As discussed last week, the USPTO is proposing a significant increase to the fee for ex parte patent reexamination (EXP). Likewise, the new supplemental examination (SE) fee, should prosecution be required, is on the order of $21K. (supplemental examination fee, plus corresponding reexamination fee)

The rules package for Post Grant Review (PGR) and Inter Partes Review were expected last week (if not before). However, these packages were delayed by OMB, which has identified them as significant rule making. It is expected that the rules for PGR and IPR will publish this week. The fees for these new proceedings will be estimated based on the same analysis applied to EXP and SE and are expected to be in the $40-50k range.

For a step-by-step explanation of the USPTO’s fee calculation process, and perhaps a preview of PGR and IPR fee determinations click here.

Early 2012 is shaping up to be an exciting time for patent law, particularly for those focused on post grant patent practice.

USPTO–As to the new rule packages necessary to implement the new post grant mechanisms of the America Invents Act (AIA), it is rumored that the supplemental examination rules will issue this week. Due to an administrative delay with the Office of Management & Budget (OMB), the more extensive IPR and PGR rule packages are expected to publish next week. Earlier this month, some less extensive rules packages issued on patent reissue oath practice and changes to ex part patent reexamination practice.

CAFC– The court has agreed to reconsider Marine Polymer Technologies, Inc. v. HemCon, Inc. (here) en banc. As a reminder, this case considers whether or not intervening rights are created for a claim that is not literally amended in a post grant proceeding by a change in verbiage, but instead, by Patentee disclaimer. (earlier post here)

The court also has yet to issue a decision in In re Staats, which presents the USPTO theory that continuation filings in a broadening patent reissue must relate to a broadening that was foreseeable as presented in the original oath.

There is much to look forward to in the weeks to come.

The new estoppel provisions of Inter Partes Review (IPR) and Post Grant Review (PGR) differ from the previous estoppel provisions of inter partes patent reexamination in that they not only prevent a subsequent request for IPR/PGR from the same requester (or privies) on issues that were raised or reasonably could have been raised in the first proceeding, but prevent the filing or maintenance of any other “office proceeding.”

By definition a Post Grant Review (PGR) can only be conducted prior to an IPR. This is because an IPR can only be filed once the 9 month PGR window has ended, or after any ongoing PGR concludes. As such, the primary office proceeding that can be requested, or maintained in this regard (i.e., after IPR/PGR estoppel attaches) is ex parte patent reexamination (EXP).

As pointed out previously, in order to properly estop an ongoing EXP proceeding or filing, the Office must implement a system to track EXP filings with respect to the real party in interest. This tracking is complicated by the fact that many EXP proceedings are filed anonymously. Last Thursday, the USPTO issued their plan.In the Notice of Proposed Rulemaking for Changes to Implement Miscellaneous Post Patent Provisions of the Leahy-Smith America Invents Act (here), the Office proposes the following mechanisms to track potential EXP estoppel.

(6) A certification that the statutory estoppel provisions of both inter partes review (35 U.S.C. 315(e)(1)) and post grant review (35 U.S.C. 325(e)(1)) do not prohibit the ex parte reexamination.

(7) A statement identifying the real party(ies) in interest to the extent necessary to determine whether any inter partes review or post grant review filed subsequent to an ex parte reexamination bars a pending ex parte reexamination filed by the real party(ies) in interest or its privy from being maintained.

In essence, EXP filers must, once the proposed rules become effective, certify that IPR and PGR estoppel do not apply to their filing. Likewise, anonymous filers must disclose their identity to the agency, under seal. The Notice provides in more detail that:

An ex parte reexamination requester has the option to remain anonymous. In order to do so, the requester must: (1) Submit the statement identifying the real party(ies) in interest as a separate paper; (2) title the paper as a statement identifying the real party(ies) in interest; (3) request in the paper that the Office to retain the paper in confidence by sealing it; and (4) include, in a clear and conspicuous manner, an appropriate instructional label designating the statement as a non-public submission, e.g., NOT OPEN TO THE PUBLIC FOR OFFICE USE ONLY. The Office will then maintain the real party(ies) in interest statement as a sealed, non-public submission

The Notice also clarifies that statements submitted under Rule 1.501(a)(2) (Patent Owner Statements and associated information on claims cope) may only be used to interpret claims once reexamination has been ordered, they may not be used to form an SNQ.

