And Deputy General Counsel
Guilford Pharmaceuticals Inc.
Submitted to the
Subcommittee on Courts, the Internet and Intellectual Property
of the
House Judiciary Committee
Patents: Improving Quality and Curing Defects
A fair, fast and effective reexamination system is key to addressing many of the challenges facing our patent system today. Today technology is changing rapidly and individuals and companies are aware of the value of protecting the new technology they are creating. There are not sufficient practitioners to provide the technical/legal services necessary to do so. Thus, more than ever, law firms are hiring the brightest, most experienced, patent examiners away from the PTO, at a rate almost equal to the rate at which the PTO has been hiring. Thus, a huge challenge is created for the PTO—it must handle more cases, including more complex cases, with less experienced staff. The result is inevitably a growth in the issuance of patents of questionable validity. When faced with such a patent that could block development of one of its drug candidates, a company like Guilford has two options—it can stop development or risk being sued for infringement. Neither of these alternatives is attractive. Discontinuing development of a drug that ultimately might prevent or alleviate human suffering because of such a patent should not happen, and litigation could destroy a small company like Guilford financially, even though it might ultimately prevail. A fair, fast and effective third party reexamination would offer a third, more attractive, solution. We do not have such a system under our present patent laws. Very few, if any, informed third parties would file a reexamination request under either of the existing ex parte or inter partes provisions of title 35.
Reexamination was first established in 1980 as an ex parte proceeding, in large part to provide an alternative to costly litigation. However, there was concern about third parties using the system to harass patent owners. At that time, the recent experience with protested (inter partes) reissues had taught those in the field several lessons. First, third party practice could be very protracted; second, the PTO was not equipped with the manpower, appropriate procedures or expertise to handle such cases. Often, the result was delays and expenses that even made federal court litigation look attractive. In reaction, when reexamination was first enacted in 1980, third party participation was essentially limited to the filing of the reexamination request.
Around 1990, the American Intellectual Property Law Association (AIPLA) revisited reexamination. Reexamination was not being used by third parties as an alternative to litigation because the procedure was too one-sided. The patent owner not only almost always prevailed but then was in a stronger position to sue the third party in federal court. The AIPLA spent months drafting legislation and obtaining wide approval of its members. That draft legislation provided additional, but limited, third party participation before the PTO examiner, gave both parties the right to appeal to the PTO Board of Patent Appeals and to the Court of Appeals for the Federal Circuit. Under the proposal, if the third party appealed to the Federal Circuit, then it was estopped from raising issues that were raised or could have been raised during reexamination. The AIPLA felt it was fair to impose estoppel only when a third party took advantage of the federal court system.
The Advisory Commission on Patent Law Reform, created in 1992, ultimately recommended amendments to the reexamination statutes similar to those in the AIPLA draft but also recommended expanding the scope of reexamination to include section 112 issues, other than best mode.
Around 1993 or 1994, a bill to amend the reexamination statutes was finally introduced. In large part, it reflected the changes recommended by AIPLA draft and the Advisory Commission. That bill had no opposition for at least a year or two. Then it became the inter partes reexamination section of an omnibus bill, ultimately enacted in 1999 as the American Inventors’ Protection Act (AIPA). Unlike the stand-alone reexamination bill, AIPA had strong opposition and went through many changes in the four or so years it was pending. During that time, inter partes reexamination was amended in several ways which make it even less attractive to third parties than ex parte reexamination.
First, and most importantly, only the patent owner can appeal to the Federal Circuit—the third party reexamination requester does not have that right. Second, the third party is estopped from later raising in federal court any issued it raised or could have raised, even though it has no right to appeal to the Federal Circuit. Thus, if a third party chooses reexamination to attack the validity of a patent and loses, the third party would have difficulty defending itself in a later infringement action.
The limitations in the present reexamination statutes are not the only impediments to a fair, fast and effective reexamination system. The Federal Circuit in In re Portola Packaging, 110 F.3d 786 (1997) limited the PTO’s ability to consider patentability in view of the prior art. The court broadly stated that, if a reference had been cited during original examination, then it could not be considered during reexamination, either alone, or in combination with any other previously cited references. According to the court, that’s because it is presumed the examiner considered all cited references in every possible combination. Given that an examiner only has a limited time to examine a given application and an application may have a large number of references cited in it, this presumption clearly has no basis in experience and makes bad law. It does not reflect the way examination is conducted. Prior to Portola Packaging, since 1980 when the reexamination statutes were first enacted, the PTO had consistently reconsidered previously cited art, if that art clearly showed a new question of patentability existed. The Portola Packaging decision imposed a new limitation on reexamination making it much less available as an alternative to litigation, in which prior art cited during examination remains available to establish invalidity. In the view of many, Portola Packaging is contrary to the statute and frustrates legislative intent.
