Action:
The patent laws should be amended to provide
for a post-grant review of patentability of patent claims.
Background Information:
Currently post-grant review of the patentability
of patent claims takes place before the USPTO (1) when an applicant files
an application to reissue a patent and requests correction of at least
one error in the patent, (2) when an interference is declared between
the patent and a pending application, and the applicant in the interference
seeks judgment based on unpatentability of patent claims, (3) when a
patent
owner or a third-party requests reexamination of the patent, and (4)
when the Director initiates reexamination of a patent on his own initiative. Apart
from an interference, however, a third party’s ability to challenge the patentability
of patent claims in the Office is limited to grounds based on prior art patents
or printed publications. In addition, a third party outside the interference
context cannot conduct discovery and develop evidence necessary to challenge
patentability. These limitations on third parties prevent the public from
effectively challenging patents, unless and until a lawsuit is threatened,
at which point the threatened party can proceed with an expensive and often
lengthy civil suit. Inter partes post-grant review would allow third parties
to challenge recently issued patents within the Office and give parties threatened
with litigation an alternative forum to challenge patent validity. By using
the Office’s expertise, these challenges could be adjudicated for less money
and in less time than by civil suit. This will enhance the patent system
as a whole by strengthening those patents that survive the review and eliminating
those patents which contain unpatentable subject matter.
Summary of Proposed Post-Grant Review
Procedures:
Implementation of a post-grant review procedure
in the form of a review proceeding is recommended to provide for correction
of recently issued patents. The same proceedings would also provide
accused infringers and patent holders with an alternative forum to district
court
litigation of patent validity issues.
The proposed review proceeding would allow
the public to petition the USPTO to cancel one or more claims in a patent
within one year of its issue date. And it allows anyone who is threatened
with a patent infringement suit to petition for review within four months
of being threatened. To prevent misuse, the review petitioner would be
required to make a sufficient initial showing of unpatentability; otherwise
the petition would be dismissed. If the showing is found to be sufficient,
a fact-finding proceeding leading to a hearing by the Board of Patent Adjudication
on the merits would follow. It is contemplated that both parties would
be obliged to make mandatory disclosure of all relevant information, followed
by discovery as permitted by the Board of Patent Adjudication. During
the review proceeding, the patent owner would have a single opportunity
as of right to make a narrowing amendment of the challenged claims.
The proceedings would be conducted by the
Board of Patent Appeals and Interferences (Board), renamed the Board
of Patent Adjudication. Thus, Administrative Patent Judges (APJs) of the
Board would preside over streamlined hearings, designed to be concluded
within a year, in which direct cases could be presented by documents,
and live cross-examination allowed where necessary.
The proposed new proceeding would expand
the role of the USPTO in enhancing the integrity of the intellectual
property system. The USPTO’s role in verifying the validity of issued patents is
currently limited to ex parte or inter partes reexamination proceedings,
which subject issued patents to a reiteration of the examination process
but not to a fully adversarial adjudicative process, or to interferences,
in which patentability can be challenged in an action concerning priority
but only for a limited period and only by an applicant whose patent application
presents interfering subject matter. The limitations of both systems have
caused them to be underutilized, while the proportion of patent cases reaching
full adjudication in the district courts has declined. An expedited process
providing for full adjudication by the Board of unpatentability claims
would help assure that those potentially affected by the economic burdens
of patents with invalid claims can obtain prompt redress. At the same
time, the availability of an amendment option would help assure patentees
that the result of such an adversarial process could provide them better
assured protection of their inventions, when appropriate.
Additionally, the present proposal would
eliminate inter partes reexamination entirely and make initiation of
third-party requested reexamination discretionary. This should alleviate the burden
on the examiners of having to examine complex and lengthy reexamination
proceedings, and thus free examiners to examine applications and reduce
pendency thereof since the post-grant review proceedings will occur at
the Board and be handled by APJs. Further, the proposal provides a vehicle
wherein the third party develops and presents the evidence thus saving
the Office a significant amount of resources that it currently expends
in making the case for patentability.
Proof of Concept
The contours of this proposal follow upon
the Board’s proof of its ability to improve the efficiency of inter partes
proceedings. The Board instituted a new Trial Section in 1998 in order
to drastically reduce the pendency of interferences. The expedited procedures
that the Trial Section has developed have allowed it to reduce the number
of pending interference to the lowest level in 20 years, reducing the time
to decision in such cases to an average of 27 months. By the end of fiscal
year 2003, the Board expects to have terminated virtually all of the interferences
declared before fiscal year 2002.
Several additional steps that the Board
will now take will further help it establish its capability to handle
expedited proceedings. The Board is now undertaking a deliberate program of increasing
the number of APJs trained in the skills of conducting expedited inter
partes proceedings. In addition, the Office expects during fiscal year
2003 to issue proposed rules to institutionalize in interferences many
of the procedures that the Trial Section has adopted by standing order. This
process will allow an opportunity for public input on expedited inter
partes proceedings in the Board before Congress considers legislation
to grant
it patent review jurisdiction.
