The sponsors of the STRONGER Patents Act of 2019[1] -- introduced to the Senate on July 10, 2019 -- may be from both political parties,[2] but they share one clear trait: they hate what post-grant proceedings have done to patent litigation. So they introduced a bill that would roll back the availability, attractiveness, and effectiveness not only of inter partes review and post-grant review, but also the availability and attractiveness of ex parte reexamination. The bill also seeks to supplant state anti-troll laws through specific federal unfair trade practices provisions directed at "targeting rogue and opaque letters" that would preempt such laws. And it includes a number of unrelated provisions that would make permanent injunctions easier to obtain, end PTO fee diversion, reduce university patent fees, and seek to aid small businesses in the patent system.
The narrowing of inter partes review ("IPR") and post-grant review ("PGR") would start with who can bring such proceedings: in order to have standing to bring an IPR or PGR, a petitioner (or its privy or real party in interest) must have been sued for infringement of the patent or charged with infringement under the patent in a manner that would give rise to declaratory judgment jurisdiction. In doing so, the bill gets rid of one of the two main rationales for the AIA's post-grant proceedings: having an avenue that would allow the interested public to get rid of "bad" patents. Furthermore, in combination with other provisions, it forces the petitioner to choose between taking a single shot[3] with an IPR or PGR petition or litigating the invalidity issues in Federal court or the International Trade Commission; it gets rid of the possibility of parallel proceedings. So only those parties who could otherwise bring their arguments in Federal court or the ITC would be able to file a petition, and then they wouldn't be able to argue invalidity in court.[4]
Next, the bill limits the number of petitions a patentee will face, prohibiting the Director from instituting any petition directed to a claim if a previous petition has been instituted with regard to that claim. Given the estoppel that would now set in upon filing -- not Final Written Decision -- that provision could result in a party being prohibited from arguing invalidity in post-grant proceedings or court. For example, if an IPR petition were filed one day after another petitioner's, and the other petitioner's IPR were to be instituted, the second filer would be shut out even if it was raising different arguments. The combination of those two provisions would severely limit the use of IPRs and PGRs, but it raises fundamental First Amendment concerns.[5] Similarly, IPR and PGR cannot be instituted if there is a final judgment on validity in either a Federal court or the ITC, apparently even if the case didn't involve the petitioner. Again, a petitioner who files before the judgment but would have the institution decision made after a judgment against a third party would be shut out of both post-grant proceedings and court litigation.
The bill then creates a higher bar for institution, making the institution standards the same as those already applied in court. In making the institution decision, the PTAB must presume every claim to be valid, and the petitioner bears the burden of showing invalidity by clear and convincing evidence. In evaluating the petition, the PTAB panel must construe the claims in the same manner as a court, and must consider any prior construction of a challenged claim term. Notably, the panel that decides whether to institute an IPR or PGR cannot then sit in review of the instituted proceeding. Furthermore, the bill would open institution decisions up for appellate review much more broadly. A patentee would be able to appeal the institution decision on any basis other than whether there was a reasonable likelihood that the petitioner would prevail (a small sacrifice, since the ultimate decision is appealable on the merits); an unsuccessful petitioner would be barred from appealing a denial of institution. The net effect is to create a much higher standard for institution of post-grant proceedings and remove the incentive for even eligible petitioners to choose them over litigation.
The disincentives would not stop even after a petition was instituted. If a court renders a final judgment on validity, a pending IPR or PGR would be stayed while the case is appealed. If the validity of the claims is upheld on appeal, the IPR or PGR will be terminated. Thus, even on the eve of oral hearing, post-grant proceedings could apparently be halted for the litigation of validity issues in an unrelated party's lawsuit.
Finally, the definition of a real party in interest -- important for both disclosure and estoppel -- is clarified and broadened to include anyone funding the petition, and is subject to discovery during an IPR or PGR.
But the bill doesn't just discourage AIA post-grant proceedings, it also limits ex parte reexamination. It would get rid of one of the significant benefits of such proceedings, the ability to bring them through a strawman. Instead, a petition for ex parte reexamination would now have to identify the real party in interest. In addition, it could only be instituted if the reexamination petition is filed within one year of service of a complaint alleging infringement of that patent. Thus, even ex parte reexamination, which preceded the AIA, would be discouraged under the STRONGER Patents Act.
The bill also has a number of provisions not related to post-grant proceedings. It would partially reverse the eBay v. MercExchange case[6] by calling for a presumption of irreparable injury and inadequacy of remedies at law upon a finding of infringement of a valid, enforceable claim. That is, it would make permanent injunctions easier to obtain, requiring showings of only two of the traditional four factors. The bill would prohibit fee diversion from the PTO and allow institutions of higher learning and their technology transfer offices to claim micro entity status for purposes of paying fees to the PTO. And it would broaden the patent pilot program in certain district courts in order to address special issues faced by individuals and small businesses charged with infringement. Notably, it would also assist small businesses by requiring the PTO to make all of the patent and trademark information available at the PTO's Public Search Facility also available for free online.
Finally, the bill has a separate title to address Federal prohibition of misleading or deceptive letters purporting to assert patents against the recipients. Currently, there are state "anti-troll" laws that prohibit such letters; the bill would pre-empt them in favor of Federal Trade Commission[7] enforcement against parties who send out letters asserting infringing in any of a number of potentially deceptive circumstances.
The STRONGER Patents Act of 2019 would actually strengthen patent owners' positions, but only through weakening other parties' defenses. It would essentially eliminate post-grant proceedings as a means of obtaining an early and rapid adjudication of validity before product launch. Even after product launch, it would establish so many hurdles to effective review that it would make seeking PTAB review far less attractive than before, and likely less attractive than court litigation. Thus, it would beat back the wave of post-grant proceedings that have eliminated many patents. While it may be true that the AIA went overboard in making the PTAB into patent death squads,[8] the STRONGER Patents Act appears to go overbroad in tightly shackling petitioners.
[1] The full title of the bill is the "Support Technology and Research for Our Nation's Growth and Economic Resilience Patents Act of 2019," S. 2082.
[2] The bill is sponsored by Senator Coons (D-DE) and cosponsored by Senators Cotton (R-AR), Durbin (D-IL), Hirono (D-HI), Kennedy (R-LA), and Cramer (R-ND).
[3] There is a minor exception that would allow a party to file an additional petition if it is subsequently charged with infringement of additional claims.
[4] An IPR petitioner would be able to argue in court that a claimed invention was in public use, on sale, or otherwise available to the public before the effective filing date, but those arguments are not available in an IPR.
[5] "Congress shall make no law . . . abridging . . . the right of the people . . . to petition the Government for a redress of grievances."
[6] eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).
[7] The bill would also allow State Attorneys General to enforce the law in certain circumstances.
[8] At least according to then Chief Judge Rader, speaking at the October 2013 AIPLA annual meeting.
