By Richard Baker, President of New England Intellectual Property, LLC
The American Invents Act, passed into law in 2011, is one of the biggest changes to US patent laws in the past fifty years. Its sweeping reforms changed our system from the “First to Invent” to a “First to File” system, and created a new method for infringers to invalidate patents. While many aspects of this legislation had impacts on inventors, the most striking impact has been the devastating financial impact of the post grant review process. The post grant review process, or more specifically, the inter partes review (“IPR”) procedure allows any entity to request that the US Patent Office initiate a review of a valid, issued US Patent. In the two and a half years since the first IPR was filed, 77% of all patent claims reviewed have been invalidated[1].
To obtain a patent in the United States, an inventor must submit his invention to an examination process before a patent examiner. This process involves several years and often many vigorous debates between the examiner and the inventor in papers that are exchanged. If the examiner is convinced at the end of this proceeding that a patent is warranted, the US Patent Office issues a patent to the inventor. By the time a patent issues, there typically is a significant examination of the merits of the patent claims.
In essence, the IPR procedure is a request for the Patent Office to admit that they made a mistake and reverse themselves on the validity of the patent. The problem with this reversal is that the inventor has relied on the patent to build a business or to initiate licensing discussions based on his faith in the original decision of the Patent Office. This is similar to a property owner building a house based on the issuance of a deed to the property. A reversal of the patent, or of the deed, after the fact impacts the investments made in the invention.
Some have argued that the IPR procedure is weeding out the weakest patents in the United States, but experience has shown that the opposite is true. The IPR procedure is only being used against the best United States patents. This is because of pure economics. The cost for a company to file and prosecute an IPR to a decision by the Patent Trial and Appeal Board (“PTAB) is between $200,000 and $500,000. No corporation can afford to file an IPR unless the patent in question is a significant threat. In fact, a review of the IPRs filed in the past month or two shows that almost every patent that is IPR’ed is involved in litigation (the few that are not in litigation are in the pharmaceutical arts). Only a small percentage of all patents are used in litigation or licensing; these patents are considered the top tier of all patents. It is these patents that are the subject of IPRs. Given the high rate of invalidation at the PTAB, most all patent litigation defenses now involve an IPR of the patents in suit.
To quantify the financial impact of the IPR proceedings in the AIA bill, we need to first assess the impact on the price of an average US patent. The lore of the US patent brokers, individuals who help inventors and companies to sell their patents, is that the price of an average US patent has dropped about 66% since the institution of the AIA IPR procedure. According to Scott Bechtel of AmiCOUR IP Group, an experienced patent broker, “US Patents have lost 2/3rds of their value since the AIA was passed in 2011.”
A bigger sampling of deal values can be found in IPOfferring’s Patent Value Quotient Annual Report of patent sales[2]. This report has been issued from 2012 through 2014, giving us three years of sales data to analyze. The deals listed in these reports may not represent all patent sales, as this list consist of deals large enough to be material and thus publicly reported as well as deals that brokers chose to report to IPOfferrings. Furthermore, there is no readily available data from before 2012 to see deal values before the AIA was passed. However, these reports show the dramatic drop in patent values over 13,564 patent sales in 93 deals over a three year period.
IPOfferings Patent Value | |||
Year | Dollar Sales | Patents Sold | Average Price |
2012 | $2,949,666,000 | 6,985 | $422,286 |
2103 | $1,007,902,750 | 3,731 | $270,143 |
2014 | $467,731,502 | 2,848 | $164,232 |
2012-2013 | -66% | -47% | -36% |
2013-2014 | -54% | -24% | -39% |
2012-2014 | -84% | -59% | -61% |
This chart shows a dramatic drop in the average price per patent over the three year period, with values dropping 61% from $422,286 per patent to $164,232. In that timeframe, the number of patents sold dropped from just under 7000 to 2800, showing a decrease in liquidity in the patent market. The overall sales dropped from $3 Billion to well under one half billion in patent sales per year, or by 84%.
But this decrease in value of US Patents should be expected given the invalidation rate of the Patent Office’s IPR proceedings. If 77% of all valid patents are canceled through this new proceeding, then the risk adjustments on patent values should also decrease by roughly the same amount. While our empirical data is showing a 60-70% drop in values, the theoretical impact should be 77%. Perhaps this is reflecting an inefficiency in the market, suggesting that patent values will drop another 10-15% in the next year or two. Or it could indicate that our samplings are not fully reflecting the actual decrease in values.
