With nearly a decade of proceedings behind it, the Patent Trial and Appeal Board (PTAB) has established a record. Medtech companies can learn from it.
Timothy P. McAnulty and Daniel F. Klodowski, Finnegan
One of the key aspects of a strong patent is the owner’s ability to enforce it. And when a patent is asserted against an accused infringer in court, two core issues always arise: whether the patent is infringed, and whether it is valid. Because there can be no infringement if the patent is not valid, attacking a patent as invalid (or “unpatentable”) is one of the primary defenses for every alleged infringer.
Patent validity can be challenged in several forums, including in court as part of an infringement litigation. It’s also possible to challenge validity through various “post-grant” procedures at the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB). The PTAB was created in 2012 and has become a popular forum, receiving over 10,500 patent challenges to date. The PTAB provides a relatively fast, focused, and cost-effective mechanism for resolving validity issues, and patent challengers face a lower evidentiary burden at the PTAB than in court.
While every patent and PTAB proceeding is unique, medical device companies can learn several lessons from the past several years of PTAB decisions. The lessons can apply equally to companies building a patent portfolio (such as for investment, acquisition, or enforcement) and companies challenging patents as unpatentable.
Here are three key points:
1. Not all patents are created equal
The PTAB’s case outcomes highlight the differences between high-quality and low-quality patents. Strong, high-quality patents often share several important qualities, including a clear description of the invention’s subject matter and the accompanying claims, which are the legally operative part of the patent defining the legal boundaries of protection. Strong patents also include strategically focused claims detailing competitive aspects of the invention, targeting specific types of infringers such as direct competitors, end-users, or device manufacturers.
Strong patents also often include a versatile mix of broad and narrow claims directed to different aspects of the invention. While narrower claims are limited in scope, and thus may cover fewer infringing products or services, they may be more defensible from a validity attack. Conversely, broader claims may cover more infringing activities (with a resulting increase in a potential financial award) but may be more vulnerable to an invalidity challenge.
A full proceeding at the PTAB includes two phases. In the first phase, the PTAB determines whether to institute a formal review of the challenged patent based on preliminary briefing from the parties that typically focuses on whether the challenger’s initial petition satisfies the substantive and procedural requirements for review. The second phase is the trial itself, where the parties prepare further substantive briefing regarding the validity of the patent’s claims. The patent challenger bears the burden of proving the patent’s claims are invalid, and the PTAB issues substantive decisions at the end of both phases.
Importantly, the PTAB’s final written decisions (issued at the end of a trial) demonstrate the value of having a mix of claims with varying scopes within either a single patent or across multiple patents. On average, the PTAB instituted a review of roughly 60% of the challenges filed from September 2013 through April 2021. For those instituted cases, about 63% of the cases resulted in no challenged claims surviving — in other words, all challenged claims were found unpatentable. For the same set of instituted cases, only about 18% resulted in every challenged claim surviving. Thus, if a PTAB case is instituted, it is likely that at least some claims will not survive.
[Image courtesy of Finnegan]
A key outcome to consider for patent strategy is a “mixed outcome,” where at least one instituted claim survives and at least one is ruled unpatentable. A mixed outcome occurred in approximately 18% of the PTAB’s decisions to date. Because only one patent claim needs to be deemed “not unpatentable” (i.e., valid) and infringed for a competitor to be liable for infringement, a mixed outcome can still lead to a significant win for a patent holder even if other claims in the same patent are ruled unpatentable. As a further benefit, an accused infringer can be legally prohibited from repeating the challenges raised — or that could have been raised — against the surviving claims, thus immunizing the surviving claims and streamlining the remaining issues in a patent infringement lawsuit.
Notably, the PTAB provides a limited procedure for amending patent claims that have been challenged; but to date, the vast majority of attempts to amend claims have not succeeded. Therefore, patent owners are better served by investing upfront in obtaining a diverse, strategically crafted set of patent claims during the patent application process, rather than relying on amending issued patent claims before the PTAB.
2. Some technology areas fare better than others
As a whole, the PTAB has proven to be a difficult forum for patent owners. Through the end of April 2021, about 75% of the claims that the PTAB instituted review of were ultimately ruled unpatentable.
[Image courtesy of Finnegan]
But the survival rate of instituted claims varies widely depending on the type of technology at issue. For example, patents in the field of biotechnology and organic chemistry (which the USPTO refers to as “technology center” (TC) 1600) had an instituted claim survival rate above 41%. However, the survival rate for instituted claims in the field of mechanical engineering (TC 3700) — which includes traditional medical device inventions — had a survival rate just above 28%. Certain technology areas have fared even worse, such as technologies relating to computing and electrical engineering, which include digital health inventions. For example, computer architecture and information security (TC 2100) and communications (TC 2600) have both had claim survival rates below 20%.
[Image courtesy of Finnegan]
Understanding this variance in outcomes for different technologies is important for medical device companies, which develop innovations across numerous technical fields. Patent owners benefit from seeking protection for ideas across a wide range of technologies as part of crafting a versatile patent portfolio and should avoid focusing each aspect of a patent portfolio within just a few technical fields—especially those that may be more susceptible to challenges at the PTAB.
3. Patents require a long-term perspective
For a variety of reasons, invalidity proceedings at the PTAB have evolved significantly since 2013. In 2015 — the year most favorable for patent challengers –– the PTAB invalidated every instituted claim in over 76% of its cases. Cases where all instituted claims survived, as well as cases with a mixed outcome where at least one instituted claim survived, were both below 12%.
In contrast, in 2019 — the year most favorable for patent owners — the PTAB invalidated all instituted claims in just over 54% of the cases. While the number of cases where no instituted or substitute claims survived was still relatively high, at least one instituted claim survived in over 45% of the cases.
PTAB outcomes have greatly varied over time, reflecting numerous changes in PTAB practice and procedure generally resulting in increased patent claim survival rates. But regardless of the short-term trends in case outcomes at the PTAB, patent owners are well served to continue maximizing the strength of their patent portfolios moving forward. For example, patent owners can maintain pending patent applications within a given patent family for several years, even when earlier-issued patents within the same family are asserted against competitors and challenged in court or at the PTAB. A patent owner may pursue alternative claims to strengthen the patent against an invalidity attack or better tailor it to a competitor’s evolving products or services by maintaining such pending applications.
Both petitioners and patent owners before the PTAB have grown more sophisticated over time. The lessons learned from the PTAB apply to each aspect of a patent’s lifecycle, including the initial application process. Patent owners can benefit from adopting a mindset of long-term portfolio development, with strategies that align business goals with offensive and defensive strategies.
Conclusion
The PTAB is an important forum for patent owners and challengers alike. The outcomes of cases over the past eight years underscore several key takeaways for patent owners, including the high value of strong patent portfolios that span different technologies and that include a variety of claims targeting different infringing activities. Patent owners also benefit from adopting a long-term approach to developing a diverse, adaptable patent portfolio to achieve strategic business objectives.
Timothy McAnulty is a partner at Finnegan, Henderson, Farabow, Garrett, & Dunner. He practices all aspects of patent law, including district court litigations, post-grant proceedings, due diligence, strategic counseling, and portfolio development.
Daniel Klodowski is an attorney at Finnegan. His practice focuses on post-grant proceedings before the Patent Trial and Appeal Board (PTAB) of the U.S. Patent and Trademark Office (USPTO), litigating patents in district court and at the International Trade Commission (ITC), and prosecuting patent applications in several mechanical and electrical technologies.
The opinions expressed in this blog post are the author’s only and do not necessarily reflect those of Medical Design and Outsourcing or its employees.