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IP: New weapons in the war against bad patents

New patent reforms in the America Invents Act provide procedures for third parties to attack unfounded claims both before and after issuance of a patent

For more than a decade, the business community has searched for ways to defend against bad patents—those that the Patent Office mistakenly grants (with a presumption of validity) because it is unaware of information or arguments that, if known, would have prevented the patent from issuing. The problem of bad patents is especially pervasive in industries such as financial services, software and information technology, in which much early innovation is not documented in the Patent Office’s search files.

Armed with bad patents, patent owners, including so-called non-practicing entities (NPEs) have built a cottage industry of extracting rich settlements from accused “infringers” wary of the cost and uncertainty of district court litigation. Regardless of merit, those facing infringement allegations might choose to pay NPEs’ significant “nuisance” settlements rather than incur an even greater cost of litigation.

On September 16, however, an array of new, less expensive procedures to fight bad patents became available as part of the ongoing implementation of patent reforms in the America Invents Act (AIA). The AIA provides procedures for third parties to attack unfounded patent claims both before and after issuance of a patent.

Pre-issuance submissions to prevent patents from issuing

A third party can now submit prior art for the Patent Office to consider while a patent application is still pending. The submission must include a concise description of asserted relevance of each document, but must not go so far as to provide proposed rejections.

Pre-issuance submissions present a high-risk, high-reward option. The risk is that any patent issuing after the submission will be difficult to later invalidate in litigation based on the submitted prior art. The reward, however, is that the submission may narrow the scope of any patent or prevent a patent from issuing at all.

Post grant challenges

When fully implemented, the AIA will provide three new post grant procedures for challenging patents: inter partes review, post-grant review and covered business method post-grant review. Each of these procedures is designed to provide a quick, low-cost alternative to litigation. Experienced, technically and legally trained Patent Office professionals, rather than a jury, review the validity of the challenged patent. Moreover, the standard of review at the Patent Office (preponderance of the evidence) is easier to meet than the “clear and convincing” evidence necessary to invalidate a patent in district court.

The inter partes review (IPR” procedure became available on September 16 as a weapon to challenge the validity of patents. The third-party challenger can rely on patents or printed publications as a basis to petition the Patent Office to conduct an inter partes review of whether the invention claimed in a patent is novel and unobvious (as required by 35 USC 102 or 103). The IPR procedure can only be initiated nine months after issuance and can only be filed by a third party who has not previously filed a civil action challenging the validity of the patent. Moreover, a petition for IPR must be filed no more than one year after service of an infringement complaint against the third party, so time is of the essence when deciding whether to file a petition.

The post-grant review (PGR) procedure is complementary to the IPR procedure and will become available on March 16, 2013. A challenger must file a PGR petition  within nine months after issuance of the patent. Significantly, a broader range of challenges may be made in petition for a post-grant review. The PGR petition can be based on 35 USC 101, 102, 103 and 112, with prior art not being limited to patents or printed publications.

Covered business method (CBM) review is a special form of post-grant review limited to “covered business method patents,” meaning that the review can be based on the full range of options a post-grant review provides. Although the PGR procedure is not yet available, the CBM procedure is. However, only a third party that has been sued or charged with infringement can initiate a CBM review.

The new, less expensive procedures now available to fight bad patents provide a much-needed strategic alternative to expensive patent litigation and nuisance settlements. One should consider these new weapons for fighting bad patents when confronted with a patent that appears to have been improvidently granted. Nonetheless, there is no one-size-fits-all strategy for responding to unfounded allegations of patent infringement. You should determine the best strategy for any particular challenge in consultation with your patent counsel.

Contributing Author

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Michael Bednarek

Michael Bednarek is a partner in the Washington, DC office of Axinn, Veltrop & Harkrider LLP and a member of the ITC Trial Lawyers Association....

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Contributing Author

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Walter Davis

Walter Davis practices in the Washington, DC office of Axinn, Veltrop & Harkrider LLP, specializing in intellectual property litigation and advising clients on global patent...

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