How Reexamination Proceedings at the USPTO Impact the Strategy and Conduct of Patent Litigation

OVERVIEW[1]

One of the significant developments to our patent system in the past 30 years has been the implementation of ex parte and inter partes reexamination. The rules for reexamination proceedings have been implemented and modified by various acts of Congress and now enable third party requesters an alternative to federal court litigation that is potentially faster and less expensive for resolving patent validity disputes, taking place at the United States Patent and Trademark Office (USPTO) level. Since the inception of the current reexamination process, practitioners have considered whether ex parte reexamination, inter partes reexamination or traditional litigation provides the best strategic avenue for resolving their particular patent validity dispute. By taking into account numerous factors that are discussed in this paper, practitioners may be assisted in choosing the proceeding that best fits their client’s needs.

EX PARTE REEXAMINATIONS

Thirty years ago, the only viable method for resolving questions of patent validity was the court system. This changed when Congress passed the 1980 Patent Act, which for the first time, established a process for ex parte reexaminations before the USPTO.[2] Through the passage of the ex parte provision, Congress intended to provide a quicker and less expensive process to resolve certain validity issues.[3] Additionally, it was Congress’ objective to have courts “benefit from the expertise of the PTO for prior art that was not previously of record” and to “strengthen confidence in patents whose validity was clouded because pertinent prior art has not been previously considered by the PTO.”[4]

Currently any person at any time may file a request for ex parte reexamination by the USPTO of any claim of a patent on the basis of any prior art consisting of patents and printed publications which that person believes to have a bearing on the patentability of any claim of a particular patent.[5] The allowance of “any person” to cite to prior art is far reaching. This ex parte reexamination process can be initiated by any third party with or without an interest in the patent, a corporation, the director of the USPTO, or even the patent owner. Allowing the reexamination to be initiated by the patent owner provides the patent owner with a strategic opportunity to bolster their patent and possibly sharpen any claims that might be ambiguous or otherwise not allowable at trial before filing a lawsuit. To initiate the ex parte reexamination, the request must be in writing and include payment of the reexamination fee.[6]

Once an ex parte reexamination has been requested, the Director of the USPTO will determine “whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request.”[7] In the past ten years, the Director of the USPTO has been given broad discretion, by both Congress and the Federal Circuit, when determining “whether a substantial new question of patentability” exists. Prior to 2002, it was the view of the courts, and subsequently the PTO, that only prior art and references that had not been considered by the Examiner during the initial examination of the patent could be the basis for a reexamination.[8] In 2002, Congress expressly amended 35 U.S.C. § 303(a) to read: “The existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the Office or considered by the Office.”[9] This allowed the Director to determine that a substantial question of patentability existed when prior art that had previously been considered was presented with a different argument that had not yet been considered by the office.

The Director’s discretion was further broadened by the Federal Circuit’s In re Swanson decision in September of 2008.[10] While addressing an appeal of an ex parte reexamination, the Federal Circuit held that the PTO can determine that there is a substantial new question of patentability for claims in a patent even if the exact same issues regarding the validity of a patent have been adjudicated in a district court.[11] The Federal Circuit based its decision, in part, on the language and the legislative history behind the 2002 Congressional amendment, as well as on the standard of review that both forums use when reviewing the validity of the patent.[12] The Court noted that in a court proceeding the challenger of the patent “must overcome a presumption of validity with clear and convincing evidence that the patent is invalid.”[13] In a reexamination, as in the initial examination, there is no presumption of validity and the standard of review is a preponderance of evidence that the patent should not be issued in light of the prior art.[14] Additionally, unlike litigating the dispute in court, in a reexamination the claims are given their “broadest reasonable interpretation consistent with the specification.”[15] Because of these difference between the two proceedings, the Court determined that considering “an issue at the district court is not equivalent to the PTO having had an opportunity to consider it.”[16 

After the Director’s determination is made, a record will be placed in the official file of the patent, and a copy will be provided to the patent owner of record.[17] If the Director determines that a substantial new question of patentability has been raised, a reexamination will be ordered, and the patent owner will be given a “reasonable period, not less than two months” to file a statement, including an amendment to his patent or new claims he may wish to propose.[18] After the time for filing a statement and reply has expired, the reexamination proceedings will take place.[19] The patent owner will be permitted throughout any reexamination proceeding to propose amended or new claims to overcome the newly cited prior art, provided that these amendments do not enlarge the scope of the original claims.[20] Finally, patent owners are also provided the opportunity to conduct interviews with the examiner during the course of the ex parte reexamination proceedings.[21] 

The patent owner has the ability to appeal any adverse decisions to the Board of Patent Appeals and Interferences and further appeal their determination to the Federal Circuit.[22] Once the reexamination proceeding has expired and all appeals have been terminated, the Director will issue a certificate cancelling any claim that has been determined to be unpatentable, confirming any claim that has been determined to be patentable and incorporating any amended or new claims determined to be patentable.[23]