2011 was perhaps the most significant year to date in terms of post grant patent practice. The perennial legislative effort generally known as “patent reform” finally bore fruit as the Leahy-Smith America Invents Act (AIA); patent reexamination filings in 2011 reached an all time high; patent reissue practice was explored and clarified by the CAFC; and patent litigation parallel with patent reexamination continues to expand as a well established strategic practice.

As to the America Invents Act, several entirely new post grant patent proceedings have now been enacted into law (effective September 16, 2012).  A summary of these proceedings, and discussions of their expected impact are linked below (and throughout the blog).

Post Grant Review

Inter Partes Review

Supplemental Examination

Derivation

Transitional Business Method Patent Challenge

The USPTO is scheduled to issue a notice of proposed rule making on these proposed proceedings within the next 2-3 weeks. 2012 will bring much more detail to the broad legislative concepts found in the AIA.

As to patent reissue, the CAFC has clarified the scope of error necessary for patent reissue (Ex Parte Tanaka) and has addressed the complexities of the recapture doctrine (Ex Parte Mostafazadeh). The CAFC is expected to issue their decision in Ex Parte Staats, another important patent reissue case, in the coming weeks.

Patent reexamination has been impacted by the passage of the AIA in that the SNQ standard is now available only for ex parte patent examination. Likewise, the USPTO has proposed their own changes to patent reexamination practice to decrease pendency. With the passage of the AIA, it is unclear where this earlier proposal now stands.

2012 is expected to bring even further attention to post grant patent practice as it expands and matures under the new legislation. Stay tuned.

The Patent Public Advisory Committee (PPAC) convened yesterday at the USPTO for their quarterly meeting. During the meeting, the USPTO presented an update on office operations and AIA implementation status. The update on the Group 2 rule making is found in the presentation materials of Janet Gongola, Patent Reform Coordinator (here)

Below is the current estimated timeline for publishing the proposed rules for Post Grant Review, Inter Partes Review, and Supplemental Examination, among other proceedings. Interestingly, it appears as though there will be public round table meetings on the NPRM, which is scheduled to be published in mid-late January. (Click to Enlarge)

Early last week, the major bar associations submitted comments to the USPTO on the current Group 2 Rule Making effort. As a reminder, Group 2 Rules are a second phase of USPTO rules designed to implement features of the America Invents Act (AIA). The Group 2 Rules include Inter Partes Review (IPR) & Post Grant Review (PGR).

Unlike other organizations that submitted commentary only, the ABA, AIPLA and IPO coordinated their efforts to prepare a set of model rules. Of course, the Office has been working on their own rule sets in parallel. As such, the submitted model rule set (here) is primarily provided to serve as a preliminary gauge of stakeholder expectations.

Some interesting suggestions in the model rules are as follows:

1. Practitioners IPR/PGR: The model rules suggest that lead counsel in any PGR/IPR proceeding must be a registered practitioner. Pro hac vice practice is contemplated, but is suggested to be “rarely granted.” (See proposed rule 41.5)

2. Thresholds: The model rules argue that the standards to implement IPR & PGR should be the same as the differences in wording are not substantive. (see footnote 11 in overview). To date, the USPTO has been taking the position publicly that the standards are indeed different. The submission also points out that the AIA statutes require a denial of a petition that seeks to advance the same, or substantially the same arguments previously considered by the Office.

3. Timing: The model rules provide for automatic extensions to the 12 month statutory time frame for certain developments in IPR/PGR. For example, where prior use or public sale evidence is alleged in PGR (due to needed discovery) an automatic extension is suggested. (likewise for those proceedings in which a significant number of new claims are added, etc). A general theme of the suggested timing provisions is that Patentees should be accorded ample time relative to third parties since third parties have had significant time to prepare their petitions. Prior to petition determination, the model rules suggest a total duration of 6 months; 3 months from petition filing to preliminary response, then 3 months for the Office decision to issue. (this is consistent with my earlier estimate of this timing, chart here)

4. Discovery: The model rules allocate a Patentee discovery phase (months 1-6 after Order), the Requester discovery phase occurs thereafter (months 6-9).

5. Oral Hearing: 1 hour in total duration; 30 minutes per side.

The submission is impressive in scope and detail; it is certainly worth a read.

