[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]
PATENT QUALITY IMPROVEMENT:
POST-GRANT OPPOSITION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COURTS, THE INTERNET,
AND INTELLECTUAL PROPERTY
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
SECOND SESSION
__________
JUNE 24, 2004
__________
Serial No. 91
__________
Printed for the use of the Committee on the Judiciary
Available via the World Wide Web: http://www.house.gov/judiciary
U.S. GOVERNMENT PRINTING OFFICE
94-459 WASHINGTON : 2004
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COMMITTEE ON THE JUDICIARY
F. JAMES SENSENBRENNER, Jr., Wisconsin, Chairman
HENRY J. HYDE, Illinois JOHN CONYERS, Jr., Michigan
HOWARD COBLE, North Carolina HOWARD L. BERMAN, California
LAMAR SMITH, Texas RICK BOUCHER, Virginia
ELTON GALLEGLY, California JERROLD NADLER, New York
BOB GOODLATTE, Virginia ROBERT C. SCOTT, Virginia
STEVE CHABOT, Ohio MELVIN L. WATT, North Carolina
WILLIAM L. JENKINS, Tennessee ZOE LOFGREN, California
CHRIS CANNON, Utah SHEILA JACKSON LEE, Texas
SPENCER BACHUS, Alabama MAXINE WATERS, California
JOHN N. HOSTETTLER, Indiana MARTIN T. MEEHAN, Massachusetts
MARK GREEN, Wisconsin WILLIAM D. DELAHUNT, Massachusetts
RIC KELLER, Florida ROBERT WEXLER, Florida
MELISSA A. HART, Pennsylvania TAMMY BALDWIN, Wisconsin
JEFF FLAKE, Arizona ANTHONY D. WEINER, New York
MIKE PENCE, Indiana ADAM B. SCHIFF, California
J. RANDY FORBES, Virginia LINDA T. SANCHEZ, California
STEVE KING, Iowa
JOHN R. CARTER, Texas
TOM FEENEY, Florida
MARSHA BLACKBURN, Tennessee
Philip G. Kiko, Chief of Staff-General Counsel
Perry H. Apelbaum, Minority Chief Counsel
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Subcommittee on Courts, the Internet, and Intellectual Property
LAMAR SMITH, Texas, Chairman
HENRY J. HYDE, Illinois HOWARD L. BERMAN, California
ELTON GALLEGLY, California JOHN CONYERS, Jr., Michigan
BOB GOODLATTE, Virginia RICK BOUCHER, Virginia
WILLIAM L. JENKINS, Tennessee ZOE LOFGREN, California
SPENCER BACHUS, Alabama MAXINE WATERS, California
MARK GREEN, Wisconsin MARTIN T. MEEHAN, Massachusetts
RIC KELLER, Florida WILLIAM D. DELAHUNT, Massachusetts
MELISSA A. HART, Pennsylvania ROBERT WEXLER, Florida
MIKE PENCE, Indiana TAMMY BALDWIN, Wisconsin
J. RANDY FORBES, Virginia ANTHONY D. WEINER, New York
JOHN R. CARTER, Texas
Blaine Merritt, Chief Counsel
David Whitney, Counsel
Joe Keeley, Counsel
Alec French, Minority Counsel
C O N T E N T S
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JUNE 24, 2004
OPENING STATEMENT
Page
The Honorable Lamar Smith, a Representative in Congress From the
State of Texas, and Chairman, Subcommittee on Courts, the
Internet, and Intellectual Property............................ 1
The Honorable Rick Boucher, a Representative in Congress From the
State of Virginia.............................................. 2
WITNESSES
Mr. James A. Toupin, General Counsel, U.S. Patent and Trademark
Office (PTO), Washington, DC
Oral Testimony................................................. 5
Prepared Statement............................................. 7
Jeffrey P. Kushan, Esquire, Sidley Austin Brown & Wood, on behalf
of Genentech, Inc.
Oral Testimony................................................. 13
Prepared Statement............................................. 15
Mr. Michael K. Kirk, Executive Director, American Intellectual
Property Law Association (AIPLA)
Oral Testimony................................................. 27
Prepared Statement............................................. 28
Mr. Karl Sun, Senior Patent Counsel, Google, Inc.
Oral Testimony................................................. 37
Prepared Statement............................................. 39
APPENDIX
Material Submitted for the Hearing Record
Prepared Statement of the Honorable John Conyers, Jr., a
Representative in Congress From the State of Michigan, and
Ranking Member, Committee on the Judiciary..................... 49
Letter to Rep. Lamar Smith and Rep. Howard L. Berman from Stephan
H. Lawton, Vice President and General Counsel, Biotechnology
Industry Organization.......................................... 50
Letter to Rep. Lamar Smith and Rep. Howard L. Berman from Warner
R. Broaddus, Vice President, General Counsel & Secretary, and
Charles S. Berkman, Associate General Counsel and Chief Patent
Counsel, Ligand Pharmaceuticals................................ 57
PATENT QUALITY IMPROVEMENT:
POST-GRANT OPPOSITION
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THURSDAY, JUNE 24, 2004
House of Representatives,
Subcommittee on Courts, the Internet,
and Intellectual Property,
Committee on the Judiciary,
Washington, DC.
The Subcommittee met, pursuant to other business, at 4:23
p.m., in Room 2141, Rayburn House Office Building, Hon. Lamar
Smith (Chair of the Subcommittee) presiding.
Mr. Smith. We will now proceed to an oversight hearing on
patent quality improvement: post-grant opposition, and our
witnesses are welcome to come forward and take their seats. I
am going to recognize myself for an opening statement and then
will recognize Mr. Boucher for his.
A year ago to this day, our Subcommittee conducted a
hearing on patent quality improvement by examining six reform
proposals. Today's hearing on post-grant opposition is the next
stop on the Subcommittee's patent reform tour. Passage of the
patent fee bill, H.R. 1561, consumed much of this
Subcommittee's time earlier this term. The Patent and Trademark
Office desperately needs the additional revenue.
While H.R. 1561 doubtlessly will improve PTO's
administrative ability to tackle the problems of application
pendency and backlogs, these goals should not supersede the
need to improve public confidence in the validity of issued
patents. All roads should lead to enhanced patent quality.
Patents of dubious probity only invite legal challenges that
divert money and other resources from more productive purposes,
purposes such as raising venture capital, commercializing
inventions and creating jobs.
Today's hearing addresses an important subject that could
strengthen how parties challenge the scope and validity of weak
patents. The primary administrative procedure for addressing
such disputes in the United States is reexamination, which may
be initiated by any party during the life of the patent.
Conceived in 1980, reexamination permits the patent owner or
any other party to request that the PTO reconsider the grounds
on which the patent was originally issued. Initiation of a
reexamination requires that some previously undisclosed new and
relevant piece of prior art be presented to the agency.
The standard, a substantial new question of patentability,
prevents the reopening of issues deemed settled in the original
examination. A relevant disclosure must also be printed in
either a prior patent or prior publication. No other source can
serve as grounds for the reexamination. A major criticism of
this system is that its ex parte nature limits the
participation of third parties. In response, our Subcommittee
developed an inter partes component of reexamination in 1999
and amended the provision further in the 107th Congress to
encourage its use.
Unfortunately, the proceeding remains something of a white
elephant to most challengers, in part because they are estopped
under its terms from asserting claims in later court
proceedings that could have been raised during reexamination.
A more elaborate and adversarial procedure for challenging
the validity of patents in the immediate aftermath of their
issuance is the European opposition proceeding. This system
permits challengers to contest a wider range of issues related
to patentability in a more robust, almost trial-like, manner.
Unlike reexamination, however, European post-grant claims must
be made within 9 months of a patent's issuance.
While our witnesses and many inventors may embrace post-
grant in the abstract, the patent community at large has not
coalesced around the particulars of one proposal. The purpose
of this hearing, therefore, is to explore whether the adoption
of a post-grant system in the United States would improve
patent quality. If so, what will be the prominent features of
the new construct?
Whatever our initial differences today, I hope that next
year, we will draft legislation that enhances, perhaps by
replacing, the current reexamination process. Our goal is to
empower inventors to challenge the scope and validity of
patents when truly appropriate in an administrative setting.
That concludes my opening statement, and the gentleman from
Virginia, Mr. Boucher, is recognized for his.
Mr. Boucher. Mr. Chairman, thank you very much for
convening today's hearing on ways to improve the process by
which patents are awarded. I would like to say a word of
welcome to our witnesses today who represent a very diverse
group of interests, and we are very glad to have you here.
Under current law, it is very difficult to challenge a
patent once it has been awarded, even if there is evidence of
the existence of prior art or other matters that would render
the patent invalid. The current inter partes reexamination
process is limited to prior art. Other matters may not be
raised in such a proceeding. If someone initiates an inter
partes reexam, he is confronted with the application of the
estoppel principle in any later court proceeding with respect
to the matters he raised in the inter partes reexamination
proceeding, and any matters he could have raised are also
subject to estoppel in a later court process.
No cross-examination of witnesses is permitted in the inter
partes reexamination; no oral testimony is permitted during the
inter partes reexamination, and so, it really is a process on
paper where material is submitted, limited just to the question
of whether or not there is prior art. No argument is permitted
essentially on either side.
And so, not surprisingly, given the limited nature of this
process, it is no wonder that the application of estoppel at
the end of it renders the process all but useless, and in fact,
it has not been used a great number of times.
If the party wanting to contest a patent decides to go to
court, he is also confronted with a very high hurdle, and that
very high hurdle is a clear and convincing evidence standard.
That is a barrier that is difficult to surmount, and so, under
current law, when you look at all the various processes open,
you have to conclude that it is extraordinarily difficult to
challenge a patent.
I personally believe that patent quality would be enhanced
if we had a more meaningful process through which these claims
can be raised. The current system clearly can be improved, and
I would suggest, as others have, that the creation of a
postaward opposition offers a meaningful opportunity to
challenge patents before going to court. That approach has
merit, and I am pleased to see a consensus developing, as I
think will be represented by our witnesses here today, that a
meaningful postaward opposition proceeding would be a positive
step for us to implement.
There are some other issues that our witnesses may care to
address, and let me simply list these: first of all, should we
consider a provision that would require the publication of all
patent applications after 18 months? Under current law, the
only patent applications that must be published after 18 months
are those that are destined for international filing as well as
for domestic filing. And those that are for domestic filing
only escape the current 18-month publication. So one question
is should we expand to all patent applications, including those
that are domestic only, the 18-month filing requirement?
There are political problems associated with that that I
readily acknowledge, but I would be interested in learning from
our witnesses whether they think in theory it is a good idea.
In the case of submarine patents, should the law be changed to
remove the automatic injunction that now applies against the
defendant whenever the court finds that an infringement has
occurred when one of these submarine patents arises, and
instead, perhaps, a provision would be better if it required
the court to weigh the harms to both sides in such an instance
before deciding whether or not to issue an injunction.
A third possible question is at what point should a person
be able to file a declaratory judgment action for a judgment on
the validity of a patent held by someone else? Is it upon the
receipt of a licensing letter from the patent holder? Is it
upon the threat of suit against the person who may be involved,
perhaps, in a manufacturing application by the patent holder?
Or should it be upon the occurrence of some other event that we
determine that a case in controversy exists and therefore make
eligible a declaratory judgment action?
These are just some of the questions that I think revolve
around the very important subject of steps we could take here
in order to improve patent quality, and I again want to commend
the Chairman for his strong interest in this subject, for
convening today's hearing and also thank the witnesses for
their participation.
Mr. Smith. Thank you, Mr. Boucher. Without objection, other
Members' opening statements will be made a part of the record.
And let me proceed to introduce our witnesses. Our first
witness is Jim Toupin, who became general counsel for the U.S.
Patent and Trademark Office in January 2001. In that capacity,
Mr. Toupin provides legal advice and court representation for
the PTO and conducts oversight of the PTO Office of the
Solicitor, Board of Patent Appeals and Interferences and
Trademark Trial and Appeal Board.
Mr. Toupin was educated at the Boalt Hall School of Law at
Berkeley, where he served as editor of the California Law
Review and at Stanford, where he received a bachelor's degree
in history Phi Beta Kappa. He has published widely on various
intellectual property, health and trade issues.
Our next witness is Jeffrey Kushan, a partner and patent
attorney at Sidley, Austin, Brown & Wood's Washington, D.C.
office. He is testifying on behalf of the biotechnology company
Genentech. Last year, American Lawyer Magazine named Mr. Kushan
as one of the top 45 lawyers in the United States under the age
of 45. Mr. Kushan, I remember asking you about that before.
When are you going to age out? [Laughter.]
Five more years? And do they have a top 50 under 50?
[Laughter.]
Just a 45 under 45; okay.
In any case, he is very distinguished. He serves as
Chairman of the American Bar Association's Patent Law Committee
and as an adjunct faculty member of the George Washington
University. Mr. Kushan is a graduate of the George Washington
University Law School. He earned a master's in chemistry from
the University of North Carolina at Chapel Hill and a
bachelor's in chemistry from the College of William and Mary.
