Giving the Federal Circuit a Run for Its Money: Challenging Patents in the PTAB

Abstract

In 2012, Congress changed the patent landscape in a crucial way. In an attempt to deal with the perception that low-quality patents and suits instituted by nonpracticing entities (“trolls”) were imposing a heavy tax on innovation, the legislature established the Patent Trials and Appeal Board (PTAB) to review the validity of patent claims under three new inter partes procedures. These procedures have proved extremely popular and startlingly effective at weeding out bad patents. But with a cancellation rate of close to 80% of the claims tried, the PTAB has been heavily criticized as a “death squad,” the place where patents go to die. This study looks beyond the numbers to examine the decisions themselves. Seen from that perspective, I argue that the high rate of cancellations is unexceptional. Challengers come forward only when they have strong cases; many claims rise or fall together; and the same claim may be the subject of multiple challenges, be it by different parties, or by the same party using different prior art or asserting different theories of invalidity.

My main objective is not, however, to defend the PTAB. Rather, it is directed at institutional questions, to gauge how well the PTAB functions to ameliorate the effect of Federal Circuit’s isolation as the sole court hearing patent appeals: to see whether PTAB decisions provide a basis for the Federal Circuit to consider new perspectives and to examine whether the decisions will furnish better guidance to the examining corps and to the district courts. A second goal is to draw greater academic attention to the potential these procedures have for changing the patent system and to provoke discussion — outside the emerging PTAB bar — on how they ought to operate. In particular, the statute layers inter partes review in a specialized agency under appellate review in a specialized court. I offer some thoughts on how authority over patent jurisprudence should be allocated between these two centers of expertise. The Federal Circuit was an important experiment in judicial administration; these procedures represent a further experiment in structuring the administrative state.

Keywords: patents, intellectual property, claim construction, standing, standard of review, PTAB

JEL Classification: O31, O34, O38