Yesterday, I published an extensive analysis of Senator Coons’ STRONGER Patents Act. As I said then, the bill would neuter the IPR process, removing any real reason to ever pursue one (assuming you could even file one after the changes to the estoppel, real party in interest, and standing provisions.)
One of the reasons I’ve heard for why we should change IPRs is the perception of IPRs as a “death squad” for patents. The statistics simply don’t bear out the idea that IPRs invalidate all (or even a majority of) patents. But last week, I ran across an interesting study from Fitzpatrick Cella1 showing that not only is that untrue in general, it’s also particularly untrue in some industries. There are a lot more bad patents in the software and business methods worlds than in biotech, and the rates of success at the PTAB show it.
Biotech Patents Less Likely To See Institution, Fare Better When They Do
From the start of an IPR, a drug patent2 IPR is less likely to even be instituted. Overall, the PTAB institutes roughly 53% of IPR petitions. But the PTAB only institutes 44% of drug patent IPR petitions. So you’re 20% less likely to even have a PTAB trial on a drug IPR.
The differences continue after institution. When you look at the final written decisions, there are significant differences between IPRs as a whole and drug patent IPRs. A drug patent is more than twice as likely to have all of its claims found patentable! If you combine the 19% of petitions with final written decisions confirming all claims with the 38% of petitions which are denied, in 57% of drug patent IPRs, the patent emerges completely unchanged without a settlement. (For all IPRs, that number is around 36%, showing that drug patents again do around 50% better.)
PTAB Judges Get It Right
I’ll note that one constant criticism of IPRs coming from the STRONGER Patents lobby is the idea that the judges who make decisions on institution shouldn’t make the final decision because they’ve already made a decision and won’t change their mind. The Coons bill, as I noted yesterday, would change this so that different judges decide on institution and the final written decision.
But the Fitzpatrick study is proof in and of itself that this criticism is completely without merit. For a drug patent, you’re just as likely to have the PTAB judges change their minds and decide the claims they instituted on aren’t valid as you are to have them decide they’re invalid. In other words, this alone is proof that PTAB judges are perfectly willing to uphold a valid patent even if they initially felt it was invalid. When they aren’t changing their minds, it’s because the patent should never have issued in the first place and their second look at the patent confirmed that fact.
So, what’s the summary?
Across all technologies, 41% of challenges wind up with at least some claims found patentable. 36% of those wind up with all claims patentable. But in drug patents, it’s 60% patentable, with 57% having all claims patentable. Two thirds of drug patents survive. (As Meat Loaf once said, “two out of three ain’t bad.”)
Fitzpatrick’s study shows pretty clearly that if the PTAB is trying to be a “death squad” for patents, they aren’t doing a very good job of it. The better reading of the facts is that the PTAB is getting it right—bad patents are invalidated, and innovative ones remain valid.
- My thanks to Fitzpatrick Cella for allowing me to reuse the images from their study in this post. ↵
- The Fitzpatrick study also looks at biologics, which are complex chemicals produced by biotechnology, as opposed to drugs, which are simpler chemicals produced by chemical synthesis. However, there have been so few biologics IPRs that drawing conclusions from the ones filed so far seems premature. ↵