Today marks the beginning of a period in which USPTO inter partes post-grant opposition proceedings will gradually disappear for many important US patents.
Patents issuing after December 16, 2011 will be subject to challenge under the new inter partes review provisions, but will also be subject to the 9-month delay period imposed by § 311(c)(1). For example, patents issuing next Tuesday (December 20) will not be subject to inter partes review in a period extending from September 16, 2012 until September 20, 2012. The 9-month postponement of inter partes review will apply to all patents subject to the new Act, and no review will be possible of patents issuing on the effective date (September 16, 2012) until June 17, 2013.
The Act further provides in § 6(c) that current inter partes reexamination will cease on September 16, 2012. The consequence of this provision is that beginning on the effective date, there will be a 9-month hiatus in which neither form of inter partes review will be available for newly-issued patents, extending until June 17, 2013.
Furthermore, the Act not merely delays, but actually eliminates any possibility of post-grant opposition for many of the most important patents, which are involved in litigation. USPTO statistics indicate that 258 requests for inter-partes reexamination were filed in 2009. Of all inter partes reexaminations, the Office estimates that 71% are involved in litigation (for all years). For comparison, in 2009 there were 2295 dispositions of patent cases by district courts, of which 11% were finally adjudicated, 48% were settled, and 41% were dismissed. Although the number of district court patent cases in which inter-partes reexamination has been invoked is imprecise, it is reasonable to conclude they have been a factor in about 10% of district court patent infringement cases which were settled or finally adjudicated. Based on partial-year USPTO statistics, it seems likely that over 500 inter partes reexamination requests will be filed in 2011. These are clearly among the most important US patents, and the number of inter partes reexaminations is increasing.
For most patents involved in current litigation, inter partes review is categorically excluded by the Act. Section 315(b) provides that an inter partes review may not be instituted if the petition requesting the proceeding is filed more than one year after the date on which the petitioner is served with a complaint alleging infringement of the patent. No petition for inter partes review can be filed before the effective date, and any petition relating to a patent in ongoing litigation in which the petitioner was served with a complaint before September 16, 2011 is thus barred. For patents involved in current litigation, the defendants may lose any opportunity for USPTO inter partes post-grant opposition, including current inter partes reexamination, on the effective date.
For these reasons, it is critical for defendants in recently-filed patent infringement suits to determine whether they will seek inter-partes reexamination before September 16, 2012, to avoid the complete loss of USPTO invalidity challenges as an alternative to decision by the district court. Quite evidently, preparation for inter partes reexamination must begin well before that date.
The window for filing a petition for inter-partes review is considerably narrowed for patents involved in future litigation, to as little as 3 months if the patentee files an infringement action and serves the complaint on the day a patent issues. A petition can only be filed after 9 months have elapsed, and is barred in one year. Furthermore, if a post-grant review is instituted during the 9-month period, the 9-month deadline for seeking inter partes review is automatically extended under § 311(c)(2). In many if not most infringement cases, inter partes review will be extinguished for a defendant if another party successfully seeks post-grant review. There are certainly interesting possibilities for leveraging in these circumstances.
The new post-grant review provisions have an effective date of September 16, 2012, under uncodified § 6(f)(2), subject to a most important proviso that they shall apply only to patents described in § 3(n)(1). That section states that the amendments only apply to patents that contain a claim having an effective filing date on or after March 16, 2013. Post-grant review will therefore only be available to challenge patents that issue from applications filed on or after that date, which will gradually end the eclipse of inter partes oppositions.
This limitation on post-grant review has led to a general view that a “dead zone” of inactivity imposed during prosecution of applications filed on or after the effective date will postpone the use of post-grant review for a number of years. In my view, this is a statistical fallacy.
It seems likely that post-grant review will initially be confined to a relatively small number of patents that are either involved in or expected to result in litigation, based on experience with inter partes reexamination. The USPTO is currently issuing patents in as little as one month from the date of filing an application, through accelerated examination procedures, and is likely to sharply reduce the pendency of applications in prioritized examination under 35 USC § 2(b)(2)(G). The patents involved in expedited prosecution are by definition sufficiently important to justify considerable additional costs, such as a $4800 filing fee under Act § 11(h), and are thus more likely to be subject to post-grant review challenge.
Contrary to the expectation that post-grant review will languish in a “dead zone” for years, the new opposition procedure may come suddenly to life with respect to a new class of submarine patents, which issue from accelerated examination prior to publication of the applications. One clear advantage to patent owners of the accelerated examination procedures is that a potential opponent will not have time to prepare a detailed post-grant review petition and evidence including fact and expert declarations, as prosecution proceeds after publication of an important application. If a patentee who surfaces with such a patent immediately files suit, it also limits the likelihood of later inter partes review.
These conclusions are at best speculative until the USPTO issues final regulations implementing the post-grant opposition and expedited examination procedures. It is nonetheless prudent for current or potential infringement litigation defendants to review any post-grant opposition strategy immediately, to avoid possible foreclosure.
A critical factor in the decision to initiate a post-grant review or inter partes review proceeding in the USPTO will be the estoppel consequences of a decision confirming the patentability of challenged claims. Following the general model of current inter partes reexamination, both new statutes provide that if a “final written decision” is issued by the USPTO, the petitioner may not assert in a patent action in district court or the ITC that the claim is invalid “on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” §§ 315, 325.
