Anascape, Ltd v. Microsoft Corp. et al

Filing 124

AFFIDAVIT in Support re 123 MOTION to Stay - Renewed Motion to Stay Litigation Pending Reexamination in Light of Patent Office Rejections of Anascape's Claims - Declaration of J. Christopher Carraway filed by Microsoft Corp.. (Attachments: # 1 Exhibit 1)(Carraway, J)

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What's Really Happening in Inter Partes

Reexamination1
Joseph D. Cohen2

1 Introduction

Inter partes reexamination has been with us for almost four years.3 During that time,
we've had many comments on inter partes procedures.4 Some say that the inter partes

i Copyright ~2004, 2005 Joseph D. Cohen, Stoel Rives LLP.
This paper is based on the article first published in the March 2005 issue of the JOURNAL OF THE PATENT AND TRAEMARK OFFICE SOCIETY, 87 J. PAT. & TRAEMARK OFF. SOC'Y 207

(2005).

2 Partner in the Patent Law Group of Stoel Rives LLP, Portland, Oregon. My direct dial

number is 503.294.9452, and my email isjdcohen(?stoel.com.
3 This depends on how you count: from the effective date ofthe legislation, or from the

first inter partes proceeding.
The inter partes reexamination legislation became effective November 29, 1999. The
procedure is part of

the Intellectual Propert and Communications Omnibus Reform Act of 1999, Pub. L. No. 106-113,
the American Inventors Protection Act of 1999, which is part of

113 Stat. 1501.

You can request inter partes reexam only for patents issued on applications fied on or
the Act. See, e.g., 37 C.F.R. § 1.913 (2004); MANUAL OF PATENT EXAMIING PROCEDURE (Rev. 2, May 2004) ("MPEP") § § 2610-2611. The PTO issued the first
after the effective date of such design patent, D422,822 ("Toothbrush holder") April

18, 2000, and the first such utility

patent, 6,062,457 ("Stapler") May 16,2000.
It took another 1 1/2 years before the first inter partes reexamination proceeding. On

Roylance, Abrams, Berdo & Goodman, Washington, DC, delivered the first inter partes reexam request: 95/000,001. The PTO assigned the request a July 27,2001, filing date. Examiner Rabon Sergent examined the case.
July 26, 2001, Lance G. Johnson of

4 E.g., Kenneth L. Cage & Lawrence T. Cullen, An Overview of Inter Partes

Reexamination Procedures, 85 J. PAT. & TRAEMA OFF. SOC'Y 931 (2003); Robert E. Cannuscio, Optional Inter Partes Reexamination: A Practitoner's Perspective, SF84 AL.LAB.A 75 (2000); Natalie M. Derzko & John W. Behringer, Inter Partes Reexamination Starting
In 2003 -A Potentially Useful Approach To Challenging Invalid Biotechnology Patents, 21
NATURE

BIOTECH. 823-825 (2003) Michael L. Goldman & Alice Y. Choi, The New Optional

Inter Partes Reexamination Procedure and Its Strategic Use, 28 AIPLA Q.J. 307 (2000); Mark D. Janis, Inter Partes Patent Reexamination, 10 FORDHAM INTELL. PROP. MEDIA & ENT. LJ. 481 (2000); Lance G. Johnson, Inter Partes Reexamination: The USPTO Alternative to 2004, at 12; Sherry M. Knowles et aI., Inter Partes Patent Litgation, SciTEcH LAWYER, Fall Reexamination in the United States, 86 J. PAT. & TRAEMARK OFF. SOC'Y 611 (2004); Frederick C. Williams, Giving Inter Partes Patent Reexamination a Chance to Work, 32 AIPLA
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procedures are a recipe for disaster: "It would be legal malpractice to recommend a client initiate an inter partes reexamination.,,5 Others maintain that the recipe is superior: "(I)n view of the many advantages of inter partes reexamination, it is not hard to envision it becoming the dominant forum for patent validity disputes . . . .,,6
Evaluations of inter partes reexam have been largely theoretical and based on the recipe the pudding is in the eating.7 With the advent of publicly available Image File Wrappers ("IFWs"), we can more readily taste the pudding; we can see what's actually happening in inter partes reexam, and how well it matches up with the theory.
itself-the statute and regulations. But the proof of 2 Key Features and Benchmarks of Inter Partes

Reexamination
key features and benchmarks of inter partes

I won't review all the reexam statutes, rules, and procedures.8 But to understand the data
I'm presenting, you need a basic understanding of

reexamination.

