Time to Simplify Patent Challenges (Perspective)

Editor’s Note: The authors of this post are intellectual property lawyers.

By Corey Leggett and Joseph Raffetto, associate and counsel, Hogan Lovells

The America Invents Act (AIA) became law roughly five years ago, and with its implementation came new administrative proceedings by which companies may challenge the validity of patents at the U.S. Patent and Trademark Office. Rather than establishing a single uniform procedure that permits challenges to any patent based on any statutory ground, however, Congress decided to create three distinct proceedings: inter partes review (IPR), post-grant review (PGR), and covered business method (CBM) review. Each has its own unique limitations and special carve-outs.

IPR has been the most popular AIA proceeding, if only because it is the most inclusive—any patent, whether issued before or after the AIA, can be challenged in an IPR. However, companies cannot challenge patents in an IPR on all statutory grounds. Rather, they are restricted to challenging patents only either (a) as anticipated (or disclosed) by or (b) obviousness in view of other patents or printed publications. PGR, on the other hand, allows challenges based on any statutory ground, including for lack of subject matter eligibility (e.g., for covering something that cannot be patented, like an abstract idea) and for indefiniteness (e.g., where the scope of a patent cannot be determined with reasonable certainty). The caveat for PGR, however, is that it is only available for AIA patents and only in the nine-month period after they issue.

The third AIA creation, CBM review, blends some of the beneficial aspects of IPR and PGR. CBM petitioners may, for example, challenge both pre- and post-AIA — like with IPR — and may raise challenges based on nearly all statutory grounds—similar to PGR. CBM review has its own special carve-outs and restrictions though. Congress created CBM review for a special class of patents: “business method patents.” Indeed, Congress specifically defined such patents in the AIA as patents that are “used in the practice, administration, or management of a financial product or service” and that are not directed to “technological” inventions. Due to these special limitations, the majority of patents—in the technology, automotive, and life sciences business segments, for example—never can be subject to CBM review.

CBM review is a transitional program that is currently scheduled to sunset on September 16, 2020. In recent years, Congress has proposed various amendments to CBM review: one to extend the sunset period six years and another to eliminate the sunset period. The proposal to make CBM permanent, rather than merely transitional, also urged removing the “financial product or service” limitation. This represents movement toward creating a more uniform proceeding for different types of patents, not just those relating to monetary matters. Still, this proposal leaves room for improvement.

An improved approach for patents in all market segments is to consolidate the three AIA procedures into a single framework that, like CBM, allows challenges to both pre-AIA and AIA patents based on any statutory ground. But, remove the carve-out for financial-type patents, and eliminate the caveat for “non-technological” patents. One of Congress’s motivations in creating CBM was to eliminate poorly-written, vague, and overbroad patents directed to simple ideas like organizing human activities. These problematic patents, however, exist in all types of technological areas. Therefore, Congress’s concerns would be better addressed by such a single robust procedure that permits petitioners to challenge all suspect patents on any statutory ground. Such a single, uniform proceeding would streamline rules and procedures, while at the same time providing more predictable decisions regarding patent validity. The result: a better, stronger patent system that would benefit companies across all market segments.