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Intellectual Property: Post-Issuance: Inter Partes Review

With the creation of inter partes review under the American Invents Act, the patent review practice in the U.S. received a complete face lift. Previously, a third-party challenger attempting to invalidate another’s patent before the U.S. Patent and Trademark Office (USPTO) had two options: ex parte reexamination, a procedure with limited involvement from the challenger, and inter partes reexamination, a similar procedure that provided the challenger with more, yet still limited, involvement. Now a petitioner can challenge the validity of another’s patent using an interactive, quasi-litigation procedure before the USPTO, a forum well versed in handling patent invalidity issues.

Inter partes review was designed to be a more effective alternative to district court patent litigation than was inter partes reexamination, and it has the potential to be even more than that. Indeed, the appeal of inter partes review may make it the preferred choice for any high-stakes invalidity challenge. First, the process is significantly cheaper than patent litigation, in which the average case has been estimated to range from $2 million to $3 million in total costs. Second, the forum of the USPTO offers a stronger level of expertise in analyzing patents and validity challenges, as the new board set up to hear these cases, the Patent Trial and Appeal Board (PTAB), is comprised of seasoned administrative patent judges, who are the same members that handle interferences and reexamination appeals. Third, it is faster than both the previous inter partes reexamination and the current ex parte reexamination procedures, with rules set up so that the entire process concludes within 12 months (extendible to 18 months in extraordinary circumstances) from the date that the PTAB makes its initial ruling.

Challenging patents in front of the USPTO offers other advantages over district court litigation. The burden for proving invalidity is, like ex parte reexamination, a “preponderance of the evidence” standard. District court judges, on the other hand, are bound by the “clear and convincing” standard to invalidate a patent. They are also required to accord the patent a presumption of validity, something that the USPTO does not do.

District court judges construe claims narrowly to preserve their validity. The PTAB, however, applies the “broadest reasonable interpretation” standard when construing claims. This broader standard allows the inter partes review petitioner to present prior art and arguments that otherwise may not be suitable in district court.

Inter partes review is often used in the context of litigation. After a patent is asserted against a defendant in district court, the defendant can file a petition for inter partes review within 12 months of the litigation suit. This provides a potential opportunity to end the litigation by invalidating the asserted claims. However, for the petitioner to be successful in this endeavor, a district court judge must first be convinced to stay the pending litigation. Certain district court judges have been reluctant to stay litigation for concurrent reexamination proceedings, particularly in jurisdictions with a fast-paced docket, due to the concern that reexamination takes too long.

Inter partes review, with its accelerated timeframe, has the opportunity to change this. District court judges now have a much stronger sense of when the inter partes review proceeding will end, and consequently, how long the stay will have to last. A successful validity challenge has the potential to end the patent infringement assertion and terminate the case at the district court. Even if unsuccessful, many of the validity issues can be resolved during inter partes review (through estoppel or otherwise), which can significantly curtail the number of issues remaining before the court. Therefore, district court judges should be more apt to grant a stay when an inter partes review petition has been filed early in the case.

Inter partes review does not, however, have to be used solely in the context of litigation. Any petitioner wishing to challenge the validity of another’s patent has the opportunity to do so through this proceeding regardless of whether they are faced with an assertion of infringement. This can be particularly advantageous for companies that feel threatened by a competitor’s patent and would otherwise challenge it in district court, but do not have sufficient grounds to file (or resources to pursue) a declaratory judgment action. Inter partes review offers a quasi-litigation setting not previously available to third-party challengers that includes limited discovery and motions – all the attributes of having a litigation-type proceeding to fully vet the issues and an important consideration in any high-stakes invalidity contest.

On the other hand, inter partes review is not always the preferred choice to district court litigation. There may be times when it is more desirable that a district court judge assess the validity of the patent, particularly if the issues are straightforward and the technology is not complex. Additionally, there are limitations built into the inter partes review process: (1) only prior art patents and publications can be asserted against the patent; (2) the patentee has the ability to amend claims (something not afforded in litigation); and (3) the petitioner can be estopped from further challenging the patent’s validity before the USPTO or a district court. The risk of estoppel can be particularly trying on the petitioner when considering that the petitioner is afforded a limited amount of space to make its case in the petition (60 pages, double spaced, 14-point font).

LeClairRyan’s Intellectual Property and Technology team has prepared and filed numerous inter partes review petitions. While many aspects of inter partes review are still unknown, our extensive skills and experience in interference practice, both ex parte and inter partes reexamination practice, and patent litigation provides us with the ideal background to handle these new proceedings.

Our team of practitioners regularly handles challenges to patents that involve a variety of technologies, including pharmaceutical compositions, medical devices, chemical compounds, optical fibers, biomagnetic separation technologies, spinal implants, and woven materials.