What’s Wrong with Reexamination and How to Make it Better

Reexamination is a low-cost but seldom used alternative to litigation for determining the patentability of the claims in an issued patent. Despite what I write below, I am a fan of reexamination and I think that the fears associated with the process are largely unfounded.  Reexamination could and should be used more often than it is, and if you are a defendant in an ongoing patent infringement litigation and you are not simultaneously involved in bringing a reexamination you need to ask yourself why not!

Yes, the reexamination process is slow.  Yes, the reexamination process doesn’t work as well as it could or should.  Yes, reexamination it adds extra cost.  But the statistics don’t lie.  In the right case reexamination is extremely effective.  Unfortunately, some patent litigators counsel clients to steer clear of reexamination.  This may be good advice, or it might just be because the litigator isn’t familiar with reexamination, or in some cases because you recommend what you know and do.  The old saying — if you are a hammer all the world looks like a nail — comes to mind.  So despite what follows relating to how Congress could and should make reexamination better, if you are on the wrong side of a patent infringement litigation you really should get some impartial advice about the pros and cons of pursuing a reexamination strategy before writing it off as a bad idea.

One of the chief problems with reexamination is that requests for the Patent Office to reexamine a patent can only be made as long as written evidence presents a substantial new question of patentability.  Because reexamination only considers printed publications and issued patents it is not useful in many circumstances to challenge validity.  Some of the best, most reliable evidence raising a substantial new question of patentability cannot be considered during reexamination, making the process nothing more than a paper tiger in many situations.

In order to ease some of the pain of reexamination the patent laws were modified just over a decade ago to allow for the option of either an ex parte reexamination or an inter partes reexamination.  The hope was that this would provide a mechanism by which invalid claims could be challenged in a meaningful way without the enormous expense of litigation.  Unfortunately, the inter partes reexamination process is as flawed as the ex parte version.  Not only does inter partes reexamination cost more, but there is the requirement that if you challenge validity in an inter partes reexamination and lose you are forever prevented from challenging validity in any subsequent proceeding.  This obviously doesn’t provide much comfort given that your whole argument during reexamination is that the Patent Office missed something.

In any given year there are not many reexam requested, although reexam has been growing in popularity in recent years.  See table to right, and reexam statistics from the USPTO. Notwithstanding, reexam remains an under utilized option.

So why the lack of interest in reexamination?  “One big defect with the current inter partes reexamination process is that there is no interview right,” said Robert Greene Sterne, founding director of Sterne, Kessler, Goldstein & Fox P.L.L.C. and editorial director of the Reexamination Center. “The examiners in the Central Reexamination Unit do not have the benefit of being able to ask needed questions and obtain needed information from either party in the reexamination. While the PTO has recently indicated some interest in creating an interview right, this may not occur due to the current fee diversion problems that the Office is experiencing.”

Furthermore, not only is much of the best prior art excluded from consideration, but the outcome of a reexamination will hang around your neck like an albatross.  Certainly, patents are entitled to the presumption of validity, but patents that have gone through the reexamination process are entitled to even more of a presumption of validity.  I have never known exactly what that means in so far as a legal standard, but US case law time and time again affirms that it is true statement to say that reexamined patents are entitled to even heightened deference, which likely explains why reexamination is not used simply as a matter of course.

Additionally, with inter partes reexamination, if the claims escape reexamination then the third party requester loses the ability to raise invalidity defenses tied to the patents and printed publications raised, or which could have been raised during the inter partes reexamination proceeding.  For this reason many defendants and would-be defendants shy away from inter partes reexamination despite the fact that historical figures show that 45% of concluded inter partes reexaminations result in all claims being lost or disclaimed and 43% result in claims being amended.  The 88% success rate just isn’t enough for some to see inter partes as a good option. Perhaps defendants should conspire behind the scenes relative to inter partes reexamination strategy such that at least some of the defendants or likely defendants aren’t all-in during inter partes reexamination, still preserving the right to challenge in district court patent litigation proceedings.

By any measure inter partes reexamination has not provided the alternative hoped for, and ex parte reexamination doesn’t offer the best opportunity for the requester to convince the Patent Examiner that the claims should be rejected or amended because after the request for ex part reexamination is granted the participation of the requesting party is over.  Yes, the requester can participate one more time if the patent owner files a Patent Owner Statement, but even if that does happen a single additional bite at the apple doesn’t offer the kind of continued adversarial proceeding offered by inter partes reexamination.

