The U.S. Patent and Trademark Office issued proposed rules for the implementation of portions of the America Invents Act relating to the post-grant review and inter partes review of patents and to the conduct of trials before the Patent Trial and Appeal Board regarding such review.  Comments on the proposed trial rules are due April 9, 2012, and comments on the proposed rules for post-grant review and inter partes review are due April 10, 2012.  If finalized, the proposed rules for post-grant review and inter partes review will take effect on September 16, 2012.  The Patent Office also issued proposed rules specifically for the review of business method patents.

As explained below, the proposals call for unprecedentedly high fees and highly compressed scheduling.

Post-Grant Review, Generally and for Business Methods

Post-grant review is an alternative to litigation by which a third party may challenge patent validity for almost any reason within nine months of patent issuance.  Grounds for seeking post-grant review include any ground that could be raised under 35 U.S.C. § 282(b)(2) or (3), which include grounds under 35 U.S.C. §§ 101, 102, 103, or 112 other than compliance with the best mode requirement.  Post-grant review is not available to third parties that have already filed a civil action challenging patent validity (unless the validity challenge was filed as a counterclaim) or that are estopped from challenging patent validity (due to, for example, an earlier final written decision regarding the challenged claim).

The post-grant review rules will apply to patents issuing from applications subject to the first-inventor-to-file provisions of the America Invents Act, i.e., patents having an effective filing date on or after March 16, 2013.  In view of the PTO's average filing-to-patent pendency of 33.8 months (as of December 2011), the proposed post-grant review rules are not likely to be used until late 2015.

The proposed business method review rules employ the same standards and procedures as the post-grant rules.  However, the business method review rules are applicable to any covered business method patent issued before, on, or after September 16, 2012 (unless the nine-month window for post-grant review is still open).  The proposed business method rules also require the petitioner to have been sued for or charged with infringement of a business method patent.

Inter Partes Review

Beginning on September 16, 2012, inter partes review will replace inter partes reexamination as the avenue for third-party patentability challenges to an issued patent.  Inter partes reexaminations filed on or after that date will not be granted.  Inter partes review is more limited than post-grant review, as the grounds for seeking inter partes review are limited to issues raised under 35 U.S.C. §§ 102 or 103 and only on the basis of prior art patents and printed publications.

Inter partes review can be requested for any patent issued before, on, or after September 16, 2012, unless the nine-month window for post-grant review is still open or a post-grant review petition is pending before the PTO.  Inter partes review is not available to third parties that (1) have already filed a civil action challenging patent validity (unless the challenge was filed as a counterclaim), (2) wait more than a year after being served with a complaint alleging infringement, or (3) are estopped from challenging patent validity (due to, for example, an earlier final written decision regarding the challenged claim).

Petitions for Post-Grant and Inter Partes Review

The proposed rules set forth nearly identical requirements for post-grant review and inter partes review petitions.  These proceedings require the payment of exceptionally high fees that are based on the number of challenged claims.  The Patent Office states that the America Invents Act does not provide for refunds of any part of the post-grant or inter partes review fees when the Patent Office determines that the review should not be initiated, although the Patent Office seeks to study this issue further.  As shown below, the fees are based on a scale that increases for every ten claims challenged:

• Post-grant review petition fees:
  
  • Fee for a petition challenging 1 to 20 claims: $35,800
  • Fee for a petition challenging 21 to 30 claims: $44,750 (an increase of $8,950)
  • Fee for a petition challenging 31 to 40 claims: $53,700 (an increase of $8,950)
  • Fee for a petition challenging 41 to 50 claims: $71,600 (an increase of $17,900)
  • Fee for a petition challenging 51 to 60 claims: $89,500 (an increase of $17,900)
  • After 60 claims, there is a fee of $35,800 for each full or partial set of 10 claims.
• Inter partes review petition fees:
  
  • Fee for a petition challenging 1 to 20 claims: $27,200
  • Fee for a petition challenging 21 to 30 claims: $34,000 (an increase of $6,800)
  • Fee for a petition challenging 31 to 40 claims: $40,800 (an increase of $6,800)
  • Fee for a petition challenging 41 to 50 claims: $54,400 (an increase of $13,600)
  • Fee for a petition challenging 51 to 60 claims: $68,000 (an increase of $13,600)
  • After 60 claims, there is a fee of $27,200 for each full or partial set of 10 claims.