INTER PARTES REEXAMINATION

In 1999, Congress provided yet another option to resolving certain patent validity disputes by providing for inter partes reexamination procedures.[24] In the course of passing the legislation for the new inter partes reexamination statutes, Congress noted that inter partes reexamination would reduce the expensive costs of patent litigation in district courts, reduce the volume of lawsuits in the district courts, and encourage third parties to rely on reexamination proceedings.[25] It was additionally noted that although ex parte reexaminations had been enacted in 1980, the process had been used infrequently because third party requesters could not participate in the proceedings after the request had been made.[26]

Rather than amend Chapter 30 of the Patent Act to include inter partes reexamination, Congress instead chose to create Chapter 31 solely for inter partes reexaminations. Currently, any third party requester at any time may file a request for inter partes reexamination.[27] To do so, the third party requester must send in writing the identity of the real party in interest, payment for the inter partes reexamination fee, and set forth the pertinency and manner of applying the cited prior art to every claim for which the reexamination is requested.[28] Not later than three months after this initial request is filed, the Director will determine whether the request raises a “substantial new question of patentability affecting any claim of the patent concerned.”[29] We see Swanson applying equally to the review that takes place in an inter partes reexamination. In fact, the relevant language of § 312(a) tracks the language in § 303(a) cited in Swanson.[30] Thus, much like ex parte reexaminations, the discretion of the Director to determine if a substantial new question of patentability exists is broad and can encompass art that was already considered by the examiner in the initial examination as well as claims that have already been litigated and upheld as valid in a district court. The record of this determination will then be placed in the official file of the patent and mailed to the patent owner of record as well as the third party requester.[31] This determination by the director is final and non-appealable.[32]

If the Director finds that there is a substantial new question of patentability affecting a claim, the determination will include an order for an inter partes reexamination of the patent.[33] An inter partes reexamination is then conducted. As with the ex parte reexamination, the patent owner will be permitted to propose any amendments or new claims, provided that these amended and new claims do not enlarge the scope of the claims.[34] Perhaps the most important change to the inter partes reexamination process is the opportunity for the third party requester to file written comments addressing the issues that are raised by either the Patent and Trademark Office (PTO) or the patent owner’s response to those issues.[35] These comments are due within 30 days of the patent owner’s response to the Office Action.[36] Throughout the process of the inter partes reexamination, any document filed by either the patent owner or the third party requester shall be served on the other party.[37] Additionally, any communication sent by the Office shall be sent to both parties.[38]

Much like ex parte reexaminations, the patent owner has the ability to appeal any decision adverse to the patentability of any original or proposed amended or new claim. The patent owner may appeal any adverse decision to the Board of Patent Appeals and Interferences and further appeal their determination to the Federal Circuit.[39] Unlike the ex parte reexamination procedure, in an inter partes reexamination the third party requester also has the right to appeal any final decision that is favorable to the patentability of any original claim, proposed amendment or new claim.[40] Like the patent owner, the third party requester may appeal the Office’s decision to the Board of Patent Appeals and Interferences and further appeal their determination to the Federal Circuit.[41] Finally, both the patent owner and the third party requester has the right to be a party in any appeal taken by the other.[42] Once the time for appeal has expired or all appeal proceedings have terminated, the Director will publish a certificate cancelling any claim determined to be unpatentable, confirming any claim determined to be patentable and incorporating any proposed or new claim determined to be patentable.[43]

Originally in the 1999 act, the right of appeal for third party requesters was limited to only an appeal to the Patent Office Board of Appeals and Interferences. In 2002, the right of appeal was broadened, however, to include the right to appeal from a decision of the Patent Office board of Appeals and Interferences.[44] The 2002 amendment also included a clarification of section 311 of the Patent Act.[45] In the original language of the 1999 act it was arguably possible for the patent owner to initiate an inter partes proceeding. In the 2002 amendment, Congress took the opportunity to clarify this and amended the language to allow only a third party requester the ability to file a request for inter partes reexamination.[46]

There are several other major differences between the inter partes reexaminations and ex parte reexaminations. After the inter partes reexamination process and appeal process has been exhausted, the third party requester will be estopped from asserting at a later time in any civil action the invalidity of any claim finally determined to be valid and patentable on any ground which the third party requester raised or could have raised during the reexamination proceedings.[47] Neither the third party requester nor its privies, may file a subsequent request for inter partes reexamination until a certificate of patentability, unpatentability, or claim cancellation has been filed by the Director.[48] Additionally, once a final decision has been entered against a party in a civil action, neither the party against whom the decision was entered nor its privies may request inter partes reexamination on the basis of any issues that were raised or could have been raised in the civil action.[49] Finally, section 318 of the Patent Act allows for a patent owner to obtain a stay of any pending litigation that involves an issue of patentability subject to the reexamination. This stay of pending litigation may only be obtained after an order for an inter partes reexamination has been issued, and should be granted unless the litigation court determines that a stay would not serve the interests of justice.[50]

