IP: Options for contesting patentability at the USPTO

To challenge or not to challenge, that is the question

It has been roughly two months since the new inter partes review (IPR) and covered business method patent review (CBM) proceedings became available at the U.S. Patent and Trademark Office (USPTO), and some long-awaited questions are beginning to be answered. Leading up to enactment of the America Invents Act, stakeholders questioned whether anyone would actually make use of the new avenues for challenging patents. The answer is “yes.” To date, 43 IPR petitions and 13 CBM petitions have been filed. While CBM petitions can be filed only for patents involving financial products or services (excluding “technological inventions”), petitions for IPR can be—and have been—filed in all technology sectors.

Several features of the new proceedings make them an attractive alternative, or supplement, to challenging patents in district court. First, the short time-frame until resolution of the proceedings at the USPTO. The new proceedings typically will be resolved within about 18 months from the filing of the petition. Additionally, the lack of a presumption of validity and the lower preponderance-of-the-evidence standard at the USPTO, rather than the district court's clear-and-convincing-evidence standard, help level the playing field for the challenger. And, since the review proceedings are adjudicated by technically-trained judges, who are well-versed in patent law, the challenger can readily focus the dispute on the core patentability issues. Given these features of the new review proceedings, potential petitioners may find that IPR and CBM are effective mechanisms for nullifying patents, even if the petitioner has been sued for infringement of the patent.

Indeed, of the 43 IPR petitions filed, 35 of the named patents are also involved in concurrent litigation. And of the 13 petitions for CBM, all of the named patents are also involved in concurrent litigation. The high percentage of patents involved in CBM and concurrent litigation is expected because petitions for CBM can be filed only if the petitioner, its real party in interest or a privy of the petitioner has been sued for patent infringement or has been “charged with infringement” of the challenged patent.

But, the high percentage of patents involved in IPRs and concurrent litigation is striking, given Congress’s goal that the review proceedings serve as a lower-cost alternative to litigation. To the contrary, IPRs are proving to be a desirable supplement to litigation. In at least one of the IPR proceedings, the IPR petitioner is not a party to the concurrent litigation. That petitioner is a generic pharmaceutical company, seeking to nullify a patent on which it likely would be sued were it to attempt to bring a generic drug to market. Petitioning for IPR may provide an attractive means for nullifying patents in such circumstances and in other instances where the patent presents an obstacle to a party’s freedom to operate. It is worth bearing in mind that a petitioner is barred from filing a petition for IPR if it has already filed a civil action challenging validity of the patent. Notwithstanding such a bar, a patent owner who chooses to enforce a patent should ensure that the possibility of an IPR or CBM is part of its calculus.

Some potential challengers hesitate to file a petition for review because of the estoppel provisions associated with each challenge. But, it is arguable that the estoppel provision in IPR is illusory. Given the lower standards for adjudicating patentability at the USPTO than for adjudicating validity in court, and given that the USPTO will institute an IPR only once it has determined that the petitioner is reasonably likely to prevail, one must ask whether a petitioner who fails at the USPTO really would have fared any better in district court. Some would-be challengers express concern that the limited discovery available before the USPTO—mostly limited to depositions of declarants—is inadequate to fully adjudicate patentability issues. But others question whether such discovery is really needed for arguments based on anticipation or obviousness. Additionally, petitioners would not be estopped from later litigating issues of enablement, written description, prior public use, etc. that are off-limits in an IPR proceeding. And losing petitioners in a CBM proceeding are estopped only with respect to arguments they actually raised.

Determining whether to challenge a patent before the USPTO and selecting the best option for doing so will depend heavily on the particular facts at hand. As the petitions for the new proceedings closely resemble requests for reexamination, and the rules for such new proceedings share many features with the rules for interferences and the proceedings are adjudicated by Patent Trial and Appeal Board (formerly named the Board of Patent Appeals and Interferences), practitioners with experience in these legal practice areas will bring significant knowledge to such decision-making processes. 

Contributing Author

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Eldora Ellison

Eldora L. Ellison, Ph.D. (eellison@skgf.com) is a director at Washington, DC-based intellectual property law firm Sterne, Kessler, Goldstein & Fox P.L.L.C. who holds significant...

Additional Contributors: Deborah Sterling

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