Patent ‘Death Squad’ Rules Owners Denounce Upheld by U.S. Court

A U.S. appeals court upheld rules that make it easier for companies like Google Inc. and Apple Inc. to get rid of worrisome patent litigation on the cheap.

The U.S. Court of Appeals for the Federal Circuit, in an appeal involving a patent for a speed limit indicator, took its first look at reviews by the Patent and Trademark Office. The decision Wednesday may benefit many companies not directly in the case by upholding rules that patent owners say make it too easy to get their legal protections tossed and led a former judge to dub the agency board a “death squad” for patents.

The reviews have become the biggest forum for intellectual property challenges, as statistics show patents are invalidated at a higher rate and at less cost than in district court. While most cases involve computers and other electronics, even drug makers are turning to the agency as a way to speed low-cost medicines to market or avoid paying costly royalties.

“This gives the patent office an enormous amount of power to invalidate patents,” said Greg Castanias, an appellate lawyer with Jones Day in Washington. “It gives the patent office, effectively, unlimited power to do whatever the heck it wants to do.”

More than 2,300 petitions have been filed with the agency since the program known as inter partes reviews began in 2012 as part of a sweeping overhaul of the U.S. patent system that Congress passed a year earlier. There were 177 petitions filed in December and 102 in November. By comparison, 441 lawsuits were filed in U.S. courts in December and 335 in November, according to Lex Machina statistics.

Split Decision

Supporters of the program say it’s a way for the agency to right a wrong; that many of the patents in litigation are for features that never should have been given the powerful protection of a patent.

The Federal Circuit, in a 2-1 opinion, said it didn’t have the authority to review the agency’s decision to look at any particular case. It also upheld the standard used by the patent office, which makes it easier to invalidate a patent than it is in court.

The case considered by the top patent court involved a speed limit indicator owned by Cuozzo Speed Technologies LLC, which had sued companies including Garmin Ltd., General Motors Co. and TomTom Inc. Garmin was the first to file a review petition after the 2012 change, and successfully argued the Cuozzo patent was an obvious variation of earlier inventions.

Cuozzo can ask that the case be reconsidered by all active judges of the court. Castanias said such a request may be granted, considering the split vote and importance of the decision.

The case is In Re Cuozzo Speed Technologies LLC, 14-1301, U.S. Court of Appeals for the Federal Circuit (Washington).