QJ. 265 (2004); David L. Stewart, Inter Partes Reexam-On Steroids, 85 J, PAT. & TRAEMA
OFF. SOC'y 656 (2003); M, Patricia Thayer et al., Inter Partes Reexamination, PATENT WORLD

May 2001, at 1 (available at http://www.hewm.com/use/articles/interpartes.pdf); Robert T. Pous & Charles L. Gholz, Wil Inter Partes Reexamination Be Embraced by Third Parties as an
Alternative to Litigation?, INTELLECTUAL PROPERTY TODAY, vol. 7, no. 3, March 2000, at 37; Frank A. DeLucia, Jr., Recent Developments in Inter Partes Reexamination Practice,

http://www.fitzpatrickcella.comlimages/pub _attachment/attachment 177. pdf; Richard L. Kaiser, Inter Partes Reexamination as an Offensive Strategy for Invalidating Patents, http://www.mbflaw.com/pubs/articles/1121.cfm; V. Bryan Medlock, Jr. & Russell Cass, Inter Partes Reexamination, in 2000 Intellectual Propert Owners Association Annual Meeting Speakers
Materials (2000); see also, e.g., 4 Donald S. Chisum, CHISUM ON PATENTS § 11.07(4)(g)
(2004); Stephen G. Kunin & Anton W. Fetting, The Metamorphosis of

Inter Partes

Reexamination, 19 BERKLEY TECH. LJ. 971 (2004); Paul Morgan & Bruce Stoner,

Reexamination vs. Litgation-Making Intellgent Decisions in Challenging Patent Validity, 86 J.
PAT. & TRAEMARK OFF. SOC'y 441 (2004); Qin Shi, Reexamination, Opposition, or Litigation?

Legislative Efforts to Create a Post-Grant Patent Quality Control System, 31 AIPLA QJ. 433 (2003).
5 Knowles et al., supra note 4, at 614,627; see Kunin & Fetting, supra note 4, at 978;
Stewart, supra note 4, at 656.

6 Goldman & Choi, supra note 4, at 333.
7 Miguel de Cervantes Saavedra, DON QUIXOTE pt. ii, ch. xxiv, quoted in John Bartlett,
FAMILIAR QUOTATIONS (lOth ed. 1919).

8 For the statute, rules, or procedures, go to the source: 35 V.S.C. §§ 311-18 (2002); 37

C.F.R. §§ 1.902-.997 (2004); MPEP chapter 26. For a summary, check the articles listed in note 4 above.
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2.1 Key Features
2.1.1 Continuing Requester Participation

The identifying feature of inter partes reexamination is that it involves not merely the patent owner and the PTO. In contrast to ex parte reexam, a third-party requester participates
throughout an inter partes case: the requester initiates the proceeding, the patent owner may

respond to any office action, and the requester may comment on any response by the owner.9 In ex parte reexam, a non-owner ex parte requester's participation ends before the first office action.
2.1.2 Statutory Estoppel

Another key feature of the current inter partes procedure is estoppel. Ifthe PTO orders

reexam and finally determines that a claim is valid, you can't defend an infringement suit on that claim on grounds that you could have raised in the reexam.io Likewise, ifthere's a final decision against you (a) in civil litigation that you didn't sustained your burden of proof on invalidity, or (b) in inter partes reexamination that a claim is valid, you can't request inter partes reexam 1 1 I mention estoppel only based on issues you could have raised in the earlier proceeding.

because the estoppel created in inter partes reexam may be the greatest deterrent to fiing inter
12 I have no data about estoppel.
partes requests.

2.2 Key Benchmarks
This article considers four benchmarks: Reexamination Order; First Action on the

Merits; Right of Appeal Notice; Reexamination Certificate.

9 35 D.S.C. § 314(b )(2).

io See 35 D.S.C. § 315(c).

ii See 35 D.S.C. § 317(b).

12 See, e.g., Goldman & Choi, supra note 4, at 326-29; see also, e.g., DSPTO, Round

Table Meeting: The Equities of Inter Partes Reexamination Proceedings (Feb. 17,2004),
htt://www . uspto.gov /web/ offces/pac/dapp/op la/comments/reexam proceed/round _ tb 1_
transcript.pdt(last visited Nov. 30, 2004) ("Inter Partes Round Table"), at 13 ("(B)ecause of

the estoppel that arises should the third-part requester lose, inter partes reexamination always puts the requester at a significant legal disadvantage.") (remarks of Michele Cimbala, Sterne, Kessler, Goldstein & Fox); id. at 15-19 (remarks of Colln Webb, chair, ABA Subcommittee for Patent
Reexamination and Opposition).

