The “America Invents Act” (“AIA”), signed into law on September 16, 2011, dramatically reformed existing patent laws. One particularly important provision replaced Inter Partes Reexamination, a form of post-grant review, with a new procedure, Inter Partes Review (“IPR”). The differences between Inter Partes Reexamination and its replacement, IPR, have resulted in IPR being a very popular option amongst defendants accused of patent infringement. Now, a recent decision by the United States Patent and Trademark Office (“PTO”) Patent Trial and Appeal Board (“PTAB”) turns the tables on patent-holders who attempt to amend their claims and creates even more benefits for IPR petitioners who have been accused of patent infringement. Below, we discuss why IPR was already a popular tool before the decision in Idle Free v. Bergstrom and why that decision makes IPR even more powerful for accused-infringers.
Replacing Inter Partes Reexamination With IPR Was Beneficial To Accused-Infringers
IPR can be requested by a petitioner to challenge the patentability of a patent. If that petitioner is a party to a patent infringement case, the petition must be filed within one year of service of the patent infringement Complaint.1 As with inter partes reexamination, which IPR replaced, the grounds for challenging patentability in an IPR are limited to anticipation or obviousness based on a patent or printed prior art.2 That means that some traditional grounds for arguing invalidity at a district court, such as insufficient written description or prior public use, cannot be the basis to request IPR.
In addition, IPR, like inter partes reexamination, is also subject to estoppel in later proceedings. Thus, if a party requests IPR against a patent, that party cannot later raise, at either the PTO or in Court, any invalidity ground that petitioner raised or reasonably could have raised.3 Simply put, when filing an IPR, there is no incentive to hold back any prior art references from review. And this estoppel applies not only to the petitioner, but also to other “real parties in interest” and “privies” of the petitioner.4
Even with these limitations on the grounds for patentability and the possibility of estoppel, one improvement in the IPR procedure is that the set of patents that can be challenged is not limited. The inter partes reexamination limited eligibility to only those patents issued after November 29, 1999. Accordingly, no matter when a patent was issued, it may be subject to a petition for IPR. IPR procedures also allow for discovery.5 Although the discovery allowed during IPR is more limited than that allowed during a district court action, IPRs allow the parties to take depositions of the party’s declarants, including experts that provide opinions.6 The parties are also obligated to produce documents and information that is inconsistent with any position advanced.7
IPRs also allow for a trial before a panel of Administrative Patent Judges (“APJs”). The APJs are made up largely of practitioners from private practice with vast legal and technical experience and are thus commonly believed to be better capable of appreciating legal and technical arguments than a district court jury.
Finally, the time-to-decision of an IPR is far superior to that of an inter partes reexamination. A decision on a inter partes reexamination took, on average, 36 months. With an IPR, a decision must be rendered within one year of the PTAB decision to initiate the review.8
IPRs Are Very Popular
With all of these benefits, IPRs are, not surprisingly, very popular. While there were 374 inter partes reexaminations requested in 2011,9 the numbers of IPRs requested has been much higher, with over 650 IPR requests filed in 2013 alone.10 This is dramatic evidence that accused infringers are finding IPR to be a valuable tool in their arsenal.
That popularity is matched by a high success rate in the grant of IPR petitions. Notably, 86% of all IPR petitions have been granted.11 That means, even though final decisions on the patentability of the challenged patents have not been handed down, in 86% of cases the PTO believes that there is “a reasonable likelihood that [the petitioner] would prevail as to at least one of the claims challenged.”
Idle Free v. Bergstrom
With the benefits of discovery, an impartial tribunal, and a fast decision, it is no wonder that alleged-infringers find IPR to be an attractive option. But there always persists a fear in the hearts of litigators that, despite the strength of the references at issue in IPR , a patent-holder can always amend the claims to overcome the best references. And if the patent-holder can amend the claims in a way that the alleged-infringement remains, the patent-holder can neutralize the best prior art and be in a stronger position after IPR than before. But with the PTAB’s recent decision in Idle Free v. Bergstrom,12 a very high bar has been created for claim amendments ; and an alleged-infringer would be wise to consider IPR as a first choice in attacking the validity of a patent in nearly every case.
The road to the PTAB’s decision in Idle Free v. Bergstrom, only the second decision to issue on an IPR, began with a patent-infringement suit. On July 5, 2012, Bergstrom sued Idle Free, its competitor in the commercial truck air-conditioning business, for alleged patent infringement. Idle Free responded by filing a request for IPR on September 18, 2012.13
The parties conducted discovery and filed competing motions over the course of the IPR. During the IPR trial, all of Bergstrom’s original claims were rejected by the PTAB or cancelled by Bergstrom. But Bergstrom attempted to salvage its patent through amendment, by adding three new claims. The PTAB’s decision rests largely on the propriety of Bergstrom’s amendment to add new claims.
