Concurrent Post Grant Proceedings with the Same Real Party in Interest

One of the more intriguing aspects of the new patentability trials of the America Invents Act (AIA) is their potential interplay with legacy post grant proceedings such as patent reissue, ex parte and inter partes patent reexamination. In formulating the rules to implement the new AIA proceedings, namely, Inter Partes Review (IPR), Post Grant Review (PGR) and the Covered Business Method (CBM) review, the USPTO did not specifically define how conflicting proceedings would be processed. For example, the first half of 35 U.S.C. § 325(d) explains that the Board may provide for the “stay, transfer, consolidation, or termination” of either of the conflicting proceedings. Exactly how those determinations would be made was explained as a “case-by-case basis.”

The first PTAB proceeding to examine such issues is IPR 2013-00033. In this proceeding, CBS Interactive petitioned for IPR of patent 7,155,241, assigned to Helferich Patent Licensing. The petition challenged several of the patent’s dependent claims. Concurrently, an inter partes patent reexamination (95/001,864) is also pending, challenging all the of independent claims in the patent. The IPR and reexamination did not challenge any of the same claims, but the same real party in interest asserted some of the same grounds of unpatentability with respect to the same prior art.  In examining the potential conflict between the proceedings, the PTAB opted to stay the reexamination proceeding pending termination/completion of the Review, explaining:

The Board will not ordinarily stay a reexamination because, in absence of good cause, reexaminations are conducted with special dispatch. Conducting the reexamination concurrently with the instant proceeding, however, would duplicate efforts within the Office and could potentially result in inconsistencies between the proceedings. Notably, since all of the challenged claims are depended from the reexamination claims directly or indirectly, the Patent Owner could amend the independent claims or other claims in the reexamination which in turn could change the scope of the challenged claims while the Board is conducting its review. Further, the patentability of all of the independent claims would be determined in both the instant proceeding and the reexamination based on the same grounds of unpatentability.

In addition, the Board is required to determine whether to institute an inter partes review within 3 months after receiving a preliminary response from the Patent Owner, or the date on which such a response is due (i.e., January 29, 2013). See 35 U.S.C. § 314(b), as amended by the America Invents Act (AIA). The final determination of any review instituted will normally be issued no later than 1 year from institution. See 35 U.S.C. § 316(a)(11), as amended by AIA, and 37 C.F.R. § 42.100(c). Any Board decision on whether to institute a review or final written decision with respect to the patentability of the challenged claims will likely simplify the issues in the reexamination.

(Order here)

As explained above, this case was especially unique due to the segregation of claims in each proceeding. Co-pending proceedings with the same claims and art should be relatively uncommon if the Board rejects those petitions that are directed to issues previously presented to the Office. In this regard, the second half of 35 U.S.C. § 325(d) provides:

In determining whether to institute or order a proceeding under this chapter, chapter 30, or chapter 31, the Director may take into account whether, and reject the petition or request because,the same or substantially the same prior art or arguments previously were presented to the Office.

As noted above, the CBS case was unique as being directed to different claims, otherwise, the petition for IPR would likely be denied pursuant to the the second half of 325(d).

The Board also noted, perhaps because such situations are not expected to be very commonplace, that the interruption of an ongoing patent reexamination will not be typical. Still, in those rare situations where a same real party in interest (challenger) is found in two conflicting post grant proceedings, even if the Board declines to stay the reexamination, the Patentee may be able to seek the same relief elsewhere within the Office.

