	More Than 350 Patents Have Been Challenged under the CBM Program, and About One-Third of These Patents Were Ruled Unpatentable

We found in our March 2018 report that, from September 2012 through  September 2017, parties accused of patent infringement filed 524  petitions with the Patent Trial and Appeal Board challenging the validity of  359 distinct patents under the CBM program, resulting in rulings against  about one-third of these patents. Stakeholders we interviewed suggested several possible reasons for the  decline in CBM petitions, including recent decisions from the U.S. Court  of Appeals for the Federal Circuit and U.S. Supreme Court that clarified  which patents are eligible for CBM review;  that CBM petitioners  successfully targeted the lowest-quality business method patents— patents that should not have been issued because they did not meet the  patentability requirements—in the early years of the program, and now  those patents have been eliminated; and that owners of business method  patents are more wary of asserting their intellectual property through  infringement lawsuits and risking its invalidation. The Board Met Timeliness Requirements and Took Steps to Analyze Decisions and Improve Proceedings but Does Not Have Guidance to Ensure Decision Consistency

We found in our March 2018 report that the Patent Trial and Appeal  Board has completed all trials under AIA-authorized proceedings within  statutorily directed time frames, according to board data, and the board  has taken steps to review issues that could affect the consistency of its  trial proceedings and decisions and to engage with stakeholders to  improve its proceedings. However, because the board  does not have documented procedures for how to review decisions for  consistency, the board cannot fully ensure the consistency of the  decisions or the processes that lead to them. We  recommended that the Director of USPTO develop guidance, such as  documented procedures, for judges reviewing the Patent Trial and Appeal  Board’s decisions and the processes that lead to the decisions. In addition, to improve various aspects of its trial proceedings, the board  has taken several steps to engage with stakeholders. The board has done so through several types  of public outreach efforts, including participating in roundtables, webinars, and judicial conferences, among other activities. Ltd. v. CLS Bank Int’l has contributed to  the reduced number of business method patent lawsuits. Stakeholders generally agreed that the ability to challenge a patent’s  validity on subject matter eligibility grounds remains important, although  there was not broad agreement among stakeholders regarding how far  that ability should extend beyond business method patents.
Why GAO Did This Study

This testimony summarizes the information contained in GAO's March 2018 report, entitled U.S. Patent and Trademark Office: Assessment of the Covered Business Method Patent Review Program ( GAO-18-320 ).

What GAO Found

From September 2012 through September 2017, entities facing patent infringement lawsuits filed 524 petitions challenging the validity of 359 patents under the U.S. Patent and Trademark Office's (USPTO) covered business method (CBM) program, resulting in decisions against about one-third of these patents. The CBM program provides entities facing infringement lawsuits an opportunity to challenge the validity of a business method patent by demonstrating that it did not meet requirements for patentability. Business method patents focus on ways of doing business in areas such as banking or e-commerce. The rate of filing petitions over this period has fluctuated but has generally declined since 2015, and none were filed in August or September 2017.
USPTO has taken several steps to ensure the timeliness of trial decisions, review past decisions, and engage with stakeholders to improve proceedings under the program:
Timeliness: USPTO regularly informs relevant parties about paperwork requirements and due dates throughout trials. According to program data, as of September 2017, all 181 completed trials were completed within statutorily required time frames.
Decision review: USPTO has taken several steps to review its decisions and has monitored the rate at which the Court of Appeals for the Federal Circuit affirms or reverses them. However, USPTO does not have guidance, such as documented procedures, for reviewing trial decisions, or the processes leading to decisions, for consistency. Without guidance, such as documented procedures, USPTO cannot fully ensure that it is meeting its objective of ensuring consistency of decisions.
Stakeholder engagement: USPTO judges have engaged with stakeholders by participating in public roundtables and webinars, and attending judicial conferences, among other things.
Stakeholders GAO interviewed generally agreed that the CBM program has reduced lawsuits involving business method patents in the federal courts. While many stakeholders favored maintaining aspects of the program, there was not strong consensus among stakeholders for how future trials should be designed.