The Scope and Ramifications of the New Post-Grant and Inter Partes Review Proceedings at the USPTO

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1 The Scope and Ramifications of the New Post-Grant and Inter Partes Review Proceedings at the USPTO By Lawrence A. Stahl and Donald H. Heckenberg The Leahy-Smith America Invents Act (AIA) makes numerous changes to U.S. patent law. Among the more significant changes are those directed to procedures for challenging the validity of patents in proceedings before the United States Patent and Trademark Office (USPTO). Although leaving ex parte reexamination untouched, the AIA replaces inter partes reexamination with two new proceedings: post-grant review and inter partes review. These new proceedings differ from inter partes reexamination in many respects, and their implementation may significantly change the thoughts of practitioners regarding challenging the validity of a patent before the USPTO. Inter Partes Reexamination Practice Inter partes reexamination was created to utilize the expertise of the USPTO to provide a less expensive alternative to patent litigation for resolving patent disputes. 1 After an initially tepid response, inter partes reexamination has been used increasingly by those looking to challenge a patent s validity. In particular, defendants in patent litigations have often initiated inter partes reexaminations to challenge the validity of patents concurrently with litigation. Nevertheless, many have found problems with inter partes reexamination practice. One of the biggest complaints is the length of an inter partes reexamination proceeding. By statute, inter partes reexaminations are to be conducted by the USPTO with special dispatch. 2 Currently, however, the USPTO indicates that the average pendency of an inter partes reexamination proceeding is more than three years. 3 And even this statistic is not a true reflection of the average pendency of inter partes reexaminations at the USPTO, as it only includes reexaminations that have been completed at the USPTO. To date, no inter partes reexamination has been 1 See USPTO Report to Congress on Inter Partes Reexamination (2004), available at U.S.C. 314(c) (the AIA amends this section of the statute, however, the previous section remains in force with respect to inter partes reexaminations until their conclusions). 3 Inter Partes Reexamination Filing Data June 30, 2011, available at 1

2 completed through an appeal to the Federal Circuit, and there are undoubtedly numerous cases pending at the USPTO that will push the average pendency upward. Another problem, at least from the perspective of some patent challengers, is that the scope of an inter partes reexamination proceeding is limited to considering the validity of patent claims under 35 U.S.C. 102 and 103, and only in view of patents and printed publications. 4 Thus, invalidity arguments based on assertions such as a lack of statutory subject matter under 35 U.S.C. 101, an on sale bar under 35 U.S.C. 102, or a failure to meet the written description requirement of 35 U.S.C. 112, cannot be raised in an inter partes reexamination. From a patentee s perspective, the relatively low standard for initiating an inter partes reexamination proved to be a concern. A third party requestor for inter partes reexamination was required only to establish a substantial new question of patentability in order for the USPTO to initiate a reexamination proceeding, and statistics indicate that this standard has been met 95% of the time. 5 With these perceived problems in mind, Congress attempted to craft the post-grant and inter partes review provisions of the AIA so as to strike a balance between the interests of patent owners and patent challengers. And even before implementation of post-grant and inter partes reviews, the AIA changes, effective immediately, the standard for initiating an inter partes reexamination from a substantial new question of patentability to a reasonable likelihood that the requester [will] prevail with respect to at least 1 of the [challenged] claims[.] 6 This new standard is ostensibly a higher one, but how much higher and what its effect will be in practice remains to be seen. Inter partes reexamination (under the new standard) will continue to be available for one year after the enactment of the AIA, i.e., until September 16, After that, inter partes review proceedings will be available to replace inter partes reexamination, and post-grant review proceedings will eventually be available for patents issued from applications filed after March 16, Post-Grant Review With respect to patents issued from applications filed after March 16, 2013, the first option for a patent challenger will be a post-grant review. There will be a limited time frame for this option, however, as a petitioner will only be able to request a post-grant review for up to nine months after the issuance of a patent U.S.C. 301, See, supra, note U.S.C. 319(3)(A)(ii) U.S.C. 321(c). 2

