“[I]t was neither Congress’s intent nor that of most of AIA’s supporters to create an unfair IPR patent ‘killing field’.”
Observers of the U.S. patent system today may rightly wonder how six years ago the United States, then the proprietor of the best patent system in the world, could have created the inter partes review (IPR) proceedings that currently exist. The U.S. patent system is now ranked tenth in the world by the U.S. Chamber of Commerce, tied with Hungary; its decline largely attributed to the “challenges, additional cost and uncertainty “of IPR proceedings compared to other post-grant opposition systems.
The truth is that Congress, the top leadership of the U.S. Patent and Trademark Office (USPTO) and most involved stakeholders at the time envisioned IPR’s quite differently, and undoubtedly would not have authorized them if they knew then what we know today. There are in fact so many differences between these originally-envisioned proceedings and the regime we have today that this article cannot begin to describe them all. Instead, it will focus on the understandings of involved stakeholders that led to the passage of the America Invents Act (AIA), if for no other reason than to provide a reminder of the vision of what might have been.
The modern idea of allowing post grant challenges of recently-issued U.S. patents traces its roots back to the discussions that led to the non-partisan 2004 report of the National Academies Sciences, Engineering and Medicine (the “National Academies Report”), entitled “A Patent System for the 21st Century,” recommending the establishment of a system of post-grant “Open Reviews” to be made available for 12 months from issuance using procedures similar to those used in European oppositions. In the European Patent Office (EPO), oppositions must be filed within nine months, and are heard and decided by a panel of patent judges who routinely authorize clarifying amendments to the challenged patent claims to preserve their validities. The decisions of these panels are subject to further internal EPO review in the form of appeals taken as a matter of right. Once completed, the resulting patents may be enforced, and injunctions obtained, without further consideration of their validities. While they may be challenged in judicial proceedings brought in individual member countries, these seldom result in pre-injunction reversals of the EPO’s original determinations. As the National Academies Report noted with respect to the Open Reviews suggested for the U.S.,
“The details of design will determine whether the system is used, whether it is efficient and fair to all parties, and importantly, whether it is subject to abuses that undermine its purpose.”
The National Academies Report made many other suggestions, including the adoption of a first-inventor-to-file system that would necessarily eliminate the need for patent interferences to determine first-to-invent issues. In the meantime, a consensus was developing that inter partes reexamination, a then-existing form of administrative reexamination allowing continued participation by the third-party requester, was both expensive and ineffective, primarily because its processes were seemingly unending.
Against this backdrop, the nature, timing and scope of proposed U.S. post-grant challenges were hotly debated. Proposals ranged from all-issues, life-of-the-patent challenges sought by defendant-oriented stakeholders, to limited-time-limited-issue proposals favored by patent owners. During these discussions, patent owners persuasively argued that fact intensive issues relating to undocumented prior art, such as prior public use, should be addressed, if at all, immediately upon issuance. Postponing consideration of such issues would necessarily prejudice patent owners as spoliation of evidence is inevitable over time. Defendant-oriented advocates countered that life-of-the-patent challenges were already available in the forms of ex parte and inter partes reexaminations, and that it would be reasonable to replace inter partes reexamination with an adjudicative alternative of similar substantive scope to ex parte reexamination.
After years of discussion, a hybrid “two-window” compromise was reached allowing for initial all-issue challenges (later named PGR), followed by life-of-the-patent limited-issue IPR’s. Key to the compromise were assurances that IPR’s would not become vehicles to harass patent owners. Effective protections would be built into the legislation that would enable patent owners to rely on their granted patent rights to protect the continuing investments needed to develop and market their inventions. By so doing, patent owners’ “reliance rights” would be considered by the Director as a factor in deciding whether the institution of a post-grant proceeding would have an adverse effect “on the economy, integrity of the patent system, the efficient administration of the Office, and ability of the Office to timely complete proceedings instituted.” 35 U.S.C. § 316(b). Patent owners would be further protected by a robust right to amend their challenged patent claims, and a heightened institution threshold relative to that used in ex parte reexamination. 35 U.S.C. § 314(a). Collectively, these protections would ensure that only facially-defective patents would be subjected to IPR review.
