Blueprint of a gear train.

 Robert J. Yarbrough
Patent Attorney

 Patents - Inventions - Trademarks 

Patent Remedies Without Going To Court 

Robert J. Yarbrough
March, 2012

I. Introduction

A patent can be attacked, amended or corrected without spending time and money for litigation in court. The America Invents Act, Public Law No: 112-29, was signed into law on September 16, 2011 and includes several new administrative procedures and tweaks several of the existing procedures. In general, there now are more ways to attack a patent for less money than before. In general, a patent owner has more options to fix errors in a patent to get ready for infringement litigation without also killing the patent. The PTO has proposed several new regulations and amendments to implement those various remedies.

The following is a summary of the administrative remedies for determining (a) whether a patent should be issued, (b) whether an issued patent is defective and (c) whether a defective patent should be fixed.

II. Remedies of the Patent Owner

A. Supplemental Examination

Supplemental examination is a new remedy provided in 12 of the America Invents Act, codified as 35 U.S.C.157(a) and that will be incorporated into 37 CFR 1.601-1.625. See 77 Fed. Reg. 3666 (January 25, 2012).  Supplemental examination will be available beginning September 16, 2012.

Supplemental examination is a mechanism by which a patent owner can avoid an inequitable conduct claim based to the patent owner's failure to bring prior art to the attention of the examiner during prosecution. Using supplemental examination, the patent owner can petition the PTO to consider whether the prior art raises substantial new questions of patentability. If the PTO concludes that the reference does raise significant new questions, then the PTO will order reexamination, which will proceed under the rules of ex parte reexamination. If the PTO concludes that the matter does not raise a significant new question, then the supplemental examination is over and the claims are affirmed.

If the patent survives supplemental examination or any resulting reexamination based on the prior art, then the patent is treated as having considered the reference during prosecution and inequitable conduct based on the reference cannot be used to attack the patent. The usefulness of supplemental examination is substantially limited by two exceptions; namely, (a) the immunity conferred by the supplemental examination will not apply to declaratory judgment litigation pending at the time the supplemental examination petition is filed, and (b) the supplemental reexamination must be concluded prior to initiation of an infringement action by the patent owner. The patent owner therefore cannot learn of the prior art through an opponent's discovery in litigation and then go to the PTO to resolve the inequitable conduct issue.  Conversely, supplemental examination is not a compulsory administrative remedy that must be exhausted for access to the courts.

In light of the limits on inequitable conduct imposed by the Federal Circuit in Therasense v Becton Dickinson, Fed. Cir. 2008-1511 (May 25, 2011) (standard of materiality of a withheld reference is a 'but for' test), the importance of supplemental examination and of these patent defense-friendly exceptions may be limited.

Supplemental examination is not limited to patents and printed publications (unlike ex parte reexamination) and instead can be based on 'information,' which is much broader. I infer that the term 'information' is broad to include all of the things that can be patent bars and prior art under 102(a)(1) of the America Invents Act; namely, information showing that the invention was on sale, in public use or 'otherwise available to the public.'

The scope of the supplemental examination is not limited to novelty and obviousness and can include 101 patentable subject matter and 112 indefiniteness, unlike ex parte reexamination. It is unclear why a patent owner would want to raise 101 or 112 matters in a supplemental examination, since those matters are unlikely to give rise to a claim of inequitable conduct. Perhaps addressing 101 and 112 issues would allow a patent owner to resolve multiple matters in one proceeding, including matters that might otherwise require a separate reissue application.

Supplemental examination may allow a patent owner to maintain a patent in effect and negate the effect of fraud on the patent office, but that may not end the matter. If the PTO concludes that actual fraud was committed, then the PTO may take other action, such as to refer the case to the Attorney General for criminal prosecution. The PTO appears to have discretion to take other unspecified actions if it discovers fraud. I infer that the PTO may conclude that it has discretion to use the supplemental examination to cancel claims on fraud grounds.