The scope of estoppel in post-grant oppositions
The scope of estoppel resulting from an unsuccessful opposition will differ in inter partes review and post-grant review, because of the vastly different grounds of invalidity that can be asserted by a challenger. Inter partes review can be based “only on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.” A petitioner should not be estopped from asserting invalidity in district court litigation on any other ground, including anticipation based on prior use or sale, or other statutory defenses. However, if the petitioner unsuccessfully asserts that a claim is anticipated by a published reference, the resulting estoppel would extend, for example, to obviousness in view of any other published reference, provided that the additional reference could reasonably have been raised during inter partes review.
In sharp contrast, post-grant review may assert “any ground that could be raised under paragraph (2) or (3) of section 282(b) (relating to invalidity of the patent or any claim).” In post-grant review, the opposer may maintain that a claim is invalid for lack of novelty on the basis of public use or sale, for obviousness, for lack of written description or enablement, lack of utility, or patent-ineligible subject matter. The breadth of subject matter that can be raised in post-grant review dictates a similarly broad scope of estoppel, which in many cases could result in forfeiture of most if not all potential litigation defenses, if the petitioner is unsuccessful on any of these grounds raised in the opposition. A notable exception is unenforceability of the patent, including inequitable conduct, which is not a ground that could be raised under the specified paragraphs of § 282(b).
These potentially severe consequences of an unsuccessful post-grant opposition are mitigated by two important factors. Estoppel results only from review that “results in a final written decision” of the Board, and most significantly, in distinction to current inter partes reexamination, an opposition will not necessarily result in a final USPTO decision. Instead, the parties to an opposition have the power to terminate the proceeding by a settlement agreement, and the statutes provide that if a settlement is reached, “no estoppel shall attach” on the basis of the institution of the opposition. §§ 317, 327. Interferences frequently end in settlement agreements that effectively share the market in the patented invention between the parties, and a serious patentability challenge that can be withdrawn by settlement provides significant leverage in negotiating a license.
When does estoppel arise? –the Federal Circuit’s decision in Bettcher v. Bunzl
Even if the Patent Trial and Appeal Board issues a final written decision confirming the patentability of challenged claims, a critical issue remains—when does the estoppel arise? If an adverse USPTO decision is appealed to the Federal Circuit during the course of concurrent district court litigation, is the defendant estopped from asserting other defenses that could have been raised in the opposition, when the appeal is pending?
This extremely important question was recently addressed by the Federal Circuit in the context of inter partes reexamination in
Bettcher v. Bunzl. After Bettcher filed suit, Bunzl requested inter partes reexamination and during the course of litigation, the examiner declined to find the claims unpatentable and issued a Right of Appeal Notice. The district court considered that the examiner had issued a “final determination” in the reexamination proceedings, and precluded Bunzl from relying on certain prior art references. Bunzl maintained that the reexamination decision was not “final” until the Federal Circuit decided the appeal from the USPTO action, and that no estoppel resulted in the copending district court action.
Considering this question of first impression, the Federal Circuit concluded that the estoppel provision of section 315 is triggered “not when examination is completed but only after all appeal rights have been exhausted.” This required the court to decide the meaning of “finally determined” in § 315(c) in the context of the statute, the related regulations and the legislative history. This estoppel provision states that an inter partes reexamination requester “is estopped from asserting at a later time, in any civil [patent] action, the invalidity of any claim finally determined to be valid and patentable, on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.”
Relying principally on the right of both parties to appeal the decision of the examiner or the Board, the court considered that “this implies that estoppel requires exhaustion of all appeal rights, including appeals to this court.” It thus concluded that § 316 “defines a determination of patentability to occur only after all appeals have terminated” and a reexamination certificate is issued. The Federal Circuit accordingly vacated the denial of Bunzl’s motion for a new trial on invalidity based on the excluded references, and remanded the case to the district court.
As illustrated by Bettcher, a defendant will not necessarily be estopped from raising additional defenses in an infringement action after an adverse USPTO decision in inter partes reexamination, until the Federal Circuit finally resolves the questions of patentability raised in that post-grant proceeding. If the defendant proves that the asserted claims are invalid on a ground that was not raised in the USPTO, prior to the issuance of a reexamination certificate, it appears that the claims could properly be held invalid by the district court in the absence of estoppel.
Whether the same reasoning will be applied to estoppel resulting from a Board decision in inter partes review or post grant review is not certain, but the 2011 Act similarly refers to a “final written decision” issued by the Board as the basis for a certificate issued by the USPTO when the time for appeal has expired or any appeal has terminated. §§ 318, 328. It would be anomalous to conclude that an immediate estoppel arises from the “final” decision of the Board in the new post-grant oppositions, prior to the ultimate resolution of the issue by the Federal Circuit.
Based on the court’s reasoning in Bettcher, the possibility of estoppel from an unsuccessful opposition challenge during concurrent litigation may not present an insurmountable obstacle to the assertion of additional defenses, even if those defenses could reasonably have been raised in post-grant review. This possibility will affect not just the decision whether to challenge claims in the USPTO during litigation, but also the timing of a post-grant opposition and the specific grounds of invalidity that are raised in each proceeding.