by Douglas Wentzel, Penn Law ’16.
When the America Invents Act (AIA) went into full effect on March 16, 2013, it brought along with it some major changes to American patent law. The most significant change was to switch the American first-to-invent patent-filing system to align with the system used around the world, first-to-file. Along with this major change came a new kind of “post-grant” proceeding called inter partes review, or IPR. Post-grant review proceedings are used to allow parties to challenge the validity of recently granted patents outside of federal court – in the Patent and Trademark Office.
The IPR proceedings have a number of features that distinguish them from the post-grant reviews of the past and from federal court litigation. IPRs promise decisions on the validity of a patent within 12-18 months of the filing for review. Such relatively quick turnaround, in an age when getting a patent filed takes upwards of three years, has been made possible by lowering the claimant’s burden of persuasion on the invalidity claim from “clear and convincing” to “preponderance of the evidence” and also by allowing for only limited discovery. By charging a minimum of $27,200 for IPRs, it would seem initially that such a review is much cheaper than litigating in federal court as well.
Despite the efficiencies that IPRs aimed to create for challenging patent validity, the fact that these proceedings are still relatively new means that attorneys need to prepare for them more and in different ways than they may have for post-grant proceedings in the past. More time spent means more cost to the client, which has the potential to destroy the cost savings of IPRs. Currently, factoring in reasonable attorney’s fees to prepare the IPR petition – around $75,000 – brings the total for these reviews to over $100,000. Because of lawyers’ inexperience with these proceedings, they still have not fully embraced IPRs, and there is good reason for their hesitation. While IPR decisions are appealable to the federal circuit, IPRs have estoppel effects, which could be very bad news for claimants. The AIA states that on appeal, the claimant in an IPR cannot allege that a patent claim is invalid “on any ground that the petitioner raised or reasonably could have raised” during the IPR. 35 U.S.C. §315(e)(2). So, if a claimant does not succeed on their invalidity claim in the IPR, they may be estopped from alleging their only bases of invalidity in any subsequent actions, thereby cutting them off from having a method of challenging the validity of what may very well be an invalid patent.
While it is easy to dwell on the negative aspects of such a new post-grant review, it seems reasonable to expect that as time goes on and more firms and lawyers get comfortable with the proceedings they will lower the price of their services while their preparation time is drastically reduced as well. As with many things though, only time will tell.
For more information on the new IPR regime, see http://www.dlapiper.com/the-impact-of-inter-partes-review-on-patent-litigation/ and http://www.postgrantproceedings.com/topics/article-CMR_PGR_IPR.html both of which served as sources for much of the information in this post.