Inter Partes Review as a Shield for Technology Purchasers: A Response to Gaia Bernstein’s The Rise of the End-User in Patent Litigation
Inter Partes Review as a Shield for Technolog y Purchasers: A Response to Gaia Bernstein's Th e Rise of the End-User in Patent Litigation
Brian J. Love 0 1 2 3
0 Brian J. Love, Inter Partes Review as a Shield for Technology Purchasers: A Response to Gaia Bernstein's The Rise of the End-User in Patent Litigation , 56 B.C.L. Rev. 1075, 2015
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2 Santa Clara University School of Law
3 This Essay is brought to you for free and open access by the Law Journals at Digital Commons @ Boston College Law School. It has been accepted for inclusion in Boston College Law Review by an authorized editor of Digital Commons @ Boston College Law School. For more information , please contact
Perhaps no entity is more responsible forrenewed interest in patent
reform legislation than InnovatioIP Ventures.1 Its campaign to collect patent
© 2015, Brian J. Love. All rights reserved.
* Assistant Professor and Co-Director of the High Tech Law Institute, Santa Clara University
School of Law. Thanks to Shawn Ambwani, Gaia Bernstein, Dan Burk, Colleen Chien, Shawn Ml-i
ler, Tyler Ochoa, David Schwartz, and Jim Yoon for helpful comments on ealrier drafts. Thanks also
to participants at the Stanford Law School Conference on the PTO and Courts, and the Santa Clara
University School of Law Faculty Workshop.
1 On February 5, 2015, Congressman Bob Goodlatte reintroduced the Innovation Act, a bill htat
passed in the U.S. House of Representatives in December 2013 but later died in the Senate in May
2014. Innovation Act, H.R. 9, 114th Cong. (2015); Kate Tummarello, Patent Reform Bill Dealt Fatal
Blow in Senat,e HILL (May 21, 2014),
htt/p/t:hehill.com/policy/technology/206793-leahy-takespatent-reform-off-committee-agenda, archived at http://perma.cc/BK4W-8MT7. If passed, the
Innolicensing fees from thousands of Wi-Fi-equipped coffee shops, hotels,
restaurants, and other small technology users2 invited scrutiny from patent scholars3
and, more importantly, angered politically-powerful constituents nationwide.4
For the first time in memory, patent litigation became an issue outside major
tech hubs and outside the tech industry itself, as businesses with no engineers
on the payroll suddenly and quite unexpectedly found themselves kne-edeep
in patent law.5
vation Act would, among other reforms, raise pleading requirements for patent infringement claims,
establish a presumption that attorneys’ fees be awarded in patent suits, and limit discovery in patent
suits prior to claim construction. H.R. 9. In 2013 and 2014, many other bills were introduced,
including a number at the state level. See Joe Mullin, Ten States Pass Anti-Patent-Troll Laws, with More to
Come, ARS TECHNICA (May 15, 2014),
htt/p/a:rstechnica.com/tech-policy/2014/05/fight-againstpatent-trolls-flags-in-the-senate-but-states-push-ahead/, archived at http://perma.cc/9V2A-KCX2
(collecting citations to stat-elevel legislative action);Patent Progress’s Guide to Federal Patent
Reform Legislation, PATENT PROGRESS,
http://www.patentprogress.org/patent-progress-legislationguides/patent-progresss-guide-patent-reform-legislation/, archived at http://perma.cc/JL4C-WLR4
(last visited Apr. 8, 2015) (collecting citations to federal patent reform bills). As a counterpoint to the
Innovation Act and other bills that target abusive patent assertion, Senator Christopher Coons inot-r
duced the STRONG Patents Ac—ta bill largely comprised of patentee-friendly reforms—on March
3, 2015. Support Technology and Research for Our Nation’s Growth Patents Act, S. 632, 114th
Cong. (2015); Gene Quinn,Pro-Patentee Patent Reform, the STRONG Patents Act Introduced in
Senate, IPWATCHDOG (Mar. 3, 2015),
http://www.ipwatchdog.com/2015/03/03/strong-patents-actintroduced-in-senate/id=55384, archived at http://perma.cc/YE6Y-DASE (referring to the STRONG
Act as “clearly and overwhelmingly favorable to innovators and patent owners” and “stand[ing] in
stark contrast with the Innovation Act”).
2 See Amended Complaint at 19, Cisco Sys., Inc. v. Innovatio IP Ventures, LLC, No.
1:11-cv09308 (N.D. Ill. Oct. 1, 2012) (“Innovatio has sent more than 8,000 threatening letters to licensing
targets [end users of Wi-Fi technology] in all 50 states.”).
3 See, e.g., COLLEEN CHIEN, PATENT ASSERTION AND STARTUP INNOVATION 12–15 (2013),
available at http://newamerica.net/sites/newamerica.net/files/policydocs/Patent%20Assertion%20
and%20Startup%20Innovation_updated.pdf, archived at http://perma.cc/GBQ5-TEM8; Gaia
Bernstein, The Rise of the End User in PatentLitigation, 55 B.C. L. REV. 1443, 1492–93 (2014);
Colleen V. Chien & Edward Reines, Why Technology Customers Are Being Sued en Masse for Patent
Infringement & What Can Be Done, 49 WAKE FOREST L. REV. 235, 235–38 (2014); Brian J. Love
& James C. Yoon,Expanding Patent Law’s Customer Suit Exception, 9B3.U. L. REV. 1605,
4 See Brian Fung, Patent Reform Advocates Are Launching a ‘Supe-rCoalition’ to Whack
Patent Trolls, WASH. POST (Jan. 15, 2015), http://www.washingtonpost.com/blogs/the-switch/wp/
archived at http://perma.cc/MCG7-REW8 (“‘When patent reform was being fought several years
ago, it was tech versus pharma . . . [But] this is no longer a tecihn-dustry issue. It’s become
much, much broader.’” (quoting John Potter, President, Application Developers’ Alliance)).
5 See Roger D. Blair & Thomas F. Cotter, An Economic Analysis of Seller and User Liability
in Intellectual Property Law, 68 U. CIN. L. REV. 1, 3 (1999) (concluding that patents are“almost
never enforced” against private, noncommercial users of inventions). There have, however, been
noteworthy exceptions. See Colleen V. Chien,Reforming Software Patents, 50 HOUS. L. REV.
325, 325 (2012) (“[I]n the late 1800s, farmers were sued by ‘patent sharks’ en masse over their
use of basic farming tools that were covered by scores of patents.”); Michael J.
