About Half of Patent Owners’ Attorneys Say PTAB Beneficial

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By Tony Dutra

The Patent Trial and Appeal Board proceedings, once called patent “death squads,” received high marks from about half of the attorneys representing patent owners, a recent survey found.

Results of a Bloomberg Law and American Intellectual Property Law Association co-sponsored survey, published Feb. 2, indicated that patent owners are getting more benefit from the Patent and Trademark Office’s PTAB trials than the popular perception of significant lost patent rights would suggest.

Congress created the PTAB under the America Invents Act of 2011 to establish a faster and cheaper way to challenge patent validity.

In-house counsel for patent owners were about evenly split on whether the value of their patents had decreased since the PTAB proceedings became available. But only 7 percent of them said their budgets for filing patent applications were decreased.

And patent attorneys with more than 10 years of experience litigating in federal district court were surprisingly strongly inclined to say the AIA challenge alternative was beneficial, the survey found.

Depends on What Happens Later, in Court

The AIA authorized the administrative patent judges of the PTAB, now numbering about 270, to decide whether existing patents should ever have been issued. Early results—higher cancellation rates than in federal district courts—worried patentees. The survey, though, asked attorneys to go beyond the PTAB decision and consider the PTAB’s impact on how the case played out in court.

The survey focused on the inter partes review (IPR) proceeding enabled by the AIA. In an IPR, the petitioner challenges the validity of an issued patent by presenting either prior art that the original examiner didn’t find or by making legal arguments that an examiner wouldn’t necessarily have considered.

Tech- and law-savvy PTAB administrative patent judges (APJs) are arguably more likely to cancel patent claims than the generalist judges and lay juries in federal district courts. In fact, statistics show that alleged infringers—defendants in court who become IPR petitioners at the PTAB—are about 50 percent successful at the PTAB in validity challenges, compared to about 30 percent in a court trial.

But the survey showed that petitioners who get a final win-or-lose decision at the PTAB aren’t necessarily done.

After only four years of PTAB operation, 7 percent of petitioners and 13 percent of patent owners have already been in a case where the PTAB gave a petitioner an incomplete “win,” and the “losing” patent owner still ended up winning its infringement case in court.

The most likely explanations are that the petitioner’s PTAB decision was to cancel some, and maybe even most, but not all, the patent claims. The patent owner’s infringement case in court can depend on only one valid claim. Or there can be a full PTAB win against one patent asserted in court but a lost challenge at the PTAB on a second patent asserted.

Gold Plated, Twice-Blessed Wins

Further, a patent owner “win” at the PTAB on validity may be more significant than a win at the validity stage of a court trial. Any patent that survives PTAB review is “twice-blessed” and “gold-plated,” according to Brad D. Pedersen, a member of AIPLA’s board of directors, perhaps giving the alleged infringer a weaker case in court.

The reverse situation was even more prevalent. Eleven percent of patent owners reported winning at the PTAB but eventually losing in court. On the other side, 31 percent of petitioners reported an incidence of losing at the PTAB and then winning in court. These reversed court results can often be traced to what the patent owner had to give up at the PTAB in order to win there, Pedersen said.

A patentee in an IPR procedure defending a patent as nonobvious, for example, may be forced to give up a broad scope of protection. The PTAB petitioner in that scenario will have lost the validity challenge, but—now back in the role as court defendant—has what it needs to avoid the infringement charge.

“In a recent IPR decision, we lost a Decision to Institute, but received a claim construction that was very favorable to the client’s non-infringement position in district court,” Pedersen said. “So, there were clear advantages to filing the petition, even though the petition was itself not successful.”

Pedersen also had an explanation for the mixed results on the perceived drop in patent value but no drop in budgets. He suggested that companies are recognizing the kinds of patents the PTAB rejects and are putting more money and effort into the applications perceived to be of highest quality and abandoning those of low quality.

Experienced Attorneys Like PTAB.

The online survey, conducted in November and December, was completed by 167 patent attorneys and agents, 62 in-house and 105 outside counsel. Outside counsel answered from the perspective of patent owner or challenger, depending on who they represented in their most recent cases. The split between owners and challengers was close to 50-50.

The attorneys’ views on the value of the PTAB proceedings didn’t depend much on which side they represented. Seventy percent of counsel with more than 10 years of experience in courts gave a rating of 7 or higher and 39 percent gave it a 10, according to a scale of 1 (not at all beneficial) to 10 (very beneficial) in answer to the question: “How beneficial is the existence of an IPR option to you?”

One possible explanation for their response is that they have developed a level of sophistication about patent law that they can count on when speaking with PTAB judges. They may believe that the outcome is more random when arguing in a district court in front of decision makers with relatively less technical training or patent focus.

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Mike Wilczek at mwilczek@bna.com

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