About a year after the introduction of the post grant challenge (PGC) options, you probably have some idea about PGCs and how to deal with the unique rules of this forum. (If you need a refresher on that, read here.) What a lot of us are left wondering is how exactly to decide whether to use one of these options. I’ll elaborate on one approach that may provide some guidance: 1) Weigh the pros and cons; 2) Think about the timing of filing; and 3) Evaluate the nature of your argument.
Assuming there’s enough at stake for your client to go this route, you’ll first want to weigh the pros and cons of filing a petition.
Advantages of PGCs
“From an in-house perspective there’s no question that the various new post grant challenge options under the America invents Act are really a major shift in strategy; it’s a major step in the right direction,” says Samir Pandya, Senior IP Counsel of the Global Litigation Group at SAP, at the 2013 AIPLA Annual meeting.
A goal of nearly every defendant is to lower the total cost of resolution of any legal issue. As counsel for the defendant, you have to weigh the settlement and licensing costs of a patent dispute against the total defense cost and how long it takes to resolve the dispute with certainty. Today, CBM, IPR, and PGR are the lowest possible cost options.
On Thursday, December 5, 2013, the United States House of Representatives passed the Innovation Act by a vote of 325-91.
Surprisingly, the Innovation Act (HR 3309) had only been introduced on October 23, 2013, and was marked-up on November 20, 2013. So what was the rush? This break-neck pace, which took place in a Congress that has been noted for its extraordinary inaction, is curious to say the least. Indeed, one Member of Congress went much further than raising a curious eyebrow. “This schedule suggests the fix was in,” said Congressman Dana Rohrabacher (R-CA) on December 3, 2013, “The clear message to little inventors: give thanks for your intellectual property rights, because you may not have them by this time next year.”
There is no doubt that Congressman Rohrabacher is correct, even if his criticism seems at first glance to be a bit over the top. There can be no serious disagreement over the undeniable truth that over the last 7 or 8 years there has been a steady erosion of patent rights both in the Courts and thanks to laws passed by Congress. There can also be little serious disagreement that the speedy process afforded the Innovation Act prevented those who favor strong patent rights from mounting a credible opposition to the bill. Unfortunately, the forces that seek to weaken patent rights are well funded and fight the battle each and every day. Even before the America Invents Act (AIA) was passed in 2011 there were efforts underway to plant the seeds of what will be the next “industry ask” of Congress, which is stripping the ITC of its patent jurisdiction or at the least preventing the ITC from issuing exclusion orders. See Follow the Moneyand Weakening the ITC Will Harm the US Economyand Are Some Patent Holders More Equal Than Others?
The Truth is that while innovators spend their time inventing and doing business, not focusing on what has been taken for granted in the United States since the days of Thomas Edison, which is a strong patent system. Indeed, in this round of patent reform Universities, small businesses, technology based start-ups and independent inventors were given no meaningful opportunity to express their views. At the one hearing on the bill David Kappos, former Director of the USPTO and now a partner at Cravath, Swaine & Moore, cautioned Congress about going to fast and pointed out that no independent inventors were even invited to testify. But there is no rest for those who seek patent reforms that make patents less valuable, they are hard at work on whatever the current attempt is to chip away at patent rights, but also working to lay the foundation for further erosion of patent rights.
EDITOR’S NOTE: What follows is a summary of the Goodlatte patent bill created by American Continental Group, which is a government affairs and strategic consulting firm in Washington, DC. Manus Cooney, a former Chief Counsel of the Senate Judiciary Committee is one of the partners at ACG, and is also frequent guest contributor on IPWatchdog.com. Cooney and his partners and associates worked to prepare this summary, which was described as a team effort. It is republished here with permission.
Manus Cooney, ACG
Sec. 3. Patent Infringement Actions
Pleading Requirements (p.2)
Amends Title 35 to establish heightened pleading requirements for patent infringement actions. A party alleging infringement must include in the pleading, unless the information is not reasonably accessible, the following:
Each patent allegedly infringed and each claim of each patent that is allegedly infringed
For each claim, which product, feature, method or process are allegedly infringed, including the name or model number; where each element of the claim is fount within the accused product/method; and how the terms of the asserted claim correspond to the functionality of the accused product/method.
Whether each element is infringed literally or under the doctrine of equivalents
A description of the direct infringement, the acts of the alleged indirect infringement that contribute to or are inducing direct infringement
A description of the right of the party alleging infringement to assert each patent identified and patent claim identified
A description of the principal business of the party alleging infringement
A list of each complaint filed, of which the party alleging infringement has knowledge, that asserts or asserted any of the patents identified
Whether each patent is subject to any licensing term or pricing commitments through any agency or standard-setting body
Legend #2: All companies have equal access in obtaining inter partes review of the patents of others.
Truth: Of the initial denials of inter partes petitions that we identified, 88% of them were directed at petitions filed by small entities.
David and Goliath by French painter James Tissot, 1904.
