Authored by Michelle Carniaux and Michael E. Sander
Although IPR proceedings were intended to provide those accused (or at risk of being accused) of patent infringement a faster and less costly proceeding to challenge the validity of a patent, it has also drawn the attention of outsiders. There are several types of “PTAB crashers,” each having its own motivation for challenging the validity of one or more patents. What they have in common is that each has filed one or more IPR petitions despite having no risk of being charged with infringement of the subject patent(s). To date, PTAB crashers account for 47 IPR petitions.
One type of PTAB crasher includes patent defense firms. These firms usually make revenue from eliciting fees from practicing companies, and then file IPRs targeting patents that potentially pose risk to their clients.1 As we have previously written, patent defense firms are often subject to the accusation that they are in privy with their clients, and in some cases, their IPR petitions have been denied for failing to list all real parties in interest.
Financiers are another type of PTAB crasher. The number of IPR petition filings by financiers has been increasing rapidly. This type of PTAB crasher challenges patents owned by publicly traded companies, and appears to be gambling on shifts in stock prices. IPR petition filings of this kind are on the upswing. Of the nine IPR petitions filed by financiers, five were filed in the past several months, and two were filed just last week by the Coalition for Affordable Drugs.
The patent monetization firm Intellectual Ventures has also jumped into the IPR arena by filing IPRs against patents owned by a district court litigation foe, presumably to put additional settlement pressure on them.
Finally, there are activists who challenge patents because they believe it is in the public interest. The Patent Office fees of $23,000+ per petition may be a significant deterrent for these types of filers, but by our count, two have been filed to date.
1 Iron Dome is a patent defense firm that has (or at least had) a different business model, about which we previously wrote.
2 Four of RPX’s 14 IPRs were filed jointly with Michael Farmwald, an entrepreneur allegedly having a short position in the publicly traded company that owns the subject patents. According to one source, Mr. Farmwald called the CEO of the company a “con man” with patents on “b.s.” technology. Thus, these four IPRs could be categorized under the financier or activist headings.