PTAB Chief Judge Discusses Post-grant Review Statistics at IPO Meeting

By Kevin E. Noonan --

The value of the post-grant review programs (post-grant review, inter partes review, and covered business methods review) has been debated since these provisions were enacted as part of the Leahy-Smith America Invents Act in 2012.  Indeed, the legal status of these review programs under the U.S. Constitution has been challenged in a certiorari petition granted for this term in Oil States Energy Services LLC v. Greene Energy Group, LLC.  Nevertheless, these forms of review remain in the statute and have been used as Congress apparently intended to them to be, invalidating numerous patents duly granted by the U.S. Patent and Trademark Office purportedly in error.  Yesterday, USPTO Patent Trial and Appeal Board Chief Judge David Ruschke presented cumulative statistics for these proceedings, at the annual meeting of the Intellectual Property Owners group in San Francisco.

The overall statistics illustrate that inter partes review, the flavor having the broadest scope (being applicable to all unexpired U.S. patents whether granted under the AIA or prior to its enactment), have been used most frequently:  on 7,429 filed petitions, 6,831 (92%) were IPRs.  Of the total petitions, 3,774 (a little more than 50%) were instituted.  And of those petitions that were instituted, 1,733 have reached Final Written Decision.

The breakdown of those Decisions illustrates the experience of patent holders that have raised allegations that these review proceedings (and IPRs in particular) are "death panels" for patents.  According to USPTO statistics, 65% of these decisions resulted in all instituted claims to be unpatentable under Section 102 (novelty) or Section 103 (obviousness) of the Patent Act, while only 19% of the Decisions resulted in all claims being held patentable (the remaining 16% had mixed results).

The technology breakdown for these resolved reviews is as follows:

• Electrical/computer 1,053 (59%)
• Mechanical/business methods 383 (22%)
• Biotech/pharma 205 (11%)
• Chemical 118 (7%)
• Design 14 (1%)

The Chief Judge also presented graphical representations of trends in these review filings:

Institution rates are dropping, according to Office Statistics, from a high of 87% in FY2013 to 63% in FY2017 (ending August 31st).  Electrical/computer (69%) and business methods (70%) continue to have the highest rates of institution, with chemical (67%) and biotech/pharma (63%) being instituted at slightly lower (but still significant) rates.  Pre-institution settlements have increased over the time these forms of review have been available to challengers (from 9-14%) while post-settlement rates have dropped from 90% to 22% (presumably on the basis that patentees believe their chances of at least some claims surviving have increased over the period).

The slide deck also contains a comprehensive slide graphically representing the fate of all 7,429 review petitions filed:

The USPTO in public comments consistently maintains that the post-grant review system in all its forms has had a positive impact on U.S. patent quality and that only those patents improvidently granted are at risk.  This attitude is reminiscent of the sentiment that one "has nothing to fear if they have nothing to hide," but it is certainly the case that, just as the USPTO must have erred in granting at least some of these claims, the PTAB must certainly have erred in invalidating them.  Neither reality can be reassuring to the patent community or the public that relies on the Office to shepherd patent protection for innovation in the U.S.

Comments

[GrzeszDeL]

I think that the "death panels" comment was more accurate than not at the time, but people keep throwing this quote around even though conditions "on the ground" have changed quite a bit.

Cast yourself back to the days when IPRs first came online. I can remember visiting clients to pitch our services in IPRs, and time and again the response was that they were concerned about the estoppel provisions and did not want to involve themselves with these new, unfamiliar procedures. Better to stay with the old, familiar DJ proceedings that they knew so well.

That meant that the earliest IPR petitions dealt only with the most transparently infirm claims. You only filed an IPR if you thought "this claim is *so* clearly invalid that there is no other possible outcome than a declaration of unpatentability." If the claims were less clearly invalid (or, to put it another way, more clearly borderline), challengers were going with DJ actions instead.

The result, of course, was that an overwhelming majority of petitions were both granted and gave rise to holdings of unpatentability. If you only petition against the most clearly invalid claims, then the only results that will be possible will be cancellations. This result is a selection bias phenomenon, not any sort of intrinsic feature of the PTAB.

The next step in this progression was quite predictable: once would-be challengers saw the steep rate of invalidity holdings, they said to themselves "these PTAB trials are death-panels. Let's file our challenges there!" There was, then, a corresponding rush of petitions against stronger claims, with a resulting increase in the rate at which petitions were denied and claims upheld.

We have now reached an equilibrium in which the rate of invalidation is much less than it was at the time of the "death panels" remark. It is time to acknowledge that this characterization is no longer accurate.

[Joe Barrera]

So 60% are computer, e.g., how to transfer telephone calls and store data, or CBM, e.g., how to locate a store by zip code, and less than 20% are chemical/biotech, and likely most are secondary life-management pharma patents, e.g., changing dose from 0.1 to 0.05%, and saying wow it still has some efficacy, that was unexpected! And then transferring ownership to the Mohawk-St Regis. What a joke!

Get in the lab or to the bench top and invent. The PTO is doing its job!

[Anonymous]

Using your numbers, these are hardly "death panels." To prevail as a petitioner, you need to have both IPR instituted (63% chance) AND prevail at PTAB trial (win on all claims - 65% chance). Multiplying the probabilities (because a loss at either stage is a loss) and petitioner has ~ 41% chance of success. Patent owner success rate is also in the 40s% when you look at applications that are denied outright at institution stage and cases where PO wins at trial. The rest of the cases are split decisions.

[Skeptical]

One does not employ product recalls (in and of themselves)as any form of manufacturing quality improvement.

ANYONE stating that what amounts to recalls as being effective in fixing the application examination process simply has no credibility.

[Skeptical]

Anonymous at 11:48 - your supposition (and hence your math) is not correct.

You do not need ALL in each instance, thus your attempt at multiplying probabilities is plain error.