Strategic Use of Patent Office Proceedings to Challenge Patents and Reduce Litigation Risk

Starting Sept. 16, parties accused of patent infringement will have several new ways to fight patent battles in the Patent and Trademark Office under a strategic, less-expensive alternative to district court litigation. These strategies may allow a party accused of infringement to reduce, or even eliminate, the risk of infringement.

Pre-Issuance Submission of Prior Art

The new U.S. patent law, known as the Leahy-Smith America Invents Act, gives third parties a new way to attack patent claims before the patent is even granted. This new avenue becomes available on Sept. 16, and will apply to all patent applications regardless of filing date.

While a patent application is still pending, a third party can submit to the PTO any information in the form of patents, published patent applications, or other printed publications, together with a statement explaining how the information is relevant to the patentability of the pending claims. The submission must be made before the earlier of: (A) a notice of allowance; or (B) the later of (i) six months after the application is first published, or (ii) first rejection of any claim of the patent application.

This option will be most effective for parties who closely monitor a competitor’s portfolio of patent applications and who proactively identify pending claims that may pose a litigation risk. Submitting prior art at this early stage may stop the patent from ever issuing, or it may force the competitor to narrow the claims in a way that would result in no infringement even if the patent is issued.

In addition, the party making the pre-issuance submission can do so anonymously and is not precluded from later raising invalidity arguments in court based on the same information it previously submitted to the PTO.

Ex Parte Reexamination

Ex parte reexamination allows third parties to attack a patent in the PTO after the patent has been granted. This procedure was created in 1980 and was largely unchanged by the 2011 patent law. Ex parte reexamination, therefore, remains a viable option and should be considered as part of any comprehensive defense strategy.

A party requesting ex parte reexamination must identify a substantial new question of patentability that the examiner had overlooked in the earlier examination of the patent. Ex parte reexamination is limited to prior art consisting of patents or printed publications.

A request for ex parte reexamination can be filed at any time after the patent has issued. The request can be filed anonymously, and the requester is not precluded from later raising in court any invalidity arguments that were raised in the ex parte reexamination.

Statistics show that the majority of ex parte reexaminations (66 percent) result in patent claims being changed. ¹PTO Data (Sept. 30, 2011), http://www.uspto.gov/patents/EP_quarterly_report_Sept_2011.pdf. Thus, even if a third-party requester does not succeed in invalidating the claims, the requester may still win by forcing the patent owner to amend the claims in a way that would result in no infringement.

In addition, if the patent owner amends the patent claims during reexamination, the amendment may trigger what is known as “intervening rights,” which eliminate some or all past damages and may allow the accused infringer to continue making, using, and selling the accused product or method.

One disadvantage of ex parte reexamination, however, is that the third-party requester cannot actively participate in the proceeding after the reexamination is ordered, which is conducted ex parte between the patent owner and the PTO examiner. Parties looking to actively participate in the invalidation proceeding should consider inter partes review and post-grant review, discussed next.

Inter Partes Review, Post-Grant Review, and Covered Business Method Patent Review

The Leahy-Smith America Invents Act creates three new, trial-like proceedings to invalidate a patent in the PTO after the patent has issued.

Inter partes review (IPR) becomes available on Sept. 16, 2012, and applies against all patents. Post-grant review (PGR) becomes available against any patent with an effective filing date on or after March 16, 2013. Third, a transitional program for covered business method patents (CBMP) will be available during the eight-year period between Sept. 16, 2012 and Sept. 15, 2020, and apply only to business method patents involving “a financial product or service” and which are deemed not “technological” inventions.

Filing deadline

A petition to initiate a PGR must be filed within the first nine months after the patent is granted or reissued. A petition to initiate an IPR must be filed after the initial nine-month PGR window, or upon conclusion of any ongoing PGR. A petition to initiate a CBMP review can only be filed if the petitioner or its real party in interest or privy has been sued or charged with infringement of the patent.

Grounds for challenge

The grounds for bringing an IPR are limited to novelty and obviousness based on patents and printed publications. Both PGR and CBMP review, by contrast, are open to all invalidity grounds, including novelty, obviousness, patentable subject matter, non-enablement, and lack of written description.

The downside of bringing any of these proceedings, however, is that the challenger must identify itself and its real parties in interest, and will be precluded from later raising in court any invalidity arguments that it “raised or reasonably could have raised” in the PGR or IPR (or “raised” in the CBMP review).

Trial-like procedures

These proceedings will be run like a small trial, with some limited amount of discovery focused on the question of patent validity—at significantly lower cost than litigation. An advantage of these proceedings is that all issues will be decided by a panel of experienced, technically-trained PTO judges—which should provide greater predictability and reliability than lay juries in district court litigation.

Speed

Another important advantage of these proceedings is speed. They must be completed within one year and can only be extended for an additional six months in limited circumstances.

The speed of PGR, IPR and CBMP review will likely result in district courts granting more stays of any parallel infringement litigation until the PTO decides the validity of the patent.

Settlement

The parties can mutually agree to settle the PGR, IPR and CBMP review. A strong position early in these administrative proceedings, therefore, may give a party leverage to obtain a global settlement of any parallel infringement litigation.

Conclusion

Knocking out a patent quickly in the PTO can save a defendant a lot of time and money that would otherwise be spent defending itself in litigation. Strategic use of these PTO proceedings may defeat a motion for preliminary injunction, and may result in a litigation stay, a narrower claim scope, or a litigation settlement.

In short, PTO validity challenges must be considered as part of a comprehensive patent defense strategy.