Our next witness is Mike Kirk, the executive director of
the American Intellectual Property Law Association. Before
joining AIPLA, Mr. Kirk worked at the Patent and Trademark
Office for nearly 30 years. Mr. Kirk earned his bachelor of
science in electrical engineering at the Citadel in 1959; his
juris doctor in 1965 from Georgetown Law Center; and his master
of public administration in 1969 from Indiana University.
Our final witness is Mr. Karl Sun, who became Google's
first patent counsel in 2002. Prior to joining Google, Mr. Sun
practiced law in California and counseled emerging corporations
on development finance and intellectual property matters. He
has also clerked for the Federal Circuit. Mr. Sun studied
electrical engineering, computer science and technology and
policy at MIT, where he earned a bachelor of science and two
master of science degrees. He completed his legal studies at
Harvard and served as editor of the law review.
Welcome to you all, probably the most educated witnesses we
have had in a long time before the Subcommittee, and we
appreciate your taking the time and giving us your expert
advice. We have statements from all of our witnesses, and
without objection, they, too, will be made a part of the
record.
We would ask you to keep your testimony, if you could, to 5
minutes, and with that, we will proceed, and Mr. Toupin, would
you start?
TESTIMONY OF JAMES A. TOUPIN, GENERAL COUNSEL, U.S. PATENT AND
TRADEMARK OFFICE (PTO), WASHINGTON, DC
Mr. Toupin. Good afternoon, Chairman Smith, Congressman
Boucher, Members of the Subcommittee. I am pleased to have this
opportunity to present the U.S. Patent and Trademark Office's
views regarding post-grant review of patents. Before I turn to
this important subject, I want to take a moment to thank you
for your continued leadership on innovation and USPTO issues.
As you know, the Office's 21st Century Strategic Plan was
developed in response to a Congressional requirement. This
blueprint for modernizing the office contains 37 initiatives
that focus on quality, productivity and e-Government. Creating
a new procedure to permit the agency to review economically
significant patents after they are granted based on full
participation of interested parties is an important part of the
strategic plan's emphasis on patent quality.
Over the past 25 years, Congress has incrementally added to
the USPTO's jurisdiction under which third parties could seek
office review of issued patents. In 1980, Congress introduced
ex parte reexamination, under which a third party could
petition for reexamination of a patent. In 1984, section 135 of
the Patent Act was amended to allow issues of patentability as
well as priority to be included in interference proceedings,
and in 1999, Congress, as part of the American Inventors
Protection Act, created inter partes reexamination, whereby a
third party could participate in a reexamination proceeding.
That, as the Chairman mentioned, was amended in 2002.
The USPTO's ability to review issued patents has grown. But
none of these procedures have fully utilized the Office's
ability to review issued patents. For example, interference
proceedings only lead to challenges of patents when a pending
application raises a priority issue as to a recently-issued
patent. Further, except in interferences, a third party cannot
conduct discovery and develop evidence necessary to challenge
patentability, nor can a third party challenge patent owner
evidence by cross-examination.
More typically, a third party may only challenge the
patentability of patent claims in the Office based on certain
prior art references, namely patents or printed publications,
by reexamination. However, potential challengers have regarded
ex parte reexamination as an insufficient mechanism because
after the proceeding has begun, the third party's participation
is limited at most to one reply.
The inter partes reexamination procedure was intended to
address this defect; however, limitations on that process, as
noted, have led it to be rarely used. Only 46 inter partes
reexaminations have been instituted during the nearly 5 years
for which the procedure has been available.
This history helped the USPTO develop its strategic plan
and consider whether it could improve its capability to conduct
post-grant review. The USPTO proposes a review model different
from reexamination, namely, a genuinely contested case presided
over by a panel of administrative patent judges which, upon the
challenger's presenting sufficient grounds to believe that
patent claims are unpatentable, would include closely-directed
discovery and cross-examination.
The proceeding would be designed to be concluded within a
year and would provide for challenges based on all grounds of
unpatentability but not inequitable conduct. They would be
available to challengers for a year after a patent issues and
thereafter to those threatened with patent infringement
litigation.
The USPTO's proposal is thus designed to put review of the
propriety of patent claims that the public regards as important
in the hands of senior, legally-qualified officials with
experience in dispute resolution. It is designed to be more
efficient than litigation while preserving enough of the full
participation according to parties in litigation that
challengers will be able to risk being able to be bound by the
result. By providing for the possibility of amendment of
challenge claims, the proposed system would preserve the
merited benefits of patent claims better than the win-all-or-
lose-all validity contests in District Court.
The subsequent response from those studying the patent
system and from user groups suggests that post-grant review is
an idea whose time has come. As you may know, two recent
reports on the U.S. patent system issued since the 21st Century
Strategic Plan espoused post-grant review proposals strikingly
similar to the USPTO's. Interested groups such as AIPLA and the
Intellectual Property Owners have also passed resolutions
supporting the concept.
It is time to develop a new American procedure that will
increase public confidence in one of America's truly great
legacies, the patent system, by establishing a comprehensive
post-grant review of patent validity. We contemplate that it
will be a cost-effective alternative to litigation while
strongly protecting the public and respecting the inventors who
are at the heart of the system.
We look forward to working with the Subcommittee and
interested parties to develop a sound proposal that will draw
on the capabilities of the USPTO to better serve the vitality
of the patent system.
Thank you.
[The prepared statement of Mr. Toupin follows:]
Prepared Statement of James A. Toupin
Mr. Smith. Thank you, Mr. Toupin.
Mr. Kushan?
TESTIMONY OF JEFFREY P. KUSHAN, ESQUIRE, SIDLEY AUSTIN BROWN &
WOOD, ON BEHALF OF GENENTECH, INC.
Mr. Kushan. Thank you, Mr. Chairman. I want to congratulate
you, Mr. Boucher and the other Members of the Subcommittee for
taking up this important issue and, as you noted, I am here on
behalf of Genentech today. Genentech very much appreciates the
opportunity to provide its views on this important topic for
legislation.
Genentech is one of the world's leading biotech companies.
It was formed just over 25 years ago, which, if you do your
math, makes it the first biotech company. It is based in South
San Francisco, California. Genentech is an active user of the
patent system and owns thousands of patents. Genentech depends
on the security of those patents to protect its cutting edge
products, and securing effective patent rights is instrumental
to Genentech's ability to bring new products to the market for
the benefit of patients.
Genentech commends the Subcommittee for taking up this
issue for deliberation and for legislative action. We strongly
support the Committee's efforts to design and implement an
effective administrative post-grant review procedure and to do
so rapidly.
As other witnesses have and will observe, there is a broad
support within and outside of the patent community for creating
an effective administrative procedure for reviewing the
validity of an issued patent. We believe this reflects an
appreciation that the existing procedures are not effective,
not balanced and not fair. It also demonstrates a clear need
for an option other than patent litigation in a Federal court
to resolve questions that may exist regarding the validity of a
patent.
The challenge for Congress, however, is to devise a system
that not only provides a rigorous inquiry into the validity of
the patent but is also structured to prevent harassment of the
owners of valid patents. A system that allows frivolous
challenges to be made or which can be used to tie up a patent
in a long and endless administrative proceeding would fail to
meet the needs of those users of the patents community and the
needs of the public.
Similarly, a process which is as complex, burdensome and
expensive as patent litigation would yield few benefits. The
broad support you see for creating a new post-grant review
procedure is based on an appreciation that the PTO does have a
special expertise in certain matters relating to the validity
of a patent. Specifically, PTO can use professionals with a
scientific or technical expertise in the field of the
invention. The PTO is also intimately familiar with the
application of certain of the patentability requirements:
novelty, nonobviousness, written description, enablement and
utility.
Genentech is confident that Congress can devise an
appropriately-structured administrative procedure rather than
attempt to go into every parameter you might see in that system
which might take 5 minutes or, at this point, two and a half
minutes, we would like to emphasize a few critical parts of the
system, whatever its shape, from Genentech's perspective.
First, it is very important that the procedure permit
review of compliance with the written description and
enablement requirements of 35 USC 112 and the utility
requirement of 35 USC 101. These requirements ensure that a
patent applicant is entitled to the breadth of the patent
rights that have been awarded and that the patent owner has
possession of the invention when the patent application was
filed.
The utility requirement ensures that the patent owner has
identified credible, specific and substantial utility for the
claimed invention. These factors presently dominate the
examination of biotechnology patent applications and are often
important factors in evaluating the validity of many
biotechnology patents. A post-grant review system that does not
permit review of these issues would fall far short of its
potential.
Second, any party wishing to commence a proceeding should
be required to establish that one or more claims in the patent
are prima facie invalid. If the PTO finds, through its
independent assessment, that that proof is not sufficient, then
it should not start a proceeding. This threshold determination,
in our view, is extremely important to protect the interests of
patent owners and should not be omitted from any system.
Third, we believe Congress should not attempt to create any
special statutory estoppel provisions in any new system. These
estoppel provisions that we have seen in the inter partes
regime have really deterred use of that regime. I would note
that we do not see that there is any need for any special
statutory estoppel provision in litigation. The issues that you
fought about in front of the Patent Office will be vibrantly
pointed out by your opponent, and there is a natural estoppel
that attaches that a court is going to give deference to, so we
see no need for any special construct that would expand that
estoppel provision.
Fourth, and this is a point which I do not believe has
picked up a lot of attention in the past, we do not believe
that the proceedings that you conduct after the patent is
issued should give rise to a basis for holding the patent
unenforceable under the inequitable conduct doctrine. Under
existing law, a patent can be held unenforceable by showing
that a patent applicant during the ex parte examination of the
application engaged in inequitable conduct before the Patent
Office.
A special duty of disclosure is imposed on the patent
applicant to make sure that the public interests are protected.
That is because the public cannot participate in that ex parte
examination. Unfortunately, the issue of inequitable conduct is
a virtual plague in patent litigation today in creating new
grounds for letting that arise in litigation; it would be very
unhelpful.
And finally, we believe that it would be very useful to
have a fixed period during which oppositions can be commenced.
We are open to considering options where it would be possible
to commence an opposition after that time period has ended.
In conclusion, we just thank you for the opportunity to
give you our views.
[The prepared statement of Mr. Kushan follows:]
Prepared Statement of Jeffrey P. Kushan
Mr. Chairman and distinguished Members of the Subcommittee,
My name is Jeff Kushan. I am a partner in the Washington office of
the law firm of Sidley Austin Brown and Wood, LLP. I am also a
registered patent attorney, and specialize in the areas of
biotechnology, pharmaceuticals and software-related inventions.
Today, I have the privilege of offering testimony on behalf of
Genentech, Inc. Genentech is a world-leading biotechnology company,
based in South San Francisco, California. Genentech is committed to
developing new biotechnology products to meet unmet medical needs.
Genentech actively procures patent protection for its technology, and
depends on an effective and fair patent system. Genentech very much
appreciates the opportunity to provide testimony to the Subcommittee on
the issue of today's hearing. We commend you, Chairman Smith, along
with your colleagues on the Subcommittee, particularly the Ranking
Member, Mr. Berman, for taking up this important and timely issue.
Genentech strongly supports the creation of an effective, fair and
expeditious post-grant administrative patent review procedure. Options
that exist today--so-called ex parte and inter partes reexamination--do
not present a viable alternative to litigation in the Federal courts,
primarily because these procedures do not provide third parties with a
fair and balanced degree of participation relative to patent owners.
The absence of a fair and efficient administrative procedure to review
patent validity makes it possible for owners of invalid patents to use
the often enormous expense of patent litigation to shield invalid
patents from challenge. An improperly granted patent that cannot be
reviewed in a cost-effective manner creates unjustified burdens and
risks for American companies, including those in the biotechnology
industry.
Genentech believes that the availability of an appropriately
structured post-grant review system will enhance public confidence in
the patent system, and provide the public with a much needed
administrative alternative for resolving questions of patent validity.
We recognize that there is broad support within and outside the patent
community for creating a viable post-grant patent validity review
procedure. The challenge, however, will be for Congress to define
certain critically important elements of such a procedure--in this
case, the devil truly is in the details. Our testimony below identifies
what we believe to be the most significant requirements of a viable
post-grant review procedure. We thank the Subcommittee for giving us
the opportunity to share our views on this important issue, and stand
ready to work with the Congress to make a viable post-grant patent
review procedure a reality.
introduction
The United States patent system is structured to deliver reliable
results in a cost-effective and timely manner. Examination is conducted
on an ``ex parte'' basis--meaning that the PTO and the patent applicant
are the only participants in the examination process. The advent of
publication of patent applications prior to grant from the 1999
American Inventors Protection Act (AIPA) has shed some light onto
ongoing examinations, but, fundamentally, the patent examination
process remains closed to substantive participation by parties other
than the patent applicant.
Practical considerations mandate that this model continue. The PTO,
given its resource constraints, simply cannot administer a system that
permits third parties to intervene in the examination of pending
applications. Experiences in other countries that do permit
intervention in the examination of applications are uniformly negative.
