In addition to his efforts regarding patent subject matter eligibility law (see "Senate Bill Proposed to Provide Subject Matter Eligibility Solution", co-sponsored with Senator Tillis), Senator Coons, joined by Senators Tillis, Durbin, and Hirono, introduced the ''Promoting and Respecting Economically Vital American Innovation Leadership Act'' (the ''PREVAIL Act'') last month. This legislative effort is directed to amending portions of the Leahy-Smith America Invents Act, particularly with regard to the Patent Trial and Appeal Board and post grant review (PGR) and inter partes review (IPR) provisions of the Act.
The bill recites in Introductory Section 2 "Findings" that "United States inventors have made discoveries leading to patient cures, positive changes to the standard of living for all people in the United States, and improvements to the agricultural, telecommunications, and electronics industries, among others," showing expansive scope of proposed reforms. It also raises the specter of Chinese competition, stating that "the People's Republic of China is leveraging and exploiting intellectual property as a critical tool within its national strategies for emerging technologies" (7(A)) and "the United States has failed to similarly recognize the importance of intellectual property in securing its own national security, economic interests, and technological competitiveness" (7(B)). Section 2:(8) raises national security concerns that "the United States needs reliable and effective patent protections to safeguard national security interests and maintain its position as the most innovative country in the world."
The more frankly political aims of the bill are stated in Section 2:(10) regarding "unintended consequences" of the Leahy-Smith America Invents Act in 2011, "including the strategic filing of post-grant review proceedings to depress stock prices and extort settlements, the filing of repetitive petitions for inter partes and post-grant reviews that have the effect of harassing patent owners, and the unnecessary duplication of work by the district courts of the United States and the Patent Trial and Appeal Board, all of which drive down investment in innovation and frustrate the purpose of those patent reform laws." Finally, in Section 2:(11) the bill places the blame for current circumstances on "[e]fforts by Congress to reform the patent system without careful scrutiny create a serious risk of making it more costly and difficult for innovators to protect their patents from infringement, there-by— (A) disincentivizing United States companies from innovating; and (B) weakening the economy of the United States."
Turning to the substantive provisions and the bill, Section 3 concerns amendments to the PTAB provisions of the AIA. The first amendment in this section of the bill concerns a Code of Conduct for PTAB members, to be established by the Director (Section 3(b)). The bill directs that this Code be patterned after the Code of Conduct for United States Judges to the extent these provisions can be applied to PTAB judges. Other provisions include the composition of PTAB panels, which should include at least three members designated by the Director (Section 3(b)(3)) and towards which any "officer who has supervisory authority or disciplinary authority with respect to an administrative patent judge" shall (mandatory) "refrain from communications with the panel that direct or otherwise influence any merits decision of the panel." The bill also precludes any member of a PTAB panel involved in a decision to institute an IPR or PGR from being eligible to hear the review.
Section 4 is specifically directed to amendments in IPR proceedings. Section 311 of 35 U.S.C. is amended to define "charged with infringement" to mean "a real and substantial controversy regarding infringement of a patent exists such that the person would have standing to bring a declaratory judgment action in Federal court," thus restricting the scope of individuals having standing to bring IPR petitions, being a person "sued for infringement of the patent" or "charged with infringement of the patent" (Section 4(a)). The definition of a "real party in interest" is expanded to include "a person that, directly or through an affiliate, subsidiary, or proxy, makes a financial contribution to the preparation for, or conduct during, an inter partes review on behalf of a petitioner shall be considered a real party in interest of that petitioner." Section 314 is amended, adding a 45-day limitation to Director consideration of "any request for reconsideration, rehearing, or review," except that the Director can extend that period for an additional 30 days "for good cause shown" (Section 4(b)).
Perhaps one of the more significant proposed changes (Section 4(c)) is directed towards eliminating repetitive proceedings by amending Section 315 of the statute, wherein the time period limitation shall raise a rebuttable presumption against joinder and by restricting validity challenges to a "single forum," i.e., once an IPR is instituted a "petitioner, a real party in interest, or a privy of the petitioner" can neither file or maintain an action in district court nor the ITC under Section 337 of the Tariff Act, or assert "a claim, counterclaim, or affirmative defense . . . on any ground defined in Section 311(b)" and the Director may reject an IPR petition should the petitioner have filed or maintained such a claim or counterclaim in these alternative fora. The capacity for the Director to grant joinder is maintained, but while the Director may permit a party that rebuts the presumption against joinder under Section 315 as amended such a party would be precluded from serving as lead petitioner or maintain the IPR should a lead petitioner that satisfied the time limitations fail to remain in the IPR (Section 4(d)).
The Director is directed to reject petitions asserting prior art submitted to the Office in other remedial proceedings such as reissue (Section 4(e)). The scope of estoppel (Section 4(f)) against a petitioner with regard to petitioning for subsequent IPRs is expanded to include any ground of invalidity that the petitioner raised or could have raised, unless the petitioner, after filing a first petition, is charged with infringement of additional claims of the patent, or the subsequent petition is directed to such additional claims that are the subject of accused infringement, and the petition is accompanied by a request for joinder to the earlier-filed IPR (and overcomes the presumption of untimeliness). These estoppel provisions also apply to any party or real party in interest of in privity therewith is joined to an IPR and arise upon filing instead of after Final Written Decision.
