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The Top 10 Patent Stories of the Decade 2010 – 2019: Part I and Part II

Updated: Mar 13

By: Gene Quinn


This year, we wind down not only the year, but the decade. So, it is time to reflect upon the biggest patent related stories of the last ten years. As with any Top 10 list or ranking, there will undoubtedly be disagreements. For example, be forewarned, Mayo v. Prometheus did not make the list, but rest assured the ineptitude of the Supreme Court with respect to patent eligibility is well represented.


Before jumping to the top 10, represented in chronological order, I want to mention several honorable mention stories that were close but didn’t make the list. First, although completely inconsequential, on June 22, 2015, in Kimble v. Marvel, the United States Supreme Court rejuvenated a 50-year-old rule that limits collecting patent royalties after a patent expires. In that decision the Supreme Court cited the importance of stare decisis, saying that there needs to be an overwhelmingly important rationale for disturbing well settled law, which is laugh-out-loud funny given how they did precisely that when they completely rewrote all of patent eligibility law with Bilski, Myriad, Mayo and Alice this decade. I’m sorry, but the Supreme Court citing stare decisis shows just how out of touch and ignorant they have collectively become.


Second, the Supreme Court’s decision in TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), did not make the cut either. The decision seemed big at the time, but as it turns out many companies are actually located in the Eastern District of Texas after all, and many others are located in the Western District of Texas, where Judge Alan Albright has shown he enjoys patent cases and is not afraid to rule in favor of patent owners. So, Texas continues to play an important role in patent litigation regardless of the Supreme Court’s ill-advised decision to accept a writ of mandamus on cert.


Now, without further ado, here are the top 10 patent stories of the decade – according to me!


Creation of the Patent Trial and Appeal Board (2011)


At exactly 11:42am on September 16, 2011, President Barack Obama signed the America Invents Act (AIA) into law. As President Obama put his pen down, he said: “All right guys, congratulations, the bill is signed.” It was at this precise moment that U.S. patent laws dramatically changed forever. See The Bill is Signed: President Signs America Invents Act and Brave New World: First to File Becomes Law.


There had been much debate and discussion about the U.S. moving from a first to invent system to a first to file system. Without a doubt, however, the biggest change to the U.S. patent system was the creation of the Patent Trial and Appeal Board (PTAB) and the simultaneous creation of three new opportunities for challengers to invalidate patent claims at the U.S. Patent and Trademark Office (USPTO). Inter Partes Review (IPR); Covered Business Method (CBM) Review and Post Grant Review (PGR) have been extraordinarily controversial. Indeed, many of the Administrative Patent Judges (APJs) seemed to believe they were hired to invalidate patent claims rather than call balls and strikes in an impartial manner, leading former Federal Circuit Chief Judge Randall Rader to refer to the PTAB as a “death squad”.


As we close out the decade, the PTAB continues to be the center of controversy. The Supreme Court is poised to decide whether it is the PTAB’s prerogative to institute challenges even AFTER the statute of limitations has expired. It is that mind-numbing lunacy that has plagued the PTAB, and patent owners, from the very onset.


Alice v. CLS Bank (2014)


On Thursday, June 19, 2014, the United States Supreme Court issued its decision in Alice Corp. v. CLS Bank, 134 S.Ct. 2347 (2014), which significantly changed the way courts and patent examiners evaluated patent eligibility of computer implemented innovation in the United States. In a unanimous decision authored by Justice Thomas the Supreme Court held that because the claims are drawn to a patent-ineligible abstract idea, they are not eligible for a patent under Section 101.


While the Supreme Court ostensibly extended the patent eligibility analysis applied in the life sciences context that had previously been adopted in Mayo Collaborative v. Prometheus Labs., 132 S.Ct. 1289 (2012), even a cursory review of allowance rates from the USPTO and invalidity rates in federal courts shows that Alice changed the prevailing analysis in profound ways.


