MIB coverass=”alignleft size-full wp-image-3515″ title=”MIB cover” src=”https://www.patentspostgrant.com/wp-content/uploads/2010/08/MIB-cover.bmp” alt=”MIB cover” />The recently published Volume 2, Issue 2 of the journal Medical Innovation & Business focused entirely on patent reform’s potential impact on medical innovation.  Special guest editors Renee Kaswan, David Boundy, and Ron Katznelson express particular concern that patent reform will weaken the investment incentive for innovations with high development costs and low production costs, notably including medical innovations.  Numerous articles in this issue discuss the effects that proposed post-grant review might have on the value of smaller companies’ patents and therefore on the incentives to invest in such companies. The articles in this patent reform issue of Medical Innovation & Business that are relevant to post-grant procedures for assessing validity fall roughly into three categories based on three different perspectives: venture capitalists’ perspective, the perspective of attorneys in private practice, and judicial perspective. Across these categories, post-grant discussions repeatedly highlight several sources of uncertainty that may apply to small companies relying on their intellectual property investments. We provide the following review of the articles in this issue that pertain to post-grant review. Venture Capitalist View: Venture capitalist contributors argue that these uncertainties may cause investors to hesitate in funding important innovations, ultimately slowing developments in medicine and other technological fields. In an article entitled “Venture Capital — The Buck Stops Where?”, venture capitalist Gary Lauder states that, while post-grant opposition nobly aims to invalidate flawed patents, any expansion of post-grant opposition opportunities increases both the uncertainties as to patent value and the costs of defending patents. Pointing out the importance of venture capital in funding medical and other technological innovation, Lauder discusses how increased uncertainty and patent defense costs could inhibit venture capitalists from funding smaller innovators. John Neis, managing director of Venture Investors, LLC, also addresses the effect of additional post-grant review options on funding of small patent owners in his article “Post-Grant Review-Our Next Nightmare? VC Perspective.”  Neis particularly criticizes the House version of proposed post-grant review because of its negligible barrier to entry, its lack of a presumption of validity, its lower burden of proof as compared to validity challenges in court, its lack of a meaningful estoppel bar against parallel or successive challenges, and its three administrative tracks of post-grant review, two of which have mini-trial procedures open to attacks on both prior art and non-prior art grounds. Neis further criticizes both the House and Senate versions for disincentivizing early-stage innovation that he argues is critical to American economic interests. Thus, the venture capitalist perspective from contributors to this issue of Medical Innovation & Business disfavors several aspects of the current House and Senate bills for the uncertainty they may add to post-grant procedures. These contributors argue that more limited forms of review would help solidify the value of small companies’ intellectual property, this encouraging small firm innovation. Private Attorney View: Private attorney contributors focus on specific areas of post-grant opposition reform, revealing possible sources of uncertainty in proposed changes. In “Would Derivation Proceedings Be The Same As Derivation Interferences?” (a revised and updated version of an earlier-published article of the same title) Charles Gholz of Oblon Spivak analyzes the proposed derivation proceedings. These proposed proceedings would be remnants of interference practice (see this earlier PPG Blog post). Specifically, Gholz delves into points of possible ambiguity in the proposed derivation proceedings, including whether they would determine if a party was affirmatively entitled to a patent rather than not entitled due to derivation, whether the PTAB must always act consistently with any settlement not contradicted by evidence, whether and how readily settlement agreements will be available to different types of parties, whether alleged derivees would have adequate notice to file for derivation proceedings against a patent resulting from an unpublished application, whether an alleged derivee who filed an application before an alleged deriver can initiate derivation proceedings, whether amendment or motion for judgment of invalidity on non-derivation grounds would be available, and whether the Senate bill’s language would make Director decisions on derivation institution “final and nonappealable.” Taken in context with the other articles of this issue, Gholz’s analysis shows that legal uncertainties, not just factual uncertainties, may face patent owners under new forms of post-grant opposition. Start-up companies’ potential increased risk and fundraising difficulties receive attention in McDonnell Boehnen Hulbert & Berghoff attorney Kevin Noonan’s article “Post-Grant Review of U.S. Patents: Will Past Be Prologue?”  