In any event, the take-away lesson here is that reexamination should absolutely be considered when there is a strong case of invalidity that is built upon prior patents or publications.  Equally important to remember is that if you elect to proceed with reexamination you had better be right because you must anticipate that you will have to live the ramifications of the Patent Office decision, whether in the form of a greater but unquantifiable presumption of validity or via the outright estoppel that accompanies a lose in inter partes reexamination. So for goodness sake, if you are going to file a reexamination perform the requisite due diligence first to make sure you are finding the best available prior art, and make sure that you are not just wishfully thinking but do have a real reason to believe you will prevail.

So what is the Patent Office doing now with respect to reexamination?  About six years ago, at the end of July 2005 the Patent Office implemented new processes for handling reexamination proceedings in an effort to improve timeliness and quality.  The goal of the Patent Office was to have all reexaminations that had been pending for more than two years resolved right away. In addition, all future reexamination proceedings were promised to be completed promptly, but in any event within about two years.  In addition, the Patent Office also created a Central Reexamination Unit.  Rather than have reexaminations being assigned to examiners according to technology (the way it was done previously), reexamination cases are now be assigned to squad of examiners assigned to a single unit, which has caused some practitioners to scratch their heads from time to time given what is perceived by some as widely varying quality and adherence to procedural requirements.

In any event, the streamlining of reexamination hasn’t unfolded quite the way the Patent Office had hoped, and the Patent Office is once again in the midst of revamping reexamination procedures.  There is hope that the Kappos Administration, which proceeds methodically and inclusively with the rulemaking process, will fashion a better, smoother system.  But for now, reexamination is too slow and perhaps even a bit quirky.  For FY 2010 the average time to the issuance of a certificate at the conclusion of ex parte reexaminations was well over 2 years, and the average time to the conclusion of inter partes reexamination is over 3 years.  See the chart below, taken from Reexamination Operational Statistics.

Fiscal Year 2010 Reexamination Time of Proceedings

The real sin is that reexamination could be a much better process.  Those in Congress talk about alleviating the burden on the district courts by having a reexamination proceeding available, but they don’t seem to appreciate why it is that reexamination is under utilized.  On top of that, patent reform circulating in Congress does absolutely nothing to revamp reexamination in a way that would streamline the process and make it more appealing.  What patent reform does do, however, is add yet another procedure to bog down the Patent Office while not allowing the Patent Office to set fees and keep those fees they collect to do the work that is promised when they accept those fees.  So if patent reform passes you can anticipate that the reexamination pendency numbers will get even more ugly, making the option even less appealing.

What should Congress be doing?  Here is a list:

  1. Congress should remove the prohibition of only allowing patents and printed publications to be used in reexamination to challenge claims.  During the course of patent prosecution in the first instance to obtain a patent every form of prior art is available to the examiner to use to reject claims.  Likewise, during a reissue proceeding after the granting of a patent the examiner is allowed to rely on any form of prior art to reject claims.  It makes no logical sense to allow all available prior art to be used during prosecution and reissue but not during reexamination.
  2. Congress should remove the estoppel provisions that limit defenses during litigation in the event of failure to prevail in inter partes reexamination.  The fact is that there is no estoppel with respect to issues decided by the ITC when the same dispute arrives at the desk of the district court judge, so why would you have estoppel in the situation where the USPTO has reviewed the same dispute?  If estoppel is about efficiency then have estoppel all around, if it isn’t then get rid of it.  I would get rid of it and then allow whatever squishy additional presumption attaches as the result of the Patent Office reviewing the patent for a second time.
  3. Congress should allow the USPTO to keep the fees it collects and set the fees it charges so long as they are reasonable and justified relative to the services to be provided.  Reexamination, like virtually every other proceeding at the USPTO, is ridiculously and unnecessarily long.  If we want to have a better patent system the USPTO needs to get faster, which requires more hiring and the ability to continually update IT infrastructure that has been allowed by Congress to become dilapidated over time.
Of course, patent reform doesn’t address the real problems or provide any real “reforms.”  Another missed opportunity.

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10 comments so far.

  • [Avatar for Paul F. Morgan]
    Paul F. Morgan
    July 27, 2011 02:02 pm

    To support one of Gene’s points, if a defendant’s litigation counsel is saying “save those good prior art patents or publications for the litigation,” get some facts, not just personal opinons. Compare the costs and low odds of invalidating asserted patent claims with such prior art in litigation [requiring a jury trial and then usually a Fed. Cir. appeal to overcome both presumed validity and the “clear and convincing evidence” budens] as compared to the invalidating claims in reexaminations, especially an inter partes reexamination. Plus, note the potential advantages of proceeding in parallel with both, for added prosecution history estoppel, intervening rights for claim amendments, potential new IC, etc.. Plus, take into account the fact that 97% of patent litigation never even get all the way to a trial, and thus invalidity defenses never even get effectively used that way in the vast majority of cases.

