Misleading Stats Lead To Misleading Testimony In Front Of Congress

Yesterday afternoon, the House Judiciary Committee’s Subcommittee on Courts, Intellectual Property, and the Internet held a hearing on “Sovereign Immunity and the Intellectual Property System.”  A fascinating topic, and one I’ve written on right here in the past.  [1] [2]

But I was struck by some testimony given by Philip Johnson, testimony he stood by at the hearing.  Johnson claimed that 200 patents had been upheld as valid by federal courts, and then struck down as invalid by the PTAB, with only 63 patents invalidated in both district court and the PTAB.  

That’d be a truly astonishing error rate, if it was accurate.  But it isn’t.  

Phil Johnson testified to a conclusion that was fundamentally wrong, based on erroneous data.

Where Did This Data Come From?

Fortunately, we know exactly where Johnson found his wrong data.  He put it into his written testimony.

If we follow footnote 27, we can see Johnson citing to an article by Josh Malone, appearing on IPWatchdog.

Now, IPWatchdog is generally not where you go if you want to find trustworthy statistics.  (This is illustrated in the prior footnote, which claims that only 15% of patents survive IPR, even though the actual rate is approximately 58%.)  But Josh Malone was nice enough to tell us where he got his data from, a service called Docket Navigator, and even provided the exact searches he derived his statistics from.  

Docket Navigator is a great tool—if you understand the data properly.  Mr. Malone and Mr. Johnson, unfortunately, don’t understand the data at all.

What Went Wrong?

Understanding where they went wrong requires understanding what they thought Malone searched for, in comparison to what Docket Navigator actually searched for.

Malone wanted to search for patents that Docket Navigator had coded as determined by a court to be ‘not invalid’, and determined by the PTAB to be either ‘unpatentable’ or ‘not unpatentable’.  This, according to Malone, would represent the patents a court upheld and the PTAB also examined.  Then, Malone tried to search for patents upheld by courts and held unpatentable by the PTAB.  Seems reasonable, right?

The only problem is, that’s not what those searches actually do.

Docket Navigator codes any situation in which a patent had some aspect of validity challenged and that aspect upheld as “determination = not invalid.”  In particular, this includes issues like indefiniteness under § 112 and patent-eligibility under § 101.  These issues aren’t actually things you can file an IPR petition on, and are rarely ruled on by the PTAB.  And those are present everywhere in Malone’s results.

In other words, the “disagreements” cited by Malone and Johnson are actually cases where the district court and PTAB were deciding totally different legal questions.  

What Actually Happened In Those 200 Patents?

This sort of problem is the kind of thing that you find if you perform even a cursory bit of quality control.  All you’d need to do is take a look at a few randomly selected patents out of the search results to determine if the search was turning up what you thought it turned up.  Malone clearly didn’t do this.

But I did.  I didn’t go through all 200, but I picked out 5 random patents and took a look at what had happened.

US 7,098,770 - 'Contactless integrated circuit reader'

The ‘770 patent was asserted by NFC Technology (a subsidiary of sovereign patent fund France Brevets) against Samsung in a single Eastern District of Texas case, and NXP filed a set of IPRs against it.  (Presumably to defend a customer, as NXP makes quite a few NFC chips.)

In the district court case, Samsung asserted that a claim term was indefinite under 35 U.S.C. § 112 and therefore invalid.  The judge disagreed, holding that term to be definite and therefore valid.  As a result, Docket Navigator coded the case as “determination = not invalid.”  The case later settled—in other words, no judge or jury in Texas ever examined whether the prior art invalidated the ‘770 patent.

The PTAB invalidated the ‘770 patent as obvious over the prior art, an issue no district court ever considered.  Hardly the “wrong decision” Johnson and Malone said it was.

US 6,430,332 - 'Optical switching apparatus'

The ‘332 patent was asserted by Fiber LLC in five Delaware lawsuits, consolidated into a single case.  In the consolidated case, the defendants again asserted that some claim terms were indefinite.  The judge found some terms to be indefinite, while other terms were definite.  This resulted in Docket Navigator coding the case as both “determination = not invalid” and “determination = invalid.”  This is an ongoing case, so no final determination of validity by the judge or by a jury has occurred.

At the PTAB, the panel held some claims obvious over the prior art and therefore invalid, while leaving other claims intact.  Again, this was an issue no district court had ever considered.  Again, no “wrong decision” reached—unless you think any decision invalidating a patent is wrong.

US 7,459,664 - 'Image sensing system for a vehicle'

We see a very similar story with the ‘664 patent.  Magna sued TRW in district court, there was a dispute over claim definiteness.  The judge found the terms not indefinite.  The parties settled the case, meaning that no judge or jury ever ruled on the validity of the claims over the prior art.

The PTAB, on the other hand, found most of the claims to be obvious and therefore invalid.  No disagreement between the PTAB and the district court to be found.

US 8,191,091 - 'Signal processing apparatus and methods'

Finally, a slightly different outcome!  The ‘091 patent was asserted by Personalized Media against Apple in the Eastern District of Texas.  

This time, instead of an indefiniteness argument during claim construction, Apple asserted that the case should be dismissed because the patent was not patent-eligible subject matter under § 101.  Judge Payne decided that it was patent-eligible.  Again, this triggers Docket Navigator to assign the status code “determination = not invalid,” even though the prior art was never examined in district court.

