IP Metalworks!A Cautionary Tale:

NOTE: Since this 2002 review, USPTO Practice has been amended to introduce certain procedures for Interpartes challenge to patent validity.  In 2005, Congress proposed adopting a European-style post-grant Opposition process [See HR 2795] and there is a good chance it will take shape by 2006.  The US, however, remains firmly opposed to the European-style pre-grant Observation process described here ... .

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Adversarial Submissions in EPO Practice:

Science-based adversarial proceedings available in Europe.

It is in the client’s best interest to file a definite and fully supported United States patent application, indeed it is critical for any start-up business, because the burdens and uncertainties of litigation may not be sustainable.  Many investors insist on seeing a credible patent estate.  A well written patent that spells out “literal infringement” is at least a little less likely to be challenged when the technology becomes profitable.  There are no shortcuts in patent application drafting. 

As in every activity, there are times when not all goes according to plan.  A weak or flawed patent application can become a keystone of support for (or an obstacle to) the whole business plan.  This raises issues for both the patentee and the potential infringer that may to litigation in US Courts.  In Europe, the situation is much less damaging.

This installment of IP Metalworks compares US and European Patent Examination procedures for amending or correcting an application post-filing, and for challenging defective patents prior to action in the Courts.  This editorial also suggests that until the US system is improved, potential defendants must carefully weigh their own resources before pursuing a full course of litigation.  Litigation is essentially the only means available in the US to attack the scientific merits of a patent application or issued patent.  Regrettably, given this limited recourse, the money can be perhaps better spent in organizing or supporting a legislative initiative to expand public intervention and inter partes re-examination proceedings at the US Patent and Trademark Office (PTO).  For the time being, licensing a bad patent may be a more productive course of action than risking infringement.  As a corollary, no licensee should agree to take on the costs of defense of any patent.  And all patentees should endeavor to craft each patent application as carefully as possible, because money spent up front can avoid irreparable harm later, especially given current US PTO procedures.

The patent system is a powerful engine for technological advance.  However, there is increasing skepticism directed at the ability of the US PTO to root out defective patent applications.  Patent invalidity continues to be the primary defense elected by all patent infringement defendants, and the courts have not been unsympathetic to this, suggesting an erosion in the credibility of the patent examination process.  One possible remedy is found already in use in the European Union, where inter partes proceedings begin early in the patent application process.

American practitioners are understandably wary of uniquely European practices that permit inter partes adversarial proceedings during patent examination and in the 9 month period following grant.  However, insofar as these procedures winnow out weaker patents without the burden of litigation, this reluctance is perhaps not in the best service of the client.  The procedures are particularly appealing as a means to settle a brewing patent controversy on the basis of the scientific merits, instead of in court.  The European system of Opposition has some elements that may seem more familiar from Trademark practice in the US, but it goes much farther, ... as described below both pre-grant and post-grant inter partes proceedings may be practiced.

In the European Union, pre-grant proceedings take the form of a petition written to the EPO attacking the patentability of a pending application, and providing scientific data and argument in support of the allegations.  Thus, competitors or other interested parties may comment on any pending, published application by filing an “Observation” which details any results that were obtained in experimental trials of the teachings of the patent, and any interpretation of those results in the context of applicable patent law.  The applicant is then given an extensible period of 6 mo to develop data that controverts the allegations.  The Examiners, all professional scientists, then weigh the scientific bases of the arguments from both sides and make a decision that the applicant may either accept or appeal.  The pre-grant proceeding is almost unknown in the United States except to those who have been been required to respond to it during prosecution of a counterpart application to a US filing in Europe. A strong patent applicant has nothing to fear in these proceedings.

