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Declaratory judgment actions, covenants not to sue, and bad patents: a call to allow the judiciary to weed out bad patents while adhering to the "case or controversy" requirement.

Introduction
I. BACKGROUND
 A. Declaratory Judgments
 1. A Brief History of the Declaratory Judgment Act
 2. The Use of the Declaratory Judgment Act in Patent
 Litigation
 3. The New Justiciability Test and its Impact on
 Subject Matter Jurisdiction
 a. Immediacy and Reality
 b. MedImmune and the New Justiciability
 Test.
 c. Common Misapplications of Cardinal
 Chemical
 B. Ex Parte Reexamination, Post-Grant Review, and Inter
 Partes Review Before the United States Patent and
 Trademark Office
 1. A Brief History of Reexamination and Post-Grant
 Review
 2. Procedural Aspects of Ex Parte Reexamination,
 Post-Grant Review, and Inter Partes Review as
 They Relate to Declaratory Judgment Actions
 3. Using Ex Parte Reexamination, Post-Grant Review,
 or Inter Partes Review in the Context of
 Litigation
 a. Legal Standards
 b. Discovery
 c. Staying Litigation
 d. Estoppel Issues
II. ANALYSIS
 A. Judicial Means of Retaining Jurisdiction
 1. Jurisdiction Over Invalidity and
 Unenforceability Via 35 U.S.C. [section] 285 Claims of
 Exceptionality
 2. Jurisdiction Over Unenforceability Claims Concerning
 Interrelated Patents
 3. Jurisdiction Based on the Sherman Act
 4. Potential Issues with Judicial and
 Administrative Remedies
 B. Administrative Proceedings and Claims of Invalidity In
 Ex Parte Reexamination, Post-Grant Review, and Inter
 Partes Review Proceedings Before United States Patent
 and Trademark Office
 1. Post-Grant Review Proceedings
 2. Inter Partes Review Proceedings
 3. Ex Parte Reexamination Proceedings
III. PROPOSED SOLUTION
 A. The Extension of Currently-Accepted Judicial Means
 B. Utilizing Administrative Remedies
 C. Public Policy Rationale

CONCLUSION


Cite as 13 J. High. Tech. L. 1 (2012)

Introduction

Suits based on the Declaratory Judgment Act (1) are well-known tools in the world of patent litigation. (2) Such suits allow alleged infringers to obtain a judicial determination of their rights without waiting for a patent owner alleging infringement to sue. (3) A typical patent-related situation involving a declaratory judgment action arises where a patent owner threatens a competitor with infringement of its patent, thus forcing the competitor to either stop producing a product or continue its potentially infringing activity. (4) An even worse situation occurs where the patentee threatens infringement, but never actually brings suit in order to stifle competition. (5)

Absent the declaratory judgment mechanism, this would act as a powerful deterrent to competition. (6) An accused infringer that continues its allegedly infringing actions opens itself up to treble damages because it is on notice and the alleged infringement may now be willful; if it stops, it loses sales. (7) The Declaratory Judgment Act empowers alleged infringers to bring a declaratory judgment action and have a court determine their rights. (8)

For an accused infringer to survive a dismissal of its declaratory judgment action, the court must have subject matter jurisdiction to hear the case. (9) This is established by showing that the patent owner's assertions of infringement are "definite and concrete" and touch on "the legal relations of parties having adverse legal interests." (10) The Court of Appeals for the Federal Circuit ("CAFC") has developed doctrine by which courts may determine whether the level of assertions and actions by the patent owner rise to this level. (11) This typically is proved by showing that the patentee has created "a reasonable apprehension of an infringement suit" in the accused infringer. (12)

Once the court obtains subject matter jurisdiction, the patent owner still has the ability to have the suit dismissed. A patent owner may decide to cut its losses and file a Covenant Not to Sue ("CNS") thereby alleviating the court of subject matter jurisdiction. (13) Without subject matter jurisdiction, a court has no authority to render a decision on the matter--the "case or controversy" (14) requirement of Article III, Section 2 of the U.S. Constitution is removed. (15) Assuming that the patent is valid and enforceable, there is no problem; the patent owner is happy because it does not have to defend its patent against invalidity claims, and the formerly-accused infringer is happy because it is no longer under threat of suit for the products covered by the CNS.

