Posts Tagged: "Patent Trial and Appeal Board"

In order to begin restoring patent rights and respect for the presumption of validity changes must be made to constrain the PTO post grant procedures… Patent holders that have IPRs, PGRs or CBMs instituted must be given the option to select two different claim interpretation standards. First, they can select the broadest reasonable interpretation (BRI) standard, which will allow claims to be amended with N auxiliary claim sets to enable the PTAB to select a preferred claim set. Second, they can select the narrower Phillips standard, applied in the U.S. District Courts, which are applied to refer to infringement analysis, by waiving the patent owner’s right to amend claims in the patent under review.

The Federal Circuit issued a decision in Homeland Housewares, LLC v. Whirlpool Corporation, which ought to be completely unnerving to every owner of a U.S. patent grant. Hearing an appeal from a decision of the Patent Trial and Appeal Board (PTAB), the panel voted 2-1 in favor of Homeland Housewares and overturned a final written decision that had confirmed that challenged claims from a Whirlpool patent were valid. So even when a patent owner manages to escape the clutches of the PTAB and prevails no patent is ever truly safe any longer. A dissent was filed by Judge Newman, who chastised the majority for rewriting the claims of the patent in a way that more broadly stated the invention than did the patentee.

IPRs introduced an asymmetric component which particularly burdens the patent holder by requiring a very expensive ten-fold higher cost to defend the patent in the PTAB relative to the alleged infringer(s) cost of initiating an IPR. In sum, then, by writing the AIA for self-benefit, the big tech industry did an end run around i4i, breached the presumption of patent validity and pushed patent validity determinations back to the PTO with the objective to deny patent holders critical due process rights. The main impetus to persuade Congress to initiate this after grant review process lied in the false narrative of the big tech cartel that patents issued by the PTO are of a poor quality.

The overly inclusive nature of obviousness interpretations has led to problems. First, with an overly broad view of obviousness, patent applicants are encouraged to flood patent examiners with prior art references in order to immunize prosecution from future surprises of prior art, even though many of these references are irrelevant. This flood of prior art burdens examiners and encumbers the patent prosecution process. Second, PTO examiners, PTAB judges and the federal district courts have different standards of determining obviousness, with the courts maintaining a clear and convincing standard for challenging the validity of an issued patent. For example, examiners may tend to narrow prior art to the field of an invention, thereby allowing applications that are then retested in IPRs under broader (higher bandwidth) standards, thereby explaining discrepancies in IPR claim kill rates.

During the second quarter of 2017, a total of 1,138 patent cases were filed at the U.S. district court level, an increase of 18 percent when compared to first quarter filings. However, that uptick in patent suits between the first and second quarters of 2017 repeats a trend which has played out since 2013. Compared to the second quarter of 2016, patent case filings were actually down 7 percent on a year-over-year basis. From the beginning of 2016 through the end of 2017, U.S. district courts have seen some of the lowest levels of patent litigation in district courts on a quarterly basis. Interestingly, the Lex Machina update shows a significant decline in case filings in the Eastern District of Texas (E.D. Tex.) correlating strongly with the Supreme Court’s recent decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, a case which restricted the statute on proper venue for patent infringement cases.

When we apply for a patent, we are sharing our secret, our discovery, with the world. In exchange for sharing our secret we are promised 20 years of exclusive rights, a promise signed and sealed by the Director of the United States Patent and Trademark Office. But with the PTAB, it means nothing. No guarantee. No warranty. Arguably a fraud. It will be revoked – by the same agency that issued it – at least 90 percent of the time.

While the Patent Trial and Appeal Board (PTAB) has not been friendly to patent owners, to put it mildly, the PTAB has not been inhospitable to pharma patent owners according to a report issued in mid-June by BiologicsHQ, a searchable database of drugs, patents, and companies involved in PTAB inter partes review (IPR) proceedings developed by attorneys at Fitzpatrick, Cella, Harper & Scinto. The BiologicsHQ report shows a much different story in terms of drug patents facing IPR challenges at the PTAB. The report looks at a combination of data sources, including the Orange Book, Center for Drug Evaluation and Research (CDER) listed biologics and statistics on America Invents Act (AIA) trials published by the PTAB. The BiologicsHQ report draws the conclusion that, despite widespread concerns about the PTAB operating as a patent death squad in IPRs, “such concern is not justified for drug patents.”

