Tag Archives: inter partes reviews

Costs to establish clear patent ownership are soaring – Here’s why

It has never been easy for American innovators hoping to generate a return on their inventions, but new hurdles have made it impossible to license even the best patents.

Despite increased availability of capital and access to data, IT patents today have a much more difficult time proving themselves than a decade or a century ago. The vast majority of the public, stakeholders if indirectly, are not aware of the situation or its impact.

With the enactment of the American Invents Act (AIA) in 2012 and several supreme court decisions setting an ambiguously higher bar for patent certainty, licensing began to resemble scaling a high peak, with enough challenges even the most innovative business or inventor.

Two such obstacles are the Patent Trial and Appeal Board (PTAB) and inter partes reviews, created to validate patents already issued by the United States Patent and Trademark Office. Until the AIA came along, USTPO-issued patents had enjoyed a “presumption of validity,” the standard since 1952.

Second Look

In theory, a “second look” for issued patents is not a bad idea. Examinations are not always as thorough as they could be. If it were fairly applied, these re-examinations would kill any dubious patents that should not have been issued by time-constrained examiners, and affirm those that deserve to be. This would make it easier for owners to license without resorting to costly litigation. In practice, however, is not the case.

Patents that the PTAB chooses not to review, and even those whose reviews are instituted and claims affirmed, still, are rarely seen as licenseable, and are subject to subsequent IPRs and/or protracted litigation. New and even more onerous obstacles to patent certainty have added to the time and cost of resolving disputes. How much time and cost?

 

Steep Climb

The illustration on this page, courtesy of Brody Berman Associates, IP communication specialists, is an illustration of the just how difficult patent licensing has become. That is not to say that every licensor must go through all of the steps, all of the time, but many do, especially those who believe the infringement warrants significant damages or a potential licensor believes the royalty costs outweigh the expensive legal ones. Many accused infringers have the capital and constitution to withstand a protracted dispute, which can last five years or more.

Defendants who take their time engage in what is known as “efficient” infringement. For a patent holder to prove patentability, validity, infringement and damages is frequently too costly and time-consuming a climb, so why bother? For many IT patent holders, licensing without litigation is no longer an option.

From Edison to Alexander Graham Bell to Nicola Tesla, market leaders have been reluctant to accept new ways of solving old problems if it may hurt their bottom line. An expensive challenge with many impediments along the way is one way of mitigating a threat. Patents that are held by businesses and individuals but are not used (enforced) are seen as less threatening to established businesses. To them, the best patents are seen but not heard.

An overly arduous path to patent certainty not only tilts the playing field, it dissuades competition and dims the future.

Image source: Brody Berman Associates, Inc.

 

Pace of patent litigation declines; 2018 applications still flat

Early indications are that U.S. patent litigation for 2018 is on track to be among the lowest in since 2005.

So far in 2018, approximately 555 patent infringement suits have been filed (3,330 on an annualized basis). This is off from a peak of 5,874 in 2015, or an average of 979 every two months. In 2005, the lowest litigation filing year in recent memory, there were just 2,582 suits. In 2017, there were 4,072. January and February are early indications, and there is time for the rate to increase.

According to statistics provided by intellectual property research firm Patexia, January 2018 patent applications came in at 27,720, just 631 higher than 2017, 27,089, which was the lowest year for that month since 2012. February applications are running behind last year, which came in at 28,329 for the same month. Final figures are not yet in.

This trend in patent applications and litigation has been accompanied by a flattening of Inter Partes Review (IPR) petitions filed. IPRs have been fairly level for the past three years, peaking in 2017 at 1,725. So far this year (through February) there have been approximately 250 IPRs filed, putting 2018 on track for about 1,500, slightly below the last two years on an annualized basis. No information on the number or percentage of instituted petitions was provided.

Litigation, IPRs and CBMs Filed to Date

IPRs and Litigation

Difficulty obtaining software and business methods patents are a likely reason for the drop in U.S. patent applications, as well as the increased difficulty defending patents. Patent uncertainty and decreased need for defendants to take a license or engage in licensing discussions, as well as the high cost of litigation, are possible reasons for an increase in IPRs.

For Patexia live litigation statistics, go here.

Image source: patexia.com


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