Impact of the America Invents Act on patent challenges at USPTO

During each proceeding, there is no presumption of validity of the patent, the standard of proof is preponderance of the evidence, and the claims will be given their broadest reasonable construction in light of the specification. Each post-issuance option should be considered when contemplating the enforcement, licensing, valuation or sale of a US patent.

Ex parte examination

Substantively, ex parte reexamination is unchanged by the AIA and so, it is not discussed in detail here. It remains available for any patent if the US Patent and Trademark Office (USPTO) determines that the request for reexamination raises a ‘substantial new question of patentability’. The request can be based only on prior art patents and publications that form the basis for anticipation or obviousness rejections.

Ex parte reexamination will continue to be adjudicated by the Central Reexamination Unit (CRU), and appeals can be made to the board (the Board of Patent Appeals and Interferences is replaced by the Patent Trial and Appeal Board [PTAB]). Significantly, the AIA makes it clear that any appeal from the Board can be made only directly to the Federal Circuit, not to district court.

Strategy considerations: Ex parte reexamination offers the advantage that no estoppels are created. Additionally, because the third party requester's involvement is minimal after ex parte reexamination is ordered, it may be relatively budget-friendly. However, it also comes with disadvantages for the third party requester. For example, the patent owner may conduct an interview with the CRU. Additionally, the requester cannot appeal.

Inter partes reexamination

Inter partes reexamination will be phased out in favor of inter partes review. Requests for reexamination must be filed before September 16, 2012, and can only be filed against patents with a filing date after November 29, 1999.

Already, the standard for ordering inter partes reexamination has shifted from a ‘substantial new question of patentability’ standard to the standard that will be used for inter partes review. Specifically, the request must show that there is a reasonable likelihood the requester would prevail with respect to at least one of the challenged claims.

Theoretically, this standard is more difficult to meet than the existing standard. However, this shift in standard may be a distinction without a practical difference, given that previous requests for inter partes reexamination have generally included proposed rejections that the USPTO either adopts or declines to adopt. Without convincing the USPTO to adopt such a proposed rejection, a request for inter partes reexamination would probably not have gone far.

Strategy considerations: inter partes reexamination should be considered by current competitors, particularly accused infringers. Inter partes reexamination offers advantages over ex parte reexamination in that the patent owner cannot conduct an interview with the CRU and the third party requester may rebut the patent owner’s arguments for patentability.

Inter partes reexamination also offers an advantage over inter partes review in that the patent owner in inter partes reexamination is not afforded an opportunity to file a preliminary response before the USPTO determines whether to institute the proceeding. Furthermore, the estoppel effect from inter partes reexamination can be delayed, if necessary, by appeal to the board and Federal Circuit.

Post-grant review

Post-grant review will first become available on September 16, 2012. It will be available only for patents that are involved in an interference, certain business method patents and patents that are filed under the first-inventor-to file system, i.e. patents filed after March 16, 2013. Post-grant review has the potential to become a very attractive mechanism for challenging patents. It will be available only within the first nine months following issuance of a patent or issuance of a broadening reissue patent.

A petitioner may seek post-grant review on any ground for invalidity of a patent claim (e.g. prior art, lack of enablement, lack of written description, or lack of utility, but not failure to comply with the best mode requirement). And, a petition for post-grant review must establish that it is ‘more likely than not’ that at least one challenged claim is unpatentable.

Ostensibly, this standard is more difficult to meet than the inter partes reexamination or review’s ‘reasonable likelihood of prevailing’ standard, but it remains to be seen whether the USPTO applies these standards in a meaningfully different way. Alternatively, post-grant review can be based on a petition that raises a novel or unsettled legal question that is important to other patents or patent applications. What might constitute such a novel or unsettled question is, well, unsettled. In response to a petition for post-grant review, a patent owner may file an optional preliminary response.