However, what about the situation where the accused infringer has discovered evidence that the patent in question is invalid? The patent owner may avoid having the patents invalidated by filing a CNS, thus removing subject matter jurisdiction from the court. (16) The court then has no jurisdiction to even hear any evidence regarding the propriety of the patent. (17) Even worse, the evidence uncovered by the accused infringer would, most likely, be under a protective order and would be unavailable to parties outside the suit. (18) The patent owner is free to assert a patent or patents that may actually be invalid against others. (19)

This paper investigates whether courts currently have the mechanisms in place to retain subject matter jurisdiction in such a situation. In the absence of such mechanisms, this paper argues that a doctrine should be developed on public policy grounds to avoid assertion of patent rights based on possibly invalid patents. This paper thereafter discusses whether courts should be able to act as third-party interests and invoke any of the administrative review proceedings available at the United States Patent and Trademark Office.

Section I of this paper discusses the history of and reasons for the enactment of the Declaratory Judgment Act. (20) Section I also presents various scenarios in which this topic may present itself in litigation, especially in light of the holding of Medlmmune, Inc. v. Genentech, Inc., which enunciated a new justiciability test for subject matter jurisdiction. (21)

Section II reviews current means by which a court may retain jurisdiction in the face of a CNS. Further, Section II discusses administrative remedies available to accused infringers and, possibly, the court in the event potentially invalidating evidence presents itself.

Section III proposes that various notable exceptions to the general rule that a CNS obviates claims of invalidity have effectively laid the groundwork for judicially mandated retention of subject matter jurisdiction sufficient to satisfy Article III. Section III additionally argues that mechanisms in place based on ex parte reexamination should be extended to the courts allowing them to institute a proceeding should a question of validity be uncovered. I. BACKGROUND

A. Declaratory Judgment Actions

1. A Brief History of the Declaratory Judgment Act

The Declaratory Judgment Act was first introduced before Congress in 1919. (22) This legislation was a means by which a party could have its legal rights adjudicated without having to wait for its opponent to strike first. (23) Prior to the Act, no mechanism existed by which a party accused of a wrong could bring its case before the court on its own volition. (24) Only a party asserting a cognizable claim had the power to bring the issue before the court. (25) The Declaratory Judgment Act itself does not confer jurisdiction, (26) it is merely a procedural tool to provide additional remedies to federal litigants. (27)

This inability to bring a declaratory judgment suit on the part of a purported infringer led to cases in which a patent holder asserted its right to bring a suit without any intention of actually doing so. (28) An example of this occurs when a patent owner asserts that the users of a competing product infringe its patent. (29) The patent owner, however, has no intention of filing suit and uses this ploy to effectively stifle competition. (30) Current and potential users of the purportedly infringing products no longer purchase them for fear of a lawsuit, thus pushing any future sales to the patent owner and driving its competitors out of business. (31) This acts to extend the patent owner's rights farther than the limited monopoly intended by the Patent and Copyright Clause of the Constitution. (32)

Even before its eventual enactment, the Declaratory Judgment Act ran into a major obstacle; the Supreme Court was unsure whether such an act was constitutional. (33) In a series of Supreme Court cases looking at the constitutionality of two state declaratory judgment statutes, (34) the Court found that the state declaratory judgment statutes did not comport with the case or controversy requirement of the Constitution. (35) These rulings were seen as a "virtual judicial veto" of the legislation before Congress. (36)

This obstacle was later removed when the Supreme Court overturned its previous rulings and held that declaratory judgments were merely a form or method of procedure. (37) Declaratory judgments did not run afoul of constitutional restraints as long as the controversy involved was not a hypothetical, but involved a real issue for the court to issue a judgment. (38) This ruling seemingly removed any remaining obstacles and led to the passage of the Declaratory Judgment Act in 1934. (39)

