07.17.18

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PTAB and § 101 (Section 101) Have Locked the Patent Parasites Out of the Patent System

Posted in America, Patents at 7:00 am by Dr. Roy Schestowitz

They want to get back in, having put one of them (Iancu) inside the patent office

Locked out

Summary: Patent Trial and Appeal Board (PTAB) inter partes reviews (IPRs) have contributed a great deal to patent quality and have reduced the number of frivolous patent lawsuits; this means that firms which profit from patent applications and litigation hate it with a passion and still lobby to weaken if not scuttle PTAB

DO NOT be alarmed by self-serving lawyers who claim that the US has collapsed in terms of “innovation” or that the patent system is in trouble. The USPTO simply improved its processes somewhat. In whose favour? Not law firms’. Then there’s the even greater contribution of patent courts, which have become stricter in lieu with SCOTUS and the Federal Circuit (the primary appeals court for patents).

“U.S. court denies Jazz Pharma bid to revive narcolepsy drug patents,” says this new report from Reuters. “A U.S. appeals court on Friday ruled invalid patents owned by Jazz Pharmaceuticals PLC covering its narcolepsy drug Xyrem, giving Amneal Pharmaceuticals Inc a boost in its effort to launch a generic version of the medicine.”

Well done. More generics!

This case (Jazz Pharms., Inc. v Amneal Pharms., Inc.) was mentioned some days ago here and elsewhere. It happened on a Friday (decision handed down), so a lot of the media overlooked/missed it. Patent maximalists said:

The patented invention at issue in Jazz Pharms is not a drug or drug treatment, but rather to a “drug distribution system for tracking prescriptions” for drugs with a risk of abuse[1] The PTAB found claims from all six patents to be invalid as obvious.

The core issue on appeal was whether a pre-filing disclosure by Jazz counted as a prior art “printed publication.”

So PTAB discards another bunch of bogus patents which should never have been granted in the first place. It’s good for the public (access to medicine), but we’re still going to see some front groups bashing PTAB over it. A few days ago we mentioned an anti-PTAB article from Thomas A. Hemphill, who does “Strategy, Innovation and Public Policy” in the School of Management at the University of Michigan-Flint. This has just been reposted by The Heartland Institute (rightwing think tank connected to the Kochs, who also bankroll other anti-PTAB think tanks); that says quite a lot about whose interests are served by him.

Michael Risch, another US professor, has just published “What do Generic Drug Patent Settlements Say about Patent Quality?”

This links to a study on which Professor Risch remarked as follows:

An interesting study about Orange Book patents challenged both under Hatch-Waxman and Inter Partes Review caught my eye this week, but perhaps not for the ordinary reasons. One of the hot topics in drug patent challenges today is reverse payments: when the patentee pays the generic to stop a challenge. The Supreme Court has ruled that these payments can constitute antitrust violations. Though the drug companies give reasons, I’ll admit that I’ve always been skeptical of these types of payments.

One of the key questions is whether the patent was going to survive. Most seem to assume that if a company pays to settle, then the patent was likely going to be invalidated. That’s where the draft, Maintaining the Balance: An Empirical Study on Inter Partes Review Outcomes of Orange Book-Listed Drug Patents and its Effect on Hatch-Waxman Litigation, by Tulip Mahaseth (a recent Northwestern Law grad) comes in.

[...]

Additionally, a split among outcomes implies that the settlements were not necessarily because the patentee believed the patent was at risk. If anti-competitive settlements were ruling the day, I would have predicted that most of the (recent) non-settlements would have resulted in patent invalidation. Then again, it is possible that a 50% chance was risky enough to merit a reverse payment settlement in the past. Regardless of how one comes out on this issue, this study provides some helpful details for the argument.

The net effect is reduction in litigation; the patents still exist, but the payouts to law firms may be orders of magnitude lower. Any Patent Trial and Appeal Board (PTAB) inter partes review (IPR) has the potential to either prevent a lawsuit or end a lawsuit, so it basically harms the business [sic] model of lawyers.

Here’s a new IPR example. It’s about MONKEYmedia, which we mentioned here before [1, 2]. To quote Unified Patents:

On July 13, 2018 the Board granted MONKEYmedia, Inc.’s request for adverse judgment and cancellation of all instituted claims in IPR2018-00059 filed by Unified Patents. This request comes shortly after the PTAB’s decision to institute trial for US 9,247,226 directed to a method for storing and playing multimedia so a user can interactively choose to expand or contract displayed content.

As one might expect, attacks on PTAB carry on. Almost every single day now. Even after Oil States, which cemented PTAB’s role in the system.

“The Supreme Crusade to Weaken Patent Rights in America” is the title of the latest rant from Gene Quinn (Watchtroll), who is still attacking the courts. These patent maximalists are totally losing their minds. Judge-bashing is now very common among them. Mind the laughable picture too, showing crusaders as if a religion is being spread (talk about hypocrisy here). Other anti-PTAB ‘activists’ nowadays send input to the USPTO, basically complaining about PTAB and AIA. There are now “over 350 submissions,” according to this.

Claim construction continues to hold focus as the centerpiece of contested patent cases — both in court and in administrative AIA trials (primarily, Inter Partes Review proceedings) before the Patent Trial and Appeal Board (PTAB).

[...]

One of PTO Director Iancu’s early initiatives has been to unify the standards. That process began with a notice of proposed rulemaking with finalized rules coming later this fall.

The USPTO has posted comments submitted on the proposed change — with over 350 submissions.

So the patent microcosm is telling someone from the patent microcosm (Iancu) what to do. It won’t change the courts’ position; it just has the potential to further erode the perceived legitimacy of newly-granted US patents. The above writer is a longtime PTAB basher who mostly celebrates the number of granted patents, not their quality. Going back to Watchtroll, yesterday it published not one but two anti-PTAB pieces, the latter being from the patent microcosm (“Jeremy Doerre is an associate at Tillman Wright, PLLC” and “David Boundy is a partner at Cambridge Technology Law”). They moan about Section 101 (trying to 'pull a Berkheimer') and make inane statements like this one:

We are hopeful that the PTO is using this forced stand-down on multiple appeals as a teachable moment. Will the PTO apply the lessons learned in a § 101 context to improve predictability and efficiency of the entire examination process? And maybe—not so coincidentally—will the PTO take this opportunity to enhance compliance with laws and failsafes that are designed to ensure agency predictability, efficiency, precision, and fairness, laws and failsafes that could have prevented this need to ask the Federal Circuit to vacate PTAB decisions?

They allude to “predictability and efficiency,” but for predictability the USPTO needs to reject all software patents (they’re predictably poor if not altogether bunk), in line with § 101. Notice how one sentence later they repeat “predictability, efficiency” (pointless repetition) and insinuate that the Federal Circuit is needed to “vacate PTAB decisions,” neglecting to say that in the vast majority of cases the Federal Circuit actually affirms PTAB decisions.

We don’t expect intellectual honesty from sites like Watchtroll; sadly, however, these people have connections at the patent office (revolving doors), they bully judges and officials whom they don’t like (e.g. Michelle Lee), and they have money for lobbying and/or think tanks with billionaires like the Kochs on their side. There’s a lot at stake for them, including their very occupation, which has become parasitic at best.

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