Patent News

Aug. 25, 2022

Conservatives for Property Rights Blog: Warning: PTAB Is Hazardous to America’s Competitive Health by James Edwards

PTAB harms U.S. competitiveness. It undermines secure, private property rights vital to our competitiveness in innovation.

The Patent Trial and Appeal Board has upended quiet title to patented inventions. This rogue body of the Patent and Trademark Office institutes proceedings against around 70 percent of challenged patents.

Then, 84 percent of patents that PTAB reviews are invalidated entirely or in part. By contrast, federal courts invalidate about 30 percent of challenged patent claims.

These stark differences in outcomes stem from fairness and due process afforded under sound procedures in real courts but a tilted playing field, unfair rules and multiple, nearly unlimited attempts at PTAB.

For example, PTAB has no standing requirement and a low standard of proof, preponderance of the evidence; courts require parties to have a dog in the fight and apply a high standard, clear and convincing evidence.

About three-quarters of patents challenged in PTAB must simultaneously fight challenges in federal court. So much for faster and cheaper and an alternative, while quiet title is out the window.

The 2011 America Invents Act created PTAB. It was spun as a faster, cheaper alternative to federal court. Proponents claimed there were all these “weak” patents being exploited in a purported litigation explosion. These were at best exaggerations by Big Tech and others.

Sen. Pat Leahy bought the spin. He still believes it. Leahy and the Obama-Biden administration gave Big Tech undue influence in the AIA debate. Big Tech continues to enjoy outsized say-so.

Patent infringer-friendly PTAB creates huge problems. One observer cites two of them: “The first problem is ‘patent mercenaries’ attacking patents for the sole purpose of harassing patent owners to earn a profit from their funders. The second problem is the financial strain on small and medium sized patent owners defending [interpartes review] suits.”

Unsurprisingly, Big Tech firms and Chinese and others’ national champions use PTAB the most. They target innovative inventors and the most valuable patents.

The gamesmanship at and weaponization of PTAB turn this U.S. government body into a powerful tool against American innovators—and against U.S. technological leadership and industrial competitiveness.

Gross abuse and harassment of patent owners goes on at PTAB. For example, VLSI Technology prevailed in a jury trial. It proved patent validity and that Intel infringed its patent. A court awarded VLSI an infringement verdict of $2.2 billion.

Then, newly founded OpenSky and Patent Quality Assurance challenged the same patents at PTAB that Intel had infringed. The LLCs hadn’t been charged with infringing VLSI’s patents themselves. The LLCs allegedly went to PTAB in order to shake down payments in exchange for dropping the cases. OpenSky and PQA filed “copycat” submissions of Intel’s previously rejected PTAB petitions.

Another example is cybersecurity firm Centripetal Networks. A court found Cisco infringing four of Centripetal’s patents, with Cisco’s patent infringement deemed “willful and egregious.” The court ordered Cisco to pay damages of $2.75 billion for willful misconduct.

Palo Alto Networks, an unrelated party involved in separate litigation with Centripetal, filed PTAB challenges against Centripetal’s patents. PTAB granted Palo Alto’s request. Centripetal requested review of PTAB’s decision to grant because it amounts to harassment of a judicially prevailing patent owner.

Meanwhile, the Federal Circuit Court of Appeals tossed the verdict against Cisco for flimsy, tangential reasons. That ruling is under appeal.

Sen. Leahy is retiring at the end of this year. His last hoorah is making PTAB even more biased in favor of patent infringers, Big Tech and foreign competitors. His “PTAB Reform Act” subverts Article III courts. It puts patent owners at even greater threat from multiple administrative challenges.

Former Federal Circuit Chief Judge Paul Michel warns, “. . . Congress is pushing forward a bill that would effectively overturn the USPTO’s efforts to balance the patent system. . . . But far from improving the legal landscape for small inventors, it will render patent owners powerless to fend off duplicative petitions at the hands of Big Tech.” Or by Chinese national champions.

Brian Pomper of the Innovation Alliance has said our patent system should be “a key part of our arsenal of democracy.” But the imbalances between real court and PTAB make our patent system AWOL in our technological competition with China.

Leahy’s legislation will make things even worse and further jeopardize U.S. competitiveness against China, whose aggressive strategy is taking big strides to overtake America as the world’s innovation leader.

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