Implementing Post-Grant Patent Review:
Alternative Design Issues, Options, and Recommendations
The pros and cons of significant alternative design issues
with respect to such a proceeding are as follows:
Alternative Design Issue #1 - Nature of Proceedings
1. Option A - Adopt a patent review proceeding that
would be instituted before, and handled by, the Board of Patent Appeals
and Interferences (Board).
(a) Pros
- Provides quality check to USPTO examination which
public can choose, particularly when patents have significant commercial
effect.
- Allows for USPTO to offer other forms of examination
that may otherwise appear to compromise quality.
- Relieves pressure on courts to decide validity
questions.
- Provides for prompter test of validity than court
proceedings.
(b) Cons
- European Patent Office (EPO) review proceedings
are perceived as expensive and allowing for vexatious litigation.
- Patent practitioners are more familiar with reexamination
and expanding reexamination may serve some, if not all, of the same purposes
without risks of great litigation burdens.
- Determinations
by the USPTO regarding some of the patentability requirements contained
in sections 101, 102(a) (known/used by others bar), 102 (b) (public use/on-sale
bar), 112 (best mode requirement) may be controversial with the patent
bar.
2. Option B - Expand Inter Partes Patent Reexamination
(a) Pros
- Builds
and expands on procedure already in place.
- Proposal
regarding this option is currently pending in Congress.
- Examiner
would evaluate evidence in the first instance.
- Relieves
courts and provides for prompter test of claim validity than courts.
- May
relieve parties of some of the burdens of litigation.
(b) Cons
- Reexamination
is less comprehensive and not a complete substitute for district court
litigation of defense of validity.
- Permits
amendment of claims thereby creating a moving target for petitioner. Courts
cannot allow amended claims.
- Adjudication
before examiner, not before an inter partes hearing officer where demeanor
of witnesses can be observed.
- Difficult
to have examiner control discovery and other inter partes issues for
which examiners are not trained.
- Does
not necessarily provide marketplace quality check to USPTO examination.
3. Recommendation:
Propose legislation creating
expeditious post-grant patent review proceeding with protections against
cost and vexatious litigation.
Alternative Design Issue #2 - Timing of Review Proceeding
1. Option A - Anyone may file a review petition anytime
during a patent’s term.
(a) Pros
- Ability
to file at any time opens the field to any challenger, so it can serve
as a continuous quality check on patents throughout their life.
(b)Cons
- Absent
any limitation on challengers or any limitation on the time when challenges
may be asserted, patent owners will view the review proceeding as an unduly
burdensome harassment tool. A major objection to the analogous EPO practice
is harassment of patent owners.
2. Option B - A review petitioner must file petition
within 12 months of the issuance of any claim challenged.
(a) Pros
- The
12-month deadline can provide patent owners with peace of mind that after
a year from issuance, the patent claim is no longer subject to review.
(b)Cons
- Limiting
the time for challenge curtails, to some extent, the effectiveness of
the quality check on patents.
- Fails
to provide a mechanism to address challenges from alleged infringers who
are accused more than a year after issuance of the patent claim. Thus,
in many instances, Option B would not provide an alternative to district
court invalidity litigation.
- May
lead to review proceedings where the subject matter lacks real commercial
significance, e.g., a review presented by a public interest group.
- Consistent
with EPO experience, concentrating review petitions in the first year
of issuance may create an initial flood of proceedings, rather than having
them spread out over the lives of the patents.
3. Option C - A review petitioner must file petition
within 12 months of the issuance of any claim challenged, except that
after 12 months, a review petitioner may file a petition not later than 4
months
after the review petitioner is placed in “substantial apprehension”
of being sued for infringement of the challenged patent claim.
(a) Pros
- Opens
the window of time and the field of challengers wider to include those
who, even more than a year after the patent issues, would meet standards
similar to the jurisdictional requirements for a declaratory judgment action
on patent invalidity in district court. Thus, it almost always provides
an alternative to district court.
(b) Cons
- May
limit, to some extent, the effectiveness of the review proceeding as
a quality control mechanism.
4. Recommendation:
Option C is recommended,
as striking the most appropriate balance between security and predictability
for the patent owner, on the one hand, and providing a viable alternative
to district court invalidity cases, on the other hand, i.e., more marketplace
confidence in patent validity. The 12-month window where any party may
challenge the patent allows for a period of quality check from outside
the USPTO, while affording the patent owner greater stability after the
12 months expires. The additional window for petitioning to cancel is
provided only to those who have some substantial apprehension of being
sued, so that the patent owner exercises control over who might qualify
as a review petitioner under the 4-month provision. Option C also ensures
that anyone who could go to district court to litigate the validity of
a patent claim can also resolve the matter in a review proceeding in
the USPTO.
