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The amount of terrorist attacks in recent years, the displacement of over 5 million Syrians—that has led to a global refugee crisis—, and the renewed seizure of power by the Taliban in Afghanistan have once again made the combat of Islamist terrorism one of the main priorities of law enforcement and regulatory bodies. The issue had first attracted significant international attention as a result of the 9/11 attacks. Although terrorist attacks cannot be prevented by simply interrupting the funding of terrorism (in fact, some ISIS attacks required comparatively little funding) (die Zeit, 2015), CFT is one of the main tools in the fight against terrorism. The literature review has revealed that legislators and prevention experts such as the FATF rely on banks and other financial service providers to develop, implement, and enforce suitable measures for the prevention of terrorist financing. There are several issues associated with this approach of making banks the first line of defense against terrorist financing, as banks’ compliance officers face significant systemic obstacles and weaknesses in the fight against terrorist financing.

As demonstrated in Sect. 2, banks generally make an effort to combat terrorist financing, mainly to avoid damages to their reputation and maintain the trust of the public (Beekarry, 2011). In addition, breaches usually lead to harsh sanctions (Zagaris, 2004). Therefore, it is not surprising that banks monitor their customers’ transactions and cash withdrawals (Barrett, 2011). However, the expert interviews have demonstrated how intelligent terrorist financiers are able to game the system by blending in. Little is known about how terrorist financiers act and operate, meaning that it is extremely difficult for compliance officers to identify them. Although banks create risk profiles to identify potential terrorist financiers, these profiles are often based on assumptions and prejudices about certain ethnic groups. Hence, they tend to be rather basic and often ineffective, according to the interviewees. Our research contributes to the closing of this knowledge gap by illustrating concrete methods that terrorist financiers employ to fly under the radar of compliance officers. As the empirical results show, smart terrorist financiers are aware of how the “typical” terrorist is profiled and will employ several different diversion techniques, including the use of straw men and forged documents, to prevent being categorized as suspicious. When compliance officers are aware of these methods, they will be able to better identify and anticipate them.

Since we first ran this survey in 2018, the number of patients who need to tap into their savings accounts to pay for prescription medications has increased yearly. In the last year, more than 20% of respondents reported using savings for medication.

[Chart omitted]

The Federal Trade Commission (FTC) has released an interim report analyzing the prescription drug middleman industry, emphasizing the outsized impact pharmacy benefit managers (PBMs) have on the pharmaceutical industry, negatively affecting patient affordability and accessibility of prescription drugs.1

PBMs are at the center of the pharmaceutical distribution chain, serving as vertically integrated middlemen that wield substantial influence over patients’ access to drugs and how much they cost. PBMs serve as both health plans and pharmacists, in addition to playing other significant roles that has led to them accruing massive power.2

The cost of prescription drugs in the U.S. has surged nearly 40% over the past decade, easily outstripping the pace of inflation, according to a new study.

Findings published by GoodRx, a drug savings company, show that the list price for prescription drugs has climbed about 37% since 2014. Although price increases have slowed this year, costs continue to pose a "significant burden" to many consumers.

According to our survey, 32% of Americans (51 million if extrapolated to the general population) had a prescription sent to the pharmacy that was ultimately not filled. The most common reason for not filling the medication was cost, followed by forgetting to pick the medication up, the medication being out of stock, and the inability to get to the pharmacy in time.

This finding is alarming given that nonadherence, or not taking a medication as prescribed, can worsen chronic conditions. The high cost of medications can force people to make difficult choices between prioritizing their health and managing other essential expenses. In turn, this can potentially lead to poor health outcomes and increased costs in the long run.

If your company has been sued recently for patent infringement, then you have undoubtedly investigated the possibility of challenging the asserted patents in an inter partes review (IPR). IPR is one of several new procedures available in the U.S. Patent and Trademark Office (USPTO), which allow for a "post-grant" attack on the validity of an issued U.S. patent. It provides defendants in district court litigation with an opportunity to switch from defense to offense and potentially bring victory without the significant expense of litigation. IPRs have proven to be so popular that the USPTO is now overwhelmed with cases. In fact, the number of IPRs filed to date has exceeded the USPTO's estimates by more than three-fold. Without a reduction in the number of IPRs instituted and/or changes in how judges handle them, the USPTO will likely have difficulty in meeting its statutory mandate to issue a final decision within one year of instituting an IPR. Below we discuss the advantages of IPR proceedings that have made them a routine tactic for defendants. We also address the possible impact of new regulations recently proposed by the USPTO on the chances of success in pursuing an IPR._ Defending a district court litigation is expensive, time consuming, and until Congress passes further patent reforms, an unfortunate reality for most every company doing business in the United States. The good news is that if you move quickly enough after a litigation is filed against you, there is a good chance that a district court judge will grant a motion to stay that litigation pending resolution of an IPR, which can help postpone the burdens and costs of litigation. Since 2011, district courts have granted over 60 percent of motions to stay cases pending resolution of an IPR. Another advantage of IPR is the ability to select the venue, i.e., the USPTO, where the burden of proof for invalidity is a mere preponderance of the evidence as opposed to the clear and convincing evidence that is required in a federal district court. Moreover, barring a successful motion to dismiss or transfer, you will be left to defend the infringement suit in a venue selected by your opponent, usually their home turf or a venue with local rules favorable to plaintiffs. Also consider the chance of victory at the USPTO versus a district court. To date, IPR petitioners have won on all challenged claims in about 15 percent of the time. Since 2008, defendants in district court litigations have a similar track record for invalidity defenses tried to verdict or final opinion. However, the district court successes includes all statutory bases of patent validity, whereas an IPR can only be based on prior art consisting of patents or printed publications. Thus, an accused infringer faces an uphill battle regardless of whether the invalidity challenge is in district court or before the USPTO, but taken as a whole, a prior art challenge has a better chance of success at the USPTO. Possible cost savings and timeliness also weigh in favor of IPR over a district court challenge to patent validity over prior art. As one might expect, IPR has most often been used in the computer and electronics technologies, where it is generally easier to find relevant prior art that was not considered during prosecution. This is because the USPTO is likely to revoke an issued patent only if there is highly-relevant, newly-discovered, prior art, or failing that, an expert who can convincingly establish that the USPTO wrongly issued a patent over prior art that was considered during prosecution. Indeed, the USPTO's recent statistics show that 63 percent of challenges to issued patents, including IPRs, post-grant proceedings, and covered business methods petitions, have been filed against patents in the electronics and computer arts. By contrast, only 9 percent of all IPRs have been filed in the pharmaceutical/biotech fields, and only 5 percent in the chemical arts.