MeureCr,ontrolling Opportunistic and Anti-Competitive Intellectual Property Litigation, 44 B.C. L.REV. 509,
517 (2003) (noting that E-Data, a company that “owns a patent which arguably covers financial
In the years that followedInnovatio’s formation, other patentholders
borrowed from the same playbook, demanding licensing fees from thousands
of small business for using of-fthe-shelf technology designed and
manufactured by large tech companies that, presumably, these patenteespreferred not
to face in cou.rtMPHJ Technology Investments—the “scanner trol”l—
inundated the likes ofdoctors’ offices, architecture firms, and even
nonprofits with vague licensing demands based on allegedly infringing use of
ordinary copy machines, eventually drawing the wrath of the Federal Trade
Commission and multiple state attorneys general6. In addition, patentees like
Lodsys, GeoTag, Soverain Software, and Clear with Computers targeted users
of ubiquitous e-commerce technology,7 and yet another pair, ArrivalStar and
PJC Logistics, sued local governments and trucking companies en masse for
using GPS technology to track buses, trucks, and trains.8
transactions on the Internet,” reportedly sent demand letters to 75,000 alleged infringers before
suing forty-one companies for patent infringement).
6 See, e.g., Complaint at 4,In re MPHJ Tech. Inv. LLC, F.T.C. Matter No. 14320-03 (F.T.C.
Nov. 6, 2014) (alleging that MPHJ “sent [demand letters] to approximately 16,465 small businesses
located in all fifty states and the District of Columbia”), available at http://www.ftc.gov/system/files/
documents/cases/141106mphjcmpt.pdf, archived at http://perma.cc/8GN2-UHST; Ashby Jones, New
York State Cracks Down on Patent Trolls, WALL ST. J., Jan. 13, 2014, at B3, available at http://www.
wsj.com/articles/SB10001424052702303819704579319071070777820, archived at https://perma.cc/
8CM2-CX6C?type=pdf (“[In addition to New York,] MPHJ has fought with other state attorneys
general. Both Vermont and Nebraska have sued the firm, and last year, thceompany reached a
settlement with Minnesota in which the company agreed to stop its licensing efforts in the state.”).
7 Lodsys has sued more than one hundred alleged infringers in actions that generally settle for
less than the cost of mounting a defene.s See Colleen V. Chien, Patent Trolls by the Numbers,
PATENTLYO (Mar. 14, 2013), http://www.patentlyo.com/patent/2013/03/chien-patent-trolls.html,
archived at http://perma.cc/4WGN-38JK; David Ruddock, Patent Trolls: What Is Lodsys Actually
Asking App Developers to Pay? You Might Be Surprised, ANDROID POLICE (Nov. 2, 2011), http://
www.androidpolice.com/2011/11/02/patent-trolls-what-is-lodsys-actually-asking-app-developersto-pay-you-might-be-surprised, archived at http://perma.cc/6ZP3-QZ8J (reporting that Lodsys
demands a royalty of only 0.575% of U.S. revenue even though royalty rates typically fall between
one and four percent). GeoTag, Soverain, Clear with Computers, and others have sued hundreds of
additional online retailers. See J.J. Barrow, GeoTag Searches for More Local Search Engines to Sue,
PAT. EXAMINER (Feb. 29, 2012),
http://patentexaminer.org/2012/02/geotag-searches-for-more-localsearch-engines-to-sue/, archived at http://perma.cc/7T88-WTVF (noting that GeoTag, Inc. has
sued approximately 400 companies that use a “website with a business or ‘store locator’ search
function,” including Giorgio Armani, Christian Dior, Oscar De La Renta, Gucci, RolexN,ordstrom,
Best Buy, Target, Yellow Book, Intelius and Yelp); Joe Mullin, How Newegg Crushed the
“Shopping Cart” Patent and Saved Online Retail, ARS TECHNICA (Jan. 27, 2013), http://arstechnica.
archived at http://perma.cc/RV78-UKX6 (discussing Soverain’s suits filed against Newegg,
Nordstrom, Macy’s, Home Depot, Radio Shack, Kohl’s, Amazon, The Gap, Avon, Victoria’s
Secret, Walgreen’s, and others for the basic use of the “shopping cart” feature on their wesbites);
John S. Pratt & Bonnie M. GranBte,ware the Trolls: Explorers or Buccaneers?, 20P7AT.
WORLD, Nov. 2008, at 18 (reporting that, likewise, Clear with Computers once sued for-tsyeven
defendants in a single suit for using ubiquitous e-commerce technology).
8 See, e.g., Emily Badger, Why Is a Patent Troll in Luxembourg Suing U.SP. ublic Transit
Agencies?, ATLANTIC CITYLAB (Apr. 23, 2012), http://www.theatlanticcities.com/technology/2012/
In her Article, The Rise of the End User in Patent Litigation, Professor
Bernstein discusses licensing campaigns like theseand convincingly makes
the case for legislative and judicial action—more frequent use of fee shifting
is her top choic—eto protect technology users from sharp patent litigation
practices.9 This Essay doesn’t aim to change the reader’s mind on that front.
In fact, I have written on ismilar topics myself.10 Instead, this Essay
investigates the possibility that in recent months this problem has already (though
quietly) been substantially mitigated by another mechanism—one signed into
law more than three years ago, but only now emerging as a powerful shield
for those accused of patent infringement.
In 2011, Congress passed the America Invents Ac(t“AIA”), the most
significant piece of patent legislation since 1952,psurred at least in partby
concern that patent rights were regularly beingenforced in abusive ways.11
Though many reforms included in the AIA were greeted by the patent
community with a collective yawn,12 one reform has recently emerged as an
un04/why-patent-troll-luxemburg-suing-us-public-transit-agencies/1819/, archived at http://perma.
cc/64N3-CSTZ (reporting that ArrivalStar has “sued the Massachusetts Bay Transportation
uAthority, the New York Metropolitan Transport Authority, Chicago’s Metra, the Port Authority of
New York and New Jersey, and Seattle’s King County Metro Transit” as well as other “transit
systems in Cleveland, Monterey, California, and Portland, Oregon”); Avery Vise,More Than 200
Carriers Sued for Patent Infringement, COM. CARRIER J. (Mar. 28, 2011), http://www.ccjdigital.
com/more-than-200-carriers-sued-for-patent-infringement/, archived at http://perma.cc/TT48-73NZ
(reporting that PJC Logistics “has sued 211 trucking companies, private fleets and logisticsop-r
viders,” many of whom were “Qualcomm customers”); see also Chien, supra note 7 (providing a
more recent litigation tally and showing that PJC Logistics and ArrivalStar have collectively sued
over six hundred parties in over 250 cases).
9 Bernstein, supra note 3, at 1452–58, 1488–93.
10 See generally Love & Yoon,supra note 3 (arguing that the “customer suietxception”
should be expanded to make it easier for manufacturers to defend patent suits filed against their
customers); Christian Helmers et al.,Is There a Patent Trol Problem in the U.K.?, 24 FORDHAM
INTELL. PROP. MEDIA & ENT. L.J. 509 (2014) (concluding that fee shifting may be a key reason
for the relative lack of patent assertion by non-practicing entities in the U.K.).
11 See Leahy-Smith America Invents Act, Pub. L. No. 112–29, 125 Stat. 284 (2011) (codified
as amended in scattered sections of 35 U.S.C. (2012;))see also Patent Act of 1952, Pub. L. No.
