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Post Grant Review, Inter Partes Review and Transitional Program for Covered Business Method Patents

Written by Kenneth N. Nigon
Practice Manager
Patent Preparation and Prosecution Group
RatnerPrestia
Posted: Aug 29, 2012 @ 7:25 am
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Post Grant Review, Inter Partes Review and the Transitional Program for Covered Business Method Patents were instituted with the goal of improving patent quality by giving third parties methods to challenge patents that are less expensive and less involved than litigation. Each of these procedures is a trial before the Patent Trial and Appeal Board (Board) composed of Administrative Patent Judges and subject to Part 42 of 37 C.F.R., Trial Practice Before the Patent Trial and Appeal Board.  The trials allow for limited discovery, which has not been available in Ex Parte or Inter Partes Reexamination, the existing procedures for challenging patents in the U.S. Patent and Trademark Office.  Because the discovery is limited, it is unlikely that these procedures will be used in cases where large amounts of evidence may be needed to prove patent invalidity.

Post Grant Review

A petition for Post Grant Review (PGR) must be filed no later than nine months after the issue date of a patent or, for claims broadened in a reissue, nine-months after the date of the certificate.  A third party may challenge a patent under PGR based on any ground that may be raised under 35 U.S.C. § 282(b)(2) or (3) including patent subject matter eligibility or utility under 35 U.S.C. § 101, novelty under 35 U.S.C. § 102, Obviousness under 35 U.S.C. § 103 and enablement, written description and definiteness under 35 U.S.C. § 112.  A PGR may only be instituted for a patent having claims with an effective filing date after March 16, 2013.  A PGR must be filed no later than one year after the petitioner has been sued for infringement and cannot be instituted if the petitioner has filed a declaratory judgment action against the patent.

A PGR begins with the filing of a petition in which the Petitioner must identify, for each challenged claim, the specific statutory grounds for challenging the claim and how the challenged claim is to be construed.  The Petitioner must also provide an analysis showing how the construed claim is unpatentable under the statutory grounds.  Although the Petitioner is required to construe the claims, the Board will review each claim according to its broadest reasonable interpretation in view of the specification as it would be understood by a person skilled in the art.

Where the petitioner challenges a claim based on prior art, the analysis must include an element-by-element comparison of the claim as construed against the prior art.  For non-prior-art rejections, the analysis must state how the claim fails to comply with the statute.  The PGR petition may also include supporting evidence in the form of exhibits, affidavits, declarations and expert reports.  Any such supporting evidence must be referenced in the claim analysis.  The petition must also be accompanied with the appropriate fee, $35,800 for up to 20 challenged claims and $800 for each additional challenged claim.  The petition is limited to 80 pages, double spaced with 14 point font, no matter how many claims are challenged.  Claim charts, however, may be single spaced or they may be provided in an expert’s opinion where they would not be counted toward the page limit.

Three months after the filing of the petition, the Patent Owner may file a preliminary response.  This response may include exhibits but may not include any testimonial evidence such as affidavits or expert reports.  If the Patent Owner has reason to believe that the Requester may not have standing to challenge the patent, however, the Patent Owner may be able to present testimonial evidence relating to the standing of the Petitioner after filing a motion with the Board.

Based on the petition and the preliminary response, if one is filed, the Board will determine whether to institute a PGR and what claims will be included.  The Board analyzes each claim to determine if, based on the submitted evidence, the Petitioner has standing and is more likely than not that at least one of the challenged claims is unpatentable.  A PGR may also be instituted if the Board determines that the petition raises a novel or unsettled legal question that is important to other patents or patent applications.

When the PGR is instituted, the Board will issue a scheduling order, specifying times for the various phases of the trial. Based on this order, the Patent Owner may begin to take discovery.  Under Routine Discovery, the Petitioner is required to provide any exhibits to the Patent Owner and to present any affiants, declarants or experts whose testimony was referenced in the Petition for cross-examination.  Petitioner is allowed similar Routine Discovery after the Patent Owner files the Response to the Petition.  Under Routine Discovery, each party is also required to provide any relevant information that is inconsistent with a position advanced by the party during the proceeding concurrently with the filing of the documents or things that contains the inconsistency.  Unless the Patent Owner and Petitioner agree to one of the Mandatory Discovery provisions under 37 C.F.R. § 42.51, all other discovery by the Patent Owner and Petitioner must be requested by motion which requires a showing of good cause as to why the discovery is needed.