Alternative Design Issue #3 - Grounds for Patent Review
That May Be Brought In Review Proceeding
1. Option A - Allow any and all grounds that may
be brought in a district court to challenge patent validity or enforceability.
(a) Pros
- Encourages
petitioners to use the proceeding rather than burdening district courts
with declaratory judgment actions.
- Ensures
that all issues related to patent validity can be heard in a single forum.
(b) Cons
- Places
the heaviest burden on the Office.
- Requiring
the Office to determine issues of enforceability will require development
of new expertise within Office.
- Allowing
Office to determine issues of enforceability will be controversial within
the patent bar.
- Allowing
the Office to determine certain issues of validity, e.g., known or used
by others, may be controversial within the patent bar.
2. Option B - Allow any and all grounds that may
be brought in a district court to challenge patent validity, but not
to challenge patent enforceability.
(a) Pros
- Encourages
petitioners to use the proceeding rather than burdening the district
court with declaratory judgment actions.
- Would
not require Office to develop new expertise, as such issues are now considered
in interference proceedings.
- Ensures
that all issues related to patent validity will be heard in a single
forum.
- As
interference proceedings are now used as back-door means to cancel patents,
the demand for the Office to consider such matters currently exists and
including all validity issues in review proceedings would eliminate limitations
on when such proceedings can be brought.
(b) Cons
- Requires
litigants who wish to raise enforceability concerns to go to district
court.
- Allowing
the Office to determine certain issues of validity, e.g., known or used
by others, may be controversial within the patent bar.
3. Option C - Allow only certain grounds related
to patent validity and nothing related to enforceability to be brought
before the Office.
(a) Pros
- Does
not require the Office to become involved in enforceability issues.
- Limits
amount of discovery that must be allowed and supervised.
(b) Cons
- Requires
litigants who wish to raise enforceability concerns to go to district
court.
- Requires
litigants who wish to raise certain issues of patentability to go to
district court.
- Will
likely be of less use to litigants who may have to use multiple forums
to decide patent validity.
- Would
increase likelihood of using the Office for harassment during infringement
cases because patent owner could be forced into multiple actions to defend
validity of patent.
4. Recommandation:
Option B. This
would clearly separate enforceability issues from validity issues. It
would allow the Office to use its expertise to check the quality of the
patents and allow the district courts to use their expertise to determine
issues such as fraud and inequitable conduct.
Alternative Design Issue #4 - Standing to Bring Review Proceeding
1. Option A - Any person may file a petition for
review-no standing requirement.
(a) Pros
- Lack
of a requirement for standing provides the strongest quality check on
patents.
- Simplifies
proceeding and conserves resources because the Board will not need to
adjudicate standing.
(b) Cons
- Lack
of a standing requirement makes use of a review proceeding more viable
as a harassment tool.
- Lack
of a standing requirement may lead to proceedings that are politically
or personally motivated involving subject matter of commercial significance.
- Lack
of a standing requirement may create Article III and prudential standing
issues on judicial review as to review petitioners, possibly (1) precluding
judicial review of holding that claim is patentable or (2) necessitating
USPTO participation, including a greater burden on the USPTO Solicitor's
Office.
2. Option
B - Any petitioner who believes that it is or will be economically damaged
by the patent may file a petition for review at any time.
(a) Pros
- Option
B mirrors the standing requirement to cancel a trademark under 15 U.S.C. § 1092,
except for the modification that the damage be economic; the standard
will be familiar for the USPTO and for practitioners.
- Option
B is less restrictive than the standing requirement to litigate patent
invalidity in district court, but still requires that some sort of potential
dispute exist between the review petitioner and the patent owner.
(b) Cons
- A
less restrictive standing requirement increases the likelihood that review
could be used for harassment.
3. Option C - Any petitioner who believes that it
is or will be “damaged” by the patent may file a petition for review
(1) within 12 months of the issuance of any claim challenged, or (2) within
4 months of being placed in “substantial apprehension” of being sued
for
infringement of any claim challenged.
(a) Pros
- Option
C provides the most restrictive standing requirement, which offers patent
owners the most protection against use of the review proceeding as a
harassment tool.
- Option
C limits reviews to real controversies between parties as to the validity
of a patent claim, and would eliminate Article III and prudential standing
concerns on judicial review of any final USPTO review decision, without
necessitating USPTO involvement.
(b) Cons
- Limiting
the field of challengers somewhat limits use of review as a quality check.
- Restrictive
standing requirements will likely complicate proceeding and require expenditure
of resources for the Board to adjudicate standing issues.
4. Recommendation:
Option A is recommended. Option
A allows the review proceeding to (1) function most effectively as a
quality check, and (2) proceed expeditiously to the merits.
