Strategies for Leveraging the America Invents Act’s Tools for Challenging Patents

With the enactment of the America Invents Act (AIA), companies now have a wide array of tools for challenging and neutralizing patents before they become a threat.  Each tool has its advantages and disadvantages, but collectively they may allow companies to head off district court infringement suits before they can happen.

The various tools are:

1)     Pre-issuance submissions;

2)     Ex parte Reexamination;

3)     Post Grant Review (PGR); and

4)     Inter partes Review

Let’s look at some of the key advantages and drawbacks of each of these tools:

Pre-issuance submissions

Pre-issuance submissions do not provide a means for challenging issued patents.  Instead, they provide a means for preventing them from issuing in the first place.  The AIA finally provides a meaningful way to intervene in the patent examination process and bring prior art to the attention of an examiner.  Under pre AIA law, any submitted prior art was merely placed in the patent file and would not necessarily be considered by the examiner. 

Under the new pre-issuance submission provisions of the AIA, the examiner must consider references submitted by third parties if they satisfy certain requirements, which include providing a concise description of the relevance of each cited reference. 

Pre-issuance submissions are the most cost-effective tool for challenging patents.  The fees are $180 for every ten (10) documents submitted to the Patent Office.  Of course, there are drawbacks.  The examiners do not have to provide a written response to the submissions.  Instead, they need only indicate that the references were reviewed by initialing a form identifying the reference (as they do now with applicant submitted IDS forms).  In addition, the window for pre-issuance submissions is limited.  They must be submitted before the earlier of (a) the issuance of a notice of allowance, or (b) the later of (i) six months after the application is published, or (ii) the date of a first rejection of any claim.  Thus, if you are contemplating using this mechanism, it is advisable to set up a watch service or some system of routine searches to watch for the publication of problematic patent applications.  Pre-issuance submissions went into effect on September 16, 2012.

Ex parte Reexamination

Ex parte reexaminations remain a tool available for challenging patents under the AIA.  However, there is now one serious drawback: as of September 16, 2012 the USPTO fees have increased by a factor of seven. Prior to September 16, the fees were $2,520.   Now, the fees are $17,750.  Thus, less well-heeled applicants will have to be more judicious about their selection of patents to challenge.  That being said, ex parte reexamination remains a bargain compared to district court litigation.  As has always been the case, requests for ex parte reexamination may only be based on patents, published patent applications, and other publications.  Issues such as enablement, indefiniteness, insufficient written description, and prior public use or sale cannot be raised.  The standard for granting an ex parte reexamination remains the same, i.e., whether the cited references raise a substantial new question of patentability.

As was the case under pre AIA law, the challenging party’s involvement in an ex parte reexamination ends with the request for reexamination (unless the Patent Owner files a statement challenging the existence of a substantial new question of patentability, in which case the requester may reply to the statement).

Inter partes Review

As of September 16, 2012, inter partes reexaminations may no longer be instituted.  Instead, the AIA provides for an inter partes review.  Inter partes review is similar to inter partes reexamination with a few notable exceptions.  First, a request for inter partes review may only be filed after the later of (1) the date that is nine (9) months after the subject patent issues or (2) after the termination of a post-grant review , if
one has been instituted. 

Inter partes review is more involved than an inter partes reexamination.  The requester may submit expert opinions with the request by way of declaration or affidavit, and there may be discovery (including depositions).  Either party may request an oral hearing.  As with ex parte reexamination, an inter partes review may only be based on patents, published patent applications, or other printed publications.  If the PTO grants the request, a “trial” is initiated.  The “trial” is not the same as a live court trial, but it can involve discovery and submissions of evidence and may culminate in an oral hearing.  Unlike a court trial, the patent owner can make narrowing claim amendments in an inter partes review.

In district court cases, patent claims may only be invalidated by “clear and convincing evidence.”  In contrast, the requester’s burden in an inter partes review is the relatively lower standard of a “preponderance of the evidence.”  Notably, a party that files a declaratory judgment action to challenge the validity of a patent is barred from instituting an inter partes review.  An accused infringer that pleads an invalidity counterclaim is not barred but has only one year after service of the patent infringement complaint in which to file the request.

