Guest post from Prof. Yelderman: How Much Did the AIA Change Prior Art in the District Court?

Stephen Yelderman is a Professor of Law at the University of Notre Dame Law School.

This week we’ll take a closer look at “activity” prior art—prior uses, sales, and “invention by another.” As I mentioned in my last post, a little more than half the time district courts find a claim anticipated, they rely on art in this category. Activity prior art is less common for obviousness invalidations, but still quite routine: just over a quarter of obviousness invalidations cite activity prior art. (For more background on this project, you can find the full paper here.)

The 2011 America Invents Act (“AIA”) changed the rules for determining when activity qualifies as prior art in several respects. At a minimum, the AIA constricted this category of prior art by removing the “prior invention by another” path previously found in § 102(g). Arguably, the AIA trimmed the category in another way too—by imposing a new “available to the public” requirement on prior uses and sales. (Whether it did or not is the question the Supreme Court will take up next week in Helsinn Healthcare v. Teva Pharmaceuticals.) In the opposite direction, the AIA eliminated the limitation that uses and sales qualify as prior art only if they occurred in United States. Given all this, one might wonder: just how significant are the AIA’s changes when it comes to the prior art district courts actually rely on?

All of the district court invalidations in our study (except for one) involved applications of pre-AIA law, so we can use our data to predict how many cases might come out differently if the stricter aspects of the new prior art rules had applied instead. The answer is not many. For prior invention by another, this exercise was straightforward: under pre-AIA law it was its own legally distinct category, and there is no question that it was eliminated by the AIA. Based on our coding, we found that prior invention by another constituted about 8% of anticipation events relying on activity, and was a basis for roughly 1% of obviousness invalidations citing any activity. From the perspective of anticipation and obviousness overall, just a little more than 2% of district court invalidations relied on this prior art path. (And we can’t rule out the possibility that some of that art might have qualified by a different path anyway.)

The effect of requiring prior uses and sales to be “available to the public” is slightly harder to predict, since we do not yet know what that language will mean (or, until Helsinn is decided, if it applies to prior uses and sales at all). To get a bit of purchase on this question, we coded prior uses and sales that were potentially kept secret from the public: offers / sales made to an identified counterparty (fact patterns like Pfaff v. Wells), internal commercial uses (fact patterns like Metallizing Engineering), and uses by a limited and identified group of outsiders (fact patterns like Egbert v. Lippmann). It’s important to note that this classification scheme is likely overbroad: from the documents before us, we could not always determine whether a use or sale was in fact secret at the time. Instead, we categorized activity based on whether the use or sale could have potentially been secret.

Despite our likely overbroad classification scheme, potentially secret uses or sales appeared to be cited only rarely. When a court found a claim anticipated based on activity, that activity was potentially secret about 14-15% of the time. (These figures are presented as ranges because of a few cases in which we could not determine whether the cited activity was potentially secret under our framework.) When activity was cited in support of obviousness, the cited activity was potentially secret somewhere between 2-7% of the time. To look at the same data from another angle, among all the uses and sales district courts relied upon to invalidate patents, 88-90% lacked any indications of potential secrecy. As a share of anticipation and obviousness invalidity overall, potentially secret uses and sales were cited in about 4-5% of claim invalidations.

So if the past is a guide, it appears that few of the cases litigated to a decision of invalidity under the old law would be flipped under the AIA’s (purported) constriction of the activity prior art category. We must hedge a bit here, however, since we cannot say what the post-Helsinn law will be, or how inventors and litigants might adapt their behavior in light of new rules. What we can say with certainty is that, among the set of all recent court decisions invalidating patents under pre-AIA law, we find only a small number (an average of 3-4 patent invalidations a year) that would be affected by the question in Helsinn.

Unfortunately, the nature of our study does not allow us to predict the effects of the AIA’s amendments in the opposite direction—that is, the changes that made it easier for some activities to qualify as prior art. As mentioned above, the AIA eliminated the longstanding rule that uses and sales may qualify as prior art only if they were conducted in the United States. Because we were observing cases litigated under pre-AIA law, all of the activities we coded had occurred within the United States. We therefore did not observe the non-U.S. activity prior art that may have been waiting in the wings but was excluded by the pre-AIA’s domestic limitation on this category. Likewise, we cannot predict what the effect of adding “otherwise available to the public” as a distinct prior art category might be (not to be confused with the Helsinn question of whether that language modifies other categories).

Finally, some might expect the importance of activity prior art in district courts to be increasing over time, for reasons that are related to the AIA but unrelated to the prior art rules themselves. Readers of this blog do not need to be told of the overwhelming popularity of inter partes review (“IPR”) as an alternative forum for adjudicating patent validity. (By my count, in 2016, roughly 380 patents were invalidated in IPR, dwarfing the number of patents invalidated on prior art grounds by district courts.)  But activity prior art is categorically excluded from consideration in IPR, leaving district courts as the primary venue for adjudicating validity when activity prior art is at issue. It would seem logical, therefore, for the share of district court cases involving activity prior art to grow over time, as defendants challenging patents based only on non-activity art select into IPR for its speed, cost, and lower burden of persuasion.

Surprisingly, however, this is not what we found:

This chart illustrates the percentage of district court patent invalidations relying on activity prior art to invalidate any claim. As this chart shows, this number has remained remarkably stable throughout the advent of IPR. Though defendants may be opting in to IPR in large numbers, it is not the case that only activity-based invalidations remain in district court.

To be clear, the availability of IPR could still be having an effect on the kinds of cases that remain for validity decisions in district court. For example, courts may now be deciding only validity challenges in which the defendant made a strategic decision not to petition for IPR, or did petition for IPR without success. Moreover, during the time period illustrated above, the patent system was undergoing a number of changes simultaneously, so it is difficult to isolate the effects of IPR.

