The America Invents Act and the role of the Patent Trial and Appeal Board

Transcript

[Music] welcome to the federalist societies webinar call today july 27th we present a response to our previous event 10 years on the america invents act in the role of the patent trial and appeal board in resolving padded disputes my name is goddess dankes and i'm an assistant director of practice groups at the federal federalist society as always please note that all expressions of opinion are those of the experts on today's fall today we're fortunate to have with us our moderator honorable paul michelle u.s court of appeals federal circuit retire throughout the panel if you have any questions please submit them through the question and answer features that our speakers will have access to them for when we get to that portion of the webinar with that thank you for being with us today judge michelle the floor is yours thank you so much the briefest introduction of our two experts who have enormously varied backgrounds each i'll start with tom grant you see behind him the magnificent buildings of cambridge university where he teaches and researches and writes he is frequently flying between england and america his country of origin because he also teaches and practices in the u.s he has a phd in international law a law degree from harvard and he's an expert in a great many things scott keefe presently at george washington university also is a multi-threat man he has taught at universities united states in multiple different disciplines he also served on the international trade commission as a commissioner for a considerable number of years before returning to his present position at the law school at the george washington university in washington d.c you see behind him a glimpse of the washington monument on the top of the jefferson mario memorial and if you look carefully over his shoulder you can see the logo of the george washington university welcome to you both it's been suggested that a cynic might say that the interparties reviews at the patent trial and appeal board are an example of bait and switch that is when the statute was enacted and conceived of and various compromises were engineered among contending stakeholders there was one set of expectations but the reality over the last 10 years has turned out to be i'd say somewhat different so i want to start with you tom to just give us a little bit of context about the nature of patent rights and the role of the u.s patent and trademark office and then we can delve into the specifics of inter-party's reviews judge michelle thank you very much for that that very kind introduction and uh thank you guy and uh to the federalist society for um inviting uh scott and me and judge michelle for this uh discussion um [Music] i'm talking about it apartheid's review and the structure of our dispute settlement system around patent law i think it may pay some dividend if we step back at the beginning and think a little bit about the nature of the rights that uh we are dealing with patent rights are a form of property right uh which um has been subjected to some contestation in recent years especially in the united states and perhaps more in the united states than in a lot of other places and without without trying without caricaturing or oversimplifying the position of some of the uh uh thinkers and practitioners who have uh started to take uh a sort of a different look at patent as property i think in a nutshell what has been proposed by some uh sort of skeptics about patent law is that patents for some reason in some way are fundamentally different in nature from the property rights that we see in other parts of law that i think is in a nutshell the proposition that some of the sort of modern-day uh especially american critics of patent law have uh levied against the patent uh system but but i i think that it also pays dividend to think a little a little harder about the comparisons between patent law and other property systems before we jump to a conclusion that patents are somehow fundamentally different proposition is that patents rely upon language to describe intangible things an invention uh is uh sort of a cognitive construct it's something that comes out of the creativity of people's minds and therefore you know it has to be described with legal formulae in words and a patent claim and the proposition of the skeptics is that that's somehow different from other property rights uh black acre green acre land land tenure the things we learn about in first year law school property class the skeptics say are tangible not intangible and therefore somehow these two systems have to be seen as different systems entirely rather than sharing any common roots and property well i i would say that actually when you look at traditional property we describe it with language with legal formulae and we also encumber property and we've been doing this a really long time even before the america invents act we had covenants we had easements we had different rights of passage over land and territory we had leases we had mortgages we had joint tenancies we had all sorts of tenant relationships we had parceling and division of mineral rights versus farming rights versus the right of residency this is not new this is pretty old stuff and it's also pretty intangible the notion of a mortgage it's not an object that exists in the wild in nature it's a construct it's an intellectual construct so starting at this kind of admittedly very high altitude view i just think there may be more reasons to think about patent law and patent property rights as part of a larger picture and a larger tradition of property so that's just it's kind of as an opener to to frame the the critical view that has emerged in the united states in recent years and maybe maybe take a little bit of a step back from that i don't know if scott has uh thoughts or judge if you have you know but that's i i just have a footnote to your helpful