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Posts in Post-Grant Proceedings.

The Patent Trial and Appeal Board (the Board) at the U.S. Patent and Trademark Office (USPTO) recently issued a decision interpreting the estoppel provisions of 35 U.S.C. §315(e)(1) in inter partes review (IPR) proceedings. See Dell Inc. v. Electronics and Telecommunications Research Institute, IPR2015-00549 (PTAB, Paper 10, March 26, 2015).

The decision is one of only a handful of institution decisions that have been designated as “representative” by the Board. Under the Board’s standard operating procedures, the “representative” designation is used to bring a decision to the attention of the public from among the numerous “routine” decisions issued by the Board.

On February 4, 2015, in In re Cuozzo Speed Technologies, LLC the Federal Circuit decided the first appeal from the Patent Trial and Appeal Board (PTAB) regarding an Inter Partes Review (IPR). Inter Partes Review is a United States Patent and Trademark Office (USPTO) proceeding created by the America Invents Act (AIA) meant to offer a more expeditious and less expensive alternative to district court litigations on validity.

The Leahy-Smith America Invents Act provided for post issuance proceedings that allow the Patent Trial and Appeal Board (the PTAB) of the United States Patent and Trademark Office (USPTO) to review issued patents for validity. These proceedings have become a popular choice for defendants in patent litigation due to a lower standard for proving that a patent is invalid, the opportunity to participate in the proceedings, and a relatively shorter duration and lower costs when compared to litigation. One type of post issuance proceeding is an Inter Partes Review (IPR), in which a petitioner may challenge the validity of one or more claims of an issued patent under 35 U.S.C. §§ 102 or 103 in view of (only) patents or printed publications. The PTAB must grant the petition if the petitioner demonstrates that there is a “reasonable likelihood” that it can prove at least one claim is invalid. If the petition is granted, the PTAB is given one year to issue a final determination on the claims at issue.

The Patent Trial and Appeal Board (PTAB) at the USPTO recently issued a rare precedential opinion in Ex Parte Mewherter that addresses subject matter eligibility of computer program product claims under 35 U.S.C. § 101. The PTAB affirmed the examiner’s rejection of a claim that recited a “machine readable storage medium” as being directed to non-statutory subject matter under 35 U.S.C. § 101. In particular, the PTAB held that the term “storage” in “machine readable storage medium” did not save the claim from encompassing non-statutory signals, carrier waves, and the like. In light of this decision, patent applicants should continue to include the modifier “non-transitory” in software medium claims to avoid § 101 issues. Explicit support for the term “non-transitory” can be provided in the specification at the application drafting stage. Claims to a “non-transitory” medium can also be properly supported even when the specification does not expressly include the term, per a USPTO Official Gazette Notice that offers guidance on this issue. Patent applicants should also continue to provide written description support for propagating signals per se, as other jurisdictions such as Europe consider such embodiments to be patent eligible.

Defendants in patent litigation suits often seek reexamination of the asserted patents in hopes that the United States Patent and Trademark Office (USPTO) will find the patents to be invalid, and therefore unenforceable. As a patent owner seeking to assert a patent, it is often critical that the patent proceed through reexamination unscathed and that the patent remain enforceable. It can also be desirable for the reexamination to proceed quickly, as the related litigation is often stayed pending the outcome of the reexamination. A quick reexamination can only be achieved when appeals are avoided.

While the America Invents Act (AIA) brought many significant changes to the U.S. patent laws, there is arguably no more impactful change than the shift from a “first to invent” system to a “first inventor to file” system that occurred on March 16, 2013. This shift has significant effects on patent applications having an effective filing date on or after March 16, 2013. Under prior U.S. law, a patent applicant could rely on the earliest documented date of the invention, and thus obtain a patent over another’s earlier-filed application. Now, under the AIA, the U.S. Patent and Trademark Office (USPTO) will award a patent to an applicant with the earliest effective filing date. The earliest effective filing date is the actual filing date of the application or the date of the earliest priority application.

This month, on September 16, 2012, post allowance proceedings as defined by the American Invents Act (AIA) begin, including Inter Partes review (IPR), Post Grant Review (PGR), and Business Method PGR. A table comparing these different post allowance proceedings, as well as current Ex parte reexamination proceedings, can be found at the end of this article, following a discussion of the various proceedings.