Alternative Design Issue #5 - Nature of Initial Showing Required of Petitioner
1. Option A - Require review petitioner to show a
prima facie case of unpatentability and provide initial disclosures similar
to those required by Fed. R. Civ. P. 26(a). Patent owner would then have
an opportunity to challenge the adequacy of the prima facie case by moving
to dismiss; alternatively the Board could also have authority to sua sponte
dismiss deficient review petitions. A decision by the USPTO that a prima
facie case had been made out would not be subject to judicial review.
(a) Pros
- Expedites
the proceeding.
- Maximizes
possibility that petitioner has a genuine interest.
- Reduces
potential use of proceeding to harass patent owner.
(b) Cons
- May
be difficult to show some grounds of unpatentability (e.g., best mode,
public use, on sale) without discovery, although a prima facie case would
be evaluated on the basis of a proffer of evidence.
- Difficult
for a petitioner under the 4-month deadline to assemble case in that
time frame.
- Adds
a step in the process--more burdensome for the Board.
2. Option B - Require review petitioner to show a
likelihood of success on the merits and provide initial disclosure (a showing
of likelihood of success would be less than a showing of a prima facie
case of unpatentability). Patent owner can then challenge the adequacy
of the showing, or the Board can sua sponte dismiss for failure to make
the requisite showing. A decision by the USPTO that a likelihood of
success had been established would not be subject to judicial review.
(a) Pros
- Eliminates
meritless complaints at earliest stage.
- Expedites
the proceeding.
- Ensures
that the petitioner has a genuine interest.
- Reduces
harassment.
(b) Cons
- Difficult
to make out case for some grounds of unpatentability.
- Difficult
for a petitioner under the 4-month deadline to assemble case.
- Adds
a step in the process and makes it more burdensome for the Board.
3. Option C - Require review petitioner to show a
substantial new question of patentability and provide initial disclosures. Patent
owner could then challenge the adequacy of the showing, or the Board can
sua sponte dismiss for failure to make the requisite showing. A decision
by the USPTO that a substantial new question of patentability had been
established would not be subject to judicial review.
(a) Pros
- Same
standard used to determine whether the USPTO should begin a reexamination.
- Eliminates
meritless complaints at an early stage.
- Expedites
the proceeding.
- Ensures
that the petitioner has a genuine interest.
- Reduces
harassment.
(b) Cons
- Difficult
to make out case for some grounds of unpatentability.
- Difficult
for a petitioner under the 4-month deadline to assemble case.
- Adds
a step in the process and makes it more burdensome on the Board.
- May
cause confusion over what cause of unpatentability the petitioner may
pursue.
- May
allow courts to read reexamination requirements into review proceedings.
4. Option D - No threshold showing required other
than a Fed. R. Civ. P. Rule 12(b)(6) standard, i.e., the review petitioner
must state a claim upon which relief may be granted.
(a) Pros
- Same
standard is used by district courts.
- Allows
for the most bases of unpatentability to be brought in the proceeding
- even those on which supporting information must be obtained through discovery.
- Stronger
patents may result.
(b) Cons
- Allows
maximum number of meritless petitions - harassment danger.
- Could
lengthen proceedings and encourage sand-bagging.
5. Option E - Adopt Option A or B for 12-month proceedings,
Option C for 4-month proceedings.
(a) Pros
- Allows
4-month petitioner access to discovery and remedies.
- Eliminates
meritless petitions by 12-month petitioners.
(b) Cons
- Adds
a step in process for 12-month proceedings.
- Difficult
for 12-month petitioner to allege some grounds of unpatentability.
6. Option F - Require initial statement of review
grounds from petitioner, but give Director discretion to set time by which
a showing of sufficient justification to proceed must be made. Otherwise
the Board may dismiss the proceeding.
7. Recommendation:
Adopt Option F. Allow
the Director discretion to issue a regulation as to the time by which a
petitioner must file all its supporting information, allowing the Board,
either sua sponte, or on motion of the patent owner, to dismiss if the
showing is insufficient to justify proceeding. This lessens the initial
burden so that petitioners may gather the necessary supporting information
in the proceeding if such information would not otherwise be available
to them. Thus, review proceedings may serve the public interest by testing
the patentability of claims in issued patents. However, the patent owner
is protected from harassment by economically disinterested parties through
the required sufficiency showing. A decision by the Board to dismiss
the proceeding is final and not appealable.
Alternative Design Issue #6 - Discovery and Sanctions
1. Option A - Mandatory initial disclosures of information,
with no further discovery permitted.
(a) Pros
- The
lack of further discovery would streamline the proceeding.
- Reduces
the expense and burden on parties.
- Reduces
the opportunities to harass parties.
(b) Cons
- Lack
of discovery would not allow for adequate development of evidentiary
cases.
- Would
preclude review from having collateral estoppel effect--no "full and
fair opportunity to litigate".
2. Option B - Mandatory limited initial disclosures
of information, with further discovery for good cause shown.
