Post-grant Review Provisions of S. 23

By Kevin E. Noonan --

The "America Invents Act" (S. 23 or the patent reform bill) passed by the Senate contains revisions to current inter partes reexamination as well as provisions for an entirely new post-grant review proceeding.

Section 5(a) sets forth the revisions to inter partes reexamination.  The most significant of these is a change in the standard for granting a request (now termed a "petition") for inter partes reexamination, from raising a "substantial new question of patentability" under current law to "a reasonable likelihood that the petitioner will prevail with regard to at least one claim" (§ 314(a)).  The proposed revisions to the statute maintain the express prohibition against the patentee requesting inter partes reexamination, as well as limiting the scope of reexamination to patents and printed publications.  To accommodate the new post-grant review proceedings, petitions for inter partes reexamination are permitted at the later of 9 months from the grant date of a patent or reissued patent, or the date of termination of post-grant review (§ 311(c)(1) or (2)).  Also consistent with current law are provisions that the Director's decision whether to grant inter partes reexamination cannot be appealed (§ 314(d)).

There are additional limits to when post-grant review petitions can be filed.  The bill prohibits a petitioner from having filed a "civil action challenging the validity of a claim of the patent" (§ 315(a)) (which certainly includes declaratory judgment actions but may include counterclaims in patent infringement litigation, depending on how they are characterized).  In addition, an inter partes reexamination proceeding will not be instituted if the petition is filed "more than 6 months after the date on which the petitioner . . . is served with a complaint alleging" patent infringement (§ 315(b)).  The bill grants the Director the authority to consolidate petitions in the case of multiple filings by third parties (§ 315(c)), as well as determining whether to "stay, transfer, consolidate[e] or terminat[e]" ex parte or inter partes reexamination proceedings, interferences or (presumably) derivation proceedings (§ 315(d)).  The bill also contains estoppel provisions, wherein a petition is estopped from "request[ing] or maintain[ing] a proceeding before the Office with respect to any claim on any ground that the petition raised or reasonably could have raised during post-grant review" (§ 315(e)(1), and is also estopped from bringing a declaratory judgment action or an action before the International Trade Commission based on any ground that was raised or reasonably could have been raised during the inter partes reexamination (§ 315(e)(2)).

Unlike current inter partes reexamination, however, the proceedings are to be held before the Patent Trial and Appeal Board and not replicate ex parte examination under 35 U.S.C. §§ 132-133 (§ 316(c)).  The Director is granted the authority under these provisions of the bill to establish regulations, including:

(1)  providing that the file of any proceeding under this chapter shall be made available to the public, except that any petition or document filed with the intent that it be sealed shall be accompanied by a motion to seal, and such petition or document shall be treated as sealed pending the outcome of the ruling on the motion;

(2)  setting forth the standards for the showing of sufficient grounds to institute a review under section 314(a);

(3)  establishing procedures for the submission of supplemental information after the petition is filed;

(4)  in accordance with section 2(b)(2), establishing and governing inter partes review under this chapter and the relationship of such review to other proceedings under this title;

(5)  setting a time period for requesting joinder under section 315(c);

(6)  setting forth standards and procedures for discovery of relevant evidence, including that such discovery shall be limited to—

(A)  the deposition of witnesses submitting affidavits or declarations; and

(B)  what is otherwise necessary in the interest of justice;

(7)  prescribing sanctions for abuse of discovery, abuse of process, or any other improper use of the proceeding, such as to harass or to cause unnecessary delay or an unnecessary increase in the cost of the proceeding;

(8)  providing for protective orders governing the exchange and submission of confidential information;

(9)  allowing the patent owner to file a response to the petition after an inter partes review has been instituted, and requiring that the patent owner file with such response, through affidavits or declarations, any additional factual evidence and expert opinions on which the patent owner relies in support of the response;

(10)  setting forth standards and procedures for allowing the patent owner to move to amend the patent under subsection (d) to cancel a challenged claim or propose a reasonable number of substitute claims, and ensuring that any information submitted by the patent owner in support of any amendment entered under subsection (d) is made available to the public as part of the prosecution history of the patent;

(11)  providing either party with the right to an oral hearing as part of the proceeding; and

(12)  requiring that the final determination in an inter partes review be issued not later than 1 year after the date on which the Director notices the institution of a review under this chapter, except that the Director may, for good cause shown, extend the 1-year period by not more than 6 months, and may adjust the time periods in this paragraph in the case of joinder under section 315(c).