For example, although unstated in the the Order, IPR is significantly faster than patent reexamination. Indeed, speed was a significant focus of the AIA’s re-invention of the previous inter partes reexamination proceeding. The speed consideration is important because, as here, where the petitioner in the IPR and reexamination are the same real party in interest, the estoppel of the faster IPR proceeding controls. So, win or lose, the co-pending reexamination would be terminated/vacated as a result of the IPR in a mere 12 months from institution. Assuming the Board did not stay the inter partes reexamination in this instance, the patent owner would have reasonable grounds to petition for suspension of the reexamination pending the relatively imminent estoppel result. MPEP 2684.04; Sony Computer Entertainment America Inc. v. Dudas 85 USPQ2d 1594 (E.D. VA 2006). Of course, this petition would not be decided by the Board, but instead, by the Office of Patent Legal Administration (OPLA) Clearly, once a co-pending IPR is ordered, a patent owner faced with fighting the same battle in reexamination, from a same requester, will seemingly be faced with an extraordinary circumstance consistent with 37 C.F.R. § 1.183. And, it would seem the USPTO has better use of their patent reexamination resources.

(Note: There is no petition option for a co-pending ex parte proceeding. This is because there is no such statutory authority to suspend an ex parte patent reexamination. Ethicon Inc., v. Quigg 849 F.2d 1422).

USPTO Reports Early Popularity….But Will it Last?

The America Invents Act (AIA) provides patent challengers with the most robust mechanisms ever offerred to challenge a U.S. patent at the USPTO. Yet, these challenges come at significant cost. A far lesser known provision of the AIA permits challengers to submit prior art materials to the USPTO before the patent even issues…in some cases, anonymously, and for free.

As of September 16th, for any pending application, 37 C.F.R. § 1.290 provides that a third party may submit written prior art, together with an explanation of relevance, to the USPTO. The submission must contain (1) a concise description of relevance, in some cases, a $180 fee, and (2) a statement affirming compliance with the necessary statute (35 U.S.C. 122). As to timing, the submission must be filed before a notice of allowance, or if not allowed, before six months after publication or rejection of any claim, whichever is later. Thereafter, the examiner should consider the submitted art in the usual manner.

In essence, Rule 290 is designed to improve and replace the old Rule, 37 C.F.R. § 1.99 submissions. Rule 290 provides a larger submission window, and, perhaps more importantly, an explanation of relevance is permitted. When considering that a party’s first submission is free, and may be filed anonymously, the option appears quite attractive. However, early adopters of this new mechanism may find that, as always, “you get what you pay for.”   First, the USPTO reported yesterday that there has been an influx of third party submissions in the weeks since September 16th. As shown in the chart below, the biotechnology, semiconductor and business method art units have received many of the initial submissions, which seem to include a large portion of Non-Patent Literature (NPL). (click to enlarge)preissuance1

As can be seen from the report, a significant number of submissions are improper for one reason or another, which could be an indication that many of the filers are pro se, submitted by public interests groups, or those otherwise unfamiliar with USPTO rules and practices.

In my view, it is unlikely that Rule 290 will be embraced by larger entities in any significant regard. This is because such filings are likely to be, as in the case of ex parte patent reexamination, favorable to patentees due to the “one-sided discussion” that occurs in an ex parte proceeding.  Likewise, while the USPTO has many highly skilled examiners, there are some that will be unfamiliar with the new procedure, or that will treat such submissions inconsistently. The danger here would be that the best prior art would be essentially laundered by an inattentive examiner, foreclosing more robust, post issuance challenges on the same issues.

Nevertheless, in some limited situations a Rule 290 filing may provide a low cost opportunity to challenge a patent before it issues and becomes a problem to your business.  Your mileage may vary.

Terminal Disclaimer Permanent Once Patent Issues

Back in January of 2011 I discussed the appeal decision in Ex parte Shunpei Yamazaki relative to patent reissue practice. In Yamazaki, a reissue patent application was filed shortly after issuance of U.S. Patent 6,180,991 for the purpose of withdrawing an earlier filed terminal disclaimer.

By way of background, the ‘991 patent issued on January 30, 2001 (based upon an application filed April 21, 1995). During the original prosecution, a terminal disclaimer was filed (November of 1996) to overcome a double patenting rejection. Thereafter, the claims subject to the earlier double patenting rejections were amended. Since the amended claims were believed to be distinct from those of the earlier patent, the Applicant petitioned to withdraw the earlier filed terminal disclaimer (April 1999). The petition remained pending for some 20+ months at the USPTO, but, the patent issued prior to any USPTO action on the petition filing. The petition was ultimately dismissed as moot once the ‘991 Patent issued.

