Editor's Note: This article was updated on April 17, 2017.
Luke Dauchot, is an IP partner at Kirkland & Ellis recently sat down with Inside Counsel to discuss why PTAB started cancelling patents so quickly as of late.
“Though it’s difficult to ascribe specific motivation behind the PTAB’s enthusiastic embrace of its authority to cancel issued patent claims, at least three systemic drivers appear to be at work,” he explained.
First, is the difference between the post-grant review and pre-issuance examination procedures. The former puts patent claims under microscopic examination by experts in the field with at their disposal prior art collected by well-heeled adversaries. While the latter procedure is by nature far less stringent. Compounding this reality are the legal standards at work, which brings into play the second driver.
“The PTAB owes no deference to the PTO examination process,” he said. “Unlike the litigation clear and convincing bar, the burden of proof in IPRs is the materially easier preponderance of the evidence standard.”
The claim construction standard applied by the PTAB allows for a broader interpretation of claims than in litigation, rendering claims more vulnerable to prior art. The third driver is advocacy needing to adjust to a new court adjudicating over a new process with new ground rules. The natural vagaries and opacity associated with such a climate favor the patent challenger. But that’s changing, according to Dauchot. “We’re already seeing a downward trend in IPR institutions and claim cancellations, and part of what is at work are clearer rules and a better sense of how they are being applied.”
Today, the single most significant effect of this has been on patent enforcement, according to Dauchot. Patentees with valuable patents should think twice about enforcing their patents at the risk of subjecting them to a process once labeled by former Federal Circuit Chief Judge Rader as a “patent death squad.”
“One can debate the fairness of that characterization, but the statistics are what they are and they have not been kind to patents. What this ultimately means to patents as a tool to stimulate innovation is an unknown. The less valuable one’s patent, the less one stands to lose by having it cancelled,” said Dauchot. “That is why patent troll litigation has not abated since the institution of the IPR process. Competitor-to-competitor litigation has, however, significantly declined.”
Patentees should think twice before asserting patents that protect valuable market territory: losing a patent very well may be worse than asserting it, according to Dauchot. But, that dynamic is not in play with trolls, where the value of the patented technology bears little or no relationship to the enforcement strategy.
So, AIA was then created first, to bring the U.S. patent system more in line with predominant international norms. The U.S. patent system was changed from a “first to invent” to a “first to file” system, emphasizing a priority of invention from the first to have invented to the first to have applied for a patent. Secondly, it was created to implement measures to curb perceived patent abuses by making it tougher on patentees to consolidate targets in a single action and instituting the IPR process.