Important to the development of the overall structure of the AIA was the principle that the public should be encouraged to bring any challenges early. Members of the public would be allowed to bring prior art directly to the Examiner’s attention during prosecution, and be allowed to petition for institution of a PGR subject to estoppels pertaining only to issues actually raised. Challengers would be discouraged from waiting to petition for IPR reviews by limiting the substantive scope of IPR’s, lowering the IPR institution rate as compared to ex parte reexaminations, and heightening the applicable IPR estoppel to the “raised or reasonably could have been raised” standard. 35 U.S.C. § 315(e).
IPR’s were never envisioned as proceedings of right, but rather as exceptional proceedings that would require the Director’s approval to institute. As drafted, the Director was expressly entrusted with the obligation to use his or her executive discretion to protect patentees by declining to institute, or by terminating a pending IPR, in certain circumstances.  Among these safeguards was the express power given to the Director to determine “if another proceeding or matter involving the patent is before the Office,” in which case “the Director may determine the manner in which the inter partes review or other proceeding or matter may proceed, including providing for . . . termination of any such matter or proceeding.” 35 U.S.C. § 315(d). In addition, the Director was expressly authorized to “take into account whether, and reject the petition because, the same or substantially the same prior art or arguments previously were presented to the Office.” 35 U.S.C. § 325(d). As a further safeguard, the Director was prohibited from instituting an IPR unless “the information presented in the petition …and any response…shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged…” § 314(a).
To further discourage the use of IPR’s relative to PGR’s, IPR scope was expressly limited by specifying that an IPR petitioner may request to cancel claims “only on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents and printed publications.” 35 U.S.C. § 311(b), (italics added). The use of the term “consisting of” was widely understood as sharply limiting the evidence that could be considered in support of a petition to the disclosures of the prior art patents and printed publications themselves. Consideration of any other kind of prior art information not appearing within the four corners of the cited patents and publications would be prohibited. Flowing from this was the expectation that the proceedings could be streamlined, as the only evidence that should be required from the petitioner would be (a) the prior patents and publications relied upon, (b) evidence authenticating the cited references as qualifying patents or publication(s), (c) evidence explaining how the disclosures in the cited patents and publications would have been understood by those of ordinary skill in the art at the time, and (d) for obviousness challenges, evidence that the disclosures themselves provide sufficient motivation to combine to render the challenged claims obvious.
While defendant-oriented stakeholders successfully argued that a clear and convincing standard was not necessary in these proceedings, this never meant (as has since been suggested) that the presumption of validity of 35 USC 282 was not intended to apply in IPR’s. To the contrary, it was well understood at the time, as explained by the Federal Circuit’s en banc decision in In re Etter, that “the § 282 presumption is a rule of procedure placing the burden of persuasion on him who attacks a patent’s validity.” 756 Fed 2d 852 at 858-9 (1985). There is no such presumption in ex parte reexamination because there is no such attacker; in PGR and IPR proceedings there is such an attacker and the presumption would apply. This conclusion is consistent with the text of the AIA, which expressly provides that the “petitioner shall have the burden of proving a proposition of unpatentability…” 35 U.S.C. § 316(e).
The AIA envisions the role of the PTAB in IPR proceedings to be limited to conducting those IPR’s that the Director has decided to institute. This is reflected in the language of the statute requiring the Director to determine whether the IPR should be instituted (35 U.S.C. § 314), the grant to the PTAB of IPR-PGR authority only to “(4) conduct inter partes reviews and post-grant reviews pursuant to chapters 31 and 32,” (35 U.S.C § 6(a)(4)), and the definition of the PTAB’s role in chapter 31 as being, “in accordance with section 6, [to] conduct each inter partes review instituted under this chapter” (35 U.S.C. § 316(c)).
During the development of the AIA, this intentional separation of the executive function of the Director from the judicial function of the PTAB was seen as an important safeguard for patent owners. In converting the merits portion of the proceeding from an administrative function to a judicial one, a protective layer of internal appellate review was forsaken in the name of expedience. This was replaced by clearly separating those responsible for the institution phase from those who would conduct the adjudication phase. This kind of intra-agency separation is consistent with the approach of the Administrative Procedure Act, which prohibits any person engaged in the performance of pre-hearing activities (such as investigative or prosecuting functions) from participating or advising on the final merits decision. 5 U.S.C. § 554(d). This separation of personnel provides a different form of internal review, ensuring that unbiased PTAB judges will serve as a check on Director’s initial determination as to whether the threshold and other requirements for institution have been met.
