for LazyCubicleMonkey]
    LazyCubicleMonkey
    November 3, 2021 01:04 am

    “No patents means no litigation” does not appear to be a solid IP policy for the United States.

    Says who? Why is this implied as a given?

    Why are poor-quality patents worth keeping around? Why shouldn’t they be thrown out, leaving only the quality pants. Is there any evidence that these patent mercenaries go after high-quality patents?

  • [Avatar for Curious]
    Curious
    November 2, 2021 10:31 pm

    The invalidity rate in IPRs is no higher than in district court (URL below). It is not the rate of invalidity that makes IPRs popular, but rather the lower transaction costs.
    Both are invalidating patents hand over fist.

    It is not the rate of invalidity that makes IPRs popular, but rather the lower transaction costs.
    Lower transaction costs for the infringer — higher for the patentee who to win not not only has to survive an IPR (more likely many IPRs for any reasonably valuable technology) and still has the costs of litigating the patent. It is a win-win-win for patent infringers.

  • [Avatar for Shawn Ambwani]
    Shawn Ambwani
    November 2, 2021 08:09 pm

    “The only patents that can be counted are the 3,000 where a determination has been made. A patent that has been denied institution is a null result. ” That is like saying we won’t count outs when determining batting average since they could have been sacrifice bunts or walks, we will only count times they get on base. You guys lose credibility every time you use that as your rallying cry 🙂

  • [Avatar for Greg DeLassus]
    Greg DeLassus
    November 2, 2021 05:44 pm

    [T]he 84% invalidation rate is precise.

    Unquestionably. It is errant nonsense and deliberately misleading, but no one can question the precision of your quoted figure.

  • [Avatar for mike]
    mike
    November 2, 2021 04:19 pm

    I understand that this might be a way to address the issue of patent mercenaries without having to invoke legislation, but the problem with this approach is that a person, a small business concern, or a domestic nonprofit organization under 37 CFR 1.27 can prematurely fall out of the definition of small entity upon simply by assignment, grant, conveyance, or licensing of rights to their invention. Just because a person licenses their invention to a non-small entity, for example, does not mean that the person is now magically financially equipped to combat patent challenges at the PTAB. Establishing status to permit payment of the USPTO’s small entity fees is a much different animal than combatting patent mercenaries at the PTAB and its associated legal fees, and the ease at which a small entity can fall outside of the definition of small entity without having the necessary resources to handle PTAB challenges remains bothersome.

  • [Avatar for Josh Malone]
    Josh Malone
    November 2, 2021 03:12 pm

    Additionally Greg, the 84% invalidation rate is precise. The only patents that can be counted are the 3,000 where a determination has been made. A patent that has been denied institution is a null result. It could have been denied due to weak prior art or argument or for discretionary reasons. Other studies have shown that if a patent is repeatedly challenged it will eventually be instituted.

    You cannot include those patents that have been denied institution once in the denominator. That involves unfounded speculation as to the ultimate validity.

  • [Avatar for Josh Malone]
    Josh Malone
    November 2, 2021 02:55 pm

    Greg, the methodology is published in the footnote.

    I have had my own claims challenged in both venues. There is no comparison.

    I have reviewed hundreds of other cases.

    No inventor wants the PTAB to review their patent. 100% of us prefer district court. We also want efficient adjudication. You cannot reconcile this. If the PTAB were fair, I wouldn’t have dedicated 10,000 hours of my life fighting to expose and correct it.

  • [Avatar for Russ Slifer]
    Russ Slifer
    November 2, 2021 12:48 pm

    Capt. “The agency would be sued immediately, and undoubtedly lose on abuse of discretion and/or lack of necessary rule making” I would take those odds. The pilot program can go through a notice and rule making process if needed to meet APA. Everything I propose is within the existing statutes. BTW, there is nothing stopping a patent owner from requesting a reexam contingent on termination of an IPR.

  • [Avatar for Paul Morinville]
    Paul Morinville
    November 2, 2021 12:28 pm

    Russ, I understand the sentiment that doing “something” is better than doing “nothing”. I don’t agree with it because once “something” is done it will be many years before anyone will look at doing “something” again.

