Senate Patent Reform Bill on Post-Grant Review

Thanks to Kevin E. Noonan at Patent Docs for recently posting his analyses of the 106-page draft report of the Senate Judiciary Committee on the Patent Reform Act of 2007 (S. 1145) which, under Section 5, would create a new post-grant review (PGR) system for United States patents, replacing and eliminating inter partes reexamination, in a new chapter 32 in title 35.

According to the draft Senate Report,

There are three ways to initiate a PGR proceeding. They are often referred to as “windows” (first window and second window) in which a third party petitions the Director of the USPTO to initiate a PGR proceeding. These windows differ procedurally and substantively, as described below. The third means of initiating a PGR proceeding is based on the patentee’s consent.

In a first window PGR, the petition must be filed within 12 months of the patent’s issuing. The presumption of validity for the patent does not apply, but the petitioner has the burden of proving invalidity by a preponderance of the evidence. This window is designed as an extension of the examination process. The expectation is that those who are interested in fields of patents – or in certain patent holders – will assiduously follow the issuance of the patents that interest them, and be ready to bring to the USPTO’s attention any immediate concerns.

. . . in the second window, significant limitations are placed on such challenges, while preserving the core intent of the old reexamination process: creating an efficient and effective process for challenging the validity of a patent. A PGR petition may be filed throughout the life of the patent in this second window, but only if (i) the continued existence of the challenged patent claim is likely to cause the petitioner significant economic harm, and (ii) the petitioner files the petition within 12 months after receiving notice of infringement. Thus, only a PGR petitioner who has a good deal at stake may bring such a challenge, and may do so only if the patent holder has already, on its own volition, placed the issue in play.

The presumption of validity for the patent does apply in the second window. The petitioner may challenge a patent based on any defense the challenger could raise in district court litigation, but the existence, authentication, availability, and scope of any evidence offered to establish invalidity must be established by clear and convincing evidence. If such predicate facts are established, invalidity shall be proven only if the persuasive force of such facts demonstrates invalidity by a preponderance of the evidence.

The PGR petition must specify in detail the claims of the patent being challenged and the basis for the challenge, with any necessary supporting documentation. PGR proceedings are open to the public unless determined otherwise by the Patent Board. After a PGR proceeding is initiated, the patent holder will have an opportunity to file a response. During the proceeding, the patent holder has one opportunity as a matter of right to amend the claims, and may only amend the claims subsequently on motion and a showing of good cause. No amendment during a PGR proceeding may enlarge the scope of a claim or add new matter.

Various safeguards and estoppels have also been included to prevent the use of PGR for harassment. Every petition to institute a PGR must raise a substantial new question of patentability; this standard was elevated at mark-up to encourage only the most meaningful challenges. In addition, the same party who has once filed a PGR petition, whether in the first or the second window, regarding any claim in a patent, may not file another PGR on the same patent, regardless of the issues raised in the completed PGR. This “one bite at the apple” provision was included in Committee to quell concerns that a party bent on harassing a patent holder might file serial PGR petitions, although the Committee heard no suggestion that anything akin to that speculated harassment takes place currently.

Moreover, once a petitioner has challenged the validity of a patent through a PGR, that party may not challenge validity in a court proceeding based on any ground it raised during the PGR. Additionally, a party who has challenged the validity of a patent in court may not file a PGR petition on any grounds they raised, or could have raised, in the district court. Because the district court action allows the challenger the full panoply of discovery (unlike the restricted discovery appropriate to the more limited PGR proceeding), the Committee believes that it is only reasonable to apply estoppel to claims the challenger was, or should have been, in a position to raise, whether or not it did so.

The USPTO must complete its work on a PGR within one year in most cases, and 18 months in only those cases where the additional time is justified. PGR proceedings are conducted in the first instance by three Patent Board judges, and not first by an examiner, thus reducing the pendency compared to reexamination proceedings. Any party dissatisfied with a Board PGR decision, may appeal to the Federal Circuit, and all parties to the PGR proceeding may participate in such an appeal.

. . . The Director is admonished, among other regulatory tasks, to ensure that regulations forbidding and penalizing harassment are enacted and enforced.

The PGR process shall take effect on the date that is one year after the date of the enactment of the Act. After that time, first window PGR petitions may be filed against any patent, so long as the other provisions of the Act are satisfied. Second window PGR petitions (as well as consented petitions), however, may only be filed on patents that issue based on applications filed after November 29, 1999. That date was chosen by the Committee because it is the date used to determine whether a patent could be eligible for inter partes reexaminations (which are eliminated under the Act). Thus, patents that were eligible for inter partes reexamination, are now eligible for the second window.