Ex Parte Reexamination

Patent Ex Parte Reexamination

Having problems with a patent that you believe is invalid? Know about uncited prior art? Consider filing a Patent Ex Parte Reexamination request.

In the US, there are various legal methods to challenge the validity of issued patents. These legal methods vary greatly in expense and relative risk.

  • You can try to challenge a patent by a full Federal Court trial. Such trials are very expensive.  Indeed, patent litigation is frequently referred to as the “sport of kings”. Another problem is that you (the challenger) can’t be anonymous. So the possibility of “return fire” is high.
  • Alternatively, you can try to challenge a patent by an inter partes review (IPR) at the USPTO Patent Trial and Appeal Board (PTAB). The IPR process is essentially a streamlined mini-trial. IPR are relatively new (since 2013) and were established in an attempt to reduce the high costs of litigation. Indeed, IPR are about an order of magnitude cheaper than Federal Court litigation. This is still quite pricy for small firms, however, and again the challenger can not be anonymous.
  • You can also challenge a patent by filing a USPTO Ex Parte Reexamination request. This is the lowest budget approach. Reexaminations can cost an order of magnitude less than an IPR (and two orders of magnitude less than Federal Court litigation!) Ex Parte Reexaminations are thus in the price range for individual inventors and small startup companies. An additional advantage of this method is that you (the challenger) can be anonymous.  That is, if you file through an attorney, you need not give your identity, thus avoiding return fire.

At present, only about 200 Ex Parte Reexamination requests are filed each year. Given the low costs, and minimal risks, why isn’t this method used more often?  Probably because fewer arguments are allowed, and the challenger has less control over the process.

To file an Ex Parte Reexamination request, you (the challenger) need to identify some new and convincing printed prior art. Usually, this is one or more patents or other publications that were not previously cited. These new prior art references should be convincing enough to raise a Substantial New Question of Patentability (SNQ). Here, only two issues can be raised. These are anticipation (35 USC 102 – one new reference is enough); or obviousness (35 USC 103 – usually based on two or more new references).

To initiate the challenge, you need to fill out a USPTO form (PTO/SB/57) with the relevant information, and further include a detailed request providing further explanation. The explanation shows how the various limitations in the challenged claims correspond to the various prior art references. Claim charts can be used, but are not required. This explanation is a bit like a USPTO office action.

The challenger submits the form and detailed request to the USPTO along with other required papers, and the required reexamination fee (presently $3,000 for a small entity). The challenger (or the attorney) must also serve a copy of this request to the owner of the challenged patent, and provide proof of service to the USPTO as well.

The USPTO will review the request. If it complies with the USPTO standards, they will inform the patent owner that their patent is now being reexamined.

The main drawback/feature of the Ex Parte Reexamination process is that after the request is submitted, you (as challenger) have no further input. This is good in that it reduces costs, but bad in that it also limits your control.

Once reexamination is initiated, the USPTO patent examiner reopens examination by issuing new rejections, which the patent owner is expected to rebut.  Sometimes this works, sometimes it does not. If your new citations are not convincing enough, the reexamined patent may issue again, either with the same claims or more limited claims.

Still, if you want to try to knock out a troublesome issued patent, know about some juicy but uncited prior art, and are on a budget, consider the Ex Parte Reexamination option.

Amazon and IP disputes

The court of Amazon

Amazon.com is enough of an 800-pound-gorilla that its IP policies can impact trademark, copyright, and patent strategy. Amazon is not kind to descriptive (supplemental register) trademarks.

Amazon.com markets products from millions of manufacturers and vendors, resulting in a large number of IP (trademark, copyright, and patent) disputes.

Unfortunately, the US court system is designed to administer slow, careful (and thus expensive) justice to a small number of IP litigants. It can’t scale to Amazon volumes. So Amazon decided to make its own IP dispute process.