A previous edition of Nutter’s IP Bulletin included an article analyzing U.S. post-grant review proceedings established by the Leahy-Smith America Invents Act (AIA) in view of European opposition proceedings. As a follow up, our readers may be interested in a cost comparison of the AIA’s post-grant review and European opposition proceedings recently presented by Director David Kappos on the USPTO’s website. Director Kappos indicates that the AIA’s post-grant review procedures are more costly than European opposition proceedings primarily because the AIA’s post-grant review procedures are more akin to litigation (e.g., conducted by patent judges, allow substantial discovery, and create estoppel) while European oppositions proceedings are akin to patent examination (e.g., conducted by examiners, no discovery, and no estoppel).

An important change to the United States patent system in the Leahy-Smith America Invents Act (AIA) is the introduction of post-grant review (PGR) proceedings that allows third parties the opportunity to request review of any newly issued or reissued U.S. patent based on a broad range of reasons. The laws enacting post allowance proceedings are found in new Sections 321329 of 35 U.S.C. and take effect on September 16, 2012. However, only patents issuing from applications filed on or after March 16, 2013 can be challenged, so these changes will gain particular relevance in subsequent years.

Any party may challenge a patent using the PGR process. However, unlike current re-examination proceedings, a PGR challenge may be for any reason, including non-patentability under any of 35 U.S.C.§§101, 102, 103, and 112 (except for best mode), and for double patenting. A request for PGR must be filed within 9 months of patent issue or reissue. After the period for PGR has expired, third parties can challenge a patent at the U.S. Patent and Trademark Office using inter partes review, which allows a third party to request review of any U.S. patent for double patenting, anticipation, or obviousness. An additional transitional post-grant program exists for business method patents. 

On its face, the new provisions for PGR are very similar to the European Patent Office opposition practice. Thus, a greater understanding of current opposition practice is helpful in determining the risks a newly granted patent will face under the new laws. Some of the more important provisions are:
 

  Post-Grant Review   EPO Opposition 
 Time Period Patents filed after March 16, 2013 (i.e., filed under new first-to-file provisions) Not relevant
 Time to Challenge Within 9 months of issuing Within 9 months of granting
 Board Composition The Patent Trial and Appeal Board (reformation of the current Board of Patent Appeals and Interferences), which consists of 3 member panels, none of whom were involved in prosecution of the patent  The Opposition Division, which consists of 3 technically qualified examiners, 2 of whom were not involved in prosecution of the patent
 Basis of Challenge

 Grounds include:

  • unpatentable subject matter
  • anticipation/obviousness
  • 112 (except best mode)
  • double patenting
  • any novel or unsettled legal question

 Grounds include:

  • unpatentable subject matter
  • lack of novelty/inventive step 
  • the invention is not sufficiently described
  • subject-matter of the patent extends beyond the content of the application as filed
 Sufficiency Standard At least one claim must “more likely than not” be unpatentable, or the petition raises a novel or unsettled legal question Sufficiency of evidence is immaterial for admissibility of an opposition
 Identity of Third Party Real party of interest must be identified A straw man is permissible
 Claim Amendments Claims may be amended but not broadened; a single motion amending the claims is allowed Claims may be amended but not broadened; amendments may be allowed up to the date of the oral hearing
 Level of Proof Preponderance of the evidence Balance of probabilities (facts are more likely to be true than the other)
 Estoppel For all grounds the petitioner raised or reasonably could have raised; no estoppel issues if matter is settled prior to decision on the merits No estoppel
 Civil action A civil action is stayed if it is filed after PGR is initiated Infringement proceedings may be stayed depending on the court's own opinion of the likelihood of the opposition succeeding
 Time frame Final Decision will be issued within 1 year of the notice of grant of PGR (6 month extension for good cause) Final Decision takes about 3 years
 Appeals Federal Circuit EPO Board of Appeals

 

In Europe, approximately 5% of European patents are opposed. Approximately 1/3 of the opposed patents are maintained as granted, 1/3 are maintained with amended claims, and 1/3 are revoked.1 Comparatively, only about 0.3% of U.S. patents are subject to the currently available, but much more limiting, inter partes re-examination procedure.2 Taking into account the number of patents that are opposed in Europe, it is conceivable that, in comparison to current inter partes re-examination procedures, up to an order of magnitude more U.S. patents will be adjudicated using PGR once the new laws come into effect.

The opposed European patents can be divided by sector, with chemistry patents being opposed the most (7.8% opposed from 2000 to 2008), followed by mechanical engineering (5.6% opposed). The lowest level of opposition is in the electrical engineering sector (2.2%).3 Further refinement shows even more diversity. For example, within the chemistry sector, 2.6% of organic fine chemistry patents, 8.5% of macromolecular/polymer patents, 8.7% of pharmaceutical patents, and 14.0% of food chemistry patents are opposed.4 One of the reasons suggested for this difference is that oppositions are more common when a product is covered by a single patent, such as in pharmaceuticals, in contrast to products covered by multiple patents, such as in microprocessors.5

The characteristics of the patents that are more likely to be opposed within the European opposition system have also been analyzed.  There is no reason to suggest a similar trend would not occur for U.S. PGR proceedings. Factors that increase the likelihood of opposition include: 

  • an increased economic relevance (using the number of designated states as a proxy);
  • a greater number of claims;
  • more references cited; and
  • more forward citations (how many other patents/application cite the patent).

