Comments of [Company Name] in Response to Advanced Notice of Proposed Rulemaking
Agency Docket: PTO–P–2020–0022
Comment Deadline: June 20, 2023


1. INTRODUCTION
[Company Name] is an American company [dedicated to/specializing in XX]. We are commonly targeted by meritless patent lawsuits and letter campaigns [XX times per year (e.g., dozens, several)], often by repeat entities seeking less than the cost of defense. Money spent on nuisance patent claims could be better allocated to research and development, the hiring and paying of employees, and making our [products/services] [better, safer, and cheaper]. 


The agency’s Advance Notice of Proposed Rulemaking (“ANPRM”) would unjustly restrict our right to AIA proceedings, increase patent abuse, and harm our industry. Further, it seeks to solve problems that either do not exist or that Congress addressed in its enactment of the AIA. The AIA tasked the PTAB with a responsibility to correct mistakes in erroneously issued patents. Not only are the ANPRM proposals legislative overreach, but they would also undermine the agency’s responsibility bestowed by Congress.


The Office should abandon the ANPRM and the conflicting proposals it contains, in particular, the ANPRM’s:
1. Restriction on access through a standing requirement and the expansion of parties that may be affected by a proceeding under the “substantial relationship” test and[1]
2. Affirmation and expansion of discretionary denials, including the “compelling merits” standard, inclusion of a stipulation requirement, the provision related to ex parte reexaminations, and requiring filing a petition within six months in certain circumstances.[2]


Each of these provisions and others within the ANPRM serve only to preclude companies like ours from utilizing the rights granted by Congress and would frustrate our efforts to achieve a more efficient patent system. In short, these proposals will increase litigation costs, reduce spending on innovation, and will harm American industry. 


2. RESTRICTING ACCESS AND ENSNARING UNINVOLVED ENTITIES UNDER THE “SUBSTANTIAL RELATIONSHIP” TEST
The Director does not have the authority to create tiered standing requirements that target for-profit membership organizations—or any standing requirements, for that matter.  The statute explicitly states, under 35 U.S.C. § 311(a), that anyone other than the patent owner can file challenges.  The latter word “may” in § 314(a)’s institution decision statute should not be broadly construed as an invitation to ad hoc re-legislate petitioner standing and burdens of proof. 
This proposal creates a heightened standard of review for entities that are not related but have similar interests (such as co-defendants, trade organizations and their members, business partners, and companies in any sort of contractual relationship).  But Congress already addressed any such concerns through the creation of rules that apply to RPIs and privies, and the Article III Federal Courts have already interpreted those rules. Importantly, Congress focuses the inquiry on the merits of the patent. Codifying Fintiv and discriminatory standards of review under one administration would effectively legislate and supplant sound statutory policies that were the result of years of bipartisan negotiation and consideration.


But even if the Office had the authority to pass such rules, the ANPRM is bad policy. The NHK/Fintiv rule and the proposed “substantial relationship” test undermine “the public’s paramount interest in seeing that patent monopolies . . . are kept within their legitimate scope.” 88 FR at 24504. The “substantial relationship” test will instigate IPR rat races by joint defendants and business partners, reducing the quality of challenges and prejudicing smaller companies with fewer resources to mount a fast challenge.  All to address lobbying concerns unsupported by empirical evidence. 


The attack on membership organizations is also misguided. These third-party entities are often the only ones that address enforcement campaigns aimed to extort nuisance settlements. By pooling resources while holding industry participants at an arm’s length, these entities can act in the public’s interest. Thus, these entities provide a valuable benefit to society and the integrity of the patent system.


The irony of the substantial relationship test is that it seems to be an overreaction to a situation that was created by the NHK/Fintiv test in the first place: OpenSky. If Intel’s challenge had not been arbitrarily denied in the first place, OpenSky would not have happened. The Proposed Rules fall in the trap of letting bad facts make bad law that punishes good-faith actors.


The “compelling merits” test is not a viable compromise. Its implementation in combination with other Fintiv factors would raise the evidentiary standard set by Congress for the majority of cases. And requiring petitioners to exceed the standards for trial at the preliminary phase will create a trial within a trial, reducing efficiency and undermining both major goals of AIA trials: reducing costly litigation and correcting patents issued by mistake.


3. AFFIRMATION AND EXPANSION OF DISCREATIONARY DENIALS
The discouragement of parallel petitions or serial petitions filed by different petitioners fails to appreciate the reality of district court litigation. AIA trials reduce the load on district courts, lead to faster settlements, and resolve some issues faster and cheaper than district courts. And of course, when there are multiple filings, it is typically the result of a patent owner’s litigation tactics, i.e., bringing suit simultaneously against a range of parties on a range of patents, such that defendants or those threatened with suit seek to challenge patents asserted against them.  


The high filing fees and costs of litigating AIA challenges are sufficient to deter abusive, duplicative, and non-meritorious challenges. This is at least demonstrated by how rare such duplicative challenges occur. For example, in FY2020 (the last time the USPTO conducted its “Analysis of multiple petitions in AIA Proceedings” study) serial petitions occurred only 2% of the time. Similarly, parallel petitions only occurred 15% of the time, which is appropriate relative to the permissible circumstances noted in the study (e.g., non-overlapping claim sets on the same art and uncertain prior art status).  Fintiv was wrong, because efficiently resolving costly litigation is one of the reasons AIA proceedings were created. Congress believed that one year would be sufficient time for a defendant to understand the patentee’s infringement contentions and mount a challenge. Thus, the existence of underlying litigation should never be a basis of denial.


Finally, the proposed rules ignore alternatives for improving efficiency, such as the “stay, transfer, or consolidation” of other proceedings. 35 U.S.C. § 325(d). The failure to include guidance for these preferred alternatives shows that Fintiv and the ANPRM are unbalanced, at best. Indeed, Congress codified one instance when discretionary denial of trial is appropriate: when the art presented is the “same or substantially the same” as previously considered art. Id. And even then, the Director only may decide to terminate, demonstrating just how rare discretionary denial should be in light of a meritorious challenge. Termination must be a last resort.


4. CONCLUSION 
We urge the USPTO to stop attempting to legislate counter to policies developed through almost a decade of bipartisan Congressional negotiations. The ANPRM is unnecessary and damaging to businesses like ours.
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[1] See, e.g., the following sections: “’Substantial Relationship’ of Entities”; “Limitations on Nonmarket Competitors—Petitions Filed by Certain For-Profit Entities”; and “Parallel Petitions.”
[2] See, e.g., the following sections: “Effect of ‘Compelling Merits’ on Discretionary Denials”; “Discretionary Denials Under 35 U.S.C. 314(a), 324(a), and 325(d)”; “Prior Adjudications Upholding Validity”; 
Serial Petitions”; “Parallel Litigation”; “Parallel IPR and District Court Proceedings—Clear, Predictable Rules”; “Exceptions—Safe Harbors Under Consideration”; and “Stipulation on No Multiple Challenges.”