September 2013
CIPA Journal
Authored by Elizabeth D. Ferrill and Anthony C. Tridico, Ph.D.
Unlike in many other countries, in the United States, the design patent examination system is intertwined with its much larger cousin, the utility patent examination system. In 2012, design patent filings represented 5.7% of the total applications filed in the United States and design patents were 8.1% of the total patents granted.1
The U.S. Patent and Trademark Office (USPTO) is responsible for examining both species of patents and it uses many of the same processes and rules, including those related to post-grant review procedures. But at the same time, design patents are examined by a select subset of examiners and the prosecution and post-grant review process for design patents includes quirks and differences not found on the utility side. Not surprising, the recent changes to the post-grant procedures in the United States also apply to design patents. Although only a few of these procedures to date have involved design patents, some trends can be gleaned from the past post-grant procedures, and this area looks to be active in the future.
Prior to the enactment of the America Invents Act (AIA) in 2011, the United States had two main forms of post-grant procedures: ex parte reexamination and the inter partes reexamination. The ex parte reexamination was created in 1980 and allowed for a reconsideration of an issued patent in light of new patents and printed publications. An ex parte reexamination could be filed by anyone, including the patent owner. If filed by a third party, the third party had no participation beyond filing the request, but there was also no estoppel effect, meaning that a third party could later use the same patents or printed publications as a basis for an invalidity challenge in federal court. The inter partes reexamination was created in 1999, and the requesting party participated in the reexamination process, and there was an estoppel effect. The requesting party could not be the patent owner or someone in privity with the patent owner. For utility applications, both types of reexaminations are handled by a special group of examiners called the Central Reexamination Unit. For design patents, however, the reexaminations are sent back to the Design Patent Technology Center (where all of the design patent examiners are assigned), but to a different examiner.
Generally speaking, some design patents were involved in ex parte reexaminations, but very few were the subject of inter partes reexaminations.2 From its inception in 1980, there were only 188 ex parte reexaminations filed on design patents, representing about 2% of the total ex parte reexaminations filings. And from 1999, only 13 inter partes reexaminations were filed involving design patents (the first was not actually filed until 2004), representing about 1% of those total filings.
From January 1999 to present, of those requests for reexamination that were granted by the USPTO, approximately 53% of design patents emerged from the reexamination process intact, whereas the remaining 47% were cancelled. This outright cancellation rate is significantly higher than for utility patents during the same period. Some have speculated that a design patent claim may be difficult to amend during a reexamination without adding new matter (which is not permitted), accounting for the higher cancellation rate. In sum, under the old system, patent owners had a slightly better than even odds of retaining their design patent after reexamination.
Following the AIA, the ex parte reexaminations continue, but no new inter partes reexaminations can be filed. Instead, the AIA created two new post-grant procedures: inter partes review (IPR) and post-grant review (PGR), both of which can be thought of as short, intense mini-trials conducted within the USPTO.
With respect to design patents, PGRs may be based on any invalidity ground including lack of definiteness or clarity, but can only be used to challenge patents with effective filing dates on or after March 16, 2013, and must be submitted within nine months of the patent grant. IPRs, by contrast, may be used to challenge any granted U.S. patent currently in force. However, IPRs may be based only on lack of novelty or obviousness in view of printed prior art publications (including patents). A request to institute an IPR or PGR must name the real party in interest, i.e., the party funding the challenge. The current USPTO fees for submitting an IPR or PGR petition for a design patent range from $18,000 to $23,000. Because a design patent only includes one claim, each IPR or PGR must be filed separately, and so the costs can add up quickly.