introduction which is that uh the relevant section of the patent act contains the command from congress that quote patents shall have the attributes of personal property end quote it would seem like that would settle the argument but the skeptics don't agree just just very well i i maybe i'll just defer for a moment but yeah that that is a really good point just to build on all of this you know when when when those who are concerned about the shock and awe or the surprise the ambush effect the confusion effect that a a large um implementer of patented technologies who's built a large expensive fabrication facility we can feel that sympathy while also noticing that with mortgages and easements and entitlements and a whole vast array of legal regulatory regimes at the federal and state level these entities managed to deal with those kinds of systems and those kinds of systems are in many respects much fuzzier and much more subject to surprise than the concreteness of the disclosure rules and patent law enshrined in patent applications that are required to be on file the patent e is hemmed in by the text as originally filed that's how the legal rules in patent law restrain a patentee um and it's quite ironic that that that you know you talk about bait and switch in some ways the american vents act was bait and deliver hook line and sinker because if anything it has taken whatever restraint was provided by the legal tools the legal doctrines of the disclosure rules of patent law and the facts of the patent application's textual record and has replaced all of those with administrative deference and political whim inside an executive branch administrative agency which just subjects all of that factual and legal predictability which admittedly is imperfect but it makes it vastly more fluid and fluid in a way that is most responsive to large entrenched politically active players which progressives ought to bristle at because they are most concerned about further entrenching entrenched power and conservatives ought to bristle at because it is the the leviathan at its worst not um rules at their best let me ask you both this fairly fundamental question it seems like the patent trial and appeal board procedures were sold on the theory that there would be quote an alternative to expensive court litigation end quote but the figures i see suggest that the vast majority of ipr proceedings have parallel proceedings in the district court and indeed the district court case started first but then it shifts over in nearly every case to the patent trial and appeal board usually the district court stays the district court case so instead of being an alternative it starts to look more like a prelude or a parallel so can i ask you each to comment on that we'll start with tom yeah absolutely one one recurring characteristic of parallel procedure is that it gives rise to a sort of underbrush of challenges for stays counter stays stays against stays this is visible internationally as countries including china get more and more involved in things like fran rate setting where you could have courts in very far-flung places asserting jurisdiction well we in our own federal system might have had the raw materials for getting control over this and having a more predictable if even if not quite a one-stop shopping location for all patent issues at least something relatively streamlined and rational the problem is it appears looking at the evidence like you just pointed out judge it's going the other direction and with inter-parties review you're not getting a one-stop shop but instead you're getting a division of patent claims into their component issues and then each each issue is being separately argued adjudicated ways i settled and i don't i say quasi because there are lots of further bites at every apple when you've got that many different instances each of which can treat each principal legal issue as a separate incident so yeah it's very problematic scott as i recall justice breyer wrote that ipr more compares to an examination than an adjudication but i wonder if that's really accurate in light of the fact that there's no discovery there's no live testimony at the ipr it's a practical matter and the result is the patent is either invalidated or not that really looks to me like it resembles a declaratory judgment action of invalidity in a district court not an examination where endless negotiations go on between the examiner or re-examiner and the applicant and where there's free amendment and limitations are added either voluntarily by the applicant or demanded as a precondition of allowance by the examiner so it seems to me justice fryer got it exactly backwards yeah i agree judge and and and i really i notice a few things if if uh back in 2011 what society really wanted was more accurate more predictable and faster adjudication of patent issues they would have noticed that we have tribunals that can do that some of the district courts are famously or infamously fast and certainly the u.s international trade commission 337 docket is infamously or famously fast 18 months but what is key to court adjudication and itc adjudication is as tom alluded to a few key factors about the way the adjudication is done it's not done by political whim or political fiat or fashion or even hyper technical technicalities instead it's done using full and fair fact-based adjudication techniques grounded in a record you then can disagree with the written opinion by referring to the public record grounded in the facts you don't defer to scientific and legal expertise of the district judge or the itc commission you defer to the ideas reflected in the legal reasoning and the facts in the record that have been interrogated by the cross-examination adversarial process so to put a fine point on it it's one thing to take a um executive branch employee in a given year today and ask her or him what exactly was the state of the prior art uh july 27th 10 years ago and how