Yesterday, Senate Judiciary IP Subcommittee Chair Sen. Leahy (D-VT) and committee member Sen. Cornyn (R-TX) introduced the Restoring the America Invents Act (RAIA). RAIA would roll back changes introduced by former USPTO Director Andrei Iancu and by the courts, restoring the America Invents Act (AIA) to what it was always intended to be—a cost-effective alternative to litigation, providing a way to accurately determine whether a patent should have been issued in the first place. These changes would protect innovators from the assertion of low quality patents and allow them to spend money on engineering, not lawyers.
RAIA addresses a number of aspects of the Patent Trial and Appeal Board (PTAB) and the inter partes (IPR) and post-grant review (PGR) programs. This post explains how RAIA would implement an Arthrex fix, overturn Return Mail, expand eligible categories of prior art, eliminate the Fintiv doctrine, modify the time bars and estoppel provisions, add a statutory stay mechanism, affirmatively require decisions on multiple procedures, bar ex parte communications to PTAB panels, place the burden of proof of patentability for new claims on patent owners, set a firm final date for issuance of certificates modifying patents after appeal is complete, and enhance statutory standing provisions. CCIA strongly supports this legislation.
First, RAIA would institute a statutory procedure to implement the Supreme Court’s Arthrex decision. The Director of the USPTO could, on their own initiative or upon request of a party, review and modify any final written decision in an IPR or PGR. There would be no obligation that the Director must review a decision, but if they choose to, they would be required to provide a separate written opinion made part of the record of the IPR that explains why they were reviewing, modifying, or setting aside the PTAB’s determination.
The Director would also be required to conduct rulemaking to set rules for certain procedural aspects of how reviews are to be requested or initiated sua sponte by the Director.
While Director review is likely to be a rarely employed power, requiring that it happen on the record and with written explanation will ensure that it will not be abused.
Returning From Return Mail
In addition to implementing a formal Arthrex procedure, RAIA would also address another Supreme Court case—Return Mail. In Return Mail, the Court held that government entities do not fall within the definition of “a person” who may request IPR. RAIA would explicitly permit government entities such as the Postal Service to request IPR and PGR reviews.
While government entities are rarely going to use the IPR process, there’s no reason they shouldn’t be able to access IPR when they are sued for patent infringement on a weak patent.
More Prior Art
RAIA would also expand what kinds of challenges would be permitted in an IPR. While written description or enablement challenges under § 112 will not be added to the statute, two new types of obviousness challenges would be permitted—challenges based on applicant admissions contained in the patent and challenges based on double patenting.
The first type of challenge, applicant-admitted prior art (sometimes referred to as AAPA), will likely be used primarily as an adjunct to ordinary patents and printed publications. This type of prior art may make it easier to challenge claims that primarily describe conventional activities, allowing the petitioner to use one reference for the purportedly novel aspect of the patent claim and the AAPA to cover the conventional elements.
The second type of challenge, double patenting, applies when an existing patent or application and a second patent or application are commonly owned and cover the same invention. This provision is likely to have a larger impact in the pharmaceutical and biotech space, where double patenting is a more frequent issue due to tactics such as patent thicketing and might give rise to more challenges by generic drug manufacturers seeking to enter a market where a primary patent has expired but secondary patents still hold them off market.
Finishing Off Fintiv
The provision likely to have the biggest impact in this bill is the change to institution. Instead of the discretionary “may not authorize an inter partes review to be instituted unless” language currently used, RAIA would permit discretion only under the limited circumstances envisioned in 35 U.S.C. § 325(d)(4), which would cover situations in which the same or substantially the same art and arguments were previously in front of the USPTO. Otherwise, “a petition that meets the requirements of this chapter shall be instituted.”
That means that Fintiv-type denials would no longer be allowed. Given that Fintiv denials are now nearly 40% of all denials—and that Fintiv denials are implicitly a signal that the merits case is enough to institute—this provision alone would significantly restore the ability of petitioners to use IPR even when facing a troll suit in the Texas rocket dockets.
There’s one possible catch—this might affect the Federal Circuit’s ruling on tribal and state sovereign immunity from IPR. That immunity decision turned on the Director’s discretion; removing that discretion could conceivably revitalize the tactic of using tribes as sham fronts to shield NPEs from litigation.
Voluntary Dismissals and Time Bars
In the WiFi One case, the Federal Circuit held that voluntary dismissals without prejudice of a patent lawsuit still triggers the one-year time bar for filing an IPR. RAIA would overturn that decision, allowing someone who obtained a voluntary dismissal without prejudice to file an IPR more than a year after the filing of the dismissed suit—for example, if the patent owner later came back to file a new lawsuit.
RAIA would also clarify that, in the event a patent undergoes ex parte reexamination and new or amended claims issue from that reexamination, the one-year time bar starts again from the date on which the challenged claims are asserted in the action. This closes a loophole in which a patent owner might obtain new claims in reexamination more than one year after filing a suit, thereby avoiding IPR of those newly obtained claims. (Omission of reissued patents from this provision is likely unimportant, as a reissued patent is actually a newly issued patent, while reexamined patents are the same patent with a certificate of correction attached to it.)
Stay With Me, This Is A Long Post
RAIA would also implement a statutory stay provision. While not requiring judges to stay cases pending IPR, it does set forth the factors courts must consider when deciding a motion for stay, and permits immediate interlocutory appeal of stay decisions.