Each of these factors, in some way, relates to the perceived importance of the patent, either by the patentees or by the industry. Some of the factors that affect outcome of the opposition proceedings are the length of pendency (positive correlation with revocation) and number of citations (negative correlation with revocation).6

While the information obtained from the European system can be valuable, there are significant and substantive differences between the new PGR process and European opposition proceedings that must be taken into account as well. Perhaps the greatest difference between the two proceedings is the difference in estoppel provisions. There is no estoppel in Europe, so a third party may be quite willing to oppose an important competitor’s European patent. However, under the new 35 U.S.C. § 325(e), a third party is estopped from raising any issue that was raised or reasonably could have been raised during PGR in both civil and administrative proceedings. Thus, the third party may decide upon a different course of action than PGR in the United States. The third party may either decide to forgo use of PGR proceedings as too risky or to “throw in the kitchen sink” and raise every “reasonable” issue. Alternatively, the third party may be much more likely to exit the PGR process via settlement before a final written decision triggers the estoppel provisions under 35 U.S. C § 328.

The PGR procedure will offer more opportunities to challenge U.S. patents without resorting to litigation. However, the introduction of this procedure will require a careful analysis, both by third parties in the decision of which patents to review and by patent owners to gain an understanding of the risks new patents face under the new law.

1 Statistics for EPO Propositions and Appeals – Update” 2010 by James Wilding, HLBBshaw Ltd.  4.7% opposed in 2009 and 5.2% in 2008, Date of Access, Nov. 2, 2011.

2 U.S. Patent Office IP Quarterly Report June 2011.  Date of Access, Nov. 2, 2011.  (Of note, within these proceedings, 71% of these patents are known to be in litigation.)

3 Scellato et.al., “Study on the quality of the patent system in Europe,” PATQUAL, March 2011.  Date of Access, Nov. 2, 2011.

4 Id.

5 European Commission, Pharmaceutical Sector Inquiry – Preliminary Report, Nov. 28, 2008.  Date of Access, Nov. 2, 2011.

6 See Scellato et. al.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.


Competing patent reform bills were passed by the Senate and House of Representatives earlier this year. Yesterday, the Senate took the unusual step of bypassing reconciliation and instead adopted the House bill without changes, paving the way for President Obama’s anticipated signature on the “Leahy-Smith America Invents Act” (“AIA”). The Act provides the most comprehensive set of patent reforms since 1952. A number of the major provisions are summarized below:

Post Grant Review

Among the biggest changes is the new provision for an administrative process to challenge newly issued patents without having to resort to litigation in a federal district court. Moreover, unlike federal district court litigation (where the patent is “presumed” valid) and invalidity must be established by “clear and convincing” evidence, a challenger need only prove invalidity before the new Patent Trial and Appeal Board by a preponderance of the evidence.

Post grant review must be sought within nine months after the grant or re-issue of a patent. This provision of the act will take effect one year after enactment and apply to all patents issued before, on or after that date. Thus patents that issue before the one year anniversary may still be subject to post grant review provided that they have not been issued for more than nine months as of the effective date.

Unlike the current re-examination process, some discovery may also be permitted. Additionally, an oral hearing can be requested. The scope of discovery will be defined by rules yet to be promulgated by the USPTO. Nonetheless, the ability to conduct discovery and present oral arguments should go a long way towards leveling the playing field between the challenger and the patentee.

In addition to the new Post Grant Review, the traditional routes for reexamining patents will remain available to challengers. However, inter-partes re-examination will be renamed inter-partes review. The AIA also tweaks the standard for initiating review. The new threshold question will be: does the request show that there is a "reasonable likelihood that the requester would prevail" with respect to at least one claim. Inter-partes review will only be available after the nine month period for instituting post grant review proceedings expires.

Forgiveness by Supplemental Examination

Patent owners will be able to request supplemental examination “to consider, reconsider, or correct information believed to be relevant to the patent.” One purpose of this provision appears to cleanse patents that might otherwise be unenforceable due to alleged “inequitable conduct” during prosecution. The bills provide that, subject to certain exceptions, “a patent shall not be held unenforceable under section 282 on the basis of conduct relating to information that had not been considered, was inadequately considered or was incorrect in a prior examination of the patent if the information was considered, reconsidered or corrected during a supplemental examination of the patent.”

