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.

Enactment of Patent Reform Legislation to Trigger Immediate Changes

Yesterday, USPTO Director Kappos participated in a Q&A session with the public on the pending patent reform legislation and its anticipated impact on the USPTO.  A replay of the webcast may be found at Managing Intellectual Property here (free, but registration required).

Using a football analogy, Director Kappos explained that the current legislation was on the “one inch line,” and that he expected enactment in the next month or two. As to the current disparity between the House and Senate bills on fee diversion, Kappos explained that the USPTO could live with the House version of the bill as it was a step forward, but was hoping for further assurances from the Senate that funding would be allocated in full (similar to that made on the floor of the House).

The Director also explained that upon enactment, the agency would have access to the additional fees of the one track program (expedited patent application examination), and the 15% surcharge.  Based on this influx of funding, it was expected that current restrictions on operations could be lifted, such as examiner overtime.

As to plans for preparing for the new proposed post grant proceedings, the USPTO will be hiring…a lot.

In discussing the movement of inter partes patent reexamination away from the Central Reexamination Unit (CRU) to the new Patent Trial and Appeal Board, as well as the need for the Board to handle the new Post Grant Review proceeding, the Director explained that there would be a need to hire at least 100-150 new Administrative Patent Judges (APJs). Each IPR and PGR proceeding will demand a panel of three APJs. While the Office is permitted to phase in these new proceedings over a period of time (starting one year after enactment) it is expected that the staffing and rule drafting efforts will begin almost immediately.

The Director was also asked about the current state of patent reissue and whether or not the Office was planning on creating another special unit akin to the CRU to handle these proceedings. Director Kappos explained that although the creation of a special unit was originally contemplated, such was not feasible (evidently there was an issue with the patent examiner union). Instead, the Office is currently focused on improving patent reissue by creation of internal resources and processing improvements to cut down on the considerable pendency issues.

Finally, throughout the program the Director commented on a variety of other issues presented in the legislation (unrelated to post grant proceedings). For example, the current plans to open a satellite office in Detroit were described as being “put on ice” until funding issues are resolved.

I would encourage anyone with an interest in the legislation to listen to the webinar.

Director Kappos to Discuss Patent Reform Today

USPTO Director Dave Kappos will answer questions on the pending patent reform legislation and its anticipated impact on the USPTO today. Registration for this event is free (here).

Also, as a reminder, I will be presenting Patent Reissue: Benefits, Limitations & Strategies today. The program will provide guidance to counsel for parties impacted by the patent reissue process. Topics will include recent developments, such as recent BPAI and CAFC rulings, as well as patent reform initiatives relating to patent correction.  Additional information, and registration information may be found (here)

Weak June Job Report Spurs Interest in Passage of Patent Reform

Last Friday’s disappointing June Jobs Report has ratcheted up the already significant pressure on the Obama Administration to address the struggling economic recovery. Meanwhile, the Senate has worked through the traditional July break in an effort to reach a compromise on the looming debt ceiling deadline (August 2nd) 

What does all this mean for Patent Reform? 

A few weeks back, the House passed H.R. 1249. This bill is now in the hands of the Senate for a possible conference to reconcile differences with Senate bill S.23.  As I pointed out previously, such a conference seems unlikely. The Senate is now quite busy trying to arrive at a compromise on the debt ceiling issue. Once an agreement is reached (no telling when that will happen, but it will), shortly thereafter, it is expected that the Patent Reform bill will be sent to the White House in present form.

While there are still some hts/id=18022/”>very vocal critics of the bill, there is very little political upside to stalling or otherwise revisiting a bill that is of little interest to the voting masses. Instead, the state of the economy, and Fall elections will drive the push for Patent Reform, which has been consistently presented to the public as a “zero cost jobs bill.” 

Manner of Amendment Obscures Claim Meaning

Back in October of last year I explained the recently concluded patent reexamination of Card Activation’s U.S. Patent 6,032,859. In the previous post, I discussed that placing confirmed/allowed dependent claims in independent form was unnecessary in patent reexamination.(MPEP 2260.01) While this procedural nuance would seem fairly trivial, the manner of making amendments can have significant impact outside the USPTO.

In the case of the Card Activation reexamination, claims 20 and 29 (independent) were amended to include the features of confirmed claims 21 and 32. That is to say, claims 21 and 32 could have simply been retained in their current form, without the need to amend the base claim. At the time, I explained that Card Activation may have unnecessarily narrowed other dependent claims, which could result in an intervening rights defense.

Last week, the Delaware District Court considered the manner of this amendment in an altogether different context. The Court found the amended claim lacking written description support on summary judgement, and in the process, shed some light on the seemingly short sighted choice in amendment style.