One could suggest that the Alice v CLS Bank Supreme Court decision also had an impact. However, the Alice decision only impacts software patents, and the IPOfferrings numbers come from all fields. The IPOfferrings numbers can be seen across three years since the AIA was implemented; Alice was decided less than a year ago and at first was not seen as a big change in patent law. Only in the past 4-5 months has Alice been expanded by the lower courts to impact a wide set of software patents, thus possibly impacting the value of software patents. Experienced brokers are seeing that software patents with Alice issues are simply not being sold, with buyers afraid to spend anything on these patents and sellers holding until the law settles in this area. Thus we believe the IPOfferrings numbers are primarily showing the impact of the AIA IPR procedure with only a minor impact from the Supreme Court’s Alice decision.
The decrease in value of patents means that the valuations of companies with US patent assets are also devalued accordingly. If a hypothetical company has patent assets on the books (much of which may be in Good Will if the company purchased the patents from others) at $1 Billion from a pre-2011 acquisition, these assets should be written down to about $390 Million based on the impact of the AIA[3].
This raises many questions on the overall impact of the AIA’s IPR procedure on the United States economy. Using one methodology to evaluate the impact, we look at the US economy and approximate the impact from top down. Intellectual capital (patents, copyrights, and other forms of economic ideas are worth about $9 Trillion in the United States[4]. So a 61% markdown of patents (and their resulting goodwill when small companies are bought) corresponds to a 61% markdown of a portion of the $9.2 Trillion. Say patents are worth about 25% of the overall value of intellectual capital[5], or about $2.3 Trillion, then a 61% loss in value is $1.37 Trillion decrease in the value of the US economy based on the impact of the AIA bill. The American Invents Act bill cost the economy about $1.37 Trillion, or an amount equal to about 7% of the US GDP.
Another way to look at the impact of the AIA starts with the count of the number of US Patents in force, about 2.1 Million according to Professor Dennis Crouch of the University of Missouri School of Law[6]. Given our 2012 IPOfferings value of $422,000 per patent, the value of patents to the US economy was $886 Billion. The AIA dropped the value to one third, leaving $344 Billion in value. This one act of Congress, the IPR proceeding of the AIA bill, destroyed $546 Billion of the US economy using this methodology.
While additional study is required to refine the macroeconomic impact of the AIA IPR procedure, it is clear that this bill has wiped out about $1 Trillion of value in the US economy.
But this number is probably greatly underestimated, as it only incorporates the first order loss in value. It does not include lost opportunities, disincentives to innovation, the inability to raise money due to the decrease in collateral, and the loss of jobs without those investments. We leave this analysis to economists in future studies.
Given the huge impact of the AIA and its IPR proceedings on the US economy, on corporate valuations, and on the value provided to individual inventors, it is time for Congress to reevaluate this procedure to assure that a much greater percentage of patents survive the IPR process.
=====
[1] US Patent and Trademark Office, “Inter Partes Review Petitions Terminated to Date (as of 1/15/2015)”, downloaded from http://www.uspto.gov/sites/default/files/documents/inter_partes_review_petitions_terminated_to_date%2001%2015%202015.pdf on 6 May 2015. In the proceeding where the USPTO decided the merits of the Inter Partes Review petitions, 643 claims were found patentable and 2176 claims were found unpatentable, or 77%.
[2] IPOfferring’s Patent Value Quotient Annual Report is available at http://www.ipofferings.com/patent-value-quotient.html.
[3] Patents generated internally in a company are not valued on a corporation’s balance sheets, according the US accounting rules. Only patents acquired in a purchase or a merger are included on a balance sheet.
[4] See Kevin A. Hassett & Robert Shapiro, What Ideas Are Worth: The Value of Intellectual Capital And Intangible Assets in the American Economy, Sonecon (Sept. 2011), available at www.sonecon.com/docs/studies/Value_of_Intellectual_Capital_in_American_Economy.pdf.
[5] Robert Shapiro estimates in a private email that patents make up 25-30% of intellectual capital, but states that it varies per industry and per company. Additional research is needed to calculate this percentage more precisely.
[6] Crouch, Dennis, “How many US patents are in-force”, May 4, 2012, found at https://patentlyo.com/patent/2012/05/how-many-us-patents-are-in-force.html.
I agree with Night Writer 100%
The US Patent System is being burnt down.
For small patent owners like myself with one or few valid patents on actual technology the moral is this: fool me once – shame on you, fool me twice – shame on me.
We are not going to be fooled again into publicly disclosing important technological know-how in return for some piece of paper with zero value.
What now ? In many fields innovation will practically stop – those are the fields where it’s easy to reverse engineer products.
In other fields people will do their best to keep everything a secret.
From now on I will never distribute even compiled binary code to anyone, only as part of device with embedded hardware-enabled code encryption microprocessor.
[…] [27]《America Invents Act Cost the US Economy over $1 Trillion》,https://patentlyo.com/patent/2015/06/america-invents-trillion.html [28] […]
[…] there’s any ‘reform’ here, it’s just the empowerment of large corporations. “America Invents Act Cost the US Economy over $1 Trillion,” says this alarmist headline from Patently-O. It’s a propaganda piece from “President of […]
From . . .
