Public Interest Groups to Congress: Protect Public Access to Administrative Patent Challenges
Alex Moss | April 26, 2023
In response to the Patent Office’s recently proposed rules that would severely restrict access to administrative proceedings for challenging invalid patents, PIPLI and other public interest groups are calling on Congress to protect these proceedings and the public’s access to them. While the Patent Office is not banning anyone’s access outright, it is proposing a litany of restrictions—and fee hikes—that would effectively shut out most, if not all, patent challengers. Because Congress created these proceedings to encourage people to challenge invalid patents, it must exercise its oversight authority to ensure the Patent Office starts executing the law and stops regulating it out of effect.
Why does the public need to challenge invalid patents? Because the Patent Office receives far more patent applications than it can examine with 100% accuracy, especially in the limited time allotted for examination. Inevitably, some granted patents claim old or obvious variations of earlier work instead of novel inventions. With more than 300,000 patents granted annually, it’s impossible to say how many are invalid, but when patents are challenged, they’re found invalid about 40% of the time.
Some invalid patents serve primarily as wall decorations. But countless others cause real harm to people seeking to access or contribute to technological advances, including consumers, patients, researchers, small businesses, and farmers. For example, brand name drug companies use patents on trivial or obvious variations of existing drugs to extend their monopolies—and monopoly prices— long after older patents on active ingredients of those drugs expire. This practice, known as “evergreening,” prevents generic competition and artificially inflates drug prices, making prescription drugs financially burdensome or completely inaccessible for millions of Americans.
Drug companies aren’t alone. Invalid patents are also weaponized by patent assertion entities (PAEs) that use them to demand outsize licensing fees, often targeting small companies that cannot afford to defend themselves or challenge invalid patents in federal court. One PAE used two patents originally obtained by Theranos—the company whose blood testing technology proved fraudulent and useless—to demand fees from companies doing COVID-19 testing at the beginning of the pandemic. While the public outcry led that PAE to back off, its Japanese financial backer, SoftBank, continues to fund numerous PAEs that use patents of questionable validity to demand fees from U.S. companies of all sizes. Every dollar that goes to a PAE is a dollar that could have gone to an employee’s salary or technology development.
Recognizing that invalid patents threaten consumers, patients, researchers, and small businesses alike, Congress created an alternative: administrative review proceedings at the Patent Office that “any person” can initiate. That was more than a decade ago, but ever since, some patent owners have fought tooth and nail to make these proceedings less affordable, accessible, and effective.
Unfortunately, their efforts have proven successful. Thanks to policies put in place by the last Patent Office Director, petitions for review have been denied at increasing rates. But to date, few of those policies have been formally codified as regulations, making them relatively easy for the Patent Office to change in the future. Now, the Patent Office is proposing to make far-reaching versions of those policies—along with entirely new ones—more impervious to change by formally codifying them regulations. If that happens, we will effectively lose the only mechanism that allows any person to prove granted patents invalid.
What, exactly, is the Patent Office proposing? As noted above, it’s proposing many new regulations that all serve the same end: making it harder to initiate a validity challenge at the Patent Office. All of these regulations are concerning, but highlighted below are several that are especially corrosive to the public benefits these proceedings were created to provide.
Requirements that prevent “any person” from petitioning for review.
Congress deliberately allowed “any person” to petition for review, yet the Patent Office is proposing to deny petitions, regardless of merit, if filed by those without standing to sue in district court. Standing requirements will shut out individuals and organizations challenging patents for the benefit of others–for example, to clear out patent thickets impeding access to medicine or medical devices. These requirements will not improve patent quality or promote innovation; they will simply protect invalid patents from meritorious challenges.
Changes to the standard for initiating review that require more than a “reasonable likelihood” of invalidity.
By law, petitioners have to show a “reasonable likelihood” that a patent is invalid for a petition to be granted and review proceedings to begin. Nevertheless, the Patent Office is effectively proposing to raise the threshold to require petitions that are “compelling” on the merits. It is not clear exactly what this means, but it clearly requires more than Congress intended and will have the effect of protecting invalid patents that should be reviewed according to the law as written.
Rules allowing the Patent Office to deny review if a court has decided any validity issue involving the challenged patent.
Congress protected patent owners by prohibiting petitioners from raising the same (or similar) invalidity arguments raised in district court. Now, the Patent Office is proposing to deny petitions if a court made any decision about the challenged patent’s validity—even if the issue decided is irrelevant to the petition or is one of the many invalidity issues that cannot be raised in these proceedings. It makes no sense to deny petitions because of irrelevant district court decisions. This, too, would do nothing but protect invalid patents and their owners’ undue profits.
These changes would be damaging enough on their own, but in combination with the rest of the Patent Office’s proposed rules, they will be fatal to patent challenges that Congress not only permitted, but sought to encourage people to bring. Rules that stop these challenges in their tracks may please a small number of patent owners, but at the expense of countless Americans, who will experience higher prices, less competition, and less innovation as a result. The Patent Office should be proposing regulations that make it easier to deny meritless patent applications instead of meritorious patent challenges.
We will continue urging policymakers to protect access to administrative patent challenges—and we urge you to do the same. Join our effort by telling the Patent Office what you think of their proposed rules by June 20, 2023.