First Settlements Spawned in Inter Partes Review Proceedings

One of the unique characteristics built into inter partes review, as compared to reexamination practice, is the ability to terminate the proceeding when settlement is reached.  See, e.g., 35 USC §317.  In two, unrelated inter partes review proceedings pending before the Board, we have been provided with the first two settlements to take advantage of this new feature – terminating the inter partes reviews at an early stage.

[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]35 USC §317(a) – “IN GENERAL.–An inter partes review instituted under this chapter shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the Office has decided the merits of the proceeding before the request for termination is filed. If the inter partes review is terminated with respect to a petitioner under this section, no estoppel under section 315(e) shall attach to the petitioner, or to the real party in interest or privy of the petitioner, on the basis of that petitioner’s institution of that inter partes review. If no petitioner remains in the inter partes review, the Office may terminate the review or proceed to a final written decision under section 318(a).”[/pullquote]

First, in International Business Machines Corp. v. Financial Sys. Tech. (IPR2013-00078), prior to the Board even ruling on the petition seeking inter partes review, the parties approached the Board to inform that a settlement had been reached.  Following a related conference call, the Board issued a helpful Order explaining the procedure for terminating an inter partes review proceeding.  Specifically, the Board instructed that the rule governing settlement (37 CFR §42.74) requires the settlement to be in writing and filed with the Board.  The Board further provided guidance on how such a settlement agreement can be filed as confidential business information – separate from the files of the involved patent.  Lastly, the Board required the parties to file a joint motion to terminate, briefly explaining why termination is appropriate in this case.  The parties quickly filed the required joint motion and we await the Board’s dismissal of the inter partes review.  Unfortunately, there is little publicly-available information to help discern why the underlying litigation was settled, taking down the IPR proceeding with it.  No stay had been instituted, and IBM had just filed its opening claim construction brief.  Indeed, that the Board had not even decided whether to institute the trial makes it difficult to draw many conclusions from this settlement.

The second IPR settlement has transpired in Macauto USA v. BOS GmbH & Co. (IPR2012-00004), after the Board had decided to institute the IPR with regard to some claims, but not others (see related post HERE).  By way of a joint motion to terminate the IPR, the parties filed their settlement agreement and a Joint Stipulation of Voluntary Dismissal with Prejudice from the co-pending federal court litigation.  Not surprisingly, the parties also requested that the settlement agreement be treated as confidential and made available only to federal agencies upon written request, or on a showing of good cause, per 35 USC §317(b) and 37 CFR §42.74(c).  Again, there is little in the public record that would indicate the reasons why settlement was reached, including, for example, whether BOS was concerned about the prior art issues raised in the IPR; or that Macauto was concerned, from an infringement perspective, about the claims that were not made part of the IPR.

Although it is hard to draw conclusions as to why these parties settled, what seems clear is that IPR is encouraging settlement and the fact that parties can terminate the IPR proceeding with such a settlement is at least somewhat attractive to IPR participants.

What is in your Inter Partes Review Claim Chart?

The claim chart has been a fixture of Patent Office post-grant practice, let alone federal court litigation, and inter partes review should be no different.  As has become a theme in inter partes practice, however, strict adherence to the Patent Office regulations is paramount in these proceedings, and the venerable claim chart has not avoided the glare of the Board.

In the case of Xilinx, Inc. v. Intellectual Ventures I, LLC (IPR2013-00112), the Board convened a conference call to discuss defects in the petition filed by Xilinx.  In the end, the Board accepted the petition, but made clear that the petition was flawed because it contained defective claim charts.  Specifically, the Board slapped Xilinx’s wrist because the claim charts contained analysis that went beyond the process of identifying key features of a claim and comparing those features with specific evidence.

The Board’s position is interesting because it is unclear where the Board derived the basis for its strict objection to the claim charts.  The Trial Practice Rules (at 48764) state that claim charts are not required, but that they may be filed to “explain clearly and succinctly what the petitioner believes a claim means in comparison to something else, such as another claim, a reference or a specification.”  The Rules go on to explain that such charts may streamline the process of identifying key features of a claim and comparing those features with specific evidence.  Of course, this latter language is what was cited by the Board in its conference call and subsequent Order, but there is nothing in the rule that would seem to prohibit including analysis in the claim chart.  There also is little to help us discern what types of “analysis” were troublesome to the Board.

