Patents Post-Grant: Encouraging Waiver of a Patent Owner Statement in Ex Parte Patent Reexamination

USPTO Proposal Forces Patentee Cooperation in Violation of Statute?

Last Monday, I proposed managing petition practice in inter partes patent reexamination based on the patent interference model already in place. As a reminder, this proposal is responsive to the proposed collection of working concepts and initiatives published in the Federal Register for the purpose of streamlining patent reexamination. (a copy of the Federal Register Notice is found here) I discussed this proposal at the USPTO, along with other speakers on June 1, 2011. (webcast and other materials here)

As I mentioned in last week's post, the USPTO proposal to modify and make permanent the Pilot Program for Waiving the Patent Owner Statement was not discussed in detail during the meeting. However, this proposal, at least from feedback I have received, is one of the more controversial.

In a nutshell, the USPTO is proposing to modify the existing Pilot Program by: (1) Making the Pilot Program permanent; and (2) Issuing a first "provisional" first action together with the Order of reexamination for those Patentees that do not agree to waiver. With respect to the "provisional" first action, unless a Patentee files a Statement overcoming the rejections in the Provisional Action, the next action would issued as a Final Rejection; therein lies the controversy.

This proposal would force efficiency at the cost of Patentee rights. Moreover, it is unikely that such a proposal could be reconciled with the patent reexamination statutes.

Statutory Roadblock (35 U.S.C. § 305)

After the times for filing the statement and reply provided for by section 304 of this title have expired, reexamination will be conducted according to the procedures established for initial examination under the provisions of sections 132 and 133 of this title. In any reexamination proceeding under this chapter, the patent owner will be permitted to propose any amendment to his patent and a new claim or claims thereto, in order to distinguish the invention as claimed from the prior art cited under the provisions of section 301of this title, or in response to a decision adverse to the patentability of a claim of a patent. (emphasis added)

Under the current proposal, reexamination would effectively begin prior to the expiration of the times for filing a Statement and Reply. A Patentee that refuses to waive the Statement, and does not file a Statement in response to the provisional action, would lose the right to propose an amendment, add new claims, or introduce evidence by virtue of the subsequent Final Action (governed by 37 C.F.R. § 1.116). 

Statutory roadblock aside, this proposal is all stick and no carrot.

So, why is the Office seeking brute force solutions to urge cooperation with this program?

USPTO Perspective

The USPTO's interest in urging compliance with the waiver this program is understandable- cooperation by Patentees would help decrease overall pendency of ex parte patent reexamination. Further, this increase in efficiency would not expend any significant Office resources. As explained in the Streamline Proposals Notice, historically, 10% of Patent Owners in ex parte patent reexamination ultimately file a Statement.  As can be appreciated, once an Order is granted, the USPTO provides a two month period (37 CFR § 1.530) to receive a Statement that is not filed in 90% of cases. For this reason, the time to a first action on the merits (FAOM) in ex parte patent reexamination is slower relative to inter partes reexamination. (inter partes reexamination does not provide for a Patent Owner Statement so a first action is typically issued together with the Order)

As I pointed out previously, the Pilot Program has had very disappointing results. Preliminary results indicate that (31%) of Patentees agree to waive the right to file a Statement.  This is a far cry from the 90% of Patentees the USPTO would expect to participate based on the historical filings. 

In finding a solution to the lack of cooperation, one must first appreciate the problem.

Patentee Perspective

As I pointed out when the Pilot Program was first announced, Patentees typically prefer to utilize the time between initial determination and first action to consider their response strategy, line up expert witnesses and hire reexamination counsel.  Another factor that complicates cooperation with the program is that patents pursued in ex parte reexamination tend to be older (i.e., not eligible for inter partes reexamination). In such patents, it is rare that the same law firm is retained to serve as reexamination counsel. So, the Office is usually calling the wrong firm to seek waiver, assuming the firm/attorney is even reachable after 10-15 years.

It is true that much of the same strategy and expert work also needs to be done in preparation for an inter partes patent reexamination. While there is no opportunity for a similar delay in that proceeding, often times ex parte requests are quite unexpected. For example, request can be filed anonymously in ex parte patent reexamination. Inter partes reexamination tend to occur more often in the face of open, and ongoing adversity.

Thus, the lack of cooperation is not unreasonable in many circumstances.

What Can be Done by the USPTO?

Certainly, the Office needs to accelerate patent reexamination proceedings to the best of their ability and the waiver program is a sensible solution. At least two months are lost between the Order and first action when a Patentee refuses to waive, and then does not file a Statement. Another way to encourage compliance with this program, and to recover these two months, is to modify the shortened statutory response period. Typically, a Patentee has (2) months to respond to an office action in patent reexamination. The Office should consider changing this period to (1) month for Patentees that do not cooperate with the Waiver Program.

In other words, in the Office communication (interview summary) that notes the Patentee's decision as to the waiver program, notice would be provided that a modified, shortened statutory period may apply to the proceeding. That is to say, for those Patentees that refuse to waive the right to file a Statement (including those that "could not be reached") that then do not file a Statement, a shortened statutory response period (1 month) would apply for all office actions. As any reexamination proceeding continuing on to appeal will include at least a first action and final action, two months would be recovered for all long term ex parte patent reexamination proceedings.

This modified, shortened statutory response (1 month) is already in use in many patent reexaminations. The Office currently modifies the response period in ex parte patent reexamination when a parallel litigation is stayed pending the patent reexamination. (MPEP 2263)

Of course, some would argue that this solution would just encourage additional petitions for extension of time. To account for this the Office would also require as a component of any such petition going forward, a statement and explanation of non-cooperation with the program, non-cooperation weighing against an extension absent extraordinary circumstances.

With this solution Patentees would retain their statutory right to amend and submit evidence, and the Office would be able to reduce overall pendency for ex parte patent reexamination proceedings.

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