A STATISTICAL COMPARISON: EX PARTE AND INTER PARTES REEXAMINATION V. TRADITIONAL LITIGATION 

Since the inception of ex parte and inter partes reexaminations numerous studies have tracked a myriad of different statistics for theses proceedings. Analyzing these statistics and being able to compare figures such as the number of reexaminations filed over a given time period, the average time of pendency, and the average estimated cost, provides practitioners with an important objective starting point to help them determine which proceeding will best suit their client’s individual needs and goals in a validity dispute. That being said, it should always be remembered that these statistics, while informative, do not necessarily reflect what will happen in each individual case. Rather, these figures should serve as a tool to help practitioners guide their clients in selecting the path(s) for a validity disputes. 

Ex Parte Reexamination Requests v. Inter Partes Reexamination Requests

Since 1981 when ex parte reexaminations were first introduced, the USPTO has kept statistics regarding the number of ex parte reexamination requests that have been filed. The following graph illustrates the number of ex parte reexamination requests that have been filed with the PTO in a given fiscal year. It should be noted that the USPTO’s fiscal year runs from October 1 of the year before until September 30 of the year mentioned (i.e. the dates for the 2008 Fiscal Year are October 1, 2007 – September 30, 2008). The following statistics were taken from the USPTO’s Ex Parte Reexamination Filing Data.[51] The data is current through December 31, 2008, so the graph shows data through only a portion of Fiscal Year 2009.

 

Figure 1 – Requests for Ex Parte Reexaminations by Fiscal Year 

As the graph illustrates, over the past 28 years, the number of ex parte reexamination requests filed with the USPTO has steadily risen. Although there was a slight regression in the number of reexaminations requests filed in the early part of the last decade, by and large the number of requests has been increasing over the last 6 years. In total, 9739 ex parte reexaminations have been requested, through December 31, 2008. The breakdown of these requests by patent owner, a third party, or by order of the Director is as follows:

Figure 2 – Breakdown of Ex Parte Requests by Requesting Party

As expected only 165, or about 2% of those 9739 requests have been made by the Director. Out of the 9739 total requests, 3592 or 37% have come from the patent owner. This data may indicate that a large number of patent owners when faced with a validity threat (or risk of a validity threat before bringing suit) utilize the ex parte reexamination process to reaffirm their patent claims. Of the requests for reexamination by patent owners, 2755 of the requests resulted in a reexamination. Of these reexaminations, 70% of the time, the claims were changed and then a certificate was issued. In 22% of the reexaminations initiated by patent owners the claims were confirmed as is. In only 8% of the reexaminations initiated by patent owners were the claims cancelled. This indicates that patent owners have been successful in using ex parte reexaminations to arrive at claims that survive a subsequent review and scrutiny. Of the 5982 requests made by third party requesters, only 3693 (under 62%) of these requests result in a reexamination proceeding. In these reexamination proceedings, 28% of the time the claims are confirmed, 13% of the time the claims are cancelled, and 59% of the time, changes are made to the claims.

Like the increasing number of ex parte reexaminations requests, the number of inter partes reexamination requests has also been climbing steadily since the inception of the program ten years ago. The following statistics were taken from the USPTO’s Inter Partes Reexamination Filing Data.[52] The data is current through December 31, 2008.

Figure 3 – Requests for Inter Partes Reexaminations by Fiscal Year

After the creation of optional inter partes reexaminations in 1999, it was believed that many third parties would take advantage of this new procedure for disputing patent validity. Initially, the USPTO had projected that it would receive approximately 400 inter partes reexamination requests in the first year of its existence.[53] Additionally, the USPTO projected that these requests would increase at a rate of ten percent per annum.[54] 

The USPTO’s projections missed the target by a wide margin. In the first year of the inter partes program’s existence zero inter partes reexamination requests were filed.[55] Furthermore, only 53 inter partes reexamination requests were filed within the first five years of the procedure’s existence.[56] Since the initially slow start in the first five years, requests for inter partes reexamination has steadily increased, with over 544 such requests having been filed since the procedures inception and December 31, 2008.[57] Despite its slow development, inter partes exams are rising in popularity. A more telling statistic is shown in the graphs below which show the relationship between the number of ex parte reexamination requests filed in the past ten years and the number of inter partes reexamination requests filed in the past ten years.

