By Scott A. McKeown
| August 27, 2012
Initiating a USPTO Business Method Patent Challenge After Seeking Declaratory Judgement?
One of the more interesting provisions of the America Invents Act (AIA) is the "transitional program" existing for the next 8 years for so-called business method patents. As described in Section 18 of the AIA, this proceeding will use the standards and procedures of post grant review (PGR). However, unlike PGR, the Transitional Program for Covered Business Method Patents (TPCBMP) will be available for qualifying business method patents on September 16th.
In addition to the requirement that the patent qualify as a "business method" patent, there are other threshold considerations to satisfy in order to properly pursue this proceeding before the USPTO's Patent Trial & Appeal Board (PTAB). The standing necessary to pursue a TPCBMP of a qualifying patent requires that the petitioner be "charged with infringement," or previously sued for infringement.
Left with implementing this requirement for proper TPCBMP standing, the USPTO has determined the meaning of "charged with infringement" consistent with the statute Sec. 18(a)(1)(B). In the final TPCBMP rule package issued this past August the USPTO provided Rule 42.302(a), which defines the terminology "charged with infringement" as ‘‘a real and substantial controversy regarding infringement of a covered business method patent such that the petitioner would have standing to bring a declaratory judgment action in Federal court.’’
Of course when such an imminent threat of patent litigation exists, rather than await the inevitable lawsuit/dreaded Eastern District of Texas venue, a potential defendant may pursue a declaratory judgement to secure a preferred venue and/or establish a lack of liability.
Interestingly, both Inter Partes Review (IPR) and (PGR) are unavailable to a petitioner that has previously filed for declaratory judgment to challenge validity. The reason for this IPR/PGR standing control is to prevent those that have chosen district court in the first instance from burdening the USPTO with a later IPR/PGR challenge. Since TPCBMP follows the "standards and procedures" for PGR, it may be surprising to some that the USPTO rules for TPCBMP exclude the DJ control.
Looking first to the AIA, Sec. 18 defines TPCBMP as following the "standards and procedures of PGR with the following exceptions:
Section 321(c) of title 35, United States Code, and subsections (b), (e)(2), and (f) of section 325 of such title shall not apply to a transitional proceeding.
-Section 321(c) is the nine month window used in PGR.
-Section 325(b) precludes stays of court actions when a motion for preliminary injunction is pending.
-Section 325 (e)(2) defines PGR estoppel (note: TPCBMP estoppel is different).
-Section 325 (f) precludes PGR for certain reissue patents.
You will note that 321 (a), which is the DJ control provision, is not expressly excluded in the statute.
Next, the USPTO's final rules define that TPCMP is subject to the PGR procedures except for §§ 42.200, 42.201, 42.202, and 42.204. This is consistent with section 18(a)(1) of the AIA, which provides that the transitional proceeding shall be regarded as, and shall employ the standards and procedures of, a post-grant review with certain exceptions.
-42.200 details procedures of PGR which are provided for elsewhere in the TPCBMP rules.
-42.201 defines the declaratory judgment control for PGR in part (a), as well as petitioner estoppel from pursuing PGR in part (b).
-42.202 relates to the 9 month window for PGR.
-42.204 refers to the content of a PGR petition.
Ostensibly, the USPTO has excluded the DJ control (42.201(a)), while Congress did not. Yet, since an independent standing requirement exists for TPCBMP, the USPTO has seemingly reasoned that the DJ control was to be excluded by implication. Indeed, each of IPR, PGR and TPCBMP has different standing requirements.