Authored by Leslie A. McDonell and Robert A. Pollock, Ph.D.
The America Invents Act (AIA) created two new post-grant procedures for challenging patents before the U.S. Patent and Trademark Office (USPTO). The first, post-grant review (PGR), opens newly issued patents to third-party challenge on any invalidity ground that is a defense to patent infringement. PGR is only available for patents having an effective filing date on or after March 16, 2013, plus a small class of covered business method patents alleged to be infringed. Consequently, PGR procedures will be rare until sometime in 2014 or 2015 when post-AIA patents begin to issue in substantial numbers.
In contrast, the second procedure, inter partes review (IPR) can be used to challenge any patent. Patents having an effective filing date before March 16, 2013, are eligible for IPR challenge at any time. Patents issued under the AIA (having an effective filing date on or after March 16, 2013) are eligible initially for PGR and are then ripe for IPR challenge at the conclusion of any PGR, or nine months after grant. In contrast to the broad grounds available under PGR, grounds for an IPR challenge are limited to obviousness and anticipation based on printed publications.
IPR replaces traditional inter partes reexamination before the USPTO, providing challengers with a rapid and relatively inexpensive forum to challenge issued patents. In both cases, the procedural rules are heavily weighted in favor of the challenger, who enjoys an unlimited amount of time to plan a strategy to attack the patent, secure experts to support his position, and prepare written reports.
IPR challenges are filed directly with the Patent Trial and Appeals Board. By statute, the board must decide within six months whether or not to institute the review, which must then be completed within 12-18 months, resulting in a final decision within two years from the initial submission. By way of comparison, the time to trial in district court litigation can easily exceed several years, not counting post trial briefing and issuance of a decision. The costs of an IPR are also relatively modest and roughly an order of magnitude less than a comparable challenge in U.S. district court.
In addition to speed and cost, IPR presents challengers with a number of substantive benefits over district court litigation. Unlike the vast majority of district court judges and all juries, the board is staffed with experienced patent attorneys with technical backgrounds. This familiarity with patent law and greater technical understanding likely favors challengers, particularly where the operative facts are confusing, or beyond the ready understanding of the lay jurist.
In construing challenged claims, the board applies the broadest reasonable construction, which increases the chances of finding invalidity as compared to generally narrower judicial constructions. And, perhaps most importantly, an issued patent is stripped of its presumption of validity before the board. Consequently, an IPR challenger need only prove its case by a "preponderance of evidence" rather than the more stringent "clear and convincing" standard of the district court.
The patent owner's burden in mounting an effective response can be hampered by the strict limits on discovery available before the board. This discovery is variously characterized as "automatic discovery," "routine discovery" and "additional discovery." "Automatic discovery" refers to publications cited in the specification and any exhibit cited in a motion or in testimony.1 A partially overlapping category, "routine discovery," further entails cross examination of opposing affiants2 and production of information "inconsistent with a position advanced during the proceeding."3
Finally, a party may petition the board for "additional discovery" necessary "in the interest of justice."4 The board, however, has strictly interpreted the scope of both "routine" and "additional" discovery. In Garmin International Inc., v. Cuozzo Speed Technologies LLC, for example, the board denied the patent holder's request for discovery on Garmin's product development, pricing, and commercialization efforts to support secondary considerations of nonobviousness, because the patent owner had not shown that the discovery would be "favorable in substantive value to [its] contention[s]"5—a substantially higher standard than the mere "relevance" required in district court under the Federal Rules of Civil Procedure.
The board also denied discovery of the challenger's legal contentions, documents provided to Garmin's expert, and documents Garmin intended to use at trial—all common subjects for discovery in district court. Finally, the board denied Cuozzo's broad request under 37 C.F.R. 41.51 (b)(1)(iii) for information inconsistent with Garmin's positions, requiring only that the company produce information that it was already aware of.
These severe limitations on discovery require a patent owner not only to independently develop evidence of secondary considerations but, more disconcerting, argue claim construction and validity without knowledge of the challenger's intended product or legal contentions. This information deficit can provide a tactical advantage to the challenger, who may tailor its claim construction positions to protect against later infringement arguments.
Based on history of inter partes re-examination, we can estimate that very few patents will emerge from proceedings unscathed. In particular, the USPTO reports6 that as of the end of June 2012, it had issued 377 inter partes re-examination certificates—11 percent issued with all claims intact, 47 percent with changes to at least one claim, and 42 percent with all claims invalidated.
