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.

One of the most formidable weapons against abusive patent litigation practicesis the ability to remove the high cost litigation from the courts by forcing the patentability determination of suspect patents back to the USPTO. In the 9 months since the passage of the post grant challenge provisions of the America Invents Act (AIA), roughly 300 patent disputes have been sent to the Patent Trial & Appeal Board (PTAB). In many cases the low cost PTAB proceeding forces a complete shut down of the higher cost litigation proceeding

The benefits of PTAB proceedings as compared to traditional district court style litigation are well known. That is, the judges at the PTAB are engineers and scientists; the patentability determination performed at the PTAB does not require the “clear and convincing standard” of evidence to prove unpatentability; PTAB proceedings must be completed within 12 months; there is no presumption of validity at the USPTO, and patent claims are not construed to preserve validity, but instead, are given a broadest reasonable interpretation. It is these standards that greatly enhances the efficacy and affordability of PTAB challenges to patent trolls relative to court-based options…..which is why it is so strange for the Goodlatte Draft to propose changing some of these standards to make them consistent with court practices.

Specifically, the Draft proposes introducing the presumption of validity of 35 U.S.C. § 282 to PTAB claim construction:

‘‘(14) providing that for all purposes under this chapter, each claim of a patent shall be construed as such claim has been or would be in a civil action to invalidate a patent under section 282, including construing each claim of the patent in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art, the prosecution history pertaining to the patent, and prior judicial determinations and stipulations relating to the patent.’’

(red text shows newly proposed duties of the PTAB)

Let’s take this new standard step-by-step.

First, when filing a patent challenge with the PTAB the proceeding will only go forward if, based on the showing of a challenger’s petition, there is a likelihood that the patent is unpatentable. So under the above proposal, once the PTAB determines that the patent is suspect, they would be asked to construe the claims in accordance with 35 U.S.C. § 282…. in which the claims are presumed valid and construed to preserve validity…HUH?

Perhaps even stranger the proposal seeks to employ judicial determinations to influence PTAB claim constructions.
Let’s think about this one for a minute. For example, Patent Troll A files suit in 2011 against a 5 small companies—4 settle out, but the 5th fights through to a Markman Hearing with inadequate counsel due to cost (where the claims are construed). The Markman Order is bad for the 5th company, so they also settle shortly thereafter.

In 2013, a new round of litigation is pursued against a larger swath of technology companies. Rather than settling, the new companies decide to challenge the patent at the PTAB. Under the last part of the proposal above the PTAB’s technically trained judges are to look to this poorly litigated claim construction order for guidance? Indeed, since the court previously applied § 282 the PTAB may even be bound by the decision.

Lastly, the proposal would result in the PTAB performing a construction that has never before been performed by the agency for Inter Partes Review (IPR) and Post Grant Review (PGR) on one hand, while on the other hand, the PTAB would use the existing challenger friendly standards for patent reexamination proceedings; perhaps even at the same time on a patent. This would force challengers away from the robust contested proceedings of the AIA, which were crafted to overcome the well known failings of the ex parte reexamination system, back to the patent reexamination system of the 1980s.

Clearly there are aspects of the Goodlatte Draft that will never see the light of day, this provision should be one of them.