Our best guess is that the Board is concerned about the page limitations that are imposed on petitions.  The inter partes rules state that a claim chart may be single-spaced, despite the requirement that a petition must otherwise be double-spaced.  If a petitioner were to include a significant amount of analysis and argument in the claim chart, instead of a succinct comparison of claim language versus specific evidence, this would help a petitioner to avoid the strictures of the page limitation.

The Mechanics of Motions to Amend in Inter Partes Review

As the first inter partes review trials head toward the deadline for a Patent Owner Response and potential Motion to Amend, the focus of the earliest trials is starting to turn to the mechanics of a Motion to Amend.  In addition to the Trial Practice Rules, the Board provided some guidance for motions to amend in an Order relating to the “Conduct of the Proceeding” in the first-filed inter partes review, Garmin Int’l v. Cuozzo Speed Tech. (IPR2012-00001).

Starting first with the applicable rules, motions to amend, like all motions, must comply with §42.22 “Content of petitions and motions.”  Specifically, a motion to amend must be filed as a separate paper and include: 1) a statement of the requested relief, 2) full statement of reasons for that relief, 3) any showings required by the rules for inter partes review, 4) a statement of material facts, and 5) any other showings or explanations required by the Board as a condition for authorizing the motion.  In addition, pursuant to §42.24(a)(v), the motion to amend must not exceed 15 pages.

[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]§42.121(a)(3) – “A reasonable number of substitute claims.  A motion to amend may cancel a challenged claim or propose a reasonable number of substitute claims.  The presumption is that only one substitute claim would be needed to replace each challenged claim, and it may be rebutted by a demonstration of need.”[/pullquote]

Motions to amend the patent-at-issue must also comply with §42.121 “Amendment of the patent.”  Pursuant to this regulation, one motion to amend is allowable, after conferring with the Board. Typically, such conferring occurs during the initial conference call that occurs shortly after institution of the inter partes review.  The due date for a motion to amend is no later than the filing of a Patent Owner Response.  The scope of the motion to amend must be limited to a response to a ground of unpatentability involved in the trial.  Further, no amendment may enlarge the scope of a claim or introduce new subject matter.  Lastly, the motion to amend must identify where in the disclosure of the patent the support for any amendment is located.

What is sure to be the most controversial portion of Rule 121 is the requirement that only a reasonable number of substitute claims be offered in a motion to amend.  As compared to reexamination practice, where unlimited numbers of claims could be offered, inter partes review rules state that there is a presumption that only one substitute claim is needed to replace each challenged claim.

In the Garmin case, the Board took the opportunity of a conference call, and subsequent order, to emphasize many of the above-requirements, including instructing the patent owner regarding the following:

  • Any proposed amendment or substitution of claims must explain how it obviates the grounds of unpatentability underlying the institution of the inter partes review;
  • Any proposed amendment or substitution of claims must explain where corresponding written description support in the specification can be found;
  • Such explanations should be contained in a motion to amend claims, which is separate from the Patent Owner Response; and
  • The motion to amend should not make any change to claims not involved in the proceeding.

While amending claims that are subject to inter partes review is an advantage to a patent owner, that advantage has been severely limited, as compared to the amendment practice common in reexamination proceedings.  Most particularly, it will be interesting to see how the Board handles the presumption of one substitute claim per challenged claim.  Given the Board’s strict reading of the Trial Practice Rules to date, however, patent owners should not expect much leeway regarding the number of claims proposed.