3 Addressing the complaints of a lack of timeliness in past reexamination practice, the AIA mandates a more expedited proceeding in which the USPTO reaches a final determination within twelve months from the date that USPTO initiates the post-grant review. 8 In order to meet that deadline, at the outset a post-grant review will be before the new Patent Trial and Appeal Board (PTAB). 9 This will eliminate the initial time-consuming proceedings before an Examiner that were a part of inter partes reexaminations. Another difference between a post-grant review and previous inter partes reexamination proceedings is the greater scope of challenges allowed in a post-grant review. As noted above, inter partes reexaminations are limited to challenges under 35 U.S.C. 102 and 103 based on patents and printed publications, but a postgrant review petitioner will be able to request cancelation of patent claims on any ground under paragraph (2) or (3) of section 282(b). 10 Thus, a post-grant review petitioner can assert invalidity of patent claims on any ground under 35 U.S.C. 101, 102, 103, and In an attempt to address the concern that the previous inter partes reexamination threshold of a substantial new question of patentability was too easy to meet, the AIA sets a new standard for initiating a post-grant review. A third party petitioner for a post-grant review will be required to show that it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable. 12 On its face, this standard is noticeably higher than the substantial new question of patentability previously required for initiating an inter partes reexamination. It is important to note, however, that while the standard for initiating a post-grant review will be higher, once initiated, a preponderance of the evidence will be used for determining the patentability of the claims, as is used in inter partes reexaminations and is used during the course of initial examination of a patent application. 13 Thus, a petitioner for post-grant review will ultimately face the same burden to show that a patent claim is invalid as in past inter partes reexamination practice U.S.C. 326(a)(11). The time period may be extended by the USPTO an additional 6 months for good cause shown. Id U.S.C. 326(c). The PTAB replaces the previous Board of Patent Appeals and Interferences. See 35 U.S.C. 6(a) U.S.C. 321(b). 11 In addition to allowing for post-grant review under 35 U.S.C. 112, section 282(b) also allows for post-grant review on any ground specified in title 35 as a condition for patentability. While 35 U.S.C. 102 and 103 are expressly titled conditions for patentability, 35 U.S.C. 101 is generally also considered to be a condition for patentability, and thus, appears to be a ground under which a petitioner can assert invalidity in a post-grant review. See Aristocrat Tech. Australia Pty. Ltd. v. International Game Tech., 543 F.3d 657, 661 (Fed. Cir. 2008) U.S.C. 324(a) U.S.C. 326(e). 3

4 Unlike inter partes reexaminations, post-grant reviews will have a discovery component. The AIA calls on the Director of the USPTO to prescribe regulations setting forth standards and procedures for discovery of relevant evidence, including that such discovery shall be limited to evidence directly related to factual assertions advanced by either party in the proceeding. 14 Other than requiring discovery to include the deposition of witnesses submitting affidavits or declarations, the statute defers to the Director on the exact scope and depth of allowable discovery. 15 Given that the scope of a post-grant review can include challenges based on grounds such as an on-sale bar or a prior public use, the yet to issue discovery rules for post-grant reviews could potentially include other provisions for further discovery, such as document production and interrogatories. Somewhat analogous to inter partes reexamination practice, the AIA allows a patent owner in a post-grant review to move to amend the patent... to cancel a challenged claim or propose a reasonable number of substitute claims[.] 16 Given the expedited nature of the post-grant review proceedings, however, it is expected that the patent owner will receive only one opportunity to propose alternative claims. Further, as is the case with inter partes reexamination, intervening rights will arise for third parties with respect to any new or amended claim that is presented in a post-grant review. 17 As with inter partes reexamination, the patent challenger is faced with a potential estoppel in further proceedings. A final decision by the PTAB creates an estoppel for the petitioner of the post-grant review whereby the petitioner is precluded from, in a further proceeding before the USPTO or a court, asserting that a claim of the challenged patent is invalid on any ground that was raised or reasonably could have been raised during the post-grant review. 18 A petitioner for a post-grant review will need to be wary of the possible scope of estoppel introduced by the could have been raised language. However, as with inter partes reexamination practice, either the patent owner or the third party challenger may appeal the decision of the USPTO to the Federal Circuit. 19 Inter Partes Review The second of the new procedures under the AIA for patent challenges at the USPTO is the inter partes review. An inter partes review is available to challenge the validity of a patent after the nine month window for initiating a post-grant review, or U.S.C. 326(a)(5). 15 As discussed, infra, the inter partes review statute describes the discovery of relevant evidence as including the deposition of witnesses submitting affidavits or declarations. 35 U.S.C. 316(a)(5) U.S.C. 326(a)(9) U.S.C. 328(c) U.S.C. 325(e) U.S.C

