Vidal’s Solution to OpenSky Abuse Encourages PTAB Extortion

There is a reason many stakeholders believe the Patent Trial and Appeal Board (PTAB) has been weaponized against patent owners. From the very outset, the first Chief Judge of the PTAB famously, or infamously, stated that if the tribunal was not doing some “death squadding” they were not doing their jobs; a rebuke to then Federal Circuit Chief Judge Randall Rader’s observation that the PTAB was nothing more than a death squad for patents. But from those early days where patent owners were not even allowed to submit evidence to rebut a petition at the institution stage, to the unbelievable lapse in ethical judgment of one former PTAB judge, there have been numerous reasons to question the tribunal.

Extortion Pays

As of Tuesday, October 4, we have yet another in a long line of reasons why the PTAB is hopelessly broken and, in its present form, incapable of being fixed. Straight from the “you have to be kidding me” department, U.S. Patent and Trademark Office (USPTO) Director Kathi Vidal yesterday found that OpenSky engaged in extortion, but has decided to continue to allow them to participate as a “silent understudy” in the inter partes review that they filed. Moreover, Intel, the beneficiary of the extortion perpetrated by OpenSky, could not have filed an inter partes review (IPR) themselves due to the statute of limitations. Nevertheless, the IPR against VLSI continues, with Intel now elevated to lead petitioner. The moral of the story: extortion pays.

Legal interpretations that ignore the statute of limitations should be viewed with inherent skepticism. A statutory bar exists for a reason, yet in the PTAB world, the prohibition against bringing a challenge more than one year after a lawsuit has been filed is far more akin to a manufacturer’s suggested retail price than anything that truly resembles a legal bar or statute of limitations. And those who champion the PTAB wonder why it is that right minded people question the integrity and very foundation upon which the tribunal is built? They are obviously feigning indignation; they know the unfairness even as it is a strategic advantage to them and their clients.

As already mentioned, in the inter partes review context, petitioners have one year to file a challenge after a lawsuit, but as a matter of course the USPTO ignores this requirement by allowing a party otherwise prevented from bringing a challenge to bring a challenge as what is called a joining party. The theory, I guess, is that there will be no harm in allowing the party legally barred from challenging to challenge because someone else is already challenging. Forget the obvious potential for strawman abuses, what is particularly offensive is when then unbarred party settles or otherwise drops the challenge and then the barred party is allowed to continue. So, the barred party couldn’t have started the case themselves but somehow, they are the ones that are left as the challenger. That is precisely what Director Vidal ordered in the OpenSky / VLSI fiasco, with OpenSky allowed to remain a nominal party but not to file any papers or direct the challenge, and Intel being moved to the position of primary challenger.

So, as the result of her Director review decision, we now know that even when the Director finds that a challenge has been filed by a party purely for the purpose of extortion— her finding, not merely hyperbole— a party that couldn’t have brought an IPR is allowed to continue in place of the extortionist even when that party could not have filed a petition themselves because of the statute of limitations. Obviously, principles of equity do not apply at the USPTO when it comes to the PTAB, and neither does common sense.

Wrong—Miserably Wrong

Director Vidal’s decision is wrong, we all know that, and I’m sure she does as well. She even foreshadows her own criticism by acknowledging that some will be upset with the decision, but she doesn’t believe Intel did anything wrong. But that isn’t the question. Intel was statutorily barred from bringing a challenge, and the predicate underlying the challenge VLSI is now facing was an act of extortion. Whether Intel did anything wrong is irrelevant or should be.

By focusing on Intel and not the patent owner, Vidal shows her bias. Her decision makes a farce out of fundamental legal process, fairness and it violates any notions of equity. To allow Intel to benefit from the misdeeds of OpenSky, which may well be criminal (or should be), is beyond comprehension and defies any reasonable explanation. Of course, the unreasonable (or at least unspoken) explanation can only be that despite Intel not being able to file their own independent challenge they need some way to challenge the $2 billion infringement verdict they lost to VLSI.

There was a right answer here. It was easy. Director Vidal got it wrong— miserably wrong. Wrong to the point where there is really no deterrent for the next petition who may want to try to extort a patent owner for the benefit of a large multinational corporation facing a mega verdict.

This whole episode exemplifies precisely why innovators believe the PTAB has been weaponized against patent owners. Credibility and sanity be damned, patent owners must lose, even if that means excusing, even rewarding, the filing of an IPR petition by an extortionist.

Image Source: Deposit Photos
Image ID: 20121639
Author: 72soul