An Analysis of the Factors Responsible For Its 73% Patent Kill Rate And How To Properly Defend Against It
By Andrew S. Baluch and Stephen B. Maebius, Foley & Lardner LLP[i]< ?xml:namespace prefix ="" o />
In creating inter partes reexamination, Congress hoped to provide a faster, cheaper alternative for resolving questions of patent validity in the U.S. Patent & Trademark Office (USPTO) rather than in the courts. As a measure of the procedure’s growing popularity and availability, the rate of requests for inter partes reexamination has steadily increased each year, totaling over 308 since the procedure was created in November 1999.[ii] But, while the pace of reexam requests continues to increase, the end results of completed proceedings have received relatively little attention.
Here, we report the outcomes of all inter partes reexaminations completed as of August 2008. Surprisingly, the proceedings displayed a high 73% “kill” rate (complete elimination of all claims targeted by the requesters) — a rate which is far above that in litigation (33%)[iii] and ex parte reexamination (12%)[iv].
Is the high kill rate explained by the fact that especially weak patents were targeted? Did the patent owners simply give up because the patents were commercially unimportant? Or is inter partes reexamination truly the best procedure for a party to use in the U.S. to invalidate a patent?
For both requesters and patent owners, the present study highlights the factors and strategies favoring success in inter partes reexaminations. Although the reported statistics appear to favor requesters, a patent owner has unique procedural tools at its disposal both in the courts and at the USPTO.
· Requester’s Success Rate: Third-party requesters succeeded in having all claims cancelled or disclaimed in 73% (22) of the first 30 completed inter partes proceedings in which a certificate issued. These early certificates are likely skewed in favor of quick dispositions in which the patent owner simply failed to respond to a first Office action, which occurred in 43% (13) of the proceedings. However, when the patent owner did respond to the first Office action, the requester’s success rate fell to 53% (9 out of 17). In any event, the requester’s likelihood of a complete victory in inter partes reexams is substantially greater than that in ex parte cases during the same period: only 12% of all ex parte reexams since January 2000 resulted in all claims being cancelled.[v]
· Pendency: The inter partes proceedings had an average pendency (measured from request date to certificate issue date) of 33.3 months. Like the requester’s success rate, the overall pendency is skewed by the numerous early cases in which the patent owner simply failed to defend its patent. Eliminating these uncontested cases dramatically increases the average pendency up to 42.5 months.
· Grounds of Rejection: In a first Office action, obviousness was the sole ground of rejection in only 20% (6) of the proceedings, whereas anticipation was a ground of rejection in 73% (22) of the proceedings. Nevertheless, obviousness-only rejections did not improve the patent owner’s chances of success: 83% (5 out of 6 obviousness-only cases) resulted in all claims being cancelled or disclaimed.
· No Board Decisions: None of the first 30 inter partes reexamination certificates was the product of a Board decision. Only one party, a patent owner, filed a notice of appeal, but then dropped the appeal by declining to file an appeal brief. In all cases where examiners found claims to be patentable, the third-party requesters did not bother to appeal the finding.
· Litigation: Five (17%) of the 30 inter partes reexaminations involved concurrent litigation between the patent owner and third-party requester. The causes of action were split: 2 declaratory judgment (DJ) actions brought by the third-party requester, and 3 infringement suits brought by the patent owner. The only still-pending cases involve reexaminations favoring the plaintiff: one DJ action in which all reexamined claims were cancelled, and one infringement suit in which all reexamined claims were confirmed.
[i] The authors are patent attorneys at Foley & Lardner LLP and further acknowledge their past and current involvement in both ex parte and inter partes reexaminations. The views expressed herein are solely those of the authors and should not be attributed to their firm or any of its clients. Comments may be directed to firstname.lastname@example.org.
[ii] USPTO Inter Partes Reexamination Filing Data (Sept. 30, 2007).
[iii] See Kimberly A. Moore, Judges, Juries, and Patent Cases – An Empirical Peek Inside the Black Box, 99 Mich. L. Rev. 365 (2000) (between 1983 and 1999, validity was upheld in 67% of cases — 64% of bench trials; 71% of jury trials).
[iv] See Dennis Crouch, Ex Parte Reexamination Statistics II, Patently-O, available at https://patentlyo.com/patent/2008/06/ex-parte-reexam.html (posted Jun. 25, 2008) (between January 2000 and June 2008, all claims were cancelled in 12% of proceedings).
[v] See Crouch, supra. See also USPTO Ex Parte Reexamination Filing Data (Dec. 31, 2007) (reporting 12% cancellation rate for all ex parte reexams initiated by third-party requester).