did it differ from july 26th 10 years ago and hope to god that person's gonna get it right um that puts an immense amount of deference um onto that individual human being's expertise and i assure you no matter how much of a superhero she or he is that's just an impossible burden but when you instead rely on the world of actors to bring to the attention of some kind of official body like a court or an agency actual documents a laboratory notebook a student thesis published in a university law library or scientific library a a sample product on a on a shelf at a company in detroit you know when you have to make the decision about what was the state of the prior art and you hang it on simple facts like a document or a thing then a lay judge a lay jury a lay itc commissioner they can handle these things just fine precisely because those are not the kind of hyper technical questions they're the kind of pedestrian factual questions that allow markets and especially the disenfranchised minorities in markets to have a fair shake at a competitive landscape tom go ahead yeah it is also an advantage of recruiting the claims process to defining the issues and marshaling the evidence on one side or the other of an adversarial proceeding we've placed our trust in our faith in adversarial proceedings to get to good outcomes in practically every branch of law for a very long time in the american and anglo-american legal systems it's kind of curious to argue for a departure from that approach especially in an area where we are dealing not just with things that exist today but with invention and invention by definition involves things that are yet to be things that haven't yet come out of people's imaginations and creativity but instead are future tense now what you see i mean i think this also opens up a question what is the function of a patent offices especially our own patent office what is its function and if you start drifting into what i'm i think of as a sort of preemptive dispute settlement function that is to say let's try through technocratic expertise in the hands of civil servants let's try to preempt all imaginable future disputes around a patent claim let us make our patent office so all knowing a sort of panopticon not just of today's prior art a thesis at the heidelberg library an implementer in south korea an african inventor it's not only to a sort of all-knowing all-seeing eye of today's state of affairs but also a sort of predictive pre-emptive function so as to freeze in place freezing aspic a picture of all social and legal relations at this point in time that will then be good forever i don't think it's exaggerating to say that's the functionality that the more ambitious proponents of the expansion of the patent office function or in fact calling for i don't see it as a very a very realistic thing to try to achieve you know the doctrine in the case law says that the perspective that's to govern these adjudications whether in court or at the patent trial and appeal board is the perspective of the ordinary artisan in that exact technology but when i look at the witnesses called by each side in a typical ipr they're not the or average artisan they're superstar people with astonishing credentials way more creative and better informed than the ordinary artisan and they have to put themselves back in the mindset of what other people knew say 10 years ago as in scott's example which is hard for anybody to do and then on top of that it seems to me that what you get is each side has a super expert he or she opines the panel of three administrative patent judges then pick which expert they like better for whatever reason they follow what that conclusion was and they rule accordingly and meanwhile they've never seen the witness in the same room with them they've never had any chance to ask any questions so they're judging credibility in various respects with no direct access to the expert and no chance to compare experts as distinct for example from some arbitration practices where the two experts are put on the stand side by side at the same time and cross-examined on their reports by opposing counsel and then by the arbitrators the patent trailer pilot practices the opposite of that so scott what what do we make then of uh the patent office compared to other administrative agencies that's another great point and and it gives a chance to highlight as well um a thread that that tom had started to pull on earlier which is that in in a typical district court or itc patent litigation there are really four main topics in issue at the same time patent validity patent infringement remedy and anti-competitive effect and is a feature of those adjudication systems that all four of those topics are on the table at the same time because two of those topics provide powerful incentives to view the patent very broadly for the patentee while two of them push in exactly the opposite direction and the incentives on the alleged infringer are the of course the opposite of those on the patentee so both sides of the lawsuit have selfish reasonable rational incentives to do the horrible thing of being self-aware self-limited [Music] moderate um and fact-based in their arguments but as soon as you strip away self-restraint both sides have um in for example an argument over only validity or only anti-competitive effect before an anti-trust body parties in those settings have hyperbolic incentives that one side argues infinity and the other side argues zero and absolute zero point zero zero and then they put a period on it for emphasis and an exclamation point after that and and it's just a is a very tortured form of argumentation that you see when you only have validity on the table or for example anti-competitive effect on the table so it's that presence of the self-cabining or self-disciplining incentives on the advocates themselves that makes for a very hard i i would not like to be sitting in a patent office on the board trying to struggle