Business Method Patent Challenge

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Improved Speed For Overlooked Post-Grant Patent Options

Once upon a time, patent reexamination was the only mechanism to challenge a U.S. patent at the USPTO.  First introduced as an ex parte proceeding in the 1980s, patent reexamination was expanded to include an inter partes option in 1999.  Thereafter, patent reexamination became a popular adjunct to patent litigation. Yet, increased popularity of patent reexamination led to significant delays and increased pendency. The expanding timelines, among other shortcomings, prevented inter partes patent reexamination from serving as a true alternative to patent litigation. Not until the patentability trial mechanisms of the America Invents Act (AIA) did Congress finally succeed in providing a true alternative to patent litigation at the USPTO. 

Once the AIA patentability trials were introduced, inter partes patent reexamination was discontinued.  Still ex parte patent reexamination remains an option.  Not surprisingly, reexamination decreased in popularity post-AIA.  The reasons for the decrease in popularity is straightforward.  First, an inter partes AIA challenge option will almost always be preferred over an ex parte option for high-value disputes (where available).  Second, a large number of ex parte reexaminations were pursued, pre-AIA, out of necessity.  That is, older patents were not date-eligible for inter partes reexamination.  Of course, all issued patents are date-eligible for AIA review.  For at least these reasons, the current filing rate of  ex parte reexamination is roughly 50% of the 2008 filing numbers.

The falling numbers for ex parte reexaminations, coupled with the elimination of inter partes patent reexamination has, in limited respects, made ex parte reexamination a more attractive option as compared to 2008.

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Continue Reading Patent Reexamination Speed Presents New Opportunity

PTAB Announces New Informative Decisions

The Patent Trial and Appeal Board (PTAB) has designated the recent decision granting a request for additional discovery in Arris Group, Inc. v. C-Cation Techs., LLC, IPR2015-00635 (Paper 10) (PTAB May 1, 2015) as an informative decision. The decision grants Patent Owner’s Motion for Additional Discovery on issues of…

Duty of Candor Controls “Prior Art Known to Patent Owner”
UPDATE: This decision is now designated as “Informative” (here)

Last week, an expanded panel of the Patent Trial & Appeal Board (PTAB) clarified the required showings necessary to a successful motion to amend. Of note, the expanded panel included Deputy Chief Nathan Kelly as well as Vice Chief Scott Boalick. In the decision, Masterimage 3D. Inc. v. RealD Inc. (IPR2015-00040) (here), the Board clarified the meaning of the Idle Free phrase: “prior art of record and also prior art known to the patent owner.”

As outlined in Idle Free Systems v. Bergstrom Inc., (IPR2012-00027), amendment during an AIA trial proceeding is by motion. As such, the burden is on the movant to demonstrate entitlement to the patentability of amended claims. One aspect of Idle Free that movants have struggled to digest is the metes and bounds of “prior art known to Patent Owner.” In MasterImage, the Board clarified that the “prior art known to Patent Owner” is linked to the art that would trigger the Patent Owner’s Duty of Candor.
Continue Reading Expanded PTAB Panel Clarifies Idle Free Amendment Requirements

CAFC Endorses PTAB Construction of “Business Method Patent”

Yesterday, the CAFC issued its long awaited decision in the dispute between Versata and SAP (here). The appeal stemmed from the very first Covered Business Method (CBM) patent challenge proceeding. On appeal, one of Versata’s (patentee) main challenges was directed to the statutory definition of “covered business method” and “technological invention” as applied by the Patent Trial & Appeal Board (PTAB) in instituting the CBM proceeding. That is, Versata’s argued that its patent did not qualify as a CBM patent, and, therefore, the PTAB had no right to institute the review.

In rejecting Versata’s arguments, the CAFC found that the PTAB applied the appropriate definitions. All other issues were also decided against Versata, including the determination that 101 challenges were appropriate for CBM proceedings, whether or not BRI may be applied in PTAB proceedings (earlier decided in Cuozzo decision) and that the Versata patent was unpatentable as being directed to an abstract idea (price calculations). Seems the Court has become quite the “death squad” for patentee appeals, affirming the PTAB in almost all but rare exceptions. 