Despite the apparent likelihood of narrowing claim scope or entirely eliminating a patent, potential challengers must contend with the possibility of estoppel in the event that their challenge is less than completely successful. Having instituted a post-grant review, the requestor is precluded from litigating in a civil action or before the U.S. International Trade Commission any issue that it did or could have raised. Although the exact scope of this standard will undoubtedly be a subject of future litigations, in the aggregate, post-grant procedures appear firmly weighted in favor of challengers.
There are many steps a patent owner can take to prepare for an IPR. In contrast, very little can be done to minimize the chances that a determined opponent will request a review. The operative word here is "determined" opponent. Compared to the millions of dollars that may be spent litigating in district court, an IPR is a relative bargain. Even so, intellectual property departments must monitor their budgets, carefully weighing the likely cost versus the potential benefit of launching an attack. Thus, if a newly issued patent blocks a competitor from a critical research arena, or threatens the launch of a major product, a competitor may eagerly budget in excess of $500,000 for a scorched-earth attack. A competitor with less to lose, however, may think twice about spending even a modest sum in post-grant challenges.
Competitive intelligence, including monitoring recently issued patents and applications, may provide some clue as to the threat your patent poses to potential challengers. Where this threat appears unclear or modest, even minor increases in the difficulty of pursing an IPR may keep less determined competitors at bay.
In this situation, minimizing the likelihood of an IPR challenge means raising the ante for filing a request, and/or lowering the odds that a single post-grant challenge will bring about the challenger's intended result. With respect to the latter, this means developing the strongest possible application, and ensuring that a continuation application remains pending. A pending application provides the option of putting new art before the examiner in ex parte prosecution and preserves the opportunity to adjust or amend claims in light of new arguments, prior art or knowledge of a competitor's potentially infringing products. This ability to quickly shift claim strategy provides a potential challenger with some measure of uncertainty regarding the success of an IPR attack.
Another potential tactic is to obtain a large number of claims of overlapping scope in the application likely to be challenged upon issuance. The additional claims increase the burden on the challenger in potentially two ways: by increasing financial hurdle to the challenge and by increasing the chance that at least one claim survives.
IPR fees are due to the USPTO in two pay-as-you-go stages, reflecting the possibility that the board will find that it is not "more likely than not" that at least one challenge claim is invalid and decline to institute the review. These fees are split into an initial $9000 to request the IPR, followed by an additional $14,000 to conduct the review. Beyond these basic fees, the USPTO will further assess $200 for every claim in excess of 20 at the requesting stage, plus $400 for every claim in excess of 15 that enters the review stage. Assuming that a challenged patent contains 100 claims, 20 of which proceed to the review stage, a challenger could be facing $51,000 in USPTO fees alone. Although this does not come close to the cost of district court litigation, such a sum may make less motivated competitors think twice before instituting an IPR.
In addition, a challenger has 60 pages of text to argue the invalidity of all claims of potential concern. A large number of claims of overlapping scope may make it difficult to address each one individually, whereas only one claim need to survive to prove infringement. Thus, a large number of claims can increase uncertainty on the part of the potential challenger, thereby lowering the likelihood that modestly concerned competitor would pursue an IPR.
Finally, patentees can take advantage of a broader strategy to increase chances that at least one relevant claim will survive. Rather than attempting to increase the number of claims in a single application, a patentee concerned with potential IPR challenge can employ a "picket fence" strategy of multiple patents—that is, developing an overlapping portfolio of patents covering the same general field but with different claiming approaches. Thus, for example, a patentee may pursue multiple patents stemming from the same application, describing his inventions in terms of compounds, methods, systems and kits. As with the prior strategy, this thicket of related patents may potentially dissuade IPR challenges by increasing the cost and uncertainty of a post-grant challenge.
In sum, IPR generally does not favor the patentee and little can be done to fend off the determined challenger. In contrast, the owner of a potentially valuable portfolio can take a number of steps to prepare and position for IPR challenge.
The USPTO's Practice Guide7 for Proposed Trial Rules illustrates the "rocket docket" pace of an IPR. In contrast to the sometimes leisurely pace of district court actions, a patent holder's preliminary response is due two months after the challenger's filing, and cases accepted by the board must be completed within 12 months (extendable by up to six months only upon a showing of good cause). Given this accelerated schedule, a proactive defense becomes a key element in surviving post-grant challenge.