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2.2.1 Reexamination Order

Based on the request,13 an examiner decides whether to order reexamination and enters an appropriate order.14 The test is whether the request (with any additional patents and publications
found by the examiner) raises "a substantial new question ofpatentability.,,15
2.2.2 First Action on the Merits

The second significant benchmark is the first office action on the merits. Normally, the PTO issues a nonfinal decision on the validity of every claim of the patent.16
2.2.3 Right of Appeal Notice

The case proceeds iteratively with owner comments and amendments, requester comments,17 and subsequent offce actions until the examiner decides to issue the inter partes i 8 The owner has one more chance equivalent ofa final action: an Action Closing Prosecution.
to comment and amend (and if

the owner does so, the requester may comment).19 After considering owner and requester comments on the Action Closing Prosecution, the examiner

13 The examiner may also perform a search and consider patents and publications that
were not part of

the request. MPEP § 2644. This is supported by the statute, 35 V.S.C. § 312(a)
patentability affecting

("(T)he Director shall determine whether a substantial new question of any claim of

the patent concerned is raised by the request, with or without consideration of other patents or printed publications." (emphasis added)), but seemingly contradicted by the regulations. See 3 7 C.F .R. § 1.923 ("(T)he examiner wil consider the request and determine whether or not a substantial new question of patentability affecting any claim ofthe patent is raised by the request and the prior art citation." (emphasis added)).
14 See 35 V.S.C. § 312(a). The examiner normally uses form PTOL-2063, "Order

Granting/Denying Request for Inter Partes Reexamination." See MPEP § 2646.
1535 V.S.C. § 312(a).

the request asks for reexamination of a limited number of claims, the PTO reexamines every live claim. MPEP § 2658(IV)(B).
17 See 35 V.S.C. § 314(b); 37 C.F.R. §§ 1.945, 1.947.
18 See 37 C.F.R. § 1.949.
19 See 37 C.F.R. § 1.951.

16 Even if

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normally issues a Right of Appeal Notice.2o This notice triggers the deadline to appeal to the Board of Patent Appeals and Interferences ("BPAi,,)?1

2.2.4 Reexamination Certificate
At the end of

the case-including any appeals-the PTO issues a Reexamination

Certificate.22 Obviously, there are proceedings between the Right of Appeal Notice (ifany) and the Reexamination Certificate. But I won't discuss those proceedings, because there simply aren't enough appeals.
3 Theoretical Advantages

Inter partes reexamination has theoretical and/or perceived advantages (and

disadvantages) for the requester. Only a third part -and not the owner-may file an inter partes request?3 Because only the third-part requester can act on these advantages, I'll discuss
them only from the requester's viewpoint.

3.1 Speed
One theoretical advantage is speed. The statute requires the PTO to enter a
parte reexamination, which has the same statutory deadline.25 And, by itself, the speed of

Reexamination Order within three months after the request.24 This isn't an advantage over ex the
little substantive import?7

reexamination order offers little advantage over litigation; the test for ordering reexamination"a substantial new question ofpatentability,,26-is so broad; a reexamination order by itself has

20 See 37 C.F.R. § 1.953(a). The examiner may instead choose to reopen prosecution.
See id.
21 See 37 C.F.R. § 1.953(c).

22 See 35 V.S.C. § 316; 37 C.F.R. § 1.997.

23 See 35 U.S.C. § 311(a) ("Any third-party requester at any time may file a request for

inter partes reexamination. . . ." (emphasis added)).
24 See 35 V.S.C. § 312(a); 37 C.F.R. § 1.923.
25 See 35 V.S.c. § 303(a).

2635 U.S.C. § 312(a). The test for ex parte reexamination is identicaL. Compare id. with
35 V.S.C. § 303(a); see also MPEP § 2642(1).

27 See MPEP § 2642; see also, e.g., Hoechst Celanese Corp. v. BP Chems. Ltd., 78 F.3d

1575,1584 (Fed. Cir. 1996) ("We take notice that the grant by the examiner ofa request for reexamination is not probative of unpatentability. The grant of a request for reexamination, although surely evidence that the criterion for reexamination has been met (i.e., that a
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The statute allows the PTO to take an initial action on the merits-the second

benchmark-with the reexamination order.28 (This contrasts with ex parte reexamination, where
the owner may file a statement-and the requester may reply to the owner's statement-after the reexamination order and before the initial action on the merits.29) The inter partes regulations go

further; they say that an action on the merits wil "usually" accompany a reexam order?O

The statute also says that inter Itartes reexamination-like ex parte reexamination-must be conducted with "special dispatch." 1 Some people cite this as an advantage of inter partes reexam.32 Neither the statute nor regulations define "special dispatch.,,33 One notable feature of

'substantial new question of

patentability' has been raised, 35 V.S.C. § 303), does not establish a

likelihood of patent invalidity .").

2835 V.S.C. § 313.
29 See 35 U.S.C. § 304; 37 C.F.R. §§ 1.525-.535 (2004); see also 37 C.F.R. § 1.939(b)

("Vnless otherwise authorized, no paper shall be fied prior to the initial Offce action on the
merits of

the inter partes reexamination.").