All of this is to say that the relationship between IPR and the work of district courts defies a simple explanation. But we can say with confidence that prior art patents and printed publications continue to play an important role in district court invalidations, notwithstanding the availability of IPR.

 

Edited 11/30: Clarified that 2% reliance on “prior invention by another” and 4-5% reliance on potentially secret uses and sales are stated percentages of claim invalidations for anticipation or obviousness. As a share of invalidations on any grounds, these numbers would be even smaller.

17 thoughts on “Guest post from Prof. Yelderman: How Much Did the AIA Change Prior Art in the District Court?

  1. 4

    So reading Paul’s comment, which agrees with my experience, one wonders why this wasn’t focused on.

    Again—ethics. The “professors” appear to have none. We should treat them like they are employees of large corporate propaganda departments.

    1. 4.1

      And I have offered to Lemley that I would reveal who I am if he would engage in a debate about his ethics.

    2. 4.2

      I didn’t “get” that.

      My take was that someone had a “quant” desire to crunch data in a certain way.

      My caveats have been more geared to understanding the larger context of the quant-crunching activity, and to realize that a level of “noise” likely obscures any meaningful take-away from the crunching.

      For me, it is far less an issue of “malice,” or even “desired narrative, and more of an issue of understanding the bigger picture and the “boogeyman” of “oh no, someone has sued someone else over a patent; so all patents must be bad”.

      On the other hand, I do see a bit of your position in that ignoring the noise and not even admitting to the possibility of proper normalizing factors IS more than a little bit like the plain observable fact that certain entities greatly inflated the “Tr011” boogeyman in order to weaken patents.

  2. 3

    I think —again–that people should not be presented as academics unless they present full financial disclosures. We have seen that large corporations are paying big bucks for “academics” to write articles to abstracts and have heavy influence at the universities. It is more accurate to call many of these people large corporate appointees at university X.

    I would suggest a title of Advocate Stephen Yelderman. And without complete financial disclosures with criminal liability probably Large Corporate Advocate Yelderman.

    We should not have to sort through un-peer reviewed article after article to try and find the flaws.

    Try to think ethically. You claim to be an academic of ethics and yet don’t follow the most basic rules. (Most of my comments like this are deleted, which is probably an ethics violation.)

    1. 3.1

      And — again– there is no consequence to one of these so-called academics acting unethically. We know that the law schools do not care. They want money and fame at all costs. That is reality. To present this as academic work is unethical.

      You would think that at least on this little blog that some semblance decency and ethics could be cobbled together.

    2. 3.2

      I do not think that deleting comments on ethics is itself unethical.

      That is to say that deleting comments to shape a desired narrative is remotely close to a neutral objective editorial control position, but that only impinges on ethics if one claims to be being neutral and objective.

      1. 3.2.1

        (…that is not to say…)

  3. 2

    I think all of this is an interesting exercise, but probitive numbers will NOT be forthcoming from any study that does not take the whole body of granted patents (and multiply to get granted claims) as a morning factor.

    Looking at “just the courts” may not even rise above a noise level, and implicitly perpetuates a “O H N O E S” lawsuits must be bad mentality.

    1. 2.1

      “morning factor” ==> “norming factor”

      Damm autocorrect

    2. 2.2

      implicitly perpetuates

      Please explain how this kind of “perpetuation” supposedly works, in English, using declarative sentences.

      1. 2.2.1

        See my comments on the first post of this series (and actually read before you Tr011)

        1. 2.2.1.1

          LOL. No, I’m not going to poke around in the archive to find out the )non) answer, Billy.

          Just explain how “implicitly perpetuation” supposedly works, in your own words. Golly, Billy, it’s almost as if you don’t know what you’re talking sometimes.

          LOLOLOL

          1. 2.2.1.1.1

            Archive? The first thread in this series was in November.

            As I said: read before you troll.

  4. 1

    Jason, Bob Armitage and other AIA experts are of the opinion that by far the greatest expansion of prior art by the AIA vis a vis AIA-subject-patents was not those mentioned above, but rather the earlier effective prior art date of the 1/2 of all U.S. applications and patents based on foreign applications – now extending back to their foreign application filing dates. Note that this affects vastly more applications, patents and IPRs than the mere few hundred patents a year that get all the way through litigation to D.C. validity decisions. Especially since the best prior art is often relatively close in filing dates in important technologies.
    I also have a question about the “prior invention” defense number. Were these all really jury-trial proofs of 102(g) prior reduction to practice or prior conception plus continuous diligence? I used to track all the rare 102(g) litigation defense cases that were appealed, and this 8% number seems surprisingly high unless it is counting successful parallel PTO interference proceeding decisions against the patents in suit that ended the suit [a not unusual tactic re pre-AIA patents]. Also, could some others have actually been prior products of the same company or others? Furthermore, some pre-AIA patents were obtained by “swearing behind” earlier filing dates of prior art in the PTO with uncontested ex parte declarations, and these patents were unusually highly vulnerable to destruction in litigation by anti-102(g) proofs

    1. 1.1

      BTW, it will be some years before one could get comparable data on AIA-subject patents in D.C. decisions, because most patent suits are on older patents.

    2. 1.2

      As previously noted, patent suit defenses of prior use, prior sales, and prior invention by another are favored by many defense counsels as more effective and comprehensible for jury trials than 112, 103 prior art patents and publications, etc. Especially if the physical product sold or used can be presented. Smart companies maintain museums of prior products and their published service manuals.

    3. 1.3

      I think this is right Paul. I see this a lot.

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