(a) Pros
- Further
discovery affords a better opportunity to adequately develop cases.
- Good
cause standard for obtaining discovery contains expense associated with
discovery.
- Good
cause standard allows the Board to determine whether the discovery is
appropriate, and restrict its nature and volume.
- Would
likely meet standard for collateral estoppel of review proceeding.
(b) Cons
- Restricted
discovery may be viewed as limiting ability to develop cases.
- Could
lead to challenges to collateral estoppel effect of the Board decisions
based on APJ exercise of discretion in limiting discovery.
3. Option C - Mandatory initial disclosures, with
unrestricted discovery.
(a) Pros
- Allows
full development of cases.
- Maximizes
chance that collateral estoppel effect will be accorded to final Board
review determinations.
- Parallels
what is available in courts.
(b) Cons
- Could
render the review proceeding as expensive and burdensome as district
court litigation.
- Discovery
could be used for harassment.
4. Option D - Sanctions authority in accordance with
(1) Fed. R. Civ. P. 11, including imposition of nonmonetary and monetary
sanctions for bad faith pleadings or representations to the Board and
(2) Fed. R. Civ. P. 37, including imposition of nonmonetary and monetary
sanctions
for failure to make disclosure or cooperate in discovery.
(a) Pros
- Discourages
harassment tactics and bad faith conduct in review proceedings.
- Parallels
authority available to district courts.
(b) Cons
- Could
result in burdensome collateral proceedings before the Board on sanction
issues.
- More
complicated for the USPTO to administer.
- Added
burden on parties and possibly Solicitor's Office to defend sanctions
awards.
5. Recommendation:
Option B is recommended
as striking the appropriate balance between the review petitioner, who
may have a legitimate need to develop its case through discovery, and the
patent owner, who may need protection from unduly burdensome unchecked
discovery. Option B allows further legitimate discovery, including discovery
from third parties (35 U.S.C. § 24) whose information might not be available
through mandatory disclosure, only where the Board deems it appropriate
in scope and nature. Option D is also recommended to allow the Board
the necessary sanctions authority to control adversarial proceedings
of this
nature.
Alternative Design Issue #7 - Nature of Evidentiary Showing
1. Option A - Apply preponderance of evidence standard.
(a) Pros
- Traditional
standard applied to proponent of proposition in administrative proceedings,
including patent examination, patent reexamination, reissue proceedings
and most interference issues.
- Lesser
standard than in district court assures that USPTO can use review proceeding
as quality control measure.
(b) Cons
- By
allowing review on standard less than the clear and convincing evidence
standard applied in district courts on the issue of patent invalidity,
critics may perceive process as diminishing value of patent.
- USPTO
likely to become forum of choice by infringers because of lower evidentiary
standard for obtaining a holding that a patent claim is unpatentable,
not because of expertise.
2. Option B - Apply Evidentiary Rules aligned with
the Federal Rules of Evidence.
(a) Pros
- Will
eliminate one of objections to EPO practice, which allows extensive hearsay.
- Fed.
R. Evid. are used in district courts which has jurisdiction to consider
patent claim invalidity and by the Boardin interference matters.
- Experience
in interference cases where Fed. R. Evid. has been applied since 1985
has minimized the need for resolution of issues related to admissibility
of
evidence.
(b) Cons
- Those
APJs who have principally handled ex parte appeals will lack experience
with Fed. R. Evid. and will need training to avoid making technical errors
leading to reversible error that more likely would not arise under more
lenient Administrative Procedure Act standard.
- May
prolong proceedings unnecessarily.
3. Option C - Allow presentation of case-in-chief
by affidavit and deposition, followed by hearing allowing live cross-examination.
(a) Pros
- Allows
for full presentation of evidence and testing of case-in-chief through
cross-examination.
- Providing
live cross-examination will maximize and preserve deference by appellate
court to fact-finding by APJs who can observe demeanor.
- Requirement
that party present to opponent entire case-in-chief before opponent decides
whether cross-examination is desirable, lessens (but does not necessarily
eliminate) need for some discovery disputes, minimizes discovery disputes
and allows more expedited proceeding.
- Current
interference proceeding and some district courts in non-jury trials require
certain direct testimony to be presented in affidavit form, subject to
live cross-examination; process has been found to be highly effective.
- Permitting
live cross-examination will enhance perception of process as suitable
substitute for district court action while presentation of case-in-chief
in paper
will facilitate expedition.
(b) Cons
- Lack
of live direct testimony may mean that APJs’ ability to test credibility
is narrower.
- Use
of live cross-examination may make expedition more difficult.
4. Recommendation:
Adopt Options A, B, and
C.
Alternative Design Issue #8 - Amendment of Claims in Review Proceeding
1. Option A - Allow no amendment of claims.
(a) Pros
- More
expedited proceeding.
- Parallel
to district court and U.S. International Trade Commission (USITC) proceedings,
where no amendment is permitted.
