Post-grant review of U.S. patents: a primer.
1. inter partes review (IPR), which replaces inter partes reexamination, the long-standing administrative option to challenge patents,
2. post-grant review (PGR),
3. a temporary post-grant review of patents claiming certain covered business methods (CBM), and
4. ex parte reexamination, which remains essentially unchanged from before the AIA was enacted.
The three new post-grant review proceedings provide distinct fora for challenging patents with different standards of review than in district court and the International Trade Commission (ITC), making a careful decision as to where to file all the more important to potential litigants. The following details key aspects of each forum that can provide decision points for the choice of one forum over another.
POST-GRANT PROCEEDINGS GENERALLY
Post-grant proceedings are proceedings before specialized PTO administrative law judges, known as administrative patent judges (APJ), in the Patent Trials and Appeals Board (PTAB) wherein an adverse party challenges the validity of a patent. As a general rule, post-grant proceedings are less expensive and faster than traditional litigation in the courts, due to a statutorily prescribed timeline for PTAB review. In fact, post-grant proceedings generally conclude within 18 months of filing the petition for review and cost significantly less than district court litigation. But there are some downsides to administrative proceedings. For instance, the whole toolbox of patent invalidity is not always available before the PTO; challengers alleging invalidity before the PTO are limited to certain attacks while others are unavailable or available only under certain circumstances.
Each type of post-grant review has slightly different features, and deciding where and how to file means appreciating these differences.
INTER PARTES REVIEW
Inter Partes Review (IPR) permits a third party to petition for review of a patent to determine whether it is invalid. The word "inter partes" is Latin for "between the parties," and an IPR is so-called because the challenger remains a party to the proceeding (unlike, for example, ex parte proceedings discussed below). An IPR occurs before a panel of three APJ who issue final written decisions appealable to the Federal Circuit. (1)
What type of arguments can a challenger raise? A challenger may argue that a patent is invalid as anticipated (lacks novelty) or rendered obvious (lacks an inventive feature) in light of patents and printed publications as described in the patent statute. (2) Importantly, however, a challenger may not raise arguments directed to written description or enablement--in other words, one cannot argue that the patent disclosure is insufficient to support the claimed invention. A challenger is also prohibited from arguing that a patent is invalid for claiming non-patentable subject matter. This can be a key issue in biotechnology cases because, recently, certain diagnostic assays have been found invalid in the district courts for claiming non-patentable subject matter. (3) In evaluating a petition, an IPR will only be instituted if the challenger can show "a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition." (4)
There are circumstances in which a party may not petition the PTO for inter partes review of a patent. For instance, IPRs may only be filed starting nine months after a patent issues or when any post-grant review proceeding involving the patent is resolved, whichever is later. (5) Moreover, a party is barred from filing an IPR if it has filed a declaratory judgment action asserting invalidity in district court with respect to the patent at issue or if more than a year has passed since the party was served with a complaint asserting infringement of the patent at issue. (6) Notably, a party's counterclaim of invalidity in an infringement suit does not preclude the filing of an IPR--only filing for declaratory judgment of invalidity triggers the bar. (7)
Although challenges are limited in scope and in time, IPRs have significant benefits over traditional litigation. First, an IPR (like PGR and CBM review discussed below) has a statutorily prescribed timeline--from filing to decision, an IPR generally lasts no longer than 18 months, as shown in Figure 1. (8) Once a petition for IPR is filed, the PTAB will decide whether to institute an IPR within six months. Upon institution, the patentee has the opportunity to amend claims amidst a period of limited discovery. (9) At close of discovery, approximately seven months after institution, the patentee and challenger are afforded an oral hearing and receive a final written decision soon after that--by statute, the time period from institution to decision must be no longer than twelve months, with a possible six month extension upon a showing of good cause. (10)
Significantly, IPRs afford the patentee and the challenger the possibility of settlement, unlike previous post-grant proceedings. (11) A potential settlement is an additional tool in the arsenal of the challenger, and an opportunity for the patentee to avoid a determination as to the validity of a weaker patent if it so chooses.