with the record you describe judge it's a hyperbolic set of arguments with fancy experts with fancy credentials in a highly abstract setting with no self-discipline judge yeah yeah thank you to pick up a thread from scott there's that old chestnut you learn in law school that says it's quite typical to argue my client did not run over the old lady but you know if he did she jumped out in the middle of the road and to a certain extent in an adversarial system we accept that you've got to sometimes make these arguments arguments and the alternative arguments in the tertiary alternative that's part of lawyering but with patent what scott's describing is a dynamic toward escalation and hyperbole in critical phases of an argument that is intended to get down to the facts of validity infringement and then find a remedy and then also deal with anti-trust issues and the way that the uh uh different issues are working in opposite directions is that if you are challenging a patent and saying it's not a valid patent why well because there is prior art this is what scott was referring to the thesis in the library overseas but the chances of there being prior art increase if you make the case that the patent is a really really broad patent a really capacious set of words reaching the sun the moon and the stars that ups your chances of winning your infringement claim because it's a higher chance somebody somewhere had prior art on evidence all right but what if you lose that phase well now you're in a position of defending yourself against an allegation that you've infringed now at that point now that you're being accused of being an infringer of a perfectly valid patent ha broad patent no no no no no it's the smallest tiniest pinprick of a patent that i've ever seen it's so small you need a magnifying glass well that's a totally different argument from the one you made before now you're arguing that it is a really tiny piece of art that's covered now all well and good all's fair in love and war and especially in litigation but if we are trying to make the system more efficient and we're trying to encourage the market to actually have good open bargaining over these very important equities it's not a very good way to deal with patent disputes parceling them out so that the legal counsel the advocates do not even have to worry about that straight face test can i argue these the old lady never jumped in front of the car or if she did she didn't know what she or do you want to remove that sort of hydraulic pressure that tends toward more reasoned more disciplined argument in other words you do it at once like in a 337 action or in a district court where you deal with your issues holistically council are under a type of self-imposed discipline that's going to get them closer to being actually helpful to the adjudicator and to one another whereas if you allow them each to have separate bites at the apple behind the screen of a separate process the dynamic as scott described it is toward escalation of claims and departure from evidence-rooted terra firma so yeah scott let me pick up on your reference to multiple bytes at the apple and highlight that aspect in my understanding of the reality is that the patent trial and appeal board virtually anybody can file an ipr petition at any time in the life of a patent 20 years for any reason with any motivation they may have including stock short selling and lord knows what else so how is it making the system of adjudication of patent infringement as alleged in district court more efficient to have multiple validity trials over at the p tab throughout the life of the patent at least potentially yeah i mean it's only a form of strange efficiency if the goal you're trying to maximize is more process that goes nowhere except each time a good chance at delaying structured settlements in the marketplace or delaying a remedy for a valid patent or what you really just would like to do is remove the patent system and and you kind of haven't accomplished that so your next best uh alternative is tie up every patentee and lots of process it's it's highly reminiscent of of what what dickens wrote about in the british patent system around the time the u.s was being founded uh he wrote a short story about patents called a poor man's tale of a patent and in this story um the the patentee goes from office to office to office to office this is also a story that describes the patent office as one of the worst parts of government um not quite as bad as the circumlocution office but but almost as bad as the circumlocation office um but um the poor man's tale of a patent uh ends with a patentee getting all of his approvals um and then being worn out in in in dickens words um patience and pocket um you know it's it's it's very hard to structure transactions in the marketplace while you announce to the marketplace please hold we're just going to spend some more time in multiple patent office proceedings waiting in line for more people to question the patent yeah time let me let me ask again on this theme of multiple bytes isn't it the case that the statistics show that every time a patent owner has to defend against an ipr it's likely to cost somewhere between three and six hundred thousand dollars and if there are multiple petitions filed either simultaneously or serially that cost adds up pretty fast we all know that district court litigation that goes all the way to trial and judgment typically costs multiple millions of dollars so now we've increased the cost of the patent owner it would seem like significantly which puts a big advantage on an implementer who has a lot of money at the expense of a smaller less rich patent owner who can just lose the war of attrition in the end because he runs out of cash is that a serious threat to fair adjudication do you think judge i think i think you've identified something that's very important and thinking about how we manage or design a system for patent and that is the