"Reforming the Patent Trial and Appeal Board - The PREVAIL Act and Proposals to Promote U.S. Innovation Leadership." Testimony by Joseph Matal, Principal, Clear IP, LLC, Washington, DC U.S. Senate Documents Dear Chairman Coons, Ranking Member Tillis, and Members of the Subcommittee: It has been 12 years since the American Invents Act was enacted and 11 years since Patent Trial and Appeal Board proceedings were inaugurated. We now have a wealth of data with which to evaluate these proceedings. Through the end of fiscal year 2023, 15,135 petitions for inter partes review have been filed, challenging 10,363 patents and resulting in thousands of final written decisions and appeals to the U.S. Court of Appeals for the Federal Circuit. PTAB validity review is working well One thing that is apparent from the data is that the PTAB is doing a good job. First, AIA trials overwhelmingly are completed within their one-year deadline, allowing them to serve as a timely substitute for district court litigation. This is no small matter. The system of post-issuance review that PTAB proceedings replaced, inter partes reexamination, was plagued with delays. Because that system was required to follow examination rules, either side could delay the proceeding at will and examiners lacked the tools to manage cases. Perhaps no fact better illustrates the problems with the prior system than that, although the authorization to initiate inter partes reexaminations was repealed during President Obama's first term in office, as of today there are still 13 of these proceedings pending before the USPTO and the courts. Regardless of the accuracy of its results, a system that takes this long to decide a case is not helpful--either to patent owners seeking an affirmation of their patent's validity or to accused infringers seeking to cancel invalid claims. In addition, AIA proceedings have also proven cost effective--their price, on average, is about one-ninth of that of district court litigation. Although the proceedings are still expensive, costs are measured in the hundreds of thousands of dollars rather than the millions. Finally, and most importantly, AIA trials produce accurate and reliable results. The Board's final written decisions are thoroughly reasoned and demonstrate a firm command of both the relevant technology and patent law. You need not take my word for it. A recent academic study that comprehensively analyzed the results of appellate review of PTAB patentability determinations has reached the same conclusion. Professor Matthew Sipe compiled and examined the results of all patent appeals that were docketed at the Federal Circuit in fiscal years 2015 and 2016. n1 He then compared the results for patent validity determinations made by PTAB panels to those made by district courts. The study's conclusion was emphatic: it found that "the PTAB is affirmed notably more often than district courts on [patent] validity issues." Indeed, according to the data, district courts are almost two and a half times more likely to be reversed on appeal when deciding patent validity issues than is the PTAB. The study ultimately determined that "the most straightforward conclusion" is that PTAB judges' technical expertise has "aided decision-making on the thorny scientific questions endemic to patent law." Notably, Professor Sipe's study also found that when the Board is reversed on appeal, it is more frequently overturned for failing to find that a claim is unpatentable than for holding that a claim is unpatentable. This would hardly be surprising to those familiar with the USPTO and its culture. People who work at the agency generally like patents and want to give inventors the benefit of the doubt. It also bears emphasis that, unlike a jury, the PTAB is subject to the Administrative Procedure Act. Thus, unlike a jury, the Board cannot hand in a verdict form that looks like an a la carte menu. The PTAB is required to analyze the evidence before it and explain its reasoning in a way that can be reviewed on appeal. (I should know--as an agency lawyer, I lost cases on appeal when the Board was less than clear in explaining its findings). Yet despite the Board's decisions effectively being subject to more exacting review, the PTAB's patentability findings are more likely to be upheld on appeal. The evidence is overwhelming that the PTAB is producing rigorous and technically sound patentability decisions. This result would be unsurprising to the Congress that enacted the America Invents Act. PTAB reviews are conducted by administrative patents judges, who are required by law to be "persons of competent legal knowledge and scientific ability." n2 In compliance with this mandate, the agency requires that all its APJs have at least an undergraduate education in a technical field. Many PTAB judges also have master's degrees or doctorates in science or engineering. And all of them have extensive patent legal experience prior to their appointment as APJs--many have even served as patent examiners. Congress has long appreciated the importance of having patentability determinations made by persons who understand the claimed invention. Since the 1836 Patent Act, patent examiners have been required to have a technical background. And every congressionally enacted system of post-issuance review, going back to ex partes reexamination in 1980, has been premised on the notion that more accurate results will be produced by a system that refers validity questions "to an agency with expertise in both patent law and technology." n3 During the last decade, in my time at the USPTO and since, I have closely followed the public debate over PTAB proceedings. I have yet to hear anyone make a serious argument that the PTAB is reaching substantively wrong results--that its validity findings are somehow less accurate than those made in civil litigation. There is no reasonable dispute that PTAB review is a higher quality, timely, and less expensive alternative to district court litigation. Jury trials are not an adequate substitute for PTAB review The last four decades of the development of post-issuance proceedings at the USPTO have also coincided with a shift in how the courts resolve patent cases. As recently as 1978, judges decided over 90% of these cases, but as changes in Seventh Amendment jurisprudence have been absorbed by the plaintiff's bar, three quarters of patent cases now go before a jury. n4 Although district judges' patent validity decisions have proven less accurate than those made by the PTAB, jury verdicts present even more difficulties. As compared to judges, juries are more likely to favor particular types of parties, more likely to favor the party that initiates the suit rather than the defendant (regardless of whether it is the patent owner or a declaratory judgment plaintiff), and more likely to decide all issues in favor of one party or another rather than distinguishing among the different questions before them. n5 Lay juries often find complex technologies inaccessible, and they are notoriously resistant to engaging in an obvious analysis that combines patents and printed publications.