Within one month of the institution of the PGR, the Petitioner or the Patent Owner may provide supplemental information as long as that information is relevant to a claim for which the trial has been instituted. Submission of supplemental information after this one month period may only be made by motion to the Board and requires a showing that the submission is in the interests of justice.

A scheduling conference will be held one month after the institution of the PGR in which the Petitioner or Patent Owner may ask the Board to adjust the time limits in the scheduling order and request additional discovery.  The Patent Owner must also obtain permission to file a reasonable number of claim amendments.  Matters discussed at the scheduling conference are presented in motions to the Board prior to the conference.

The Patent Owner’s response to the petition is due at a time determined in the scheduling order.  The default time is three-months after the institution of the PGR but this time may be adjusted by the Board.  Patent Owner’s response may include a motion to amend including a reasonable number of claim amendments.  The default is one replacement claim for each contested claim but more amended claims can be provided if allowed during the scheduling conference.  The patent owner may make additional claim amendments, after the amendments made with the Patent Owner’s Response, on motion to the Board but any additional amendments require a showing of good cause or agreement between the parties.

Once the Patent Owner’s response has been filed, the Petitioner may begin Routine Discovery and, if agreed with the Patent Owner, Mandatory Discovery.  At a time determined in the scheduling order (default three months), the Petitioner may then file a reply to the Patent Owner’s Response and an Opposition to the Patent Owner’s motion to amend.

After the Petitioner’s Opposition, the Patent Owner may file a reply to the Opposition at a time determined in the scheduling order (default one month).  After the filing of this reply, the PGR enters a period for observations and motions to exclude evidence.  During this period, either party may request an Oral Hearing.  After the Oral Hearing, the Board issues the Final Written Decision.

Once the Final Written Decision has been issued and the conclusion of any appeals to the Federal Circuit, the Petitioner is estopped from challenging any claim that was finally adjudicated based on any ground that was raised or reasonably could have been raised.  This estoppel applies to proceedings before the PTO, District Court and ITC.  The Patent Owner is also estopped from pursuing, in the USPTO (e.g. in a continuation application) any claim which is not patentably distinct from a claim that was finally refused or canceled in the PGR.

Inter Partes Review

Inter Partes Review (IPR) is provided as a substitute for the Inter Partes Reexamination proceedings which will not be available after September 16, 2012.  IPR is similar to PGR but has several key differences.

First, the petitioner may not file a petition for IPR until the later of nine-months after the issue date of the patent and the conclusion of any PGR proceeding that has been instituted for the patent.

Second, the grounds for invalidating a patent under IPR are more restricted; the IPR petition may address only issues of novelty and obviousness based on patents and printed publications.

Third, the standard for instituting an IPR, “reasonable likelihood that at least one of the claims challenged in the petition is unpatentable,” is less stringent than for a PGR, allowing the Board more latitude for instituting an IPR.

Fourth, the standard for obtaining motion-based discovery is more stringent for IPR, an “interest of justice” standard rather than the “good cause” standard for PGR.

Fifth, the page limits and fees for an IPR are lower.  An IPR Petition, Preliminary Submission and Reply are limited to 60 pages each and the fee for challenging up to 20 claims is $27,200 and $600 for each additional claim.

Transitional Program for Covered Business Method Patents

 The Transitional Program for Covered Business Method Patents (CBM) allows a party who has been sued or threatened with suit based on a financial business method patent to be able to use a procedure similar to PGR to determine the validity of the patent.  Although CBM follows the procedures for PGR, there are several important differences.