larger the bureau the bureaucratic input the more substantial the technocratic input then the more idiosyncratic and more also more politicized the process is likely to become it's the nature of a governmental bureaucracy ultimately to respond to political input uh we do have civil service protections we have principles that say the bureaucracy is a sort of objective remote group of uh technocrats and at an individual level in my experience the technocrats really try to be that way and they mean well they try to do their best the problem is the reality writ large when you look at these institutions as institutions and not just well-meaning individuals the reality is that they do have to be responsive to the political inputs whether it's appropriations whether it's new legislation coming down the pike from capitol hill whether it's personnel because in our system we have lots of important decision-making functions performed by political appointees now if you go back to the quotation you had judge earlier about property in the patent act property is a general principle applicable across many different domains of law we've worked with it as lawyers for a really long time we have a rich set of argumentative tools evidence scattering rules to deal with property type disputes they are nice it's a nice general framework in which to think of a dispute bureaucracy is the opposite bureaucracy is not about general frameworks it's about the highly idiosyncratic priorities under a given statute of given regulation as implemented by given decision makers some of whom will in fact be explicitly directed through political decision problem there is you don't have equal access to political decision the best running democracies in the world including our own [Music] have channels of input to the political process which are inherently less egalitarian less open than pure evidence-based forensic process so the further you get away from classic adversarial procedure and the more you get into technocratic functions in a political frame the more the large players and the incumbent players are going to have leverage over outcome now that's i think i think that's that's a systemic problem that could be addressed by stepping back a little bit from investing so much functionality in these technocratic offices and the patent office being the main example we're talking about so i actually i think i think the evidence does suggest and you you judge what you're looking at the figures the statistics on litigation cost that quite i think pretty it's common sense i think to say that when the defense of your patent is going to be that expensive you would better be a very deep pocket to begin with and then here again it's a question of appreciation but is it really the very large is it the behemoths who are always the most creative or is it sometimes smaller players idiosyncratic players who come up with interesting new ideas some of them are crazy and aren't worth it but other others are really valuable productive ideas and trial and error is part of it i'm a little afraid of a system that starts to squeeze out trial and error scott let me ask you this since you're a former adjudicator at the essentially trial-like level does it bother you that the standard the burden of proof and a p-tab proceeding is lower than the burden of proving in validity in a court or the trade commission yeah it strikes me as frankly strange that those who are most interested in having the patent office kind of do more at the same time think it should do more on the one hand because it's so expertise it's got so much talent and then on the other hand give it such a low bar it seems to not have the courage of one's conviction you know if you think the patent office really is the best place to focus all the understanding of the prior art and the disclosures then it seems to me you've spent a few billion dollars on that office you've staffed it with thousands of technologically trained legally trained human beings i'm not sure it makes sense to give them the lowest bar to climb over in fact if you've located it in a politically responsive branch of the government and given it a very low bar i think you'd i'm kind of shocked why anyone is shocked there are politics at play in that um it's just strange on the on the point of politics uh tom obviously in the wake of the arthrex decision the ability of the politically appointed director of the uspto or his lieutenants to influence or actually reverse panel decisions made by the board in inner parties reviews uh certainly suggests that since arthrex the political input is is real and and actually constitutionally required not just theoretically available that that's the other thing in a system of responsive government if you set up an administrative apparatus you can have the ambition of imparting independence to it but our constitutional law over generations has demonstrated that the independence of these bodies has to be tempered with a transmission belt to the elected officials now in its proper space that's a good thing the problem is here we're talking about dispute settlement over particularly particularly commercially important equities and equities that you want to encourage the development of by future inventors future contributors to the market in technology and it's not clear you're leaving the door open to the really inventive segments of society the diverse inputs that you get from different types of people and organizations if the system is so much more congenial to the really big actors and so much less congenial to the smaller ones one way to capitalize this is that decisions about validity ought to be made based on merit not money not america has the bigger warchief to carry on the fight forever well and and isn't it noteworthy that even back in the quaint cute old-fashioned days of 2011 when a typical presidential campaign only cost a billion dollars that the publicly disclosed lobbying spend on the america invents