Patent News

Mar. 14, 2014

IP Watchdog: Is More Patent Reform Really Necessary? Patent Litigation Declines, PTO Administrative Trials Increase, by Gene Quinn

This post originally appeared in IP Watchdog on March 14, 2014.

The United States Patent and Trademark Office has recently released the latest information about the number of post grant trial proceedings that have been initiated. The clear, resounding verdict is that post grant administrative trials are extraordinarily popular. In fact, they are far more popular than Congress anticipated they would be at the time the America Invents Act (AIA) was passed.

Scott McKeown, a partner with Oblon Spivak who co-chairs the firm’s Post Grant practice group and is the primary author of the Patents Post Grant Blog, recently posted his analysis of the latest post grant trial statistics announced by the Patent Trial and Appeals Board (PTAB). See March 2014 Update to PTAB Trial Statistics.

According to McKeown these numbers are significant because they are significantly higher than the numbers originally anticipated by Congress, showing that the industry finds these administrative trials to be extremely useful, even more so than predicted. His article explains: “These numbers are well beyond the 281 filing limit per year Congress envisioned…”

Section 319 of the AIA gives the PTO the ability to limit the number of proceedings for the first 5 years based upon the number of inter partes reexams in the last fiscal year before enactment, which was 2010. In 2010 the number of inter partes reexamination proceedings was 281. Therefore, Congress granted the USPTO the authority to limit the number of proceedings initiated to 281 per year. During FY 2013 there were double that number of administrative trials. Five months into FY 2014 we are already at 468 administrative trials, which suggest that the PTAB is on pace for more than 1,100 administrative trials in FY 2014, which would be 4 times the number of inter partes reexams, and 4 times the expectation of Congress before limitations could kick in. The USPTO has announced they would not exercise the option to limit the number of proceedings, but the fact remains that there is much more interest in administrative trials than anticipated at the time the AIA was enacted.

This latest updating of the PTAB statistics comes on the heals of data from Lex Machina that suggests that the number of patent lawsuits filed during the first two months of 2014 has decreased by 25% compared with the same time frame in 2013. See Sharp Decline in Patent Litigation in 2014.

All of this has to make you wonder whether any new patent legislation is necessary at this time. The House of Representatives has already passed new patent legislation that focuses on patent litigation and the perceived abuses. Reasonable minds can perhaps differ about whether the measures being discussed are good, bad or would do anything to address the manipulation of the judicial process by nefarious actors. The facts suggest, however, that patent litigation is declining and the administrative trials are increasing beyond expectations. This is significant because the administrative trials were created in order to offer defendants a better, cheaper avenue to challenge patents outside of litigation. So why not allow the reforms of the AIA time to work before once again tinkering with the patent laws and potentially upsetting the incentive to innovate?

The America Invents Act passed in September 2011, and the administrative trials created did not become an option to pursue until September 2012. Yet, less than 18 months later Congress is considering additional changes to the patent laws without ever giving the changes ushered in by the AIA a chance to play out and succeed.

New patent legislation seems unnecessary, particularly when it appears that the tide of patent litigation has been significantly curtailed by the procedures put in place by Congress that became effective on September 16, 2012. Add that the Government Accountability Office (GAO) says that 80% of patent litigation is brought by manufacturing companies. See GAO Unmasks Mythical Patent Troll Problem and GAO Report Finds No NPE Patent Litigation Crisis. It seems far too early to be considering additional changes to the patent laws. Congress should allow the procedures they established to continue to play the role they envisioned and not simply make additional changes for the sake of change.