Decrease in Patent Reexamination Docket Leads to Faster Orders

Back on September 16, 2012, the America Invents Act (AIA) replaced the old inter partes patent reexamination system with a new proceeding, known as Inter Partes Review (IPR). Since petitions for IPR are not handled by patent examiners, but instead, the judges of the Patent Trial & Appeal Board (PTAB), the USPTO’s Central Reexamination Unit (CRU) has experienced a significant cut to their incoming workflow. This change in workflow, coupled with the fact that requests for ex parte reexamination are also off by roughly 50% of pre-AIA filing rates, has resulted in an apparent benefit for patent challengers.

Ex parte patent reexamination requests are being processed faster.

As shown in the chart below requests for patent reexamination (made in the last 3 months) are being granted in roughly 43 days on average, some as fast as 29 days. As a reminder, the USPTO has 90 days, by statute to grant such requests. Historically, the average time to an Order has been about 60 days. (Click to Enlarge)

reexamination orders 2013

The above charts correspond to those reexamination filings made on or after December 16, 2012. This date was chosen to study a steady state of operations at the CRU post-AIA. Keep in mind that leading up into the September 16 change in the law there was a significant bolus of reexamination filings that had to be ordered within 90 days (i.e., prior to 12/16/12)

While it is true that the CRU is also responsible for a new stream of work, Supplemental Examination (SE), the volume of this work has been negligible with fewer than 10 such filings to date. Simply stated, post-Therasense, many inequitable conduct defenses are falling at the summary judgement stage. Thus, Therasense has largely eliminated the need for this proceeding outside of the most limited of circumstances.

Going forward, the CRU will be left with a much smaller docket. Absent a reduction in head count at the CRU, it is expected that the pendency of new proceedings will necessarily decrease. This is because the existing inventory of legacy inter partes reexamination prosecution will soon be exhausted and examiners will increasingly turn to new ex parte patent reexamination filings.

Should patent reexamination pendency drop in a significant manner going forward it may become a more attractive option for real time business disputes.

How Often Are Examiner Claim Confirmations Upheld in Inter Partes Patent Reexamination

For challengers in an inter partes patent reexamination (IPX), confirmation of patent claims by the examiner can pose a significant set back. That is to say, the challenger would be estopped (35 U.S.C. § 317(b)) from raising invalidity defenses that “could have been raised” relative to the confirmed claims during the IPX proceeding, in a later court proceeding.

Although IPX is no longer available as an option to patent challengers, the rate of affirmance by the PTAB in such situations will still be of significant interest in the years to come thanks to the avalanche of IPX filings submitted to the USPTO earlier this month.

Based upon the outcomes of the IPX decisions issued so far in 2012, challengers have about a 50/50 chance of reversing at least one claim of the examiner confirmation.

The chart below illustrates the outcomes of  the 46 IPX decisions in which a claim was confirmed.

So far in 2012 there have been 46 IPX Board decisions where an appeal/cross-appeal concerned either the Examiner’s confirmation of claims 40 or the Examiner’s decision not to adopt additional rejections 6.

Of those cases, confirmed claims were:

-Affirmed in 16 – Affirmed in part in 10 – Reversed in 14

Additional rejections not adopted:

-Affirmed in all 6

Thus, of those 46 decisions, 24 resulted in the reversal of at least one confirmed claim (52%). (Click to Enlarge)

confirmed

USPTO Considers Record Number of Requests for Patent Reexamination 

In fiscal year 2011 the USPTO initiated a total of 1133 patent reexamination proceedings (both ex parte and inter partes). The 2011 tally represents an overall increase in filings of about 7% relative to 2010 numbers.

Interestingly, while ex parte filings receded slightly, inter partes filings surged by 33% relative to 2010. In FY 2011 374 requests for inter partes patent reexamination were filed.

