It has been five years since the implementation of the America Invents Act’s (AIA’s) most popular post grant procedure, Inter Partes Review (IPR), and we now have sufficient data to begin to evaluate its effectiveness. The procedure was intended to be a less expensive and quicker alternative to litigation as a means to invalidate improvidently granted patents by the United States Patent and Trademark Office (USPTO), and its usage has widely exceeded expectations.
But many patent owners argue that IPRs are unfairly tilted against the patent owner. And some have gone so far as to suggest that the entire procedure should be tossed.
The vast majority of the users of the patent system recognize that the original intent of IPR, namely bolstering the confidence in the patent system and patent quality by establishing a quicker and cheaper method to challenge questionable patents at the USPTO, is a laudable goal and there have been numerous suggestions for improving the system to allow it to serve its purpose fairly, efficiently and effectively.
Instead of being an alternative to litigation, the IPR is a common adjunct to any litigation strategy. Whether conducted in parallel or sequentially, the procedure is frequently providing additional challenges to issued patents, causing patent owners to defend their issued patents in different venues with different standards. In addition there have been instances of “gang tacklings” where numerous IPR challenges against the same patent are filed at the same time or where sequential petitions are quashed but a later one succeeds. These strategies can swamp a shallow-pocketed patent owner.
Certain standards used in IPRs also rankle some patent owners. While a court would presume that the patent is valid, the Patent Trial and Appeals Board (PTAB), which reviews the IPR petitions and ultimately decides the cases, does not rely upon the presumption of the validity of the patent even though it has been reviewed and issued by the very administrative agency that is hearing the case. The PTAB also uses the broadest reasonable interpretation (BRI) when construing the claims instead of the narrower Philip’s standard used in court. That might make sense since the USPTO can permit amendments to overcome a rejection while a court cannot, but the leave for amendment to date has been a truly rare grant. Perhaps it makes sense to permit amendment more liberally when the amendment is narrower than the claims that issued.
Limitation of discovery by the patent owner prior to institution has also been a source of concern to some. It might be reasonable to allow some affidavits early in the process that could dispose of the case before incurring significant costs.
The USPTO had some reasons for limiting discovery and amendments when the IPR process was initially instituted. The office didn’t have sufficient “fire power” in the number of judges to handle the high volume of cases that were filed, and the statute required the completion of the process within one year of institution in most cases. But five years later we have an entire cadre of judges who are fully up to speed with significant experience in handling IPRs, and it is time to reevaluate the rules that might have been more necessary earlier.
Some criticism of panel determinative decisions has surfaced recently. The autonomy of judges is, on one level, important, but consistency among panels and proper implementation of patent office policy is also important for the Office and for stakeholders. Perhaps a representative group of managers at the PTAB can quickly review proposed decisions before they are issued to assure that policies are being properly applied and blunt concerns about inconsistent decisions.
Lastly, there is currently a case pending at the Supreme Court which calls into question the constitutionality of the PTAB procedures as it is alleged that a non-Article III court cannot take away a patent. While this could cause some significant problems if the Court finds a constitutional impediment, I believe the Justices will find some way to sustain administrative review.
Post grant procedures can be an effective and efficient way of promoting patent quality by invalidating weak, inappropriately granted patents. What we need now is thoughtful review and assessment, based upon five years of experience about what is working and what needs to be done to improve the system. The above issues need to be watched and analyzed, and, if appropriate, modifications need to be suggested and tried. Many improvements can be made by the USPTO itself through transparent rule-making. Some may need legislative intervention. But there is no need to throw out the entire process. We should learn from what has happened before and be willing to improve the system for the benefit of innovation in our country and the continued growth of our economy.