The only constraint the Section puts on the Director is a consideration of "the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter" (§ 316(b)).

The patentee is given the right to file one motion to amend one or more of the challenged claims, either by cancelling the claims outright or proposing a "reasonable number" of substitute claims for each cancelled claim (§ 316(d)(1)(B)).  Any further motion to amend can be filed only as an agreed motion between the patentee and the petitioner (§ 316(d)(2)), and any amendments filed in any motion under this section "may not enlarge the scope of the claims . . . or introduce new matter" (§ 316(d)(3)).  The petitioner bears the burden of proof by a preponderance of the evidence (§ 316(e)).

An inter partes reexamination can be terminated by settlement (§ 317) or decision of the Board (§ 318).  While similar to current provisions for settlement in interferences, the provisions differ in that whether review is terminated or the Board renders a decision is at the discretion of the Director (§ 317(a)).  As with interferences, any such settlement must be in writing and filed with the Office before review will be terminated and, although the settlement will not be published with the remainder of the review proceedings, settlements will be available to Federal Government agencies upon written request, or anyone upon a showing of "good cause" (§ 317(b)).

The provisions regarding decisions of the Board provide for a certificate "canceling any claim of the patent finally determined to be unpatentable, confirming any claim of the patent determined to be patentable, and incorporating in the patent by operation of the certificate any new or amended claim determined to be patentable" (§ 318(b)).  The Office is tasked with making available the length of time it takes for the Board to complete its review (§ 318(c)).

Any party is entitled to appeal a "adverse" decision after post-grant review, under any of the provisions of 35 U.S.C. §§ 141-144 (§ 319).

These amendments are to take effect "not later than" one year after the enactment date of the bill into law (Section 5(c)(1)) and "shall apply to all patents issued before, on or after" the effective date (Section 5(c)(2)(A)), except for inter partes reexamination petitions filed prior to enactment, which will proceed as if the revisions were never passed (Section 5(c)(2)(B)).  The Director also has discretion to limit the number of inter partes reexamination petitions granted for the first four years after enactment, provided that the number is at least as many requests/petitions that were granted "in the last full fiscal year prior to the enactment date" of the revised law (Section 5(c)(2)(C)).  The bill also contains "transition provisions" (Section 5(c)(3)) amending the current statute to incorporate the changed standard (from "substantial new question of patentability" under current law to "a reasonable likelihood that the petitioner will prevail with regard to at least one claim") for inter partes reexamination requests filed between the date of the bill's enactment and the effective date of the revisions.

Section 5(d) sets forth the new post-grant review provisions of the bill.  As with inter partes reexamination, the new post-grant review provisions (§§ 321-329) are instituted by petition to the Director by any person "not the patent owner" (§ 321(a)).  Unlike inter partes reexamination, however, post-grant review can be based on an allegation that at least one claim is invalid under any of the provisions of 35 U.S.C. § 282(b) and should be cancelled (§ 321(b)).  Inter partes reexamination is available throughout the unexpired term of a patent, while a petition under the new post-grant review provisions of the statute must be filed within 9 months of the patent grant or issuance of a reissue patent (§ 321(c)).