Third Inter Partes Review Trial Offers Clarification on Several Key Issues

As with any new creature in the law, inter partes review proceedings, created in the America Invents Act, will require time and interpretation before their nuances will be understood.  Virtually every new order issued by the Patent Trial and Appeals Board has provided at least some level of context for the new IPR rules, and the third ever decision instituting an inter partes review is no different.  In Macauto USA v. BOS Gmbh & KG, IPR2012-00004, the PTAB decided on January 24, 2013 to institute an inter partes review trial on most, but not all, of the claims challenged by the petitioner therein.  Most interesting about the decision, however, is the interpretation provided regarding two key issues in the IPR rules; namely clarification of: 1) the statutory bar from 35 USC §315(b); and 2) the effect of a prior proceeding (here a reexamination of the patent-in-suit), on the institution of an inter partes review, pursuant to 35 USC §325(d).

[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]35 USC §315(b) — “An inter partes review may not be instituted if the petition requesting the proceeding is filed more than one year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” [/pullquote]

Statutory Bar

The patent owner in this case asserted that the patent challenger was statutorily barred from filing the IPR petition in light of a previous lawsuit between the parties.  On April 7, 2011, the patent owner filed complaint in federal district court, alleging infringement of the patent-in-suit by petitioner’s Taiwanese parent company.  The complaint was delivered to that Taiwanese company on or about May 13, 2011.  The lawsuit case was later dismissed, without prejudice, pursuant to a stipulation between the parties.

35 USC §315(b) states that a patent challenger has only one year from the date a patent infringement complaint has been served on it to file a petition seeking inter partes review regarding that patent.  Because the petitioner’s parent company was served with an infringement complaint more than one year prior to the filing of the petition for inter partes review, the patent owner argued, this IPR proceeding was statutorily barred.

The Board disagreed that the patent owner demonstrated that the statutory bar was applicable.  First, the Board looked to Federal Circuit precedence that interpreted dismissals without prejudice, and found that such dismissals were treated as returning the parties to a position as though the action had never been brought.  The dismissal of the case with prejudice against the parent corporation, therefore, nullified the effect of the alleged service of the complaint on the petitioner.  Further, while the parent corporation apparently signed and returned a waiver of service, that waiver of service was apparently never filed.  Thus, the patent owner’s failure to demonstrate that a waiver of service was filed was a second, independent reason to not institute the statutory bar.

Effect of Prior Proceeding

The America Invents Act was seemingly enacted with a built-in bias against re-litigating issues that have already been considered by the Office.  Specifically, 35 USC §325(d) states that the Director may reject a petition if the same or substantially the same prior art or arguments were previously considered.

[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]35 USC §325(d) – “…the Director may…reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office.”[/pullquote]

Prior to the petition for inter partes review filed in this case, the patent-in-suit was the subject of a request for ex parte reexamination (brought by the same petitioner).  While the request was granted, ultimately all 21 claims of the patent were confirmed as patentable by the Office.  In its Order granting inter partes review, the Board took issue with several determinations by the Examiner in the reexamination — to a large extent second-guessing the previous determinations by the Office.  For example, the Board stated that it “reviewed the declarations [submitted in the reexamination proceeding] and agree[d] with Petitioner that they should not have been given determinative weight by the Examiner.”  Specifically, the Board provided several reasons why it disagreed with the analysis provided by the patent owner’s expert witnesses in the reexamination.  In what will certainly be fodder for future commentary, the Board admitted in its Order that the petitioner did not provide any declarations of its own to refute the declarations provided by the patent owner in the underlying reexamination.  Thus, the Board has disagreed with the analysis and conclusions of the patent owner’s experts on its own, without any countervailing evidence having been provided by the petitioner.

In the end, the Board noted that it is not required by statute to reject the petition just because it was based on facts and arguments previously presented, and it chooses not to do so here, given its disagreement with the patent owner’s experts.


With each passing PTAB Order, more granulation and clarity is brought to inter partes review practice.  In the end, the success or failure of these proceedings to function as an effective and efficient alternative to federal court litigation is going to largely be based upon how comfortable the proceedings are to patent challengers.  The PTAB’s decision to initiate an IPR in the Macauto case has aspects that are certainly favorable to patent challengers – the estoppel of §315(b) has been interpreted in a narrow sense and the option to not re-litigate issues previously before the office, set forth in §325(d), was not exercised.  In addition, the Board challenged the findings and conclusions of a patent owner’s expert witnesses, even in the absence of any argument or expert testimony from the patent challenger.  It is still early, but signs point to inter partes review proceedings being a favorable forum for patent challengers.

