2020-1026-Coalition Ltr re PTAB.FINAL
The following letter to Congress appears to have substantial support from patent owners. The basics of the letter is to say that Dir. Iancu’s changes to the IPR process have been positive and should stick. Part of the issue here is that Dir. Iancu is a political appointee who is on his way out in 2021 if President Trump loses (and would likely leave in 2021 regardless).
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Dear Chairman Graham, Ranking Member Feinstein, Chairman Nadler, and Ranking Member Jordan:
The undersigned represent a diverse array of American innovators, ranging from universities and non-profit foundations, to individual inventors, to start-ups and small businesses, to manufacturing, technology, and life sciences companies. Together we represent thousands of organizations that employ millions of workers in the United States. We all believe that the future of the U.S. economy, including domestic job growth and our competitive advantage in the global economy, depends on a strong patent system that incentivizes innovators to invent and protects their inventions from unfair theft by others.
We write to express our support for the important improvements the U.S. Patent and Trademark Office (USPTO) has implemented over the past several years under the leadership of Director Andrei Iancu. In this short period, Director Iancu has clearly changed the dialogue surrounding patents, defined the patent system by the brilliance of inventors, the excitement of invention, and the incredible benefits they bring to our economy and society as a whole. He continuously demonstrates commitment for restoring balance and confidence in the U.S. patent system.
Of particular importance, the USPTO has made several critical changes to the operations of the Patent Trial and Appeal Board (PTAB) that addressed some—but not all—of the unintended consequences of the America Invents Act (AIA), injecting more predictability, reliability, and consistency into the patent system. Patent owners must have confidence in the reliability of their patents so that they will invest the significant resources required to develop their ideas into new products and technologies.
Many of the recent changes the USPTO has implemented were intended to harmonize the standards used in PTAB trials with those used in patent infringement trials in federal district courts. Given that Congress intended PTAB trials to be a cost-effective alternative to district court litigation, and Director Iancu has the statutory authority, it made sense to ensure a consistent application of standards between proceedings in court and before the PTAB.
Perhaps the most important of these changes was adopting regulations to require PTAB to interpret issued patent claims according to their ordinary meaning as understood by a person of ordinary skill in the field covered by the patent. By adopting this so-called Phillips standard of claim construction used in federal court for use in PTAB proceedings, the USPTO provided much needed consistency in the interpretation of challenged patents. We also strongly support other recent changes, including updated briefing procedures, improved procedures for amending claims before PTAB, and appropriately assigning the burden of proof of invalidity on the patent challenger, all of which strengthen predictability of decisions by the USPTO and ensure that patent rights are more fairly issued and adjudicated.
We also understand from press reports that USPTO had been preparing to institute a proposed rulemaking concerning the factors PTAB panels can use to deny institution of a panel when there is parallel litigation in district court. While several large platform companies filed suit challenging the authority of the Director to exercise his discretion in this way, we think it clear that both the AIA itself and common sense support the authority of the USPTO director to set regulations for the exercise of discretionary authority to deny institution in these instances. We see basic unfairness to litigants who must otherwise litigate the same issues more than once, and little need to waste scarce government resources on duplicative actions proceeding in parallel before the PTAB and the district court. We strongly support a USPTO rulemaking to confirm this approach.
Recent letters to Congress opposing the USPTO rulemaking incorrectly suggest that it would upset congressional intent in passing the AIA by foreclosing an additional proceeding to challenge patents. Congress was clear that it intended inter partes review (IPR) to provide a cheaper and faster alternative – not an addition – to district court litigation. If a district court case is likely to conclude near the same time as an IPR proceeding concerning the same dispute, the IPR proceeding would not be a faster alternative, and instituting an IPR proceeding would only add to the cost of resolving the dispute, so it would also not be cheaper. Logically, then, when a dispute can be more efficiently resolved by a district court, or an ongoing litigation is likely to resolve the dispute in a reasonable period of time, the Director was given the discretion not to institute an IPR proceeding.
