By Scott A. McKeown
| February 12, 2013
Estoppel Arising from Inter Partes Review (IPR) Will Have Minimal Practical Impact
The new patentability trial proceedings of the Patent Trial & Appeal Board (PTAB) have been met with great enthusiasm by many science and technology innovators as the first true alternative to patent litigation; especially those faced with costly "patent troll" assertions. Still, there are a small minority of patent challengers that look on these "new" proceedings with great fear and skepticism. These naysayers will often dismiss the speedier, lower cost PTAB proceeding as being too much of an estoppel risk.
The estoppel concern is almost always distilled down to two unenlightened propositions. That is, a fear of a "new, untested and unpredictable" proceeding, and the belief that the USPTO may somehow give short shrift to the submitted prior art.
Both criticisms are easily demonstrated as misguided.
Practitioners will certainly recall the parade of horribles that was feared to arise from the estoppel in inter partes reexamination proceedings. Countless attorneys cautioned against the use of inter partes reexamination because of the dreaded “estoppel” that would attach to a failed proceeding; some going as far to argue that such a recommendation was tantamount to malpractice. Those fears were debunked as practitioners learned that the right to participate (and appeal to the CAFC) provided reasonable assurances that the challenger’s positions would be given due consideration. In fact, the overwhelming success of such reexamination filings for patent challengers is statistically staggering (89% of filings resulting in claim cancellation or amendment). Practitioners also began to appreciate that the USPTO was in many ways a superior forum to district courts for adjudication of validity issues given the lower burden of proof, lack of presumption of validity, broader claim construction, and the technical expertise of the specialized reexamination examiners and judges.
This truism applies with equal force to post-grant proceedings before the PTAB. In other words, if you’re not going to win at the PTAB you’re certainly not going to win on the same art at the district court. As to the "could have raised" aspect of the previous reexamination estoppel provision, this language has even been liberalized to "reasonably could have raised" for the new proceedings. Clearly, the concern that prior art will be lost or "wasted" at the PTAB is nonsensical, especially considering the alternative is to save such for a jury of laypersons.
Given the choice of three administrative patent judges and the lower challenger burdens on one hand, and a plaintiff friendly, Texas jury with much higher burdens for the challenger on the other, spending several million dollars to explain complex technology to a hodgepodge of Texas plumbers, cosmetologists, and retail sales reps is more than a bit foolhardy.
Further, the new PTAB proceedings are not new in any material function, but in name only. The "new" PTAB proceedings are in many ways a hybrid of traditional USPTO reexamination appeal, and patent interference trial practices. The lead PTAB judges have decades’ worth of experience in such adversarial proceedings. There is no material aspect of an inter partes review proceeding which does not find a direct ancestor, and ample precedent, in either patent interference or patent reexamination appeal proceedings. It is also worth noting that patent examiners, the traditional whipping boys of these "don't trust the PTO" arguments, are not involved at all in these new PTAB proceedings.
Another practical reality is that inter partes review petitioners usually have a number of independent and discrete defenses that can be raised in litigation in the event that the patentability trial is concluded in a manner favorable to the patent owner. Such auxiliary defenses often include written description, enablement, subject matter eligibility, public use, on sale bars, prior invention and the like. In the typical case there are ample auxiliary defenses for counsel to provide a suitable “plan B” in the event the petition is unsuccessful.
In this connection it is also worth noting that the PTAB orders instituting IPR proceedings have been providing substantial guidance on claim construction. The same is expected for final written decisions issued after completion of the trial. The parties to an IPR are thus likely to have, at a bare minimum, substantial guidance from a panel of three APJs concerning the broadest reasonable scope of the claims, which in some cases could drive settlement within 4-6 months of petition filing. On the other hand, Markman orders are typically years, and millions of dollars into a litigation docket.