Changes to laws let challengers strip property rights from owners.
When President Obama signed the America Invents Act into law more than five years ago, the United States embarked upon the most radical overhaul of patent laws in the nation’s history. Much time was spent debating and ink spilled analyzing the largely philosophical move from first to invent to first to file, the unnecessary dismantling of the grace period, and the fact that for the first time foreign-filed patent applications could be prior art as of their foreign filing dates. The most monumental change was the introduction of three new post-grant proceedings that allow for challengers to strip property rights from owners through an Article II tribunal rather than in an Article III court that makes up our independent federal judiciary.
While checks and balances have been turned on their head and the agency tasked with issuing patents has also been stripping those property rights at alarmingly high levels, it prompts
the question: Has the United States Patent and Trademark Office, and in particular USPTO Director Michelle Lee, been following the law?
Not really a win
According to Title 35 of the United States Code, Section 316(b), regulations relating to the conduct of inter partes review or IPR (used to challenge the patentability of claims in a patent) must take into consideration the effect on the economy, the integrity of the patent system, and the efficient administration of the patent office. The statute reads:
“In prescribing regulations under this section, the Director shall consider the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter.”
Although the patent office prefers to promote misleading statistics (see Inventors Digest, October 2016) that erroneously suggest the impact of IPR has been minimal, the truth in the real world is quite different. The way the patent office manages to convolute reality is by the disingenuous assertion that claims not subject to a final written decision of the Patent Trial and Appeal Board remain patentable, which represents a win for the patent owner. But claims not subject to a final written decision can be challenged again because there is no estoppel, leaving the possibility of the PTAB finding them likely invalid.
When the office paints a misleading picture in order to attempt to convince the public and popular press that things are not as bad as patent owners say they are, how is the integrity of the patent system anything other than compromised?
Not one harassment case?
Further, according to Title 35, Section 315(d), the director has the authority to intervene and stop the harassing filing of interpartes review challenges. In relevant part, 315(d) says: “[D]uring the pendency of an inter partes review, if another proceeding or matter involving the patent is before the Office, the Director may determine the manner in which the inter partes review or other proceeding or matter may proceed, including providing for stay, transfer, consolidation, or termination of any such matter or proceeding.”
In a 2015 Report to Congress titled “Study and Report on the Implementation of the Leahy-Smith America Invents Act” by the USPTO, the office acknowledged this power to prevent harassment, explaining: “To protect parties from harassment, the AIA required the USPTO to establish regulations prescribing sanctions for abuse of discovery, abuse of process, and any other improper use of the proceeding. Further, the AIA protects patent owners from unwarranted multiple proceedings by providing that the Director may take into account whether the same or substantially same prior art or arguments previously were presented to the USPTO, and may reject the petition on that basis.”
On multiple occasions, Director Lee has been asked to exercise this authority but has not yet found one case where it would be warranted. This may lead uninformed people to erroneously conclude that there has yet to be any evidence of harassing filings, but that is simply not true. Certain patent owners face a number of post-grant challenges, in particular IPRs. In some cases, the same patent will be challenged multiple times, by multiple challengers.
The truth is simple. Certain patent owners are being harassed; their patents—sometimes the same patents—are challenged repeatedly. Yet, Director Lee has not exercised her authority to say
“enough.” It seems abundantly clear what is going on. If you are one of several disfavored patent owners, you are almost certainly not going to receive a fair procedural shake at the patent office.
Every courtesy and benefit will be extended to the challenger, including serial challengers. The patent or patents that took you upwards of 10 years to obtain at a cost of $50,000 to $100,000 will
be presumed invalid by the agency that issued them.
Hanging ’em high
The United States Court of Appeals for the Federal Circuit seems to have finally grown tired of the abuses of the PTAB, ruling that certain decisions are arbitrary and capricious. Truthfully,
many of the procedural decisions have been arbitrary and capricious, but to satisfy that legal standard is virtually impossible and should speak volumes about how much of a runaway tribunal
the PTAB has become.
At what point does expediency so compromise the fairness of the outcome that something must be done? This question is one that the patent office, and in particular Director Lee, must be asking. Unfortunately, there seems to be little evidence of fairness considerations, or the impact post-grant review as it is currently configured is having on the integrity of the patent system.
316(b) commands the director to consider efficiency, but efficiency without fundamental fairness has always been unconstitutional. We simultaneously laugh and cringe when we hear the famous line from just about every Western movie—the one where the crowd yells: “Hang him!” The sheriff replies: “No. We are going to give him a fair trial, and then we are going to hang him!” Welcome to the PTAB, which seems to play the role of “death panel” as a badge of honor because that is what it thinks the AIA commanded it to do to patents.