In an earlier article, we wrote about the adverse effects of the America Invents Act (AIA) on American innovators (see The Implications of the America Invents Act on Innovation in America). In that article, we promised to tackle the new post-grant review feature of the America Invents Act separately. This article fulfills that promise.
The AIA mandates a nine-month Post-Grant Review (PGR) period under which a patent claim can be challenged on any ground. What this means is that any patent may be challenged in the US Patent and Trade Office for nine months after the issuance of the patent. After the nine months are up, patents can only be challenged on the basis of existing patents or printed publications.
PGR does not take away the option of a rival claimant to a patent to an Ex Parte Reexamination, which is a holdover from previous patent laws. Under Ex Parte Reexamination, patent owners can obtain judicial review of adverse decisions from the USPTO by civil action in district court.
Moreover, the AIA allows Inter Partes Review (IPR) to be availed of by a challenger to a patent. Under IPR, a third party can challenge the validity of a patent claim after the first year.
Thus, under the AIA, if a patent is challenged under the PGR and, later on, in an IPR, it may take a minimum of 21 months before its validity can be proven. The actual time may last twice as long as, or even more than, 21 months, if we consider that litigation proceedings typically take more than a year or two to resolve in the USPTO and the federal courts.
At first glance, the post-grant review period seems to be harmless, at least from the viewpoint of the inventor. Upon closer examination, you’ll see that this feature will hamper, rather than help, the inventor. How is this so?
PGR has long been a part of the patent systems in Europe, and it has failed everywhere it has been implemented. In Patent Reform: One Giant Step Backwards, Dale L. Carson says:
“Another proposal in the patent reform bill would adopt the European-style opposition protocol–ambiguously described in the bill as “post-grant review.” Such a protocol is analogous to the inter partes re-examination form of post-grant review that is already available under the existing U.S. patent law. The fact that a European-style opposition procedure was adopted by Japan, China and South Korea two decades ago, and was subsequently abolished in each of those countries within a decade, should be enough to give Congress and Obama pause.”
“The salient questions are: Why would a country that is a world leader in inventiveness change its patent system to comport with that of a European protocol that has been tried and shown to fail elsewhere?“
In New Patent Law Means Trouble for Tech Entrepreneurs, Gary Lauder writes that:
“post-grant review is yet another reason why the European (patent) system does not work for small companies. It is used by deep-pocketed companies to prevent others’ patents from issuing. If the patentee is a small company, it usually can’t afford to fight.”
Quoting Judge Paul Michel, the top patent judge in the US, who retired from the bench so that he can campaign against the passage of the AIA, Lauder continues:
“He (Judge Michel) said of PGR: I can guarantee you that if I went into private practice, I could hold up any patent for almost a decade in post-grant proceedings. It would never get to trial in the district court.”
Venture-backed companies may not be able to cope in the face of these potential delays in the granting of a patent. The previously-mentioned Judge Paul Michel, in Torpedoing Patent Rights, writes:
“Back-to-back challenges lasting five years or more are likely. How can such uncertainty over validity not defer investment decisions or discourage them altogether? What venture capital investors will risk their money before all such challenges are concluded? And without repeated investments most start-up companies will stall, or even die. Given that such firms are responsible for almost all new job creation and economic growth, this could have severe negative effects upon the whole society.”
In the face of these criticisms, it is a big wonder why the AIA got passed at all. Well, we have a misguided President and Congress to thank for that. Patent reform may not have been needed, after all. Instead, we are left wondering what the next years will bring forth for American innovation.