DepartmentYesterday, the Dept of Commerce released their position paper on certain aspects of the proposed patent reform legislation. The paper outlines economic justifications for post grant review, citing the well known inefficiencies and cost of patent litigation. Interestingly, the paper points out that post grant review is expected to be 50-100 times cheaper than patent litigation.

Previously I discussed the potential of patent reform legislation to supplant traditional patent litigation. There is significant question in my mind on how the USPTO, based on current resources, can quickly and effectively transform from the current examiner based reexamination model to a system managed by the newly labeled Patent Trial and Appeal Board.

With the expanded role of discovery practices provided by the post grant proposals, statutory time line (12-18 months), and oral hearings it seems to me that the legislative proposals cannot plausibly be compared to the cost of patent reexamination as we currently know it. While an efficiently run post grant system may very well offer a respectable cost savings compared to traditional patent litigation, a cost savings of 50-100 times is simply unrealistic.

In arriving at the 50-110 time number, the Commerce Dept assumes $100k to be the high end cost of a reexamination ($5 million for litigation). Yet, the reexamination estimate is based on the current system that provides none of the discovery, or oral hearing features of the current proposals ($100k number appears to be based on 2009 AIPLA survey for inter partes reexamination). Likewise, with inter partes reexamination only recently becoming commonplace, I question the predictive value of the $100k number based on the miniscule sample of completed inter partes reexamination to date.

The post grant review proposals of the proposed legislation have been years in the making, and offer great opportunity to refine the current litigation landscape. Certainly there is an opportunity for cost savings, but expectations should be tempered by a more realistic cost saving estimate.