(b) Cons
- Would
lead to multiplicity of proceedings, since amended claim could be obtained
through reissue, reexamination, and interferences.
- Would
diminish settlement prospects.
- Would
diminish use of review to improve quality.
2. Option B - Allow unlimited amendment
of claims.
(a) Pros
- Would
substitute for reissue process.
- Would
diminish risk of unpatentability of substitute claim.
(b) Cons
- Would
unduly prolong proceeding.
- Would
be perceived as unfair to review petitioner, who must challenge a "moving
target".
- Would
make review proceeding primarily into a form of examination.
- Would
diminish utility of proceeding as substitute for district court.
3. Option C - Allow single, narrowing amendment of
any claim at issue, with additional amendment on good cause shown. Additional
dependent claims would be allowed.
(a) Pros
- Permitting
narrowing amendment after petitioner's proffer would (1) encourage petitioner
to be aware that an amendment might be presented, (2) to prepare for
that contingency and (3) limit the need for extensive further discovery.
- Provides
a patent owner with a fair chance to maintain a patent with patentable
claims.
- Permitting
one opportunity as a matter of right to present narrower claims has been
a successful practice in interference cases.
- Additional
amendment with leave minimizes possibility of inadvertency leading to
patent owner’s not obtaining valid claim.
(b) Cons
- Less
effective in allowing patent owner to assure obtaining valid claim.
- Good
cause motion practice may become burdensome.
4. Option D - Only permit amendment upon surrender
of original claim.
(a) Pros
- Would
simplify subsequent litigation.
- Somewhat
parallels reissue.
(b) Cons
- Would
require patent owner to choose to abandon claims which are possibly patentable.
5. Recommendation:
Adopt Option C. Permit
patent owner to propose single, narrowing amendment of claim at issue,
and/or the addition of dependent claims, with additional amendment on good
cause shown. Do not require surrender of original claim. This strikes
the best balance between fairness to the patent owner and to the review
petitioner.
Alternative Design Issue #9 - Time for Completing Review Proceeding
1. Option A - Have statutory provision requiring
the Director to put in place regulations designed to result in final
decisions in review proceedings to be entered within one year from docketing
of review
proceeding.
(a) Pros
- Would
provide assurance of expedition without mandatory language that would
make USPTO subject to mandamus in the event of reasonable delay.
- Would
give assurance to courts that stays of litigation pending outcome of
review before USPTO would be justified.
- USPTO
has experience achieving one-year deadlines, since from 1998 it has decided
the patentability phase of almost all interferences within a 10-month
period; USITC sets 15-month goal for more complex patent cases.
(b) Cons
- Would
put pressure on Director to allocate budget to achieve set goal for review
proceeding, perhaps at cost of other processes.
- Alternative
of mandatory deadlines would provide litigants more certainty.
- Setting
forth specific deadlines for interim points of proceeding within statute
would provide greater assurance.
2. Option B - Use "conducted with special dispatch" language
to ensure that the Board will not allow other matters to take precedence.
(a) Pros
- Does
not interfere with Director discretion in setting priorities for funding
in USPTO.
- Instructs
the Board as to priorities in proceedings.
(b) Cons
- May
not provide adequate assurance of expedition to make legislative package
acceptable, because the Board has in past allowed inter partes proceedings
to become quite extended and "special dispatch" proceedings
are not reliably expedited in USPTO.
3. Recommendation: Set time-limited expedition
goal in statute and give Director flexibility to design rules to meet
it.
Alternative Design Issue #10 - Relation to Other Post-Grant Proceedings
1. Option A - Eliminate inter partes reexamination.
(a) Pros
- Process
has been little used and its function is likely to be superseded.
- Post-grant review would allow third parties to proceed on every ground
available under inter partes reexam.
- Post-grant review would also
allow third parties to proceed on additional grounds and receive discovery
not available under inter partes reexam.
(b) Cons
- The fee for inter partes reexam
is somewhat lower than anticipated for post-grant review therefore continued
inter partes reexam might serve a niche market interested in challenges based
solely on prior art patents and publications.
2. Option B - Eliminate requirement that Director
act on third-party requests for reexamination.
(a) Pros
- Would
facilitate devoting greater examiner time to original examination.
- Would
still allow requests to Director, thereby putting information in his
hands to use at his discretion.
- Would
limit prospects of simultaneous parallel reexamination proceedings against
same patent owner in USPTO.
- In
cases where parties are simply seeking an opinion from the USPTO, they
can achieve the same effect by agreeing not to proceed beyond a motion
to dismiss in a review proceeding.
- Since
review proceeding allows full participation by party challenging patent,
limitations on third party-initiated reexamination should make it a less
attractive option.
(b) Cons
- Would
eliminate reasonably efficient proceeding with which practitioners are
familiar to decide friendly disputes on which they simply want declaration
of rights and not cost of adversary proceedings.