Those now familiar with IPR proceedings will already have recognized how little resemblance current IPR proceedings have to what most supporters of the AIA envisioned upon its passage. In current practice, the role of the Director as an independent IPR gatekeeper never materialized because the USPTO’s implementing rules bypass the Director altogether, assigning the institution function to the PTAB, which in turn routinely assigns both the institution and final decisions to the same three judge panel. As a result, most of the safeguards against patent owner harassment were lost.
Although the statutory threshold showing required for institution has been maintained, it has been effectively torpedoed by the USPTO’s implementing regulations. Initially, these regulations prohibited patent owners from submitting like-kind testimonial evidence in opposition to a petition (37 C.F.R. § 107(c)), making it nearly impossible to rebut a petitioner’s factual allegations. While later modified in response to patent-owner outcry to allow patent owners to submit testimonial evidence, these new regulations still expressly favor the petitioner’s evidence over that of the patent owner’s even when the patent owner’s evidence is material enough to raise a genuine issue of disputed fact.
Petitioners further benefit from the failure of the USPTO to promulgate regulations implementing the AIA’s intended safeguards, and from the promulgation of others never contemplated by the AIA. For example, no regulation requires the PTAB to consider whether the same or similar prior art or arguments have been previously presented to and/or decided by the USPTO, none require the USPTO to determine if it has the ability to fairly complete the proceeding in a timely manner, and none specify when the USPTO will decline institution or terminate the proceeding if either of these conditions is not met. The PTAB is thus left with a nearly unlimited ability to ignore prior USPTO determinations and to proceed with reviews even if their numbers or timings will be prejudicial to patent owners. The PTAB is further left with the discretion to institute serial challenges against the same patents no matter how duplicative they may be.
Petitioners also benefit from the PTAB’s surprising adoption of a “broadest reasonable interpretation” (BRI) claim standard, which artificially expands the scope of the challenged claims relative to how they would be interpreted in court, so that the likelihoods of them running afoul of the prior art is enhanced. Given such petitioner-friendly rules, it comes as no surprise that almost four times more IPR’s have been filed than originally projected by the PTO, nearly half of which are serial petitions bringing a second or subsequent challenge against the same patent.
The PTAB’s overt bias in favor of petitioners is further reflected by common practices which overwhelmingly promote deciding instituted IPR’s in favor of petitioners. During both the institution and merits phases of an IPR, the PTAB routinely ignores the AIA’s limits on the evidence petitioners may introduce in support of their contentions and routinely bases their final decisions on petitioners’ expert declarations which run far afield of the teachings of the cited patents and publications. And although the PTAB purports to conduct “trials,” it eschews hearing live cross examination even though it is a bedrock principle of due process, and is still “the greatest legal engine ever invented for the discovery of truth.”
By failing to adopt the implementing rules needed to carry out the intent of the AIA, and by adopting other rules and procedures that are plainly skewed towards petitioners, the PTAB has intentionally tilted its IPR proceedings against patent owners. While this has been good for the PTAB, which has quadrupled in size, it was neither Congress’s intent nor that of most of AIA’s supporters to create an unfair IPR patent “killing field.”
The dialogue around the Oil States case, highlighted in the amicus briefs submitted thus far, indicate the deep level of concern around the implementation of IPR proceedings felt by innovators who rely on the patent system to provide a predictable right that warrants investment and job creation around new technologies, and why Article III courts with an independent judiciary have historically provided the due process protections necessary to adjudicate granted property rights.
The question is whether these PTAB proceedings can be fixed, and patent owner and investor confidence in the US patent system restored, or whether at this point their abolition would be more prudent. Many believe that we still have an opportunity to retool these proceedings to elevate considerations of due process and fair play over simple expedience, so that petitioners and patent owners will both be treated fairly. If so, time is of the essence. America’s future competitiveness depends on it.
 The US Chamber IP Index (Fifth Edition) February 2017, p. 112.