New Inter Partes Review Fee Structure In Effect


The new inter partes review proceeding may have just gotten even more attractive to potential patent challengers in light of a revised fee structure implemented by the Patent Office, effective January 18, 2013.  In general, the Patent Office has lessened the risk of filing an inter partes review by breaking the costs associated with such a filing into two discrete segments – one fee for filing, and another fee to be paid only if an inter partes review trial is instituted.

More specifically, under the original rules, the Patent Office fee to file a petition seeking inter partes review was $27,200 for up to 20 claims (with a $250 per claim fee for each claim in excess of 20 claims).  That fee was due upon filing of the petition and no refund is provided if the inter partes review proceeding was not ultimately instituted.

The fees charged by the Patent Office were originally calculated with an eye toward covering the actual costs the Office anticipated incurring in handling an inter partes review – both in terms of administrative costs, as well as the time the Administrative Patent Judges would have to spend on each filing. To better align the costs to be incurred with inter partes review practice, however, the Office apparently recognized that there will be instances in which petitions are not granted, lessening the anticipated burden on the Office.  That cost savings will now be passed along to the patent challenger.

Under the new rules, when a petition seeking inter partes review is filed, the cost is broken up into two parts:

  • Filing Fee: $9,000 for up to 20 claims ($200 per claim for each claim in excess of 20)
  • Institution Fee: $14,000 for up to 15 claims ($400 per claim for each claim in excess of 15 claims made part of the inter partes review trial)

This change will, if anything, further incentivize use of the IPR process because the risk has been lessened for patent challengers.  They only risk a $9,000 filing fee with their petition, instead of the full $27,200 fee required under the old rules.  This continues a trend – making these proceedings as easily accessible as possible to provide an effective, inexpensive option to district court litigation for patent challengers.


PTAB Handles First Inter Partes Review “Initial Conference Call”

On Tuesday, January 22, 2013, the PTAB held its first “Initial Conference Call” in an inter partes review, in the case of Microsoft Corp. v. Proxyconn, Inc., IPR2012-00026 (Harness Dickey represents the Patent Owner, Proxyconn, in this matter).  The format of the call was very similar to a Rule 16 Conference before a federal district court judge.  At the outset of the call, the Board clarified certain filings that had occurred in the case, and then proceeded to address the expected formalities of the upcoming trial, including:

[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]Office Patent Trial Practice Guide at 48765 — “The Board expects to initiate a conference call within about one month from the date of institution of the trial to discuss the Scheduling Order and any motions that the parties anticipate filing during the trial.”[/pullquote]

1) Whether the proposed scheduling order was agreeable to the parties;

2) Whether the form Protective Order set forth in the Trial Practice Guide was agreeable to the parties;

3) Whether “Initial Disclosures” were exchanged between the parties, or expected;

4) Whether compelled discovery was expected;

5) What motions each party expected during the trial (including, with respect to certain of the motions identified by the parties, what the party expected to include in the motion); and

6) Whether the parties had discussed potential settlement.

The Board also handled questions and clarifications from the parties and otherwise cleared the deck of all outstanding issues before the next phases of the inter partes review proceeding are to take place.  In sum, the approximately 30 minute phone conference was very reminiscent of an Rule 16 conference in district court litigation and parties should be prepared to address similar topics in an inter partes review “Initial Scheduling Conference.”

Multiple Back-Up Counsel Allowed in Inter Partes Review

Despite the wording of 37 CFR § 42.10, as well as the accompanying comments thereto, that seem to limit parties to a single back-up counsel, the PTAB has recently granted concurrent pro hac vice motions that allow a patent owner to have two back-up counsel participate in a single Inter Partes Review proceeding.  It remains to be seen whether the PTAB will or will not place a restriction on the number of back-up counsel that are able to participate in an IPR.