Figure 4 – A comparison of the Number of Requests by Fiscal Year for Ex Parte Reexaminations and Inter Parte Reexaminations

Figure 5 – Percentage of all Reexamination Requests Filed per Fiscal Year that are Inter Partes Requests 

These graphs show that over the course of the ten years that inter partes reexaminations have been offered, there has been a very steady growth in the program’s requested use. Upon the first five years of its existence, less than roughly 5% of parties that filed requests for reexamination chose to file for an inter partes reexamination. In the four full years since, that number has climbed each year to its current high of 20%. Furthermore, after the first quarter of fiscal year 2009, inter partes reexamination requests are on pace to top 30% of all reexamination requests filed. According to the USPTO’s ex parte Reexamination Filing Data, over the 28 years of that program, only 61% of the ex parte reexaminations requests were by third party members of the public. Although there is no breakdown of this on a year by year basis, if this 61% number holds for fiscal year 2008 requests, then the number of third party reexamination requesters who chose inter partes reexamination was closer to 40%. 

This data shows that although third party requesters may have been initially reticent to utilize the new inter partes reexamination procedures, this fear has slowly been overcome, and more and more third party requesters are utilizing the inter partes reexamination process over the ex parte reexamination process. 

A Discussion of the Average Pendency Times

A factor that counsel usually considers is how quickly does their client want to get a determination concerning the validity of a patent. When clients’ want to know how strong their patent position is, they may want to have a resolution fairly quickly – before contacting a potential infringer, for example. In other cases, a quick resolution of a certain validity question may not be paramount. For example if there are multiple validity issues raised in a lawsuit, some applying to different claims and not all of which can be dealt with in reexamination, it may not be cost effective to try for a “faster route.” The statistics for the following graph were obtained from the USPTO’s report entitled “Ex Parte Reexamination Filing Data”, the USPTO’s report entitled “Inter Partes Reexamination Filing Data”, and PricewaterhouseCoopers’ report on patent litigation entitled “A closer look * 2008 Patent Litigation Study: Damages awards, success rates and time-to-trial.” 

Figure 6 – The Average and Median Pendency Time for each of the Options

It must be noted that the litigation statistics that are displayed here are for only the median time-to-trial between the years 1995-2007. This means two important things: (1) there is no data for the average time-to-trial concerning litigation (only the median time to trial is shown); and (2) this measurement for litigation is only concerning, as stated, the time-to-trial (not the total pendency of the litigation). The pendency times for both the ex parte and inter partes reexaminations are from the filing date to the certificate issue date. That being said, one can imagine that even though it looks as if the median pendency time for patent litigations is less than the median pendency time for inter partes reexaminations, the opposite is more than likely true. These statistics show that in the time it takes to bring a patent litigation to trial, an inter partes examination will almost be completed. There are of course many factors that can skew these statistics, including which district court is handling a lawsuit. For example, “rocket docket” districts will provide answers to validity questions very quickly. Whereas other district may take much longer. 

Comparison on the Average Cost for the Three Different Procedures 

A corollary to the pendency question is another issue that is equally if not more important to most clients – cost. As the thinking usually goes, the sooner there is a resolution to an issue, the less amount of time that counsel can spend on the matter. The less time that can be spent by counsel usually results in a less expensive resolution to the problem. Not shockingly, the average costs for an ex parte reexamination, an inter partes reexamination, and traditional litigation break down in a similar manner. The following statistics were gotten from the AIPLA’s Report of the Economic Survey 2007. This report was prepared under the direction of the AIPLA’s Law Practice Management Committee. 

Figure 7 – Comparison of the Costs or Charges for Various Patent Validity Proceedings

This data was compiled by the 2007 AIPLA survey of intellectual property attorneys. It should be noted that the figure for the ex parte reexaminations is actually the average charge a client would incur from a firm to conduct an ex parte reexamination. On the other hand, the figures for an inter partes reexamination, a litigation with a value of under $1,000,000 and a litigation with a value over $1,000,000 is the total cost of the entire process. Once again, this data shows that if patent validity is likely to be the deciding factor, the least expensive reexamination proceeding is likely to be the ex parte reexamination proceeding. Additionally, in comparison to the average cost of any kind of litigation, the inter partes reexamination is likely to be less expensive. This data can be very helpful when working with clients to attempt to determine what is the best method for attacking the validity of a patent.

Comparison on the Results for the three different procedures

Finally, no statistical evaluation would be complete without a brief look at the average results of each of the different procedures. The following graph shows these results. These statistics were once again obtained from the USPTO’s report entitled “Ex Parte Reexamination Filing Data”, the USPTO’s report entitled “Inter Partes Reexamination Filing Data” and Kimberly A Moore’s Judges, Juries, and Patent Cases – An Empirical Peek Inside the Black Box.[58]

Figure 8 – Comparison of the Results of from Ex Parte and Inter Partes Reexaminations and Litigation

Two notes about this data. Under the USPTO’s methodology, if all claims have been disclaimed by the patent owner, then this counts towards the statistic for all claims cancelled. Additionally, the litigation data was compiled between the years 1983 and 1999.[59] When comparing the results of the two kinds of reexamination, patent owners fared much better with an ex parte reexamination. As the data shows, all the claims in dispute have been confirmed in 25% of all final ex parte reexaminations. Compared with only 9% of all final inter partes reexaminations. While 64% of ex parte reexaminations resulted in at least one of the claims changed, this statistic is not necessarily a negative. It may be that in many of those cases, the patent owner was making their claims tighter and came out with a stronger patent. On the other hand, they may also have their claims amended to the point where they no longer have an infringement case against some third parties. Regardless, the patent owner walked away from those reexaminations with a patent intact. 