This is also likely to have a significant impact. While some courts are willing to stay pending IPR, others have effectively refused to do so in almost any circumstance. By providing both statutory stay factors and the ability to appeal decisions immediately, jurisdictions that currently routinely deny stays are likely to begin granting them in at least some cases, allowing the IPR process to more effectively reduce the cost of litigation and helping the estoppel provision have a more meaningful effect.
Speaking Of Estoppel
RAIA also modifies the AIA’s estoppel provision. In particular, it extends estoppel to parties who participated in an IPR via a request for joinder and to their real parties in interest and privies. Currently, joined parties are only estopped as to those grounds that are actually part of the petition that is joined. This allows petitioners to join one petition and then file their own on different grounds. RAIA would require parties that join a petition to be estopped to the same extent as the party that filed the original petition.
RAIA would also address some quirks in the original estoppel provision, clarifying that estoppel against a petitioner attaches after any appeal has finished or after the time for appeal has expired, rather than when the final written decision issues. Petitioners would also only be estopped from asserting invalidity if the final written decision was that the claim is valid—right now, even if petitioners win at the PTAB, there have been attempts to argue that petitioners are still estopped from claiming that a patent is invalid in district court.
RAIA would also estop the USPTO from issuing new patent claims to a patent owner that are not patentably distinct from a cancelled claim or a claim found to be unpatentable, ensuring that patent owners whose patents were found to be invalid cannot receive new patents on the same thing.
More Than One Proceeding Per Patent
Right now, when multiple proceedings—IPR, ex parte reexamination, or even continuation applications sharing a common filing date to a patent subject to an IPR petition—are in front of the USPTO, the Director has the power to determine how to conduct those various proceedings. The Director, under 35 U.S.C. § 315(d), “may determine the manner” in which those proceedings are stayed, transferred, consolidated, or terminated.
RAIA would change that from something the Director may do to something the Director must do—when multiple proceedings are pending, the Director would be required to issue a written decision determining whether to stay, transfer, consolidate, or terminate any of those proceedings. That power is restricted in two important ways—first, the Director may not “terminate an inter partes proceeding in favor of an ex parte proceeding.” And second, the presumption is that the Director will consolidate proceedings of like type filed reasonably close in time.
Inter Partes Reviews, Ex Parte Communication?
Another provision would bar anyone with authority over a panel judge, who isn’t themselves a member of the panel, from communicating with the panel judges regarding any matter before the panel. This would prevent the Director or senior PTAB judges from unofficially influencing a panel’s decision. While the Director could still review a panel decision, that would be on the record and would require the Director to take responsibility, unlike an off-record ex parte communication.
This is a topic that appears to be of significant interest to Congressional members, as evidenced by the request to GAO from House Judiciary IP Subcommittee Chair Johnson (D-GA) and Ranking Member Issa (R-CA) asking GAO to investigate whether and how such ex parte communications might have been used by the USPTO. It seems unlikely that Reps. Johnson and Issa would have made such a request if they didn’t have at least some reason to believe that this has happened, perhaps under former Director Iancu; I am very interested in what the GAO report finds.
Aqua Products Goes Underwater
In an extremely fractured decision in Aqua Products, the Federal Circuit held that the USPTO had not properly implemented a rule placing the burden of proof for claims amended in IPR on the patent owner. RAIA would place the burden of proving the patentability of new claims on patent owners. Right now, the burden is placed on the petitioner, who may not have any interest in opposing the amended claim if they would no longer infringe. In that scenario, a claim would effectively go unexamined and a patent could issue with a claim that never received substantive examination. By placing the burden on the patent owner with regard to amended and new claims, overturning former Director Iancu’s ill-advised rule setting the burden on petitioners, RAIA would ensure that no claim issues without meaningful examination.
This provision is strengthened by explicit statutory authority for the PTAB to refer new and amended claims to the Director to arrange for examination of substitute claims, presumably by a patent examiner.
Setting A Final Date
RAIA also makes one small, but important, amendment. Right now, the Director is obligated to issue a certificate that amends a challenged patent to reflect any claims determined to be unpatentable or patentable, and to add in any new or amended claims. But there’s no date by which this has to happen, and in some cases there has been significant delay in issuing the certificate.
RAIA would require the Director to issue the certificate within 60 days after termination of all appeals or after the time for appeal has expired, setting a date certain for the final outcome of any given IPR.
Standing (And More Estoppel)
Finally, RAIA aims to create a clear injury-in-fact provision for purposes of standing on appeal. Right now, the Federal Circuit limits appellate review for IPR petitioners who haven’t been actively sued. In some cases, this limit is applied even if the petitioner has significant reason to believe that they are at risk of future suit. While statutory standing has been significantly limited by the Supreme Court, this provision at least provides an avenue to try to assert it.
It also links standing and estoppel. If a party cannot appeal an IPR due to a lack of standing, estoppel would not apply to that party. This ensures that parties who cannot obtain judicial review of their arguments cannot be estopped from bringing those arguments in front of a district court.
Summing It Up
RAIA would be overwhelmingly positive for the patent system and for innovation. While there are minor concerns about a few aspects of it, the overall impact would be the restoration of the PTAB to its place as an effective and efficient reviewer of patent validity—and that, in turn, would enable innovators to spend their time and money on engineering instead of lawyering. IPR has saved billions of dollars in legal fees since its creation, but changes like Fintiv threaten that. RAIA would make sure that Congressional intent is respected, with the PTAB serving to provide a second look at patents that never should have issued.
And by making these changes through legislation, rather than through rulemaking, RAIA would ensure that future USPTO Directors can’t try to sabotage the IPR system.