Attorney Ethics And IPR Trials

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What Clients Should Be ToldEric Halber Senior VP – Intellectual Property | GreyB (USA)

Eric Halber BSME, JD, LLM

Senior VP - Intellectual Property | GreyB (USA)

Eric Halber brings 25+ years – 18 years of patent practice and 7 years as a commercial litigator – of experience which encompasses all dimension of the IP field. During these years Eric worked with many top US law firms such as Sughrue Mion and Phelps Dunbar, and as an in-house counsel with Fortune 500 companies such as Nortel and Pitney Bowes. Apart from this, Eric has been hired by IP professionals worldwide to

solve challenges in the creation, management and monetization of patents.

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My Experience

● IP solutions for clients in the US and in Europe

● Began practicing commercial litigation in 1991

● Moved to IP litigation and prosecution in 1997

● In-house IP counsel for several companies

● Founded an IP consulting practice in 2009

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During these past 25 years I've represented many clients and I've been a client myselfso, I have a firm grounding in the issues surrounding attorney-client relationships.

We'll be talking about why high IPR (Inter Partes Review) rates represent a substantive change in IP law.

We'll also address why IP attorneys need to educate their clients on high IPR invalidation rates and ways to address this problem.

What I'm going to share with you through this webinar?

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Do you feel most U.S. Issued patents are valid?

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Poll No. 1

Do you feel most U.S. Issued patents are valid?

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Poll No. 1

71% people said yes!

Attorney-Client Relationships

Formal Informal Educational

Retainer agreement, Standing instructions, etc.

Knowing a client inside-out. Notification of substantive changes in the legal landscape

Firm newsletter to clients

Litigation results, Fed Circuit, new legislation, AIA and IPR proceedings

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What is the true impact of the high invalidation rate coming out of IPR (Inter Partes Review) trials?

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Are IP attorneys required, under the rules of ethics, to educate their clients 

on the issue of high IPR invalidation rates?

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●Patent Portfolio Represents Value

●An effective attorney-client relationship helps maximizes value.

●An effective relationship involves education.

●Overlooked issues raised by IPR trials statistics

Attorney-Client Relationships

What is the USPTO’s IPR (Inter Partes Review) procedure?

● Challenge the validity of patent claims

● §§102 & 103 - patents or printed publications

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Standard to Initiate an IPR Trial:

● Reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged.

Burden of Proof: Preponderance (51%)

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IPR Favors the Challenger

● Broadest Reasonable Interpretation Standard

● Lower Burden for Challenger compared to a civil trial

● Presumption of validity does not apply

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As of July 31, 2016

3410 IPR Petitions Filed

1086 out of 1738

1738Reached a final decision

Trials Initiated

Most Recent IPR Statistics – How bad is it?

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Reached a FinalDecision

In 158 out of 1086Trials, ALLclaims Survived

In 764 out of 1086Trials, ALL claims found invalid

In 164 out of 1086Trials, SOME claimsfound invalid

As of July 31, 2016

3410 IPR Petitions Filed

Most Recent IPR Statistics – How bad is it?

1086 out of 1738Trials

Initiated

1738

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Why are the IPR Statistics Relevant to Inventive Entities?

● Broadest Reasonable Interpretation Standard

● Lower Burden - Preponderance of the Evidence

● Presumption of validity does not apply

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High IPR Invalidation Rates - Game Changer

No commercially viable patent seems safe in the view of the IPR process.

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“- Rob Sterne and Gene Quinn

High IPR Invalidation Rates - Game Changer

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7000 Patents sold for $3 Billions

2850 Patents sold for $500 Millions

2012 2014

Patents

Cost

Average cost of per patent sold fell by 61%

Reasons for Such High Invalidation Rates?

● No presumption of validity

● Newly found prior art

● Low burden

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● Low cost of IPR

What Patent Owners Can Affect?

● No presumption of validity

Newly found prior art

● Low burden

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● Low cost of IPR

Pre-drafting patentability search is a clear solution

A meaningful patentability search should accompany every “approved” invention disclosure

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The invention satisfies the criteria of the inventive entity for moving forward with a patent application“Approved” =

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If the invention is important enough to justify the filing of a patent application there is no sound reason for not pursuing a meaningful

patentability search

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Bonus Download!

Our Free Guide: 5 Things to do when an Examiner rejects your patent application.

Click to Download!

Reasons for not requesting a patentability search

Not enough funds in budget

The Inventor knows the art

The drafting attorney knows the art

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Relying on the Examiner's search efforts

Refuting: Not Enough Funds in Budget

Total cost for an issued patent:

$20,000 to $30,000For allowance

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$10,000 to $15,000In time/effort related to enforcement

$50,000In maintenance fees

$80,000+

Refuting: Not Enough Funds in Budget

Patentability search costs:

Gets 20 to 40 hoursof expert searcher’s time

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A small addition to strengthen validity

$1,000 to $5,000

A small expense if decision not to draft/file

Refuting: The Inventor/Attorney Knows the Art

● IPR stats do not support

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● Meaningful search requires 20-40 hours

● Will attorney/inventor spend a similar amount of time searching?

Refuting: Relying on Examiner’s Search Efforts

● IPR stats do not support

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● Meaningful search requires 20-40 hours● Will attorney/inventor spend a similar amount of time searching?● Examiners spend less than 10 hours drafting the first office

action including reviewing the application and searching for prior art.

How to Strengthen Validity?

● A patent provides negative right that is not self-enforceable.

● The right to prevent others from practicing the claimed invention.

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● Enforcement, which is a combination of validity and infringement, requires significant investment of time and money.

Meaningful prior art search is the only way to strengthen validity

Educating the Client – Rules of Professional Conduct

ABA Model Rule 1.2(a) & PTO Rule 11.102(a)

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Client makes all decisions concerning the objectives of representation and the attorney shall consult with the client as to the means by which

the objectives are to be pursued.

The decision to conduct a patentability search clearly falls within this rule

Educating the Client

How do clients reach an informed decision?

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PTO Model Rules of Professional Conduct Section 11.104(5)(b)

(b) A practitioner shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation

Educating the Client

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With respect to patent validity, education requires a discussion on how and why a substantial majority of patent claims are rejected

under prior art when brought before the PTO, under the IPR process.

Educating the Client

IPR Education 101

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The PTO's IPR process started in 2012.

Trial statistics indicate that 70% of IPR trials result in invalidating ALL of the challenged claims.

Educating the Client

IPR Education 101

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● Possible that substantial majority of allowed patents are invalid in view of prior art if challenged with IPR.

● Patent that get issued without the benefit of a meaningful patentability search is of a little value.

Educating the Client

IPR Education 101

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Conduct a meaningful patentability search prior to making a decision on whether or not to draft and file a patent application.

It's the client's decision!

Poll No. 2

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Do you feel it’s important for Inventive entities to speak with their IP counsel about high IPR invalidity rates and prior art searching as a possible solution?

Poll No. 2

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Do you feel it’s important for Inventive entities to speak with their IP counsel about high IPR invalidity rates and prior art searching as a possible solution?

100% people said yes!

Now it’s your turn!

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Q/A

Thanks For Attending.

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Click to watch the webinar recording!