Supplemental Examination

CRU Faster Than Before AIA, Provides Options for Patent Owners

Patent reexamination filings have fallen 86% since 2012.  With the elimination of the popular inter partes patent reexamination option in 2012, an overall decrease was certainly expected.  However, ex parte reexamination filings continue to drop every year.  Only 191 ex parte reexamination requests were filed in 2017.  This was the lowest number of ex parte reexamination filings since the mid-1990s.  While an ex parte patent challenge is far less appealing to a patent challenger than a contested proceeding (AIA trial proceeding), and this factor has undoubtedly contributed to the decreasing numbers, patent reexamination and other post-grant proceedings of the Central Reexamination Unit (CRU) still provide unique rehabilitation opportunities for patent owners.

Continue Reading Thwart PTAB Attacks With These USPTO Post-Grant Options

No-Cause Extensions Available for Patent Owner/Director Initiated Post Grant Patent Proceedings

Tucked away in last week’s Federal Register Notice is a significant change to patent reexamination/supplemental examination procedures at the USPTO. Currently, any extension of time sought in an ex parte patent reexamination (the only type of patent reexamination still in existence) requires a show of cause for the requested extension. This is not a trivial matter as the USPTO’s Central Reexamination Unit (CRU) can be quite strict in granting such requests. However, on December 18, 2013, this practice will change for some filers. (Federal Register Notice here)

Starting in December extensions of time for up to two months will no longer require a showing of cause in proceedings that were not initiated by a third party. That is, for Director/Patent Owner initiated reexaminations, extensions of time for up to two months will be available as a matter of right. This change would also apply to supplemental examinations, which are patentee requested and are largely conducted under the same reexamination rules. The version of 1.550(c) that takes effect on December 18, 2013 is shown below (applies to all filings in existence on that date).

§ 1.550 Conduct of ex parte reexamination proceedings.

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(c) The time for taking any action by a patent owner in an ex parte reexamination proceeding may be extended as provided in this paragraph.

(1) Any request for such an extension must specify the requested period of extension and be accompanied by the petition fee set forth in § 1.17(g).

(2) Any request for an extension in a third party requested ex parte reexamination must be filed on or before the day on which action by the patent owner is due, and the mere filing of such a request for extension will not effect the extension. A request for an extension in a third party requested ex parte reexamination will not be granted in the absence of sufficient cause or formore than a reasonable time.

(3) Any request for an extension in a patent owner requested or Director ordered ex parte reexamination for up to two months from the time period set in the Office action must be filed no later than two months from the expiration of the time period set in the Office action. A request for an extension in a patent owner requested or Director ordered ex parte reexamination for more than two months from the time period set in the Office action must be filed on or before the day on which action by the patent owner is due, and the mere filing of a request for an extension for more than two months from the time period set in the Office action will not effect the extension. The time for taking action in a patent owner requested or Director ordered ex parte reexamination will not be extended for more than two months from the time period set in the Office action in the absence of sufficient cause or for more than a reasonable time.

(4) The reply or other action must in any event be filed prior to the expiration of the period of extension, but in no situation may a reply or other action be filed later than the maximum time period set by statute.

(5) See § 90.3(c) of this title for extensions of time for filing a notice of appeal to the U.S. Court of Appeals for the Federal Circuit or for commencing a civil action.

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(e) If a response by the patent owner is not timely filed in the Office, a petition may be filed pursuant to § 1.137 to revive a reexamination prosecution terminated under paragraph (d) of this section if the delay in response was unintentional.

Preemptive Filing May Provide More Patentee Flexibilty in Amending

Prior to the AIA, some patentees would preemptively challenge their own patents in an ex parte reexamination proceeding in the hopes of staving off an imminent inter partes reexamination challenge. The thinking was that since the challenge was inevitable, it made more sense to choose the ex parte proceeding as statistically more favorable to patentees.  In essence the patent owner would rush in with art identified by an opponent so that a later presentation of the same art by the opponent in an inter partes reexamination filing would be deemed cumulative— and in some cases it worked. 

For patentees facing the imminent threat of a new AIA filing (IPR, PGR, or CBM) is this tactic still effective?