Details relating to specific timing an extension scenarios are not expected to be adopted by the Office. For example, many oral arguments in high profile inter partes patent reexamination disputes routinely extend beyond 60 minutes, and automatic extensions are not expected to be favored by the Office. As such, the Office is more likely to substitute their own judgement in arriving at these more detailed timing provisions of IPR/PGR. Nevertheless, the overall themes and concepts presented in the model rules will serve as a valuable benchmark to the agency as Group 2 rule making efforts finalize over the next 4-6 weeks.

Business Method Patent Definition Keyed to Claim Scope?

The Transitional Program for Covered Business Method Patents, (TPCBMP) will be implemented by the UPSTO on September 16, 2012. The new post grant option essentially provides that any “covered business method patent” is eligible for Post Grant Review (PGR) independent of the standard limitations for initiating PGR (i.e., 9 month window, patent application filing date).

The legislation defines a “covered business method patent” in amorphous terms, as follows:

a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.

It is left to the USPTO to interpret the practical scope of a “covered business method patent.” Not surprisingly, those that routinely obtain patents in this space, USPTO (Class 705), advocate a narrow interpretation. On the other hand, companies subject to e-commerce patent assertion campaigns hope that the definition will be keyed to claim breadth– embracing patents outside of the banking and financial services industry.

In their submission on Group 2 Rule making, Google, Verizon and Cisco advocate that:

[T]he scope of patents eligible for review under the transitional program is not limited to those covering any particular financial activity. . . .The plain meaning of this language encompasses a broad range of services relating to money. It includes for instance, payment–‐processing services for sales that occur in person or over the Internet. Certainly, nothing in the statute suggests that covered financial services are limited by the type of institution providing the service, such as a bank. On the contrary, Section 18 addresses the problem of invalid business method patents for “all businesses that have financial practices.” . . .

The example provided illustrates the full breadth of Section 18:

For example, if a patent claims a general online marketing method but does not specifically mention the marketing of a financial product, such as a savings account, if that marketing method could be applied to marketing a financial product or service, the patent would be deemed to cover a “financial product or service.”

A more narrow definition of “covered business method patents” would destroy the ability of the transitional program to promote innovation by weeding out invalid business method patents that would otherwise generate wasteful litigation and unwarranted licensing fees. . . .

Although “technological inventions” are not subject to review under the transitional program, both the statute and the legislative history indicate that this exception is narrow. . .[T]he PTO should not consider all patent–‐eligible subject matter under 35 U.S.C. § 101 to be a “technological invention” that falls outside the transitional program. The AIA clarifies that there is no link between patent–‐eligible subject matter and patents eligible for the transitional program. Excluding any invention sufficiently “technological” to satisfy Section 101 would vitiate the Section 18. . .

[T]he PTO should state that the presence of claim limitations reciting physical elements, such as a computer or the Internet, does not render a claim a “technological invention.”

(see full submission here)

On the other side of the debate are companies such as top business method patent (Class 705) filer IBM.

The definition is written to include methods (and corresponding apparatus) for performing certain functions relating to a financial product or service. As there is some ambiguity in the scope of this language, we believe it is important for the Office to ensure the definition remains appropriately limited to its purpose, which is to address poor quality business method patents. We therefore encourage the Office to interpret the exclusion for “technological inventions” broadly to ensure technological innovations, such as software innovations, are considered to be “technological inventions” and thus not included within the Section 18(d) definition.

(emphasis added, IBM submission here)

The first post grant review filings will be TPCBMP filings. This is because regular PGR filings cannot begin until first inventor to file patents begin to issue. As such, an expansive definition of “covered business method patent” could subject  many technology companies to post grant review challenges sooner than anticipated.

As pointed out last week, the USPTO has been busy fashioning new rules to implement the various provisions of the Leahy-Smith America Invents Act (AIA). Comments on Group 2 Rules, which include Inter PartesReview & Post Grant, must be submitted by November 15th.

Last week, Cisco, Google, Verizon and Intuit submitted joint comments (here) directed solely to the implementation of post grant proceedings, namely, Inter PartesReview (IPR) and Post Grant Review (PGR). Not surprisingly, these tech giants (i.e., targets of serial patent infringement suits) are especially supportive of post grant mechanisms as an alternative to traditional litigation. The Group’s comments encourage the Office to adopt liberal standards for initiation of IPR and PGR, limit the potential estoppel affect of a concluded proceeding, and provide procedural flexibility for petitioners.

