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October 2012

New Ways to Challenge Patents Both Before and After They Issue

On September 16, 2012 the Patent Office introduced a series of new procedures to challenge patents both before and after they issue. Some of these provisions take effect immediately, whereas some of them will not see practical use for another year. They provide excellent strategies to attack competitors anonymously, and to move district court actions back to the Patent Office itself.

The thrust of these new procedures is two-fold. First, the Patent Office is trying to get the best possible prior art in front of the patent examiner during the examination process. It is doing this by now allowing 3rd parties to submit prior art to the examiner in their competitor’s patent applications. This is a major change in patent practice, and opens up new opportunities to go after competitors. It also has a “David and Goliath” appeal since small companies and individuals can now anonymously challenge industry giants.

Second, the Patent Office is setting up new procedures to challenge patents after they issue. These new procedures will look a lot like trials (with discovery, oral hearings and motions), but are to be conducted within the Patent Office in front of three judges. A major thrust is to move patent practice disputes out of the District Courts, and bring them back to the Patent Office. These procedures are not cheap, but compared to District Court actions, they are substantially less expensive. In addition, the Patent Office is promising to process them to their conclusion within one year of their filing, so they are expected to be both (comparatively) fast and cheap.

What the Patent Office has in store while applications are still pending is called a 3rd party Pre-Issuance Submission. What the Patent Office has in store for issued patents now involves two main procedures. The first is called a Post Grant Review and must be filed within 9 months of issuance; and the second is called Inter Partes Review, and is only filed for patents that have been issued for more than 9 months.

Pre-Issuance Submissions:

Now, any third party is invited to cite prior art reference to an Examiner in their competitor’s cases. This is a major change in patent strategy (both for those filing their own patents, and for those trying to stop others from getting their patents). The Patent Office’s objective is to have the best art in front of the Examiner during prosecution, rather than having civil court actions filed after issuance arguing that: “if only the Examiner saw this reference, (s)he would never have allowed this patent”.

These new third party submissions can be made by any interested party, and they can be made for any pending patent application1, regardless of when the patent application was filed. Importantly as well, these submissions can be made anonymously. According to the Patent Office, such anonymity is specifically designed to help small start-ups in supplying art against large entities with whom they may have a business relationship. However, if the 3rd party wants to remain anonymous, they must use a registered patent attorney for the filing.

The actual filing is made through a new web interface, and the Patent Office has forms printed online as to how it wants to receive these new submissions. (Patent literature is listed on one part of the form and non-patent literature is listed elsewhere).

The timing for these submissions is very important. They must be filed by the earlier of: (a) the Notice of Allowance; or (b) the later of: (i) six months after publication, or (ii) date of the first rejection. Basically, what this means is that the Patent Office wants to see the submission before the examiner has written the First Office Action or sent out a Notice of Allowance. The idea is to make these 3rd party submissions part of the examination process. However, the Patent Office does give 3rd parties up to 6 months after publication of the application to submit the prior art. This is so that the 3rd party is not prevented from submitting the prior art if the Office Action comes early.

The actual 3rd party submission must contain more than a bare statement that the information submitted is relevant. Instead, is must contain a concise description of the relevance of each document submitted.

It’s free for a 3rd party to submit the first three prior art references they find. After that, it costs $180 to submit up to 10 documents. There is no limit on the number of submissions that may be filed, but they must be submitted in groups no larger than 20. (Citing 10 to 20 costs $360). Safeguards are in place such that a 3rd party does not references separately in groups of three to avoid paying the $180 submission fee.

The references cited by the 3rd party to the examiner will be considered. If the Examiner feels that they are relevant, then the patent applicant will be notified by the examiner by email. Submissions will only be entered into the official patent file after the examiner has considered them. If the examiner concludes that they are relevant, the references will be printed on the front page of the patent (as is currently the practice with any references cited by the application of the examiner).

It is also very interesting what references can be submitted. Basically, the field is wide open. For example, marketing brochures can now be submitted. If a marketing brochure is submitted, then the 3rd party must state what trade show it was available at and when. It the publication date is not known, the 3rd party must provide evidence of publication (i.e.: prima facie publications or evidence that establishes that they are publications). Notably, the new rules state that web shots are also proper submissions. In addition, submissions can now also include statements made by the patent applicant in court documents that are not subject to secrecy orders.

Basically, competitors now have the (wonderful) opportunity to review the patent owners literature, web screens, sales pitches, etc., and are encouraged to cite these references to the examiner. This is a very effective way to stop patents from issuing if the patent owner can be shown to have publicly disclosed their invention more than a year before they filed their patent application. However, submissions can not include trade secrets, unpublished internal documents, or other non-patent documents that don’t qualify as publications. In all cases, the patent applicant can challenge the determination that the document submitted is in fact a publication.

Interestingly, submissions can also be sent for unpublished applications, although it would be a curious (but not unheard of) situation for the 3rd party to know the identity/serial number of such a patent application in the first place.

Note: the patent owner can not file these 3rd party submissions. In fact, the party making the submission must state that they are not the patent owner.

