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PublishedJanuary 12, 2024

The PREVAIL Act: A Step Backward for Patent Policy

How often does someone offer you an option that is not only cheaper and faster, but also better?  Not very often, I would guess.  

Yet that is what is provided to patent litigants via patent validity reviews before the U.S. Patent and Trademarks Office’s Patent Trial and Appeal Board. A decade’s experience has shown that PTAB proceedings cost a fraction of civil litigation and are nearly always completed within 18 months – much faster than district court trials, especially once you consider post-trial motions. Congress designed PTAB review to be an efficient, more reliable, less expensive alternative to district court patent litigation, which often involves costly, time-consuming discovery. It has fulfilled that mission. 

PTAB trials produce more accurate and reliable results. This should hardly be surprising.  Congress required PTAB trials to be conducted by technically trained judges appointed by the Secretary of Commerce. Each PTAB judge has at least an undergraduate degree in science or engineering, and many have advanced degrees. A PTAB panel approaches a patent review with a background knowledge of the relevant technology that is almost never available in district court.  

The higher quality of the PTAB system is evident on appeal. A recent academic study found that the PTAB’s decisions are affirmed “notably more often” than those of district courts. The “most straightforward conclusion,” the study found, is that PTAB judges’ technical backgrounds have “aided decision making on the thorny scientific questions endemic to patent law.”  

Given this record since the enactment of the 2011 America Invents Act, you might think that Congress would be contemplating strengthening PTAB proceedings and expanding their role.  Yet some in Congress are proposing to move in the opposite direction. In November, I testified before Congress about the PREVAIL Act, a recently introduced bill that would cut off access to PTAB proceedings in multiple circumstances.  

PREVAIL would limit all patent challenges to a single 14,000-word petition, effectively making it impossible to challenge patents with numerous or complex claims. PREVAIL would prohibit clearance petitions, in which a manufacturer tests a patent to see if it can proceed with a new product without incurring infringement liability. PREVAIL would require the PTAB to defer to the USPTO’s earlier grant of a patent – even if the relevant prior art was never before the examiner.  PREVAIL would even cut off review altogether for prior art that was cited among thousands of references but was never actually considered by the USPTO.

Why would anyone want to block access to PTAB review in this way? I’ve been following the debate over PTAB proceedings for years. Here are some of the arguments that are made against PTAB

Some critics argue that PTAB review must be biased because of its invalidation rate. They cite a figure that the PTAB cancels 85% of the patents that it reviews.  

These critics are trying to mislead you. They ignore the fact that PTAB trials proceed in two phases. At the institution phase, the Board assesses whether the petitioner’s evidence shows a “reasonable likelihood” that the patent’s claims are invalid. Only about 67% of challenges survive this initial hurdle (already a much lower rate than 85%). And of course, once you weed out the weak challenges, the cases that do proceed to trial are stronger and result in the invalidation of at least some claims – this is where the 85% figure comes from.  

When you consider both the institution rate and the final decision rate, the actual PTAB invalidation rate is about 56% – which is in the same range as district courts’ historic rate of invalidating 40-45% of challenged claims. Given the Board’s technical expertise and high filing fees that discourage pursuing challenges that are never going to succeed, there is nothing unusual or surprising about the PTAB’s invalidation rate.  

None of the critics makes a serious argument that the PTAB is reaching wrong results – that the Board is somehow misunderstanding the claims or the prior art. Instead, the attacks tend to veer into tangential arguments.

Some critics still contend that the PTAB is unconstitutional – despite the U.S. Supreme Court’s decisive rejection of this argument in 2018.  

Others complain about supposed serial petitions. We can all agree that serial challenges to a patent can be abusive, but the PTAB has largely prohibited such challenges since 2017. Serial petitions account for less than 1% of allowed PTAB reviews. And when such challenges are allowed, it is for a good reason, such as when the patent owners assert new patent claims in litigation.  

One participant in the recent PREVAIL Act hearing argued that recent litigation against Intel Corp. illustrates the need to curtail PTAB review.  In my view, this litigation shows the exact opposite.  

Intel, America’s leading-edge chipmaker, has been sued repeatedly by VLSI. It is hard to say what VLSI is. VLSI’s parent company is a hedge fund based in Abu Dhabi. VLSI refuses to disclose who its own investors are, other than to describe them as “high wealth individuals” and “sovereign wealth funds” – i.e., foreign governments.  

When VLSI sued Intel in U.S. Courts, Intel concluded that the asserted patents are invalid and filed review petitions at the PTAB. The petitions made a strong case that VLSI’s patent claims should be canceled, but Intel never got a hearing on the merits. Instead, applying some legally questionable policies, the USPTO dismissed the petitions on the ground that it would be more “efficient” to allow VLSI to proceed in district court.  

The result: over $3.2 billion in damages awarded against Intel based on dubious patents. And we know now for a fact that at least some of these patents should not have been granted. After Intel’s petitions were blocked from consideration, other entities copied the substance of the petitions and filed their own challenges, resulting in the invalidation of two of the three patents that led to the awards against Intel. (The third patent has yet to be challenged in a petition that has been heard on its merits.)  

We thus know exactly what happens if we arbitrarily block access to PTAB review: billions of dollars will be extracted from one of our nation’s most important chipmakers. Money that could have been invested in maintaining American leadership in semiconductor design and production will instead be transferred to dodgy foreign entities – all based on invalid patents.  

Microprocessors are critical to America’s economic and defense needs. Ceding American preeminence in this technology to foreign entities would be foolish.  

The recent VLSI litigation counsels in favor of requiring complete disclosure of who exactly is funding patent litigation against U.S. companies. It counsels in favor of more rigorous procedures for reviewing patents before they issue. And along with our last decade’s experience with the proceedings, it counsels in favor of maintaining reliable access to patent validity review at the PTAB.

Joe Matal

Joe Matal is a former Acting Director and Acting Solicitor of the USPTO and a current partner at Haynes and Boone, where he specializes in PTAB trials and Federal Circuit appeals.

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