2. The Use of the Declaratory Judgment Act in Patent Litigation

The use of the Declaratory Judgment Act in patent litigation presents itself in one of two ways: it is plead in response to a suit claiming infringement, (40) or it is brought as its own cause of action by a purported patent infringer. (41) In either case, claims or counterclaims brought under the Declaratory Judgment Act in patent cases most often include assertions of non-infringement, invalidity, unenforceability, or any combination thereof. (42)

A patent holder facing a claim or claims based on the Declaratory Judgment Act may avoid litigation by issuing a CNS. (43) Such covenants can take one of several forms: (1) an explicit covenant; (44) (2) an oral promise before the court; (45) (3) a statement of non-liability; (46) or (4) prior to 2007, failure to bring a claim for infringement. (47) A CNS effectively removes a court's subject matter jurisdiction over the case by removing the case or controversy requirement of Article III. (48) This occurs because the removal of the infringement suit by the patent owner vitiates the very reason that the parties were before the court-i.e. to determine if infringement liability exists. (49) Once a case or controversy is removed a court is without jurisdiction, absent some other means for retaining said jurisdiction. (50)

An important distinction exists between counterclaims brought under the Declaratory Judgment Act and those that are merely plead in an answer. (51) Those that are plead in an answer do not survive if the plaintiff's case is withdrawn or dismissed. (52) However, claims based on the Declaratory Judgment Act are their own causes of action and therefore generally survive a withdrawal or dismissal of the underlying claims. (53)

A patent owner's decision to issue a CNS may be for any number of reasons: (1) the patent holder may come to realize that the declaratory judgment plaintiff's product or process is not actually infringing; (2) the patent holder may be restrained by statutory limitations; (54) (3) the patent holder may decide that the cost of litigation is not proportional to the infringing activity; (55) or, (4) the patent holder may become aware that the declaratory judgment plaintiff is in possession of damning evidence that would render its patent either invalid or unenforceable. (56)

3. The New Justiciability Test and its Impact on Subject Matter Jurisdiction

a. Immediacy and Reality

In the situations noted in the previous section, the party bringing a suit based on the Declaratory Judgment Act must initially satisfy the case or controversy requirement of Article III. (57) In the patent world, the test for this requirement has been distilled into a two-part justiciability test for subject matter jurisdiction. (58) This two-part test was developed to satisfy the Supreme Court's immediacy and reality requirement enunciated in Maryland Casualty Co. v. Pacific Coal & Oil Co. (59) The first part of the test, which is referred to as the reality portion of the test, essentially looks to whether the case is ripe for adjudication. (60) Currently, courts look to "all the circumstances" to determine if the case is sufficiently ripe. (61) Ripeness, however is not a mechanical determination and the facts of each case must be taken into account. (62)

The second part of the test is referred to as the 'concrete steps' test. (63) This looks to the timing between the suit and the steps taken in furtherance of the purported infringing activity to determine if the immediacy requirement is met. (64) If the purported infringing activity will not be immediate, the court will decline to issue a ruling for fear of issuing an advisory opinion. (65)

The subject matter jurisdiction through which a court may rule on a case must be extant throughout the entire case. (66) There exists any number of mechanisms by which subject matter jurisdiction may be removed by the parties to a suit after the instigation of litigation. (67) One example involves voluntary dismissal of a case after the parties have agreed to a settlement. This would be enforced pursuant to Federal Rule of Civil Procedure ("FRCP") 41(a)(1)(A)(ii) which allows for stipulated dismissals with or without prejudice if agreed to by the parties. (68) More germane to the present discussion, subject matter jurisdiction may be unilaterally removed by a patent owner through the issuance of a CNS. (69)

