The post-grant opposition proceedings created by the America Invents Act, used in parallel with litigation under the Hatch-Waxman Act, will alter the timetable that has favored branded manufacturers, and can preserve the first ¶ IV filer’s right to 180-day market exclusivity without the necessity of a district court adjudication of invalidity or noninfringement.
Generic drug makers who file ANDAs are required to make a certification with respect to each patent listed in the Orange Book by the NDA holder that allegedly covers the approved drug. The generic may maintain under ¶ IV that the listed patent is invalid, unenforceable, or not infringed by the proposed generic drug described in the ANDA. An ANDA applicant who is first to file a ¶ IV challenge obtains 180-day market exclusivity, if it successfully maintains the ¶ IV. Alternatively, a certification under ¶ III states that the proposed generic drug will not be commercially marketed until the expiration of a listed patent.
If the generic applicant serves a ¶ IV statement, the patent owner has 45 days to file suit for infringement, and obtain an automatic 30-month stay of FDA approval. At the expiration of the 30-month period, the FDA can approve the ANDA without further delay. If the district court enters judgment in favor of the ANDA applicant within the 30-month stay period, the FDA may approve the ANDA immediately.
A number of statutory limitations restrict generics’ ability to challenge patents owned by branded manufacturers. An ANDA cannot be filed until four years after approval of a new drug by the FDA, and if a ¶ IV certification results in an infringement action, issues of invalidity generally cannot be resolved prior to summary judgment, after pretrial discovery is completed. The patent owner may forgo suit, and in this case the generic can seek a declaratory judgment of invalidity or noninfringement, subject to establishing an actual case or controversy, which is not certain, except for the likelihood of an appeal on jurisdictional issues. Even if the ANDA applicant establishes in district court that the asserted claims are invalid or not infringed, and launches the ANDA product at risk, the chance remains that the Federal Circuit will reverse the district court judgment.
As a result, an ANDA applicant who files a ¶ IV certification is generally faced with a 30-month delay of FDA approval, and frequently a still longer delay in obtaining a final judgment of invalidity or noninfringement.
The post-grant opposition proceedings created by the America Invents Act will alter the timetable that has favored branded manufacturers by delaying challenges by ANDA applicants to patents listed in the Orange Book, and by staying FDA approval after infringement litigation is commenced.
Most significantly, an ANDA applicant will be able to file a petition for inter partes review at any time after nine months from the date a patent issues, under § 311(c)(1). Where the basis of invalidity asserted in a paragraph IV notice is anticipation or obviousness based on prior art publications, the ANDA applicant can launch a preemptive attack on validity before filing an ANDA, and obtain a final USPTO decision that is normally expected within one year of instituting inter partes review. If a follow-on patent is granted to the branded manufacturer, an ANDA applicant can seek post-grant review immediately, without waiting for the patent to be listed in the Orange Book, under § 321(c). An ANDA applicant can also challenge blocking patents that are not listed in the Orange Book, but that could later be asserted against commercial products.
Timing of the opposition will be a critical factor in the parallel opposition strategy. The USPTO will issue regulations establishing the time period for a patentee to respond to a petition for post-grant review, and the deadline for a USPTO decision on the petition. An ANDA applicant who contemplates filing a ¶ IV certification will be able to raise many, but not all, potential defenses in a post-grant proceeding before filing the ANDA. For example, if the USPTO is required to decide whether to institute an opposition within 5 months after a petition is filed, the ANDA applicant can file its request with the USPTO and obtain an initial administrative determination on issues of patentability (i.e., by the decision to institute the opposition) just prior to the 4-year ANDA filing date. A final determination of invalidity, including a decision by the Federal Circuit, could reasonably be expected within the 30-month stay period.
It will often be to the ANDA applicant’s advantage to pursue an opposition that will not be finally decided until after the filing of an ANDA, with respect to Orange Book listed patents, in order to qualify for 180-day exclusivity. In this event, the ANDA applicant will also be required to file a certification with respect to each patent listed in the Orange Book, and a ¶ IV filing is likely to lead to an infringement action and an initial 30-month stay of FDA approval. The USPTO opposition would be a concurrent, parallel action raising at least some of the same defenses that are presented in the infringement action. As shown in the chart, an opposition could be timed to obtain a final USPTO decision prior to filing an ANDA, with an appeal to the Federal Circuit providing the opponent with an opportunity to secure a final judicial decision early in litigation.
One restriction on the use of inter partes review, as indicated in the chart, is that a petition cannot be filed more than one year after the petitioner is served with an infringement complaint under § 315(b), imposing a litigation time bar to inter partes review.
If the USPTO final decision holds that all challenged claims are invalid, they will be canceled from the patent under § 318(b) (inter partes review) or § 328(b) (post-grant review). If no patent claims survive the opposition, there will be no claims for the district court to adjudicate, and the ANDA applicant will have “successfully maintained” its ¶ IV challenge when the court dismisses the infringement action.