Patent validity is just one of several issues before the jury--in addition to infringement, willfulness, and damages--and it is easy to simply defer to the USPTO's initial examination of the patent. Rather than scrutinize the teachings of the prior art, juries tend to focus on stories about the invention and the parties. Few things are more dispiriting from a patent policy perspective than watching how skilled trial lawyers prepare for a patent jury trial. There is an enormous focus on narratives and themes, on trying to present one's own side as the "little guy," and on uncovering internal communications that can be presented in a bad light and thereby taint the jury's view of all the issues. What is often missing is an analysis of the limitations of the claims and how they are met by the prior art. Another unfortunate development in patent litigation in recent decades is the rise of the patent magnet jurisdictions. Judges in these courts have actively advertised n6 for patent cases and recruited plaintiffs n7 to file before them. In their efforts to make themselves an attractive venue for patent plaintiffs, they have also allowed the presentation of jury instructions and arguments that tend to depress the jury's sense of responsibility to assess patent validity. This, in combination with a routine disregard for Rule 702, has made it possible to seek outsized awards for invalid patents. n8 This is an absurd way to run an intellectual-property system, particularly when critical technologies are at stake. In many cases, a PTAB trial is not simply a less expensive or more technically accurate form of validity review--it is the only meaningful form of review. It is also important to consider the character of much of the patent litigation in America today. A majority of infringement lawsuits are filed by parties that do not practice the invention, and the bulk of this litigation is brought by so-called patent assertion entities. These entities purchase their patents on the secondary market and often receive financial backing from hedge funds and other litigation financiers. n9 Some of the largest investment funds are foreign owned and rely on investors from foreign countries, including undemocratic ones. One might think that such a plaintiff--a foreign non-practicing entity suing an American manufacturer--would cut an unsympathetic figure before a U.S. jury. In some districts, however, patent assertion entities have been allowed to exclude evidence of their identity from the jury. n10 This effectively allows them to invoke the jury's sympathy by falsely implying that they are an independent inventor or an American start-up company. One can hardly criticize a district judge for excluding this type of evidence. Patents are transferrable property, and the identity of the parties is irrelevant to whether the patent is valid. Except that in a jury case, we all know that this evidence does matter. I am not here today to condemn our current system of litigation finance or to second guess whether foreign NPEs should be allowed to sue American companies. I simply to note that given that our system does operate this way--that a majority patent lawsuits are brought by entities that contribute very little to the U.S. economy--it is imperative that we provide American manufacturers with an accurate and reliable system for testing the validity of asserted patents. Unfortunately, recent events have further highlighted the importance of preserving access to PTAB review

We support this provision which, much like the provision harmonizing claim construction standards between the PTAB and district courts, is necessary to prevent the gamesmanship that can occur where a challenger chooses to seek the invalidation of a patent at the PTAB rather than federal court because of the lower evidentiary burden. We also believe the stricter "clear and convincing evidence" standard, along with the presumption of validity, provides due deference to the expert determinations made by the USPTO's patent examiners when they make the original decision to award a patent. Patent holders that have invested a substantial amount of money in the process of discovering, developing, and patenting their innovations need the certainty that the decision of the USPTO's patent examiners in the first instance have some meaning.

