December 6, 2019
Authored and Edited by Mark J. Feldstein, Ph.D.; Joshua L. Goldberg; Jill K. MacAlpine, Ph.D.; Gracie K. Mills; Thomas L. Irving; Stacy Lewis*
Introduction
The America Invents Act (“AIA”), signed into law on September 16, 2011, created two types of post-grant proceedings: inter partes reviews (IPRs) and post-grant reviews (PGRs).1 Enough time has now passed to be able to look at PGR outcomes. This post reviews activity in PGRs, considers why there are still so few relative to IPRs, and identifies statistics showing why PGRs may be the better option for some patent challengers. Note that the PGR data remain fairly volatile because the numbers are small. The IPR numbers are larger and therefore more robust. We chose to represent the charts in percentage terms for comparison purposes, but the small size of the PGR dataset dictates that restraint must be exercised to avoid reading too much into the data.
Snapshot of PGRs to Date
Under AIA, PGRs came into effect on September 16, 2012 but are only available for patents having at least one claim with an effective filing date on or after May 16, 2013 (“AIA-patents”). Although a PGR petition must be filed within nine months of patent issuance and is thus temporally more limited than an IPR, it allows a broader range of statutory patentability challenges.2 For example, unlike IPRs, PGR grounds, as shown in Fig. 1, may be based on 35 U.S.C. §§ 101 and 112, and on prior art other than patents and printed publications. Non-statutory grounds, such as obviousness-type double patenting or inequitable conduct, are not allowed in either IPRs or PGRs.
Source: Finnegan research using Docketnavigator. May be more than one ground per petition.
Despite the availability of these additional unpatentability bases in PGRs, post-grant petitioners have thus far chosen IPRs more than 90% of the time. Not only do PGRs account for a small percentage of the total number of petitions filed with the Patent Trial and Appeal Board (Fig. 2), but the number of PGR filings per year remains in the dozens compared with the 1,000+ IPR petition filings per year (Fig. 3).
Source: https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/statistics
Source Docketnavigator 2018 Year in Review Patent Litigation Special Report.
Lack of Interest in PGRs So Far Likely Not Driven by Outcomes
Overall, the PGR institution rate is a little lower than the IPR institution rate (Fig. 4), which should follow, one might speculate, from their slightly higher threshold for institution. For IPRs, the threshold is “a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”3 For PGRs, the threshold is “more likely than not that at least 1 of the claims challenged in the petition is unpatentable.”4
Source PGR Institution Rate: Finnegan research using Docketnavigator, FY12 to FY19.
Source IPR Institution Rate: https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/statistics
Oct. 1, 2012 to Oct. 31, 2019.
Institution rate = instituted/instituted+denied (does not include settled prior to institution decision, dismissed, or pending petitions). “Instituted” includes partial institutions prior to SAS.
However, it appears that the lower institution rate results from the additional threshold requirement of PGR-eligibility, i.e., that the challenged patent is an AIA-patent.5 As shown in Fig. 5, institution was denied in 22 instances where the challenged patent was found not to be PGR-eligible. This was the single largest reason for PGR institution denials. If these denials are excluded from consideration, the PGR institution rate for PGR-eligible patents is 70%—slightly higher than the 66% IPR institution rate.
Source: Finnegan research using Docketnavigator. May be more than one ground per petition.
Moreover, rather than the institution rate being a driver for the lower interest in PGRs, the number of PGRs filed increased each year from FY2013-FY2018, even following years, such as FY2016, when the institution rate was only 39% (Fig. 6).
Source: Finnegan research using Docketnavigator. Institution rate = instituted/instituted+denied (does not include settled prior to institution decision, dismissed, or pending petitions). “Instituted” includes partial institutions prior to SAS.
Further evidence that outcomes are not the cause of reduced interest in PGRs is that PGRs, once instituted, are generally more favorable than IPRs for the patent challenger, as reflected in a lower claim survival rate compared to IPRs (Figs. 7 and 8).
Source PGR Survival Rate: Finnegan research using Docketnavigator, through FY19. Survival rate = all claims survived/all claims survived + all claims unpatentable. Does not include Final Written Decisions with mixed result.