30 See 37 C.F.R. § 1.935 ("The order for inter partes reexamination wil usually be
accompanied by the initial Office action on the merits of

the reexamination.").

31 See 35 V.S.C. § 314(c) (inter partes); 35 V.S.C. § 305 (ex parte).

32 See, e.g., Johnson, supra note 4, at 13:
Fast. The entire reexamination process is expedited and treated with "Special

Dispatch": two months for the examiner to decide whether to proceed (one month if in litigation), two months for the Patentee to respond, and 30 days for Requester rebuttal comments. There are no extensions of time other than for "sufficient cause" and these are by no means automatically granted.
33 But cf Ethicon, Inc. v. Quigg, 849 F.2d 1422, 1426 (Fed. Cir. 1988):
"Special dispatch" is not defined in the statute. ... According to Webster's New World Dictionary, special means distinctive, unique, exceptional,

or extraordinary, and dispatch means to finish quickly or promptly. Consequently, the ordinary, contemporary, and common meaning of special dispatch envisions some type of unique, extraordinary, or accelerated movement. In fact, the PTO itself has interpreted special dispatch to require that "reexamination proceedings wil be 'special' throughout their pendency" in the office, and provides for an accelerated schedule. MPEP § 2261. Whatever else special dispatch means, it does not admit of an indefinite suspension of reexamination proceedings pending conclusion of litigation.
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"special dispatch" is limits on extensions for the parties: the owner may get a time extension only for good cause shown/4 and the requester cannot get an extension.35

3.2 Cost
Another cited advantage of inter partes reexamination over litigation is cost. One estimate is "less than $50,000 before experts in the technology and the law" and "3-10 percent of what a judicial proceeding costs. ,,36
3.3 Greater Likelihood of

Favorable Result for Requester

The most important advantage of inter partes reexam would be a better outcome than in
other proceedings. I haven't found an author who explicitly says that you're more likely to get

better results in inter partes reexam. But this is implicit in articles that recommend the proced 37 ure.
4 What's Actually Happening?

The PTO recently made IFWs available on the Internet.38 Although publicly available
IFWs are far from perfect,39 they are a relatively easy way to see the details of inter partes

3437 C.F.R. § 1.956.

35 The requester's deadlines are fixed by statute. 35 U.S.C. § 314(b)(3); see MPEP
§ 2647.01 ("Extensions of comment period of30 days from service of

time are not available for third part requester comments, because a patent owner's response is set by statute.").

36 Johnson, supra note 4, at 14.

37 E.g., Goldman & Choi, supra note 4, at 323-24 ("By removing the participation hurdle,

inter partes reexamination is not merely a proceeding that is neutral to the parties, but rather it may decidedly benefit the patent challenger.").

38 IFWs became available via Public PAIR around August 1,2004. See, e.g., USPTO
Press Release No. 04-13, "Internet Access to Patent Application Files Now Available" (Aug. 2,
2004), http://www.uspto.gov/web/offices/com/speeches/04-13.htm.

problems including: documents not yet scanned, missing documents, double scanning, and incorrect indexing. See also Inter Partes Round Table,
supra note 12, at 55 ("(A)s they get scanned in, the lowest GS-minus whatever level is scanning

39 The IFWs suffer from a host of

them in, and the papers get lost and skewe~ and fied. We can check on the (PAIR) sites and find cases which are every which way but loose with halfthe papers fied in the last year not there, and no response in over a year on some of the most important reexams that we've seen.") Harold C. Wegner, Foley & Lardner). (remarks of
For a longer review of some problems with IFWs, see the article in the November 2004
newsletter ofthe PTO professional employees' union, "POPA Proposes Much-Needed IFW
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reexams.40 The data in this article are based on my review ofIFWs available in Public PAIR
through July 1,2005.
I have been reviewing all available IFWs for inter partes cases. I generally look at each

fiing in the Public PAIR IFW41 and at the original patent claims. I note (among other things): the claims for which reexam was requested, how long it took to issue the reexam order, whether the PTO issued an action on the merits with the reexam order, how the examiner ruled on the claims, and how far the case progressed. I also reviewed the PAIR "Transaction History." If there is a concurrent PTO proceeding (such as an ex parte request), I look at any available IFW
for the concurrent proceeding. Ifthere is concurrent litigation, I at least look at the electronic docket for that litigation.

Here's what I have found, based on the 100 inter partes requests filed so far:

4.1 Speed
Inter partes reexamination generally moves quickly to the earliest benchmarks-the

Reexamination Order and the First Office Action. But later activity can be relatively slow.
4.1.1 Reexamination Order

So far, the PTO has been timely in meeting the three-month statutory deadline for the the 100 requests filed so far, 85 are older than three months. In 2 cases, the PTO vacated the proceeding for procedural reasons before deciding whether to allow reexamination.43 In the remaining 83, the PTO entered a Reexamination Order in a timely fashion. It typically takes about 80 days from request to the Reexamination Order.
Reexamination Order.42 Of

Changes," POPA Newsletter, Nov. 2004, Vol. 4, No.7, available at
http://www . popa.org/newsletters/nov04 .shtml.

