Lawsuit: United States Patent and Trademark Office Post-Grant Proceedings have ‘Decimated’ Patent Values

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A proposed class action lawsuit has been filed in the Court of Federal Claims against the United States in which the plaintiff company alleges the Patent and Trademark Office’s (PTO) invalidation of proposed class members’ patents amounts to an unconstitutional “taking without just compensation.”

At the heart of the complaint are post-grant proceeds (PGP) initiated, among other new policies, in September 2012 by the PTO in an effort to harmonize U.S. patent law with the rest of the world. These post-grant proceeds, the lawsuit says, dictate that a person who is not the patent owner may petition the PTO to “review the validity of an issued patent” within nine months of its grant or issuance of a reissue patent.

The plaintiff company argues that post-grant proceedings have “completely decimated the value of issued patents” and have been so detrimental to inventors and patent holders that the group tasked with reviewing PGPs has come to be known as the “patent death squad.” At primary issue, the case goes on, is that many patents sunk by post-grant proceedings were already granted and were later taken away, apparently without just compensation.

Further, the lawsuit sticks on the admission from the PTO that its PGPs are “designed to invalidate patents that were erroneously granted” in the first place. If this is true, the plaintiff company argues, the United States must return all issuance and maintenance fees for patents struck down through the PGP process:

Despite this public admission, and the direct implications thereof, the USPTO has (1) failed to compensate patent owners for the taking of their property rights without just compensation, including, but not limited to, expected royalties and other payments related to use of the patents, (2) failed to compensate patent owners for the attorney fees expended in defending these patents in PGP proceedings (patents that were presumed valid by statute), (3) not compensated patent owners for the investments they made into to [sic] the subject inventions that each of the patent owners thought were protected by the patents and patent claims, and (4) chosen to retain the fees it collected as a result of issuing those patents, which it is not entitled to keep if these patents were, as claimed by the Defendant, issued in error.”

The full complaint can be read below.