May 2019
Publication

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.