First, a CBM may be instituted for any eligible patent as of September 16, 2012 based on 35 U.S.C. §§ 101, 102, 103 or 112.  If it is instituted against a patent having claims with an effective filing date prior to March 16, 2013, however, the prior art that may be used to invalidate the patent is limited to prior art under the current 35 U.S.C. § 102(a) and prior art that disclosed the invention more than one year before the filing date of the application for the patent and would have been prior art under 35 U.S.C. § 102(a) as of the invention date of the patented invention.  Challenges based on prior art under 35 U.S.C. §§ 102(e), (f) and (g) are not allowed.

Second, a CBM cannot be instituted during the period that a PGR could be instituted against the patent.

Third, the Petitioner must have been sued or have standing to bring a declaratory judgment action against the patent.

Fourth, the claims challenged in a CBM must concern a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.  A CBM may not challenge a claim for a technological invention.  A technological invention is one in which the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.  The burden of proving that a claim is not directed to a technological invention is on the Petitioner.

Fifth, the estoppel for a CBM is not as broad for proceedings in District Court and before the ITC – the petitioner is estopped from raising only issues that were actually raised.  The estoppel for subsequent PGR or IPR proceedings before the USPTO is the same: raised or reasonably could have been raised.

 

About the Author

Ken Nigon has 29 years of experience in Intellectual Property Law, including five years as Patent Counsel for a major consumer electronics corporation and 24 years with RatnerPrestia. In his work at RatnerPrestia, Mr. Nigon has acted as Patent Counsel for three U.S. laboratories of a major Japanese consumer electronics company, advised in-house patent counsel of a major U.S. research laboratory and managed the procurement and licensing of Intellectual Property for numerous other companies. Mr. Nigon is also the Practice Manager for the Patent Preparation and Prosecution Group at RatnerPrestia.


22 comments
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  1. Kenneth,

    There is quite a bit of discussion as whether the scope of post-grant review includes 35 USC 101 because it isn’t characterized as a “condition for patentability” under part II as required by 35 USC 282(2). What is your reasoning for including 35 USC 101?

  2. I was going to ask the same question.

    EG, as I respect (although not always agree) your views, what is your take on the issues being discussed on Patently-O?

  3. The statements I made are based on the PTO’s view that 101 issues may be raised in a PGR. “Other grounds available for post-grant review include 35 U.S.C. 101 and 112, with the exception of compliance with the best mode requirement.” 77 FR 7061. The questinon is whether 101 is a “condition for patentability” specified in part II of 35 U.S.C. 102 and 103 are expressly identified as “conditions of patentability” but 101 is not. In the Mayo decision, however, the Supreme Court noted that 101 is a condition for patentability. Quoting the legislative history for the 1952 act. “‘A person may have ‘invented’ a machine or a manufacture, which may include anything under the sun that is made by man, but it is not necessarily patentable under section 101 unless the conditions of this title are fulfilled.'” (see page 21 of the slip opinion). This passage indicates that congress believed 101 to be a condition for patentability and, thus, in the Supreme Court’s view, even though section 101 is not identified as a “condition for patentability” in the statute, it is such a condition. Although there may be a legal argument and I’m sure it will be raised, I don’t believe that it will make it through the Supreme Court.

  4. the PTO clearly believes that 101 challenges can be raised in a PGR proceeding. “Other grounds available
    for post-grant review include 35 U.S.C.101 and 112, with the exception of compliance with the best mode requirement.” 77 FR 48682. The issue is whether 101 is “specified in part II of this title as a condition for patentability” pursuant to 35 U.S.C. 282(b)(2). The problem occurs because sections 102 and 103 are labeled “conditions for patentability” but 101 is not. The Supreme Court appears to believe that it is, however. In the Mayo decision it cites to legislative history from the 1952 act: “A person may have ‘invented’ a machine or manufacture, which may include anything under the sun that is made by man, but it is not necessarily patentable under section 101 unless the conditions of the title are fulfilled.” This appears to indicate that the drafters of section 101 believed that it was a condition for patentability. I am sure that this issue will be raised but given this legislative history and the legislative history of the AIA, I think it’s pretty clear that Congress intended for PGR to allow 101 challenges. I expect that this will be formally corrected in the technical amendments to the AIA.

  5. Anon,

    Thanks for your respect, it means much to me. And I don’t mind if we do disagree on some issues, it happens, and is done with professional courtesy, unlike what we too often see happen on Patently-O, which is why I no longer comment there, as much as I might like to.

