Key Discussions from the Patent Institutions Summit

By TAP Guest Blogger

Posted on June 5, 2012

On May 21, 2012, the Berkeley Center for Law & Technology and the Stanford Program in Law, Science & Technology co-hosted the Patent Institutions Summit in Palo Alto. The conference focused on exchanging ideas and exploring opportunities for coordination between the four patent institutions in the U.S.: the Patent & Trademark Office (PTO), the International Trade Commission (ITC), the Federal Circuit, and the district courts. Distinguished jurists and key officials were joined by legal academics, corporate counsel, and seasoned practitioners in a day-long discussion.
PTO Director David Kappos delivered the opening keynote address, highlighting various PTO initiatives in connection with the implementation of the America Invents Act (AIA), prioritized examination, improvements in quality control, and IT changes designed to enhance examination.  
The first panel explored the PTO-district court interface, where the discussion focused on the greater role assumed by the PTO on post-issuance invalidity issues, and whether district courts should grant stays pending post-grant reviews. Prof. Arti Rai compared inter partes reexamination with the new “inter partes review” procedure available under the AIA, noting that estoppel effects will be created earlier in the latter proceeding, so the courts should consider granting stays during inter partes review. Judge Jeremy Fogel, Director of the Federal Judicial Center, observed that district courts view the PTO as a “black box.” Judge Fogel suggested that courts should be able to get information directly from the PTO regarding reexaminations—without relying on the parties—so as to allow judges to make informed decisions on whether to grant a stay.
The ITC-district court interface was the topic of the second panel, which focused on non-practicing entities (NPEs) at the ITC. Prof. Mark Lemley asked the panel whether the ITC could deny relief to a complainant, such as an NPE, who does not need an injunction because it is only seeking a license. Commissioner Shara Aranoff responded that Prof. Lemley’s question has not yet been squarely presented to the Commission, and that only three NPE cases have reached the remedy stage. Commissioner Aranoff added that the ITC is not a policy-making body and that it takes no position on whether NPEs are “good” or “bad.” 
The third panel discussed the interface between the Federal Circuit and the district courts. The panelists agreed that deference on claim construction issues was needed in view of the reality that the process of construing claims has a factual component, but had differing views on the relative importance of maintaining uniform constructions. Prof. John Duffy suggested that the district court might ask the PTO for an advisory opinion on claim construction, which can help with the uniformity issue. Regarding damages issues, Federal Circuit Judge Kathleen O’Malley observed that not enough attention is being paid to whether the damages analysis is sound.
The fourth panel, entitled “The Market for Patent Litigation,” focused on the secondary market for patents and NPE litigation. Mallun Yen of RPX Corp. provided a timeline of an NPE’s patent monetization strategy from buying patents to filing suit. She also presented statistics on NPE activity at the ITC and in district court litigation: in 2011, NPEs were responsible for 50% of the respondents in ITC cases, and 57% of the defendants in district court cases. Patent litigator Matthew Powers discussed the maturation of patents as an asset class, and suggested that NPEs enhance the efficiency of the patent enforcement market. Yen disagreed, observing that the market is extremely inefficient because of litigation costs.
The last panel was a discussion entitled “Integrating the Patent System.” Looking at the patent system as a whole, Director Kappos discounted the severity of the problems created by NPEs, characterizing their activities as “two standard deviations away from the mean.” Prof. Lemley disagreed, observing that NPE litigation was common. Prof. Peter Menell expressed skepticism regarding the extent to which a unitary patent system can efficiently promote innovation for disparate industries. Director Kappos disagreed, expressing confidence in the ability of a unitary patent system to accommodate different technologies. The panelists were largely in agreement about the problems posed by budget and resource constraints. Judge O’Malley expressed disappointment that the funding was stripped out of the Patent Pilot Program, and noted that the district courts cannot freely use the fees that they collect. Judge Fogel mentioned that the Patent Pilot Program judges visited the PTO recently, and stressed the importance of getting judges more attuned to different pieces of the patent puzzle.
Jeremy Bock is a Research Fellow at the Berkeley Center for Law & Technology at U.C. Berkeley School of Law.