Preliminary indications are that the PTAB is nowhere near as strict on the concept of cumulativeness as the Central Reexamination Unit (CRU), and has stayed earlier filed ex parte proceedings in favor of later filed PTAB proceedings. Yet, there some fact patterns would that still warrant a first filed ex parte filing.

One such example would be where an opponent informs a patentee of certain art that may also be used as an inequitable conduct defense. In such a scenario, if the art could not be avoided under the USPTO’s more liberal standards absent amendment (i.e., a “but for” showing of materiality), prudent patentees will quickly avail themselves of a largely unused aspect of the AIA, supplemental examination (SE). 

SE is one of the new post grant mechanisms of the AIA that you don’t hear much about. SE was envisioned by Congress some years back as a way to effectively cure inequitable conduct via a USPTO proceeding (which was never before possible). In the years prior to Therasense, when inequitable conduct was alleged and entertained in almost every patent assertion, SE would have been a wildly popular option. Post-Therasense, courts require a near impossible intent showing as well as “but for” materiaility, and at a much higher transaction cost. For these reasons, absent egregious circumstances, patentees are foolish to even consider a SE. As no surprise, the demand for SE has been tepid and will remain so.

Still, for those few patentees faced with the rare scenario outlined above, a quick SE filing prior to an opponent’s inter partes challenege (IPR, PGR, CBM) will provide a significant benefit. That is, even if the PTAB stay of the earlier filed SE is inevitable, they are unlikley to do so prior to issuance of the SE certificate (statutorily mandated). Once issued, the patentee will have the freedom to amend their claims in the later filed IPR/PGR without fear of the demonstrated “but for” materiality of the alleged art (assuming certain exception do not apply, See 35 U.S.C. § 257 (c)). This is the value of the SE certificate that is issued within 90 days of filing.

While this scenario may seem far fetched, there is at least one example already on the books. 96/000,007; (IPR2013-0122, Invue Security Products Inc. v. Merchandising Technologies Inc.)

Robust Filings Reported for Some AIA Proceedings

Late last week, the USPTO issued a Final Rule to implement the Technical Amendment to the America Invents Act (AIA). The Notice essentially revises 37 C.F.R. § 42.102 to eliminate the “dead zone” for certain first inventor to file patents. You can find the straight forward rule notice (here) The rule became effective yesterday, March 25th.

In other news, the Patent Public Advisory Committee (PPAC) convened on March 15th at the USPTO Alexandria campus. During the meeting, the USPTO reported on the progress of AIA filings to date. There continues to be robust demand for Inter Partes Review (IPR), but others of the new AIA mechanisms have not proven nearly as popular as originally thought.

First, there have only been nine (9) requests for supplemental examination since September 16th. (Click to Enlarge)

Supp_ex

In operation, Supplemental Examination (SE) allows a Patentee to submit very detailed explanations of potential issues that may render the patent invalid under an inequitable conduct theory. Upon submission of Substantial New Questions of Patentability (SNQs) detailing such potential defects, the Office will reconsider the information; that is to say the Office will perform a “supplemental examination.” Once such issues are considered and dispatched by an SE certificate, the subject patent would be free of inequitable conduct charges based on the issues considered in the SE. On the other hand, should the materials presented raise an SNQ, a form of patent reexamination is conducted (differing from typical practices in that it is not limited to patents and printed publications).

Pre-Therasense there would have been significant value to SE, but now it is best reserved for only the most egregious cases. It seems very unlikely that the USPTO will receive the 110 filings they initially anticipated in their rule proposals. (SE was seen as potentially replacing all patent owner initiated reexamination requests)

As to petitions for challenging patents before the PTAB, the USPTO reports robust IPR filings, but limited demand for Covered Business Method (CBM) Patent Challenges. (Click to Enlarge)

IPR

CBMAs CBM filings offer a tremendous value for challengers, it seems that the public is either slow to appreciate the benefits, or there just are fewer patents that fall cleanly into the “business method” definition. For example, as such patents often include “system claims” that present issues of divided infringement, it may be that such patents are being asserted less frequently since the Global Tech/Golden Hour line of cases.

Tepid Demand for New Proceeding

Supplemental Examination (SE) is a new mechanism of the AIA designed to effectively cure inequitable conduct via a new post grant proceeding of the USPTO. The new mechanism went into effect on September 16, 2012 along with the other major post grant provisions.

