By Jan H. Schut
First, have a solid prior art case. If you do, there is a much less expensive way to get a patent revoked than litigation. “Even a small patent litigation case in court may run $1 million for each side,” says intellectual property lawyer Steven J. Grossman of Grossman, Tucker, Perreault & Pfleger PLLC in Manchester, NH (www.gtpp.com). Patent lawsuits cost both sides because it’s hard to get cost shifting, he adds, so even the winner will pay a lot.
The less expensive alternative is to ask the patent office to reexamine a patent. “USPTO reexaminations typically cost only about $100,000,” Grossman asserts, including around $2500-$8800 in fees to the USPTO and the cost of a patent lawyer. “They also have an extremely high ‘kill’ ratio,” he adds. USPTO reexaminations are successful for the challenger nearly 80% to 90% of the time (www.uspto.gov/patentsReexamination_operational_statistic_through_FY2011Q).
Grossman introduced the process to a plastics audience for the first time at the Society of Plastics Engineer’s ANTEC conference in Boston in May (see May blog). His presentation on “Recent Procedures Introduced to Challenge Patent Grants at the United States Patent and Trademark Office” explains how it works. A CD of all ANTEC papers is available to non-attendees for $150 from the SPE (www.4spe.org).
USPTO reexaminations are intended to streamline the complaint process and reduce the burden on federal courts. They have been around in some form for 30 years, but are still little known and little used because of several limitations.
One limitation is that they can be based only on prior art, the same criteria the patent office uses to grant patents in the first place, specifically “prior written art consisting of patents or printed publications.” A patent office reexamination can’t use legal discovery or depositions the way a lawsuit could. So if a challenger’s issue is prior manufacture or sale of the technology, for example, or a suspicion that the patent holder misrepresented facts to the patent office, these arguments can’t be raised in a reexamination.
WHICH TYPE OF REEXAM TO USE?
The USPTO offers two types: “ex parte” and “inter partes,” which are quite different. “Ex parte,” the original form, was instituted in 1981 and can be used to attack any issued patent. “Inter partes” reexamination was authorized by Congress in 1999 and is limited to challenging patents filed after Nov. 29, 1999.
A bigger difference between the two is whether the challenger is involved. “Ex parte” means “without” the challenger involved. The challenger isn’t allowed to see or comment on the patent holder’s response to the prior art issue, which gives the patent holder the upper hand.
“It’s a little like firing a cruise missile without control,” comments Michael Brown of Brown & Michaels PC in Ithaca, N.Y. (www.bpmlegal.com), who hasn’t brought any patent office reexaminations himself, though others in his firm have. “Unless you have absolutely solid prior art, the examiner will examine the art you have cited and issue an office action. That office action goes to the patent holder, who then responds to it. If the patent holder can amend their claims, you have allowed the patent holder to keep their patent. It’s this lack of control that bothers some people,” notes Brown.
“Inter partes” reexamination means “between” the patent challenger and the patent holder and offers a more level field. The challenger can see the patent holder’s response and file comments on it in return. “The requestor is allowed to remain fully active in the proceeding and continue to raise arguments against the patent holder as the patent holder attempts to overcome the cited prior art,” Grossman explains.
Not surprisingly, both the overall success rate and patent “kill” rate for “inter partes” reexaminations are higher. Inter Partes Reexamination Certificates favor the challenger 88% of the time vs 77% for “ex parte.” “Inter partes” also cancels four times more patents—45% for “inter partes” vs 11% for “ex parte.”
In the first five years that “inter partes” reexaminations (black) were available, there were only 53 vs around 1700 “ex parte” requests (diagonal lines). Both are still far below patent office projections (vertical lines). Source: Grossman, Tucker, Perreault and Pfleger
The mixture of outcomes for the two types is also different. “Inter partes” certificates have cancelled patent claims 45% of the time, amended patent claims 43% of the time, and upheld them 12% of the time. “Ex parte” certificates, on the other hand, have cancelled patent claims only 11% of the time; amended them 66% of the time; and upheld them 23% of the time. So the patent survival rate for “ex parte” is nearly double that of “inter partes.”
