Posts Tagged: "covered business method review"

The Patent Office has begun a planned series of updates to the Practice Guide, with the first such update having been released in August 2018. The August 2018 Practice Guide updates are intended to bring the Practice Guide into conformance with the Patent Office’s current view on best practices. Importantly, these updates do not generally reflect new practices, but rather appear to gather in one place the analysis used by existing PTAB decisions in determining commonly disputed procedural issues.

This week in Capitol Hill hearings, it will be a relatively light week all around, and particularly so for those who focus on intellectual property, technology and innovation. Indeed, there are few hearings on tap for the week that might be of interest. Nevertheless, financial services innovation, health care cost reductions will be discussed in the Senate on Tuesday.

In early August, patent owner Smartflash filed a petition for a writ of certiorari with the U.S. Supreme Court to appeal a case stemming from covered business method (CBM) review proceedings carried out at the Patent Trial and Appeal Board (PTAB). Smartflash is asking the Supreme Court to decide whether PTAB administrative patent judges (APJs) are principal officers of the United States who are subject to the terms of the Appointment Clause, whether CBM review of patents disclosed prior to passage of the America Invents Act (AIA) violates the Fifth Amendment’s Due Process Clause, and whether undisputed evidence that an invention is not unduly preemptive is relevant to answer questions of patent eligibility under 35 U.S.C. § 101. At issue in this petition are a total of 30 CBM reviews petitioned by Apple, Samsung and Google against Smartflash, which were instituted by APJ panels at the PTAB.

Lisa Jorgenson, executive director of the American Intellectual Property Law Association (AIPLA), asked the agency to better justify the increased surcharge for late maintenance fee payments as well as the increases to IPR and PGR trials. Jorgenson noted that much of the additional work required by SAS Institute would take place after the institution decision and thus it might make more sense to divide the fee increase such that the pre-institution fees bear less of the increase than those charged post-institution. Roland McAndrews of the Intellectual Property Owners Association (IPO) also sought additional justification for the 525 percent increase to the late payment surcharge for maintenance fees, noting that the desire to encourage on-time payments alone didn’t support that increase… Josh Malone, inventor of Bunch O Balloons, noted that the day’s hearing on fee increases was “based on an unrealistic and aspirational value proposition,” namely that the fees paid for obtaining a patent would actually result in the grant of a patent which was backed by the full faith of the U.S. government.”

Principe and Rudroff unfortunately regurgitate much of the misguided dialogue, which has done nothing to serve this country except to decimate its patent system in recent years. In the view of the authors, patent trolls, or patent assertion entities (PAEs) (which the authors note is the less pejorative term), provide no market value and often enforce software or business method patents which have questionable validity. Of course, it is worth noting that in its 2016 study on PAEs, the Obama Federal Trade Commission called the term “patent troll” both unhelpful and prejudicial, and also specifically recognized that PAEs can and do play a valuable role in the market. So the conclusions of Principe and Rudroff are not supported by even an FTC study commissioned for the purpose of condemning patent trolls. 

On Wednesday, July 11th, the Court of Appeals for the Federal Circuit issued a decision in Apple v. ContentGuard Holdings vacating a decision by the Patent Trial and Appeal Board (PTAB) to institute a covered business method (CBM) validity proceeding… Amazingly, the Federal Circuit’s vacature of the PTAB’s determination of unpatentable subject matter came after appeals from petitioners Google and Apple sent the case to the Federal Circuit. Although the panel of administrative patent judges (APJs) determined the challenged claims to be unpatentable, they also granted a motion from ContentGuard to amend claims which substituted the unpatentable claims. This appeal gave ContentGuard the ability to cross appeal the PTAB’s determination that the ‘280 patent was subject to CBM review.

In 2011, as part of the American Invents Act (“AIA”), Congress significantly restructured the way in which previously issued patents could be challenged.   In some cases, existing post-issuance proceedings, like ex parte reexamination and reissue proceedings, were kept intact as such proceedings existed prior to the AIA.  In other cases, existing post-issuance proceedings, like inter partes reexamination, were replaced with new proceedings, such as the inter partes review proceedings (“IPRs”).    In addition, brand new proceedings were created, such as post-grant review proceedings (“PGRs”), covered business method patent review proceedings (“CBMs”), and supplemental examination proceedings.  In each instance, Congress made policy choices as to who could (or could not) bring and/or participate in such proceedings, and who could (or could not) raise challenges to decisions made by the government in such proceedings. 