Source IPR Survival Rate: https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/statistics
Source for PGRs, Finnegan research using Docketnavigator, through FY19. Does not include Final Written Decisions with granted Motion to Amend (1).
Source for IPRs, https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/statistics
Differences Across Technologies
The most popular technologies for PGR petition filings are computer/software, electrical and mechanical, followed by pharma and biotech (Fig. 9). These are also the most commonly targeted technologies in IPR petitions. Note, however, that as compared to IPRs, the proportions of PGRs challenging design, pharma and biotech, and chemical are all larger while the proportions of PGRs in the computer/software, electrical and mechanical arts are smaller
Source PGR Petition Filings: Finnegan research using Docketnavigator. Chart conformed to USPTO labels for comparison purposes. Breakdown of PGR petition data - Biotech: 24, Pharma: 25, Mechanical: 43, Computer/Software: 44, Electrical: 18, Medical Device: 8.
Source IPR Petition FIlings: https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/statistics. Caveat: this data does not indicate the data reflect IPR petitions only. The data may include PGR and CBM petitions also. But since PGR and CBM filings are such a small percentage of the total, the data still provide a good general picture of the technology breakdown of IPR petition filings.
As shown in Fig. 10, computer/software and mechanical also have the highest PGR institution rate with pharma and biotech following next. Medical devices have the lowest institution rate, followed by electrical. Fig. 11 compares institution rates in PGRs and IPRs by technology using the USPTO’s technology labels. In both IPRs and PGRs, the electrical/mechanical/computer-related petitions have the highest grant rate but IPR institution rates are higher than PGR institution rates for all technologies except design patents.
Source PGR Petition Filings: Finnegan research using Docketnavigator. Chart conformed to USPTO labels for comparison purposes.
Source IPR Petition FIlings: https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/statistics. Caveat: this source does not indicate the data reflect IPR petitions only. The data may include PGR and CBM petitions also. But since PGR and CBM filings are such a small percentage of the total, the data still provide a good general picture of the technology breakdown of IPR petition filings.
Since these institution rates do not exclude PGR denials for non-AIA patents, outcomes once instituted may be the better metric for comparison. Once instituted, PGR petitioners’ success with mechanical cases stumbles with 60% of all claims surviving in the Final Written Decision (Fig. 12), though this number must be taken with caution, since the number of PGR mechanical Final Written Decisions it represents is small (3/5). As shown in Fig. 13, this 60% survival rate for mechanical claims in PGRs is much higher than the corresponding 30% survival rate in IPRs. Notably, as also shown in Fig. 13, for all other technologies the claim survival rate is lower in PGRs than IPRs. That is, so far, except in mechanical cases, a petitioner’s likelihood of cancelling all claims is higher in PGRs than IPRs.
Compare the difference for bio/pharm claims, where the all-claims-survived rate was only 17% in PGRs but 46% in IPRs. Again, the PGR numbers are small (1/6), but this large difference in favor of petitioners in PGRs appears to result from the additional grounds of challenge available, in particular §112 (a) and (b) grounds. In fact, our research shows that §112 grounds were asserted in 93% of PGR bio/pharm petitions. Only three PGR bio/pharm petitions did not include a §112 ground. This is substantially higher than in PGRs generally, where the rate of asserting a §112 ground is 60% averaged across all technologies.
Source Finnegan research using Docketnavigator, through FY19.
Source Finnegan research using Docketnavigator, through FY19. Survival rate calculated as all claims survived/all claims survived + all claims unpatentable. Mixed outcomes and granted motions to amend are not included in the chart.
Source for IPR/CBM data: https://www.finnegan.com/en/insights/blogs/america-invents-act/ipr-and-cbm-statistics-for-final-written-decisions-issued-in-october-2019.html
Differences Across Claim Types in Biotech and Pharmaceutical Patents
In biotech PGR petitions, compound claims were the most popular target while method of treatment claims were the most common target in pharma PGR petitions (Fig. 14). Looking at the PGR data in Fig. 14 together with the corresponding IPR data in Fig. 15, a notable difference is that compound claims are much more likely to be challenged in a biotech PGR. In pharma petitions, method of treatment claims are the single most commonly challenged claim type in both IPRs and PGRs but are even more common in PGRs. Composition/formation and compound claims are targeted at similar rates in pharma PGRs and IPRs, but it is much more common that a pharma PGR petition challenges method of treatment claims (Fig. 15).
