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Inter Partes Review – Heads I Win, Tails You Lose

Robert M. Asher

Robert M. Asher | Partner View more articles

Robert is a member of our Trademark Practice Group and Patent Practice Group

Inter partes review is, plain and simple, a tool for killing patents. In light of rules implemented by the USPTO and judicial interpretations of the America Invents Act, it would be careless to refer to these proceedings as a litigation alternative. Litigation in courts offers opposing parties an opportunity to discover and present evidence in support of their respective positions. At the end of the litigation, a judgment typically resolves the contested issues between the parties. If Congress intended inter partes review (IPR) to result in an equivalent sense of closure for patent owners, that goal remains frustratingly elusive.

By way of background, IPR was passed into law to replace previous inter partes reexamination challenges to patents in the patent office. Inter partes reexaminations were getting bogged down by the filing of unlimited new patent claims and claim amendments, multiple patent examiner actions and multiple levels of appeal.

By contrast, IPR commences at the level of the Patent Trial and Appeal Board (PTAB), severely limits the ability to amend claims, and proceeds according to strict time limits. To satisfy the rapid timetable when presented with multiple grounds for challenging claims of a patent, the PTAB will often “institute,” i.e., go forward with, an IPR on only some of the grounds and as to only some of the patent claims.

By statute, the PTAB’s institution decision is not subject to appeal. The PTAB has therefore had unfettered discretion in deciding which patent claims, and which grounds for challenge, it will consider in an IPR. The Federal Circuit Court of Appeals recently addressed the question of whether the PTAB can limit the scope of an IPR in this manner.

In Synopsys, Inc. v. Mentor Graphics Corp., the Federal Circuit examined the statute governing IPRs and found the different wording in two of its provisions highly significant. A proceeding may not be instituted, under 35 U.S.C. § 314(a), unless “there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”

In addressing the end-point of an instituted IPR, however, the statute provides that the final written decision must issue with respect to “any patent claim challenged by the petitioner.” 35 U.S.C.§ 318(a). Because Section 318(a) does not use the language “the claims challenged in the petition,” the PTAB may, said the court, issue a final decision only as to the claims and grounds on which it instituted review.

It may seem advantageous to the patent owner to avoid a challenge to patent claims for which an IPR is not instituted. But instead of benefiting from a determination that a probable showing of invalidity has not been made out, the patent owner may be forced to defend against the invalidity challenge again in court, even against the losing petitioner.

On March 23, the Federal Circuit addressed whether an unsuccessful petitioner could raise a non-instituted validity challenge later in court. “We agree with the PTO that § 315(e) would not estop [petitioner] from bringing its [non-instituted invalidity argument] in either the PTO or the district courts.” Shaw Industries Group, Inc. v. Automated Creel Systems, Inc.

Rather than resolving the validity challenge, the IPR has given the challenger a first chance to try out its invalidity argument, and, if it does not succeed, an unhindered opportunity to revise its challenge and assert it again in court. This is because estoppel does not apply to those grounds raised in a petition which were not permitted in the IPR trial.

Estoppel extends to grounds that the petitioner “reasonably could have raised” in the IPR. 35 U.S.C.§ 315(e). Grounds that were not instituted could not have been raised during the IPR trial, so the non-instituted grounds may be raised later in court.

What about grounds that weren’t presented in the petition but could have been? Judge Lefkow of the Northern District of Illinois appears to be the first to consider what is meant by the statutory phrase, “reasonably could have raised.” In her recent decision in Clearlamp, LLC v. LKQ Corp., she provides a loophole for petitioners. The judge concludes that a petitioner can try again in court by including at least one reference, which would not have been found by a skilled searcher, even if that reference discloses no more than information than was available in another reference that could easily have been found.

Judge Lefkow asked not whether the prior art content was reasonably available to the petitioner but rather whether the asserted document itself could have been found. The court placed the burden on the patent owner to show that a skilled searcher would have found the reference at the time the petition was prepared.

In Clearlamp, the defendant found a datasheet through a third party subpoena. Although the datasheet had been published on the manufacturer’s website in 2001, it was not shown to have been readily available to a searcher at the time of the IPR petition. Even though the datasheet might have been redundant of prior art that was readily available, the datasheet itself could not reasonably have been raised.

Thus, the court allowed a fresh invalidity challenge against a patent claim that had survived the IPR. The claim was then invalidated on the basis of references raised in the IPR plus the datasheet. Petitioner was able to overcome its failure in the PTAB by locating a hard-to-find prior art document, which may have disclosed no more than was available to the petitioner at the time of filing its petition.

Patent owners justly fear losing their patents in an IPR proceeding. Oddly enough, winning at the PTAB will not squelch those fears. If the PTAB declines to consider “redundant” grounds for invalidity, it opens the door to the petitioner to raise those grounds, perhaps with a better-reasoned presentation, again later in court. The weakness of the estoppel provisions puts patent owners in what may seem like a never-ending battle to defend their patents.

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