March 8, 2018

Monte Falcoff Discusses Risks for Medtech Companies if IPRs are Unconstitutional, Medtech Insight, May 8, 2018

Ahead of the Supreme Court’s expected decision in Oil States Energy Services LLC v. Greene’s Energy Group LLC later this year, Metro Detroit patent attorney Monte Falcoff shared his insights into the implications for digital health and medical technology companies if Inter Partes Reviews (IPRs) are held to be unconstitutional by the Supreme Court.

At stake in Oil States v. Greene is the whether the IPR process to invalidate patents in the U.S. Patent and Trademark Office, versus in federal courts, itself is unconstitutional.

If IPRs are found to be unconstitutional, it would remove the double edged sword that has dogged the medtech industry for years. On one hand, IPRs have posed a risk to patent owners due to the high percentage of cases in which patent claims have been invalidated.

On the other hand, IPRs have been an effective weapon for companies defending themselves against accusations of patent infringement brought by non-practicing entities (NPEs). Rather than give in to NPEs — who frequently purchase low quality patents with the sole intent of suing businesses and receiving quick cash settlements — it can be cheaper to simply invalidate their patent at the PTAB and take away the grounds on which their infringement suit is based.

Falcoff asserts that IPRs move at a faster pace than typical courtrooms. The speed, however, is also part of the risk. “In a courtroom,” he said, “you can also invalidate a patent, although it will be presumed valid and therefore requires a clear and convincing evidentiary standard for an invalidity ruling, which is much higher.

“My experience with IPRs is that judges are presuming the patents are invalid unless the patent owner can prove otherwise,” he added. “And that’s the wrong shifting of burden.”

If IPRs are held to be unconstitutional then potential defendants are left with the traditional ex parte reexamination process at the USPTO if they seek a less expensive alternative to district court invalidation.  But, ex parte reexam is much more patentee-friendly in its validity determinations and also much more freely allows claim amendments that may overcome the prior art but still read on the accused product.

The Future of IPRs

Falcoff does not expect that IPRs will be struck down by the Supreme Court. How can the IPR process be unconstitutional when the courts have not had any constitutional problems with ex parte reexamination, which has been around for many decades yet has considerably less involvement of the third party validity challenger?  If they are, however, he says that medtech patent owners should rejoice. “The legal and asset value of patents will increase if the IPR procedures are deemed unconstitutional, since it will chase most future patent validity fights back to the federal courts,” he said. “And the federal courts are much more patent-owner friendly than are the PTAB judges.”

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