Intellectual Property Law Knowledge Center

Inter Partes Reviews – A Brief Primer, Recent Supreme Court Rulings, and the USPTO’s Notice of Proposed Changes

May 21st, 2018

By Stephen E. Murray

Inter Partes Reviews – A Brief Primer, Recent Supreme Court Rulings, and the USPTO’s Notice of Proposed ChangesInter partes reviews (IPRs) were enacted on September 16, 2012, as part of the America Invents Act (AIA) passed by Congress. IPRs are trial proceedings conducted at the Patent Trial and Appeal Board (PTAB) to review the patentability of one or more claims in a patent in view of prior art in the form of patents or printed publications.

IPRs essentially replaced inter partes reexaminations, which themselves had stemmed from ex parte reexaminations, as the main mechanism for challenging patent claims at the U.S. Patent and Trademark Office that permitted the challenger to remain extensively involved throughout the proceeding.

Challenging patent validity in district court litigation before a jury typically costs millions of dollars, while IPRs conducted at the PTAB cost more in the hundreds of thousands of dollars range, a significant difference. High tech companies such as Apple and Samsung are frequently the target of patent infringement suits and for that reason have championed IPRs as an affordable way to combat non-participating entities or “patent trolls” who often bring those suits.

The IPR proceeding begins when a third-party (a person not the owner of the patent) files a petition. A patent owner gets three months to file a preliminary response, then the PTAB decides whether or not to institute trial.

If a trial is instituted, additional papers are filed by the parties following periods of very limited discovery.  The PTAB is required to issue a final written determination within 12 months of institution (or if good cause can be shown, a 6-month extension may be permitted).

The final, written determinations of the PTAB may be appealed to the U.S. Court of Appeals for the Federal Circuit, but the Board’s decision whether to institute an IPR or not is generally not subject to appeal.

The U.S. Supreme Court issued two rulings related to IPRs on April 25, 2018. The justices upheld the constitutionality of the IPR process in a 7–2 vote in Oil States Energy Services v. Greene’s Energy Group.  Oil States had argued that the invalidating of an issued patent by the PTAB in an IPR constituted a taking of property, which requires a jury trial.  The majority held that patents are public property, the grant of which can properly be subject to later reconsideration by the administrative agency that issued them.  Thus, a jury trial in an Article III court was not needed to invalidate patent claims.

In SAS Institute v. Iancu, the issue was the PTAB’s practice of instituting some IPRs on less than all of the claims challenged by a petition. The justices, in a 5–4 vote, rejected this practice as being contrary to the statutory design.

Oil States had been the more highly anticipated case, as a decision finding IPRs unconstitutional would have sent the patent system into chaos.  Many wondered about the fate of the large number of patents that had previously had claims canceled as part of an IPR final decision.  Alas, the Supreme Court’s decision essentially preserves the status quo, leaving a minimal impact on the patent system in its wake.

SAS, on the other hand, ushers in a major change.

Institution decisions in IPRs now have to be an all or nothing proposition, and just how the PTAB will handle this shift remains to be seen.  Some have suggested that, in order to avoid overburdening the judges, institution decisions will be much shorter, potentially depriving the parties of key insights that frame arguments later in trial – although the PTAB has initially given indications that its decisions would not be significantly scaled back.

It has also been suggested that more IPRs will be denied to avoid trials where only a small number of challenged claims are actually likely to be found unpatentable.  Another key question surrounds currently instituted proceedings – and the PTAB has indicated that it is likely to reconsider claims that were dropped at the institution stage in ongoing trials.  This will likely lead to a rise in six-month extensions to final decisions.  It will take some time before the dust settles on this decision.

Another change that many practitioners had been clamoring for appears to finally be happening with the USPTO’s May 7 Notice of Proposed Rulemaking (NPRM).  The proposed change is a departure from the use of the Broadest Reasonable Interpretation Standard (BRI) “for construing unexpired and proposed amended claims in…PTAB proceedings under the America Invents Act. The proposed new standard is the same as the standard applied in Article III courts and International Trade Commission (ITC) proceedings.”

The new standard, the Phillips standard, is currently used in federal courts and the ITC. The PTAB would be required to interpret unexpired and proposed claims “in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent.”

The USPTO also proposes to consider “any prior claim construction determination concerning a term of the claim in a civil action, or an ITC proceeding, that is timely made of record in an Inter Partes Review.”

USPTO Director Andrei Iancu signed the NPRM. It will be published in the Federal Register on May 9, 2018. Anyone wishing to comment on the NPRM should email within 60 days from May 9.

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