Update – IPR and PGR Provisions of House Bill Aimed at Patent Trolls

November 21, 2013

John Bird Patent trolls

On November 20, 2013, the House Judiciary Committee passed an anti-patent troll bill (Innovation Act of 2013, H.R. 3309). As discussed in our previous post, most of the provisions are directed towards discouraging patent trolls from filing federal district court infringement actions. However, there are a few provisions that would affect inter partes review (IPR) and post grant review (PGR). These provisions include:

• Expanding the type of prior art that can be relied upon in the transitional Covered Business Methods (CBM) PGR program to include 102(e) secret prior art and 102(d) prior patent prior art.

• Removing prior art that “reasonably could have been raised” from the estoppel provisions. This allows would-be patent challengers to start proceedings without the substantial “chilling” effect of not knowing how far estoppel would apply, should the IPR and PGR prove unsuccessful.

• Providing that the claim scope in IPR and PGR would be determined according to the Phillips v. AWH (Fed. Cir. 2005) (en banc) standard used in district court litigation, rather than the Broadest Reasonable Interpretation (BRI) standard that the USPTO currently uses in IPR and PGR proceedings.

The amended bill eliminated the following two provisions, which would have been favorable to a party which is the target of a patent infringement allegation:

• Broadening the definition of “used in the practice, administration, or management of a financial product or service” for the PGR transitional program for CBM. A broadened definition would expand the number of patents susceptible to this type of invalidity challenge.

• Eliminating the 8-year sunset provision for the transitional CBM PGR program.

On the whole, the bill as amended would weaken the effectiveness IPR and PGR in invalidating patents. While the expansion of prior art in the transitional CBM PGR program and weakening of the estoppel provision are would be clearly favorable to IPR and PGR petitioners, the use of the Phillips standard, as opposed to the BRI standard, for claim construction would disadvantage petitioners. The BRI standard currently used in USPTO proceedings makes it more likely for a petitioner to show unpatentability at the USPTO than to show invalidity in a district court. This claim scope provision is most likely motivated by having a more consistent claim scope across forums, thereby providing better certainty for the affected parties. If passed by Congress, the anti-troll bill would take some of the teeth out of IPR and PGR.