But only a slightly different outcome.  Again, when the PTAB examined the patent in light of the prior art, it was found to be both anticipated and obvious and therefore invalid.

US 8,696,166 - 'Kinetic flame device'

This one is a strange one.  The ‘166 patent was asserted in district court litigation.  During the course of that litigation, there was never any sort of adjudication of any issue of validity.  One of the defendants settled, but the settlement took a relatively unusual form—the defendant admitted infringement and stipulated to validity of the patent.  The judge issued an order ratifying the settlement, including declaring the patent to be valid between those two parties (but not valid as a whole).  But there wasn’t any actual adjudication of the validity issue, just this bare order of validity as part of the settlement.  The other parties continued to litigate the case.  Interestingly, in this case the Federal Circuit actually handled an appeal of a preliminary injunction, deciding that the defendants had actually raised a substantial validity issue.  The parties later settled.

In other words, in this case, not only had no court ever ruled the patent was valid, the Federal Circuit had actually ruled that there was a real possibility that it wasn’t!

The PTAB ruled in line with the Federal Circuit’s suspicions, issuing a detailed analysis of validity.  The PTAB decided that the patent was invalid because the prior art anticipated or rendered obvious the claimed invention.

(If you’re curious what a ‘kinetic flame device’ is, it is (sadly) not a flamethrower.  It’s a flameless LED candle with a moving piece to simulate flame motion.)

Are They All Like This?

I’m not sure.  That was a random set of 5 out of the 200, all of which showed literally no disagreement between the PTAB and the district court.

But I knew of one instance where there was some level of disagreement, and it did show up in Malone and Johnson’s data.  Let’s take a look at US 7,237,634, titled “Hybrid vehicles.”

US 7,237,634 - 'Hybrid vehicles'

Paice LLC sued Ford, Hyundai, and Kia over a set of hybrid vehicle patents.  The Hyundai/Kia case went to trial.  A jury decided claims 16, 29, 80, and 173 of the ‘634 patent were infringed.  They also decided that claim 16 wasn’t anticipated by US 4,335,429, and that claims 16, 29, 80, and 173 weren’t obvious over US 4,335,429 with certain combinations of US 5,343,970, US 5,842,534, US 5,826,671, and US 6,605,912.

The PTAB disagreed that the claims were patentable.  But they weren’t looking at the same documents as the jury.  The PTAB said claim 16 wasn’t patentable if you looked at US 5,343,970 along with WO93/23263 and a Society of Automotive Engineers article.  The PTAB didn’t disagree with the jury—they were looking at different documents that the jury never saw, and in combinations the jury never considered.  The same was true of the claims 29, 80, and 173, along with a number of other claims that the jurors never considered.

The end result is that, even when I cheated by taking a case where I knew a jury had looked at a patent and held it to be valid while the PTAB invalidated it, there’s still no actual disagreement between the jury and the PTAB.  They were still answering different questions.

No Contradictions

It’s possible that somewhere in those 200 patents that Malone and Johnson point to there’s an instance where the PTAB and district court disagreed on the same exact question; I didn’t go through all 200, just a random sample.  I’m hoping to be able to go through all 200 in the near future.

But in my random sample (and most likely for much of the rest of those 200 patents), there was no disagreement, and Malone and Johnson’s characterization of the PTAB’s decisions as “wrong” or contradictory was utterly false.  Malone and Johnson assume that the district court and PTAB were answering the same question, even though they quite evidently were not.

At the time of writing, both Malone and Johnson’s articles remain online and unchanged.  In the event that either Malone or Johnson correct their mistaken statements, I will update this post to reflect the correction.

Joshua Landau

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

Follow @PatentJosh on Twitter.

 

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  • Easwaran

    “the ‘disagreements’ cited by Malone and Johnson are actually cases where the district court and PTAB were deciding totally different legal questions.”

    Isn’t that their point? Folks complaining about the PTAB proceedings are usually positing that the rules are slanted against patent holders, not that the PTAB is violating those rules. That’s clearly Malone’s point, and it is indisputable that he was given a rough ride by the PTAB. And your point is not even in tension with Johnson’s claim that “200 patents had been upheld as valid by federal courts, and then struck down as invalid by the PTAB, with only 63 patents invalidated in both district court and the PTAB.”

    You are arguing that there is more nuance than meets the eye. But if PTAB proceedings were supposed to be a system that would reach the same result as a court but at less cost, as I believe Johnson would contend to be the original goal, then the fact that there’s legal minutiae that frustrates this goal actually is, if anything, a point in Johnson’s favor, because it suggests that we have a system that is operating differently than intended. On this count, it doesn’t matter why the PTAB reaches a different validity determination from the court, only that it does. I’m not drawing a value judgment here on whether that difference is positive or negative for the country, but it is an important consideration for Congress.

    • Joshua Landau

      The PTAB did not reach a different validity determination than the courts in the majority of the cases in this dataset. Deciding that a claim term is not indefinite during claim construction is not upholding a patent as valid, but Malone treats it as if it was.

      Having gone through more of the cases Malone points to since this post, in one instance, Malone says that the district court upheld a patent as valid *even though the jury in that case determined it was invalid*. He does that because early in the case, the judge decided that a term wasn’t indefinite.

      His data is riddled with this kind of error; this isn’t legal minutiae.

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