One year after the U.S. Patent and Trademark Office (USPTO) instituted new guidelines regarding post-grant review (PGR) and inter partes review (IPR), the transition to the new filing system appears to be running smoothly, with several clear patterns beginning to emerge in the Patent Trial and Appeal Board’s (PTAB) handling of claims.
PGR, which is only available for patents issuing from applications filed on or after March 16, 2013, is the means of challenging a patent’s validity during the nine months immediately following its issuance. IPR, which is available for all patents, is a means of challenging a patent’s validity thereafter, as well as during the initial nine-month period for older patents not subject to PGR.
Statistically, 999 IPR petitions have been filed as of January 9, 2014, with the PTAB accepting approximately 90 percent of filed petitions. The high rate of petition acceptance is most likely the result of the low threshold required for granting petitions, with only a reasonable likelihood of success for invalidating at least one claim needed.
Unlike in district courts, there is no presumption of claim validity, which lowers the bar further for petitioners. In addition, the petitioner receives an early advantage by being allowed to include expert reports in the petition. In contrast, the patent owner cannot provide his or her own expert reports until after the petition is granted.
According to John Kilyk, Jr., a member in Leydig’s Chicago office, this statistical data answers one of the central questions that swirled around IPR when it was first initiated.
“At the onset of IPR, practitioners wondered about the petition acceptance rate by the USPTO,” Kilyk says. “Under the old re-examination system, there were high odds that the USPTO would proceed with re-examination, and the belief was that under the new system those odds would remain steady. As it turns out, under the new system, the rate of acceptance has remained relatively high. So, that particular prediction turned out to be true.”
Despite the low bar for petitioners seeking to have their petition accepted, though, the PTAB is still strictly enforcing all filing rules and reading through each petition carefully before making a decision.
“How much of a stickler is the PTAB going to be on granting acceptance for these petitions? The PTAB actually has been rigorously applying the rules so far,” Kilyk says. “So if your petition does not dot every ‘i’ and cross every ‘t,’ it will be rejected. It is crucial that each petition is complete and carefully sets out the prior art position.”
Another important question regarding IPR was how the PTAB would run discovery.Garmin International, Inc. et al. v. Cuozzo Speed Technologies LLC, the first IPR case to receive a trial decision, has provided a blueprint for how stringent the PTAB’s discovery regulations will be for future cases.
In Garmin, the PTAB set out five elements that must be met before additional discovery would be allowed: that the request is based on more than a possibility and mere allegation; the request does not seek litigation positions; the information is not reasonably available through other means; the request is easily understood; and the request is not overly burdensome to answer. According to Elias Soupos, an associate in Leydig’s Chicago office, “discovery in IPR proceedings is significantly more restrictive than in district court proceedings.”
In Garmin, for example, the PTAB repeatedly denied the defendant’s requests for additional discovery, indicating that the board requires a substantially higher standard than the mere “relevance” required in district court. “In some instances, the party requesting discovery should already be in possession of evidence showing something useful will be uncovered, i.e., the PTAB will not allow fishing expeditions,” Soupos says. He adds, “the PTAB denied requests that traditionally are granted in district court litigation, such as requests for product development, pricing and commercialization effort information.”
According to Kilyk, this strict enforcement of discovery will have both positive and potentially negative effects on future IPRs and PGRs.
“Since discovery costs have the potential to balloon during particularly litigious cases, the PTAB’s limitations on discovery help to make IPRs and PGRs an even more cost-effective alternative to district court litigation,” he says. “But, the stringent rules could potentially handicap one side or the other in addressing the merits of the case.”
Soupos adds that “these discovery limitations may force patent owners to independently develop evidence of secondary considerations in support of their patent’s validity and, considering that most IPR proceedings involve patents already in litigation, argue claim constructions and validity without knowledge of the challenger’s intended product or legal contentions.
“At the end of the day, the currently emerging trends seem to provide a tactical advantage to a patent challenger, which may be able to tailor its claim constructions position to protect against later infringement arguments,” he concludes.
As of November 2013, Garmin is the only IPR case to have reached its conclusion. In the case, Garmin sought to cancel all 20 claims of Cuozzo’s patent. Initially, the PTAB denied the cancellation of 17 claims, but sent the case to trial on the remaining three. Ultimately, the PTAB found in Garmin’s favor and canceled the remaining three claims.
“While it may be too soon to characterize IPRs as favoring patent challengers, this victory, combined with the high level of petition acceptances, is certainly encouraging news for patent challengers,” Kilyk says.
While this initial year has answered some important questions regarding the use of PGRs and IPRs, there are still several open questions for attorneys and clients alike that will likely be answered within the coming months and years, such as whether companies will further embrace IPRs and PGRs as a substitute for district court litigation.
“We do not know for certain if the current popularity of IPRs and PGRs will continue throughout the next few years,” Kilyk says. “However, the prospects are for an increasing number of IPRs and PGRs based on the information to date, especially the significantly ramped up filing of IPR petitions in the past few months. This upward trend in their use will most likely continue into 2014 and beyond.”