In contrast, the third party requestor in inter partes reexaminations, was able to have all claims cancelled or disclaimed in 70% of the cases. While at first glance this data looks impressive, it is important to realize that a large portion of these cancelled claims came from cases in which the patent owner failed to respond to a first Office Action.[60] Taking this into account, it is estimated that when patent owners actually respond to the first Office Action, the likelihood of having all claims cancelled or disclaimed in inter partes proceedings is actually closer to 53%.[61] Even with this lower cancellation percentage, inter partes reexamination can still be considered a somewhat better statistical bet for third parties to have all the claims of a patent cancelled in comparison to either ex parte reexaminations or traditional litigation. 

THE BENEFITS OF EX PARTE REEXAMINATIONS

To adequately evaluate the benefits of ex parte reexaminations, we will look at this issue from two points of view – that of the third party requester and that of the patent holder. 

Mutual Benefits

As the statistics above show, perhaps the largest benefit to both third party requesters and patent owners is the amount time, effort, and money they must invest in this proceeding. If a third party requester wishes to initiate an ex parte reexamination, they simply need to present the prior art that they believe is pertinent, state the reason for the prior art’s pertinence and then submit the fee for reexamination. Because there is no opportunity for the third party requester to advocate in the proceedings, after they attempt to initiate these proceedings, they are essentially done making their case. Similarly the patent owner does not need to expend time and energy arguing the validity of the patent against a third party’s hired advocate. Rather, the patent owner needs to show the examiner that the claims are still valid over the newly discovered prior art. As the statistics show, this process is likely to be the least expensive for both parties.

Another mutual benefit that both parties may enjoy from the ex parte reexamination process is a quick resolution to the dispute. Usually within roughly two years, a final certificate will be issue and both parties will know whether or not the claims have been confirmed, changed or rejected by the USPTO. This may be advantageous if either party is looking to make a significant decision related to the validity of the disputed patent.

Benefits to the Third Party Requester

One of the main benefits for a third party requester is that when requesting an ex parte reexamination, it is possible for the third party requester to remain anonymous. Under 35 U.S.C. § 301, a third party can reveal art to the patent office confidentially for the Director to consider. If the third party wishes to be more proactive in seeking an ex parte reexamination they can have an agent file the reexamination request, and still remain anonymous. This could have several strategic advantages. Most importantly it allows a third party to test the patent’s validity without revealing their identity. In many situations if a patent owner faces a validity challenge from a known party, they will certainly be on notice to look for possible instances of infringement from that third party. By being able to anonymously challenge the validity of the patent, there are some instances when the third party will be able to reap the rewards if the patent is deemed invalid, and if it is not, avoid the potential infringement case that would almost certainly follow. It should be noted, however, that in many cases, a patent owner may still be able to presume who is requesting the reexam, particularly in a market with a limited number of competitors. 

Finally, third party requesters, have the additional benefit of not being estopped from pursuing their arguments in a court of law. Third party requesters are not allowed to appeal the final determination of the USPTO in an ex parte reexamination proceeding. They are not, however, estopped, from bringing an invalidity suit or defense in a court, asserting the same basis for invalidity. Depending upon the facts of the case the courts may give a great amount of deference to the USPTO’s ex parte reexamination determination.[62] Therefore, this lack of estoppel, may be only a marginal benefit to the third party requester. Conversely, a third party requester who has already adjudicated the validity of a patent in court and lost, will not be estopped from filing a request for reexamination. As held in Swanson, a reexamination after adjudication is permitted because of the intent of Congress in passing the 2002 amendments to § 303(a),[63] the lower standard of proof that is required in a reexamination, and the fact that the examiner will be giving the claims the broadest reasonable interpretation. Therefore, for a third party requester, the post-litigation ex parte reexamination request may provide him with one last chance to dispute the validity of a patent.

