Software patents now in a deadlock

Summary: At an accelerating pace and with growing determination, PTAB (part of AIA) crushes patent trolls and software patents; the statistics and latest stories speak for themselves

THE USPTO, owing to the Leahy-Smith America Invents Act (AIA) and the Patent Trial and Appeal Board (PTAB), improves patent quality, but patent maximalists aren't happy. To them, patent quality is a threat, not a goal. Patent Docs, a site of patent maximalists which we mentioned in our previous post, has just promoted this event ('webinar') which explores "the AIA’s impact on an inventorship determination?"

What we're expecting to happen there is based on who attends and speaks; it's an event of patent maximalists.

One patent maximalist, writing in his blog yesterday, showed patent backlog decreasing as well as (apparently) the number of applications and patents too. Some sources say that this year will see a turnaround in the sense that the number of patents granted will have declined. What's not declining is post-grant reassessments and invalidations.

According to Docket Navigator, "411 petitions were filed in the first quarter, up on 373 petitions in the fourth quarter of 2017," so PTAB rises still, smashing bogus patents. As Managing IP put it on Thursday:

Managing IP analyses Docket Navigator data on PTAB petitions filed in the first quarter of 2018 to reveal the most active entities and law firms

Patent Trial and Appeal Board (PTAB) filing for the first quarter arrested a downward trend. Some 411 petitions were filed in the first quarter, up on 373 petitions in the fourth quarter of 2017 and 393 in the third quarter....

Very good. PTAB is about cracking down on patents rather than granting more and more of them (irrespective of merit). The more of PTAB, the better patent quality will become.

The patent reform (AIA) made programmers a lot happier and capable of going on with a freedom to operate (as in develop), not to litigate or be sued.

"Let’s debunk myths," HTIA wrote some days ago. "Patent reform has not harmed innovation. The 300 U.S. companies who have invested the most in R&D have increased R&D spending by 44% since 2012."

This links to their press release from Dec 14^th (2017). They're also linking to an article from January, adding: “If you think your business is too big or too small or too off the radar to fall prey to a patent troll, think again. Your business can be a target — & the damage spreads far beyond the office of your general counsel."

HTIA is backed by technology companies both large and small. Not law firms; HTIA is like a lobby against these patent maximalists.

AIA alone did not fix things, but conjoined with Alice and IPRs it became a software patents-smashing machine. We love it! The patent maximalists hate it and they have set up lobbying groups against it. Some even try to create PTAB-bashing entities like Anticipat. In its latest post it admits that about 90% of the time IPR (patent challenge) appeals will fail and thus rubbish abstract patents. These will remain rubbished even upon appeal, so why bother? To quote:

As seen from Anticipat’s daily recap emails, last month the PTAB reversed a slew of abstract idea rejections. As already discussed in our blog post, several of these reversals related to business method applications. Using Anticipat’s Research database to look even beyond last month, we see interesting results relating to trends of business method appeals outcomes.

The term “business method” has been broadly defined as “a method of operating any aspect of an economic enterprise”. Tech center 3600 includes broad categories of business methods. For example, three sets of art unit groups are listed below.

[...]

For the past year, these abstract idea rejections for business method applications have been consistently reversed at about 10%. This is a very low reversal rate compared with all grounds of rejection. But as applicants choose to appeal rejections of their business method applications, even if the reversal rate stays low, it still means that a large number of such rejections will get reversed. That is, a 10% reversal rate of 120 applications still yields 12 reversals even if it took a lot of applications to get there.

Business method applications are taken into account above; but Alice goes further than this and impacts software patents, too. Don't believe the spin about software patents making a comeback. There's absolutely no such comeback. Peter Leung, writing in Wall Street media (Bloomberg), becomes a megaphone of the patent microcosm's spin to that effect; he's just name-dropping Berkheimer and Aatrix (or 'pulling a Berkheimer'), as if these mean much for CAFC and PTAB (old and forgotten).

Quoting Leung:

A set of recent decisions by the nation’s patent appeals court may make it more difficult for defendants to score quick victories in infringement cases.

The U.S. Court of Appeals for the Federal Circuit has rejected several trial court rulings disposing of cases in their early stages, criticizing lower courts for not doing enough to analyze relevant factual disputes.

