The America Invents Act, signed by President Obama on Sept.16, significantly altered the landscape of patent enforcement for businesses and inventors. In an effort to streamline the patent dispute process, the bill provides incentives designed to make it more desirable to keep challenges within the U.S. Patent and Trademark Office. These incentives limit, but don’t remove, what have been perceived as abuses that needlessly exacerbated the time and expense of litigation.
So, in essence, this means that patent owners and challengers have more strategic options for patent reviews throughout the life of a patent.
Under this new regime, the Patent Office will no longer conduct inter partes “reexamination,” which is currently used in many of the most hotly contested patent cases. Instead, two new post-grant challenges, called “inter partes review” and “post-grant review,” will be available. These new proceedings are similar, but post-grant review expands the type of defects in a patent that can be challenged, but only if raised within nine months of issuance. These new proceedings promise to resolve questions of validity of a patent at least a year faster than current inter partes “reexamination”—and, more importantly, faster than a typical patent case moves through the courts.
As a result, whenever challenging patents for reasons that are likely to be better understood by skilled patent judges within the Patent Office than a judge or jury in district court, these proceedings will provide an attractive option. Congress is even providing additional incentives to use them. For example, these proceedings can be settled privately, making it more possible to arrive at win-win business solutions to patent disputes.
Businesses willing to monitor competitive patent activity can use settlements, coupled with the new ability to challenge threatening patents, for almost any reason as a new tool for managing risk. The ability to settle makes these proceedings more like “oppositions,” that are frequently used in other countries for retiring—or at least clarifying—risks from patents before an active dispute arises.
This ability to manage risk is enhanced by a change in the threshold requirement for initiating post-grant review in combination with an expanded ability to provide prior art to an examiner, even before a competitive patent is issued. The changed threshold removes the requirement for a post-grant challenge to raise a “new” question and, instead, allows prior art that an examiner considered but perhaps misunderstood to be a basis for a post-grant challenge. There is now more upside, and less downside, to providing prior art to an examiner that may block issuance of an overly broad competitive patent.
Of course, wasteful litigation tactics in hotly contested patent cases are not the sole province of patent owners. Congress also has targeted the tactic of defending a charge of infringement by alleging “inequitable conduct” by the patent holder. Now, “supplemental examination” will be available in which the Patent Office will consider possible defects—if proactively disclosed by the patent owner. If the defect does not affect the validity of the patent, the Patent Office will issue a certificate to that effect. If there is a question about the validity of a patent, the Patent Office will order reexamination to resolve the question.
In either event, once disclosed, the defect cannot be used as a basis for rendering a patent unenforceable for “inequitable conduct.” However, these new proceedings are not without caveats, including the possibility of estoppel arising from a post-grant challenge. Expedited timetable and rules of practice for contested matters in the Patent Office can pose risks for lawyers who cavalierly participate in these proceedings without fully understanding their specialized nature. Nonetheless, patent holders and challengers would do well to consider how to use these new procedures to their advantage as they come into effect.