Interestingly, during pre-grant Observation proceedings, the new data provided by the applicant can serve to supplement or flesh out an otherwise weak or flawed application, and constitutes “acceptable new matter” that is considered by the EPO in evaluating and amending the application.  Think of this as “filling in the holes” rather than expanding the scope of the invention.  By virtue of a science-based adversarial process, the outcome is generally a fair and accurate assessment of the substance and scope of the invention as it was filed and a more precise delineation of the claims.  A strengthened patent usually emerges.  This substantially eliminates the need (and motivation) for litigation during the post-grant lifetime of the patent.

Even after grant, the European system offers Opposition proceedings that permit third parties to again challenge a patent by either legal argument or experimental data, although the grounds for such challenge are more limited and must be based on either:

        Non-novelty, lack of inventive step, or non-statutory subject matter;

        A non-enabling disclosure;

        Or, an allegation that expansion of the claims during prosecution constitutes new subject matter.


The number of submissions made by advocates for the opposing parties is not fixed or limited, and the EPO will continue to solicit material until clarity is reached.  Both written and oral arguments are permitted, and the process is inexpensive.  A post-grant Opposition must be filed within 9 mo of the date of grant.  Following this period, granted patents gain a strong assumption of validity if challenged in court, although each member country of the European Union forms a separate juridiction, and the impact of a successful litigation in one country has no impact on a similar litigation in any other country.  The strong assumption of validity of patents within the European system should be seen as a plus by innovative technology-based small businesses, who may not have the resources for the kind of “due process” that at the outset levels the playing field in the United States courts, and then tilts it in favor of the party with the deepest pockets.

While some US Patent Attorneys steadfastly refuse to participate in the European Observation process, arguing that the European Opposition processes give away ammunition that could better be used in court, the forum nonetheless has merit.  For one, the EPO Observation proceeding avoids the need for redundant litigation in each national jurisdiction within the European Union.  It also should be noted that technical experts, not a judge or jury, review the scientific results and that the applicant has the opportunity to respond with comments or added experimentation, thus contributing to a strong scientific and legal record in support of the claims.   No similar opportunity for scientists to weight the scientific data is provided in the US patent examination system.

Indeed, there is no adversarial balance in the patent examination proceedings of the US PTO, which is an ex parte proceeding.  The PTO does not itself research and test the technologies that come before it, and no adversarial scientific testimony or peer review is of record for any issued patent.  Evidence in the circumscribed inter partes reexamination procedures is limited to prior art from publications or from patent files, and submissions and oral arguments are grossly stacked in favor of the patentee, acting unopposed (who may take advantage of the reexamination process to correct, clarify or expand the claims), often in concert with the Examiner who originally allowed the patent.  Even very recent legislation to address these concerns[1] made only token concessions to “third-party requestors” by widening the scope of prior art that may be brought to bear on any “substantial new question of patentability” and by legislatively undoing the Portola Packaging[2] decision.  Estoppel continues to apply: any findings of fact made in the re-examination process cannot be challenged in a follow-on civil action.   Admittedly, the changes do provide a more seamless transition from re-examination to patent litigation, [3] affording for the first time 3d party access to appellate relief following adverse re-examination decisions, but empowering neither the PTO nor the courts to engage a science-based adversarial, peer review of the patent in the interests of prompt, affordable justice.

Thus in the United States, strangely as it may seem, all scientific questions about a patent are the responsibility of the District Courts and Court of Appeals for the Federal Circuit to untangle, however poorly prepared they are to tackle the explodingly advanced technologies of nanocomposites, biotechnology, or electron tunnelling and electrochemi-luminescence, for example. 

The current US system relies entirely on the wits of oft overworked Patent Examiners, most of whom have an entry level scientific background, to ensure that issued patents meet the requisite standards of validity. Working ex parte, the Examiner must have prima facie grounds for questioning the assertions of the patent applicant, or take them as fact.  It is perhaps not surprising that some appellate panels have demonstrated skepticism that an issued US patent merits the special status it once commanded.  