USPTO statistics for 2011 are found (here)

Ex parte patent reexamination proceedings are typically disfavored over inter partes reexamination proceedings as being too one-sided, and historically biased in favor of patent holders. Likewise, as patent reexamination is increasingly employed as a litigation tool, it is not surprising that the more robust proceeding is now surpassing ex parte filings (especially now that most issued patents qualify by virtue of being filed as applications on or after 11/29/1999)

On the one year enactment anniversary of the America Invents Act (AIA), inter partes patent reexamination (IPX) will be replaced by Inter Partes Review (IPR). The USPTO will gradually implement Inter Partes Review over the first four years by limiting the proceeding to the first 281 filers. This limit was established by the AIA as a control to keep the Office from being overwhelmed in the early implementation stages of this new AIA proceeding.

The 281 filing cap is based upon the total inter partes patent reexamination filings for 2010. (fiscal year concluding before passage of the AIA)

Based upon the current market demand for IPX filings, the USPTO may find themselves up against the 2010 limit very quickly. 

Is Appeal Pendency Really Reflected in USPTO Pendency Figures?

In considering whether or not to stay a parallel litigation in view of a pending patent reexamination the court will consider several factors. One of the more hotly contested factors is whether the stay will unduly prejudice, or present a clear tactical disadvantage to, the non-moving party.

While delay is common to all stayed cases, the degree of delay caused by patent reexamination can be considered prejudicial. For example, it has been argued, successfully at times, that a delay that is not merely lengthy, but potentially indefinite is prejudicial to the non-moving party. For this reason, especially when it comes to inter partes patent reexamination, the average length of the proceeding can be instructive to the Court.

Hoping to convince the Court of a prejudicial delay, Patentees will argue that inter partes patent reexamination takes on the order of 5-7 years to complete through appeal. Defendants, on the other hand, will cite to published USPTO statistics that indicate inter partes patent reexamination pendency to be an average of 36 months, including appeal. 

So, which party is manipulating the truth?

In order to understand the USPTO statistics, it is important to consider the limited data set of inter partes patent reexamination. Since its inception in 1999, there have been only 1200 inter partes reexamination requests filed. Of those 1200, only 253 have been concluded. Of those 253 concluded cases, only 29 have concluded after appeal to the BPAI or CAFC

Only 29 decided appeals in 12 years of practice, the first of which reached the CAFC in January 2011.

So, while the USPTO is certainly reporting accurate numbers, the overall average is skewed by the 224 proceedings that have terminated prior to appeal (close to 90% of the concluded cases).

As shown in the chart below, (Click to Enlarge) when calculating separate averages for cases that have ended prior to appeal, as compared to those that concluded after appeal, the difference is quite significant.

inter partes pendencyCases that conclude after appeal are pending, on average, for 63 months.

So, in essence, defendants arguing the 36 month figure are misleading the court. That is to say, if the disputed claims are confirmed/allowed, the defendant has the sole power (by virtue of appeal right that will almost certainly be exercised) to convert a 36 month proceeding to one that has historically lasted up to 5 years or more.

Still, this silly numbers game persists in virtually every dispute over whether or not to stay a parallel court proceeding pending inter partes patent reexamination.

2011 Patent Reexamination Appeal Results (Q1-Q3)

As discussed last week, every quarter, the BPAI releases general statsistics on patent reexamination appeals.  As promised, I have now gathered statistics that are specific to the type of reexamination proceeding. (Special thanks to the USPTO for providing me these figures).

Below are statistics from October 1, 2010 through May 20, 2011.  Note that Q3 of FY 2011 has not yet closed, so, these statistics to not quite cover all of Q1-Q3.  First let’s look at the overall statistics for 2011.

overall

(Click to enlarge)

As explained last week, the three year results for patent reexamination appeals indicate that the examiners of the Central Reexamination Unit are affirmed, at least partially, in roughly 70% of cases.  

Preliminary results for FY 2011, as shown in the chart above by the number of filings and percentage x,y%, indicate that the affirmance rate is trending  upward with roughly 80% of cases including some form of affirmance (61 % Affirmed, 19% Affirmed-in-part). Reversal rates are coming in at about 17%, which is slightly lower than 2009 and 2010 (see 2009 and 2010 stats here).

