Tag Archives: Patent Trial and Appeal Board

PTAB fairness data is misleading, say more patent holders

Not all patent owners agree the Patent Trial and Appeal Board (PTAB) is a fairer forum for vetting patent quality today.

While some believe that the United States Patent and Trademark Office (USPTO) board is no longer the “death squad” that it was described as by the former Chief Judge of the Court of Appeals, most patents subject to multiple inter partes reviews are, with an uncanny frequency, either invalidated or severely weakened. Few, emerge as clear winners.

The USPTO established the PTAB, an administrative law body, as part of the America Invents Act in 2012 to eliminate issued patents that should not have been granted because prior art way overlooked. IPRs are said to be a patent office “second look,” but while patent office re-examinations (an earlier review process superseded by IPRs) eliminated many patents that should not have seen the light of day, they also strengthened some, making them easier to license. To date, IPRs effectively have been a one-way street, eliminating many patents that should not have been issued but ineffective at identifying good ones.

An article that appeared last week, “How IPR Gang Tackling Distorts PTAB Statistics,” takes the recently reported data to task for misleading about the ultimate effect of multiple IPR filings on a single patent.

“If you use the PTAB published statistics, they’ll tell you that the institution rate was 50% – because only 1 of 2 petitions was granted. That’s true, as far as it goes. But from the patent owner’s perspective, they used to have 10 claims, and now they have 0.  That’s a 100% kill rate!”

“Assume 10 petitions and one institution,” wrote Peter Harter in IP Watchdog. “A 10% institution rate seems terribly biased towards [in favor of] the patent owner. But if all 10 claims get killed, that’s still a 100% kill rate – pretty good for challengers. When both sides think the deck is egregiously stacked against them, it’s easy to see why there’s no middle ground for compromise and improvement. And the way the PTAB is reporting statistics is to blame.”

An article that appeared recently in Law 360, “Inter Partes Reviews Becoming Friendlier to Patent Owners,” argues that holders whose patents are subjected to IPRs today have a better chance of survival than in the past.

“The PTAB also now institutes inter partes reviews less frequently,” writes Law 360. “Looking at all institution decisions made by the PTAB, the board decided to institute trials more than 85 percent of the time in the first year after inter partes reviews became available (2013) according to data from the U.S. Patent and Trademark Office, but only 68 percent of the time in its 2016 fiscal year.”

Statistically Valid

The decline in the institution rate may be statistically valid, but some patent holders argue that it does not tell the whole story. The statistics do not explain that some of the worst, most easily invalidated patents came before the PTAB in the first year of its existence, so the institution rate was destined to go down as it became clearer the weakest patents had been terminated.

Results from a November-December 2016 Bloomberg Law and AIPLA research study asserts that “progress has been made in patent owner attitudes towards IPRs.” However, it really depends on which patent owners you ask: those that have large portfolios that they rarely enforce or those with a small number of quality patents that they wish to license.

Brad D. Pendersen, former chair of AIPLA’s IPR Committee and co-author Bloomberg Law-AIPLA’s Patents After the AIA: Evolving Law and Practice (2016) believes that there is an opportunity for patent holders subject to IPRs to strengthen their patents, despite evidence to the contrary.

“Given the potential gold-plated downstream advantages (in litigation and/or settlement) of surviving an IPR (either at the Decision or Institute stage, at the Final Written Decision stage), and given that one-third of patents survive at the Decision to Institute Stage, it is surprising – but not completely unexpected – that some portion of patent owners are starting to look more favorably on the IPR process.”

It is not clear that most patent owners who license would agree with the “gold-plated” reasoning. If it were true, there would be even fewer patent suits and more owners seeking IPRs of good patents. In fact, it is a bit of a mystery what happens to patents that pass PTAB muster. A significant number appears to move on to district court litigation, and there is little data analyzing if they have greater value or fare any better licensing than patents that are less successful running the IPR gauntlet.

Leading IPR Target

Finjan is an example of an IP holder that engages in licensing whose patents are frequently subject to IPRs. The company has fared surprising well in defending itself at the PTAB, but that success does not seem to have translated into significant shareholder success for the cybersecurity company which also frequently out-licenses its patents.

On March 15, 16 and 17, as reported in The Patent Investor, Finjan won three more IPR rulings, involving Palo Alto Networks. Shares of Finjan (FNJN) currently sell at just $1.54. The company has a micro market capitalization of $35M, $18M on 2016 revenues. Its shares are up significantly over 12 months vs. for the S&P 500 Index, but the company, which lost $12.6M in 2015, showed its first profit in 2016, $350K or .02 per share. Finjan has executed a difficult IP strategy. If successful IPRs have gold-plated its patents, the value has yet to shine through.

Finjan was the fourth most IPR’d patent holder in 2016 and the third most in 2015. It is the most successful company in successfully defending against IPR petitions. Of 47 total IPRs against Finjan patents to date, 32 have been denied institution.