The "all the circumstances" test is relatively new and it is unclear what effect it will have on future declaratory judgment actions. (70) Case law based on the now-overturned "reasonable apprehension" test stood for the proposition that a CNS completely absolved the court of subject matter jurisdiction from which to hear claims or counterclaims alleging invalidity. (71)

b. MedImmune and the New Justiciability Test

For several decades the two-part justiciability test incorporated the reasonable apprehension of suit test. (72) During this time, the reasonable apprehension test was used to determine whether the reality requirement of Maryland Casualty was met. (73) The reasonable apprehension of suit test asked whether there exists "an explicit threat or other action by the patentee which creates a reasonable apprehension on the part of the declaratory plaintiff that it will face an infringement suit...." (74) Thus, absent an explicit threat by the patentee, a court would decline to extend jurisdiction and would not hear the case. (75)

Blind adherence to this test presented a major problem for licensees who wished to challenge the validity of the patents they licensed. (76) A licensee could not bring a suit under the Declaratory Judgment Act to establish invalidity, for instance, without first breaching the license and exposing itself to treble damages for willful infringement. (77) This effectively reverted the standoff between patent owners and purported infringers back to the days before the enactment of the Declaratory Judgment Act. (78)

The Supreme Court in Medlmmune took up this seemingly inequitable conundrum and realigned the reality portion of the justiciability test. (79) It held that the Court of Appeals for the Federal Circuit's ("CAFC") reasonable apprehension of suit test conflicted with Supreme Court precedent established in Altvater v. Freeman, Maryland Casualty, and Aetna Life Insurance Co. v. Haworth. (80)

The Court held that a court must affirmatively answer "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment" in order to retain jurisdiction. (81) A proper application of this test requires a dispute that is "'definite and concrete, touching the legal relations of parties having adverse legal interests'; and that it be 'real and substantial' and 'admi[t] of specific relief through a decree of a conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.'" (82)

In redefining the justiciability test, the Supreme Court is seen to have lowered the bar over which a Declaratory Judgment plaintiff must hurdle to allow a court to render a judgment. (83) Subject matter jurisdiction exists when opposing parties litigate issues "touching the legal relations of parties having adverse legal interests." (84) It is unclear at the present time whether, or how much, this redefinition will impact the ability of a court to retain jurisdiction over claims of invalidity in declaratory judgment actions.

c. Common Misapplications of Cardinal Chemical

Of note, the Supreme Court's Medlmmune opinion specifically mentioned invalidity claims when referencing Cardinal Chemical Co. v. Morton International Inc. (85) The ruling in Cardinal Chemical is often misquoted. As quoted, the language states: "A party seeking a declaratory judgment of invalidity presents a claim independent of the patentee's charge of infringement." (86) Merely reciting this sentence by itself removes it from the context in which it was meant to be read. (87) A thorough reading of the next paragraph shows that the Court was referencing the CACF's jurisdiction to rule on the invalidity issue on appeal. (88) The Court was not referring to the district court's ability to retain jurisdiction over invalidity claims after a CNS had been issued. (89)

Cardinal Chemical invalidates the CAFC's mootness doctrine whereby the court would automatically dismiss a district court's finding of invalidity if it reversed a finding of infringement. (90) Cardinal Chemical held that a finding of non-infringement does not necessarily lead to a finding of invalidity and thus the reviewing court retains jurisdiction to address the lower court's invalidity ruling, at its discretion. (91)

The language of Medlmmune reiterates the holding of Cardinal Chemical, but neither case held that invalidity should carry with them their own subject matter jurisdiction. (92) Thus the problem remains. A patent owner has the power to avoid a ruling of invalidity by issuing a CNS. (93) The sections that follow discuss various existing means for retaining subject matter jurisdiction as well as an alternative remedy available to anyone wishing to have a patent reviewed.

