United States: Inter Partes Reexamination: The USPTO Alternative To Patent Litigation

Crippled in its reach, shunned for express estoppel provisions, and written out of the USPTO’s 21^st Century Plan, the inter partes reexamination procedure has had a troubled start. Nonetheless, inter partes reexamination remains a significant strategic tool for competitors, defendants (actual and potential), and those with marketing problems that involve a patent.

Inter partes reexamination under 35 U.S.C. §311 et seq. first became available at the end of April 2002. The statue was born with the limitation that it was available only for patents filed on or after November 29, 1999. While still available only for new patents, Congress expanded the right of appeal in November 2002 by allowing Requesters the right to appeal a decision for patentability to the Federal Circuit. Following this change, the number of inter partes reexamination requests rose significantly: 20 of the 26 inter partes reexamination cases filed to date were filed after this legislation went into effect. This is not bad for a proceeding that still does not have a chapter in the Manual of Patent Examining Procedure (one possible reason the proceeding is not used more).

Procedurally, inter partes reexamination is one small step up from the current ex parte reexamination. Indeed, the original Request looks the same except for a much bigger filing fee ($8800 v. $2520). Service of the Request on the Owner and the need for documentary evidence of unpatentability^** are unchanged Additionally, the "second bite" practice still seems to be available under 37 CFR §1.989 although the merged proceeding would limit the rights of the Requester to those under an ex parte reexamination. (A reexamination "second bite" refers to the practice of filing an ex parte reexamination request with art that was not included in the original inter partes reexamination request and then having the proceedings merged.) Please note, however, that the ex parte request can be avoided for newly discovered art during the inter partes reexam by sending the new art and a detailed argument to the Owner. The duty of disclosure and the ramifications for non-disclosure of material art will likely cause the Owner to submit the art to the examiner, possibly without your detailed comments, but allowing Requester to introduce Comments on the new art.

The differences are more apparent as the proceedings come to the end of the prosecution:

• The examiner issues an "Action Closing Prosecution", receives any last comments from both parties, and issues a Right of Appeal Notice (equal to a "final action" per 37 CFR 1.951(c)) that allows either party to pursue an appeal. (A pending procedural change would allow the examiner to issue the Right of Appeal Notice with the Action Closing Prosecution.)

• Appeals and cross-appeals are available with a change in title to "Appellant" and "Respondent". The same party can be both an Appellant and a Respondent depending on the issues under discussion.

There have been 26 Requests for inter partes reexamination filed from April 2001 to September 2003. After entering the reexam, the early cases saw a number of amendments encounter objections as to form of the amendment with a one month period for correction.

- Chemical - 5
- Mechanical - 11
- Electrical - 3
- Biotech - 1

Although it shares some common advantages with ex parte reexamination compared to litigation, inter partes reexamination has a number of distinct advantages for the Requester over litigation with relatively minor disadvantages:

• Requester Has An Opportunity to Respond. – Like litigation, inter partes reexamination allows the Requester to file rebuttal Comments with supplemental arguments and evidence within 30 days of the mailing date of the Owner’s Response. The three day mailing allowance provided under the federal Rules of Civil Procedure does not apply.

• Both Parties Can Appeal. – As in a litigation, inter partes reexamination allows the Requester to appeal an examiner’s decision for patentability to the Board as well as the Federal Circuit. Cross appeals are permitted so both parties can appeal adverse decisions (interferences model).

• The Process Is Fast. – Unlike many court proceedings that involve patents, the entire reexamination process is expedited and treated with "Special Dispatch": two months for the examiner to decide whether to proceed (one month if in litigation), two months for the Patentee to respond, and 30 days for Requester rebuttal comments. There are no extensions of time other than for "sufficient cause" and these are by no means automatically granted.

• The Duty of Disclosure Applies - Unlike litigation, the Owner is subject to the continuing duty of disclosure of information that is material to patentability, and failure to comply can render the patent unenforceable even if it survives the reexamination. The Requester is not subject to the same duty, although the estoppel provisions should be more than sufficient to elicit all relevant information. Moreover, Requesters can get past much of the effects of the estoppel provisions (see below) for art discovered during pendency of the reexam by sending the art and a detailed commentary to the Owner. The Owner thus assumes the risk of non-citation due to the duty of disclosure.