Mr. Baker somehow arrives at . . .
That’s a nasty twisting of the data IMO. 77% of all claims reviewed and 77% of all valid patents are two entirely different things. Mr Baker takes the figure for the percent of claims reviewed and contorts it into percent of patents busted and then draws his conclusions as to the “values of patents” based on the twisted 77% of all patents figure.
Some comments, such as 2.3, have fallen for this sleight of hand. (But I agree with Insignificant Dallasite that it is surprising this piece found its way into this otherwise august blog of venerable and academically-minded patent wizards and wizardesses.)
Mr. Baker, quoting Mr. Bechtel:
“US Patents have lost 2/3rds of their value since the AIA was passed in 2011.”
Another way to put this would be: Prior to AIA, 66% of income derivable from patents was ill-gotten b/c the patents were actually trash and unenforceable. And so the calculation we need is the cost to the economy of everyday people being ripped off by having to pay the ill-gotten royalties through the price add-ons.
Whiners to the left, please. Moaners to the right.
This article misses – and misses badly for several reasons and “jumps” in logic (not just the one you identify).
What is even worse though, is that this miss creates a torrent of equally misbegotten anti-patent rhetoric.
This then would be a thread simply better off being boarded up and flushed away.
I realize that Dennis can run his blog anyway he wants. And I understand that there’s no peer review requirement (except perhaps at the comment level). But this article is the worst sort of snake-oil masquerading as statistical analysis.
Among other things: it entirely forgets the OTHER SIDE of the equation. If you’re trying to compare before and after costs, you might want to consider the impact of the same patents before and AFTER the changes. This loss almost entirely focuses on the patent holders. There were (and still remain) huge costs to the economy arising from: payments for nuisance settlements (claims never litigated because its cheaper just to pay $100k to settle), money spent defending or partially defending infringement allegations (a million bucks to get to summary judgment or claim construction), time and energy spent addressing would-be licensors (is there any study conducted to account for internal costs, advice, response, negotiation, etc.) prior to litigation, and so on.
In some ways, I’d wager the shift has almost been neutral for the economy because good, valid patents still have value.
Anecdotally, while we’re still engaged with one patent troll in litigation, we have seen a decrease in what I would consider “other frivolous assertions”. The particular troll we’re currently fighting is the quintessential reason for the frustration with the system: they acquired the patent in a fire sale, the patent expires shortly, the claims are very likely invalid, rather than allege infringement of things near the core of the patent, they’ve stretched their contentions to apply loose language of the 90s to standards-based technology that came a long a decade later. Yet, now, they’re willing to force us to run up litigation costs, have little incentive to settle since the patent expires even if it’s invalid, etc.
I thought the whole modus operandi of a patent tro ll was to settle? What benefit do they have for staying in litigation?
Look at the Rac is t response to this post by R.J. Lehmann.
link to rstreet.org
“”After all, ending slavery also meant mass write-downs of a highly valued form of “property.” It was still the right thing to do.””
This guys has no clue of what slav ery was like for slaves. And he is comparing slaves to patents.
In his mind we should make all US Patents FREE !
So China, India, and Russia can copy our inventions ? and get a FREE ride on our R&D ?
Mr R.J. Racist Lehmann wants to make US a third world country.
You don’t seem to know what “racism” means, Justin.
When I drive back home today, I will tell my family that someone named “go arthur” on the web told me today “that I dont know what racism means”, and that I am now white ! (not)
Thank you go arthur, let me go buy a mirror today.
Should I change my pseudo name to rahimm from Justin ! for you “go arthur”
Experienced brokers are seeing that software patents with Alice issues are simply not being sold
Hooray!
And more to come. There’s still a lot of information-processing junk out there that needs to be expunged from the system before we get anywhere close to sanity.
For instance, elsewhere in this thread you can find a wannabe “innovator” bemoaning the fact that the “financial industry” doesn’t like his patents on “methods” of (try to believe this) presenting information to banking customers and the like.
Accounting and financial gambling schemes were never one of the “useful arts” intended to be promoted by the patent system. The infamous Judge Rich and his fellow patent huffers on the Federal Circuit tried to change that but they failed miserably. They failed so miserably, in fact, that their failure is ongoing and the mess they created is going to take years to clean up. Meanwhile the parasites who became addicted to the patent hustling way of life are looking to monetize every last scrap of “do it on a computer” junk before the gates are bolted shut.
There’s more to come. The clean up is just beginning, friends.
The financial services industry would appear to disagree considering they are holding a conference this summer – for the 12th year in a row – on how to get patents.
link to worldcongress.com
Attendees of the conference include the same entity who filed the IPRs against the patents cited in the other post here.
Your mantra of “they failed” is itself a clear failure, Malcolm.