[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]37 CFR § 42.10(a) – “If a party is represented by counsel, the party must designate a lead counsel and a back-up counsel who can conduct business on behalf of the lead counsel.”[/pullquote]

More specifically, the express wording of § 42.10 seems to suggest that only a single lead counsel and single back-up counsel is allowed in any Inter Partes Review proceeding.  Further, the comments accompanying the rule only reinforce this limitation.  To that end, one of the comments to the proposed Trial Practice Rules contained a proposal for multiple back-up counsel.  In response, the Patent Office stated only one lead and one back-up counsel would be required in any proceeding:

The comment suggesting multiple back-up counsel is not adopted.  Based on the experience of the Office in contested cases, designating one lead counsel and one back-up counsel by each party should result in more efficient and effective case management.  “Rules of Practice for Trials Before the Patent Trial and Appeal Board and Judicial review of Patent Trial and Appeal Board Decisions; Final Rule,”  77 Federal Register 157 (14 August 2012), p. 48630.

The imposition of such a limitation could be, in some circumstances, unduly burdensome to parties in an Inter Partes Review proceeding.  Given the schedules of busy attorneys, as well as the potential in Inter Partes Review and Post Grant Review proceedings of multiple depositions within an abbreviated 3 month discovery period, having the ability to designate more than one back-up counsel could be advantageous and reasonable.

Despite the limitation in § 42.10 and the accompanying comments to a single back-up counsel, however, the PTAB recently granted two motions for pro hac vice admission in the ongoing IPR styled as Nissan N. Am., Inc. v. Carl B. Collins and Farzin Davanloo (IPR2012-00035). In that case, therefore, the PTAB tacitly over-ruled § 42.10 by allowing two separate back-up counsel.  The Board’s Order speaks of the patent challenger having “shown good cause why [counsel] should be recognized pro hac vice for purposes of this proceeding,” but the Order does not discuss whether good cause was shown to admit two separate back-up counsel.  Indeed, the issue was avoided entirely by virtue of the fact that the grant of the motions for pro hac vice admission were made in two separate Orders.

It is also interesting to view this order in light of a Notice of Defective Petition entered in Midland Radio Corp. v. Anthony Mirabelli (IPR2013-00021) wherein the PTAB stated that the Midland Radio Petition was defective because it listed as back-up counsel “all counsel” associated with a particular PTO customer number.  The PTAB instructed that “Per 37 CFR § 42.10(a), ‘the party must designate . . . a back-up counsel who can conduct business on behalf of the lead counsel.’” (emphasis in original).  Thus, to receive a filing date for its petition, Midland Radio filed an amended petition that listed only a single back-up counsel.

In the end, time will tell whether two or more back-up counsel will be allowed on regular basis, or whether the Board will continue with its early practice in other contexts of sticking to the letter of the Trial Practice Rules.

PTAB Does Not Tie Inter Partes Review With Related, Pending Applications

The PTAB has issued its second order regarding the consolidation of related “proceedings” in the two companion Inter Partes Reviews brought by Chi Mei Innolux Corp. (CMI) against two patents owned by Semiconductor Energy Laboratory Co. (IPR2013-00028, IPR2013-00038).  In each case, CMI moved to have the PTAB either (1) take jurisdiction over, and suspend prosecution of, an application that claims priority from the patent at issue in the IPR; or (2) review and authorize any further patent filings, claim amendments, etc.  More specifically, CMI argued that the pending (or future) applications may be used to present claims that are patentably indistinct from those at issue in the IPR.  The Board denied the motion, finding that 37 CFR § 42.3(a) (relating to inter partes review jurisdiction) does not require it to take jurisdiction over the related applications and, further, that the patent examiner is in just as good, if not better,  position to review the pending claims vis-à-vis the IPR.  As such, it is not necessary for the Board to review any filings or proposed claim amendments in related patent application(s).

[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]37 CFR § 42.3(a) – “The Board may exercise exclusive jurisdiction within the Office over every involved application and patent during the proceeding, as the Board may order.”