The Groups comments suggest that the new standards for inititiating IPR and PGR are not so different from the previous SNQ standard of inter partes patent reexamination, and should be set to be “relatively low” standards. The comments explain,

[I]t bears emphasis that the thresholds [for IPR and PGR]are just that: initial standards of review that merely determine whether a post-issuance review will be commenced, not whether the petition is ultimately meritorious. Thresholds that are too onerous will nip the new processes in the bud.

As a practical matter, the new thresholds should not necessarily produce a higher rejection rate than that which resulted under the “substantial new question” threshold for inter partes reexamination. Although some have described the new thresholds as “elevated,” the difference is one of kind and not of degree. Under the “substantial new question” inquiry, the PTO looked for the existence of a new question that had not previously been addressed by the Office. If “a patent or printed publication . . . present[ed] a new, non-cumulative technological teaching that was not previously considered and discussed on the record” during the initial examination, the petition met the threshold for review. The new thresholds focus on a different purpose—one of improving patent quality across the wide spectrum of issued patents. No longer is the identification of a new question the critical factor; rather, the focus is on whether review could improve patent quality by altering “at least 1 of the claims challenged in the petition” or by resolving “a novel or unsettled legal question that is important to other patents or patent applications.” Indeed, under this latter standard, no new question need be presented at all

(internal citations omitted)

Here, the Group seems to argue that although the old SNQ standard for inter partes patent reexamination is different in terminology and goal relative to the new standards for IPR and PGR, it is argued that the new standards are not necessarily higher hurdles. Perhaps a better way to look at the changed standard is that going forward, the PTO will review submissions from both sides before deciding to grant the petitioner’s request. So, while the tests for IPR and PGR are couched in different terms, the hurdles presented need not be higher per se – the records will just be more developed.

With respect to the “real party in interest” and “privy” aspects of the IPR and PGR estoppel statutes, the Group suggests that the PTO follow the control test. In this regard, the Group proposes the following definitions:

Real party in interest means an entity who controlled the filing of the petition for post-grant review or inter partes review, provided the entity is eligible to file a petition for post-grant review under 35 U.S.C. § 321(a) or inter partes review under 35 U.S.C. § 311(a). Mere contribution of funds or advice regarding the petition is not sufficient to become a real party in interest, nor is mere connection to the petitioner through mutual membership in a joint defense group or other association.

Privy of the petitioner means an entity who assumed control of the post-grant review or inter partes review by unilaterally making the petitioner’s strategic decisions, including which prior art to submit, what legal theories to advance, and whether to seek further review. Mere contribution of funds or advice is not sufficient to become a privy of the petitioner, nor is mere connection to the petitioner through mutual membership in a joint defense group or other association.

The Group seems concerned with the new language of § 315(2) that extends estoppel beyond that of the third party requester. The current version of 315 (applied to inter partes patent reexamination) attaches to “requesters” only and does not extend to privies. Contrast that with the new statute language of petitioner. . . or real party in interest or privy of the petitioner.

Finally, the Group comments on a host of provisions relating to discovery, amendment and petition options. These comments and more can be found (here).

The USPTO continues to work to fashion rules to implement the new post grant proceedings of the Leahy-Smith America Invents Act (AIA). One can only speculate that the new “trial” like, post grant proceedings of the AIA will be closely modeled on the procedures of existing patent interference practice. This is because the USPTO, aside from patent interference, has limited experience in presiding over the types of contested proceedings contemplated by Inter Partes Review (IPR) and Post Grant Review (PGR).

In patent interferences, the Trial Division of the existing Board of Patent Appeals & Interferences (BPAI) conducts proceedings based upon a Standing Order. Patent interference requires an in depth knowledge of a difficult and relatively obscure aspect of patent law. As such, the attorneys who conduct these proceedings are seldom general litigators, but almost always registered patent attorneys with substantial experience in handling interferences–i.e., members of “the interference bar.”  However, such is not required.