Original claims 20 and 29 recited a step of “entering an authorization code through the keypad…” Dependent claims 21 and 32 recited that entering the authorization code included entering a customer code, and a clerk code.  In the Court’s Summary Judgement decision (here) it is explained that Card Activation argued at Markman (footnote 29) that the authorization step embraced three distinct codes–a generic authorization code (base claim), and a customer code and a clerk code (dependent claim).

So, in amending base claims 20 and 29 to include the customer code and clerk code, without deleting the more generic “authorization code” language of the base claim, Card’s claim construction argument was bolstered. Simply standing by the confirmed dependent claims, rather than amending the base claims in this manner would not have had the same claim construction benefit.

So, that solves that bit of mystery. That is to say, from the Court’s perspective the amendment was deliberately designed to game the system for claim construction purposes.

Unfortunately, for Card Activation, the Court did not find written support for three distinct authorization codes and found the claims invalid under 35 U.S.C. 112 1st paragraph.

As can be appreciated from this case, USPTO statistics on claim confirmation in patent reexamination only tell part of the story. A successful patent reexamination from a defendant’s perspective does not always result in claim cancellation. In other words, even where claims are confirmed, statements in the reexamination record, and even minor claim changes may provide new, non-infringement and invalidity positions in parallel litigation.

This case was brought to my attention by the great Docket Navigator.

USPTO Posts Public Comments on Patent Reexamination Streamline Proposals

As discussed here in significant detail over the past few months, the USPTO is considering various proposals in an attempt to streamline patent reexamination. Back in April, the USPTO published a collection of working concepts and initiatives in the Federal Register for the purpose of streamlining patent reexamination. Based upon public commentary, the USPTO will now begin the process of considering to implement/modify the various proposals via a formal rule-making process, or through internal policy changes. (a copy of the Federal Register Notice is found here)

The deadline for submitting comments to the USPTO was last Wednesday. Comments submitted to date can be found posted (here). (Note: AIPLA and ABA comments are not yet available as they are still being drafted.)

I am pleased to report that several proposals published on this blog (and submitted separately on behalf of my firm) have been adopted by the IPO, Intellectual Ventures, and other bar organizations.

Program to Discuss Current & Future Patent Correction Options

In 2010, there were more reissued patents than in any year in history. While patent holders can benefit from using the reissue process to correct patent defects, there are limitations that must be understood and considered.

For those looking for some CLE credit in the month of July, I will be presenting Patent Reissue: Benefits, Limitations & Strategies on July 12th. The program will provide guidance to counsel for parties impacted by the patent reissue process. Topics will include recent developments, such as recent BPAI and CAFC rulings, as well as patent reform initiatives relating to patent correction.

Additional information, and registration information may be found (here)

Claim Interpretation Practices in Patent Reexamination

As discussed over the past few months, the USPTO is considering various proposals in an attempt to streamline patent reexamination. The proposals of the speakers at the June 1 public meeting, as well as the webcast, are found (here).

Throughout the month of June, I have explained my own proposals to accelerate/improve patent reexamination. In past posts, I explained an alternative that the USPTO might consider to encourage Patentee cooperation with the Pilot Program to Waive a Patent Owner Statement in Ex Parte Patent Reexamination. More recently, I have discussed changes to petition practice for accelerating petition processing, and avoiding common petition issues when a Third Party withdraws from an inter partes patent reexamination.

With June drawing to a close, and with public comments due to the USPTO on the Streamline Proposals due today (June 29, 2011), this will be my final post of this multi-part series.

In this post I explain how a relatively common claim interpretation deficiency is overlooked by the USPTO, leading to unnecessary reexamination proceedings and expense for Patent Holders.

Currently, the grant rate of patent reexamination is well over 90%. With patent reexamination increasingly initiated concurrent with district court and/or ITC litigation, the mere grant of a request for patent reexamination can have a devastating effect on the timeliness of patent enforcement efforts. For patents in inter partes reexamination, roughly 50% of cases in litigation remain subject to a stay pending the outcome of the patent reexamination proceedings for at least 4 years. Thus, an improvidently granted reexamination request can effectively shut the Patent Holder out of court for years, and significantly add to (1) the cost of enforcement and (2) the delay in collecting damages for patent infringement.

In analyzing requests for patent reexamination, Examiner’s are trained to apply a Broadest Reasonable Interpretation (BRI) to patented claims. Unfortunately, over emphasis upon this standard ignores the fact that the scope of certain patent claims are defined by 35 U.S.C. § 112, 6th paragraph, and may not be interpreted in this manner, namely—“means-plus-function” claims.