B. Ex Parte Reexamination, Post-Grant Review, and Inter Partes Review Before the United States Patent and Trademark Office

1. A Brief History of Reexamination and Post-Grant Review

The institution of the reexamination procedure followed an extended congressional debate into the need for a mechanism by which the patentee and the USPTO could fix errors in issued patents. (94) Prior to the enactment of the reexamination process, it was very difficult to correct defects in an issued patent. (95) Neither the USPTO nor the patentee could re-institute patent examination. (96) The only means to correct claims or to raise a question of patentability was before an Article III court. (97)

Reexamination was meant to end this difficult process and was enacted with the aim to (1) "settle validity disputes more quickly and less expensively" than protracted litigation, (2) "allow courts to refer patent validity questions" to the Patent Office and (3) to "reinforce 'investor confidence in certainty of patent rights' by affording the PTO a broader opportunity to review 'doubtful patents.'" (98) Congressman Robert Kastenmeier noted that reexamination was "an effort to reverse the current decline in U.S. productivity by strengthening the patent and copyright systems to improve investor confidence in new technology." (99) It was also meant as a means to correct errors made by the examiner during prosecution. (100)

Reexamination proceedings finally gained congressional approval in 1980, (101) and the first reexamination of a patent was believed to have been instituted on July 1, 1981. (102) The procedure allowed for a patentee, a third party, (103) or the Commissioner of Patents acting sue sponte, to institute a reexamination of a granted, valid U.S. patent. (104) This initial form of reexamination was, however, an ex parte procedure. (105) Though a third party could request a reexamination and bring potentially invalidating prior art to the attention of the USPTO, the third party could not participate in the reexamination process. (106)

This lack of a third party's ability to participate in the reexamination process was not lost on Congress. (107) It noted that the ever increasing cost of patent litigation was a burden to U.S. companies and that one way of fixing this problem was to institute an administrative means to review the validity of a patent. (108) The Honorable Carlos J. Moorhead noted in a 1995 Congressional hearing that the purpose of establishing inter partes reexamination "is to increase third party use of the reexamination system and to provide a meaningful, inexpensive and expeditious alternative to patent litigation." (109)

The American Inventors Protection Act (AIPA) was signed into law four years later on November 29, 1999. (110) Among other patent reforms, AIPA authorized the USPTO to institute a procedure whereby third parties could actively participate in the reexamination process. (111) This procedure became known as inter partes reexamination and allowed third parties to not only institute reexamination proceeding, as they could in an ex parte reexamination, but also file arguments in response to those of the patentee. (112) Inter partes reexamination is applicable to patents filed on or after the date of the passage of AIPA, November 29, 1999. (113) The first inter partes reexamination request was believed to have been granted on October 17, 2001. (114)

Most recently, the America Invents Act of 2011 ("AIA") significantly revised the ability of patentees and third parties to institute post-grant review procedures. (115) The congressional record indicates that the changes to the reexamination procedure were intended to cure an "administrative review process at the USPTO [that] is widely viewed as ineffective and inefficient." (116) USPTO Director David Kappos testified that the AIA's reform of "[t]hese review proceedings will serve to minimize costs and increase certainty by offering efficient and fast alternatives to litigation as a means of reviewing questions of patent validity. Such proceedings also will provide a check on patent examination, ultimately resulting in higher quality patents." (117)

While ex parte reexamination remains mostly unchanged, the AIA substantially revised aspects of the review processes that may be instituted by third parties who wish to utilize administrative procedures to challenge the validity of an issued patent. (118) This third-party procedure now encompasses (1) post-grant review (119) and (2) inter partes review. (120)

Note that for the purposes of this paper, a discussion of inter partes reexamination has been ignored. Inter partes reexamination and its replacements, post-grant review and inter partes review, (121) are applicable to patents filed on or after the date of the passage of AIPA, November 29, 1999. (122) At the anniversary of the passage of the AIA (September 16, 2012), inter partes reexamination will cease to exist and will be replaced by post-grant review and inter partes review, as applicable. (123) Thus a discussion of inter partes reexamination was deemed to be unproductive.

