Dale L. Carlson 1 and Robert A. Migliorini 2

On September 1, 2005, Representative Lamar Smith introduced a “Coalition Print” version of a patent reform bill (Substitute bill H.R. 2795) into Congress.  That bill included a post-grant opposition procedure not later than nine months after grant.  On April 5, 2006, Representative Howard Berman introduced the “Patents Depend on Quality Act of 2006” (H.R. 5096 - the “PDQ Act”) into Congress.  The proposed PDQ Act includes a so-called “second window” for bringing an opposition, namely within six months of the alleged infringer's receiving notice of suit.

The concept of a post-grant review procedure has the support of the Director of the United States Patent and Trademark Office, Jon Dudas, and warrants consideration by the patent community at large.  The authors submit that the form and substance of any such post-grant review procedure are critical elements to its success.  The authors submit that the review procedure should not take the form of an “opposition” protocol, but rather should be woven into the existing inter partes reexamination procedure.

The authors recommend an alternative administrative patent invalidation system that differs from those suggested in the H.R. 2795 and H.R. 5096 bills.  As backdrop for the authors' proposal, the strengths and weaknesses of the existing inter partes and ex parte reexamination procedures for challenging a patent are explored.  International systems for challenging patents in Europe, Japan, China, and Taiwan are also benchmarked.  The European post-grant opposition, unlike the proposed United States system, does not include estoppel with respect to subsequent litigation, and thus does not preclude raising in the litigation the same issues of law and fact argued in an opposition proceeding.

Due to negative experiences, Japan and China have abolished their time-limited post-grant opposition systems in favor of a single non-time limited patent invalidation system.  Other potential problematic aspects associated with the proposed United States post-grant system include:  the nine-month time limitation for filing an opposition request, the lack of qualified PTO resources to adequately support a completely new system, overlap and redundancy with existing reexamination systems, and a lack of consistency with the invalidation system of one of our tripartite partners, namely Japan.

To resolve these issues, the authors propose a non-time limited invalidation system that is based off of the existing inter partes reexamination framework.  The proposed system is a 'hybrid'-combining many of the beneficial aspects of the proposed United States opposition system with the existing inter partes reexamination system.  The proposed changes to inter partes reexamination include, inter alia, making the system retroactive to patents issued from applications filed prior to November 29, 1999, expanding the grounds to be consistent with statutory patentability requirements, expanding the scope of evidence considered, expanding third party involvement via oral hearings and deposition testimony, and modifying the current estoppel provision to include only legal determinations relative to invalidity of issues actually raised in the proceeding.  The proposed invalidation system would provide a speedy, simple, low cost, and efficient method of challenging United States patents to increase their quality and certainty while obviating the overlap and redundancy associated with having both a United States post-grant opposition system and an inter partes reexamination system.

I. Introduction

“Those who cannot remember the past are condemned to repeat it.”

-George Santayana (1863-1952)

The United States patent laws help to fuel technological progress by awarding to an inventor a limited monopoly to exclude others from making, using, and selling the invention in exchange for his or her disclosure of the invention to the public.  This in turn encourages others to learn from, and improve upon, the inventions of others to further incentivize innovation and patenting activity.  The United States Patent and Trademark Office (“PTO”) has come under increasing attack for issuing patents that are allegedly overly broad or simplistic and of questionable validity.  This attack implicates a number of constraints imposed upon the PTO due to resource limitations that prohibit the accurate determination of  the scope of information in the public domain that is usable as prior art.  For example, PTO examiners are faced with time limitations in searching for prior art and examining a patent application against it.  An examiner typically spends from about eight to thirty-two hours searching and examining a patent application during the average two to three year prosecution period.3  In contrast, patent attorneys, search experts and technical experts seeking to invalidate a patent may spend hundreds, or even thousands, of hours searching for and reviewing prior art to undercover and synthesize invalidity arguments.4

The number of United States patent applications filed and patents granted continue to increase without a proportional increase in the number of PTO examiners.5  Hence, the PTO is significantly short staffed in terms of examiners.6  These factors tend to negatively impact the quantity and quality of prior art that can be identified and applied to a patent application.  There are also other sources of activity, such as on-sale bar and public use more than one-year prior to filing a patent application, for which an examiner cannot search, but nonetheless would invalidate an issued United States patent.7  In addition, there are certain more recently developed technologies, such as computer software and business methods, where identifying the relevant prior art is often difficult with current computerized search tools.8

According to PTO data, approximately sixty to sixty-five percent of all United States patent applications result in issued patents.9 One statistical study revealed that, of patents that are subsequently litigated, at least forty six percent of United States patents are invalidated in litigation.10

To compensate for these imperfections in the United States patent examination, systems are necessary to remedy issues associated with patents of questionable validity.  Some of these systems are already in place, such as ex parte reexamination11 and inter partes reexamination12 systems.  For a variety of reasons, these reexamination systems have not been utilized to the extent hoped.  

An alternative approach to reexamination of an issued patent is the use of a patent opposition system as a basis to challenge a patent application (i.e., “pre-grant opposition”) or issued patent (i.e., “post-grant opposition”).  Generally, oppositions permit a greater breadth of evidence to be used in challenging a patent, as well as greater involvement of the challenger in the proceeding.

Recently there has been momentum to enact a United States post-grant patent opposition system analogous to the system currently in place in Europe.13  The authors submit that such an opposition system is not appropriate for the United States, and if enacted, would further complicate our patent system without accomplishing the stated objectives for implementation.  As a better alternative, the authors propose that the current inter partes reexamination system be modified to improve its effectiveness and use rate.  To this end, the authors propose specific changes to inter partes reexamination to incorporate options provided under a non-time limited invalidation proceeding.  This would obviate the need for implementing yet another protocol, namely a United States post-grant opposition system.

This article proceeds in five parts.  Part II discusses the characteristics and issues associated with the current United States reexamination system.  Part III explores oppositions systems in Europe, Japan, China and Taiwan.  Parts IV and V overview the proposed legislation for a United States post-grant opposition system and the potential issues associated with such respectively.  Finally, Part VI develops an alternative approach consisting of a revamp to the current inter partes reexamination system to incorporate the best aspects of an invalidation proceeding as a framework for resolving patent validity disputes within the PTO.