If the PTAB is permitted to wholly disregard a patent examiner's finding and essentially engage in de novo review each time a patent is challenged, the reliability of a patent granted by the USPTO is significantly reduced. This deprives patent owners the ability to accurately gauge the validity of a patent that has been issued, but not litigated, and thus creates uncertainty.

In light of these problems, Congress passed the AIA and empowered the United States Patent Trademark Office (“USPTO”) to reevaluate and revoke previously issued patents through the creation of the Patent Trial and Appeal Board (“PTAB”).[2] The goal of these post-grant administrative proceedings is to serve as an efficient alternative to district court litigation and to lower the cost of invalidating low-value patents.[3] Despite Congress’s best intentions, there is still much uncertainty regarding these cancellation procedures. Contrary to congressional expectations, the U.S. patent system ranking dropped consecutively from first to tenth to thirteenth in its patent protection ranking between 2017 and 2018, receiving the lowest score in patent opposition out of all developed countries’ post-grant opposition mechanisms.[4] Such downward trend raises the question: Are these subpar ratings merely a result of the new tribunal’s growing pains which will soon subside, or do they indicate a systemic flaw of the U.S. patent opposition system?

So there's two thoughts right now. So what the district courts sometimes are doing is they're staying the case to prevent that duplication and the PTAB has also adopted policies where they will discretionary deny if they feel that the district court is going to hear the issue. First and a jury will decide validity.

But both of these approaches are not implemented systematically and they've been very controversial. I mean, nobody's really happy with any of this. So the proposed amendment in the bill to section 315 which provides that if the IPR is instituted, a party can't maintain the same challenge in another proceeding that would absolutely reduce that duplicative litigation cost.

Problem: When validity of a patent is challenged in district court, "clear and convincing" evidence is needed to invalidate the patent. But at the PTAB, a petitioner need only show invalidity by a "preponderance of the evidence" standard. Further, until recently, the PTAB interpreted patent claims under a different standard than the district court. These differences often lead to inconsistent results between the two tribunals.

Solution: Harmonize PTAB claim interpretation and burden of proof with federal district court. The PREVAIL Act requires the PTAB to find a patent invalid by "clear and convincing" evidence and requires the PTAB to interpret claims using the same "plain and ordinary meaning" standard used in federal district court.

The Department of Justice, U.S. Patent and Trademark Office (USPTO) and the National Institute of Standards and Technology (NIST) (the Agencies) announced today the withdrawal of the 2019 Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (2019 Statement). After considering public input on the 2019 Statement and possible revisions, the Agencies have concluded that withdrawal of the 2019 Statement is the best course of action for promoting both competition and innovation in the standards ecosystem. On Jan. 8, 2013, the Antitrust Division of the Department of Justice and the U.S. Patent and Trademark Office (USPTO) issued a Policy Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments (2013 Statement). On Dec. 19, 2019, the Agencies withdrew the 2013 Statement and issued the 2019 Statement, which offered the views of the Agencies and expressly recognized that it had “no force or effect of law.” In July 2021, President Biden issued an Executive Order on Promoting Competition in the American Economy noting that, “[a] fair, open, and competitive marketplace has long been a cornerstone of the American economy.” He encouraged the Agencies to review the 2019 Statement to ensure that it adequately promoted competition. In response to the Executive Order, on Dec. 6, 2021, the Agencies issued a Draft Policy Statement on Licensing Negotiations and Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments and a request for public comments through a Dec. 6, 2021 news release, extending the deadline for comments in a Dec. 13, 2021 news release. The Agencies thank the wide range of individuals, organizations and other stakeholders who submitted comments, all of which have been considered. After a review of those comments and a collaborative deliberation on how best to proceed, the Agencies are announcing the withdrawal of the 2019 Statement. As noted in the Withdrawal of the 2019 Statement on Remedies for Standards-Essential Patents Subject to Voluntary F/RAND Commitments, “[a]fter considering potential revisions to that statement, the Agencies have concluded that withdrawal best serves the interests of innovation and competition.” “The U.S. Patent and Trademark Office is focused on creating incentives to generate more innovation, especially in underserved communities and in key technology areas, and maximizing that innovation’s widespread impact,” said Under Secretary of Commerce for Intellectual Property and USPTO Director Kathi Vidal. “Forging our global leadership in new industries cannot happen without greater investment in research and development in technologies that may become international standards. We also need greater U.S. engagement in global standards-setting organizations from our large multi-national companies, as well as from small- to medium-sized businesses and start-ups. I stand behind any measure that will enable innovation that will drive sustainable, long term growth in the U.S. economy.” “The withdrawal of the 2019 Statement will strengthen the ability of U.S. companies to engage and influence international standards that are essential to our nation’s technology leadership and that will enable the global technology markets of today and tomorrow,” said Under Secretary of Commerce for Standards and Technology and NIST Director Laurie E. Locascio. “A common thread in so many of the thoughtful stakeholder comments we received is a commitment to America’s industry-led, voluntary, consensus-based approach to standards development. This approach consistently delivers the best technical solutions, and I wholeheartedly support it.”“The Antitrust Division will carefully scrutinize opportunistic conduct by any market player that threatens to stifle competition in violation of the law, with a particular focus on abusive practices that disproportionately affect small and medium sized businesses or highly concentrated markets,” said Assistant Attorney General Jonathan Kanter of the Justice Department’s Antitrust Division. “I am hopeful our case-by-case approach will encourage good-faith efforts to reach F/RAND licenses and create consistency for antitrust enforcement policy so that competition may flourish in this important sector of the U.S. economy.” In exercising its law enforcement role, the Justice Department will review conduct by standards essential patent (SEP) holders or standards implementers on a case-by-case basis to determine if either party is engaging in practices that result in the anticompetitive use of market power or other abusive processes that harm competition. In addition, in accord with President Biden’s Executive Order, the Agencies plan to continue to cooperate as appropriate on matters that affect the intersection of competition, standards development and intellectual property rights. Standards-developing organizations (SDOs) and the widespread and efficient licensing of SEPs on reasonable and non-discriminatory (RAND) or fair, reasonable and non-discriminatory (FRAND) terms (collectively F/RAND) help to promote technological innovation, further consumer choice, and enable industry competitiveness, including in emerging technologies and by new and small-to medium-sized market entrants. SDOs may require parties participating in the standards development process to voluntarily commit to making patents essential to the standard available on F/RAND terms. The specific F/RAND commitments are contractual obligations that vary by SDO. U.S. laws and regulations govern the interpretation of those contractual obligations and otherwise govern the conduct of parties participating in SDOs.