Post-grant review is the first stage of review and may be instituted within 9 months of the issue date of the patent in question. (124) Inter partes reexamination is now known as inter partes review and was revised with the aim to allow "a petitioner in an inter partes review ... request to cancel as unpatentable 1 or more claims of a patent only on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications." (125) Additionally, the inter partes review may only be instituted after the 9-month postgrant review window or after a post-grant review has been completed. (126)

2. Procedural Aspects of Ex Parte Reexamination, Post-Grant Review, and Inter Partes Review as They Relate to Declaratory Judgment Actions

The timing of the instigation of either an ex parte reexamination, post-grant review, or inter partes review depends upon who is requesting the review, how much the requester wants to participate in the process, and when the request is filed. An ex parte reexamination may be instigated by any party at any time. (127) This is accomplished by filing a petition requesting reexamination along with the appropriate fee, (128) though the fee requirement may be waived by the Director. (129) The petition must include a list of "patents or printed publications which that person believes to have a bearing on the patentability of any claim of a particular patent...." (130)

There is no limit to the number of ex parte reexaminations that can be filed as long as the threshold legal standard for review is met (131) and as long as the filings are not done to harass the patentee. (132) It is only the patentee that may participate in the reexamination; (133) third parties do not have the right to any further participation in the ex parte reexamination process. (134) This is true with the exception that if the patent owner responds to the initial reexamination order by including "any amendment to his patent and new claim or claims he may wish to propose, for consideration in the reexamination," (135) the third party requester may respond to the patentee's statement. (136)

The Commissioner for Patents must then respond to a petition for reexamination within three months by granting or denying the petition. (137) Once instituted, ex parte reexamination proceeds as a normal examination on the merits. (138) The patentee is allowed to cancel claims, amend claims, or provide arguments in support of its position as with a regular examination. (139)

In addition to the above-mentioned method of instigating ex parte reexamination, a patentee may, instead, file a request for a supplemental examination. (140) A supplemental examination is a mechanism by which the patentee "... may request supplemental examination of a patent in the Office to consider, reconsider, or correct information believed to be relevant to the patent, in accordance with such requirements as the Director may establish." (141) The main function of this mechanism being the ability of the patentee to cure errors made during prosecution (142)--such as failing to provide prior art known to the patentee during prosecution. (143) The result of an approved request for supplemental examination is that an ex parte reexamination is instituted to allow the USPTO to consider the submitted documents. (144)

Post-grant review and inter partes review proceed similarly to an ex parte reexamination in that they are both instigated by filing a petition along with the appropriate fee. (145) A post-grant review may be instigated within nine months of the issue date of the patent (146) and may be filed by "a person who is not the owner of the patent." (147) After this nine month window has closed, a petitioner may petition for a inter partes review. (148) A major limitation to both forms of review is that there is a narrow window for filing a petition when concurrent litigation is involved. (149) A petitioner may only institute a post-grant review or inter partes review (1) prior to the petitioner filing a complaint (150) or (2) in the case of an inter partes review, within one year of the patentee filing a complaint. (151) As with post-grant review, the petitioner must be "a person who is not the owner of the patent...." (152)

Once a petition for review is filed, the patentee is then permitted to file a petition explaining why it believes that the review should not be instituted. (153) And, one of the more appealing features of the two review options includes the ability of the third party in both post-grant review and inter partes review to participate in the review process. (154) This includes the ability to respond to arguments put forth by the patentee. (155)

To provide context as to the scope of the reexamination process prior to the changes instituted by the AIA, some statistics are presented: as of March 31, 2011, there have been a total of 11,415 ex parte reexamination requests, with 9,997 of said requests being granted (92%). (156) Of the requests granted, 33% were requested by the patent owner, 66% were requested by a third party, and 1% were instituted by the commissioner. (157) The reexaminations had an average total pendency of 25.7 months. (158) Roughly 1/3 of those were in litigation during the reexamination. (159)

As of March 31, 2011, there have been a total of 1,195 inter partes reexamination requests, with 988 of said requests being granted (82%). (160) The reexaminations had an average total pendency of 36.5 months. (161) Seventy one percent (71%) of those were known to be in litigation during the reexamination. (162)