On Wednesday, May 9th, Oklahoma-based patent owner Christy Inc. filed a class action complaint in the U.S. Court of Federal Claims against the United States seeking just compensation for the taking of the rights of inventors’ and patent owners’ patent property rights effectuated by the Patent Trial and Appeal Board (PTAB). Members of the proposed class would include all owners of patents which were deemed by the U.S. Patent and Trademark Office to include patentable subject matter which were later invalidated by the PTAB.

The USPTO has provided us with a comment from Chief Judge David Ruschke, who defends APJs of the PTAB as having extensive legal and technical experience. The problem is this view is simply not consistent with the data. While APJs may be technically competent, there is little doubt many on the PTAB were appointed when they simply did not have extensive legal experience… PTAB judges preside over administrative trials, which have all the trappings of litigation (i.e., motions to dismiss, discovery, discovery disputes, hearings, testimony, depositions, constitutional rulings, jurisdictional matters, questions of contract interpretation and privity, and much, much more. No matter how much Ruschke and others do not want to acknowledge the truth, it is perfectly accurate to say that patent agents and patent examiners have absolutely no experience in that world. They simply can’t, unless they are engaging in the unauthorized practice of law.

Given the PTAB’s ability to make decisions precedential, Ruschke’s argument about how important and meaningful it is to have expanded panels to ensure uniformity misses the mark. The PTAB does not designate many cases as precedential (another problem for a different day), but it is possible for a three-judge panel decision to be made precedential. In fact, there have been a number of cases that have been pronounced as precedential by the PTAB where the decision was made by a three-judge panel. That being the case, why is it necessary for any expanded panels unless PTAB leadership is trying to influence Administrative Patent Judges despite the lack of a precedential designation? And doesn’t such an attempt to influence call into question the decisional independence of APJs?

On Tuesday, January 23rd, the Court of Appeals for the Federal Circuit issued a ruling in Google LLC v. Network-1 Technologies, Inc. which affirmed a finding by the Patent Trial and Appeal Board (PTAB) that a patent covering a method of identifying media linked over the Internet was valid. The Federal Circuit disagreed with Google that the PTAB erred in its claim construction during the validity trial, leaving in place a patent that has been asserted by Network-1 against Google’s major online media platform YouTube.

This experiment in patent validity review an executive agency by the Patent Trial and Appeal Board, an Article I tribunal in the PTO, has been unsuccessful…The chief constraints of the public rights doctrine involve consent and due process by an Article I tribunal and review of tribunal determinations by an Article III court. None of these features are present in the PTAB review of issued patents. In fact, the PTAB has shown a massive number of institutional abuses of IPRs that have undermined its legitimacy and negated its determinations… Ultimately, it will be shown that PTAB has vastly worse patent validity review results than federal district courts because of a blatant disregard for due process. As a consequence of these observations, it should be clear that the PTO is susceptible to political influences by the powerful technology lobby’s false narrative of poor quality patents that resulted in creation of a sanctimonious mechanism for patent validity review to constrain competition from market entrants, with an effect to promote technology incumbent profits.

I want to believe Congress ultimately sought to strengthen the U.S. patent system with the AIA by providing a mechanism to more easily remove a small percentage of granted patents that were being inappropriately used in litigation. Specifically, patents that were being asserted with claim constructions not contemplated when the patent was examined. After all, Congress had been heavily lobbied with the narrative that NPE’s had been stretching patents well beyond the four corners of the granted patent and hurting the integrity of the patent system.

The PTO has increased the number of Board decisions as being precedential (so as to serve as a binding authority) by 36% within the last two years. With respect to the increase in precedential decisions: while a 36% increase is substantial, that translates into only an additional 10 precedential decisions – 2 ex parte appeals and 8 IPRs. The current total number of precedential decisions is 38, broken down into 27 ex parte appeals, 2 interferences, 8 IPRs and 1 CBM. Compare these numbers to the number of ex parte appeals and AIA petitions received in 2017 alone (10165 ex parte appeals, 1853 IPR petitions, 54 CBM petitions, and 40 post-grant review petitions).

In 2012, the American Invents Act established three new administrative procedures: post grant review (PGR), inter-partes review (IPR), and covered business method patent (CBM) review. In each of these proceedings, anyone may file a petition challenging the validity of an issued patent. Patent practitioners have long been trained to draft patents that survive litigation. It is no secret that most asserted patents now end up before the PTAB, and the PTAB tends to use different rules that favor the challenger. As we approach the five year anniversary of the PTAB, patent practitioners should reconsider long-held strategies. BRI and evidence standards adopted by the PTAB make surviving post-grant proceedings especially challenging. Pursue a narrowly-focused patent with clear and unambiguous terms, to avoid post-grant proceedings or survive them when instituted. A robust prosecution that addresses a range of issues, corrects Examiner’s errors, and places evidence on the record helps achieve the same goals.