40 Before the PTO made IFWs publicly available, you could track the details ofPTO

proceedings only by ordering the fie wrappers from the PTO or another source. You also could easily track the contents ofa wrapper via the PAIR "Transaction History". See, e.g., Johnson,
supra note 4, at 13 (listing status of20 reexams). But the contents often reveal next to nothing.

For instance, the fact that there's an office action doesn't reveal whether the claims were rejected or confirmed. See id.
41 Some papers in the IFW are not available via Public PAIR.

42 There's one possible exception. The request in 95/000,067 was fied December 20,

2004, making the Reexamination Order due March 20, 2005 - a Sunday. The Public PAIR Transition History page shows the Order mailng date as Monday, March 21. But the Order itself, as well as the Public PAIR Image File Wrapper Page, show the mailng date as Tuesday, March 22. The MPEP says that when the 3-month period ends on a weekend or holiday, the order "must be mailed by the preceding business day." MPEP § 2641 (emphasis in original).
43 In 95/000,011, the request was incomplete. In 95/000,019, the requester was estopped.
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medann 76 e m ia 79
maximum 92 minimum 43
4.1.2 First Action on the Merits
the Reexamination Order. Indeed, of

time to reexam order da s

The PTO has made good on its intent that an action on the merits "usually" accompany the 86 orders granting reexamination, 67 have been accompanied by an Action on the Merits. In the remaining 19 cases, the Action on the Merits followed soon after the Reexamination Order, or there's usually an obvious (and good) reason

why there was no simultaneous Action on the Merits.44

Getting a ruling on the merits - even an interim one - within three months is an
advantage of inter partes reexam. In contrast, after an ex parte reexam order the PTO must wait

for (l) any owner's statement on the reexam order, and (2) any response to such a statement from
the third-part requester. Only then does the examiner rule on patentability.

The first inter partes office action does not merely give a ruling; it gives a reasoned response to each ofthe requester's invalidity arguments, and a reason for any new grounds of rejection.45 So far, the Office Actions on the merits have been long, thorough documents - much

44 Here are some examples:

In 95/000,005, when the PTO ordered inter partes reexamination, there was a pending ex
parte request (fied by a different third-part requester) awaiting an owner's statement and

requester's response.
In 95/000,020, there is a pending Director-ordered ex parte reexamination. The PTO decided to merge the proceedings. Furthermore, the patent in reexamination has 665 claims.

In 95/000,025, a reissue application was pending when reexamination was ordered. Instead of wasting time ruling on the merits of the original patent, the PTO ordered the reexam to proceed on the basis ofthe reissued claims.

In 95/000,031, the PTO said that the originally filed request papers lacked a detailed
explanation why some of

the claims were invalid. The requester fied additional papers, and the

PTO entered an action on the merits less than two months after the reexam order.

In 95/000,053, when the PTO ordered inter partes reexamination, there was a pending ex
parte request (fied by the owner) awaiting an owner's statement and requester's response.

45 See MPEP § 2660(II).

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longer than the samples in the MPEP.46 You're unlikely to convince the examiner to change his mind about these decisions.
No patent owner has yet succeeded in changing an examiner's mind about a rejection.47

Thus, in all the other inter partes with a second office action, the examiner has not had a change of heart from the position taken in the first action. Thus the first action on the merits is a guide to the viability of the original claims. It therefore also is a speedy and excellent predictor whether the requester wil have mandatory intervening rights.
4.1.3 Later Benchmarks

In the 86 cases in which it ordered inter partes reexamination, the PTO has issued only 17 Actions Closing Prosecution which were not withdrawn and 3 Right of Appeal Notices. The parties have appealed only 2 case to the BPAI, which hasn't ruled on either appeaL. The PTO has issued only 2 Reexamination Certificates; in those cases there was no appeal to the BPAL No case has made it as far as the Federal Circuit. From this data, it's apparent that inter partes cases move more slowly after the initial offce action, and that it may take years for the examiner to issue a final order.48 The time to a final order is longer than in ex parte reexamination.49 Indeed, in the time that the PTO (i.e., both the examiner and BP AI) takes to reach a result on an inter partes reexamination, some courts
could reach a

judgment on the merits.5o

4.2 Cost
The IFWs say nothing explicit about costs. Inter partes reexam is doubtless less expensive than litigation. One author says:
46 See MPEP § 2660(IV).
the requester. The initial Offce Action confirmed 23 claims. But a later Offce Action rejected all live claims, including
47 In 95/000,003, the examiner changed her mind in favor of

all the ones previously confirmed. This is the only examiner change of position I've noticed.
48 USPTO Director Jon Dudas recently laid out a plan for speeding up both ex parte and
inter partes reexamination. This plan includes establishing "firm processing time periods for all

reexamination proceedings ordered (after the Offce order for reexamination) on or after October
1,2005, for both ex parte and inter partes reexamination proceedings." Statement Of Jon W.

