Not All of the New Patent Reform Ideas are Good Ones
A few weeks back House Judiciary Committee Chair Bob Goodlatte (R-VA), released a “discussion draft” of further patent reform ideas. The Draft is a collection of adjustments to the U.S. patent system designed to encourage a dialogue on these important reform issues. In particular the abusive litigation tactics of so called “patent trolls” are the driving force behind the legislative effort. For this reason, the bulk of the proposals of the Goodlatte Draft are squarely aimed at preventing the abusive behaviors and practices of patent trolls. Yet, there is one proposal of the Draft that stands out as a glaring exception. This troll-friendly provision, if enacted into law, would virtually ensure the continued success of the patent troll business model. Read the rest of this entry »
PTAB Delivers on Congressional Mandate
As discussed previously, the very first petition for a Covered Business Method Patent Challenge (CBM) was filed on September 16th by SAP (CBM2012-00001). The petition (here) challenged U.S. Patent 6,553,350 of Versata Development Group. In May of 2011, Versata secured a $391 million dollar verdict in the Eastern District of Texas against SAP. The verdict was upheld by the CAFC some weeks ago.
The PTAB expedited the parallel CBM proceeding to oral argument as the issues were narrowed to 101 grounds only. Yesterday, the PTAB cancelled the challenged claims. (here)
The PTAB’s 9 month turnaround in this matter is an impressive feat that should not be lost on Congress as they deliberate further patent reforms. The patentability challenges of the America Invents Act (AIA) are significantly impacting the patent litigation landscape, and it is expected that the second round of proposed reforms will increasingly focus on enhancing these valued litigation alternatives.
Motion Practice Requirements Emphasized by Board
The rules of the new patentability trials of the America Invents Act (AIA) are designed to ensure timely resolution within the statutorily mandated 12 month time frame. In particular, the Patent Trial & Appeal Board (PTAB) fashioned their new rules to prevent the notorious delays and complications of the previous inter partes patent reexamination system. One way in which the new AIA post grant proceedings are vastly different from the previous inter partes patent reexamination model is the manner in which claim amendments may be proposed.
In the previous inter partes reexamination system, any number of amended claims could be added or submitted prior to the close of prosecution before the examiner. There was no numerical limit on the number of claims that could be submitted. In fact, it was not uncommon practice for patentees to submit hundreds of new claims. By doing so, patentees made it more difficult for the third party to respond to all issues within their 30 day period, and within page limits. Likewise, the addition of such extensive amendments made examiner/APJ processing all the more tedious and time consuming.
In the new AIA proceedings, Inter Partes Review (IPR) and Post Grant Review, the PTAB provides for a reasonable number of substitute claims. 37 C.F.R. § 42.121/221. The “reasonable” aspect has been explained as a one-to-one correspondence in the typical case. In addition, claim amendments must be presented by motion, in a particular manner. Not surprisingly, patentees are demonstrating that old habits die hard. Read the rest of this entry »
Courts Grapple With Post Grant Patent Practice
A standard component of any patent litigation is a protective order. Such orders will invariably include a “prosecution bar. ” The prosecution bar operates to ensure that individuals accessing confidential data of an opponent are precluded from prosecuting patent applications in the area of the litigated technology (usually for a fixed duration of time). Absent this bar, patent applications/claims could be fashioned by competitive decision makers involved in the litigation based on the confidential information of their rival.
With concurrent PTAB proceedings now commonplace with most patent litigation, the question becomes:
Should a prosecution bar extend to PTAB post grant patent proceedings?
The answer to the above question varies across district courts, and, of course, is highly dependent upon the agreed upon language of the Order. The problem becomes, in many cases, when outdated boilerplate that does not directly reference new proceedings of the PTAB appears in the Order. In some districts the bar is found to extend to PTAB proceedings to the extent amendments are contemplated. Other courts take the stricter view that manipulation of the intrinsic record of a patent is an unfair advantage. These courts appreciate the value in allowing patentees to use confidential information of an accused infringer as a navigation aid to be used throughout a USPTO post grant patent proceeding. (especially where IPR, PGR and CBM are explicitly contemplated by the Order)
Courts have recently emphasized the new “ajudicative” nature of the post grant challenges of the America Invents Act to distinguish them from previous patent reexamination proceedings; especially where old boilerplate language is at issue in the Order. While it is true that the new PTAB proceedings do not have an examination phase, the intrinsic record is still susceptible to the very same alterations as made during any application/patent prosecution. That is to say, amendments and prosecution history estoppel are added to the intrinsic record just as they were before. The only difference is that patent examiners are no longer involved— a largely irrelevant detail.
Indeed, history has demonstrated that the stricter view of the courts is the most prudent. Read the rest of this entry »
Competing Bills Target Patent Troll Business Model
Congress has gotten the patent troll memo in a big way. The political stage is being set for a summer of legislative festivities. Like any good summer festival, Congress is separately establishing main and side stage legislative spectacles. The side stage spectacles, the more alternative acts, such as the Shield Act; Patent Abuse Reduction Act of 2013; and the Patent Quality Improvement Act will occupy many until the main stage effort takes shape. Last Friday the main stage act was announced.