As reported by Patently-O last week, only a handfulof SE filings have been submitted to date, far fewer than expected by some.

In operation, SE allows a Patentee to submit very detailed explanations of potential issues that may render the patent invalid under an inequitable conduct theory. Upon submission of Substantial New Questions of Patentability (SNQs) detailing such potential defects, the Office will reconsider the information; that is to say the Office will perform a “supplemental examination.” Once such issues are considered and dispatched by an SE certificate, the subject patent would be free of inequitable conduct charges based on the issues considered in the SE. On the other hand, should the materials presented raise an SNQ, a form of patent reexamination is conducted (differing from typical practices in that it is not be limited to patents and printed publications).

Sounds like a great idea….and it was, prior to Therasense.

As SE was fashioned by Congress prior to the Therasense decision, it employs the very liberal (SNQ) standard. Thus, an SE is only concluded favorably if the materials submitted would not be deemed important by a “reasonable examiner.” Yet, Therasense changed the standard from a “reasonable examiner” test for materiality to a ”but for” standard of materiality. The new “but for” standard defines material information as any non-cumulative information which, had it been disclosed prior to patent issuance, would have prevented the patent from issuing.

So, by filing an SE request, the information submitted is actually considered under the old standard of materiality first. Historically, SNQs have been found in roughly 94% of filings for patent reexamination; SE filings are not expected to fare any better. Once an SNQ is found, the examiner will consider the proposed materials relative to the prima facie showing necessary to issue a rejection. Thereafter, a Patentee may rebut the prima facie showing and ultimately demonstrate a lack of “but for materiality,” perhaps years later and at significant cost.

Had Congress considered the issue today, or reconsiders the statute via technical amendment, it would seem that a heightened standard would make far more sense.

Aside from those cases with seemingly egregious issues of lack of candor, or perhaps instances where infectious enforceability is a concern, SE filings would seem to be of little practical value (not to mention there are other ways to achieve the same end result). Indeed, in light of the fact that courts need to couple “but for” materiality with a showing of specific intent to deceive the USPTO, it is not surprising that many inequitable conduct charges are now falling at the summary judgment stage. As a result, the demand for SE is far less than it was when the statutes were first drafted by Congress.

Proposal Apportions Post Grant Patent Trial Fees Into Petition & Trial Phases

As I predicted in early August, the USPTO has announced a proposal to apportion the filing fees for the new post grant proceedings of the Patent Trial & Appeal Board (PTAB) across petition and trial phases; primarily as a mechanism to facilitate refunds. A portion of the proposed fees would correspond to the cost of considering the petition filing, the second portion would correspond to the cost of conducting the trial. This proposed fee structure is set pursuant to Section 10 of the America Invents Act (AIA), and provides revised fees not only for the new post grant patent proceedings, but also for ex parte application prosecution as well. The Notice of Proposed Rulemaking (NPRM) will be published in the Federal Register on Thursday. (advanced reading room copy here)

Aside from the post grant fee apportionment (discussed in detail below, which actually provides a slight fee reduction), notable fee increases include a change to the RCE filing fee for ex parte prosecution. The RCE fee based upon the number of previously filed RCEs. For example, the cost of an RCE moves from the current $930 for large entitites to $1200 for the first RCE, and $1700 for the second and subsequent RCEs. You may recall that initially the USPTO was seeking a change to $1700 for all such filings. The Office has now recognized that since 70% of applicants file at least one RCE, it seems some modest additional time is required to resolve most issues, hence the difference in pricing between the first and second RCE filing.

As to fee decreases, the following are noteworthy:

-The filing fee for ex parte patent reexamination is proposed to be decreased from the $17,750 (effective on September 16th) to $15,000, corresponding changes are made for small entity and micro entities. The filing fees for supplemental examination is likewise decreased.

Returning back to the apportionment of post grant fees, currently, the post grant fees are all inclusive, $27,200 for Inter Partes review (IPR) and $35,800 for Post Grant Review (PGR) (plus any excess claim fees). These all inclusive fees are non-refundable.

The USPTO has proposed allocating the specific costs of post grant proceedings into four discrete components. The proposed fee structure enables the USPTO to readily identify funds for refund.

