Challenging Patent Validity at the USPTO
For startup companies, intellectual property protection is essential to success. They must protect their inventions and prevent other businesses from profiting from them by filing for patents with the United States Patent and Trademark Office (USPTO). If a startup company has to enforce its patent rights in court, the validity of its patent claims may be challenged by the infringing party. As part of a basic patent education, startups should learn of the various proceedings that a third-party might use to challenge their patents after they have been granted. It is also important for startups to know how they can use these proceedings to challenge competitors’ patents.
This article will discuss three post-grant proceedings, conducted by the USPTO, that a party may use to petition the validity of a patent claim. The proceedings are part of the patent system that was recently reformed by the America Invents Act of 2011. They require a lower standard of proof than a court determination and are often cheaper and faster than court proceedings. A party may use a USPTO decision to support its argument in a lawsuit. This article will end with a brief discussion of the future of these proceedings in light of Oil States, a case currently before the Supreme Court.
For the first nine months after a patent has been granted, a third party may petition the validity of the patent claims to the Patent Trial and Appeals Board (PTAB) of the USPTO through a Post-Grant Review. The PTAB is comprised of judges who have technical backgrounds and are experts in patent law. If the PTAB is persuaded that at least one claim is more likely than not to be found unpatentable, the proceedings will begin. The proceedings happen quickly. The typical Post-Grant Review is completed within 12 months but can be extended to 18 months. During this time, there are limited periods of discovery followed by motions and an oral hearing. The PTAB will then issue a final written decision. Final decisions are immediately appealable to the U.S. Court of Appeals for the Federal Circuit.
Inter Partes Review
Nine months after a patent has been granted, Post-Grant Review is no longer available to challenge the patent. However, a similar proceeding, called Inter Partes Review, is available through the PTAB. A petitioner must show a reasonable likelihood that at least one claim will be unpatentable. Although this is different than the standard for Post-Grant Review, it remains to be seen exactly how it is different. Significantly, in Inter Partes Review, a petitioner may only challenge patent claims based on prior art and publications. If a party is sued for patent infringement, Inter Partes Review is only available to that party if they file within one year of being served. Inter Partes Review is typically limited to 12 months and is appealable to the U.S. Court of Appeals.
Ex Parte Reexamination
At any time during a patent’s enforcement period, a third-party may file for Ex Parte Reexamination. They may do so anonymously. The petitioner must provide prior art to show a substantial and new question of patentability that was not previously considered in reviews of the patent. This standard is intended to prevent third-parties from raising frivolous challenges to patents. Reexamination is significantly different than Post-Grant Review and Inter Partes Review, because the proceeding is only between the patent owner and the USPTO. The petitioner usually does not play a role other than the initial filing. The review is conducted by a special panel of examiners called the Central Reexamination Unit (CRU) and usually takes two years. A patent owner may appeal a decision by the CRU to the PTAB and then the U.S. Court of Appeals. Ex Parte Reexamination might be attractive to third-parties that have strong prior art to challenge a patent and want to remain anonymous. It is also relatively cheap for the petitioner because they are not involved in the proceedings.
The Future of Post-Grant Proceedings
Although Inter Partes Review is a new feature of the patent system, we may soon see it change. In November 2017, a case, commonly referred to as Oil States, was argued before the Supreme Court that challenged the constitutionality of Inter Partes Review. Oil States Energy Services, a rental services company in the oil and gas industry, sued a competitor for patent infringement. The competitor then filed for Inter Partes Review, and the USPTO agreed with the competitor that the patent was invalid. Oil States argued to the Supreme Court that its patent right is a property right and it cannot be taken away without a trial before a jury in a federal court. Some who agree with Oil States argue that the USPTO system of review creates uncertainty in patent rights and makes it harder for startups to attract investors. On the other hand, many industry leaders believe the system prevents patent trolls from targeting innocent users of technology. Because Inter Partes Review is a low-cost alternative to litigation, the innocent users are less pressured to settle with patent trolls. We won’t have to wait long to hear what the Supreme Court thinks. It is expected to release its decision this year.