House Judiciary Committee Chair Bob Goodlatte (R-VA), a key participant in the legislative effort behind the America Invents Act (AIA) released a draft bill that seeks to sweep in many of the concepts of the competing bills, while introducing fixes to the AIA. (here). The bill puts a new spin on the competing legislative proposals that address discovery controls, loser pay mechanisms, and the revision to notice pleading (brief overview here). Certainly these “troll” specific proposals will get the bulk of the attention from Congress and the public. As to the proposed “improvements and technical fixes” to the AIA, the draft post grant proposals are a mixed bag. Read the rest of this entry »
Requests for Rehearing May Backfire on Patentees
As detailed earlier this week, a patentee’s decision to file a preliminary response in an IPR/CBM preliminary proceeding is not as straightforward as one would expect. Where such a preliminary response is imprudently pursued by a patentee this misstep can be further compounded by other optional filings post-Trial Order.
Subsequent to the filing of a preliminary response by a patentee the Patent Trial & Appeal Board (PTAB) will issue its decision. If unsatisfied with the Trial Order either party may file a Request for Rehearing as a matter of right within 14 days.
As is the case with the optional patentee preliminary response, just because you can request rehearing doesn’t mean you should. Read the rest of this entry »
Preliminary Responses: Just Because You Can Doesn’t Mean You Should
The new post grant patentability challenges of the America Invents Act (AIA) have been warmly embraced by the public as a cost effective patent dispute resolution tool. Patent challengers have quickly leveraged these new proceedings of the USPTO’s Patent Trial & Appeal Board (PTAB) to circumvent the high cost of patent litigation and to accelerate opportunities for settlement. Patentees, on the other hand, have been largely caught unaware of the significant threat presented by these new road blocks to patent monetization.
While many of the new PTAB proceedings are only now getting underway a significant number of preliminary proceedings have been concluded. It is during these preliminary proceedings, and shortly thereafter, that many patentees have been committing significant strategic errors. Read the rest of this entry »
Tactical Advantage Found in IPR Timing
The primary business distinctions between the USPTO Patent Trial & Appeal Board (PTAB) proceedings and traditional court based patent invalidity proceedings are the vast improvements in cost, predictability, effectiveness, and speed of PTAB proceedings— to date, the speed has been changing the perspective of the judiciary on staying litigation pending USPTO proceedings. However, while the PTAB proceedings are far faster than the previous inter partes USPTO option (i.e., inter partes patent reexamination) that doesn’t mean that courts will look past a perceived tactical delay in pursuing IPR.
Read the rest of this entry »
Senate Proposes Expansion of USPTO’s Business Method Patent Challenge Proceeding
As I pointed out last week, Congress is considering fixes to the U.S patent system are designed to combat the patent troll problem. Yesterday, S.866 or the “Patent Quality Improvement Act” was introduced by Senator Charles Schumer (D-NY) to amend Sec. 18 of the recently passed America Invents Act (AIA). The Bill proposes to remove the 8-year sunset provision of the Transitional Program for Covered Business Method (CBM) Patents so that it becomes permanent. Additionally, the Bill proposes to remove the language “a financial product or” from the standing definition. In its place, the bill proposes “an enterprise, product, or.” The change would effectively make clear that any e-commerce patent, even if not related to finances per se, is subject to a CBM challenge. (Note that the USPTO has been sued very recently on the importance of this “financial” component of the statute.)
The Bill essentially seeks to codify Senator Schumer’s commentary provided to the USPTO last year on the appropriate scope of a CBM. In his earlier comments to the USPTO, the Senator urged the USPTO to take an expansive read of a covered business method patent such that e-commerce and software patents would be covered.
As I have pointed out in the past, CBM challenges are especially lethal to patent trolls. While the above fix will not apply to trolls excepted under the ”technological invention” component of the CBM definition, it would almost certainly devastate the business model for most e-commerce and software patent trolls. Without the leverage of the high cost of litigation to force settlements, and with the far less expensive and challenger friendly proceedings of the USPTO, contingency based legal representation becomes a very dicey proposition.
I expect that this legislation will garner wide support and become law in the near term.
Patentee Challenges PTAB Decision to Institute IPR Proceeding
Every time Congress has tasked the USPTO with conducting a new post grant patent proceeding the agency finds itself fending off legal challenges to their new authority. For ex parte patent reexamination, Ethicon v. Quigg explored whether or not the USPTO had authority to conduct such a reexamination in parallel to a district court proceeding. Thereafter, In re Swanson and In re Trans Texas Holdings explored topics such as issue preclusion and the appropriate threshold for granting an ex parte patent reexamination. Similarly, when inter partes reexamination was introduced Sony v. Dudas challenged the USPTO’s procedural treatment of these filings. Not surprisingly, now that the new patentability challenges of the America Invents Act (AIA) are being embraced by patent challengers the USPTO is seeing another flurry of lawsuits.
In early March, patentee Versata filed suit against the USPTO under the Administrative Procedure Act (APA) challenging the agency’s definition of a “covered business method,” and the ability to raise 101 as a statutory ground in a Covered Business Method (CBM) challenge. (101 is argued as not being embraced by 35 U.S.C. § 282, complaint here).
Last week, patentee Mentor Graphics also filed an APA action in the EDVA challenging the USPTO’s decision to institute an IPR on its patent and seeking an injunction to stop the proceeding. Mentor Graphics alleges that the petitioner should be barred by the 12 month window of 35 USC § 315(b) based on the fact that it acquired a company that was sued some years previously on their patent. (complaint here). The USPTO explained in the Trial Order that the patentee had not shown that the petitioner had exercised control over the previous litigation (i.e., privy), and, that in any event the acquisition occurred post IPR petition filing.
The prohibition of 315(b) is essentially a codification of a laches time bar. The policy behind the statute is to encourage litigants to come to the USPTO early in a litigation battle. Applying this laches prohibition to new parties of a new lawsuit would seem a difficult sell.
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