United States: Navigating Today's Patent Landscape: Practical Considerations For Innovation, Enforcement, And Defense


Recent statutory and precedential changes have weakened patent protection under US law. This chapter sets out our view of these changes, together with some statistical analysis of their effect on the patent landscape.

The positive takeaway from this news is that clients who are most often on the receiving end of patent suits can leverage these recent developments to their advantage. When sued, companies generally have the flexibility now to challenge the asserted patents' validity in special procedures at the US Patent & Trademark Office (USPTO), while the district court litigation is kept on hold.

Alternatively, should a client who is accused of infringing a software or business method patent want more immediate relief, it may be able to move to dismiss the litigation from the outset on grounds that the asserted claims are too abstract to constitute patentable subject matter. In either case, the client can delay or avoid discovery while negotiating to settle the matter—all with the threat of possible attorneys' fees in its back pocket.

The more interesting questions regarding the recent changes pertain to how attorneys can navigate these developments for their clients who want to enforce their portfolios and to keep competitors out of their important market spaces. There are several answers to these questions, which we discuss in this chapter, stretching chronologically from intake of invention disclosures through a patent infringement case.

Recent Developments Have Resulted in Uncertain Patent Rights

Three recent developments are currently impacting patent law, making it at least unsettled, if not startlingly anti-patent. Weakened patent protection would seem inconsistent with the continued importance of innovation to the American economy; therefore, these developments are likely temporary. This chapter details the recent developments and suggests patent prosecution, portfolio-building, and litigation strategies for innovators and patent aggregators to consider, as the patent-rights pendulum slowly swings back to their side.

Post-Grant Proceedings Create Uncertainty for Patents Generally

The first significant development creating an unsettled patent law landscape is the continued and increasing reliance by accused infringers on post-grant proceedings before the USPTO's Patent Trial & Appeal Board (PTAB), including inter partes review procedures (IPRs) and covered business method patent reviews (CBMs), as a default litigation defense strategy. Patent litigators (and their clients who were facing infringement suits) initially were skeptical of the effectiveness of IPRs and CBMs as litigation defense tools, in large part because of the gestalt feeling that previous USPTO post-grant proceedings had been ineffective—ex parte reexaminations produced too uncertain a result and allowed the patentee to negotiate outcomes in private interviews at the USPTO, while inter partes reexaminations simply took too long. However, that initial doubt quickly faded—in large part because the results of the initial group of proceedings were quite favorable to patent challengers.

Much of the early success of IPRs was due to their being filed primarily by the industrial and high-tech targets of non-practicing entities (NPEs) against patents of the low-hanging fruit variety. But while the rate of IPR success has dropped since that early euphoria, the success rate is still high.

In the first three years of their availability (through September 30, 2015), parties have filed for nearly 3,600 IPRs (including requests to join an existing IPR trial), in 65 percent of which the PTAB has decided whether to institute an IPR trial.1 The PTAB has instituted an IPR in 72 percent of the requests it has decided.2 Without including petitions where a party sought to join an already instituted IPR trial, the percentage drops slightly to approximately 70 percent.3 Of the instituted IPRs that have been completed in the first three years, approximately 42 percent have been terminated during trial (due to settlement, dismissal, or a request for adverse judgment).4 And of the remaining 58 percent, in which trials have been completed and the PTAB has issued a final written decision, 72 percent have resulted in the invalidation of all claims upon which the PTAB instituted IPR proceedings, 15 percent have resulted in the invalidation of only some instituted claims, and only 13 percent have resulted in confirmation of all of the instituted claims.5

An analysis of CBMs finds similar results, though on a smaller scale. During the first three years, parties filed approximately 375 petitions for CBMs, in approximately 75 percent of which the PTAB has issued decisions on whether to institute a trial.6 Of these, the PTAB has instituted a CBM proceeding in approximately 73 percent, including joinder cases, or 72 percent without considering joinder cases.7 Of trials that have been instituted, approximately 39 percent were terminated during trial.8 Of the 61 percent that reached completion, the PTAB invalidated all instituted claims in approximately 82 percent, invalidated some—but not all—instituted claims in approximately 14 percent, and found no instituted claims unpatentable in a mere 4 percent.9

