Wednesday, April 15, 2015

Despite the Negativity, Revised Patent Laws Improve the System //National Law Journal

Op-Ed: Despite the Negativity, Revised Patent Laws Improve the System:

by PeterC.Pappas //National Law Journal

 "When the America Invents Act was enacted in 2011, stakeholders cheered this major reform of the patent system. Negotiated and drafted with extensive involvement from patent holders and patent lawyers, the act established postgrant review proceedings to be conducted by expert administrative judges within the U.S. Patent and Trademark Office. These three new proceedings were touted as more cost-effective and quicker alternatives to litigation — making it easier to challenge, and invalidate, certain low-quality patents.

Improperly issued patents are often used abusively by patent trolls against startups and others, and the America Invents Act created mechanisms for taking bad patents out of circulation.
But things have changed. These post­issuance proceedings are now under attack, often by the same entities that helped create them. The main target of criticism has been inter partes review, which allows an issued patent to be challenged, but only on the ground that it is not novel or nonobvious — in short, that it was not truly inventive.
These popular and effective proceedings have been labeled "death squads" of patent rights, and accused of bias against patent holders.

Legislation has even been introduced to curtail these proceedings — all based on inaccurate and misleading statistics on invalidation rates, faulty inferences and conjecture.
Let's look at the facts. Some have ­complained that the inter partes review proceeding is more widely used than expected. Much has also been made of allegedly too high invalidation rates. It is sometimes wrongly asserted that 80 percent of patents are being invalidated. But the critics of inter partes review fail to point out that these proceedings were ­specifically designed to deter challenges to good patents.

First, the Patent Trial and Appeal Board only institutes proceedings if it has first determined that some of the challenged patents are "more likely than not" to be invalidated. Given this high bar, it should not be surprising that a high percentage of these patents are invalidated. If invalidation rates were low, that would indicate a real problem: It would reflect poorly on the board's decisions to institute proceedings, and would mean that too many good patents were being targeted for challenge.
These proceedings have a provision that discourages the filing of weak challenges. Once an inter partes review is instituted, the challenger is barred from seeking judicial review of any matter that could have been raised in the review. Filing an inter partes review without strong grounds will result in a denial of the petition, which effectively "gold plates" the challenged patent, rendering it very hard to attack in the future. In addition, the proceedings are designed to be costly and front-­loaded, another deterrent to weak challenges.

 Because these proceeding are engineered to take up only strong challenges, one would expect to see relatively high invalidation rates.
But the Patent Office's most recently published statistics do not support the meme of overly high invalidation rates. In reality, just more than 600 petitions (encompassing an aggregate 20,000 or so claims) have been concluded to date. The board has instituted proceedings against 68 percent of patent claims challenged, and declined to institute them against 32 percent. The board has invalidated 36 percent of these claims.

The invalidation rate of total claims challengers have sought to invalidate in these proceedings is even lower — 24 percent. So the board has actually "gold plated" far more patent claims than it has invalidated.

 Lastly, the legal landscape has changed dramatically. Recent court decisions have significantly raised the bar for patentability in key areas, making it easier to invalidate bad patents.
And it is unreasonable to criticize the board for implementing the law. Moreover, as the board's decisions are appealable to the U.S. Court of Appeals for the Federal Circuit, time will tell whether anything is flawed about these proceedings. But thus far the court has upheld the board's decisions. None of this is to suggest that the inter partes review proceedings are perfect.

From the time the Patent Office was charged with the huge task of implementing the law, Patent Office leadership acknowledged that it would not get everything right the first time. It conducted extensive outreach across the country to gather input from stakeholders, and its implementation of the America Invents Act has been a resounding success."

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