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Post-grant review, continued: Inter partes, covered business methods

Jason Schwent September 2, 2014

In my last post, I detailed some of the most common frustrations with patent litigation and how the U.S. Patent and Trademark Office offers alternative ways to challenge issued patents. I provided descriptions of two of the four administrative methods for such challenges — ex partes reexamination and post-grant review. Today I’ll discuss the last two methods.

Inter partes review (IPR)

This is the new version of what used to be called inter partes reexamination before the America Invents Act. This procedure can only be used more than nine months from the issuance of a patent (and must be used within one year of being sued on a patent). This procedure is also available for all patents, regardless of when they were applied for or issued.

To begin the process, a challenger files a petition arguing that at least one of the claims of the patent are either anticipated or are obvious in light of prior art patents or printed publications. The challenger cannot argue grounds of invalidity other than anticipation or obviousness. The challenger must also provide a claim construction for each challenged claim and must pay $9,000 to request the review; if the petition is granted, the challenger must pay an additional $14,000.

As with post-grant reviews, after the challenger files its petition, the patent holder can file an optional preliminary statement offering its arguments in opposition. If the challenger shows a reasonable likelihood that they will prevail with respect to at least one claim, the Patent Office will grant the petition. And, as with the post-grant review, the challenger, patent holder, and Patent Office participate throughout the process. The challenger and patent holder are also both allowed to take the deposition of any witnesses who submit affidavits or declarations in support of arguments made in the proceedings and can file motions seeking other discovery. Similarly, if an inter partes review is unsuccessful, all invalidity arguments that were raised or reasonably could have been raised will be unavailable to the challenger. And, because of this estoppel and the statutory requirement that proceedings be completed within one year, courts are more willing to stay pending litigation to allow inter partes reviews to remove invalidity issues from the litigation.

Covered business method patent review

This process was created with the America Invents Act and applies only to patents drawn to “a covered business method.” The statute defines “covered business methods” to be patents that claim “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” but does not apply to patents which possess a “technical feature that is novel and unobvious over the prior art and solves a technical problem using a technical solution.” A reading of this definition leaves many, many, questions unanswered — many of which must await further case law or rules to sort out.

The challenger also must have been sued or charged with infringement of the covered business method. Finally, this process is only available during the same time as the inter partes review proceedings (i.e., more than nine months after issuance of the patent) but must be filed before September 16, 2020 (as the statute set an eight-year sunset on the program). If the challenger and patent meet the requirements, the challenger can file a petition and pay the required fee of $12,000. If the petition is granted, the challenger must pay an additional $18,000. As with post-grant reviews and inter partes reviews, all parties participate throughout, limited discovery is allowed, and unsuccessful challengers in covered business method patent reviews will be estopped from raising any of the invalidity arguments they raised or could have raised in the proceeding.

The ups and downs of post-grant review

Each of these administrative procedures differs and each provides different advantages and comes with different risks. They should not be seen as the “easy way” to avoid litigation. If post-grant reviews are used and the court presiding over the patent litigation decides not to grant a stay for example, you will be faced with fighting a war on two fronts. And because obtaining a stay is easier the sooner an IPR is filed, work on preparing an IPR must begin immediately upon being sued and can involve substantial costs. In addition, the estoppel provisions are substantial and potentially devastating if your post-grant review is unsuccessful — leaving you with essentially no invalidity argument in the litigation.

So, in summary, undertaking a post-grant review is not something to be taken lightly. But these vehicles do provide significant advantages. They provide a venue with patent expertise. They come with a lower burden of proof. And they do, in most circumstances, provide the best opportunity available for invalidating patents. So they should be part of your troll-fighting arsenal.

Note: I’m leading a webinar on Oct. 21, 2014, titled, “You’ve Got Mail: How Your Company Can Better Respond to Patent Cease and Desist Letters.” Join us to learn about practical strategies you can use when faced with a cease and desist letter.

Jason Schwent is a partner in Thompson Coburn’s Intellectual Property group. He is the editorial director of the Patent Billy Goat. You can find Jason on Google+Twitter, and reach him at (314) 552-6291 or jschwent@thompsoncoburn.com.