- Option
of providing reexamination opportunity based on third-party submission
on order of Director may be little used if requestor has no guarantee
of action and thus may be less effective as a quality control procedure.
3. Option C - Merge into review proceeding any issues
raised in pending reexamination or narrowing reissue proceeding that
review petitioner raises in review proceeding, and allow any other issues
to proceed
in reexamination or reissue.
(a) Pros
- Would
prevent parallel proceedings on same issues.
- Would
assure that review petitioner is fully informed of existence of other
proceeding.
- Would
yield a single judgment from USPTO on overlapping issues.
(b) Cons
- Would
take choice of forum out of hands of patent owner and other third parties.
- Would
impose some administrative burdens in consolidating proceedings.
- May,
in some cases where reexamination is well developed, delay results.
4. Option D - In the event of pending reissue proceeding
in first two years after issuance of patent, when broadening is allowed,
authorize review petitioner choice of whether to stay review proceeding
pending outcome of reissue or vice-versa.
(a) Pros
- Would
minimize burden on patent owner of parallel proceedings without prohibiting
reissue.
- Allows
review petitioner to delay effort of review litigation if narrowing amendment
sought by patent owner ex parte would moot case.
- Would
allow narrowed claim to be tested by review petitioner if so chosen.
- Prevents
issuance by USPTO of inconsistent judgments and race between units of
USPTO.
(b) Cons
- Takes
existing choice of reissue out of hands of patent owner.
- May
delay broadening reissue needed for other reasons.
5. Option E - Review proceeding estops the parties
and privies from pursuing district court actions, reexamination and future
reviews on the same issues.
6. Option F - Statute will give the Director flexibility
to determine, by regulation or otherwise, the manner in which various
proceedings will proceed, including the power to terminate, transfer, consolidate
and/or
stay any proceedings where appropriate.
(a) Pros
- Offers
the most flexibility to address complex (and currently unforeseeable)
interrelationships between Office proceedings involving the same or related
patents.
- Conserves
resources by ensuring that duplicative proceedings need not go forward
concurrently.
(b) Cons
- May
be viewed as depriving parties of their current rights to pursue other
Office proceedings, such as reexamination or reissue.
7. Recommendation:
Eliminate inter partes
reexamination, and third-party requested reexamination, as a matter of
right, but not other forms of post-grant proceedings. Give the Director
broad authority to regulate the interrelationship among Office proceedings,
to provide the most efficiency for the Office and the parties.
Alternative Design Issue #11 - Settlement
1. Option A - Allow settlement by parties without
reporting content of settlement to the USPTO or obtaining USPTO approval.
(a) Pros
- Facilitates
expedition in completion of proceeding.
- Makes
USPTO no more burdensome to parties than district court.
- Recognizes
that commercial interests of parties may be served by minimizing litigation
costs.
(b) Cons
- May
lead to repeated review proceedings starting from scratch if other competitors
also doubt validity of patent claim.
- Provides
less access by Federal Trade Commission (FTC) and Department of Justice
(DOJ) to settlements than current law concerning interferences.
- May
lead to collusion between competitors.
2. Option B - Allow parties to settle without approval
by USPTO, but require filing of settlement agreement.
(a) Pros
- Parallel
to current interference practice (35 U.S.C. § 135(c)).
- Provides
antitrust enforcers ability to assure that USPTO not used to create anticompetitive
agreements.
(b) Cons
- May
lead to preservation of claims that are known to, or suspected by, the
Board to be unpatentable.
- May
make any follow-on litigation by other parties more burdensome on those
other parties.
3. Option C - Provide the Board ability to reject
settlements terminating reviews, based on the public interest.
(a) Pros
- Serves
quality control purpose of proceeding by allowing the Board to cancel
claims known, or suspected, to be unpatentable.
- Prevents
burden on third parties to bring additional proceedings.
(b) Cons
- May
discourage settlement and thus expedition in case.
- May
require APJ to exercise public policy discretion in matters beyond USPTO
expertise (e.g., antitrust concerns).
- Diverges
from district court practice.
4. Option D - Allow APJ to take other actions--require
submission of discovery taken to date, Director-ordered reexamination--short
of rejection of settlement.
(a) Pros
- Would
have less effect in discouraging potentially meritorious settlement while
allowing USPTO to take action to minimize burdens on third parties.
- Option
would lessen risk of DOJ/FTC objection to review proceeding as possibly
allowing collusion.
(b) Cons
- USPTO
may allow to stand some claims known to be unpatentable.
- Would
delay the proceeding.
- APJs
currently have authority to recommend Director-ordered reexamination,
but Director-ordered reexamination rarely takes place.
- Additional
reexamination would take away resources available for initial examination
of patents.