At least $17 million. That is what my Bunch O Balloons patent has cost so far. It could grow to $50 million. Yes, we are talking about water balloons, not smartphones. How can this be? Because the patent grant issued by the U.S. Patent and Trademark Office means nothing to infringers like Telebrands and Walmart. They simply ignore the patent and rush to take over the market with their knock-offs (Balloon Bonanza in 2015, Battle Balloons in 2016, and Easy Einstein Balloons in 2017). Then they use those revenues to hire attorneys and experts to say the patent is invalid. If the patent owner lacks deep pockets or good lawyers, his patent will not survive. If he does have access to infinite funds, he has about a 5 percent chance of survival thanks to the America Invents Act (AIA) and the USPTO’s implementation of the Patent Trial and Appeal Board (PTAB).

The Federal Circuit vacated and remanded the Board’s finding of obviousness of certain challenged claims based on a means-plus-function limitation, affirmed the Board’s finding of obviousness as to other challenged claims and affirmed the Board’s findings that the prior art discloses all other limitations of the challenged claims on appeal… In a patentability determination, the Board must identify the structure of a means-plus-function limitation disclosed in the specification; it is insufficient to merely disagree with patentee’s arguments. Additionally, if a practitioner reopens prosecution and amends claims during inter partes reexamination, additional prior art can be cited against the amended claims.

The Federal Circuit decision proves that there really is no end to the nightmare that patent owners face in trying to uphold the validity of their property right, which is supposedly protected by the U.S. Constitution. In a decision in Google Inc. v. Intellectual Ventures II LLC, Judges Lourie, Wallach and Stoll vacated and remanded a final written decision issued at the Patent Trial and Appeal Board (PTAB) in an inter partes review (IPR) trial that patent claims owned by Intellectual Ventures were neither anticipated nor non-obvious. The Federal Circuit’s decision affirmed the parts of the final written decision at PTAB that did find some claims of the challenged patent as directed at unpatentable subject matter.

However, what if the Board refuses to terminate an IPR despite a joint request by both parties based on a settlement and proceeds to a final written decision? As indicated in Section 317, a joint request for termination may not be granted if the Office has decided the merits of the proceeding before the request for termination is filed. Although the section does not specifically list or explain the criteria for determining the merits of the proceeding to a final written decision, there are cases providing us with a number of considerations… From the cases above, it can be seen that even when the Board terminates an IPR as to a petitioner, it may nevertheless proceed to a final written decision when the trial issues have been fully briefed and argued at the time the parties move to terminate an IPR. The Board may also proceed to a decision on the merits when there is a large number of existing district court cases involving the patent at issue.

In late June, the Support Technology and Research for Our Nation’s Growth and Economic Resilience (STRONGER) Patents Act of 2017 was introduced into the U.S. Senate by co-sponsors Sen. Chris Coons (D-DE), Sen. Tom Cotton (R-AZ), Sen. Dick Durbin (D-IL) and Sen. Mazie Hirono (D-HI). The bill’s purpose is “to strengthen the position of the United States as the world’s leading innovator by amending title 35, United States Code, to protect the property rights of the inventors that grow the country’s economy.”

The Supreme Court has long stated patents are property rights, and the statute says they are to be treated as they are property rights. Taking property rights away with such a fundamentally flawed process is practically un-American… It is absolutely essential for the President to pick someone who believes patents are private property rights, not public rights. The next Director should also believe that as a property right title in a patent must at some point quiet in order for ownership to be certain and investment to be property incentivized, because without ownership questions resolved only a fool would invest the sums necessary to take most paradigm shifting, game changing innovation to market.

So obviously the patent claims VirnetX has used to pursue infringers such as Apple and Microsoft are not the weak patents that opponents of the patent system claim are the scourge of the system. Well — not so fast! Just because an Article III federal district court confirms the validity of a patent doesn’t mean anything anymore. Indeed, federal courts have become subordinate to the PTAB, which is as ridiculous as it sounds but sadly true. A patent is not valid until an Article I executive tribunal says so, and absolutely no deference is paid to Article III judges of the United States federal courts.

Partial institutions lessen the value of estoppel because the petitioner avoids estoppel on claims that were challenged but not instituted. The PTAB never issues a final written decision for these challenged-but-not-instituted claims. And because estoppel only applies to claims receiving a final written decision, these non-instituted claims escape the estoppel statute See, e.g., Shaw Industries Group v. Automated Creed Systems, 817 F.3d 1293, 1300 (Fed. Cir. 2016). In effect, the PTAB’s current practice saves a petitioner from estoppel on claims it had little chance of invalidating. Thus, under the current practice, a petitioner currently only risks estoppel on claims that it stands a good chance of invalidating. But if the Supreme Court decides as expected, estoppel will attach to all challenged claims of an instituted IPR. Final written decisions will more often include claims found valid, and a petitioner will no longer be able to avoid estoppel for some claims by relying on the PTAB to sort strong challenges from weak ones at the institution stage.