Benefits to the Patent Owner 

Perhaps one of the clearest advantages that exists if you are the patent owner is the requirement that you only have to work with the examiner that is assigned to the case. As discussed above, in ex parte reexaminations, there is no continuing input from outside parties. Clearly this can be a major advantage. Related to this lack of opposition by a third party is the unique ability of the patent owner to request an ex parte reexamination of his or her own patent. This is the second major advantage to the patent owner. By requesting an ex parte reexamination of their own accord, a patent owner can essentially make a preemptive strike against any arguments that a third party may make, attacking the validity of a patent. The ex parte reexamination proceedings will allow the patent owner the opportunity to test the validity of their claims in their current form, and the chance to amend the claims to sharpen them against a possible validity challenge from a third party. This advantage can be tremendous. Factoring in the deference that is given by the courts to the reexamination process (see footnote 49 below), by sharpening or confirming their claims, patent owners could potentially eliminate some of a third party’s arguments in a patent validity dispute.

Another major advantage to the patent holder is the ability to have the patent reviewed against the prior art by an arguably knowledgeable person. The official policy of the USPTO is to assign the reexamination to a primary examiner in the same art group as the patent.[64] Although the reexamination will not be conducted by the same examiner who originally reviewed the patent application,[65] the patent owner will still have the luxury of having someone reexamine the patent who is presumably well versed in the art, and who will, in turn, have a much better chance of understanding the intricacies of the patent. 

Finally, one last benefit afforded to the patent owner in an ex parte reexamination proceeding is the ability for the patent owner to appeal any adverse decisions. This provides an additional security blanket to the patent owner in the event that the claims to the patent are cancelled or amended in an unsatisfactory manner. Even more advantageous is the fact that the right to appeal allows the patent owner to appeal to the Board of Patent Appeals and Interferences and further appeal their determination to the Federal Circuit. Therefore, if a patent owner is forced to be involved in a patent validity procedure, more than likely, in many cases they may prefer to be in an ex parte reexamination proceeding, where they can fight a quick, inexpensive, unopposed, yet appealable proceeding.

THE BENEFITS OF INTER PARTES REEXAMINATIONS

Like ex parte reexaminations, there are numerous benefits to both the third party requester and the patent owner. Some of these benefits are mutual, while some of these benefits are directed at one party or the other.

Mutual Benefits

One of the mutual benefits to inter partes reexaminations is the price and pendency time. Although the cost of an inter partes reexamination procedure is clearly not as inexpensive as the cost of an ex parte reexamination, the costs for an inter partes reexamination pales in comparison to costs to litigating a patent dispute in federal court. Additionally, it can be said that another mutual benefit to both parties is the likely shorter pendency time, although this can certainly vary depending upon which district court is involved with a litigation. There is nothing faster than a jury decision in a rocket docket to get to an answer. With that caveat in mind, opting for an inter partes reexamination over traditional litigation can generally save both parties time and money.

Another potential benefit to both parties is 35 U.S.C. § 318, the statutory provision that allows patent owners to petition the courts involved with pending litigation that concerns the patent in question to grant a stay in the court proceedings until the inter partes reexamination has run its course. It must be noted however, that these stay of proceedings are not mandatory and the court presiding over the litigation does not have to issue a stay if it is not in the interest of justice.

The final mutual benefit to both the third party requester and the patent owner is that both parties have the right to appeal an adverse finding. In the original 1999 statute this right to appeal was stronger for patent owners, because third party requesters were limited to appeals only to the Board of Patent Appeals and Interferences. After the 2002 amendment, both parties were granted equal rights to appeal. 

Benefits to the Third Party Requester

Similar to an ex parte reexamination, a third party requester shall be able to request an inter partes reexamination even if they have already adjudicated the issue before a court and lost. As discussed above, this provides a third party requester with one last opportunity to challenge the validity of a patent, which can be a considerable advantage. This advantage is enhanced by the lower standard of proof required (preponderance of the evidence v. clear and convincing evidence) along with the claims being given the “broadest reasonable interpretation consistent with the specification”, without a presumption of validity. Another significant benefit to the third party requester in an inter partes reexamination proceeding is quite simply the fact that he or she gets to actively participate in the proceeding after filing the request. The third party requester is allowed 30 days to respond to any arguments made by the patent owner. This gives the third party requester an opportunity to not only cite the prior art, but also to advocate as to why the art is pertinent and how the art would render the patent owner’s patent invalid. In this way, the third party requestor can provide analysis beyond that available or capable by the examiner and the examiner’s limited resources. This is a remarkable difference over the ex parte reexamination process and is reflected in the results of the inter partes reexamination proceedings that are discussed above.

Another advantage that the inter partes reexamination process provides to the third party requester is that only a third party can initiate an inter partes proceeding. The patent owner can not bring a third party into the proceeding. Any third party can initiate these proceedings regardless of whether they have an interest in the patent and prior art or not. This is unique because this is the only alternative of the three that allows a party (without a dispute ripe for litigation) to initiate and participate in a patent validity dispute. When pairing these advantages with all of the mutual benefits listed above, it is easy to see how inter partes reexaminations can be an effective alternative to traditional litigation.