    To be clear, there are two different threads being presented on Patently-O on challenges under 35 USC 101. One relates to challenges in litigation (raised by Professor Hricik), the other to challenges under the new post-grant procedure provided by the AIA. Regarding the former, I hadn’t thought about the 35 USC 282(2) angle, but what Hricik has raised is a legitimate question as to whether challenges to patent validity based on 35 USC 101 are proper in litigation and on what basis. What’s interesting is that the SCOTUS cases prior to Mayo v. Prometheus which ruled on 35 USC 101 involved ex parte prosecution (Gottschalk v. Benson, Parker v. Flook, Diamond v. Diehr, Diamond v. Chakrabarty and Bilski v Kappos) with one notable exception: Pioneer Hi-Bred International v. JEM AG Supply (on patenting sexually reproduced plants). In Mayo v. Prometheus, Breyer (as well as everyone else, including the parties) completely blipped over this fine point about 35 USC 282(2) supporting validity challenges under 35 USC 102/103 but possibly not under 35 USC 101. (I could also raise a few points about how Breyer and SCOTUS can create based on their version of federal common patent law “exceptions” to patent-eligibility when 35 USC 101 specifies none if the claimed invention is truly within one of the statutory classes, but that’s an entirely different subject.)

    Regarding the post-grant procedure, the meaning of 35 USC 282(2) has been raised anew. There’s no doubt in my mind that the USPTO has the ability to examine an application in ex parte prosecution as to whether it satisfies 35 USC 101 because 35 USC 131 says the examination must determine whether “the applicant is entitled to the patent under the law” and if what is claimed by the application isn’t in one of the statutory classes of 35 USC 101, it isn’t entitled to a patent “under the law.” But once that patent is granted, 35 USC 282(2) (as well as 35 USC 282(3)) control as to what validity issues may be raised. Now that at least some in the patent world have been alerted to this fine point, it will be interesting how this question plays out in the new post-grant procedure. What’s scary is that 35 USC 101 challenges like the Myriad case could end up flooding the USPTO through this new post-grant procedure where parties like the ACLU, PubPat, and others want to advance a “policy” agenda about what can and especially cannot be patented.

    One of the Federal Circuit judges who might well consider this 35 USC 282(2) question to be a valid point is Judge Newman. Newman is a real stickler for paying attention to what the patent statutes say and mean (I frankly agree with her view and approach), unlike some of her Federal Circuit colleagues and especially unlike SCOTUS which gives lip service to the patent statutes on core patent law issues (35 USC 101, 102, and especially 103) as an “inconvenience” to be merely cited in passing, but subordinate to their federal common patent law.

  6. Gene,

    I can’t seem to get my comments to post. Is there an issue here?

  7. Anon:

    I do have comments in response to your query, but when I try to post them, nothing happens. Let me try it in stages.

  8. Anon,

    I’ve tried partial posts and it doesn’t seem to work. Don’t know what the issue is.

  9. EG-

    Not sure why your comment was getting caught up in spam. It is posted now. Sorry about that.

    -Gene

  10. Hey Gene,

    Not a big problem. Better to keep the postings “clean” and on point.

  11. Ken,

    Thanks for the response to my question. I’ll agree that the USPTO believes that PGR challenges can be based on 35 USC 101, but the language in the AIA which references 35 USC 282(2) & (3) which can be construed ot exclude 35 USC 101 as a basis for such a challenged. Also, from what I’ve seen, the legislative history/intent is somewhat fuzzy, mainly based on statements by Senator Kyl which may or may not reflect the consensus of Congress in passing the AIA. Also, some jurists, like Justice Scalia, view the legislative history/intent as irrelevant, meaning they will only look at the language of the statute itself.

    I’ve reviewed that passage that Breyer may have relied upon as the basis for allowing a validity challenge under 35 USC 101 in litigation, and it doesn’t necessarily support that 35 USC 282 permits such challenges. As I’ve noted in my response to Anon, SCOTUS is notoriously sloppy on dealing with the fine points of statutory construction of patent statutes, especially when it serves their agendas (Stevens concurring/dissenting opinion in Bilski about what 35 USC 273 means in terms of the patenti-eligibility of “business methods” is a glaring example of this practice). As I also noted in my response to Anon, Mayo v Prometheus is the rare patent infringement case where the issue of patent-eligibility has reached SCOTUS.

