27 April 2023FeaturesPatentsMuireann Bolger

Concerns grow over ‘tone-deaf’ PTAB reforms

As the US Patent and Trademark Office (USPTO) unveils plans promising wide-sweeping reforms to the Patent Trial and Appeal Board (PTAB), some have been left decidedly underwhelmed by the much-anticipated blueprint.

Nicholas Matich, principal at McKool Smith, is forthright in his disappointment.

“At first glance, the USPTO’s recent advanced notice of proposed rulemaking provides some relief for patent owners from PTAB abuse by large technology companies,” he says.

However, he adds, there is a big ‘but’.

“Many of the proposed reforms have significant loopholes that will make them meaningless in practice.”

Parallel litigation

According to the USPTO, the proposals will address the rules used in exercising discretion to institute inter partes reviews (IPR) and post-grant reviews.

Other proposals would allow petitioners to pay additional fees for higher petition word count limits, provide a separate briefing process for discretionary institution arguments, and clarify that parties that settle prior to institution must file copies of any settlement agreements with the PTAB.

Undoubtedly, the important item up for discussion is the PTAB’s discretion on the institution of an IPR or a post-grant review petition.

As Manita Rawat, partner at Morgan Lewis explains, the PTAB currently has discretion to decline instituting an IPR or PGR petition, “even in circumstances where the petition has met the requisite criteria for institution”.

One of the most controversial grounds for denials by the PTAB has stemmed from the Fintiv rule, and more specifically, parallel litigation.

In 2020, the PTAB established a six-factor test for discretionary denial based on a parallel district court litigation, including: a stay or likelihood of a stay in district court; whether trial would occur before final written decision; investment in the district court action; overlapping issues; identity of parties; and other circumstances.

Trial dates ‘often pushed back’

“Many practitioners have been critical of such denials because they deem the test can be a subjective and an unreliable standard given how district court trial dates can vary and change,” notes Rawat.

For example, the likes of Apple and Mylan have petitioned SCOTUS, arguing that the rule compromised the integrity of the US patent system by protecting poor quality patents.

In a further blow to the PTAB’s disposition towards Fintiv, Perkins Coie released findings in late 2021 showing that the PTAB’s references to the rule’s dictate of parallel litigation precluding reviews are often derived from inaccurate data as the trial dates are “almost always pushed back”.

To assuage concerns arising from the rule, USPTO director Kathi Vidal issued guidance for discretionary denials in AIA-post grant proceedings with parallel district court litigation in June 2022.

“Although this guidance does not negate the six-factor analysis, it does provide some needed clarity to discretionary denials," reflects Rawat, who does, however, add that more clarity is needed.

Indeed, predictions that the guidance heralded the potential demise of the Fintiv rule proved decidedly premature, when Vidal criticised the PTAB in February for failing to apply it in  CommScope Techs v Dali Wireless.

This move, in turn, prompted speculation that the power of the rule would be revived, after the PTAB saw a slump in Fintiv-related decisions—which dropped to just one during the third quarter of 2022, down from 60 in the first quarter of 2021.

Arguably, the latest set of proposals is aimed at clearing the smokescreen of confusion that has enveloped the PTAB’s approach to deciding whether to institute review or not.

“It will be good to obtain further public input on the denials such that more clarifying regulations can be promulgated to ensure a fair process with the institution of IPR and PGR petitions,” added Rawat.

An ‘astonishing’ proposal

But Matich is less optimistic, pointing out that the proposals singularly fail to tackle the problem of parallel petitions—where a petitioner can file multiple challenges against a single patent.

In particular, he trenchantly opposes the suggestion that petitioners “pay additional fees for a higher word-count limit” so that the petitioner “may file effectively two petitions”.

“The proposal is astonishing,” complains Matich, who adds that: “No court would ever consider allowing a wealthy party to expand its briefing by paying the court money.  Moreover, it’s unlikely that the filing fees—typically a tiny fraction of the cost of an IPR—are likely to deter petitioners from “fil[ing] effectively two petitions.”

This step, he argues, would open the door to petitioners paying for more space, effectively legitimising such practices, and making it the norm for Big Tech patent challengers.

“This tone-deaf proposal, along with others, will feed the unfortunate perception that the PTAB is not a fair forum for IP disputes.”

David’s slingshot, Goliath’s mask

And Matich’s misgivings have met with support online.

Commenting on LinkedIn in response to Matich’s viewpoint, Martin Ciuk, associate director, Science & Engineering, Technology Transfer at Innovate Calgary, ruefully observed that any patent system “is inherently skewed against smaller entities, because of the cost of litigation/enforcement of IPRs”.

“The deeper your pockets, the more and better lawyer time you can afford….That's always been the case. A wealthy corporation can prolong proceedings essentially indefinitely against a small entity/sole inventor, despite often being in the wrong,” he added.

A large corporation, he wrote, can also delegate a crack legal team to the proceedings without affecting their business in any way. “For the SME/individual, this is not only a cost, but also lost time away from the business for the core team.”

But the PTAB, he argued, is on “another plane entirely”.

“Not only is the standard of proof for establishing a case by the plaintiff lower than in court, but attacks are frequently made against individual claims, effectively bypassing the single case/single IPR rules.

He concluded with a colourful analogy underscoring his lack of conviction in the system.

“[This] leads to a David and Goliath situation, where David has no stones for his slingshot and Goliath has a full face mask.”

In response to WIPR's request for comments, a USPTO spokesperson said: “To ensure all stakeholders have equal access and for the USPTO to not inadvertently shape the outcome in any way, the USPTO will not discuss the substance of the proposals in the ANPRM with stakeholders or with the press, but instead we encourage everyone with an interest in these topics to submit their written comments through the comment portal at”

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