5 after the completion of a post grant review. 20 There is no specific time limit for requesting an inter partes review during the life of a patent, except that a defendant in a patent litigation may only request an inter partes review for up to one year after that defendant is served with a complaint, and a party that has previously brought a declaratory action for invalidity of a patent cannot initiate an inter partes review on the same patent. 21 An inter partes review will have many of the same or similar procedures as a postgrant review. An inter partes review will be initially before the PTAB, and is to be completed in twelve months. 22 Also, the threshold for initiating an inter partes review will be higher than the previous inter partes reexamination standard, with the requirement that a petitioner for an inter partes review show that there is a reasonable likelihood that the petitioner [will] prevail with respect to at least 1 of the claims challenged in the petition. 23 The patent owner will also have the opportunity to propose alternative claims during the course of an inter partes review. 24 Additionally, either the patent owner or the patent challenger may appeal the decision of the USPTO to the Federal Circuit. 25 While the inter partes review proceedings are similar to post-grant review proceedings, the inter partes review proceedings will also be more restrictive in several key respects. Significantly, unlike post-grant review, a petitioner for an inter partes review can only challenge the validity of claims under 35 U.S.C. 102 and 103, and only on the basis of patents and printed publications. 26 In this respect, an inter partes review will be the same as current inter partes reexamination practice. Discovery in an inter partes review will be more limited than in a post-grant review. This follows from the more limited scope of an inter partes review compared to a post-grant review. The AIA only allows in an inter partes review for the deposition of witnesses submitting affidavits or declarations, and what is otherwise necessary in the interest of justice. 27 An inter partes review will also carry an estoppel provision precluding the challenger from later asserting that the challenged patent s claims are invalid on any U.S.C. 311(c) U.S.C. 315(a)(1), 315(b)(2) U.S.C. 316(c), 316(a)(11). As with a post-grant review, the time period for concluding an inter partes review may be extended by the USPTO an additional 6 months for good cause shown. 35 U.S.C. 316(a)(11) U.S.C. 314(a) U.S.C. 316(a)(9) U.S.C U.S.C. 311(b) U.S.C. 316(a)(5). 5

6 ground that was raised or reasonably could have been raised during the inter partes review. 28 Effect of New Patent Challenge Procedures - A Tilt Toward the USPTO as a Forum to Challenge a Patent The expedited nature, expanded scope, and litigation style discovery in the new postgrant and inter partes review proceedings may have a significant effect on the decision to initiate a patent challenge before the USPTO. A common strategy of accused infringers in litigation is to file a request for inter partes reexamination and request a stay of the litigation pending the outcome of the reexamination. Some courts, however, have denied such motions for a stay because of the length of reexamination proceedings. 29 With the expedited nature of the new review proceedings, however, we may see courts grant motions to stay more often. Moreover, even if the stay is denied, the defendant may still win the race to the Federal Circuit, since an expedited USPTO review proceeding may well conclude more quickly than a district court litigation, leaving the Federal Circuit to decide the patent validity first based on the USPTO record. The new review proceedings may also be more enticing to a patent challenger since they make available to the accused infringer more procedures analogous to those available in patent litigation. The existing inter partes reexamination practice is similar to regular examination of a patent application in that the proceedings are initially before an examiner, and only documentary evidence is permissible. Many believed that these similarities put patent challengers at a disadvantage. On the other hand, the new review proceedings go directly to the PTAB, and may include new types of evidence, such as depositions of experts. Thus, those that were uncomfortable with the nature of a reexamination proceeding in lieu of litigation may be more receptive to the litigation-like aspects of the new post-grant and inter partes review procedures. Post-Grant or Inter Partes Review - The Choice is Not Always Clear While practitioners will have new considerations when moving from inter partes reexamination to the new post-grant practices at the USPTO, in many cases they will also now have to consider the choice of whether to initiate a post-grant review versus an inter partes review to challenge a patent. As discussed above, one of the most significant differences in post-grant and inter partes reviews will be the grounds that can be considered in the proceedings. While the potentially more expansive scope of a post-grant review might be attractive U.S.C. 315(a)(e). 29 Fusilamp, LLC v. Littelfuse, Inc., No CIV, 2010 U.S. Dist. LEXIS 56553, at *12 (S.D. Fla. 2010). 6

7 in some circumstances, potential challengers will necessarily have to be mindful of how that allowable scope broadens the effect of the estoppel provision when considering whether to initiate a post-grant review. The estoppel provision prevents a challenger from later asserting, in the USPTO or in a court, that the challenged patent s claims are invalid on any ground that the petitioner raised or reasonably could have raised during the post-grant review. 30 As any ground under 35 U.S.C. 101, 102, 103, and 112 can be raised during a post-grant review, this in turn means that the petitioner might be estopped from later asserting invalidity of the challenged patent on any ground under those same sections that could have been raised in the post-grant review. Thus, a petitioner for post-grant review risks significantly foreclosing on their future options for challenging the validity of the patent. On the other hand, as an inter partes review is limited to assertions of invalidity under 35 U.S.C. 102 and 103 based on patents and printed publications, the petitioner for an inter partes review will still have multiple other possible grounds for future challenges to the validity of a patent. Nevertheless, a post-grant review appears likely to allow broader discovery than an inter partes review, although the discovery for a post-grant review will not be of the same breadth as in a litigation. Thus, an alternative for a patent challenger may be to proceed on dual courses in litigation and post-grant review, using the discovery obtainable in the litigation to buttress the post-grant review proceeding. Of course, the choice between initiating a post-grant review versus an inter partes review will be limited. As discussed above, a post-grant review can only be requested for up to nine months after the issuance of a patent. After that time frame, only an inter partes review will be available to a patent challenger U.S.C. 325(e). 7