Adjudication of post-grant review will have many parallels with adjudication of interferences, e.g. it will be adjudicated by a three-judge panel of the PTAB, a patent owner that wishes to amend its claims must do so by motion, certain discovery will be available (discovery related to factual assertions of the parties), and an oral hearing. By statute, the USPTO generally must make a final determination of a post-grant review within one year or 18 months if good cause exists.

Post-grant review will not be available to a petitioner who has filed a civil action challenging the validity of a claim of the patent. Likewise, if the petitioner or its real party in interests files a civil action subsequent to petitioning for post-grant review, the civil action will be automatically stayed. However, a counterclaim challenging the validity of a patent claim is permissible.

Additionally, if the patent owner files suit within three months of issuance of the patent, a court may not stay consideration of a motion for preliminary injunction on the ground that a petition for post-grant review has been filed or that post- grant review has been instituted. Conclusion of post-grant review may lead to estoppel before the USPTO, a district court or the ITC on any ground that the petitioner raised or reasonably could have raised.

However, a timely settlement of post-grant review will avoid estoppel as to the settling petitioner. Either party to post- grant review may appeal to the Federal Circuit.

Strategy considerations: Post-grant review should be considered by competitors who would like a relatively rapid adjudication of patentability issues, resolution of novel or unsettled legal questions, or who do not have standing to bring an action in district court. It is the only proceeding discussed here in which the third party can directly attack the claims for unpatentability based on non-prior art grounds.

Thus, post-grant review may be of heightened interest in the life sciences, as patents in the life sciences may be vulnerable to enablement or written description challenges.

The ability to obtain resolution of any patentability issues early on in the life of the patent is appealing to the life sciences and pharmaceutical industries because the enormous research and development and regulatory costs for a new product must generally be incurred before the competitor has standing to bring a declaratory judgment action.

However, if the competitor’s strongest arguments are based on grounds that can be raised via inter partes review, the competitor should consider the benefits of seeking that rather than post-grant review, so as to minimise the potential estoppel effects.

Inter partes review

As of September 16, 2012, inter partes review will be available for all patents, irrespective of filing date. However, it can be instituted nine months after issuance of the patent or after the termination of any post-grant review proceeding.

Inter partes review will not be available to a petitioner who has filed a declaratory judgment action challenging the validity of a claim of the patent, nor will it be available to a petitioner who had been served with a complaint for patent infringement more than one year prior to filing a petition for inter partes review on the patent in suit.

The standard for initiating inter partes review is whether the petition shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the challenged claims. However, before instituting it, the USPTO will consider any preliminary response that the patent owner has filed. Adjudication will have many parallels to adjudication of post-grant review as discussed above.

However, the scope of discovery in inter partes review may be narrower, and it remains to be seen how the USPTO will interpret the discovery provisions of the AIA.

Strategy considerations: Inter partes review may be suitable for a competitor that has solid prior art-based unpatentability arguments, but who wishes to avoid the possibility of creating an estoppel as to its other invalidity arguments.

An accused infringer who has been served with a complaint must be wary of the time constraints. Because inter partes review can be sought only after termination of any post-grant review, but also must be sought within one year of service of an infringement complaint, an accused infringer may not have much time to seek inter partes review.

Additionally, a potential challenger must carefully consider the timing of any potential estoppel created via inter partes review versus the timing of any potential infringement suit.

Conclusion

Each post-issuance option under the AIA has its advantages and disadvantages, and one cannot take a one-size-fits-all approach when considering them.

Prior knowledge and experience with patent reexaminations, interferences, prosecution and litigation will be invaluable in devising the optimal strategy for a particular situation.

Eldora L. Ellison, PhD, is a director at Sterne, Kessler, Goldstein & Fox. She can be contacted at: eellison@skgf.com

Deborah Sterling, PhD, is an associate in the biotechnology/chemical group at Sterne, Kessler, Goldstein & Fox. She can be contacted at: dsterlin@skgf.com