09.24.17

PTAB Supreme Court Case (Oil States) is a Case of Patent Parasites Versus the Producing Industry

Posted in America, Courtroom, Patents at 8:51 am by Dr. Roy Schestowitz

Patent sharks want (and profit from) legal chaos

Summary: Ahead of the decision regarding Oil States (probably months away, some time next year), various influential sites confront the misleading and self-serving propaganda from the patent microcosm, e.g. law firms (to whom patent quality is a threat)

The Patent Trial & Appeal Board (PTAB) is one of the best things about the USPTO. It’s truly a shame that the EPO is nowadays driving away (to Haar) its own equivalent of PTAB. In this post we’d like to focus our attention on PTAB, having written about it 24 hours ago in relation to the Mohawk tribe.

“Who is it that spreads all the PTAB hate? The patent ‘industry’ (trolls, lawyers and so on).”Let it be understood, upfront, that PTAB is widely supported by scientists, technologists and their employers (including the very largest technology firms). Who is it that spreads all the PTAB hate? The patent ‘industry’ (trolls, lawyers and so on). Covering additional CAFC cases, PTAB basher Dennis Crouch wrote about NFC Tech v Matal a few days ago to state:

Following an IPR administrative trial, the Patent Trial & Appeal Board (PTAB) concluded that the challenged claims of NFC’s U.S. Patent 6,700,551 are unpatentably obvious. The focus of the dispute is on a pre-AIA inventorship claim — The PTAB rejected NFC’s attempt to claim priority to its date of invention.

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On remand, it looks like the IPR case will continue — in its original analysis, the PTAB did not actually determine whether the prototype embodied the claimed invention since it dismissed on other grounds. Thus, NFC is simply one step closer to success.

As we noted here back in August, Crouch and his blog (Patently-O) had become the loudest PTAB bashers out there, probably worse than Watchtroll (if that’s even possible). Crouch just does it with more ‘class’, being a university professor. His bias is showing though. Crouch tries to solicit attacks on PTAB in the form of briefs for the Supreme Court to read.

“Crouch tries to solicit attacks on PTAB in the form of briefs for the Supreme Court to read.”Crouch is of course not alone (albeit he’s almost alone among the professors/academics).

Joining the same sort of attacks (attempts to discredit PTAB) we have this guy who’s writing crap about the EFF in a patent troll’s blog (Dominion Harbor) — the same blog which defames me.

Among his latest tweets:

• Visa wins rare 1 at PTAB: https://e-foia.uspto.gov/Foia/RetrievePdf?system=BPAI&flNm=fd2017004510-09-18-2017-1 … generating verification values passes 2nd part of Alice test [link]
• More patent abuse at PTAB: mass spectrometric imaging of tissue sections rejected as “abstract idea” under 101 https://e-foia.uspto.gov/Foia/RetrievePdf?system=BPAI&flNm=fd2017000075-09-18-2017-1 … [link]

No, enforcing the law is not “patent abuse” but rather combating abuse of the patent system. Classic example of narrative reversal.

“No, enforcing the law is not “patent abuse” but rather combating abuse of the patent system.”Make no mistake about it; all those who attack PTAB seem to be people who produce nothing at all. They just try to tax those who do.

Josh Landau of the Communications and Computer Industry Association (which represents technology companies) has just come out with another long post about how PTAB IPRs (“inter partes reviews”) keep technology safe from patent trolls. To quote:

September marks the five-year anniversary of inter partes review (IPR), and Patent Progress is highlighting how successful the system has been at achieving its stated goals of increasing patent quality by providing a second look at invalid patents and decreasing costs by providing an efficient alternative to litigation. Last week, I showed that, in those 5 years, IPR has saved at least $2 billion in attorneys’ fees and other deadweight losses alone.

One of the most famous IPR successes is EFF’s IPR filed against Personal Audio’s “podcast patent.” Patent Progress has written about that case before, from early on when Personal Audio first asserted their patent to my post on how the STRONGER Patents Act would have prevented EFF from filing their IPR, as well as making it less likely to succeed, through to my story on the recent decision on appeal affirming its invalidity.

