[Ip-health] Inter Partes Review and the Design of Post-Grant Patent Reviews by Colleen V. Chien, Christian Helmers :: SSRN

Jamie Love james.love at keionline.org
Sun May 10 15:36:38 PDT 2015


Inter Partes Review and the Design of Post-Grant Patent Reviews

Colleen V. Chien
Santa Clara University - School of Law

Christian Helmers
Santa Clara University - Leavey School of Business; Universidad Carlos III
de Madrid

May 5, 2015

Stanford Technology Law Review, Forthcoming
Santa Clara Univ. Legal Studies Research Paper No. 10-15

Inter partes review (IPR) is one of a number of mechanisms for eliminating
improper patents through “post-grant review.” Challenging an issued patent
is expensive and paid for by the challenger, but all who practice the
patent benefit from its invalidation, creating a free-rider problem. While
post-grant review has widely been heralded as a cheaper, more expert
alternative to litigation for screening out bad patents, little attention
has been paid to the particular design of post-grant review systems. These
design choices matter tremendously, as arguably small changes to the
pre-existing inter partes reexam system, leading to the inter partes review
system, have had a big impact, the expanded uptake of reviews. As the U.S.
weighs making additional changes to the IPR system created by the America
Invents Act just a few years ago, it is worthwhile to consider the
experiences of other countries whose systems are older.

One particularly important feature of IPR relates to the interplay between
invalidity and infringement. District courts more often than not stay their
cases when parallel IPRs are filed, meaning that the USPTO decides novelty
and obviousness based on a subset of prior art, leaving infringement and
remaining invalidity issues to the district courts to decide. This creates
a bifurcated system that resembles the system that Germany has had in place
for decades, in which validity and infringement are decided by different
venues. Much can be learned by considering the two countries’ systems, and
the similarities and differences in their designs and their outcomes.

In the first 21 months that IPRs have been available, an estimated 87
percent of decided IPRs resulted in partial or total invalidation of the
patent, raising great concern in the U.S. But this number must be
understood in context. The patents that get reviewed in IPR are those that
are highly selected, both by the Patent Office as likely containing an
invalid claim, and by the public as justifying the considerable expense of
a challenge. Accordingly, IPR decisions are likely to be issued in cases
where the case for invalidity is particularly strong. These selection
effects also mean that only a tiny fraction of issued patents – around
0.17% when the patent is also litigated – are the subject of an IPR
decision. In most cases, the invalidated patents represent Patent Office
mistakes; patents that should never have been issued in the first place,
they also may be the product of a change in law. Post grant proceedings are
a well-recognized way to correct Patent Office error – for example, in
Europe, opposition proceedings at the European Patent Office (EPO), which
are used to review 5-8 percent of issued patents, have resulted in the
partial or total invalidation of patents close to 70 percent of the time,
and in German revocation proceedings, which in many ways resemble IPRs, 73
percent of patents are partially or fully revoked. Within EPO opposition
and German revocation proceedings, chemistry patents have been the most
likely to have been revoked or amended (71 percent in EPO, and 84 percent
in German revocation); in US IPRs, medical device (93 percent, N=29) and
biopharma and chemistry patents (87 percent, N=23) have fared the worst,
but based on relatively small sample sizes.

Less attention has been paid to an arguably more important metric – the
share of instituted reviews that are decided. In Germany, only 45 percent
of revocation challenges are actually adjudicated, likely due to the way
the German system is designed and leaving unclarified the status of the
majority of challenged patents, while in the US, settlement is higher in
litigation but lower in IPR. We examine these and other key aspects of
post-grant review as well as various factors that contribute to these
outcomes, including claim construction standards, litigation stays, and the
timing of reviews, to consider some general lessons for the design of
post-grant inter partes patent reviews.

Number of Pages in PDF File: 23

Keywords: patents, post-grant review, comparative studies

JEL Classification: 034, 048, 031

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