Almost immediately after Alice, patent examiners started to issue new subject-matter eligibility rejections for computer implemented innovations using the abstract idea exception to the statutory categories of patent eligibility. “The ubiquity of subject-matter eligibility rejections in office actions exploded, leading many to wonder whether software implemented inventions remained patentable at all,” explained Kate Gaudry and Samuel Hayim, who have done a series of articles on IPWatchdog detailing their statistical analysis. “This effect was largely centered in business method art units of [USPTO technology center] (TC) 3600. For example, the number of allowances issued from business-method art units dropped from 24% in the months before Alice was decided to about 3% in months after.”


While many will not cry a river over innovations that have been routed to the business method art units suffering the indignation of insurmountable Alice rejections, in the aftermath of Electric Power Group, LLC v. Alstom, S.A., 830 F.3d 1350 (Fed. Cir. 2016), the USPTO started issuing patent eligibility rejections in the Artificial Intelligence (AI) art units. And not just issuing rejections, but rejections on a frequency and difficulty level commensurate with the level of Section101 rejections found in the business method art units. Not surprisingly, investment in AI technologies has been leaving the U.S. in favor of Chinese startups.


This past spring Senator Chris Coons (D-DE), Senator Thom Tillis (R-NC), Congressman Doug Collins (R-GA), Congressman Hank Johnson (D-GA) and Congressman Steve Stivers (R-OH) held roundtable discussions in search of a potential legislative solution. Those efforts have failed, at least for now. Ironically, the best hope for a solution to the patent eligibility crisis originally caused by the Supreme Court lies with the Supreme Court changing its mind.


The Alleged Abuse of Kyle Bass Challenging Pharma Patents (2015)


In April 2015, the Wall Street Journal published an article explaining the novel strategy of Kyle Bass, head of Hayman Capital Management, to make money by invalidating patents. Bass, who has teamed up with Erich Spangenberg, has filed several petitions for inter partes review (IPR) at the USPTO asking the PTAB to invalidate patent claims covering drugs. After filing the IPR Bass then either shorted the stock of the company owning the patent, or he bought shares in companies that would be benefited by the patent claims becoming invalidated.


Given the purpose for creating new post grant challenges was to create a low-cost alternative to litigation to determine the validity of patent claims that should never have issued in the first place, it is difficult to understand why the Bass challenges were ever appropriately considered abusive. Certainly, neither Congress nor the pharmaceutical industry thought this type of challenge would occur, but the challenge that Bass and Spangenberg bought against these pharma patents was absolutely allowed under the rules and laws.


So, why is this one of the biggest moments and not just worth honorable mention? What became the AIA passed in large part because big pharma and big biotech companies relented and joined big tech. Pharmaceutical companies and biotechnology companies were absolutely convinced that they had nothing to worry from the PTAB because no one would ever challenge their patents with an IPR proceeding. Particularly the pharmaceutical companies thought with the Hatch-Waxman regime there would be no reason for anyone to rely on an IPR challenge. I never understood their confidence, which Bass and many generic companies have since demonstrated to be wholly misplaced. So misplaced and miscalculated was the pharmaceutical belief that they had nothing to worry from the PTAB that once challenges started flying they sought a carve out that would exempt pharmaceutical patents. Therefore, the saga provoked by Kyle Bass provided a rare glimpse into the under belly of lawmaking, and the extreme consequences paid for the miscalculation of pharma advisors with respect to passage of the AIA.


Sequenom v. Ariosa Diagnostics (2015)


If a medical test that reduces risk from a potential catastrophic event to no chance of a catastrophic event is not patent eligible, something has gone significantly wrong. Surely the Supreme Court didn’t mean for this to happen and would step in and modify its decision in Mayo v. PrometheusBut the Supreme Court did not step in and that was precisely the outcome of Sequenom v. Ariosa.


In June 2016, the United States Supreme Court denied certiorari to Sequenom, Inc., which let stand a decision of the United States Court of Appeals for the Federal Circuit that ruled a truly revolutionary medical test to be patent ineligible. This marked the moment in time when the industry realized the Supreme Court just didn’t care or didn’t understand enough about the consequences of their decisions to care.


