‘Patent Death Squads’ vs. Innovation

When Ultratec, a manufacturer of closed-captioned phones for the deaf, realized that a rival had created a knockoff using its patented technology, the company filed a patent-infringement lawsuit. A Wisconsin federal jury ruled for Ultratec in October, ordering rival Sorenson Communications to pay $44 million in damages.

But Ultratec may never receive a cent. In March a little-known but hugely powerful federal body called the Patent Trial and Appeal Board (PTAB) invalidated Ultratec’s patents, on grounds that the designs were too obvious to be patentable.

The PTAB, created by the 2011 America Invents Act, was intended to strengthen the patent system. Lawmakers hoped to avoid the need for patent lawsuits by giving patent holders and challengers a quick and inexpensive way to resolve disputes as an alternative to the courts.

But the board uses looser standards than a federal court to evaluate a patent’s legitimacy. Courts assume that a patent is valid until a challenger provides “clear and convincing” evidence to the contrary. The PTAB requires only that challengers show that it’s more likely than not (i.e., a “preponderance of the evidence”) that a patent is too broad.

In recent months the board has overturned patents on a computer memory technology, a popular videogame, and a system for monitoring car tires. The PTAB has invalidated at least one “claim”—or part—in almost 80% of the patents it has ruled on, according to a study in the University of Chicago Law Review. Some patent experts such as Randall Rader, former chief judge at the U.S. Court of Appeals for the Federal Circuit, have referred to the 300-odd administrative judges, attorneys and legal aids on the board as “patent death squads.”

Patent challengers have jumped at the chance to exploit the board’s lax standards. Since it began to operate in September 2012, the PTAB has received more than 2,600 patent challenge requests—three times more than it expected.


 
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