Following March’s announcement of a new interim, bifurcated review process for America Invents Act (AIAAmerica Invents Act of 2011. AIA made modest reforms, most notably moving the U.S. to a first-inventor-to-file system more aligned with foreign practice, but also including expanding prior user rights to all patent-eligible subject matter, and instituting a post-grant review proceeding.) petitions, the USPTOUnited States Patent and Trademark Office. See also PTO. Acting Director has given herself largely unchecked authority to discretionarily deny patent validity challenges prior to their consideration on the merits. In the months since, the process, hastily and probably illegally implemented, has been exploited by non-practicing entities (NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it.) and foreign interests in an attempt to block meritorious challenges. While supporters of these changes will cherry-pick cases to argue that the new process protects U.S. innovators, a comprehensive look at the evidence tells a very different story. And with the Fourth of July almost here, it’s a good time to show exactly how this process hurts Americans.
On Patent Progress, we’ve already highlighted how Acting Director Coke Morgan Stewart used the new review process to de-institute a request by Motorola Solutions for review of a patent held by the NPENon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. Stellar LLC and its shadowy funder, IP Litfin. Despite the PTAB’s determination that the patent, related to law enforcement body-cam technology, was likely at least partially invalid, Stewart de-instituted the review for discretionary reasons preventing the proper advancement of an AIAAmerica Invents Act of 2011. AIA made modest reforms, most notably moving the U.S. to a first-inventor-to-file system more aligned with foreign practice, but also including expanding prior user rights to all patent-eligible subject matter, and instituting a post-grant review proceeding. proceeding.
NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. like Stellar LLC and their funders have long opposed open and accessible PTABPatent Trial and Appeal Board. Reviews adverse decisions of examiners on written appeals of applicants and appeals of reexaminations, and conducts inter partes reviews and post-grant reviews. The Board also continues to decide patent interferences, as it was known as the Board of Patent Appeals and Interferences (BPAI) before the AIA. reviews, and the new process gives an unneeded boost to their efforts to monetize low-quality IP via lawsuits. Indeed, a Unified Patents report found that this year NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. had their busiest first quarter in nearly a decade—up 47% from Q1 2024. It’s not surprising, then, that we’ve seen—and will continue to see—PTAB detractors hold up the rare instances where discretionary denials may appear to favor U.S. companies over foreign interests. PTABPatent Trial and Appeal Board. Reviews adverse decisions of examiners on written appeals of applicants and appeals of reexaminations, and conducts inter partes reviews and post-grant reviews. The Board also continues to decide patent interferences, as it was known as the Board of Patent Appeals and Interferences (BPAI) before the AIA. opponents need to make a big deal of these examples when they pop up, because they certainly are not representative of most discretionary denials at large.
One such case involves Efficient Power Conversion Corporation (EPC), a California-based microchip company, which used the new denials process to challenge a petition brought by Chinese competitor, Innoscience. EPC retained the services of former Director Andrei Iancu, the creator of Fintiv—the flawed discretionary denials framework upon which Acting Director Stewart is now expanding. As one expert put it, Iancu has been “cashing in on the chaos he helped create.” (We covered it here at Patent Progress as well.)
An op-ed from Rep. Nathaniel Moran in The Hill this month called the PTAB’s decision to invalidate EPC’s patents a “direct assault on American innovation and the Trump administration’s efforts to crack down on Chinese intellectual property theft.” Moran, who also reintroduced the RESTORE Act in the House this month, used this one-off case to advocate for the PREVAIL Act, which would codify significant alterations to who can access the PTABPatent Trial and Appeal Board. Reviews adverse decisions of examiners on written appeals of applicants and appeals of reexaminations, and conducts inter partes reviews and post-grant reviews. The Board also continues to decide patent interferences, as it was known as the Board of Patent Appeals and Interferences (BPAI) before the AIA. and when.
However, this case is the exception, not the rule.
