Patent owners are responsible for patent failure, not PTAB.

The potential reliance cost concern with the PTAB depends on two premises: that the patent owner made investments in reliance on patent protection and that those investments were diminished or rendered worthless by patent invalidation. As to the second premise, the patent owner’s investments may remain protected, even after patent invalidation, by the consequences of the first mover advantage conferred by the now invalidated patent, such as developed expertise, brand recognition, established distribution networks, customer loyalty, etc.116 Moreover, at least some of the costs incurred in reliance on patent protection (e.g., building manufacturing facilities or establishing distribution networks) may be transferable to other product lines or business pursuits.

As to the first premise, a fairly large number of patents invalidated in the PTAB are owned by non-practicing entities who only license and do not commercialize in a way that would generate significant reliance interests.117 More generally, the extent of costs incurred in reliance on patent protection will vary with the circumstances and industry.118 For example, inventions in computer-related fields tend to be commercialized before patent protection, and are often obsolete around the time that the patent issues,119 suggesting limited reliance interests. By contrast, patent protection is seen as a necessary prerequisite for pharmaceutical and biotech companies to undertake the clinical trials and other commercialization efforts necessary in these industries,120 suggesting significant reliance interests.

Even if patent owner reliance costs exist, the patent owner itself may be responsible for these costs. Arguably, the patent owner is responsible for the ex post invalidation because it failed to draft, submit, and obtain patent claims that satisfy all of the statutory criteria and therefore has no legitimate claim to protection of its reliance interests.121 However, this assumes that patent owners can accurately identify the line between fully protecting their actual invention and encroaching on the prior art or going beyond the written description in a way that renders the patent invalid and can accurately draft claims to reflect this line, a task that is notoriously difficult.122 Alternatively, at least some ex post invalidations result not from a miscalculation of the patentability of the claims during examination but rather from the patent owner’s actions after patent issuance in exploiting the inherent malleability of patent claims to stretch their patent rights beyond their actual invention to cover new technology or new developments in the market that would not have been thought to be within the scope of the patent rights during patent examination.123 This argument is more persuasive, though it is unclear how many patents invalidated at the PTAB fit into this category.

Finally, even if PTAB invalidation imposes patent owner reliance costs, the PTAB may still be socially desirable when all the costs and benefits are weighed. In particular, the existence of invalid patents imposes well-recognized, and perhaps significant, costs on the public.124 Moreover, limiting ex post invalidation, combined with the well-recognized costs of invalid patents and the incentives of patent owners, may necessitate expending more resources in ex ante examination to prevent issuance of invalid patents.125 This might not be the optimal apportionment of resources, given that very few issued patents ever become relevant.126