Tag Archives: Inter Partes Review
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Reporter: Patent system failed heart valve inventor

One of the biggest obstacle to inventors today may the system created to protect them. Research cardiologist Tory Norred thinks so.  

In a recent post on IP Watchdog, excerpted below, I summarize how investigative reporter Scott Eden skewers the U.S. patent system in the July-August Popular Mechanics article, “How the U.S. Patent System Got So Screwed Up.”

Eden, an award-winning reporter, whose credits include the Wall Street Journal, ESPN and TheStreet, examines the devastating impact of recent changes to the patent system by focusing on an inventor who got caught up in it.

The NPR-style article tells the story of Tory Norred, a fellow in the cardiology program at the University of Missouri cardiologist, who in 1998, came up with the idea for a collapsible prosthetic aortic valve that could be fished up through an artery with a catheter, and implanted in the hearts of patients who suffered from failing aortic valves. Unlike previous valves, Norred’s stent disperses the force needed to hold it in place against the aorta’s walls, requiring no sutures.

gallery-1466458424-pmx07116-patentoffice15In November 2002 he received U.S. Patent No. 6,482,228, “Percutaneous Aortic Valve Replacement.” Norred knew that he was onto something important, but that was not the beginning of success, it was the start of a nightmare that led to repeated frustration.

“That’s my valve!”

Norred spent the next four years talking to venture capitalists, medical products companies and even a Stanford University consultant, in an effort to finance his invention. Despite many quality meetings, no one was interested in providing capital or product development – including the product-development people he signed non-disclosure agreements with at Medtronic, Edwards Lifesciences, Johnson & Johnson, and Guidant.

“By September 2003,” writes Eden, “Norred had all but given up on his dream when he and a colleague were strolling the exhibition hall at an important cardiology congress held annually in Washington, D.C. They came upon a booth occupied by a California startup called CoreValve. With increasing alarm, Norred studied the materials at the booth. He turned to his colleague: ‘That’s my valve!'”

The rest of the story is not unfamiliar: CoreVale basically ignored him, and Norred settled into private practice. Then, in 2009, Norred saw the news online: CoreValve had sold itself to Medtronic for $775 million in cash and future payments.

In fact, collapsible prosthetic valves fished up through an artery with a catheter and implanted in the aorta are well on their way to becoming the standard method of replacing worn-out heart valves. Thee annual market has already surpassed $1.5 billion and is expected to grow.

Immediate Suspicion

The remainder of “How the U.S. Patent System Got So Screwed Up,” is devoted to the slow decline of the patents system over the past decade, and how a handful of patent “trolls” have been used as the reason to systematically dismantle much of the patent system. The same system that was the envy of the free-world and spawned many breakthrough inventions, as well as successful businesses that employ millions.

“Norred wasn’t a troll,” continues the article, “and the decision to sue did not come easily for him. His lawyer told him that the cost to litigate could exceed half a million dollars. Norred did not have half a million dollars. He considered letting it drop and moving on with his life, but in the end he couldn’t. ‘It’s gallery-1466458804-pmx07116-patentoffice17hard to give up on something you’ve worked so hard on,’ he said.”

“Whenever an independent inventor sues for infringement today, an immediate suspicion attaches to the case,” states Eden. “The anti-patent feeling is such that to assert one is to become stigmatized as a troll or, worse, a con artist or a quack. But there’s another way to look at these litigants. It could be that an inventor-plaintiff is a modern-day Bob Kearns, the Michigan engineer who spent decades fighting the global automobile manufacturing industry over the intermittent windshield wiper. They made a movie about it called Flash of Genius.

Greater Uncertainty

Inter partes reviews (IPRs) were supposed to clear up much of the uncertainty surrounding patents that are thought to be infringed, by determining which, if any, of their claims are valid in the first place. But IPRs also have had an unfortunate side effect. IPR tribunals make it easier for sophisticated defendants to kill patents held by legitimate inventors.