The standard for granting an inter partes review is arguably more stringent in some respects and less stringent in other respects relative to the standard for granting an ex parte reexamination.  Inter partes reviews may only be granted if the requester shows that there is a reasonable likelihood that it would prevail with respect to at least one of the challenged claims.  In an ex parte reexamination, only a “substantial question” of patentability need be shown, which is presumably less stringent. However, the question is supposed to be “new” relative to those questions considered during the initial examination.  Inter partes review does not require that the issues raised be new (although it would presumably help).  The difference in standards suggests that if a reexamination is to be predicated on prior art that was simply misunderstood or misapplied by the PTO, it may be safer to seek an inter partes review.

The key benefit of an inter partes review relative to an ex parte reexamination is that the requester is allowed to respond to the arguments and amendments made during reexamination. The trial proceedings adopted by the PTO allow the Patent Owner to file a response and amend the claims after a review is instituted, but the requester gets to reply to the response and may oppose any proposed amendments.

Unlike Post Grant Review, inter partes review applies to any issued U.S. patent as long as the request is filed at the appropriate time, as described above.

Relative to ex parte reexamination, inter partes review maintains the one key drawback of inter partes reexamination: estoppel.  If a final decision is issued in an inter partes review, the requester may not then challenge the patent in court based on the same grounds.  Ex parte reexamination does not have a similar estoppel provision.  However, as a practical matter, a party requesting ex parte reexamination can expect the patent owner to use an adverse PTO decision against the requester if there is a subsequent court proceeding.

The USPTO charges $27,200 for a request for inter partes review plus $600 for every claim in excess of 20.  In addition, the possibility of discovery makes it potentially significantly more expensive than an ex parte reexamination.  However, the fees and costs will still be well below those incurred in district court litigation.

Post Grant Review

Post Grant Review (PGR) expands the bases upon which a patent can be challenged to include section 101 and 112 issues such as lack of statutory subject matter, enablement, written description, and indefiniteness.  In addition, invalidity based on prior public use or sale of a claimed invention can be raised.  However, PGR only applies to patents issued under the first to file system.  While PGR went into effect on September 16, 2012, with narrow exceptions it will only apply to patents issuing from applications filed after March 13, 2013, when the first inventor to file provisions of the AIA become effective. 

The PGR is conducted as a “trial” in the same way that an inter partes review is conducted.  However, the window for seeking PGR is limited to nine (9) months after the subject patent issues.  Therefore, those who contemplate using PGR may want to set up alerts for patents issuing to their competitors and/or in their technology space to make sure that they do not lose the opportunity to seek PGR. 

The threshold showing that must be made to initiate a PGR is that it is more likely than not that at least one challenged claim is unpatentable.  As with inter partes review, a requester must demonstrate unpatentability by a preponderance of the evidence to prevail.  In addition, the patent owner will have the opportunity to make narrowing amendments to its patent claims.  The USPTO fee for requesting a PGR is $35,800 plus an additional $600 for every challenged claim in excess of 20.

Strategies for Using the Various Tools

District court litigation remains an option, albeit an expensive one, for invalidating patents.  It has a higher burden of proof (clear and convincing evidence) than inter partes review or PGR, but the patent owner cannot amend its claims to distinguish the prior art. 

For those invalidity defenses that are on the technical side, the PTO mechanisms such as ex parte reexamination, inter partes review, or PGR may be preferable because the relative technical skill level (and familiarity with the law) of the PTO relative to lay juries.  However, if you want to hedge your bets, you will have to use ex parte reexamination because the estoppel provisions of inter partes review and PGR will prevent you from relitigating any invalidity defenses raised in those proceedings in a subsequent district court proceeding.  In addition, PGR is only available to patents that are subject to the first inventor to file system, which does not become effective until March 13, 2013.

If you are relying on grounds other than prior art invalidity (e.g., section 112 defenses), your only options are PGR or a court proceeding.  Of course, the PGR option will only be available for the first nine (9) months after the patent issues and only as to patents subject to the first inventor to file system.  In all other cases, such defenses can only be raised by way of district court litigation.  If you want to prevent problematic patents from issuing in the first place, then pre-issuance submissions are the way to go.  Time will tell if examiners give pre-issuance submissions the weight and attention they deserve.

Congress has responded to frequent complaints of “junk patents” with the various AIA mechanisms for challenging (or preventing) the issuance of patents.  The various alternatives have their advantages and drawbacks, but collectively they may provide a more cost-effective means for reducing the in terrorem effect of meritless patent infringement lawsuits that are based on overly broad or otherwise questionable patents.