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 27, 2011 12:46 pm

    Mike-

    Fair point. There is already a fair amount of self selection going on. Nevertheless, it seems odd that more aren’t filed. After all, every defendant seems to whine in the press about being held hostage by bad patents. If that were actually true reexamination would be used far more often.

    Cheers.

    -Gene

  • [Avatar for Blind Dogma]
    Blind Dogma
    July 27, 2011 10:44 am

    Bolstering Mike’s comment is the requirement that Gene would eliminate. The fact that such type of evidnece that more likely than not will be enough to meet the C& C standard in the first place also contributes to the success rate.

    There is no doubt in my mind that opening the gates to any type of evidence would dramatically lower that succes rate. If the aim is to increase success rates, then the answer is to tighten down just what evidence should be entertained and to invoke estoppel for what could have been brought.

    How would people feel if these requirements were brough to the court system?

  • [Avatar for Mike]
    Mike
    July 27, 2011 08:32 am

    I think the statistics you present on the success rate of inter partes reexam challenges is directly explained by your later statement, “…if you elect to proceed with reexamination you had better be right….” It seems that this message is already well understood – very few people are filing inter partes reexams unless they are absolutely certain they will win. From this viewpoint, an 88% success rate doesn’t sound quite as impressive.

  • [Avatar for Blind Dogma]
    Blind Dogma
    July 27, 2011 07:32 am

    Steve M,

    I recommend reading the Microsoft v i4i case. As you read that case, think of the type of evidence that most likely will not meet that standard, and who the “judge” is in determining whether to allow a reexamination to take place.

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 26, 2011 05:41 pm

    BD-

    Having watched patent reform unfold I am really quite disgusted with Congress and the political process. There are a few good legislators in the House and in the Senate, but by and large they seem to be an uniformed bunch. We deserve better!

    -Gene

  • [Avatar for Steve M]
    Steve M
    July 26, 2011 05:40 pm

    BD/Gene,

    What is the (legislative history) reason only such art (printed pubs & patents) was permitted in reexams?

    Thanks.

  • [Avatar for Blind Dogma]
    Blind Dogma
    July 26, 2011 02:20 pm

    Gene,

    Your quip “Probably right, but if anything that only suggests that my recommendations are on target.” made me laugh.

    However, I would only suggest (in a humorous rebuttal) that this means only that the Congress has their eyes already set (thank you to the financial, um, contributors) on a certain wrong target, rather than your um, less financed, wrong target, which is not to say that your target is any closer to being the right target.

    Whether or not they are flat out wrong really is not the point – the reason why only such art was considered to be allowed is the important point. It is that which I draw your attention to. This is a bit nuanced, but such falls in line with the recent i4i case.

  • [Avatar for Gene Quinn]
    Gene Quinn
    July 26, 2011 01:12 pm

    BD-

    You say: “I do not think that had your recommendations been before Congress during the discussion of introducing the procedure, that that procedure would have passed.”

    Probably right, but if anything that only suggests that my recommendations are on target. Congress has done nothing particularly productive with patent reform, and instead are pursuing an agenda that simply shuffles the chairs. There are many things that they could have done that would have been useful.

    You say: “the legislative record precisely indicates why Congress so limited the available art that your numbered 1 recommendation addresses. Your article completely misses this point.”

    Congress is just flat wrong regardless of what they said in the legislative history. There is no good reason to limit reexamination to patents and printed publications, period. If there is a limit in reexamination then that limit should apply across the board to district courts. It is absurd to think that reexamination is a useful tool to challenge all patents, as Congress continues to say, when it is so limited in ways that a district court proceeding is not.

    -Gene

  • [Avatar for Blind Dogma]
    Blind Dogma
    July 26, 2011 12:20 pm

    Gene,

    Your call for actions do not take into account the rather loose methodology for revoking a fully granted patent right and initiating the reexamination procedure. I do not think that had your recommendations been before Congress during the discussion of introducing the procedure, that that procedure would have passed.

    Do not forget that in reexamination, the duly granted Clear and Convincing presumption of validity has been removed. This, in my opinion, is currently acted upon far too lightly, as indicated in the stats that show the significant new question is virtually rubber stamped.

    In particular, the legislative record precisely indicates why Congress so limited the available art that your numbered 1 recommendation addresses. Your article completely misses this point.

    I also disagree that estoppel should be removed. This feature prevents serial abuse. I would go with your first option of making such estoppel apply across the board. If anyone wants to contest a patent that is fine – but bring all you got the first time and then be quiet. We do, after all, want certainty.

    I agree with your third point – but this applies across the board and not just to reexamination.