It is important to note that, in the old inter partes reexamination, the patent holder could amend the claims by right.14 Those reexamination amendments need only overcome the references identified by the petitioner or the examiners. But “[a]n inter partes review is neither a patent examination proceeding nor a patent reexamination proceeding.”15 As seen in the PTAB’s decision, the relatively low hurdle to amend during reexamination is not comparable to the high bar that the PTAB has set for amending during IPR.
In its Idle Free v. Bergstrom decision, the PTAB explains just how high a bar it sets for a patent-holder to amend claims. In IPR the patent-holder has the burden to show “general patentability.”16 It is not the burden of the petitioner or the PTO to show unpatentability, but the burden of Bergstrom to show patentability.17 And it is not enough for the patent-holder to simply overcome the cited art, but rather it must show “patentability of the proposed substitute claims over the prior art in general, and thus entitlement to add these proposed substitute claims to its patent.”18
The PTAB further stated that even if a patentee is not aware of any applicable prior art, it still must demonstrate that the proposed amendment is patently distinct from the prior art in general. There is no presumption that the patent-holder is “aware of every item of prior art presumed to be known to a hypothetical person of ordinary skill in the art.”19 But the patentee still must discuss the “level of ordinary skill” and what was previously known about each novel feature.20
Bergstrom failed this high burden because, although it stated that the cited art was the “closest prior art” and that its claims overcame that prior art, that was deemed insufficient.21 Bergstrom’s statements about the closest prior art were not enough because “that alone is insufficient and not meaningful, without discussing the level of ordinary skill in the art, and what was previously known, with respect to each added feature, including the ordinary skill set possessed by such a hypothetical person.”22 Instead, according to the PTAB, Bergstrom should have represented that, ”to its knowledge, it was the first to have” invented the allegedly novel feature.23 To the extent that Bergstrom could not make such a statement because Bergstrom was not the first to invent the novel feature, “then it should have revealed, in its motion, what would have been known to one with ordinary skill in the art, or otherwise within the ordinary creativity and skill set of one with ordinary skill in the art[.]”24 Moreover, Bergstrom should have explained any “pre-existing manners of operation, and why it would not have been applicable to render the invention of [the claims] obvious to one with ordinary skill in the art.”25
The PTAB’s decision in Idle Free v. Bergstrom represents a complete turning of the tables on patent-holders. No longer will a patent-holder be able to amend its claims as a matter of right. A patent-holder cannot simply fix its claims during IPR to cover the alleged-infringers products and overcome the prior art. No longer is the burden on the examiner or petitioner to prove that the patent-holder’s amended claims are not allowable. The factual showing required of the patent-holder, both with respect to the state of the art and the reasons why the art “in general” would not render the claims anticipated or obvious in view of one of ordinary skill, is immense and represents a significant new hurdle for a patent-holder during IPR.
IPR did not need the PTAB’s decision in Idle Free v. Bergstrom to be a popular option for alleged-infringers to attack a patent’s validity. The distinguishing features of IPR allowing for discovery, a trial before technically and legally savvy APJs, and a short time to decision, are all enough to warrant the hundreds of IPR petitions that are filed quarterly at the PTO. But now, with the decision in Idle Free v. Bergstrom, assuming that such decision stands up to appellate scrutiny, IPR is shaping up to be the most powerful method for alleged-infringers to attack a patent. Certainly one that should not be ignored.
1AIA 35 U.S.C. § 315(b); 37 C.F.R. 42.101(b).
2AIA 35 U.S.C. § 311(b); 37 C.F.R. 42.104(b)(2).
3AIA 35 U.S.C. § 315(e).
4Id.; see also 37 C.F.R. § 42.101(c).
5See 37 C.F.R. § 42.51.
637 C.F.R. §§ 42.51(b)(1)(ii), 42.53.
737 C.F.R. § 42.51(b)(1)(iii).
837 C.F.R. § 42.100(c).
9See, e.g., Inter Parte Reexamination Filing Data - September 30, 2013, available here. (Last Visited February 10, 2014)
10See, e.g., AIA Statistics, available here. (Last Visited February 10, 2014); Trial Proceeding Statistics, available here (Last Visited February 10, 2014).
11See, e.g., Trial Proceeding Statistics, available here. (Last Visited February 10, 2014).
12Case IPR2012-00027, Final Written Decision Jan. 7, 2014.
13Id. at 2.
14Pre-AIA 35 U.S.C. § 314(a).
15Idle Free at 33.
17Id. at 34.
18Id. at 33 (emphasis added).
21Id. at 34.
23Id. at 35.
25Id. at 35-36.