The United States Patent and Trademark Office (USPTO) provides invalidity tools via inter partes review (IPR) and post-grant review (PGR), but which route is better? One may consider important factors such as time, cost, petitioning standards, invalidation grounds, and likelihood of success of the proceeding. While aspects of the proceedings are different, the more attractive option will depend on the client’s needs and circumstances.
What is an Inter Partes Review?
IPR proceedings replaced inter partes reexamination, and provide grounds for a petitioner to challenge validity before the Patent Trial and Appeal Board (PTAB). A petition to institute an IPR proceeding may be filed with the USPTO to challenge the validity of patent claims on the basis of prior art patents and printed publications under sections 102 and 103 of Title 35. Patent invalidity challenges based on other grounds such as subject matter, written description, enablement, and on-sale activities may not be used in an IPR. Instead, they must be brought in a district court or other type of proceeding. An IPR petition may be filed challenging any issued patent so long as it is nine months beyond the patent’s filing date.
PGR proceedings were introduced alongside IPRs, but require the patent to have an effective filing date of March 16, 2013 or later, and the petition must be brought within nine months of the patent’s issuance. This vastly limits PGRs as an option in many instances because the patent must be newly issued for this type of proceeding. PGRs allow a patent to be challenged on more grounds than an IPR, including usefulness, subject matter, novelty, obviousness, written description, and public use. Therefore, a PGR does not necessarily have to rely on prior art references like an IPR does.
Granting of a Proceeding
In an IPR, the petitioner must establish “a reasonable likelihood that the petitioner would prevail with respect to at least one claim challenged in the petition”. Whereas in a PGR, the petitioner must establish “that it is more likely than not that at least [one] of the claims challenged in the petition is unpatentable”. Compared to IPRs, PGRs have the higher standard. This higher standard, in combination with the requirement of petitioning within nine months from a patent’s issuance, incentivizes PGR petitioners to ensure that they quickly and adequately explain their grounds for unpatentability and include the best prior art available. However, should one wish to take advantage of a looser standard, the PTAB provides a lower bar for entry with IPRs.
The PTAB’s decision to accept or deny the petition for either proceeding is not appealable. This bestows upon the petitioner great care when filing an IPR or PGR. If the petition is denied, the petitioner will be precluded from asserting arguments in a new petition that they could have mentioned in the denied petition.
Discovery and Associated Costs
Patent litigation is expensive. There has been an increase in both the number of patent cases filed and the cost of patent litigation, which can easily rise into the millions of dollars per proceeding. These costs are attributable to an intense amount of discovery, expert witnesses, and attorney time. While IPRs and PGRs do not completely satisfy the need for an alternative to traditional litigation, these less-expensive alternatives are welcome and attractive options.
In comparison with litigation, IPRs have lower costs via limited discovery and frequent denials for further discovery requests because of their limiting rules. Discovery is generally limited to depositions of witnesses (usually experts) who have previously submitted affidavits or declarations. IPRs include three stages of discovery: mandatory initial disclosures, routine disclosures, and additional discovery. Mandatory initial disclosures require agreement between the parties, as a result they are rarely utilized. Routine discovery includes expert depositions. Additional discovery is anything that the PTAB determines is necessary in the interest of justice. However, requests to utilize additional discovery are frequently denied.
These discovery limitations are significant for the petitioner. Discovery in traditional litigation works as an equalizer between parties. In theory, both parties should have access to everything of significance of the other party. In an IPR, because there is much less mandatory discovery, the petitioner has a more favorable advantage than in traditional litigation. This is because the petitioner may develop a significant patent attacking strategy prior to instituting the IPR. However, a patentee may be better positioned to defend the invalidity petition, and may be less likely to settle the matter with a petitioner, due to the lowered discovery costs.
PGRs have broader rules than most USPTO proceedings. Relevant evidence may merely be “directly related to … factual assertions advanced by either party.” Also, while further discovery is rarely granted in an IPR due to the “interest of justice” requirement, additional PGR discovery merely needs to meet the “good cause” standard, a lower burden. Because of this larger scope of discovery, costs of discovery alone may be similar to that of an interference proceeding. The broader grounds for invalidity in combination with more extensive discovery make PGRs a more expensive USPTO patent challenging procedure, but likely still cheaper than a district court proceeding.
Estoppel for IPRs and PGRs will apply to “any ground that the petitioner raised or reasonably could have raised” during the proceeding (emphasis added). Notably, the old inter partes reexamination had the same standard for estoppel, but without the word “reasonably.” This broadened standard should be considered before using either of these USPTO proceedings as the petitioner may be estopped from raising additional arguments in a later proceeding. This is quite relevant to any petitioner because if they lose their challenge, they will likely be estopped from challenging the patent on almost any ground. This is an all-or-nothing bet, and the petitioner will be unable to challenge the patent if they are subsequently sued in court for infringement. Because of the much broader grounds for validity challenges available in a PGR, the estoppel effects of PGR can be greater than those of an IPR.