IPR and PGR proceedings are decided by the newly-created Patent Trial and Appeal Board (discussed in more detail in this month's Journal article: Lessons on the First Birthday of the U.S. Patent Trial and Appeal Board (PTAB)). Although the statute states that this three-judge panel has "competent legal knowledge and scientific ability," 35 U.S.C. § 6, practically speaking, the PTAB has less experience with design patent matters, because the vast majority of their docket involves utility patents. The IPR and PGR processes are also designed to be simple, streamlined, on a controlled timeline, and are intended to serve as alternatives to litigation in the U.S. federal courts or the U.S. International Trade Commission (ITC) on questions of a patent's validity. Thus, if the PTAB issues a final written decision upholding some or all of the challenged patent claims, the challenger is estopped from raising the same arguments in a later-filed U.S. proceeding against the patentee. The challenger is also barred from raising in later proceedings any arguments that the challenger reasonably could have made in the IPR or PGR, but did not to make for whatever reason. If the proceeding settles before a final written decision is issued, however, there would be no such estoppel. Any estoppel against a party would also apply in any future proceedings at the USPTO. In addition, the patent owner is subject to intervening rights as to any claims that were amended during the IPR. That is, the patent owner would not be allowed to recover damages based on infringement of a claim that was amended during the IPR.3
The overall structure of either an IPR or PGR provides strong incentives for a patent challenger to gather its resources and experts well before filing an initial petition, and to ensure that it is based on the best available arguments and prior art. Thus, it is important to understand and pay attention to the few existing design patent IPRs to glean important lessons about future IPR and PGR practice.
The USPTO has instituted one design patent IPR and there are currently four other IPR petitions awaiting consideration and possible institution by the USPTO. In that same period, over 500 petitions have been filed for inter partes review of utility patents and over 140 requests have been granted. Most of the four pending petitions are likely to be granted, given the USPTO's current 86% institution rate.4 Thus, the design patent IPRs currently represent just under 1% of these petitions and less than 1% of the granted petitions.
No PGR has yet been filed on a design patent. However, because of the relatively short prosecution period for a design patent, design patents have issued that could be the subject of PGRs (because they were filed after March 16, 2013, and do not claim priority before that date). Starting in July 2013, more than 25 such design patents have issued, including designs for athletic shoes, a fountain, and turbine rotors. Because the design patents are often challenged on clarity and definiteness grounds, in addition to novelty and obviousness, it seems reasonable that the PGR procedure will be the more attractive procedure to petitioners if available.
Munchkin, Inc. and Toys "R" Us, Inc. v. Luv N' Care, Ltd.
On December 5, 2012, Munchkin, Inc. and Toys "R" Us, Inc. filed the first petition for an IPR involving a design patent, owned by Luv N' Care, Ltd. Luv N' Care's design patent claimed a design for a child's drinking cup, known as a "sippy" cup.5 On April 25, 2013, the PTAB granted Munchkin's request, but only with respect to one combination of prior art references set forth in the petition. In the decision on institution, the PTAB found that the challenged claim was not entitled to benefit of the filing date of the alleged priority application because certain elements disclosed in the challenged claim were not supported by the priority application. Thus, certain intervening references should be deemed prior art to the challenged claim, calling into question the claimed design's validity. While IPRs do not technically permit the petitioner to challenge the sufficiency of a claim's written description, challenging priority is permitted and allows the PTAB to consider sufficiency of written description in this limited context.
On July 25, 2013, Luv N' Care filed a response and motion to amend its design patent to conform the challenged claim with the disclosure from the priority application in an attempt to restore the chain of priority.
The fate of this amendment remains to be seen. The PTAB may deny an amendment where, for instance, the amendment does not respond to a ground of unpatentability involved in the trial, seeks to enlarge the scope of the claims, or introduces new subject matter. Additional briefing continues through the fall, and, if requested, the PTAB will conduct oral argument in late January 2014.
ATAS International, Inc. v. Centria
On April 30, 2013, ATAS International, Inc. filed the second petition for an IPR involving a design patent, owned by Centria, directed to a design for a building panel.6 In its petition, ATAS set forth nine grounds upon which it argued that the PTAB should find there is a reasonable likelihood that the claimed design is invalid. Just under three months later, Centria took the opportunity to file the first preliminary response in an IPR of a design patent. In its preliminary response, Centria challenged the sufficiency of ATAS's anticipation and obviousness argument and alleged that ATAS has prepared certain views of prior art references that did not actually appear in those references. A decision on institution is expected by the end of October.
In an IPR proceeding, the patent owner may file a preliminary response to the petition before the PTAB's institution decision. Not all patent owners choose to file such preliminary responses, because by electing to waive the preliminary response, the patent owner may "expedite" the IPR proceeding.
Sensio Inc. v. Select Brands, Inc.
