Can Arbitration Fix the Patent System?
PTAB Participants Consider Arbitration In View of Increased Complexity of IPRs.
By David Newman
Chair, Intellectual Property Practice
Patent litigation has now become a much more complex, expensive and timely endeavor—especially at the Patent Trial and Appeal Board (PTAB). Patent litigators must deal with an overly complex Inter Partes Review (IPR) system as a result of the Supreme Court’s SAS decision [i], new amendment process [ii] and evolution of the BRI standard [iii]. A costly and complicated PTAB proceeding and lengthy appellate process make arbitration an appealing option to obtain a patentability ruling in a streamlined manner.
IPR Arbitration as Compared to IPR
Use of an arbitration process fashioned by the parties themselves, may mirror a PTAB IPR.Parties may receive the benefits of a streamlined and condensed IPR Arbitration process and obtain an arbitration award regarding validity of a patent(s) that must be recognized by the USPTO. In some cases a compact IPR Arbitration may be completed within six months.
During an arbitral proceeding, a party would be entitled to raise as defenses, any or all of the defenses set out at 35 U.S.C. §282; such as noninfringement, unenforceability, patent or claim invalidity.The award issued by the arbitrators in such a proceeding would be enforceable just as any other arbitration award, as provided in 9 U.S.C. §9 (provided that proper notification of the award has been previously given to the Commissioner of Patents, as required by 35 U.S.C. §294(d)) [iv]. An IPR Arbitration lasting only six months would likely incur attorney’s fees of less than $100,000 per party [v]. To the contrary, an IPR at the PATB will last 18 months (1 year following institution) plus at least 2 years on appeal and incur attorney’s fees of more than $350,000 per party [vi].
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[i] SAS Institute Inc. v. Iancu, 584 U.S. ___, No. 16-969, April 24, 2018
[ii] Request for Comments on Motion To Amend Practice and Procedures in Trial Proceedings Under the America Invents Act Before the Patent Trial and Appeal Board; 83 FR 54319; https://www.federalregister.gov/documents/2018/10/29/2018-23187/request-for-comments-on-motion-to-amend-practice-and-procedures-in-trial-proceedings-under-the
[iii] Changes to the Claim Construction Standard for Interpreting Claims in Trial Proceedings Before the Patent Trial and Appeal Board; 83 FR 21221, May 9, 2018, 2018-09821
[iv] § 18:2.The Arbitrability of Intellectual Property Disputes Within the United States, 1 Alternative Dispute Resolution Practice Guide § 18:2
[v] “Some disputes may be resolve by licensing, for total arbitration fees under $25,000 per party.” www.RoseArb.com website (last visited 8/8/18). Attorney’s fees are likely to be less than $50,000 for a 6 month arbitration.
[vi] 2015 Report of the Economic Survey, American Intellectual Property Association; $100,000 median cost through filing of IPR petition in 2017. Median cost for PTAB hearing $250,000 in 2017.M. Nayak, Bloomberg Law/BNA, August 10, 2017.