5. Recommendation:
Adopt Option B, with appropriate
modifications to the § 135(c) [interference settlement] model. To protect
against collusion, do not provide for the issuance by the Board of any
decision on patentability of proposed amended claims, in the event of settlement. This
system places little burden on the Office, but still protects the public
interest by requiring disclosure of settlement agreements and by minimizing
any advantages that might be gained through collusion.
Alternative Design Issue #12 - Judicial Review
1. Option A - Allow judicial review of final decisions
(not interlocutory orders) in the Federal Circuit or a district court.
(a) Pros
- Would
be parallel to most appeal processes from decision by USPTO.
- Would
allow parties to bring USPTO record before district court judge who has
jurisdiction over total dispute between parties.
- Expedition
not as crucial as in original examination, where appeals may prolong
patent term, but dual options allowed in those cases.
(b) Cons
- Access
to district courts will discourage full litigation before USPTO, thus
detracting from utility of proceeding.
- Prolongs
proceedings, since appeal to Federal Circuit following district court
decision would still be available.
- Limits
utility of proceeding to divert cases from judicial system.
- Different
standards applied in Federal Circuit (substantial evidence) and district
court (clear error on existing evidence and de novo on new) encourages
forum shopping.
2. Option B - Allow appeal from final decisions to
Federal Circuit only.
(a) Pros
- Faster
and eliminates forum shopping.
- Encourages
full submissions before agency, in which case judicial review by civil
action should be unnecessary.
- Serves
efficiency in courts by eliminating claims that might otherwise proceed
to full litigation and providing courts guidance on claims that are not
cancelled.
- Model
already provided for this step in inter partes reexamination.
(b) Cons
- Does
not allow district court with jurisdiction over matter as a whole to
reopen matter when justice warrants.
- Push
for expedition in USPTO may prevent full and fair opportunity of litigation.
3. Recommendation: Adopt Option B.
USPTO Recommended Course of Action:
Implementation of a review proceeding is
recommended to respond to strong interest from the public in such a proceeding,
to provide a quality check on issued patents, and to provide an alternative
to district court litigation of patent validity issues. Legislation would
be necessary, and is projected for submission to the Congress in January
2004. Thus, implementation of the proceeding in the USPTO in fiscal year
2005 would be realistic. Fees for review proceedings could be set to
cover the costs of these proceedings.
The review proceeding should be structured
to place some limits on when patents can be challenged and who is eligible
to challenge them. A review petitioner should be required to make a strong
initial showing in order to go forward in the proceeding, and all parties
should be required to make mandatory disclosures of the relevant information,
with limited additional discovery allowed for good cause. A patent owner
would have the limited ability to narrow the challenged claims by amendment. Hearings
should be streamlined so that direct cases can be presented by documents,
and live cross-examination allowed where necessary. As structured, the
proceeding could offer a more expedited and potentially less expensive
alternative to district court, and could serve as a useful quality control
mechanism for patents.
Estimated investment:
1. APJ
training to allow APJs to become familiar with handling live testimony
cases (currently only some interference APJs handle live testimony on
an irregular basis).
2. Promulgation
of rules.
3. Additional
Associate Solicitor positions to defend the Board’s review decisions
in appeals where, because of the lack of standing required for the 12-month
review petitioner, the petitioner lacks standing (no actual “case or
controversy”)
to defend the decision.
4. Currently,
it would be somewhat difficult to assess the extent to which review might
be used and hence the resources to implement review. If review were
to be instituted, it is likely--given trademark's experience--that interferences
generally would not be necessary. Accordingly, the Board’s resources
dedicated to handling interferences at least initially would be expected
to be sufficient
to handle reviews, at least in a 2005 time frame.
While there is no solid basis for estimating
the number of reviews, if it is assumed that the Board would have to
handle twice as many reviews as it handles interferences, it would be expected
that 300 reviews could be presented in 2005. Those reviews could be
handled by the 15 APJs currently assigned to interferences, if it is
assumed that
interferences would decrease or be eliminated--probably a good assumption. Additional
resources would be a function of how successful review proceedings are
viewed by the public and the number of reviews filed. On the other hand,
some reviews would take the place of reexaminations, and accordingly,
there would be some examiner resources freed for other purposes.
Estimated benefits:
The principal benefit of the proposal is
in providing a review proceeding where the patentability of patent claims
can be tested, before the Office, by a party with an economic interest
in determining the patentability of a claim. The proceeding would be a
cheaper and faster alternative to district court litigation and would serve
as a useful quality control mechanism for patents. Additionally, the proposal
would eliminate inter partes reexamination entirely and make initiation
of third-party requested reexamination discretionary. This should alleviate
the burden on the examiners of having to examine complex and lengthy reexamination
proceedings, and thus free examiners to examine applications and reduce
pendency thereof. Further, the proposal provides a vehicle wherein the
third party develops and presents the evidence thus saving the Office
a significant amount of resources that it currently expends in making
the
case for unpatentability.
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