Adding insult to injury, the USPTO explained in their belated petition decision that a terminal disclaimer could not be removed once a patent issues as patent reissue did not contemplate such mistakes as “error” under the reissue statute. In other words, even though the patent holder had disclaimed some 14 years of patent term by mistake, there was no mechanism to cure that mistake post issuance. Nevertheless, the Patentee filed a patent reissue application in an attempt to withdraw the terminal disclaimer.

In deciding the propriety of a patent reissue proceeding to remove a terminal disclaimer, an expanded panel of the BPAI (now PTAB) held that patent reissue could not reset the term of the original patent (which was set by the disclaimer). Interestingly, the BPAI decision also included concurring opinions that would have held differently had the patent not expired prior to completion of the reissue proceeding (December 2003).

Last week, the CAFC affirmed the USPTO, and made clear that patent reissue cannot withdraw a terminal disclaimer, even if the reissue proceeding were capable of concluding prior to expiration.

In their decision the CAFC explained (here):

[W]e recognize that the reissue statute “is remedial in nature, based on fundamental principles of equity and fairness, and should be construed liberally.”In re Weiler, 790 F.2d 1576, 1579 (Fed. Cir. 1986). Yet “the remedial function of the statute is not without limits.” In re Serenkin, 479 F.3d 1359, 1362 (Fed. Cir. 2007). In this case, the various delays Yamazaki experienced in prosecuting his reissue application, while puzzling and undeniably unfortunate, had no effect on the eventual outcome because, as discussed, § 251 precluded the PTO from allowing the Reissue Application at any point during its pendency. Cf. In re Orita, 550 F.2d 1277, 1280–81 (CCPA 1977) (rejecting a reissue application as seeking a correction that would have offended statutory requirements).

In footnote 3 of the opinion, the CAFC emphasizes the significant delays in both the patent reissue proceeding and original prosecution of this case. Unfortunately, patent reissue, while an important post grant tool for patentees, is still plagued to this day by unacceptable delays and maddening inefficiency.

USPTO Seeks Input to Address Growing RCE Inventory

Request for Continued Examination (RCE) filings are largely a creature of pre-grant, patent application prosecution (patent reissue being the lone exception on the post grant side). Recently, the backlog of RCE filings has increased significantly. This is largely the result of the Office switching the priority of such filings on examiner dockets coupled with the recent initiative to reduce the backlog of unexamined patent applications. 

In yesterday’s Federal Register, the USPTO issued a public request for information on RCE (Request for Continued Examination) filing behaviors during patent procecution (here). The “RCE outreach” is a further effort of the Office to cut down on filings that are viewed as distracting examiners from the existing backlog of unexamined applications. The growing RCE backlog is best illustrated in the USPTO’s presentation explaining the problem (here)

The Outreach Notice poses the following questions:

(1) If within your practice you file a higher or lower number of RCEs for certain clients or areas of technology as compared to others, what factor(s) can you identify for the difference in filings?

(2) What change(s), if any, in Office procedure(s) or regulation(s) would reduce your need to file RCEs?

(3) What effect(s), if any, does the Office’s interview practice have on your decision to file an RCE?

(4) If, on average, interviews with examiners lead you to file fewer RCEs, at what point during prosecution do interviews most regularly produce this effect?

(5) What actions could be taken by either the Office or applicants to reduce the need to file evidence (not including an IDS) after a final rejection?

(6) When considering how to respond to a final rejection, what factor(s) cause you to favor the filing of an RCE?

(7) When considering how to respond to a final rejection, what factor(s) cause you to favor the filing of an amendment after final (37 CFR 1.116)?

(8) Was your after final practice impacted by the Office’s change to the order of examination of RCEs in November 2009? If so, how?