Using IPR as an example, the first fee component is the cost of filing an IPR petition, which is set to a flat $9000 (for up to 20 claims). If the IPR is not instituted, this fee is not returned. The second fee component is a $200 surcharge per claim for each claim in excess of 20. The second fee component is refundable if an IPR is not instituted.

The third and fourth fee components are trial institution fees. The third is $15000 for an IPR trial of up to 15 claims. This fee is refundable if the trial is not instituted. The fourth fee is a $400 surcharge per claim for each claim over 15.  This fee would be returned if the IPR is not instituted.

Following the above guidleines, the USPTO has provided an example for an IPR seeking a trial on 52 claims. The petitioner would pay $44,200 ($9,000 plus 32 (52-20) x $200= $15,400); this is the first and second fee components. The third and fourth fee components would be calculated as ($14,00 plus (52-15) x $400=$28,800.  $15,400+$28,800 = $44,200

The USPTO reasons that 25% of petitioned claims will not be reviewed for trial (hence the 20 claim and 15 claim difference in fee calculations). Under the current all inclusive fee structure the same IPR would cost $46,400. ($27,200 + (32 x $600))

With the publication of the NPRM, the USPTO is opening a 60-day comment period in which the public can provide input on the latest proposal. Following the comment period, the Office will prepare the final fee-setting rule, which would go into effect no less than 45 days after it is published in the Federal Register.

Reduction in Incoming Requests & Inter Partes Workload to Free Up Resources

Much attention has been given to the contested proceedings of the newly formed Patent Trial & Appeal Board (PTAB) since enactment of the America Invents Act (AIA) last fall. Starting in September of 2012, these new patentability trials (Post Grant Review (PGR), Transitional Program for Covered Business Method Patents (TPCBMP) and Inter Partes Review (IPR)) will become available, and must conclude by statute within 12-18 months of initiation. The pendency of the new trial proceedings is a significant improvement relative to existing patent reexamination and is expected to be a significant driver behind filings concurrent with litigation.

As a result of the new options for contested proceedings, the law eliminates inter partes patent reexamination. So, going forward, the Central Reexamination Unit (CRU) will lose a significant, resource intensive stream of work. While it is true that the CRU will remain responsible for legacy inter partes reexamination filings, the 100+ examiners will necessarily have extra time on their hands post-AIA.

Absent a replacement stream of work, the remaining stream, ex parte patent reexamination filings, may benefit from the newly available bandwidth.

While it is true that the CRU will be responsible for a new stream of work, Supplemental Examination (SE), the volume of this work will be negligible. Simply stated, post-Therasense, many inequitable conduct defenses are falling at the summary judgement stage. Likewise, the filing of an SE will only serve to create further inequitable conduct accusations. Therasense has largely eliminated the need for this proceeding outside of the most limited of circumstances.

So, post-AIA, the CRU will eventually be left with a docket of ex parte reexamination cases. Absent a reduction in head count at the CRU, it is expected that the pendency of these proceedings will decrease in a fairly significant manner as examiners increasingly turn to these cases. This increase in speed may also be helped by a 10-20% decrease in filings of ex parte reexamination requests resulting from the fairly significant fee increases coming in the months ahead.

Another potentially significant wild card is the Lingamfelter v. Kappos case now before the CAFC. If the CAFC should decide that third parties may not file declaration evidence during the prosecution of inter partes patent reexaminations, the last bubble of inter partes patent reexamination filings expected prior to September 16th could shrink considerably.

In the years ahead ex parte patent reexamination may become significantly faster than it is today. As such, rather than venture into the relatively higher cost realm of PTAB proceedings, challengers not under the pressure of a co-pending litigation may first take a shot at one or more serially filed, ex parte patent reexamination challenges.

Item of Information Limit Accounts for Practical Realities

Supplemental Examination (SE) is a mechanism of the AIA that is designed to effectively cure inequitable conduct via a new post grant proceeding of the USPTO. This mechanism, effective September 16, 2012 will be available to all issued patents.