This refusal by the Supreme Court to hear this case easily earns a place on this list above Mayo v. Prometheus because when the Supreme Court decided Mayo it could be said the Court was invalidating claims that everyone agreed should have been invalid for lack of novelty (i.e. under 35 U.S.C. 102) or invalid as being obvious (i.e., under 35 U.S.C. 103). Furthermore, when deciding Mayo, the Supreme Court might not have understood the magnitude of the harm – or put another way how they would destroy the research and development of medical diagnostics in America. But by the time Sequenom arrives with a medical test that is recognized as being truly revolutionary and new, but not patentable, the Supreme Court refusing the case is simply inexcusable, period.


Examiner A Submits Fraudulent Time Sheets (2015) and Commerce Department Uncovers Patent Examiner Fraud (2016)


On August 31, 2016, the Inspector General of the United States Department of Commerce released a scathing report titled Analysis of Patent Examiners’ Time and Attendance, which painstakingly detailed what appears to be widespread patent examiner financial fraud on the Patent Office. The investigative report, prompted by interest caused by the infamous “Examiner A,” who falsely claimed he worked 730 hours in fiscal year 2014, concluded that for the 15-month period of August 10, 2014 through November 28, 2015, patent examiners submitted 288,479 hours that could not be supported or verified as being worked. These unsupported hours equated to $18.3 million in over payments.


To be fair there has been a difference of opinion between respected and thoughtful commentators on the findings of the Inspector General. While I have been critical of the 400 or so patent examiners noted as engaging in what appears to be fraud, legitimate questions about the report have been raised. See Inspector General’s Hyperbolic Report Distracts From Improving Patent Quality and Time and Attendance Report has No Merit.


Still, what remains true is there have been patent examiners who have commented here on IPWatchdog.com and have admitted to fraud, which was pointed out by the Inspector General during a December 2016 hearing on Capitol Hill. And sources tell IPWatchdog that Examiner A was advised to quit by the union rather than have anything negative placed in his/her employment file. Moreover, the district attorney in Alexandria refused to prosecute Examiner A for the nearly 5 months of time he/she claimed to have worked but did nothing.


Why resurrect this episode in Patent Office history? There will no doubt be some who are offended by this story making the cut, but this story speaks to a much larger problem the federal government has generally speaking, and for our purposes the USPTO specifically. The single most asked question I receive from patent practitioners is this: How do I get an examiner removed from a case? The answer is absent malfeasance you can’t, period. But this episode tells us that there is a small but not insignificant percentage of patent examiners who use questionable time keeping accounting methods. If they are doing that what else are these less than stellar employees doing? Can the Director and Commissioner really police patent examiners? When there are patent examiners employed by the Office who have not issued patents for years one has to wonder. So, again, this makes the cut not because of the episode itself but because of what this story necessarily means for the system at large.


As we explained in Part I of this series yesterday, this December marks the end of a decade as well as 2019. In reflecting on the top 10 patent stories from 2010 to 2019, we acknowledge that there will undoubtedly be disagreements and mentioned yesterday that some big cases, like Mayo v. Prometheus and TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S. Ct. 1514 (2017), and others did not make the cut (although Mayo was addressed as part of the Sequenom debacle). This is the top 10 patent stories of the decade according to me alone—and now without further ado, here are stories 6-10. Let the debate begin!


Apple v. Samsung (2016)


This list would be woefully inadequate without mention of the epic patent battle of the decade: Apple v. Samsung. Still, was there any single event, case or decision that rises to the level of being worthy for this list? That is debatable, although I’d tend to say that the answer is no. Still, given the magnitude of the all-out war between these tech giants, and the unusual global nature of the grudge match, the totality of the patent battle certainly qualifies for top story of the decade status.


That being the case, the easy event to point to is the December 2016 Supreme Court  decision in Samsung Electronics Co. v. Apple, which found by a unanimous 8-0 vote that a damages award for design patent infringement may be limited to revenues attributable to a component of an article of manufacture and not the entire article itself. The SCOTUS decision overturned a judgment reached in May 2015 at the U.S. Court of Appeals for the Federal Circuit, which would have awarded nearly $400 million in damages to Apple Inc. for the infringement of three design patents by mobile devices marketed by Samsung Electronics. The Supreme Court concluded that the term “article of manufacture is broad enough to encompass both a product sold to a consumer as well as a component of that product.”