Benefits to the Patent Owner

Although the statistics arguably show that third parties receive a greater benefit in inter partes reexaminations, there are two major benefits for patent owners when they are in an inter partes reexamination proceeding. The first of these benefits is that an inter partes proceeding takes place before an arguably knowledgeable adjudicator. This is no guarantee of a “proper” result, but removes some of the angst over whether a judge’s or jury’s lack of technical experience will adversely affect a party’s position on a patent validity question. Just like in ex parte reexamination proceedings, it is the USPTO’s policy to assign the reexamination to a primary examiner from the same art group as the patent.[66] Like the case of the ex parte reexamination assignment, the USPTO will not assign the reexamination to the same examiner who examined the patent application.[67] 

Possibly the greatest advantage to the patent owner in an inter partes reexamination is the fact that a third party requester will be estopped from asserting any claim they raised or could have raised at the time of the inter partes reexamination. This means that once the appeals process has ended and a final certificate is issued that either confirms all the claims or allows the amended claims, the third party will no longer be able to pursue these arguments against validity in a separate civil action. Furthermore, third party requesters are not allowed to argue any issues that they could have raised at the time of the inter partes reexamination.[68] At the very least, this estoppel provision provides the patent owner with the knowledge that after the inter partes reexamination is complete, he will not have to litigate these issues again and give the third party requester a second chance at victory. Furthermore, this provision also provides the patent owner with the knowledge that the third party requester must present all of their arguments over the course of the inter partes reexamination. If a third party attempted to reserve some arguments for a future proceeding, these arguments would more than likely be barred by the provision as something that the third party requester could have argued at the time.

THE BENEFITS OF TRADITIONAL LITIGATION

A discussion of the alternatives to resolving patent validity disputes would not be complete without a brief look at using the court system to answer validity questions. Litigation has usually been viewed as the most expensive and lengthiest form of resolution.

In spite of the large cost and lengthy time to resolution of validity litigation, there are several benefits to using the court system. One advantage is the amount of time and the manner in which both parties can advocate their positions. Litigants are able to submit their briefs with supporting evidence beyond what can be submitted to the USPTO. They are also usually afforded multiple responses to papers beyond that permitted by the USPTO. In addition, they are provided the opportunity in many cases to appear in person before the Judge and/or Jury, as well as provide live and expert testimony. Although it can be certainly argued whether or not the extensive discovery that takes place in a patent lawsuit is beneficial and to whom, parties in the litigation are entitled to discovery. Although expensive, discovery can be helpful in resolving a patent dispute. Even when dealing with questions of validity, it is possible to find evidence or statements by the patent owner that contradict a position they are taking. 

Another point to consider is that not all validity questions can be raised before the USPTO. Often times there are multiple validity issues, some of which may not apply to all claims. Instead of breaking up the validity process over multiple forums, it may be more efficient to deal with them all at one time. It must be remembered, however, that if the parties do attempt to deal with all the validity issues in court, this may not be the end of the process. As discussed above, third party requesters may be able to continue challenging the validity of the patent, even after a litigation has run its course. A patent owner must always be aware of this possibility and consider this before they make any decisions to continue litigating the validity of their patent in court.

One last advantage to traditional litigation that can not be forgotten is the ability of the parties involved to stop the process and reach a settlement. Once a reexamination proceeding has been initiated in the USPTO, essentially, the ability for the parties to settle has been lost. In both an ex parte and inter partes reexamination, once the Director has made a determination to have a reexamination, there is no mechanism to get the office to stop the reexamination proceedings. In the case of the ex parte proceedings the examiner assigned to the reexamination will continue to review the validity of the patent regardless of the wishes of the third party. While the patent owner may stop the proceedings, this will only result in the cancellation of any unresolved and disputed claims in the patent. In an inter partes reexaminations, although the third party may stop responding to the patent owner’s replies, this will not stop the examiner from making a determination. 

CONCLUSION

Since the inception of ex parte and inter partes reexaminations, parties involved in a patent validity dispute have been given a wider latitude of choices to attack or defend against a validity challenge. Although inter partes reexaminations were not significantly utilized for the first four or five years of the program, they have been used more frequently over the last few years and it looks like that trend will continue. While not offering all of the same opportunities to advocate that are available in traditional litigation, ex parte and inter partes reexaminations provide third party requesters with viable alternatives to federal court litigation that can be pursued to determine the validity of a patent. Determining how best to address a dispute over patent validity will always involve many factors to consider. By taking these factors into account, practitioners will be able to tailor their strategies to meet their client’s goals and better serve them in the long run.


[1] Benjamin E. Leace is a shareholder and Zachary Fansler is an associate at the law firm of RatnerPrestia. The article represents the thoughts and opinions of the authors and are not necessarily those of the firm. Nothing in this paper should be construed as legal advice.

[2] Pub. L. No. 96-517; 35 U.S.C. §§ 301-307.

[3] In re Recreative Tech. Corp., 83 F. 3d 1394, 1396-1397 (Fed. Cir. 1996).