Post-grant review petitions cannot be filed anonymously, requiring identification of the real party in interest (§ 322(a)(2)), and must identify "with particularity, each claim challenged, the grounds on which the challenge to each claim is based, and the evidence supporting the challenge to each claim" (§ 322(a)(3)).  The petition must be accompanied by copies of all patents or printed publications and any affidavits containing supporting evidence or opinion (§§ 322(a)(3)(A) and (3)(B)), as well as "any other information that the Director may require by declaration" (§ 322(a)(4)).  The petition and all supporting evidence must be supplied to the patent owner or representative (§ 322(a)(5)).  As with other proceedings concerning granted patents, all proceedings are public and made available "[a]s soon as practicable after receipt of a petition" for review (§ 322(b)).

The patentee has the option of responding to the petition within two months, which response is limited to providing reasons why the petition fails to meet the requirements for its grant (§ 323).  Petitions must put forth evidence, presumably in light of any evidence or argument in the patentee's response, that if unrebutted would make it "more likely than not" that at least one of the challenged claims is unpatentable (§ 324(a)).  Alternatively, a grantable petition may contain a showing that there is a "novel or unsettled legal question that is important to other patents or patent applications (for example, the ACLU's challenge to the patent-eligibility of gene patents; § 324(b)).  The Director must make the determination to institute post-grant review within three months after receiving the patentee's response or when the time for that response has expired (§ 324(c)), by notifying the petitioner and the patentee (and the public), wherein the notice contains the date on which the review will commence (§ 324(d)).  As with reexamination, the Director's decision whether to institute post-grant review cannot be appealed and is final (§ 324(e)).

There are additional limits to when post-grant review petitions can be filed.  The bill prohibits a petitioner from having filed a "civil action challenging the validity of a claim of the patent" (§ 325(a)) (which certainly includes declaratory judgment actions but may include counterclaims in patent infringement litigation, depending on how they are characterized).  In addition, if a patent infringement suit is brought within three months of the patent grant date, a district court cannot stay its consideration of a motion for preliminary injunction based on the filing (by anyone) of a post-grant review petition (§ 325(b)), but there is nothing in the statute to prevent the court from considering the petition when assessing the likelihood of success on the merits prong of the preliminary injunction standard.  The bill grants the Director the authority to consolidate petitions in the case of multiple filings by third parties (§ 325(c)), as well as determining whether to "stay, transfer, consolidate[e] or terminat[e]" ex parte or inter partes reexamination proceedings, interferences or (presumably) derivation proceedings (§ 325(d)).  For reissue patents, review is limited to broadened claims (§ 325(f)).  The bill also contains estoppel provisions, wherein a petition is estopped from "request[ing] or maintain[ing] a proceeding before the Office with respect to any claim on any ground that the petition raised or reasonable could have raised during post-grant review" (§ 325(e)(1), and is also estopped from bringing a declaratory judgment action or an action before the International Trade Commission based on any ground that was raised during post-grant review (§ 325(e)(2)).  The latter provision does not raise an estoppel against any defense under 35 U.S.C. § 282(b) in infringement litigation, and does not include the "or could have been raised" language contained in the provisions relating to matters before the Office.  As a consequence, petitioners face far lower risks of estoppel from filing post-grant review petitions, and no disincentive against making strategic decisions as to which grounds to assert vel non in those petitions.

The Director is given broad authority to prescribe regulations for post-grant review proceedings, including:

(1)  providing that the file of any proceeding under this chapter shall be made available to the public, except that any petition or document filed with the intent that it be sealed shall be accompanied by a motion to seal, and such petition or document shall be treated as sealed pending the outcome of the ruling on the motion;

(2)  setting forth the standards for the showing of sufficient grounds to institute a review under subsections (a) and (b) of section § 324;

(3)  establishing procedures for the submission of supplemental information after the petition is filed;

(4)  in accordance with section 2(b)(2), establishing and governing a post-grant review under this chapter and the relationship of such review to other proceedings under this title;

(5)  setting forth standards and procedures for discovery of relevant evidence, including that such discovery shall be limited to evidence directly related to factual assertions advanced by either party in the proceeding;