In operation, SE allows a Patentee to submit very detailed explanations of potential issues that may render the patent invalid under an inequitable conduct theory. Upon submission of Substantial New Questions of patentability (SNQs) detailing such potential defects, the Office will reconsider or correct such information; that is to say the Office will perform a “supplemental examination.” Once such issues are considered, any patent issuing as a result of the SE would be free of inequitable conduct charges based on the same issues considered in the SE.

In the proposed rules to implement SE, the USPTO has limited the number of “items of information” for presenting a SNQ to 10. Public comments directed to this implementation detail have been largely negative.

A few days back, the Director more or less made clear that this limitation will remain in the Final rules.

In justifying the 10 item limitation, the Director explained:

The supplemental examination procedure was designed to provide patentees with a quick and decisive examination of items that were overlooked during the patent’s original prosecution. So quick in fact, that the AIA set a three-month period for us to conduct and conclude a supplemental examination after a request is filed. That’s just three months to determine if any of the items of information raise a substantial new question of patentability.

In order to meet this timeframe, we have proposed a limit of 10 items of information that a patent owner can submit to the USPTO for consideration in each request. The purpose of this limit is to strike a balance between the needs of the patent owner and the ability of the Office to timely conclude the proceeding. That said, we did not limit the number of issues that these 10 items of information can raise, nor did we limit the number of separate supplemental reexamination requests that a patentee can file.

Following publication of the proposed rules, the Office received a number of suggestions requesting us to accept more than 10 items of information in a single supplemental examination request. While we’re still considering this and all of the other input we have received, I wanted to share with you the factors the Office took into consideration in proposing a limit of 10 submissions.

First, far fewer than 10 prior art documents form the basis for most inequitable conduct allegations. In fact, we are unaware of any publicly reported inequitable conduct dispute involving more than 10 items of information – if you know of one, please let us know. Second, in over 85 percent of the requests for ex parte reexamination, the requester cites 10 or fewer items for consideration by the Office. Third, the Office was very mindful of the time necessary for examiners to analyze the items of information submitted, particularly since the items are not limited to patents and printed publications, and each item may raise multiple issues.

Accordingly, limiting the number of items of information to 10 will help the USPTO establish a procedure that is not only practical, but also one enabling an examiner to fully, comprehensively, and timely analyze all submitted items of information and issues to accurately determine whether there is a substantial new question of patentability.

The Office would seem to be on solid ground here.

A more interesting question is, post-Therasensewhether or not SE is a risk worth taking at all.

In re Tanaka Decision Likely to Drive Two-Part Supplemental Examination Filing Strategy

During yesterday’s Strafford Legal webinar on the topic, I explained that Supplemental Examination (SE) is a mechanism of the AIA that is designed to effectively cure inequitable conduct via a new post grant proceeding of the USPTO. This mechanism, effective September 16, 2012 will be available to all issued patents.

In operation, SE allows a Patentee to submit very detailed explanations of potential issues that may serve to render the patent invalid under an inequitable conduct theory in litigation. Upon submission of Substantial New Questions of patentability (SNQs) detailing such potential defects, the Office will reconsider or correct such information; that is to say the Office will perform a “supplemental examination.”

If the SNQs of an SE request do not rise to the appropriate level to justify further proceedings, an SE certificate is issued stating such, and the proceeding concludes. Likewise, should SNQs be identified in the request for SE, a certificate is issued identifying such. Thereafter, a modified form of “re-examination” is initiated by the Office to explore the SNQs presented in the request. Should the Office determine that the identified SNQs do not preclude patentability in the reexamination phase, a reexamination certificate is issued to complement the SE certificate. Thus, SE is modeled on the same “but for” materiality standard pronounced in Therasense.

At first blush, the option to cure potential inequitable conduct issues seems an attractive option for Patentees. Yet, practically speaking, there may be very few instances in which an SE filing is advisable.

First, the level of detail required to present an SNQ in an SE request is significant, unlike other post grant options— such as patent reissue. The CAFC’s decision in Tanaka may present a more appealing option for those seeking to correct all but the most pronounced inequitable conduct problems.

