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`IPR2016-01198 and IPR2016-01201
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`PTAB Kill Rates: How IPRs Are Affecting Patents - Law360
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`Expert Analysis
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`PTAB Kill Rates: How IPRs Are Affecting Patents
`
`September 15, 2015, 9:44 AM EDT
`
`Law360, New York (September 15, 2015, 9:44 AM EDT) --
`
`Amy Simpson
`
`Hwa Lee
`While the America Invents Act’s introduction of inter partes review proceedings was intended to strengthen the quality of issued
`patents, no one could have predicted how quickly IPRs would become a mainstay defensive tactic in U.S. patent litigation. Indeed, as
`the Patent Trial and Appeal Board began releasing decisions invalidating patents, some even labeled the PTAB as a “patent death
`squad.”[1] Whether that description is a fair one or not, it cannot be disputed that in just three short years, IPR proceedings have
`become so popular that the PTAB is now a preferred patent invalidation venue.
`
`There have been numerous reports on the overall institution of IPR proceedings and their “kill rates.” However, these high-level
`statistics (1) obscure the important differences in kill rates between cases in which all claims in a patent are challenged and instituted
`and those in which only some claims are challenged and instituted, and (2) are inadequate for making informed decisions on whether,
`when and how to try to invalidate a patent using the IPR process.
`
`Thus, we analyzed all of the approximately 404 final written decisions on instituted IPRs from September 2012 through Aug. 1, 2015,
`to explore the factors behind IPR kill rates. We determined the number of patents that have been invalidated in their entirety via IPRs
`and investigated the statistical impact that certain aspects of the IPR petition have on the kill rate, including petitions to invalidate all
`claims in a patent and petitions under § 102, § 103 or both.
`
`The Kill Rate Analysis — Key Points
`
`1. Very few petitioners are walking away empty handed: 88 percent of petitions with final written decisions resulted in at least one
`claim being invalidated.
`
`2. A notable percentage — 21 percent — of all final written decisions resulted in complete invalidation of the patent.
`
`3. Success starts and ends with the petition. The invalidity success rate for fully instituted petitions is 82 percent while the invalidity
`success rate for partially instituted petitions plummets to 52 percent. The PTAB’s first impression of the petition’s strength appears to
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`affect the entire proceeding and ultimate outcome.
`
`Success Rate on IPR
`
`Over the entire three-year life of the IPR process, petitioners have achieved high success rates in getting challenged claims both
`instituted and ultimately invalidated. Our analysis shows, however, that over the past year or so, the PTAB appears to be raising the bar
`at the institution stage. Once an IPR is instituted, however, the PTAB continues to invalidate those challenged claims at a very high rate.
`
`Institution on all challenged claims is becoming more difficult.
`
`In analyzing the 404 final written decisions to determine the success rate for getting the challenged claims instituted, we found that in
`76 percent (306 of 404) of the cases, all challenged claims were instituted.[2] In looking at year-over-year numbers, the institution
`success rate in 2015 (through Aug. 1) dropped 15 percent (to 69 percent) from the 2014 success rate of 84 percent. This shift likely
`indicates that the PTAB is raising the bar for institution.
`
`Fully instituted petitions have a high invalidity success rate.
`
`Of those petitions where all challenged claims were instituted (full institution), 82 percent (250 of 306) of those instituted claims were
`ultimately invalidated in the PTAB’s final written decision. This high percentage indicates that the highest hurdle a petitioner must clear
`is at institution. In other words, it appears that if an IPR petition is fully instituted, there is a reasonably high probability that the
`instituted claims also will be invalidated.
`
`These numbers highlight the importance of the preliminary response even though the patent owner has no opportunity to submit
`evidence at this stage. Nevertheless, hope is on the horizon for the patent owner, as the PTAB is considering a rule change that would
`allow evidence to be submitted at the preliminary response stage.
`
`Partially instituted petitions have a much lower invalidity success rate.