82-593, 66 Stat. 792 (codified as amended in scattered sections of 35 U.S.C.) (enacting “title 35 of
the United States Code entitled Patents”). For more on the motivations behind passage of the AIA,
particularly modifications to post-grant administrative review, see, for example,Protecting Small
Businesses and Promoting Innovation by Limiting Patent Troll Abuse: Hearing Before the S. Judi
ciary Comm., 113th Cong. 3–6, 8 (2013) (statement of Q. Todd Dickinson, Exec. Dir., Am.
Intellectual Property Law Ass’n), available at
http://ipwatchdog.com/blog/dickinson-senate-testimony12-17-2013.pdf, archived at http://perma.cc/95RL-RHDX (recounting the debate leading up to the
AIA and referring to “the assertion of allegedly invalid or overbroad patents” as “the very abuse
for which AIA post-grant procedures were created”).
12 See GARY R. MAZE & K. KALAN, THE AMERICA INVENTS ACT: MUCH ADO ABOUT VERY
LITTLE 2, 8 (2011), available at http://www.bw-legal.com/news/nbin/20111006_whitepaper.pdf,
archived at http://perma.cc/6A4S-QHQH.
expected exception: procedural modifications to po-sgt rant patent
Specifically, the America Invents Act replaced the Patent Office’s
procedures for so-called “inter partes reexamination” of issued patents with a
modified and renamedregime of “inter partes review” (“IPR”).14 In doing so,
Congress raised the bar for grantingpetitions to review issued patents, but at
the same time, advantaged petitions that do pass muster by expediting the
process and allowing the reviews to take place before theatePnt Trial and
Appeal Board in the first instance, rather than on appe1a5l.Following these
modifications, interest in administrative patent challengesgrew, slowly at
first, before eventually erupting in a full-blown explosion of filings in 2014.16
To date, in-depth commentary on this “new normal” in patent defense
has been scarce and what exists has largely focused on overall statistics
spanning all types of patents andparties. This Essay breaks down statistics on
IPRs to examine the extent to whichthey have been a boon for all accused
infringers, regardless of size and position on the supply chaiAn.s the data
reported below demonstrates, technology purchasers and small businesses (as
well as those with reason to step in and protect them) are beginning to seek
refuge at the patent offic—emuch as Congress intended—and have done so
with a fair amount of success. As Professor Bernstein aptly explains in her
Article, there was good reason to be skeptical that this result would come to
13 See Rob Sterne & Gene Quinn, PTAB Death Squads: Are All Commercially Viable Patents
Invalid?, IPWATCHDOG (Mar. 24, 2014),
http/:/www.ipwatchdog.com/2014/03/24/ptab-deathsquads-are-all-commercially-viable-patents-invalid, archived at http://perma.cc/23H5-YETX (“[N]o
one could have predicted .. . how broadly andrapidly the new challenges to the patentabilityof
issued U.S. patents would become the standard defense tactic in U.S. patent litigation in all areas
14 Leahy-Smith America Invents Act, § 6, 125 Stat. at 299–305 (setting forth procedures for
IPR). The AIA also established two new forms of administrative po-sitssue review—“post grant
review” and “covered business method patent review”—but both procedures have more restrictive
availability and, as a result, have not to date generated enough petitions to warrant empirical
analysis. See DOCKET NAVIGATOR, http://home.docketnavigator.com/, archived at http://perma.cc/
K8J6-Y4JX (last visited Apr. 8, 2015) (reporting that as of February 1, 2015, there have been a
total of seventy-seven petitions for CBM review and a total of foupretitions for post grant
15 See Justin A. Hendrix & Robert F. Shaffer, Post Grant Proceedings of the AIA Provide
New Opportunities and Require Reconsideration of Old Patent Litigation StrategieFsINNEGAN,
HENDERSON, FARABOW, GARRETT, & DUNNER LLP (June 15, 2012), http://www.finnegan.com/
resources/articles/articlesdetail.aspx?news=598696f7-7eba-4fcb-83b8-2369caa91dd3, archived at
http://perma.cc/Q9QJ-EAE8 (last visited Apr. 8, 2015) (describing the similarities and differences
between IPR and inter partes reexamination).
16 Brian J. Love & Shawn Ambwani, Inter PartesReview: An Early Look at the Numbers, 81 U.
CHI. L. REV. DIALOGUE 93, 93–95 (2014),
https://lawreview.uchicago.edu/page/inter-partes-reviewearly-look-numbers, archived at http://perma.cc/3HYZ-8KDF.
fruition17—and, to be clear, the data reported below suggests that there is still
room for improvement. Nonetheless, early returns on the impactof IPRs are
now in, and what they show is encouraging.
The Essay proceeds in three Parts.Part I describes the data I gathered
and my classification methodology.18 Part II summaries my findings,19 and
Part III briefly assesses what conclusions policymakers might draw from
I. STUDY DESIGN
To study the extent to which IPR has thus far benefited technology
purchasers and other relatively small entities, I assembled a database of IPR
petitions and collected a variety of information abouthe parties and outcomes
associated with each. In this Part, I explain what petitions I studied and what
data I collected.
For this study, I started witha previously-compiled database that
nicludes data on outcomes and cop-ending litigation, current as of September
30, 2014, for all petitions for IPR filed on or before March 31, 201241. As
described in greater detail in a prior Essay examining these petit,iotnhsis
study window includes 979 total petitions,22 proceeding in parallel with a
ottal of 249 unique patent suits involving the same parties,23 and resulting in a
total of 823 decisions whether to gran—tor “institute”—a petition24 and 160
final decisions affirming, invalidating, or cancellingclaims challenged in an
17 Bernstein, supra note 3, at 1473 (arguing that “end users are less likely to benefit from [the
AIA’s post grant administrative review] procedures because they lack the technological k-now
how, and are unlikely to beimplicated in the patent conflict at the mti e periods when the patent
can be most effectively challenged”).
18 See infra notes 21–29 and accompanying text.
19 See infra notes 30–48 and accompanying text.
20 See infra notes 49–61 and accompanying text.
21 See Love & Ambwani, supra note 16, at 99, tbl.3. Because institution decisions are
generally issued close to six months after petitionsare filed, this study window includes the lion’sshare
of IPRs that received at least a preliminary ruling on their merits by the end of September 2014.
22 Id. at 96. To identify IPRs and access the docket for each, we usDeodcket Navigator.
DOCKET NAVIGATOR, supra note 14.
