Leahy/ Tillis Announce Bill to Balance PTAB Process

“If we take the words of Senators Leahy and Tillis seriously, which there is every reason to do, it seems that they are contemplating allowing those defendants who are facing a lawsuit to have one opportunity to assert a meritorious challenge against the patent at the PTAB. That would be a big step in the right direction.”

Leahy-TillisLast night, the Chairman and the Ranking Member of the Senate Judiciary Subcommittee on Intellectual Property published an op-ed in The Hill on the important role the Patent Trial and Appeal Board (PTAB) plays in the U.S. patent ecosystem, and expressed their commitment to strong patent rights as a necessity for American innovation to flourish.

“In order to ensure America’s continued dominance in all areas of innovation, we must have strong patent rights,” Senator Patrick Leahy (D-VT) and Senator Thom Tillis (R-NC) wrote. “However, for our patent rights to truly be strong, they have to be based on high-quality patents… The Patent Trial and Appeal Board (PTAB) plays a critical role in this process and is a necessary backstop to invalidate truly low-quality patents that do not represent true innovation and never should have been issued.”

The Senators recognized in their op-ed that in the past the PTAB “has been abused by bad actors and has operated in a way that had disadvantaged patent holders and independent inventors alike.” They explained that they “feel it is important that those facing lawsuits from patent owners should have the opportunity to raise at least one legitimate, good-faith, and meritorious challenge against patents being asserted against them, without allowing the process to overwhelm patent owners with gamesmanship and strategic litigation…”

According to Senators Leahy and Tillis, a draft bill will be released in the coming days that will seek to reform the PTAB and to “restore predictability to the inter partes review process, eliminate abuse by bad actors like OpenSky Industries, and ensure there are safeguards in place to prevent gamesmanship and strategic litigation aimed at efficient infringement.”

High Time for Reform

As I wrote several months ago, the PTAB desperately needs reform. At the time the America Invents Act (AIA) was enacted, the purpose was to create a streamlined, less expensive, alternative administrative means to challenge the invalidity of issued patents. If that was the purpose of the PTAB, this entire experiment can be objectively characterized as nothing other than an abysmal failure. What has evolved is anything but streamlined, and it is certainly not inexpensive, costing anywhere from $300,000 to over $1,000,000 per petition.

And now, OpenSky has created a cottage industry that can only fairly be characterized as extortion. They are challenging the VLSI patents that were the basis of a $2 billion verdict just because they want to extract a settlement from VLSI. It is clearly a shakedown, as explained in an e-mail from OpenSky’s attorney to the attorney representing VLSI, who agreed to settle the inter partes review (IPR) challenge, not notify the PTAB and then work with VLSI behind the scenes and unknown to the PTAB or the other parties to ensure the VLSI patents survived.

Meanwhile, the PTAB still does not have any judicial code of conduct for its Administrative Patent Judges, which has allowed at least two of the APJs to rule on cases of former clients (see here and here, for example).

None of this, nor the myriad other procedural infirmities that always seem to cut against the patent owner, can be what Members of Congress thought they were creating.

If we take the words of Senators Leahy and Tillis seriously, which there is every reason to do, it seems that they are contemplating allowing those defendants who are facing a lawsuit to have one opportunity to assert a meritorious challenge against the patent at the PTAB. That would be a big step in the right direction. The lack of a standing requirement to bring an IPR challenge has led to enormous gamesmanship, as demonstrated by the OpenSky debacle. It has, of course, continued to create problems associated with who is really paying for the challenges. The question about real party in interest, which has a long and well-understood meaning in the law, has never been appropriately applied by the PTAB, even after the Federal Circuit’s ruling in Applications in Internet Time, LLC v. RPX Corporation.

So, as we wait for the draft PTAB reform bill, we hope for something that will fulfill the promises made in 2011 by Members of Congress. If the bill does contain a standing requirement, it will fix a lot of the ailments of the IPR system, eliminating most of the gaming. A standing requirement would also further reduce the number of filings, giving the APJs more time to focus on actually holding real hearings, taking evidence, listening to witnesses and getting things right before they decide to take away what are supposed to be vested property rights.

UPDATED: Wednesday, April 13, 2022 @ 12:32pm ET to elaborate on the last paragraph. 

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15 comments so far.

  • [Avatar for truthteller]
    truthteller
    April 15, 2022 10:21 pm

    “I know I’m a broken record on this, no one in their right mind is spending $1,000,000 on one IPR”
    – Jonathan Stroud, Chief IP Counsel, Unified Patents—a company born out of a congressional loophole that invalidates issued patents by the USPTO at the same USPTO without any standing, estoppel, or any time bar, and it does so on behalf of financially-enabled subscribing member companies who, rather than license the technology, efficiently infringe

    “we spent more than that on [just] one of our IPRs”
    – Josh Malone, Inventor of BunchOBallons, selfless champion and volunteer for inventors and uprooted his family by moving to DC to dedicate himself to solving the problem of efficient infringement

    [crickets from Stroud]

    Thank you, Josh, for not being in your “right mind”, according to Stroud. I don’t know how Stroud can sleep at night, and I look forward to the day when that broken record is thrown in the trash.