These experiences show that in many instances, third parties intervene
to simply delay the issuance of a patent, which disrupts business
expectations of patent applicants and consumes limited patent office
resources. Allowing public intervention in the examination of pending
U.S. applications would create immense practical problems, given the
volume of applications now pending before the PTO, and the limited
amount of examination resources that are available.
The logical alternative is a post-grant review procedure
administered by the PTO. Congress, perhaps recognizing this, has always
focused on procedures that envision an opportunity for the public to
have the PTO review the validity of an issued patent. The first such
system adopted by Congress was the ``ex parte'' reexamination system,
enacted in 1982. In the ex parte reexamination system, any person,
including the patent owner, may commence a reexamination of any issued
patent on the basis of a patent or a printed publication that raises a
substantial new question of patentability. See, 35 U.S.C. Sec. 302. The
ex parte reexamination procedure, like original examination, is a
closed procedure--only the patent owner and the PTO participate
substantively in the proceeding. As a result, most third parties avoid
use of this procedure for commercially significant patents, since it
does not afford those third parties a meaningful opportunity to
participate in the proceeding.
the 1999 inter partes reexamination effort
In 1999, Congress created an enhanced version of reexamination,
termed ``inter partes'' reexamination. The inter partes reexamination
procedure does provide more of an opportunity for third parties to
participate in the proceeding. However, due to the limitations built
into the system, this ``enhanced'' version of reexamination has fallen
short of expectations. The limited number of inter partes reexamination
requests that have been commenced--despite the fact that hundreds of
thousands of otherwise eligible patents have issued since enactment of
the legislation--suggests that the design of this procedure will
continue to limit its use by the members of the public.
The most significant deficiencies of the inter partes reexamination
system can be summarized as follows.
It is not possible to use the procedure to review
patentability issues that are most commonly encountered in
biotechnology patents and applications; namely, compliance with
35 U.S.C. Sec. Sec. 101, and 112, first paragraph. It has been
our experience that issues of compliance with the written
description and enablement provisions of 35 U.S.C. Sec. 112,
first paragraph, and the utility requirement of Sec. 101,
frequently are significant inquiries affecting the validity of
many biotechnology patents and patent applications. Not
permitting these grounds to be raised in a post-grant review
procedure renders the system far inferior as an alternative to
litigation in a Federal court.
The law imposes two distinct ``statutory estoppels''
that in combination make the procedure unattractive as an
alternative to litigation in a Federal court. The first, found
in 35 U.S.C. Sec. 315(c), prohibits a requestor from raising in
a Federal court any issues of validity that ``could have been
raised'' at the time of the request for reexamination in view
of art known to the requestor. This broad estoppel attaches by
the mere filing of a request for inter partes reexamination.
The second ``estoppel'' is found in an uncodified section of
the AIPA (Sec. 4607 of the Intellectual Property and
Communications Omnibus Reform Act of 1999, as enacted by
Sec. 1000(a)(9) of Public Law 106-113), and is designed to
prohibit a third party who participates in a reexamination
proceeding from later contesting the legitimacy of any
``facts'' determined in the proceeding. These statutory
estoppel provisions impose an unacceptable price on use of the
inter partes reexamination procedure in almost all situations.
The inter partes reexamination system does not permit
third parties to use certain evidentiary procedures that would
ensure that the procedure is sufficiently rigorous. For
example, it is not possible to cross-examine expert witnesses
used in the proceeding or direct questions to the opposing
party.
Finally, the system cannot be used to review issues
of validity involving patents issued on applications filed
before November 29, 1999. We note that this limitation, in
particular, has rendered the system of marginal value to many
companies in the biotechnology industry, in part because there
still remains a significant number of biotechnology patent
applications pending before the PTO that were filed before this
date.
These limitations in the inter partes reexamination system--ostensibly
established in 1999 to provide a more robust alternative to ex parte
reexamination--have made the procedure of marginal value to the public.
It is not an effective alternative to expensive, unpredictable and
protracted litigation in the Federal courts. As such, the inter partes
reexamination procedure has not met expectations.
recent developments
In the past year, the Federal Trade Commission (FTC) and the
National Academies of Science (NAS), have both issued reports calling
for the creation of a more robust and effective administrative post-
grant patent review system. The motivation for these organizations is
the same as that which led Congress to establish the ex parte and inter
partes reexamination procedures. Specifically, each organization
recognizes that the PTO has a special expertise in evaluating certain
patentability issues, such as anticipation, nonobviousness, enablement,
written description and utility. They also recognize that certain
issues often addressed in litigation before a Federal court (e.g.,
infringement, inequitable conduct) are a major source of the high cost
of patent litigation, yet are not pertinent to validity of the patent.
Both organizations accurately recognize that an administrative patent
validity review proceeding can be conducted more rapidly than
litigation in a Federal court, and that the public would significantly
benefit from the availability of a procedure that does not present the
burden, duration and associated expenses of patent litigation. These
organizations also appreciate that that any new system should not
permit third parties to harass patent owners, or initiate groundless
attacks on patents.
recommendations for reform
Genentech believes it is possible to create a viable, cost-
effective, and fairly balanced post-grant administrative patent review
procedure. A variety of models have been proposed for such a system in
the past few years, including those from the Patent and Trademark
Office in its 21st Century Strategic Plan, the NAS, the FTC and the
American Intellectual Property Law Association (AIPLA). Many of these
proposals have significant merit, and could serve as a suitable
foundation for legislation. Moreover, these organizations have
identified a number of important assumptions and conditions for a
successful post-grant review procedure. We encourage the Congress to
study these proposals carefully.
The excellent work done by these organizations also permits us to
focus on a number of key issues that Genentech believes are of
particular importance, regardless of the ultimate framework chosen for
the system. We note that each of these organizations, for example,
recognize that the PTO has resource constraints. They also recognize
that the PTO has a special expertise in certain, but not all
patentability issues. For example, the PTO rarely encounters issues
associated with compliance with the ``best mode'' requirement of 35
U.S.C. Sec. 112, first paragraph. Similarly, the PTO does not often
evaluate compliance with the duty of disclosure requirement of 37 CFR
Sec. 1.56. Such topics in which the PTO has no special expertise or
which cannot be fairly evaluated using objective inquiries should not
be placed in the hands of the PTO to evaluate in a post-grant review
procedure.
We also recognize that certain decisions will have to be taken as
to how the new regime relates to the existing ex parte and inter partes
reexamination procedures. For example, we believe there is value in
retaining an efficient and simple documentary procedure for reviewing
validity issues raised by a patent or a printed publication. It may be
possible to design a flexible post-grant review procedure to permit
parties to conduct the procedure in a way that preserves this ``least
complicated'' approach. We also believe it is appropriate for the PTO
to continue to have the authority to conduct Director-ordered reviews,
but to expand this authority to evaluate compliance with issues under
35 U.S.C Sec. 101 or Sec. 112, first paragraph (other than best mode).
The Congress should also carefully evaluate how multiple
proceedings initiated under the new system will be coordinated, both
with respect to other opposition requests, and with interference
proceedings. We note that it may be desirable to provide statutory
guidance to the PTO and to parties as to how such proceedings may be
merged, suspended or otherwise coordinated so as to reduce the
potential burdens on patent owners involved in multiple proceedings,
and to ensure that efficient disposition of validity issues associated
with a patent.
With these initial observations in mind, we believe there are a
number of important parameters that must be included in any post-grant
review procedure. These can be summarized as follows:
1. Scope: The system must permit review of questions of
compliance with 35 U.S.C. Sec. 101 and Sec. 112, first
paragraph (other than best mode), in addition to Sec. Sec. 102
and 103. As noted earlier, compliance with the written
description and enablement requirements of 35 U.S.C. Sec. 112,
first paragraph, and with the utility requirement of Sec. 101,
is often an important inquiry for a biotechnology patent. These
issues also tend to be among the more significant issues
addressed during original examination, rather than prior art
issues. A system that omits the possibility of raising these
non-prior art issues would significantly reduce the value of a
post-grant review procedure to most biotechnology companies.
2. Estoppel. Participation in a post-grant review system must
not create any barrier for the participants to litigate patent
validity on issues that were not actually raised and addressed
in the post-grant review proceeding before the PTO. Genentech
believes Congress should avoid including estoppel provisions in
any post grant review legislation, and should specifically
avoid including provisions that are comparable to the codified
and uncodified estoppel provisions applicable to inter partes
reexamination proceedings.
3. Preliminary Showing to Initiate Procedure--Any party
wishing to commence a proceeding should be required to set
forth, supported by substantial evidence, a prima facie showing
of invalidity of one or more claims. If such an initial showing
is not made, the Office should not commence the proceeding.
Genentech believes this ``initial proof'' requirement is an
important part of any post-grant review procedure that could
result in invalidation of one or more claims of a patent.
Without this initial determination, patent owners could be
subjected to groundless challenges to their patents.
4. Time Limits to Initiate Proceeding. Any third party should
be allowed to initiate a post-grant review proceeding provided
it has made an appropriate preliminary showing within a fixed
period following issuance of the patent. In our view, that
period of time could range from one to two years after grant of
the patent. Genentech also believes it may be appropriate to
allow post-grant review proceedings to be commenced after this
fixed period has expired, but only in strictly limited
circumstances. One example would be where the patent owner
consents to having the proceeding commenced before the PTO.
Genentech remains open to consideration of additional,
appropriately limited circumstances in which oppositions may be
commenced after a fixed period from patent grant.
5. Applicable to All Patents. The system should permit review
of any patent that is capable of being enforced, subject to the
threshold showings and limitations noted above. Thus, the
system should permit review of patents issuing on applications
filed on or before the effective date of the American Inventors
Protection Act.
6. Limited Additional Evidentiary Procedures. Genentech
believes a viable post-grant review procedure should permit use
of evidentiary procedures that will provide a more rigorous
review of issues pertinent to the validity of a patent than are
permitted under the current inter partes reexamination
authority. At the same time, we recognize that if all the
evidentiary procedures available in litigation before a Federal
Court were allowed to be used in a post-grant review procedure
before the PTO, no benefits would be realized from using the
PTO-based procedure. As a result, Genentech believes it would
be appropriate to make available only certain limited
additional procedures in a post-grant review procedure. Such
additional procedures should include the right to cross-examine
a witness who offers testimony in the proceeding. Additionally,
if the presiding authority (e.g., an administrative patent
judge) finds it appropriate, certain additional procedures
could be made available including: (i) limited requests for
admissions, (ii) a limited number of interrogatories, and (iii)
the opportunity for an oral hearing. Other measures, however,
should be prohibited. In particular, parties to a post-grant
proceeding should not be subject to document production, or
forced to produce fact witnesses for depositions. Such
restrictions are appropriate and will not undermine the
effectiveness of the procedure, in part because they are
unnecessary. We note in this regard that the PTO, unlike a
court, can use officials with technical expertise in the
particular field of a patented invention to conduct and manage
proceedings. This provides the PTO with a capacity to
independently assess assertions made by the parties to the
proceeding. We believe these limitations on the types of
evidentiary measures made available in a post-grant proceeding
will help to ensure that the PTO procedure does not replicate
the functions of full-scale litigation in a Federal court.
7. Prohibit inequitable conduct challenges based on actions of
parties during post-grant proceedings. The inequitable conduct
doctrine operates to ensure that patent applicants during ex
parte examination of their applications are held to a higher
standard of dealing with the PTO. See, 37 CFR Sec. 1.56. A
party that does not meet his or her duty of disclosure to the
Office can cause that party's patent to be held unenforceable.
The reason for this enhanced duty of disclosure is that the ex
parte examination procedure is closed and the public cannot
participate. Unlike ex parte examination, however, post-grant
review procedures under consideration would be public and would
include the active participation of one or more parties opposed
to the patent owner. These factors eliminate the need for any
enhanced disclosure standards comparable those imposed during
original examination. Moreover, there is no comparable sanction
that can be imposed on third parties in such a proceeding
(i.e., those parties will be free to litigate infringement,
enforcement and invalidity in the future largely unfettered by
their participation in the proceeding). In view of this,
Genentech does not believe it would be appropriate to impose an
enhanced duty of disclosure on participants in a post-grant
proceeding that could result in the patent being held
unenforceable. Certainly, regulations designed to ensure proper
conduct of parties in such proceedings are appropriate, and
should be enforced by the PTO. If the PTO finds that one party
has made a misrepresentation, it should have the authority to
take actions to sanction that party during the proceeding.
Where such misrepresentations are discovered after the patent
emerges from the proceeding, courts may give due consideration
to the actions of the party, but should not be allowed to hold
the patent unenforceable.