As explained in the Contested Case Practice Guide, § 41.5 Counsel, [t]he Board may authorize a person other than a registered practitioner to appear as counsel in a specific proceeding. But the practice note of the same section of the Guide emphasizes that [c]ontested cases can be technically, legally, and procedurally complex. Consequently, a motion to appear pro hac vice will rarely be granted unless the counsel is an experienced litigating attorney and has an established familiarity with the subject matter at issue in the contested case. (emphasis added) See, e.g., Howell v. Lentz, 83 USPQ2d 1381 (PTOBPAI 2006), discussed in Gholz, A Critique of Recent Opinions in Patent Interferences, 90 JPTOS 9, 20-21 (2008).

So, although it is rarely utilized, pro hac vice practice does exist in patent interferences.

Will this procedural nuance be adopted by the the new Patent Trial & Appeal Board (PTAB) for the umbrella rule set contemplated for PGR and IPR proceedings

While patent interference may serve as a baseline model with respect to IPR and PGR procedural rule makers, the substantive issues of a patent interference trial relating to priority are quite different from the traditional prosecution based mechanisms of IPR and PGR. These differences must be taken in consideration.

Most interferences are terminated during or at the end of the first phase, which usually involves only issues of patentability, including patentability over the prior art available against each party and claim and count scope–including the correspondence of or non-correspondence of the parties’ claims (including claims that the parties seek to add to their cases in interference in order to get around their respective patentability problems) to the count or counts of the interference.

Rarely, an interference proceeds to the second phase, which usually involves issues of priority, derivation, and inventorship.  The focus of the second phase is not patentability of the parties’ claims.

Both IPR and PGR will include substantive amendment opportunities and prior art analysis that are the hallmark of prosecution practice before the USPTO, and will be the very same issues tried by the PTAB fact finders. Of course, the very same practice when before the examining corps of the USPTO requires a registered patent agent or attorney.

It is true that both IPR and PGR (like interferences) will have limited discovery, and other ancillary litigation style mechanisms. Yet, the layering of litigation style mechanisms onto a prosecution foundation would still seem to warrant the USPTO registration requirement historically required to pursue such patentability determinations before the agency.

Post Grant Review (PGR) is limited to patents maturing from applications filed on or after March 16, 2013 (note, the exception for business method patents, Sec. 18 of the AIA).  Of course, it will take several years for such patents to issue from the USPTO. Thus, practically speaking, PGR will not be an option for third parties seeking to challenge the validity of an issued patent until at least the second half of this decade. Nevertheless, the PGR statutes will have a significant impact on third party options and parallel litigation strategy going forward.

As a reminder, patents eligible for PGR that are not business method patents, are those that are within 9 months of issuance, or re-issuance for broadening reissues (§ 321 (c)).

When fashioning the Inter Partes Review (IPR) statutes, Congress mandated that IPR may not be requested until the later of 9 months from patent issuance, or if PGR is instituted the date of termination (§ 311(c)). This timing limit is meant to ensure that PGR and IPR are not conducted in parallel. IPR, unlike PGR,  becomes available for all patents next September 16, 2012.

So, for newly issued patents that will not be eligible for PGR over the next few years, do requesters still have to wait 9 months before filing a request for IPR? To answer that question, one has to review the language of § 311(c).

(c) Filing Deadline- A petition for inter partes review shall be filed after the later of either–

(1) the date that is 9 months after the grant of a patent or issuance of a reissue of a patent; or

(2) if a post-grant review is instituted under chapter 32, the date of the termination of such post-grant review.

As can be appreciated, the statute makes no exception to the 9 month window for patents based on their eligibility for PGR. Perhaps some basis may exist in the legislative history for excluding such, but it seems very unlikely that the rules for implementing IPR will stray that far from the clear language of the statute.

Going forward, this creates a troubling dilemma for third parties faced with an infringement action that includes a newly issued patent that is not eligible for PGR. While on the one hand, the statutes mandate that IPR must be pursued within 12 months of service of a complaint, 9 months of that time is effectively unavailable for any inter partes challenge (IPR or PGR). For those defendants sued in courts with a particularly swift dockets, waiting 9 months may destroy any opportunity to stay the case pending USPTO proceedings. Certainly, a third party may still resort to ex parte reexamination (EXP), but that option is much less attractive for third party requesters based on historical results. Likewise, a later IPR may be denied if the issues presented in an earlier EXP are substantially similar to those presented in the later IPR request.

Patentees that obtain patents after September 16, 2012, that fall under the old first to invent scheme, seem best served taking advantage of this inter partes dead zone by suing immediately.