USIJ Amicus Brief on behalf of Petitioner SSL Services, LLC
Summary of Argument:
Inter Partes Review (“IPR”) procedures were created by Congress as an economical way to eliminate “bad patents” through expedited administrative proceedings at the PTO instead of litigation in a district court. Whatever success IPRs may have had in nullifying bad patents, the PTO’s processes have expansively allowed IPRs to be instituted against meritorious patents that already survived multiple challenges. The outcome in this case is a direct reflection of that indifference and cries out for this Court’s guidance. The PTO struck down the SSL patent after the same agency, using the same or nearly identical prior art, had affirmed its validity on six separate occasions and after a district court and the Federal Circuit had also affirmed the validity of the same claims in an infringement case.
The failure of the PTO to implement Sections 315(e) and 325(d) in a meaningful way at the outset has allowed abuse of IPRs on a grand scale. Large infringers have been permitted to mount wave after wave of challenges to the same patent claims. What was envisioned by Congress as limited to “one bite at the apple” – i.e., a single challenge to a patent claim – became instead a system wherein a single patent claim can be attacked by even the same challenger with two, three, four, five, six, or more petitions. That same challenger, often a large corporation, also can coordinate its challenges with those of other challengers who file their own separate salvos against the same claim. Not surprisingly, a crop of enterprising profiteers, funded principally by a network of large technology companies, has emerged to file separate petitions pretending to be independent of the real party in interest and thereby hoping to avoid the estoppel provisions of the AIA.
Congress never intended the post grant challenges to patent validity created by the AIA to be used as weapons to raise the cost of litigation for inventors and small companies. Indeed, the legislative history of the AIA is to the contrary, with numerous expressions of concern, through successive sessions of Congress, about the ability of large infringers to use post grant challenges to harass “brilliant inventors” and small companies by attacking their patents. Congress understood clearly that if the very best patent imaginable is subjected to a sufficient number of probabilistic challenges, as all litigation inevitably becomes, sooner or later the patent will be held invalid.2
35 U.S. §325(d) was included in the final version of the AIA for the very purpose of preventing infringers from forcing a patent owner to defend multiple proceedings whenever it tried to enforce its patents. Allowing multiple attacks eviscerates doctrines such as stare decisis and res judicata that have existed for decades to settle contested issues with finality and to provide repose to the parties. Section 325(d) is a clear statement by Congress that the interests of legitimate patent owners must be taken into account and balanced against the statutory objective of eliminating so-called “bad patents.” After a patent claim has been subjected to an IPR challenge once without falling, that patent no longer can be considered a “bad patent,” and infringers should be required in most cases to use the district courts to adjudicate any further assertions of invalidity.
Section 325(d) is particularly applicable to the situation here. Prior to the ruling at issue in this case, the SSL patent had survived ex parte reexamination brought by an infringer on three prior occasions, two of which were based upon the identical prior art that later was used by the PTO to invalidate the SSL patent. Each of the three proceedings was followed by an additional de novo review requested by SSL, and each of these affirmed the patent’s validity with written opinions. Thereafter, the SSL patent was asserted against the same infringer who raised, as a defense in the district court, the same primary reference that it had used unsuccessfully in each of the reexaminations, this time in combination with RFC1508 (a portion of the internet specification). The jury found, as the PTO had previously held, that the prior art did not invalidate the patent. That judgement of the district court was affirmed on appeal by the Federal Circuit.3
Against this backdrop and in light of Section 325(d), it is unacceptable for the PTO simply to ignore its own conclusions in six prior reviews of the same question and to reject the final ruling of an Article III district court, affirmed by an Article III court of appeals. Equally important, it is both shocking and surprising that the Federal Circuit, in issuing a Rule 36 affirmances without opinion, did not provide any substantive guidance on this critical question of separation of powers. An Article I administrative tribunal should never be allowed to override the conclusions of prior tribunals of the same agency and the final rulings of two Article III courts.
There must be meaningful restraints on the willingness of the PTO to accept multiple challenges seeking to invalidate a patent that already has survived a post-issuance challenge, particularly where the prior art on which the later challenge is based is the same or substantially the same as in the prior challenge. The unfairness in such a process is evident to anyone. Sooner or later, a panel of judges will be found that will conjure up a justification to kill a patent, as happened here, despite numerous contrary rulings by the same agency. A single unfavorable panel is all it takes to destroy an important and highly valuable property right.4 It is not the “bad patents” that have become the focus of IPRs, but now it is the most meritorious.
It is difficult to gauge the damage that this type of outcome has had on those inventors and entrepreneurs who would risk economic livelihood, time and monetary resources in the pursuit of critical breakthrough technololgies. The inventor and investor communities increasingly despair about the cost and uncertainties of genuine patent protection. It is this community that USIJ represents and that is in great need of some good news.