Kappos Gives Presentation at PLI Post-Grant Program


Director KapposOn Wednesday, March 27, 2013, the Practising Law Institute hosted the New York edition of the all-new USPTO Post-Grant Patent Trials program. This was the second of four stops across America for the program. The first stop was in Chicago on March 4, 2013. The remaining live presentations will be in San Francisco, CA, on April 15, 2013, and in Austin, TX, on April 29, 2013.

The headliner for the New York event was David Kappos, the former Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. Kappos, now at Cravath, Swaine & Moore, provided an overview of what has been happening at the Patent Trial and Appeals Board (PTAB). The slides were prepared by the USPTO and the presentation was originally scheduled to be delivered by Chief Judge James Smith of the PTAB, who unfortunately had to back out due to sequestration/budget matters.

Kappos ably filled in and was a fountain of useful information on the PTAB, what the Office is doing and why. He was, of course, the head of the Office at the time the America Invents Act (AIA) was passed and was intimately involved with the formulation of the Appeals rules that went into effect at the end of 2011 and the many rules packages dealing with the new post-grant trial procedures that went into effect on September 16, 2012, the one year anniversary of enactment of the AIA.

Kappos started with some straightforward facts and figures:

  • As of January 14, 2013, the USPTO has 164 Administrative Patent Judges and well on the way to doubling the size of the Board compared to where numbers were when hiring started. The USPTO’s goal for fiscal year 2013 is to hire an additional 60 APJs, bringing the total number of judges to over 200 by the end of FY 2013.
  • The Board backlog crested at over 27,000 cases in October 2012, but has since come down and is now on a noticeable downward trajectory.
  • The Board affirmance rate of examiners is 54%, with 29% reversed and 14% affirmed-in-part and reversed-in-part.

Substantively, Kappos also spent time explaining that the PTAB will increasingly issues short per curiam decisions in an effort to address appeals but drive through the backlog. Program Co-Chair, Rob Sterne asked Kappos whether this would present problems for those who might want to appeal to the Federal Circuit. Given the standards applied by the Federal Circuit will it be possible for an applicant ever be able to satisfy the standards? Kappos acknowledged that is a concern and why we will see hundreds of shorter per curiam decisions rather than thousands. Kappos explained that the USPTO wants these types of decisions issued only when the record is extremely clear, making a detailed decision of the Board less necessary.

Interestingly, Kappos also raised the question about what happens if the Board does not complete the post grant trial proceedings within the maximum time allocated in the statute. He suggested that if a case goes uncompleted through the statutory maximum that he thought that the USPTO would lose jurisdiction over the case. As streamlined as things seem at the USPTO now, and as well as things seem to be running at the moment, it is easy to envision that the USPTO will eventually miss a deadline. Only time will tell what happens then, and if the USPTO will believe they lack jurisdiction. While Kappos is probably correct it seems unlikely to me that the USPTO would take the position that failure to meet a deadline strips jurisdiction.

During the Q&A period there was also discussion of the fact that over 95% of inter partes reviews that have been requested have been granted despite what was pitched as a heightened standard to initiate when compared with reexamination. Program Co-Chair Scott McKeown explained that when speaking with the Judges at the USPTO they are quite concerned that they will be viewed as “patent killers.” They have pointed out that in some cases where the petitions have been granted they have been granted to some, but not all claims.

Rob Sterne also raised in interesting question about “patent pirates,” asking whether there is any reason why one couldn’t just approach those with important patents and tell them that unless they are paid they would file post-grant trial proceedings against them. It seems to me that this could be an antitrust issue, not to mention just an old-fashion shake-down, but we know how well the patent litigation system has been at handling clearly shake-down, extortion-like lawsuits brought by the truly bad actors.

Kappos steered clear of the “patent pirate” issue, but did point out that there is a self-selecting nature associated with inter partes review, which could well explain the high allowance rate. Given the cost of initiating, the estoppel that attaches and everything at stake it seems logical that only when there seems to be clear evidence to question claims would it make sense to bring such a proceeding.

All in all the program was very good, and Kappos’ presentation excellent.

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