Source: Finnegan research using Docketnavigator. May be more than one claim type per petition.
Source: Finnegan research using Docketnavigator. May be more than one claim type per petition.
Source: Finnegan research using Docketnavigator. May be more than one claim type per petition.
In biotech PGRs, method of treatment claims appear to be particularly vulnerable to institution, with all petitions challenging a method of treatment claim being instituted (Fig. 16). Biotech composition/formulation and method of making claims have so far been the most resistant to institution in PGRs. In terms of pharma PGR petitions, method of making claims and method of treatment claims have the highest grant rates, while composition/formulation claims are quite low at 17% and compound claims very low at 0%. In IPRs, method of making claims have the highest institution rates in both biotech and pharma (Fig. 17).
Source Finnegan research using Docketnavigator. May be more than one claim type per petition. Institution rate = instituted/instituted+denied (does not include settled prior to institution decision, dismissed, or pending petitions). “Instituted” includes partial institutions prior to SAS.
Source Finnegan research using Docketnavigator. May be more than one claim type per petition. Institution rate = instituted/instituted+denied (does not include settled prior to institution decision, dismissed, or pending petitions). “Instituted” includes partial institutions prior to SAS.
Looking at the final outcomes, pharma method of treatment claims were held unpatentable in 80% of PGR Final Written Decisions (Fig. 18). This is much higher than in pharma IPRs, where the method of treatment claim cancellation rate is 51% (Fig. 19).
Source Finnegan research using Docketnavigator, through FY19. May be more than one type of claim per Final Written Decision. There has only been one biotech PGR FWD so far, and it involved apparatus claims. All challenged claims were held unpatentable.
Source: Finnegan research using Docketnavigator. May be more than one type of claim per petition. FWD rate calculated based on “all claims unpatentable” or “all claims survived.” “Mixed” outcomes not included, nor are adverse judgments, settlements, or granted motions to amend proposing substitute claims.
Potential Reasons for the Lack of PGRs
As previously mentioned, annual filings of IPR petitions are 1,000+, while PGR petition filings are only in the dozens. Why aren’t challengers using PGRs more often?
For the first few years of PGRs, it was (and maybe still is) largely due to the fact that most existing patents were (and are) pre-AIA patents and therefore not eligible for PGRs.
IPR petition filings usually occur after a third party is sued for infringement in district court. Indeed, according to a USPTO study, more than 80% of PTAB proceedings have corresponding litigation.6This is the primary driver for what patents are being challenged in post-grant proceedings. It may also be the primary driver for the form of challenge, i.e., IPR vs. PRG, as the limited window of 9-month from issuance for filing PGRs will have already closed in most cases before the infringement suit is filed. Indeed, to file a PGR a third party must be ready to move quickly once a patent issues, independently of having been sued. Some companies have the resources to closely monitor their competitors’ patent application status, but not all do. The timing rarely is expected to work out to exercise the PGR option if one waits until being sued.
Another reason parties may avoid PGRs is that the broader range of grounds available for challenging patentability means that the potential estoppel against the petitioner is also broader. In this regard, the estoppel provision of 35 U.S.C. §325(e) prohibits a petitioner in a PGR that results in a Final Written Decision from raising a ground the petitioner “raised or reasonably could have raised” during the PGR before either a district court, the ITC, or a proceeding before the USPTO.7Petitioners may be reluctant to risk foregoing all these arguments in their district court defense. The corresponding grounds “raised or reasonably could have raised” in an IPR are necessarily narrower, leaving at least §101 and §112 grounds for defenses in district court.
There is some evidence that PGR petition filings went down after the decision in SAS Institute v. Iancu, 138 S.Ct. 1348 (2018), which held that institution had to be on all claims raised in the petition. The PTAB issued Guidance on April 26, 2018, stating that the PTAB would be instituting as to all claims or none. If instituted, the PTAB will institute on all challenges raised in the petition.8
Source: Finnegan research using Docketnavigator.