About 7% of European patents provoke Opposition proceedings after grant.  In contrast only 0.3% of US patents undergo reexamination, most at the request of the patentee to correct errors, omissions, or to broaden the claims.  At the EPO, about 70% of the 7% of patents that are challenged undergo amendment, limitation or cancellation of claims (ie. ~5% of all EPO patents).  In contrast, patented claims are reduced in only about 12% of the 0.3% of US patents that are reexamined (ie. less than 0.03% overall).  Similar figures were generated when sibling US and EPO applications were compared, demonstrating that it is not a difference in the quality of the patents themselves that underlies the statistical outcomes.[4]  Doing the math, defective US patents are as many as 5% of all issued US patents.  These must be either stared down (made unenforceable by word of mouth) or invalidated by the courts, a horrendously expensive process by comparison. 

No readily comparable statistics for patent litigation are available for Europe versus the United States, so we can’t draw a final conclusion as to the ultimate efficacy of the pre- and post-grant Opposition processes in avoiding litigation of weak or defective patents.  [This author would like to believe that the procedures provide some effective relief to the courts and welcomes any comments on the question.]

Given the issues that impact the credibility of the current system, all participants view the US system with a certain level of dissatisfaction and suspicion, and businesses not infrequently elect to go ahead with putatively infringing products after receiving from counsel a favorable formal or informal infringement analysis.  There are many cautionary tales derived from the disasters that have followed from this risky strategy.[5],[6]   Simply put, the courts are rarely in a position to equitably judge intellectual property issues involving complex and advanced science, and no one should go to court on the belief that the justice of their cause will prevail.  The best possible outcome is a summary judgement sustained on appeal.  As the level of ambiguity in the litigant’s positions increases, litigation becomes increasingly a measure of resources, not right or wrong.

While care can be taken in the drafting of patents to avoid the kind of ambiguities that fuel litigation, perhaps only yet more legislative patches will fix the greater imperfection in American IP practice; policy debate and lobbying interests are already fully engaged.2,[7]   Rather than cast about for imaginative reform, we can look to the institutions of the EPO for practical ways to stimulate inter partes review and to thereby better protect the public interest in and credibility of this valuable engine for technological advance.   As long as litigation is the only option, the aggregate costs to both patentees and potential infringers run in hundreds of millions of dollars annually, a cost that is borne at the expense of technological progress.

Of course, as this website will never tire in pointing out, individual patentees have the option to retain the highest quality patent counsel to draft their patent applications.  A few thousand dollars spent to thoroughly vet the application and search the prior art can save millions over the life of a patented product.  Well written applications that force literal infringement form an eloquent warning to the potential infringer, placing at risk not only the infringing company, but also the personal fortune of its officers.

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[1]   Patent and Trademark Office Authorization Act of 2002.

[2]   In re Portola Packaging Inc 110 F3d 786, 790 (Fed Circ 1997).

[3]   Intellectual Property and High Technology Technical Amendment Act of 2002.  For a more enthusiastic view, see JD Bodner. 2003. New Patent Legislation Impacts Practitioners.  Intellectual Property Today 10(3):8-10.

[4]   Graham SJH et al. 2002.  Post-issue patent “quality control”: a comparative study of US patent re-examinations and European patent oppositions.  Formerly available at http://www7.nationalacademies. org/step/Hall_et_al_paper.pdf but archived here in its entirety (see link to this site).

[5]   American Medical Systems Inv v Medical Engineering Corp, 794 F Supp 1370 (1370 E.D. Wisc 1992); 6 F3d 1523 (Fed Circ 1993).

[6]   Bar-Shalom A and R Cook-Deegan. 2002.  Patents and innovation in cancer therapeutics: lessons from CellPro.  The Milbank Quarterly 80(4):637-676.

[7]   Hall, BH. 2001.  The global nature of intellectual property: discussion.  Available at http://emlab.berkeley.edu/users/bhhall/bhhdisc_toronto501.pdf  and archived here in its entirety (see link).


  Copyright K K Lambert 2001-2005.  All rights reserved.   For permissions, contact the author.