The PTO is proposing high fees for supplemental examination. The petition cost is $5,180.00. If the PTO orders reexamination as a result of the petition, the reexamination will cost an additional $16,120.00. We are presented with the downside of providing fee setting authority to the PTO. The PTO can set fees so that only the very wealthiest of companies can afford the procedures, and then only in the most important of cases. The high price of supplemental examination will exclude many patent-owning entities.

B. Reissue

The existing reissue provisions of 35 U.S.C. 251 and 252 allow a patent to be corrected after issuance where the patent is 'invalid' or 'inoperative.' Reissue has been used in the past to correct a claim of priority, expand the scope of claims, correct claims, correct a specification or drawing or fix written description issues. Since reissue applies only to patents that are invalid or inoperative, reissue cannot be used to add only dependent claims. Reissue also cannot be used to recapture subject matter that was waived through failure to file a divisional application.

The reissue provisions are largely unchanged, with one important exception. Section 20 of the America Invents Act includes 'technical amendments.' Subsection 20(d) relates to reissue and removes the 'without deceptive intent' requirement. Intent is no longer an element where the patent owner seeks to fix a patent through reissue.

The Act does not address specifically whether the doctrine of inequitable conduct applies to an error corrected through reissue.  However, an argument can be made that misconduct in the original application does not apply to the reissued application, particularly in light of the changes in the disclaimer and inventorship sections, discussed below.  

C. Disclaimer

The 'technical amendments' at section 20 (e) of the America Invents Act also make an important change to the disclaimer provisions of 35 U.S.C. 253. That section provides that if one claim of a patent is invalid, the remaining claims still are valid and the patent owner can disclaim the invalid claim. Before the America Invents Act, this provision required that the invalidity be 'without deceptive intent.' The intent element is now removed, so the intent of the applicant is not an issue.

The patent owner can, for example, fail to disclose relevant prior art in bad faith and with the intent to deceive the examiner. As an alternative to supplemental examination, the patent owner can disclaim the claim that was anticipated by the non-disclosed prior art without risk to the remaining claims.

D. Correcting Inventorship

The correction of inventorship provisions of 35 U.S.C. 256 allow the list of inventors to be corrected after a patent is issued. The 'technical amendments' at section 20(f) of the America Invents Act change 256 to remove the condition of lack of 'deceptive intent.' Intent is no longer an issue when considering whether the patent owner can correct the identity of the inventors listed in a patent.   Under language of 256 that is not changed, if the error is corrected, then the error "...shall not invalidate the patent in which such error occurred... ."

The change to 256 is a continuation of the paring back of 'inequitable conduct' and the harsh result of terminating all patent rights for errors such as an incorrect list of inventors. Under amended 256, a person can fraudulently procure a patent by naming false inventors and can settle litigation with the real inventors by assigning the fraudulently-obtained patent to the real inventors, who then can correct inventorship through 35 U.S.C. 256. This would reverse the Supreme Court decision in Precision Instrument v Automotive Maintenance Machine Co., 324 U.S. 816 (1945), one of the original cases that created the doctrine of inequitable conduct.

E.    Is Inequitable Conduct Dead?

I suggest that the doctrine of inequitable conduct may not be as dead as it looks, for two reasons:

First, the creation by Congress of specific exceptions to the doctrine of inequitable conduct suggests that Congress intended that other conduct not covered by a specific exception is 'inequitable conduct' rendering a patent unenforceable.  For example, if the patent owner becomes aware of withheld prior art but elects not to proceed through supplemental examination, a court may be more willing to find that failure to disclose the item of art was 'inequitable conduct' rendering the patent unenforceable.   

Second, if a Federal judge concludes that a patent was obtained by fraud, the judge can reach back to the equity underpinnings of the doctrine to refuse to grant equitable relief in the form of an injunction. This would not affect the judge's duty to award damages at law for patent infringement.