23 Love & Ambwani, supra note 16, at 104, tbl.8. We determined whether cop-ending
litigation existed by searching Lex Machina for each challenged patent’s number.LEX MACHINA, https://
lexmachina.com, archived at http://perma.cc/NK64-A969 (last visited Apr. 8, 2015). We collected
data on motions to stay by reviewing the docket sheet available on Lex Machina for each
24 Love & Ambwani, supra note 16, at 100, tbl.4; see Leahy-Smith America Invents Act § 6,
35 U.S.C. §314 (2012) (setting “a reasonable likelihood that the petitioner would prevail with
respect to at least 1 of the claims challenged in the petition” as thestandard for the institution of
25 Love & Ambwani, supra note 16, at 102, tbl.6.
Building on this database, I first classified each IPR’s petitioner as either
a manufacturer or purchaser of the allegedly infringing technol2o6gyA.s
shown below in Table 1, I include inthis latter category all down-stream
purchasers of the accused technology, including component buyers who
incorporate the infringing technology into larger produc,tsdistributors and retailers
who disseminate those products to customers, anodff-the-shelf purchasers
who buy and use those products.
Next, I classified petitioners as either “small and medium-sized
enterprises” (“SMEs”) or large enterprises.27 Though there is noone established
definition for what constitutes an SME, I applied this term (as others studying
patent litigation have) to all entities earning less than $100 million in annual
revenue.28 Finally, for all petitions challenging a litigated patent, I examined
court records to determine whether or not the petitioner had been sue2d9.In
addition, I checked to see whether anyof the petitione’rs customers were
among those accused of infringement in court.
26 I made this determination by reviewing both the challenged patent and public-layvailable
information about the petitioner, including the petition’esr website. When available, I also
erviewed documents filed in litigation asserting the challenged patent, including the patentee’s
pleadings. I excluded from both categories a small number of thirdp-arty entities that neither
purchase nor manufacture the accused technology.
27 I made this determination by reviewing publicly-available information about the petitioner,
including financial disclosures and other materials prepared for investors, marketing materials and
other information available on the petitioner’s website, and (whennecessary) information
collected by third-party providers like Bloomberg Business Week, Manta, and Hoovers.
28 Cf. James Bessen & Michael J. Meurer, The Direct Costs from NPE Disputes, 99 CORNELL L.
REV. 387, 398 (2014) (reporting separate findings for “[f]irms making less than $100 million in
revenue”); Colleen V. Chien, Startups and Patent Trolls, 17 STAN. TECH. L. REV. 461, 464–66 (2014)
(reporting survey evidence linking the impact of patent litigation to firm size, as measured by
revenue); March 2014 Litigation Repo,rtUNIFIED PAT., INC.,
22_2014&utm_medium=email&utm_term=0_5140119467-8298fafa3a-81845149, archived at http://
perma.cc/RA6D-88GP (last visited Apr. 8, 2015) (defining “SME” as “about $100 million or less in
revenue per year worldwide”). I excluded from the category of SMEs third-party entities that neither
use nor manufacture the accused technology, even if those entities appeared to earn less than $100
29 As in my prior study, I collected data on cop-ending litigation by searching Lex Machina
for each challenged patent’s number.LEX MACHINA, supra note 23. All litigation data reported
infra, including stay rates, has been updated and is current as of January 1, 2015.
In this Part, I report the findings of my study.30 On the whole, what I
find is encouraging.Though technology purchasers and SMEs constitute a
relatively small percentage of those taking advantage of administrative
review proceedings, these parties are relatively successful in their efforts when
they do file petitions.In addition, the data reveals thatsome manufacturers
are also taking advantage of IPR to shield their customers from lawsuits and,
to date, have been more successful doing so with IPRs than through the
A. Technology Purchasers as IPR Petitioners
Looking first at those IPR petitions filed by technology purchasers, I
find that resellers and users of allegedly infringing technology are responsible
for a surprisingly small number of IPRs, but nonetheless have performed well
in the IPRs that they have initiated.
As shown below in Table 2, purchasers are responsible for less than
seven percent of the petitions in my database.31 Though comprehensive statistics
on the share of patent suits filed against technology purchasers do not exist at
present, purchasers appear to be substantially underrepresented among IPR
petitioners relative to the share of patentassertions they defend in court. For
comparison, I collected data fora random sample of250 patent suits filed
contemporaneously with the IPRs in my database. In that sample, a purchaser
of the allegedly infringing technology was named as a defendant in over
onethird of suits—a share almost six times larger than the percentage of IPRs
initiated by purchasers.32
30 See infra notes 31–48 and accompanying text.
31 Technology purchasers were responsible for a near-identical percentage of the total number
of unique patents challenged during the period covered by my database (6.2%, 47/764), as well as
a very similar percentage of the total number of petitioners and cpoe-titioners across all IPRs in
my database (6.9%, 70/1011). My tally of petitioners counts a parent company and its subsidiaries
as one party. In addition, to test whether the percentage of IPRs filed by purchasers has changed in
the last year, I categorized the petitioners in a random sample of 100 petitions filed between April
1, 2014, and April 21, 2015. The percentages are virtually identical. In that sample, purchasers
filed 6% (6/100) of petitions, comprised 7.2% (11/152) of all petitioners and pcoet-itioners, and
challenged 6.2% (6/96) of unique patents.
32 I collected this data by searching Lex Machina for all patent suits filed between September
16, 2012, and March 31, 2014 and coding the defendants in a random sample of suits. In this
smaple, purchasers were sued in 53.6% (89/250) of all suits, accountedfor 34.5% (100/290) of all
defendants, and were accused of infringing 316.% (156/493) of all unique asserted patents.
Consider also that fifteen patentees specializing in suing purchasers alone filed almost six percent of
all patent suits initiated in the U.S. between 2010 and mid2-013. Compare Chien & Reines, supra
note 3, at 236 tbl.1, 256 app. A (reporting that between January 1, 2010, and Jun2e013, the 15
most litigious non-practicing entities sued roughly 2214 customer defendants in 813 lawsuits),
with Cases Filed by Year, LEX MACHINA, https://law.lexmachina.com/ (located behind paywall)
Whatever the reasons might be for some purchasers’ reluctance to
pursue IPR, my findings suggest that fear of failure shouldn’t be high on the list.
Among those petitions in my database, purchasers have performed reasonably
well, even relative to parties that actuallydesign and producethe accused
technologies. Petitions filed by purchasers have been instituted at
ratesvirtually indistinguishable from institution rates achieved by technology
manufacturers33—rates which have generally been regarded as extremely favorable to
accused infringers.34 Moreover, technology purchasers have achieved a one
hundred percent grant rate thus far in motions to stay patent suits co-pending
instituted IPRs—a trend that hinders patentees’ ability to induce alleged
infringers to settle simply to avoid the high cost of discovery.35
(last visited Apr. 27, 2015) (reporting that there were roughly 14,764 total patent suits filed during
this same time period). Moreover, in recent years almost half of all parties sued by nonp-racticing
entities were “non-tech” companies operating in industries like retail, transportation, financialr-se
vices, and hospitality. Exposure by Industry, PAT. FREEDOM
https://www.patentfreedom.com/aboutnpes/industry/, archived at http://perma.cc/Y69D-BU2S (last updated July 14, 2014) (reportingthat
between 2005 and mid-2014 over 45% of all parties sued by nonp-racticing entities were
companies operating outside the “high tech” sector in industries like retail, transportation, financial
services, and hospitality); see CHIEN, supra note 3, at 12–13 (reporting that surveyed venture
capitalists indicated that about forty percent of patent suits filed by NPEs against startups targeted the-c
nology the startup purchased, rather than developed).