“The IPR isn’t an effort to figure out whether an inventor invented something,” says Ron Epstein, the former Intel attorney. “It has turned into a process where you use every i-dot and t-cross in the law to try to blow up patents… There isn’t a patent that doesn’t have some potential area of ambiguity.”

Go here to read, “How the U.S. Patent System Got So Screwed Up.”

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Popular Mechanics was first published in 1902. It is known as the monthly bible of the independent inventor. 

In 2011, two of Scott Eden’s pieces received “Best in Business” awards from the Society of American Business Editors and Writers (one for investigative reporting and one for feature writing). Eden is former staff reporter for TheStreet and Dow Jones Newswires.

Image source: popularmechanics.com

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Symantec acquires Blue Coat, a leading IPR filer with a $289M loss

Cybersecurity firm Blue Coat Systems has decided to opt-out of an initial public offering and sell itself to software security leader Symantec for $4.65 billion. 

What has not been widely reported in the press is that Blue Coat, a relatively small cybersecurity company with a loss of $289 million in 2015, is a leading filer of United States Patent and Trademark Office Inter Partes Reviews (IPRs) that are designed to invalidate patents that are being asserted by Non-Practicing Entities (NPEs) and others.

According to patent research firm Patexia, Blue Coat is a top-ten IPR filer for 2016, along with Apple, Samsung, Microsoft and GE. The firm filed ten IPRs, a higher numbers than H-P for the period.

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“Blue Coat has been at war with Finjan,” Gaston Kroub of Markman Advisors, LLC told IP CloseUp.  “Like Blue Coat, Symantec has been fighting with Finjan too, so these IPR’s may be of value to Symantec as well.”

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Finjan (FNJN) is among the leading targets for IPRs. It could be that Symantec finds Blue Coat attractive not only for its cybersecurity products, but also for its adversarial position with regard to Finjan and others which could assert their patents against it or Blue Coat.

In a 2015 verdict in Finjan Inc. v Blue Coat Systems, a jury awarded Finjan more than $39.5 million in damages, reports IP Watchdog. The lawsuit alleged that claims from a series of Finjan patents were infringed by several Blue Coat products, including Malware Analysis Appliance (MAA), Content Analysis System (CAS), and WebPulse.

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To help finance the transaction, Blue Coat’s existing majority investor, Bain Capital, will invest an additional $750 million in the deal. The private equity firm Silver Lake, which invested $500 million in Symantec in February, will invest an additional $500 million.

Bain had acquired the company for $2.4B in 2015.

According to The New York Times, “The deal will create a big provider of security products, both the traditional antivirus kind that has long been Symantec’s focus and the newer online protection services in which Blue Coat has specialized. Executives see little overlap between the two businesses.”

“With this transaction, we will have the scale, portfolio and resources necessary to usher in a new era of innovation designed to help protect large customers and individual consumers against insider threats and sophisticated cybercriminals,” Dan Schulman, Symantec’s chairman stated.

In its I.P.O. prospectus, Blue Coat said that it lost $289 million on top of the $598 million in sales for the 12-month-period that ended on April 30. That compares to a $271 million loss on top of nearly $569 million in sales for the same period a year before.

Image source: twitter.com/symantec; patexia.com

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“All Prior Art” algorithm won’t stop bad patents or actors

Stopping new inventions dead in their tracks by making them “automatically” unpatentable might sound like a good idea to some.

However, programming a computer to disclose an endless combination of dubious inventions is more effective at stopping bad patents in theory, not practice.

At least that is what three experienced patent attorneys told me recently. Publishing millions of pieces of supposed prior art will not stop bad patents (really, unpatentable inventions)  from being issued or make legitimate invention-ownership less difficult to discern.

More Style than Substance

All Prior Art is a project that attempts to “algorithmically create and publicly publish millions of pieces of possible new prior art, thereby making the disclosed concepts unpatentable.”  All Prior Art is trying to take highly obvious ideas out-of-play. Unfortunately, preventing patents from being granted, even those that do not deserve to be, is not a simple fix.

In order to be admissible, prior art must be enabling; i.e. the disclosure must describe how the invention can be produced — not something that All Prior Art addresses.

