Posts Tagged: "CBM"

The Past, Present and Future of Post Grant Administrative Trials

Between September 16, 2012, and August 7, 2014, there were 1793 post grant challenges instituted. See USPTO PTAB Update, slide 5. Of those challenges 1,585 (or just over 88%) were inter partes reviews. There have been 201 covered business method challenges, 6 derivation proceedings and only a single post grant review… Prior to enactment of the AIA it was believed that bio/pharma would largely be spared from post grant challenges. Biotech and pharmaceutical companies tend to have fewer patents and do not collect patents in the same way that electronics and software companies do. Furthermore, biotech and pharma patents tend to be more detailed and overall of a higher quality than your average patent. Given the relatively few patents that these companies hold that cover core assets even 5.2% of post grant challenges coming from the bio/pharma space is surprising. No patents are safe from post grant challenge it seems.

PTO Seeks Comment on AIA Post Grant Administrative Trials

The administrative trial proceedings created by the AIA are: (1) Inter partes review; (2) post-grant review; (3) covered business method patents review; and (4) derivation proceedings. To bring these new proceedings into being, the USPTO issued a number of final rules and a trial practice guide in August and September of 2012. It is now time for the USPTO to take a step back and take account of these new proceedings, aided by public input. This is not an unexpected occurrence. Many will recall that during the rule making phase the USPTO held roundtable discussions in a number of cities across the country. During this timeframe the USPTO committed to revisiting the rules and practice guide once the Board and public had operated under the rules and practice guide for some unspecified period of time and had gained experience with the new administrative trial proceedings. With nearly two years of practical experience with these new proceedings, the time has now come for the USPTO to revisit and quite possibly revise the rules.

Patent Eligibility Post-Alice

From a patent challenger’s perspective, Alice further reinforces the need to evaluate whether an early dispositive motion under § 101 can end the litigation. In crafting such motions, it is important to clearly define the abstract idea and to demonstrate how it is merely well-understood, routine, conventional activity. Additionally, it may be helpful to articulate how the claims do not recite any technological improvement. Another strategy is to petition the PTO to institute a covered business method (CBM) patent review. A CBM proceeding may be preferred as the evidentiary burden is lower compared to district court litigation. Currently, the PTO has taken the position that § 101 is an available basis for challenging claims in a CBM proceeding. However, please note that the availability of §101 is being challenged at the Federal Circuit.

‘Patent Reform’ Will Keep Small Business Inventions From Being Commercialized

In this Part III, we will discuss the Covered Business Methods (CBM) expansion and the proposed elimination of post grant review estoppel. If these provisions are enacted it will provide greater incentive to challenge granted patents, making serial challenges the new norm. This will substantially and negatively impact small business innovators who will be forced to continually fight to keep the patents they have obtained after having already spent many years during patent prosecution to obtain the rights. This means patent rights will never be more than an expectation and not a true property right. Therefore, if these provisions are enacted it will mean no patent is every truly safe, no title is every quieted, and this will substantially, and negatively, impact investment opportunity and ultimately the commercialization of innovations.

For Whom the Bell Tolls: The US Patent System

An infringer can drag you through endless PTO rounds of attack, if necessary (taking into account the current stats, 1 round is likely enough!), and now the Judge will be equipped to create a series of high hurdles followed by summary execution. You think Tech Transfer has trouble with a Valley of Death attracting capital and enthusiasm now; just take their patents out and shoot them… that ought to help. Start-ups will have absolutely no basis in value except for a popularity contest. Whatever the IP is or was, is worthless, and can never be sold for any value because it can never be enforced. Take that ….tech transfer.

PTAB Death Squads: Are All Commercially Viable Patents Invalid?

The Board cancelled 95.2% of all claims for which trial was instituted, and cancelled 82.9% of all claims that were initially challenged by the petitioner… These bleak statistics have lead Federal Circuit Chief Judge Randall Rader to at the AIPLA annual meeting in October 2013 call the PTAB “death squads killing property rights.” Then again on Friday, March 21, 2014, at a conference hosted by the George Mason University School of Law, Chief Judge Rader said he was “troubled” by the many differences between proceedings at the PTAB and in the district courts, particularly pointing to the disparities in the treatment of the same evidence concerning the same claims. Rader mentioned that his recent comments about the Board being a “death squad” for patents in contested proceedings may be more accurate than some originally thought, considering the dismal track record for survivability of challenged claims in the first wave of final written decisions.

The PTAB and Patent Office Administrative Trials

KUNIN: ”But what is the one thing that can be a break the bank issue? What if the patent owner asserts eight patents against you in a litigation. Can you pick and choose which are the best patents among the eight to challenge? Or are you going to have to file and pay for eight IPRs? At what particular point does it actually become a financial burden for you to go after every asserted patent against you in that litigation in separate IPRs? Either you can try to strategically determine which are the patents which are most harmful to you and most vulnerable and go after them in IPRs, or try to go after all of them in IPRs. But if you go after all of them, you already explained how expensive it is, all right? So let’s assume for argument sake it’s a fairly complex proceeding and it’s costing $300,000 per IPR. So $300,000 times eight is the total cost. What’s the cost of the litigation in defending against all the asserted patents?”

Is More Patent Reform Really Necessary? Patent Litigation Declines, PTO Administrative Trials Increase

All of this has to make you wonder whether any new patent legislation is necessary at this time. The House of Representatives has already passed new patent legislation that focuses on patent litigation and the perceived abuses. Reasonable minds can perhaps differ about whether the measures being discussed are good, bad or would do anything to address the manipulation of the judicial process by nefarious actors. The facts suggest, however, that patent litigation is declining and the administrative trials are increasing beyond expectations. This is significant because the administrative trials were created in order to offer defendants a better, cheaper avenue to challenge patents outside of litigation. So why not allow the reforms of the AIA time to work before once again tinkering with the patent laws and potentially upsetting the incentive to innovate?