33 Two limitations of the results reported in this Essay bearmention. First, they do not control
for the quality of patents asserted against purchasers and SMEs compared to the quality of patents
asserted against manufacturers and large companies. Thus, it is possible, for example, that
patentees targeting purchasers and SMEs assert marginally weaker patents (i.e., patents more likely to be
found invalid) because they anticipate facing a litigation opponent that is unlikely to mount a
vigorous defense. If true, this would tend to inflate the success rates of purchasers and SMEs that
do petition for IPR relative to other petitioners. Second, they do not control for the relative quality
of the legal teams representing various subsets of petitioners and patentees. Thus, it is also pois-s
ble, for example, that purchasers and SMEs hire lawyers, expert witnesses, and other legal
services providers who are marginally less skilled compared to those hired by larger entities with
deeper pockets. If true, this would tend to deflate the relative success rates of purchasers and
SMEs. Unfortunately, neither of these two potentially confounding effects is readily or reliably
34 See, Meaghan H. Kent et al., 10 Reasons Every Defendant in Patent Litigation Should
Consider Inter Partes Review, MONDAQ, http://www.mondaq.com/unitedstates/x/309504/Patent/10+
at http://perma.cc/7BT4-4DPU (last updated Apr. 16, 2015) (referring to the Patent Trial and
Appeal Board as “pro-petitioner”); Scott A. McKeown,Speed of PTAB Fuels Criticism of Initial
Trial Results, PAT. POST-GRANT (Apr. 22, 2014),
http://www.patentspostgrant.com/recalibratingptab-amendment-practice, archived at http://perma.cc/Z8EL-E5XL (“Critics of the Patent Trial &
Appeal Board (PTAB) are out in force decrying the work of the PTAB as a-nptaitent. . . . Some
consider the heavy number of claim cancellation decisions as evidence of a bias against patt-en
35 Patent owners, especially those that do not sell products of their own and, thus, cannot be
countersued for infringement, can impose asymmetrical litigation costs on their opponenStse.e
Patent Assertion Entities: Informational Hearing Before the Cal. Assemb. Select Comm. on High
Tech., 2013 Leg., Reg. Sess. 3 (Cal. 2013) (statement of Brian J. LoveA,ssistant Professor of Law,
Santa Clara University), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2347138,
archived at https://perma.cc/2ANZ-EZMZ?type=pdf. As a result of this cost differential, patentees
That said, purchasers have less to cheer at the final decision stage.
Though the small sample size makes it hard to draw strong conclusions,
purchasers do not appear to succeed as often as their manufacturing peers. Even
so, almost sixty percent of purchasers that pushed an IPR all the way through
to a final decision succeeded in eliminating all of the patenteiens’tituted
claims—a success rate well above that seen in previous incarnations of
daministrative patent review.36
are often able to collect settlements that reflect the cost of defense in addition to the value of the
patented invention and strength of the patentee’s claims. Id.
36 Inter Partes Reexamination Filing Data, U.S. PAT. & TRADEMARK OFF. 1 (Sept. 30, 2013),
http://www.uspto.gov/patents/stats/inter_parte_historical_stats_roll_up_EOY2013.pdf, archived at
http://perma.cc/D5K5-22LU (reporting that only thirty-one percent of inter partes reexaminations
ended in the cancellation of all claims).
† This group excludes twenty-five petitions filed by third-party entities—like RPX, Unified
Patents, and Iron Dome—that neither use nor manufacture the accused technology.
± This number excludes petitions that were not instituted because the petition was deemed
untimely or duplicative, without reaching the merits of the petition. A party seekinIgPR of a
patent asserted against it in court must, by statute, file a petition within one year of being sued. 35
USC § 315(b) (2012). If a party fails to seek IPR within that one-year window, its petition will be
denied as untimely. The PTAB also may deny a petition without reaching its merits on the grounds
that it is substantially duplicative of an earlier-filed petition. Id. § 325(d).
‡ Due to the small sample size, this result is significant with just 83%
(p=0.1605) despite the large gap between the two sets.
♦ Tables 2, 3, and 4 indicate when the differences in institution, invalidation, and stay rates
between the compared subsetsof petitioners are statistically significant with at least 90%
conifdence. With the exception of tests ofper-claim institution rates, all p-values reported were
calculated using a two-tailed Fisher’s exact test, which is the preferred testwhen sample sizes are small
and data is unequally distributed among contingencies. For per-claim institution rates, the number
of observations is sufficiently large to use a chi-square test. Both the Fisher’s exact and chi-square
tests calculate statistical significance under the assumption that all observations are independent.
For a number of reasons, including that some IPRs challenge the same patent and that some patent
claims are quite similar, this assumption is not completely accurate. Other nea-rsignificant results
are noted in individual footnotes.
B. SMEs as IPR Petitioners
Next, because many commentators argue that patent law should provide
special protection to technology purchasers due to their relative lack of
ersources and sophistication,37 I also collected data on IPRs filed by small
businesses of all types to see what, if any, impact size might have on access to,
and performance in, IPRs.
Contrary to conventional wisdom, my data suggests that smaller
companies, as a group, have embraced IPR and, thus far, have held their own on the
merits of their challenges. As shown below in Table 3, SMEs are responsible
for about twenty-one percent of the petitions in mydatabase,38 a share that
appears to be below the percentage of patent suits filed against themduring
the same period, but not dramatically so. In the comparative sample of 250
patent suits discussed supra, patentees accused SMEs of infringemenint
about thirty percent of cases.39
Moreover, SMEs have performed about as well astheir larger
counterparts overall. Though SMEs have fared slightly worse at the institution stage,
they have performed slightly better in final decision—seffects that roughly
offset one another.40
37 See Bernstein, supra note 3, at 1489 (“[T]here is an imbalance of power between the pr-a
ties. Many end users, such as patients or small businesses, are entities of limited resou”r)c;es.
Chien & Reines, supra note 3, at 237 (“The burden for these suits falls disproportionately on small
companies and too often results in nuisance settlements based on the high cost of defending a
patent case, not the merits of the claim.”).
38 SMEs were responsible for a similar percentage of the total number of unique patents
challenged during the period covered by my database (25.%9, 198/764), as well as a similar
percentage of the total number of petitioners and cop-etitioners across all IPRs in my database (21.8%,
220/1011). In addition, to test whether the percentage of IPRs filed by SMEs has changed in the
last year, I categorized the petitioners in a random sample o1f00 petitions filed between April 1,
2014, and April 21, 2015. If anything, the percentage appears to have fallen over time. In that
sample, SMEs filed 17% (17/100) of petitions, comprised11.2% (17/152) of all petitioners and
co-petitioners, and challenged 17.7% of unique patents (17/96).
