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The US post grant opposition system assessed

New rules allow third party patent stakeholders to challenge granted patents in the US. Who has been taking advantage of the changes?

September 16 has come and gone, and the U.S. has entered a new frontier in patent law. For the first time, third party patent stakeholders have the opportunity to challenge patents that have already been granted on a broad range of grounds, and at the USPTO rather than in the courts. The new post grant opposition system includes inter partes review (IPR) proceedings, a transitional post grant review program for covered business methods (CBM) and, eventually, post grant review (PGR) of all patents filed after March 16, 2013 under the new first-inventor-to-file regime. But whether these procedures will be utilized and how effective they will be remains to be seen.

So far, the number of IPR and CBM petitions posted on the USPTO’s Patent Review Processing System portal has been on par with what the Office anticipated. During the rulemaking process, the USPTO projected an annual rate of about 420 IPR petitions and 50 CBMs. In the first three weeks, 25 IPRs and 10 CBMs were received, which annualizes to about 600. Intellectual Ventures has filed the most IPR cases, while Liberty Mutual Insurance has filed the most CBMs.

You can see a list of the petitions on Managing IP's dedicated webpage.

Those numbers do not include incomplete petitions, which are assigned a number and maintained on the portal, but are not publicly posted. The most common reason for incomplete petitions is that counsel does not have all the documents or funds readily available. This explains the various gaps in sequential numbering on the portal.

The final rules governing IPR, CBM and PGR cases were implemented in August. While lawyers seemed generally enthusiastic, AIPLA and other groups remain concerned that fees are still somewhat high and that the proceedings still lack proposed efficiencies.

The revised rules contain provisions that should help both petitioners and patent owners. For example, the petitioner has 10 extra pages to set out arguments in its petition, and can now use single spacing instead of double spacing. The new limits are now 60 pages for IPR and 80 pages for PGR petitions. Patent owners will also benefit from an additional month to file a preliminary response to the petition, and an extra month to file a response to the board’s order instituting a trial.

But AIPLA Executive Director Q. Todd Dickinson said in a statement following the publication of the final rules in the Federal Register that “we continue to have concerns that some of the final rules do not necessarily provide the kind of flexibility and efficiency of process that we believe they could.” Despite this, he said that AIPLA remains “optimistic that the USPTO will make appropriate adjustments as experience with the rules demonstrates their necessity.”

Among other concerns, AIPLA, IPO and the ABA IP law section believe that the USPTO’s rules governing discovery in post grant review proceedings could be overly burdensome. The three groups submitted a joint proposed framework for post grant proceedings in April, which they hoped the Office would adopt as part of the final rules. But such changes may be too far out of the USPTO’s realm of experience to contemplate. “It’s fair to say [the USPTO] is apprehensive about the wave of cases that may sweep over them, so they want to lean toward the familiar,” said James Crowne of AIPLA.

Chief Administrative Law Judge James Smith of the USPTO’s Patent Trial and Appeal Board (PTAB) told the AIPLA Daily Report that the Office adopted many of the changes suggested by the public, “including substantial changes to fees, page limits, estoppel, and permitting non-registered counsel to appear with registered counsel as well as certain provisions of the discovery.”

He noted that, in view of public comments, provisions were added for mandatory initial disclosure, expansion of additional discovery when the parties agree, and said that the scope of the inconsistent statement provision was narrowed. However, Smith explained: “Not all changes were adopted as some would have resulted in delay of the proceedings, and others would have imposed excessive burdens on the parties and the Board.”

Matt Smith of Foley & Lardner, the firm that has filed the most IPR petitions so far, said that overall he’s been very pleased with the initial experience. Smith said that the USPTO did a good job staffing phone calls for those confused by the new online filing system, and he’s been impressed with how well the process is working so far.

But the real test will come around next March, when the PTAB begins issuing decisions on whether to grant the first petitions filed. Said Smith: “That’s when we’ll really see how the system is going to work.”

The reexamination rush

Just prior to September 16, the number of inter partes reexamination filings at the USPTO spiked exponentially. Chief Administrative Law Judge James Smith said the Board received 650 filings for both ex parte and inter partes reexaminations in the last three weeks leading up to and including September 15. “The inter partes filings outnumbered ex parte filings by about 50, so there was a pretty even distribution,” said Smith. But the 350 or so inter partes reexaminations filed represents 96% of all of last fiscal year’s filings.

Despite the surge, Smith said the Central Reexamination Unit had been preparing for the workload. “We hired and trained 15 new reexamination specialists knowing that they would be needed to handle the extra filings,” said Smith. Backlogs were also tackled n the latter two quarters of FY 2012, “thereby maximizing the time we can devote to the new filings.”

This report was first published in the AIPLA Daily Report. Download the AIPLA Daily Report, published by Managing IP from Washington, DC from our conference newspapers page.

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