37 CFR § 42.2 – “Involved means an application, patent, or claim that is subject of the proceeding.”[/pullquote]

More particularly, the Board pointed out that § 42.3(a) states that the Board may exercise exclusive jurisdiction over “involved” patents or applications.  But, § 42.2 defines “involved” patent as meaning the patent that is the subject of the proceeding and “involved” application as meaning an application that is subject of a proceeding, such as a derivation proceeding.  Order at 2.  The pending, or future, application(s) that claim priority to the patent that is subject of the IPR are not “involved” and there is, therefore, no requirement that the Board take jurisdiction over such application(s).

The Board further declined to review and authorize any filings or claim amendments in any current or future patent prosecution matters.  Such relief would require the Board to be a “gate keeper” for all papers and CMI did not explain why the Board should take on the gate keeper function.  As has become its practice, however, the Board does drop a hint regarding what it may take to convince it to take such action, stating that CMI “has not explained how the claims present in the…application are patentably indistinct from the claims involved in the [subject] patent.” Order at 3.  A patent challenger seeking to obtain the relief sought by CMI in these inter partes review proceedings should attempt to make such a showing – providing a detailed account of how the pending claims are patentably indistinct from the claims at issue in the IPR.

The Board also pointed out that the examiner handling the application(s) is in as good of a position to consider the relative scope of the pending and IPR claims.  For example, “[i]f the examiner makes a determination that the claims of the application are patentably indistinct from the [subject] patent claims, then the examiner can suspend the application pending the outcome of this proceeding.”  Order at 3.

In the end, the Board denied exercising jurisdiction over pending or future patent applications, but did instruct that its ruling be placed in the administrative records of the pending application to put the examiner in that prosecution on notice of the ruling.

Inter Partes Review and Post Grant Review Are Game-Changers

Originally posted on January 8, 2013 on IP Law360.

Inter partes review (IPR) and post-grant review (PGR) “trials” at the U.S. Patent and Trademark Office have the potential to be game-changers in the way patents are challenged in the future. After several attempts at creating USPTO-based proceedings that are efficient and effective, there is much in the new IPR and PGR that lend credence to the notion that Congress finally hit on a combination of pure patent litigation and USPTO procedure that will be attractive to patent challengers. Patent owners are already gearing up to defend against these proceedings, knowing the advantages they present for patent challengers.

That is not, however, to say that IPR/PGR proceedings will be commonly filed and serve to weed out many “bad” patents, along the lines of European opposition practice. Their high cost (as compared to prior USPTO proceedings and EU opposition practice), as well as the strong estoppel that attaches upon the conclusion of the proceedings, will ensure that patent challengers will carefully pick and choose their opportunities to file IPR/PGR petitions.

For significant disputes between patent owners and alleged infringers, however, where litigation is pending, threatened or expected, inter partes review and post-grant review may become the norm. For at least the five reasons below, these proceedings have the potential to change the face of patent litigation forever.

1) Keep Control of Your Best Prior Art Via Pseudo-Litigation

Among the main attractions of the new inter partes review and post-grant review proceedings are their pseudo-litigation features. As compared to previous attempts by Congress to create cost-effective proceedings for challenging patent validity, via IPR/PGR, patent challengers can be more confident that they will remain in control of their best prior art, instead of throwing that art over the wall for the USPTO to handle (or mishandle), without the type of control and input that a patent challenger is used to in federal court litigation.

Principal among those pseudo-litigation features, include: (1) the ability to take discovery, (2) the extensive use of experts (to include their depositions), (3) the ability to make challenges to evidence (pursuant to the Federal Rules of Evidence), and (4) access to subpoena power to compel discovery from third parties. Indeed, even Rule 26(a)(1)-style initial disclosures and scheduling orders with strict deadlines are required by the Trial Practice Rules before the Patent Trial and Appeal Board.