On August 7, 2013, Sensio Inc. filed the third and fourth petitions for an IPR involving a design patent.7 The design patents at issue are owned by Select Brands and are directed to designs for a multiple crock buffet server, a type of slow cooker kitchen appliance.8 The petitions are related to the co-pending district court litigation, design patent infringement litigation.9 Another petition for IPR was filed on a related design patent earlier this month.10 Select Brands has until early November to file its preliminary response to these petitions, and the PTAB is expected to render its decision regarding institution by February 2014.
The key to a quality petition is to a comprehensive search of prior art references. Motivated by litigation, a client may be inclined to widen the search to include non-patent publications and foreign resources. While IPRs are limited to printed publications and patents, the prior art reference needs to only sufficiently show a similar design. No description of the product embodying the design is required. Thus, helpful prior art references may include product advertising images, catalogs, and even screen shots of promotional videos. Moreover, the Munchkin IPR shows that a petitioner can implicitly challenge definiteness by challenging a priority claim to a prior application. If a priority claim fails, then additional intervening prior art may be available, including the patent owner's own publications showing any products embodying the design.
Armed with sufficient prior art, a petitioner can craft an IPR or PGR with multiple grounds for invalidity and support that petition with an expert declaration. Expert declarations may be particularly helpful to support obviousness arguments by illustrating combinations of prior art references for the PTAB. Keeping in mind that the PTAB does not see many petitions based on design patents, enlisting the assistance of a good graphics vendor will make sure that your arguments are well illustrated and accessible to the PTAB.
While some clients may shy away from the post-grant procedures because of the costs associated with filing fees, search and petition preparation, the limited discovery and quick timeline suggests that money would be saved in the long run, as compared to a full blown federal court litigation. Moreover, a PGR and IPR at the USPTO so far appears to be a strong basis for requesting a stay of any co-pending litigation, allowing even more cost savings.
Although the IPR practice for design patents is in its infancy, the historical rate of cancellation in ex parte and inter partes reexamination proceedings suggests that IPRs (and eventually PGRs) may also enjoy an almost 50-50 cancellation rate. While this rate is substantially higher than for utility patents, it is difficult to compare these rates, because each design patent may have only one claim. Nonetheless, this high rate of cancellation alone may drive settlement.
Even if the patent survives the IPR or PGR, the silver lining is that the PTAB or the patent owner may make comments during the proceedings regarding the scope of the claimed design. Moreover, the patent owner may be forced to amend its design patent, significantly narrowing the scope of the claimed design and potentially bestowing intervening rights on the accused infringer. Any of this may help the accused infringer avoid future infringement, damages, or an adverse decision when the case returns to the district court or ITC.
Post-grant review proceedings for design patents, whether IPR or PGR, if the patent qualifies, may serve as an effective and lower cost defensive strategy for competitors or accused infringers, provided that the petition is carefully prepared. Turning the tables on the patent owner also places it on the defensive and may encourage timely settlement of district court or ITC litigation.
Endnotes
1 USPTO Performance and Accountability Report FY2012 at Table 1, available at http://www.uspto.gov/about/stratplan/ar/USPTOFY2012PAR.pdf. 32,258 design patent applications filed in FY 2012, as compared to 565,566 total applications filed. 21,953 design patents issued in FY 2012, as compared to 270,258 total patents issued.
2 Durkin, Tracy-Gene, Post Grant Proceedings of Design Patents: A Look Back and to the Future, presented at USPTO Design Day 2013.
3 See, e.g., Seattle Box Co. v. Indus. Crating and Packing Inc., 756 F.2d 1574, 1579 (Fed. Cir. 1985).
4 As of August 30, 2013, the USPTO had considered 166 total petitions, granting 143 requests and denying only 23 requests.
5 IPR2013-00072 (D617,465 for a "Drinking Cup").
6 IPR2013-00259 (D527,834 for a "Building Panel").
7 The authors' firm, Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, is representing Sensio in this matter.
8 IPR2013-00500 (D669,731 for a "Multiple Crock Buffet Server"); IPR 2013-00501(D675,864 for "Multiple Crock Buffet Server").
9 Select Brands, Inc. v. Sensio, Inc., Case No. 2:2013-cv-02108 (D. Ka).
10 IPR2013-00580 (D686,447 for a "Multiple Crock Buffet Server").
Originally printed in CIPA Journal. 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.
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