Those decisions are warning shots to trial courts that the lower courts shouldn’t gloss over factual disagreements when considering whether a patent covers eligible subject matter. Trial courts may become reluctant to hand defendants early victories that allow them to avoid lengthy, costly litigation.

These defendants are victims a lot of the time; it's not even about whether they infringe or not but about whether the claimant has a bogus patent which should never have been granted. The patent office has a responsibility to clean up the mess it created.

Patent maximalists like Mr. Gross continue with their anti-Alice/PTAB rants. "Inconsistent PTAB €§101 rulings," he alleges. "SAME applicant (Visa) found eligible by 1 panel bc "claims as a whole is directed to an improved encryption device" e-foia.uspto.gov/Foia/RetrieveP… but NOT by different panel: e-foia.uspto.gov/Foia/RetrieveP… bc "computer is used as a tool in its ordinary capacity"..."

As if no court ever changed its mind? Ever? Based on new evidence or different grounds?

It's worth noting that PTAB still stops a lot of software patent trolls, such as those that Mr. Gross habitually promotes and writes for. The notorious patent troll Personal Audio, for example, is not quite dead yet. But its patents may be, thanks to PTAB. Unified Patents' Robert Jain wrote about what happened 4 days ago:

On April 11, 2018, the Patent Trial and Appeal Board (PTAB) instituted trial on all challenged claims in an IPR filed by Unified against U.S. Patent 9,280,886 owned and asserted by Wireless Monitoring Systems, LLC, an NPE controlled by Bradley D. Liddle (an individual connected to Personal Audio and several other patent assertion entities). The '886 patent, directed to circuit monitoring devices (such as those employed in motion detectors, smoke detectors and the like), has been asserted in multiple litigations against such companies as AT&T, Comcast, ADT, Frontpoint Security, CenturyLink, Charter Communications.

At Patent Docs, Andrew Williams mentioned Personal Audio, LLC v Electronic Frontier Foundation (EFF) -- a very famous case where the PTAB disarmed a troll. Williams talks about Luitpold Pharmaceuticals, Inc. v Pharmacosmos A/S and takes note of the decision:

Which parties to an IPR proceeding have standing to either appeal or participate in an appeal from an adverse final written decision by the Board? The Federal Circuit had previously held that a petitioner that did not otherwise have Article III standing could not appeal an adverse decision (Phigenix, Inc. v. Immunogen, Inc.), but that a successful petitioner was "not constitutionally excluded from appearing in court to defend" a decision (Personal Audio, LLC v. Electronic Frontier Foundation). Today, in Luitpold Pharmaceuticals, Inc. v. Pharmacosmos A/S, the Federal Circuit answered in the negative the question whether a petitioner otherwise without standing could cross-appeal a final written decision in which some of the claims were determined to be patentable. In a two-page order, the Court stated that "[b]ecause Pharmacosmos has not established an injury fact sufficient to confer Article III standing," it was dismissing the case. However, because the order is nonprecedential, and more importantly because there was no discussion or analysis as to why Pharmacosmos lacked standing, it is unclear what the broader implications of this case will be. Nevertheless, by looking at the underlying briefing and oral argument, we might be able to glean some information about the contours of what is required to find petitioner standing for IPR proceedings.

So not much can be learned from it and it's nonprecedential, too.

Going back to Unified Patents, another patent troll, IP Edge, is hiding behind proxies like Kaldren and blackmails a lot of companies. PTAB to the rescue? It seems so:

On April 11, 2018, the Patent Trial and Appeal Board (PTAB) instituted trial on all challenged claims in an IPR filed by Unified against U.S. Patent 6,820,807 owned and asserted by Kaldren, LLC, an IP Edge subsidiary and well known NPE. The '807 patent, directed to formatting digital data into an encoded pattern (such as a QR code), has been asserted against 39 different companies since only March 2017 including such companies as JP Morgan, Snap, HSBC, General Mills, J.D. Power and Associates, Allstate, and Blue Cross Blue Shield.

It's a software patent. It seems like the patent holder, a troll, has targeted too many angry firms and the punishment will be invalidation of the patent. Such is the post-AIA reality. Software patents, especially if asserted against anyone (mere demands/threats, not just lawsuits), will almost always perish. ⬆