The vast majority of inter partesreview (IPR) decisions have cancelled claims. Most of these cases deal with electrical and computer patents. Companies need to understand how to use and defend themselves from these proceedings because IPRs are changing the fundamental nature of patent litigation.
Federal Circuit Chief Judge Randall Rader called the Patent Trial and Appeal Board (PTAB) a “death squad.” Specifically, the thought is that the PTAB kills property rights through an administrative proceeding. The PTAB recently fired-back at Rader’s comments putting-forth the statistic that only a small fraction of patents under IPR have their claims completely invalidated. The truth lies somewhere between these two statements. This post will analyze the breakdown of PTAB decisions to show why IPR are an effective way to cancel a patent, but by no means are IPRs a “get out of jail free card” for defendants in patent litigation.
The PTAB tries to argue that it does not invalidate nearly as many patents as practitioners think. However, the PTAB’s own statistics inflate the number of claims not cancelled through an IPR, because the report includes claims that were never challenged in an IPR in the first place, but were in a patent with claims that were challenged in an IPR. This is not an effective measurement because 60% of petitions challenge less than all the claims in a patent. In truth the best way to measure the effectiveness of an IPR is to look at the written decisions and see how many petitions cancel all, some, or none of the claims they seek to challenge.
Practitioners can understand how their trial might proceed by analyzing the breakdown of IPR decisions. This post will not analyze the 122 instances where the PTAB denied petitions or the cases that settled without a written opinion. This post seeks to provide information to practitioners so that they know the results of taking an IPR to final judgment.
As of May 7, 2014, the PTAB instituted IPRs for all claims challenged in 37 of its 42 cases taken through to final written opinion. Of those 37 decisions where IPRs were instituted for all the challenged claims, the PTAB cancelled all the challenged claims in 28 cases. That means the PTAB cancels all challenged claims in 75% of the cases where it institutes a trial for all the challenged claims. Of the remaining nine cases, the PTAB cancelled some of the claims in four, but interestingly cancelled none of the claims in five. This shows it is possible to fight back from an IPR with the patent intact, but it is difficult. In the five cases where patents emerged from an IPR unscathed, the patent owner systematically picked apart the petitioner’s case, point-by-point. Picking apart a petitioner’s case, as opposed to arguing why the patent owner’s patent was valid, appears to be the most effective way to fight an IPR. Interestingly enough, the only patents that have survived an IPR unscathed so far are ones where the PTAB instituted an IPR for all claims in the petition. A different breakdown occurs when only some of the claims in the petition proceed to an IPR.
So far, only five written decisions have come from cases where only some of the claims in the petition had a trial instituted. This could be because the petitioner realizes the weaknesses in their case and settle early. Of those five cases, two have all the claims in the IPR cancelled, and three have only some of the claims in the IPR cancelled. Interestingly enough, none of the decisions where only some of the claims had an IPR instituted ended up finding all the claims patentable.
The PTAB cancels claims in 88% of its final written decisions. This statistic seems high, but the vast majority of IPRs settle, and perhaps only the strongest IPR cases do not settle. As practitioners become more comfortable with inter partes reviews, these proceedings may soon be filed alongside almost every patent suit. Even if the PTAB reviews every patent objectively, the numbers indicate that a patent examined in an inter partes review will more than likely have at least some of its claims cancelled.
Technology, manufacturing and transportation companies need to understand that while IPRs can be a threat to their patents, they can also be an effective shield from patent litigation. If a company has its patents challenged in an IPR it must decide between fighting the IPR by picking it apart or by amending its claims – because choosing both has not proven to be an effective strategy. Alternatively, if a company is sued it has a chance to challenge the validity of a patent with a much higher likelihood of success than in a district court. This can save time, money, and frustration caused by lengthy patent lawsuits. The institution of an IPR does not automatically spell the end for a patent, but careful steps must be taken depending on the company’s goal.