III. Remedies of Third Parties

A. Submission of Prior Art by a Third Party During Application Pendency

1. Third party submission

Beginning September 16, 2012, under section 8 of the America Invents Act, codified at 35 U.S.C.122(e) and implemented by proposed 37 CFR 1.290, a third party will be able to submit to the PTO prior art patents, published applications or other printed publications of potential relevance to someone else's patent application. The third party must provide written explanation of the relevance of the prior art, which allows the third party to insert both prior art and written argument directly into the file wrapper of a competitor's patent application.

The time period for the third party submission is limited. Documents must be submitted prior to (a) date of mailing of the notice of allowance, or (b) the later of 6 months after publication and the date of first rejection of the application. In most instances, the date of the first PTO office action on the merits will control. For applications subject to accelerated review, the date six months after publication will become important. See 77 Fed. Reg. 448 (January 5, 2012).

The third party must pay a fee set under 1.17(p) of $180.00 for every 10 documents submitted. The fee is waived for submittal of 3 or fewer references. These provisions may not be used by the applicant and are not a substitute for filing information disclosure statements since the submitter must aver that it does not have a duty of disclosure to the PTO.

The PTO intends to allow third partes to submit documents and argument electronically; however, the documents will be manually reviewed for compliance with 1.290 before the document is visible in the electronic file wrapper and available to the examiner. Once a reference is submitted, it will be treated like a reference included in an IDS - the inventor is not required to submit a separate IDS listing the reference. The submission can be made for any patent application, including an abandoned application or one that has not been published.

The provision requiring written argument makes the third party submission procedure much more attractive to a potential infringer than the old practice of notifying the applicant's counsel of prior art and relying on the applicant's duty of disclosure. I believe that the provision will be widely used.
I infer that patent monitoring services will be the hot business model. A company in a technologically competitive industry may well find it a valuable blocking strategy to compile collections of prior art patents and publications relevant to its products, to monitor pending applications and to comment on all applications relevant to its area of business. We may see otherwise competing industry groups compiling collections of prior art along with synopses of the art to dump the synopses and the art into patent applications by others.

A patent applicant can substantially reduce the risk of third party submissions by requesting that the patent application not be published and hence keeping the patent application secret until after the first office action. Of course, publication of a U.S. patent application is a condition precedent to claiming priority to the U.S. application in other countries. The patent applicant is well advised to decide early whether the applicant will seek international patent protection. If not, the applicant should file a non-publication request to avoid publication and hence third party submissions. We can anticipate that the unintended consequences of 35 U.S.C.122(e) will include that fewer U.S. patent applications are published, fewer U.S. inventors will obtain foreign patents and fewer U.S. companies will compete on the world stage.

2. Protests by the public

Third party protests to a pending patent application under 37 CFR 1.291 have been around for a long time. A 'protest,' like a third party submission, allows the third party to insert prior art and argument into the file wrapper of someone else's patent application. The protest is not limited to patents and published documents and may include 'other information,' such as information relevant to charges of inequitable conduct. The PTO will not act on the allegations of inequitable conduct.

Public protests are very limited in time and can be submitted only during the period of time prior to publication of the application or issuance of the patent, whichever occurs first. The major problems with the public protest are that the public has no way to learn of the patent application prior to publication and the PTO does not have a way to match a protest to an unknown application.

Upon consent of the applicant, the protest can be filed at any time up until the notice of allowance is mailed. I cannot imagine a situation in which the applicant would consent to a late-filed protest. The protest is otherwise similar to the third party submission, and the reason for a distinction between the two is not immediately obvious. The protest references will be entered into the application file, presumably triggering the applicant's duty to disclose the references to the PTO in an IDS. See 77 Fed. Reg. 456 (January 5, 2012).

The old public use proceedings under 37 CFR 1.292 are deleted in favor of the new Post Grant Review proceedings.