In addition to these pseudo-litigation features, IPR/PGR has the potential to function as a mini-claim construction phase in an ongoing patent dispute. At threshold, like prior USPTO proceedings, claim terms in inter partes review and post-grant review proceedings will be given their broadest reasonable interpretation, consistent with the specification. Pursuant to this standard, reasonable disagreements regarding the scope of a particular claim limitation will be resolved in favor of assuming that the limitation is broadly construed. This standard, of course, is more likely to result in a finding of unpatentability as compared to a district court proceeding where such reasonable disagreements will default to a reading of a claim limitation that preserves validity.

But Congress has directly injected claim construction issues into inter partes review and post-grant review proceedings, as evidenced by the fact that each petition seeking IPR or PGR is required to set forth the petitioner’s claim construction position. The petitioner may simply state that the terms are to be given “their broadest reasonable interpretation in light of the specification.” But, strategic opportunities exist to raise specific claim construction issues in the petition that may force the patent owner to begin talking, in detail, about the scope of particular claim terms. Any such statements will, undeniably, find relevance in later claim construction arguments in federal court proceedings. For example, this strategy may be invaluable for a group of defendants facing the same patent(s) — claim construction statements in an IPR by the patent owner can ripple throughout many pending lawsuits.

Notably, for means or step-plus-function claims, more specificity is required in the petition. If a challenged claim has a means-plus-function limitation, the petition must also contain the specific portions of the specification that describe the structure, material or acts corresponding to each claimed function. It seems especially likely that, when 35 U.S.C. §112(f) limitations are at issue, a patent owner is going to be put in the uncomfortable situation of putting claim construction positions on the record.

In any event, by directly addressing claim construction issues in these proceedings, patent challengers have an opportunity to get patent owners to start talking about claim scope in a manner that may impact litigation positions, including later Markman proceedings.

2) Allure of a Low Burden of Proof and Broader Classes of Validity Challenges

Patent challengers will find the burden of proving a patent claim unpatentable in IPR/PGR to be an attractive alternative to federal court litigation — “preponderance of the evidence” before the Patent Trial and Appeal Board versus the “clear and convincing evidence” standard of district court litigation. Relatedly, some challengers may find value in avoiding juries that tend to have a higher degree of respect for patents than that of an administrative patent judge. While not technically a change, as compared to reexamination practice, the above factors will bias patent challengers toward IPR/PGR proceedings. This is especially so when highly technical arguments are presented or invalidity is a close call.

Further, the post-grant review proceeding gives patent challengers access to a much larger set of grounds for establishing unpatentability. Patentable subject matter challenges (§101), written description and enablement challenges (§112), as well as non-documentary prior art challenges, such as prior uses and sales (§102 and §103) are all possible under PGR practice. Indeed, under many circumstances, patent challengers will conclude that the PTAB is better situated to consider complicated §101 or §112 challenges, as compared to most district courts.

3) Short Timeline and Quick Litigation Stays

The streamlined nature of IPR/PGR proceedings are already proving to be attractive to district court judges considering stay requests from defendants in patent infringement lawsuits. Per the AIA, from the date of filing of a petition seeking inter partes review or post-grant review, a final, written decision must be rendered no later than 18 months (with the ability to extend the deadline up to six months). That 18-month timeframe may be shortened if the patent owner chooses to either waive its ability to file a preliminary patent owner statement or files such statement in less than the three months otherwise allowed. In addition, that time frame may be shortened if the Patent Trial and Appeal Board takes less than its allotted three months to decide whether to institute a trial.

At least one district court judge (Judge Joan Lefkow, Northern District of Illinois) granted a motion to stay within days of the filing of a petition seeking IPR, and without allowing any opposition briefing from the patent owner. District court judges, seemingly always willing to lessen the burden of their dockets, are likely to find the short, definitive timeline of IPR/PGR proceedings to be meaningful in determining whether to institute a stay of litigation. Patent challengers will be biased toward instituting inter partes review or post-grant review proceedings if the likelihood of getting a very early stay increases as compared to the protracted inter partes reexamination timelines.

4) Patent Owner Estoppel and Limited Ability to Amend

For patent owners with pending continuation applications, the novel patent owner estoppel provisions of IPR/PGR proceedings are significant. Per the Trial Practice Rules, a patent applicant or owner is precluded from taking action in a later proceeding that is inconsistent with an adverse judgment in an IPR/PGR. For example, a patent owner may not obtain a claim in a later patent application that is patentably indistinct from a finally refused or canceled claim.