act which by the way was done before 2011 ended it was signed by the president in september both houses of congress were done with it basically by the start of the summer um it had huge bipartisan support just like the current uh quarter of the billion dollar spending bill has bipartisan support it's easy to buy a lot of votes across the aisle with a lot of money going in or out of washington the lobbying spend on the 2011 america events act in just the first several months of 2011 was a billion dollars industry was not spending a billion dollars to lobby the american vents act because they thought they'd get nothing out of it they were spending a billion dollars to help themselves in the very short-term way that lobbying spend always helps short-term uh interests of large established players now i asked earlier about the money problem for particularly less rich companies owning patents but let me ask now about delay given that the district courts typically stay the case at least until the patent trial and appeal board in an instituted petition is done and very often until the federal circuit has uh reviewed that decision so now we're talking about 18 months to two years or two and a half years or something like that it seems like the aia architecture has given us something that's not only more expensive to the patent owner and more risky because of a lower burden of proof but also slower as against the promise that it would be faster simpler cheaper yeah it's not clear why rational decision makers writ large and not just decision makers for certain large incumbent players would design an architecture like the architecture of the american events act it goes back to what do we want the patent office to do as its functionality what is its job and if you go back to this idea that really you cannot preemptively settle every dispute percolating in the back burner today much less preemptively settle all future disputes over intellectual constructs that is inventions that haven't even been invented yet then it's a little bit of a fool's errand to invest more and more technocratic capital and real money capital into a government functionality whose purpose seems to be to try to pre-actively settle the disputes we don't do this in other systems if you file your deed in the county registry you are under rules that constrain how you do it there are forms there is tested language that courts have adjudicated over centuries in the case of real property and does that mean that every single potential dispute over the encumbrances on your property the meats and balance of your property are settled does that mean all the disputes today and in the future over your land are settled no that nobody would imagine that but if we transpose the aia mentality onto the county land registry the state legislature has to quintuple the funds for that registry they need ten times more staff and they need smarter staff with phds rather than just bas or or you know uh street street smarts about registering deeds but nobody would do that nobody would think to do that but so but for some reason we're thinking that that will work with patent scott the defenders on the prior panel of the current structure of iprs and their implementation at the board asserted that the district courts were flooded with unnecessary excess and frivolous uh infringement claims but when i look at the statistics as to what percentage of cases are adjudicated as frivolous it's minuscule absolutely absolutely you have any reaction to the idea that the courts are flooded with frivolous uh cases and that somehow justifies uh the shift over to the board yeah absolutely it's a fascinating set of arguments that had been made um they start with the idea that the so-called american rule that each side pays its own fees is a fundamental contributing exacerbator of the problems in the u.s patent system and yet even during the period when the court uh the u.s court of appeals for the federal circuit your your court where you sat even in the days when that court was viewed as pro-patent it was a court that was um quite clear quite active quite explicit in using fee shifting techniques um to punish bad faith litigation on both sides including very famous cases against patentees patentees lawyers patentees trial and appellate lawyers and including cases where some very famous law firms and lawyers had their names discussed in the record because they had signed on to pretty obviously thin opinions of counsel and and the market and the the legal system uh provided the necessary feedback loops which was to put some of those law firms out of business because they were getting too um loosey-goosey with their willingness to assert bad patent arguments um by the way on the side of the patentee and um you know when it comes to the notion that that um uh that that the fix for all of this is gonna you know somehow be an administrative agency tribunal um that that's a such a strange fix for this this kind of stated problem if what we're really talking about in in for example several of the high profile cases where arguments about patent hold up and patent litigation expenses and patent surprise those cases became so salient in academic and policy discussions because lobbying and government communications and corporate communications budgets have grown so big but of course those were cases that made themselves all the way to the supreme court and they made themselves all the way to the supreme court usually on issues of remedy or of arcane patent doctrines like patentable subject matter but that means that the objective disclosure rules the patent law 112 rules about written description enablement definiteness those objective legal rules were met by those patents and those were mostly willful infringement cases which means not only were those patent documents objectively clear they were subjectively litigated by the infringer side as willful infringement which is pretty close to bad faith argument made