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Post Grant Proceedings of the AIA Provide New Opportunities and Require Reconsideration of Old Patent Litigation Strategies

Medical Device
June 15, 2012

Shaffer, Robert F., Hendrix, Justin A.

Article

Authored by Justin A. Hendrix and Robert F. Shaffer

The America Invents Act (AIA) (H.R. 1249, Pub. L. No. 112-29) was signed by President Obama and enacted into law on September 16, 2011. The AIA is the greatest overhaul of the patent system since 1952, including some notable changes to post grant procedures and a shift from a first-to-invent system to a first-inventor-to-file system. Addressed in more detail below, the revised post grant procedures include inter partes review (previously called inter partes reexamination) and a new post grant review procedure, which is similar in nature to a European Patent Office opposition. These new procedures provide companies with a modified armamentarium for asserting and defending patent infringement lawsuits.

Overview of the AIA's Post Grant Procedures

The inter partes review (IPR) and post grant review (PGR) procedures will take effect on September 16, 2012. Some key differences between the two procedures and prior reexamination procedures include the point in time when they are available, the threshold showing to be made, the time given to the United States Patent and Trademark Office (PTO) to reach a final determination, available invalidity arguments, and trier of the determination.

  • Availability: The new PGR procedure will be available within nine months of grant of a patent. IPR, by contrast, becomes available after nine months of patent grant or after the expiration of a PGR proceeding, if one has been initiated. Ex parte reexamination will remain available anytime after patent grant. PGR will be available for some business method patents, patents that qualify under the first-inventor-to-file system, and pending interferences. By contrast, all patents will be eligible for IPR. Notably, the AIA does not allow a petitioner to file an IPR/PGR request if he has previously filed a declaratory civil action challenging a patent's validity. Further, a civil action challenging validity filed by a petitioner on or after the date an IPR/PGR is filed will be automatically stayed unless (1) the patent owner moves to lift the stay, (2) the patent owner files an action or counterclaim for infringement, or (3) the petitioner moves to dismiss the civil action. Finally, it should be noted that a counterclaim of invalidity does not qualify as a civil action challenging validity. 
  • Threshold Showing: The standard for instituting a PGR proceeding requires a showing that it is more likely than not that at least one claim will be found to be invalid. To institute an IPR proceeding, the request must show that there is a reasonable likelihood that the requester would prevail with respect to at least one claim. This "reasonable likelihood of success" (RLS) standard replaces the "substantial new question of patentability" (SNQ) standard previously required in inter partes reexamination proceedings. SNQ only exists now for ex parte reexamination. 
  • Anonymity: While a petitioner for ex parte reexamination can anonymously submit a request and avoid any estoppel effects, a petitioner for PGR or IPR must identify all real parties in interest, including those entities in privity with the petitioner.
  • Estoppel: Estoppel applies to "any ground that the petitioner raised or reasonably could have raised" during the PGR or IPR proceeding. Estoppel will have legal effect in further proceedings before the PTO, federal courts, and the International Trade Commission.
  • Time to Completion: The AIA will require a final determination in any PGR or IPR proceeding to be issued within one year. The PTO may, only in the event that good cause can be shown, extend that time by up to an additional six months.
  • Appeal: In current reexamination proceedings, any appeal from the Central Reexamination Unit's (CRU) decision must go to the Board of Patent Appeals and Interferences (BPAI). Any subsequent appeal would then go to the United States Court of Appeals for the Federal Circuit. In both PGR and IPR proceedings, both parties can appeal directly to the Federal Circuit.
  • Bases of Invalidity: In a PGR proceeding, like in district court, the petitioner can argue any ground of invalidity raised under 35 U.S.C. § 282(b), including novelty, obviousness, statutory subject matter, written description, enablement, or definiteness. In an IPR proceeding, like current reexamination proceedings, the PTO will consider only novelty or obviousness arguments based on patents or printed publications. Notably, the AIA eliminates the failure to disclose the "best mode" as a basis for invalidating a patent.
  • Before Whom: Both PGR and IPR proceedings will be before the Patent Trial and Appeal Board (PTAB or Board). Current ex parte and inter partes reexamination proceedings are before the PTO's Central Reexamination Unit.

The table below summarizes the differences between ex parte reexamination, the old inter partes reexamination, and the new PGR and IPR proceedings.

