March 16, 2014, marks the eighteen-month anniversary of the inter partes review ("IPR") system of challenging issued patents at the Patent Office. We thought that this would be an appropriate time to look back at the last year and a half and reflect on the system thus far. In that time, the Office has seen close to 1,000 petitions filed. Looking back only six months ago, no final decisions had issued by the one-year anniversary. But to date, more than 20 final written decisions have been issued by the Patent Trial and Appeal Board ("PTAB" or "Board"). This number will should increase at even a faster rate, considering petition filings have only increased since September 16, 2012. Initially, there was a question whether the Board would essentially "rubber-stamp" the original decisions of the patent examiners, or whether this system would be a viable alternative to tackle the perceived patent-troll problem. There remains little doubt today which way the Board is leaning -- the overwhelming majority of cases have seen all of the reviewed claims canceled. Of the questions that remain, some of the more interesting include why the challengers have been so successful, whether this trend of claim cancellation will continue, and what will the Federal Circuit do when it starts hearing appeals from all of these proceedings.
The first decision rendered set the tone for most that followed. As we reported at the time, the first inter partes review opinion was released last November in a case related to speed limit indicators on GPS devices. The outcome of IPR2012-00001 (Garmin USA, Inc. (Petitioner) v. Cuozzo Speed Technologies LLC (Patent Owner)) was considered good news for parties wishing to challenge the validity of patents at the Office. Since that time, of the more than twenty Final Written Decisions based on the merits of the case, the large majority went against the patent holder. In fact, it was not until February 19, 2014 that the PTAB upheld any claim that it had reviewed. On that date, the Court issued two such decisions. The first, Microsoft Corp. (Petitioner) v. Proxyconn, Inc. (Patent Owner) (IPR2012-00026 and IPR2013-00109), involved U.S. Patent No. 6,757,717, which was directed to systems for data access in a packet switched network. Microsoft was able to show that all reviewed claims except claim 24 were either anticipated or obvious in view of the prior art. Nevertheless, because it was unable to establish by a preponderance of the evidence that the final claim was unpatentable, that claim was spared. On the same day, in Synopsys, Inc. (Petitioner) v. Mentor Graphics Corp. (Patent Owner) (IPR2012-00042), the Board upheld the validity of several claims in a patent related to the fields of simulation and prototyping of integrated circuits. Even with these few successes by the patent holders, it is interesting that the requestors have been so successful in cancelling all of the reviewed claims of the patent at issue.
Of course, this raises the issue of whether the PTAB is predisposed to "correct" any perceived mistakes previously made by the Patent Office, or whether the Office has just issued that many flawed patents. On the one hand, it is possible that the PTAB is cancelling so many claims because it is mainly reviewing patents that qualify as the worst of the worst. After all, filing a petition is not cheap, so it would stand to reason that a party would only file one if they believed they had a reasonable chance at success. The counter to this argument is that most petitions are directed to patents that are already involved in litigation. In such cases, the accused infringer has every incentive to seek relief from the Board (regardless of the actual merits of the case). Not only is the standard for invalidating the claims lower (preponderance of the evidence versus clear and convincing evidence), but claims are given their broadest reasonable interpretation by the Board, as opposed to the narrower standard used by Federal Courts. Another reason that the Board may appear predisposed to cancel claims is because it must first determine that there is a reasonable likelihood that the petitioner will prevail before a trial is instituted. Therefore, when looking at the success rate of petitioners, it is probably more useful to look at the number of cases that make it past this initial hurdle. We will look at these figures in a future post.
Nevertheless, there is at least one outspoken critic of the PTAB's actions. According to a report in the Wall Street Journal, Chief Judge Rader appears to be alarmed by the rate at which claims are being canceled by the Board. In fact, as reported in that article, he equated the Board's panels with "death squads," at least with regard to intellectual property rights. He expressed concern that the Board's actions would decrease the incentives necessary for human progress. These comments might be considered good news for patent holders, because they have the ability to appeal the Board's decision to the Federal Circuit. In fact, the patent holder in the first decided case, Cuozzo Speed Technologies, has already filed an appeal with the appellate court. As of March 12, 2014, counsel for Garmin had not yet filed an appearance or any of the other requisite preliminary information with the Federal Circuit. We will also continue to monitor this case.
Based on a review of the cases with Final Written Decisions as mentioned above, and the conventional wisdom regarding the IPR system, the majority of patents reviewed have been related to computer technology and the like. However, on March 6, 2014, the Board issued three Final Decisions in cases involving Illumina as the petitioner and the Trustees of Columbia University in the City of New York as the patent holder. These cases involved patents related to "sequencing DNA by synthesis" or "SBS." In all three reviews (IPR2012-00006, IPR2012-00007, and IPR2013-00011), the Board invalidated all of the reviewed claims as obvious in view of the prior art. We will report on those three cases in more detail in a future post. Moreover, there have been a significant number of petitions filed related to the biotech and pharmaceutical industry, and we can only expect this number to increase in the coming months.
It is interesting looking back at the trends at the Board in the past 18 months. However, considering that IPRs are to be concluded within a 12-to-18-month period, we should continue to see a lot more decisions rendered by the two-year anniversary next September. A review at that time should help clarify whether the current trends are based on a sample size that is too small, or whether they will be the status quo for the foreseeable future.