Most importantly, however, post-AIA proceedings before the PTO have a different evidentiary standard for proving invalidity of the patent. In district court, a challenger must prove a patent invalid with clear and convincing evidence. In an IPR, the evidentiary standard is merely a preponderance of the evidence, a more relaxed standard. (12) This lower standard makes it easier to prove a patent invalid, essentially negating a patent's presumption of validity. In fact, this lower standard has resulted in a high percentage of claims being cancelled when challenged before the PTO. According to the most recent data available, a total of 14,332 claims have been challenged in IPRs that have proceeded to a written decision. Of these claims, 6774 were found unpatentable by PTAB, 1608 were cancelled by the patentee, 1330 were found patentable by PTAB, and 4620 remain patentable because they were not addressed by the written decision. (13) Thus, 58 percent of the claims in patents that proceeded to a written decision were cancelled. Moreover, in approximately 87 percent of final written decisions, at least one claim of the challenged patent was cancelled. (14)
INTER PARTES REEXAMINATION
Pre-AIA, the familiar inter partes reexamination was the only form of adversarial post-grant review at the PTO, but it has been eliminated by the AIA and replaced by IPR. Like IPR, reexamination was a challenge to the novelty and/or obviousness of a patent brought by a third party. But beyond the substantive basis for challenging the patents, reexaminations differ greatly from IPRs--the procedure is quite different. Reexaminations could be filed at any point during the life of a patent with a showing of a "substantial new question of patentability" as to the challenged claims of the patent, rather than waiting nine months from issuance to challenge under the "reasonable likelihood" standard. (15) Additionally, reexaminations were heard by a panel of three patent examiners, rather than the specialized APJs available for IPRs, and were appealable to the Board of Patent Appeals and Interferences--an administrative body that no longer exists--rather than to the Federal Circuit directly. (16)
POST-GRANT REVIEW (PGR)
Post-Grant Review is another new proceeding before the PTO that has a wider range of bases on which to challenge a patent--essentially any invalidity grounds under the patent statute. (17) A tradeoff for this wide range of invalidity arguments is the severely limited timeframe during which a petition for PGR can be asserted. A third party may file for a PGR only during the first nine months after a patent issues. (18) Thus, only quick actors get the benefit of a full range of invalidity arguments before the PTO; after nine months challenges to the written description, enablement, and validity of the subject matter of a patent must take place in another forum.
Quick actors might not necessarily prevail in securing institution of PGR. Unlike the "reasonable likelihood" standard of IPR, a petitioner must show that at least one of the challenged claims is invalid by a preponderance of evidence. (19) Thus, in order to attack a patent with the full range of invalidity arguments, a petitioner must be prepared to show that a claim is more likely invalid than not, a higher standard of review than that of an IPR. This has proven difficult; recent data shows that no PGR trials have been instituted and only two challenges have been made. (20) However, because this process is so new, it is unclear whether it will remain difficult to institute PGR. If instituted, the PGR proceeds on the same timeline as an IPR and is subject to the same rules of discovery and procedure.
COVERED BUSINESS METHOD REVIEW
Although companies operating in the life sciences space are unlikely to encounter a significant number of patents that qualify as "covered business method" patents, it is worth noting that the AIA has provided a specialized review process for claims dealing with certain business methods. (21) A party may only file for review of a covered business method patent if it has been accused of infringement by the patent holder; other than that limitation, the procedure of covered business method patent review is similar to that of PGR and IPR. (22)
THE ROLE OF ESTOPPEL
Estoppel is a legal principle that bars a party from raising certain facts or claims in a proceeding or litigation. The AIA affords meaningful estoppel effects to the PTAB's post-grant decisions. When a final written decision is issued in a PGR or IPR, the petitioner may not bring any additional challenges to a patent in any forum if the challenge is based on "any ground that the petitioner raised or reasonably could have raised" before the PTAB. (23) This bar applies to challenges before the PTO, district court, and the ITC. (24) At first glance, this appears to be reasonable--a petitioner should not get two bites at the apple. However, particularly for PGRs, where the full range of invalidity arguments is available, this standard is actually quite burdensome. Because almost any invalidity argument "could be raised" in Post Grant Review, failing to succeed in a challenge to a patent severely limits a party's later options, especially because a party may not appeal any decision until after a final decision has been rendered, as discussed below. Moreover, the PTAB generally does not institute review based on all of the grounds raised in the petition, (25) and recent cases suggest that grounds on which the PTAB does not institute review will not be subject to estoppel; estoppel may arise only on claims and grounds that are addressed in the final written decision. (26)
APPEALS & POST-GRANT PROCEEDINGS
The PTAB's final written decision in a post-grant proceeding is appealable to the Federal Circuit directly, bypassing the district courts. This provides a major advantage over pre-AIA post-grant proceedings, which had to be appealed first to the Board of Patent Appeals and Interferences, a former administrative body at the PTO, before reaching the Federal Circuit. A direct appeal to the Federal Circuit greatly shortens the time to final resolution.