Post Grant Review:

The new Post Grant Review procedure allows a 3rd party to submit reasons (and prior art) as to why the issued patent should not have been allowed. Importantly, it must be filed within 9 months of the patent’s issuance. However, Post Grant Review can only be used on issued patents with filing dates after March 16, 2013. Therefore, this procedure won’t even likely be used until 2014 at the earliest.

In a Post Grant Review, the 3rd party can submit prior art references and argue that the patent should not have been allowed as being obvious or anticipated (i.e.: violate sections 103 or 102). That is similar to the way patent reexaminations have always been conducted. However, what is completely new and especially important is that the 3rd party may also argue that the claims are to non-statutory subject matter (i.e.: violate section 101), or that they are vaguely worded or indefinite (i.e.: violate section 112). In addition, the petitioner can also introduce evidence that the patent should not have been allowed because the owner violated an on-sale or public use bar (i.e.: show that the invention was in the public realm for more than one year prior to the filing of the application). Thus, this new procedure will open a wealth of opportunities to challenge issued patents without having to go to federal court.

Unfortunately, it costs $35,800 just to file this Petition! (and even more for claims in excess of 20). There is no small entity fee discount either. The Petition also has an 80 page limit. Therefore, it is only expected that the parties using Post Grant Review will be the ones that have been sued for patent infringement. (Note: and have been sued within 9 months of the issuance of the patent!). To file a Petition for Post Grant Review, the petitioner must certify that they haven’t already filed a civil action challenging the validity of a claim in the patent.

The objective of this new procedure is to remove cases from District Courts, and place them back in the Patent Office. The Patent Office justifies their obscenely high filing fee by saying that it is so much cheaper than litigation, and faster too. The Patent Office promises that the whole Post Grant Review process will take no more than one year (after first taking no more than 3 months to decide whether to approve the Petition and commence the process). The patent owner will then have 3 months to file an (optional) reply. After that, the Patent Office and the Petitioner have discovery, followed by an oral hearing and final decision in front of three judges. The patent owner may file one motion to amend the claims (but only after conferring with Board). Importantly, the lead counsel handling this procedure (with discovery, motions and cross-examination), must be a registered patent attorney.

Inter Partes Review:

In many respects, Inter Partes Review is similar to Post Grant Review (discussed above). It also is new a Patent Office procedure similar to a trial entailing discovery, motions and cross-examination.

The biggest two differences between the two procedures are: (1) an Inter Partes Review can’t be filed until 9 months after the patent has issued2; and (2) it only can be used to challenge the patent on the grounds of anticipation or obviousness (i.e.: sections 102 and 103). Thus, you can’t challenge the patent on the grounds of non-patentable subject matter or vagueness (i.e. sections 101 or 112) using this process. Also, only printed publications and patents can be considered. Thus, its scope is somewhat limited.

However, it does specifically expand the scope of information that may be cited to include written statements the patent owner has filed in court or at the Patent Office that take a position on the scope of any claim. In such cases, the submission must identify the forum in which the statement is made, and also explain its relevance. The Petition itself must explain both how the claim is to be construed, and why it is unpatentable. The Patent Office will make a determination whether or not to start inter partes review within 3 months of receiving the Petition.

Unfortunately, it costs $27,200 just to file the Petition! (and more for claims in excess of 20). (Only about $8,000 will be refunded if the Patent Office decides not to proceed with the review). Also, there is a 60 page limit to the Petition. In view of the high cost, it is expected that only parties that have been sued for patent infringement will file such a Petition.

In response to the obscenely high filing fee, the Patent Office provides a full trial type procedure that is heard by three judges (i.e.: not by an examiner). Importantly as well, since this is an inter partes procedure, the parties may actually decide to settle the case prior to the judges’ final  decision.

Other restrictions include the fact that the party filing the Petition must certify that they have not already filed civil action, or have been served with an infringement complain more than a year ago. Also, there is an estopple provision in that the Petitioner may not assert in a subsequent district court or International Trade Council action that a claim is invalid on any ground that the petitioner raised or reasonably could have been raised in the inter partes review.

Ex Parte Rexamination:

Ex Parte Rexamination has been around for years. It is a procedure in which a 3rd party submits prior art after a patent has issued to convince an Examiner to revoke the patent. It was relatively cheap ($2,520 to file up until Sept 16, 2012), and allowed 3rd parties to attempt to invalidate patents without having to go to court. The prior art that could be submitted to the Examiner was limited to patents and printed publications.

The procedure still will continue to exist under the new rules, but is now discouraged. The Patent Office made it a less favorable option by raising the filing fee from $2,520 to $17,750 overnight.

In addition, a new estopple provision has been added. Specifically, a party is estopped from filing an ex parte reexamination if they have already filed an inter partes review or a post grant review and a final decision has issued. This new estopple provision applies to the real party in interest and their privies. The party filing the Petition must certify that the statutory estopple provisions do not bar the request.

