Opinions and Legal Insights

Letter to Congress: Iancu is Good for the Patent System

2020-1026-Coalition Ltr re PTAB.FINAL

The following letter to Congress appears to have substantial support from patent owners. The basics of the letter is to say that Dir. Iancu’s changes to the IPR process have been positive and should stick.  Part of the issue here is that Dir. Iancu is a political appointee who is on his way out in 2021 if President Trump loses (and would likely leave in 2021 regardless).

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Dear Chairman Graham, Ranking Member Feinstein, Chairman Nadler, and Ranking Member Jordan:

The undersigned represent a diverse array of American innovators, ranging from universities and non-profit foundations, to individual inventors, to start-ups and small businesses, to manufacturing, technology, and life sciences companies. Together we represent thousands of organizations that employ millions of workers in the United States. We all believe that the future of the U.S. economy, including domestic job growth and our competitive advantage in the global economy, depends on a strong patent system that incentivizes innovators to invent and protects their inventions from unfair theft by others.

We write to express our support for the important improvements the U.S. Patent and Trademark Office (USPTO) has implemented over the past several years under the leadership of Director Andrei Iancu.  In this short period, Director Iancu has clearly changed the dialogue surrounding patents, defined the patent system by the brilliance of inventors, the excitement of invention, and the incredible benefits they bring to our economy and society as a whole.  He continuously demonstrates commitment for restoring balance and confidence in the U.S. patent system.

Of particular importance, the USPTO has made several critical changes to the operations of the Patent Trial and Appeal Board (PTAB) that addressed some—but not all—of the unintended consequences of the America Invents Act (AIA), injecting more predictability, reliability, and consistency into the patent system.  Patent owners must have confidence in the reliability of their patents so that they will invest the significant resources required to develop their ideas into new products and technologies.

Many of the recent changes the USPTO has implemented were intended to harmonize the standards used in PTAB trials with those used in patent infringement trials in federal district courts.  Given that Congress intended PTAB trials to be a cost-effective alternative to district court litigation, and Director Iancu has the statutory authority, it made sense to ensure a consistent application of standards between proceedings in court and before the PTAB.

Perhaps the most important of these changes was adopting regulations to require PTAB to interpret issued patent claims according to their ordinary meaning as understood by a person of ordinary skill in the field covered by the patent.  By adopting this so-called Phillips standard of claim construction used in federal court for use in PTAB proceedings, the USPTO provided much needed consistency in the interpretation of challenged patents.  We also strongly support other recent changes, including updated briefing procedures, improved procedures for amending claims before PTAB, and appropriately assigning the burden of proof of invalidity on the patent challenger, all of which strengthen predictability of decisions by the USPTO and ensure that patent rights are more fairly issued and adjudicated.

We also understand from press reports that USPTO had been preparing to institute a proposed rulemaking concerning the factors PTAB panels can use to deny institution of a panel when there is parallel litigation in district court.  While several large platform companies filed suit challenging the authority of the Director to exercise his discretion in this way, we think it clear that both the AIA itself and common sense support the authority of the USPTO director to set regulations for the exercise of discretionary authority to deny institution in these instances.  We see basic unfairness to litigants who must otherwise litigate the same issues more than once, and little need to waste scarce government resources on duplicative actions proceeding in parallel before the PTAB and the district court.  We strongly support a USPTO rulemaking to confirm this approach.

Recent letters to Congress opposing the USPTO rulemaking incorrectly suggest that it would upset congressional intent in passing the AIA by foreclosing an additional proceeding to challenge patents.  Congress was clear that it intended inter partes review (IPR) to provide a cheaper and faster alternative – not an addition – to district court litigation.  If a district court case is likely to conclude near the same time as an IPR proceeding concerning the same dispute, the IPR proceeding would not be a faster alternative, and instituting an IPR proceeding would only add to the cost of resolving the dispute, so it would also not be cheaper.  Logically, then, when a dispute can be more efficiently resolved by a district court, or an ongoing litigation is likely to resolve the dispute in a reasonable period of time, the Director was given the discretion not to institute an IPR proceeding.

The IPR proceeding was structured to provide a quicker resolution and on a more limited set of issues than might be brought in litigation.  As a result, parties in the proceeding were provided a more limited set of tools than available in District Court to allow the USPTO to meet this congressional mandate.  Congress clearly put the Director in the position to determine, for the efficiency of justice, which forum could resolve the issues best, then went further by making that decision non-appealable – lest those appeals undercut the speed and low cost of the new proceeding.  Suggesting otherwise is not consistent with the congressional record.  Moreover, the recent Supreme Court decisions in Cuozzo v. Lee and Thryv v. Click-to-Call both affirm the Director’s broad discretion on instituting an IPR, a position at least one of the companies who signed the letters opposing the rulemaking supported in its own amicus brief to the Court.

Director Iancu has also brought a renewed commitment to much-needed administrative regularity at the USPTO and a real and commendable focus on ways to expand American innovation by tapping into the strength of our nation’s diversity and increasing the opportunities for all Americans to participate in innovation.  He has also introduced innovative measures to help patent stakeholders during the COVID-19 crisis, including deferred fee payments for small and micro entities and extensions of time for certain statutory deadlines.

Under Director Iancu’s leadership, the USPTO has taken great strides toward restoring a predictable, reliable, and consistent patent system that protects inventors and promotes U.S. leadership in global innovation.  We urge you to support these reforms, and look forward to working with you and your colleagues on the Judiciary Committees to further strengthen our patent system.

Sincerely,

[324 American innovators and patent owners]