Before SAS, the Federal Circuit decision in Shaw Indus. Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016), held that petitioned, non-instituted grounds were not estopped. After SAS, there are generally no longer petitioned, non-instituted grounds. But there remains the question of whether a petitioner “reasonably could have raised” a ground in a PGR petition. This is determined by deciding “whether a diligent, skilled searcher would have found” the reference in question.[9] With the time pressure of the 9-month window for PGRs, third parties may feel too uncertain that they can show that a reference could not reasonably have been raised in the PGR petition.
Even in districts where patent challengers may ostensibly raise non-petitioned grounds without fear of estoppel, they may face limitations on what grounds they may raise, with some combination grounds not expressly detailed in their petition still being considered “petitioned” if based solely on unasserted combinations or subsets of prior art found in the petition.10
Perhaps the fees are an additional obstacle; they are higher for PGRs than IPRs.11 But this is likely not a big deterrent inasmuch as the difference with IPR fees is not that big and the cost of a PGR is still significantly less than district court litigation.
Will there be more PGRs in the future?
This article reviews activity in PGRs and why the uptake by the patent community seems only lukewarm so far. One might think that the broader range of grounds that are available for challenge should make them attractive. In particular the grounds of lack of written description, lack of enablement, and indefiniteness may be attractive because the current trend in the PTAB (and the courts) is to consider these requirements more strictly than in the past.12 Indeed, as discussed above, the claim survival rate in bio/pharm PGRs, where section 112 grounds are almost always asserted, is much lower than for comparable IPRs.
Endnotes
135 U.S.C. §§311 et seq and 321 et seq. The AIA also created a post-grant proceeding called Covered Business Method post-grant review (CBM) as a transitional program for covered business method patents. (Public Law 112-29, sec. 18, 125 Stat. 284 (Sept. 16, 2011). According to SEC. 18(a)(3), the transitional program will end eight years after the regulations take effect (Sept. 15, 2020). Although CBMs are a type of PGR, references to PGRs in this article do not include CBMs. Instead, CBMs are separately identified except for in Figs. 9 and 11, which show data for IPRs that may include PGRs and CBMs because of the way the USPTO reports institution rates.
235 U.S.C. §321; 37 C.F.R. §42.202.
335 U.S.C. §314(a).
435 U.S.C. §324(a).
535 U.S.C. 321 (note) Post-grant review applicability.
(1) APPLICABILITY. —
(A) The post-grant review provisions of the Leahy-Smith America Invents Act (AIA) apply only to patents subject to the first inventor to file provisions of the AIA[.]
6“An Analysis of Multiple Petitions in AIA Trials” Oct. 2017 (“Approximately 85% of IPRs in Fiscal Year 2017 have a co-pending district court case”).
735 U.S.C. §325(e).
8https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/trials/guidance-impact-sas-aia-trial . Also affirmed by the appellate court as an appropriate approach. See PGS Geophysical AS v. Iancu, 891 F.3d 1354, 1359–-60 (Fed. Cir. 2018) (“We will treat claims and grounds the same in considering the SAS issues currently before us. . . . We read [the SAS opinion] as interpreting the statute to require a simple yes-or-no institution choice respecting a petition, embracing all challenges included in the petition, and we have seen no basis for a contrary understanding of the statute in light of SAS.”)
9 SiOnyx, LLC v. Hamamatsu Photonics K.K., 330 F. Supp. 3d 574 (D. Mass. Aug. 30, 2018), citing 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl). Several district courts have adopted this as the standard. E.g., Parallel Networks Licensing, 2017 WL 1045912, *11-12; Clearlamp, LLC v. LKQ Corp., 2016 WL 4734389, at *7-8 (N.D. Ill. Mar. 18, 2016).
10E.g., Advanced Micro Devices, Inc. v. LG Elec., Inc., 2017 U.S. Dist. LEXIS 98630 (N.D. Cal. June 26, 2017).
1137 C.F.R. §42.15(a) and (b).
1235 U.S.C. §112(a) and (b).
*Stacy Lewis is a Law Clerk at Finnegan
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