• There Is No Presumption Of Validity. – In re Etter, 756 F.2d 852, 225 USPQ 1 (Fed. Cir. 1985). Elimination of the presumption and its attendant burdens can be a key factor in the resolution of doubts or ambiguities in the strength or teaching of a reference.

• A New Examiner Is Used For All Reexaminations. – There is no fight against the original examiner’s ego or emotional need to confirm the original examination. Additionally, examiners have access to internal reexamination experts as an added quality measure. Judges often do not have an equivalent level of experience in patent matters and substantive support infrastructure.

• Claims Are Given The Broadest Reasonable Interpretation That Is Consistent With The Specification. – (MPEP §2258(I)(G)). The examiner will not try to construe the claims in a manner that tries to preserve patentability, like a court must, unless the patent under reexamination is an expired patent. (Id.) This difference in interpretation standard may be particularly useful to challenge unduly broad Owner assertions of "means plus function" claims or to force a claim interpretation onto the patented claims that exclude embodiments of particular concern.

• Reexams Are Harder To Start But Easier to Win. – Unlike filings in a court that have no initial threshold, reexamination requires the "substantial new question" standard to begin the reexamination. This makes it harder to start a reexamination, but the challenger needs only the lower preponderance (the USPTO prosecution standard) case of unpatentability to prevail. This standard is much lower than the "clear and convincing" standard for invalidity faced by defendants in court. (See, MPEP 2242 - defining standard in context of ex parte reexam). Once started, the reexamination process cannot be stopped, withdrawn, or settled into obscurity until patentability is resolved.

• In re Portola Has Been Overruled. – Requesters may once again use and cite the art originally considered or at least cited into the file. A court generally gives deference to the original examiner’s experienced interpretation of the patent. In reexamination, however, the new, equally skilled examiner may view the same reference differently than the original examiner. With the help of explanatory declarations in the Request and Comments, the chances are better that a good, but previously unappreciated, reference of record may be given the importance it deserves.

• There Are No Interviews With The Examiner By Any Party. Everything is on the record.

• Reexamination Builds A More Complete Record. – New arguments presented by the Owner can introduce new prosecution history estoppel and may force the Owner to choose among claim interpretation options that limit the claims. Omissions or misrepresentations to the examiner can be the basis for a later defense of unenforceability based on inequitable conduct. In my view, the more the patent owner says to an examiner, the better are my chances of finding a defect or means for restricting the claims.

• Amendments To The Claims Provide Possible Intervening Rights. –Your client might not be able to expand the business much, but it the availability of intervening rights may buy enough time to help redesign the product, find alternatives, or negotiate a license. Note below. This cuts two ways, depending on the age of the patent.

• Reexamination Costs Less Than Litigation. – Inter partes reexamination should cost no more than $50,000. The 2001 AIPLA survey notes a median cost of patent infringement litigation to be between $502,000 (less than $1 million at risk) and $3.495 million (more than $25 million at risk). Inter partes reexamination costs much less than a judicial proceeding.

• There Is No Discovery Or Cross Examination. – This is an advantage to the Requester because the Requester’s Comments are filed after the Owner’s Response, and the Owner has no right to file another response. The Requester and any declaration submitted with the Comments get the last word before the examiner makes a decision.

• Admissions Can Be Used. – If an admission from the Owner comes your way and affects validity, a reexam request can be filed based on the key patents or publications in view of the Owner’s admission. See, MPEP §2258(I)(F).

• Requester Cannot Raise Best Mode Issues. – Best mode issues require credibility determinations for which patent examiners are not well suited.

• Requester Estoppel Is Expressly In The Rules. – This is a much over-stated basis for concern about inter partes reexaminations. Inter partes reexamination includes an estoppel against the Requester that precludes the Requester from contesting validity in a later inter partes reexamination request on evidence that was or should have been known at the time of the 1^st reexam or during a civil action. 35 U.S.C. §317(b). The estoppel rule does not affect efforts to raise the issue in a later civil action. The estoppel rule should prevent harassment of patent owner by an unrelenting competitor.

