Is the Patent Trial and Appeal Board Still a “Death Squad” in Instituting Covered Business Method Reviews?
Last year, then Federal Circuit Chief Judge Randall R. Rader referred to the Patent Trial and Appeal Board (the “PTAB”) as a “death squad,” a view not shared by the PTAB. The focus of this blog is to look at the latest trends in PTAB decisions, specifically in Covered Business Method (“CBM”) reviews, and determine if the PTAB is still a “death squad” for CBM reviews.
The United States Patent and Trademark Office (“ USPTO”) publishes statistics on a quarterly basis for PTAB post grant proceedings. As of October 31, 2015, according to the USPTO, 3,684 Inter Partes Review (“IPR”) petitions, 393 CBMs, and 13 Post Grant Reviews (“PGRs”) were filed since the inception of post grant proceedings on September 16, 2012. In focusing on CBM reviews, the USPTO reported that 247 CBM petitions had reached a final disposition. Of these 247 cases, 128 proceedings (52%) had trials instituted and 119 (48%) did not have a trial instituted. Of the 128 proceedings that had trials instituted, 79 trials (62%) reached final written decisions and 49 (38%) were terminated during trial. However, these statistics represent all decisions since the inception of Post Grant Proceedings.
While the USPTO’s data is accurate, its analysis does not highlight the recent trends in PTAB proceedings. For insight into the latest decisions, rulings in 69 instituted CBM proceedings that concluded between July 1, 2015 and November 30, 2015 were analyzed. Of interest was the fact that the number of petitions that were NOT instituted have increased – from 48% overall since CBM reviews began to 55% during the July-November time period. This increase is significant in light of the fact that over 88% of the final written decisions where the requested grounds were granted concluded that all of the claims under review were unpatentable. Of the 69 CBM proceedings, there was only a single proceeding where the PTAB reversed itself from the institution decision to find all the claims patentable. And there were only an additional 3 proceedings where the PTAB did a partial reversal and found a portion of the claims under review patentable. In other words, if a proposed ground of rejection for a claim is granted in the institution decision, then there is an extremely high likelihood that the claim will ultimately be found unpatentable.
What does this mean for the patent owner, or the petitioner? For the patent owner it means that the optional Patent Owner Preliminary Response (“POPR”), due three months after a CBM petition is filed, is not realistically optional and is the best vehicle, and possibly the only vehicle, to convince the PTAB that a claim is patentable. For the petitioner it means that the initial CBM petition is the vehicle to convince the PTAB that a claim is unpatentable as the later filed Petitioner Reply to Patent Owner Response after the institution decision is probably too late to change the PTAB’s mindset. In contrast to IPRs, CBMs allow a petitioner to propose a ground of rejection under 35 U.S.C. §101, arguing the patent claims an “abstract idea” and unpatentable. Thus, how does the use of 35 U.S.C. § 101 factor into the recent PTAB decisions? Of the 69 proceedings, 46 proceedings, or 67%, involved grounds under § 101. However, of the 46 requests to institute proposed grounds of rejection under § 101, only 14 (20%) were granted. And, in those trials where the § 101 proposed rejection was granted the PTAB invalidated the claim in 100% of the trials. Thus, while the percentage of granted § 101 grounds appears low, if the PTAB does institute a proposed ground of rejection under § 101 the claim has a minimal chance of survival. So, is the PTAB still a “death squad” when it comes to CBMs? As always, it depends how you look at the numbers. In one sense, the trend to not institute a review appears to be increasing. However, if instituted, the likelihood of survival is not great.