The Leahy-Smith America Invents Act provides new ways to challenge issued U.S. patents — inter partes review and post-grant review. These new proceedings will take place before the newly named Patent Trial and Appeal Board of the U.S. Patent and Trademark Office (PTO) and will be decided by panels of three technically trained administrative patent judges. Inter partes and post-grant review should be potent weapons, particularly for accused patent infringers, as these proceedings will apply a lower burden of proof (preponderance of the evidence) than is applied in litigation.
Inter partes and post-grant review may dramatically reduce the cost of determining patent validity issues. The filing or grant of a petition for either form of review could stay pending patent litigation and avoid broad district court discovery that is pursued concurrently on infringement, invalidity, damages, etc. These proceedings focus on patentability issues and apply a narrower scope of authorized discovery. They also provide an expedited decision within one year or, at the discretion of the board, 18 months.
There is a lot of buzz around the patent bar as to how these new proceedings will take place — the America Invents Act sketched a broad outline, and now the PTO is obligated to prescribe regulations for conducting the two forms of review. Although the bulk of the PTO’s work is ex parte patent examination — a dialogue solely between an applicant and the PTO examiner — the PTO does have experience with inter partes disputes in its administration of interferences and inter partes re-examinations. Experiences with those proceedings may guide the new inter partes and post-grant review proceedings.
The framework for them is provided in Section 6 of the new law, which amends the patent laws to add 35 U.S.C. Chapter 31 — sections 311 to 319, which apply to inter partes review, and Chapter 32 — sections 321 to 329, which apply to post-grant review. Both forms are initiated by the filing of a petition by any person who is not the patent owner. The real party in interest must be identified.
For inter partes review, the scope of review is limited to grounds that could be raised under 35 U.S.C. 102 or 103, conditions for patentability based on novelty and nonobviousness, and only on the basis of prior art consisting of patents or printed publications. The grounds for challenging patentability in post-grant review are broader — they include any ground relating to invalidity of a patent. That includes, for example, challenges to the patentability of a claim for lack of enablement or written description under 35 U.S.C. 112. Additionally, post-grant review may be instituted based on a showing that the petition raises a novel or unsettled legal question that is important to other patents or patent applications.
The petition for either form of review is a written document that identifies with particularity the challenged claims, the ground for each challenge and the evidence that supports the grounds for the challenge to each claim. The petition may be supported by affidavits or declarations of supporting evidence, opinions and expert testimony. The PTO will make the petition available to the public as soon as practicable. The patent owner will be given an opportunity to file a preliminary response that sets forth reasons why no post-grant review should be instituted.
The petition will then be reviewed within three months of the patent owner’s preliminary response, and the PTO will determine if there is “a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition.” That determination is final and nonappealable. If either inter partes or post-grant review is instituted, further filings and discovery may be authorized to develop the record in an inter partes context.
Under 35 U.S.C. 1 and 326, the PTO is directed to issue regulations for conducting both forms of review. In prescribing those regulations, the director will consider the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the office and the ability of the office to timely complete proceedings instituted under this chapter.
The new regulations will need to address issues such as public disclosure of the proceedings, the standard for showing sufficient grounds to institute the proceedings, the scope of discovery, protective orders, sanctions for abuse of discovery or process, amendment of claims by the patent owner, oral hearing, joinder and responsive filings. The new rules must be issued and implemented before the new procedures take effect on Sept. 16.
The current PTO plan is to issue Federal Register publications for the notices of proposed rulemaking in mid-January, accept public comment and conduct public roundtables from mid-January to mid-March, and issue final rules in July. Patent Public Advisory Committee Meeting Status Report: PTO Implementation of the America Invents Act, Nov. 30, 2011, at 6. Then- Commissioner of Patents Robert Stoll also stated that the PTO intends to hire 400 new administrative patent judges to meet the demands of implementing America Invents Act provisions.
The longest-running inter partes proceedings at the PTO are interferences, which are used to decide priority of invention when two parties claim the same invention. Interferences take place before the Board of Patent Appeals and Interferences and, like the two soon-to-be-instituted proceedings, are decided by panels of three administrative patent judges. In the course of determining priority, the board also decides issues of patentability.
In 1998, the board formed the Interference Trial Section to better manage interferences. A new standing order was issued to provide efficient, uniform procedures for conducting interferences and a handful of administrative patent judges were selected to decide interferences as part of the Interference Trial Section. The board set a goal of completing each interference within two years and, remarkably, met that goal in 97 percent of cases.
Interferences will eventually be eliminated as the America Invents Act moves the United States to a modified first-to-file system. Nonetheless, the motions practice before the Interference Trial Section will provide guidance for conducting the inter partes and post-grant review proceedings. It is also expected that many of the judges of the Interference Trial Section will lead the effort in conducting these procedures at the Patent Trial and Appeal Board.
