IPR Successes: The Next Five Years

Over the past month, I’ve shown just how successful the inter partes review (IPR) program has been in its first five years.  IPR has saved billions of dollars and helped everyone from city governments to realtors to the targets of patent trolls funded by foreign countries.  Those stories are listed below:

Today, I want to discuss the next five years of inter partes review, with respect to the current challenges to the system and with respect to possible improvements.

Current Challenges: Courts

The inter partes system already faces some challenges.  Opponents of inter partes review’s role in promoting fairness and efficiency in the patent system have challenged IPR’s constitutionality in a case, Oil States, that the Supreme Court will hear on November 27.  That same day, the Court will also hear a challenge to whether the Patent Trial and Appeal Board (PTAB) can efficiently decide whether certain claims are patentable in the SAS v. Matal case.  

Oil States could potentially result in a need for major reforms of the IPR system.  In particular, Congress could require patent owners to consent to IPR in order to benefit from their patents; for example, the statute could be changed to prevent a patent owner from obtaining an injunction or past damages if they refuse to consent to IPR.  Consent to IPR could also be required in order to record the assignment of a patent.  

The SAS case will likely create smaller changes.  However, if the Supreme Court determines that the PTO must issue a final decision on all claims and can’t find claims likely patentable at the institution stage, that may impose additional burdens not just on the PTO, but also on petitioners and patent owners forced to either dispute claims that the Office has already determined are almost certainly patentable, or else to wait for the final decision to even have a preliminary idea of which claims the PTAB has initially determined are unpatentable.  Neither scenario is appealing, and a legislative change allowing the PTAB to finally determine, at institution and subject to rehearing and/or appeal, that certain claims are likely patentable would help preserve the efficiency of the current process.

Current Challenges: Policy

Aside from the legal challenges to the structure of IPR, there have been attempts to tactically shield patents from review.  In particular, the Allergan-Saint Regis Mohawk deal attempts to use tribal sovereign immunity to prevent review of patents by the PTAB.  If this shield is upheld as valid, you can expect to see patent owners racing to tribes (and perhaps tribes racing to underbid one another) in order to obtain this type of protection.  Fortunately, this is an area where Congress can easily legislate a fix, and Senator Claire McCaskill has already introduced a bill to remove tribal immunity with respect to IPR.  In addition, the judge in the companion district court litigation has already expressed skepticism as to Allergan’s “sale” of the patent, asking Allergan to show that the transaction wasn’t a sham.

A more challenging issue is the use of sovereign immunity with respect to state universities.  These universities, acting as arms of the state, are entitled to Eleventh Amendment sovereign immunity.  That type of immunity is much more difficult to overcome by Congressional legislation.  However, state universities have not (to date, at least) engaged in selling their immunity; immunity assertions have been restricted to patents coming out of the universities’ own research.  If state universities did begin to launder immunity, one possible way to address it would be to require universities that receive federal research funding to waive their sovereign immunity with respect to IPR (either generally, or with respect to the funded research).  The Supreme Court signed off on requiring waiver of immunity as a condition for federal funding in Florida Pre-Paid, referencing the South Dakota v. Dole conditional funding case.

In other words, while sovereign immunity presents some potential challenges, those challenges could be overcome by Congressional action if needed.

Current Challenges: Procedure

There are also criticisms of the PTAB’s procedures.  In particular, there have been criticisms leveled at the PTAB’s procedures on multiple petitions.  Setting aside the fact that very few patents (even litigated patents!) are the subject of IPR petitions, the fact that most of the petitioned patents are only subject to 1 or 2 petitions in the first place, and the legitimate need for multiple petitions in some circumstances, the PTAB has appropriately handled instances in which multiple petitions were used inappropriately.  In a recent case, the PTAB addressed the factors it uses to determine whether multiple petitions are appropriate, and used its discretion to deny inappropriate follow-on petitions.

In addition, the PTAB has been criticized for not allowing amendments.  Patent owners complain that they would file more amendments if they thought they’d be allowed.  Of course, an amendment that doesn’t actually overcome the prior art of record, or an amendment that creates an unclear or ill-defined patent should never be allowed.  While the Federal Circuit’s recent Aqua Products case will shift the burden of proof away from a patent owner who wishes to amend, I still don’t expect to see a significant number of amendments.  The reason patent owners don’t amend isn’t because they don’t think they’ll get their amendment through; it’s because, in order to satisfy due process considerations, amended claims don’t receive past damages.  Most patent owners choose to risk their patent instead of their right to past damages, as evidenced by the fact that the number of requests to amend didn’t significantly decrease after it became apparent that there was a high standard of proof involved.  Aqua Products’ shift in burden of proof won’t significantly increase the number of amendments, because it was never the burden of proof that drove patent owners to avoid amendments.

The existing challenges to the PTAB’s procedures are generally weak, and the PTAB is handling them appropriately using its existing authority.  I would expect that to continue as additional procedural issues in IPR are identified, particularly in light of the PTAB’s ongoing effort to address these sorts of procedural issues as they’re identified and to gather feedback from IPR participants on procedural concerns.

The Future of IPR

Assuming, as I think will be the case, that IPR survives Oil States and that sovereign immunity doesn’t render IPR ineffective, the question becomes: what’s next?  While IPR is a generally fair and effective procedure, what changes could be made to continue to promote IPR’s role as a fair and efficient way to provide a second-level review of issued patents?

PTAB And The PTO

CCIA has previously submitted comments to the PTAB identifying where their procedures are working well and where they could be improved.  In addition to the proposals in our comments, the Aqua Products case suggests two other actions the PTO should take.  

First, it should conduct a formal rulemaking to set the burden of proving patentability of an amended claim on the requesting party (the patentee).  This comports with normal motion practice as well as with the Federal Circuit’s practice in the analogous circumstance of constructing so-called “hypothetical claims” in doctrine of equivalents cases.  

Second, the PTAB should issue guidance barring the practice of contingent amendments and requiring amendments to be filed within a short timeframe after institution.  By requiring patent owners to amend their claims at the beginning of the proceeding, as opposed to the end, patent owners would be more likely to set out patentable claims as opposed to trying to rephrase their existing claims in minor ways.  This would help IPR remain an efficient way to settle the issue of validity.

Congress

Beyond actions the PTO can take, Congress could improve IPR in a number of ways.  

First, in the event that the Supreme Court decides in SAS that the PTO’s interpretation of the statute does not receive deference, Congress could amend the statute to make clear that the PTAB can institute on less than all challenged claims in order to promote efficiency of the proceeding.  

Second, with the covered business method (CBM) proceeding sunsetting in the near future, Congress should consider whether to incorporate challenges to subject-matter eligibility, written description, enablement, and indefiniteness into IPR.  Expanding IPR to include these types of validity concerns would help petitioners place all their challenges to a patent’s validity into a single place, rather than challenging prior art validity at the PTAB and then challenging the patent’s eligibility and clarity in district court, as is currently the case.

IPR has had a good first five years.  In five year’s time, I hope to see a similar post showing  how improvements have cemented IPR’s place as an efficient, effective way to adjudicate all forms of patent validity.

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.