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New USPTO Post-Grant Review A Small Step For Patent Harmonisation

On 16 September, the United States made its patent system more like everyone else’s. The country began implementing a new patent office procedure for challenging the validity of recently issued patents. This was, however, only a modest step towards harmonisation because the US version of post-grant patent review has little in common with the corresponding processes available in other countries, according to experts.

Many countries around the world authorise their patent offices to preside over challenges to recently issued patents and to decide whether the challenged patents are valid. China, India, Japan, South Korea, Australia, Canada and Taiwan, for example, allow such administrative post-grant review, said Peter A. Jackman, a partner in the Washington, DC office of Sterne Kessler Goldstein Fox. The EU also provides such a post-grant challenge, and this “opposition procedure” has become a popular method for challenging patents issued by the EPO.

“There are, on average, about three thousand oppositions filed each year at the EPO,” said Anthony C. Tridico, a partner in the Brussels office of Finnegan, Henderson, Farabow, Garrett & Dunner. As a result, oppositions are filed against approximately six percent of all patents issued by the EPO, Tridico calculates.

Six percent might not seem like lot, but it is. “That’s a pretty substantial number,” said Wab P. Kadaba, partner in the Atlanta office of Kilpatrick Townsend & Stockton. “EPO opposition is a well used proceeding.”

To appreciate how often opposition is used in Europe, consider what would happen if six percent of US patents were challenged each year in USPTO proceedings. That would produce challenges against 12,000 to 15,000 patents annually, which would overwhelm the US patent office. “The USPTO wouldn’t know what to do or how to handle them,” Tridico said.

There are five major reasons why the EPO’s opposition procedure is so popular. First, it’s cheap. The EPO subsidises these proceedings, in order to encourage challenges to dubious patents. “The filing fees are very low, so it is available to everyone,” said Tridico.

Second, there’s no estoppel, so a challenger can’t suffer a lasting legal defeat. If a challenger loses a validity challenge in an opposition proceeding, the challenger can raise the same validity issues in other forums.

Third, a challenger can bring an opposition anonymously, by filing through a front. This allows a business to challenge a troublesome patent without fear of retaliation from the patentee – such as an infringement suit.

Fourth, opposition is the only way to attack a European patent in a single proceeding. “It is the only opportunity to take out a patent throughout all of Europe. Otherwise, you must knock out the patent country by country,” Tridico said.

Finally, challengers have a high probability of success. A study of EPO oppositions published in 2010 showed that one-third of challenged patents were revoked, one-third of the patents were narrowed, and just one-third of the patents were fully upheld. “That type of success rate makes the proceeding attractive. That’s why you see a pretty significant number of oppositions filed,” Kadaba said.

A more recent study by Jackman’s firm, however, indicates an even higher success rate for challengers. “About 44 percent of patents are revoked, 30 percent of patents are amended, and 26 percent of patents are maintained as granted,” Jackman says. He adds, “Opposition certainty seems to be a good tool for patent challengers in Europe.”

Last year, the US Congress passed the America Invents Act [1] [pdf], which enacted sweeping changes to the country’s patent system. Among these changes was a new post-grant review process loosely modelled on the EPO’s opposition proceeding. Both post-grant review and opposition allow challengers to attack the validity of recently issued patents in patent office proceedings. Both require challengers to initiate proceedings within nine months of a patent’s issuance. Both allow attacks based on practically any grounds of invalidity, and both will invalidate patent claims if it appears more likely than not that the claims are invalid. Moreover, both proceedings are far less expensive than litigation.

The similarities between these two proceedings, however, are dwarfed by the differences. “Procedurally, they are very different, and these differences are very important,” said Tridico.

One major difference is temporary: EPO oppositions are available now, but USPTO post-grant review won’t be available for quite some time. Although the America Invents Act states post-grant review goes into effect on 16 September 2012 [2], other parts of the statute specify that this process is available against only patents that will issue in the future.

More specifically, post-grant review can be used against only patents that result from applications filed on or after 16 March 2013. Patent prosecution at the USPTO takes on average two-and-a-half to four years, so the vast majority of patents subject to post-grant review “won’t be issuing until 2015, at the earliest,” said Dr. Janet S. Hendrickson, a partner in the St. Louis law firm of Senniger Powers.

When USPTO post-grant reviews become available, they will be far more expensive than EPO oppositions. A USPTO post-grant review would cost a challenger “hundreds of thousands of dollars, at a minimum,” said Matthew I. Kreeger, a partner in Morrison & Foerster’s San Francisco office. By contrast, a challenger can expect to pay about $20,000 in an EPO opposition, according to Hendrickson.

The main reason for this huge cost differential is that the two proceedings are fundamentally different. An EPO opposition is akin to a patent prosecution proceeding, with the EPO shouldering the work of investigating the patent. Indeed, once a challenger files an opposition, it can walk away from further involvement in the proceeding.

USPTO post-grant review, by contrast, requires a challenger to participate in an adversarial process that bears many hallmarks of litigation, including discovery, cross examination, and oral arguments. The proceeding “is more like a trial than an administrative hearing,” Kreeger said. It’s no wonder the process is so expensive.

Another major difference between EPO oppositions and USPTO post-grant reviews: Challengers can file EPO opposition proceedings anonymously. Those seeking USPTO post-grant reviews must reveal themselves, thus risking unpleasant responses from patentees.

Moreover, unlike in opposition proceedings, challengers in USPTO post-grant review are at risk of estoppel. If the challenger fails to invalidate a patent in USPTO post-grant review, the challenger is estopped from later attacking the patent’s validity on any grounds that could reasonably have been raised in the post-grant review. This is a “very broad estoppel,” Kreeger said.

There are other differences between opposition and post-grant review. For instance, it usually takes the EPO
three years to render a decision in an opposition proceeding, while the USPTO is expected to take a maximum of 18 months to issue a decision in a post-grant review, according to Kadaba.

Overall, however, challengers will find USPTO post-grant review far less attractive than EPO opposition. Broad estoppel, lack of anonymity, and high cost will discourage many from using post-grant review, experts assert.

Challengers will use post-grant review only “sparingly,” Kreeger said. That may wind up being the biggest difference between USPTO post-grant review and the widely-used EPO opposition procedure.