However, unlike in district court litigation, it appears that only a final decision is appealable; the AIA does not provide for interlocutory review of PTAB rulings and the Federal Circuit has affirmed this understanding of the AIA in rejecting appeals arising from non-final decisions, such as decisions not to institute proceedings. (27) This is a double-edged sword: waiting for a final decision makes it more difficult to appeal an adverse discovery decision or claim construction, but it guarantees speed as there will be no interruptions to the PTAB's timeline.
In practice, the inability to appeal adverse decisions, such as claim construction, as they are rendered could have enormous impact on the outcome of the case--and the validity of a patent. Where there are no factual disputes, the Federal Circuit reviews claim constructions by the PTAB de novo under the broadest reasonable interpretation standard, and where there are factual disputes as to the extrinsic evidence, the Federal Circuit reviews the factual decision for clear error--showing deference to the PTAB. (28) And because the PTAB construes claims according to their broadest reasonable interpretation, the scope of claims may differ from a district court's claim construction; depending on the scope, this may result in a potential advantage to either the challenger or the patentee. (29) In contrast, district courts construe claims according to their "ordinary and customary meaning" from the perspective of one of ordinary skill in the art at the time of the invention. (30) The PTAB's treatment of claim construction may change as the Supreme Court recently granted review of this issue.
Similarly, discovery disputes are not reviewable until the written decision is rendered. (31) Although few cases have yet addressed this, as the new post-grant proceedings at the PTO have not been in effect long enough to develop a significant body of law on the issue, the Federal Circuit's treatment of discovery disputes arising from other agencies suggests that the court will be rather deferential. For instance, the Federal Circuit reviews the discovery disputes of other administrative courts for abuse of discretion. (32) Nothing in the AIA suggests that the PTAB should be treated differently than other agencies. Thus, successful appeal of an adverse discovery decision will likely be difficult to obtain.
EX PARTE REEXAMINATION
One final proceeding before the PTO is ex parte reexamination, which remains available post-AIA. Although any party can request ex parte reexamination of a patent (including the patentee), upon institution, the process is not adversarial; in fact, a petition for ex parte reexamination can even be filed without revealing the filing party. Unlike the other forms of post-grant proceedings, the patentee is the only party that interacts with the examiners. Thus, a party seeking to challenge a patent does not have the benefit of discovery, claim construction, and motions practice as it would in the new post-AIA review proceedings. However, ex parte reexamination does not result in a true estoppel if the patent is found not invalid; one could conceivably attempt to invalidate a patent more than once. As a practical matter, though, it is difficult to invalidate a patent on prior art that was vetted during reexamination.
OTHER FOR A FOR PATENT LITIGATION
The obvious, traditional forum for patent litigation is district court. As discussed above, the PTO proceedings have various differences from litigation. First, district court litigation has no statutory limit on length--and cases can and often do last for years. Further, in district court, a patent has a presumption of validity; invalidity must by proven by the higher "clear and convincing" standard. This affords patentees an advantage at the outset, unlike at the PTAB. Additionally, claim construction takes place under the so-called Phillips standard, and claims are construed according to the "ordinary and customary meaning" from the perspective of one of ordinary skill in the art at the time of the invention. (33) This permits a patentee to have claims construed narrowly and with the benefit of expert testimony to explain the proper scope of the claims. Narrow claims, counterintuitively, generally benefit the patentee. If a claim is construed after expert testimony, the expert has an opportunity to opine as to the support for the claims in both the prior art and the patent specification. Thus, the construed claim is tailored to the patent itself, demonstrating to the judge precisely where support for the claim is found.