Cf2sxeUWEAE864bThe brainchild of Alexander Reben is a self-described engineer and artist with a background in robotics and applied math.  Mr. Reben’s random configurations have been described to me as “a mishmash of questionably inventive ideas.” Even if there are millions of combinations, it is highly unlikely that they will serve to invalidate a perspective patent, let alone one that an NPE may be enforcing.

All Prior Art may be more style than substance. Sure, inventions that do not meet the appropriate tests of novelty should be prevented from issuing or invalidated if they are enforced (or, maybe, even if they are not). Even if this scheme were to work, it would weaken the prospects of many inventors, universities and SMEs, and dissuade investment in innovation.

Missing Description

The theory behind Mr. Reben’s invention is that if a computer can spew out enough combinations of prior art — i.e. publish millions of pieces of data that describe inventions — the subject matter disclosures will preempt patent issuance. It’s just not that simple.

The problem is that for any prior art reference to serve as an invalidating disclosure, it has to be enabling. And the fact that no human being has come up with the combination is a pretty good argument against enablement.

The means it must be described so that a “person of ordinary skill in the field of the invention can practice the subject matter based on the reference, without undue experimentation.” (Sanofi-Synthelabo v. Apotex, Inc., 550 F.3d 1075, 1082 (Fed. Cir. 2008).

When it comes to All Prior Art’s prior art, the “description” is missing, according to Bloomberg BNA’s Tony Dutra.

“The virtually infinite number of combinations will generate over 99 percent dreck,” chides Mr. Dutra. “But, like the ‘infinite monkey theorem’ that predicts a monkey hitting typewriter keys at random for an indefinite time will almost surely, eventually type a given text, Reben believes his project will generate at least some combinations that someone, someday might try to patent. It’s that someone [Reben] aims to stop.”

Patent the Universe

NPLThe tech media, notably the DailyDot, encouraged by with the idea of that patents can be neutered, has taken an ill-conceived idea and made it worse with a misleading, inaccurate headline: “One man is trying to single-handedly create every patent imaginable.”

A sister website All The Claims is attempting to achieve a similar objective, but with the use of claims and a more verbose alternative.

“Hard to Take Seriously”

“Bruce, this approach is hard to take this seriously, especially with an admission that most of the inventions generated will be nonsensical,” one patent attorney wrote to me. “Pertinent excerpts from the Patent Office Examiner guidelines illustrate that:

‘In determining that quantum of prior art disclosure which is necessary to declare an applicant’s invention ‘not novel’ or ‘anticipated’ within section 102, the stated test is whether a reference contains an ‘enabling disclosure’… .’”

“To be invalidating prior art as to make a meaningful contribution,” a former USPTO examiner, inventor and Fortune 100 Chief Patent Counsel told me. “If utility is missing, it will not be seen at invalidating. Prior to be taken seriously by an examiner or in litigation needs novelty and utility, or specific application.”

“There are billions of combinations, but so what? There needs to be novelty and utility to qualify as prior art. This scheme might be well intended bu ti hurts the little guy more than the big tech player. I doubt that courts will take it seriously or that automated generation of inventions will have a meaningful impact.”

Trivial Variations

“Is Mr. Reben really attempting to automate the generation of trivial, random variations of existing stuff?” asked another patent attorney. “It is already difficult to patent trivial variations, as they are ‘obvious’.  The term ‘automated generation of patentable’ is kind of an oxymoron. This approach  should be titled ‘automated generation of trivial variations of existing inventions’.”

Non-Patents

So for now, at least, bad patents (really, non-patents) will continue to be issued by the USPTO and other major patent offices in large numbers because they lack the resources to prevent them.

Inter Partes Reviews and other mechanisms will continue to try to eliminate or to help fix erroneously issued patents, and litigation will remain the only reliable, albeit, costly way to determine if a patent is valid and infringed.

If it were easy to solve patent problems algorithmically with a PC, mathematicians would be higher paid than patent attorneys. That’s not likely to happen anytime soon.

