ARTICLE FOCUS

• Post-grant review proceeding for challenging patents
• Comparison to other vehicles for challenging patents
• Weighing the options

The intellectual property strategies of medical device companies include not only obtaining and protecting their own rights, but monitoring and challenging the rights of others. Currently, a third party may challenge the validity of a competitor's patent in a civil action, generally by defending against a charge of infringement, or before the United States Patent and Trademark Office ("PTO") by instituting a reexamination proceeding. Both of these vehicles have their disadvantages. For example, litigating in the courts is expensive and time consuming, jeopardizing the valuable resources of medical device companies known for continually bringing to market new products, equipment, and technologies. In addition, existing reexamination proceedings limit the prior art a third party is able to assert in the Patent Office.

The America Invents Act (the "Act") created two new PTO proceedings, effective Sept 16, 2012, that enable a third party to challenge the patentability of an issued patent. The first, inter partes review, is an amended version of the current inter partes reexamination proceeding. The second, post-grant review, is a new inter partes proceeding that permits a petitioner to rely on a scope of prior art similar to a civil action, while maintaining the lower cost and quicker time to decision typical of a proceeding before the Patent Office. This article analyzes the new post-grant review proceeding as a vehicle to challenge the patentability of a competitor’s patent.

Benefits to post-grant review
Asserting invalidity in a civil action is expensive. According to the American Intellectual Property Law Association (“AIPLA”), the 2011 median cost for a patent infringement suit through the end of discovery was estimated at $2,500,000 (with $1 to $25 million dollars at risk). Proceedings before the PTO are attractive on that basis alone, with the 2011 median cost for a inter partes reexamination estimated at around $75,000 (excluding appeal). One significant drawback to the new inter partes review (and current reexamination proceeding), however, is the limited scope of prior art available. Specifically, a petitioner is limited to assert unpatentability based on "prior art consisting of patents or printed publications." Pursuant to this restriction, the petitioner is unable to challenge claims based on a public use or sale before the filing of the patentee’s application, the patentee’s failure to adequately describe the invention in the specification, or the patentee’s failure to distinctly claim the invention (resulting in indefinite claims). The newly created post-grant review expands the prior art available to a petitioner, and permits any ground of invalidity that could be raised in a civil action, including all of the grounds previously mentioned. Yet, the post-grant review is expected to remain a more affordable option than civil litigation.

In addition to larger scope and lower costs, the post-grant review maintains an expedient time to decision. Specifically, unlike a civil action, which typically takes many years to resolve, a petitioner in a post-grant review is expected to get a final decision within one year after the PTO grants the petition (with some exceptions). Furthermore, the burden of proof and remedial action by the patent owner are also limited in a post-grant review proceeding. As is the case for reexamination proceedings, the petitioner need only prove unpatentability “by a preponderance of the evidence,” as opposed to the more stringent “clear and convincing evidence” required in a civil action. If the PTO agrees with the evidence set forth by the petitioner, a patent owner is entitled to move to amend, cancel or substitute claims as a matter of right only once, with any further motions typically requiring good cause.

Drawbacks to post-grant review
Despite these advantages, would-be petitioners are making a one-time choice to present their unpatentability arguments in a post-grant review. Once a proceeding results in a final written decision, the petitioner is prohibited from asserting that a claim at issue in the post-grant review is unpatentable or invalid on any ground the petitioner “raised or reasonably could have raised” during the proceeding. This prohibition applies to any subsequent proceedings before the PTO, as well as a civil action in district courts, or an investigation at the International Trade Commission. With the expanded scope of prior art available, this may not seem like a significant drawback. The petitioner, however, does not have the range of discovery that would be available in a civil action. Specifically, in a post-grant review the parties are limited to discovery of “evidence directly related to factual assertions advanced by either party in the proceeding.” This scope is likely narrower than the standard in a civil action which includes “any nonprivileged matter that is relevant to any party’s claim or defense.”

Another disadvantage may actually result in increased costs to a petitioner, namely, the petitioner may be subject to both a post-grant review before the PTO and a civil action in the courts. Although a declaratory judgment action filed by the petitioner after instituting a post-grant review will be stayed (with some exceptions), the Act does not foreclose the patent owner from asserting infringement in a civil action. Indeed, if certain requirements are met, a court is not permitted to consider the existence of a post-grant review in a motion to stay until after a preliminary injunction proceeding.

Finally, the post-grant review proceeding is available only for a limited period of time following the issuance of a patent. The petition, complete with patents, printed publications, affidavits and other supporting evidence must be filed within nine months of the issuance of the patent, or a broadening reissue. After this time period expires, third parties can challenge the patentability of claims only through ex parte reexamination and inter partes review proceedings.

Weighing the options
In conclusion, medical device companies seeking to challenge the validity of a competitor’s patent should consider the availability of a post-grant review. The comparatively low cost and available defenses make the new proceeding an attractive option. The scope of discovery permitted and restricted timeframe, however, may detract potential petitioners. A petitioner should weigh all available options on a case-by-case basis in determining whether a post-grant review is the best (and only) bite at the apple.