But that’s far from the only case where inter partes review has been used by non-profits, cities, small companies, and the U.S. government to defend themselves from patent trolls. In fact, there’s quite a few.

Jeff Roberts, a good journalist who had written in favour of patent reform for a number of years, wrote the other day: “helpful look at the IPR process, a key plank of patent reform that’s now in jeopardy…”

“We don’t really worry about Oil States because we are pretty certain that the Supreme Court will defend PTAB, taking into account creators rather than destroyers (litigators and trolls).”It’s about an article from another good journalist, Joe Mullin, who habitually exposes patent extremists who prey on people that actually create things (products, code and so forth). He wrote about the analysis from the Communications and Computer Industry Association (CCIA):

Five years ago this month, the first “inter partes review” began, a process laid out in the America Invents Act, which was passed in 2011. In a piece of legislation that was timid in its scope, the IPR process gave some hope to those in the tech sector who hoped to reduce the scourge of so-called “patent trolls.”

Now that IPRs are seeing their five-year anniversary, it’s a good time to take stock of the process. That’s especially true since the Supreme Court will take a close look at IPRs when it hears Oil States Energy Services v. Greene’s Energy Group, a case that challenges the constitutional basis of IPRs.

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Josh Landau, a lawyer and pro-reform patent lobbyist at the Communications and Computer Industry Association, has written a blog post about the IPR anniversary with some back-of-napkin math estimating how much money IPRs have saved the US economy.

His conclusion: IPRs have prevented $2.31 billion of “deadweight losses” to the economy, mainly in the form of legal fees. How did he get there? Landau used data from defensive patent aggregator RPX that puts the average amount spent by a defendant facing a “non-practicing entity” (the polite term for patent troll) at $950,000. He then limited the universe he was looking at to only IPRs that were on patents that had associated litigations and in which the related litigation was stayed. In other words, he focused only on the subset of IPRs that objectively ended some type of litigation costs.

Using the average costs, Landau added up the cost of the litigation that would have gone on but for IPRs. The total was $3.95 billion. That money was saved by spending $1.637 billion on the IPR process, leading to a net savings of $2.31 billion.

“That’s approximately $460 million a year that companies can spend on creating new jobs and researching new technologies, instead of paying lawyers to write motions and argue in court,” Landau writes. “To me, those numbers say IPR has been a tremendous success.”

To be fair, there are some costs not accounted for in Landau’s rough estimate. For instance, he assumes that IPRs always end lawsuits. But in at least some cases, where the patent survives, the IPR process doesn’t lead to a quick settlement, meaning court litigation will continue.

We were pleased to see that even Spectator, a fairly influential publication over here, wrote about the subject under the headline “The Patent Troll Lobby Never Learns From SCOTUS” (the “troll lobby” being — among other things — sites like Watchtroll and Patently-O, which consistently help trolls).

To quote:

In 2007, the court ruled that obvious ideas like connecting a car’s control panel to electricity were not patentable, invalidating a troll’s joke patent, in KSR International v. Teleflex Inc. Then, in 2011, the court found that a law of nature (like, say, the law of gravity) could not simply be patented because someone had filed a patent with the words “apply it” involved in Mayo Collaborative Services v. Prometheus Laboratories. Then, in 2014, the court ruled that vague software patents were invalid in the case Alice Corp. v. CLS Bank International, invalidating one of the favorite weapons of patent trolls to hamstring innovators. And finally, this year, in TC Heartland v. Kraft, the court put serious limits on the venues in which patent lawsuits could be brought, effectively emasculating the patent trolls’ favorite tactic of bringing suits in the notoriously plaintiff-friendly East Texas District Court.

