Since the passage of the America Invents Act (AIA) in September, questions have ensued regarding the implementation of post-grant review (PGR). Proponents of PGR believe that it will provide another avenue for challenging patents, but remain unsure how effective and efficient the new process will be.

In February, the United States Patent and Trademark Office (USPTO) published a notice of proposed rule-making in the Federal Register and solicited comments to identify potential issues before formalizing the rules, which is likely to occur this summer. Although many comments on a variety of PGR topics and uncertainties were submitted, a seemingly majority focused on three general areas: fees, discovery and estoppel.

Fees

It is widely thought that the filing fees currently proposed by the USPTO for filing a PGR are preclusive to wide utilization. Even when considering relatively conventional and straight-forward patent cases, the aggregate cost to a client, between the filing fee and legal fees, can easily exceed $100,000, a large burden to bear for companies. Even large companies may find the costs to be too restrictive to engage in the process, especially if they plan to file for post-grant review on a plurality of patent claims and/or patents. The proposed fees for filing a PGR petition are $35,800 to request review of 20 or fewer claims up to $89,500 to request review of 51 to 60 claims, and an additional $35,800 for review of additional groups of 10 claims. Under these large proposed fees, the process could lose some of its effectiveness if participants are unable, or unwilling, to initiate it.

Many commenters have proposed a multitude of potential solutions to mitigate the barrier that is implicitly imposed by the large filing fee. First, the USPTO may institute a “pay by phase” fee structure that enables the petitioner to pay a fee at each phase of the review process, rather than front-loading the entire fee. It is assumed that many instituted PGRs will reach resolution in various phases; hence, this proposed structure would enable petitioners to only pay for the phases of the process they actually use, resulting in cost-savings for matters that are resolved early in the process. Moreover, in instances when the USPTO refuses to institute a PGR upon petition, the petitioner may not owe the entire up-front cost.

While the pay-by-phase structure could minimize the financial barrier to initiating the post-grant review process, some fear that the impact may swing too far in the other direction and lead to more filings than the USPTO can efficiently manage and still meet their statutory requirement of resolving the proceeding within one calendar year. As a result, some have suggested that instead of a “pay by phase” fee structure, a better alternative would be a “refund by phase” structure. Under a “refund by phase” structure, if a PGR is not instituted, the petitioner would receive a refund for phases not reached. A perceived benefit of the process is to create a cost-effective and more efficient alternative to federal litigation. Similarly, if the party reached a settlement during the proceedings, the petitioner would receive a refund for phases not utilized. This may alleviate the concern of flooding of the USPTO with PGR filings, but would also mitigate the financial barriers for companies, who would not be on the hook for full fees unless their matter exhausted the entire review process.

Another solution to the proposed fees is to differentiate the fee structure based on the type of invalidity being asserted in the PGR petition. The costs associated with reviewing PGR petitions vary with regards to the type of invalidity asserted, and establishing a fee structure that reflects this variability could help the USPTO better charge their services. For example, obviousness is more common, and therefore typically handled by the USPTO with greater efficiency and fewer resources, than those involving written description issues and other non-anticipation/obviousness issues. In fact, some believe that blending the foregoing differentiated fee structure and a “refund by phase” fee structure would maximize the value of the process for both the petitioner and the USPTO, striking a perfect balance between fees paid and services rendered.

Discovery

The second component of the PGR process that has created substantial discussions among IP practitioners includes the rules and regulations surrounding discovery. As with federal litigation, the repeated filing of motions and handling of other procedural matters could prove to be too costly to pursue, even if a case has merit. In short, the proposed rules could enable the discovery process, and resulting case, to be hijacked by tangentially-related tasks, resulting in inefficient use of time, resources and money for all parties involved.

The obvious solution to expediting the discovery process and enabling the crux of the case to remain in focus is to implement a standing order or specific rules that clearly define what will be granted in discovery. Identifying the parameters of discovery at the forefront of the review process would likely minimize the filing of discovery motions.

While each case will encompass unique circumstances, the discovery process in many cases will likely follow a similar template, and therefore establishing a standing order and/or defined rules that regulate procedure should be completed. There are some who suggest that the discovery process should not only contain general parameters, but also strict limits on depositions and time for examinations, in order to improve the efficiency of the case. The final consideration on the structure of the discovery process, including time limits or detailed guidelines, will be at the discretion of the PTO, who must determine the best way to allocate their resources and still meet their statutory responsibilities.

Estoppel

According to the AIA, the estoppel bars the petitioner will be barred from asserting “any ground that the petitioner raised or reasonably could have raised during that post-grant review” in a later civil or administrative action.

The impacts of this estoppel are clear - patent challengers may be deterred from using the post-grant review process, simply based on the fact that the petitioner may be estopped from raising any grounds of invalidity in any future actions.

As with any new procedure, PGR, and the AIA as a whole, are certain to present new opportunities and challenges to businesses. While closely monitoring industry trends and competitors’ patents have always been requisite of businesses looking to gain an advantage, it will become even more significant in the world of PGR, which has a limited, nine-month window of opportunity to petition for a PGR. The effectiveness of PGR, a well-intentioned tool, will not be known until the rules are officially implemented and parties have commenced proceedings. It is important to begin preparing now.

First published in Intellectual Property Today.