(6)  prescribing sanctions for abuse of discovery, abuse of process, or any other improper use of the proceeding, such as to harass or to cause unnecessary delay or an unnecessary increase in the cost of the proceeding;

(7)  providing for protective orders governing the exchange and submission of confidential information;

(8)  allowing the patent owner to file a response to the petition after a post-grant review has been instituted, and requiring that the patent owner file with such response, through affidavits or declarations, any additional factual evidence and expert opinions on which the patent owner relies in support of the response;

(9)  setting forth standards and procedures for allowing the patent owner to move to amend the patent under subsection (d) to cancel a challenged claim or propose a reasonable number of substitute claims, and ensuring that any information submitted by the patent owner in support of any amendment entered under subsection (d) is made available to the public as part of the prosecution history of the patent;

(10)  providing either party with the right to an oral hearing as part of the proceeding; and

(11)  requiring that the final determination in any post-grant review be issued not later than 1 year after the date on which the Director notices the institution of a proceeding under this chapter, except that the Director may, for good cause shown, extend the 1-year period by not more than 6 months, and may adjust the time periods in this paragraph in the case of joinder under section § 325(c).

The only constraint the Section puts on the Director is a consideration of "the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter" (§ 326(b)).

The proceedings are to be conducted by the Patent Trial and Appeal Board (§ 326(c)).  The patentee is given the right to file one motion to amend one or more of the challenged claims, either by cancelling the claims outright or proposing a "reasonable number" of substitute claims for each cancelled claim (§ 326(d)(1)(B)).  Any further motion to amend can be filed only as an agreed motion between the patentee and the petitioner (§ 326(d)(2)), and any amendments filed in any motion under this section "may not enlarge the scope of the claims . . . or introduce new matter" (§ 326(d)(3)).  The petitioner bears the burden of proof by a preponderance of the evidence (§ 326(e)).

Post-grant review can be terminated by settlement (§ 327) or decision of the Board (§ 328).  While similar to current provisions for settlement in interferences, the provisions differ in that whether review is terminated or the Board renders a decision is at the discretion of the Director (§ 327(a)).  As with interferences, any such settlement must be in writing and filed with the Office before review will be terminated and, although the settlement will not be published with the remainder of the review proceedings, settlements will be available to Federal Government agencies upon written request, or anyone upon a showing of "good cause."  These settlement provisions are curious in view of the avowed basis of the post-grant review proceedings being to cure the "plague" of "bad" or "poor-quality" patents;  just because a petitioner may be willing to settle with the patentee the public's interests are not addressed by such private agreements.

The provisions regarding decisions of the Board provide for a certificate "canceling any claim of the patent finally determined to be unpatentable, confirming any claim of the patent determined to be patentable, and incorporating in the patent by operation of the certificate any new or amended claim determined to be patentable" (§ 328(b)).  The Office is tasked with making available of the length of time it takes for the Board to complete its review (§ 328(c)).

Any party is entitled to appeal a "adverse" decision after post-grant review, under any of the provisions of 35 U.S.C. §§ 141-144 (§ 329).

The Director is compelled ("shall") issue regulations effecting post-grant review "not later than" one year after enactment of the bill into law (Section 5(f)(1)) and shall apply only to patents described in Section 2(o)(1) of the bill (Section 5(f)(2)).  In addition, the Director can "impose a limit on the number of post-grant reviews initiated in the first 4 years following the effective date" (something presumably within the Director's discretion to grant petitions in the first place under (§ 324(e)).  Section 5(f)(3) provides for the Director to determine how to integrate post-grant review provisions with interferences "commenced before the effective date" of the post-grant review provisions.