The IPR proceeding was structured to provide a quicker resolution and on a more limited set of issues than might be brought in litigation. As a result, parties in the proceeding were provided a more limited set of tools than available in District Court to allow the USPTO to meet this congressional mandate. Congress clearly put the Director in the position to determine, for the efficiency of justice, which forum could resolve the issues best, then went further by making that decision non-appealable – lest those appeals undercut the speed and low cost of the new proceeding. Suggesting otherwise is not consistent with the congressional record. Moreover, the recent Supreme Court decisions in Cuozzo v. Lee and Thryv v. Click-to-Call both affirm the Director’s broad discretion on instituting an IPR, a position at least one of the companies who signed the letters opposing the rulemaking supported in its own amicus brief to the Court.
Director Iancu has also brought a renewed commitment to much-needed administrative regularity at the USPTO and a real and commendable focus on ways to expand American innovation by tapping into the strength of our nation’s diversity and increasing the opportunities for all Americans to participate in innovation. He has also introduced innovative measures to help patent stakeholders during the COVID-19 crisis, including deferred fee payments for small and micro entities and extensions of time for certain statutory deadlines.
Under Director Iancu’s leadership, the USPTO has taken great strides toward restoring a predictable, reliable, and consistent patent system that protects inventors and promotes U.S. leadership in global innovation. We urge you to support these reforms, and look forward to working with you and your colleagues on the Judiciary Committees to further strengthen our patent system.
Sincerely,
[324 American innovators and patent owners]
If the point of this letter was to get Biden to retain Iancu as USPTO Director, the pro-Trump pre-election email Iancu sent from the USPTO discussed in a more recent Patently=O blog is not going to help that.
[Logically, then, when a dispute can be more efficiently resolved by a district court, or an ongoing litigation is likely to resolve the dispute in a reasonable period of time, the Director was given the discretion not to institute an IPR proceeding.]
A dispute can never be more efficiently resolved by a district court. The authors acknowledge that efficiency is the IPR’s raison d’être and then contradict themselves. Efficiency more often supports requiring district courts to stay cases, not to deny institutions of IPRs.
Mandatory stays are the better solution, but not one that the PTO can institute on its own authority. As a second best solution, the PTO is not wrong to decline to institute in certain cases where the Art. III court declines to stay (as is common in certain TX districts and the ED Va).
I respectfully disagree, Greg, that mandatory stays are the best solution. Mandatory stays would allow any defendant to shut down/suspend any pending litigation without regard to underlying circumstances, which can obviously lead to abusive or repetitive IPR filings simply to disrupt litigation. Never staying cases regardless of circumstances (leading to discretionary PTAB denial), on the other hand, basically eviscerates the statute and defeats Congress’ purpose in creating AIA reviews. The interplay between IPR and district court litigation is far too complex for any kind of bright-line rule.
The most balanced solution would be for Congress to simply make rulings on motions to stay pending IPR immediately appealable to the Federal Circuit. Right now they’re not (and the Federal Circuit won’t hear them on mandamus), so pretty much any district judge knows he or she can do whatever it wants and there’s no recourse for either side. Immediate appellate jurisdiction for motions to stay would allow the Federal Circuit to develop (and most importantly, enforce) a consistent body of case law governing this issue, making results on motions to stay more predictable in districts across the United States.
This was actually the case with CBM reviews: the CBM statute (now sunsetted) expressly authorized direct and immediate appeals of rulings on motions to stay pending CBM. And for the brief period when people were actually filing CBM reviews (before they nosedived in popularity beginning around 2016 for reasons unrelated to stays), you actually saw that orders on motions to stay pending CBM were much more predictable and carefully drafted in districts across the United States than motions to stay pending IPR, as the judges knew their rulings on CBM stays were immediately appealable.
The most balanced solution (under the current statute) would be to let the district court decide whether it needs help from the PTAB or not.
My dispute would have been more efficiently resolved by the district court. The PTAB added over a millions dollars and two years to the dispute. The same is true for every dispute in which a single asserted claim survives the PTAB. The only time that PTAB is more efficient is when they invalidate the entire portfolio while the district court case is stayed.