Dudas Before The Subcommittee On Intellectual Propert Committee On The Judiciary United States Senate, at 7 (Apr. 21, 2005) (available as http://www.uspto.gov/web/offices/com/speeches /2005apr2 1. pdf; last visited June 14, 2005).
49 The average pendency of ex parte reexams (filing date to reexamination certificate) is

21.6 months and the median is i 6.9 months. USPTO, "Ex Parte Reexamination Filng DataMarch 31, 2005" ii 7.
50 Of course, there won't be an appeal in every appealable reexam.

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Inter partes reexamination through the USPTO can address the issue of patentabilty, including the enhanced filing fee, for less than $50,000 before experts in the technology and the law. The 2001 AIPLA survey notes a median cost of patent infringement litigation in Texas to be $500,000 (less than $1 million at risk) and $1.5 milion ($1-$25 milion at risk). Inter partes reexamination costs
3-10 percent of

.

what ajudicial proceeding costS.(51)

Because that author prosecuted an inter partes reexamination to completion,52 his

" comments are a good starting point for a cost estimate. In that reexam, the Request for Reexamination was only five pages long and included neither claim charts nor expert declarations. The patent owner disclaimed half of the patent before the reexamination order was
53 The owner also abandoned its efforts after the second office action54 (and, obviously,
entered. there was no appeal to the BPAI). So if

the $50,000 estimate is based on the fees in this reexam, consider increasing the upper end of an estimate to account for a longer, more involved proceeding; a less compromising opponent; a more complex patent; a more important patent;

51 Johnson, supra note 4, at 14.

5295/000,001.
53 The patent had 39 claims. The owner disclaimed 17 of

them after the request was fied

but before the PTO ordered reexamination.

54 The second office action rejected amended claims fied by the owner. The owner
didn't respond.

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etc.55 For instance, another lawyer suggests that at least $150,000 to $200,000 is a reasonable

cost for a major reexam ofa "company-buster" patent.56

Consider, for instance, the inter partes request in 95/000,053. This request is 79 pages long and cites 121 prior art references. The requester is a defendant in infringement litigation
and also fied two other inter partes requests of similar complexity for two related patents.57

And there are pending ex parte reexaminations fied by the owner.58

4.3 Results
There are at least preliminary results on validity in at least 83 inter partes cases. We can

review those actual results. We can also compare them to historical ex parte data to get some
59
feeling for which procedure works better for the requester.

55 Also note that a different (and probably earlier) version of

Mr. Johnson's article uses

slightly different language to discuss costs. See Lance G. Johnson, United States: Inter Partes Reexamination: The USPTO Alternative to Patent Litigation (Sept. 30, 2003), at

http://www.mondaq.com/article.asp?article_id=22747 (last accessed Nov. 30,2004); see also
Lance G. Johnson, Reexamination as a Limited Alternative to Litigation, IP LITIGATOR Jan./Feb. 2005 at 19, for the latest version of this article.

Here is a marked-up comparison showing the differences between the first and second versions ofthis article:

Inter partes reexamination through the USPTO can address the issue of patentabilty, including the enhanced filing fee, (should cost no more than) for less than $50,000 befòre experts in technology and the law. The 2001 AIPLA survey notes a median cost of patent infringement litigation in Texas to be (between $502,000) $500,000 (less than $1 milion at risk) and ($3.495 milion (more than $25 milion at risk)) $1.5 milion ($1-$25 milion at risk). Inter partes
reexamination costs (much less than ajudicial proceeding) 3-10 percent of

what a

judicial proceeding costs.

56 Inter Partes Round Table, supra note 12, at 95 ("(W)e did a major ex parte

years ago, and this brings me to comment on how authoritative your prior art search would have to be. When an opposing patent is potentially a company buster, you have to go all out, and $150,000 to $200,000 of expense for an ex parte or inter partes reexamination is-it makes people wince, but it's not a company buster.") (remarks Frederick C. Wiliams, Burns & Levinson). of
reexamination for a client a couple of

57 95/000,057 and 95/000,058.

