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Inter partes review (IPR) is one of a number of mechanisms for eliminating improper patents through “post-grant review.” Challenging an issued patent is expensive and paid for by the challenger, but all who practice the patent benefit from its invalidation, creating a free-rider problem. While post-grant review has widely been heralded as a cheaper, more expert alternative to litigation for screening out bad patents, little attention has been paid to the particular design of post-grant review systems. These design choices matter tremendously, as arguably small changes to the pre-existing inter partes reexam system, leading to the inter partes review system, have had a big impact, the expanded uptake of reviews. As the US weighs making additional changes to the IPR system created by the America Invents Act just a few years ago, it is worthwhile to consider the experiences of other countries whose systems are older. One particularly important feature of IPR relates to the interplay between invalidity and infringement. District courts more often than not stay their cases when parallel IPRs are filed, meaning that the USPTO decides novelty and obviousness based on a subset of prior art, leaving infringement and remaining invalidity issues to the district courts to decide. This creates a bifurcated system that resembles the system that Germany has had in place for decades, in which validity and infringement are decided by different venues. Much can be learned by considering the two countries’ systems, and the similarities and differences in their designs and their outcomes. In the first several years that IPRs have been available, an estimated 84 % of decided IPRs resulted in partial or total invalidation of the patent, raising great concern. But this number must be understood in context. The patents that get reviewed in IPR are those that are highly selected, both by the Patent Office as reasonably likely containing an invalid claim, and by the public as justifying the considerable expense of a challenge. Many claims drop out along the way, because they do not meet these thresholds. Thus, only about 25% of challenged claims (as opposed to reviewed) claims end up being canceled. Accordingly, IPR decisions are likely to be issued in that tiny fraction of issued patents where the case for invalidity is particularly strong. In most cases, the invalidated patents represent Patent Office mistakes; patents that should never have been issued in the first place, they also may be the product of a change in law. Post grant proceedings are a well-recognized way to correct Patent Office error – for example, in Europe, opposition proceedings at the European Patent Office (EPO), which are used to review 5-8 %% of issued patents, have resulted in the partial or total invalidation of patents close to 70 % of the time, and in German revocation proceedings, which in many ways resemble IPRs, 73 % of patents are partially or fully revoked. Within EPO opposition and German revocation proceedings, chemistry patents have been the most likely to have been revoked or amended (71 % in EPO, and 84 % in German revocation); in US IPRs, medical device (93 %, N=29) and biopharma and chemistry patents (87 %, N=23) have fared the worst, but based on relatively small sample sizes.Another key metric is the share of instituted reviews that are actually decided, rather than settled. In the US, a high stay rate of parallel litigation, as facilitated by clear and predictable timeframes and outcomes, contribute to a high decision rate on validity and the efficient staging of disputes. This provides a benefit to the public, the clarified status of the claims. In Germany, in contrast, infringement proceedings do not wait for the validity decision. This leads to validity challenges often settling, for example when the infringement decision is handed down. As a consequence, the status of the patent claim is left unclarified. We examine these and other key aspects of post-grant review as well as various factors, including claim construction standards, litigation stays, and the timing of reviews, to consider some general lessons for the design of post-grant inter partes patent reviews.

Inter Partes Review and the Design of Post-Grant Patent Reviews