EPRx 201: The Risks and Rewards of Ex Parte Reexamination

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• EPRx 101: Getting to Know Ex Parte Reexamination

Ex parte reexamination (EPRx) comes with risks and rewards for both patent challengers and patent owners. Patent challengers enjoy a lower threshold for institution and avoid the estoppel risk of other post-grant proceedings but are often not allowed to participate in the EPRx beyond the initial request. Patent owners, on the other hand, risk their patent claims being found unpatentable, but also enjoy relatively wide latitude to make non-broadening amendments that can strengthen the patent.  

Risks and rewards for patent challengers

EPRx offers several strategic advantages for patent challengers.

Unlike inter partes review (IPR) and post grant review (PGR) petitions, which are subject to strict word limits, EPRx requests have no word or page limits, allowing for a more detailed discussion of prior art and legal arguments. In addition, the threshold for institution is lower, requiring only a substantial new question of patentability (SNQ) to be raised rather than requiring the challenger to meet the higher “reasonable likelihood of success” standard required for IPRs and PGRs. In EPRx, claims of patents that have not yet expired are construed under the broadest reasonable interpretation (BRI) standard, as in original prosecution. The BRI claim construction standard is broader than the Phillips standard applied in IPR and in District Court, which benefits patent challengers in EPRx proceedings.

EPRx also provides greater flexibility in timing. IPR petitions must be filed within one year of service of a District Court complaint, and PGR petitions must be filed within nine months after the underlying patent issues. In contrast, EPRx has no such time restriction. As a result, EPRx is often the only option for challenging a patent at the U.S. Patent and Trademark Office (USPTO) if more than a year has elapsed since service of a complaint.

EPRx proceedings are not subject to discretionary denial under 35 U.S.C. § 314, and thus, EPRx requests do not need to address Fintiv factors (e.g., timing of a District Court trial, a co-pending International Trade Commission investigation, resources expended in the co-pending litigation, etc.) that are commonly raised and discussed in the context of other post grant proceedings.¹ Indeed, unlike in IPR, where petitioners commonly stipulate that their District Court advocacy will not involve invalidity challenges based on patents and printed publications (e.g., “Sotera stipulations”), no such stipulations are necessary for EPRx. As such, a patent challenger in an EPRx retains the ability to pursue the full range of invalidity defenses in co-pending litigation.

Additionally, EPRx proceedings give challengers increased flexibility because they do not create estoppel that would limit challenges in other forums. With EPRx, the challenger retains the ability to later assert any prior art in litigation or other proceedings, including prior art previously raised in the EPRx proceeding. By contrast, after a final written decision in IPR or a PGR, an unsuccessful challenger becomes estopped from later raising any arguments that were “raised or reasonably could have been raised” during the IPR or PGR. Thus, filing an EPRx poses fewer risks for challengers than IPR because challengers preserve the full range of defenses for litigation or even subsequent EPRx filings.

Finally, an EPRx request, if granted by the USPTO, can serve as the basis for a stay in parallel District Court litigation until the EPROx is completed. Because most EPRx requests are granted (often about 90% or more), EPRx can be an effective way to obtain a stay and pause co-pending litigation, which patent challengers often desire.

Despite these benefits, EPRx presents some notable risks for patent challengers. The most significant limitation is the inability of the patent challenger to participate beyond the initial request. This means that patent owners engage directly with the examiner without input or advocacy from the patent challenger/requester (beyond the initial EPRx request filing). So, as a practical matter, the patent owner gets the last word, since the third-party requester has no opportunity to rebut the arguments and evidence the patent owner submits during the proceeding.

The patent owner also has the ability to amend claims in the proceeding, including by adding new claims. Although the patent owner cannot add or amend claims in a manner that broadens their scope relative to the original claims, it can nonetheless make narrowing amendments to avoid the prior art used to reject the claims. Fortunately for patent challengers, amendments to the claims can create intervening rights that can reduce or eliminate damages of the patent challengers in parallel District Court litigation. In many cases, the opportunity to prompt amendments that may cut off past damages is highly valuable for patent owners, even if amended claims ultimately issue as a result of the EPRx proceeding.

EPRx proceedings are also subject to discretionary denial under 35 U.S.C. § 325(d). Even if a challenger shows an SNQ, the USPTO may deny an EPRx request when, for example, the same or substantially the same prior art or arguments were previously considered during prosecution or another post-grant proceeding. To avoid discretionary denial, challengers in EPRx (much like in IPR and PGR) often include at least some new prior art references or prior art combinations that were not raised in earlier proceedings.

