PTAB strengthens patent trolls---small investors are forced to seek them out during litigation.

The AIA aimed to increase patent quality through a number of administrative procedures. 147 Postgrant proceedings certainly have the potential to invalidate improperly granted patents, including the overly broad ones on which patent trolls heavily rely. In postgrant proceedings before the Patent Trial and Appeal Board ("PTAB"), "rules are stacked in favor of the challenger," the challenger being the target business in an administrative action against a patent troll. 148 Further, patents "do[] not enjoy any presumption of validity" before the PTAB, whereas patent validity is presumed in district courts. 149 Finally, the claim construction standard before the PTAB is much broader than the standard before the district courts. In district courts, claims are given their "ordinary and customary meaning" with construction aimed at preserving validity when possible; in the PTAB, claims are given their "broadest reasonable interpretation," with no attempt to maintain claim validity. 150 This difference means that it is likely easier to find a patent invalid as anticipated or obvious by prior art in a proceeding before the PTAB than before a district court judge since a broader construction means a greater number of prior art references could potentially fall within the scope of the challenged claims. 151

Even with such potential, administrative proceedings may prove ineffective at combating patent trolls. The scope of review under an IPR is limited. Only a patent's validity under 35 U.S.C. § 102 (novelty) or § 103 (obviousness) may be challenged, and "only on the basis of prior art consisting of patents or printed publications." 152 Section 101 (patentable subject matter) challenges and section 112 (disclosure requirements) cannot be brought in an IPR. 153 Further, a patent's enforceability cannot be challenged in an IPR by raising an inequitable conduct defense. 154

Like IPRs, PGRs may turn out to be less effective than intended at battling patent trolls. A PGR must be filed within the first nine months after a patent's issuance. 155 PGRs are only available for patents filed under the AIA's new first-to-file system, which did not go into effect until [*1141] March 16, 2013. 156 This leaves out many of the broad patents currently used by patent trolls that were filed before the AIA went into effect, including the scan-to-email patents at issue in the MPHJ case. 157 PGRs may be capable of invalidating some currently pending and future overly broad patents, but can do nothing to protect target businesses from patents filed before March 16, 2013. Further, for those patents eligible for PGR, the standard for initiating a PGR is rather high, requiring a showing that "it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable." 158 Fewer patents are capable of reaching this higher standard, giving PGRs a narrower reach than IPRs and potentially allowing improperly granted patents to escape review.

Both IPRs and PGRs may be prohibitively expensive for target businesses to initiate. It costs $ 9,000 to file an IPR request 159 and an additional $ 14,000 if the request for review is granted. 160 PGRs are even more expensive: $ 12,000 for the initial request 161 and an additional $ 18,000 if the request is granted. 162 These fees, of course, do not include the actual cost of the proceedings. The United States Patent and Trademark Office ("USPTO") estimates that outside of the fees, preparing an IPR request will cost $ 46,000 per request 163 and about $ 631,000 inclusive of all costs. 164 Some firms have even quoted estimates as high as $ 1,000,000 for an IPR, start to finish. 165 Estimates on the cost of a PGR are less developed due to their newness, but it is likely to be "well over $ 250,000," probably reaching "the range of three quarters of a million to one million dollars, including government fees," from start to finish. 166 By comparison, the cost of defending against a patent troll suit for small businesses is, on average, $ 857,000, 167 somewhere between the cost of an IPR and a PGR. With the cost of settling at $ 340,000 on average; 168 however, small businesses can still be strong-armed out of pursuing even administrative proceedings against patent trolls due to their cost. Administrative proceedings also suffer from disincentives to pursue; the high cost of an [*1142] administrative hearing is borne by one party while all other potential defendants enjoy the benefits of a favorable outcome without having to pay a dime. Parties are less willing to follow through on potentially meritorious proceedings when they are the only one paying for a benefit enjoyed by all. 169

In addition to administrative proceedings being prohibitively expensive for defendants, the cost can also be used by patent trolls as a tool to coerce defendants into settlement. The costs of both IPR and PGR increase with the number of claims requested for review. 170 This escalating cost schedule gives patent trolls a way to prevent pending and future patents from becoming subject to postgrant proceedings. "Trolls will invariably add countless claims to pending applications" so that the cost of initiating an IPR or PGR is greater than the cost of the license the patent troll offers to the target business, "effectively insulating themselves from post grant challenges from all but the biggest of targets." 171 Even with these postgrant proceedings, their high cost will still allow patent trolls to coerce settlement payments. Moreover, the cost of these proceedings, together with the very high risk of invalidation by the PTAB, 172 can actually strengthen patent trolls' abilities to coerce licensing fees. Smaller inventors without sufficient funds to pay for attorneys should their patent become the subject of an IPR or PGR may be forced to seek out NPEs, both legitimate ones and patent trolls alike, to adequately protect their patents, thereby strengthening some patent trolls' assertion portfolios. 173