“Since 2021, the invalidation rate has been increasing and is currently at 71% for the first two quarters of 2024. In 2023, all challenged claims were found invalid 68% of the time. These are daunting statistics for patent holders. The invalidation rate of patents in America Invents Act (AIA) proceedings, such as inter partes reviews (IPRs), has been high since the inception of the PTAB. Just one year into the AIA, Chief Judge Randall Rader famously referred to the PTAB as a “death squad” at the 2013 American Intellectual Property Law Association (AIPLA) annual meeting because the invalidation rate was so high. This article focuses on the “total invalidation” rate where all challenged claims are found invalid such that the patent is effectively killed off. (For convenience, we refer to “invalidation” with the understanding that the PTAB adjudicates claims as “unpatentable”).

Of course, not all petitions result in institution, and the U.S. Patent and Trademark Office (USPTO) is correct when it points out that invalidation rates are lower when the rate of institution (currently about 67%) is factored in. Still, most petitions result in institution. Additionally, many patents are subjected to multiple petitions over time so they eventually will be subjected to a full AIA trial. This article focuses on what happens when AIA trials are conducted and final written decisions are issued.

Another way of looking at the data is to consider the percentage of challenged claims that have been invalidated by the PTAB. Out of a total of 1,962 claims before the Board, 1,572 or 81% were found to be invalid. This is a staggering rate, especially considering that the only issues the Board is allowed to consider are novelty and obviousness. By comparison, in district court litigation, claims are invalidated for obviousness or lack of novelty about one third of the time, (i.e., at less than half the PTAB rate). 44Similarly, academic studies suggest that when properly examined, only about 30% of issued patents are actually invalid for reasons of obviousness or lack of novelty. 45That the PTAB invalidates patents at more than double these rates may indicate that it is giving short shrift to the vested patent rights of inventors.

The CBMR data is even less encouraging for patent holders. Admittedly, the data is significantly more sparse, because only a small subset of patents are eligible for CBMR. Nonetheless, the trends are fairly evident. As of November 2014, the PTO received 255 CBMR petitions, and processed 149 of them to determine whether to institute a full-blown trial. The Board chose to institute trial in 76% of all cases it considered. Of the cases that have gone to trial, the Board issued a final decision in 17 cases covering over 339 claims. 46In no case did the Board uphold all challenged claims, and in only two cases did the PTAB find any of the challenged claims to be valid. The total claim invalidation rate in CBMR tops 96%.

At the outset, it is worth noting that today's clamor over "low quality patents" is by no means a new complaint. Indeed, allegations that the Patent Office issues "useless patents" that result in "onerous litigation" have been with us for over 200 years. 4And while it is true that the PTO can make mistakes or be defrauded by unscrupulous applicants, there is no evidence that "low quality" patents are overly-prevalent today or that they cause any significant economic problems. 5Indeed, there is not even a settled definition of what constitutes a "low quality" patent (as opposed to "high" or "medium quality" one). 6To be sure, there are plenty of anecdotes and popular press stories about silly patents, such as patents claiming a "Method for Exercising a Cat" or a "Method for Swinging on a Swing." What is absent is any reliable empirical evidence that low quality patents actually present a significant problem in our patent system.

All of this means that when Congress created the AIA's post-issuance review mechanisms to solve the "problem" of "low quality patents," it was far from clear that there was actually a problem in need of solving. Even assuming that there was a problem, and that it was serious enough to warrant a legislative solution, the solution offered ended up imposing costs on legitimate patent holders that appear way out of proportion to the alleged problem of bad patents. Moreover, the AIA's post-issuance review mechanisms have significantly amplified [*52] opportunities for patent challengers to abuse the system to the detriment of legitimate patent holders. To understand why, it helps to first look at the arsenal of weapons that are available to invalidate a patent.

