May 13, 2021
April 2012 | Vol. XI - No. 4
America Invents Act: Challenging Patents, Post Grant Review, and More
AIA Offers Less Costly Alternatives to Challenge Patents
The next wave of the newest patent laws (America Invents Act (“AIA”)) rolls into effect September 16, 2012. In preparation, the USPTO recently announced proposed rules for implementation.1 The proposals bring a mix of good news and bad news.
For patent holders, it's mostly good news. Before AIA, anyone challenging patent validity could expect to accrue attorneys' fees in the mid-six figure range, arguing their case in a U.S. district court. Under pre-AIA rules, patent challenge via the USPTO’s procedures imposed a high burden on the challenger and ambiguous estoppel provisions, which effectively chilled use of the PTO’s procedures.2 The AIA’s creation of Inter Partes Review (IPR) and Post Grant Review (PGR) of patents provide less costly and seemingly less onerous alternatives to challenge patents.
Post Grant Review
PGR allows for challenges similar to those available in U.S. court proceedings. These include invalidity based on ineligible subject matter (Section 101); insufficiency of disclosure or patent indefiniteness (Section 112); lack of novelty of the invention (Section 102) or obviousness of the invention (Section 103). Generally speaking, the PGR request must be filed within nine months of the issuance of the patent. This procedure becomes available on September 16, 2012 for all patents filed according to the first-to-file statute under AIA. However, as the AIA’s first-to-file statute itself does not go into effect until March 16, 2013, PGR effectively will not become available for several years. Though first-to-file law takes effect March 16, 2013, another year will pass before the first applications filed according to “first-to-file” actually mature into patents. Thus, PGR will not be in widespread use for at least another two years.
Business Method Patents
The AIA does carve out an exception to apply PGR for business method patents on September 16, 2012.3 This special provision allows an earlier PGR challenge for business method patents, regardless of the filing and issue date of the patent. While business method patents are conventionally thought of as including a finance, pricing or investment component, there is some latitude to how a “business method” is defined. Thus, those parties who receive warning letters for a patent that includes improvements in running a commercial enterprise, such as by expediting manufacturing or delivery, lowering costs or other logistics, may attempt a patent challenge under PGR as early as September 16, 2012.
Inter Partes Review
A second alternative for challenging patents, IPR, takes effect on September 16, 2012 for all patents regardless of issue and filing date. Unlike PGR, the bases of patent invalidation are more limited. Challenges to patent validity must be based on documentary evidence showing lack of novelty of the invention (Section 102) or obviousness of the invention (Section 103). IPR may only be pursued after nine months of a patent's issuance or after a PGR decision, if the same patent was subject to such a PGR proceeding.
High Costs Offer Financial Buffer
So why are these additional procedures to demonstrate patent invalidity good news for patent holders? Despite providing less burdensome and less expensive ways to challenge patents, the proposed USPTO fees for initiating either the PGR or IPR proceedings are by themselves significant. Therefore, it is unlikely that patent holders will come under multiple invalidity attacks. For example, the basic governmental fees for filing an IPR and PGR are $27,200 and $35,800, respectively. The fees increase steeply depending on the number of patent claims that are challenged. These high fees offer patent holders a financial buffer against frivolous or spurious challenges to their patent rights.
There is no small entity discount of these fees, which are levied to offset the USPTO’s costs of hearing each challenge. Some commentators have voiced concern that the fees impose a severe bias against small businesses. Remarks or questions on the above aspects of AIA should be submitted to the USPTO no later than April 10, 2012 for consideration.
There is good news for those seeking to have some say on another party’s patent rights before the patent issues. AIA allows would-be infringers or those in competition with the patent holder (i.e. third parties) to shape the patentee’s claims. In particular, pre-issuance submissions allow a competitor to identify documents and explain to the Examiner why no patent should issue at all, based on the identified documents. Correctly used, the submitted explanation is a tool to guide the Examiner to require the patent applicant to modify the claims in a particular way.
The third party can thus create a “safe harbor” in the patent in which to operate. Such third party submissions can be done anonymously, and thus do not “tip off” the patentee of a potential infringer. By contrast, IPR and PGR require identification of the real-party-in interest. Finally, the third party submissions are significantly less expensive than IPR and PGR. In particular, if a third party submits three documents or fewer, there is no fee. For submissions of four to ten documents, the fee is $180.00 and for eleven to twenty documents, the fee is $360.00.
As a cautionary note, third party submissions cannot be used haphazardly. There are timing constraints that must be met. In particular, the submission must be made before (a) the earlier of: allowance of the application or (b) the later of (i) six months after the application is published by the USPTO or (ii) the first rejection on the merits. Beyond the basic timing requirement, an improper presentation of the identified documents can actually wind up lending strength to the patent, rather than creating the safe harbor that is intended.
PGR, IPR and third party submissions will not take effect for several months at the earliest. However, it is not too early to think strategically about how to use them. Additionally, if there are any comments on PGR or IPR, the USPTO is accepting input until April 10, 2012.4
1. “Changes to Implement the Preissuance Submissions by Third Parties Provision of the Leahy-Smith America Invents Act,” Federal Register, Vol. 77, No. 3, page 448 (January 5, 2012, comment period closed March 5, 2012); “Changes to Implement Inter Partes Review Proceedings,” Federal Register, Vol. 77, No. 28, page 7041 (February 10, 2012, comment period closing April 10, 2012); Changes to Implement Post-Grant Review Proceedings,” Federal Register, No. 77, No. 28, page 7060 (February 10, 2012, comment period closing April 10, 2012); “Changes to Implement Transitional Program for Covered Business Method Patents,” Federal Register, Vo. 77, no. 28, page 7080 (February 10, 2012, comment period closing April 10, 2012).
2. Existing “Inter Partes Reexamination” in the USPTO remains available until September 16, 2012.
3. This business method PGR law will be repealed on September 16, 2020.
4. IPR: firstname.lastname@example.org. PGR: email@example.com. All submitted comments will be made available for public review. If anonymity is desired, please consult the submission instructions in the appropriate Federal Register Notice referenced above.
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