This month, the Patent Trial and Appeal Board (PTAB)
celebrated its second birthday. While two years may seem young, the PTAB has
accomplished quite a bit in that time. After a slow six month ramp-up, the
number of petitions challenging patents under the new system has grown
significantly, reaching nearly 200 new filings a month. It takes 18 months for
a patent challenge to make its way through the PTAB, and we are now finally seeing
the effects of the influx. Now, with 75% of all trials resulting in every
challenged patent claim being invalidated, it’s clear that the PTAB will have a
very broad reach in patent litigation.
A Brief History of
the PTAB
The PTAB was created under Obama’s Leahy-Smith America
Invents Act and opened its doors in September of 2012, providing litigants with
a brand new forum to challenge patent validity. There are several avenues
available to a party looking to challenge the validity of a patent: Inter Partes Review (IPR), Covered
Business Method Review (CBM), Derivation Proceedings (DER), and Post-Grant
Review (PGR).
The type of procedure available to a party depends what type
of patent they are challenging and what arguments they want to make. The
majority of petitions are filed for
Inter
Partes Review, which is available to challengers of any type of patent.
Trailing IPR proceedings in popularity are Covered Business Method proceedings,
which are specifically focused on controversial business method patents. A
small number of
Derivation Proceedings and
Post-Grant Review proceedings have
been filed as well.
From beginning to end, the process from filing the initial petition
challenging a patent to receiving a final decision from the PTAB takes about 18
months. Thus, at the two-year mark, we are only now seeing the effects of the
first six months of filings, and we can expect to see a multitude of decisions
being issued in the near future.
Stalled Legislation
A bill to protect companies from patent trolls was shelved
by the Senate Judiciary Committee earlier this year. The legislation’s unraveling
was due in large part to hard lobbying of universities and medical companies
with extensive patent holdings. On the other side of the coin, the bill’s
failure to gain momentum was a blow to patent troll targets, software companies
and retailers, who called the decision to drop the legislation “
a
victory for the trolls.”
But Has the PTAB Made
a Legislative Solution Unnecessary?
Despite the legislative breakdown, the U.S. may have
inadvertently solved its troll problem through the creation of the PTAB. By design,
the PTAB is structured to render speedy, less expensive resolutions to quickly invalidate
bad patents, potentially making long, multi-million dollar trials over low-quality
patents held by trolls a thing of the past.
Many of the petitions for IPR and CBM are being filed
against some of the most notorious patent trolls, including giants like Intellectual
Ventures, VirnetX, and Acacia. To date,
nearly
70 petitions for IPR have been filed against the various arms of
Intellectual Ventures, and
nearly
40 petitions for IPR against VirnetX. With about 80% of IPR petitions
resulting in a trial, and 75% of the instituted trials ending in invalidating
every challenged claim, the odds don’t look good for patent owners who find
themselves involved a post-grant proceeding. This is in large part thanks to
the meticulous fact-finding of the
PTAB’s
technically savvy judges. IPR and CBM filings against patent trolls have been picking up steam in the
past several months, so we can expect to start seeing the PTAB’s effect on these
companies in late 2015 or early 2016.
Another potential residual effect from the creation of the
PTAB is the encouragement of quick settlement in many patent troll cases. For
example, in a IPR proceeding involving Acacia and Volkswagen,
a
settlement was reached less than a year after Volkswagen had filed its
petition.
Rather than waiting for legislation that might never come, the
U.S. could already have in the PTAB the solution it needs to solve the patent
troll problem.
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