By: Katherine Rubino

Background

In 2011, Congress and then President Barack Obama enacted legislation revolutionizing the patent system in the United States. This legislation, known as the America Invents Act (AIA) transitioned the U.S. from a first to invent patent system to a first to file patent system. Along with such changes, the AIA modified ways to challenge the validity of issued patents outside of litigation by filing post-grant proceedings at the Patent Trial and Appeal Board (PTAB). Challenges before the PTAB include post grant review (PGR), inter partes review (IPR) and covered business method review (CBM; available only to patents directed to covered business methods).

PGR allows for a patent to be challenged on any ground of invalidity that could otherwise be asserted as a defense in patent litigation. For example, PGR allows a patent to be challenged under ⸹101 patentable subject matter, ⸹102 novelty, ⸹103 obviousness, and ⸹112 indefiniteness. While PGR allows for a broad scope of challengeable subject matter, such a challenge must be brought within nine months after a patent has been issued. PGR can be filed by a person who is not the patent owner and who has not previously filed a civil action challenging the validity of a claim of the patent. The challenger must provide sufficient evidence to demonstrate that it is more likely than not that at least one claim is unpatentable. The basis of the challenge is not limited to patents and printed publications, but can allow for any form of prior art. A final decision made in a PGR is appealable to the Federal Circuit.

IPR proceedings are utilized to review the patentability of one or more claims in a patent based on ⸹102 and ⸹103 challenges, including novelty and obviousness. IPR is more limited in that only patents or printed publications may be utilized to demonstrate that at least one claim is unpatentable. IPR may not be filed until the later of nine months after a patent has been issued or after a PGR proceeding has terminated. IPR can be initiated by a person who is not the patent owner and has not previously filed a civil action challenging the validity of a claim of the patent. The PTAB may grant an IPR petition when there is a reasonable likelihood that the petitioner will prevail as to at least one challenged claim. A final decision made in an IPR is appealable to the Federal Circuit.

Petitions by Trial Type

As of February 28^th, 2019 the PTAB reported that 9,858 petitions for a post grant proceeding have been filed, with the 10,000^th expected to be filed at some point in March or April of this year. Overwhelmingly, the majority of these post grant petitions have been for IPR, with 92% filed for IPR, 2% for PGR, and 6% for CBM.

Source: USPTO

The reasons for the majority of these petitions filed for IPR are most likely twofold. First, the time period for when an IPR can be filed is much greater, as it can be filed 9 months after issuance and throughout the duration of the 20 year patent term. PGR in comparison, can only be filed from issuance until 9 months after issuance. Frequently a challenger may miss such a narrow time frame so that IPR is the only post grant challenge available. Secondly, IPR’s require a lower standard of proof than PGR, with a petitioner for an IPR only needing to establish “reasonable likelihood” as compared to a challenger in a PGR who must establish “more likely than not.”

Institution Rates

Currently, approximately 60% of all petitions for post grant proceedings are initiated. Petitions may not be initiated if a challenger fails to meet the adequate burden of proof, if a petition is not timely, or if some sort of settlement occurs. When first enacted in 2013, 87% of all petitions for post grant proceedings were enacted. Now, that number hovers around 60% and is projected to reach 65% this year. Most likely this decrease is accounted for by the passage of time as judges and challengers create precedents and begin to apply this new area of law.

Source: USPTO

Institution Rate by Technology Type

Specifically, institution rate by technology type differs among different industries. Electrical and mechanical technologies have the highest institution rate with 68% of post grant challenges filed in these fields initiated. Bio/pharma and chemical technologies have slightly lower rates, with 59% of those post grant challenges initiated in bio/pharma industry, and 63% initiated in chemical industry. These differences are most likely accounted for by the fact that a larger number of post grant challenges have been filed in the electrical and mechanical fields as opposed to bio/pharma and chemistry. Further, last year 12% of post grant petitions were settled prior to initiation, with that number expected to increase and reach 20% this year. In addition, last year 24% of post grant petitions were settled after initiation, with that number projected to reach 29% this year.

Source: USPTO

Pre-Institution Settlements

Initially pre-institution settlements occurred very infrequently, with only 9% of pre-instituted petitions settling. However those numbers have been trending upwards, with 20% expected to settle this year.

Source: USPTO

Post-Institution Settlements

As the number of pre-instituted settlements rises, the number of post-instituted settlements have gradually decreased. When first enacted, post-institution settlements were occurring in 90% of initiated petitions, while this year that number is expected to only be at 29%.

Source: USPTO

Takeaways

As we approach the eve of the 10,000^th petition soon to be filed, there are several key takeaways for patent holders looking to avoid potentially losing claims in their patent subjected to post grant challenges. First, knocking out potential challengers so that petitions are not initiated can be one such strategy. At a time when 40% of petitions for post grant challenges are not granted, being part of that 40% can be crucial. Working with patent counsel to demonstrate that a challenger has not established the required standard of proof necessary to initiate, can be one such way to do this. Also, working with patent counsel to create a settlement agreement can be another way to knock out challengers. Patent holders should also work with patent counsel to ensure that any drafted patents have a good probability of surviving post grant challenges. For example, having a well described specification that describes different embodiments of the invention can be paramount. Additionally, making sure that all terms in a patent are well defined while avoiding any vague terms can be of utmost importance.

Further, working with patent counsel to have an effective prosecution strategy can also help minimize risk of future challenges. For example, claims subject to a restriction requirement during prosecution will be much more likely to survive a post grant proceeding. In addition, retaining evidence during prosecution may be useful in subsequent post grant challenges. As post grant proceedings become commonplace in patent practice, working with patent council to build robust monetizable patents that minimize risk of future invalidation is key in ensuring success for many years to come.