Patent Law Reform
By Scott A. McKeown
| January 11, 2017
Chevron Deference for AIA Trial Matters Trumped?

Key Administrative Law Doctrine on the Congressional Chopping Block & Onerous Rule Hurdles


As pointed out in yesterday's Top 5 PTAB Trial Developments of 2016, the Administrative Procedure Act (APA) is the constitution of Article I courts. In its 70 years of existence, the APA has never been modified. Yet, over time, common law developments have been intermingled with APA considerations — none more prominent than the "Chevron Doctrine." Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). This judge made doctrine stands for the proposition that where there is silence or ambiguity in a statute conveying agency authority or action, that courts should apply deference to reasonable agency interpretations. Critics of Chevron argue that it cannot be reconciled with the APA, and has led to a highly inconsistent body of case law.

Politicians argue that Chevron allows regulatory agencies to create law independent of judicial review, and leads to an unwarranted expansion of costly bureaucracy.

Today, the House will begin to consider HR. 5, which not only proposes to eliminate the Chevron Doctrine by amending the APA to expressly exclude it, but also proposes to heap a boatload of additional regulatory roadblocks to the promulgation of agency rules. 
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By Scott A. McKeown
| October 12, 2016
Constitutional Challenges to PTAB Fail

Jury Trial/Article III Challenges to PTAB Expectedly Fail at High Court


Yesterday, the Supreme Court of the United States denied certiorari in two cases challenging the constitutionality of AIA trial proceedings. MCM Portfolio LLC v. Hewlett-Packard Co. et al., and Cooper et al. v Lee et al.  These cases largely presented the same constitutional challenge as that lodged against the USPTO's patent reexamination system in the 1980s, in Patlex Corp. v. Mossinghoff, 758 F.2d 594 (Fed. Cir. 1985).  Since that time, patent validity has been found to fall within the "public rights exception," permitting adjudication before non-Article III tribunals.

These more recent cases hoped to distinguish reexamination from AIA trials on the ground that reexamination was not adjudicative, but examinational.  Of course, after Cuozzo, it has been clear that this line of reasoning was certain to fail.
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By Scott A. McKeown
| September 15, 2016
The Evolution of PTAB Trials

Four Years of PTAB Trials

I've read quite a few AIA retrospectives over the last week in the run up to Friday's AIA anniversary. Almost all pose the rhetorical question: "who could have predicted the PTAB would become so impactful?" Well, for starters anyone up to their armpits in NPE lawsuits with the only available USPTO solution being patent reexamination, that's who.  Prior to the AIA the pent up rage/demand for a more effective USPTO post-grant challenge solution was palpable. For that reason, back in July of 2012, I thought that PTAB trials might break the NPE business model, especially for smaller NPEs.  

In 2016, NPEs still exist.  But, there are far fewer small fish.  Even large patent aggregators yearn for the go-go days before the AIA.  It is clear that the AIA trials ended the golden era of seven figure, cost of defense settlements.  Congress did it—it actually provided a workable USPTO post-grant solution that is cost effective, and fast enough to make a difference.  The PTAB levels the playing field.  No longer are businesses helpless to settle cases of dubious merit because of the lopsided discovery costs of an NPE suit, or risks of outlandish jury verdicts.  

That said, four years into AIA trials the PTAB is not without its critics.   

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By Scott A. McKeown
| October 2, 2015
USPTO Recommends PTAB Changes to Congress in AIA Report

USPTO AIA Implementation Report Explains Progress, Recommends Changes

Two weeks back, the USPTO provided a report to Congress on the implementation of the America Invents Act (AIA) (as required by the legislation). The 65 page report (here) explains the administrative effort to implement the mechanisms of the AIA, as well as four years of statistics. Of particular interest to me are the recommendations to Congress on adjusting IPR/PGR mechanisms, as well as some of the statistics on such procedures as third party submissions and (the all but forgotten) supplemental examination. 
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By Scott A. McKeown
| September 14, 2015
Patent Reform Efforts Lack Traction

Senate Patent Reform Effort Placed Back on Calendar

Whether a favor to pro-reform lobbyists, or just wishful thinking, Senate Bill S.1137 (the "PATENT Act") has been placed back on the Senate Calendar.  As a reminder, a Manager's Amendment to the bill last spring included a pile of PTAB changes. The majority of these changes, as was expected when proposed, have since been mooted by similar USPTO rule proposals. The bill still includes the mooted PTAB proposals, as well as a host of other proposals (fee shifting in particular) that have received far more negative attention.  Like the PTAB proposals, the fee shifting proposal has also been undermined by intervening events such as Octane Fitness. (See Federal Circuit Bar Assoc. letter to the House on Octane impact here)

Absent significant, further mark-up, neither the House nor Senate bills seem likely to advance to vote.  

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By Scott A. McKeown
| July 8, 2015
PTAB Cheat Sheet for Senate Bill

PTAB Proposals on Senate Side


With Congress headed toward a summer recess in a few weeks, it is expected that the pending patent reform bills will be front and center for July. Below is a high level overview of the PTAB proposals currently embodied in the Senate's Patent Act" (S.1137).  As previously pointed out, many of these proposals are expected to be mooted in a matter of weeks by the PTAB's July rule package.  Perhaps PTAB movement will cool the legislative appetite for these proposals, time will tell.

1.      Preliminary Response - IPR
§ 313 is modified to add subsection (b), which enables a preliminary response to include affidavits/declarations of supporting evidence and opinions.  In addition, a petitioner may seek leave to file a response to respond to new issues raised in the preliminary response.

