Clarity Needed on the STRONGER Patents Act’s Approach to Validity Determinations

The “Support Technology and Research for Our Nation’s Growth and Economic Resilience Patents Act of 2019” or the “STRONGER Patents Act of 2019,” currently under consideration as Senate Bill 2082 and House Resolution 3666, poses questions about the types of decisions that would operate to bar inter partes review (IPR) and post-grant review (PGR) of patent claims.

The STRONGER Patents Act is an effort to cure some of the perceived infirmities in the U.S. patent system. While prior versions—introduced in 2015 and 2017—were more wide-ranging, the STRONGER Patents Act of 2019 primarily focuses on the availability of injunctive relief and the susceptibility of patents to IPR and PGR. Among other changes, the bill would effectively overrule the Supreme Court’s eBay v. MercExchange decision, require inter partes and post-grant review petitioners to prove invalidity by clear and convincing evidence, permit only one such review of any given patent claim, and purport to finally end the occasional practice of diverting some the USPTO fees from its operations.

Sections 102(h) and 103(h)

While much can (and has) been written about the merits of such reforms, the present comment specifically considers the proposed “Priority of Federal Court Validity Determinations.”  In particular, sections 102(h) and 103(h) of the bill would provide as follows:

(c) Federal Court Validity Determinations.—

(1) INSTITUTION BARRED.—An inter partes [post-grant] review of a patent claim may not be instituted if, in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), a court has entered a final judgment—

(A) that decides the validity of the patent claim with respect to section 102 or 103; and

(B) from which an appeal under section 1295 of title 28 may be taken, or from which an appeal under section 1295 of title 28 was previously available but is no longer available.

(2) STAY OF PROCEEDINGS.—

(A) IN GENERAL.—If, in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337), a court has entered a final judgment that decides the validity of a patent claim with respect to section 102 or 103 and from which an appeal under section 1295 of title 28 may be taken, the Patent Trial and Appeal Board shall stay any ongoing inter partes [post-grant] review of that patent claim pending a final decision.

(B) TERMINATION.—If the validity of a patent claim described in subparagraph (A) is finally upheld by a court or the International Trade Commission, as applicable, the Patent Trial and Appeal Board shall terminate the inter partes [post-grant] review.

What Constitutes “Decided”?

Setting aside whether “Federal Court” and International Trade Commission (ITC) decisions should preclude IPR or PGR, the bill as written poses questions as to the types of decisions that should be afforded such effect.

For example, IPR or PGR would be barred (or terminated) based on “a final judgment . . . that decides the validity of the patent claim with respect to section 102 or 103.”  It is unclear, however, what constitutes “deciding.”  Overwhelmingly, patent cases resolve in settlement and entry of agreed judgments, and it is not uncommon for such agreed judgments to include acknowledgments of patent validity. Would such cases operate to bar or terminate IPR or PGR, or would something more—an adjudication on the merits—be necessary?

Even if limited to merits decisions, in what circumstances is validity decided? Patents are presumed valid, and in litigation the burden is on challengers to prove invalidity. Judgments that challengers did not carry that burden—that they did not prove invalidity—stand for nothing more than that the patents are not invalid. They do not necessarily equate with conclusions that the patents are valid. Would affirmative findings of patent validity be necessary to invoke the provisions of sections 102(h) and 103(h)?

The bill also does not specify whether validity determinations would operate to bar or terminate proceedings only as to the grounds that were before the federal court / ITC. While other parts of the STRONGER Patents Act impose estoppel provisions based on any ground that was raised or could have been raised in prior proceedings before the Patent Office, sections 102(h) and 103(h) state only that they are applicable when there is a validity determination with respect to anticipation or obviousness. Perhaps the intent is to bar any subsequent IPRs or PGRs, regardless of ground, although such a result would seem incongruent, particularly in view of the fact that PGRs are not limited to anticipation and obviousness questions.

Lastly, the legislation appears to be internally inconsistent with respect to the finality that is necessary to bar institutions. While subparagraphs (c)(2) would have pending IPRs or PGRs stayed pending the appeal of validity decisions, and terminated only if they were upheld, subparagraph (c)(1)(B) would appear to bar institutions regardless of the appellate posture. If the intent is to give effect to decisions that have been affirmed, or that could have been appealed but for which the time to appeal has run, further clarification may be appropriate.

A Closer Look May Be Needed

Regardless of whether the reforms contemplated by the STRONGER Patents Act are well advised—and there are many interesting proposals, from splitting institution panels from decision panels, to giving the Federal Trade Commission power to police “bad trolls,” and the aforementioned changes to the availability of injunctive relief, the susceptibility of patents to “serial” challenges, and the burden of proof in PTAB proceedings—the current version of the “Federal Court Validity Determinations” provisions could benefit from closer consideration.

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