11.28.16

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Patents Roundup: Patent Trolls, Patent Quality, and the Patent Trial and Appeal Board (“PTAB”)

Posted in America, Patents at 7:27 am by Dr. Roy Schestowitz

Game of backgammon

Summary: A week’s roundup of patent news from the United States, where there’s a mixture of good news, bad news, good reporting, and misleading (or selective) reporting

TAKING a break from European scandals and looking at the USPTO for a moment, there’s some good news and some bad news. This post is an outline of recent coverage and some interpretation of recent developments.

IoT and Other Buzzwords Targeted by Trolls

Using buzzwords for patent thickets, MIP published “Defining the IP landscape in IoT” several days ago. In simple terms , IoT is just a device with a TCP/IP stack, where IP stands for Internet Protocol, not Intellectual Property (quite a buzzword in its own right).

Another new article, published by a site that piggybacks the buzzword “IoT” (as meaningless as the buzzword “smart”), is titled “IoT Time: Don’t Feed the Trolls” and it speaks of a real and growing problem. Patent trolls, including some of Microsoft’s, are trying to tax — using patents — every device out there, even routers. One of Microsoft’s patent trolls that does this is still fighting for software patents. Here is what the article said:

The White House estimates that 62 percent of all patent-related lawsuits in 2014-2015 came from these trolls. And although it is a problem in the hardware space, it’s a much bigger one for software folks.

The New York Times in 2012 reported that the number of software patents has gone through the roof in the last few years, and software is hard for courts to nail down in terms of what, specifically, is the proprietary bit of code. Much of the code looks like any other code, even to experts, which leads to after-the-fact lawsuits asking for huge settlements years later.

Improved Patent Quality Means Less Litigation

The US patent system gives us many reasons for optimism, Trump’s presidency aside (we wrote about this last night). With better quality control in recent years the number of lawsuits sank, especially frivolous lawsuits from trolls. Here is how IAM put it:

It has been clear for most of 2016 that the number of new patent litigation cases was going to be down this year in the US. But it is now becoming ever more likely that the fall will be dramatic. According to the latest estimate from Lex Machina, the total amount of suits for 2016 is expected to be 4,586; that’s down from 5,822 last year, which was the second busiest on record.

This data from Lex Machina was mentioned elsewhere as well, though not in publications that are busy glorifying patents and attempting to inflate their value (no emphasis needed on such articles).

PTAB, Inter Partes Reviews (IPRs) and the Courts

David from Patently-O, a rather scholarly site, said that “courts continue to split on whether IPRs (reeexam, reissue, etc.) are “prosecution.””

In our view, a good analogy or parallel here is the EPO’s Boards of Appeal. Here is what David wrote:

I’ve written a lot about so-called prosecution bars (buy some of the books for Christmas gifts here! They make great stocking stuffers for toddlers), and this case is in many ways not that unusual but it does raise one interesting issue and serves as a reminder to both check your side and the other’s for folks who may need to be subjected to a bar, and its scope.

The opinion is not online that I can find but is Emerson Electric Co. v. Sipco, LLC, 2016 WL 6833741 (N.D. Cal. Case No.16-mc-80164-DMR, Nov. 21, 2016). A third party, Linear Technologies Corporation (“LTC”) was served with a subpoena that included a request for its source code. LTC sought to ensure that one of the party’s experts, Ameroth, would not have access to it because he was participating in IPRs. LTC had not instituted the IPRs and was not a party to the litigation.

Everyone agreed to amend to include a prosecution bar in the protective order (apparently it did not, before the subpoena, contain one), but the dispute was over whether Ameroth could view LTC’s source code and still participate in the IPR.

Suffice to say, we’re huge fans of IPRs and of PTAB in general. It helps ensure greater and more reliable control over the quality of patents. It’s a bit like an independent (sort of) regulator of examiners. Its very existence is enough to compel examiners to think twice before they grant a patent in error. PTAB is almost like a watchdog, i.e. the very opposite of Watchtroll who just keeps attacking PTAB. It was sorely needed for over a decade and now it’s under never-ending attacks from the patent microcosm (profiting from the absence of such oversight mechanism).

Here is a very recent article titled “Federal Circuit PTAB Appeal Statistics – November 2016″. It’s from a site of patent law firms and it says:

Through November 1, 2016, the Federal Circuit decided 128 PTAB appeals from IPRs and CBMs. The Federal Circuit affirmed the PTAB on every issue in 101 (78.91%) of the cases, and reversed or vacated the PTAB on every issue in 9 (7.03%) of the cases. A mixed outcome on appeal, where at least one issue was affirmed and at least one issue was vacated or reversed, occurred in 11 (8.59%) of the cases.

