Joff Wild

Patent re-examination at the USPTO is supposed to be a quick and relatively cheap alternative to litigating validity issues before the US courts. However, research done by the recently-established Institute for Progress indicates that, in reality, in most cases the patents involved in inter partes re-exams are also litigated at some stage, while delays mean that the average inter partes case takes over three and a half years to complete, if there is no appeal.

Disturbingly, the research finds that statistics provided by the USPTO, which state that the average pendency in an inter partes case is 28.5 months, may be “mathematically accurate” but are also “highly misleading”. In a report that accompanies the research, the institute states: “An appropriate reading of the statistic is that the Patent Office takes two years to dispose of a patent through inter partes re-exam if the patent holder doesn’t care to defend its rights. It takes significantly longer to get to a resolution if the patent holder participates in the process.”

Among the findings highlighted by the report that will, I imagine, surprise (and alarm) quite a few people in the States, are the following:

• Inter partes re-examinations requests are rising rapidly – a 6X increase between 2003 and 2007 (from 24 to 142).

• Reexamination, particularly inter partes re-examination, is not simply used as an alternative to litigation, but an integral part of litigation strategy – more than half (52%) of patents in inter partes re-exams are known to be in litigation during their re-examination.

• Virtually all requests (95%) for inter partes re-examination are granted, and this statistic may actually understate the effective grant rate.

• To date, there has never been a single inter partes re-examination that has gone through the entire re-examination process (including appeal) and made it to completion. Only three have ever received a decision by the Board of Patent Appeals and Interferences.

• Despite a mandate for “special dispatch”, the time required to complete an inter partes re-examination is much longer than commonly believed.

• Without appeal, the average pendency period for inter partes re-exam is 43.5 months, much longer than the 28.5 months reported by the USPTO – a 95% confidence interval would put the pendency between 34 and 53 months.

• Although no inter partes re-exam has ever been completed after being appealed, the average pendency for appealed inter partes reexams is 78.4 months (assuming no rework by the patent office or secondary appeal) – a 95% confidence interval would put the pendency between 5 and 8 years.

Given the growing popularity of the re-examination process at the USPTO, these findings will surely be a cause for concern not only among patent owners, but at the office itself. Patent owners need certainty for all kinds of reasons. The re-examination process, it turns out, is just one more example of them not getting it in the US. Says the report:

Although the re-examination statute in the US may have been intended to provide an alternative to litigation, the actual use of re-examination appears to be an augmentation of litigation strategy rather than an alternative. In many cases, patent litigation in US courts and 337 actions at the International Trade Commission (investigations of unfair trade practices related to IP infringement) run simultaneously with re-examination at the Patent Office. Simultaneous litigation and re-examination raise serious questions for US courts about whether to wait for the results of a pending re-examination or continue with their court proceedings.

The conclusions so far have been mixed. In some cases, patent litigation has been stayed pending the results of re-exam, while in others, the cases have continued. Many people will remember for example that Judge Spencer who presided over the contentious patent battle between NTP and RIM over the “Blackberry patents” famously refused to stay the litigation proceedings despite the fact that the PTO had issued an initial rejection of the claims at issue.

These difficult and often critical decisions by circuit court judges and administrative law judges depend heavily on their understanding and expectations of what will happen in the re-examination process at the PTO. How reliable are initial office actions as a predictor of final results in a re-examination? How long will the process take? How often are the patent examiner’s finding upheld on appeal? For judges, these questions are critical in determining whether a request for a stay should be granted. For litigants, these questions can strongly influence litigation strategy.

As if it the USPTO did not already have enough problems to deal with, this looks like being another one. It also makes you wonder how the office would cope should a post-grant opposition process, as envisioned by the Patent Reform Act, ever come into being. There could well be many more oppositions than there are currently re-examinations – so the delays could be horrific.