`
`What happens when the PTAB partially institutes the claims challenged in a petition? The results are surprising: To date, 25 percent of
`the final written decisions were partially granted at institution. This means the PTAB did not grant institution on all the challenged
`claims. Interestingly, for the partially instituted petitions, only 52 percent of final written decisions invalidated all the instituted claims.
`This is a drastic drop in the invalidity success rate when compared to fully instituted decisions, where 82 percent of final written
`decisions invalidated all the instituted claims. If a petition is only partially instituted, chances significantly decrease that the instituted
`claims also will be invalidated.
`
`The PTAB’s first impression of the petition’s strength appears to carry significant weight throughout the entire hearing. If the PTAB is
`not convinced that the petition is strong enough to warrant full institution, this skepticism seems to stay with the panel and harms the
`chances of success at the final written decision. This statistic emphasizes the importance of crafting a strategic and focused petition.
`Each ground should be reviewed to determine whether it affects the quality and strength of the overall petition. If the ground weakens
`the credibility of the petition, petitioners should think twice about including it in the petition.
`
`There is a high chance of invalidating at least one challenged claim.
`
`Once the PTAB institutes a petition, the odds are overwhelmingly in favor of the petitioner. Of the 404 final written decisions analyzed,
`88 percent (356 of 404) resulted in at least one claim being invalidated. Importantly, this average remained steady between 2014 and
`2015, providing petitioners with a reasonably high level of confidence that an IPR can and will weaken a challenged patent.
`
`Fewer petitioners are trying to invalidate the entire patent.
`
`Our analysis reveals that only 37 percent (148 out of 404) of petitions with final written decisions challenged all issued claims. In other
`words, only 37 percent of petitioners are swinging for a home run. Instead, a majority are focusing their petitions on strategically
`selected claims.
`
`IPRs have so far killed 88 patents.
`
`Of the 404 final written decisions, 22 percent (88 out of 404) invalidated all claims in the patent. Many of these “kills” occurred with
`the early written decisions issued by the PTAB, thus leading to the PTAB’s nickname as the “patent death squad.” However, with the
`passage of time, the PTAB seems to be giving the patent owners some relief. The yearly statistics show a significant drop in the
`percentage of petitions where all issued claims have been invalidated. In 2014, 29 percent of petitions resulted in all issued claims being
`invalidated. In 2015, that number dropped to 15 percent. While the PTAB appears to be “killing” fewer patents, this statistical decline is
`also influenced by the fact that petitioners are now less likely to try to invalidate the entire patent.
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`The war is won and lost at the institution stage.
`
`Based at least on this data showing that obtaining institution on the challenged claims is becoming more difficult, it appears that the
`PTAB is taking its stance at the institution stage. Once claims are instituted, the question appears to be how many instituted claims will
`be invalidated rather than if the claims will be invalidated.
`
`The PTAB continues to earn its “patent death squad” nickname at least once the petition is instituted. Challenging all instituted claims
`does not seem to affect the success rate of invalidating all challenged claims. However, the hurdle is the highest at institution. If a
`petitioner clears this hurdle, it seems to be downhill towards a successful invalidation.
`
`Success Rate When Raising §§ 102 and 103 Challenges in an IPR Petition
`
`The choice of § 102, § 103 or both when challenging the validity of claims in an IPR is at least partially driven by the availability of
`prior art printed publications. We looked behind the numbers to determine how petitioners are selecting grounds to challenge the claims
`and then analyzed these numbers to determine which, if any, of the choices are more successful.
`
`Challenging both §§ 102 and 103 grounds is the most popular option.
`
`Not surprisingly, 69 percent (277 of 404) of petitions raised both §§ 102 and 103 grounds in an effort to invalidate the challenged
`claims. We analyzed the 404 final written decisions to determine the effectiveness of raising both §§ 102 and 103 grounds.