It is worth noting that the seemingly quick turnaround time required by statute is actually not that quick. Taking into account the time for filing an IPR request, the time allowed for opposition, and the time the PTO has to decide whether to grant the petition, the total time that a patent can spend in limbo waiting for resolution of an IPR proceeding is up to 27 months (or 33 months if the deadline for rendering the decision is extended). The 27-33 month timeframe is roughly equivalent to a district court litigation timeframe. Thus, though IPR may be cheaper and more streamlined, it is not necessarily faster, especially if one considers the time spent in additional litigation resolving issues of infringement and invalidity that were not addressed in the IPR process.

The most persistent structural reason for duplicative litigation in the PTAB is its weaker burden of proof. Petitioners must prove claims of unpatentability by a preponderance of the evidence. 120This is in contrast to the more stringent burden of clear and convincing evidence that a litigant must meet to overcome the statutory presumption of patent validity 121and prove unpatentability, both in the U.S. district courts 122and in the ITC. 123The doctrinal effect of this disparity is significant, as it permits open disregard by administrative patent judges not only to disregard the decisions of Article III judges even with respect to the same patents but also to reach altogether conflicting judgments of their own in the PTAB (though the conflict in underlying standards themselves means that these contrary judgments are not inconsistent in the legal sense). Meanwhile, the origins of this disparity in the legislative history and in the underlying assumptions of the AIA have also been a point of considerable confusion. It is useful to consider these issues separately.

The doctrinal effect of these divergent standards became clear immediately. After the AIA trial proceedings went online in September 2012 and as the earliest final written decisions began to issue in June 2013, the PTAB observed in SAP America, Inc. v. Versata Development Group, Inc. that neither the statutory presumption of validity nor the burden of clear and convincing evidence applied to petitioners in the PTAB. 124The PTAB in Google, Inc. v. Whitserve LLC put it even more clearly, explaining that "[g]iven these differing evidentiary standards, the same evidence that the jury found insufficient could meet the burden of proof in an inter partes review." 125The PTAB further observed that even conclusions that the Federal Circuit [*80] reached about patent validity under the clear and convincing evidence standard would not foreclose a contrary PTAB conclusion about the same patent under the preponderance standard. 126

Similarly, and with greater reason for statutory amendment, the presumption of validity, as well as the burden and standard of rebutting that presumption by clear and convincing evidence, should also be the same in the agency as they have long been in the courts and those presumptions of validity were recently reaffirmed by the Supreme Court in Microsoft Corp. v. i4i Limited Partnership.433In enacting the AIA, Congress dealt specifically with the standard of proof and chose a mere preponderance of the evidence as the standard.434This was a mistake of policy by Congress for the same reason that the initial use of broadest reasonable interpretations was a mistake of policy by the Patent Office. Although the agency did, and does, have significant virtues of superior expertise and access relative to the federal courts, those virtues still do not justify the use of divergent substantive standards for evaluating patentability. Not only does this disparity allow patents that would otherwise have survived judicial review to be struck down, but it also tolerates and even encourages numerous instances in which patents actually did survive prior judicial review only to fall in the PTAB as the result of legal arbitrage.

It is no reply, moreover, to say that if aligned standards of proof are all that matter, then the courts, as well as the Patent Office (and, for that matter, the ITC), could all turn instead to a preponderance standard. Before the enactment of the AIA, this very question came before the Court in Microsoft v. i4i.435In that case, i4i had sued Microsoft for allegedly infringing i4i's patent on an improved method for computer document editing, and Microsoft responded by asserting that i4i's patent was invalid. 436There was no doubt that the patent examiner during examination had never considered the prior art that Microsoft now offered as evidence that i4i's patent was invalid, but there was vigorous dispute over whether that prior art would actually have any invalidating effect on the i4i patent.437Microsoft argued that it should not be required in court to prove invalidity by clear and convincing evidence but rather that a mere preponderance should be enough where the evidence offered was evidence that had not been before the examiner.438