Importantly, (as is similar to existing practice), the real party in interest can remain anonymous by using a registered patent attorney. In such a case, the registered patent attorney must now certify that the real party in interest is not stopped from filing the request.

The Patent Office is now promising to make a decision on these Petitions within 3 months of receiving them.

“Transition Procedure For Covered Business Method Patents” Review:

Another new and rather quirky procedure is the “Transition Procedure For Covered Business Method Patents”. It also came into force on Sept 16, 2012 (but ceases to exist on Sept 16, 2020).

This procedure applies only to business method patents related to “finance”, and can be used to challenge the patent’s validity regardless of when it was filed. However, the cost to file this Petition is a whopping $35,800 just to file (and more for claims in excess of 20)! There is an 80 page limit. The clincher is that (per the statute), a party can only file after they have already been sued for infringement under the patent!

How does the Patent Office justify this expensive procedure? Once again, the Patent Office is saying that it is trying to decrease the cost of a party defending themselves from a bad business method patent. Basically, this is done by moving the action from a full district court proceeding to a (sped up) Patent Office proceeding. The Patent Office is again promising a speedy turn around with the review not to exceed one year.

So, what exactly is a “covered business method?” Basically, a covered business method is specifically limited to a business method that is used in financial services. The rules state that a covered business method is: “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration or management of a financial product or service, except that the term does not include patents for technological inventions”.  The rules go on to state that a “technological invention” solves a technical problem using a technical solution. In practice, understanding the above definition will likely be as clear as mud.

Similar to a Post Grant Review, the Petitioner can have the patentability evaluated on wide grounds (patentable subject matter, anticipation, obviousness, vagueness (Sections 101, 102, 103, 112). However, the Patent Office’s determination as to whether or not to issue the review is final and non-appealable.

Inventor’s Oath:

On of Sept 16, 2012, the Patent Office also changed the requirements for inventors’ Oath forms. Importantly, these changes only apply to patent applications that are filed after Sept 16th.

The first change is that patent applications can now be filed by persons to whom the inventor has assigned or is under an obligation to assign. The Patent Office has made this procedure quite simple. If the inventor refuses to sign the Oath, a simple form is provided for the assignee to sign instead. Basically, all that needs to be done is for the assignee to check two boxes on the form and fill out their name. It’s as simple as that! There is no longer any need to “prove” the fact that the inventor can’t be found or to explain to the Patent Office why they will not sign. Moreover, the Patent Office seems ready and willing to accept such a simple explanation. The Patent Office has stated that it will not be independently checking these facts.

Another positive change is that it will now be very easy to change inventorship (simply by telling the Patent Office what the correct inventorship should be). In other words, patent practitioners no longer have to state that inventorship changes are required due to errors or claim amendments. Basically, the Patent Office is relying more on the data they receive and asking for less “proof” from the inventors / assignee.

Yet another positive change is that inventor order can now be changed prior to issuance. In the past, the Patent Office would not do this. We expect to see more inventors jockeying for first position on the listing (since this will mean their last name will appear on the printed patent in large numbers, while the co-inventors will be listed as “et. al.” in big letters). 

Interestingly, the inventor no longer has to state their citizenship, or even attest to the fact that they believe themselves to be the first inventor of the subject matter.

Interestingly, although the new rules state that the filing of the Oath can be postponed until the application is in condition for allowance (i.e.: well after the case has been examined), the Patent Office will still send Missing Parts Notices (and charge late fees) if it does not receive the signed Declaration. Until this contradiction is resolved, Oaths should continue to be filed as soon as inventor signatures can be obtained.

Other New Patent Office Initiatives:

(a) Supplemental Examination:

On September 16, 2012, the Patent Office started a “Supplemental Examination” procedure in which a patent owner can submit new art against their own patent after it issues. The Patent Office is promising to make a decision as to whether this new art would put the patent validity into doubt. However, since the Patent Office is going to charge $27,000 for this service, we don’t predict many patent owners will consider using it.

(b) Derivation Proceedings / First To File:

The US is moving from a “first-to-invent” to a “first-to-file” jurisdiction to harmonize its patent laws with the rest of the world. This change won’t officially happen until March 16, 2013 (at which time “Derivation Proceedings” will also start). Derivation proceedings are Patent Office proceedings in which the late patent filer tries to show that the earlier patent filed derived (e.g.: “stole”) the invention from them and are not entitled to the patent.

(c) Fee Increases for Subsequent RCE’s:

A common thread of all the above is that the Patent Office fees are going up. This is also true with proposed increases to patent maintenance fees. Interestingly as well, the Patent Office is also proposing that the fees for RCE’s (Requests For Continuing Examination) be increased for second, third, etc. RCEs filed in a case. Currently, when a patent application has received two rejections, the second one is typically a “Final” rejection. Paying the RCE fee simply re-starts the case. In practice many cases are kept alive through long numbers of rejections. The idea of increasing the RCE fee will make this strategy much more expensive for patent applicants.

1Except for reissue or reexamination proceedings.
2Or the date of termination of a post grant review, if one was instituted.


David R. Heckadon