3, the new 4, is still not 5.
I wonder, how does the described change affect design patents? Are they more or less vulnerable than utility patents?
Invalid patents stifle competition and need to be removed. The author should also have considered the financial losses of the competitors that can’t enter into the market because of the invalid patents.
Don’t you know that all patents are valid and moar patents are always better? Less patents equals economic depression. Patents are an inventor’s birthright, it says so in the constitution. You silly anti-patenter. Who’s paying you to post this? Google?
This article is truly absurd. It does not dispute the correctness of the decisions of the PTO in the relatively small number of challenges which are accepted for review (which, of course, are appealable to the federal circuit). But bemoans the loss of “value” of invalid patent claims. Whatever value those claims have is derived from their ability, in most cases, to extract unearned revenues from parties who have developed successful products or, in others, to artificially inflate profits by deterring legitimate competition. That “value” adds nothing to the economy as a whole but simply redistributes wealth from parties who have earned it to those who have not.
George, correctness of the decisions of the PTO?
Observe that the IPR standard of proof is much lower than that of court, where there is a presumption of validity that essentially gives a strong benefit of the doubt to the patent owner. The PTO standard of of proof only requires that the petitioner move the needle slightly over the midpoint.
Add to this that the claim construction, BRI, is designed to read on prior art.
Add to this that the same people who decide to institute at a very much lower standard of proof also decide the final decision on essentially the same evidence.
Add to this that the Federal Circuit on review is bound by the substantial evidence rule to the facts determined by the PTO.
So how can you determine, realistically, whether the PTO decision is right when one compares the PTO decision to the hypothetical decision coming out of a court? One can expect that with all the disadvantages given to the patent owner in the IPR, that in the ordinary case as patent will be declared invalid, while it would be sustained in court.
The high presumption of validity presumes that the PTO did its job adequately. I can tell you from working there that this is not likely the case. And that is not because the examiners were not willing, but because the government considered the PTO only a first line defense against improper patents. Even at the high end an examiner only gets around 15 hours to examine a patent once submitted. That is simply not enough time to comb through the trove of prior art, especially when applicants are allowed to be their own lexicographer and intentionally obfuscate.
That is simply not enough time to comb through the trove of prior art, especially when applicants are allowed to be their own lexicographer and intentionally obfuscate.
And when (1) the PTO still barely understands how to identify and apply relevant prior art because it continually looks to its worst “customers” for guidelines on how to apply the law and (2) the Federal Circuit habitually goes out of its way to pretend that it, too, was born yesterday.
But bad habits can sometimes be broken. In that regard, keep an eye out for the decision in Circut Check v. QXQ. This should be a Rule 36 affirmance of the district court judge (claims invalid as obvious over thousands of years of prior art notwithstanding a verdict by a confused jury).
Actually, I think they are bemoaning the loss in value of patents whose value was artificially enhanced by the high cost of patent litigation (which has been reduced somewhat by the use of the IPR and business method review). Just because some patents are losing value does not mean that all are (as the author’s assumption that the patents involved in transactions are the high value patents is just that, an assumption), or that all of that value was properly supported.
These exotic numbers by folks who unfortunately got into the patent selling business when it peaked for certain types of patents during the “smart phone wars” (when parties were aggressively collecting “ammunition”} are amusing speculations. [Back when, BTW, we already has lots of effective reexaminations and, unlike now, only rare patent litigation sanctions awards, and few prior art searches done on patents for sale or even pre-litigation.] I know of folks with lots of patents offered for sale for several years who cannot even get a nibble, much less those kinds of valuations, except for a few with broad internet functional claims.
Contrary to other allegations, the actual Congressionally expressed purpose of reexaminations and other post-grant proceedings is to reduce patent litigation costs. Naturally that is hated by many patent litigators who were used to getting easy cash settlements in the vast majority of patent suits made to avoid massive discovery and other litigation costs before any prior art was ever considered by the Court. But the expressed intent of Congress is viewed as successful by many patent suit defendants. See. e.g., the following article:
“Auto Companies Are Enjoying Benefits of Inter Partes Review
Companies in the automotive industry face patent litigation on a regular basis. A frequent target of non-practicing entities, both car manufacturers and suppliers frequently get dragged into federal district court where the balance of hardships weighs heavily against the auto companies. Specifically, auto companies can spend millions of dollars defending themselves while the NPE-plaintiff, who’s only assets include the patent rights (typically purchased from a third party), spends very little. To combat this inequality, the America Invents Act created new administrative review procedures, including inter partes review, that cost significantly less than litigation and focus solely on the validity of the patent. Very quickly, auto companies have turned to these new procedures to combat unwarranted patent infringement claims. …”
[Finnegan firm newsletter]
the expressed intent of Congress is viewed as successful by many patent suit defendants
But patent defendants (and potential patent defendants who vastly outnumber patent owners and always will) are the wrong kind of people to pay attention to.
