After Final USPTO Initiative Retooled
Some pre- grant news of note this week. Last Friday the USPTO announced the After Final Consideration Pilot Program 2.0 (Federal Register Notice here). The revised pilot program modifies the initial concept by introducing a patent examiner feedback component.
Recall that the USPTO launched version 1.0 as the “After Final Consideration Pilot” (AFCP) to foster compact prosecution and to slow the growing RCE backlog. The pilot program allotted additional productivity time to patent examiners in exchange for their consideration of after final amendments that might result in allowance of the application. Prior to the pilot program even amendments requiring nominal further consideration were routinely denied under 37 C.F.R. § 1.116.
Under the terms of the first version of the pilot, examiners decided whether the after final amendment could be fully considered, including any additional search required, within the three hour time limit provided for by the program. (i.e., fully considered and allowed). There was no need to file any special request in the previous version of the program.
Recognizing that some examiners were treating such submissions inconsistently, and that unsuccessful amendments proceeded along the normal course without any additional added value (e.g., acknowledgment/feedback from the examiner), the USPTO has provided for examiner further communication in version 2.0. Read the rest of this entry »
Requests for Rehearing May Backfire on Patentees
As detailed earlier this week, a patentee’s decision to file a preliminary response in an IPR/CBM preliminary proceeding is not as straightforward as one would expect. Where such a preliminary response is imprudently pursued by a patentee this misstep can be further compounded by other optional filings post-Trial Order.
Subsequent to the filing of a preliminary response by a patentee the Patent Trial & Appeal Board (PTAB) will issue its decision. If unsatisfied with the Trial Order either party may file a Request for Rehearing as a matter of right within 14 days.
As is the case with the optional patentee preliminary response, just because you can request rehearing doesn’t mean you should. Read the rest of this entry »
Preliminary Responses: Just Because You Can Doesn’t Mean You Should
The new post grant patentability challenges of the America Invents Act (AIA) have been warmly embraced by the public as a cost effective patent dispute resolution tool. Patent challengers have quickly leveraged these new proceedings of the USPTO’s Patent Trial & Appeal Board (PTAB) to circumvent the high cost of patent litigation and to accelerate opportunities for settlement. Patentees, on the other hand, have been largely caught unaware of the significant threat presented by these new road blocks to patent monetization.
While many of the new PTAB proceedings are only now getting underway a significant number of preliminary proceedings have been concluded. It is during these preliminary proceedings, and shortly thereafter, that many patentees have been committing significant strategic errors. Read the rest of this entry »
Tactical Advantage Found in IPR Timing
The primary business distinctions between the USPTO Patent Trial & Appeal Board (PTAB) proceedings and traditional court based patent invalidity proceedings are the vast improvements in cost, predictability, effectiveness, and speed of PTAB proceedings— to date, the speed has been changing the perspective of the judiciary on staying litigation pending USPTO proceedings. However, while the PTAB proceedings are far faster than the previous inter partes USPTO option (i.e., inter partes patent reexamination) that doesn’t mean that courts will look past a perceived tactical delay in pursuing IPR.
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Senate Proposes Expansion of USPTO’s Business Method Patent Challenge Proceeding
As I pointed out last week, Congress is considering fixes to the U.S patent system are designed to combat the patent troll problem. Yesterday, S.866 or the “Patent Quality Improvement Act” was introduced by Senator Charles Schumer (D-NY) to amend Sec. 18 of the recently passed America Invents Act (AIA). The Bill proposes to remove the 8-year sunset provision of the Transitional Program for Covered Business Method (CBM) Patents so that it becomes permanent. Additionally, the Bill proposes to remove the language “a financial product or” from the standing definition. In its place, the bill proposes “an enterprise, product, or.” The change would effectively make clear that any e-commerce patent, even if not related to finances per se, is subject to a CBM challenge. (Note that the USPTO has been sued very recently on the importance of this “financial” component of the statute.)
The Bill essentially seeks to codify Senator Schumer’s commentary provided to the USPTO last year on the appropriate scope of a CBM. In his earlier comments to the USPTO, the Senator urged the USPTO to take an expansive read of a covered business method patent such that e-commerce and software patents would be covered.
As I have pointed out in the past, CBM challenges are especially lethal to patent trolls. While the above fix will not apply to trolls excepted under the ”technological invention” component of the CBM definition, it would almost certainly devastate the business model for most e-commerce and software patent trolls. Without the leverage of the high cost of litigation to force settlements, and with the far less expensive and challenger friendly proceedings of the USPTO, contingency based legal representation becomes a very dicey proposition.
I expect that this legislation will garner wide support and become law in the near term.
Patentee Challenges PTAB Decision to Institute IPR Proceeding
Every time Congress has tasked the USPTO with conducting a new post grant patent proceeding the agency finds itself fending off legal challenges to their new authority. For ex parte patent reexamination, Ethicon v. Quigg explored whether or not the USPTO had authority to conduct such a reexamination in parallel to a district court proceeding. Thereafter, In re Swanson and In re Trans Texas Holdings explored topics such as issue preclusion and the appropriate threshold for granting an ex parte patent reexamination. Similarly, when inter partes reexamination was introduced Sony v. Dudas challenged the USPTO’s procedural treatment of these filings. Not surprisingly, now that the new patentability challenges of the America Invents Act (AIA) are being embraced by patent challengers the USPTO is seeing another flurry of lawsuits.
