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Patent reform series: A practical guide to supplemental examination

The second in a series on America Invents Act implementation, Michael Flibbert and William Raich offer tips on how to get the most out of the new law’s supplemental examination option

Traditionally, patent owners could not cure inequitable conduct. The America Invents Act, however, will allow patent owners to ask the USPTO for supplemental examination to consider, reconsider, or correct any information believed to be relevant to a patent. Once this information has been considered, reconsidered, or corrected, the patent cannot be held unenforceable based on conduct relating to that information. This new procedure will become available for all US patents on September 16 2012.

At first blush, supplemental examination presents significant potential benefits. Unlike regular ex parte reexamination, supplemental examination will not be limited to patents and publications and may include, for example, sales, offers for sale, or public uses; errors in declarations; or issues relating to patentable subject matter or written description. If successful, supplemental examination may allow a patent owner to strengthen a patent before enforcing it by eliminating a range of potential inequitable conduct allegations. But deciding whether or not to pursue supplemental examination will require several key steps.

Make sure it’s an option

Supplemental examination will not apply to allegations pled with particularity in a civil action (such as a declaratory judgment action), or set forth with particularity in a Hatch-Waxman paragraph IV notice letter received by the patent owner, before the date of the supplemental examination request. It will also not apply to any defence raised in a patent infringement action or an ITC action unless both the request and any resulting reexamination are concluded before the action is brought.

A patent owner, however, may be unaware of any potential problems until after filing suit. Inequitable conduct allegations are typically first raised in the defendant’s answer to the complaint, and sometimes they are not raised until after the defendant reviews documents produced by the plaintiff or deposes key witnesses during discovery. But supplemental examination will not be available after suit has been filed.

Decide if it’s worth the risk

The benefits of supplemental examination are counterbalanced by certain risks:

Delays: The USPTO must complete supplemental examination within three months by issuing a certificate stating whether the information presented raises a substantial new question of patentability (SNQP). If the Office finds a SNQP it will order reexamination of the patent. Reexamination likely will occur in most cases since the SNQP standard requires only that a reasonable examiner would consider the information important. Over the last 30 years, the USPTO has granted more than 90% of reexamination requests based on the SNQP standard. If reexamination is ordered, it may require years to resolve, particularly if any appeals are required. Patent owners will have to assess the effects of any continuing infringement and other factors to determine whether they can endure such delays.

Cancelled or narrowed claims: Reexamination can lead to cancelled or narrowed claims, which may leave the patent owner with nothing to enforce. The USPTO has required claim changes in 70% of patent owner-requested reexaminations over the last 30 years and cancelled all claims in another 9% of those reexaminations. Reexaminations are conducted under a lower standard of proof than required to invalidate claims in district court.

Imperfect foresight: To benefit from supplemental examination the patent owner will have to reasonably predict what specific inequitable conduct charges a defendant may assert during future litigation. Issues the patent holder fails to anticipate or address in the supplemental examination will not be eliminated from future litigation.

Loopholes: Under the proposed rules, a patent owner requesting supplemental examination must list each item of information to be considered; identify each aspect of the patent to be examined and each issue raised by each item; and explain how each item is relevant to each aspect of the patent and how each item raises each issue. A patent owner may therefore be required to define the issues with such specificity that, even if the claims are confirmed, a court may decline to bar inequitable conduct defences that the USPTO did not squarely address or that vary slightly from the issues the USPTO did address. Meanwhile, defendants will remain motivated to uncover new facts or evidence and to develop new inequitable conduct arguments not resolved during supplemental examination.

Fraud: If the USPTO becomes aware that a so-called material fraud on the Office may have been committed, the director must refer the matter to the attorney general for further action. The USPTO considers a material fraud to be narrower than inequitable conduct, so this provision may find little use. In addition, however, although the statute provides that requesting supplemental examination cannot be relevant to patent enforceability, the courts may imply a good-faith requirement. Thus, any deliberately false statements made during supplemental examination may give rise to a charge of inequitable conduct.

Consider Therasense

Barring a limited exception, Therasense Inc v Becton Dickinson & Co (Fed Cir 2011) precludes inequitable conduct unless the defendant can prove so-called but-for materiality, meaning that the USPTO would not have allowed the claims had it been aware of the undisclosed information. One might ask, then, whether supplemental examination is ever necessary or appropriate. If information is not but-for material, the defendant should be unable to prove inequitable conduct under Therasense. And if information is but-for material,the patent claims may not survive supplemental examination/reexamination.

In practise, however, there may still be advantages to having a statutory right to exclude inequitable conduct allegations rather than relying on case law. Although Therasense raises the standard for inequitable conduct, it does not eliminate the defence. SeeAm Calcar Inc v Am Honda Motor Co (SD Cal Apr 17 2012) (applying Therasense to find inequitable conduct). Patent holders must still devote extensive litigation efforts - perhaps through trial and appeal - to establish that information was not but-for material. A successful supplemental examination may allow the patent owner to cut off such arguments from the outset.Michael FlibbertWilliam Raich

Ultimately, deciding whether to pursue supplemental examination will require a rigorous factual investigation and balancing of the benefits and risks. Patent owners should proceed - if at all - with due care.

Michael Flibbert and William Raich are attorneys at Finnegan Henderson Farabow Garrett & Dunner in Washington, DC.

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