Of course, the real story is the relative worthlessness of the Apple patent portfolio. With tens of thousands of patents covering its iPhone from countless different angles and perspectives, the only patents that were found infringed were the design patents and those design patents continued to become worth less and less with each passing decision. As Samsung produced smartphones that looked exactly like Apple products the Apple patent portfolio was completely incapable of providing exclusivity and wound up providing very little by way of patent damages either. One is left to wonder the potential value of this case for Apple had software patents not become completely devalued and the Patent Trial and Appeal Board not become weaponized.


Michelle Lee Remained USPTO Director (2017)


Those who believed Friday, January 20, 2017 would be the last day for USPTO Director Michelle Lee received a big surprise.


On January 18, 2017, just two days before President Trump’s inauguration, we learned that Lee was either refusing to resign or perhaps attempting to revoke her letter of resignation. Shortly thereafter we learned that senior Obama officials were upset with what was happening at the Patent Office and that Lee had “gone rogue.” And thus began a crazy story that saw the USPTO and Department of Commerce refusing to acknowledge whether Michelle Lee remained as Director or had left the USPTO (see hereherehere and here). The USPTO even postponed addressing my FOIA request pertaining to the matter citing unusual circumstances.


“Unusual circumstances” was an understatement. Lee remained Director of the USPTO without any official statement on her status until March 10, 2017, when the USPTO finally confirmed she was the Director of the USPTO. After all of this, apparently without giving anyone at the USPTO any advance notice, Lee resigned as Director on June 6, 2017, by sending an all-employee e-mail.


This story represented a most bizarre series of events, but it makes the top stories of the decade not only because of how unusual it was for an agency of the federal government to refuse to identify who was in charge for many weeks, but because it is an example of the lack of transparency that has unfortunately become the USPTO. This saga was particularly bizarre, but even the most direct, easy, straight forward questions are often met with complete silence. For example, we’ve recently tried on several occasions to find out how many Administrative Patent Judges (APJs) are currently employed by the USPTO. Obviously, someone has that number and it cannot be a state secret, yet no answer has been or likely will be provided. And if you submit a Freedom of Information Act (FOIA) request to the USPTO you will be met with delay after delay after delay, and then ultimately get very little useful, with many (if not most) pages completely redacted.


The USPTO and Department of Commerce refusing to answer questions about who was running the USPTO in January, February and March 2017 was Monty Python-esque. Sadly, the politicization of the patent system is real.


U.S. Patent System Falls from 1st Place (2017 et seq.)


Each year, the U.S. Chamber of Commerce ranks the top economies around the world in terms of favorability for the intellectual property ecosystem. In 2017, the United States was once again the top ranked country in the  annual Global IP Index for 2017, but the rankings were closer than ever before. The closeness of the rankings was no doubt in significant part due to the fact that the United States tumbled to 10th overall for patents. According to the Chamber report, the omnipresent threats of more patent reform, a Supreme Court that has created unprecedented uncertainty surrounding what is patent eligible, and a hostile PTAB contributed to the U.S. fall from 1st place to 10th place.


The United States was once again the top ranked country in overall score in the Annual Global IP Index for 2018, but the rankings were even closer than in 2017. The United States edged out the United Kingdom by a mere .01 points on the Chamber scale. The U.S. position was helped by improved scores relating to copyrights and trademarks but was dragged down for the sixth consecutive year as the result of a patent climate that the Chamber characterizes as causing “considerable uncertainty for innovators.” In 2018, the U.S. patent system fell to 12th place overall.


Earlier this year, the Annual Global IP Index for 2019 showed an improved U.S. ranking in patent rights—moving from its twelfth-place ranking in 2018 to a tie for second place this year. This jump in rankings, attributable to the Iancu effect (i.e., the arrival of Andrei Iancu as Director of the USPTO and his willingness to advocate for strong patent rights) is certainly welcome news but the nation’s patents and related rights score is 7.5—only 0.25 points ahead of thirteenth-place Italy and putting the country’s patent ranking in a seemingly tenuous position.