Under the proposed fee structure, challenging 80 claims of a patent will require a $161,100 fee for a post-grant review petition and a $122,400 fee for an inter partes review petition.  Fee levels such as these are unprecedented in the Patent Office, particularly when the fee will not be refunded if a review is not instituted, at least under the Office's present view of the law.

Procedures and Timing for Post-Grant Review and Inter Partes Review

The proposed rules are intended to promote the completion of post-grant and inter partes proceedings within one year of the petition filing date, with a possible extension of an additional six months for good cause.  The proposed rules also set forth nearly identical procedures and schedules for post-grant and inter partes review petitions.  The differing and most significant requirements in the proposed rules are highlighted below.

• Preliminary Proceedings
  
  • After receiving a completed petition, the PTO will issue a notice indicating that the petition has been granted a filing date.
  • The patent owner can file a preliminary response to the petition, elect to waive the response, or submit no response.
  • The preliminary response must be filed no later than two months after the date of the notice granting the filing date.
  • The preliminary response must be limited to setting forth reasons why post-grant or inter partes review should not be instituted.
  • The preliminary response is subject to page limits and can include certain types of evidence.
    
    • For post-grant reviews: 70 pages
    • For inter partes reviews: 50 pages
  • The patent owner may disclaim particular claims to remove them from consideration.
• Institution of Post-Grant or Inter Partes Review
  
  • After receipt or non-receipt of the patent owner's preliminary response, the Board determines whether to institute a post-grant or inter partes review for some or all of the challenged claims or to deny some or all of the grounds set forth in the petition.
  • The patent owner may file a response addressing any remaining ground for unpatentability.
    
    • The response must be filed within two months of the date the post-grant or inter partes review was instituted or by another date set by the PTO.
    • The response is subject to page limits.
      
      • For post-grant reviews: 70 pages
      • For inter partes reviews: 50 pages
    • The patent owner may file a motion to amend the patent in response to the petition, after conferring with the Board.
• Trial before the PTO's Patent Trial and Appeal Board
  
  • The PTO will notify the petitioner and patent owner in writing of the beginning of the trial. 
  • Within the first month of trial, the petitioner may request permission to supplement the petition.

Conclusion

If the proposed rules are adopted, the high fees and short time frames may require patent holders and third parties to adjust their strategies for some patent assets.  For parties contemplating using post-grant or inter partes review to challenge patent validity prior to a litigation, the high, non-refundable filing fees for challenging a large number of claims may present a significant and unprecedented cost barrier.  For parties preparing for challenges to their patents, the highly compressed timing for responding to post-grant or inter partes challenges may make it advisable to prepare defensive positions when highly valued patents are issued.

Sources

• Proposed Rule of Practice for Trials before the PTAB (77 Fed. Reg. 6879, Feb. 9, 2012)
  
  • http://www.uspto.gov/aia_implementation/rin-0651-ac70.pdf
• Proposed Rules for Inter Partes Review (77 Fed. Reg. 7041, February 10, 2012) 
  
  • http://www.uspto.gov/aia_implementation/77fr7041nprm.pdf
• Proposed Rules for Post-Grant Review (77 Fed. Reg. 7060, February 10, 2012)
  
  • http://www.uspto.gov/aia_implementation/77fr7060nprm.pdf
• Proposed Rules for the Transitional Program for Covered Business Methods (77 Fed. Reg. 7080, February 10, 2012)
  
  • http://www.uspto.gov/aia_implementation/77fr7080nprm.pdf
• USPTO website "AIA Frequently Asked Questions"
  
  • http://www.uspto.gov/aia_implementation/faq.jsp#heading-7

© 2012 Perkins Coie LLP