Congress needs to pay attention to people like Richard Baker because Richard Baker is sooper dooper important. Without Richard Baker, we’ll go back to the iron age because Richard Baker will take his shiny True American Innovator football home and nobody will ever invent anything anymore because, well, lazy copiers. How do we know all this? Because Richard Baker told us so! And he’s a very serious person.
Mr. Baker’s article raises an issue that is not often mentioned and which haunts patent law constantly. The issue is reliance, a well known defensive concept in the law.
As Mr.Baker points out, money is spent and businesses are based upon patents which are valid at the time they are issued. Maintenance payments are accepted assuring that patent life continues, but years or decades later, the Courts can change “interpretations” of the rules (not the rules themselves) and patents which are valid up to that point are suddenly worthless. At least when Congress acts to change rules, a grandfather period is acknowledged. Not so with the Courts.
The article is misleading.
According to the PTO, 2,176 out of 20,206 claims in 617 petitions were found unpatentable. That is 11%. The other 89% were either denied review, not challenged, remained patentable or were found patentable.
link to uspto.gov
Thanks, and below are the numbers right off that PTO stat report for terminated IPRs
But I bet the blatantly false statistical claims of the IPR claim cancellation rate of IPR challenged claims will continue unabated in the Beltway, where finding the truth is of no interest to many lobbyists and the financially self-interested:
9,048 Claims Challenged
(617 Petitions)
6,114 Claims Instituted
(68% of Claims Challenged)
(425 Petitions)
2,176 Claims Found
Unpatentable
(36% of Claims Instituted,
24% of Claims Challenged)
(173 Petitions)
11,158 Claims Not Challenged
2,934 Claims
Challenged
but Not
Instituted
(32% of Claims
Challenged)
893 Claims Cancelled or Disclaimed (Non-PTAB)
(15% of Claims Instituted, 10% of Claims Challenged)
643 Claims Found Patentable by PTAB
(10% of Claims Instituted, 7% of Claims Challenged)
2,402 Claims Remaining Patentable
(39% of Claims Instituted, 27% of Claims Challenged)
Steve,
I spend much time trying to decipher the USPTO slide that you refer to. First of all, the 11,158 claims that are not challenged never were the subject to an IPR, they are simply other claims in a patent that had other claims challenged. This should not be in the count at all.
Of the 9048 claims that were challenged, 2934 were challenged but not instituted. While I chose not to included these claims, a good case can be made to include them as the PTAB did make a decision not to institute (although deeper study is required to see if they are rejected for formalities and refiled, or rejected on merits).
This leave 6114 claims that an IPR was instituted. 893 claims were canceled or disclaimed by the patent owner. A case can be made to include these in the count of the unpatentable, as that is their status today, but this decision with not the PTAB’s. Neither was the decision on the 2402 that were settled by the IPR being dropped during the process. So neither the disclaimed or the settled should be included, as these were not the PTABs decision.
The PTAB made a final decision on the 643 claims they found patentable and the 2176 claims they found unpatentable. This is the 77% unpatentable percentage used in the article.
Why not include those cases where petitions were denied or where claims aren’t challenged in the calculation?
The hardest part of IPR is getting the case reviewed, so when claims are denied review or the attorney decides not to challenge them (presumably because they would fail the initial review), wouldn’t those numbers be the most crucial to include?
Only 45 % of all claims get challenged. Out of those only 65 % get instituted. So this is a total of 29 % of claims that even get to the board!!
So who cares what happens after. Of course if you get to the board you probably win! Why? Because you need to establish a reasonable likelihood of success. So putting aside all of the BS, all you proved is that those who can establish a reasonable likelihood of success are more likely to succeed! (*bangs head against wall*)
Bull, I think the point is to compare as closely as possible the validity rates between the courts and the PTO. Not all claims are challenged in court, nor do the accused infringers have a right to challenge all claims in court. They only can challenge those claims for which they are accused of infringement.
There are similar reasons why not all claims are challenged in an IPR.
Thus, we should compare the claims results of the claims actually challenged and instituted versus the validity rates in courts. Nothing else actually would result in a valid comparison of validity rates because the whole point here is to determine whether the PTO is finding higher rates of invalidity than the courts.
OK. Let’s say I concede your point. There is still no reason not to take into account that only 65% of claims get to the review stage at all.
65% of 75% is 48.75 % of total claims petitioned found invalid. Not quite as egregious anymore.
Whoops wrong pseudonym. I use a bunch of these and get them mixed up.
Ned, if you are going to compare the claim invalidity decision % in litigation with the % in IPRs, you have to add in all the Fed. Cir. reversals of jury validity decisions and exclude the high % of patent infringement suits entirely argued and decided on non-infringement. Because of the vastly higher cost of patent litigation few parties even get to trial and settle and thus invalidity is never even decided.
