Post-Grant Proceedings Under the America Invents Act

By Tom Engellenner
The America Invents Act (AIA) creates several new administrative procedures to challenge or revise U.S. patents after they have issued.  The AIA also makes significant changes to some of the existing mechanisms for challenging or correcting issued patents.  The new (and old) procedures are summarized below:

Ex Parte Reexamination

About thirty years ago a mechanism, known as reexamination, first became available to correct patents.  The AIA makes several changes to this procedure but it will continue to be an important option.  In fact, in conjunction with the new procedure of “Supplemental Examination” (discussed in more detail below) ex parte reexamination may become even more prevalent.

In 1981 Congress amended the patent laws to provide for reexamination.  This was the first time Congress allowed third parties to challenge issued patents.   The name of this procedure was changed to “ex parte reexamination” several years later (to distinguish it from another form of reexamination, inter partes reexamination, which will be discussed later).

Under the 1981 law, anyone could request reexamination.  A third party requesting reexamination can even be anonymous in these ex parte proceedings.  Despite its availability as a mechanism for the public to challenge patents, it is still more often invoked by the patentee. 

Reexamination can only reaffirm, narrow or cancel patent claims.  Unlike reissuance, it cannot be used to broaden the scope of the issued claims.  The issues that one can raise are also limited.  Ex Parte reexaminations can only be invoked to reconsider the validity of claims based on prior art patents or printed publications

Since its inception, ex parte reexamination has been criticized as a procedure that strongly favors the patent holder.  If the ex parte process is initiated by the patent holder, the public essentially has no opportunity to participate.  Even when the ex parte process is initiated by a member of the public, the requestor is essentially excluded from participating in the proceedings following the initial request.

The AIA keeps the ex parte mechanism in place essentially unchanged – apart from a clarification regarding appeals.  Ex parte reexaminations are (and will continue to be) conducted by a special examining group at the U.S. Patent and Trademark Office (USPTO) called the Central Reexamination Unit (CRU).  Since the proceedings are ex parte, only the patent holder can appeal, first to the Patent Office Board of Appeals (which will be reconstituted in September 2012 by another section of the AIA, discussed below) and then to the courts.  The AIA specifies that effective immediately, a patent holder who wishes to appeal a Board of Appeals decision can only appeal to the Court of Appeals for the Federal Circuit.

Inter Partes Reexamination

A second type of reexamination was enacted by Congress in 1999.  The second type of reexamination, known as “Inter Partes Reexamination,” gave limited rights to third parties to participate in the proceedings.   Congress also created a penalty for failed challengers.  The law provided for an “estoppel” or preclusion in subsequent litigation.  Anything that the challenger raised or could have raised in the Inter Partes Reexamination, could not be raised again as a defense in a subsequent patent infringement suit in federal court.

Inter Partes Reexamination was phased out on September 16, 2012 in favor of a new proceeding, now known as Inter Partes Review, discussed below.  The USPTO (through its Central Reexamination Unit) will continue to conduct inter partes reexaminations initiated prior to September 16, 2012.

Prior to the AIA, the standard for initiating either an ex parte or inter partes reexamination was whether or not the request for reexamination raises a “significant new question of patentability.”  This standard is often referred to by the abbreviation “SNQP” and has been considered an easy standard to meet. (Over 90% of all requests for reexamination have been granted under the SNQP standard.)

The AIA replaced the SNQP standard for inter partes reexaminations with a new standard, that being, whether there is a reasonable likelihood that the requester will prevail with respect to at least one of the claims challenged in the request.

Inter Partes Review

Effective September 16, 2012, “Inter Partes Review” (IPR) replaced “Inter Partes Reexamination.”  The IPR proceedings are conducted before a panel of three administrative patent judges rather than an examiner within the Central Reexamination Unit.  Presumably, the three judge panels will have more independence and will develop expertise over time in reviewing challenged patents.

The judges conducting the IPRs will come from a reconstituted Patent Trials and Appeals Board (which replaced the old Board of Patent Appeals and Interferences).  This new board will preside over appeals from examiner decisions in normal patent examination and ex parte reexamination as well as IPRs, (and also Post-grant Reviews and Supplemental Examinations).  The US Patent Office has hired over 100 new administrative judges for this new administrative appeals body.

Many of the same rules and requirements from Inter Partes Reexamination have carried over into the new IPR proceedings.  The real party in interest must be identified and there still is an estoppel; the requestor who enters into an IPR proceeding will be barred from raising or rearguing in a subsequent civil action issues that were raised or could have reasonably been raised during IPR.  The types of issues that can be raised during IPR will also follow the old reexamination rules; the requestor will only be able to raised novelty and obviousness arguments (§102 or §103) and these arguments can only be based on prior art patents or printed publications.  The patent owner has only one opportunity to file amendments to the claims.  (See, Rule-121_Amendments-during-IPR)

However, there are also several significant differences between the new IPR proceedings and the old Inter Partes Reexamination.  In addition to the new PTAB tribunal, IPR proceedings will include limited discovery (e.g., taking of deposition testimony from any person who submits a factual or expert opinion declaration on behalf of the other side), motions practice and the right to an oral hearing at the close of discovery.  The USPTO has imposed a much higher fee for these proceedings ($23,000 fee for a petition for IPR of up to 20 claims in a challenged patent and additional fees for more than 20 claims.  The fee consists of two parts: $9,000 for the petition and $14,000 if the petition is accepted.  Both fees must be paid up front, however, and the second component refunded if the IPR is not initiated.)

An IPR challenge can only be brought against patents that have been issued for more than nine months.  The AIA requires the USPTO to conduct IPR proceeding with “dispatch” and, absent extraordinary reasons, a final decision must be rendered within one year of the institution of an IPR.  The PTAB will issue a final written opinion to conclude the proceeding.  However, the parties can voluntarily terminate the proceedings by settlement any time before the written opinion – and in the case of settlement (the substance of which need not be revealed), the estoppels provisions will not apply to the petitioner.

