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  • The opinions, commentary and characterizations provided to this online forum by the authors and moderators are provided for encouraging discussion, thought and debate on important post grant issues. These postings are in no way representative of the opinions of Oblon Spivak et al., or its clients.

The Asymmetric Estoppel of Business Method Patent Challenges

Posted On: Oct. 16, 2012   By: Scott A. McKeown
CBM EstoppelUnsuccessful CBM Challengers Forced Back into Court?

As discussed last week, the Transitional Program for Covered Business Method Patents, or “CBM” proceeding offers significant advantages to qualifying patent challengers. While technically a Post Grant Review (PGR) proceeding, CBM is free of the Draconian estoppel provision applied to PGR. CBM estoppel is limited to those grounds actually raised in the proceeding (that is, there is no “reasonably could have raised” estoppel as in PGR).

More specifically, Sec. 18 of the America Invents Act (AIA) defines a CBM proceeding 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 employed 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 (”raised or reasonably could have been raised”)
-Section 325 (f) precludes PGR for certain reissue patents.

By eliminating the “reasonably could have been raised”  aspect of PGR estoppel the CBM proceeding ostensibly presents a  “free shot” proposition for patent challengers….but, unsuccessful CBM challengers may be surprised to learn that PGR estoppel will apply to the challenger in later, USPTO proceedings.

As noted above, the CBM statute excludes 325(e)(2), which relates to the application of PGR estoppel in later civil actions and ITC proceedings. Notably, however, 325(e)(1) is not excluded by the CBM statute. That is to say, PGR style estoppel still applies internal to the USPTO under 325(e)(1). Thus, unsuccessful challengers that arguably “could have raised” an issue during the CBM, but did not, would be free to introduce that issue in a later district court or ITC proceeding, but not in another CBM proceeding, Inter Partes Review (IPR) or patent reexamination. (Note: if the challenger was earlier sued by the Patentee IPR may be foreclosed as a later option).

The legislative history of the AIA makes clear the intent to maintain the “could have raised” estoppel for both IPR and PGR for the purpose of preventing harassment of Patentees. Yet, the sponsors of the CBM provision were also attempting to reduce business method patent litigation. By presenting a more favorable estoppel path through the courts for failed CBM challengers, one is left wondering whether this asymmetrical CBM estoppel was truly intended, or is yet another technical error of the AIA.

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