Yet, while a loss on all fronts for Versata, on the bright side, Versata was already paid several hundred million dollars from SAP last fall — for infringing Versata’s abstract ideas.
Continue Reading CBM Patent Need Not be Directed to Financial Sector

Hedge Fund IPR Scheme Unraveling

Last week, the USPTO’s Patent Trial & Appeal Board (PTAB) authorized a Motion for Sanctions in four IPR proceedings filed by the now infamous Kyle Bass & friends. The motion for sanctions will be based on an alleged abuse of process by Bass & Co. for pursuing four IPR proceedings relating to Celgene patents 6,315,720 and 6,045,501. 37 C.F.R. § 42.12(a)(6) The sanction sought is termination of the proceedings. 42.12(b)(8). (motion here)

The motion authorization, while clearly not an ultimate decision as to the propriety of sanctions is a clear harbinger of things to come. First, as busy as the Board is, any request for additional work is strongly indicative of far more than a passing interest in the topic. Second, the authorization in these cases comes by way of expanded panel. Finally, such motions are exceedingly rare (like less than 1% of cases, rare).  If shares in Hayman Capital were publically traded— like its IPR targets— shares would be significantly down trending on this news. The game is over.

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Continue Reading PTAB Considers Unplugging Hedge Fund Filings

First Reversal of PTAB in IPR

Yesterday, in Microsoft Corp v. Proxyconn Inc. (here), the Court of Appeals for the Federal Circuit (CAFC) reversed an Inter Partes Review (IPR) determination USPTO’s Patent Trial & Appeal Board— a first.  (The decision also affirmed-in-part, vacated-in-part, and remanded-in part) The Court found that the Board’s construction of several key terms to be unreasonably broad. The IPR is now remanded for further Board proceedings on a narrowed construction.  In this sense, apart from historical significance, the decision is unremarkable.

As to IPR specific issues, the Court brushed aside another challenge to the use of the Broadest Reasonable Interpretation (BRI) standard in IPR, citing its recent Cuozzo decision. Perhaps of most interest in this decision is the commentary of the Court in affirming aspects of the PTAB’s much maligned amendment practices.

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Continue Reading CAFC Reverses & Remands IPR to PTAB

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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Continue Reading Senate Moves to Derail Gains of America Invents Act

June Boardside Chat on AIA Discovery

The USPTO’s Patent Trial & Appeal Board (PTAB) will host its third  “Boardside Chat” lunch webinar for 2015 today from noon to 1PM. The topic is “Discovery in AIA Trials.”  I will be participating on the the practitioner panel. 

Dial-in is as follows:
Webcast Instructions…

First Hedge Fund IPR Ready for PTAB Institution Decision

Earlier this week, Acorda Therapeutics filed its response to the first of the now notorious hedge fund IPR filings in (IPR2015-00720). In its response (here), Acorda points out that unnamed investors are directly funding the filing, yet remain unknown to the public despite the requirements to list all real-parties-in-interest.  Acorda also points out the profiteering nature of the filing as a means to influence the price per share of publicly traded stocks, which is inconsistent with the PTAB’s congressional mandate.

Since the first round of hedge fund filings, the same entities have filed upward of 15 IPRs. Additional copycat IPR filings have followed from other hedge funds. Meanwhile, the demand for the PTAB’s limited resources remains at an all time high from parties with legitimate patent disputes. 

As I have pointed out previously, independent of the RPI issue, the Board has the power to shut down this burgeoning avenue of abuse, and should do so quickly (a decision is not due until 8/26).  While Congress is poised to quickly provide a statutory control to cut off this chicanery, the public would be far better off if the PTAB exercised its discretion. Such decisive action by the agency would avoid the unintended consequences that would certainly follow the current legislative proposals. 

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Continue Reading First Hedge Fund Filing Moves to PTAB Decision

Today’s Federal Register Notice provides the long awaited “quick-fix” rule changes. The rules codify the changes announced on Director Lee’s March 27th blog post, which provided for the use of a claim appendix in Motions to Amend, expanded page limits for such Motions, and expanded page limits for Petitioner Replies.

The final rules (…