Recently, in the pages of this blog, we reported on the dire predictions made at the IPO Annual Meeting here in Chicago of the “end of days” for patents. The purported culprits? The PTAB and the America Invents Act’s newly enacted Inter Partes Review and Covered Business Method Review. “Well, allow me to retort,” to borrow a line from Samuel L. Jackson’s character in Pulp Fiction.
Former Chief Judge of the PTAB, James Smith, had it exactly right when he sought to dispel the “sky is falling” handwringing that now so often characterizes these discussions. As Judge Smith observed, the Patent Office issues over 300 thousand patents a year. Only a handful of those patents are the subject of IPRs or CBMs.
Surprisingly, the panel leveling complaints against these PTAB proceedings was not limited to the usual representatives of the pharma community (who may have more legitimate grounds for concern), but included counsel from General Electric and Hewlett-Packard. One might expect that GE, and in particular HP, would be more sympathetic to procedures that finally offer salvation to tech companies beleaguered by litigation from non-practicing entities (NPEs).
What is frustrating about panels such as these is that few ever point to actual miscarriages of justice by the PTAB. In answer to an audience question, the industry participants acknowledged that none had performed a systematic study of the final written decisions of the PTAB, such that they could say with confidence that the PTAB was “getting it wrong,” i.e. that the PTAB was indiscriminately canceling claims reciting patentable inventions. It took Judge Smith to come to the rescue of the PTAB, noting that when the procedures were first implemented, he took it upon himself to read hundreds of initial institution decisions and final written decisions, and that he saw no apparent bias in the PTAB’s decisions against patent owners.
It brings to mind the adage that “if it ain’t broke, why fix it?” Proposals to weigh down the initial institution decision with much of the evidence that would otherwise be later introduced in the trial undermine the lightweight framework for accelerated determinations in these proceedings. Insisting that three Administrative Patent Judges continue to be involved in every institution decision ignores the reality of the number of these petitions being filed and may ultimately jeopardize the ability of the PTAB to comply with its mandate to dispose of these petitions within eighteen months of filing.
Sentiments, such as the following, drive many of these proposals: “[T]he view of patent owners is that once trial is instituted, your claims are going down.” But that observation, even if true, does not evidence that the system is defective.
After all, the statutory mandate of the PTAB is to institute trial only where the petitioner has shown a “reasonable likelihood” that it will prevail as to at least one claim. Moreover, the statute limits the grounds in IPRs to printed prior art publications. One would not ordinarily anticipate that the substance disclosed by these sources would transform between the time the PTAB first reviews them and the date that it renders its final written decisions. While not perfectly analogous, no one would skip a beat if they were informed that plaintiffs who establish a sufficient likelihood of success on the merits to obtain a preliminary injunction also prevail at trial in high percentages.
Indeed, if anything, the fact that the PTAB nevertheless declines to cancel a percentage of claims after instituting an IPR is arguably proof of the PTAB’s openness to the patent owner’s arguments—not the reverse. The high percentage of final decisions that confirm the initial decision to institute need not evidence that PTAB’s judges are guilty of forming early unwarranted judgments that they unreasonably resist revisiting.
Nor do the PTAB’s decisions argue for increasing the burden of proof from a preponderance of evidence to clear and convincing evidence. Are we really interested in a system that approves claims even though acknowledged to be invalid, “more likely than not?” Particularly where the patent owner is accorded the opportunity, unlike in litigation, to amend its claims.
The Federal Circuit long ago determined that the presumption of validity enshrined in Section 282 of the Patent Act does not attach to post-grant proceedings in the Patent Office. In an observation that would no doubt strike the critics of current post-grant review as ironic, the Federal Circuit observed then that the rationale for adopting the lower burden in reexamination proceedings (the predecessor to modern IPR and CBM practice) was that such reexamination would “reinforce investor confidence in the certainty of patent rights by affording the PTO a broader opportunity to review doubtful patents.” See Patlex Corp. v. Mossinghoff.
Validity often is brought into question in disputes between private parties, but the threshold question usually is whether the PTO, under the authority assigned to it by Congress, properly granted the patent. At issue is a right that can only be conferred by the government.
The panelists in the recent IPO session complained that the opportunity to amend was illusory, and should not serve to justify application of the burden applied in patent prosecutions. Judge Smith responded, however, noting that his review of the decisions denying amendments convinced him that the decisions did not issue from any hostility of the PTAB to amendments, but from deficiencies in the proposed amendments. In fact, the concern of the certain panelists with respect to amendments appeared less about fairness and motivated more by the impact on parallel litigation. But the fact that intervening rights might arise with respect to a previously unissued claim seems hardly to argue in favor of preserving existing claims deemed invalid. In any event, if the complaint is with perceived impediments to amendment, the solution lies in improving that mechanism—not in diminishing the ability of the PTAB to reexamine issued claims. Proposals to do just that have been made.
I realize that Stanley Kubrick intended the title of his 1964 classic to be sarcastic. But I sincerely believe that we should worry less, and embrace more, these new tools in the PTAB. Apologies for the rant and, needless to say, the views expressed here should be attributed to no one but the author. In fact, don’t even hold me to these views. Tomorrow I am just as likely to see things differently. Keeping an open mind.