39 See supra note 32. In this sample, SMEs were sued in 29.6% (74/250) of all suits,
accounted for 28.6% (83/290) of all defendants, and were accused of infringin2g6.0% (128/493) of all
unique asserted patents. Consider also that arecent study of all 2014 patent suits found that
twenty-four percent were filed against SM2E0s1.4 Litigation Repo,rtUNIFIED PAT., http://
unifiedpatents.com/2014patentlitigationreport/, archived at http://perma.cc/DN4R-HCBY (last
visited Apr. 8, 2015).
40 For example, SMEs and larger business are both about equally likely to win across the
board in an IPR—i.e., invalidate all claims challenged in the petition. See infra Table 3.
C. Manufacturers Protecting Customers via IPR
Finally, because anyone—including parties that have not yet been
sued—can file an IPR,41 entities that manufacture accused technology can use
IPR as a mechanism for defending(and potentially preempting altogethe)r
suits filed against their customers.To determine the extent to which this is
taking place, I collected data on petitions filed by manufacturers whose
csutomers had previously been sued.
41 See 35 U.S.C. § 311 (2012) (stating that an IPR may be filed by any “person who is not the
owner of [the challenged] patent”).
As shown below inTable 4, more than fourteen percentof petitions in
my database42 were filed by manufacturers with at least one customer facing
a full-blown lawsuit asserting the challenged patent. Just one-quarter of these
petitions, however, were filed by manufacturers who had not also been sued
themselves—a fact that calls into question manufacturers’ willingness and
ability to look after their customers’ interests, rather than simply their own, in
the majority of these challenges.43
42 Manufacturer-petitioners with at least one sued customer were responsible foar similar
percentage of the total number of unique patents challenged during the period covered by my
database (15.1%, 115/764), as well as a similar percentage of the total number of petitioners and
co-petitioners across all IPRs in my database (14.6%, 418/1011). In addition, to test whether the
percentage of IPRs filed by this subset of petitioners has changed over time, I categorized the
petitioners in a random sample of 100 petitions filed between April 1, 2014, and April21, 2015. In
that sample, manufacturer-petitioners with at least one sued customer filed15% (15/100) of
petitions, comprised 15.1% (23/152) of all petitioners and pceoti-tioners, and challenged14.6%
(15/96) of unique patents.
43 Of 140 total petitions that fall in this category, thirty-five co-pend litigation that exclusively
targets technology purchasers, without the manufacturer joinedas a co-defendant. The remaining
105 petitions all cop-end litigation in whichthe manufacturer was sued along with at least one
customer. In my sample of more recently filed IPRs, six percent co-pend litigation that exclusively
† This group excludes four petitions that, though they challenge patents previously asserted
against technology purchasers, were filed by non-manufacturing third-party entities, including the
Electronic Frontier Foundation, RPX, and Unified PatentsS.ee infra note 59 and accompanying
text (discussing these petitions and citing legislation that would prohibit them from being filed).
± This tally includes eighteen suits in which a manufactur-epretitioner was sued along with
one or more customers and fiftyo-ne suits in which the only named defendants were customers of
the manufacturer-petitioner. These fifty-one suits collectively relate to a total of just twelve ip-et
tions for IPR filed by a manufacturer of the accused technology.
Potential conflicts of interest aside, I find that manufacturers were
largely as successful in these petitions as they were in others, achieving only
marginally lower pe-rclaim rates of institution and invalidationP.erhaps more
importantly, manufacturers were alsorelatively successful in leveraging the
IPR process to halt litigation filed against their customers. More than
fourfifths of the time their customers moved for a stay pendingreview, that
motion was granted. As a result, some manufacturers were able to completely
preempt litigation filed against their customersand, thus, effectively take the
reins of defense, albeit in a limited administrative forum.
Notably, in doing so, manufacturersnot joined to suits tagreting their
customers were able to accomplish something with IPR that they have
historically been unable to accomplishthrough litigation. Though manufacturers
often file declaratory judgment actions when their customers are sued, ine-r
cent decades manufacturers have generally not been able to convince courts
to stay earlier-filed suits targeting customers so that the manufacturer can
litigate in their stead.44
With IPR, manufacturers have thus far had much more luck stepping
into their customers’ shoes. For example, SAP America’s IPR challenging
patent rights held bynon-practicing entity Pi-Net International led to stays in
several suits Pi-Net filed against car rental agencies using allegedly infringing
software.45 Similarly, Oracle was able to levearge an IPR petition to helpits
customers—including Macys, Carnival Cruise Lines, andmultiple car
insurance companies—halt a suit filed by patentee Click-to-Call Technologies.46
In fact, an IPR filed jointly by Lexmark, Ricoh, and Xerox led to the
preemption of several suits filedby the infamous MPHJ.47 Many others, including
44 Love & Yoon, supra note 3, at 1614.
Under the customer suit exception, courts can stay litigation filed against a customer
until after the resolution of a late-rfiled declaratory judgment action initiated by the
accused product’s manufacturer . . . . [Unfortunately,] the customer suit exception
has long existed in a state of relative disuse. Since the 1960s, the doctrine has been
raised in fewer than seventy cases, and has been applied in just nineteen. The
Federal Circuit has discussed the doctrine just five times in the last thirty years, and has
affirmed its application only once.
Id. If enacted, the Innovation Act would codify a much more custo m-ferirendly version of this
doctrine. Innovation Act, H.R. 9, 114th Cong. § 5 (2015).
45 See Minute Order Re: Stay Pending Inter partesReview at 3, Pi-Net Int’l, Inc. v.Enter.
Holdings, Inc., No. 12-CV-3970-PSG (C.D. Cal. July 2, 2013) (staying an additional four suits,
filed against Enterprise, U-Haul, Ace Rent A Car, and Payless); Order Granting Motion to Stay at
1, Pi-Net Int’l, Inc. v. Hertz Corp., No. 12-CV-10012-PSG (C.D. Cal. June 5, 2013) (staying three
suits filed against Hertz, Dollar Thrifty, and Avis Budget).
46 See Order at 4–5, Click-to-Call Technologies, LLC v. Oracle Corp., No. -1C2V-468-SS
(W.D. Tex. Nov. 26, 2013) (staying the case as to all parties, including several customers); Order
Granting Motion to Stay Case at 4, Click-to-Call Technologies, LLC v. Ingenio, Inc., No.
12-CV465-SS (W.D. Tex. Aug. 16, 2013).
47 Stipulated Order for an Interim Stay at 3, MPHJ Tech. Invs. LLC v. Unum Grp., No.
1:14CV-00006-SLR (D. Del. Apr. 4, 2014)(stipulating a stay for cases against Coca-Cola, Dillards,
Huhtamaki, and Unum); Order at 1, MPHJ Tech. Invs. LLC v. Unum Grp., No.
