Challenging A Patent Without Litigation – The New Inter Partes Review

The America Invents Act (AIA) has invoked significant changes to the U.S. patent system, a principal one being creation of Inter Partes Review (IPR), and concurrent elimination of the inter partes reexamination. Like the latter, the new Inter Partes Review is an administrative proceeding to invalidate patents, by allowing a party to petition the U.S. Patent and Trademark Office (USPTO) with prior art that destroys novelty or establishes the claimed invention is obvious. The IPR proceedings are administered by the newly formed Patent Trial and Appeal Board (PTAB) and there is no examination involved.

The party challenging patent validity, namely the petitioner, must submit: (1) an identification of the patent claims being challenged (with one challenged claim being sufficient); (2) a copy of the evidence used for the invalidity challenge; (3) a description of the evidence supporting the challenge; (4) payment of a requisite fee (currently $27,200 for the first 20 claims and $600 for each additional claim); (5) identification of the real party in interest; and (6) certification that the petition has been served on the patent owner.

Previously, an inter partes reexamination could be filed at any time. However, the new legislation places two important limitations on the filing of an IPR petition. First, under 35 U.S.C. § 315(b), a party cannot file an IPR petition more than one year after the petitioner was served with a complaint alleging infringement of the patent at issue in the petition, though it may be extended by another 6 months for good cause. Second, under 35 U.S.C. § 315(a)(1), a party cannot file an IPR petition if it first brought a declaratory-judgment action for invalidity on the same patent at issue in the petition; however, counter-claims brought by the same accused infringer are permitted in a patent infringement action brought by the owner of the patent.

In reference to the bases for challenging validity, the IPR is similar to the inter partes reexamination. In particular, both proceedings permit determinations of novelty and non-obviousness of a patent in light of only prior patents, published patent applications and other printed publications. Excluded is patent invalidity due to a prior commercial sale or a prior public use. Like in the inter partes reexamination, IPR also sets the legal standard as a reasonable likelihood of prevailing, termed the preponderance of evidence standard in legal parlance, and the party challenging patent validity bears the burden of proof.

However, examination and appellate review is quite different as between the inter partes reexamination and IPR. In the latter, examination was performed by a panel of three examiners, with Office appellate review of the decision by the USPTO’s Board, the highest USPTO legal authority. Under the new legislation, the IPR itself is an adjudicative proceeding conducted by the Board itself, newly designated the PTAB, with appeals brought directly to the Federal Circuit without federal district court review. Critics have argued that skipping the federal district courts is substantially disadvantageous to patent owners, who have traditionally enjoyed establishing their case on the merits by conducting plentiful discovery, and having a judge and jury determine invalidity. Advocates argue that while there was no discovery available under inter partes reexamination, IPR permits limited discovery, including deposition of declarants, initial disclosures, production of exhibits cited and inconsistent information, and the ability to move for additional discovery to suit the interests of justice.