With that track record at the PTAB, one would think Finjan would have a field day licensing its patents, but the IPRs continue to come, and it still must win hard-fought victories in district court litigation. In September, a California jury found that cybersecurity firm Sophos infringed all eight patents asserted in a lawsuit brought by Finjan over software that identifies new computer viruses, awarding the company $15 million in damages.

“We have a portfolio of patents that has been proven durable in light of the increasing number of administrative pathways to challenge validity largely due to two factors,” says Finjan CEO, Phil Hartstein.  “First, our patents were developed jointly and alongside product development of technology that was disruptive to a market.  Second, we do not deviate from the intrinsic record of the assets themselves and vigorously defend our patent rights on the merits.”

Coordinated Challenges

Editor and patent attorney Gene Quinn of IP Watchdog believes that Finjan and other businesses that attempt to out-license their patents are frequently subject to repeated, coordinated attacks.

“At least several patent owners, including Finjan, are routinely subject to serial, harassing IPR challenges,” writes Quinn. “The Patent Office doing something about harassing IPR challenges is long overdue. If the Director is not going to exercise the discretion vested in that Office by the America Invents Act (AIA) hopefully more panels of the Board will take it upon themselves to do just that.

“Patent owner harassment needs to stop. Patent owners shouldn’t have to be subjected to many dozens of IPR challenges before someone recognizes there is coordinated harassment – perhaps even collusion – against certain patent owners who have the audacity to want to be paid for blatant, ongoing, willful infringement.”

23 IPRs Filed on a Single Patent

Zond makes plasma generators, the kind used in manufacturing semiconductors. Pulsed DC plasma generators for magnetron discharge were first introduced in the late 1990s to reduce arcing during for the purpose of improving the quality of thin-film materials. A big breakthrough came in September 2002, when Zond applied for what it describes as a “revolutionary” pulsed technology approach.

Zond is a Massachusetts-based company that wholly owns Zpulser LLC, which commercializes its patent technology by making and selling high-power plasma generators. The patent at issue relates to methods for generating magnetically enhanced plasma.

Over the last three years, Zond’s patents have challenged an average of 12.5 times in IPRs and as many as 23 times.  The patent research firm, Patexia, writes that it is difficult for holders of good patents to survive multiple IPR challenges. In the case of Zond, it has made licensing pretty much impossible.

A study last year, reported in Law 360, showed that Zond’s patents have been challenged in AIA reviews more than those of any other patent owner, including largest patent licensing company, Intellectual Ventures, which owns more than 70,000 patents and took second place on the list.

Zond’s large number of infringement suits, reports Law 360, spurred many companies to band together to challenge the patents in AIA reviews. In addition to Fujitsu and Gillette, petitioners have included Toshiba Corp., Advanced Micro Devices Inc. and Taiwan Semiconductor Manufacturing Co. Ltd.

Were potential licensees and defendants in patent suits lining up against Zond’s patents because they were bad and its case without merit, or did they want to destroy some potentially good patents that would have cost them to license?

For IPRs the devil certainly is in the details, as Patexia’s Pedram Sameni points out in a case study, “Can Patents Survive Multiple IPR Challenges?”

“Some have been suggesting that solely relying on the denial rates reported by the patent office is not enough to conclude that patents are surviving the IPR challenge,” writes Sameni. “Many have called PTAB, the patent death squad. Our study shows that in some cases, patents are challenged many times.

“The reality is that it only takes one successful IPR to completely kill all the claims of one patent. Therefore, the case-level status is not the best indication of PTAB performance and patent survival rate. While as IPR’s Final Written Decision usually means that some of the claims were invalidated, it does not necessarily mean that all claims were canceled.”

Not the Full Story

If claims still exist, they could be threats. And potential licensees/defendants will go to lengths to “kill” a patent to avoid paying a license or being dragged into court, including teaming on multiple petitions. Repeat IPRs are an efficient way to make a potential infringement suit or royalty payment disappear for multiple parties.

“The statistics that show that the PTAB is becoming fairer for patent holders do not tell the full story,” a prominent NPE told IP CloseUp. “IPRs are frequently unfair fights between several, well-funded petitioners and a single patent owner who has to run the gauntlet, repeatedly.  Surviving an IPR doesn’t mean anything if subsequent challenges can be filed at any time, especially in coordinated fashion.”

Once a patent is challenged multiple times with different prior arts, it is highly unlikely that any of its claims will survive – no matter how good it is.

“The PTAB may not be a death squad, but challenged patents are put in a kind of headlock that can render them useless. Where are the patents that emerge from IPRs generally intact or whose petitions against them for review are not instituted? They should be eminently licensable, but they are nowhere to be found. The ‘normalization’ statistics that are being cited to show that the PTAB is becoming a fairer forum for patent holders are highly misleading.”

Lack of Uniformity

Another patent licensing business, one whose petitioned patents have survived multiple IPRs, still believes that the lack of uniformity among the many PTAB panels and administrative law judges is a major factor in the continued unfairness that has effectively destroyed patent licensing for many companies and independent inventors.

