When people get sued by patent trolls, they can fight back in one of two places: a U.S. district court or the Patent and Trademark Office. But the Patent Office is putting its thumb on the scale again in favor of patent owners and against technology users. This time, the Office is relying on specious legal arguments to shut down patent reviews at the Patent and Trademark Appeals Board (PTAB).
The procedure that’s being undermined at PTAB is a procedure called inter partes review, or IPR. Congress created IPRs in 2012, as a faster and less expensive way of resolving patent disputes than district courts. Since then, they have become an important part of maintaining the patent system. Many patents (especially software patents) are granted after woefully inadequate examinations, and are ultimately invalidated when challenged in court. Given that, it makes sense to allow the U.S. Patent and Trademark Office to take a second look at the patents they’ve handed out. The Patent Office granted more than 350,000 patents last year, and the median examiner review time is less than 20 hours. Mistakes happen. When users or small businesses are accused of patent infringement, they shouldn’t go broke trying to defend themselves in expensive court litigation.
The IPR system has proven effective. In the years it has operated, PTAB trials have invalidated more than 1,900 patents altogether. There have been several hundred more cases in which patent owners lost at least some of their claims.
Unfortunately, a series of recent decisions is choking off access to the IPR process. The PTAB is now denying petitions on procedural grounds, to avoid carrying out the job that Congress tasked it with.
The Patent Office is putting a stop to IPR proceedings when there are district court cases going on that involve the same patents. But that’s the opposite of what Congress told the Patent Office to do—review all patents that are likely invalid when presented with a timely petition.
Thanks to these “discretionary denials,” questionable patents go un-reviewed. What’s more, the defendants in these patent cases can't appeal the Patent Office's decision—the law creating IPR makes decisions to deny review final and unappealable.
When IPR isn’t a viable option, more patent owners can demand bigger settlement payments—effectively, as a ransom for avoiding the costs of litigating a case through discovery and trial. The time and cost it takes to get a patent reviewed are precisely why Congress mandated the IPR procedure in the first place. Now, as the Patent Office denies more IPRs, we’re seeing the same problems that were so acute back in 2012: forum shopping and gamesmanship in patent litigation over patents that should never have been granted in the first place.
Patent owners are pushing aggressive trial schedules in courts, then bringing those timetables to the Patent Office, as an excuse to insist that PTAB should not review their patents. That’s already contributed to an uptick in lawsuits in “rocket dockets” like the Western District of Texas and the Eastern District of Texas. Those two districts now account for an estimated 45 percent of cases filed by “non-practicing entities,” or patent trolls. Discretionary denials of IPRs are actually making district court litigation more onerous for defendants.
When a government agency like the Patent Office isn’t doing its job, Congress needs to step in and exercise oversight. That’s why we’ve signed letters to the House [PDF] and Senate [PDF] leaders on the judiciary and IP committees, asking them to stop patent owners’ gamesmanship of the IPR process. Together with Engine Advocacy, a group representing startups, and several other groups supporting patent reform, we’re asking lawmakers to get involved and make sure that IPR “can live up to Congress’s intent of providing a meaningful, low-cost alternative to litigation and promoting patent quality.”