An effective defense includes some of the same strategies for minimizing the threat of an IPR attack:
Preparation for an effective defense may also involve steps to strengthen the potential target patent, identifying experts, and preparing offensive countermeasures.
Due diligence on an important patent in your portfolio should begin long before you receive notice of an IPR challenge. Understanding potential weaknesses early can buy time to strengthen your position. It is thus important to conduct a detailed prelitigation analysis on the most valuable patents in your portfolio before or immediately after issuance.
Ideally, issues are identified before the patent issues. Any new art can be brought to the attention of the examiner, and claims can be drafted in response to new rejections or to otherwise address the issues of claim scope or validity.
All is not lost, however, if a due diligence investigation identifies problem areas after the patent
has issued.
The simplest option may be to address the issues in a continuation application, if one is available. Other more expensive and involved options include filing a reissue application and requesting ex parte re-examination to address newly discovered art. In addition, and particularly if the investigation suggests the possibility of a later charge of inequitable conduct, the USPTO will consider information that was in the possession of the applicant but not submitted during prosecution in a supplemental examination proceeding.
Experts will likely be crucial in developing your IPR strategy and providing declarations and testimony during the proceedings. Again, the IPR schedule does not favor delay and it may be prudent to identify and retain the experts well in advance. Early retention assures your access to the best possible testifying and nontestifying experts—and correspondingly limits the choices of the potential challenger. Moreover, early identification provides time for your experts to fully explore the issues, including those identified during the due diligence investigation. Expert preparation may entail consideration of the prior art, collecting evidence of secondary considerations of nonobviousness, or even conducting experiments distinguishing prior art. With this lead time, your experts can be ready to respond effectively when the patent is challenged.
Getting involved in an IPR does not guarantee a fight to the death. Rather, as in district court litigation, an IPR can be settled. Your bargaining position depends on the strength of your defense: having the strongest possible patent, well-thought-out arguments, and top-flight experts. It may also reflect the pressure you can bring to bear on your opponent. Competitive intelligence, including monitoring your competitors' patent publications, can reveal bargaining chips for settlement negotiations.
For example, by understanding your opponent's interest in the field, you might obtain blocking claims in a continuation application, or even challenge one of your competitor's key patents by filing your own IPR. Moreover, as interference proceedings are still an option for many patents (those filed in an application that contains or ever contained a claim with an effective filing date prior to March 16, 2013), you might find that it is possible to instigate an interference threatening an important aspect of your competitor's portfolio.
Thus, while a patentee's options for avoiding IPR challenge may be few and uncertain, much can be done to prepare for the challenge. Successful preparation, however, should begin well before you receive notice that an IPR has been filed.
Endnotes
1 37 C.F.R. § 41.150(b)(1)-(2); see also 37 C.F.R § 42.51(b)(1)(i).
2 37 C.F.R § 42.51(b)(1)(ii).
3 37 C.F.R § 42.51(b)(1)(iii).
4 37 C.F.R § 42.51(b)(2)(i).
5 Garmin Int'l., Inc., v. Cuozzo Speed Technologies LLC, IPR 210112-0001 (Paper No. 26) (Mar. 5, 2013) at 27.
6 Available at http://www.uspto.gov/patents/stats/IP_quarterly_report_June_30_2012.pdf. 7 Available at http://www.gpo.gov/fdsys/pkg/FR-2012-02-09/pdf/2012-2523.pdf#page=6.
Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
June 10-12, 2024
San Francisco
Lecture
Patent Protection for Software-Related Inventions in Europe and the USA Training Course
June 5, 2024
Hybrid
Workshop
Life Sciences Workshop: Updates and Key Trends in Pharmaceutical and Biotechnology IP Law
May 2, 2024
Cambridge
Conference
Boston Intellectual Property Law Association 4th Annual Symposium
April 10-11, 2024
Boston
Due to international data regulations, we’ve updated our privacy policy. Click here to read our privacy policy in full.
We use cookies on this website to provide you with the best user experience. By accepting cookies, you agree to our use of cookies. Please note that if you opt not to accept or if you disable cookies, the “Your Finnegan” feature on this website will be disabled as well. For more information on how we use cookies, please see our Privacy Policy.
Finnegan is thrilled to announce the launch of our new blog, Ad Law Buzz, devoted solely to breaking news, developments, trends, and analysis in advertising law.