Draft Report on Senate Patent Reform Bill: Post-Grant Procedures

    By Sherri Oslick --

As we reported last week, a draft of the Senate Judiciary Committee's report on the Patent Reform Act of 2007 (S. 1145) has been circulated on the internet.  The 106-page draft report contains sections on the background and purpose of the bill, the legislative history of the bill, a section-by-section summary of the bill, a placeholder for a cost estimate, a regulatory impact evaluation, and a list of the changes to Titles 15, 28, and 35 that would result if the Senate bill were passed into law.  The circulation of the draft report suggests that Senator Patrick Leahy, Chairman of the Senate Judiciary Committee, intends to keep his mid-December patent reform bill pledge to seek "favorable Senate action as early as the floor schedule permits" (see "Patent Reform Discussed on Senate Floor").  In view of the length of the draft report, Patent Docs has been providing a discussion of selected sections of the bill since the draft report began to circulate.  Today, we address section 5 of the bill.

Section 5 of the draft report begins by noting the original intent of Congress in enacting laws providing for reexamination of issued patents -- "to serve as an effective and efficient alternative to often costly and protracted district court litigation" -- but quickly launches into a recitation of the deficiencies of the current reexamination format.  First, as the Report notes, a third party challenger seeking reexamination has available to it only a limited subset of the validity challenges it would be permitted to raise in district court.  Second, while as of 1999 a third party could participate in reexamination proceedings via inter partes reexam, the relevant statutory provisions estopped that party from pursuing later in court challenges based on issues not even raised during the reexamination proceedings.  And third, a third party challenger who did not prevail in reexam had no right to appeal, administratively or in court, the Patent Board's decision.  Finally, the draft report noted that reexamination proceedings were both costly and time consuming (citing that, in some cases, reexamination proceedings have been pending before the USPTO for more than four years).

The current reexamination system, concluded the Senate Judiciary Committee, "remains troublesomely inefficient and ineffective as a truly viable alternative for resolving questions of patent validity."  The Committee therefore elected "not to try to adopt another, and necessarily massive, set of amendments to the current system.  Rather, the Committee determined that it would be simpler, and ultimately better, to make a clean start."  The Committee retained ex parte reexamination initiated by the patentee, however a third party wishing to challenge a patent would necessarily need to do so through a newly created post-grant review (PGR).  The provisions of the proposed PGR system are summarized below.

There are three ways, or "windows," in which a third party can raise a challenge to an issued patent under the PGR.

The first window is considered to be an extension of the examination process and includes the following features:

• The request for PGR must be filed within 12 months of issuance of the patent.
• The presumption of patent validity does not apply.
• The petitioner must prove invalidity by a preponderance of the evidence.

The second window is an effort to balance the need to ensure that invalid patents do not exist with the values of certainty (and consequent business decisions based on this) for the patentee.  The second window includes the following features:

• The request for PGR may be filed throughout the life of the patent but only if:  1) the continued existence of the challenged patent claim(s) is likely to cause the petitioner significant economic hardship, and 2) the petitioner filed the petition within 12 months of receiving notice of infringement.
• The presumption of patent validity does apply.
• The petitioner may challenge the patent on any grounds available to it in district court litigation, but the existence, authentication and scope of any evidence supporting invalidity must be established by clear and convincing evidence.
• If such facts can be established, they must demonstrate invalidity by a preponderance of the evidence.
• The patent holder will have an opportunity to file a response.
• The patent holder will have one opportunity as a matter of right to amend the claims; additional amendments may be subsequently made only on motion and a showing of good cause (and no amendment may enlarge the scope of a claim or add new matter).

The third way of initiating PGR proceedings is through the patentee's consent.  In addition to providing the methods of initiating a PGR, the draft report notes that various provisions have been included to prevent the use of PGR for harassment:

• Every petition for a PGR must raise a substantial new question of patentability.
• The same party who has once filed a PGR (whether in first or second window) regarding any claim of a patent may not file another PGR petition on the same patent.
• A petitioner who has challenged the validity of a patent in court may not file a petition for PGR on any grounds they raised, or could have raised, in the district court.

The USPTO, for their part, has a number of obligations under the new system:

• The USPTO must complete its work on a PGR within one year in most instances, and 18 months in only those cases where additional time is justified.
• PGR proceedings are conducted by three Patent Board judges, not by an examiner as is the case with current reexamination proceedings.
• The Director of the UPTO is instructed to issue regulations for rules and procedures governing PGR proceedings, and is charged in particular with ensuring that regulations forbidding and penalizing harassment are enacted and enforced.

Any petitioner unhappy with a Board PGR decision may appeal to the Federal Circuit, and all parties to the PGR proceeding may participate in such an appeal.  The PGR system would take effect on the date one year after the date of enactment of the Act.  After that time, first window petitions may be filed against any patent, provided the requirements noted above are met.  Second window petitions for PGR, as well as consented petitions, could only be filed on patents that issue based on applications filed after November 29, 1999 (the date for determining eligibility for inter partes reexam under the current system).

For additional information on the draft report, please see:

• "Inequitable Conduct Provisions," Section 12, January 21, 2008
• "First Inventor to File Provisions," Section 2, January 17, 2008
• "Assignee Filings, Mandatory Publication, and Third Party Submissions," Sections 3 and 7, January 16, 2008
• "Late Patent Filings," Section 13 January 15, 2008
• "Draft Report on Senate Patent Reform Bill Circulated," Sections 9 and 15, January 14, 2008

For additional information regarding this topic, please see:

• "U.S. Senate Mailbox Filling with Letters against Passage of Patent 'Reform' Bill," January 18, 2008
• "Patent Reform Discussed on Senate Floor," December 21, 2007
• "Enjoined New Rules and Patent Reform Finally Appearing on Biotech Industry's Radar," December 20, 2007
• "Chinese IP Judge Discusses Implications of U.S. Patent Reform Bill and Two Congressmen Heed Warning," December 17, 2007
• "IPO President Seeks Deletion of Patent Reform Provision," December 12, 2007
• "Senate May Act on Patent 'Reform' Bill in the New Year," December 2, 2007
• "The Wall Street Journal Gets It Half Right," November 5, 2007
• "BIO CEO Provides Briefing on Follow-On Biologics and Patent Reform," September 18, 2007
• "Patent 'Reform' Bill Passes House of Representatives," September 9, 2007
• "Reversal in Microsoft Case Weakens Patent Reform Argument," August 7, 2007
• "San Francisco Chronicle Opines on Patent Reform," August 6, 2007
• "Patent Reform Bill to Be Delayed?" June 12, 2007
• "Senate Judiciary Committee Holds Hearing on Patent Reform," June 10, 2007
• "Could Creating a U.S. 'Utility Model' Patent Fulfill the 'Need' for Patent Law Reform?" May 21, 2007