Why PTAB filings are dropping and how they may affect medical device firms

With the number of Patient Trial and Appeals Board (PTAB) filings expected to drop by 24% for 2019 compared to the previous year, web content editor Ian Bolland spoke to Bridget Smith, an intellectual property litigation and transactions partner at Knobbe Martens. They cover the advice she might give to medical device companies and her assessment of the reasons behind the reduction.

The rules may not have changed that much, but their application may be behind the drop according to Smith, though she notes that one of the main rule changes may be in the use of discretionary denials. 

She explained: “We’ve thought about the reasons. We’re looking at things like decreasing institution rates by the judges, decreasing success rates at final written decisions, but there’s other factors as well. The long story short is that rules are being applied more strictly and that applies to lower success rates, which is probably translating to a drop in the filing rate.

“The board has always had the discretion to institute or deny a petition.

“In the early days of the proceedings it was not applied very frequently, or maybe it was applied to a claim here or a claim there. There was a supreme court case that came out in 2018, and that changed how institutions were applied, so instead of being able to dismiss one claim here, one claim there, now it’s all or nothing.”  

What about the effect for medical device companies? Smith feels that they might not be as affected as other industries as they are likely to be involved more in competitor disputes rather than non-practising denials. However, she does admit there is a slight change to the advice that is likely to be offered to them. 

“My sense is that even though there’s been this dramatic drop in the filing rates of the PTAB, that may not affect medical device companies to the same extent as these non-practising entity litigations in the software or semi-conductor space. Faced with the prospect of going to trial, a challenger in the medical device industry is probably statistically better in a PTAB in the district court, even with these overall lower success rates.

“The PTAB right now is looking for very strong, comprehensive petitions. The days of submitting a shorter, less well thought out petition and filling in the gaps later - that strategy is not going to work. They need to be very rigorously drafted at the outset. 

“Before the PTAB was colloquially known as patent death squad and I think that perception is changing.” 

The changes may have come about because of a letter from Senators Tillis and Coons to the director of the U.S. Patent and Trademark Office (PTO) Andrei Iancu addressing concerns about the patent system in April this year. The senators reported that patent stakeholders reported abuse of the inter partes review process in the form of ‘serial petitions,’ suggesting they reflect ‘coordinated efforts by certain organisations to undermine the strength of the patent system’.

Smith suggests the pressure from Congress to apply existing rules more rigorously is having the desired effect, and although she feels that this is more of an issue for the United States, the comparative swiftness of proceedings against other parts of the world such as in Europe may account for some early feedback in opposition proceedings or an invalidity case internationally. 

“To the extent it might affect international litigation, they do move very fast – you get a final resolution about a year from the institution. If there’s a slower proceeding in Europe where there’s also an international litigation, you might have this early decision on validity that’s not binding in Europe but probably going to be seen as pretty persuasive. That’s how I see PTAB proceedings fitting into the international scene.”