8. Authority to Delegate Certain Issues for Resolution. The
PTO faces annual challenges and uncertainty in its funding. In
view of this, it would be desirable for Congress to allow the
PTO to delegate responsibility to private parties to resolve
certain fact issues. For example, as is the case with the
existing interference authority, the PTO may allow parties to
arbitrate certain issues. In a similar fashion, the PTO could
allow a third party to adjudicate certain conflicts, and then
to rely on those findings in making its patentability
determinations. This authority may be useful to have to ensure
that funding problems do not adversely affect the progress of
cases that have been commenced. Genentech believes, however,
that the ultimate determination of validity of the patent
within the context of these proceedings--once a proceeding has
been commenced--must remain the exclusive jurisdiction of the
PTO. In other words, while we support the use of appropriate
cost-saving measures, the PTO must continue to make its final,
independent determination of whether a patent meets the
statutory requirements of validity.
conclusions
Genentech relies extensively on the patent system to protect its
innovations. Our experiences teach us that invalid patents cause the
greatest business disruptions--both when Genentech owns the patent and
when Genentech is facing the patent. A cost-effective procedure that
allows for robust participation by third parties, yet is appropriately
limited to avoid prejudice and the problems of litigation before a
Federal court, would provide immense value for patent owners and the
public alike.
As Congress begins it deliberations on this important issue, it
should keep certain fundamental principles in mind. First, there is no
right of a member of the public to retain and enforce an invalid
patent. It also is not appropriate to permit entities to use the high
cost and complexity of patent litigation to prevent discovery of
invalidity of a patent. Invalid patents impose an immense and
unjustified cost on American businesses, including companies in the
biotechnology industry.
Second, we believe a properly designed system must incorporate
safeguards to ensure that it will not be abused by third parties. As
noted above, the devil is in the details. The challenge is for Congress
to create a procedure that provides a rigorous and balanced inquiry
into the validity of a patent, and to make that procedure feasible for
the PTO to administer. A system that permits a third party to paralyze
a patent by initiating an open-ended administrative proceeding would
seriously undermine the incentives and purpose of our patent system.
Likewise, a proceeding that becomes comparable in complexity, burden
and cost to litigation in the Federal courts would yield no benefits.
Finally, a patent review system administered by the PTO must remain
focused on those issues that the PTO has special expertise in
evaluating, and work within the practical constraints of an
administrative proceeding that is designed to be efficient but
thorough. In particular, the system should avoid having the PTO
evaluate questions of compliance with the ``best mode'' requirement of
35 U.S.C. Sec. 112, or compliance with the duty of disclosure under 37
CFR Sec. 1.56. The system should also build on the recognition that the
PTO can bring a special technical expertise to independently evaluate
scientific and technical questions that bear on patentability. At the
same time, the PTO is not well-equipped to manage contentious
proceedings that will turn on critical evidentiary questions. As such,
we encourage the Congress to incorporate safeguards that take account
of these limitations, and to not create a system that the PTO is
incapable of effectively managing.
Genentech thanks the subcommittee for the opportunity to present
its views, and encourages the Congress to act promptly to enact this
much-needed legislation.
ATTACHMENT
Mr. Smith. Thank you, Mr. Kushan.
Mr. Kirk?
TESTIMONY OF MICHAEL K. KIRK, EXECUTIVE DIRECTOR, AMERICAN
INTELLECTUAL PROPERTY LAW ASSOCIATION (AIPLA)
Mr. Kirk. Thank you, Mr. Chairman.
I am very pleased to have the opportunity to present the
views of AIPLA on the question of improving patent quality with
a post-grant opposition system. Any time patents are issued
which appear to be of questionable validity, it undermines the
confidence of businesses and consumers. While the validity of
such patents may be tested through litigation, reexamination,
reissue and interference, all of these options suffer
significant deficiencies.
Litigation is expensive, averaging $1.5 million to $4
million per party, depending on the amount at risk. Both types
of reexamination, as has been pointed out, also have failings.
They are limited to patents and printed publications. In ex
parte reexamination, the third party requestor is effectively
denied any opportunity to participate. Inter partes
reexamination, which was designed to allow and encourage that
participation, has failed primarily due, as was pointed out, to
the stringent estoppel provisions and also to the requirement
to name the real party in interest. Reissues and interferences
generally are not available to challengers and therefore play a
minor role in that respect.
We agree with the PTO that the time is now for an effective
post-grant opposition system. AIPLA has attempted, through the
establishment of a blue ribbon committee back in November, to
establish recommendations for a post-grant system, first by
formulating a draft text of such a system to try to understand
better what the problems would be when you get down to the
details.
In a perfect world, we would have a post-grant opposition
system in which every issue relevant to patentability could be
raised and resolved quickly and inexpensively. All parties
would have the opportunity to obtain discovery, present
affidavits and declarations, present live testimony, cross-
examine the opposing party's witnesses and generally conclude
the proceeding rapidly, perhaps within 1 year.
In the real world in which we live, however, this is not
possible. Compromises are inevitable. The proceeding must be
sufficiently attractive that the public will be willing to use
it. The grounds must be those which the PTO can effectively
handle. All parties must have a reasonable opportunity to
present evidence and to test the evidence presented by the
other party. They must have confidence in the decision makers,
and patentees must be protected against undue harassment and
delay.
We believe that the proposal that we have developed
accomplishes these goals in a fair and balanced manner. We
would propose that the proceeding have the following
attributes--first, a 9-month period in which to request an
opposition to encourage the public to promptly challenge
questionable patents--a requirement to identify the real party
in interest, but allowing that name to be kept in confidence
and disclosed only when required by issues of fairness. This
avoids the need for requestors to identify themselves as
targets for potential litigation. The proceeding should be
handled by a panel of administrative patent judges, not by
patent examiners. The patentee should have one opportunity to
amend claims, but these claims should not be enlarged.
Discovery should be generally limited to the cross-examination
of affiants, with exceptions in rare circumstances.
The requestor should have the burden of establishing facts
by a preponderance of evidence that would result in a
conclusion inconsistent with the patent's presumed validity. A
patent owner could rebut this request with his own factual
evidence and expert opinions. A 1-year limit for concluding the
proceeding, extendable by 6 months, similar to the process that
the International Trade Commission follows; an opportunity for
an oral hearing should be present, with the filing of briefs,
reconsideration and an appeal to the Court of Appeals for the
Federal Circuit.
Determinations of validity raised by a requestor would be
preclusive against that requestor in any subsequent proceeding.
And finally, any requestor should be precluded from later
filing a request for an inter partes reexamination.
The draft bill text appended to our written statement is
the result of 6 months of focused efforts by our blue ribbon
committee. We recognize that this is only the beginning.
Achieving a fair balance between the competing objectives is
challenging. New ideas and perspectives can always improve the
outcome. We also believe that the success of any opposition
procedure can only be proven in practice and that achieving a
balance would require adjusting the post-grant procedure and
its relationship to both types of reexamination and to the
other procedures based on the experience achieved.
One cautionary note that we would add: any post-grant
opposition system will be of limited value unless the necessary
resources are dedicated to its implementation. Hiring a number
of properly-trained and skilled individuals to handle post-
grant oppositions, irrespective of the details of the proposal
adopted, will be essential if the system is to achieve the
results intended and desired.
We believe that our draft proposal for a post-grant
opposition system represents a solid foundation on which to
build an effective system. We thank you for the opportunity to
address this issue and look forward to working with the
Subcommittee in designing such a system.
Thank you.
[The prepared statement of Mr. Kirk follows:]
Prepared Statement of Michael K. Kirk
Mr. Chairman:
I am pleased to have the opportunity to present the views of the
American Intellectual Property Law Association (AIPLA) on the question
of improving patent quality, specifically by establishing a post-grant
opposition system in order to create a quick, relatively inexpensive,
and effective means of challenging patents of questionable validity.
AIPLA is a national bar association whose nearly 15,000 members are
primarily lawyers in private and corporate practice, in government
service, and in the academic community. The AIPLA represents a wide and
diverse spectrum of individuals, companies, and institutions involved
directly or indirectly in the practice of patent, trademark, copyright,
and unfair competition law, as well as other fields of law affecting
intellectual property. Our members represent both owners and users of
patents, and have a keen interest in achieving an efficient and
effective post-grant opposition system.
introduction
AIPLA commends you, Mr. Chairman, for taking a fresh look at how
patent procedures can be improved to strengthen the quality of U.S.
patents and enhance the confidence of inventors, businesses, and the
investment community in the patent system. Any time patents are issued
which, on their face, appear to be of questionable validity, it
reflects negatively on the patent system and undermines the confidence
of business and consumers. While the validity of such patents may be
tested through litigation or ex parte or inter partes reexamination,
these proceedings all suffer substantial disadvantages.
Litigation is very expensive. AIPLA conducts an Economic Survey of
our membership every two years to collect data on a number of aspects
of the practice of intellectual property law. According to the most
recent Economic Survey, the average cost of patent litigation,
including the costs of discovery, ranges between $500,000 and
$3,995,000 per party, depending on the amount at risk.
In addition, it is only possible to test a patent's validity
through litigation if the patentee brings an infringement action
against a competitor or provides the competitor with standing to bring
a declaratory judgment action based on threats by the patentee. Thus, a
competitor cannot challenge a patent in litigation before the
competitor incurs the costs and risks of developing and marketing a
product.
Even where litigation is available to test the validity of a
patent, the recent National Academy of Sciences (NAS) report, A Patent
System for the 21st Century, reported that such litigation typically
does not occur until 7 to 10 years after the patent is issued and final
decision is not reached for another 2 to 3 years. Until the litigation
has been concluded, there is uncertainty in the marketplace and
uncertainty in the technology as to the scope of the patent right.
Another method of challenging patents is through reexamination in
the United States Patent and Trademark Office (PTO), either ex parte or
inter partes. While a reexamination can be initiated by a competitor
promptly after patent grant, both types of reexamination suffer
significant deficiencies. Both types of reexamination are limited to
challenges based on patents and printed publications and are decided by
patent examiners rather than by Administrative Patent Judges (APJs).
Ex parte reexamination, as its name implies, involves only the
patentee and the examiner after it is initiated. Thus, a third-party
requestor is denied any meaningful participation, allowing the patentee
the exclusive right to argue the case to the examiner and to appeal any
decisions adverse to the patentee. Moreover, the PTO has not succeeded
in handling ex parte reexamination proceedings with the ``special
dispatch'' required by the statute; one witness at the recent PTO
Roundtable Regarding Inter Partes Reexamination reported that, based on
a limited review, he found that ex parte reexaminations that went to
the Court of Appeals for the Federal Circuit (CAFC) took 9.5 years from
filing until issuance of the reexamination certificate (see Wegner,
Transcript from Round Table Meeting, www.USPTO.GOV)
Inter partes reexamination was conceived to provide a more balanced
procedure for the public by permitting greater participation by third-
party requestors, but limitations added during the legislative process
destroyed that balance. For example, unlike ex parte reexamination,
which applied to all patents in force on the date of its enactment, the
inter partes reexamination procedure only applies to patents issued on
applications filed on or after November 29, 1999.
Also, the name of the real party in interest has to be revealed
upon requesting inter partes reexamination. This creates a chilling
effect by requiring requestors to essentially identify themselves as
litigation targets under the challenged patent. A further chilling
effect arises from the stringent estoppel provisions that were added
during the legislative process even though third-party requestors have
no recourse to discovery to aid in presenting their cases.
the time for post-grant opposition has come
In view of the absence of an effective and inexpensive means to
challenge patents, AIPLA, the PTO, the Federal Trade Commission (FTC),
the NAS, and, just last week, the Intellectual Property Law Section of
the ABA have all put forth suggestions for post-grant opposition
proceedings as a means of permitting a more meaningful, timely and
cost-effective opportunity for the public to challenge patents that may
be of questionable validity.
In 1996, AIPLA proposed the establishment of a post-grant
opposition system to provide parties with an efficient, effective, and
relatively inexpensive procedure to evaluate whether the claims of an
issued patent are too broad or simply should not have been issued at
all. The PTO, as part of its 21st Century Strategic Plan released in
2002, called for the post-grant review of patents. Last October, the
FTC, in its report entitled ``To Promote Innovation: The Proper Balance
of Competition and Patent Law and Policy,'' also recommended the
establishment of an effective post-grant opposition system. Earlier
this year, the NAS, in its report mentioned earlier, recommended the
creation of an ``Open Review procedure'' to provide ``more timely,
lower cost, and more efficient review of granted patents'' to replace
the current reexamination procedures. The resolution adopted by the IPL
Section of the ABA is generally supportive of a post-grant proceeding
along the lines of the proposal AIPLA has developed. The call for an
effective, efficient post-grant system to review patents has reached a
crescendo. It is time to act.
aipla proposal for post-grant opposition
In November 2003, AIPLA President Rick Nydegger created a Special
Committee on Patent Legislative Strategies to focus on legislative
changes that are desirable and achievable for the U.S. patent system.
The Special Committee was co-chaired by two former AIPLA Presidents and
included as members a former U.S. District Court judge, a former PTO
Commissioner, five other AIPLA Past Presidents, and several other
distinguished patent attorneys. Among the many topics reviewed by the
Special Committee was post-grant review. Building on the earlier
proposal of AIPLA and the more recent recommendations of the PTO, the
FTC, and the NAS, the Special Committee developed what is believed to
be an effective and carefully balanced post-grant opposition proposal.