[4] Id.

[5] 35 U.S.C. §§ 301, 302.

[6] Id.

[7] 35 U.S.C. § 303.

[8] See In re Pertola Packaging, Inc., 110 F.3d 786 (Fed. Cir. 1997).

[9] 35 U.S.C. § 303(a).

[10] 540 F.3d 1368 (Fed. Cir. 2008).

[11] Id.

[12] Id. at 1377.

[13] 540 F.3d 1368 at 1377.

[14] Id. at 1377-1378.

[15] Id. at 1378.

[16] Id.

[17] 35 U.S.C. § 303.

[18] 35 U.S.C. § 304.

[19] 35 U.S.C. § 305.

[20] Id.

[21] 37 C.F.R. § 1.560.

[22] 35 U.S.C. §§ 306, 134, and 141-144.

[23] 35 U.S.C. § 307.

[24] Public Law 106-113, §§ 4601-4608, 113 Stat. 1501 (Nov. 29, 1999).

[25] H.R. No. 106-287(I), 106th Cong., 1st Sess. (1999). 

[26] Id.

[27] 35 U.S.C. § 311.

[28] Id.

[29] 35 U.S.C. § 312.

[30] See 35 U.S.C. §§ 312(a) and 303(a).

[31] Id.

[32] Id.

[33] 35 U.S.C. § 313.

[34] 35 U.S.C. § 314.

[35] Id.

[36] 35 U.S.C. § 314(a).

[37] Id.

[38] Id.

[39] 35 U.S.C. §§ 315(a), 134, and 141-144.

[40] 35 U.S.C. § 315(b).

[41] 35 U.S.C. §§ 315(b), 134, and 141-144.

[42] 35 U.S.C. § 315(a) and (b).

[43] 35 U.S.C. §316(a).

[44] See Changes to Implement the 2002 Inter Partes Reexamination and Other Technical Amendments to the Patent Statute, 68 Fed. Reg. 70996, 70997 (Dec. 22, 2003).

[45] Id.

[46] Id.

[47] 35 U.S.C. § 315(c) (Emphasis added).

[48] 35 U.S.C. § 317(a) (Allowing that the Director has the discretion to authorize a subsequent request for inter partes reexamination).

[49] 35 U.S.C. § 317(b).

[50] 35 U.S.C. § 318.

[51] This document is available at: http://www.uspto.gov/web/patents/documents/ex_parte.pdf.

[52] This document is available at: http://www.uspto.gov/web/patents/documents/inter_partes.pdf.

[53] See United States Patent and Trademark Office, Report to Congress on Inter Partes Reexamination, http://www.uspto.gov/web/offices/dcom/olia/reports/reexam_report.htm, Progression of USPTO Post-Grant Review, ¶8 (2004).

[54] Id.

[55] United States Patent and Trademark Office, Inter Partes Reexamination Filing Data, http://www.uspto.gov/web/patents/documents/inter_partes.pdf, (Dec. 31, 2008).

[56] Id.

[57] Id.

[58] 99 Mich. L. Rev. 365 (2000).

[59] Id.

[60] Baluch, Andrew S. and Maebius, Stephen B., The Surprising Efficacy of Inter Partes Reexaminations: An Analysis of the Factors Responsible For Its 73% Patent Kill Rate And How To Properly Defend Against It, http://www.patentlyo.com/patent/law/baluchmaebius.pdf (2008).

[61] Id. at 10.

[62] E.I. Du Pont de Nemours & Co. v. Cetus Corp., 1990 U.S. Dist. LEXIS 18414 at 13 FN4, 19 U.S.P.Q.2D (BNA) 1174, FN4, (N.D. Cal. Dec. 3, 1990) (stating “Although the court finds that the reexamination rulings are to be accorded the deference prescribed by the Federal Circuit and other courts, du Pont would still bear the burden of proof on invalidity by clear and convincing evidence if the court found the reexamination rulings defective either procedurally or on the merits. Reexaminations which affirm the validity of a challenged patent increase the challenger’s burden in litigation, but a court’s decision not to defer to the Examiner’s ruling does not decrease the challenger’s burden.”).

[63] Although it was not specifically addressed in the Swanson decision, in 2002 when Congress amended 35 U.S.C. § 303(a) it also amended 35 U.S.C. § 312(a) to include the language: “[t]he existence of a substantial new question of patentability is not precluded by the fact that a patent or printed publication was previously cited by or to the Office or considered by the Office.”

[64] See MPEP § 2236. 

[65] Id.

[66] See MPEP § 2636.

[67] Id.

[68] The language “could have raised” in 35 U.S.C. 315(c) is currently one of the most hotly debated aspects of inter partes reexamination. Numerous papers have been dedicated to this topic alone. As such, this paper will not get into the numerous intricacies that are brought up in this debate.