Post-grant oppositions will be front-loaded, and will often require testimony from fact and expert witnesses in support of the initial petition. The schedule for USPTO decision will be rapid and unrelenting, with few opportunities to correct errors for either party. The advantage of obtaining an initial administrative determination of likely invalidity, prior to filing a ¶ IV certification, will often justify the initial costs of preparing a petition for post-grant opposition.
The decision to pursue a USPTO opposition should be based on a thorough evaluation of prior art and other defenses, because the opponent will forfeit any other defense that is either actually raised, or could have been raised in the opposition, under the estoppel that is imposed in both inter partes review and post-grant review.
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.
The America Invents Act provides that current § 102(g) continues to apply to each claim of a patent or application that contains a specific reference to a pre-Act application, in uncodified § 3(n)(2).
Although § 102(g)(2) provides the basis for the US first-to-invent system, it is also a statutory novelty provision, outside the context of any interference proceeding. A third party’s prior undisclosed actual reduction to practice of a later-claimed invention in the United States is secret prior art that can be raised to invalidate that claim in litigation. Nothing in the 2011 Act appears to limit the scope of § 102(g)(2) that continues in effect for many post-Act applications and patents.
Unlike the general expanded worldwide novelty provisions of § 102(a)(1), which apply to all claims of a post-Act patent that contains even a single claim that is not entitled to an earlier filing date, §§ 102(g) and 135 will be applied to applications and patents that contain a single claim having a pre-Act filing date, as discussed in a previous post. The issue of benefit will be critical to determining not only whether a patent claim is patentable in view of prior art, but also to establish the universe of prior art that is applicable to a patent or application.
The Act creates a disparity in prior art with respect to three classes of post-Act applications and patents. Applications with all claims having pre-Act effective dates will not be subject to the new novelty provisions, but will remain subject to existing prior art, including § 102(g)(2) secret prior art. Applications with no reference to any pre-Act application will not be subject to § 102(g) prior art, but will be subject to the new prior art categories established by § 102(a). Applications with even one claim having a pre-Act effective filing date, and another claim not entitled to such benefit, will be subject to the worldwide novelty provisions of § 102(a), and also § 102(g) prior art. For example, continuation-in-part applications filed after the effective date by definition will disclose new subject matter, and will likely contain some claims that are fully supported by pre-Act disclosure, and other claims that are not entitled to a pre-Act filing date. It seems likely that all of the claims will be subject to the new worldwide “first-to-file” absolute novelty standard of § 102(a) (under § 3(n)(1)). In addition, the statute evidently requires that each claim will also be subject to existing § 102(g)(2) prior invention art.
With respect to benefit, determination of the US effective filing date of a claim can be elusive, even if a prior application contains identical disclosure. This problem will be acute for patents claiming benefit of earlier foreign national or EPO applications that are not identical in scope, such as applications that are combined for US filing, or US applications that contain added disclosure not present in foreign counterparts. This disclosure may be essential, for example, to provide a written description under § 112, ¶ 1, of inventions that are more narrowly disclosed and claimed in foreign counterparts. Such benefit issues are commonly litigated in USPTO interference proceedings.
Under § 321(b), post-grant review can be based on any statutory defense of invalidity, which in some cases may include § 102(g)(2) prior invention, whether by the petitioner or a third party, as discussed in a previous post. The proof of prior invention in a post-grant review proceeding should closely resemble the proof required in an interference, but without the requirement that the petitioner actually claim “interfering” subject matter. This critical requirement has limited the scope of interferences, in contrast to post-grant review proceedings which do not require the petitioner to have any US patent application at all. The result may well be that although an applicant cannot use secret prior invention to obtain a patent, as a post-grant review petitioner it can defeat the right of an applicant who was the first to file a US application.
If this turns out to be the case, foreign owners of US patents will be subject to two very significant disadvantages. Their patents will be subject to attack in the USPTO and in litigation based on the prior secret invention of another in the United States. If the inventions claimed were made outside the United States, the prior inventions will not be effective as prior art under § 102(g)(2) against other US patents. As discussed in an earlier post, the status of § 102(g)(1), which refers to interference proceedings, is unclear in view of other amendments made by the Act.
The second disadvantage of foreign-based US patent owners is that they generally will not be able to claim the prior commercial user’s right to avoid infringement that is established by § 273 of the Act. Secret, noninforming prior commercial use of a product or process in the United States now establishes a defense to infringement by the prior user, but not a novelty defense under § 273(g). This benefit is denied to prior commercial users of later-claimed subject matter who employ the subsequently-patented technology outside the United States, by § 273(a)(1). Secret, prior US commercial users of patented technology may also be able to assert such uses as novelty-defeating prior art under § 102(g)(2) in some cases.
In these two respects, the new law is truly an America Invents Act, which may be subject to criticism under TRIPS (an issue which I have not considered).
