September 30, 2014
Neutralize Threatening Patents Using the U.S. Patent and Trademark Office’s Inter Partes
Review Process
By Max Colice and Orion Armon
How do you deal with a patent that may cover a product or service that you plan to make, use,
sell, or import? What happens if one of your competitors controls that patent? Or if you receive
a letter threatening a patent infringement lawsuit? Or if you get sued? If you have reason to
believe that the patent is invalid and never should have issued (based on your knowledge of the
industry or the results of a prior art search), you may be able to challenge the patent’s validity
using a United States Patent and Trademark Office (USPTO) process that is much cheaper than
litigation. If the USPTO finds the patent to be invalid, then the threat of a patent infringement
lawsuit may diminish or even disappear altogether.
Starting in 2012, the USPTO began offering three new proceedings for challenging the validity
of already issued U.S. patents: inter partes review, post grant review, and covered business
method patent review. In each of these “post-grant” proceedings, a Patent Trial and Appeal
Board (PTAB) of administrative patent judges determines whether or not the claims of the
patent are valid based on prior art, evidence, and arguments presented by both the patent
owner and the challenger. The patent owner and the challenger can even conduct limited
discovery and argue before the PTAB. What’s more, the PTAB will issue its decision 18-24
months after a petition is filed — which is significantly faster than previous processes at the
USPTO. In addition to the faster time table, post-grant proceedings are typically much less
costly than litigation in the federal courts because they focus exclusively on patent validity
instead of encompassing other issues such as patent infringement and damages.
Inter Partes Review Statistics
Of the new post-grant proceedings, inter partes review, or IPR, is by far the most popular, with
over 1800 petitions for IPR filed since 2012. (For perspective, the USPTO received just under
2000 petitions for the predecessor proceeding, inter partes reexamination, between 1999 and
2013.) To date, the PTAB has initiated a full invalidity review on about 78% of the petitions for
IPR that it has considered so far. And roughly 60% of the IPRs concluded to date were settled
before the PTAB issued a final written decision.1
So far, the patent challengers have been faring better than the patent owners in IPRs that have
ended in a final written decision. According to Cooley’s PTAB Digest database
(www.ptabdigest.com), which contains information about every inter partes review, post grant
review, and covered business method patent review ever filed, the USPTO has:
http://www.uspto.gov/ip/boards/bpai/stats/aia_statistics_09_18_2014.pdf (accessed September 23,
2014)
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invalidated, on average, 83% of all claims that are subject to a final written decision by
the PTAB; and
in more than 66% of the cases that have reached a final written decision, invalidated all of the
challenged patent claims.
In contrast, the predecessor process, inter partes reexamination, resulted in invalidation of all of
the challenged patent claims only about 31% of the time. Put differently, the USPTO is about
twice as likely to invalidate all challenged claims when it issues a final decision in an IPR than it
did in the inter partes reexamination process that IPR replaced.
Inter Partes Review and Patent Infringement Litigation
To date, about 66% of all IPRs have been filed by defendants in patent litigation, possibly
because the combination of IPR’s speed and lethality complicate a patent owner’s ability to
successfully assert patent claims in district court. Unlike inter partes reexamination, which
would often take three years or longer to complete, an IPR must finish within 18 months after a
petition is filed in most circumstances. If a defendant in a patent infringement litigation files a
petition for IPR soon after being served with the initial complaint, the IPR should finish before
the district court litigation reaches trial. Perhaps as a result of the fast timetable for IPRs, district
courts have stayed about 54% of patent infringement litigations where the PTAB has instituted
a corresponding IPR. This delays trial by 18 months, increases the total cost of litigation, drains
the patent owner’s resources—and in many cases, the PTAB’s final written decision narrows
issues in the underlying litigation significantly or provides complete resolution of the lawsuit.
A defendant can also use IPR to force a settlement or improve settlement terms. The settlement
and invalidation statistics listed above suggest that over 80% of the patent litigations with a
corresponding IPR have been settled or dismissed. To date, at least 50 patent litigations have
settled after the PTAB instituted corresponding IPRs. Even petitioning for an IPR induces
settlement, with at least 110 patent litigations settled before the PTAB decided whether to institute
IPR. Both before and after institution, the settlement rates jump dramatically with the number
of patent claims challenged by the defendant.
Inter Partes Review and Other Patents and Patent Applications
Patent owners may be settling in response to IPRs for many reasons, including the increased
cost of litigation and the relatively high likelihood of success for patent challengers. They may
also be considering the possible effects of an IPR on obtaining and enforcing future patent
rights. Unlike in inter partes reexamination, IPR also carries the possibility of estoppel in further
prosecution for the patent owner. Put simply, if the patent owner loses, it cannot pursue claims
of similar scope in other patent applications—including possibly even in patent applications
whose priority dates antedate the invalidating reference(s).2 In other words, a successful IPR
See, e.g., 37 C.F.R. § 42.73(d)(3)(i) (“(3) Patent applicant or owner. A patent applicant or owner is
precluded from taking action inconsistent with the adverse judgment, including obtaining in any patent:
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can invalidate a patent, call into question the validity of related patents, and potentially create
roadblocks to future patent portfolio development.
Inter Partes Review and Future Patent Litigation and Portfolio Development
IPR has changed and continues to change the patent litigation landscape. Its speed and lethality
provide defendants in patent litigation with powerful tools to induce settlement. Its lethality
and estoppel provisions also present new challenges for patent owners, both in enforcing
patents and acquiring new patents. For example, patent owners should contemplate using other
post grant proceedings, including reissue and ex parte reexamination, to proof patents against
validity changes in IPR. And patent owners should also consider filing strategies for new patent
applications that are more likely to result in patents that can withstand the scrutiny of the IPR
process and mitigate the risk that the estoppel effects of the IPR process will interfere with
future patent portfolio development.
For full access to key metrics and decisions in PTAB proceedings, create a free account at
www.PTABDigest.com.
Max Colice (mcolice@cooley.com) is an associate at Cooley LLP. He provides strategic
counseling and day-to-day patent prosecution advice for clients pursuing patent protection on
photonics, optics, lasers, semiconductor devices, electronics, software, telecommunications and
medical devices. He has also represented patent owners and requesters in inter partes reviews,
ex parte reexaminations, and inter partes reexaminations.
Orion Armon (oarmon@cooley.com) is a partner at Cooley LLP. His practice focuses on patent
litigation, with particular emphasis on cases involving software and electronics technologies.
He has experience in all aspects of patent office litigation, and advises his clients on the strategic
use of IPRs in the context of litigation. The opinions expressed in this article are personal and
not attributable to Cooley LLP or its clients.
(i) A claim that is not patentably distinct from a finally refused or canceled claim”) (Emphasis added).