5890/007,169,90/007,170, and 90/007,171.
59 There are weaknesses in these comparisons, including: the inter partes data is interim,

whereas the ex parte data is final; the ex parte data is older than the inter partes data; the number of inter partes cases is orders of magnitude smaller than the number of ex parte cases; a
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How many requests are denied? From the start of ex parte reexam through March 2005,

the PTO denied 9% of ex parte requests.60 In recent years the denial rate has been lower. More recently, the PTO rejected about 4% of ex parte requests.61 The reason for rejection typically is lack of a substantial question of patentability.
So far, the inter partes Reexamination Orders have found a substantial new question of

patentabilty and ordered reexamination in all but 2 cases.62 In those cases, the examiner did not compare the patent to the references.63 The numbers look like this:
Total Reexam Orders Orders Granting Reexam Orders Denying Reexam
88 100%

86 98%

2 2%

What happens on the merits? In inter partes proceedings in which there's been an action

the cases in which it has the cases in which there's been an offce action. In the remaining 29% of inter partes cases, there have been some claim chan~es-either new or amended claims. This table shows this data and compares it to ex
on the merits, the PTO has allowed all the claims in i case - 2% of issued an offce action. The PTO has so far rejected all claims in 71 % of

parte data: 4

all claims confirmed all claims rejected / cancelled some claim changes

substantial number of ex parte requests are filed by owners; and each case is different, so comparing numbers may not be valid.
60 See, USPTO, "Ex Parte Reexamination Filing Data - March 3 i, 2005" ~ 5.b; see also,
e.g., FY 1999 USPTO ANNUAL REpORT ("CENTURY OF AMERICAN INNOVATION"), Table 13;
61 See USPTO, 2003 PERFORMNCE AND ACCOUNTABILITY REpORT 119 Table 13A

(about 4% of ex parte requests denied). This data covers FY1999 to FY2003. In earlier years,

the PTO denied 5-10% of ex parte requests.
62 The PTO also vacated two inter partes requests for procedural reasons. See note 43

above.

63 The cases denying reexam were companion cases, 95/000,082 and 95/000,08. The
same requester asked for reexamination of two closely related patents of

the same inventor. The

same examiner ruled that the requester's references were not prior art.
64 The inter partes data is from the 76 cases with an action on the merits. The ex parte

data is for issued reexamination certificates and is from USPTO, "Ex Parte Reexamination Filing Data - March 31, 2005" ~ 8.
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Based on the first two rows, inter partes reexamination is, in fact, much more favorable to the
third-part requester.

The information in the last row is almost useless. When the Reexamination Certificate includes some claims, the critical questions are whether (l) the issued claims cover the requester's product(s), and (2) the requester acquired intervening rights.65 This depends on
which claims issue. Ifthe PTO confirms any claim (including a new or amended claim) that

covers the requester's product, the requester's future path may be cut off. On the other hand, if the PTO cancels all original claims covering the requester's product, the requester wil avoid back damages.
There's no easy way to compare all confirmed claims to the requester's product(s). Indeed, the IFW rarely reveals the requester's products. But we can make an educated guess about intervening rights: if the PTO rejects all the claims for which reexam was requested, then the requester wil get intervening rights. The next table shows what is happening to the claims for which inter partes reexam was requested ("requested claims"). Unfortnately, nobody has yet compiled similar data for ex parte cases:

some requested claims confirmed all requested claims rejected
So inter partes requesters likely have gained at least intervening rights at least 84% of the time. It's hard to tell anything about most ofthe remaining cases-the requester may have asked for reexam of

more claims than needed to obtain intervening rights.66

4.4 Popularity

I've seen contrasting statements about the actual or projected popularity of inter partes reexam-for instance, on the one hand that it will be "dominant,,67 or, on the other that it's hundreds of times less popular than ex parte reexamination.68 At this moment, the truth is in between.
65 Also in some cases, the requester could theoretically convince a court to grant

equitable intervening rights. See 35 U.S.C. §§ 307(b), 252 (l999).
66 But we can certainly say that the requester is striking out in the one case in which all
claims were confirmed, 95/000,009. This is one of

the cases now before the BPAI.

67 Goldman & Choi, supra note 4, at 333 ("(I)n view ofthe many advantages of inter

partes reexamination, it is not hard to envision it becoming the dominant forum for patent validity disputes. . . .").
68 See Knowles et aI., supra note 4, at 614 ("In the years following its inception, less than
to hundreds of

fort only three (sic) requests for inter partes reexaminations were have been fied, as compared requests for ex parte reexaminations received each year.").
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Only 100 inter partes requests have been fied in the four years from the first request. So
inter partes reexam isn't dominant.
Ex parte requests do outnumber inter partes requests by one to two orders of magnitude

concluding that third parties choose ex parte reexam by a similar ratio. Inter partes reexam is not an option for most requesters: (1) many ex parte requesters are patent owners69 (inter partes reexam is not an option for owners), and (2) so far, the vast majority of patents in ex parte requests issued from applications fied before November 29, 1999, so inter partes reexam is not an option for those requesters.70
(something like 15:1). But don't make the mistake of