The amendments also include a prohibition against an IPR of a patent claim for which a district court or the ITC has entered a final judgment on validity based on any ground as described in Section 311(b). Conforming amendments to Section 316(a) of the statute set forth provisions for the conduct of IPRs, including ones for discovery, depositions, evidence for identifying the real party of interest, allowing the patent owner to move to amend the claims and revise such claims after the PTAB provides "guidance" on such amendments, and "ensuring that any information submitted by the patent owner in support of any amendment entered under subsection (d), and any guidance issued by the Patent Trial and Appeal Board, is made available to the public as part of the prosecution history of the patent." Amendments to Section 316(e) specify evidentiary standards, including ones regarding the presumption of validity (i.e., which is specified to apply to challenged claims), burden of proof (consistent with the presumption, raised to the clear and convincing evidence standard), and Section 316(f) amendments that establish a statutory basis for claim construction following the Philips factors used in patent litigation before a district court (including having the PTAB "consider" any claim construction made in a civil action).
Section 317(a) is amended to strike the sentence that reads "If the inter partes review is terminated with respect to a petitioner under this section, no estoppel under section 315(e) shall attach to the petitioner, or to the real party in interest or privy of the petitioner, on the basis of that petitioner's institution of that inter partes review." Amendments regarding timing of issuing trial certificated and decisions on rehearing are also included.
Another significant amendment is set forth in Section 4(f) on Director review. Regarding "re-hearing, reconsideration, or review of a decision by the Patent Trial and Appeal Board" by the Director any decision shall be issued in a separate written opinion that is part of the public record and sets forth the reasoning of the re-hearing, reconsideration, or review, which will be considered a Final Written Decision and subject to the appellate review proceedings under Section 141. Decisions on remand from appellate review shall be rendered no later than 120 days from the date a mandate issues, which deadline can be extended by not more than 60 days by the Director for good cause shown.
Section 5 of the bill applies many of these same amendments to the portion of the statute governing post-grant review proceedings (35 U.S.C. § 321 et seq.), particularly with regard to single forum, multiple proceedings, estoppel, joinder, presumption of validity, burdens of proof, claim construction, settlement, conduct of post-grant review proceedings, and review by the Director.
Section 6 of the bill is concerned with re-examination under 35 U.S.C. § 302 et seq. Significant amendments include that that reexamination request must identify all real parties in interest (Section 6(a)) and is barred "if the request for reexamination is filed more than 1 year after the date on which the requester or a real party in interest or a privy of the requester is served with a complaint alleging infringement of the patent," which is to be applied to any person "that directly or through an affiliate, subsidiary, or proxy makes a financial contribution to the preparation for, or conduct during, an ex parte re-examination on behalf of a requester" (Section 6(b), amending 35 U.S.C. § 303 by adding new subsection 303(d)). The Director is mandated to reject any re-examination request that relies on "prior art or an argument that is the same or substantially the same as prior art or an argument that previously was presented to the Office" (added § 303(e)(1)) and may reject any request that, at the Director's determination, "has used a prior Office decision as a guide to correct or bolster a previous deficient request filed under this chapter or a previous deficient petition filed under chapter 31 [inter partes review] or 32 [post-grant review]." Section 304 is amended to take into consideration the Director's ability to reject a re-examination request under §§ 303(d) or 303(e).
Section 7 mandates elimination of diversion of USPTO fees, a frequent temptation for Congress to obtain monies for other governmental activities and largess. This prohibition would apply to fees for service by PTO (Section 7(a)) and the Innovation Promotion Fund (Section 7(b)), and such fees are to be used to defray expenses of USPTO activities until such activities are carried out (Section 7(c)). Such fees include patent fees (Section 7(b)(2)(A)) and trademark fees (Section 7(b)(2)(B)). The bill establishes in the U.S. Treasury a revolving fund (the "United States Patent and Trademark Office Innovation Promotion Fund") for these purposes and provide a substitution for the Patent and Trademark Fee Reserve Fund, which will be terminated (Section 7(b)).
Finally, Section 8 (institutions of higher education) and Section 9 (U.S. Small Businesses) contain provisions for providing financial benefits as a microentity (universities) and free on-line availability of public research facility materials (small businesses).
Many of the provisions of the PREVAIL act are reminiscent if not identical to those in the STRONGER Act which was introduced in an earlier Congresses in 2015, 2016, 2017, 2018, and 2019 (see "The STRONGER Patents Act of 2019: Weakening Post-Grant Proceedings"), although some seem to have been left out (such as provisions for overturning the Supreme Court's eBay decision regarding standards for injunctive relief). This bill apparently has as much chance for passage as the STRONGER Act did; however, there may be other considerations at play. As suggested by Scott McKeown (see "New PTAB Bill to Drive 101 Compromise?"), one possibility may be that this bill and the subject matter eligibility bill also introduced by Senators Coons and Tillis (see "Senate Bill Proposed to Provide Subject Matter Eligibility Solution") may be part of a broader legislative strategy. As posited by Mr. McKeown, the PREVAIL Act is something of an anti-tech "stick" that might be used to obtain concessions from the high-tech industry on its subject matter eligibility position (which has been that that industry segment is quite content with the status quo). This analysis brings to mind an episode of "The West Wing," ("Hartsfield Landing," Season 3, Episode 15, first aired February 27, 2002) where in the context of chess matches with his staff President Bartlett illustrates the need to "see the whole board" in a geopolitical chess match with China over Taiwan, caused by a U.S. offer to supply advanced weapons systems that Taiwan couldn't afford and the U.S. could not risk falling into mainland Chinese hands. It is unclear whether Mr. McKeown is onto something concerning the political machinations between pharma/biotech and the high-tech industry with regard to patent reform. But to many, anything that makes more likely some solution to the current subject matter eligibility "chaos" occasioned by recent Supreme Court jurisprudence would be welcome (and for political junkies, if Mr. McKeown is right, perhaps somewhat entertaining to boot).