3. Using Ex Parte Reexamination, Post-Grant Review, or Inter Partes Review in the Context of Litigation

Ex Parte reexamination in the context of patent litigation is a useful tool for both the patentee and the accused infringer. (163) The patentee may use ex parte reexamination to bolster the strength of its patent by having the USPTO consider prior art asserted against it during or in preparation for litigation. (164) It may also use reexamination to have the USPTO consider a different aspect of previously-considered art. (165) This aids the patentee because a reexamined patent enjoys the same presumption of validity as any other valid patent (166) and the burden of proof required to have a patent invalidated based on a piece of art previously considered by an examiner during prosecution is very high. (167)

Ex parte reexamination may also work in favor of accused infringer. (168) An accused infringer may request a reexamination in order to have the USPTO consider new, potentially-invalidating art, or to review previously-considered art. (169) The reexamination may result in a weaker patent or may result in the patent being found to be invalid altogether. (170) However, the reexamination may result in a stronger patent, which is the chance one takes when selecting to enter into a reexamination. (171)

Similarly, post-grant review and inter partes review are also very powerful tools for a third party petitioner. (172) They offer the same opportunity to have the USPTO consider new or previously-reviewed prior art, which may result in a change in the claims or invalidation of the entire patent. (173) Again, though, a petitioner must weigh the potential that the patentee may emerge from either post-grant review or inter partes review with a stronger pa tent. (174)

While an exhaustive discussion of the role of ex parte reexamination, post-grant review, and inter partes review is beyond the scope of this article, the following sections provide an outline of some of the key points that may be considered. Many articles and books have been written that detail the procedural aspects of ex parte reexamination. (175) It is left to the reader to explore these if additional information is required. With regard to post-grant review and inter partes review, the authors note that these were only recently implemented by the AIA and that the procedural benefits and detractions will, we are sure, be discussed at length by other commentators.

a. Legal Standards

Several issues present themselves with regard to ex parte reexamination, post-grant review, and inter partes review. The most glaring of these include (1) the threshold legal standard that must be overcome to institute one of these proceedings and (2) which of the four means to invalidate a patent may be asserted during the proceeding. (176)

One of the more interesting things that was instituted by the AIA is three different legal standards required for a petitioner to overcome depending on which review process the petitioner selects. (177) Ex parte reexamination was largely unaffected by the revisions of the AIA and, as such, the threshold legal standard for review has been fleshed out by the courts much more thoroughly than the standards of post-grant review and inter partes review. (178) For a petition for an ex parte reexamination to be approved, "the Director will determine whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request, with or without consideration of other patents or printed publications." (179)

If the Director concludes that there is a "Substantial New Question" ("SNQ") of patentability, a reexamination will be instituted. (180) This standard has been interpreted as "a balance between curing allegedly defective patents [via reexamination] and preventing harassment of patentees." (181) A SNQ will be found if a teaching of (prior art) patents and printed publications is such that "a reasonable examiner would consider the prior art patent or printed publication important in deciding whether or not the claim is patentable." (182) The SNQ threshold is seen to be a low standard with Former Chief Judge Paul Michel describing it as "almost no standard at all." (183) Indeed, in the period spanning from the instigation of ex parte reexaminations to March 31, 2011, 92% of all petitions were approved by the Director. (184)

Prior to 2002, such a question of patentability could only be in the form of patents or printed publication (185) that questioned the validity of the patent and that were not previously considered by the patent examiner during examination. (186) This was changed in 2002 to include any prior art, even prior art considered by the examiner during the initial examination. (187) This change was instituted to allow the USPTO to review previously-considered documents as long as the petitioner presented them in "a new light or a different way that escaped review during earlier examination." (188) Notably, unlike a reissue proceeding, (189) the patentee is not permitted to enlarge the scope of its patent during the reexamination process. (190) The 'substantial new question of patentability' must present a "new, non-cumulative technological [prior art] teaching...." (191)

Post-grant review, on the other hand, is centered on the threshold legal question of whether the Director determines that "it is more likely than not that at least 1 of the claims challenged in the petition is unpatentable." (192) The 'more likely than not' ("MLN") standard as it applies to post-grant review has not been fleshed out in the courts yet, but is generally accepted to mean that there is a greater than 50% likelihood that the patent is invalid based on the cite prior art. (193) This standard is more stringent than the SNQ standard, thus making post-grant review less appealing in this regard. (194)