Another difference between district court and the PTAB is the discovery process. Although the PTAB's post-grant proceedings provide for discovery, the scope of discovery is quite limited, unlike in district court. In an IPR, for instance, discovery is generally limited to production of "any exhibit cited in a paper or testimony" and "relevant information that is inconsistent with a position advanced during the proceeding" and this information must be provided concurrently with any filing, such as the petition itself. (34) Parties can request additional discovery, but the PTAB rarely grants such motions. (35) In contrast, discovery in district court is a lengthy, intrusive affair.
Finally, a patent challenger will typically have the opportunity to conduct his or her trial before a jury. This can be a significant advantage for a sympathetic client whose counsel can create a narrative that appeals to the jury. Often, adept story-telling can tip the balance in close or difficult cases. As such, a patent challenger should identify counsel with a proven record of successfully trying cases before a jury to maximize his or her chances for a favorable verdict. Likewise, where other fora are utilized, in addition to litigation experience, specific expertise (such as before the PTAB) should be sought by a patent challenger (or a defendant).
INTERNATIONAL TRADE COMMISSION (ITC)
The ITC is another common forum for patent litigation. It permits patentees to exclude infringing products from the US market, but does not allow for monetary damages or for cancellation of a patent. Moreover, a party can only challenge imported goods that allegedly infringe a patent; a potential infringer cannot seek declaratory judgment of invalidity of a patent before the ITC, as it can in district courts, or seek cancellation of claims as before the PTAB. In addition to these substantive differences, ITC actions differ procedurally from traditional litigation in that they are heard before an administrative law judge (ALJ) rather than a jury, are reviewed by the full Commission before potential appeal to the Federal Circuit, and proceed according to a statutorily mandated time frame.
Of these, one of the more valuable differences is the speed with which an ITC action proceeds from filing to decision. At the ITC, a case is typically resolved via an initial determination by an ALJ within 12 to 15 months of filing in accordance with a statutorily mandated timeframe. (36) Following the initial determination, the parties are permitted to petition the Commission for review of any aspect of the decision, including findings of fact. Only after the Commission either reaches its final determination following review or declines to review the initial determination may a party appeal to the Federal Circuit. (37)
Perhaps the most drastic difference between the ITC and district court litigation is the limited remedy--exclusion orders. If a product is found to infringe a patent, the ITC has the power to forbid the importation of that product via either a global or limited exclusion order. (38) While this prohibits a party from importing the infringing product into the United States, it does not entitle the patentee to monetary damages; an ITC determination is forward-looking and most valuable for patents far from expiration.
In conjunction with the limited remedy, the ITC also provides unique benefits in terms of jurisdiction over defendants. Because the ITC is charged with investigating alleged infringement of imported goods, the commission has "in rem jurisdiction" over the imported good themselves--and can order their exclusion even without personal jurisdiction over the manufacturer. Essentially, filing at the ITC allows a patentee remedies against potential defendants over which a given district court may not be able to assert jurisdiction. (39)
WHAT DOES THIS ALL COST?
Of course, a major factor in pursuing litigation or a challenge to a patent is cost, and each of these proceedings has a different scale of cost. In part, this reflects the available options at each forum--in the district court, where all infringement and invalidity arguments (and full discovery) are available, litigation is generally more expensive than proceedings before the PTAB. (40) But even within a forum, cost varies due to the complexity of a given case; complex cases involving numerous experts and extensive discovery will naturally be more expensive. Moreover, ITC and district court proceedings are more likely to settle, often after discovery, which can mitigate a portion of the overall costs. Experienced counsel minimize costs by strategic scheduling of cases. For example, where possible, the parties can agree to early claim construction of a patent, which determines the meaning of claim terms in a case. Such claim construction can often be case dispositive. Counsel with expertise in document discovery can also save costs by working with opposing counsel to limit discovery, by crafting tailored requests for production, and by utilizing sophisticated data review and organization software. Ultimately, a careful weighing of the pros and cons of each forum, the importance of the case to a company's business objectives, and the need for expediency will drive a final choice of forum.
