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Tuesday, 16 June 2015

Monarchy in the United States: validity is king, for patents at any rate

The IPBC Global 2015 Intellectual Property Business Conference is being this year in the Palace Hotel, San Francisco, to the delight of its close-on-700 participants. The first three sessions, two plenaries dealing respectively with patent sales and purchases and inventor-entrepreneurs, have been posted on the IP Finance blog here and here, together with a report on the breakout session dealing with small businesses, here. This post deals with a more mainstream IP topic, patent validity, which was the subject of the "Validity is king" breakout session. 

Moderator Julia Elvidge (President, Chipworks) opened this session with a review of the America Invents Act (AIA)'s inter partes reviews, asking whether the Patent Trial and Appeal Board (PTAB) was truly a patent-killing board, as former judge Randall Rader had suggested, or whether its initially harsh treatment of patents had mellowed somewhat.  She also adverted to Alice Corporation v CLS [noted on the IPKat here], to which the other speakers would later refer. 

Dana Hayter (Vice president, legal and corporate affairs and associate general counsel, technology licensing, Intel) was first to speak, reviewing at a fairly high level the current patent litigation environment. The new administrative proceedings under the AIA have the effect of slowing down the rate at which deals are struck and tends to reduce the number of naked patent deals (NPDs). Licensors will now have to risk some of their strongest assets before the PTAB. 

Michael Lennon (Partner, Kenyon) then took over. There are more and more opportunities for defendants to challenge the validity of valuable patent assets, he explained, as well as more chances to cite prior art. The USPTO uses a lower standard of proof for invalidating patents than does the District Court, he said, and if patent owners are dragged into inter partes reviews there are more opportunities for defendants to obtain stays -- which is also to their advantage, particularly when it comes to negotiating a settlement. Apparently more than 30 inter partes requests for review have been filed in respect of a single dispute, which gives some idea of their potential impact on a patent owner's prospects for enforcement. 

Abstract, but still
a recognisable cat?
Micky Minhas (Associate general counsel and head of patent strategy, Microsoft) then spoke on the post-Alice environment in terms of the swing of the pendulum away from software patent grants. A handful of Court of Appeals for the Federal Circuit (CAFC) cases have been even more conservative than Alice, while some other decisions have recognised the patent as covering more than merely an abstract idea. Michael added that it's difficult to characterise things as "abstract" since the word has never been defined and many inventions today that are characterised as functional today would probably have been described as abstract in the past.  Back to Micky, he observed that statistics show that rates of allowances of applications are actually quite sector-specific and don't apply equally across all areas of technology and all types of software.

The final speaker, Laurie Gathman (Principal IP counsel, Philips Intellectual Property & Standards), had performed some research on the survival right of patents following inter partes reviews. Once the battleground was the infringement trial, but now the focus has turned to PTAB invalidity proceedings.  Now the proportion of of successful invalidity claims has fallen and at present around 55% of patent claims survive. In the European Patent Office, in contrast, around one third of patents are held invalid, one third amended and one third upheld as they are.  As the dust settles, it may be seen that the initial death rate of US patents was related to weak patents. It's worth a patent owner concentrating its efforts on attacks on its patents at the inter partes review stage, since there are page-limits on the challenges at that stage, Laurie added. The US scenario now rather resembles the bifurcated system which is currently familiar in parts of Europe. 

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