I suppose it wouldn’t have sounded credible if the letter had acknowledged any legitimate policy interest to be balanced against the interests of patent applicants and owners.
But without anything like that, the letter seems like a pretty obvious statement that Iancu has been a pro-patent PTO director, and people with pro-patent interests appreciate that.
Such as…?
(and I mean, outside of the Efficient Infringer mantra)
The CAFC needs to be wiped.
OT, but why were the comments about InterDigital removed?
Editor’s choice.
Big Tech howls.
American innovation cheers.
I don’t do IPR’s, and neither the overwhelming majority of patent attorneys or patent owners. What has Iancu done for us?
He’s given you a significant reduction in 101 rejections if you practice in the right area.
Haven’t seen it in my art units, but I wouldn’t mind.
He’s promised to force .docx filing down everyone’s throats, in which the filer allows the PTO to convert a .docx document to some other format, and then the filer gets to proofread that converted file online while logged in, before filing. By submitting the file, the filer agrees that there are no mistakes in the converted file. Filers who don’t trust the PTO’s conversion can instead fork over $400 for the privilege of filing a pdf document that they themselves created and are sure has the correct text.
He’s also promised to replace EFS and PAIR with “Patent Center”, which still has many, many bugs that were pointed out to the PTO over two years ago, as well as bugs that beta testers are still finding. And the PTO seems not to be interested in feedback on “Patent Center”.
That’s what Iancu has done for patent attorneys and patent owners.
Surprise surprise surprise TRUMP TRUMP TRUMP workin’ good on the patent system.
I agree with the text reproduced above that Dir. Iancu’s effects on the IPR system have been largely salutary. I am less certain of the effects of his other well-known initiative: the §101 guidance. I can imagine that five years from now—when the first wave of verdicts emerge from suits on patents that granted under the Iancu guidance—that more than a few patentees will be disappointed to discover that they have sunk resources into litigation that was doomed to fail from the start. The defendants in these suits will be similarly disappointed that they were obliged to spend money to defend against suits that would never have happened if the earlier Lee guidance had not been superseded.
“that more than a few patentees will be disappointed to discover that they have sunk resources into litigation that was doomed to fail from the start.”
Bruh the PTO is just giving them a chance to fail if they want to. Ain’t nobody forcing them get patents on ineligible subject matter and then get found out.
Sure, but that attitude should logically lead to a registration system instead of an examination system. In any event, even if you feel no sympathy for the wrongful-grant patentees, one should still have some sympathy for their defendants. The whole reason why Congress commissioned a patent system was to weed out the legally non-compliant claims pre-grant, on the logic that it is more efficient for society overall to prevent non-compliant claims on the front end than to have individual defendants litigate them to invalidity on the back end.
“but that attitude should logically lead to a registration system instead of an examination system”
Cue my statements from a LONG time ago…
The whole reason why Congress commissioned a patent system was to weed out…
Sorry, that should say “[t]he whole reason why Congress commissioned a patent examination system was to weed out… .” My apologies for confusion.
“I can imagine that five years from now—when the first wave of verdicts emerge from suits on patents that granted under the Iancu guidance—that more than a few patentees will be disappointed to discover that they have sunk resources into litigation that was doomed to fail from the start.”
Yes, but that doesn’t count against his efforts if the metric for evaluation is short-term benefit to practicioners, rather than long-term value to applicants. I suspect the latter is the primary motivation here. The thinking likely goes: Prop up the industry of patents themselves until congress can come to its senses.
It’s interesting that you choose the phrase “industry of patents” as opposed to “promote innovation.”
There can be no solution to the subject matter problem because Alice is a mess and will always be a mess. “Routine and conventional” cannot be set apart from an obviousness inquiry in any meaningful way. “Do it on a computer” claims are textbook applications of what should be an obviousness doctrine, not a subject matter one. If the PHOSITA is a computer person rather than someone from the art that is being modeled or simulated, that’s a good clue.
