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By Tony Dutra
May 10 — The head of the Patent Trial and Appeal Board insisted May 10 that the prevailing view of the board as a “graveyard for patents” has no basis.
“There is no bias against patents” in PTAB challenge proceedings, Acting Chief Administrative Patent Judge Nathan Kelley said at the 2016 Symposium on Intellectual Property at the George Washington University School of Law in Washington.
Conference planners devoted the symposium's morning session to the PTAB, as in the past two years. But this year, presentations and questions from the audience reflected a change in tone, with fewer complaints about board bias and more explanations as to why a patent is more likely to be invalidated at the PTAB than in court.
“The [America Invents Act of 2011] statute says what it says,” Kelley said. “And we're doing what it says.”
The AIA created the inter partes review process as an administrative route for challenging a patent's validity at the PTAB on the grounds that it is non-novel or obvious. Petitioners frequently challenge a patent's validity after they have been sued for infringement.
Kelley used his keynote address to defend the PTAB's record, pointing out that parties who lose at the board have filed about 500 appeals to the U.S. Court of Appeals for the Federal Circuit — 200 of which have been abandoned. Of the remaining appeals, the court has affirmed the PTAB in 92 of 108 decisions to date, he said.
During a panel discussion, stakeholders griped about details of PTAB proceedings. For example, Jonathan Stroud, chief patent counsel at Unified Patents, called the board's rules for when a petitioner can join a trial in progress “a mess.”
However, the usual complaints about petitioners' overall success at the PTAB—that trial is instituted in about 60 percent of petitions and at least one claim is canceled in about 80 percent of cases that reach the end of trial—gave way to a general view that proceedings have grown more predictable over the past three and a half years.
The PTAB's administrative panels “have matured and the practitioners have matured,” panel moderator William P. Atkins of Pillsbury Winthrop Shaw Pittman LLP, Washington, said.
The PTAB has also been called an infringer-friendly substitute for district court litigation. There are parallel litigations in district court for 80 percent of the PTAB's docket, and statistics show a greater likelihood that a patent claim will be canceled by the board than ruled invalid by a court.
Critics conclude that shows bias. However, courts deal with a presumption that a patent is valid, something that doesn't exist at the PTAB. One audience member suggested that patents brought to the PTAB could be the ones that are most vulnerable to validity challenges.
Kelley said only 20 percent of court cases lead to a PTAB filing, while critics make it seem as though the vast majority of lawsuits are effectively being moved to the board.
But panel members said there are reasons why petitioners in the other 80 percent of cases never file a petition. For example, Steven M. Purdy, counsel in IBM's Corporate Litigation group, said an alleged infringer may have a better argument for why they didn't infringe than for why the patent is not valid.
Stroud said a case for patent ineligibility, under 35 U.S.C. §101, can unfold—and often be resolved in a petitioner's favor—more quickly in court than via a PTAB challenge.
But the most prevalent reason for not going to the PTAB is because of court cases settling early. That scenario tends to unfold, especially, when a patent holder is a non-practicing entity and an alleged infringer pays in order to avoid litigation costs, Stroud said.
Stroud and others argued that the PTAB is driving that increase in the incidence of early settlement.
In court, said Purdy, a patent owner can sit back while an alleged infringer incurs discovery costs. At the PTAB, though, patent owners are put to work within three months if a preliminary response is filed—and immediately once trial is instituted. Overall, costs are lower at the PTAB than in court for those accused of infringing patents. But the reverse is true for patent owners.
Such changes in the economics of filing complaints boil down to a likelihood that NPEs are willing to settle for less, although settlement terms are not made public.
Kelley also turned the “PTAB-as-death-squad” narrative around by predicting a downstream benefit—having stronger patent applications in the first place—to the post-grant opposition system.
Prior to the PTAB's existence, applicants probably didn't perform detailed prior art searches because they perceived that as an examiner's job, Kelley said. But now, they are likely being more vigilant because a patent's issuance can't be considered as an end onto itself; a patent owner must expect that someone challenging their patent at the PTAB will find prior art that the examiner didn't dig up.
“Maybe [applicants] will do more prior art searching than they did a year ago,” Kelley said. “You really need to think in advance about how you're going to get your patent, knowing how it's going to be reviewed afterward [at the PTAB].”
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Conference details at https://www.law.gwu.edu/2016-symposium-intellectual-property.
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