    There is no question that power corrupts. When power is not separated, dictators emerge – just ask the Chinese, the Russians, the Iranians, the Cubans or the Venezuelans.

    In American government, the reason that power is separated is to form a bulwark against corruption by limiting power.

    The power to both create and destroy the most valuable property rights in the US can end no other way that with a corrupt system. That corrupt system is in full display at the PTAB and it will not change by doing “something”. Doing “something” because it is better than “nothing” will only perpetuate that corruption by enabling a new method of to implement corruption.

    This is a call for those of good conscience to join in the effort to destroy the PTAB.

  • [Avatar for Greg DeLassus]
    Greg DeLassus
    November 2, 2021 12:19 pm

    [T]he invalidation rate is almost triple at the PTAB – 84% vs.29%.

    The source that I link calculates an invalidation rate in the district courts (sum of all steps, i.e., judgment on pleadings + summary judgment + jury verdict + post-jury JMOL) of 42.6%. The source that you link calculates a 28.76% invalidation rate in district courts. That is quite a discrepancy.

    My source has published their research methodologies. Has your source? It would be interesting to compare the methodologies to see how one can account for such a discrepancy.

    Meanwhile, the number you give for the PTAB is nonsense, and you know it is nonsense. This figure is calculated by ignoring decisions not to institute. That is as much as to say “if you ignore the majority of decisions where the PTAB decides that the claims are not invalid, the PTAB has a shockingly high rate of invalidity decisions.” This is bogus statistical analysis in the service of a rather unsubtle agenda.

  • [Avatar for Capt. Obvious]
    Capt. Obvious
    November 2, 2021 12:12 pm

    Russ, The Director has discretion to manage multiple proceedings – but that power is not so all encompassing as to be able to rewrite the law.

    Creating an ex parte reexam for the sole purpose of shutting out an IPR petitioner, and then shutting down the IPR in favor of the created reexam is not docket management. The agency would be sued immediately, and undoubtedly lose on abuse of discretion and/or lack of necessary rule making (even assuming such rules were possible).

  • [Avatar for Russ Slifer]
    Russ Slifer
    November 2, 2021 11:51 am

    Paul: Unified Patents files more IPR petitions them almost anyone else. This is not healthy for the system. More importantly, since there is no district court case with them, reexamination is a better solution.

  • [Avatar for Pro Say]
    Pro Say
    November 2, 2021 11:40 am

    Thank you Russ for standing up for besieged small business and individual inventors.

    Had Congress known that the patent-attacking shenanigans you detail would result, I suspect that the AIA would not have passed in its existing, little-guys-and-gals-are-destroyed form.

    Since IPR / PGR “trials” were created in the name of being quicker, easier, and cheaper than district court real trials, one easy partial fix comes to mind:

    Only entities which have actually been sued in district court should be able to file one (and only one) IPR or PGR against the asserted patent/s.

    And this: IPRs and PGRs should be prohibited in the final 2 – 3 years of a patent’s life. With district court challenges always available, after 14 – 15 years, title deserves to be quieted at the PTO.

  • [Avatar for Russ Slifer]
    Russ Slifer
    November 2, 2021 11:06 am

    Greg: I am sure that there are multiple reasons for seeking an IPR. Perhaps some large corporations believe that the cost is a bargain. Mercenaries are not motivated by the cost (they are financed), they are in existence because of the high invalidity rate achieved at a lower evidentiary standard.

    Capt. Obvious: I respectfully disagree with you. The Director has the authority under the AIA to terminate an IPR in favor of another proceeding. The AIA never removed the Director’s authority to initiate a reexamination. I have never spent $300k+ in reexamination, so I believe I am correct that it would be much less expensive than an IPR trial. In fact, it should be comparable to the original examination costs. Regarding your “public rights” provided by Congress; those rights were explicitly limited to the Director’s discretion.

