Why C4IP Supports the PREVAIL Act

The PREVAIL Act provides a comprehensive set of reforms that — after a decade’s worth of experience with the Patent Trial and Appeal Board — would ensure that the PTAB meets the Leahy-Smith America Invents Act’s original goals of providing more efficiency in the patent system, while also being fair to patent owners and petitioners alike.

1. By Eliminating Needless Duplication, the PREVAIL Act Promotes Efficiency and Fairness

Several provisions of the PREVAIL Act address sources of duplication that were not intended by the AIA, but which have become a drain on resources. This includes duplication between the district court and PTAB and within the PTAB itself. 

This multiplicity imposes a significant burden on the patent owner, who often needs to litigate cases before both courts and the PTAB at the same time (under different standards, discussed below) in addition to potentially fielding multiple challenges at the PTAB. And all of this can happen before they get any relief on their claims of intellectual property theft. 

It is also not a good use of governmental resources to decide the same issues repeatedly. The possibility of inconsistent results between these different proceedings serves to undermine public confidence in the patent system overall — confidence that is needed to drive investment into innovation in the first place. A weakened patent system means that we all lose from innovations that will never be made and new startups that will never be founded.

The PREVAIL Act addresses these issues by: 

  • Ensuring that only a single forum hears a challenge – if a petition is instituted at the PTAB, the petitioner (or their real party in interest or privy) may not maintain the same challenges in the district court or International Trade Commission. This provision directly ensures that only one forum — and that of the petitioner’s choice, not the patent owner’s — hears a validity dispute;
  • Providing that petitioners may only challenge a patent at PTAB once, unless they are subject to additional infringement allegations on the same patent – this provision makes petitioners bring their best challenges at once, and only once. But it is also balanced by ensuring that if a patent owner further challenges the petitioner on the same patent, the petitioner has another chance to go to the PTAB on those new challenges;
  • Providing that, if a district court or the ITC has ruled on a patent’s validity, accused infringers in that case (or their RPIs or privies) cannot go to the PTAB to try to get a re-do – after one forum has decided on a patent’s validity, it is a poor use of resources to have another forum do so. The parties in the original case have appellate review rights for the very reason of ensuring that the initial decision was made correctly;
  • Reforming the joinder process to guard against an unfair pile-on of additional petitioners – additional parties are allowed to join a filed petition, but there is a process to ensure that petitioners who could not bring a challenge on their own because they filed too late cannot circumvent that existing statutory limitation. This helps protect patent owners from the additional challenges that the AIA intended to prevent;
  • Clarifying that real party in interest limitations extend to membership groups filing challenges on behalf of their members – right now, certain membership groups file challenges on patents that may be, or are, asserted against their members. These groups claim to have no coordination about which challenges they assert, thereby allowing their members to file their own challenges if they choose. This change would end this practice, ensuring that parties do not effectively get two bites at the apple to challenge validity at the PTAB;
  • Adjusting the scope of mandatory discovery to avoid gamesmanship – to ensure that the AIA’s (and this bill’s) limitations on real parties in interest and privies are enforced, patent owners would automatically be entitled to discovery on this issue. The current lack of automatic discovery puts patent owners at a disadvantage if they suspect that these provisions are being violated because they may not have access to evidence to prove it.

All these changes align with the AIA’s original intent to balance the petitioner’s right to challenge a patent at the USPTO with the patent owner’s need for quiet title. As the House Report associated with the AIA stated: “The Committee recognizes the importance of quiet title to patent owners to ensure continued investment resources. . . . [T]he changes made by [the AIA] are not to be used as tools for harassment or a means to prevent market entry through repeated litigation and administrative attacks on the validity of a patent. Doing so would frustrate the purpose of the section as providing quick and cost-effective alternatives to litigation.” 

2. The PREVAIL Act Aligns PTAB and District Court Standards, Creating a More Rational and Equitable System

The PREVAIL Act takes several steps to align PTAB standards with that of a district court, including by:

  • Requiring the same standard of proof for invalidation, reflecting that the patent has already undergone an examination process – this is the appropriate standard for post-grant proceedings because some deference should be due to the initial examination regardless of what forum takes a second look at the patent. This standard also helps guard against hindsight bias, making it fairer to patent owners. The objective validity of an issued patent should not depend on which tribunal might happen to analyze it in the first instance.
  • Creating a standing requirement for IPRs to avoid gamesmanship – the need for a standing requirement that is the equivalent of a district court’s has become apparent after the current IPR system has been abused by hedge fund managers and others to make a quick buck. Virtually all adversarial proceedings have long-required standing, precisely to eliminate abuse by parties that have no direct stake in the dispute. Given the already extremely high overlap between district court and PTAB litigation, this change also would not significantly impact the current pattern of filers. And all would remain able to use the ex parte reexamination process to challenge a patent. Additionally, PGRs — which are available only for the first nine months after a patent issue — would continue to have no standing requirement to encourage early challenges.
  • Codifying current Office practice on how the scope of patents is interpreted – the Office has codified use of the district court claim construction standard after initially codifying an alternative practice. The Office recognized that aligning these standards promotes efficiency between district courts and the PTAB by not requiring parties to make different arguments in different proceedings on the same topic. Codifying this practice would ensure no further change at the PTAB, helping to promote certainty in the patent system.

3. The PREVAIL Act Establishes a Number of “Good Government” Provisions

Experience with the PTAB has shown some inadvertent gaps that could benefit from statutory guidance and regularization. The same is true for certain important court decisions.

To that end, the PREVAIL Act:

  • Codifies the Director Review process, requiring transparency – following the Supreme Court’s decision in U.S. v. Arthrex, the Director now has the power to revisit PTAB decisions. The PREVAIL Act would codify this process and require the Office to put all such decisions in writing and on the record.
  • Requires the Director to create a code of conduct for PTAB judges similar to federal courts – right now, PTAB judges only follow the ethics rules of the Department of Commerce. This means they are out of step with federal court judges, for example, on whether they can hear cases when they own stock in the parties appearing before them. Given the enormous implication of PTAB decisions — akin to that of district courts’ — it is appropriate for the ethical standards to be similar too.
  • Establishes practices for PTAB panels that are more transparent – if there are changes to the members of a PTAB panel hearing a given case, they must be made public. This will help guard against making personnel changes to alter case outcomes.
  • Codifies the current claim amendment process – patent owners are guaranteed to have a chance to amend their claims during post-grant proceedings, but initially, almost none were granted. Subsequent case law and rule changes now allow for patent owners to receive feedback on an initial round of proposed substitute claims and then submit revised ones. While the numbers of amendments are still low, the numbers have increased significantly. This process is more in keeping with the intent of the AIA to ensure that patent owners have a meaningful chance to correct defects in their patents.
  • Requires the Director to decide how multiple challenges against the same patent will be handled – right now, the Director has discretionary authority to do this. Making it mandatory should help ensure that there is consideration of whether there can be a better consolidation of proceedings, or if one of the proceedings should be stayed.
  • Requires that officers and supervisors may not direct or influence PTAB merits decisions – consistent with due process, this provision ensures that parties know that the judges appearing before them are the only ones deciding their case without other ex parte communications within the Office.



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