    Frankly, Breyer and SCOTUS could have avoided this problem if they would have focused first on whether the claimed invention passed muster under 35 USC 102, 103, and especially 112. (Prometheus’ claimed method is at least problematical in view of 35 USC 112, second paragraph, as to what, exactly the claimed method is that would be infringed.) Unfortunately, Breyer was “hell bent” on reserving to SCOTUS the veto power on what subject matter is patent-eligible based on a “I know it when I see it standard” under 35 USC 102, instead of letting 35 USC 102, 103, and especially 112 do the “heavy lifting” for them which are clearly defined as valdity defenses under 35 USC 282.

  12. Dear Ken,

    My apologies for a few “typos” in my post which I’ve reposted as corrected:

    Thanks for the response to my question. I’ll agree that the USPTO believes that PGR challenges can be based on 35 USC 101, but the language in the AIA which references 35 USC 282(2) & (3) can be construed to exclude 35 USC 101 as a basis for such a challenges. Also, from what I’ve seen, the legislative history/intent is somewhat fuzzy, mainly based on statements by Senator Kyl which may or may not reflect the consensus of Congress in passing the AIA. Also, some jurists, like Justice Scalia, view the legislative history/intent as irrelevant, meaning they will only look at the language of the statute itself.

    I’ve reviewed that passage that Breyer may have relied upon in Mayo v Prometheus as the basis for allowing a validity challenge under 35 USC 101 in litigation, and it doesn’t necessarily support that 35 USC 282 permits such challenges. As I’ve noted in my response to Anon, SCOTUS is notoriously sloppy on dealing with the fine points of statutory construction of patent statutes, especially when it serves their agendas (Stevens concurring/dissenting opinion in Bilski about what 35 USC 273 means in terms of the patent-eligibility of “business methods” is a glaring example of this practice). As I also noted in my response to Anon, Mayo v Prometheus is the rare patent infringement case where the issue of patent-eligibility has reached SCOTUS.

    Frankly, Breyer and SCOTUS could have avoided this problem if they would have focused first on whether the claimed invention passed muster under 35 USC 102, 103, and especially 112. (Prometheus’ claimed method is at least problematical in view of 35 USC 112, second paragraph, as to what, exactly the claimed method is that would be infringed.) Unfortunately, Breyer was “hell bent” on reserving to SCOTUS the veto power on what subject matter is patent-eligible based on a “I know it when I see it standard” under 35 USC 101, instead of letting 35 USC 102, 103, and especially 112 do the “heavy lifting” for them which are clearly defined as validity defenses under 35 USC 282.

  13. EG and Anon,

    I agree that there are potential problems with 101 issues in view of the way 282(2) and (3) are written. I believe that if these are real issues, they will be addressed quickly by congress because the Transitional Program for Covered Business Methods, which can be used on September 16 to challenge existing financial business method patents, uses the PGR proceedings. The inability to address 101 issues for a covered business method patent would greatly weaken this section of the AIA. Because the banking industry was behind this section of the AIA, there will be a lot of pressure on congress to fix it.

    EG I also agree with your analysis of Bryer’s decision. I too think it would be better to avoid the “swamp of 101 jurisprudence” where possible by relying on 112, 102 and 103 and bring in 101 only where there’s a Benson-like preeemption issue.

  14. Ken,

    Thanks for your further reply. It would be nice for Congress to clarify the 35 USC 101 “challenge” question but I wouldn’t hold my breath that Congress would do it this year or even in the near future next year with all the other political “turmoil” in DC. I also don’t think challenges to existing financial business method patents using tPGR proceedings would be significantly affected if 35 USC 101 were unavailable. (I’m not happy that Congress selected a particular category of claimed inventions for this transitional procedure, but that’s “water over dam” now.) Challenges of this nature could still be made under 35 USC 112 as if the method is too “abstract” it likely runs afoul of 35 USC 112 under either the second paragraph or first paragraph.