In early March, patentee Versata filed suit against the USPTO under the Administrative Procedure Act (APA) challenging the agency’s definition of a “covered business method,” and the ability to raise 101 as a statutory ground in a Covered Business Method (CBM) challenge. (101 is argued as not being embraced by 35 U.S.C. § 282, complaint here).
Last week, patentee Mentor Graphics also filed an APA action in the EDVA challenging the USPTO’s decision to institute an IPR on its patent and seeking an injunction to stop the proceeding. Mentor Graphics alleges that the petitioner should be barred by the 12 month window of 35 USC § 315(b) based on the fact that it acquired a company that was sued some years previously on their patent. (complaint here). The USPTO explained in the Trial Order that the patentee had not shown that the petitioner had exercised control over the previous litigation (i.e., privy), and, that in any event the acquisition occurred post IPR petition filing.
The prohibition of 315(b) is essentially a codification of a laches time bar. The policy behind the statute is to encourage litigants to come to the USPTO early in a litigation battle. Applying this laches prohibition to new parties of a new lawsuit would seem a difficult sell.
Senator Schumer Readies Second Round of Patent Reform
Although many of the more significant changes to U.S. patent law provided by the America Invents Act (AIA) are only months old, Congress is already considering a re-calibration of these changes. Over the past few months the patent troll dilemma has been given significant attention by Congress and politicians are now clamoring to fashion legislation to address the problem. While the “SHIELD Act” has been discussed for the better part of the last year, and rewritten in that time frame, lawmakers are well aware that this “loser pays” proposal is significantly flawed and a non-starter in a political sense. As a result a new legislative solution is rumored for consideration by Congress next week. The new bill will propose an expansion of the patentability trial mechanisms of the AIA.
While the legislation is not yet public, Senator Charles Schumer (D-NY) will introduce legislation that will force trolls to the USPTO before they can file a lawsuit. (Senator Schumer was the force behind the Transitional Program for Covered Business Method (CBM) Patents) It is unclear exactly how this “PTO first” control will be mandated. The new legislation is rumored to remove the “transitional” nature of the CBM program and to expand the standing required for a CBM proceeding to include any patent asserted by a patent troll.
One might argue that the legislation is unnecessary since any defendant can already seek review at the USPTO via CBM or Inter Partes Review (IPR). In fact upward of 50% of such filings already relate to troll suits. Yet, the intent here seems to be Read the rest of this entry »
District Court Discovery Plans Fall Flat
Parties to an Inter Parties Review (IPR) proceeding may obtain “limited discovery” at the USPTO’s Patent Trial & Appeal Board (PTAB). Such discovery is limited as it must fall in an accepted class of discovery, namely, “routine discovery” or “additional discovery.”See Rule § 42.51. Routine discovery is generally categorized as: (1) any exhibit not otherwise publicly available or served, (2) cross examination of a declarant, and (3) non-cumulative information that is inconsistent with a position taken by the party before the PTAB.
“Additional discovery” defines everything outside of the above noted categories. To seek such additional discovery in an IPR an “interest of justice” showing is required. Since patent challengers in IPR rely on patent and printed publications filed with their IPR petition, they need only routine discovery (i.e., the ability to cross examine the patentees’ declarant).
Patentees on the other hand have been seeking additional discovery at the PTAB on a variety of topics, typically issues of standing and secondary indicia. However, the interest of justice showing is proving quite difficult to meet for patentees. In fact, to date, there has not been any additional discovery authorized at the PTAB. For plaintiff attorneys more accustomed to the liberal relevance standard of F.R.E. Rule 401, the PTAB’s high hurdle for additional discovery is a sobering reality check.
Read the rest of this entry »
Increased Speed and Heightened Threshold Showing for New PTAB Proceedings Drive Stays
The primary business distinctions between the USPTO Patent Trial & Appeal Board (PTAB) proceedings and traditional court based patent invalidity proceedings are the vast improvements in cost, predictability, effectiveness, and speed of PTAB proceedings— but it is the speed and effectiveness that is changing the perspective of the judiciary on staying litigation pending USPTO proceedings.
As most are aware, the old patent reexamination system, at least on the inter partes side, has been replaced by IPR. IPR must be concluded by statute within 12-18 months, a marked improvement over the (roughly speaking) previous 6+year path through the Central Reexamination Unit (CRU), Board of Patent Appeals & Interferences (BPAI) and Court of Appeals for the Federal Circuit (CAFC). These changes are being quickly recognized by courts, several of which have agreed to halt litigation proceedings upon the mere filing of an IPR (months in advance of an Order to grant the IPR petitions).
Previously, when an inter partes patent reexamination was the basis for the motion to stay the court proceeding, the strongest plaintiff arguments in opposition were that the significant USPTO delay would prove prejudicial to the plaintiff. Indeed, some of the cases stayed in the early days of inter partes reexamination are only now being reopened, 8 years later. Read the rest of this entry »
Failure to Consider AIA Patentability Challenges May Be Costly Mistake for Law Firms
The face of patent litigation in the U.S. was forever changed on September 16, 2012. This was the date the post grant patentability trials of the America Invent’s Act first became available to patent challengers. The emergence of the new low cost alternatives to patent litigation creates opportunities for patent challengers to pursue a lower cost resolution to patent disputes on far more favorable terms relative to the district court.
If not adequately considered as an alternative to patent litigation, ignorance of the new AIA proceedings may create malpractice opportunities for unsuccessful litigants against their former law firms. Read the rest of this entry »