The Patent Trial and Appeal Board Flexes Its Muscles
A major shift is taking place in the world of patents, and nowhere is this more evident than at the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB), the body that hears patent challenges at the PTO.
The PTAB is now the No. 1 venue for patent challenges in the United States, with more cases filed there than in any single district court. The filing rate has accelerated rapidly since inter partes and covered business method reviews launched in the fall of 2012—authorized by the America Invents Act’s patent reforms. Until last spring, the PTAB saw about 30 petitions filed per month. By fall 2013, that number had doubled to about 60. And now, attorneys are filing between 90 and 100 petitions at the PTAB every month.
And the pace shows no signs of slowing in 2014. “As of this week, about 1,000 petitions have been filed in total,” said Eleanor Yost, a partner at Goodwin Procter who specializes in intellectual property.
The volume of cases means that within the next few months, the PTAB is going to issue a large number of final decisions. By statute, the board is required to issue its decisions within one year after a case is instituted.
But if the past is prelude, many a patent owner will not be happy. So far, the PTAB has issued decisions in five cases—and it has invalidated claims in every one. “We’re five for five,” said Yost. “Two decisions came down in the last week alone.”
Two of those five were decisions from inter partes reviews—challenges that can be brought by anyone and involve a minitrial before the PTAB. The other three were reviews of covered business methods (CBMs), which concern patents related to financial services and involve business methods that are nontechnological inventions. These also involve a streamlined minitrial. Some of the claims in these cases were invalidated based on prior art and some on statutory subject matter. But the end result was the same.
“Every single decision on the merits so far canceed the patent claims under review,” said Yost, who is involved in about 10 pending cases at the PTAB. “In other words, no patent owner has won.”
To be sure, the PTO isn’t the only place that has made life difficult for patent holders—especially those considered “patent trolls,” companies that exist solely to buy and assert patents. Calls for patent reform have spread so forcefully and rapidly through the halls of Congress that bipartisan legislation is expected to pass within the next few months. President Barack Obama spoke of the need for patent reform in his 2014 State of the Union speech. The Federal Trade Commission is investigating the impact that patent assertion entities (PAEs) have on innovation and competition. And the U.S. Supreme Court, which has agreed to consider an unprecedented number of patent cases this term, is expected to reverse at least some of the pro-patent holder rulings issued by the U.S. Court of Appeals for the Federal Circuit.
“It’s a tough time to be a patent owner,” Soverain Inc.’s president, Katharine Wolanyk, said last month after the Supreme Court denied her company’s petition for cert in a case in which its patent had been invalidated.
While the current environment is especially tougher for patent owners with weak patents, the PTAB changes the game for everyone, Yost says. A company trying to take the offensive by asserting a patent can suddenly be put on the defensive if its patent claims are challenged before the PTAB.
It remains to be seen whether the PTAB’s decisions will continue to lean in favor of the patent challenger. But irrespective of that outcome, the large number of filings will have major implications for those who are also party to parallel lawsuits pending in district courts. The PTAB has recently accelerated trial schedules so that oral argument is now a mere seven months from trial institution—two months earlier than the previous schedule.