In addition to converting the U.S. patent system from a “first to invent” to a “first inventor to file” system, the Leahy-Smith America Invents Act (“AIA”) also created new post-grant proceedings including the popular Inter Partes Review (“IPR”) as well as the less widely used Post-Grant Review (“PGR”).1 While there are certain structural limitations on the wide adoption of PGR, e.g., PGR proceedings can only be filed against post-AIA patents (patents with at least one claim having an effective filing date after March 16, 2013), recent successful challenges, particularly those based on assertions of patent-ineligibility under 35 U.S.C. § 101, may make PGR an attractive option for potential petitioners.
The main elements of a PGR proceeding are summarized in Table 1.
Aside from the fact that PGR is only available for the first 9 months of the life of a post-AIA patent, a key differentiator from IPR proceedings is that a PGR request may be based on any ground related to patent invalidity under 35 U.S.C. § 282 (excluding best mode), including challenges under 35 U.S.C. §§ 101, 112, public use and on-sale.
As of October 31, 2016, only 36 PGR petitions have been filed with PTAB compared to the 3,451 IPR petitions that have been filed since implementation of the AIA.2 Of course, an increase in PGR petitions is to be expected as more patents issue with claims falling within the first-inventor-to-file system. In the two years since the first filing of a PGR proceeding on August 5, 2014, the PTAB has rendered four decisions. In three of those decisions the patents were invalidated (in each case as directed to patent in-eligible subject matter under § 101),3 while in the fourth decision the patent was upheld.4
The Supreme Court’s decision in Alice5 and the USPTO’s corresponding guidelines6 have played a significant role in PGRs to date. This is, at least in part, due to the redefinition of the patent eligibility analysis set forth in Alice and the Guidelines. Specifically, the redefined analysis consists of a two-step process whereby a claim is first analyzed whether it falls into a statutory category (e.g., a process, a machine, a manufacture, or a composition of matter) and then is evaluated as to whether it (a) is directed a judicially-recognized exception, i.e., a law of nature, a natural phenomenon or an abstract idea, and, if it is directed to such an exception, then (b) whether it recites additional elements that amount to significantly more than the exception.
In the first two PGR decisions where the PTAB invalidated patent claims under § 101, both of which are dated June 13, 2016, the patents at issue related to a correlation of the genetic quality and market value of livestock. The petitioner, American Simmental Association (“ASA”), filed two petitions challenging validity of U.S. Patent Nos. 8,660,888 and 8,725,557 after those patents had been asserted against ASA by Leachman Cattle of Colorado LLC. In arriving at its decisions, the PTAB utilized the Alice two-step test to find that the challenged claims of the ’888 and ’557 patents were invalid under § 101 because: (i) they were directed to the abstract idea of “determining an animal’s relative economic value based on its genetic and physical traits,”7 and (ii) all computer recitations in the claims were directed “to generic computer hardware used in a conventional manner, which are insufficient to impart patentability under Alice”8 and as a result do not amount to significantly more than the abstract idea itself.
On August 2, 2016 the PTAB issued a third decision invalidating claims as directed to patent-ineligible subject matter. Petitioner Netsirv and Local Motion MN, a storage and moving company with a software business arm, filed a petition challenging validity of U.S. Patent No 8,756,166, directed to a storage container tracking and delivery process under multiple grounds. In reaching its decision, the PTAB once again applied the Alice two-step test to determine subject matter eligibility. It found that the challenged claims of the ‘166 patent were invalid under § 101 because (i) they were directed to the patent-ineligible abstract idea of “facilitating containerized storage” which is basically a “bailment scheme using storage containers,”9 and (ii) all computer recitations in the claims provide “a solution implemented with generic technical components in a conventional way”10 that do not transform the abstract idea into patent-eligible subject matter.
During the proceeding, the patent owner attempted to counter the § 101 ground asserted by the petitioner, arguing that the claims did amount to significantly more than the abstract idea because “a human cannot perform the dynamic associations and disassociations with sufficient speed and accuracy.”11 The patent owner further argued that the claimed invention addresses “the new challenge of dynamically reassigning reusable containers to different customers while still in the field.” The PTAB, however, was unpersuaded by the patent owner’s argument stating that the notion of “dynamic associations” was not expressly found in the claims.12
As the number of PGR decisions rendered by the PTAB increases, the usefulness of the proceeding will become clearer, particularly with respect to challenges unavailable in other post-grant proceedings. In the meantime, it appears that, at least for early adopters, PGR may provide an effective tool for invalidating patents under 35 U.S.C. § 101, particularly with respect to patents that issued during the period the that the Alice framework and accompanying USPTO guidelines were in development.