PTAB ineffective at eliminating low-quality patents


Those who engage in patent assertion activity are not per se bad actors, or patent trolls, simply because they choose to exercise the exclusive rights granted by the federal government. In fact, the FTC recently acknowledged the term “patent troll” isn’t helpful. “In the Commission’s view, a label like ‘patent troll’ is unhelpful because it invites pre-judgment about the societal impact of patent assertion activity without an understanding of the underlying business model that fuels such activity,” the report reads.

Of course, it is true that the number of patent infringement lawsuits are up significantly compared to the 1980s. It is also true, however, that the increase in patent infringement lawsuits that came after passage of the America Invents Act (AIA) was deemed desirable by Congress. Indeed, it seems that Congress specifically envisioned more patent infringement cases (i.e., a higher volume) because they made the conscious choice to make it difficult (if not impossible) for patent owners to sue large numbers of infringers in the same lawsuit. Thus, the spike in cases that came after 2011 was an intentional feature of the AIA. Even that being the case, quarter after quarter we see patent litigation declining. See herehere and here, for example.

But a recent article authored by Karl Fazio, who is Chief Patent Counsel for Pearson, makes the case that the patent system remains broken because bad actors continue to harass individuals and corporations with bad patents. But that wasn’t supposed to happen after the AIA passed and created post-grant administrative trials! Indeed, the AIA was supposed to fix the harassment brought by bad actors, but hasn’t. Therefore, a strong case can be made that the Patent Trial and Appeal Board (PTAB) has been a failure…failing at its primary job to provide an alternative forum for cheap, fast review of these bad patents being used to hold innovators hostage.

The Fazio article demonstrates how and why the PTAB has fundamentally failed its purpose. Fazio writes:

These broad, vague patents have become glaring targets for trolls, who are eagerly buying them up and asserting them wherever they can. As a result, companies are being sued for patent infringement for things that aren’t directly related to their end products and services.

Rather than wasting time, energy, and money litigating such cases, many companies simply settle their troll cases, further depleting their IP budget.

Post-grant challenges were created in the AIA for the express purpose of getting rid of these low-quality patents. These low-quality patents were supposed to be challenged at the PTAB, invalidated, and the patent troll problem was supposed to eventually go away because trolls would learn there was no money to make. Instead, as Fazio explains, large operating companies sued on low quality patents continue to choose to settle those cases. Thus, the system is broken, only now more so, given that the PTAB has brought uncertainty to the patent marketplace and through nearly five years of operation, caused patent values to crater as it has become easy to challenge all patents, even pharmaceutical patents.

With bad actors in possession of low-quality patents continuing to bring nuisance lawsuits, how much longer before the industry has a serious conversation about whether the cure has been worse than the disease?

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