(PTAB expected to propose a similar modification)

2.      Institution Decision - IPR
§ 314 is modified to permit non-institution if it “would not serve the interest of justice.”  Factors considered in making this decision include whether the grounds or arguments are the same or substantially the same as those considered and decided in a prior judicial or PTO proceeding and whether there is another proceeding or matter involving the same patent before the PTO.

(appears to target hedge fund filings, but PTAB is likely to take care of that problem on its own)

§ 314 is also modified to state that an IPR shall not be instituted on the basis that the evidentiary standard at the PTO differs from the one used in a court proceeding to adjudicate the claims in the petition.

(Also appears directed to hedgies/PTAB trolls that seek to re-purpose art of a litigation)
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By Scott A. McKeown
| June 12, 2015
Kyle Bass: The Inconvenient Truth

Bio/Pharma's Favorite Target Serves a Critical Role

Both Houses of Congress now have bills moving to their respective floors on further patent reform thanks in large part to Kyle Bass. Of course Congress had been toying with the idea of further reform long before everyone's favorite boogeyman came along. But now, thanks to Mr. Bass, Congress has a story to sell otherwise mind numbing legislation to the masses. Keep in mind that America Invents Act (AIA) wasn't about patents, but job creation. Remember that? The new patent reform story, at least for the significant Bio/Pharma lobby, is this: Hedge funds are devaluing drug patents to the point that and there may not be any future, ground breaking medications —unless Congress comes to the rescue. Silly, yes, but effective for advancing otherwise stagnant legislative agendas?...you betcha.

The fact of the matter is Kyle Bass has been a boon to Bio/Pharma lobbyists. His stunts (and that's exactly what they are) allow the debate to turn away from patent quality to one of simple gamesmanship. Everyone can rally around a perceived abuse of legal process, especially when perpetrated by a vilified outsider. But the changes contemplated in the name of stopping Mr. Bass go well beyond that which is necessary. 

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By Scott A. McKeown
| June 4, 2015
Senate Moves to Derail Gains of America Invents Act

Patent Act Rewritten to Appease Bio/Pharma Lobby

In a surprising change of course, the Senate bill known as the 'The Patent Act" (S.1137) has morphed into a PTAB reform bill. The initial version of the Bill hardly touched the patentability trials of the USPTO's Patent Trial & Appeal Board (PTAB). A competing bill, known as the "Strong Act," — on the other hand— proposed gutting these highly effective patent challenge mechanisms.  After the Manager's Amendment to the Patent Act on Tuesday (here), at least with respect to the PTAB, both bills now propose significant alterations to the PTAB's patent challenge mechanisms.

As a reminder, the impetus behind the AIA of 2011 was to thwart abusive litigation fueled by weak patents. It was argued pre-AIA that patents were issuing from the USPTO of overly broad scope and on questionable technology. These patents were then used as tools by extortionists (patent trolls) to extract large settlements from the domestic tech industry. This cottage industry was spawned from an over abundance of such patents. And, since defeating these patents in a district court was quite difficult (due to the deferential treatment of U.S. patents) and expensive, settlement was the only option. The AIA provided relief from these practices by introducing a low-cost, expedited "opposition" to such patents at the PTAB known as Inter Partes Review (IPR) and Post-Grant Review (PGR). That is, the PTAB challenge proceedings of the AIA were designed to weed out weak patents, quickly and cost effectively. These proceedings have been very effective to the delight of some of America's largest tech companies (i.e., serial defendants).  

Since enactment of the AIA, however, many have realized that when presented with appropriate evidence, the PTAB does not discriminate.  It is not just weak troll patents that are being cancelled, and this has a bunch of folks, especially the Bio/Pharma lobby, up in arms.

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By Scott A. McKeown
| May 4, 2015
Senate Patent Act on Fast Track?

Senate Bill Jumps to Forefront of Patent Reform Debate

Introduced just last week, the Patent Act of 2015 (S.1137) will be considered by the full Senate Judiciary Committee this Thursday.  The hearing, entitled Finding Effective Solutions to Address Abusive Patent Practices, will be the starting point for possible amendments.  That said, it seem unlikely that the Bill will be altered in any material respect given the significant compromises embodied by the current draft. Competing Senate efforts, such as the Strong Act, will now fall by the way side as consensus grows around this more measured effort.
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By Scott A. McKeown
| April 29, 2015
Patent Act of 2015 Offers Bipartisan Compromise on Reform

New Senate Bill, Patent Act of 2015 Introduced

Today, key drafters of the America Invents Act introduced their own bipartisan patent reform bill in the Senate.  (Senators, Grassley (R - Iowa), Leahy (D- Vt.);  Coryn (R - Tx), Schumer (D -NY), Lee (R- UT), Hatch (R- UT), and Klobuchar (D - Minn.)). The bill entitled: Protecting American Talent and Entrepreneurship Act of 2015,  or Patent Act of 2015 for short (here), is a compromise version of H.R. 9 (The Innovation Act). The bill wisely steers clear of the most extremist proposals of the Strong Act and House Bill.

The bill attempts compromise on the controversial fee shifting proposal of the House bill (major sticking point) by creating and "objectively unreasonable standard" for such an award as opposed to the loser-pays presumption of the House Bill. This would keep the determination in control of the judiciary, as it should be.  Other key issues addressed include enhanced pleading requirements for patent suits, discovery changes, stays of customer suits, and provision to reign in abusive demand letters. The Patent Act leaves PTAB trial proceedings undisturbed. The one and only substantive change provided in the bill on the PTAB would fix the 102(e) drafting mistake of the AIA.  This technical fix is is long overdue.

Given the significant influence of the senators backing the Patent Act of 2015, and the attempt at compromise, it may be that there is hope for 2015 after all.  Stay tuned.

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