by the infringing community so they were not a surprise set of cases and um i guess the way i think about this one is you have to have a pretty capacious notion of what surprise means to have it include my lawyer said it would happen i had a legal opinion that it would happen but i'm surprised let me ask you another question tom about the structure it seems to me in a way there's an inversion going on here that is there have been cases where the validity of a certain patent has been upheld in court and on appeal and then subsequently an ipr against the same patent invalidates the patent so in that circumstance it looks like you have a subordinate tribunal in the patent office that's supposed to be underneath the district courts and the court of appeals in a way being more powerful and dominating the district court uh and the court of appeals and when you couple that with the affirmance rate of ipr results which is somewhere in the neighborhood of 90 plus percent uh then you you you not only have a potential inversion you've kind of made the federal circuit a meaningless adjunct to the system it's really all about what happens in the patent trial and appeal board at least as far as validity is concerned does that make any sense to you once again i mean yeah whilst in many areas of law the devil's in the details we also sometimes have to think about first principles and the way we've constructed our constitutional system we do have a system article three courts and they're rather important they're a coordinate branch of government now in that system where you have a federal circuit with the expertise and the history and the jurisprudence that has developed over a long time to deal with patents it is facially very strange to have a technocratic structure put in place through statute at its appropriate level at least on its face it's where it belongs in the structure of the united states federal law but then in practice performing a function that supersedes supervenes the decision-making of courts that not merely have the formal authority to do that work but are pretty well equipped because of their history and their long development of a jurisprudence around patent law to do that work so inversion's a good way to put it judge i think it's yeah it's also a little bit of taking a building a new architecture because you don't like the paint on the wall in one room of the house it'd be kind of strange to tear down the house just because you'd rather have a blue room than a green some people claim that the american system of politics uh always yields over-correction of perceived problems never do correction of perceived problems well i'm assuming the perception is correct another dimension here if i may just build on that for a moment by saying if the central criticism of patent adjudication in district court is that it golly g is technologically and legally complex i guess i'm just curious how do courts handle tort cases involving the exact same technologies contract cases involving the exact same technologies let alone all sorts of even more complicated statutory regulatory cases involving the exact same technologies where the legal systems are let's just say longer and denser than title 35 and 37 cfr the federal register section corresponding to the patent office tom let me ask you this if some of the criticisms that we've suggested here in this panel today or that others have previously are reasonably sound to the degree that some adjustment of the architecture and the practice are both needed would you view the so-called stronger patent act provisions as appropriately addressing those criticisms of iprs and the ptap difficult to predict exactly how a new solution is going to play out in practice it goes back to the double being in the details you have also the inherent challenge if you're trying to adopt a corrective to something that itself was billed as a corrective but it's turned out to be a complicating factor rather than a correction it's just very hard to tell how it would play out and i think aiming for a place where you adjudicate your disputes in the round and where that hydraulic influence on council militates against exaggeration and hyperbole finding some more direct path to quiet title so that then commercial parties can go out and do what they do which is actually negotiate with one another in the market that's the target i'm not sure we even all agree i think on this panel we're coming to some common ground but i'm not sure in the wider world in washington we even have agreement on those outcomes just say that there are pressures from other dispute settlement environments other sovereigns who do this but then also things like arbitration which is always an option to parties who can see through to agree to an arbitral clause including in their patents in regard to their patent issues so there may be you come you may reach a point where the flaws and the drawbacks are so darius a patent that parties will go elsewhere if they possibly can and that may turn out to be a pressure of its own that ultimately disciplines us i'm not sure it's remains to be seen scott we're getting close to the time where we should see if there are questions so let me give you a last shot here well just i'll just echo what's been said that that district court in the u.s the international trade commission in the u.s arbitration and mediation in the u.s and tribunals outside of the u.s including private tribunals these are all options for more predictable fact-based record-based determinations rather than the kind of more bureaucratic and politically driven agency determination that somehow we don't do this for any other area of law we don't in in environmental law in financial securities regulation in food and drug in uh telecom in in so many other areas of law we don't try to do what we've tried to do with the patent office through the america invents act and it's because doing that was and is and always will be a bad idea we