1:14-CV-00006SLR (D. Del. Sept. 23, 2014) (staying the case against Unum); Order at 1, MPHJ Tech. Invs. LLC
v. The Coca-Cola Co., No. 1:14-CV-00003-SLR (D. Del. Sept. 23, 2014) (staying the case against
Cisco, IBM, and Nintendo, have also successfully used this strategy to shield
their customers from suit.48
Overall, the data presented above suggests that the plight of small
technology purchasers is not as dire today as it was just two years ag.oDespite
the obvious disadvantages purchasers have relativeto parties that actually
manufacture accused technology, users and resellers appear to be performing
unexpectedly well in IPR. Moreover, this seems to be true evenamong the
smallest fifth of petitioners, who, despite having fewer resources available for
litigation, do appear to have the funds and sophisticationecessary to fight
infringement allegations in an administrative proceeding.
Though this seems like a surprising finding, perhaps it shouldn’t be.
Because IPRs focus exclusively on the validity of the challenged
pate,npturchasers’ relative lack of knowledge about the accused technolog—ywhich is
primarily relevant to the separate question of infringement—is less of a
liability. For the same reason, purchasers can also rely heavily on relatively cheap
third-party prior art searchers, rather than relatively expensive expert
witnesses, to provide the firepower behind their defense.49
Moreover, regardless of resourcesand sophistication, some purchasers
that find themselves embroiled in a lawsuitwill soon thereafter be(at least
temporarily) shielded from litigationcosts by stays granted pending IPRs
lodged by their suppliers.Whether due to indemnification agreements, good
business judgment, or something else entirely, some manufacturers are using
IPR to protect their customers and, those that are, have done so with a good
deal of success.50
Again, although this finding may surprise some, it probably shouldn’t.
Manufacturers have long attempted to accomplish these same goals through
litigation and, moreover, have shown at least some willingness in the past to
use far less petitione-rfriendly administrative procedures, like ex parte
Despite the successes purchasers and small businesseshave had to date,
however, these statistics also leave good reason to believe that IPR is far from
a silver bullet for abusive suits and, thus, far from a perfect substitute for
other forms of legislative reform presently under consideration in Congress.52 Of
the first 979 IPR petitions, purchasersfiled less than seven percen—ta
percentage that appears to be well below the percentage of patent litigation in
which purchasers are named defendantsand much further below the share of
all patent enforcement efforts, including demand letters,that target
purchasers.53 In addition, though the degree of underrepresentationis much smaller
for SMEs—and for both groups is mitigated to some degree by petitions that
manufacturers filed in response to suits targeting their customers54—the ratio
of total IPRs filed by purchasers and SMEs to total patent suits filed against
them is also well below one-to-one.55 Put simply, large numbers of purchasers
and SMEs confronted with patent demands choose not to take advantage of
IPR—a system specifically designed to provide the sort oifnexpensive and
51 Indeed, many of the patentees most notorious for suing enuds-ers faced ex parteor inter
partes reexaminations. See EFF Challenges Tracking-Services Patent Used to Threaten Cities
Across the U.S., ELEC. FRONTIER FOUND. (Sept. 14, 2012),
https://www.eff.org/press/releases/effchallenges-tracking-services-patent-used-threaten-cities-across-us, archived at http://perma.cc/
5W4A-KLYK (discussing EFF’s petition for reexamination of an ArrivalStar patent used ine-d
mands against California, Cleveland, and the Illinois Commuter Rail for the use of transi-ttracking
systems); Mike Isaac, Google Steps Up to Defend Android Developers from Patent Lawsui,t WIRED
(Aug. 13, 2011), http://www.wired.com/2011/08/google-android-lodsys-patent/, archived at http://
perma.cc/24K4-DWYD (discussing Google’s petition for reexamination of two Lodsys patents,
which was accompanied by Google’s statement that “‘[d]evelopers play a critical part in
thenAdroid ecosystem and Google will continue to support them’(”quoting Kent Walker, Vice
Preisdent, Google, Inc.)).
52 See supra note 1 and accompanying text (discussing the Innovation Act and other
53 See supra, notes 2, 5–8 and accompanying text (describing demand letter campaigns that
collectively generated tens of thousands of letters directed to small businesses).
54 As the data shownsupra in Table 4 suggest, the degree of mitigation may well besmall.
Just thirty-five petitions were filed by manufacturers to challenge patents that were asserted
against groups of their customers, but not against the manufacturserthemselves. See supra note
43. All other petitions discussed supra in Part II.C were filed in response to suits thatname a
petitioning manufacturer as a defendant. See supra notes 41–50 and accompanying text.
Overwhelmingly, these suits additionally name just one or two strategicall-yselected customer co-defendants
and, thus, appear to be primarily aimed at the manufacturer, rather than its customers. Even if this
were not the case, it appears that purchasers would still be substantially underrepresented among
IPR petitioners relative to the frequency with which they are accused of infringement in court.See
supra notes 31–32 and accompanying text.
55 In 2013 and 2014, there was roughly one IPR petition for every five patent lawsuits filed.
See DOCKET NAVIGATOR, supra note 14 (reporting that there were 2204 petitions for IPR filed in
2013 and 2014); LEX MACHINA, supra note 23 (reporting that there were 11,080 total patent suits
filed in 2013 and 2014).
expedited adjudication that these parties desire—and instead opt for
traditional litigation or, more likely, quick settlement.
While the reasons for this deficit are likely myriad, cost remains a likely
culprit. Estimates of the costs of litigating an IPRto final decision generally
exceed $250,000 andoften reach half a million dollars—not far below the
median cost to litigate a patent suit toa pre-trial settlement and an amount
that clearly leaves ample room for unscrupulous patentees to
forcenuisancevalue settlements.56 In short, despite the benefits of IPRreflected in the
findings discussed above, for many SMEs and purchasers the cost to fignh-t i
fringement allegations remains prohibitively high.
Accordingly, as Professor Bernstein argues, there does appear to be a
place for additional litigatio-fnocused patent reforms even in a -pIoPsRt
world. Moreover, short of adopting new reforms to further deter abusive suits,
policymakers and courts could also consider minor tweaks to reduce and
control the cost of administrative review.For one, the PTO couldreduce the
filing fees for IPR, which presently top $23,000 for asingle instituted petition
with no discount for small and micro entities.57 The PTAB can also help keep
costs low by continuing to grant motions to amend sparingl,y58 by taking a
permissive view of challenges by thirdp-arty industry and public interest
56 Compare Kent et al., supra note 34 (“[T]he [legal] fees to take a PTAB proceeding through
completion generally range from $200,000–750,000”), with AM. INTELLECTUAL PROP. LAW ASS’N,
REPORT OF THE ECONOMIC SURVEY 2013, at 34–35 (2013) (reporting that the median cost to litigate
a patent case to the end of discovery is $350,000 for cases with less than $1 million in potential
dmaages, and $1 million for cases with between $1 million and $10 million in potential damages). Many
patentees have been known to settle patent cases filed en masse for relatively small sums.See
Gregory Thomas, Innovatio’s Infringement Suit Rampage Expands to Corporate Hotel,sPAT. EXAMINER
(Sept. 30, 2011),
http://patentexaminer.org/2011/09/innovatios-infringement-suit-rampage-expands-tocorporate-hotels, archived at http://perma.cc/B7WV-EKKF (reporting that Innovatio demanded just a
“few thousand dollars” to settle with small businesses to ensure that a legal defense strategy would
not make sense); Joe Muliln, Patent Trolls Want $1,000—for Using Scanners, ARS TECHNICA (Jan.