Also it makes no sense to exclude all the IPR petitions that were denied, because these have essentially the same effect as if defendant claim invalidity arguments in litigation were thrown out ab initio on partial summary judgement or otherwise [which, unfortunately rarely is even considered at that stage other that for 101].
Paul, all we really want is a comparison of decisions actually made. IPRs can be settled just as court cases.
Regarding not getting to trial, we have gone through this before. This a game big litigation firms play to make money. First they advise their clients to litigate. Then they do a lot of law and motion, making millions. Then they advise their clients to settle. Usually, the settlement value is unchanged or substantially unchanged from prior to litigation.
The result is, the litigators clean up and the client is not “harmed.”
Dennis,
Great Article. I can confirm first hand effects of IPR challenges on an independent inventor holding patents not involved in litigation. I personally own three patents (8,297,502, 8,523,063 and 8,540,152) that are part of a 28 patent set that has been issued, which are being challenged in IPR2015-00122; -00123; -00124; -00125; -00133; and -00137 by a well funded entity representing the financial industry, who is a strong lobbyist and submits a legion of amicus briefs favoring the interest of huge entities over individual patent owners. This entity (Askeladden/The Clearing House Payments Company) is one of the key players currently pushing for ‘patent reform’ legislation. I am responding to the IPRs pro-se, due to the funding restrictions you mentioned. The process is daunting for a private patent owner, given the disparate funding positions (While representing myself pro-se, I am constantly conversing with 3-5 different NY Patent Attorneys for the Petitioner). Basically, the process provides a way for (in my case) a company that processes 2 trillion dollars (the Clearing House) a day to attack issued patents of a private patent owner without provocation (the IPR record admits no contract was made of the financial industry for the patents, no litigation is present). The discovery process of IPRs is known to be restrictive, which allows for a hiding of the most basic information. After tremendous expenses, the PTAB has determined that the original RPI was incorrect (IPR2015-00122, paper 30) as The Clearing House Payments Company (PayCo) has tight rein over Askeladden for the IPRs. Close entanglements between PayCo and owner banks and the Clearing House Association exist, which may cause these entities to be RPI as well (see IPR2015-00122, Paper 47 for an elaboration and publicly assessable evidence, significant additional evidence has been hidden by protective order). Basic information has been requested of the Petitioner continuously (See IPR2015-00122, Preliminary Response “IV. RPI is Improper) and is strongly opposed at every turn. In short, the Duty of Candor for IPRs where Petitioners are to provide facts opposed to their position appears to be in impractical safeguard – in practice. To emphasize this, a companion IPR was filed by Askeladden on the same day (IPR2015-00129) with Askeladden as the only RPI, no facts have been disclosed in that proceeding about the IPR2015-00122 RPI change to include The Clearing House, despite the duty of Candor that would presumably require Askeladden to disclose this information. The process is unfair to patent owners, who can be financially intimidated without recourse by huge entities, simply for having innovations for which patent rights have been granted (even when no litigation or licensing efforts are pushed. I’d be happy to write a guest article or provide you with additional information – as noted by the included support, I can back the above with clear, publically available information. It is a travesty when IPR Trolls (serving the interest of billion dollar companies with patent portfolios) can attack private patent owners simply because they own patents showing innovations in the same space. What is happening to our innovation system?
Wake up, Brian: it’s not just your targets that don’t like you and your patents. It’s ordinary people who can smell a bottom-feeder like you a mile away.
Try to believe this junk:
1. A method comprising:
a computer presenting a graphical user interface (GUI) on a display, said graphical user interface showing a quantity of non-negotiable credits earned through previous interactions with an entity
This is unadulterated garbage of the lowest order and it’s existence in the patent system is *exactly* why we are having this “discussion”.
You’re days are numbered, Brian. Good riddance.
So, assuming that Mr. Buchheit does not use his patents in an offensive manner (and note that there is no indication he is), why do you think it’s good that he’s in IPRs with people he has not sued for patent infringement?
Even if his patents are “garbage”, if they’re “garbage” used defensively, what is your problem with that?
The America “Invents” Act is like a bull in a china-shop of tech startups. I have equity positions in a number of tech startups, and I am seriously worried that if our patents get in front of the ‘hanging judges’ on the PTAB, where assertions of constitutional rights are literally expunged from the record, out entire investment will be subject to theft by any competitor who has sat back while we invested millions of $s and figure out and proved how to many money with these inventions. I am in a network of angel investors, and I am close to ringing the alarm bells with my colleagues that investments in patents are a waste of money, and that we will only get pennies on the dollar in acquisition for what our inventions are really worth because the Patent Office won’t stand behind the patents that they issue.