That proposal was approved by the AIPLA Board of Directors following
additional deliberation during several meetings. The challenge is
significant because, in the view of many, no country has truly achieved
an optimal opposition system.
In a perfect world, one would desire a post-grant opposition system
in which every issue relevant to patentability could be raised and
resolved quickly and inexpensively. Both opposer and patentee would
have the opportunity to obtain discovery, be able to present affidavits
and declarations, present live testimony, cross-examine the opposing
party's witnesses and affiants, conclude the proceeding in no more than
twelve months, accomplish this inexpensively, and protect the patentee
from harassment. In other words, we would have the equivalent of a
district court trial, but quickly and inexpensively and in the PTO.
In the real world in which we live, however, this is not possible.
In designing a post-grant opposition system, compromises are
inevitable. We must seek the appropriate balance of procedures to
accomplish the competing objectives, noted above, in a fair, effective,
relatively inexpensive, and reasonably prompt review process.
The proceeding must be sufficiently attractive for the public--
largely competitors of the patentee--so that they will be willing to
request an opposition. The grounds for challenging patents must be
those which the PTO can effectively handle. Both opposer and patentee
must have reasonable access to procedures to present evidence in
support of their case and to challenge that presented by the other
party, but without the time-consuming, expensive discovery that
accompanies patent infringement suits. And patentees, especially small
business and independent inventors, must be protected against
harassment from multiple sequential challenges, and against undue delay
in resolving questions of patent scope and validity. We believe that
the new proposal we have developed for a post-grant opposition
proceeding addresses these competing goals in a fair and balanced
manner.
The principal features of our proposal for a new post-grant
opposition proceeding are the following:
Nine-month post-issuance period in which to request
the opposition.
Requirement to identify the real party in interest,
but allowing its name to be kept confidential in appropriate
cases, until such time as justice and fairness require
disclosure.
``Front loading'' of the requester's evidence
supporting the opposition is required to expedite the
proceedings.
Opportunity for the patent owner to respond with
evidence.
Opportunity for the patent owner to amend the claims
at least once.
Discovery is normally limited to cross-examination of
affiants, but could be extended if required in the interests of
justice.
Requester has the burden of proof by a preponderance
of the evidence.
One-year time limit, start to finish, but extendable
to no more than 18 months in appropriate cases.
Opportunity for oral hearing, filing briefs,
reconsideration, and appeal to CAFC by all parties to the
opposition.
Bar to any later inter partes reexamination by the
opposer and no concurrent reexamination proceeding until the
opposition terminates
Estoppel against unsuccessful requester as to the
validity issues actually decided, but with exceptions for
issues based on later availability of new material evidence
regarding a legal or factual issue.
We believe that the draft post-grant opposition proposal appended
to our statement accomplishes these goals. The Special Committee held
numerous meetings, prepared, debated, and revised several drafts, all
the while receiving constant guidance from the Board of Directors and
the substantive Standing Committees of AIPLA. As we worked to develop
the details of a post-grant opposition procedure, we continually
discovered new issues, the resolution of which has made our proposal
more effective and balanced. Indeed, the varied background of the
participants--attorneys representing independent inventors, large and
small businesses, and universities--contributed to this balance.
As previously noted, the present proposal has been approved by
AIPLA's Board and we believe it is a commendable beginning. I say
beginning because we recognize, based on our recent experience, that
achieving a fair balance between the competing objectives of a well-
designed post-grant opposition proceeding is challenging, and new ideas
and perspectives can always improve the product. I also say beginning
because the success of any opposition procedure only can be proven in
practice, and achieving a fair balance may well require adjusting the
procedure or its relationship to ex parte and inter partes
reexamination based on experience. I would like to outline for the
Subcommittee the major features of our proposal, which is attached as
an Appendix.
Any person would be permitted to file a request for opposition to
an issued patent. The opposition request must be made not later than
nine months after the patent is granted. However, the patent owner may
consent to the filing of a request at anytime during the life of the
patent. The requester would be required to provide a complete
disclosure of the basis for the opposition together with the request.
Copies of any patents and printed publications relied upon must be
provided. If the requester relies on factual evidence or expert
opinions in support of the opposition, the requester must provide all
such evidence and opinions in the form of affidavits or declarations at
the time of filing the request.
As with inter partes reexamination, the real party in interest must
be identified. However, recognizing that this could discourage the
filing of an opposition by a party fearful of identifying itself as a
target for an infringement action, a real party in interest can request
that its identity be kept separate from the file of the opposition. In
such cases, the identity of the opposer would be made available only to
government agencies or to persons demonstrating good cause.
The need for protecting the identity of the opposer is balanced,
however, by the interests of justice and fairness in certain
circumstances. For example, under our proposal, a request cannot be
made for keeping the identity of the real party in interest separate
from the opposition file where the opposer relies upon factual evidence
or expert opinions in the form of affidavits or declarations. The
patentee must be able in such a situation to learn the opposer's
identify in order to effectively cross-examine the opposer's affiants
and declarants. Similarly, if an appeal is taken from a final decision
of the PTO, the identity of the real party in interest must become part
of the opposition file.
AIPLA's proposed opposition proceeding would allow a broader range
of issues to be raised than the existing reexamination proceedings, but
they would not be coextensive with the issues of patent validity that
could be raised in the courts. The issues in the opposition proceeding
would essentially be co-extensive with the issues that a patent
examiner considers in deciding whether to permit an application for
patent to issue as a patent. We would exclude certain issues because
they depend upon the state of mind of the inventors and are not
susceptible to resolution in such an administrative proceeding without
the availability of extensive discovery that would render the
proceeding excessively expensive and lengthy. These include issues such
as ``best mode'' in section 112 and priority of invention in section
102(g). The proceeding would permit consideration of issues under
section 101 (patentable subject matter), sections 102(a) (known or used
by others) and (b) (public use or sale), section 112 ( 1 & 2--written
description and enablement), section 251 ( 4--no broadened reissue
claims) and double patenting (only one patent per invention).
An opposition would be instituted upon request unless the Director
determined it lacked substantial merit. The Director would assign the
opposition proceeding to a panel of three APJs. The decision on the
opposition would be made upon the prosecution record that was the basis
for the grant of the patent and the additional submissions by the
parties to the opposition proceeding.
The patent owner would be afforded the opportunity to make a
complete response to the opposition request and to provide factual
evidence and expert opinions in rebuttal to the submission presented by
the requester. However, the patent owner would not be permitted to
later make additional evidentiary submissions, as a matter of right,
after making the initial response to the request.
A patent owner would have the right to amend the claims of the
patent as a part of the patent owner's response to the opposition
request. Any amended claim could not enlarge or broaden the subject
matter claimed in the patent. Subsequent amendments could only be made
upon a showing of good cause. Where an amended claim raises a new issue
of patentability, the requester would be permitted to address that new
issue.
As noted previously, we believe that significant limitations must
be imposed on the discovery available during an opposition in order to
constrain costs and avoid unduly protracted proceedings. Thus, the only
form of discovery that we believe should be available to any party to
an opposition, whether the requester or the patent owner, is the right
to cross-examine a person providing factual evidence or expert
opinions. Thus, a patent owner would be able to depose a requester's
declarants and affiants, and a requester would be able to depose a
patent owner's declarants and affiants. Only those persons whose
affidavits or declarations were submitted as part of the opposer's or
the patentee's submission could be cross-examined by way of deposition
by the other party during the opposition proceeding.
Other than depositions of these declarants or affiants, additional
discovery would only be permitted if the requesting party demonstrates
that it is required in the interests of justice. One example of where
this might apply is where cross-examination reveals the existence of
evidence that rebuts the affidavits submitted by the requester.
Discovery should be permitted in this situation so that the evidence
could be obtained. Thus, discovery in an opposition proceeding should
be available only to the extent that discovery is currently authorized
in patent interferences pursuant to 37 C.F.R. Sec. 1.687(c).
The Director would have discretion whether to accept or reject
supplemental submissions. It is anticipated that the Director would
administer this authority in a manner so as to balance fairness to the
parties with the desirability of bringing the proceeding to a timely
and prompt conclusion.
An oral hearing would be held if requested by a party to the
opposition, or ordered by the three-judge panel. Whether or not a
hearing takes place, the three-judge panel would have authority to
require the filing of briefs before deciding the issues raised in the
opposition request. We would expect that briefs would be routinely
required and operate in the manner of a typical pre-trial brief.
The fact-finding would be done on a ``preponderance of the
evidence'' standard. Since the opposition proceeding involves an issued
United States patent, the presumption that the patent is valid remains
in effect. Thus, the requester would have the initial burden of making
arguments and establishing facts by a preponderance of the evidence
that would result in a conclusion inconsistent with the patent's
presumed validity. Unlike court proceedings, however, the determination
of invalidity would be based on the ``broadest reasonable
construction'' of the claim. This is the standard used to test the
patentability of a claim during examination.
The final determination of the Director in an opposition proceeding
would be based upon a written decision, including findings of facts and
conclusions of law on the issues raised in each opposition request.
Any party adversely impacted by a decision should have the right to
request reconsideration and modification of the decision, not less than
two weeks from the date of the decision. Any party to an opposition
proceeding dissatisfied with a final determination of the Director may
appeal to the CAFC.
A very important aspect of any post-grant-opposition proceeding is
the effect the decision will have on the parties. If the estoppel
provision is too harsh, no one will use the procedure, as we have seen
with inter partes reexamination. If it is too lenient, patentees may be
subject to needless repetitive challenges by the same party. Therefore,
we believe that a determination with respect to any issue of validity
actually raised by an opposer should be preclusive against that opposer
in any subsequent proceeding, absent any factual evidence that could
not have been reasonably discovered or presented. Given the relatively
short, nine-month period for initiating an opposition and the limited
discovery available to the parties, we believe this would strike the
right balance.
We believe it is extremely important that an opposition proceeding
terminate with a final determination within one year after institution.
This one-year period would serve the public interest by providing
prompt final determinations of patentability issues raised in the
opposition. Recognizing that exceptional circumstances could arise,
however, we believe that any party to an opposition should be able to
obtain an extension of the one-year period for no more than an
additional six months upon a showing of good cause. In addition, the
three-judge panel could sua sponte extend the period for six months.
We would provide, as with interference proceedings, that an
opposition proceeding could be terminated upon the joint request of the
opposer and the patentee. Any agreement or understanding between the
patent owner and an opposer would have to be in writing and the
opposition would not be terminated until a copy was filed in the
Office. The request would have to be filed before the panel issued a
written decision. Where an opposition is terminated, there would be no
estoppel as to that opposer. If requested, the agreement would be kept
separate from the file of the opposition, and made available only to
Government agencies on written request, or to any person upon a showing
of good cause.
Similar to reexaminations, any claim determined to be patentable
would be subject to the intervening rights provision specified in the
second paragraph of section 252 for claims in reissued patents.
The opportunity to bring an opposition proceeding is intended to
encourage members of the public to make prompt submissions of facts and
expert opinions bearing on the validity of U.S. patents. The
proceeding, therefore, is designed to provide greater certainty to both
inventors and the public on the scope of valid patent rights. To ensure
against harassment by a requester, no patent for which an opposition
has been instituted should later be the subject of an inter partes
reexamination request by the party that initiated the opposition.
However, this would not apply to parties who did not initiate an
opposition.
The public should be able to continue to request ex parte
reexamination based upon patents and printed publications for the life
of a patent. This balance would best serve the public interest by
granting members of the public administrative redress where questions
of patentability exist for which additional consideration by the Office
is desired, and in granting inventors finality in the administrative
consideration of questions of patentability.
In addition, we would give the opposition proceedings preference
over reexamination proceedings. Thus, reexamination requests filed by
third parties during the nine-month period would be considered to be
requests for an opposition. Once an opposition is instituted, however,
later requests for reexamination would be stayed until the opposition
is terminated.
a word of caution
The adoption of any post-grant opposition system by the United
States would be of limited value unless the necessary resources are
dedicated to its implementation. As a point of reference, the latest
statistical report of the European Patent Office (EPO) indicates that
the EPO granted 59,992 European patents in 2003. That same year, 2,634
patents, or approximately 4.4%, were opposed. In the context of the PTO
which granted 189,597 patents in 2003, this would translate into over
8,000 oppositions. Even discounting this number by 90% to account for
patent owners or others who would continue to use ex parte
reexamination to test patent validity and who would be reluctant to use
the post-grant opposition procedure, one could still be looking at a
potential caseload that is many times the number of interferences
currently handled by the Board. While interferences are admittedly more
complex than the proposed post-grant oppositions, the adoption of a
post-grant opposition system would require a significant increase in
the number of APJs (20 of the 61 APJs currently at the Board are
exclusively dedicated to interferences). Hiring the number of properly
trained and skilled individuals needed to handle post-grant
oppositions--irrespective of which proposal is adopted--will be
essential if the system is to achieve the results intended. We cannot
overlook this need when considering this change to the patent system.
conclusion
AIPLA reiterates its support for an efficient, cost-effective post-
grant opposition proceeding to serve as an alternative to litigation
for challenging patents of questionable quality. Such a system must be
comprehensive and balance a number of significant factors, providing an
attractive option for third parties while avoiding harassment of patent
owners. We believe that our draft proposal for a post-grant opposition
system represents a solid foundation on which to build just such a
post-grant opposition system. We thank the Subcommittee for its time
and attention to this issue and look forward to working with the
Subcommittee in the design and implementation of such a system.