The solution to providing a fair, fast and effective reexamination system is not complex. An elaborate opposition system is not needed for this purpose and is not a substitute for reexamination in that it will not be fast and will place burdens on the PTO that the PTO is not prepared to handle at this time. Only three changes must be made in our present inter partes system to provide a fair, fast and effective alternative to litigation. First, third parties must be given a right to appeal to the Federal Circuit. Second, estoppel must not arise until such an appeal is filed. And, third, Portola Packaging should be legislatively overruled.
In addition, while not necessary to provide a fair, fast and effective alternative to litigation, including reexamination of section 112 issues, other than best mode, should be considered. The PTO has expertise in determining whether a patent teaches how to make and use an invention, whether the patent shows the inventor had possession of the invention at the time the application was filed, and whether the claims are sufficiently clear and concise. On the other hand, the PTO has difficulty in evaluating whether the best mode of practicing the invention has been disclosed. This issue brings in questions of intent to conceal—questions better addressed by the courts and ones that would unduly lengthen reexamination. Section 101 issues should not be included either. As the Supreme Court held in Diamond v. Chakrabarty, “anything under the sun made by man” is patentable. Thus, bringing in section 101 would unduly lengthen the procedure to address an issue that seldom should bar patentability. To make reexamination a viable option to litigation, it must be concluded in a reasonably short time.
It has been suggested that third party reexamination requests be made within 9 months of the issuance of a patent. The problem with doing so is that a company may not be aware of a patent within that 9 month period. That’s particularly true for smaller companies that do not have the resources to maintain an extensive watch for such patents. Further a company may not be working in the relevant area until years after the patent issues. In such cases, a third party would be unable to use reexamination as an alternative to litigation at a later time. However, it is believed that a large number of patents of questionable validity can be identified during the 9 month period after issuance. Thus, if necessary, limiting requests to the 9 month period following issuance is a reasonable compromise with those concerned about harassment of patentees.
If enacted, H.R. 1333 would provide a very lengthy inter partes opposition, first in the PTO and then in the courts. As earlier noted, an opposition is not a substitute for expanded inter partes reexamination. Oppositions in Europe are not as complex as that proposed in H.R. 1333, yet still take many years to complete. Further, in order to conduct such oppositions, PTO would be required to develop trial court expertise it presently does not have. That could be difficult at a time patent lawyers with litigation skills are in great demand, particularly given the government’s constraints on hiring and salaries.
I have the following specific comments on the bill:
1. The language in Sec. 321 (b)(1)(B), “to be held on the record after opportunity for a hearing” would for the first time subject the PTO to the formal adjudication requirements under the Administrative Procedure Act. Satisfying these requirements would place additional costly burdens on the PTO.
2. The bill provides that the administrative opposition judge must make his or her determination within 18 months after the filing of the request, yet permits the patentee to file an unlimited number of successive claim amendments. From a practical standpoint, it is difficult to see how these two provisions can coexist.
3. The bill permits appeal under section 145, which, in essence, provides a trial de novo before the district court. This review route could take several additional years and thus would unduly prolong the procedure, providing a mechanism to harass the patentee.
4. Sec. 4 of H.R. 1333 requires patent applicants to disclose attorney work product in that they must disclose the extent the prior art was searched to meet the requirements of title 35. It also provides for penalties if such information is not disclosed. This provision should be eliminated. While the law does not require a patent applicant to search the prior art, not doing so, or failing to search in a particular area, could later be used against the patentee in litigation. It is particularly unfair to individual inventors and small companies with limited funds for searching.
AIPA provides patent term extensions when the PTO unduly delays in issuing a patent application. But there is no provision addressing the PTO’s delay in completing a reexamination (or a reissue). This should be changed to avoid uncertainty involving the validity of patents that are often commercially valuable. Thus, I recommend that the PTO be required to issue a final decision in reexaminations and reissues within 18 months of the filing of the request.
An increasing number of very broad patents of doubtful validity are issuing today that may block development of commercially important products, including drugs to treat diseases for which there is presently no treatment. Even though such patents may ultimately be held invalid if litigated in court, the high cost, delays and uncertainty of litigation may result in companies such as Guilford foregoing the development of certain products. Everyone loses in such a scenario—companies, inventors and the public. A fair, fast and effective inter partes reexamination system would go a long way to providing an adequate solution.