Post-grant proceedings provide several avenues for attacking the validity of a U.S. patent, each with its own advantages and disadvantages. Some of the most salient features are summarized below in Table 1. A challenger seeking to invalidate a patent should carefully weigh these factors in pursuing relief through a particular forum. Finally, a challenger should carefully discuss with counsel the pros and cons of each forum with a particular focus on counsel's track record and expertise at each forum.
Stefan Michael Miller is a partner at the New York office of Kirkland & Ellis LLP, and a member of the firm's Intellectual Property group. Dr. Miller formerly prosecuted patent applications before the United States Patent & Trademark Office and is now a litigator handling chemical, pharmaceutical, and biochemical patent cases. Dr. Miller earned his B.S. in Chemistry from the University of Texas at Austin, his Ph.D. in Organic Chemistry from Yale University, and his J.D. from New York University School of Law.
Gregory R. Springsted is an associate at the New York law firm of Kirkland & Ellis LLP and a litigator in the firm's Intellectual Property group, primarily handling chemical, pharmaceutical, and biochemical patent cases. Mr. Springsted obtained his B.S. in Chemistry from the University of Richmond and his J.D. from New York University School of Law.
Stefan Michael Miller, Partner, Kirkland & Ellis LLP, US. Email: firstname.lastname@example.org
(1.) 35 U.S.C. [section] 319.
(2.) 35 U.S.C. [section] 311(a)--(b) (2012).
(3.) See Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1377 (Fed. Cir. 2015) (invalidating claims to amplifying and detecting naturally-occurring DNA because amplification steps are conventional).
(4.) 35 U.S.C. [section] 314(a).
(5.) 35 U.S.C. [section] 311(c).
(6.) 35 U.S.C. [section] 315(a)(1), (b).
(7.) 35 U.S.C. [section] 315(a)(3).
(8.) 35 U.S.C. [section][section] 316(a)(11), 326(a)(11).
(9.) Although the statute provides that a patentee may amend claims, the PTAB has held that a patentee must show that such an amendment would make the claim patentable. Prolitec, Inc. v. Scentair Techs., Inc., 807 F.3d 1353, 1363 (Fed. Cir. 2015) (upholding PTAB ruling that "the patentee's burden on a motion to amend includes the burden to show patentability over prior art from the patent's original prosecution history").
(10.) 35 U.S.C. [section] 314(a)(11) (2012).
(11.) 35 U.S.C. [section] 317(a)-(b) (2012).
(12.) 35 U.S.C. [section] 316(e).
(13.) http://www.uspto.gov/sites/default/files/ documents/2015-10-31%20PTAB.pdf at 12.
(14.) LegalMetric Inter Partes Review Report (March 07, 2016).
(15.) 35 U.S.C. [section] 312(a) (2000); 35 U.S.C. 314(a).
(16.) 37 CFR 41.61(a).
(17.) 35 U.S.C. [section] 321(b).
(18.) 35 U.S.C. [section] 321(c).
(19.) 35 U.S.C. [section] 324(a).
(20.) http://www.uspto.gov/sites/default/files/ documents/2015-10-31%20PTAB.pdf at 12.
(21.) 37 CFR 42.302(a).
(22.) See 37 C.F.R. [section] 42.300 (2014).
(23.) 35 U.S.C. [section] 325(e).
(24.) 35 U.S.C. [section] 325(e).
(25.) See, e.g., Harmonic Inc. v. Avid Tech., Inc., No. 2015-1072, 2016 WL 798192, at *7 (Fed. Cir. Mar. 1, 2016) (finding that the Federal Circuit does not have authority to review the PTAB's decision to institute review on only a subset of grounds raised in the petition).
(26.) See Dell Inc. v. Electronics & Telecommunications Research Institute, IPR2015-00549 (PTAB March 26, 2015) (permitting a second IPR on grounds raised in the petition for the first IPR but on which the first IPR was not instituted).