78.91% affirmation rate is very high and it’s similar to the rate of CAFC invalidations of software patents.

MIP also wrote about PTAB last week (Mr. Loney writes a lot on the subject from New York). “Though the AIA and PTAB have made strides in curtailing the practices of the non-practicing “trolls”,” it said, “patents can still be monetized through these same methods by operational and non-operational companies alike.”

Watch what PTAB does to the patent troll of Ericsson, based on this report from MIP: “In Unwired Planet v Google, the Federal Circuit has declared: “The Board’s application of the ‘incidental to’ and ‘complementary to’ language from the PTO policy statement instead of the statutory definition renders superfluous the limits Congress placed on the definition of a CBM patent””

A lot of the press coverage last week actually focused on this one case. They have been pretty much ignoring all the cases which did not suit them and instead cherry-pick this one case. We’ll deal with that separately later.

PTAB made many people realise that passing the examiners’ ‘quality’ control at the USPTO is not enough, or as IAM put it: “The extent to which patent value and validity are correlated in the current market was called into question last week at Unified Patents’ annual meeting in Silicon Valley.” To quote IAM’s headline (it’s a blog post), “To understand a patent’s true value these days you have to factor in the PTAB” (which habitually shoots down patents even after a grant and without the patents being tested in court).

Remember how companies used to issue press releases to brag about being granted a patent or two? Well, watch how PTAB too gains recognition, based on this press release:

Voip-Pal Announces the USPTO Has Denied on All Grounds Institution of Unified Patents Inc.’s Petition for Inter Parted Review Filed

Voip-Pal.com, Inc. (“Voip-Pal,” the “Company”) (VPLM) is pleased to announce that on November 18, 2016 the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office (“USPTO”) denied on all grounds a petition for Inter Partes Review (“IPR”), IPR2016-01082, filed by Unified Patents Inc. against Voip-Pal’s Routing, Billing and Rating Patent (“RBR”), Patent No. 8,542,815 (“815”)

Patent Microcosm Makes a Mountain Out of a Molehill

As we noted above, in one particular case CAFC did not agree with PTAB. It’s one of those exceptions or rare situations. As expected, patent law firms try to use this one case against PTAB’s legitimacy and they hope to overturn software patents’ death. How many articles did we find about it last week? Plenty! See [1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15] and also “Federal Circuit Tightens Standard for AIA Review” (behind paywall), which generalises based on one single case. Greedy law firms ignored what CAFC has said about PTAB’s function until they got something that supports their narrative/business model, so now they amplify it. It obviously got PTAB foes (patent maximalists) all riled up (see Watchtroll) and various sites that wrote about it were careful to note that it’s just one case of many. If one actually bothers visiting the USPTO’s site, there’s a post there which calls PTAB a success. To quote: “As part of the USPTO’s ongoing Enhanced Patent Quality Initiative, in April 2016 we launched the Post Grant Outcomes Pilot, focused on pending patent applications that are related to issued patents undergoing an America Invents Act (AIA) trial proceeding before the Patent Trial and Appeal Board (PTAB). We’d like to report that the Post Grant Outcomes Pilot has succeeded in making examiners aware of patents related to applications they are examining that are involved in PTAB trials, and in turn has facilitated the timely and effective examination of applications.”

Here is an article about that:

Post grant pilot a success, says PTAB chief judge

A US initiative called the “post grant outcomes pilot” has been a success, according to the chief judge of the Patent and Trial Appeal Board (PTAB).

In a blog by David Ruschke, chief judge at the PTAB, and Drew Hirschfeld, commissioner for patents, the pair noted that the pilot had “succeeded in making examiners aware of patents related to applications they are examining”.

This in turn facilitated “the timely and effective examination of applications”.

As part of the US Patent and Trademark Office’s (USPTO) ongoing “enhanced patent quality initiative”, the pilot was launched in April to focus on pending patent applications that are related to issued patents undergoing an America Invents Act (AIA) trial proceeding.

We sure hope that Ruschke and his colleagues will keep their job after the Trump administration fills the swamp, as it so habitually does amid transition. It looks like Lee will be pushed out, so what will that mean for PTAB and the America Invents Act (AIA)?

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