Finally, patent challengers must carefully consider whether the timing of EPRx allows a resolution before litigation occurring in parallel. Reaching a final resolution of an EPRx can take longer than many patent challengers anticipate. While many factors affect the duration of an EPRx proceeding, the examination process can take around a year to complete. Then, the patent owner can choose to appeal to the Patent Trial and Appeal Board, which may take roughly another year depending on the Board’s caseload. The patent owner then has the ability to appeal to the Federal Circuit, which can add another year or more to the process. If related litigation has been stayed pending resolution of the EPRx proceeding, the patent challenger may welcome the delay. But if related litigation is not stayed, and court proceedings are on track to reach a final decision first, delays and appeals by the patent owner may greatly diminish the practical impact of the EPRx proceeding.

Risks and rewards for patent owners

Although patent owners typically do not welcome challenges to the validity of their patents, they nevertheless can benefit from EPRx through the opportunity to amend or add new, non-broadening claims. In many cases, patent owners preemptively submit a large number of new claims before the first office action, increasing the likelihood that some will be found allowable at an early stage of the EPRx.

The ability to amend claims is perhaps the greatest advantage to patent owners in EPRx. It is much easier for a patent owner to make amendments in an EPRx proceeding than in IPR, where amendments are limited in scope and are not entered as a matter of right. Amendments in EPRx are much more like standard prosecution, where there is no limit to the number of claims that can be added, and amendments are always permitted in response to non-final office actions. It is not uncommon for patents to emerge from EPRx with two or three times the number of claims in the original patent, even if some original claims were cancelled or narrowed to overcome rejections.

In some cases, the patent owner may decide to file an EPRx request for its own patent to strengthen it and address prior art discovered after issuance. If the patent owner initiates EPRx, it has control over which prior art it initially asserts against the patent. This allows the patent owner to be strategic in selecting prior art to raise an SNQ while potentially also incorporating other prior art into Information Disclosure Statements, which can be submitted during EPRx. A self-initiated EPRx challenge can strengthen the patent against subsequent challenges by proactively addressing potential weaknesses and reinforcing validity while also adding new claims.

Despite these advantages, some aspects of EPRx can make validity challenges more difficult for patent owners to overcome. The Central Reexamination Unit typically applies the BRI standard when analyzing challenged claims. This standard for claim interpretation is broader and more liberal than the plain and ordinary meaning standard applied in IPR and District Court litigation. By allowing examiners to interpret claims broadly, BRI can increase the likelihood of a finding of unpatentability compared to an IPR using the same prior art. Historically, the majority of EPRx proceedings result in at least some challenged claims being narrowed or cancelled.

Patent owners also risk losing the ability to claim past (and in some cases, future) damages due to the doctrine of intervening rights. If a patent owner amends claims during EPRx, damages for past (and potentially future) infringement may be significantly reduced — if not eliminated — in parallel District Court litigation. Thus, intervening rights stemming from new or amended claims issued in EPRx can significantly impact the value of litigation involving patents near expiration and patents in rapidly changing industries. Notwithstanding the potential short-term impact to patent damages due to intervening rights, patent owners may still benefit from having new or amended claims issue during am EPRx at least because (1) the issuing claims are likely to be more resistant to subsequent challenges and (2) the short-term damages impact may be outweighed by the potential for future damages from one or more challengers that can be obtained during the remaining term of a patent (particularly for a patent that has significant additional term remaining and/or is directed to a technology that is foundational and/or has long-term relevance).

Takeaways

Compared to IPR, EPRx has a significantly different risk and benefit profile for both patent challengers and patent owners. Some of the greatest differences are results of the ex parte nature of the proceedings and the relative ease of amending claims.

• For patent challengers, high grant rates make EPRx an appealing way to obtain a stay of litigation and to challenge validity without estoppel that would limit District Court validity challenges. But the likelihood of cancelling all claims is lower than in IPR due to the patent owner’s ability to amend claims and present arguments and evidence with no rebuttal from the patent challenger.
• For patent owners, the ability to amend claims more easily than in IPR gives them the flexibility to overcome validity challenges through amendment, when claims might be cancelled outright otherwise, as well as the ability to obtain new claims. But if amendments are needed to preserve claims, those same amendments may mean giving up past damages, which can be a significant portion of the value of ongoing District Court litigation.