IV. Insufficiency of the Preponderance Standard as Applied to Patent False Marking Under the Due Process Clause The final and most compelling reason why the burden of proof for false marking must be raised is that the preponderance standard is constitutionally insufficient here. Section § 292 is - at the very least - a quasi-criminal provision. Consequently, the Due Process Clause of the Fifth Amendment demands a stricter burden of proof in connection with false-marking claims. A. Section 292 as a (Quasi-)Criminal Statute The Supreme Court provided a two-factor test in United States v. Ward for determining whether a given statutory penalty is civil or criminal, a distinction of "constitutional import." 151 The first factor asks "whether Congress, in establishing the penalizing mechanism, indicated either expressly or impliedly a preference for one label or the other." 152 The second factor, which applies only "where Congress has indicated an intention to establish a civil penalty," asks "whether the statutory scheme was so punitive either in purpose or effect as to negate that intention." 153 Accordingly, [*1413] the first Ward factor may be determinative where Congress indicated an intention to establish a criminal penalty. Here, the language of the false-marking statute does not explicitly contain the word "criminal" or "civil." 154 However, the legislative history of § 292 evidences that Congress (or at least the Senate) expressly intended for this to be a criminal provision. 155 Therefore, the first Ward factor weighs in favor of finding that the penalty under § 292 is criminal. Even if the first Ward factor were not determinative - which it arguably is here - applying the second Ward factor to § 292 further supports the criminal nature of this provision. In Ward, the Court referenced a list of factors from its earlier decision in Kennedy v. Mendoza-Martinez that is "helpful" in applying the second Ward factor. 156 That list includes: Whether the sanction involves an affirmative disability or restraint, whether it has historically been regarded as a punishment, whether it comes into play only on a finding of scienter, whether its operation will promote the traditional aims of punishment-retribution and deterrence, whether the behavior to which it applies is already a crime, whether an alternative purpose to which it may rationally be connected is assignable for it, and whether it appears excessive in relation to the alternative purpose assigned are all relevant to the inquiry, and may often point in differing directions. 157 In a later case, the Court explained that when Congress "confers authority upon administrative agencies" - as opposed to judicial bodies - to impose statutory penalties, this serves as "prima facie evidence" that Congress intended the penalties to be civil. 158 Here, multiple Kennedy factors weigh in favor of finding that Congress created a punitive scheme in § 292. 159 First, in the past, many courts that addressed this issue deemed § 292 and its predecessor statutes to be either criminal or at least highly penal, which suggests that the false- [*1414] marking penalty has historically been regarded - at least in some courts - as a punishment. 160 Second, the § 292 penalty comes into play only after a finding of scienter, given that intent to deceive the public is a key element of the false-marking cause of action. 161 Third, § 292 exists to "punish[] the defendant for conduct that deceives the public regarding the patented status of the marked product and seeks to deter such behavior in the future." 162 Fourth, "while unfair competition claims may provide compensation to competitors harmed by false marking, only § 292 makes certain acts of false marking criminal." 163 Furthermore, the penalty under § 292 may be imposed only by a court of law, not by an administrative agency (such as the USPTO). 164 Finally, § 292 penalties do not compensate the government for damages it suffered directly as a result of the defendant's alleged acts of false marking, which further supports the punitive nature of this statute. 165 Therefore, under the Supreme Court's tests, § 292 appears to impose a criminal rather than a civil penalty. However, one cannot overlook the fact that false-marking suits are nevertheless civil in form because they involve only private litigants. 166 In considering the repercussions of imposing criminal penalties in civil lawsuits, one court poetically summarized the problem by asking, "Is a wolf in sheep's clothing a wolf or a sheep?" 167 Perhaps the best solution is to classify § 292 as a quasi-criminal provision, given its hybrid nature. 168 This classification does not change the fact that the preponderance standard as applied to § 292 is unconstitutionally low. The Supreme Court has held that "punishment cannot be imposed "without due process of law.'" 169 Because even a quasi-criminal statute is punitive, imposition of its statutory penalty must comply with due process. The preponderance standard as applied to § 292 simply does not meet this requirement. [*1415] B. Due Process Requirements The Due Process Clause (DPC) of the Fifth Amendment states, "No person shall … be deprived of life, liberty, or property, without due process of law." 170 This clause is "intended to secure the individual from the arbitrary exercise of the powers of government." 171 Due process encompasses both substantive and procedural aspects. First, substantive due process - which is not implicated by § 292 - "bars certain government actions regardless of the fairness of the procedures used to implement them," and thus "serves to prevent governmental power from being used for purposes of oppression." 172 Second, procedural due process - the variety relevant here - acts as a "guarantee of fair procedure" that prevents the government, inter alia, from "taking [a defendant's] property without providing appropriate procedural safeguards." 173 Procedural due process "imposes constraints on governmental decisions which deprive individuals of "liberty' or "property' interests within the meaning of the Due Process Clause." 174 Importantly, when a law violates procedural due process, "it is not the deprivation of property or liberty [under the law] that is unconstitutional; [rather] it is the deprivation of property or liberty without due process of law - without adequate procedures." 175 The Supreme Court put forth a three-factor analysis in Mathews v. Eldridge for identifying the "specific dictates of [procedural] due process" in a given legal context: First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. 176 [*1416] Applying this framework to the false-marking statute illustrates that a higher burden of proof than a mere preponderance must be imposed on § 292 to satisfy due process requirements. 177 Each of the three Mathews factors is discussed in turn below. 1. The Private Interests at Stake The first Mathews factor looks to the private interests affected by the official action. 178 First, false-marking defendants have a property interest in the money they stand to lose under § 292. The Supreme Court has emphasized that "the property interests protected by procedural due process extend well beyond actual ownership of real estate, chattels, or money," 179 which implicitly encompasses money as a protected property interest. 