Meanwhile, the subject matter issue almost always turns on some species of information, where nobody has a clue about how to characterize new and useful information or rationally determine which is technical accomplishment, which is discovered fact, and which is entirely synthetic, having meaning only to persons.
“where nobody has a clue about how to characterize new and useful information or rationally determine”
You are definitely part of that ‘nobody’ given your attempts to characterize the invention as to information per se.
Innovation is what is to be protected by the patent system.
You would be FAR better off acknowledging that, and seeking to employ your efforts in concocting your schemes to protect innovation of the Kondratiev Fifth Wave.
“which is entirely synthetic, having meaning only to persons.”
ALL utility in the patent sense has meaning only to persons.
Alice is a mess and will always be a mess.
Agree 100%.
Not that it may make any difference either way, but I did not see either the IPO or the AIPLA among the list.
Also, re “Perhaps the most important of these changes was adopting regulations to require PTAB to interpret issued patent claims according to their ordinary meaning as understood by a person of ordinary skill in the field covered by the patent. By adopting this so-called Phillips standard …” Note that this change only applies to IPRs, not to other PTO proceedings, and has yet to show significant identifiable changes in outcomes. Iancu’s examiner 101 guidelines have had far more numerous effects, but have no effect on the Fed. Cir. treatment of patents allowed thereunder.
[H]as yet to show significant identifiable changes in outcomes.
How would we ever know? I would expect that the most significant of employing Philips in IPRs would be in discouraging institutions, not in altering outcomes of final written decisions.
Greg, the requirement to “interpret issued patent claims according to their ordinary meaning as understood by a person of ordinary skill in the field covered by the patent” [at what date?] should also be part of a proper BRI claim test as I understood the relatively few modern Fed. Cir. cases reversing BRI claim interpretations for missing the “R” [not “reasonable”]. Both tests are generally supposed to be reading claims “in light of the specification,” but not amended by the specification, and neither test solves truly ambiguous or indefinite claim problems. I find it hard to believe that far more defendants being sued for patent infringement have now been deterred from filing IPRs solely on the basis of the switch from BRI to In re Phillips. If they have assertable prior art it still does not make sense to “save it for the jury” given far lower odds of success and the 95% or so of patent suits that never even get to trials.
P.S. Please this is not a criticism of changing IPR claim interpretation from BRI to In re Phillips, just a challenge to allegations that it made a significant difference.
The other part of the letter, about discretionary IPR denials when D.C. suits will resolve validity earlier than or about the same time as the IPR, is also not very significant, because that rarely occurs. Because IPRs are completed much faster than most D.C. dockets ever actually get to the same issues. Deciding patent invalidity in a D.C. requires a vastly more expensive full blown trial and appeal, since S.J. is rarely granted on invalidity issues. Very many district courts stay the litigation for the IPR, to potentially get it off their docket and avoid all litigation time and costs, with no duplication.
Is there no duplication? Or is the IPR merely a additional precursor step with its attendant costs?
If patent suits with IPR responses remove all the suit-asserted claims in the IPR before trial the claims are gone, period, and there cannot be any lawsuit duplication. .
If a claim in suit was NOT removed by the IPR the lawsuit defendant is estopped from challenging its validity on any ground that could have reasonably been raised in the IPR. Again, no duplication.
But there IS duplication in that the results of the IPR challenge then are pushed into the Article III forum for resolution.
I “get” how you want to spin this as NO duplication, but that is just not so.
Anon below with “Article III” is confusing the subject issue of avoidable D.C. trial costs with the costs of Fed. Cir. appeals of IP decisions. [Both, of course, are Article III courts.]
Yet Fed. Cir. appeals commonly occur after both – even more often after D.C. patent trials, and those typically have more appeal issues and thus are more costly.
No “confusion” at all, Paul.
Fair enough, and correlation is not causation, but it can hardly go unnoticed that institution rates have dropped since the Philips standard came online.
link to law360.com
Paywall…. how is “institution rate” being used?
Overall use of IPR system ? (Controlled one part with ‘low hanging fruit’ impacts); or
Percentage of cases in which the Office exercises its discretion…?
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