The Ins and Outs of the Inter Partes Review (IPR)

Tangible IP, LLC

Tangible IP is a sponsor of NPE 2015, to be held in New York on March 12, and some of our execs will be in attandance. 

The Ins and Outs of the
Inter Partes Review (IPR)

by Alan Burnett, VP Technology

The America Invents Act has armed defendants with a new means for invalidating patents that has been highly successful and comparatively cost effective when compared to litigation.  Inter Partes Review (IPR) is a post-grant proceeding before the Patent Trial and Appeal Board (PTAB or Board) and the United States Patent and Trademark Office (USPTO). The Congressional goal of such IPR proceedings was to provide a petitioner the opportunity to challenge the validity of an issued patent in a timely and cost-effective manner so that mistakenly issued patents could be more easily eliminated.  However, the IPR rules are so slanted in favor of the petitioner, completely valid claims by any other reasonable measure are being invalidated left and right.  Retired Chief Federal Circuit Judge Randal R. Rader dubbed the PTAB a “death squad” for patents in an October 2013 speech.  Indeed, the most-likely outcome once an IPR trail has been instituted is invalidation of all of challenged claims.  As of Dec. 2014, the Patent Trial and Appeal Board (PTAB) has granted IPR petitions at a rate of about 70%, and so far, in those granted petitions, 72% of the challenged claims have been found unpatentable (with an additional 8% conceded by the patent owner).

The IPR process begins with the filing of a Petition for Review by a petitioner, which will typically be an actual or potential defendant in a current litigation between the patent holder and the petitioner.  For IPR, the petition must identify, for each challenged claim, the specific statutory ground under 35 U.S.C. § 102 or 103 and the patent or printed publications relied on for each ground.  IPR petitions are limited to challenging claims based on printed patents and publications only.  The petition must include a statement of precise relief requested for each challenged claims, and it must identify how the challenged claims is to be construed.  

In response to a petitioner’s filing of an IPR request, the Patent Owner has three months to file a Preliminary Response, which is optional.  The Preliminary Response is limited to setting forth reasons why the Board should not institute an IPR under 35 U.S.C. §§ 314 or 324.  It may include evidence supporting the patent owner’s contentions, but cannot present new testimonial evidence beyond that already of record, except as authorized by the Board (which may be obtained by filing an authorized motion).

The Board decides whether to institute a trial based on the petition and the preliminary response where such a response is filed.  The Board will not institute a trial for a ground of unpatentability unless the Board decides that the petition supporting the ground would demonstrate that there is a reasonable likelihood that at least one of the claims challenged in the petition is unpatentable.  Once an IPR trial is instituted, the patent owner can file a response to the petition addressing any ground of unpatentability that the Board did not already deny in instituting the trial.  In the response, the patent owner must identify all claims believed to be patentable and state the basis for that belief.  Typically, this basis will include affidavits and other factual evidence, as well as an expert declaration.  Issues that are not addressed in the patent owner response are waived even if they were included in the preliminary response to the petition.  In response to the patent owner’s response, the petitioner may file a petitioner’s reply, which is supposed to be limited to issues raised in the patent owner response.  An oral hearing is subsequently held, followed by a written final decision.

For both the petitioner and the patent owner, of paramount importance is being able to clearly articulate technical arguments respectively supporting invalidity and validity in their IPR filings.  On the petitioner’s side, it is very important to make a clear case of unpatentability in the petition.  Based on the first two years of data, the best likelihood to successfully defeat a petitioner’s IPR challenge is to prevent an IPR trial from being instituted to begin with (or otherwise preclude invalidity positions by the Board with respect to valuable claims being challenged).  A solid petition should have enough technical support to withstand the preliminary response.  On the flip-side, well-articulated preliminary responses have been used to prevent a trial from being implemented; without the use of a preliminary response it is substantially guaranteed that and IPR trial will be instituted.  Notably, the use of expert testimony is unavailable for the preliminary response.

Once an IPR trial has been instituted, the patent owner response is (absent unusual circumstances) the only opportunity that patent owner has to traverse the positions asserted in the petition and/or the Board’s decision to institute.  The technical arguments in the response need to be very clear and compelling.  While use of expert testimony (via a declaration) in the response is generally advantageous, experts are typically not well-versed in the nuances of patent law, and the assertions made in such declarations should be based on objective factual evidence rather than mere opinion testimony.  This is particularly important for the patent owner, since there is substantial evidence that the IPR Boards generally take the petitioner’s expert’s testimony at face value, even in cases when it is blatantly false.

As discussed above, on the patent holder’s side it is paramount that the assertions made in the petition be clearly refuted on a technical level.  Many, if not most attorneys are ill prepared for drafting the technical arguments, since they are not experts in the art (or in many cases do not even have ordinary skill in the art in the patent’s technical field).  One approach is to still hire an expert (typically the same person that would provide a subsequent expert declaration in the Patent Owner’s Response, and have the attorney make the arguments based on input from the expert.  This typically is both inefficient and costly, as there are many hours spent guiding an expert and/or formulating/interpreting the expert’s arguments. 

What would be more effective is to hire someone who is both a technical expert and seasoned patent attorney who is familiar with the IPR rules and process. 

At Tangible IP, our experts have been involved in both PTAB petitions and panel hearings, as well as in one of the very few appeals of a PTAB hearing so far. We can help defend a petition and provide support to you or your law firm to make sure the patent you invested in will emerge unscathed from the proceedings.
Louis Carbonneau, Founder & CEO
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