This is the third in a series of comments on the status of current § 102(g) under the America Invents Act. These comments are at most speculative, until the USPTO issues regulations governing the effect of § 102(g) under the America Invents Act, and the courts definitively construe the uncodified interference provisions.
If the USPTO exercises its discretion to dismiss future interferences “without prejudice to the filing of a petition for post-grant review” under § 6(f)(3)(A) of the America Invents Act, the first-to file reform Act may create a new “super-interference” proceeding, greatly expanding the review of non-priority issues available under current interference practice.
Since an interference can be dismissed without prejudice to instituting post-grant review, the scope of post-grant review necessarily includes issues of prior invention under § 102(g). Under § 321(b), post-grant review may be based on any statutory ground relating to invalidity of the patent or any claim, including § 102(g) as extended by the Act. If an interference is dismissed without prejudice to instituting a post-grant review, an applicant should have the statutory right to raise any statutory ground of invalidity with respect to a patentee’s claims, without the restrictions imposed in current interference preliminary motions practice.
Invalidity challenges have been a driving force behind interferences, but the Board effectively limits the scope of patentability issues that are currently considered in interferences, by requiring prior approval of each patentability motion, and restricting the number of motions for judgment on issues of invalidity, or declining to consider patentability motions that do not raise “threshold” issues. The unfettered ability to raise patentability as well as priority issues in post-grant review would provide powerful incentives to pursue interferences after the effective date of the Act.
More generally, to the extent that the grounds of post-grant review include priority of invention under § 102(g), an applicant should have discretion to decide whether to attempt to provoke an interference, or initially to petition for post-grant review. This decision will be guided by the time limits imposed on initiation of post-grant review, the scope of other grounds of invalidity at issue, the different estoppel consequences of an adverse judgment, and issues related to priority, such as derivation, that are currently considered in interferences. In many cases, interferences will provide advantages to applicants seeking to challenge recently-issued patents.
As discussed in a previous post, § 3(n)(2) of the Act provides that the current interference statutes (§§ 102(g) and 135) will remain in effect when post-Act applications or patents contain specific references to pre-Act applications, regardless of whether claims of the post-Act applications or patents are actually entitled to benefit under §§ 120, 121, or 365(c). Uncodified § 6(f)(3)(A) of the Act requires the PTO to issue regulations concerning the procedures under which an interference commenced before the effective date is to proceed, including whether such interference (i) is to be dismissed without prejudice to the filing of a petition for a post-grant review; or (ii) is to proceed as if the Act had not been enacted.
The authority to dismiss an interference without prejudice to filing a petition for post-grant review raises a number of significant issues, which may be addressed by USPTO regulations.
Under § 3(n)(2), the interference statutes will continue to apply to a patent or application containing a specific reference to a pre-Act application, including continuations and divisionals. Under § 3(n)(1), the post-grant review provisions apply only to patents or applications containing at least one claim that is not entitled to a pre-Act effective filing date. Determination of whether an interference can be dismissed in favor of a post-grant proceeding may thus depend on complex issues of benefit, which frequently require evidence, including depositions, and briefing in interference motions.
Under § 321(c), a petition for a post-grant review may only be filed within 9 months of patent grant. If this provision limits the ability of the USPTO to require a petition for post-grant review by an applicant involved in an interference, it may severely restrict the option to dismiss interferences in favor of post-grant review proceedings. Unlike post-grant review, an interference may generally be provoked by presenting interfering claims up to one year after patent grant under § 135(b)(1). The declaration of an interference typically requires a suspension of prosecution of several months to define the interfering subject matter and the initial status of the partes, which could restrict or eliminate the narrow window for a post-grant petition.
The new statute provides more general authority for the USPTO to determine the manner in which post-grant review or “another matter or proceeding may proceed,” if another proceeding involving the patent is before the Office.” Section 325(d) states that “notwithstanding sections 135(a), 251, and 252, and chapter 30, the Director may provide for “the stay, transfer, consolidation, or termination of any such matter or proceeding.” Under this section, an interference could be consolidated with an existing post-grant review proceeding, but it is unclear whether § 325(d) could provide independent authority for the USPTO to substitute post-grant review for an interference more than 9 months after patent grant.
To the extent that interference motions raise only issues of priority and unpatentability based on prior art publications or patents, §325(d) might provide the USPTO with authority to maintain the interference, but require that non-priority issues be decided in an inter partes review proceeding. Since there is no specific statutory time limit for decision in an interference, priority issues could be deferred until after resolution of patentability questions, as permitted in derivations under § 135(c).
Despite these uncertainties, interferences will remain a significant part of post-grant opposition practice, in addition to post-grant review, inter partes review, and derivations.
These comments are at most speculative, until the USPTO issues regulations governing the treatment of interferences under the America Invents Act, and the courts definitively construe the uncodified interference provisions.