`
`Of petitions that raised both §§ 102 and 103 grounds, 73 percent (202 of 277) resulted in all challenged claims being instituted. This
`success rate, however, decreased by 15 percent between 2014 and 2015. This decline may be due to a number of factors, including the
`PTAB’s raising the bar at the institution stage. Also, the PTAB’s crackdown on redundant grounds may affect these numbers since only
`63 percent of petitions that raised both types of grounds resulted in both §§ 102 and 103 grounds being instituted. Anecdotally, we have
`seen petitions that raised both §§ 102 and 103 grounds based on a common primary reference, but the PTAB has declined to institute on
`both types of grounds.
`
`Once instituted, the odds are in favor of the petitioner. On average, 83 percent (168 of 202) of petitions that raised both §§ 102 and 103
`grounds and where the PTAB instituted on all challenged claims resulted in all challenged claims being invalidated. Year over year, this
`success rate has only slightly increased.
`
`Our analysis suggests that raising both §§ 102 and 103 grounds is effective in invalidating all challenged claims once all these claims
`are instituted. While the PTAB has raised the bar at the institution stage, once the challenged claims are instituted, the PTAB is likely to
`invalidate them.
`
`Practice Tips
`
`While institution on all challenged claims is getting tough, it can still be effective.
`
`It is not clear whether choosing to challenge on both §§ 102 and 103 grounds, only on § 102 grounds, or only on § 103 grounds makes
`any significant difference to the chances for success on the IPR. What is clear is that year-over-year, as noted above, the PTAB seems to
`have raised the bar on whether all challenged claims will be instituted. The decline in the institution rate appears to be greater when
`challenging on § 103 grounds only (93 percent in 2014 to 76 percent in 2015) compared to challenging on § 102 grounds only (75
`percent in 2014 to 73 percent in 2015). To improve the chance for instituting on all grounds, petitioners should be careful in raising §§
`102 and 103 grounds, exercising caution to avoid redundancy.
`
`Caution: Avoid redundancy.
`
`The PTAB is scrutinizing each asserted ground for invalidating challenged claims and rejecting those grounds that it deems to be
`“redundant.” While it is prudent to raise multiple grounds for invalidating each challenged claim, petitioners must use caution to avoid
`the PTAB dismissing grounds as redundant. In situations where multiple grounds are used to challenge a claim, petitioners must
`articulate why the second ground is not redundant to the first ground. To do so, petitioners should consider articulating alternative claim
`constructions or situations where one reference/ground is more applicable than the second reference/ground.
`
`Caution: Motivation or reasons for combining references.
`
`The numbers suggest that the PTAB is getting even tougher on the motivations or reasons to combine. Petitioners must avoid relying on
`conclusory statements to support § 103 arguments. Some general tips for structuring a successful § 103 argument are set forth below.
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`1. Expert testimony, if used, should not be identical to the § 103 arguments in the petition. Rather, the expert must provide facts and
`data to support the opinion. Experts should explain the how, what and why of the proposed combination of references.
`
`2. Do the work for the PTAB: Petitioners must provide reasoning that supports the combination of references and explain why one of
`ordinary skill in the art would make the alleged combination.
`
`—By Amy Simpson and Hwa Lee, Perkins Coie LLP
`
`Amy Simpson is a partner in Perkins Coie's San Diego office and chairwoman of the firm's patent litigation group. Hwa Lee, Ph.D., is a
`counsel in the firm's San Diego and Palo Alto, California, offices.
`
`The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media
`Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not
`be taken as legal advice.
`
`[1] Wall Street Journal, June 10, 2015—“Patent Death Squads v. Innovation,” citing Randall Rader, former chief judge at the U.S. Court
`of Appeals for the Federal Circuit.
`
`[2] The institution rate statistic is calculated based on the 404 final written decisions issued by August 1, 2015, and thus may slightly
`differ from the overall institution rate calculated based only on institution decisions as discussed in the Filing Trends & Institution Rate
`section.
`
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