Noonan reviews the origins and procedures of the current ex parte and inter partes reexaminations. He points out that Congress introduced these types of review to reduce patent infringement litigation, yet that in practice, reexaminations often run in parallel with such litigations rather than instead of them, further complicating post-grant procedures and making accurate evaluation of intellectual property more difficult for patent owners. Noonan then characterizes the goals of proposed post-grant review procedures as similar to those of reexamination. He likens proposed post-grant review to European practices, which he says are more expansive than current reexaminations. He states that new post-grant review procedures would be more difficult to initiate than reexamination but would also greatly limit rebuttal opportunities, giving patentees better treatment in some ways and worse treatment in others. By Noonan’s reports, the estoppel rules for post-grant review appear to make it another procedure that could run parallel to litigation rather than replacing it.  Noonan thus proposes including stronger estoppel ruled in post-grant review. He also discusses other aspects of post-grant review, such as effects in district court, that might affect incentives and funding in innovation. Charles E. Miller and Daniel P. Archibald of Dickstein Shapiro focus more specifically on proposed court-related changes to post-grant proceedings in their article “Attenuated Judicial Review of Patent and Trademark Office Decisions: ‘Technical Amendment,’ or Stacking The Deck Against Inventors?” Currently, patent owners subject to unfavorable ex parte reexaminations may seek Federal Circuit review or may sue the USPTO in the District Court for the District of Columbia. In the former type of action, the Federal Circuit reviews for substantial evidence, but in the latter type of action, the trial court examines the facts de novo.  However, proposed measures would eliminate the district court option for review of ex parte reexamination. Miller and Archibald argue that such measures would eliminate an important route involving de novo review in a court more skeptical of administrative action. They also argue that such measures could be a slippery slope leading to eliminating district court jurisdiction over PTO patent application rejections. However, amidst these arguments, Miller and Archibald admit that district court suits for ex parte reexaminations are less frequent than Federal Circuit appeals. Therefore, these proposed changes to jurisdiction over PTO decisions may or may not have significant impact. While reduced possibilities for litigation venues might serve to make patent values more certain, Miller and Archibald argue that patents would also be less valuable as a result. While private practitioners may examine different parts of post-grant opposition, they seem to agree that the proposed reforms create some ambiguity as well as some cause for concern among patent owners. Judicial View: Unlike many of the contributors to this issue, Chief Judge Rader discussed European post-grant opposition favorably. While he agreed with several of the contributors that lengthy post-grant opposition can “cast a perpetual cloud over the value of the patent,” he expressed confidence in Congress’s intent to address that worry. He also characterized interferences as frequently expensive and unsuccessful, preferring first-to-file systems over the current U.S. first-to-invent system because the former would eliminate the need for interference proceedings. Thus, regarding proposed post-grant opposition, Chief Judge Rader takes a more hopeful view than that of several of the more venture capital-minded contributors to this issue. As the Chief Judge for the appeals court with exclusive jurisdiction over patent matters, Chief Judge Rader will interpret and influence the interpretation of any patent bills that Congress passes. Chief Judge Rader notes the conflicting concerns on either side of the post-grant review scale: quality of presumably valid patents on one hand, and certainty as to patent value on the other. Thus, his tone regarding proposed post-grant review reform will likely neither scare nor excite any extremely pro- or anti-patent parties. While former Chief Judge Michel did not directly address post-grant opposition procedures, he generally expressed enthusiasm regarding current U.S. patent law, aside from some procedural aspects in Article III courts that he felt to be problematic. Former Chief Judge Michel’s silence on post-grant matters throughout his interview with Medical Innovation & Business, if it can be taken to mean anything, may indicate a satisfaction with post-grant procedures as the Federal Circuit has applied them under his recently-concluded Chief Judgeship. The insights from former Chief Judge Michel and Chief Judge Rader provide perhaps some of the most significant lead into the future of these bills should they become law.

Note: Special thanks to Eric Myers for his assistance in the research for this posting.