IPRs have many litigation-like elements. A patentee is presented with the right to file a preliminary response to a petition within three months of the review being granted. The patentee may cancel or amend the challenged claim or claims. The petitioner then has the opportunity of an oral argument before the PTAB. Rather than solely relying on memorandums to get one’s point across, the ability to orally respond to the PTAB’s most significant questions about the proceedings could greatly improve the petitioner’s case and may allow for a better explanation and argument for their position. In general, oral communication between a petitioner and those who are reviewing the claims in view of the prior art (judges) brings about a better understanding of each other’s concerns, similar to the benefits that an examiner interview provides during patent prosecution. Rather than wasting time drafting and filing further arguments, there is a possibility for agreement to be reached during oral discussion.
PGR petitions must identify the challenged claims and the grounds with particularity for challenging them. Once instituted, the petitioner may present evidence of unpatentability that may include patents, publications, factual declarations, and expert declarations. If the prior art used in the original examination was considered mishandled or misapplied, that art may still be used in the proceeding. As PGRs are also an inter partes action, the patentee has the opportunity to respond to the petition. Once the PGR petition is granted, the patentee (or patent owner) can cancel the challenged claim or claims, or propose a reasonable number of substitute claims to avoid the prior art without enlarging the scope of the claims. However, since other grounds of invalidation that do not require prior art may be brought in a PGR, amending the claims may not be a viable path for saving them. PGRs also have other litigation-elements similar to IPRs such as oral hearings.
Prior to the America Invents Act, reexamination procedures were a great way to defer litigation costs. Typically, an accused infringer could respond to a cease-and-desist letter or licensing request by filing a reexamination proceeding to stay any court action for years. This delay allowed the client to obtain funds for litigation and to possibly design their product around infringement. However, IPRs and PGRs have a shorter completion time, and even with any good cause extension, is at most twenty-four months. This means that litigation-like patent review costs will be almost immediately necessary with little to defer.
IPR proceedings are typically concluded around eighteen months from the filing request. The Patent Trial and Appeal Board has three months after the filing of the patent owner’s preliminary response to make a decision to grant or deny the petition. Where a proceeding is instituted, the PTAB enters a final written decision within one year, which is extendable up to six months for good cause. This totals a maximum of eighteen to twenty-four months from a filing of a petition to a decision. However, one should investigate their local district court’s typical litigation timeline before assuming that an IPR is the fastest route to a final decision.
There are also timing limitations for when a petitioner may bring an IPR. A petitioner will be barred from filing an IPR petition if it is not brought within a year of being served a complaint alleging infringement. A petition may not be filed immediately upon granting of a patent or upon the reissue of a patent, nor may a petition be filed while a post-grant review proceeding is underway.
PGRs have a very similar timeframe as IPRs. While not statutorily binding like the twenty-four-month period of an IPR, the USPTO has said that all PGRs will be decided within twelve months. What makes PGRs a difficult option is requiring not only that the petition be filed within nine months of the patent’s issuance, but also that the patent have an effective filing date of March 16, 2013 or later. This timing window may be particularly difficult for smaller entities to be aware of. Establishing a patent invalidation attack strategy within this timing window may prove difficult for one wanting to file a PGR.
IPRs have a high success rate. Few final written decisions have been published without canceling at least one claim. This explains the significant number of IPR petitions filed in the relatively short amount of time since they became available. This high success rate for petitioners makes IPRs an attractive option.
While there have been much fewer PGRs filed, their grant and success rate for the petitioner has varied depending on their grounds for unpatentability. With so few PGR petitions, likely due to the timing window and higher hurtle for entry as discussed above, there is less confidence in predicting how the PTAB will handle a particular PGR.
Regardless of the invalidation method chosen, a petitioner should evaluate what aspects of litigation are most important to their client. Typically, these include cost, time, invalidation grounds, and likelihood of success.
PGRs are estimated to cost more because of their broader discovery rules. If cost is a major factor, IPRs are a less-expensive option due to restricted allowance of discovery, the most expensive aspect of patent litigation.
If the invalidating arguments are not based on prior art, then a PGR is the viable option. If a petitioner has grounds for invalidation other than anticipation or obviousness, they should look to a PGR proceeding if they want to avoid district court litigation because these are not eligible invalidation grounds for an IPR.
If the invalidating arguments or art are not strong, an IPR may be a better option due to its lower threshold for institution. The same prior art arguments that failed in a petition for a PGR may have succeeded in an IPR petition due to the lower standard.
The petitioner may have a few additional effects to consider, depending on whether they desire a longer or shorter proceeding. They may wish to defer litigation by obtaining a stay of any district court case, or they may wish to reach a final decision as early as possible. While both PGR and IPR proceedings are typically shorter than district court litigation, the petitioner should investigate their local court’s average time to a final decision in order to compare it with the options afforded by the USPTO.