IAM

Nisha Shetty
08 February 2024

Renewed debate about the need for reform at the Patent Trial and Appeal Board is swirling among US patent practitioners. The discussion comes from US Patent and Trademark Office Director Kathi Vidal’s recent order that VLSI Technology be awarded sanctions of nearly $413,300 for “time spent addressing OpenSky’s abusive behavior”.

It was the first time that monetary sanctions were issued during the USPTO director review process, and patent holders may see ways to use the ruling to deter abusive PTAB behaviour, while petitioners and their counsel need to be wary to avoid similar conduct.

Attorneys for OpenSky offered, in writing, to come to an agreement secretly with VLSI, in exchange for a cash payment. The “construct”, as it was called, included a deal to sabotage the IPR petition by refusing to produce its expert for deposition. OpenSky also approached Intel after the institution of the IPR to solicit compensation for moving the IPR forward and for success in the proceeding.

Vidal had initially excluded inter partes review petitioner OpenSky Industries from PTAB proceedings in October 2022 after finding the company had abused the IPR process. Vidal had then temporarily elevated Intel to lead petitioner, but she changed tactics in February 2023, reinstating OpenSky and instead ordering it to pay VLSI reasonable attorney fees.

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Many attorneys agreed the sanctions decision, though a step in the right direction, wasn’t enough. The case raised questions as to what an appropriate sanction would be and how the PTAB might need substantive reform to address the imbalance between petitioners and patent holders.

“I don’t think that awarding regular attorney fees is a powerful enough sanction to deter this kind of conduct,” said Wendy Verlander, an attorney at Verlander. “It just doesn’t really even come close to addressing the harm that VLSI suffered.”

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Attorneys say the real solution to deter abusive PTAB conduct lies outside of the patent office.

Congress has been mulling the Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act in June 2023 by Senators Chris Coons (D-DE), Thom Tillis (R-NC), Dick Durbin (D-IL) and Mazie Hirono (D-HI).

The bill would have a standing requirement for petitioners, with the condition that it must have been sued or threatened with a patent infringement lawsuit before challenging a patent at the PTAB; limit multiple petitions against the same patent by “prohibiting any entity financially contributing to a PTAB challenge from bringing its own challenge”; get rid of joinder for time- barred parties; and require parties to either file a complaint at the PTAB or in district court, but not both.

“It would go a long way towards getting us to a place where IPRs are not used in purposes for which they weren’t intended for,” said Verlander, describing the current system as “terribly one-sided”.

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