US Patent and Trademark Office Proposes Rules for New Administrative Proceedings for Challenging Patentability

The new AIA administrative proceedings—inter partes review and post-grant review—become available on September 16, 2012, one year after the AIA was enacted. On February 10, 2012, the USPTO’s draft rules to implement these post-issuance proceedings were published in the Federal Register, marking the beginning of the 60-day public comment period, with comments due on or before April 10, 2012. The AIA itself established many fundamental aspects of the proceedings these rules will implement, however, and the effect these proceedings could have is becoming clearer.

Summary of New Post-Grant Proceedings

Inter partes review and post-grant review share many common features. Both proceedings: (i) allow nearly anyone to file a petition challenging the patentability of claims of a US patent, (ii) will proceed before Administrative Patent Judges of the Patent Trial and Appeal Board and (iii) are supposed to last only 12 months, except under exceptional circumstances. 

The two proceedings have key differences, however, and will likely serve different purposes. Petitions for post-grant review proceedings can only filed within nine months of patent grant, while petitions for inter partes review can only be filed after that nine-month window. Unlike post-grant review, which can involve any grounds of invalidity to challenge the patentability of claims of a patent, inter partes review will be limited in scope. A petitioner for post-grant review has to meet a higher burden before the review will begin than does a petitioner for inter partes review. Finally, although both proceedings will allow for discovery, discovery in inter partes review is more narrowly limited than it is in post-grant review.

Additionally, a variation on post-grant review—covered business method review—may be available, primarily to financial services institutions, that find themselves accused of infringing certain business method patents, even if the nine-month window has passed.

Effect of Post-Grant Proceedings

Inter partes and post-grant review proceedings replace the existing inter partes reexamination procedure, which has been in place since 1999. Inter partes reexamination has been frequently used in conjunction with patent litigation, but it has also been used as a way for smaller players to challenge more dominant competitors without full-blown litigation, which often costs millions of dollars. Notably, there need not be any dispute about patent infringement for an interested party to petition for reexamination: the new proceedings are the same in this respect. 

Like inter partes reexamination, the new proceedings may serve as a secondary or an alternative forum for challenging patents that are the subject of patent litigation or as a principal forum for competitors looking to challenge the patents of others in their fields. Like inter partes reexamination, the burden of proof is lower than in district court litigation, and the USPTO provides a forum with a greater institutional grasp of technology. The rules, however, are more similar to litigation than examination, and there are likely to be unpredictable developments in the evolution and application of these rules. Therefore, any company that relies on patents, whether or not it is routinely involved in patent litigation needs to understand how these new proceedings will fit into the patent enforcement and licensing regime.

Of course, the proposed fees for these new proceedings are still being finalized, and the cost of the proceedings may affect their attractiveness and availability. As proposed, the schedule of fees may be substantial, depending on the number of claims at issue. For example, the proposed filing fees for inter partes review of 21-30 claims is $34,000.

Top 5 Things to Know About New Patent Proceedings

• The new proceedings will replace the existing regime, offering more robust proceedings in a compressed time frame, and will provide an alternate, and potentially more appealing, forum for challenging patentability of issued patents.
• Anyone but the patent owner can use the new proceedings to challenge a patent, even if a district court would lack jurisdiction (e.g., if there is no present dispute between the patent owner and the challenger regarding the patent).
• Post-grant review allows a challenger to assert any basis of invalidity for challenging patentability, but it is only available in the first nine months after a patent issues—this requires monitoring competitors’ patents for optimal effectiveness. Inter partes review is available after the nine-month post-grant window and is more limited in scope.
• A specialized version of post-grant review will allow companies accused of infringing certain business method patents to challenge patentablity using any basis of invalidity even after the nine-month post-grant window.
• There are other new proceedings enacted by the AIA to address claims that a patent owner derived (i.e., misappropriated) the claimed invention, and for patent owners to seek a decision clarifying potential errors or nondisclosure during the process of obtaining a patent (i.e., supplemental examination).

The Comment Period

The comment period is now open, and the USPTO is receiving written comments on the proposed rules for these proceedings, among other rules relating to the implementation of the AIA. In addition, the USPTO is conducting a series of public hearings around the country relating to the AIA and the proposed rules. Given the impact of these proceedings and rules on the implementation of the AIA, companies and individuals with an interest may seek to provide comments on the proposed rules and/or fees for these proceedings on or before April 10, 2012.   

Links to the Federal Register entries corresponding to the proposed rules for different proceedings are included here:

• Proposed Rule of Practice for Trials before the PTAB (77 Fed. Reg. 6879, Feb. 9, 2012)
• Proposed Trial Practice Guide (77 Fed. Reg. 6868, Feb. 9, 2012)
• Proposed Rules for Inter Partes Review (77 Fed. Reg. 7041, February 10, 2012)
• Proposed Rules for Post-Grant Review (77 Fed. Reg. 7060, February 10, 2012)
• Proposed Rules for the Transitional Program for Covered Business Methods (77 Fed. Reg. 7080, February 10, 2012)
• Proposed Rule for the Technological Invention Definition (77 Fed. Reg. 7095, February 10, 2012)
• Proposed Rule for Derivation Proceedings (77 Fed. Reg. 7028, February 10, 2012)

For more information about the proposed rules or any other matter raised in this report, please contact Kyle Friesen, Sharon Israel, Joseph Mahoney, Brian Rosenthal, and Bryon Wasserman.

Learn more about our Intellectual Property practice.