(27.) See, e.g., St. Jude Med., Cardology Div., Inc. v. Volcano Corp., 749 F.3d 1373, 1375-76 (Fed. Cir. 2014) (denying appeal of decision not to institute for lack of jurisdiction).
(28.) See In re Cuozzo Speed Technologies, LLC, 793 F.3d 1268, 1279-80 (Fed.Cir.2015); cert. granted sub nom. Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 890 (2016).
(29.) In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1278 (Fed. Cir. 2015) cert. granted sub nom. Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 890 (2016).
(30.) Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005).
(31.) 35 U.S.C. [section][section] 141(c).
(32.) Kirkendall v. Dep't of the Army, 573 F.3d 1318, 1321 (Fed. Cir. 2009).
(33.) Phillips v. AWH Corp., 415 F.3d 1303, 1312 (Fed. Cir. 2005).
(34.) 37 C.F.R. [section] 42.51(b)(1).
(35.) See, e.g., Garmin Int'l, Inc. v. Cuozzo Speed Techs. LLC, No. IPR2012-00001, 2013 WL 2023626, at *4 (P.T.A.B. Mar. 5, 2013).
(36.) 19 U.S.C. [section] 1337(b)(1).
(37.) 28 U.S.C. [section] 1295(a)(6).
(38.) 19 U.S.C. [section] 1337(d).
(39.) See Sealed Air Corp. v. Int'l Trade Comm'n, 645 F.2d 976, 985 (C.C.P.A. 1981) ("An exclusion order operates against goods, not parties. Accordingly, that [limited exclusion] order was not contingent upon a determination of personal or in personam jurisdiction over a foreign manufacturer. The Tariff Act of 1930 (Act) and its predecessor, the Tariff Act of 1922, were intended to provide an adequate remedy for domestic industries against unfair methods of competition and unfair acts instigated by foreign concerns operating beyond the in personam jurisdiction of domestic courts").
(40.) See Am. Intellectual Prop. Law Ass'n, Report of the Economic Survey 37-38 (2015).
(41.) 35 U.S.C. [section][section] 316(a)(11), 326(a)(11).
(42.) 35 U.S.C. [section][section] 316(a)(11), 326(a)(11).
(43.) 35 U.S.C. [section][section] 316(a)(11), 326(a)(11).
(44.) Ex Parte Reexamination Filing Data, U.S. Patent and Trademark Office (Sept. 30, 2014) available at http:// www.uspto.gov/sites/default/files/documents/ ex_parte_ historical_stats_roll_up_EOY2014.pdf
(45.) 19 U.S.C. [section] 1337(b)(1).
(46.) LegalMetric Nationwide Patent Litigation Report (April 2015) at 32.
Table 1: Summary of Post-Grant Forums Forum Allowable Grounds Average Time to Estoppel? & institution Resolution Standard Inter Partes * Novelty and 12 to 18 months Yes Review obviousness based after institution on printed (41) publications and patents * Must show reasonable likelihood of prevailing with respect to at least one claim Post Grant * Novelty, 12 to 18 months Yes Review obviousness, after institution written (42) description and enablement * Must show that (i) more likely than not that at least one claim is unpatentable, or (ii) a novel legal question is raised Covered * Any ground of 12 to 18 months Yes Business invalidity for after institution Method patents granted (43) under first-to- file provisions * If the patent was granted pre- AIA, limited prior art * Must show that at least one claim drawn to a covered business method is more likely than not unpatentable Ex Parte Reexam * Novelty and ~22 months (44) No obviousness only, based on printed publications, patents, and admissions of the patentee * Must show substantial new question of patentability ITC Proceeding * Any ground of 12 to 15 months No invalidity for for initial patents, but only determination (45) as a defense District * Any ground of ~26 months Yes Court invalidity for for contested patents judgment (46) * Presumption of patent validity applied * Can be expensive compared to pro- ceedings before the PTO
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|Title Annotation:||IP MANAGEMENT|
|Author:||Miller, Stefan Michael; Springsted, Gregory R.|
|Publication:||Journal of Commercial Biotechnology|
|Date:||Apr 1, 2016|
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