As we end the decade, many countries continue to pursue pro-innovator patent policies while the Federal Circuit continues to find more and more software to be patent ineligible, virtually all medical diagnostics to be patent ineligible, and says they are not bound and will not follow the patent eligibility guidance issued by the USPTO in January 2019. With Congress unable to reach an agreement to even get anything to a Committee vote and the Supreme Court AWOL, it is hard to imagine the U.S. patent score rising when the Chamber releases the Annual Global IP Index for 2020.


Conflicts of Interest at the PTAB (2017 et seq)


In May 2017 we wrote several times (hereherehere and here) about a Patent Trial and Appeal Board (PTAB) situation that, in my opinion, symbolizes everything that is wrong with a tribunal that is out of touch with reality. Prior to being hired in March 2013 by the U.S. Department of Commerce to become an Administrative Patent Judge (APJ) on the PTAB, Matthew R. Clements represented Apple as patent infringement defense counsel while working for Ropes & Gray. Beginning in September 2014, APJ Clements was assigned to numerous CBM and IPR petitions filed by Apple. Not surprisingly, Apple did remarkably wellin those challenges decided by APJ Clements.


Upon this story breaking, the USPTO removed Clements from his Apple assigned caseload, changing the entire panel assigned in each case altogether. Sometime thereafter Clements left the USPTO and in a twist that almost defies belief was hired as in-house counsel by Apple.


On Thursday, May 11, 2017, we submitted a Freedom of Information Act (FOIA) request to the United States Patent and Trademark Office (USPTO). Our FOIA request sought a copy of any and all rules of judicial conduct, ethical policies and/or codes of professional or judicial conduct that apply to Administrative Patent Judges (APJs) of the Patent Trial and Appeal Board (PTAB). On May 31, 2017, we received a response confirming that there is no code of judicial conduct or ethics rules that apply to APJs on the PTAB. The judges of the PTAB are governed by the same ethics policy that applies to all USPTO employees, which requires only a 1-year disqualification period.


No federal court judge would be able to decide a case involving a former employer after as little as 1 year, and indeed would be disqualified from cases involving former employers and clients indefinitely. Similarly, patent attorneys and patent agents could never represent a competitor of a former client without express permission from that former client. It seems federal judges and the patent bar are held to a significantly higher ethical standard than PTAB judges (See here and here).


Oil States Energy v. Greene’s Energy Group (2018)


On April 24, 2018, the United States Supreme Court issued its decision in Oil States Energy v. Greene’s Energy Group, 138 S.Ct. 1365 (2018), which asked the Court to consider whether post-grant challenges to issued patents at the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO) are constitutional under Article III and the Seventh Amendment of the U.S. Constitution. As anticipated by many, in a 7-2 decision, the Court found that post-grant challenges, specifically inter partes review (IPR) challenges, are constitutional.


While the Supreme Court attempted to leave open the faint possibility that they were not foreclosing the possibility that patents are no longer property rights, the Supreme Court’s decision in Oil States did state that patents are a government franchise.


Justice Thomas, writing for the majority, said that all inter partes review involves is “reconsideration of the Government’s decision to grant a public franchise.” Thus, patents are not considered property rights by the Supreme Court despite the Patent Act saying that patents are to be considered to be property, and despite what the Supreme Court themselves have ruled to the contrary previously. Of course, in true Supreme Court fashion, none of its previous rulings stating that patents are property rights were overruled.


Here’s looking forward to more exciting patent stories for the next decade!


Source:

Quinn, Gene. "The Top 10 Patent Stories of the Decade 2010 – 2019: Part I." IPWatchdog, https://www.ipwatchdog.com/2019/12/22/top-10-patent-stories-decade-2010-2019-part/id=117119/

Quinn, G."The Top 10 Patent Stories of the Decade 2010 – 2019: Part II." IPWatchdog, https://www.ipwatchdog.com/2019/12/23/top-10-patent-stories-decade-2010-2019-part-ii/id=117123/