How tech companies use the PTAB to fight patent trolls
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How tech companies use the PTAB to fight patent trolls

Senior sources from high-tech, gaming and financial services companies explain how they succeed in their inter partes reviews and covered business method actions to invalidate broad patents filed by non-practising entities

Businesses have had seven years to work out how best to use the US Patent Trial and Appeal Board (PTAB) to invalidate overly broad patents belonging to non-practising entities (NPEs).

Senior in-house lawyers at high-tech and financial services companies say inter partes reviews (IPRs) and covered business method (CBM) actions have become key elements of their anti-patent troll strategies as a cost-efficient means of removing patents that could be used to ‘unfairly’ sue firms.

But while these petitions are often successful, many do not end with a positive outcome, and sources say they have been looking for ways to maximise their chances of success with the board.

The big challenge now is making sure that a petition gets instituted by the board in the first place. The PTAB is increasingly using its discretionary authority to deny IPR and other actions, only instituting 60% of the petitions brought before it last year compared to 87% when it was first established.

The senior patent counsel at a high-tech company in the US says the best way to ensure a petition gets through is by doing plenty of research to make a convincing case for why a particular NPE’s patent should not exist.

“The petition is your whole story,” she says. “You have to lay out your research and your entire case and you cannot introduce new ideas at a later stage.”

She adds that it is important for patent attorneys to go in knowing that only 60% of petitions get instituted and not to assume that putting a petition forward will be an easy process just because it is seen as more cost-efficient than a traditional court case.

“Petitions are still expensive and time-consuming to prepare – and knowing that, you know you need to do a good job and not bring them in every case if you do not have enough evidence to back them up.

“You may want to pursue an infringement argument instead,” she adds.

Kevin Jakel, CEO of Unified Patents in Washington, DC, agrees that research and presentation is the cornerstone of successful petitions at the PTAB. He adds that his member-based organisation, which has a goal of reducing NPE assertions in certain technology areas, has found that a case based on strong prior art is usually successful.

He adds that it is important to have specialists who are knowledgeable of patent law and the complexities of various technologies to make your case for you.

“The main reason why the PTAB is so great is that it is made up of experts – and you need to hire experts that know what they are talking about and do a good job of explaining technology that is often quite complicated,” he says. “That’s a really big part of success at the PTAB.”

He adds that so long as businesses do a great job of consulting with experts and establishing the quality of their prior art, they have a good chance of putting their cases to the judges at the PTAB and getting a fair ruling based on the technical details of the case.

Another way that businesses can maximise their chances of getting a good outcome against NPEs is by filing the right type of petition. The IP director at a US fintech company says that CBMs, which cover claims directed to financial systems, are often much more effective than IPRs.

“You can raise Section 101 rejections in CBMs and do not even have to present prior art,” he explains. “They often have an effect like a Thanos snap in the new Avengers film on broader NPE patents.”  

For some smaller companies, success at the PTAB against NPEs may become easier with a wait-and-see strategy. The head of IP at a US-based gaming company says that when her business is faced with litigation from a patent troll, her team will search to see if the same claim has been brought against larger providers.

“We do not have the same resources as Intel or Lenovo, for example,” she says. “We will often wait and see whether someone else files an IPR, and if they do, we apply for a stay.”

She adds that smaller companies can also enter into collaborative agreements with larger firms that have chosen to file an IPR. “If we have strong prior art that can help a company taking the lead against an NPE that has also filed against us, we will support them in that sense.”

PTAB pluses

Sources say that while NPE litigation aimed at tech companies has dropped since the America Invents Act and the Alice judgment of the US Supreme Court, it has not disappeared. They add that PTAB petitions continue to form an integral part of firms’ anti-patent troll strategies.

“If you compare the numbers of NPE cases from 2014 to now, you will see a clear reduction,” says Jakel at Unified Patents. “But at no point has NPE litigation stopped.”

The high-tech senior patent counsel adds that the PTAB gives relatively fast decisions compared with the speed of prior patent office procedures. She has also found the decisions to be very thoughtful, which gives an advantage to tech companies with strong prior art.

“If you have a strong case to show that a patent is invalid, you want careful decision makers such as those at the PTAB,” she says. “If you are a patent owner with bad patents, you want a jury decision.”

The fintech IP director says he has made enormous use of the PTAB system in his fight against risk of patent troll litigation. He says that he has filed at least 12 CBMs, which have proved remarkably successful overall in eradicating broad patents based on financial developments.

He is also in the process of drafting eight IPRs against a large company.

“We often use IPRs to kill bad patents. So long as you are convinced that the registrations are overly broad, IPRs are a viable option.”

One perhaps underrated benefit of the PTAB when it comes to halting NPE litigation, according to in-house counsel, is that it changes the incentives of patent applicants.

The high-tech senior patent counsel explains that US patent applicants can file for protection at the USPTO without having to look for prior art and explain beforehand why what they do is better. That burden falls on the office.

“A strategy then used by a lot of companies is not to look at what is out there, see what the PTO says in a small amount of time and get a patent. And a lot of them will be bad. I’m not blaming the patent office; that is just how the system works.”

The IPR system has incentivised businesses to file patents that will hold up under expert scrutiny. That development means there should be fewer bad patents getting onto the register.

NPE litigation is down but it is far from out. The PTAB has proven its worth as a means of fighting bad patents in a relatively inexpensive way, but is becoming more selective in choosing which cases to hear.

If tech firms want to keep using it, they need to put the work in and build a compelling case based on strong prior art and delivered by someone knowledgeable in the field.

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