Recently, the U.S. Patent and Trademark Office released a plan that will significantly increase the cost of challenging a patent in America Invents Act reviews. The first major change in over four years, this plan overhaul will raise inter partes review (IPR) fees from $23,000 to $30,500 in many cases. According to the USPTO, fee increases will even help cover operational costs, which are expected to reach nearly $3 billion this fiscal year.
To discuss the major implications this fee increase on inter partes reviews may have on future litigation, Inside Counsel sat down with Axinn, Veltrop & Harkrider’s Aziz Burgy and Mayer Brown’s Brian Nolan, who regularly handle patent disputes.
Right now, in order to institute an IPR, a challenger is required to pay a $9,000 IPR request fee for petitions challenging up to 20 claims and a $14,000 post-institution fee. These fees are submitted at the time the IPR is filed. If the PTAB declined to institute a trial on all challenged claims, the Petitioner could request a refund of the $14,000 Post-Institution Fee. In January 2018, those fees will increase to $15,500 for the IPR request fee and $15,000 for the post-institution fee. The increases in IPR/PGR/CBM review fees are unlikely to deter many petitioners from filing patent challenges, as, among other reasons, the cost of challenging a patent at the Patent Trial and Appeal Board remains less than at U.S. district courts, per Burgy.
“I think that the USPTO’s decision to increase the IPR request fee ($6,500) by a high percentage compared to the Post-Institution Fee ($1,000) acknowledges that the Board must undertake a thorough analysis to come to the determination on whether it should institute,” explained Nolan. “The level of work required at the institution phase, in the USPTO’s view, likely justifies the proposed increase. Further, by increasing the IPR request fee by a great amount, the USPTO increases the total amount of money that will not be subject to a request for a refund in IPRs when the PTAB declines to institute a trial.”
According to Nolan, this fee increase should not affect the patent litigation landscape by causing fewer alleged infringers from seeking to invalidate patents at the USPTO. As part of its justification for the increase, the PTAB noted that the trial fees and associated costs of an IPR still remain significantly lower than court proceedings. Petitioners tend to select the PTAB because of the perceived increased likelihood of success based upon a potentially broader claim construction ruling coupled with a lower burden of proof.
Although potentially in flux, the potential for estoppel against prior art arguments in later district court proceedings has not been applied as broadly as many thought would happen when IPRs first became available. The increased filing cost will not deter most petitioners from filing an IPR proceeding because it should still give the petitioner an increased chance for success at a cost lower than incurred in a district court matter.
So why is this the first major change in over four years?
“As IPRs were a new process, the USPTO likely needed a few years to understand the cost it would incur to handle the proceedings,” said Nolan. “Considering the popularity that the proceedings have enjoyed it is surprising that the USPTO did not raise the costs sooner.”
The increases were the result of PTO biennial review of its operations that began in 2015, said Burgy. As part of its review the Office concluded that targeted fee adjustments were necessary to continue to fund patent operations, enhance patent quality, continue to work toward patent pendency goals, support the continued efforts of the Patent Trial and Appeal Board (PTAB) to deliver high quality and timely decisions, fund general support costs necessary for patent operations, invest in strengthening the Office’s IT capability and infrastructure, and achieve operating reserve targets.
The overall cost of an IPR should be less than that of a district court proceeding so the increase should not deter filings. The increase will provide additional resources for the PTAB to handle these proceedings, which should assist the PTAB in meeting its obligation of complete each IPR within 18 months of filing unless good cause is shown.
Nolan doesn’t think that there will be any future legal implications associated with this change. He added, “The increase does not affect the desirability of using the IPR process so I do not see any change to the legal landscape resulting from the fee change.”
Amanda G. Ciccatelli is a Freelance Journalist for Corporate Counsel and InsideCounsel, where she covers intellectual property, legal technology, patent litigation, cybersecurity, innovation, and more.