Finally, inter partes review has yet another standard; here the petitioner must show "that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition." (195) As Chief Judge Smith notes, "[c]omparing the two standards, the 'reasonable likelihood' standard is lower than the 'more likely than not' standard. The reasonable likelihood standard allows for the exercise of discretion but encompasses a 50/50 chance whereas the 'more likely than not' standard requires greater than a 50% chance of prevailing." (196) As such, this standard falls in between the SNQ standard (197) and the MLN standard. (198) Thus the RLS bar is seen to be a reasonably high one, but not too high. (199)

With regard to the second point, of the four defenses to a claim of patent infringement, it is invalidity that is of importance to this discussion. (200) Ex parte reexamination proceedings may only involve claims of invalidity. (201) Claims of unenforceability due to inequitable conduct are no longer investigated under reexamination proceedings due to the need to make a substantive determination of the intent of the patentee. (202) This limits the overall usefulness of reexamination, but, in light of the CAFC's ruling in Therasense, Inc. v. Becton, Dickinson and Co. (203)--which raised the burden of proof for inequitable conduct-this may be of lesser importance that is used to be. (204)

The AIA provides an avenue by which the USPTO may investigate instances of fraud uncovered during an ex parte reexamination proceeding instituted via a supplemental examination request. (205) Again, the scope of this avenue is yet to be discussed by the courts, but provides a potential means by which the USPTO may investigate fraud in the form of inequitable conduct. (206) However, this is a narrow opening because such an investigation is limited to those ex parte reexaminations that are instituted pursuant to a supplemental examination request. (207)

Post-grant review proceedings may also involve claims of invalidity, but may additionally consider other types of defenses to infringement. (208) The statute allows for a "petitioner in a post-grant review may request to cancel as unpatentable 1 or more claims of a patent on any ground that could be raised under paragraph (2) or (3) of section [35 U.S.C. [section]] 282(b)." (209) Where paragraph (2) or (3) of section 282(b) provides for defenses in the form of invalidity based on prior art, invalidity based on section 112, and invalidity based on section 251. (210)

Note that this expands the tools available to a petitioner by expanding the defenses which can be raised. (211) Formerly, inter partes reexamination only allowed the petitioner to assert claims of invalidity based on prior art. (212)

Even more restrictive than post-grant review, inter partes review proceedings may also involve claims of invalidity based on patents or printed publications. (213) This harkens back to the days of inter partes reexamination by not allowing investigation into other defenses to a claim of patent infringement. (214) As with ex parte reexamination, discussed above, this includes the inability to assert claims of unenforceability due to inequitable conduct. (215)

b. Discovery

One of the more interesting aspects of the noted types of administrative review is the ability to perform a limited level of discovery depending on which type of review is selected. Ex parte reexamination remains largely unchanged by the AIA and does not allow for a third-party requester to perform discovery. (216) Since the third-party requester is not allowed to participate in the ex parte reexamination, other than filing the initial request, this makes sense. (217) However, both post-grant review (218) and inter partes review now have provisions for discovery during their proceedings. (219)

With post-grant review, the discovery is limited to evidence relevant to factual assertions made by the opposite party during the proceeding. (220) A "good cause standard" is employed for discovery in post-grant review. (221) With inter partes review, the discovery provisions are directed to the deposition of witnesses submitting affidavits or declarations and, more importantly, to that which "is otherwise necessary in the interest of justice." (222) It is this last provision which appears to provide the most interesting possibilities with respect to the issue presented in this paper.
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Title Annotation:Introduction through I. Background B. Ex Parte Reexamination, Post-Grant Review, and Inter Partes Review Before the United States Patent and Trademark Office 3. Using Ex Parte Reexamination, Post-Grant Review, or Inter Partes Review in the Context of Litigation b. Discovery, p. 1-45
Author:Tiedeman, Jason Scott; Gorman, Eric D.
Publication:The Journal of High Technology Law
Date:Jan 1, 2013
Words:6318
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