Below is the break out of these statistics into ex parte and inter partes patent reexamination categories.

Not surprisingly, as ex parte patent reexamination proceedings make up the bulk of the sample, these case closely track the general patent reexamination statistics.

ex parte

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BPAI results in inter partes patent reexamination exhibit only slightly more variability. Affirmance rates in these proceedings is roughly 83% (affirmed 54%, in part 29%). 

ipr

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As mentioned previously, an affirmance in inter partes patent reexamination is not always a victory for challengers as allowed claims are also subject to appeal in such proceedings.

While the ex parte patent reexamination statistics for FY 2011 are based upon a sample size that is double that of inter partes, it may be that the variation between the proceedings is just a statistical anomaly. Yet, one would expect examiner rejection to fare better on appeal when supported by the efforts of an additional party. The difference between absolute affirmance rates in inter partes and ex parte patent reexamination appears to be accounted for by a corresponding increase in the affirmance-in part rate of the inter partes proceedings. This may be a reflection of the cross appeal mechanism that is unique to this proceeding.

It is hoped the BPAI will publish future statistics to account for the type of reexamination proceeding.

How do Appellants Fare on Appeal in Patent Reexamination?Every quarter of the fiscal year, the USPTO releases a statistical analysis of the number patent reexamination filings and concluded proceedings. In addition to this helpful information on new filings and concluded proceedings, the USPTO releases appeal statistics that explain the results of appeals art unit 3900, the Central Reexamination Unit (CRU).An analysis of the appeal results from the CRU show a slightly higher affirmance rate and lower reversal rate relative to the rest of the examining corps. Below is a chart providing the outcome of all reexamination appeals from 2009 through April 2011. (click to enlarge)  The category “other” refers to administrative remands, substantive remands and dismissals.Over the past three years, examiners have been affirmed, at least in some fashion, close to 70% of the time. Unfortunately, this appeal data does not distinguish between ex parte and inter partes results. One would expect the inter partes appeal results to be more favorable to third party requesters based upon USPTO statistics on the ultimate outcome of these proceedings. Still, an affirmance in inter partes patent reexamination could also indicate a favorable outcome for a patentee if the affirmance relates to an examiner decision to allow claims. Hopefully the PTO will begin to distinguish between the type of reexamination proceedings in future appeal statistics. In the meantime, I will present a more detailed analysis of the general results above in the near futu

Every quarter of the fiscal year, the USPTO releases a statistical analysis of the number patent reexamination filings and concluded proceedings. In addition to this helpful information on new filings and concluded proceedings, the USPTO releases appeal statistics that explain the results of appeals art unit 3900, the Central Reexamination Unit (CRU).

An analysis of the appeal results from the CRU show a slightly higher affirmance rate and lower reversal rate relative to the rest of the examining corps. Below is a chart providing the outcome of all reexamination appeals from 2009 through April 2011. (click to enlarge)  The category “other” refers to administrative remands, substantive remands and dismissals.

appeals

Over the past three years, examiners have been affirmed, at least in some fashion, close to 70% of the time. Unfortunately, this appeal data does not distinguish between ex parte and inter partes results. One would expect the inter partes appeal results to be more favorable to third party requesters based upon USPTO statistics on the ultimate outcome of these proceedings. Still, an affirmance in inter partes patent reexamination could also indicate a favorable outcome for a patentee if the affirmance relates to an examiner decision to allow claims. Hopefully the PTO will begin to distinguish between the type of reexamination proceedings in future appeal statistics. In the meantime, I will present a more detailed analysis of the general results above in the near future.