    Yeah, Breyer’s opinion in Mayo v Prometheus ignored all the practical advice (including that from the government) on how to better resolve issues like these because he wants SCOTUS to retain veto power over what is or is not patent-eligible subject matter for “policy” reasons. Also, in my mind, Benson-like preemption really isn’t an issue for 35 USC 101, but is, instead, an issue for 35 USC 112, first paragraph (primarily the “enablement” prong). O’Reilly v. Morse is miscited in my opinion as a patent-eligibility case when it is really an “enablement” case.

  15. Ken-

    I really appreciate your making things so clear, as I don’t happen to be trained in patent law. As EG alludes to, it seems as if the Supreme Court is perhaps stepping outside of the bounds of what Congress intended. How it will be resolved is anyone’s guess I suppose, but it seems to me as if the Supremes are inviting controversy and doubt as regards their wisdom in the matter. If they decide to flip-flop on a whim, who is going to respect their opinions further down the road? Is their judgment really sound and in the best interests of the country? I tend to think not, as they seemingly have a pretty large chip on their shoulder as far as I am concerned. They also cannot be fired or de-elected, which is problematic in a truly democratic form of government.

  16. The effective date for PGR is September 16, 2012. It’s only available, however for applications with an effective filing date of March 16, 2013. In what sense, then is PGR “effective” as of September 16?

  17. Mark,

    Although PGR for all patents will not be available for a while, the Transitional Program for Covered Business Methods (CBM) uses the same procedures as PGR. CBM is available on September 16 for all patents.

    Ken

  18. Ken,

    Thanks. That makes sense. I wanted to make sure I didn’t miss some obscure way that an issued patent could qualify as FITF before March 16.

  19. I finally got a chance to listen to the Foley and Lardner webinar recording that deals with much of what is being discussed here. I would recommend having a listen, as it seems very clear and well said, especially by Teresa Rea at the beginning, who seems to be another energizer bunny like David Kappos. I am just starting to dig into what James D. Smith, Chief Administrative Patent Judge has to say, which also seems to be very well informed and relevant.
    http://www.foley.com/aia-post-grant-implementation-begins–is-your-business-strategy-aligned/

    To hear the recording, you will have to right click, and *save as* to download it, complete with the slide presentation. So far it is very understandable, even for a legal rookie like myself. It seems as if the PTO is trying to be careful, after being dealt the hand they have by Congress. The 101 and 112 issues are covered pretty clearly, which were making me a bit nervous. Great discussion all, and thanks to Ken for the great article.

    Stan~

  20. I have a request for clarification. In your summary, it states: “A PGR must be filed no later than one year after the petitioner has been sued for infringement . . . ”

    I’m unclear on whether the one-year-after-being-sued restriction actually applies to everything, or just to inter partes review.

    37 CFR § 42.101 prohibits filing of an inter partes review by a petitioner who has filed a civil action challenging validity of the patent, and it also includes a restriction preventing filing by petitioners who have waited more than one year after being served with a complaint alleging infringement.

    37 CFR § 42.201 prohibits filing of a PGR if the petitioner has filed a civil action challenging validity of the patent, but it doesn’t mention the one-year-after-being-sued restriction.

    Is there something in the AIA or the CFR that indicates that the one-year-after-being-sued restriction applies to everything, and not just inter partes? Thanks for your help, and for a great summary overall.

  21. Anon,
    Thanks for noticing this. You are correct the one year limitation applies only to IPR. PGR and CBM do not include this limitation on when the request may be filed. For PGR, the limitation would not make sense as a PGR needs to be filed within 9 months of the patent issue date and you can’t sue on a patent until it issues. CBM is exempt from the 9-month limitation, however, and does not include the one-year limitation.
    Ken

  22. […] new 35 U.S.C. § 321(b) means in terms of “grounds” that may be raised.  See Ken Nigon’s Post Grant Review, Inter Partes Review and Transitional Program for Covered Business Method Patents.  Interestingly, the USPTO post-grant review rules package has interpreted new 35 U.S.C. § […]