Key characteristics that changed in interference practice before the Interference Trial Section were the faster pace for conducting interferences, authorization requirements for controlling the number and types of issues raised in the interference, the scope and style of discovery and the emphasis on procedure.
Discovery was generally limited to depositions of witnesses filing a declaration in support of a party’s motion and that which was in the interests of justice. Before obtaining discovery, the requesting party needed to confer with its opponent, make a motion to the board and obtain formal authorization. That effort generally resulted in narrowly tailored discovery, if any. Although this brand of discovery was broader than any other inter partes proceeding in the PTO, it was much more limited than the federal district court standard that allows discovery of any information reasonably calculated to lead to admissible evidence.
One lesson is that the inter partes and post-grant review are not going to be entirely new proceedings for the PTO, because the administrative judges of the Interference Trial Section have been addressing issues of patentability of claims in an inter partes context for many years. The procedures refined under the Interference Trial Section have enabled the PTO to reach an expedited decision with effective case management that eliminates much of the unnecessary discovery pursued in district court litigation. Another important lesson is that the administrative patent judges have a developed preference for handling patentability and discovery issues that are sure to be revisited in the context of inter partes and post-grant review, and one would be well advised to consult with interference counsel to understand those viewpoints.
The two new review procedures will also parallel some aspects of inter partes re-examination proceedings, which currently take place before examiners of the Central Reexamination Unit. Indeed, inter partes review is intended to replace inter partes re-examination. Inter partes re-examination could be initiated by any party who could show a substantial new question of patentability of a claim in an issued U.S. patent. The patent owner and requester both had roles in submitting arguments and evidence. When introduced, there was initially skepticism regarding the ability of the PTO to handle such proceedings and whether they were a viable alternative to addressing patent validity in district court patent litigation. Moreover, some potential requesters were cautious of the inter partes estoppel provisions — especially until the PTO developed a statistically significant track record.
Within a few years, however, the number of inter partes re-examinations escalated as it became apparent that a high number of requests for inter partes re-examination were granted and resulted in a high success rate for petitioners. Also, a high proportion of those inter partes re-examinations were filed in conjunction with patent litigation. That led to the formation of the Central Reexamination Unit in 2005 to manage the increasing number of these relatively complex proceedings.
Since their inception on Nov. 29, 1999, a total of 1,389 inter partes re-examination requests have been filed. Of those, 70 percent were known to be in litigation. Moreover, 95 percent of requests were granted. Although some have been surprised by this success rate, this high percentage of granted requests is due to several factors. First, accused infringers have an “advantage” over the PTO inasmuch as the potential scope of a patent claim is not necessarily apparent until applied against real-world systems. Creatively broad claim constructions for purposes of infringement lead to admissions and more applicable prior art. Second, accused infringers are highly motivated and have resources and time beyond those of a PTO examiner.
The total number of inter partes re-examination certificates issued is 305 — 44 percent issued with all claims canceled or disclaimed, 45 percent issued with some claims changed and only 11 percent issued with all claims confirmed. PTO Inter Partes Re-examination Filing Data — Sept. 30, 2011. Of those with claims changed and claims confirmed, it is possible that even these results can be counted as successes for accused patent infringers, as under the recent U.S. Court of Appeals for the Federal Circuit decision of Marine Polymer Techs. Inc. v. HemCom Inc., 659 F.3d 1084 (2011), even changing a claim construction through argument has the potential to trigger intervening rights and wiping away significant damages.
The current volume of inter partes re-examinations is on the order of 80 to 100 requests per quarter. (In fiscal year 2011, there were 100 requests in the first quarter, 80 in the second, 91 in the third and 103 in the fourth.) During the past five years, the total number of inter partes re-examination requests has only increased (there were 126 requests in fiscal year 2007, 168 in 2008, 158 in 2009, 281 in 2010 and 374 in 2011). The average pendency from filing date to conclusion with the issuance of a re-examination certificate was 36.2 months and the median pendency was 32.9 months.
The lesson from re-examinations is that, after an initial round of skepticism, inter partes review and post-grant review will likely be an important strategic tool in patent litigations. The PTO has shown that, despite its overall goal to issue valid patents promptly, it is willing to review and revoke patent claims. Particularly when the PTO is exposed to opposing viewpoints and evidence, it is willing to narrow or cancel claims that are at issue in high-stakes patent litigation.
Whether the growing popularity of inter partes re-examinations will transfer to inter partes and post-grant review proceedings will depend on a number of factors including the eventual procedures that issue, the proportion of petitions that are instituted, the ability of the PTO to retain additional fee income to fund the expansion of the resources of the Patent Trial and Appeal Board, and the soundness of the decisions issued in the proceedings. Because both proceedings will retain many of the advantages that made inter partes re-examination increasingly popular, they should eventually be widely utilized.