Study of the Post Grant Procedures Is Needed Now

The procedures created by the America Invents Act (AIA) for challenging patents at the United States Patent and Trademark Office (USPTO) have now been in place for a couple of years. These procedures include: Inter Partes Review (IPR); Post Grant Review (PGR) and Covered Business Methods (CBM). As of June 2015, over 3500 petitions had been filed for the combined procedures. The numbers are way above what the Office expected, but the Patent Trial and Appeal Board (PTAB) has been churning through the petitions at a rapid rate. The new methods for challenging patents are statutorily required to be completed within a year of institution in most cases, so we are beginning to collect data and discern patterns from those settled or decided cases.

We are seeing that when the claims are considered individually, the PTAB is instituting the procedures 70% of the time and that once instituted, most claims will not survive the procedures.

We are also seeing the development of a body of case law from some of the decisions emanating from the PTAB. Several decisions relating to issues including: joinder, real party of interest; limits on discovery; limits on claim amendments; claim construction standards; and, the scope of estoppel after written decision, are being fleshed out. And the blogosphere is full of comments and concerns about these developments. These discussions have led to legislative proposals relating to these procedures that have found their way into the patent reform bills that are moving through Congress.

There have been proposals on the Hill to change the standard for claim construction from the broadest reasonable interpretation, a standard used at the USPTO, in part, because the claims can be amended, to the Phillips standard used by courts. There are proposals that would make it easier to amend the claims during the procedure and legislative language to establish the presumption of validity. There is also language in some bills that change the estoppel in post grant procedures from “raised or reasonably could have raised” to just “raised” permitting sequential attacks on the same patent claims by the same petitioner. There has also been an unwarranted – and unsuccessful – effort to extend the temporary CBM program.

[PTAB-1]

But what is really needed right now is a comprehensive study of the entire system of challenging patents before the USPTO to determine what modifications would make our whole post grant system better.

The USPTO has already made some “Quick Fix” Rules to remedy complaints learned through Federal Register inquiries about the operation of the system. These have ranged from increasing page limits to routine discovery to requiring specific fonts to prevent the need for a magnifying glass for the judges to read the documents.

None of those changes cause any great concern. But with the importance of these procedures, as evidenced by their usage, we need to understand how the procedures are being used, what behaviors we want to encourage and discourage and, what the likely long term consequences of any change will have on our system.

Very few thought that the IPR procedure would be used by creative hedge fund managers to reap benefits for the price drop of pharmaceutical companies’ stock that have had their important drugs challenged in an IPR. Most would not have thought that small patent owners would be swamped by serial petitions to invalidate their patents. Others were very surprised at the limited manner in which the USPTO permitted the patent owner to amend her claims during the process. And many did not expect the USPTO to interpret statutory language of the AIA to include so much subject matter in what was intended to be a limited-scope CBM program.

As implementation of the AIA has shown, the system of patent review is complex and has many interwoven parts. Changing one aspect may have profound and unintended consequences. Our patent system – including post-grant administrative review — is critical to job creation and economic growth and changes should not be made haphazardly in a piecemeal fashion.

It is time to review and assess the AIA’s post-grant processes. We don’t know all of the facts. We need a detailed analysis about what is working and what needs to be modified and how the processes should be improved. In the meantime, if Congress is set about doing something on the post grant procedures, it should authorize the funding and direct that a study should be undertaken. Alternatively, the USPTO or interested stakeholders should undertake detailed analysis of the post grant system soon.