Consistent with Tanaka, a patent reissue application can be pursued based upon the simple addition of new dependent claims. Thereafter, IDS filings can be submitted for many of the same SNQs that would otherwise be presented in a request for SE. Perhaps most importantly, there would be no need to explain these issues with the same detail as required by the SE rules. After considering such IDS filings, should the Office allow the claims without amendment “but for” materiality is disproven. In other words, inequitable conduct on such issues is for all practical purposes cured by operation of the patent reissue. On the other hand, if it becomes apparent that amendment is required (thus proving “but for” materiality), the Patentee can simply abandon the reissue filing and pursue the more detailed, and much more expensive, SE filing.

Second, as mentioned above, the cost of the SE filing is significant.

As outlined in January’s rule package for supplemental examination, a filing fee of $ 5,180 is necessary to request supplemental examination, and another $16,000 for the resulting ex parte reexamination (should the supplemental examination request raise a substantial new question of patentability (SNQ). Conversely, the filing fees for patent reissue are currently set at a fraction of the cost of an SE filing.

Moreover, the SNQ standard applied in SE is a very low hurdle (over 94% of SNQs are accepted by the Office in ex parte patent reexamination filings.) On the other hand, the prima facie standard necessary for a first action is considerably higher. As such, it is not that uncommon in current ex parte patent reexaminations proceedings for the Office to grant an SNQ, then promptly issue a first action confirmation of the claims. Under the SE cost structure, a Patentee would be paying $16,000 for a determination that may be seemingly made for several hundred dollars via a patent reissue IDS filing.

Third, calling out practitioner conduct is fraught with peril.

It seems extremely unwise for a law firm to pursue SE for issues arising from it’s earlier prosecution representation as they must detail such issues in an SNQ format. Depending upon the circumstances, the request itself could serve as a road map for a malpractice charge. Likewise, filing a request and calling out the conduct of a competitor, in a public filing, may be equally unwise.

The USPTO has predicted roughly 100 SE fillings per year based upon current Patentee initiated ex parte patent reexamination filings (the thinking being SE offers the same advantages with additional benefits). Yet, SE filings are expected to be few and far between. For those that are pursued, testing the waters first via patent reissue would seem to be a prudent strategy.

New Mechanism to Cleanse Inequitable Conduct

Yesterday, the USPTO issued a Notice of Proposed Rule Making to outline the procedures for conducting supplemental examination (here). (See the earlier discussion on the related changes to patent reexamination fees provided by this Notice).

As a reminder, the America Invents Act provided supplemental examination (SE) as a mechanism to cure inequitable conduct before the USPTO. Upon submission of SNQs that explain potential issues for supplemental examination, the Office may initiate a type of “re-examination” that follows the procedures for ex parte patent reexamination with some modification. In essence this proceeding was based on a “but for” theory later adopted in Therasense.

In addition to proposing a steep price to initiate SE and conduct the related reexamination proceeding, (roughly $22K) the Office has outlined the rules for conducting supplemental examination.

Notable provisions are as follows:

-A request for SE is limited to a maximum of 10 “items of information.” (additional filings may be pursued in parallel)

-Only the owner of a patent may pursue SE.

-The Office will consider SE requests within 90 days of submission in the same manner as patent reexamination.

-A mapping of means or step-plus-function claims relative to the patent specification for any such claim to be examined.

-A mapping of specification support for claims called into question by the presentation of a 112 or 101 based SNQ.

-Explanation of documents, and transcripts of any audio/vide0 submissions are required. (SE is not limited to patents or printed publications).

-No amendments or interviews are permitted in SE. (i.e., within first 90 days of filing)

-The SE proceeding concludes with a determination that an SNQ exists, or not. Should an SNQ be identified, ex parte patent reexamination is conducted in the usual manner with the exception that there is no Patent Owner Statement permitted and the  proceeding will not be limited to patents and printed publications.

Curiously, the Notice predicts that all owner initiated ex parte patent reexamination filings will be filed as SE requests going forward. The thinking being that the added benefit of inequitable conduct protection will be a driving force for filers. However, after Therasense, and in view of the fact that SE is not limited to patents and printed publications, and in some respects requires much more detail as to claim mappings, etc., this prediction seems more than a bit optimistic.

Although not outlined in the Notice, the Office has stated publicly that SE will be conducted by the examiners of the Central Reexamination Unit (CRU).

For more information on this topic as well as ethical implications, I will be guest speaking together with Professor Lisa Dolak on February 14th. (Strafford Legal Webinar, register here)