The patent office projected 400 “inter partes” reexaminations in 2000, the first year they were available, and got 0. Growth has been slow even though they cost a fraction of the cost of litigation. Source: Grossman, Tucker, Perreault and Pfleger
It’s sometimes hard to pick clear winners because reexamination certificates can combine all three outcomes. “If the patentee has to amend his claims so that your product no longer infringes, you win, even if the patent survives the reexamination,” notes Brown.
Even with a mixture of outcomes, both types of patent office reexaminations are highly successful for the challenger in terms of either canceling or amending patent claims. The reason, intellectual property lawyers say, is that the USPTO is so over-loaded. It has a backlog of a year and a half of applications to review (695,086 applications as of June 2011) and only 6,775 examiners to review them, so a lot of patents get approved that shouldn’t have been.
One high profile example of a patent that probably shouldn’t have been is the so called “patent on a stick” (US Pat. # 6360693) for an Animal Toy that looks like a stick of wood. The patent, which certainly looked tongue-in-cheek, but wasn’t necessarily, caused such a furor among intellectual property lawyers after it was issued March 26, 2002, that the director of the USPTO asked for an “ex parte” reexamination.
This patent for a dog toy, known as “the patent on a stick,” was revoked in 2006 in one of the more famous “ex parte” reexamination cases, raising awareness of patent office reexaminations. Source: U.S. Pat. # 6360693
The inventor, Ross Eugene Long III, a California architect, had presented a bunch of ideas to a patent law firm and selected the flavored, potentially injection molded “stick” as the likeliest to be licensed. After Long initially received the patent, he hired an agent to identify prospective licensees. During the reexamination, he tried twice to amend the claims, but couldn’t. Four years later the claims were revoked. It turned out that there were a half dozen previous patents on stick-like items, mostly garden related, but close enough. Long didn’t appeal the decision because at that point he says he had already spent about $20,000 on the project. The unforgettable drawing may, however, have raised awareness of the reexamination process because requests to the USPTO definitely picked up after 2006.
Appeals are also different after “ex parte” and “inter partes” reexaminations. In “ex parte” cases only the patent holder has the right to appeal, not the challenger, a distinct disadvantage for the challenger. The patent holder can appeal either to the Board of Patent Appeals and Interferences in the patent office or to federal appeals court. In an “inter partes” reexamination, both the patent holder and challenger can appeal a decision first to the Board of Patent Appeals and Interferences and then to federal appeals court.
PTO reexaminations can also be concurrent with patent infringement litigation (in U.S. district court) with interesting twists. If the district court decides that a patent claim is valid, and the reexamination subsequently decides the claim was unpatentable, the patent will be cancelled. If, however, a final non-appealable court decision says the patent is invalid, that will stop the patent office reexamination.
During patent office reexaminations of either kind, an alleged infringer can keep selling his product with no immediate penalties until the reexamination certificate is issued and then only if the certificate validates the patent claims. By contrast, in patent infringement litigation, the court presumes the patent is valid, and the alleged infringer may have to stop selling the product if served with a preliminary injunction, Grossman points out. However, if an infringer ultimately loses in court, he still can be ordered to pay damages, which may go back either to the date of the patent grant or the date the suit was filed.
Activity in both types of USPTO reexaminations has been negligible for years. In mid 2011 a total of only 8129 Ex Parte Reexamination Certificates had been issued in all the 30 years that they have been available. Requests for “inter partes” reexaminations have been even more anemic. There were only 53 in the first five years that they were available, whereas the patent office had projected over 2000. There have still been only 253 Inter Partes Reexamination Certificates issued in all 11 years they’ve been available.
Lately, however, requests for patent office reexaminations are growing at last, presumably buoyed by recent successes for the challenger. Requests for “inter partes” reexaminations totaled 1061 in 2010 with 281 “inter partes” and 780 “ex parte.” Total requests in the first half of 2011 is 572with 180 “inter partes” and 392 “ex parte.”
Congress is currently also considering changing the regulations on patent office reexaminations to augment “inter partes” reexamination with “post grant review.” This would allow challengers to raise more issues against a patent than prior art. “In post grant review, it appears that one could attack the granted patent on the grounds that in addition to prior art arguments, the claimed invention is not supported by the disclosure, or that the claims fail on the basis that they are unclear in scope,” Grossman explains. That would remove a big limitation on the scope of reexaminations and should finally increase their use.