B. Third Party Submission after Issuance

35 U.S.C. 301 was added to the patent statute in 1980. That section provides that any person, including the patent owner or an anonymous person, can submit prior art patents or printed publications for inclusion in a patent file, provided the person also provides argument as to why the prior art is relevant to a claim of the patent. The section 6(g) of the America Invents Act modified this section to also allow submission of statements by the patent owner in a legal proceeding addressing the scope of any claim. The proposed regulations at 77 Fed. Reg. 448 (January 5, 2012) will implement the changes in the Act. Of interest, the regulations provide that the statements of the patent owner will be considered in determining the scope of the claims during a subsequent reexamination.

A defense strategy is presented: depose the patent owner to nail down the patent owner's interpretation of claims, submit the interpretation to the PTO and request ex parte reexamination based on the patent owner's interpretation of the claims during the deposition.

C. Post Grant Review

Post Grant Review, or 'PGR' in PTO speak, is a procedure for a third party to attack a patent during the first nine months after the patent issues. The petition must identify the real party at interest, and so cannot be anonymous or filed by a straw man. Any grounds to deny the patent can be the subject to the post grant review, including whether the patent addresses patentable subject matter, whether the patent is not novel, obvious or subject to a patent bar, whether the claims are indefinite, and whether the claims are barred by double patenting. This is equivalent to the challenges that could be raised in court and the results are binding on both the patent owner and the third party, just as a court decision would be binding.

The PTO will grant PGR only if it determines that it is 'more likely than not' that the third party will prevail as to a claim or if there are important and unsettled questions presented. This is substantially more limited and different from the 'case or controversy' requirement for access to the Federal courts, and appears closer to one prong of the standard for granting preliminary injunctive relief.

Discovery is available for both parties. Issue preclusion applies, and the petitioner must raise any issues that the petitioner reasonably can raise or lose those issues forever. The PTO is to complete the process within 12 months from the petition date, which time can be extended by another 6 months. Appeals from the post-grant review can be filed through the courts.

If the PTO actually decides cases in the time period specified, then the post grant review may carry some of the burden currently carried by the courts. The relative speed, relatively low cost and right of appeal may attract potential infringers for whom speed and certainty are a priority.

PGR has an odd effective date, particularly when considered in light of inter partes review below. PGR applies only to patents issued on applications filed after March 17, 2013. We therefore will not see the first PGRs until mid 2014 at the very earliest, and likely will see very few prior to 2016.

D. Ex Parte Reexamination

Ex parte reexamination allows the patent owner or a third party to bring prior art references to the attention of the PTO and to have the PTO reconsider the patent in light of the new prior art references. Ex parte reexamination has similarities to supplemental examination, with two important exceptions. First, a conclusion favorable to the patent owner does not prevent an infringer from arguing that failure to provide the reference to the PTO during the original prosecution was inequitable conduct. Second, the reexamination is limited to prior art patents and printed publications. We can expect that ex parte reexamination will continue to be a popular defense tactic in infringement litigation due to the relatively low cost and absence of risk to the infringer.

Ex parte reexamination remains largely unchanged under the America Invents Act. Either a third party or the patent holder can request ex parte reexamination based on prior art patents and publications. If the PTO determines that a 'significant new question of patentability' exists based on prior art references cited, then the PTO will order reexamination. The PTO will issue an office action based on the new art. The applicant has the opportunity to present amended claims and argument to the PTO, although very short timeframes apply. A third party who was the 'real party at interest' in a previous inter partes review or a post grant review cannot raise the same issues in a subsequent ex parte reexamination. See the proposed regulations at 77 Fed. Reg. 448 (January 5, 2012).

The major changes in ex parte reexamination are in the fees required. The cost of a petition is $17,750.00. If the petition is denied, the petitioner gets back all but $4,320.00. See 77 Fed. Reg. 3678 (January 25, 2012).

E. Inter Partes Review

As a procedural avenue for dispute resolution, 'inter partes reexamination' will cease to exist on September 16, 2012 and will be replaced by 'inter partes review.' Inter partes review applies beginning 9 months after the patent issues; that is, after the period for PGR has passed, and extending for the life of the patent. 'Inter partes review' ('IPR') is authorized by Section 6 of the America Invents Act, codified as 35 U.S.C. 311-319.