The PTAB Roadblock to Patent Monetization

The “new normal” created by the PTAB has drastically altered the patent assertion landscape. Simply stated, when a patent owner is notified that a patent they own is being brought into a post grant proceeding the statistics, if not the gravity of the threat, suggest that it must be taken seriously immediately and competent representation must be obtained quickly. The burdens are different at the PTAB than they would be in the Federal District Court. Specifically, the PTAB will employ the standard USPTO technique of giving patent claims their broadest reasonable interpretation, which will make it easier for a claim to be determined to overlap with the prior art. Furthermore, in litigation patent claims are presumed valid and the defendant must prove by clear and convincing evidence that a claim is invalid for one or more reasons.

Let the AIA Reforms Have an Opportunity to Prove They Work

A recurring theme that can be traced through the patent reforms of the AIA to the current debate over patent litigation abuse is the issue of patent quality. A key component of the reported abuses is the assertion of allegedly invalid or overbroad patents, the very abuse for which AIA post-grant procedures were created, in order to improve patent quality. These matters of patent quality are being addressed by the changes made to the law by the Judiciary and by Congress in the AIA, which are only now beginning to be felt. It may well be premature to conclude that they are not doing the job. Take one major example, as a former Director of the USPTO in particular, I would support, as former Director Kappos did, giving the post-grant processes in the USPTO a chance to work.

Post Grant Challenges: Strategic and Procedural Considerations

There are several varieties of a stay. With post grant proceedings we’re talking mostly about discretionary stay. Every district court has inherent right to do this. Judges are generally favorable to granting stays with more being granted than not. “All a judge has to do is get burned once by not granting a stay, going to trial to the end, and then having claims invalidated by the Board and then having to have an appeal,” says John J. Marshall, law professor at Villanova University School of Law, previously Of Counsel at Drinker Biddle. The initial stay before a petition is granted is short. Then after the petition is granted, the district court judges are more likely to grant a stay, because IPR will simplify issues that might be important to the district court judge. That quick timeline is one of the factors that helps you get a stay for concurrent litigation and getting ammunition for use in district court claim construction. In fact, you may find that these factors are so persuasive that if a defendant in district court case files a petition for IPR, and you, as another defendant, can’t join because you are past the one month joinder cutoff, you still may be asked to stay your case until other defendant’s IPR concludes. As of October 2013, contested stay motions pending IPR petitions have a 68.5 percent grant rate and those pending CBM petitions have an 83 percent grant rate, according to a Finnegan infographic based on the published PTO AIA statistics. Those are really good rates. It’s something to consider even in districts like Delaware or East Texas.

Deciding Whether a Post Grant Challenge is Right for You

A goal of nearly every defendant is to lower the total cost of resolution of any legal issue. As counsel for the defendant, you have to weigh the settlement and licensing costs of a patent dispute against the total defense cost and how long it takes to resolve the dispute with certainty. Today, CBM, IPR, and PGR are the lowest possible cost options. Speed is one of the biggest benefits. The statute requires that a PGC proceeding must be completed in 12 months after institution, and in rare cases this extends to 18 months if the PTAB exercises a good cause exception. APJs are motivated to stay on deadline.

Navigating Post Grant Challenges after the AIA

As evidenced by the numbers above, the Board takes as many cases as they reasonably can within the statute. If there’s a good case to be made that a case could be litigated in PTAB, it’s usually accepted. As of last month, the office has instituted 192 trials and denied 32 trials for an overall institution rate of 85.7 percent, according to a statistics report compiled by the PTO. One example of this is Intellectual Venture Management, LLC v. XILINX, Inc., IPR2012-00018, Paper 12 (P.T.A.B. Jan. 24, 2013). Here, XILINX argued that IVM’s petition should be denied, because IVM failed to identify all the real parties in interest as required by 37 C.F.R. § 42.8(b)(1). XILINX pointed to another case in California where IVM was listed with 5 other defendants in a suit that had 63 entities as evidence of IVM’s failure. The Board ruled in IVM’s favor, saying that XINLINX had not given any argument for why the civil local rules of the Northern District of California are analogous to the Board’s rule on real parties in interest or for specifically why any of the 63 entities were real parties of interest.

The America Invents Act “Mini-Trials” are the Next Battleground for Resolving Patent Disputes and Shifting Fees to Patent Owners

There is a battle cry against abusive litigants in the patent industry. Among the tactics suggested is a “loser pays” system to try to mirror Europe, where this type of abuse is minimal. The Congressional Research Service presents that 92% of companies who assert but do not make products (over broadly and derisively called “trolls”) lose litigation that reaches judgment on the merits… Defendants can call upon the PTO to trigger up front fee shifting for the patent owner and an accelerated PTO determination on the validity, even potentially before the court analyzes it. But there’s more. IPRs and CBMs can be used to drive settlement, either before or after filing. Pre-filing, a drafted petition can be shown to the patent owner as a basis to settle.

Patent Reform: House Holds Hearing on “Innovation Act”

The hearing focused on the effect the Innovation Act would have on the problem of abusive litigation practices and on the patent system as a whole. Three central themes emerged from the hearing: 1) there is an urgent need to fully fund the PTO; 2) significant skepticism remains about expansion of the Covered Business Method (“CBM”) program; and 3) some of the more technical aspects of the Innovation Act would help rid the patent system of expensive and wasteful lawsuits. Divergence of opinion remained among the Members, however, about whether Congress should address fee shifting at this time or wait for the Supreme Court to hear the two fee shifting cases before it, although the witnesses agreed that legislation on fee shifting would be helpful, and Congress should proceed with legislation on this front.