Relatedly, one of the drawbacks of prior USPTO proceedings to challenge patent validity was the ability of the patent owner to draft virtually unlimited numbers of new claims to avoid the subject prior art, yet still get patent claims that are commercially viable. In IPR/PGR practice, however, there is no such unlimited ability to amend.

More specifically, as compared to ex parte re-examination or the now-obsolete inter partes re-examination proceedings, where dozens, or even hundreds, of new proposed claims were the norm, amendment practice in inter partes review and post-grant review is restricted. The presumption offered by IPR/PGR rules (§42.121 and §42.221) is that only one substitute claim would be needed to replace each challenged claim. This presumption may be rebutted by a demonstration of need, and decisions by the PTAB on this point will be interesting to flesh out the boundaries of this presumption, but the right to amend the patent has been severely curtailed.

Further, this presumption is another factor that ways in favor of heading down the path of inter partes review and post -grant review because patent challengers can strategically decide to only include a limited number of patent claims in the IPR to limit the ability of the patent owner to offer amended claims — the fewer challenged claims, the fewer substitute claims that can be introduced. Also notable, the patent owner’s amendment is due within three months of the institution of an IPR/PGR. Such an early deadline is another disadvantage for the patent owner.

Lastly, as in prior USPTO proceedings, claim amendments will work to give rise to intervening rights for any alleged infringer. In IPR/PGR practice, therefore, forcing a patent owner to make claim amendments can cut off a past damage claim. This is especially beneficial if the asserted patent is nearing the end of its patent term because the elimination of a large past damage claim, with little worry of infringing in the future.

5) Low Cost as Compared to District Court Litigation

USPTO proceedings to challenge the validity of patents have always carried a significantly lower price tag than district court litigation. Inter partes review and post-grant review proceedings have the same advantage, albeit slightly less so. Higher filing fees, the use of experts, discovery costs (including deposition costs), are all factors that lead to projections that overall fees for IPR/PGR will range from $150,000 to as much as $300,000 per party. The advantages offered to patent challengers in these proceedings, however, as discussed in detail above, are a bargain when compared to the average cost of patent litigation in the federal courts.

* * * * * * *

In sum, inter partes review and post-grant review proceedings are not likely to become garden-variety tools to weed out “bad” patents, in the way that EU opposition practice is often used. However, for significant disputes — where litigation is ongoing, contemplated or expected — patent challengers with legitimate invalidity defenses will find access to the above-referenced features of IPR/PGR, even at a somewhat higher price tag, to be a true bargain. At a cost that is up to an order of magnitude less expensive than district court litigation, expect patent challengers to dive into the lower burden, higher likelihood of success inter partes review and post-grant review.

Congress Passes America Invents Act Technical Corrections Bill

The House of Representatives today passed a technical corrections bill directed to the America Invents Act.  There are several proposed changes (a summary of which can be found HERE), but only one that directly affects Inter Partes Review and Post Grant Review proceedings.  Namely, the technical corrections bill fixes the “dead zone” in IPR practice that has prevented the initiation of an IPR within the first 9 months after a patent has issued.

Post Grant Review, of course, will become available 0-9 months after issuance of any patent that qualifies as a “first to file” patent under the America Invents Act.  That is, PGR is available for any patent that has an effective date of March 16, 2013 or later.  Given the time required to examine a patent, at the very earliest, the first PGR will not be filed, therefore, until late 2013 or, more likely, early 2014.

In the meantime, Inter Partes Review is, of course, available now, but by the letter of the AIA, a petition seeking IPR can only be filed 9 months after a patent issues, or later.  Thus, for patents that have issued in the last nine months, IPR is technically not available.  This “dead zone” in the legislation was recognized almost immediately and is now being fixed in House Bill 6621.

President Obama is expected to sign HR 6621 into law, making Inter Partes Review available for any non-“first to file” patent at any time, fixing the IPR “dead zone.”