When the America Invents Act was first passed, it was contemplated by many that its post-grant challenge procedures would be “particularly useful for individuals, start-up companies, and small-to-medium enterprises.” See, Rantanen, Lee Peterbridge and Jay P. Kasen, America Invents, More or Less? (University of Iowa Legal Studies Research Paper, Number 12-09, p. 235, March 2012).
Our inter partes challenge data from pre- and post-passage of the AIA clearly show that of the relatively few initial denials made by the USPTO of an inter partes challenge request, most fell on entities that typically file as small entities. We found 88% of denied petitions for inter partes review were filed by small entities, while only 12% of those denials related to petitions filed by large entities (Fig. 6). That is, small entities are 7 times more likely to have their petitions for inter partes review denied than large entities. Of the large entity petitions for inter partes review that were denied, only one of them was by a company in the Global 2000+. It is unclear why this is occurring. It could be argued that small entities simply are not seeking the same high quality legal work that the large entities are employing. An alternative answer may simply relate to an ingrained bias in the USPTO for the reexamination requests of the largest companies (as inter partes review requests are not blinded), which is unwittingly leading to more small entity requests being denied.
Editor’s Note: This post is part 1 of 2 of an article written by Steven J. Moore and with the assistance of Marvin Wachs and Timothy Moore, also of the Kelley Drye & Warren Patent Department. Part 2 will be published on Friday, August 16, 2013. Please also see Moore’s recent 5 part series on Patent Trolls titled: A Fractured Fairy Tale: Separating Fact & Fiction on Patent Trolls.
David and Goliath by French painter James Tissot, 1904.
In this paper, we look at whether the AIA, via its ex parte reexamination and inter partes review provisions, and its transitional program for covered business method patents, has actually benefited small entity companies, as many in the press and in Congress had urged upon its passage.
This study began before passage of the AIA, and was originally designed to center on the reexamination world to determine whether the patents of small entities were actually fairing worse than those of large entities under this procedure. However, the study morphed into a larger project, as the America Invents Act changed inter partes reexamination to inter partes review, and added a new challenge procedure, the so-called transitional program for covered business method patents. The project also expanded as the USPTO raised fees exorbitantly high post-AIA, pursuant to its newly obtained fee setting authority to “recoup costs,” for all ex parte and inter partes procedures, including the transitional program for covered business method patents. In regard to reexamination/review we feared that the whole mix of filers was going to be different pre- and post-AIA. Of particular concern to us was the extremely large increase in fees associated with inter partes review which we thought might affect the ability of small entities to file inter partes challenges, the nearly three-fold increase in fees by the USPTO in regard to ex parte reexamination, and the extraordinarily high fees associated with the transitional program for covered business method patents. Thus, a study originally designed to look only at pre-AIA reexaminations, was altered into a study of the effect of the AIA on all ex parte and inter partes procedures at the USPTO. Completion of our study was held up, as we waited for more data to come out in respect of post-AIA ex parte reexamination and inter partes review, as well as the transitional program for covered business method patents.
Our study on inter partes proceedings was based on 201 random inter partes reexamination requests filed before the enactment of the inter partes review procedures of the AIA, as well as 230 inter partes review requests made after the passage of the America Invents Act. We compared these samples to determine how small entities, and small corporate America as a subset, has been affected by the new inter partes proceedings against third party patents.
The latest incarnation of the SHIELD Act was introduced on February 27, 2013, and changes direction as if the first iteration were waived off in disgust before it could even lower its gears. SHIELD Act 2, scuttles the “reasonable likelihood of succeeding” idea floated and introduces a new tool aimed at walling off the troll: a bond requirement. If the plaintiff is not an original inventor or assignee, did not make a substantial investment in practicing the invention, or is not a university, that troll must post a bond.
Interest in design patents is increasing, in part, because they can be obtained relatively inexpensively and quickly. Dennis Crouch recently reported that from 2010-2012 the majority of design patents issue within 12-months of their filing date (see “Design Patents Are Still Relatively Quick” by Dennis Crouch, Patently-O, January 21, 2012,. In addition, most design patents issue without amendment and with little or no file wrapper estoppel, potentially leading to a “cleaner” patent with potentially fewer issues to be raised in litigation that could negatively affect the scope of the patent. The number of design patent filings has increased approximately 20% since 2009 (Robert Olszewski, “State of the Technology Center,” USPTO Design Day 2013), and, with this increase it is reasonable to expect an increase in design patent enforcement.
Design patent infringement is based on a finding of “substantial similarity” between an accused design and the patented design in the eyes of an “ordinary observer”. This typically involves a more straightforward analysis than utility patent enforcement, particularly given the Federal Circuit’s warning of the dangers of reliance on a detailed verbal claim construction. SeeEgyptian Goddess, Inc. v. Swisa, Inc., 543 F.3d 665, 680 (Fed Cir. 2008) (en banc). Moreover, the potential for disgorgement of the infringer’s profit can motivate a defendant to quickly settle on reasonable terms.
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