Mark Syman: I have equity positions in a number of tech startups, and I am seriously worried that if our patents
Share the patent numbers and I’ll give you some free advice, Mark.
assertions of constitutional rights are literally expunged from the record
Oooh, they sound like really important patents if you’re getting all constitutionally with your arguments. Most of the best innovators focus on their unexpected results and provide evidence with actual data. What did you do? Share the application numbers, Mark, so we can all see exactly what you’re talking about.
I am in a network of angel investors
The most important people ever! Can you show everybody something you wrote in the run-up to Prometheus v. Mayo so we can all see how deeply you think about the operation of the casino where you gamble your money? Thanks in advance, Mark.
IPR was set up to eviscerate the US patent system.
It is succeeding.
What ever happened to “harmonization” to make the US like the rest of the world??
Post grant review – say for 9 months like cases before the EPO or the JPO would be fine to see “if the PTO made a mistake”.
Putting the ability to kill each issued patent into the hand of each accused infringer, long after the fact of patent issue, is a huge and unfair disadvantage for the patentee. However, popular in today’s political climate, it should ultimately be killed by the Supreme Court – or after theUS patent system fades into irrelevance in the patent world, perhaps politicians will begin taking “campaign donations” from a different cast of characters. But, many of today’s young patent practitioners may not live that long, and given the current trajectory, likely will be doing something other than patent prosecuution long before IPRs are killed – unless the court acts…
IPR was set up to eviscerate the US patent system.
No, it wasn’t. Nice try, though.
Blindman Putting the ability to kill each issued patent into the hand of each accused infringer, long after the fact of patent issue, is a huge and unfair disadvantage for the patentee.
ROTFLMAO.
There is nothing at all unfair about it.
Nothing.
>>There is nothing at all unfair about it. <<
Au Contraire…
I agree with Judge Newman's dissent in In re Cuozzo Speed Technologies LLC….
— Limited motions to amend… ability to get new claims is illusory (MUCH DIFFERENT THAN IN JPO OR EPO PROCEEDINGS)….
— Use of BRI rather than "correct construction" as would be done in Federal Court…. Use of BRI should provide opportunity to amend, per Newman….
–Reduced standard of proof – treats cases on a "patentability" basis, rather than on a "validity" basis, as set out in the implementing statute.
I know what you mean Mark. I have been on the corporate side where we would evaluate whether to buy or build new tech. The price and decision depended on whether they had patents.
The IPRs make it so that any large company can just beat up any small company. The cost of just one IPR is $300-$800K and the big corp can file multiple IPRs.
But the big problem is that IPRs use BRI, more likely than not, and don’t allow claim amendments. It is really unfair if new art is applied. The PTO is supposed to find the best art. That is what they are paid for and it makes the most sense for them to find it. So, instead you get a patent, and then you get a $300-$800K budgeted Office Action with new art and you can’t amend the claims.
It is burning the system down. Don’t pay attention to the likes of MM on this blog. He spends like 40+ hours a week blogging anti-patent propaganda and has been doing it for 11 years. You figure out how he supports himself.
And, by the way, (not legal advice–seek out your attorney), but one consequence of the IPRs is that you should always keep a continuation pending so that you can amend the claims at a pending application at the PTO.
So, be clear:
Failure of PTO, if IPR (PGR or CBM) petition includes better art than the last Office Action before allowance.
Lee (as if she even knows what an office action is) should make that a rule.
(And be real—those that are patent attorneys like me know that finding the best art is too time consuming and there isn’t even someone to turn to get the job done at a reasonable cost. The only people that can spend the time becoming experts in a niche and make it economical are the examiners or specialize people.)
I’ll note that some post-grant petitions I’ve seen couldn’t come up with better art than the EPO. Think about that. The EPO can do it. They can find the best art. Why can’t the PTO?
finding the best art is too time consuming
Boo hoo hoo hoo!
Poor baby.
Night, you raise a very good point here that IPRs seem to be instituted whenever there is better art. This is the same as the former “substantial new question of patentability” standard which was observed by all to be far too easy of a standard and practically no barrier at all. Yet, if IPRs are instituted whenever there is better art, is the new standard, “reasonably likely … [to] prevail,” any different from the former standard? It was intended to be different. It was intended to be far more difficult.
But as we know, the statute provides that an institution decision cannot be appealed. Thus we can never have judicial review of the standard used by the patent office in instituting IPRs and whether the standard is too high or too low. This lack of judicial review places the patent office in the position of being both judge and jury, an institution completely without control by the judiciary, and therefore out-of-control as an institution.
Assuming, and I do not agree with this, that this is all constitutional in the first place, Congress is seriously look at the monster it has created. It needs to change the institution requirements to require at least standing, and should further provide judicial control over whether an IPR even begins.
Congress is seriously look at the monster it has created
Most people (i.e, VOTERS) love seeing invalid patents invalidated, Ned.