Inter partes review differs from ex parte reexamination in that the third party (the infringer) can participate in all parts of the process, including presenting argument to the PTO and responding to arguments presented by the patent owner. Inter partes review is limited to whether prior art patents and printed publications render a claim invalid for 102 or 103 reasons, which will include novelty, obviousness and the patent bars. Inter partes review is binding on the parties and so is similar in effect to a court proceeding. Issue preclusion applies, so the petitioner must raise all ground for invalidity or lose the ability to raise those arguments later. Infringement defendants have been reluctant to initiate inter partes reexamination in the past because they lose the right to make the same arguments to the court.

The inter partes review petition can only be based on prior art patents and printed publications. The petition can include affidavits and declarations from experts, as where expert opinion is needed to explain a prior art patent or printed publication.

Inter partes review applies to any patent issued on or after September 16, 2012. For patents issued before that date, the current inter partes reexamination will continue to apply and will continue not to be used.

The changes of the America Invents Act reduce the likelihood that litigants will use the procedure in the future. The ground for inter partes review is changed to a 'reasonable likelihood that the requester will prevail with respect to at least one of the challenged claims... .' This is similar to one of the prongs of the preliminary injunction standard.

For inter partes review and post grant review, the procedures will be the same:

a. The third party will file a petition.
b. The patent owner will file a preliminary response as to why review should not be granted. The reason can be that the third party will not prevail on the merits.
c. Within 3 months, the PTO must decide whether to allow the IPR or PGR to proceed
d. If IPR or PGR granted, then patent owner may file a response with evidence and may amend the claims.
e. The third party may file written comments and supplemental information.
f. Either party may take discovery, including depositions. The PTO may issue protective orders, consolidate petitions and require joinder of petitioners. The scopes of review in IPR and PGR are different, so the evidence that can be introduced and the discovery taken are different.
g. The matter may be settled by agreement of the parties.

F. Relation of PGR and IPR to Court Actions

1. Venue selection by the third party

If a third party files a declaratory judgment action attacking a patent before filing a petition for post grant review or inter partes review, then the PTO will deny the petition and the matter will proceed through the courts. The party has selected the judicial process to resolve the dispute and must stick with the selection. However, the third party still can request ex parte reexamination in parallel with the declaratory judgment action.

If the third party files the declaratory judgment action after petitioning for post grant review or inter partes review, the litigation will be stayed pending resolution of the post grant review or inter partes review, or if the patent owner counterclaims for infringement. The petitioner has selected the administrative process to resolve the dispute and must stick with his or her selection.

2. Venue selection by the patent owner

If the patent owner files an infringement action within three months of the patent grant, then the court will not stay a preliminary injunction motion because of a co-pending petition for post grant review. The post grant review may nonetheless proceed. From this, the third party has the power to select whether the patent validity issues will be decided by the PTO or by the courts. The patent owner cannot select one or the other and have that selection binding on the third party.

If a third party files a petition for inter partes review more than one year after suit for infringement is filed against the third party, then the PTO will deny the petition for inter partes review. The petitioner will be bound by the patent owner's selection of the courts if the third party waits too long; that is, after the third party agrees to the patent owner's selection of venue.

IV.  Conclusion

When the above changes are fully effective, persons wishing to either strengthen or to attack a patent will have several avenues available without filing a single paper in court. Some of the remedies described above, such as reissue, disclaimer and correcting inventorship, are currently available. Others, namely post grant review, will not be in place for several years. Still others, such as third party submissions, will be available within six months from this writing (March, 2012). A patent practitioner is well advised to keep these remedies in mind when advising clients on patent strategies; for example, the tension between the client's interest in protecting international patent rights by allowing publication and the client's interest in avoiding third party submissions by preventing publication.