The PTAB Inter Partes Review process: Danger, Will Robinson

The PTAB Inter Partes Review process: Danger, Will Robinson
by Scott Griffith on 02-21-2015 at 7:00 am

Companies with significant investment in their patent portfolios have recently faced a harsh reality: their intellectual property has become a collection of paper with large targets on them. Taking aim is the US Patent and Trademark Office’s Patent Trials and Appeal Board (PTAB), and recent figures on dismissed claims shows that the Board’s aim is not only true, but often deadly.

Since the September 2012 onset of the Leahy-Smith America Invents Act (AIA), the PTAB has earned a troubling reputation of being a “death squad” for patents that come under its review.

In the article “Inter Partes Review Initial Filings of Paramount Importance: What Is Clear After Two Years of Inter Partes Review under the AIA”, Michael McNamara and Patrick Driscoll of Mintz Levin extracted some jarring statistics from the first 24 months of IPR proceedings. Here is what the raw data of PTAB actions as of 9/4/14 showed. Of 11,046 claims in 348 petitions presented:

· 5,045 claims were challenged, 6,001 not challenged
· 3,344 claims instituted from 237 Petitions, with 66% challenged
· 1,701 claims challenged but not instituted, with 34% of claims challenged

Of the 3,344 claims instituted:

· 999 claims were found unpatentable
· 606 claims were cancelled or disclaimed during the proceedings
· 1,739 claims were found patentable

On the surface, the results would appear to represent a 48% chance of a given claim failing to survive once the review is instituted. However, as McNamara and Driscoll point out, this is somewhat misleading, and the results for patent owners may be even grimmer. Taken on a per-petition basis, 66 proceedings reached decisions on patentability. That is a small number for statistical analysis, but the results should still give patent owners and their attorneys pause. Of the 66 cases:

· 6 cases resulted in all claims found patentable (9%)
· 10 cases resulted in a mix: some claims patentable, some unpatentable (15%)
· 50 cases resulted in all claims found unpatentable (73%)

The PTAB has actively tried to combat the perception that is has an agenda to find claims unpatentable. However, the unavoidable conclusion has to be that few patents survive completely unscathed once a review is instituted.

In the months following the period that McNamara and Driscoll studied, the pace of filings has increased. In fact, December 22, 2014 saw an all-time high of 28 petitions filed in a single day. The ongoing statistics to February 15, 2015 show the continuing patterns, from 20,206 claims in 617 petitions:

· 9,048 claims were challenged, 11,158 not challenged
· 6,114 claims instituted from 425 Petitions, with 68% challenged
· 2,934 claims challenged but not instituted, with 32% of claims challenged

Of the 6,114 claims instituted:

· 2176 claims were found unpatentable
· 893 claims were cancelled or disclaimed during the proceedings
· 3,045 claims were found patentable

Source: USPTO

At the time of writing, results on a per-petition basis from 9/4/2014 to 2/15/2015 has not yet been completed. However, the chance of a given claim failing to survive remains on the order of 50 percent. The initial evidence suggests that the trend remains essentially unchanged at best, and could even be worsening. In the final analysis, the chances of a given patent surviving unscathed will very likely continue to be on the order of 10 percent at best. Poor odds, indeed.

The news is of particular importance in computer technology and, specifically, the semiconductor industry. As of February 5[SUP]th[/SUP], 2015, the vast majority of AIA petitions for fiscal year 2015 — 68.3%, or 432 petitions — addressed TCs 2100, 2400, 2600, 2800, or electrical, electronic, and computer areas.

Furthermore, we at Micro Methods have noted an increased number of petitions filed by major semiconductor manufacturers against Non-Practicing Entities (commonly known as “patent trolls”, thanks to Intel) since roughly October of 2014. It would appear that some of the major players in our industry have begun to see that the IPR process might well be precisely the blunt instrument needed to respond to a lawsuit filed against them by a patent troll. This can be very effective as a strategic move, as quite often the initial court case can be stayed pending the results of any PTAB action.

This trend certainly deserves further study. As McNamara and Driscoll conclude, “…a petitioner’s best strategy is to ensure that a review is instituted, while a patent owner’s best defense against an IPR is to make certain that one is not instituted in the first place.”

The message has become clear to those subject matter experts who support Inter Partes review efforts. As Cyrus Morton and David Prange of Robins Kaplan LLP point out in their article “Surviving Inter Partes Review: Good Experts Are Key”, experts must redouble their efforts to provide unassailable detail and basis for any opinions, and be prepared to comprehensively rebut each and every argument of the opposing side, whether retained by the petitioner or the owner. The stakes are high, and the PTAB has been very consistent in its willingness to find less-than-perfect expert testimony unpersuasive, often with disastrous results for the patent owner.

Scott Griffith is a Member of Micro Methods LLC, a group of Subject Matter Experts committed to excellence and unerring accuracy in providing semiconductor focused Intellectual Property services for our multinational client base.


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