    Paul: I understand your position, but hoping for a homerun should not stop you from taking first base. This pilot program can provide immediate relief and maybe slow some in Congress from making it worse.

  • [Avatar for Paul F Morgan]
    Paul F Morgan
    November 2, 2021 10:51 am

    Could you please provide examples and statistics for [and why] the allegation that “The first problem is “patent mercenaries” attacking patents for the sole purpose of harassing patent owners to earn a profit from their funders.” IPRs themselves do not make money, they cost money. Thus, almost all IPR petitioners are by those being sued for patent infringement for substantial damages. In a very few cases a trade association may file an IPR petition for the benefit of members being sued, but they cannot appeal to the CAFC from the IPR decision.

  • [Avatar for Josh Malone]
    Josh Malone
    November 2, 2021 10:08 am

    Greg @1, the invalidation rate is almost triple at the PTAB – 84% vs. 29%. Worse, that is with only half as many grounds available (102/103) as in district court (101/102/103/112).

    https://www.scotusblog.com/wp-content/uploads/2017/09/16-712-tsac-US-Inventor-Inc..pdf#page=9

    In a real court arguments like “a person of ordinary skill cannot determine whether a balloon is substantially filled with water” elicit laughter from the bench along with fee shifting sanctions, but that same argument prevailed at the PTAB. Numerous claims have survived multiple challenges in district court only to fall at the PTAB on the identical evidence and arguments.

    Everyone who has been through an IPR on either side knows that patents are way easier to invalidate at the PTAB.

    PTAB is popular because it adds cost, delay, and uncertainty to litigation. The complete opposite of the false narrative that you and the infringer lobby perpetuate.

  • [Avatar for MaxDrei]
    MaxDrei
    November 2, 2021 05:27 am

    From Europe, and based on 40 years of patent attorney experience before the EPO, in inter Partes proceedings, I shall watch with interest the reaction of patent litigators to this very sensible proposal. I suspect they will resist it tooth and nail, finding a slew of reasons why it should be binned without further ado.

  • [Avatar for PAUL MORINVILLE]
    PAUL MORINVILLE
    November 2, 2021 04:03 am

    Russ, I’m happy that you call out small entities as harmed. That is certainly true. However, there is no way that any version of the PTAB can work. The same person in charge of issuing patents is also in charge of invalidating them. That is far too much power in the hands of one person. It violates separation of powers and will be corrupt, as it is now. It can only be disbanded.

  • [Avatar for Capt. Obvious]
    Capt. Obvious
    November 1, 2021 08:15 pm

    “Congress instructed the USPTO Director, in 35 USC§ 316(b), to “consider the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter.” It is time for the Director to reevaluate the effect of IPRs.”

    1. You seem to suggest that the Director has been given the power to legislate with the above quoted language. Incorrect. This language refers only to considerations given to rule-making efforts – hence the term “regulation” in the quoted passage. The Director simply has no power to “reevaluate the effect of IPRs” and change the system to his/her liking. If it were otherwise, Iancu would have undoubtedly done a lot more.

    2. You also seem to assume that reexaminations will conclude favorably in most instances. Otherwise, a patent owner ultimately ends up at the PTAB anyway (on appeal). There would be no money savings in large majority of such “pilot” cases.

    3. Finally, shutting down an inter partes proceeding in favor of ex parte would take rights away from the public provided by Congress. Pilot programs can only be used to enhance current procedures, not foreclose them. Notice and comment rule-making exists for this very purpose. While the Director can manage multiple proceedings, he cannot create one to shut a party out of another.

    Any such program would require rule-making at a minimum, and more likely legislative changes.

  • [Avatar for Greg DeLassus]
    Greg DeLassus
    November 1, 2021 06:41 pm

    Because of the high invalidity rate, IPR trials have been popular with companies accused of patent infringement…

    The invalidity rate in IPRs is no higher than in district court (URL below). It is not the rate of invalidity that makes IPRs popular, but rather the lower transaction costs.

    https://www.patentprogress.org/2018/05/01/a-little-more-than-forty-percent/