35 U.S.C. § 112 6th requires:

An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof. (emphasis added)

As further outlined by MPEP 2181-2183, it is impossible to examine a means or step-plus-function claim without considering the structure, material or acts described in the specification; otherwise there is no claimed structure or acts by which to compare any equivalence in the prior art. See MPEP 2183 (C)

In my experience, the USPTO will almost always grant a reexamination request for MPF claims by applying an improper BRI analysis of the recited function alone.  In fact, I have never seen a Request denied for failure to provide the necessary structural mapping between the specification and MPF claims.  This practice encourages accused infringers in parallel litigations to pursue reexamination requests with little to no downside. That is to say, the Request can be devoid of any structural analysis relative to the patent and still be granted.  In this way, the accused infringer maintains all flexibility in the parallel proceeding with respect to arguing structural equivalents (i.e., non-infringement & invalidity).

The USPTO should not accept a Request for Patent Reexamination which would be dismissed as non-compliant if it were part of an Appeal Brief to the BPAI—an appeal brief requires this structural analysis explicitly. (CFR 41.37(c)(1)(vii)). Which makes perfect sense as any reasoned analysis requires analysis of the equivalent structure of the specification.

For this reason, many of these improvidently granted reexaminations ultimately terminate in favor of the Patent Holder, sometimes years later on appeal to the BPAI, where such structure is considered for the first time.

To avoid litigation gamesmanship, and to reduce Patent Holder harassment, it is incumbent upon the USPTO to require that means plus function claims be examined, from the outset, in accordance with the 35 U.S.C. § 112 6th paragraph guidance provided in MPEP § 2181-2183.

Success in Halting Infringement Case Varies Across Courts/Judges

Courts have the inherent power to manage their dockets, including the authority to stay patent infringement litigation pending the conclusion of a Patent Office reexamination. For this reason, patent reexamination parallel to a district court/ITC litigation is often initiated in an attempt to stay the more cost prohibitive court proceeding.

Perceptions as to whether or not a stay is warranted will vary significantly, even though the same analysis is performed by each court. (See factor based analysis here). Attitudes vary across courts (ITC v. EDTX, v NDCA), even amongst judges of the same court.

Thus, a threshold determination for any defendant becomes:

How does Court/Judge X view requests for patent reexamination?…and is there somewhere I can find this information?

Statistics for 2008-2011 are found below for many of the major district courts. (click to enlarge)

Stay_Pending Reexamination

There are many database services that will provide such information, some at a significant cost. This report was easily generated using the Docket Navigator Database, I find this service more cost effective and user friendly than others.

Further Fee Diversion Wrangling Unlikely 

As the saying goes, “almost” only counts in horseshoes and hand grenades. Recent events suggest that patent reform can now be added to the list.

Last week, H.R. 1249 was passed by the House. A copy of the bill, with all amendments, is found (here). A helpful mark-up illustrating the differences between the Senate Bill (S.23) and H.R. 1249 is found here, updated 6/28 to correspond to revised H.R. 1249. (Thanks to Brad Pedersen of Patterson Thuente Christensen & Pedersen for the mark-up).

As discussed last week, typically, the differences between the House Bill and Senate Bill would be reconciled by way of conference in the Senate. Yet, due to the politicizing of the fee diversion proposal of S.23 in the House (i.e., “the Republicans looking to increase government spending”), further tinkering with this proposal would seem risky. Perhaps recognizing that the “almost” compromise of H.R. 1249 is better than nothing in this economically charged political  environment, the USPTO has signaled that 10 years of of patent reform bickering is enough already.

Director Kappos issued the following statement last Friday:

I want to congratulate the House of Representatives for passing the Leahy-Smith America Invents Act  today, and to again thank Judiciary Chairman Smith, Subcommittee Chairman Goodlatte and Ranking Member Watt, as well as the House Leadership, for their stewardship of this critical legislation.

The effort to reform our nation’s patent laws began a decade ago, and House passage today brings patent reform a significant step closer to becoming law. This bi-partisan legislation will transform our patent system, enhance our Nation’s competitiveness and promote economic growth and job creation.

We are encouraged by the statements of so many Members of Congress calling for the USPTO to have full access to all of its fee collections.  We are particularly thankful to Chairman Rogers for his commitment to ensure that the USPTO has full access to its fees when fee collections exceed Congress’ annual appropriation for USPTO.  Full funding of the USPTO is necessary for the USPTO to successfully implement this legislation and to more effectively perform its core mission.

We are hopeful that this critical legislation can move expeditiously toward final passage and enactment.

With hiring and overtime frozen at the USPTO, the Office is being starved of much needed resources to prepare for the new changes proposed in the legislation (not to mention the current workload). When starved, a half a loaf of bread is better than none.