As the numbers illustrate, IPRs are far more common than CBMs, largely because of certain threshold CBM requirements not required for IPRs. IPRs may be filed by anyone, with a few limitations that can be fairly summarized as follows:

  • The petitioner or its real-party-in-interest (RPI) cannot own the patent;
  • The petitioner or its RPI cannot have previously filed a civil action challenging the validity of a claim of the patent (for example, a declaratory judgment action); and
  • The petitioner or its RPI cannot have been served with a complaint alleging infringement of the patent more than one year prior to filing an IPR, with a limited exception for the joinder of another petition.

CBMs, in contrast, require that the petitioner or its RPI must have been sued or charged with patent infringement, and the patent claims must be related to "a financial product or service" and must not be directed to a "technological invention."

Many in-house counsel now view the filing of an IPR or CBM as the default first-strike maneuver in a patent litigation—particularly in an NPE litigation—as it generally results in a near-term stay of the litigation (before significant discovery), enables negotiation for a cheap settlement, and often results in the invalidity of important claims. The last is a particularly effective stick when the patentee has an ongoing patent license royalty stream that could be upset by an invalidity finding.

We have successfully implemented this strategy on behalf of clients on several occasions. For example, Toyota Motor Corp. filed twelve IPR petitions as part of a defense strategy against infringement allegations by plaintiff American Vehicular Sciences LLC (AVS) in the Eastern District of Texas covering twenty-four different patents.10 While the cases were stayed, Toyota successfully petitioned the Federal Circuit for a writ of mandamus directing the Eastern District of Texas to transfer the cases to the Eastern District of Michigan.11 AVS dismissed the remaining cases against Toyota before litigation in the Eastern District of Michigan resumed.12

Alice Creates Unpredictability, Particularly for Software Patents

The second development has been the aftermath of the Supreme Court's Alice decision in June 2014, which set forth a stringent two-part test for determining whether a patent claim is directed to patentable subject matter, or whether it is an impermissible attempt to stake broad, preemptive claim to an algorithm or an abstract concept.13 The Supreme Court held that a court should first investigate whether the patent claim at issue is directed to an unpatentable concept, such as an abstract idea or algorithm; if so, the court should find the claim unpatentable unless it contains additional limitations such that it is directed to more than just the bare algorithm or abstract concept itself.14

While many practitioners argue about the clarity of the Supreme Court's guidance and about the type of technical limitations that can save an abstract claim from invalidity, there is no doubt that district courts have responded by greatly increasing the rate at which they grant motions to dismiss, motions for judgment on the pleadings, and motions for summary judgment alleging the unpatentability of the asserted claims under 35 United States Code, Section 101.15 From the time Alice was decided through November 30, 2015, there have been more than 160 decisions in district courts on Section 101 motions filed by accused infringers, including motions to dismiss, motions for judgment on the pleadings, and motions for summary judgment of patent invalidity.16 These motions have met with considerable success: more than 60 percent resulted in a full grant of patent invalidity under Section 101, and more than 70 percent resulted in at least a partial grant.17

The increased judicial acceptability of motions to dismiss and motions for judgment on the pleadings based on Section 101,18 has an additional advantage: there is usually at least a partial stay of onerous discovery obligations while the court considers the merits of the patent challenge.

All of these post-Alice decisions have been especially comforting to inhouse counsel for a defendant facing software patents, which face the brunt of most Section 101 attacks. She could now safely lower her expectations of the downside of litigation, and, of course, lower the expected cost of outside legal services to defend the litigation.

