On August 14, 2012, the U.S. Patent & Trademark Office (“PTO”) issued its final rules for implementation of the new “inter partes review” (“IPR”) proceeding set forth in the America Invents Act of 2011 (“AIA”). The statutory provisions authorizing IPR proceedings go into effect September 16, 2012. IPR will thereafter replace inter partes reexamination and will be available for any patent issued at any time, provided that the patent has been issued for at least nine months, is not subject to a pending post-grant review and is not the subject of a patent infringement complaint filed more than one year before the IPR. An IPR proceeding enables parties to challenge the validity of issued patents based on prior art patents and printed publications before a panel of administrative law judges.

The final rules for IPR proceedings reflect the PTO’s consideration of hundreds of comments from the public regarding the proposed rules, which were published in February 2012. In our view, the final rules remove some of the uncertainties created by the proposed rules, which may have deterred parties from using this proceeding. These uncertainties included: (1) how the PTO would interpret and apply the estoppel provisions of the AIA; (2) the scope of each party’s disclosure obligations during an IPR proceeding; and (3) how the PTO would handle the claim construction phase of an IPR proceeding. The final rules also addressed public concerns regarding the PTO’s proposed fee structure for IPR proceedings.

The statutory estoppel provisions applicable to IPR proceedings have been widely discussed. Both proposed and final rule 42.73(d) provide that the “petitioner, or real party in interest or privy of the petitioner” initiating an IPR proceeding is estopped from subsequent PTO proceedings on “any ground that that petitioner raised or reasonably could have raised” during the IPR proceeding. Like the proposed rule, the final rule does not define “real party in interest or privy of the petitioner.” However, the PTO states in its summary and discussion of the final rules that it will “consider, on a case-by-case basis, relevant case law”[i] to resolve disputes regarding whether a party is a “real party in interest” or “privy” for purposes of estoppel as it applies to a specific IPR proceeding. The PTO further explains that “actual control or the opportunity to control the previous proceeding is an important clue that such a relationship existed”[ii] when determining whether a particular party is estopped from seeking a post-grant challenge to a patent before the PTO. For example, mere membership in a trade association or joint defense group is “irrelevant” to the determination; other factors, such as the party’s relationship to the petition, the nature and/or degree of involvement in the petition, and the nature of the entity filing the petition, are the relevant factors to the determination.[iii] The PTO’s explanation and examples provide useful guidance that may alleviate some of the concerns regarding the potential breadth of the estoppel provisions.

Like proposed rule 42.51(b)(3), the final rule requires each party to an IPR proceeding to disclose information that is inconsistent with a position advanced by the party during the proceeding. The proposed rule stated that “[t]he party submitting the information must specify the relevance of the information, including where the information is presented in a document and, where applicable, how the information is pertinent to the claims.”[iv] In contrast, the final rule requires each party to disclose “relevant information that is inconsistent with a position advanced by the party during the proceeding concurrent with the filing of the documents or things that contains the inconsistency.”[v] The final rule also clarifies that the submitting party will not be required to provide a written explanation of the relevance of the information. While this modification still requires the submitting party to consider whether information “is inconsistent with a position advanced by the party during the proceeding” and to disclose any such information, parties can now satisfy their duty of disclosure without concern for conflicts of interest that would naturally arise if the submitted information is construed to be adverse to the positions taken.

Both proposed and final rule 42.104(b)(3) specify that an initial petition for IPR must identify “[h]ow the challenged claim is to be construed.” The patent owner may optionally file a “preliminary response” setting forth the reasons why IPR should not be instituted, and, if the PTO grants the petition initiating the IPR proceeding, the patent owner may later file a “patent owner response” to the petition addressing pending grounds for unpatentability. Neither the preliminary response nor the patent owner response require the patent owner to address the petitioner’s proposed claim construction—the patent owner can optionally choose only to attack the petitioner’s position without taking a position of its own. Despite comments suggesting that this proposed rule would be unfair because it places the entire burden on evaluating and providing constructions for the challenged claims on the petitioner, the PTO declined to implement joint claim construction procedures similar to those used in many district courts. The PTO clarified, however, that “petitioners are not required to define every claim term, but rather merely provide a statement that the claim terms are presumed to take on their ordinary and customary meaning, and point out any claim term that has a special meaning and the definition in the specification.”[vi] The PTO also noted that the final rules “do not preclude providing alternative claim constructions in a petition or in later-authorized filings.”[vii] These clarifications provide the petitioner with some measure of comfort that it need not provide exhaustive claim constructions in its initial petition.

The proposed fee structure for IPR proceedings has been widely reported and discussed, particularly with regard to the high cost as compared to that of the existing inter partes reexamination proceeding. Proposed rule 42.15 set a fee of $27,200 for filing a request for IPR challenging up to 20 claims of a patent. The fee escalated rapidly for every 10 claims challenged thereafter ($34,000 for 21-30 claims; $40,800 for 31-40 claims; $54,400 for 41-50 claims; $68,000 for 51-60 claims and $27,200 thereafter for every 10 claims or portion thereof).[viii] In response to numerous comments, the PTO’s final rule provides for a flat fee of $600 per claim for each claim in excess of 20.[ix] This final rule should reduce the incentive for the petitioner to challenge additional claims once a proposed claim threshold is reached and will eliminate the substantial “penalty” fee that would have otherwise occurred if the petitioner decides to challenge 61 claims, for example, instead of only 60.

While many uncertainties remain with respect to how the IPR proceeding will progress in view of these final rules, we are satisfied that the PTO seemed receptive to considering changes in response to the hundreds of comments received, and we believe that the final rules resolve several uncertainties resulting from the proposed rules and provide additional guidance relating to others that will help ensure a smoother transition to the use of the new IPR proceeding.