Again, all of these decisions were unanimous. However, as already stated, patent trolls once more think they have a winner. This time, their target is the Inter Partes Review process, a common-sense process by which the Patent Trial and Appeal Board (PTAB), an offshoot of the U.S. Patent and Trademark Office (USPTO) can invalidate patents that, for whatever reason, were granted erroneously. The trolls claim this process is unconstitutional, the USPTO obviously disagrees, and while it has previously declined to weigh in, this time the Supreme Court has decided to (literally) lay down the law, in the upcoming case Oil States Energy Services LLC v. Greene Energy Group.

As is commonly the case in such disputes, both sides of the case argue from seemingly ironclad constitutional precedent. Ryan Davis of Law 360 has explained their respective interpretations of the law ably, but to summarize briefly, the central point that seems the most likely to decide the case is whether the Inter Partes Review process strips legitimate private property rights from patent owners in an unconstitutional fashion, or whether it merely acts as a continuing use of the USPTO’s well-established power to decide whether the supposed rights in question are enforceable at all. Further, there is some question as to whether the over-a-century-old case of McCormick Harvesting Machine Co v. Aultman & Co., which the trolls rely on to make their case, amounted to a rebuke of the patent office’s authority to reexamine patents on constitutional grounds, or merely on the grounds that such authority did not exist in the Patent Act at the time the case was decided, but has since been added.

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In short, whatever the legal merits of Oil States, and there is plenty of reason to believe they are lacking, at a policy level, a finding for the trolls would be disastrous. One only hopes that the Justices keep up their continuing streak of recognizing such disasters and snuffing them out before they arrive. Then maybe, just maybe, the fifth time will be the charm for the patent bar’s increasingly desperate attempts to defend its own overreach.

We don’t really worry about Oil States because we are pretty certain that the Supreme Court will defend PTAB, taking into account creators rather than destroyers (litigators and trolls).

“The patent ‘industry’ has done everything possible to bypass patent quality control and circumvent true patent justice.”The other day, Ilya Kazi, senior partner of Mathys and Squire in London, mentioned PTAB and said that he “made use of material from US litigation in EPO proceedings” (he worked for British Gas in patent infringement action).

From his long article (which suggests PTAB-dodging, e.g. the Mohawk “scam”):

The surge in popularity of Patent Trial and Appeal Board (PTAB) review procedures in the US in the last few years is testament to the notion that the best way to defend US court patent infringement proceedings is to win a battle somewhere else instead. Although rarely considered (and often not applicable), somewhere else may sometimes be in Europe rather than in the US. I have made use of material from US litigation in EPO proceedings, putting the other side in a difficult position to try and deal with the EPO challenge without undermining their US position. The most satisfying such occasion resulted in a call from a US colleague shortly after spending only a few thousand dollars filing an opposition saying “I don’t know what you did, but we just had a call offering to settle everything, including the US litigation (which wasn’t going very well after years and millions of dollars) on favourable terms.”

Back in US courts, being (overly) aggressive can sometimes achieve results it arguably should not in an ideal world. More importantly, even if trying an aggressive and/or diversionary tactic fails and does not ultimately help a case, unless particularly egregious, it is not often particularly unhelpful and is unlikely to carry serious sanctions particularly in costs, or materially prejudice a case.

Little of this will be news to seasoned US litigators, although they might say that things have mellowed somewhat since the high water mark of early Eastern District of Texas cases. However, for Europeans faced with litigation in the US, cautions which might apply elsewhere do not necessarily apply to US litigation (and this varies somewhat from court to court) so while you should of course question costs and the need to take certain actions, don’t necessarily baulk at what US counsel suggests. Conversely, tactics applied in US litigation may not translate well elsewhere.

Notice the wording. It’s not about justice but about winning a case (at all costs!), so Justices in the US ought to see through these rhetorics. The patent ‘industry’ has done everything possible to bypass patent quality control and circumvent true patent justice. Justice is not the business model of law firms but the ‘business model’ of judges (who rely on reputation, consistency, and lack of decisions being overturned due to error of judgment). This is why we need PTAB not only in the US but also in Europe; sadly, however, Battistelli has diminished and severely assaulted the European appeal boards -- a mistake for which we'll pay for decades to come. █

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