• The Period to File Rebuttal Comments Is Very Short. – The rules do not allow extra time for mailing delays in the service of the Owner’s Response. A short rebuttal period and the need for documented rebuttal evidence requires a Requester to be ready to respond. The Requester should be willing to devote the technical resources necessary to file a complete rebuttal.

• Amendments To The Claims Provide Owner Opportunities To Amend. – The ability to amend the claims also counts as a possible disadvantage depending on whether a broadening reissue is still available. If so, the Owner may still find other patentable aspects that could cause even more problems.

• There Is No District Court Appeal Option. – Inter partes reexamination does not permit the Requester to pursue an appeal by way of a district court review as in Section 145. (This is consistent with the desire for written proceedings on limited patentability issues.) Thus, the original case for unpatentability needs to be made as completely as possible with supporting explanatory declarations to explain nuances in the technology, details of the ordinary skill level, and possible commercial reaction to the invention if commercial success is likely to support patentability. Declarations can also be submitted in the rebuttal Comments to explain or disprove allegations made to the examiner by the Owner.

• There Is No Appeal Of A Decision Not To Reexamine.

• There Is No Ability To Raise Claim Ambiguity Or Enablement Issues. – It would be nice to be able to resolve ambiguity issues directly. Nothing prevents ambiguous claims from being tested by a reexam request based on art that teaches embodiments falling within one of the possible interpretations.

In view of the significant advantages and relatively minor disadvantages, inter partes reexamination is best suited for cases in which:

- If the conflict also includes trademark, unfair trade, contract, or other business matters, reexam can still help by lowering the overall cost, reducing number of issues to be tried, and decreasing possibility that the hard technical issues in the patent might get lost among the more conventional legal issues.

- The case for unpatentability must be proved by patents or publications, the clearer the better. The examiner can raise new issues under Section 112 only as to new or amended claims. If your best case for invalidity is anything other than for anticipation or obviousness (including obviousness-type double patenting per MPEP §2258(I)(D)), reexam is not for you.

- Always file an explanatory declaration. The ability to underscore, explain, and provide perspective about the references is what a good witness will do in court. The same principle applies in an inter partes reexamination proceeding, and MPEP §2258(I)(E) expressly provides for the use of explanatory declarations. Examiners like to hear from those working in the art to get the "real" story (even if that story is written by the lawyer).

- Examiners are reluctant to make new law during regular examination proceedings, so they will be unlikely to so under the scrutiny of an inter partes reexamination proceeding.

- For a well-documented case of unpatentability, no discovery should be needed. Ambiguous publication dates or facts in the possession of third parties can be resolved by some advance investigation and a declaration.

- The lack of discovery means that Requesters must be prepared to perform and present an affirmative set of examples or tests to prove or disprove key facts, where the technology and issues of patentability warrant. Any such tests should be accurate because they will likely be subject to dispute in a subsequent Owner response.

- Reexamination is one step removed from the interactivity necessitated by litigation. This distance helps reduce the development of animosity and "bad blood" between the parties and can minimize additional harm to the relationship. Reexam is well-suited for patent conflicts involving customer-supplier, friendly competitors, and joint developers of a technology where the development continues.

While simultaneously expressing concern about increasing pendency and appeals before the Board, the USPTO has announced plans to scrap the inter partes reexamination proceedings in favor a new post-grant opposition proceeding. Whether and when they can do that is anybody’s guess.

This new post-grant review proceeding would look like a trademark opposition or interference determination but before the Board of Patent Appeals and Interferences. This procedure would have to take place within a year of issue or four months after threat of infringement. There would be a set of mandatory disclosures, discovery, and only one opportunity for the Owner to amend the claims. Live testimony would be permitted, and the entire procedure would have to be completed within a year. Details can be found on the USPTO website at: http://www.uspto.gov/web/offices/com/strat21/action/sr2.htm.

This new post-grant opposition procedure may go thru many iterations and variations before anything happens. It is not too late for interested members of the Patent Bar to make their feelings known and try to preserve this newest form of reexamination or, at least, help shape an efficient alternative. Until then, inter partes reexamination is an excellent alternative to patent litigation.

^{**Please note that "unpatentability" is the term used in USPTO proceedings. "Invalidity" is the term used in court proceedings where a presumption of validity applies. Not a key issue, but the different terminology reflects the different perspective of the USPTO towards patent grants.}

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.