(9) How does client preference drive your decision to file an RCE or other response after final?

(10) What strategy/strategies do you employ to avoid RCEs?

(11) Do you have other reasons for filing an RCE that you would like to share?

Repeal of 325(f) May Have Unintended Consequences

As discussed earlier this week the House is currently considering H.R. 6621, which proposes some technical corrections to the America Invents Act. One of the stated goals of the technical bill is to eliminate the 9 month dead zone that now applies to newly issued, first to invent patents relative to the availability of Inter Partes Review (IPR). This technical change is proposed in Section 1(d)(1) of the bill.

As a reminder, patents issuing today are not eligible for IPR until 9 months has elapsed from the time of issuance. This is because the first 9 month window after patent issuance is reserved for Post Grant Review (PGR) challenges; yet PGR is not a possibility for such first-to-invent patents. (first-inventor-to-file applications, which are eligible for PGR, will not even be accepted by the PTO until March 16, 2013)

The bill also proposes, in Section 1(d)(2) to address another perceived dead zone that is particular to reissued patents. But, correction of this perceived dead zone, in the manner proposed, may have unintended consequences.

As enacted, the AIA permits PGR for those patent reissue filings that are “broadening” with respect to the originally issued patent. (See 35 U.S.C. § 321(c) in view of 325(f)). So, theoretically speaking,  a broadened reissue patent is eligible for PGR twice. Once during the first 9 months of issuance, and then again, 9 months after the patents is broadened via patent reissue. When you think about it, this makes sense as a broadening of the original claims of the patent may result in liability for a new group of potential infringers. On the other hand, 325(f) prohibits a second window for those patents that are reissued with identical, or narrowed claims. (assuming the first 9 month window has expired, which is a practical certainty).

The current concern with 325(f) is that the narrowing reissue patent would not only be ineligible for PGR under 325(f), but is also immune to IPR for 9 months for reissuance (i.e., dead zone). To remedy this perceived technical fault with the AIA, the Bill proposes to repeal 325(f).

While repeal of 325(f) will address the dead zone it will also create a second PGR window for a patent with claims that are unchanged, or narrrowed long after the close of the first 9 month PGR window.

In essence, repeal of 325(f) ensures that all —not just reissues with broader claims— will be subject to two separate PGR windows. There does not appear to be any compelling policy reason to subject a patent that has been narrowed to such additional scrutiny. If 325(f) is repealed, there would be a significant disincentive to correct high value patents via patent reissue. This would be especially pronounced in the Bio/Pharma area, where PGR challenges are more of a concern.  A more sensible solution would be to simply amend 325(f) or 311(c) to exclude narrowing reissues from the 9 month delay period while maintaining the prohibition of 325(f).   

Straight Forward Changes Expected to Pass Quickly

AIA technical amendmentAs discussed last month, Congress will be considering a technical amendment to the AIA before Christmas. Congressman Lamar Smith (R-Tx) proposed this bill (H.R. 6621 here) to the House last Friday, passage of which seems very likely in the near term.

The proposed technical changes relating to post grant patent practice are as follows:

1. Eliminate the 9 month dead zone that now applies to newly issued, first to invent patents relative to the availability of Inter Partes Review (IPR). As a reminder, patents issuing today, are not eligible for IPR until 9 months has passed, despite the fact that PGR is not a possibility for such first-to-invent patents.

2. Repeal 35 U.S.C. 35 U.S.C. 325(f), which prohibited Post Grant Review (PGR) for “narrowing” reissue patents that issue after the 9 month window of the original patent issuance. (which, practically speaking, would be all of them anyway). The idea here is that 325(f) creates another type of dead zone for narrowing reissue (i.e., existing 325(f) creates a 9 month period where neither PGR nor IPR would be possible after reissue of the patent).

3. Correct some scrivener errors in the Transitional Program for Covered Business Method Patents.

4. Adjust the derivation and interference rules (e.g., provide for court review of interference proceedings after September 15, 2012).