How Likely Is It to Recover At least 1 Original Claim?  One of the factors considered by district court judges in deciding whether to stay a case pending patent reexamination is the likelihood that the proceeding will simplify issues for trial. Typically, litigants will cite to published USPTO reexamination statistics in the hopes of persuading the court that simplification will/will not result.For example, recent ex parte reexamination statistics indicate that all claims are confirmed in 23% of cases, all claims cancelled in 12% of cases, and some claims amended in 65% of cases. As such, defendants will argue that in 77% of cases there are claim changes (cancellation + amendment). On the other hand, plaintiffs will take the other extreme and emphasize the 12% of cases in which all claims are cancelled– reasoning that there is a very low likelihood that the case will be completely disposed of via patent reexamination. However, in deciding whether or not stay a district court litigation pending patent reexamination, perhaps a more helpful statistic to courts would be the % of cases concluding with at least 1 confirmed claim.Since the USPTO does not provide such statistics, I have compiled them for the last 12 months (Feb. 2010 – Feb. 2011). As shown below, I have broken out ex parte and inter partes cases separately. Confirmed claims were those claims that were actively reexamined and indicated as confirmed in the reexamination certificate, or claims amended to include dependent claims only. The charts below represent the 807 certificates printed from February 2010 – February 2011.Ex Parte Patent Reexamination 59% of Cases Have 1 Claim ConfirmedInter Partes Patent Reexamination 41% of Cases Have 1 Claim ConfirmedThese survival rates demonstrate that there is much more to the story than the all-or-nothing USPTO statistics, and the combined cancellation/amendment figures of defendan

One of the factors considered by district court judges in deciding whether to stay a case pending patent reexamination is the likelihood that the proceeding will simplify issues for trial. Typically, litigants will cite to published USPTO reexamination statistics in the hopes of persuading the court that simplification will/will not result.

For example, recent ex parte reexamination statistics indicate that all claims are confirmed in 23% of cases, all claims cancelled in 12% of cases, and some claims amended in 65% of cases. As such, defendants will argue that in 77% of cases there are claim changes (cancellation + amendment). On the other hand, plaintiffs will take the other extreme and emphasize the 12% of cases in which all claims are cancelled– reasoning that there is a very low likelihood that the case will be completely disposed of via patent reexamination. However, in deciding whether or not stay a district court litigation pending patent reexamination, perhaps a more helpful statistic to courts would be the % of cases concluding with at least 1 confirmed claim.

Since the USPTO does not provide such statistics, I have compiled them for the last 12 months (Feb. 2010 – Feb. 2011).  As shown below, I have broken out ex parte and inter partes cases separately. Confirmed claims were those claims that were actively reexamined and indicated as confirmed in the reexamination certificate, or claims amended to include dependent claims only. The charts below represent the 807 certificates printed from February 2010 – February 2011.

Ex Parte Patent Reexamination 59% of Cases Have 1 Claim Confirmed

xp10

Inter Partes Patent Reexamination 41% of Cases Have 1 Claim Confirmed

ip10

These survival rates demonstrate that there is much more to the story than the all-or-nothing USPTO statistics, and the combined cancellation/amendment figures of defendants.

42% of 2007 Cases Remain StayedPatent reexamination parallel to a district court/ITC litigation is often initiated in an attempt to stay the more cost prohibitive court proceeding. Court’s will stay the ongoing litigation pending the patent reexamination outcome in the interests of judicial economy.But, what happens to these cases? Are they ultimately dismissed altogether? Do the majority of these cases resume? Do the answers to these questions vary based upon the type of patent reexamination request?In 2007, 81 cases were stayed pending patent reexamination. Looking at the status of these cases today, long term results demonstrate a significant advantage for defendants. As shown in the chart below, the combined results of 2007 cases stayed for both ex parte and inter partes reexamination requests is illustrated. (click to enlarge)As shown above, only 35% of cases were reopened after the initial stay. This indicates that as much as 65% of stays yield a favorable result for the defendant (i.e., remain stayed/dismissed). While it is possible that some cases were dismissed upon favorable settlement to the defendant, such does not appear to be the case.In those cases involving only ex parte patent reexamination (below) 46% of cases are reopened (a negative result for defendants), with 54% of cases ending favorably to a defendant.(Click to enlarge)Interestingly, those defendants seeking inter partes patent reexamination fared much better than those seeking ex parte patent reexamination.In those cases involving only inter partes patent reexamination, or both inter partes reexamination and ex parte reexamination, (below) only 18% of cases have been reopened, with a staggering 50% of cases still stayed. Adding together the 32% of cases that have been dismissed, indicates up to an 82% favorable result for such defendants.A common complaint of Patentees facing a motion to stay pending inter partes patent reexamination is that granting of such a motion effectively suspends the case for years on end. In view of the 2007 results, it seems likely that argument will proliferate as defendants embrace inter partes filings in increasingly greater numbe

