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)
In my April post I explained that Rule 42.12 provides the PTAB with the ability to terminate filings that waste agency resources for profit. Congress created AIA trial proceeding to combat trolls, not create an altogether new class of them. Rule 42.12 provides sanctions for abuse of process and other improper use of office filings. When the Wall Street Journal is reporting on the financial schemes driving PTAB filings, it is time to act.
To the Board’s credit, they are doing exactly that. The Order explains:
Patent Owner confirmed that it wishes to move for sanctions against Petitioner, but not Petitioner’s counsel. Specifically, Patent Owner requested authorization to move for dismissal of the Petitions as a sanction for abuse of process by Petitioner or its real parties-in-interest. 37 C.F.R. § 42.12(a)(6), (b)(8). Based on the specific representations made during the telephone conference, we granted the requested authorization. Our decision was based on a determination that briefing will facilitate development of a complete record and, thereby, will promote the just resolution of the issues raised by Patent Owner.
. . . . .
We instructed the parties to address specifically in their briefs (1) the elements required to establish an abuse of process; (2) any evidence of intent that supports or undercuts the allegation of abuse of process in these cases; and (3) the standard of proof that applies when deciding a motion for sanctions.
Of course, if Mr. Bass & Co. are put out of business, the Bio/Pharma lobby will find the wind suddenly taken from its patent reform sails.
Should make for an interesting few months.