apparently have no questions let me just ask this uh this final question to each of you um i was told at the time the act was passed that people shouldn't be so worried about its impact for two main reasons first i was told that delay won't become a problem because district judges will never stay the case but that turned out to be the opposite of reality and i was told don't worry the patent owner will be okay because he'll get to amend freely amend his claims to avoid invalidation that also turned out not to be true so in light of those kind of disparities between expectation or promise on the one hand and actual experience on the other hand do you think that alone justifies a re-look at the ipr's short answer would be yes it's it's not the worst thing in the world to get something wrong worst thing though is once you learn you've made a mistake to just double down and repeat the mistake that that's kind of the definition of not very good so yeah there were voices in the wilderness who admonished before american events that maybe that new statute wasn't really the way to go but now that we have an evidentiary record i think the case is a lot stronger that it needs a fresh look scott yeah i agree and and and i would just say um for the reasons that that that you each have identified this might be in the category uh outside of unintended consequences it's certainly not unanticipated consequences and then one starts to wonder well then who intended them uh i'm sure that the america invents act suited the short-term business interests of those who were pouring the billion dollars down k street at the time and for the seven years that led up to that statute but i don't think that that means it's a good idea for our system nor by the way do i think we should do something in our system that is fundamentally antithetical to those companies i think that the patent system of yesteryear before the american vents act worked pretty well for everybody and going back to something like that would really be a good idea for everybody and to the extent there are specific concerns they can be addressed with much more moderate um tailored fixes like those that the federal circuit implemented through for example its fee shifting rules um and judgments many of which to be clear were against the patent plaintiff community not just the infringer community do you think that the fact that the most frequent filers at the patent trial and appeal board of ipr petitions are 10 of the biggest mega companies on the planet most being american gives us a hint about who wanted uh iprs as they were actually legislated yeah i mean i think i think this starts to get to more more subtle topics that we could explore in another another uh discussion about what what some of what can be done with a large patent portfolio in the current system and i think in a nutshell a lot of these patent portfolios are used by these large players in ways that are frankly pretty foreign to the basic idea of the patent where the patent is a right to exclude people in the marketplace large players use patents now to transact with each other and to transact with regulators so you say if you're a large player to an antitrust regulator or a consumer safety regulator uh i cry uncle uh you caught me i'm gonna change my behavior but going forward will you please allow me some freedom to operate or some pricing flexibility to the extent i'm now innovative and let me show you how innovative i am let me count my patents and now they dish out their patent portfolio to regulators in industry in in areas of law that have nothing to do with patent law and and are then basically told please trust the good folk over at the patent office who issued me this large portfolio of patents as a measure of how inventive i am so that you and any trust regulator or safety regulator uh you you can you can you can tell your appropriators that you're not gumming up the works of innovation when you regulate because me i'm a large player and i have lots of patents and you're going to let me continue to sell my product into the marketplace so i think we've bastardized the patent system and made it into a set of chits that companies use to coordinate with each other and to coordinate with regulators rather than final commercialization each of you if you had the proverbial magic wand would you discontinue iprs or would you address the discrete alleged problems and try to change them that way which of the two basic strategies do you think is more appropriate tom i i think in the interest of intellectual consistency i would say it would be sensible to try to reform and modify around the edges in order to set a point to make a point for future reference if people try for example to replicate this in the environmental field or the food and drug field or the transportation field in other words send a signal let's do incremental change before we do whole cloth change but i i i i i'm skeptical or i'm pessimistic about ipr's being fixed in that sort of liminal way i i think you might have to go to the heart of the matter scott would you wave your magic wand for abolition or refinement i i think it's hard to refine this one well that's a very good closing line for our time together the time has expired as we used to say at the federal circuit when the red light went on i want to thank the federalist society and guy to thank us for organizing this and recruiting us i thank the audience for tuning in and hopefully it was interesting and useful these issues certainly are faithful for our country so guy back to you thank you on behalf of the federalist society i want to thank our experts for the benefit of their valuable time and expertise today and i want to thank our audience for joining and participating we also welcome listener feedback by email at info fed-sock.org as always keep an eye on our website and your emails for announcements about upcoming virtual events thank you all for joining us today we are adjourned [Music]