An analysis from Unified Patents reveals that while most petitioners at the PTABPatent Trial and Appeal Board. Reviews adverse decisions of examiners on written appeals of applicants and appeals of reexaminations, and conducts inter partes reviews and post-grant reviews. The Board also continues to decide patent interferences, as it was known as the Board of Patent Appeals and Interferences (BPAI) before the AIA. are U.S.-based patent holders, most patent owners defending challenges are foreign-based. Denying petitions on discretionary grounds, then, usually means denying American innovators a chance to invalidate a low-quality patent—one usually being used against them in litigation.
Although it’s too early to gather complete data on the discretionary denials being requested under the new process, an early analysis from IAM suggests that concerning trends are already unfolding. Using data from Docket Navigator, IAM found that 68 discretionary denial requests were filed between March 26th and April 22nd to block petitions from American companies like Tesla, Microsoft, and Amazon. And who made these requests? You guessed it. According to IAM, “several well-known patent licensing companies” have been utilizing the new discretionary denial process, including “Daedalus Prime, Intellectual VenturesThe largest patent aggregator, currently holding around 40,000 patents. Closely associated with co-founder Nathan Myhrvold. IV is often viewed as a patent assertion entity, although much of its activities are conducted through spinoffs, and the company is at least nominally in the business of producing inventions in-house. See our posts on Intellectual Ventures., and WSOU Investments”—some of the most prolific NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. in the industry. Daedalus has been called out for targeting auto manufacturers, while Intellectual VenturesThe largest patent aggregator, currently holding around 40,000 patents. Closely associated with co-founder Nathan Myhrvold. IV is often viewed as a patent assertion entity, although much of its activities are conducted through spinoffs, and the company is at least nominally in the business of producing inventions in-house. See our posts on Intellectual Ventures. was once dubbed “Patent TrollAn entity in the business of being infringed — by analogy to the mythological troll that exacted payments from the unwary. Cf. NPE, PAE, PME. See Reitzig and Henkel, Patent Trolls, the Sustainability of ‘Locking-in-to-Extort’ Strategies, and Implications for Innovating Firms. Public Enemy #1” by IP Watchdog.
As of June 16th, Acting Director Stewart has ruled on 18 of these requests—granting seven and denying eleven. Among the granted denial requests is Stewart’s startling June 6th ruling in iRhythm v. Welch Allyn, in which she denied institution based on the “settled expectations” of the patent owner while ignoring the settled expectations of petitioners that they’d be able to pursue their petitions.
That new standard is “upsetting [attorneys’] understanding of how to navigate the Patent Trial and Appeal Board,” and is just one way in which the new process is upending years-long precedent and rewriting agency rules to the detriment of American businesses and innovators. (That’s one reason why CCIA has filed amicus briefs in favor of overturning this new standard.)
Particularly in light of the new “settled expectations” standard, NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. will remain eager to exploit the bifurcated review process to preserve their infringement lawsuits and maintain leverage over legitimate innovators, all while avoiding careful scrutiny of their patents’ quality.
So don’t be fooled if NPEsNon-Practicing Entity. A broad term associated with trolls but now disfavored because it includes universities and legitimate technology developers that seek to license technology in advance rather than after a producing company has independently developed it. and their defenders cherry-pick the rare cases where PTABPatent Trial and Appeal Board. Reviews adverse decisions of examiners on written appeals of applicants and appeals of reexaminations, and conducts inter partes reviews and post-grant reviews. The Board also continues to decide patent interferences, as it was known as the Board of Patent Appeals and Interferences (BPAI) before the AIA. review denials appear to help actual American inventors. The reality is that when low-quality patents are able to avoid review for reasons that have nothing to do with the merits of each case, it will allow for manipulation by those who seek to abuse the IP system at the expense of businesses and inventors who are operating in good faith and trying to follow the rules.
The growing body of evidence is far more powerful than any spin some advocates try to put on an individual case.