    Here’s to the Crazy Ones:
    https://www.youtube.com/watch?v=-z4NS2zdrZc

  • [Avatar for Anon]
    Anon
    April 15, 2022 10:12 am

    Mr. Malone,

    No doubt you are aware that Mr. Stroud’s employer has a business model that depends on his not understanding the points you provide.

    If it sounds like he is a broken record, it is because he IS a broken record – perhaps just not broken in a way that he comprehends (or that his employer’s business model would WANT him to comprehend).

  • [Avatar for Josh Malone]
    Josh Malone
    April 14, 2022 12:53 pm

    @Jonathan Stroud, we spent more than that on one of our IPRs, particularly if you count discovery and protective order motion practice that was necessary to get our objective evidence of non-obviousness (the PTAB does not allow such discovery). Plus a mandamus and appeals. Of course it’s never “one IPR”, it ranges from 2 to 30 for my colleagues who are trying to compete against big tech and their henchmen.

    In your world you can just fill out a boilerplate IPR with an attorney-drafted expert declaration for $50K. NPE’s with thousands of patents do the same. It is just churn for the PTAB bar.

    You don’t seem to understand that the PTAB is killing small businesses. Those of us who can raise $1M for a Hail Mary to save our life’s work do it.

    Also, the last 3 or 4 AIPLA surveys show $450K average and $850K as 90th percentile cost of IPRs. Those are heavily weighted by non-essential patents that don’t warrant a best effort.

    While we are at it, those costs are IN ADDITION to the costs of district court litigation. PTAB has not decreased cost of litigation, it has increased it.

  • [Avatar for Jonathan R Stroud]
    Jonathan R Stroud
    April 14, 2022 11:05 am

    I know I’m a broken record on this, but no one in their right mind is spending $1,000,000 on one IPR.

  • [Avatar for PTO-indentured]
    PTO-indentured
    April 14, 2022 10:31 am

    Music to Big Tech’s Ears? “…important that those facing lawsuits from patent owners should have the opportunity to raise at least one legitimate, good-faith, and meritorious challenge…” Until a next ‘an at least one …’

    Subject that to PTAB style gamesmanship and such wording would (first be stripped of its intended context, then) be deemed on its face “objectively weak” — which, even a clerk working for a US court judge would then understand is a simple shibboleth needing only to be echoed once, in writing — and viola! — you’re invalidated, pre-trial. Well, that’s got to save at least someone some money!

    Here’s any easy fix: Found a patent that isn’t quite ‘strong enough’? Let a US patentee upon notice of such being asserted / alleged, amend their claims, with a clear understanding that if doing so — makes their US patent ‘stronger’ (subject to no new matter being raised) — then such amending shall be allowed. After all, that’s not changing one’s actual invention, no change is being made to the specification — there’s no augmenting of the invention itself as already described.

    Then, let’s see who truly is interested in stronger US patents. Or if we were just pretending that’s what we really wanted.

    Maybe we will even hear an argument like: Well you can’t make a US patent stronger by going ahead and simply making it stronger 😉

  • [Avatar for Pro Se]
    Pro Se
    April 14, 2022 05:22 am

    @Night Writer: The day she was finally confirmed, her former clients filed this PGR… It’s unrecoverable and fatal right here (look at the big lie on this one): https://www.dropbox.com/s/kjtrr5h86f3cnkf/PGR.png?dl=0 – The petitioner is just rewriting clear facts of the art. How could such a fatal argument be made at the PTAB in 2022 without fear of having wasted $300k from the petitioner?

    We’ve geared up that she’s promised them this kind of argument would be “enough” to win institution and perhaps slow me down. Should this junk argument finds support at the new USPTO, we’ve factored in a hard necessity of time to get the abuse of power addressed at the CAFC.

  • [Avatar for Erfinder]
    Erfinder
    April 13, 2022 09:30 pm

    The PTAB has caused inventors (with a brain), to stop inventing.
    It must be entirely eliminated “yesterday”. It was created under false pretenses, and it’s main purpose is to give huge corporations a means of stealing inventions from smart hard working independent inventors, who don’t have the $$$ to fight big unscrupulous organizations, that don’t have original inventive ideas, and therefore resort to stealing for manufacturing new and useful merchandise.

  • [Avatar for Night Writer]
    Night Writer
    April 13, 2022 05:36 pm

    Pro Se –wow. That is something to have Kathi Vidal litigating against you. Frankly, from her experience and everything else I saw about her, I’d be surprised if she did much beyond help out large corporations and make it easier to invalidate a patent.

  • [Avatar for Night Writer]
    Night Writer
    April 13, 2022 05:31 pm

    Standing is huge.

    But estoppel is just as big. The games drop off a cliff when there is real estoppel and the D can’t just relitigate everything again in DC if they loose at the PTAB.

  • [Avatar for Pro Say]
    Pro Say
    April 13, 2022 03:40 pm

    Six thoughts:

    1. The PTAB should be abolished. Plain and simple.

    It’s unneeded. It’s unjust. It’s unAmerican.

    2. If it’s not abolished, Gene’s changes should all be implemented.

    Each and every one of them.