Section 5(g) expands the provisions for third party citation of prior art, by amending § 301 to permit "[a]ny person at any time" to submit prior art or patent owner statements made in litigation concerning the scope of any claim.  The third party submitter can also provide an explanation in writing on the "pertinence and manner of applying the prior art or written statements to at least one claim of the patent" as well as additional information ("any other documents, pleadings, or evidence from the proceeding in which the statement was filed that addresses the written statement"), which will become a part of the official file of the patent/application.  However, written statements and any such additional information (but not cited prior art) "shall not be considered by the Office for any purpose other than to determine the proper meaning of a patent claim in a proceeding that is ordered or instituted pursuant to section 304, 314, or 324."  Submissions can be made anonymously, and these revisions (by themselves or as they relate to ex parte reexaminations) become effective one year after the effective date of the bill's enactment but will apply to patents issued "before, on or after that effective date."

Comments

[Patrick]

Pardon a dumb question, but how will introducing a new and complex procedure help the PTO's mission to reduce overall patent pendency?

[Skeptical]

This bill is an abomination.

If it takes the learned doctor over three thousand words to explain just one portion, there is no justification that plays to "simplify" or "reduce."

Congress - please start over.

[Kevin E. Noonan]

Dear Patrick:

I think we need to remember the history of the bill over the past 6-7 years. The impetus for reforming patent law in the first place was the complaints by some (mostly the "hi tech" industry and their academic supporters) that U.S. patent quality was "bad" and that these "bad" patents were being used to harass companies like Cisco and Microsoft. (Remember that the IP Troll Tracker was a Cisco employee.)

Thus the two-pronged approach: make it harder to get/easier to challenge patents and reduce the amount of damages that would be available to successful patentees. The latter provisions are stripped from the current bill, primarily because the Federal Circuit has become less per se and more analytical regarding damages.

This leaves the "bad patents" argument, and these post-grant review provisions are intended to provide an avenue to address them. The potential for big companies to harass small companies with these petitions is evident, which is why the estoppel provisions needs to be strengthened to make sure challengers have sufficient skin in the game to minimize those opportunities for harassment.

You are correct, of course, that these provisions will not help address the backlog, but the answer to that criticism is that different PTO personnel will be handling both inter partes reexamination and post-grant review on the one hand and ex parte examination on the other - the new PTAB and the examining corps., respectively. So although appeals may slow down as the new procedures are adopted, there should be little effect on ex parte examination (or at least that is the thought). We'll see.

Thanks for the comment.

[staff]

"new post-grant review proceeding"

Currently the PTO allows 95% of reexam requests. To add additional ways for large multinationals (make no mistake that's who wrote this provision) to contest issued patents of inventors and other small entities is an abuse of process. First, we have to fight the PTO to issue our patents, then we have to fight a never ending stream of administrative actions. It's more than abuse, it's a denial of due process. The PTO has become a rubber stamp for large infringers. They cannot be trusted.

Small entities have been given far too little voice on this bill when one considers that they rely far more heavily on the patent system than do large firms who can control their markets by their size alone. The smaller the firm, the more they rely on patents -especially startups and individual inventors. Yet small entities create the lion's share of new jobs. According to recent studies by the Kauffman Foundation and economists at the U.S. Census Bureau, “startups aren’t everything when it comes to job growth. They’re the only thing.” Congress is rushing headlong into disaster. This bill will be a wholesale slaughter of US jobs.

“Patent reform”

Just because they call it “reform” doesn’t mean it is. Patent reform is a fraud on America.

Please see http://truereform.piausa.org/ for a different/opposing view on patent reform.
http://docs.piausa.org/

[Patrick]

Kevin - apologies as I forgot to come back and look for a reply to my comment ...

"the answer to that criticism is that different PTO personnel will be handling both inter partes reexamination and post-grant review on the one hand and ex parte examination on the other"

True enough, but the PTO is not an organization of limited resources. Funding that gets devoted to personnel for new procedures is funding that cannot be spent on adding to the base examining corps.

I'm skeptical, but then, most people already know that ;)

[Patent post grant review]

I don't know whether it is possible to abolish software patent or not. The Supreme Court tried and was offset by a lower court. Then, the previous lower court was invalid, but software patents are not yet eliminated. The American judicial system is incredible.