“It’s difficult to predict how the PTAB will rule,” says the executive, a lawyer. “The first year or two that patents were subjected to IPRs there was a lot of low-hanging – really, rotting –  fruit. Those petitions were almost universally instituted, and many bad patents were appropriately eliminated.”

“But anyone can file and IPR and they can keep filing them. Reliable patents don’t seem to emerge from the process, only ‘bad’ ones, which are eventually neutralized. Few patent holders have the time or money to repeatedly defend themselves in IPRs. This has made otherwise licensable patents pretty much worthless and daily infringement, at least to some, an acceptable way of doing business.”

Image source: patentlyO.com; patentacademyonline.com; 

Patent Quality Commissioner will provide performance update at Corporate IP Counsel Forum

Valencia Martin Wallace, Deputy Commissioner for Patent Quality at the United States Patent and Trademark Office, will deliver the keynote address at the USPTO’s Enhanced Patent Quality Initiative at the 8Valencia_Wallace-Martinth annual Corporate IP Counsel Forum in New York, March 23-24.

Chief IP and In-House Counsel from a broad cross-section of industries and companies will be speaking at the two-day event. Topics include “Navigate the PTAB Process” and “Evaluate Patent Damages Reform Measures to Improve Risk Management.”

Readers of IP CloseUp who are in-house attorneys are invited to attend IP Counsel Forum at an 80% discount. By using the promo code BBIPCU when reserving they can attend for $195.

“Exploring the IP Issues of Open Source Software” will be the topic of a round-table discussion led by Red Hat’s Robert H. Tiller at the end of the first day.

Industries and companies represented include:

IT/Electronics:

  • Vringo
  • Entegris
  • Broadcom, Ltd.
  • IBM Research
  • NCR Corporation
  • Red Hat

Insurance/Finance:

  • MasterCard
  • The Hartford Financial Services Group
  • Aetna

Pharmaceutical:

  • HR Pharmaceuticals
  • MedImmune
  • Merck
  • Alexion Pharmaceuticals

Consumer Products:

  • Colgate-Palmolive
  • Avon Products
  • PepsiCo
  • Conair Corporation
  • FormLabs
  • Monsanto
  • Robert Bosch
  • Luxottica Group
Higher Education:

  • Columbia University
  • UVA Licensing and Ventures Group

Entertainment/Hospitality:

  • CBS Law Department
  • Fuse Media
  • Marvel Entertainment
  • Starwood Hotels & Resorts

Chemicals/Biotech:

  • Heraeus Incorporated
  • Advaxis
  • Chemtura
  • Rambus
  • Thermo Fisher Scientific

Corporate IP Counsel Forum is produced by the World Congress and sponsored by Intel among others. The event is being held at the Marriott Eastside at 525 Lexington Avenue at 48th Street. For the agenda and speakers go here. For pricing and registration information here or call +1 800-767-9499.

Image source: uspto.gov; worldcongress.com

 

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

$300 discount for IPCU readers to attend US Patent Forum 2016

The fifth annual US Patent Forum is returning to Washington DC on March 17, 2016. A similar forum will precede it in Palo Alto on March 15.

In light of the recent US patent developments, the US Patent Forum, hosted by Managing Intellectual Property magazine, will take an in-depth look at topics affecting US patents today.

The conference will delve into post-grant proceedings before USPTO’s PTAB, examine strategies that make patents more secure, and explore levels of proof and understanding regarding how claims are construed.

Topics covered in the Washington US Patent Forum will include:

  • ITC Litigation and Licensing
  • Post-Grant Proceeding Before the PTAB
  • Uncertainty of Patentable Subject Matter
  • Patent Reform
  • Focus on Unitary Patent & Unified Patent Court
  • Trade Secret Protection for Innovationpress-mip

Featured speakers include Tom Scott, former chair of Goodwin’s Proctor’s IP Department and now Senior Vice President and General Counsel of Personalized Media Communications (PMC), one of the leading patent licensing companies.

IPCU Reader-Discount

For Silicon Valley, the US Patent Forum, is being held at the Sheraton on El Camino and University, opposite the Stamford University Campus in Palo Alto on March 15. The focus will be the Patent Trial and Appeal Board and strategies for dealing with it.

A $300 discount is being offered off of the full delegate price to IP CloseUp readers who attend. Just mention this article. (In-house counsel and corporate executives attend for free.) 

Delegates are invited to attend a full day of discussion to hear from, and network with over 100 leading experts in multiple fields.

They will be able to participate in important discussion about the most significant developments in the US patent system and receive updates on important changes to major global IP systems from experts. There also will be opportunities to contribute to the discussion as well as learn.

For more information, or to register for US Patent Forum 2016, go here for Washington, and here for Palo Alto.

Image source: huffingtonpost.com; managingip.com

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.

Dierdre3

 

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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