Post-Grant Review

The AIA also includes a brand new mechanism for challenging newly issued patents.  This new proceeding, Post-Grant Review, will also be adjudicated by the Patent Trials and Appeals Board (PTAB) and resembles to some extent opposition proceedings conducted by the European Patent Office.  Like EPO oppositions, a third party will be able to petition in the US for post-grant review within nine months following issuance of a US patent.  Post-Grant Review (PGR) only applies to patents with a priority date on or after March 12, 2013.  Hence, PGR will not really be an option until about 2015.

PGR petitions, like IPR petitions, will have to meet a higher standard for review to be granted: the requestor must show it is more likely than not that at least one challenged claim is unpatentable.  The USPTO has set a $30,000 fee for a petition for PGR of up to 20 claims in a challenged patent and additional fees for more than 20 claims.  The fee consists of two parts: $12,000 for the petition and $18,000 if the petition is accepted.  Both fees must be paid up front, however, and the second component refunded if the PGR is not initiated.

In contrast to an IPR proceeding, a Post-Grant Review petition can be based on any ground that can be raised in a civil suit, e.g. §112 issues such as indefiniteness, lack of enablement, lack or written description. Thus, during the first nine months, a third party wishing to challenge a patent will not be limited to the presentation of prior art patents or publications but instead can present evidence of prior public use, prior sales activity, or other public disclosures.  Moreover, post-grant review can be sought based on a lack of compliance with written description or enablement rules of §112 – or even the patent eligibility standards of §101.

Like IPR proceedings, Post-Grant Review will include limited discovery (e.g., deposition of declarants), motions practice and the right to an oral hearing before a final written decision is isussed. Similarly, if a PGR is settled prior to a decision, the proceeding will be terminated without any finding and no estoppel will attach.

Covered Business Methods Review

For one particularly disfavored class of patents, Congress decided that a post grant review-type mechanism should kick in right away (on September 16, 2012 rather than apply only to patents that were filed after March 15, 2013).  This class of patents, referred to in the act as “covered business methods” (CBMs) are defined by the AIA as any “patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.”

The AIA does not specify what a patent for a technological invention covers, but the USPTO rules suggest that a claim must recite a specific technological feature to been exempt from CBM review. 

After an initial flurry in which several dozen petitions for CBM review were filed in late 2012, interest in these proceedings appears to have waned.  (The were no additional CBM review petitions filed in the first three months of 2013.  Like post grant review, the USPTO has set a $30,000 fee for a petition for CBM review of up to 20 claims in a challenged patent and additional fees for more than 20 claims.  Also like PGR, The fee consists of two parts and the second component refunded if the review is not initiated.

The AIA provides a sunset provision for covered business methods review after 8 years from the effective date specified in the act.  Accordingly, the USPTO will not accept new petitions for covered business method review filed on or after September 16, 2020.

Effects of IPR and PRG on Civil Litigation

The AIA provides several provisions governing the interplay of the new administrative challenge options and civil litigation.

In fact, there is a major incentive for those fearful of infringement charges to race to the USPTO first.  If a patent holder files a civil action on or after the filing date of a post-grant or inter partes review petition, the civil action is automatically stayed.  However, a court cannot stay its consideration of a patent owner’s motion for preliminary injunction against infringement of the patent on the basis that a post-grant review has been filed or instituted if the action alleging infringement is filed within 3 months of the date of grant. 

If a patent holder brings suit in a federal district court first, staying the proceedings pending the resolution of a subsequently filed IPR or PRG will remain discretionary with the courts.  But the anticipated speed (one year) of IPR and PRG proceedings may make it more likely that a court will stay the civil litigation.  The defendant will need to act promptly, however, if it wants to avail itself of administrative challenge route at the USPTO.  The IPR or PRG mechanisms are only available to those defendants that file their review petitions with the USPTO within one year of commencement of the civil litigation.

If a civil action, e.g., a declaratory judgment action is filed challenging the validity of a claim of the patent, the plaintiff is barred from seeking post-grant or inter partes review.  However, a counterclaim challenging the validity of a patent does not constitute a civil action for the purposes of this provision of the AIA.

Supplemental Examination

Under the AIA, patent owner may request supplemental examination of a patent to “consider, reconsider, or correct information believed to be relevant to the patent.”  This option appears to be specifically designed to inoculate the patentee against inequitable conduct charges.  The effective date of this provision will be September 12, 2012.

Unlike IPR and PRG proceedings, the USPTO plans to have examiners in the Central Reexamination Unit conduct supplement examination.  The standard will be same as ex parte reexamination whether the petition presents a significant new question of patentability.  Any issue may be raised including novelty, obviousness and priority, as well as §101 and §112 issues.  If the examiner concludes that the SNQP threshold has been met, an order for ex parte reexamination is issued.  Amendments may be made during the reexamination phase but not as part of the Supplemental Examination petition.

The current fee for supplemental examination is $16,500 (large entity) with most of this amount refunded if the USPTO determines that reexamination is not necessary.  The petition can identify up to 10 items of information.  Relevant documents over 50 pages in length must be summarized (or redacted to less than 50 pages).  The petition must identify each aspect of the patent to be examined and provide an explanation of the issues raised by each item of information.

The AIA provides that a patent in subsequent litigation will “not be found unenforceable on the basis of conduct relating to information or prior art considered, reconsidered or corrected during a supplemental examination.”

By Tom Engellenner

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Pepper Hamilton's blog all about challenging and defending patents after issuance: inter partes review, post grant review, reexams & foreign oppositions.
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