Image source: ttconsultants.com

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PTAB instituted IPRs are flat after declining slightly in 2015

After declining 9% in 2015 from the 2014 fiscal year Patent Trial and Appeal Board-instituted inter partes reviews (IPRs) have leveled off.

Instituted reviews were at 74% in 2014, went to 65% in 2015 and are thus far at 66% for fiscal year 2016. This is according to, “PTAB Grants Lower Rare of IPRs as Patent Owners Fight Back,” by Erin Coe in Law 360.

Coe reports that patent holders have “an 86 percent chance of seeing the PTAB find some or all of the instituted claims unpatentable, according to the total number of IPR trials that reached final decisions in the review period.”

The declining rate has been attributed to among other things, improved quality of the patents being put before the PTAB, although it still is reviewing about two-thirds of the patents that petitioners request.

An analysis through August 2015 showed that instituted reviews result in invalidation of one or more claims 88% of the time; invalidity success rate for patents with fully instituted petitions is 82%.

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The Kill Rate Analysis

According to Amy Simpson and Hwa Lee, attorneys at Perkins Coie LLP, the key take-aways or recent IPR activity:

1. Very few petitioners are walking away empty-handed: 88 percent of petitions with final written decisions resulted in at least one claim being invalidated.

2. A notable percentage — 21 percent — of all final written decisions resulted in complete invalidation of the patent.

3. Success starts and ends with the petition. The invalidity success rate for fully instituted petitions is 82 percent while the invalidity success rate for partially instituted petitions plummets to 52 percent. The PTAB’s first impression of the petition’s strength appears to affect the entire preceding and ultimate outcome.

Simpson and Lee analyzed all of the approximately 404 final written decisions on instituted IPRs from September 2012 through Aug. 1, 2015 to explore the factors behind IPR kill rates.

Image source: Law360.com via USPTO

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NPEs are winning 4.5x more in damages than opcos, new PwC patent litigation study shows

With patent litigation down 13% over 2013, and median damages awards just $2.9 million, the lowest in at least 20 years, NPEs are still besting operating companies in damages at trial by more than four fold.

PwC’s 2015 annual patent litigation study, subtitled “A change in patentee fortunes,” is a useful overview of trends in the IP space. The annual study is long on the big picture and short of reasons for changes. There is some attempt this year at a summary page and suggested implications (“Leading Observations”), which runs before the Table of Contents.

Median damages awards for NPEs over the period from 2010-2014 were $8.9M, compared to just $2.0M (page four of the 2015 study) for operating companies (opcos). Reasons for this may include: SMEs that tend to enforceScreen Shot 2015-05-22 at 10.41.50 AM their patents against competitors, not the deepest pockets, have more modest goals; and simply that NPEs are better at enforcing patents, with more experience targeting big companies than opcos, and are able to identify better quality patents to enforce.

The drop in litigation over 2013, already much discussed, can be attributed to may things, the PTAB and IPRs, Alice, less favorable large damages awards, longer time to trial, etc. Possibly overlooked is that after AIA was instituted in 2012 there was a rush to file suits, possibly to avoid IPR scrutiny.

The 2015 PwC Patent Litigation Study can be found here.

Image source: PwC

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Study: Alice v. CLS Bank led to a strong increase in subject matter patent invalidations

The Supreme Court’s decision in Alice Corporation v. CLS Bank International, a case involving computer software, has led to a marked increase in patents being invalidated under Section 101 of Title 35 the United States Code covering subject matter eligibility.

The findings are part of “2014 Patent Litigation Year in Review,” just out from Lex Machina, the litigation analytics firm.

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Surprisingly, according to the findings in the report, median damages awards based on reasonable royalties paid in 2014 was $3M based on 25 cases. This was the second highest amount since 2000, with only 2009 being higher.

39% of IPRs Settled before a Final Decision

The Lex Machina 2014 review indicates that of the 503 IPRs terminated between 2012 and 2014, 196 or 39% were settled before a final decision was made by the PTAB. (See figure 47 below.)