It would be more useful to know how often requesters pick inter partes reexamination when they actually have a choice. To get a handle on this, I looked at the ex parte requests in the Electronic Official Gazettes from July 6 though November 30, 2004. These Gazettes covered requests fied May 21 through October 21,2004. I identified and counted the requests that were
eligible to be fied inter partes-i.e., the requests fied by third parties on patents that issued

from applications fied on or after November 29, 1999. Here's what I found, and how it
compares to inter partes requests fied in the same period:

May 21 - Oct. 21, 2004
requests fied

ex parte inter partes

% of requests fied inter partes eligible requests fied % of inter partes eligible requests
So if

210 94%
33

14

6%
14

70%

30%

total 224 100% 47 100%

this data is a fair sample, requesters who have a choice currently choose ex parte over inter

partes reexam by a ratio of 2.3: 1. Ex parte is stil the procedure of choice, but not by an order of

magnitude. Also, the pace of inter partes requests is gradually increasing, as shown by this table:

69 From the inception ofreexam through FY2003, patent owners fied 43% of ex parte

requests. See USPTO, "Reexamination Filng Data-September 30, 1995" at 1, ~ 1 (data from

inception through FYI995); USPTO, 1998 Annual Report, Table 13 (FYI996-FYI998);
USPTO, 2003 PERFORMNCE AND ACCOUNTABILITY REpORT, 119, Table 13A (1999-2003).

70 See Inter Partes Round Table, supra note 12, at 92-93 ("I did a really back-of-the-

envelope calculation of how many patents are subject to inter partes reexamination in comparison to how many patents are actually in force at the current time, with some very gross assumptions, and I came out with a figure like 6.25 percent. This leads to a ratio of patents available for (inter partes) reexamination to patents in force of something like a factor of 16. If you look at the numbers cited in the notes that were handed out to us, the ratio between ex parte reexamination requests during the time period cited and inter partes reexamination requests
during the same time period is approximately 9 or 10 to one.") (remarks of

Frederick C.

Wiliams, Burns & Levinson).
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eriod 07/01/01-06/30/02 07/01/02-06/30/03 07/01/03-06/30/04 07/01/04-06/30/05

5 Conclusions
Review of the records in inter partes reexaminations shows that within three months, the PTO will actually rule on the reexamination request and - in almost all cases - issue an action on the merits. After the first offce action, no patent owner has yet convinced an examiner to change his mind about how prior art applies to the original claims. After the first office action, the case likely wil proceed more slowly than an ex parte reexam, and possibly as slow as infringement litigation in faster districts. Thus inter partes reexam is best suited (compared to litigation and to ex parte reexam) to requesters who need a fast interim result and are wiling to live with lack offinality for years.

So far, requesters have achieved good results in inter partes reexamination. Even given the diffculty of comparing interim inter partes results to old, final ex parte data, third-part
requesters are doing significantly better in inter partes cases than in ex parte cases. Inter partes

requesters likely will gain mandatory intervening rights in about three-quarters of the cases. Thus third parties who decide to seek reexamination are significantly more likely to do better by filing inter partes as opposed to ex parte.

6 Data
Based on IFWs available through PAIR as of July 1,2005.

Filed inter partes requests 100
Number of Number of Number of

requests at least 3 months old 85

proceedings vacated prior to reexam order 2
requests at least 3 months old, not vacated 83

2% of requests

Reexamination Orders 88
Reexam Orders within 3 months of fiing date 88

Median days to Reexamination Order 79 Minimum days to Reexamination Order 43
Maximum days to Reexamination Order 92

Mean days to Reexamination Order 76
2% of reexam orders 98% of reexam orders 78% of orders granting reexam 12% of orders granting reexam

Orders Denying Reexamination 2 Orders Granting Reexamination 86
Reexam Orders accompanied by action on the merits 67 Reexam Orders not accompanied by action on merits 19

Cases with at least one action on merits 76
Cases with Action Closing Prosecution 17

Right of Appeal Notices 3
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Appeals to BP AI
BP AI decisions

2 o
o

Appeals to Federal Circuit
Reexamination Certificates

2

Cases rejecting (so far) all claims Cases rejecting (so far) all original claims Cases rejecting (so far) all claims for which reexam was requested Cases allowing (so far) at least some claims for which reexam was requested Cases allowing (so far) some claims Cases allowing (so far) all claims Cases allowing (so far) some or all claims

54 71% of cases with actions 55 72% of cases with actions 64 84% of cases with actions
12 16% of cases with actions

21 28% of cases with actions
1 i % of cases with actions

22 29% of cases with actions

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