 Available at www.nap.edu/read/10976/chapter/6#96 , see Table I-4; see also Metal, “A Guide to the Legislative History of the America Invents Act: Part II of II,” The Federal Circuit Bar Journal, v. 21, n. 4, pg. 539 at pg. 600 (also noting a series of Congressional hearings and other activities relating to the subject).
 National Academies Report at 97.
 Id. at 83.
 Metal, supra at 600-605.
 Per the House Committee Report on the AIA, “[t]he Act converts inter partes reexamination from an examinational to an adjudicative proceeding, and renames the proceeding ‘‘inter partes review.’’ Available at www.gpo.gov/fdsys/pkg/CRPT-112hrpt98/pdf/CRPT-112hrpt98-pt1.pdf at pp. 46-47.
 With the understanding that the amended claims could not be broadened as compared to the original claims of the patent and that they would be subject to intervening rights. 35 U.S.C §§ 316(d) & 318(c).
 Per the House Committee Report, “[p]ost-grant petitioners are only estopped from raising in civil litigation or ITC proceedings those issues that they actually raised in the post-grant review.” Pg. 76. While this was clearly the intent of the AIA, because of a well-documented “scrivener’s error,” the AIA as actually enacted now applies a “raised or reasonably could have raised” estoppel in PGR proceedings as well. Ibid., Matal at 616-18 & nn.499-504 (providing a more detailed explanation of this error).
 Metal supra at note 380.
 The Director was also charged with “prescribing sanctions for…any…improper use of the proceeding (35 U.S.C. § 316(a)(6)).
 Metal supra at pp, 614-15.
 The House Committee Report makes it clear that the purpose of the threshold is to reduce the incidence of IPR institution:
- Reasonable likelihood of success for instituting inter partes review. The threshold for initiating an inter partes review is elevated from ‘‘significant new question of patentability’’—a standard that currently allows 95% of all requests to be granted—to a standard requiring petitioners to present information showing that their challenge has a reasonable likelihood of success. Satisfaction of the new threshold will be assessed based on the information presented both in the petition for the proceeding and in the patent owner’s response to the petition.
Available at www.gpo.gov/fdsys/pkg/CRPT-112hrpt98/pdf/CRPT-112hrpt98-pt1.pdf at pg. 47
 As explained in the House Committee Report, “The Board of Patent Appeals and Interferences is replaced with the new Patent Trial and Appeal Board (‘‘Board’’). The Board is charged with (i) reviewing adverse decisions of examiners on applications and reexamination proceedings, (ii) conducting derivation proceedings, and (iii) conducting the post-grant review proceedings.” Available at www.gpo.gov/fdsys/pkg/CRPT-112hrpt98/pdf/CRPT-112hrpt98-pt1.pdf at pg. 77.
 As the House Committee Report explains, the statute requires that the information presented by both parties be considered in determining whether the threshold is satisfied:
Satisfaction of the new threshold will be assessed based on the information presented both in the petition for the proceeding and in the patent owner’s response to the petition.” (pg. 47).
 Compare 35 U.S.C § 314(a) requiring all preliminary response information to be considered to 37 CFR § 108(c) which directs that the “Board‘s decision will take into account a patent owner preliminary response where such a response is filed, including any testimonial evidence, but a genuine issue of material fact created by such testimonial evidence will be viewed in the light most favorable to the petitioner solely for purposes of deciding whether to institute an inter partes review.” (italics added)
 Metal supra at pg. 610 (referencing Senator Kyl’s view that the AIA requires the USPTO to issue such regulations.}
 John Henry Wigmore.
 See for example the Supplemental Statement of Chief Judge Paul R. Michel (ret.), submitted to the IP subcommittee of the House Judiciary Committee, dated Sept. 12, 2017, detailing many needed fixes to IPR. Available at www.ipwatchdog.com/wp-content/uploads/2017/09/Supplemental-Statement-of-Paul-R-Michel-Sept-12-2017.pdf See also Slifer, “How to improve IPRs without tossing the baby out with the bath water,” IP Watchdog, April 11, 2017, www.ipwatchdog.com/2017/04/11/how-to-improve-iprs/id=81946/ .