The STRONGER (Support Technology & Research for Our Nation’s Growth and Economic Resilience) Patents Act of 2017 was recently introduced in the Senate. The Act is an updated version of the STONG Patents Act of 2015 that stalled in Congress. Like its predecessor, the STRONGER Patents Act is designed to significantly modify the AIA trial proceedings at the PTAB. Enactment of this Act would severely diminish the usefulness of AIA proceedings.
A goal of the Act is to reduce or eliminate strategic filings intended to decrease stock prices and extort settlements. To accomplish this goal, the Act creates a standing requirement such that only a party that has been sued or charged with infringement of a patent could file a IPR or PRG petition on that patent. The standing requirement would effectively limit these “strategic” filings; but would also eliminate proactive challenges by parties seeking to address potential freedom-to-operate issues before being accused of infringement. AIA proceedings were designed to be a lower cost option to litigation and the standing requirement would, in many instances, remove this option.
To reduce harassment of patent owners and to avoid unnecessary duplication of work by the PTAB and the District Court, the Act prohibits institution of review of a claim if the Director previously instituted an IPR or PGR review with respect to that claim. This modification ignores the fact that some instituted petitions are settled without a final determination of patentability. With this modification, the first petitioner would be in complete control of the fate of the patent in the PTAB.
To further eliminate repetitive proceedings, the Act broadens the scope of estoppel. A party would be estopped from petitioning review of a patent claim in a subsequent IPR or PGR with respect to any ground that was raised or reasonably could have been raised in the initial petition, unless the party is charged with infringement after filing of the initial petition. This modification eliminates the Board’s discretion to institute a second petition for an IPR or PGR.
The Act also significantly broadens estoppel for later-filed civil actions in the District Court. After the PTAB institutes review, the Act would prevent the petitioner from asserting that a claim is invalid based on 35 U.S.C. §§102 and/or 103 in a civil action unless the invalidity argument is based on prior public use, prior sale or availability to the public before the effective filing date of the claimed invention. The Act effectively eliminates the possibility of asserting invalidity on any prior art even if this art was not asserted in the IPR or PRG petition. Thus, if the petitioner loses the PTAB trial, the Act prohibits that petitioner from asserting any other prior art in a later filed civil action.
The Act allows a patent owner to appeal the institution of an IPR or PGR to the Federal Circuit, but does not permit the petitioner to similarly appeal a denial of institution. The interlocutory appeal would not automatically stay the proceeding. The appeal may be granted when i) the institution decision appears to be in error and the mere institution of the proceeding presents a risk of immediate, irreparable injury to the patent owner, ii) the institution decision presents an unsettled and fundamental issue of law, or the iii) the institution decision is manifestly erroneous.
Under the Act, a final judgment on the validity of a patent with respect to 35 U.S.C. §§ 102 and/or 103 by a federal court or the International Trade Commission bars the institution of an IPR or PRG review of the patent. In addition, any ongoing PTAB proceedings shall be stayed if a final judgment on validity is issued and from which an appeal may be taken. This stay will continue until the Federal Circuit renders its decision; if validity is upheld, the PTAB proceeding will be terminated. This modification gives more weight to a validity determination in an ITC proceeding than the PTAB proceeding.
The Act broadens the definition of a “real party of interest” for a PTAB proceeding to include a person that makes a financial contribution to the preparation for or conduct during an IPR or a PRG on behalf of the petitioner. In addition, the Act expands discovery to identify any real parties of interest. The purpose of this modification is to ensure that a party does not get a second opportunity to challenge a patent.
The Act also provides other less radical modifications to PTAB proceedings. The standard for institution of an IPR or PGR would be modified to be a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition. The Act also provides a means for patent owners to enter amendments in an expedited procedure in the USPTO as an alternative to canceling or amending the claims before the PTAB. Further, the three-judge panel for deciding a PTAB proceeding would need to be different than the panel that granted the petition.
If enacted, the pro-patent owner modifications provided in the STRONGER Act would severely diminish the usefulness of AIA trials. It is likely that this Act will be met with opposition, and without further revision is likely to suffer the same fate as its predecessor.