It’d be pretty silly for a Congress person to reverse a system that is working exactly as it was intended to work.
Maybe you should focus on making it harder for ordinary people to vote. Then you could just buy the result you want.
Oh right: Republicans are already doing that. How’s that working out for them?
Perhaps Ned’s underlying point is that the Art I USPTO has now become – arguably – the most powerful adjudicatory body in the nation. A de facto monopoly over the claim of patent validity confers tremendous power (relative to its importance to the American economy).
MM, I don’t know what cool aid congress was thinking when they passed IPRs into the law — just some modest improvement on inter partes reexamination, as if there such reexaminations were not themselves a problem.
The point, MM, is not that there are invalid patents. There are. It is about the rule of law. This is fundamental. There are reasons why we divided the power between three co-equal branches, MM. We should not forget these reasons just because the PTO and the Federal Circuit have driven patent law into the muck by not being overly concerned about junk patents. The short term problem with recent history is fixable. What is not fixable is an abandonment of the rule of law.
Agreed. SCOTUS rule of law establishes when a particular claim may or may not be resolved with finality by an Article I tribunal. There is an ideological war currently brewing at the SCOTUS between the Justices backing “functionalism” and those who tend to support more traditional notions of separation of powers.
you can’t amend the claims.
Try writing better claims in the first place.
It’s what the grown-ups do.
” that investments in patents are a waste of money,”
Not if you’re actually patenting upon technology rather than “ideas” about technology.
“because the Patent Office won’t stand behind the patents that they issue.”
Oh come on, they’ll go where the evidence leads them. I know several of the judges, they’ve seen things survive just fine.
So, it looks like most people on the blog agree with the post whole heartedly. Great post!
(Don’t mind the noise from MM and his sock puppets. He has to earn his living somehow.)
Refusing to acknowledge dissenters is an odd way of declaring a majority.
Are the dissenters really paid bloggers or just self-interested bloggers that have some little axe to grind?
The fact is that academia–the real ones not the judicial activists like Lemley– came out and said enough! You guys are burning the system down.
I have been laughed at on this blog for 11 years because I said the massive weakening of the patent system was coming. It was an easy prediction because big international corporations wanted it. They always get what they want in the US.
You guys are burning the system down.
Nothing is burning down.
Some vermin infesting the system are being poisoned.
And we all knew that they whine and cry really loudly because that’s all they know how to do.
Like they said in law school. Lawyers are bad at math.
Ah, most of us in patent law have engineering degrees. Normal attorneys don’t, but we do.
Alice was decided less than a year ago and at first was not seen as a big change in patent law
LOL
Really?
LOLOLOLOLOLOLOL
Just $1 trillion?
Why not $100 trillion?
C’mon, patent maximalists! Eat your wheaties. Show everybody what you’re all about it.
Funniest. Post. Ever.
What bunk!
How about patent prosecutors stepping up and getting up to speed on the prior art?
You are trying to switch the burden from the applicant from the PTO. Typical anti-patent stance.
As a side note, it would be interesting to see how many IPRs are filed with new art or different arguments of the same art. If new art and 75% of claims are dying, then search at the PTO–Rachael–needs to be improved.
Bunk^2.
Where did I hear this type or argument before.. that’s right, this is akin to a cigarette manufacturer crying fowl years after researchers spend years proving what the manufacturer already knew.
So, 35 U.S.C. says it is the director’s responsibility to find the prior art, but according to you the applicants are like the tobacco company? Wow, bat sh1t cr@zy stuff.
35 USC is what she’s talking about changing mah brosef.
Keep hiding behind 35 USC, problem is that the sun is shining right through it. Even the SCOTUS can see the light!
Don’t be ridiculous Rachael. There are many reasons that the PTO needs to be the expert on prior art. I work with many Ph.D.s at the top tech companies. They tell me what they think is the closest art and sometimes we do a search. But the reality is searches —by the top search firms by the way—aren’t very good. You don’t get much for $1000-$2,500. The searchers just don’t know what they are doing.
So, you need an expert in the field. The PTO examiners should all have at least master’s degrees and be experts in their niche. That is the only way for them to police their niche. Anyone that holds differently is clearly just a judicial activist. Or, Rachael, I have given you substantive reasons why and you blab out ad hominem attacks.
So, Rachael, try to give me substance-I know I put in some ad hominem at you, but I also gave you the real reason why.
Fact: those $300-$800K IPRs petitions should not come out with better art than the examiner. If they do, then the PTO has failed.
That is the problem Rachael and you yapping about light and implying that we know we are doing something wrong won’t change that. But, I am sure you will endless yap with no substance like all the other judicial activist.
By the way, thank Obama for appointing Lee–someone that is totally ignorant of prosecution–to fix PROSECUTION problems. You bought off little man.