E-Newsletters

Intellectual Property Report: January 2012 Bookmark and Share


January 27, 2012
by Intellectual Property Group

Update on the America Invents Act: Post-Grant Review
By Ryan C. Smith
On September 16, 2011, President Obama signed the America Invents Act (“AIA” or “the Act”) into law. The Act is the largest overhaul of the United States patent system since 1952. Included in the overhaul are significant changes to the process for reviewing patents after issuance. The Act introduces two new proceedings for reviewing a granted patent – post-grant review and inter partes review.

Scheduled to take effect on September 16, 2012, the new proceedings (post-grant review and inter partes review) will broaden a third party’s ability to challenge patent validity. Any person “who is not the owner of a patent” may file a petition to initiate either proceeding. Moreover, a third-party challenger will be able to base its challenge on any ground that could be raised under paragraphs 2 or 3 of 35 U.S.C. § 282 – i.e., any claim of invalidity under 35 U.S.C. §§ 101, 102, 103 and 112.

Comparatively, current reexamination proceedings are limited to validity challenges based on publications and applications. Additionally, interference proceedings limit who can bring an interference proceeding before the United States Patent and Trademark Office (“USPTO”).

This article discusses the mechanics of each new proceeding, as well as the advantages and disadvantages of post-grant review and inters partes review at the USPTO.

The Mechanics of Post-Grant Review(“PGR”) and Inter Partes Review(“IPR”)
To initiate a PGR proceeding with the USPTO, a challenger must file a petition. Anyone other than the patent owner may file a petition for review, so long as the petitioner is not challenging the patent’s validity in a civil action. The petition must be filed within nine months of patent grant, or broadening reissue. Grounds for cancellation of the patent include any basis in 35 U.S.C. § 282 (b) related to invalidity, i.e., any claim of invalidity under 35 U.S.C. §§ 101, 102, 103 and 112.


Like PGR, an IPR proceeding must be initiated by petition. IPR may take place after expiration of the nine month period for initiating a PGR proceeding, or after a PGR proceeding has concluded. It remains unclear whether an IPR can be initiated while an appeal from a PGR decision is pending.

In contrast to PGR, inter partes review can only be based on anticipation and obviousness. Additionally, the challenger in an IPR proceeding must only assert anticipation and obviousness grounds that are based on patents and printed publications.


A petition to initiate a PGR or IPR proceeding must establish that “it is more likely than not that at least 1 of the claims challenged is unpatentable” or that the “petition raises a novel and unsettled legal question that is important to other patents or patent applications." [1] The decision of the Director whether to initiate a PGR or IPR proceeding is not appealable. [2] Accordingly, practitioners should provide the USPTO with the most convincing arguments possible in the initial petition.

Moreover, the new proceedings may be affected by other administrative and legal proceedings. In addition to the discretion afforded the USPTO in initiating proceedings, the AIA allows discretion in structuring multiple proceedings before the USPTO. “[T]he Director may determine the manner in which post-grant [proceedings] or other proceedings or matters may proceed including providing for stay, transfer, consolidation, or termination of any such matter or proceeding.” The USPTO, furthermore, can “take into account whether … the same or substantially the same prior art or arguments previously were presented to the Office." [3]


 The Advantages of Post-Grant Review(“PGR”) and Inter Partes Review(“IPR”)
The new post-grant review proceedings provide certain advantages over bringing a validity challenge in district court. In either a PGR or IPR proceeding, a challenger must show only by a preponderance of the evidence that a patent is invalid. [4] Contrastingly, clear and convincing evidence of invalidity, which is a much higher
standard, is required in actions before district courts.

An appeal is also available in both PGR and IPR proceedings. If a petitioner disagrees with the Patent Trial and Appeal Board’s decision, the AIA provides for appellate review. Such an appeal goes directly to the Federal Circuit.

PGR and IPR also afford parties an opportunity to terminate the proceeding through settlement. Settlement also prevents a petitioner from facing estoppel issues that could result from a final decision by the USPTO. This is markedly different from the currently-available inter partes reexamination proceedings where settlement is not an option.



The Disadvantages of Post-Grant Review(“PGR”) and Inter Partes Review(“IPR”)

Although PGR and IPR provide many advantages, they also provide distinct disadvantages. First, neither proceeding may be initiated or maintained if the petitioner brings an action in federal district court challenging validity. Additionally, there are estoppel issues related to PGR and IPR that may prevent an alleged infringer from challenging patent validity in subsequent district court proceedings. For example, PGR, as compared to IPR, allows a petitioner to challenge validity using a much broader arsenal of “prior art.” Thus, using PGR to invalidate a patent will likely preclude a challenger from using in a subsequent district court proceeding any invalidity defenses that could have been brought in the PGR proceeding. By way of contrast, IPR is based solely on anticipation and obviousness. Thus, a petitioner should not be estopped from challenging validity in a district court on grounds not available during IPR, such as 35 U.S.C. §§ 101 and 112.

