Prior Art in Inter Partes Review

By Yelderman, Stephen | Iowa Law Review, July 2019 | Go to article overview

Prior Art in Inter Partes Review


Yelderman, Stephen, Iowa Law Review


I. Introduction

In 2011, Congress created a new procedural tool-inter partes review ("IPR")-for the express purpose of making it cheaper and easier to contest the validity of issued patents in an adversarial proceeding.1 The first IPR petitions were accepted in 2012,2 and the first Final Written Decisions ("FWDs") issued in late 2013.3

In terms of cost and ease of access, IPR has undoubtedly been a success. Several years after IPR's launch, practitioners reported that the cost of litigating an IPR to a final written decision was about $324,000, which pales in comparison to the $1-2 million reported cost of litigating a patent in court.4 The volume of patent invalidations has expanded as well. Whereas district courts previously invalidated about 80 patents a year on prior art grounds,5 the Patent Trial and Appeal Board ("PTAL") now invalidates about 280 patents a year through IPR.6 Largely due to this new procedure, the number of patents invalidated based on prior art increased by at least 400% between 2011 and 2017.7

But these numbers hint at a counterintuitive counterpoint: that the introduction of IPR may have actually increased the total number of dollars spent adjudicating patents annually. While individual invalidity events are cheaper in IPR than in district court, the sheer volume of IPR activity could more than offset these lower unit costs. And though confounding factors complicate the story, there is no evidence that the new procedures have reduced the rate of district court litigation. Whether compared in terms of number of patent cases filed or patents invalidated, the work of district courts actually increased from 2011 to 2017.8 In sum, the new IPR procedures have dramatically increased the number of patents subjected to adversarial scrutiny. But all this additional process has come at a significant cost-easily exceeding half a billion dollars a year.s

Whether this additional process is worth its costs depends on the public benefits afforded by IPR. And there are many ways that increased scrutiny of patents could plausibly benefit the public. For example, in some cases, cancelling a patent in IPR may increase competition in a product market, resulting in lower prices for consumers.10 As another example, a second-stage review process like IPR could help the U.S. Patent and Trademark Office ("PTO") ensure that it is consistently applying patentability rules across a complex bureaucracy.11

This Essay focuses on one potential public benefit in particular-that revoking invalid patents can increase inventors' incentives to create legitimately patentable inventions in the future. As the theory goes, the power of the patent bargain depends both on the likelihood that inventors will receive patent rights when they deserve them and the likelihood that inventors will not receive patent rights when they do not deserve them.12 By subjecting patents to additional adversarial scrutiny, IPR has the potential to enforce the patent bargain in doubtful cases, thereby strengthening incentives to comply with the substantive demands of patent law in the future.

However, the availability of this particular benefit depends on the reason that a particular patent is revoked. Some patent doctrines are designed to be bargain-enforcing, while others are not.13 In the case of the two doctrines at issue in IPR-anticipation and obviousness-whether or not a revocation is bargain-enforcing depends on the prior art at issue.14 In some cases, it may be-such as when the inventor knew or should have known about the prior art that rendered her patent invalid. But in other cases, revoking patents in IPR may not be bargain-enforcing at all-such as when the inventor loses her patent on the basis of facts she simply could not have known. In short, without knowing something about the prior art underlying those determinations, we cannot say whether IPR is increasing incentives for future inventors to do what patent law demands of them, or is simply revoking patents from inventors whose only fault was a stroke of bad luck. …

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