The seemingly never ending political battles relating to the pending patent reform legislation rage on, especially as they relate to the proposed post grant opposition and reexamination provisions.
The current bills, H.R. 1260 and S 515, originated from legislative proposals from as far back as 2005. S. 515 was reported out of the Senate Judiciary Committee on April 2, 2009, a committee report on this bill was issued on May 13, 2009.
Both of the bills include overlapping proposals, with respect to post grant oppositions and expanded inter partes reexamination. Minor differences exist in the proposed bills, such as the availability of public use evidence to the expanded inter partes reexamination proposed, and the application of inter partes estoppel to ITC actions.
In January 2009, the Heritage Foundation released a white paper entitled: Promoting Innovation with Patent Reform: A Memo to President-elect Obama. The paper opposed the legislative proposals regarding the expansion of reexamination and establishment of post-grant opposition.
In July of 2009, a report of economist Professor Scott Shane Ph.D. was provided at the request of Jeff Sessions, the ranking Republican on the Senate Judiciary Committee, regarding the perceived impact of post grant opposition on the patent system. The report was overwhelmingly negative, noting that the proposed opposition system would achieve none of the goals it was designed to accomplish and would, among other things, increase the length of patent pendency, increase the cost of validity disputes, decrease R&D efforts and disadvantage universities and small organizations. Some have speculated that Senator Sessions is an ally of the anti-reform lobby and requested this information with a strong idea of the answer (previously the same economist had attacked the infringement damages aspect of the same legislation).
On October 5, 2009, the Obama administration released, via a letter from Commerce Secretary Gary Locke to the Senator Sessions, the administration’s positions on S. 515. In the letter, the Administration took some notable positions not previously considered.
Of particular relevance to post grant proceedings, Secretary Locke stated:
Post-Grant Review and Other Quality Enhancements
The Administration supports the establishment of a phased-in post-grant review procedure, as well as phased-in changes to inter partes reexamination, to reduce costs and increase certainty by offering a lower-cost and faster alternative to litigation as a means of reviewing questions of patent validity. Such a procedure also would provide a check on patent examination, ultimately resulting in higher-quality patents. It is important that post-grant review procedures be designed to prevent delay and abusive challenges.
A post-grant review procedure like that envisioned by S. 515 would improve the quality of patents and lead to significant savings by avoiding unnecessary litigation. At the same time, any review procedure would increase USPTO’s costs. The USPTO would benefit from the flexibility to set or adjust fees to recover the cost of doing the applicable work. Depending on the scope and timing of post-grant review, intermediate steps to ensure adequate resources may need to be explored until a new fee schedule can take effect. We would be pleased to work with Congress to develop procedures to meet the above goals or to provide technical drafting assistance on these provisions.
With this in mind, it is worth looking at S. 515 to see what post-grant proceedings the Obama Administration supports. Section 5 of S. 515 as reported by committee on April 2, 2009, can be summarized as follows:
- Reexamination Proceedings: Inter partes reexaminations would begin to look more like court cases and would be heard by administrative patent judges. The Bill would eliminate the “or could have raised” estoppel. The Bill would also clarify that parties would be estopped from filing inter partes reexamination requests after a district court judgment.
- Additional Post Grant Review: Within (i) 12 months of issuance of a patent or reissue patent or (ii) at the consent of the patent owner, a third party can file a cancellation petition based on virtually any ground of invalidity (rather than simply prior art). The only enumerated exclusion is invalidity based on failure to disclose the best mode as required by 35 U.S.C. §112. Post grant review would be precluded between the same cancellation petitioner and the same patent. The post grant reviews would also be conducted by the administrative patent judges.
In a press conference conducted on October 6, 2009, Director Kappos outlined the position of the USPTO relative to the legislation. The Director noted that 12 months needed for rulemaking relating to Post-grant review. After rulemaking, the implementation would be gradual, over a period of an additional 4 years, to allow PTO to prepare/staff for such proceedings.
Current State of the Legislation
Upon learning of Senator Locke’s letter, Senator Patrick Leahy (D-Vermont) issued the following statement:
The administration’s letter of support for the needed provisions in the Patent Reform Act reinforces the urgent need to enact this legislation. It has been more than 50 years since Congress passed meaningful reforms to our nation’s patent system, and it is wrought with inefficiencies. I have been working with the bill’s cosponsors, interested Senators, and the administration to reach consensus on this important legislation. I particularly appreciate the commitment of Secretary Locke and Under Secretary Kappos to this legislation. Now that the administration has indicated its support for the Patent Reform Act, I look forward to working with Majority Leader Reid to schedule Senate debate before the end of the year.
Shortly thereafter, 12 Republican Senators issued a letter to Reid and to Minority Leader Mitch Connel (R-Kentucky) stating that the Senate bill “needs additional work before it is brought to the floor….the measure includes new and expanded mechanisms for the administrative reexamination of patents. These so-called post-grant review provisions, as currently crafted, are quite problematic”
Looking Down the Road
The only conclusion that can be drawn from recent developments is that the reexamination and post grant aspects of the reform legislation, along with other provisions relating to damages and inequitable conduct, are still drawing significant attention from lobbyists. While the Administration is hopeful to move this bill to a conclusion by year end, in view of the battles looming on health care, one can only conclude that patent reform has once again lost momentum.