2, 2013), /h/attrps:technica.com/tech-policy/2013/01/patent-trolls-want-1000-for-using-scanners,
archived at http://perma.cc/JF9Z-RSXW (reporting that MPHJ requested $1000 per employee from
small businesses across the country for the use of ‘distributed computer architecture’ patents used in
57 Fee Schedule, U.S. PAT. AND TRADEMARK OFF., http://www.uspto.gov/web/offices/ac/qs/
ope/fee010114.htm, archived at http://perma.cc/M5R7-DQ4P (last updated Apr. 1, 2015) (listing a
$9000 filing fee and a $14,000 “post-institution fee,” as well as $200 and $400 per claim “excess”
claim fees at each respective stage).
58 To date, the PTAB has granted just two motions to amend. Andrew WilliaPmTsA,B
Update—The Board Grants Its Second Motion to Amend (At Least in Par,t)PAT. DOCS (Jan. 8, 2015),
http://www.patentdocs.org/2015/01/ptab-update-the-board-grants-its-second-motion-to-amend-atleast-in-part.html, archived at http://perma.cc/HNM6-U445 (“For only the second time, the Patent
Trial and Appeals Board . . . granted a motion to amend claims.”). The recently introduced STRONG
Act would change this status quo by instructintghe PTAB to generally allow claim amendments
during the course of IPR. Support Technology and Research for Our Nation’s Growth Patents Act,
S.632, 114th Cong. §102 (2015) (providing that claim amendments should be allowed as long as
they are “reasonable”).
groups that can efficiently poolthe resources necessary to mount a
challenge,59 and perhaps also by further simplifying its procedure6s0 or relying
less than it currently does on expert declarations.61 Finally, district courts can
assist as well, by continuing to stay suits proceeding in parallel with instituted
IPRs with high frequency so that purchasers and SMEs can petition with
confidence that they won’t have to fund ameritorious IPR and a lawsuit at the
Although my data suggests that there irsoom for improvement, PIR
does appear to bea substantial benefit to technology purchasers and other
small businesses that find themselves staring down the barrel of a patent suit.
So far, smaller players have been relatively successful at instituting reviews,
halting co-pending litigation, and ultimately winning on the merits of their
petitions. Moreover, manufacturers have been getting in on the act as well,
using IPR to shield customersthat choose not to defend themselves.One
serious chink in IPR’s armor, however, is that many non-traditional defendants
appear reluctant to use it, likely because they largely remainunable to afford
59 A small but growing number of IPRs have been filed by industry groups (like the Printing
Industries of America), public interest organizations (like the Electronic Frontier Foundation), and
membership-based patent risk management firms (like RPX and Unified Patents)S.ee supra
Tables 2, 4. By pooling resources ex ante, these groups also help mitigate the collective action
problem that arises when multiple purchasers, rather than one manufacturer, is faced with infringement
allegations. See Joseph Farrell & Robert P. Merges,Incentives to Challenge and Defend Patents:
Why Litigation Won’t Reliably Fix Patent Office Errors and Why Administrative Patent Review
Might Help, 19 BERKELEY TECH. L.J. 943, 958 (2004) (“[A] challenger bears the cost of litigation
but its rivals . . . will capture almost all the benefits of successful challenge . . . .”). The Electronic
Frontier Foundation, for example, was able to crowd-fund an IPR that successfully challenged patent
rights asserted against numerous podcasters. See Joe Mullin, Infamous “Podcasting Patent” Knocked
Out, ARS TECHNICA (Apr. 10, 2015), http//:arstechnica.com/tech-policy/2015/04/10/infamous-pod
casting-patent-knocked-out-in-patent-office-challenge/, archived at http://perma.cc/725K-L4S3. If
enacted, the STRONG Act would prohibit groups like these from filingpetitions. S.632
(restricting IPR to only those parties that would otherwise have standing to sue in court).
60 For example, one commenter has suggested that the PTcOould adopt “an analogue to
judgment on the pleadings” in PTAB challengesand, moreover, could increase competition in the
legal market by dropping the requirement that challenges be filed only by attorneys who are
registered patent prosecutors. Rochelle Cooper Dreyfuss, Giving the Federal Circuit a Run for its
Money: Challenging Patents in the PTAB, 90 N.D. L. REV. (forthcoming 2015) (manuscript at 43–
44), available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2572647, archived at https://
perma.cc/WC42-PVNK?type=pdf. The STRONG Act would, to the contrary, make PTAB
challenges less efficient by requiring each challengeto be heard by two differentthree-judge panels,
one at the institution stage and another at the trial stage.S.632 (“A member of the Patent Trial and
Appeal Board who participates in the decision to institute a pos-gtrant review or an inter partes
review of a patent shall be ineligible to hear the review.”).
61 PTAB decisions not to institute a petition commonly criticiez the petitioner’s expert
declaartion. See Matt Cutler, Conclusory Declaration Testimony Again Leads to Unsuccessful IPR Petition,
HARNESSING PAT. OFF. LITIG. (Aug. 28, 2014),
http://ipr-pgr.com/conclusory-declaration-testimonyagain-leads-to-unsuccessful-ipr-petition/, archived at http://perma.cc/Z29C-MC7Q.
it. Accordingly, additional patent reform may still be necessary to assist
vlunerable parties. And, if IPR costs can be further reduced,the potential
benefits to purchasers and SMEs may well grow in kind.
48 See, e.g., Order at 7, AIP Acquisition LLC v . Comcast Corp., No. 1 : 12 -cv-01690 -GMS (D. Del . Jan. 9 , 2014 ) (staying six cases); Opinion & Ordeart 8, Intellect. Ventures II LLC v . SunTrust Banks , Inc., 1 : 13 -cv-02454 -WSD (N.D. Ga . Oct. 7 , 2014 ) (staying the case); Ordeart 1 , Motion Games , LLC v. Nintendo Co., No. 6 : 12 -cv-00878 -JDL (E.D. Tex . Sept. 23 , 2014 ) (staying the case for customers Rent-A-Center and GameStop ).
49 See Love & Yoon, supra note 3, at 1629-30 ( explaining why technology purchasers must rely heavily on professional expert witnesses in traditional patent litigation).
50 Id. at 1613 “ (Widespread use of indemnification agreements means that manufacturers often remain on the hook for their customers' settlements. Manufacturers also legitimately fear losing goodwill with existing customers as well as business in the future if they fail to stand up for customers accused of infringement .”).