The narrative set out by both attorneys and judges in advocating for or deciding the unpatentability of software claims is both straightforward and damning. In a case we briefed, Judge MacMahon of the Southern District of New York found system and method claims for simplifying and reducing the cost of making long-distance and international calls to be patentineligible.19 Judge MacMahon, in analyzing the two-step Alice framework, analogized the invention thusly:

When I was a child I watched Lassie on television. Whenever June Lockhart, playing Ruth Martin, wanted to reach someone by telephone, she rang Jenny at Central and got herself connected to whomever she wished by saying, "Can you get the doctor?" or "I need to speak to Timmy's teacher, Miss Jones." Ruth didn't have to dial any numbers at all. Jenny, the intermediary, recognized Ruth as the caller from the line that rang at Central, and she knew which receptacle to plug Ruth's line into so that Ruth's call to Central would be forwarded to its intended recipient. Nothing different happens here, except that switching machinery and computers (none of which is claimed) recognize who the incoming caller is and to whom she wishes her call forwarded. As defendant points out, a room full of telephone operators with sheets of paper containing look-up tables could accomplish the same result


[U]nder the Alice-Mayo test, not every clever solution to a problem—not everything that leads someone to exclaim "Eureka!"—is eligible for patent protection ... In short, patents are not available for all inspirations of genius, but only for processes, machines, manufactures and combinations of materials. The Stanacard method for placing overseas long distance calls is most certainly an improvement, but it is none of the above. Therefore, it is not patentable.20

Octane and Highmark Create New Reasons for Avoiding Litigation The third significant development—the Supreme Court's twin rulings in 2014 in Octane and Highmark—made it easier for the winner of a patent litigation to obtain attorneys' fees, thereby adding another reason for a patentee to avoid litigation or to expect less on average from monetizing its portfolio.21 The Supreme Court ruled that a patent litigation victor could prove the case was "exceptional"—and therefore that it deserved attorneys' fees—merely by proving the case "stands out from others" by a preponderance of the evidence. The Supreme Court also granted great power to the district courts to make these decisions, as it further ruled that an appellate court may disturb a ruling regarding exceptionality subject only if there is "clear error."

To continue reading this article, please click here


1 See USPTO Patent Trial and Appeal Board Statistics, at 4, 7 (Sept. 30, 2015), available at http://www.uspto.gov/sites/default/files/documents/2015-09-30%20PTAB.pdf (NB: That leaves approximately 35 percent of IPRs that either were terminated before an institution decision or have yet to be decided.)

2 Id.

3 Id.

4 Id.

5 Id.

6 Id.

7 Id.

8 Id.

9 Id.

10 Case Nos. 6-12-cv-00404, 6-12-cv-00405, 6-12-cv-00406, 6-12-cv-00407, 6-12-cv- 00408, 6-12-cv-00409, and 6-12-cv-00410.

11 In re Toyota Motor Corp., 747 F.3d 1338 (Fed. Cir. 2014).

12 See American Vehicular Sciences LLC v. Toyota Motor Corporation, 2015 WL 10384290 (E.D. Mich. 2015).

13 Alice Corp. Pty. Ltd. v. CLS Bank Intern., 134 S. Ct. 2347, 189 L. Ed. 2d 296 (2014).

14 Alice, 134 S. Ct. at 2355-59.

15 35 U.S.C.A. § 101.

16 Source: DocketNavigator.

17 Source: DocketNavigator.

18 35 U.S.C.A. §101.

19 See Stanacard v. Rubard LLC, 2015 WL 7351995 (S.D. N.Y. 2015).

20 Id. at *7-8.

21 Octane Fitness LLC v. ICON Health & Fitness Inc., 134 S. Ct. 1749, 188 L. Ed. 2d 816 (2014); Highmark Inc. v. Allcare Health Management System Inc., 134 S. Ct. 1744, 188 L. Ed. 2d 829 (2014).

Previously published by Aspatore Books

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions