What You Can Do to Prevent Multiple Petitions (or How You Can Successfully File One) -- Part I: The PTAB's "Multiple Petition Study"

By George "Trey" Lyons, III --

As an endcap to a recent webinar Andrew Williams and I did on the most important PTAB stories from the past year, I addressed the effects that multiple, often serial, petitions can have on patent owners and their patents, and what can be done to alleviate some of the associated stresses -- or increase them if you're the petitioner.  See Top Stories at the PTAB: What You Need to Know (Mar. 13, 2018), available here.  As final topics often go, however, my coverage was constrainedly brief.  So, here I will unpack the analysis patent owners and petitioners, alike, should keep top-of-mind when moving through this strategy.

To frame this issue, for PTAB petitioners who pay no attention to sunk-cost fallacies, the idea of throwing good money after a bad petition (e.g., those filed by another petitioner, based on different art and/or arguments) may always seem like the most aggressive and effective option at your disposal.  From the point of view of the patent owner, the anxiety of finding yourself as the recipient of a multiple petition barrage crying for the revocation of your hard-earned patent rights is often real, and may even seem fundamentally unfair.

Understanding this concern, late last year the PTAB undertook a comprehensive study to look at just how many patents have actually faced multiple petitions, who filed them, when they were filed, and how effective they were, both in terms of institution rate and the number of challenged patents that were ultimately lost (in whole or part).  See Multiple Petitions Study (Oct. 24, 2017), available here.  Because both the ultimate message (i.e., "Fear not, multiple petitions are really not that big of a threat") and the delivery (e.g., fairly confusing metrics, etc.) felt a little unsettling, a few key aspects of the study are likely worth further explication.

In the study, the PTAB reviewed 7,168 petitions addressing 4,376 patents.  From this, taking a "just the facts" approach where we can, some of the more important statistics presented in the study were as follows:

Who's Filing:  84.8% of patents were challenged by a single petitioner, and 94.5% faced two or fewer.

What's Being Filed:  67% of patents are challenged by one petition, 20.2% of patents are challenged by two petitions, and the numbers fall off quickly from there.

When Are They Filed:  Next, in slightly different approach, the PTAB examined when all of these petitions were actually filed.  The presentation, however, may have been a little misleading considering the topic at hand -- the impact of multiple petitions on post-grant proceedings.  The PTAB's graph below indicates that 79% of petitions are filed before the patent owner preliminary response or institution decision, 95% of petitions are filed in a given petitioner's first round (before any institution decision), and only 5% of petitions are filed after a patent owner preliminary response, but before institution decision.

The slightly confusing part of this graph, however, is that some might interpret it on first impression as applying only to multiple petitions.  Not so.  Instead, the 41% (seen here in purple) included in the PTAB-touted "79% of Petitions" being filed without the benefit of seeing a patent owner preliminary response or institution decision are actually instances in which only one petition was ever filed.  But, if you are more interested in the more pressing question seemingly at the center of the study -- when multiple petitions were filed -- the percentage of "wait-and-see" petitioners are actually much more substantial.  Specifically, normalizing these percentages over the number multiple petitions filed, the impact looks more like this:  64.4% of multiple petitions were filed on or near the same day, 8.4% were filed after the patent owner preliminary response, and 27.19% were filed after the decision institution.  Thus, if you're going to be filing (or facing) multiple petitions, the "wait-and-see" strategy seems to be alive and well.

Finally, perhaps not surprisingly at this point, the Board also found that instances of any further, subsequent rounds of petitions past a second round were statistically insignificant (less than 0.1%, and where a "round" is all petitions filed before receiving a decision institution on one of those petitions).  Considering the typical timeline from filing to institution decision in light of the statutory time bar for filing, the PTAB really only confirmed that there are, statistically, very few instances in which multiple full rounds of petitions were filed.

Based on these figures, it would seem that some of the biggest challenges for patent owners who consider these petitions (and PTAB proceedings generally) as "death marches" for their hard-earned property rights (e.g., facing more than one petitioner, facing more than two petitions) are not, statistically, as relevant as some may have thought; but facing the ever-dreaded (and often effective) "wait-and-see" petitioners may well be.

The impact articulated by the PTAB that these petitions actually have on the challenged patent was also very surprising -- although a little difficult to appreciate in the graphs presented below.

Multiple Petition Effect on Institution Decision:

First, the PTAB noted that although institution rates have decreased, the effect that multiple petitions have on those ultimate institution rates is marginal (70% versus 64% in 2017), but has increased slightly (4% in 2013 to 7% in 2016).  To help cut through these figures, the blue line below indicates a measure of the institution rate by patent, which is agnostic of how many petitions were actually filed against the patent (e.g., two petitions filed against a patent, one gets instituted, one does not = 100% institution rate).  The green line, on the other hand, indicates a measure of the institution rate by petition, which is an outcome averaged by how many petitions were actually filed against the patent (e.g., two petitions filed against a patent, one gets instituted, one does not = 50% institution rate).

Thus, as you can see, although the overall institution rate in post-grant proceedings has decreased over the past four years, the impact of filing multiple petitions has increased slightly (note, the figures for 2017 only include analysis for the first half of the year).  Even so, the PTAB's answer to biggest question left on everyone's lips -- "What will this process ultimately mean for my patent (or the one I'm challenging)?" -- was perhaps the most surprising of all.

Multiple Petition Effect on Ultimate Outcome of the Challenged Patent:

Turning to this answer, it is clear that the real effect of multiple petitions is most naturally viewed by considering how these same variables affect the ultimate outcome of the trial[s] and how the patent itself actually changed by going through it [them].  In the graph below, once again the blue and green coloration reflects the scenarios above, which indicate that 69% of all petitions result in a patent being unchanged and 58% of patents are completely unchanged at the end of one or more AIA proceedings.  Furthermore, the PTAB's figures also indicate that multiple petitions are slightly more beneficial for challenging some claims as unpatentable, as opposed to all claims as unpatentable.  Regardless, from the PTAB's view, the impact of multiple petitions in post-grant proceedings on the number of challenged patents that were ultimately lost (in whole or part) does not seem as great as some people feared.

Takeaways:

Bringing all of this back home, although somewhat hard to believe the results of the PTAB's "Multiple Petition Study" seem to indicate that the threats posed to patent owners by petitioners "abusing the system" and filing multiple petitions is not as rampant or pressing as many believed -- at least based on the PTAB's metrics.  The effect that these statistics really have on strategies for navigating post-grant proceedings moving forward, however, really seems to be threefold, all depending on the chair you're sitting in.

First, if you're in the petitioner's chair, and you want to make multiple attempts at invalidating a patent using these proceedings (e.g., correct deficiencies of your own petition, divide and conquer claims, or show another petitioner what they should have argued), you're going to be inclined to throw good money after what you've perceived to be bad (or, more fairly, incomplete) results.  Second, if you're in the patent owner's chair, you don't really care what this study says or what happened to anybody else, because you just got a second (or potentially third, etc.) petition dropped in your lap and you want to know the best path forward.  And third, if you're in the PTAB's chair, based on this study, you probably don't even think there's a problem, and even if there is, you'll deal with it in the "broad discretion" you've been granted by 35 U.S.C. §§ 314(a) and 325(d).

But all said, because this strategy is likely not going away in the foreseeable future, we will turn to the factors and strategies at play when navigating multiple petition proceedings in light of this study and subsequent case law in the next installment. 

Comments

[Jonathan Stroud]

(*In my personal capacity*)

George, I have to take issue with this on at least one front---while it's a thorough editorial on the strength of the numbers and the state of challenges as a whole, it doesn't really tell practitioners what they should or shouldn't do in their particular cases.

I would recommend that all petitioners filing a second or subsequent petition should explain, at length, the timing, presentation, delay, and reasons for their filing, including factors relevant to parallel district court litigation, licensing, ITC litigation, and Federal appeals.

On the patent owner side, I think the study does an admirable job tipping the Board's hand on what they might look to when denying a second or subsequent petition---factors like unreasonable delay, using the first or earlier petitions as a roadmap to harass the patent owner, a lack of seeking or creating situations for joinder or consolidation where relevant, and the like. I think the single biggest factor the Board will consider, whether this is made explicit or not, is fairness to both parties---i.e., if a defendant is sued for infringement, the Board is likely going to consider it fair for that defendant to proceed, unless it appears they're objectively trying to harass or prejudice the patent owner. On the flip side of that, a complete absence of explanation (or a weak or short one) is something a patent owner can easily exploit. I think that's the practical takeaway of the fascinating study. We can parse the numbers all we want, but in my experience, it's always best to file first, and any petitioner's counsel who's trying to wait and see is doing so at their own risk.

[Trey Lyons]

Hey Jonathan,

Thanks for weighing in. I agree with a lot of what you've said here, particularly that the Board is always going to take a little harder look at follow-on petitions. This is not a groundbreaking revelation; but one, like you, I agree is often overlooked by counsel over-relying on "wait-and-see" tactics.

But, again, this post was just an attempt to cut through the PTAB's study and illustrate what the numbers really said, so I can tee up the issues for further, more practical analysis in part II.

Looking forward to your input there as well...

All the best,
Trey