Patent reexamination parallel to a district court/ITC litigation is often initiated in an attempt to stay the more cost prohibitive court proceeding. Court’s will stay the ongoing litigation pending the patent reexamination outcome in the interests of judicial economy.

But, what happens to these cases? Are they ultimately dismissed altogether? Do the majority of these cases resume? Do the answers to these questions vary based upon the type of patent reexamination request?

In 2007, 81 cases were stayed pending patent reexamination. Looking at the status of these cases today, long term results demonstrate a significant advantage for defendants. 

As shown in the chart below, the combined results of 2007 cases stayed for both ex parte and inter partes reexamination requests is illustrated. (click to enlarge)

stay1

As shown above, only 35% of cases were reopened after the initial stay. This indicates that as much as 65% of stays yield a favorable result for the defendant (i.e., remain stayed/dismissed). While it is possible that some cases were dismissed upon favorable settlement to the defendant, such does not appear to be the case.

In those cases involving only ex parte patent reexamination (below) 46% of cases are reopened (a negative result for defendants), with 54% of cases ending favorably to a defendant.

stay2

(Click to enlarge)

Interestingly, those defendants seeking inter partes patent reexamination fared much better than those seeking ex parte patent reexamination.

In those cases involving only inter partes patent reexamination, or both inter partes reexamination and ex parte reexamination, (below) only 18% of cases have been reopened, with a staggering 50% of cases still stayed. Adding together the 32% of cases that have been dismissed, indicates up to an 82% favorable result for such defendants.

stay3

A common complaint of Patentees facing a motion to stay pending inter partes patent reexamination is that granting of such a motion effectively suspends the case for years on end. In view of the 2007 results, it seems likely that argument will proliferate as defendants embrace inter partes filings in increasingly greater numbers.

                                                                                                                          Inter Partes SNQs Outpace Ex Parte 2:1 

Untitled

Looking back on 2010 patent reexamination filings, the mean number of Substantial New Questions of Patentability (SNQs) presented differs based upon the type of reexamination proceeding.  For ex parte patent reexamination, the mean value is 8.7 SNQs per request, for inter partes patent reexamination the number is 17.3 SNQs per request. The median values are 6 for ex parte patent reexaminations and 11 for inter partes patent reexamination. Of course, these numbers are unlikely to surprise most practitioners.

For example, ex parte patent reexamination may be requested by a patent owner. In such situations there is certainly little motivation to bury the USPTO in reasoned statements to undermine patentability (IDS filings are another issue altogether). More importantly, requesters of ex parte patent reexamination are not bound by the estoppel provisions of inter partes patent reexamination. Continue Reading SNQ Rates in Patent Reexamination

Upward of 70% of Patent Reissue Filings Include a Defective Oath

oaths

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As most practitioners are well aware, defective oaths in patent reissue are the rule, not the exception. As the chart above demonstrates for patent reissues filed in 2005, such oath problems lead to longer patent reissue pendencies.

With narrowing patent reissue filings constituting the bulk of patent reissue applications at the USPTO, it is not surprising that the impact of defective oaths are more pronounced in this sub-category. For narrowing reissue applications filed in 2005, applications without any oath problems were completed 1.14 years faster (1.74 vs 2.88 years) than those with oath problems.

Surely, both the USPTO and stakeholders share the blame equally for these recurring problems. As demonstrated just yesterday, these issues are rarely resolved prior to appeal. Continue Reading Defective Oaths Plague Patent Reissue Filings