First to File

In a roundabout way, the patent reform act provides that a patent will be issued to the first inventor to file a patent application. Both the House and Senate bills redefine prior art to include any earlier filed patent application by another, thereby ensuring that the second to file will be unable to get a patent. But both bills also provide for “derivation proceedings” before a Patent Trial and Appeal Board (which will replace current Interference proceedings) to determine whether a prior applicant had derived the subject matter in question from a later patent applicant. The effective date for the “first to file” provisions will be 18 months after enactment.

The act also provides greater rights to prior users of an invention, who chose not to seek patent protection. Currently, US patent laws provide a “first inventor” defense to an action for infringement – but only for business method patents. The AIA appears to create a more general prior user right for those who used the “subject matter” on which they are being sued for infringement commercially more than one year prior to the effective filing date of the application giving rise to the patent.

Fee Setting Authority

Currently, the USPTO submits a budget each year to Congress and proposes fees that will cover the cost of running the patent and trademark operations. Congress routinely approves the fees but only gives the USPTO part of the revenue. The rest of the money gets spirited away and spent by Congress for sundry projects. The Senate bill would have allowed the USPTO to set fees and retain all of its fee revenue. However, the final resolution (based on the House bill approach) will allow fees to be set aside in a special fund that can be accessed by the USPTO based on congressional approval.

Prior Art Citation

The AIA expands the rights of third parties to submit prior art. Such submissions have to be considered by the examiner so long as they are submitted before allowance and no more than six months after publication.

After issuance, the Act also permits submissions of written statements made by the patent owner in federal court or USPTO proceedings as to the position taken by the patent owner as to the meaning of one or more claims. Such statements can be used for claim interpretation in re-examination, inter-partes review or post grant review proceedings.

Best Mode Requirement

In a nod towards international harmonization, the AIA disables the unique requirement of the US patent laws that applicants must disclose the “best mode” of practicing their inventions. The Act removes failure to disclose the best mode from the list of invalidity defenses to an infringement action by providing that this is “not a basis on which any claim of a patent may be canceled or held invalid or otherwise unenforceable.”

Direct Filing by an Assignee Rather Than the Inventor

The AIA provides for filing in the name of an assignee or one to whom the inventor is under an obligation to assign the invention. A person who otherwise shows “sufficient proprietary interest in the matter” may make an application “on behalf of and as agent for the inventor,” and the patent will issue to the real party in interest. The AIA thus paves the way for corporations to file directly and dispenses with the notion that patent applications must be filed by individuals – and only after filing can they be assigned to a corporate employer.

Virtual Marking and an End to Marking Trolls

The AIA permits “constructive notice” (for seeking damages) to be met by notifying consumers that the product is patented and directing the public to an internet site that provides a current list of patents covering the product. The Act also puts an end to so-called “false marking” actions by enterprising plaintiffs (“marking trolls”) who have sought damages (as private attorneys general) for incorrect identification of patents covering products. Henceforth, only the US Government will be able to sue for false marking and collect statutory penalties. Entities that have suffered “competitive injury” will also be able to sue for actual economic damages but marking trolls will be out of luck.

Satellite Offices

“Subject to available resources” the USPTO is directed to open two more satellite offices (in addition to one in Detroit currently being planned) within three years of enactment. Several criteria for selecting the locations of these satellite offices are set out, including geographic diversity, origin of patent filers and the availability of technically trained personnel for hiring as examiners.

The Cutting Room Floor

A number of patent reforms that had been proposed in the prior unsuccessful House and/or Senate bills were scraped to make the package of patent reforms less controversial. These include prior attempts to legislate changes in the way damages are awarded in infringement action, e.g., calculation of compensatory damages, new definitions for willful infringement and calculation of enhanced damages upon a finding of willful infringement. Changes in the law on inequitable conduct were also abandoned (apart from new supplemental examination process discussed above). A requirement for 18 month publication of all applications was also nixed as were rules relating to venue and provisions for interlocutory appeals after a district court had completed claim construction but prior to final disposition of a case.

This advisory was prepared by Nutter's Intellectual Property practice. For more information, please contact your Nutter attorney at 617-439-2000.

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.

Maximizing the protection and value of intellectual property assets is often the cornerstone of a business's success and even survival. In this blog, Nutter's Intellectual Property attorneys provide news updates and practical tips in patent portfolio development, IP litigation, trademarks, copyrights, trade secrets and licensing.

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