Utilizing a post-grant review proceeding should be carefully considered. Although appearing to be more petitioner-friendly on their face, both new proceedings carry a certain level of uncertainty. Moreover, specific details pertaining to navigating through a post-grant proceeding are not yet clearly outlined. However, USPTO rules promulgated in the future may give more guidance.

For more information on the subject of this article, contact the author of this article, or the Larkin Hoffman attorney who customarily handles your matters. Larkin Hoffman Daly & Lindgren Ltd. has proudly served the legal and business counseling needs of clients since 1958. The firm includes over 70 attorneys serving clients’ legal needs throughout the state, the country and around the globe. As a full-service law firm, it provides counsel and legal guidance in more than 20 areas of law to clients ranging from individuals to emerging companies and Fortune 500 corporations.

While the information provided in this publication is believed to be accurate, it is general in nature and should not be construed as legal advice. You should consult an attorney for advice regarding your individual situation.

_____________________________________________________________________________________

Stop Online Piracy Act Causes Controversy Between U.S. Giants
By Molly T. Eichten

In an effort to combat online piracy, Representative Lamar Smith from Texas introduced the Stop Online Piracy Act (SOPA) in October 2011. (A companion bill in the Senate is called the Protect IP Act-PIPA). SOPA would allow intellectual property right holders and the United States Attorney General to obtain court orders against websites that facilitate infringement. Court orders could also be served on service providers for such offending websites (e.g., Internet service providers, payment processors, ad networks, and search engines), barring those providers from providing services to the offending websites. Without those supporting services, the offending website could not operate and would in effect be shutdown. 

The stated purpose of SOPA is to “promote prosperity, creativity, entrepreneurship, and innovation by combating the theft of U.S. property.” Whether it achieves those objectives, and at what cost, has generated controversy and the bill has attracted the attention of U.S. industry heavyweights. In one corner are Hollywood and the recording industry, who say they are losing billions of dollars each year due to piracy. In the other corner are Internet companies such as Google, Facebook, and eBay, who make billions of dollars each year from providing services on the Internet.

SOPA supporters argue that the U.S. needs new tools to combat online piracy and counterfeiting, especially against foreign websites. They believe that existing remedies for intellectual property right holders are very limited or futile where the offending website is outside of the United States. SOPA provides the power to attack a foreign offending website by cutting off its online supply chain. 

SOPA opponents argue that the bill will achieve the opposite of its objective because legitimate websites
that might contain a small portion of infringing material could be shutdown. Such a risk of shutdown, opponents argue, would discourage Internet start-up companies, which have been a catalyst for innovation
in the online economy.

After a sudden groundswell of criticism and withdrawal by previous supporters, SOPA and PIPA were both put on the shelf, with the hope that the factions can coalesce on a solution for combating theft of U.S. intellectual property. However, heated debate is expected to continue if and when the bills are revived. Activity on SOPA (H.R.3261) can be found on the website of the Library of Congress, located at http://thomas.loc.gov.

For more information on the subject of this article, contact the author of this article, or the Larkin Hoffman attorney who customarily handles your matters. Larkin Hoffman Daly & Lindgren Ltd. has proudly served the legal and business counseling needs of clients since 1958. The firm includes over 70 attorneys serving clients’ legal needs throughout the state, the country and around the globe. As a full-service law firm, it provides counsel and legal guidance in more than 20 areas of law to clients ranging from individuals to emerging companies and Fortune 500 corporations.

While the information provided in this publication is believed to be accurate, it is general in nature and should not be construed as legal advice. You should consult an attorney for advice regarding your individual situation.
 
Contact Our Intellectual Property Group:

Thomas J. Oppold, Department Chair | 952-896-3397 | toppold@larkinhoffman.com
John A. Cotter | 952-896-3340 | jcotter@larkinhoffman.com
Molly T. Eichten | 952-896-1545 | meichten@larkinhoffman.com
Glenna L. Gilbert
| 952-896-3283 | ggilbert@larkinhoffman.com
Jose W. Jimenez
| 952-896-3203 | jjimenez@larkinhoffman.com
John A. Kvinge
| 952-896-1554 | jkivinge@larkinhoffman.com
Craig J. Lervick
| 952-896-3245 | clervick@larkinhoffman.com
Jerry S. Podkopacz | 952-896-3262 | jpodkopacz@larkinhoffman.com
James P. Quinn | 952-896-3309 | jquinn@larkinhoffman.com
Ryan C. Smith | 952-896-6703 | rsmith@larkinhoffman.com