 

 Ex Parte Reexamination

 Inter Partes Reexamination

 Post Grant Review (PGR)

Inter Partes Review (IPR) 

 Availability

 After grant

After grant (not available after Sept. 16, 2012)

Within 9 months of grant 

After 9 months of grant, or after termination of PGR, if PGR has been initiated (available on Sept. 16, 2012)

 Threshold Showing

 SNQ

Reasonable liklihood of success with respect to at least one claim (was SNQ*)

 More likely than not, at least one claim is unpatentable or novel/ unsettled legal question

 Reasonable liklihood of successful (RLS) with respect to at least one claim

 Anonymity

 Yes

No 

 No

No 

 Estoppel

 None

 Issues raised or could have been raised

 Issues raised or could have been raised

Issues raised or could have been raised 

 Time to Completion

 Potentially multiple years

 Potentially multiple years

 1- 1 ½ years

 1- 1 ½ years

 Appeal

Only patentee can appeal to BPAI and then Federal Circuit

 Both parties can appeal to BPAI and then Federal Circuit

 Both parties can appeal to Federal Circuit

 Both parties can appeal to Federal Circuit

 Bases of Invalidity

 Novelty and obviousness- only patents and printed publications considered

 Novelty and obviousness- only patents and printed publications considered

 Most grounds- can argue prior art; utility and patent eligibility, written description, definiteness

 Novelty and obviousness only (like current reexaminations)

 Before Whom

 CRU        

CRU 

PTAB 

PTAB 

* Became effective on September 16, 2011, and applies to all requests filed after enactment.

Strategy Considerations

With new post grant procedures available, companies may need to reassess old litigation strategies in view of the following:

  • Decision Maker: Because both the PGR and IPR proceedings will be before the Patent Trial and Appeal Board, the decision on validity will be made by a panel of three administrative patent judges who may be very experienced in patent matters. In district court, validity may be decided by a jury of laymen with little knowledge of the patent laws. Depending on the merit of invalidity arguments to be made, it may benefit an accused infringer to have the Board decide validity. With PGR and IPR, like district court, both parties can appeal the decision to the Federal Circuit.
  • Cost and Speed: The cost of a PGR proceeding is anticipated to be higher than a European opposition but much less than district court litigation. The PTO's proposed rules set the filing fee based on the number of claims, with the fee for 20 or fewer claims being $35,800. 77 Fed. Reg. 6879, 6909 (to be enacted as 37 C.F.R. § 42.15). The fee scale increases with each additional set of 10 claims, extending up to $89,500 for 51-60 claims, with $35,800 due for each additional set of 10 claims past that point. PGR and IPR proceedings will likely be much faster than most district court proceedings, with the AIA requiring a decision in 1 to 1½ years.
  • Claim Interpretation: The PTO will give the claims their broadest reasonable interpretation. The courts, by contrast, may construe the claims more narrowly in a way that might avoid prior art.
  • Burden of Proof: In PGR and IPR proceedings, a petitioner must prove invalidity by a preponderance of the evidence, a burden of proof that is much lower than a district court's "clear and convincing" standard where the patent enjoys a presumption of validity. The lower standard for proving invalidity in PGR and IPR proceedings may make them more desirable forums than a district court in some situations.
  • Threshold Showing: The threshold for instituting a PGR proceeding is the "more likely than not" standard. Legislative history indicates that the RLS standard for an IPR proceeding is a higher threshold. The lower threshold for instituting a PGR proceeding provides an incentive for challenging the patent early, but it requires quick and decisive action. In some situations, it may not be feasible to fully develop invalidity arguments prior to the nine-month period. Challenging the patent in district court, therefore, may be more beneficial in order to have additional time and avoid the estoppel effects from a PGR proceeding.
  • Limitations on Available Evidence: In a PGR proceeding, the petitioner can assert prior art, as well as argue other grounds of invalidity such as lack of utility, enablement, written description, and definiteness. In an IPR proceeding, the Board will only consider patents and printed publications. The estoppel effect, therefore, is reduced in IPR compared to PGR, which permits the requester to challenge the patent on many more grounds. There will be limited opportunities for discovery in both proceedings, but likely much less than what is available in district court. The benefit of additional discovery in district court may make that a more desirable forum in certain instances.

Reprinted with permission from Medical Device Manufacturers Association. 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.