__________
APPENDIX
Chapter 32_Post-Grant Opposition Procedures
Sec.
321. Right to oppose patent; opposition request
322. Real party in interest
323. Timing of opposition request
324. Invalidity issues
325. Institution of the opposition proceeding
326. Patent owner response
327. Amendment of claims
328. Discovery and sanctions
329. Supplemental submissions
330. Hearing and briefs
331. Written decision
332. Burden of proof and evidence
333. Reconsideration
334. Appeal
335. Certificate
336. Estoppel
337. Duration of opposition
338. Settlement
339. Intervening rights
340. Relationship with reexamination
Sec. 321. Right to oppose patent; opposition request
(a) A person may request that the grant or reissue of a patent be
reconsidered by the Office by filing an opposition seeking to
invalidate one or more claims in the patent. The Director shall
establish, by regulation, fees to be paid by the opposer. Copies of
patents and printed publications to be relied upon in support of the
request must be filed with the request. If an opposer relies on other
factual evidence or on expert opinions in support of the opposition,
such evidence and opinions must be filed with the request through one
or more accompanying affidavits or declarations.
(b) Copies of any documents filed pursuant to subsection (a) must
be provided to the patent owner or, if applicable, the designated
representative of the patent owner, at the time of filing under
subsection (a), except that if a request is made that the identity of a
real party in interest be kept separate pursuant to section 322(b),
then the identity of the real party in interest may be redacted from
the copies provided.
(c) The file of any opposition proceeding shall be made available
to the public except as provided in section 322.
Sec. 322. Real party in interest
(a) The person making the request shall identify in writing each
real party in interest and the opposition shall proceed in the name of
the real party in interest.
(b) If requested, the identity of a real party in interest shall be
kept separate from the file of the opposition and made available only
to Government agencies on written request, or to any person upon a
showing of good cause. In the event that the identity of a real party
in interest is kept separate from the file pursuant to this subsection,
then the opposition shall proceed in the name of the individual filing
the request as representative of the real party in interest. However,
no request under this subsection to keep the identity of a real party
in interest separate from the file of the opposition may be made or
maintained if the opposer relies upon factual evidence or expert
opinions in the form of affidavits or declarations during the
opposition proceeding or if the opposer exercises the right to appeal
under section 141.
Sec. 323. Timing of opposition request
An opposition request made under section 321 must be made not later
than nine months after the grant of the patent or issuance of a reissue
patent, except that, if the patent owner consents in writing, an
opposition request may be filed anytime during the period of
enforceability of the patent. A court having jurisdiction over an issue
of validity of a patent may not require the patent owner to consent to
such a request.
Sec. 324. Limits on scope of validity issues raised
The opposition request must identify with particularity the claims
that are alleged to be invalid and, as to each claim, one or more
issues of invalidity on which the opposition is based. The issues of
invalidity that may be considered during the opposition proceeding are
double patenting and any of the requirements for patentability set
forth in sections 101, 102, 103, 112 or 251, fourth paragraph, of this
title, except for:
(a) the requirement in section 112, first paragraph, to disclose
the best mode; and
(b) issues arising under section 102(c), 102(f), or 102(g).
Sec. 325. Institution of the opposition proceeding
(a) If one or more requests meeting the requirements of section 321
are received by the Director that have not been dismissed as provided
in this subsection (a), an opposition proceeding shall be promptly
instituted, but not prior to nine months after the date of grant of the
patent. The Director may dismiss an opposition request that the
Director determines lacks substantial merit. The determination by the
Director to dismiss shall not be appealable. The dismissal of an
opposition request shall not be admissible in any civil action related
to the patent against which a dismissed request was filed. If the
opposition is instituted based upon more than one opposition request,
the opposition shall proceed as a single consolidated proceeding,
unless later divided as provided in subsection (b).
(b) The parties to the opposition proceeding shall be the patent
owner and each opposer whose request meets the requirements of section
321 and has not been dismissed under subsection (a). The Director shall
assign the opposition proceeding to a panel of three administrative
patent judges, hereinafter in this chapter referred to as the
``panel.'' The panel shall decide the questions of patentability raised
in each opposition request for which an opposition has been instituted.
The decision shall be based upon the prosecution record that was the
basis for the grant of the patent and the additional submissions by the
parties to the opposition proceeding authorized under this chapter. The
panel may, in appropriate cases, divide the opposition into separate
proceedings if the opposition involves multiple opposition requests by
different parties.
Sec. 326. Patent owner response
After the Director has instituted an opposition, the patent owner
shall have the right to file a response to each opposition request
within the time period set by the panel. The patent owner, in
responding to an opposition request, shall file with the response any
additional factual evidence and expert opinions on which the patent
owner relies in support of the response through affidavits or
declarations.
Sec. 327. Amendment of claims
The patent owner is entitled to request amendment of any claims
that are the subject of the opposition, including by the addition of
new claims. Any such request for amendment shall be filed with the
patent owner's response to an opposition request. The panel may permit
further requests for amendment of the claims only upon good cause shown
by the patent owner. No amendment enlarging the scope of the claims of
the patent shall be permitted in the opposition.
Sec. 328. Discovery and sanctions
(a) After institution of an opposition, the patent owner shall have
the right to depose each person submitting an affidavit or declaration
on behalf of any opposer, and each opposer shall have the right to
depose each person submitting an affidavit or declaration on behalf of
the patent owner. Such depositions shall be limited to cross-
examination on matters relevant to the affidavit or declaration. The
panel shall set the times for taking the deposition of any affiant or
declarant. No other discovery shall be permitted unless the panel
determines that additional discovery is required in the interest of
justice.
(b) In the event that any party to an opposition fails to properly
respond to any discovery under this section, the panel may draw
appropriate adverse inferences and take other action permitted by
statute, rule, or regulation.
Sec. 329. Supplemental submissions
The panel may permit one or more supplemental submissions to be
made by any party to the opposition, subject to the rights and
limitations on discovery described in section 328.
Sec. 330. Hearing and briefs
Any party to an opposition may request an oral hearing within the
time set by the panel. If a hearing is requested or the panel
determines sua sponte that a hearing is needed, the panel shall set a
time for the hearing. The panel may permit the filing of briefs by the
parties, and shall permit cross-examination of all affiants and
declarants, either before the panel or by deposition taken under
section 328.
Sec. 331. Written decision
The panel shall issue a written decision on each issue of
patentability with respect to each claim that is the subject of the
opposition. The written decision shall consist of findings of fact and
conclusions of law. The written decision shall become a final
determination of the Office on the issues raised in the opposition
unless a party to the opposition files a request for reconsideration
and modification of the written decision within a time set by the
panel, which period shall not be less than two weeks from the date of
the written decision.
Sec. 332. Burden of proof and evidence
(a) The opposer shall have the burden to prove invalidity of a
claim by a preponderance of the evidence. The determination of
invalidity shall be based upon the broadest reasonable construction of
the claim.
(b) The Federal Rules of Evidence shall apply to the opposition
proceeding, except to the extent inconsistent with any provisions of
this chapter.
Sec. 333. Reconsideration
If a request for reconsideration of the written decision is filed,
the panel may authorize a non-requesting party to file a response to
the request for reconsideration. Following any reconsideration, the
panel shall either deny the request for modification of the written
decision or grant the request and issue a modified written decision
that shall constitute the final determination of the Office on the
issues raised in the opposition.
Sec. 334. Appeal
A party dissatisfied with the final determination of the panel may
appeal under the provisions of sections 141-144. Any party to the
opposition shall have the right to be a party to the appeal.
Sec. 335. Certificate
When the time for appeal has expired or any appeal proceeding has
terminated, the Director shall issue and publish a certificate
canceling any claim of the patent finally determined to be
unpatentable, confirming any claim of the patent determined to be
patentable, and shall incorporate into the patent any new or amended
claims determined to be patentable. The issuance of the certificate
shall terminate the opposition proceeding.
Sec. 336. Estoppel
(a) Once the certificate has issued under section 335, the
determination with respect to an issue of invalidity raised by an
opposer shall be preclusive against that opposer in any subsequent
proceeding involving that opposer as to any issue of fact or law
actually decided and necessary to the determination of said issue,
provided that, if the opposer demonstrates to a later tribunal that
there is additional factual evidence that is material to an issue of
fact actually decided and necessary to the final determination that
could not reasonably have been discovered or presented in the
opposition proceeding by that opposer, the opposer may raise that issue
of fact and any determined issue of law for which the issue of fact was
necessary.
(b) For purposes of this section, the term ``opposer'' includes the
person making the request under section 321, any real party in
interest, and their successors in interest.
(c) If the subsequent proceeding involves a real party-in-interest
not identified to the patent owner pursuant to section 322, the real
party-in-interest shall notify the Director and the patent owner of
that fact and of the subsequent proceeding within 30 days after
receiving notice that the subsequent proceeding has been filed.
Sec. 337. Duration of opposition
The final determination described in section 333 shall issue not
later than one year after institution of the opposition as described in
section 325. Upon good cause shown, the Director may extend the one-
year period by not more than six months.
Sec. 338. Settlement
(a) The opposition proceeding shall be terminated as to any opposer
upon the joint request of the opposer and the patent owner, unless the
panel has issued a written decision under section 331 before the
request for termination is filed. If the opposition is terminated as to
an opposer under this section, no estoppel under section 336 shall
apply as to the terminated opposer. The written decision under section
331 shall thereafter be issued only with respect to issues of
invalidity raised by opposers that remain in the opposition.
(b) Any agreement or understanding between the patent owner and an
opposer, including any collateral agreements referred to therein, made
in connection with or in contemplation of the termination of the
opposition, shall be in writing. The opposition as between the parties
to the agreement or understanding shall not be terminated until a true
copy of the agreement or understanding, including any such collateral
agreements, has been filed in the Office. If any party filing an
agreement or understanding requests, the agreement or understanding
shall be kept separate from the file of the opposition, and made
available only to Government agencies on written request, or to any
person on a showing of good cause.
(c) Any discretionary action of the Director under subsection (b)
shall be reviewable under section 10 of the Administrative Procedure
Act.
Sec. 339. Intervening rights
Any proposed amended or new claim determined to be patentable and
incorporated into a patent following an opposition proceeding shall
have the same effect as that specified in section 252 of this title for
reissued patents on the right of any person who made, purchased, or
used within the United States, or imported into the United States,
anything patented by such proposed amended or new claim, or who made
substantial preparation therefor, prior to issuance of a certificate
under the provisions of section 335.
Sec. 340. Relationship with reexamination proceedings
A patent for which an opposition proceeding has been instituted may
not thereafter be made the subject of a request under section 311 for
inter partes reexamination by the same opposer or on behalf of the same
real party in interest. An ex parte reexamination request made by a
person other than the patent owner during the nine-month period
specified in section 323, or an inter partes reexamination request made
during the nine-month period specified in section 323, shall be treated
as a request under section 321, and no ex parte reexamination or inter
partes reexamination may be ordered based on such request. A request
for ex parte reexamination or inter partes reexamination made after the
nine month period specified in section 323, and a request for ex parte
reexamination made by the patent owner at any time, shall be stayed
during the pendency of any opposition.
Mr. Smith. Thank you, Mr. Kirk.
Mr. Sun?
TESTIMONY OF KARL SUN, SENIOR PATENT COUNSEL, GOOGLE, INC.
Mr. Sun. Mr. Chairman, Ranking Member Boucher and Members
of the Subcommittee, thank you for the opportunity to testify
at today's hearing.
Google takes pride in its ability to provide innovative
products and services to help organize the world's information
and to make it usable and accessible to all. We therefore
believe that a properly-functioning patent system rewards
inventors by providing a limited right to exclude. At the same
time, we also strongly believe that the current patent system
needs reform to ensure that competition and innovation are not
stifled by the issuance of invalid patents.
We believe that reforms need to recognize and address the
practical realities of the patent system, including the
accelerating rate of patent filings, an overworked and
understaffed PTO examining corps, and fundamentally, the ex
parte process by which patents are granted.
Google supports reforms that create proper incentives for
applicants and the Patent Office during the examination process
provide for increased third-party involvement in a post-grant
administrative review process and that allow subsequent
judicial review, each of which steps are tailored to the
particular challenges of the patent process.
We believe that a post-grant opposition procedure would
enhance the quality of patents granted under an otherwise ex
parte examination system. We believe that a successful post-
grant opposition procedure would have a number of important
components. First, a post-grant opposition procedure should
offer third parties a meaningful opportunity to challenge the
validity of issued patents. As a point of comparison, parties
right now do employ the current inter partes reexam procedure
because of several concerns, including, as mentioned here, the
limited right to participate in the process and also the broad
estoppel that results.
