New England Biz Law Update
It seems every company has at one time or another seen a competitor’s issued U.S. patent and said, “How did they get that? Everybody knew that.” or “That doesn’t work.”
All that may very well be true. A company might even obtain an opinion from its patent attorney stating that the offending patent is invalid on one of those grounds.
But the U.S. Patent and Trademark Office issued the patent, and the patent is statutorily entitled to a presumption of validity in any U.S. court. If the offending patent covers the company’s technology, every time the company seeks to raise funds, the value of its business will be discounted by the uncertainty the patent creates, even if 100 people agree the patent is invalid.
Unfortunately, the U.S. does not have an effective way of eliminating the uncertainty created by such an offending patent. Unless the patent owner actually sues, or sufficiently threatens to sue the company, patent litigation is not available. Moreover, no company wants to invite a patent litigation, which is very expensive, invasive, and distracting.
Many other countries address the problem of such offending patents by providing a post-grant review process by which parties can oppose in the patent office the grant of a patent soon after its issuance. If the opposing party prevails, the patent office revokes the patent. While there are growing calls for such a post-grant opposition procedure in the U.S., none exists.
Instead, the U.S. has experimented over the years with a hodge-podge of reexamination procedures where a company can request, or put political pressure on the PTO to decide on its own, that an offending patent be reexamined by the PTO.
Those reexamination procedures, however, continue to be unsatisfactory, largely because the deck is stacked in favor of the patent owner. Rather than request a likely unsuccessful reexamination (and forfeit certain rights in any subsequent litigation with the patent owner) most companies are well advised legally to do nothing. Of course, this does nothing to resolve the uncertainty.
Another Alternative
Fortunately, many companies may have another alternative available to them for challenging an offending patent. To determine the first-to-invent among competing inventors, the PTO conducts “interference” proceedings. Since 1984, the PTO has also determined patentability issues in interferences.
This provides a potential avenue for challenging the validity of an issued patent – one that is highly favorable to a patent challenger. Few patent attorneys are comfortable with interferences, however, and few recognize their potential.
To have the PTO consider the patentability of an issued patent, a company needs to have a pending application claiming the same invention. If a company is developing a patent portfolio and the offending patent covers its technology, it will often have such an application pending before the PTO.
Moreover, the application doesn’t have to presently claim the same invention. As long as a pending application supports claims to the “same patentable invention,” the company can add claims to it to provoke an interference. The claims must be present at some time before one year from the patent’s issue date, and they must be allowable.
Finally, the challenger must be able to show that it is at least possible that it could establish an earlier date of invention than the patent owner. If these conditions are met, the PTO should declare an interference between the pending applications.
The PTO has recently indicated a reluctance to declare any interference that is a mere “post-grant cancellation proceeding.” Nonetheless, if a challenger meets those threshold requirements for an interference, the PTO should consider the validity challenges to the offending patent.
Numerous Advantages
Interferences have numerous advantages for challenging an offending patent.
First, with essentially no discovery and no live testimony, interferences are much less expensive than litigation. Second, unlike reexaminations, interferences can consider all patentability issues. Third, patentability issues will be decided by Administrative Patent judges who, unlike judges and juries, regularly find inventions unpatentable and, being technically trained, understand the inventions.
Fourth, a patent is not entitled to the statutory presumption of validity in an interference proceeding. Fifth, the challenger’s burden of proof is lower in an interference than in a district court litigation (a preponderance versus clear and convincing evidence). Sixth, “interference estoppel” – which prevents a losing party from obtaining in its patent portfolio claims that it could have pursued in the interference – potentially puts the patent owner’s entire portfolio (as well as the challenger’s) at risk, increasing the incentive to settle.
Before attempting to provoke an interference to challenge the validity of a patent, a company should consider whether traditional estoppel (collateral estoppel and issue preclusion) could prevent it from asserting in subsequent litigation validity challenges that it previously lost in the interference.
One case that is binding precedent for all patent litigation, Coakwell v. United States, 292 F.2d 918 (CCPA 1961), arguably supports the application of such an estoppel. Coakwell’s scope is uncertain. In over 40 years it has never been applied in this way, and few patent attorneys are aware of its existence. Nonetheless, it should be considered when deciding whether to provoke an interference to challenge the validity of an offending patent.
Interferences potentially provide a highly favorable and relatively inexpensive forum for challenging the validity of an issued patent. A company faced with a blocking patent it believes is unpatentable should consider the availability of an interference to challenge the offending patent.
