Patent Baristas

“Eliminate the Patent Restrictions Standing in Your Company’s Way”

The Innovation Alliance, a coalition of companies with the stated goal to enhance America’s innovation environment by improving the quality of patents and protecting the integrity of the U.S. patent system, is worried that lawyers (the bad ones, not us) will be lining up to offer just this service to big companies to help them avoid paying for the use of legitimate, patent-protected technology.

The Alliance fears that such service will “creat[e] uncertainty about a problem patent by tying it up in a long reexamination process and effectively nullify the problem patent” to get lower rates during license negotiations “until the uncertainty ends.”  Obviously, this would not be the intended result.

The cause of this fear are provisions being considered in in both S. 515 and H.R. 1260, “The Patent Reform Act of 2009,” regarding post-grant review mechanisms that could allow repeated frivolous patent challenges, resulting in increased costs to patent holders, decreased certainty regarding validity and enforceability of patents, and lower-value patents for U.S. businesses and patent holders.

Both ex parte and inter partes reexamination would be retained, and cancellation proceedings would be before administrative law judges.  In addition, the grounds for both types of reexamination would still be limited to prior art but expanded to include prior use or sale and patentee statements.

The proposed post-grant review procedure can be instituted either within 12 months after the issuance of a patent or a reissue patent, or if the patent owner consents.  The post-grant review begins with a cancellation petition and moves forward only if the Director determines that there is a substantial new question of patentability.  The presumption of validity does not apply in this proceeding, but the burden of proof is on the party advancing a proposition.

Any ground of invalidity, other than failure to disclose the best mode, could be used in seeking cancellation and only limited discovery may be permitted in cancellation proceedings on order of the PTO Director.   The Director will prescribe rules governing the proceeding, including rules to sanction abuse.  This section prohibits successive filings or filings after a final decision in a civil action.

Challengers would be estopped from: (1) asserting invalidity of any claim determined to be valid in inter partes reexamination on any ground raised in the reexamination; and (2) instituting an inter partes reexamination proceeding after a district court judgment on patent validity.

The Innovation Alliance is now concerned that the expanded post-grant review and inter partes reexamination of U.S. patents will allow repeated frivolous challenges, resulting in increased costs to patent holders, decreased certainty regarding validity and enforceability of patents, and lower-value patents for U.S. businesses and patent holders.  They feel this could undermine legitimate patent rights and discourage investment in new technologies.

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