The 2014 litigation report examines the key axes of legal data and their interactions, drawing upon Lex Machina’s platform that combines data from PACER, PTAB, the U.S International Trade Commission (ITC) , and the U.S. Food Drug Administration (FDA) Orange Book on abbreviated new drug applications (ANDAs).

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IPCU readers interested in receiving “2014 Patent Litigation Year in Review” can follow the link here.

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Lex Machina also recently announced the launch of Legal Analytics for trademark and copyright cases, which affords lawyers insights into the behavior of district court judges, opposing parties, and opposing counsel, enabling them to gain competitive advantage in trademark and copyright litigation.

Image source: Lex Machina

Post-Grant Reviews are Shaping NPE Patent Quality & Portfolio Size

More and better patents have greater meaning for licensors now that a petitioner can seek an internal review (IPR) canceling a patent because of a single claim. Expect those with capital and experience to prevail.

IPNav announced in May that the firm’s President, Deirdre Leane, is set to succeed CEO Erich Spangenberg by the end of the year.

Leane spoke with IPBC Global’s Richard Lloyd recently in Amsterdam about the future of patent licensing and the impact that Inter Partes Reviews (IPRs) are having on patent licensing. Leane also chatted about the a more expanded role for women in IP and her increased responsibilities at IPNav.

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She says the IPR pendulum has already starting to swing back in favor of patent holders. Patent Trial and Appeal Board (PTAB) decisions have gone from “a 90% plus kill rate to 82%,” Leane notes.

Leane believes that trend is likely to continue to move towards 70%, as patent holders select better patents to assert.

For those of you who wish to go directly to Leane’s remarks about IPRs, they start a bit after 2:00 in the 13 minute interview. The entire interview can be found here.

Image source: ipbcglobal.com

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Five New Stocks added to IP Close Up 30 Patent Licensing Index

Finjan, Inventergy, Network-1, Straight Talk and Universal Display have been added to the IP licensing company (PIPCO) stock index, IP Close Up 30.

To remain relevant a stock index must change. Companies added to the IP CloseUp® 30, a conveniently configured, real-time listing of company stock performance, financials and news include those that can be described as operating companies.

These companies are otherwise known as PIPCOs, a term coined by this writer in September 2013.

Companies removed include ARM and Qualcomm, because of their much larger relative size, as well as Murgatroyd and RWS, which are more of an IP services play and less an IP licensing one. AxoGen, a medical technologies company that focuses on nerve repair, was removed because of a lack of IP information.

Inventergy (INVT), which began trading on June 9, says that it will have a market cap of about $150M once its merger with eOn Communications Corporation is completed. According to analysts close to IP Close Up who have examined the public filings this would establish the value of the company’s patent portfolio at approximately $130M.

Network-1 (NTIP) won a rare Patent Trials and Appeals Board (PTAB) ruling on May 23 affirming all claims in its Remote Power Plant patent, and defeating an Inter Partes Review (IPR) challenge (U.S Patent No. 6,218,930). ipcu30-blurb2-21

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As stated previously, the IP CloseUp® 30 is a stock index in progress. It is informally represents small, micro and nano-cap companies engaged in significant patent licensing whose market value hovers in the range of under $1 billion, $50 million to $350 million, and under $50 million.

The goal of the index is to make it easier to follow and understand companies who license their IP actively relative to each other by providing real-time trading data, news and charts. IPCU 30 hopes to include all companies whose stock price and shareholder value are significantly affected by IP performance. This could include direct income generation, such as in out-licensing, as well as strategic or defensive use of patents to secure and maintain market share and profit margins, and to manage risk.

In the future we plan to include more IP Close Up 30 group data, including how the group’s performance compares with other indices, like the S&P 500. Image source: IP CloseUp® 30

PIPCO Monitoring Made Easier:

The IPCU 30 can be conveniently followed on your PC or Mac. Click here, highlight the URL, and drag it to your desktop. Scroll down the page for recent company news.

To access the IPCU 30 on your smart phone: click here, tap the arrow at the bottom (iPhone), and select “Add to Home Screen.” You’re good to go.

Be sure check-in with IP Close Up (the blog) periodically to see if the list has been updated.


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