Accordingly, we believe that the new opposition procedure
would give opposers a real opportunity to participate by
providing for limited discovery, expert testimony, oral
argument and cross-examination and that this would occur before
patent administrative law judges who are trained in the law and
who are independent of the examining corps.
Additionally, we believe that an opposition process should
allow challenges based on any patentability grounds, not merely
the lack of novelty and obviousness as is the case with the
current inter partes reexam. Second, estoppel arising from
patent opposition should be limited to the grounds that are
raised and addressed in the opposition. Again, as a point of
comparison, the broad preclusive effect currently given in
inter partes reexamination is a significant disincentive for
its use. At the same time, failure to oppose a patent should
not have any bearing in potential later litigation, because
parties should not be given artificial incentives to oppose
patents.
Third, to prevent harassment of patentees, opposition
should be initiated within certain limited time periods. For
example, as one possibility, allow opposition by any party
during an initial 1-year period following the issuance of
patent claims. However, because many third parties generally do
not become aware of patents until they are notified by a
patentee, consider giving these third parties an additional
window of time within which to initiate opposition after they
have received notice or threat of litigation.
With such a system, after the initial period, patentees
will have certainty that their patent cannot be opposed, except
by third parties whom they themselves notify and threaten with
infringement.
Fourth, we believe that a presumption of validity should
only be given to patents that have undergone the opposition
process. There is general agreement that patent examiners need
more time to examine applications. Current estimates for the
total time that an examiner spends on average per patent
application from start to finish range from between 8 to 25
hours. Moreover, patent examination is conducted as an ex parte
process between an examiner and the applicant with no third
party involvement currently.
Finally, examiners are rated according to a system that
creates incentives for granting patents. Patents which are
issued by an overburdened PTO without inter partes safeguards
as to quality should not be accorded a presumption of validity
courts.
In addition to these observations on the mechanics of post-
grant opposition, we would also like to suggest just a couple
of additional points for future consideration by the
Subcommittee. First, consider requiring patent applicants to
disclose the relevance of prior arts submitted to the PTO. This
would simultaneously relieve examiners from the burden of
attempting to decipher the relevance of prior art that the
applicant submits and would also discourage applicants from
dumping art of questionable relevance on the PTO.
Second, consider providing prior use rights or similar
protection from claims that are opportunistically broadened in
continuation practice. Third, increase funding for the PTO so
that examiners' work loads may be reduced. And finally,
consider modifying the PTO rating count system to remove
artificial incentives to grant patents. Instead, a system that
provides neutral incentives can be implemented.
Once again, thank you for the opportunity to testify today
on this important topic.
[The prepared statement of Mr. Sun follows:]
Prepared Statement of Karl Sun
Chairman Smith, Ranking Member Berman, and Members of the
Subcommittee, thank you for the opportunity to testify at today's
hearing on the role of post-grant opposition in improving patent
quality. My name is Karl Sun and I am Patent Counsel at Google.
background
Google takes pride in its ability to provide innovative products
and services to help organize the world's information, and to make it
accessible and useful for people everywhere. We believe that a properly
functioning patent system rewards inventors by providing a limited
right to exclude, and thereby promotes innovation. At the same time,
Google also strongly believes that the current patent system needs
reform to ensure that competition and innovation are not stifled by the
issuance of invalid patents.
Reforms need to recognize and address the practical realities of
the patent system, including the burgeoning rate of patent filings, an
overworked and understaffed examining corps, and the ex parte process
by which patents are granted. Google supports reforms that create
proper incentives for applicants and the patent office during pre-grant
examination, that provide increased third party involvement in post-
grant administrative review, and that allow subsequent judicial review
tailored to the unique challenges of the patent process.
recommendations
Google believes that a post-grant opposition procedure would
enhance the quality of patents granted under an otherwise ex parte
examination system. A successful post-grant opposition procedure would
have a number of important components.
First, we are in favor of a post-grant opposition
process and/or a substantially revised inter partes
reexamination process that offers third parties a meaningful
opportunity to challenge the validity of issued patents.
Parties do not employ the current inter partes reexamination
procedure because of several concerns, including their limited
right to participate in the process and the broad estoppel that
results.
Accordingly, the new opposition procedure should give
opposers a real opportunity to participate by providing for
limited discovery, expert testimony, oral argument, and cross-
examination before patent administrative law judges who are
independent of the examining corps. Additionally, an opposition
process should allow challenges based on any patentability
grounds, not merely lack of novelty and obviousness as is the
case with the current inter partes reexamination procedure.
Second, estoppel arising from patent opposition
should be limited to grounds that are raised and addressed in
the opposition. In addition, failure to oppose a patent should
not have any bearing in later litigation. The broad preclusive
effect currently accorded to inter partes reexamination is a
disincentive for its use and should be reconsidered; at the
same time, parties should not be given artificial incentives to
oppose patents.
Third, to prevent harassment of patentees, opposition
should be initiated within prescribed time periods. As one
possibility, allow opposition by any party during an initial
one year ``quality control'' period following the issuance of
patent claims. After the initial period, patentees may be
entitled to some certainty that their patent cannot be opposed,
except by third parties whom they themselves notify and
threaten with infringement. Because third parties generally do
not become aware of patents until notified by a patentee, these
third parties may be given an additional window within which to
initiate opposition.
Fourth, a presumption of validity should be given
only to patents that have undergone the opposition process.
There is general agreement that patent examiners need more time
to examine applications. Current estimates for the total time
an examiner spends per patent application from start to finish
range from 8 to 25 hours on average.\1\ Moreover, patent
examination is conducted as an ex parte process between an
examiner and an applicant, with no third party involvement.
Finally, examiners are rated according to a ``count'' system
that creates incentives for granting patents. Patents which are
issued by an overburdened PTO without inter partes safeguards
as to quality should not be accorded a presumption of validity
by the courts.
---------------------------------------------------------------------------
\1\ See Federal Trade Commission, To Promote Innovation: The Proper
Balance of Competition and Patent Law and Policy (October 2003)
(hereinafter FTC Report), ch. 5 at 4-5.
In addition to the above observations on the mechanics of a post-
grant opposition process, Google would also like to suggest the
following additional patent reforms for future consideration by the
---------------------------------------------------------------------------
subcommittee:
First, we should require patent applicants to
disclose the relevance of prior art submitted to the PTO. This
simultaneously relieves examiners of the burden of attempting
to decipher the relevance of prior art submitted by the
applicant, and discourages applicants from ``dumping'' art of
questionable relevance on the examiner.
Second, provide prior use rights or similar
protection from allegations of infringement based on claims
that are opportunistically broadened in continuation
practice.\2\
---------------------------------------------------------------------------
\2\ See, e.g., FTC Report ch. 4(II)(C)(1) at 26-31.
Third, increase funding for the PTO so that
examiners' workloads may be reduced to allow an adequate amount
---------------------------------------------------------------------------
of time for considering patent filings.
Finally, modify the PTO count system to remove
artificial incentives to grant patents. Patent examiners are
rated according to a point or ``count'' system that encourages
patent issuance.\3\ A system that provides neutral incentives
with respect to allowance versus rejection should be
implemented.
---------------------------------------------------------------------------
\3\ See, e.g., Robert P. Merges, As Many as Six Impossible Patents
Before Breakfast: Property Rights for Business Concepts and Patent
System Reform, 14 Berkeley Tech. L.J. 577, 609 (1999).
---------------------------------------------------------------------------
conclusion
Thank you again for the opportunity to testify today and to share
Google's perspective on this important topic.
Mr. Smith. Thank you, Mr. Sun.
Mr. Toupin, let me address my first question to you, and
that is, well, first of all, let me observe that it is amazing
to me that there is general agreement on the need for post-
grant opposition, and there is general agreement at least--yes,
general agreement on a lot of suggestions as well, which makes
this panel one of the most agreed and agreeable that we've had,
I think.
But, Mr. Toupin, my question for you is that it seems to me
that we might really supplement rather than replace the current
reexamination system that we have right now. We are talking
more about post-grant today, but don't you think we ought to
take the best of the present and combine it with a lot of your
suggestions for the post-grant opposition?
Mr. Toupin. The 21st Century Strategic Plan suggests that
inter partes reexam be abandoned; that it is not going to be
effective for the reasons that have been indicated.
Mr. Smith. So you would for replacement, not supplement.
Mr. Toupin. Replacement in that respect. With respect to
third party initiated ex parte reexamination, I believe that we
suggest some form of discretion with respect to third-party
initiated reexams might be appropriate if you also have a post-
grant review but maintaining that system.
Mr. Smith. Okay; fair enough, thank you.
Mr. Kushan, you may have been the only witness to have
mentioned privatization, although you didn't use that word. You
suggested that we, let's see, in the case of arbitration of
specified issues that we perhaps private parties as a cost-
saving measure. Would that unnecessarily complicate matters, or
would that streamline matters?
Mr. Kushan. One of the things that motivated that
recommendation was the recognition of uncertainty in the
funding of the office uncertainty and complexity of these
proceedings, and we draw on our experience in litigation where
we are able to offload some issues for resolution.
There's also some experience in the PTO in interference
proceedings where there is some capacity to do a bit of an
offloading exercise. To some extent, if there is a way of
delegating to an entity or allowing the parties resolve certain
factual issues as part of this proceeding, we believe that this
would facilitate and essentially control the volume of work
that's associated with any one proceeding, and it is typically
encountered in litigation where you sort things out.
But we were trying to find ways of putting some type of
safeguards into the system, because we know that there are
going to be proceedings which are going to be extremely
complex, and we see a risk of having these proceedings start
and essentially paralyzing the patent for an indefinite period.
Mr. Smith. Thank you, Mr. Kushan.
Mr. Kirk, it is clear to me that certainly, large
corporations are going to benefit from post-grant opposition,
but would smaller businesses and independent inventors benefit
as much as the larger corporations?
Mr. Kirk. Mr. Chairman, I think that the fact that we can
provide an attractive procedure that would determine the
validity of claims of issued patents more efficiently, more
effectively, quicker, than District Court litigation, which, as
I noted, runs into the millions of dollars, is going to help
large and small companies but especially the small company and
the independent inventor.
Mr. Smith. Thank you, Mr. Kirk.
And Mr. Sun, you suggested in your written testimony that
only patents that have been challenged in an opposition
proceeding should be entitled to a presumption of validity.
Isn't that a pretty tough standard? And why would that be
justified to, in effect, make that requirement?
Mr. Sun. Well, Mr. Chairman, I think we believe that with
the way the current system is set up, with the ex parte
process, what the PTO is doing and what we probably wanted to
do was to do the initial pass of making sure that there is
nothing clear out there that would preclude the issuance of a
patent. But I think what we are talking about here including
with the post-grant opposition process is that right now, there
is something fundamentally wrong with the system, which is that
patents are making their way through which should not have been
granted in the first place.
And given that that is the reality, we think that it is not
justified that patents all receive a presumption of validity in
the situation where we all acknowledge that there are many
patents being questioned.
Mr. Smith. Thank you, Mr. Sun.
That completes my questioning, and the gentleman from
Virginia, Mr. Boucher is recognized for his.
Mr. Boucher. Well, thank you very much, Mr. Chairman. I
want to say at the outset that I share Chairman Smith's
pleasure through the fact that we have parties appearing today
who, shall we say, are not always in agreement when it comes to
matters of patent policy, and today, I am pleased to note a
broad area of agreement on a number of matters.
I actually took the opportunity to synthesize and place in
chart form various aspects of each of your testimony, and this
chart reveals a very interesting fact, and that is on three
broad areas, there is basic agreement. Now, I think there may
be some shading differences with regard to how you would do
each of these three things, but I detect basic agreement on
these matters.
First of all, you are all in favor of post-grant opposition
and having a legislated process for putting that into place.
Secondly, I note that each of you favors the general
requirement that all patent applications be published after 18
months. Now, I've always thought that was good, particularly if
you had some kind of window inside the patent review process
itself for the opportunity for third parties to submit evidence
of prior art.
Obviously, if they don't know a patent application is
pending, they wouldn't have any reason to submit the prior art,
and the publication serves the very valid function of providing
that notice. As I indicated in my opening statement, we have
some substantial problems in getting that adopted in the House.
That actually was tried once before, and we were not successful
for reasons I will not dwell on today. Why give your opponents
publicity?
But it is difficult, and it may be as difficult now as it
was four or 5 years ago, the first time we undertook that
exercise. Nevertheless, I think it is beneficial. But, you
know, you need it less if you know you have got a really good
post-grant opposition process, because by the time the patent
is awarded, notice is automatically provided. Anybody who has
got prior art and is paying attention would then be in a
position through the post-grant opposition process to have that
evidence of prior art or other matters that might affect the
validity of the patent be submitted.
Nevertheless, I still think publishing after 18 months is
in theory a good idea. I notice all of you were in agreement.
The third area in which I notice agreement among each of
you is with respect to making modifications in the current
process for inter partes reexamination. I guess I just have a
basic question, and that is this: if we put into place a really
good post-grant opposition proceeding, and it meets the
standard of providing a fair opportunity for anyone who has got
a legitimate basis for challenging a patent to come in and make
his case and have administrative law judges perhaps within the
Patent Office make a determination, why should we also retain
the inter partes reexamination process?