Not surprisingly, the draft bill avoids some of the thornier issues, such as the significant estoppel of Post Grant Review (PGR). While a change to this standard is necessary, in my opinion, the controversy surrounding such a proposal would likely kill any chance of the bill passing this year. Some other post grant fixes may still be added, of course, H.R. 6621 is just a starting point and amendments may be proposed along the way. Stay tuned.

AIA Creates Dilemna for USPTO on Patent Ownership

This past Monday, the USPTO issued a Notice in the Federal Register entitled Notice of Roundtable on Proposed Requirements for Recordation of Real-Party-in-Interest Information Throughout Application Pendency and Patent Term (here).

In a nutshell, the agency is currently struggling to promulgate regulations to unravel the complex business relationships behind many patent assignments (i.e., real-party-in-interest). For example, some large patent aggregators may create subsidiaries or exclusive licensee arrangements that are not captured in current assignment records of the USPTO. Yet, the new prior art defintions of the AIA demand transparency in this regard. Generally, the USPTO lays out some policy arguments for increased real-party-in-interest information (RPI). First, the Notice explains that as patents are increasingly valued as intangible assets that industry/financial markets should have the most up to date information on ownership to navigate the competitive landscape, produce competitive products, facilitate investment etc. Second, the Notice explains that more complete information is required to ensure that Power of Attorney filings are confirmed as up-to-date, and USPTO officials may recuse themselves as necessary.

Yet, perhaps the most compelling rationale for the proposed Roundtable discussion and rule making effort is the AIA change to the definition of prior art. For example, 35 U.S.C. § 102(b)(2)(c) exempts as prior art those patent applications or issued patents that name different inventors where ‘‘the subject matter disclosed and the claimed invention, not later than the effective filing date of the claimed invention, were owned by the same person or subject to an obligation of assignment to the same person” (emphasis added)

The Notice explains that:

[U]nder new section 102(b)(2)(C), there may be an opportunity—in the period before the filing of the second application—for ownership to change in a way that affects whether the earlier patent or patent application is prior art for purposes of section 102(b). As a result, tracking ownership information for patent applications and issued patents is directly relevant to questions of novelty during prosecution and to mechanisms for challenging patents post-issuance.

During the Roundtable, the USPTO will discuss separate proposals for defining the necessary RPI to be submitted by owners:

1. Those parties having the legal right to enforce the patent (all necessary parties).

2. “Ultimate Parent Entity” (defined as an entity not controlled by another) not as broad as option 1.

The USPTO is proposing the collection of this information upon filing of an application, prior to publication, prior to issuance, and at the time of each maintenance fee payment. These new controls are designed to apply to applications filed on or after March 16, 2013.

The Roundtable is schedule for January 25, 2013.  Requests for participation must be submitted to the USPTO by December 21, 2012.

Director Announces January 2013 Departure

In an email to USPTO staff Director Kappos announced he will depart the agency in January. Director Kappos’ tenure is widely recognized as the “golden age” of USPTO leadership having successfull implemented the massive changes brought about by the America Invents Act, as well as modernizing and updating agency practices. He will be missed.

Early 2013 CLE Programs Announced

With 2013 on the horizon, it is time to look forward to a fresh crop of CLE programs directed to the new post grant proceedings of the Patent Trial & Appeal Board (PTAB).

Starting off in January is the 8th Annual Patent Law Institute at the USPTO Alexandria campus. The yearly program, a joint effort of the USPTO, George Mason School of Law, and the University of Texas, is always a huge draw due to the significant participation of USPTO personnel.

Looking forward into the early months of 2013, the Practicing Law Institute’s USPTO Post Grant Trials- 2013is now in it’s 4th year. I will be chairing the program once again, together with Rob Sterne of Sterne Kessler Goldstein and Fox. This year’s program will coincide with the release of the new treatise entitled Post Grant Proceedings Before the Patent Trial & Appeal Board. This years stops include:

See you there.

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.