180 Courts have also explicitly recognized money as a property interest under the DPC. 181 After Forest Group, Inc. v. Bon Tool Co. - in which the Federal Circuit held that the $ 500 penalty under § 292 applies on a per-article basis - defendants stand to lose enormous sums of money if found liable for falsely marking a large quantity of mass-produced products. 182 Second, false-marking defendants may possess a liberty interest in preserving their professional reputations in order to ensure their ability to garner future business. In Board of Regents of State Colleges v. Roth, the Supreme Court suggested that governmental action may implicate a protected liberty interest by imposing a stigma on one's "good name, reputation, honor, or integrity" that "forecloses [one's] freedom to take advantage of other employment opportunities." 183 The Court clarified this [*1417] notion in Paul v. Davis by holding that although one's "interest in reputation [alone] … is neither "liberty' nor "property' guaranteed against [governmental] deprivation without due process of law," due process protections are implicated when one's reputation suffers from stigma caused by governmental action and one's "[previously recognized] right or status … [is] distinctly altered or extinguished." 184 This has become known as the "stigma-plus test." 185 Some courts have interpreted Roth and Davis - at least in the government-employment context - to mean that an employee's liberty interest in "pursing the occupation of his choice" may be infringed when a government-employer's termination of the employee somehow publicly "stigmatizes" the latter, thereby causing the employee to "suffer[] a tangible loss of other employment opportunities." 186 In the false-marking context, defendants facing § 292 claims stand to have their professional reputations significantly damaged by the stigma that attaches through false-marking liability. 187 As a result of this stigma, a false-marking defendant's ability to secure future business could be jeopardized, especially if the public learns of the defendant's false-marking activity and thereafter boycotts the defendant's products. 188 This situation is analogous to that described above where the government terminates an employee in a publicly stigmatizing fashion and thereby interferes with the latter's liberty to "pursue the occupation of his choice." 189 In both situations, the government's actions negatively impact the public's perception of the stigmatized party, thereby endangering the latter's opportunity to pursue desired employment or business prospects. Accordingly, false-marking defendants arguably hold a protected liberty interest in their business reputations. 190 2. Insufficiency of Existing Procedures and Proposed Alternative Procedures The second Mathews factor addresses the sufficiency of current procedures and the benefit of alternative procedural safeguards. 191 Here, the [*1418] only contested aspect of existing procedures is application of the preponderance standard to § 292 claims. As previously discussed, courts generally apply the preponderance standard in civil disputes for which society has the least concern for the outcome and feels comfortable allocating the risk of error equally among the litigants. 192 In light of this observation, the preponderance standard is inappropriate as applied to § 292. More specifically, the mandatory rebuttable presumption of intent under § 292 - which arises once a plaintiff has shown that the defendant's product was falsely marked and that the defendant knew the marking was false - should rest on a greater evidentiary showing than a mere preponderance. 193 First, § 292 is at minimum a quasi-criminal, punitive provision, which renders false-marking litigation quite unlike typical civil disputes. 194 Second, given that § 292 is a quasi-criminal provision, society demands greater assurance than the preponderance standard can provide that false-marking defendants have not wrongfully been found liable. Finally, the risk of error in a false-marking suit should not be allocated equally among the litigants because the interests as stake for the defendant are much more significant than those of the qui tam plaintiff, particularly when the latter has suffered no competitive injury (as is usually the case) and seeks only financial gain. 195 As an alternative procedure, courts should require false-marking plaintiffs to prove the elements of § 292 claims by clear and convincing evi [*1419] dence. 196 Furthermore, the rebuttable presumption of intent to deceive should not arise unless a plaintiff has shown the predicate facts by clear and convincing evidence. This standard is preferable because: it allocates a greater risk of error to the qui tam plaintiffs whose interests are less significant than those of the defendants; 197 it better reflects society's level of concern that false-marking defendants not be erroneously found liable for a quasi-criminal act; 198 and it offers greater protection against the probable reputational harm faced by false-marking defendants. 199 Furthermore, applying the clear and convincing standard to § 292 would better ensure that penalties are imposed against only those defendants who actually engaged in the egregious practices § 292 seeks to deter. Nevertheless, the burden on defendants to rebut the presumption of intent (by showing that they did not act with a deceptive purpose) should remain preponderance of the evidence. 200 There is no reason why defendants should face a higher hurdle than they already do for proving that their false-marking activities resulted from legitimate business decisions. 3. The Government's Interests The final Mathews factor examines any additional fiscal and administrative burdens the proposed alternative procedural safeguards would impose on the government. 201 Because false marking harms the public, the government has a legitimate interest in deterring the practice and seeing that those who falsely mark their products are appropriately punished. 202 However, requiring plaintiffs to prove false-marking claims under § 292 by clear and convincing evidence - rather than by a mere preponderance - will not negatively impact the government's interest. In fact, elevating the burden of proof may actually benefit the government. First, although qui tam plaintiffs facing an elevated burden will likely have to expend greater resources to investigate their cases than they otherwise would if the preponderance [*1420] standard applied, 203 this extra cost will be imposed on the plaintiffs, themselves, and not on the government. Accordingly, wealth-seeking qui tam plaintiffs who have suffered no competitive injury may be deterred from bringing frivolous lawsuits under § 292, which would in turn conserve judicial resources for legitimate false-marking cases. 204 Second, the government has an interest in ensuring that only those defendants who acted with intent to deceive the public are penalized under the statute in order to instill public confidence in the just operation of the government's laws and to enhance the statute's deterrent effect. The clear and convincing standard is better able to achieve this objective than the less stringent preponderance standard.