    3. Re: ” . . . low-quality patents that do not represent true innovation and never should have been issued.”

    Repeating this never-defined, Big Tech-loving “low-quality patents” swill over and over again does not make it true.

    Curiously, all of their 100’s and 1,000’s of patents are high-quality.

    Each and every one of them.

    You know how we know this? Why, because they tell us so.

    4. Why should the very same government agency that issues patents be able to — often 5, 10, even 15 or more years later — be able to turn around and revoke them?

    Why should PTAB “judges” be able to destroy the hard work of their colleagues the Examiners. You know, the hard-working folks who know their respective arts better than the “judges” do?

    5. Either the abolishment of the problem-plagued Section 101 or the abrogation of the Congress-usurping Mayo / Alice decisions should be — indeed must be — part and parcel of this bill.

    American innovation is dying on the vine, Senators.

    Dying. On. The. Vine.

    6. The headline giveth and the fine print taketh away?

    Will this committee — this Congress — be willing to stand up to Big Tech’s forthcoming full-press onslaught against any provisions protecting the innovation of others, including potential competitors?

    We’ll know soon enough.

  • [Avatar for mike]
    mike
    April 13, 2022 03:18 pm

    “We are confident that we can craft a compromise …”

    Watch out. The word “compromise” was used. Like was done in the § 101 debate, Tillis will have private meetings behind closed doors and leave out inventors. He’ll then say that a “compromise” wasn’t met by all parties, leaving everyone wondering who these other parties were.

    Again, fool me once…

    Also, there should be no compromise with wrong and right. The AIA was wrong. There should only be right. Tillis’ last election was rather close, wasn’t it?

  • [Avatar for mike]
    mike
    April 13, 2022 03:08 pm

    The linked article reads: “while we must continue to improve patent quality, invalid patents have already been issued and need to be addressed on the back end, invalid patents have already been issued and need to be addressed on the back end”

    1) How do the Senators know with certainty that “invalid patents have already been issued”? How do they know that? Are they USPTO examiners? Who are they listening to?
    2) Why should the AIA (or subsequent legislation toward this ‘invalid patent’ problem) apply to future patent applications, when the argument is to “improve patent quality”? The obvious remedy for future patent applications after such a bill would be to focus on patent examination (the front end) and issue quality patents at the outset.
    3) Why did we “need” to do something different “on the back end” when district court was properly handling it?
    4) Why wasn’t this question asked in 2011: “What can you NOT get at district court that you can get at the PTAB?” Here’s just a few things that the Constitutional Inventors CAN get at district court: Faster, less costly resolution. Access to discovery for defending obviousness challenges. An independent and tenured judge. A jury to decide factual questions, determine real parties in interest, etc. A presumption of validity. The backing of the United States Government. Live testimony and cross-examination of hostile witnesses. The Federal Rules of Civil Procedure. A clear and convincing burden for proving invalidity. Contingency representation.

    Leahy trying to clean up Leahy’s mess. Fool me once…

  • [Avatar for mike]
    mike
    April 13, 2022 02:45 pm

    In addition to the problems of the PTAB identified in this article…

    IF the PTAB is to be preserved, at a minimum:
    1) use of the PTAB should be voluntary and only be pursued under the consent of both the petitioner and the patent owner (Mr. Malone’s recommendation here in these comments);
    2) a district court judge should have the discretion whether to stay a case and use the PTAB subject to the voluntary consent of both the defendant and the patent owner;
    3) use of the PTAB in a district court adjudication subject to 2) above should prohibit use of the same arguments in the district court;
    4) an Article III ruling on a validity determination should prohibit use of the same arguments at any subsequent PTAB trial; AND
    5) any instituted PTAB trial should create estoppel on future challenges, for both defendants and petitioners.

    Without the conditions above, a bill preserving the PTAB would not be helping society or innovation, but would continue to create distrust in our patent system and in our system of law and order, as well as continue to make property rights subject to political power and abuse.

    Considering that you did not invite yours truly to the table to discuss these matters, I anticipate these elements will be missing, so expect strong resistance against this bill, Senators.

  • [Avatar for Pro Se]
    Pro Se
    April 13, 2022 02:07 pm

    My biggest enemy’s lawyer, Kathi Vidal representing PayPal and the big banks in all of my cases just left my cases as Attorney and became Director of the USPTO.

    I like to thank Josh for his years of fighting for us independent Inventors.

    It’s gone bro… The anti-patent lobby in Utility has succeeded.

    Anyone that can afford to go fishing, go fishing.

    Anyone thinking about becoming a U.S. Inventor, especially a minority U.S. Inventor, don’t. The system is rigged and racist.

  • [Avatar for Josh Malone]
    Josh Malone
    April 13, 2022 11:28 am

    The PTAB serves no legitimate purpose. Leahy’s bill is a total failure. It’s not faster. It’s not cheaper. It doesn’t help small businesses. It’s done nothing to curtail patent trolls. Its only utility is as a weapon for big corporations to steal patented products and technology.

    Here’s a reform that will stop the abuse and achieve the purported objectives of the 2011 legislation – make the PTAB voluntary.