Why have two avenues through which these matters can be
raised? Is there any value in keeping that second door open? Is
there a category, perhaps, of individuals who might find the
post-grant process to be unduly burdensome or perhaps
unaffordable who might want to take advantage of a more
simplified and less formal inter partes reexamination?
I don't know, and so, I will ask you that question. I note
that each of you is basically recommending keeping it, possibly
as modified by what Mr. Toupin said during his response to the
Chairman's question, but I would be interested in hearing your
views on why we need to keep both of these avenues open.
Mr. Kirk?
Mr. Kirk. Let me step in first if I might, Mr. Boucher.
From our perspective, we have discussed this, and our viewpoint
was first, we would like to see an effective post-grant
opposition system in place and operating, to see it implemented
and working properly. Once that is in place, and we are
comfortable that it can be implemented properly and is working
the way we had intended, then, I think we would certainly want
to turn our attention to the post-grant--to the inter partes
reexamination system to see how that might be changed in the
future, keeping in mind that most of the proposals for post-
grant discuss having a limited period, 9 months in our case, 1
year in others.
There needs to be some mechanism after that period for
effectively challenging the patents, and given an opposition
system that works properly, I think that could be worked out,
and then, perhaps, inter partes reexamination would just
disappear. But we sort of take the approach of ``let us see if
it works first'' before we start throwing things out.
Mr. Boucher. So you were saying if you time-limit the post-
grant opposition proceeding, you would need some other avenue
to remain open, perhaps indefinitely, for individuals who may
not have been in a position to challenge within the window of
the post-grant proceeding.
Mr. Kirk. That is true, but that can also be accomplished
by, for example, as the PTO suggested, having an open window
following, for example, a threat sufficient to establish
declaratory judgment standing so that they then could bring a
proceeding within a period of time.
Mr. Boucher. But it would be triggered on some event such
as that; is that correct?
Mr. Kirk. Well, that is one way of doing it. I would not
want to say that this should be the only way of doing it. I
think again, we have to wait and see. How well does it work?
How expensive is it? How fast is it? Once we understand that
and see that, I think many changes could be made.
Mr. Smith. Without objection, the gentleman is recognized
for an additional 2 minutes so the other witnesses can respond
to the question.
Mr. Boucher. Thank you, Mr. Chairman.
Mr. Kushan?
Mr. Kushan. I think one way to look at the two regimes is
kind of a bare bones and a deluxe proceeding, with the
difference in the concept of opposition being that you get
additional evidentiary procedures put at your disposal so you
would be able to depose or cross-examine witnesses that are
being advanced to throw their views into the mix. You can get a
hearing, things of that nature.
One benefit at least conceptually not in the system as
implemented but conceptually of the inter partes regime is that
it is a simpler proceeding, and it may be suitable for settings
where you have really clear-cut issues of patent validity.
Maybe the best perspective is to absorb the simplified process
into a structure which is basically the opposition proceeding
and then allow the judge that is going to be conducting the
proceeding to decide exactly how much discovery is needed.
I think one concern we have had, and it is in our written
testimony, there are some types of discovery which we think
should definitely be avoided in an opposition proceeding, which
if you allow them to go into that proceeding would essentially
eliminate the difference between that and litigation.
And so, perhaps one perspective to take to this is to
envision a simplified pathway within the authority to conduct
the more rigorous proceeding which allows the additional
evidentiary tools.
Mr. Boucher. Okay; Mr. Sun, would you care to comment?
Mr. Sun. Sure. Congressman, I think I would echo what Mr.
Kirk said, which is I think our position is that the first
point to be made is that the post-grant opposition is one that
is a more robust procedure and is one that we would like to see
put in place.
After that is in place, it may well be the case that an
inter partes reexam is a good complement to the opposition
procedure. And it is possible that many times, it will be the
case that it will not be necessary. But I can envision a system
where the inter partes reexam continues to be a documentary-
based procedure where it is conducted before an examiner as
opposed to a patent judge, so it would, in many senses, be
simpler for someone who wants to challenge that process, and it
may well be the case, as you mentioned, that that is an avenue
that some people would still want to take advantage of. But I
think it remains to be seen.
Mr. Boucher. Well, thank you each for those answers.
I just have one other brief question. This can be a yes or
no. In fact, I hope it is, because my time is up. Would you
each agree that as we set about this task, we should be guided
by the principle that in repairing the inter partes reexam, we
should eliminate the estoppel concept? That is part of the
question. The other part is in the post-grant opposition
proceeding, should the standard of proof simply be
preponderance of the evidence?
Can I get a yes from each of you with regard to those
questions?
Mr. Kirk?
Mr. Kirk. Yes.
Mr. Boucher. Excellent.
Mr. Kushan?
Mr. Kushan. Yes, on the first one, and the second one is
maybe a little bit more complicated, but generally, it should
be once you get the proceeding started, yes.
Mr. Boucher. Okay; all right.
Mr. Toupin?
Mr. Toupin. As to the first, we have a different solution
to inter partes reexam, so I can't answer yes or no on that
one. With respect to the second one, yes, we contemplate once a
proceeding was underway, it would be preponderance.
Mr. Boucher. Okay.
And Mr. Sun?
Mr. Sun. Yes.
Mr. Boucher. Thank you very much.
Thank you, Mr. Chairman.
Mr. Smith. Good question, Mr. Boucher. Thank you.
And the gentlewoman from California, Ms. Lofgren, is
recognized for her questions.
Ms. Lofgren. Thank you, Mr. Chairman and thanks to the
witnesses for their excellent testimony. And as the Chairman
and Ranking Member, or today's Ranking Member, have mentioned,
there is actually remarkable agreement on the basic outlines of
what we should do. As many of you know, in 2001, I had a patent
reexamination bill that would have expanded the existing
procedure by enlarging the scope of challenges and also setting
a 12-month deadline and changing the estoppel issue by allowing
third parties to later introduce evidence which was not known
at the time of the proceeding.
And in talking to people, I reached the conclusion that it
would not necessarily be useful to reintroduce that bill
because of this process that is moving forward, although I
think there are some elements that are certainly similar and
some things that go beyond that concept of a few years ago.
One of the benefits of being last in the questioning is
that all of your questions have already been asked, and so the
remaining question that I have that has not already been asked
by Mr. Smith and Mr. Boucher really has to do with the
evidentiary load.
I mean, it is a fine line between providing sufficient
opportunity to really flush out the information without
destroying the ability to have a streamlined procedure by
having too much process. And I am just sort of wondering, what
should we make available to the parties? I mean, shouldn't we
allow for depositions? Shouldn't we allow for interrogatories?
How would we limit that? How do we get the information out
without destroying this whole new innovation? Do you have
thoughts on that for us to ponder or at least benchmarks on how
we would approach that question?
Any of you? Maybe I'll go to--Mr. Kushan wants to answer
first; and I'd like to hear from all of you on that point.
Mr. Kushan. This is definitely an important variable in the
design of the system, because if you let things run amok, it
scares people, particularly patent owners, from either
supporting this type of regime or not. I think if you look at
the environment of a post-grant proceeding, you have the
benefit of someone who can evaluate issues at a technical level
in a very good, in an accurate way, so you have the benefit of
an expert listening to the technical arguments.
I think it is a fairness issue to be able to cross-examine
or depose someone who has been put up by the other party into
the proceeding. We don't want to see the proceeding give an
authority to call out witnesses and to make it a litigation-
like process, where you are essentially trying to pull all the
stuff into the proceeding. That would, I think, cross the line.
There may be some value for interrogatories and requests
for admissions. I think that would be something that should be
left in the hands of the APJ to assess whether that is
necessary in the proceeding. Again, this is an objective
question that they are answering a validity, and they have, at
the Patent Office, an ability to answer that on their own.
So you can use that inherent advantage that they have.
Ms. Lofgren. Do you agree with that, Mr. Kirk?
Mr. Kirk. I think we are generally in the same area on
this. I think there are two issues that are related. One is the
breadth of the issues that you can allow to be considered in
the post-grant opposition, the extent to which you are going to
allow evidence to come in, and what type of evidence. We
certainly think it would be proper to have affidavits,
depositions, to be able to cross-examine by affidavits and
depositions the witnesses of the other party, and to have that
come forward.
You get into certain issues, for example, best mode, which
is very subjective, and it is in the inventor's mind. This kind
of an issue, which is raised frequently in court, requires a
great deal of discovery. Usually, it doesn't result in any
invalidity finding, but nevertheless it occupies a lot of time
in court and a lot of expensive discovery. That we believe
should be kept out, the issue and with it the discovery that
one might need to really fairly evaluate that.
So you are compromising on the one hand enough evidentiary
flexibility to encourage people to use the system; on the other
hand, not so much that you would harass that----
Ms. Lofgren. That is an interesting approach. I hadn't
really thought of that.
Mr. Toupin and Mr. Sun, do you have further comments? I
realize I'm almost out of time.
Mr. Toupin. Thank you. We think that there are three
elements that work in this. First, there has to be a
substantial initial showing generally in the line of a prima
facie case. That would allow an APJ to closely define what
issues would be subject to discovery. We don't recommend that
either the tools of discovery or the substance that would be
available for inquiry be limited.
We currently have experience with the full range of
patentability issues being able to be raised in interference
proceedings. These APJs know how to do it and know how to do it
expeditiously.
Ms. Lofgren. You are cleanup, Mr. Sun.
Mr. Sun. I was just going to add what was just said, which
is in the interference proceeding, I think there already is
some mechanism there. I think we would also be in agreement
that the amount of process is in some sense dependent on the
scope of what can be covered, and we would be in favor of a lot
of the 112 issues being in play, and so, there would be a need
for a similar process, but we think the combination of the APJs
being able to have power to handle discovery as well as the
expertise that already exists; things should be manageable in
that fashion.
Ms. Lofgren. Thank you very much, and thank you, Mr.
Chairman.
Mr. Smith. Thank you, Ms. Lofgren.
Let me thank all the witnesses. This has been particularly
informative for us and a particularly helpful panel. And as I
mentioned in my opening statement, we will use your testimony
to draft legislation which we expect to take up if not
immediately then sometime within the next several months, I
would hope. And so, it is not often we have hearings that lead
directly to legislation, and it's not often that we have so
many panelists that agree generally on the direction we should
take, so it's much appreciated, and we thank you all for being
here, and with that, we stand adjourned.
[Whereupon, at 5:18 p.m., the Subcommittee adjourned.]
A P P E N D I X
----------
Material Submitted for the Hearing Record
Prepared Statement of the Honorable John Conyers, Jr., a Representative
in Congress From the State of Michigan, and Ranking Member, Committee
on the Judiciary
There has been a long debate in the patent community on whether the
United States should implement a new system for challenging patents
after they have been issued, otherwise known as post-grant opposition.
This system would be broader than the reexamination process that exists
now. While there are strong arguments in favor of an opposition system,
there are policy questions that should not be ignored.
It cannot be denied that the patent laws are a major incentive for
investment and research into new technologies, whether the field is
life-saving drugs, computers, or a new method of transportation.
Because patents may discourage competition, we rely on the Patent and
Trademark Office to make sure that the patents it issues are narrow and
clear. Because developments in technology has exploded in recent years,
information is widespread, and applications are up, it is difficult to
properly review every application in a timely manner. If investors and
researchers cannot rely on the validity of patents, either someone
else's or their own, then the flow of ideas and capital will be
severely restricted.
That is why it is vitally important for the PTO to be able to
correct patents even after they have been issued. While we do have such
a system in place, known as reexamination, the process is unwieldy and
limited. That is why there has been broad support for the new
opposition proceeding. We must allow for third parties to be more
involved than they are in reexaminations, for appropriate evidence to
be introduced, and for broader patent eligibility questions to be
asked.
As I stated earlier, though, I do have concerns. The only reason we
are thinking of making it easier to challenge patents is because there
is a problem of bad patents being issued. If we are going to address
this problem, though, we must not only make it easier to challenge them
but also prevent them from being issued in the first place. In other
words, I hope that a movement toward post-grant opposition will not
deter our efforts from making sure the PTO has what it needs to review
patent applications thoroughly the first time.
Second, if we do establish an entirely new type of proceeding, it
is important to consider what resources will be required at the PTO.
The PTO has made a push for outsourcing many of its functions on the
grounds that it does not have enough trained personnel to concentrate
on its core function of evaluating applications. If it does not have
the resources now, I wonder what strains an opposition system would
create.
Letter to Rep. Lamar Smith and Rep. Howard L. Berman from Stephan H.
Lawton, Vice President and General Counsel, Biotechnology Industry
Organization
Letter to Rep. Lamar Smith and Rep. Howard L. Berman from Warner R.
Broaddus, Vice President, General Counsel & Secretary, and Charles S.
Berkman, Associate General Counsel and Chief Patent Counsel, Ligand
Pharmaceuticals