Trademarks:

The Amazon Band Registry offers a number of methods to help trademark owners protect their rights and promote their products. However, at least for the US, just any trademark won’t work. The Amazon Brand Registry is presently only available for USPTO trademarks on the principal register. USPTO supplemental registry trademarks are out of luck.

The USPTO supplemental register is where otherwise OK, but “descriptive” trademarks are put to “age” for 5 years until the mark is considered to have “acquired distinctiveness”. So, the moral is that if you are planning to sell on Amazon, it is good to avoid the supplemental register. This can be done by registering a less descriptive product name.  There are trade-offs here, however, since descriptive names help customers understand the purpose of new products.

Copyrights:

Be careful about the text and images that you upload. It should either be your own material, or material that you have clear rights to (e.g. license, resale of previously purchased physical items). Amazon operates a Digital Millennium Copyright (DMCA) infringement reporting system that you (and others) can use to report issues. If you hold copyrights that you feel are important, consider registering them with the US copyright office, as this can make enforcement easier. Note, however, that under their terms of service, Amazon acquires a license to use your uploaded material.

Patents:

Amazon has recently announced a pilot patent dispute program.  The process is fast and (for patent law) inexpensive. The plaintiff provides the US patent number and the Amazon listing of the allegedly infringing product. Both parties can argue this (e.g. one submits written arguments for infringement, and the other submits written arguments in defense).  Both can pay $4,000 to submit their arguments to an Amazon selected neutral patent evaluator. The neutral evaluator evaluates the patent and product in question.

The winner gets their $4,000 fee back. The loser loses its fee. If the allegedly infringing product loses, Amazon will take down the listing. The neutral evaluator’s decisions are apparently final, but you can still go to the court system if you want.

Disclaimer: I have no affiliation with Amazon. Amazon IP policy can change at any time. However, Amazon is enough of an 800-pound-gorilla that their IP policies are having an impact on the IP ecosystem.

Confusingly Similar Trademarks

Confused snail

If a proposed trademark looks or sounds too similar to another mark, and the proposed trademark is in a related area of commerce, it can be rejected as being confusingly similar.

Trademark applicants often think that if their proposed trademark is not identical to an existing mark, then it will be approved. This is not the case.

The law, in general, is all about human mental states and intentions. Trademark law is no exception. Here trademark law acts to protect us (as consumers) from accidentally purchasing the wrong thing. Trademark law also protects us (as sellers) from having unscrupulous competitors mislead our customers. For trademarks, a key issue is: would trademark “A” confuse the customers of trademark “B”?

For complicated “confusingly similar” cases, the courts can consider up to 13 distinct “Dupont factors”  (from In re E. I. du Pont de Nemours & Co. 476 F.2d 1357, 177 USPQ 563, 1973).  However, we can simplify. For most cases, the two biggest issues are Dupont factors 1 and 2:

Dupont factor 1:The similarity or dissimilarity of the marks in their entireties (to a human, who may not be paying careful attention) as to appearance, sound, connotation and commercial impression.

If a trademark examiner, judge or jury considers all of the elements of the marks and thinks that the marks are similar, this is bad. If there is actual real-world evidence that customers are being confused, this is also bad. There is some good news, however.  If similar-looking trademarks are for very different products or services, then the chance of confusion is much less. So this can be a way to escape this problem.

For example, back in the day, a customer looking to purchase music might not be confused by similarly named computer products. So originally, trademarks for Apple records and Apple computers could coexist. (Now not so much, and deals had to be made — which is OK under Dupont factor 10.) This brings us to:

Dupont factor 2:The similarity or dissimilarity of and nature of the goods or services as described in an application or registration or in connection with which a prior mark is in use.” (Here there are various trademark classes, and products and services in different trademark classes are usually considered to be dissimilar.)

USPTO trademark examiners will often just initially consider factors 1 and 2. However, if you get a “confusingly similar” rejection, or someone else raises this issue, it is time to start considering the other Dupont factors.

In defense, arguments might be made that the suppliers use different trade channels (factor 3); that the buyers are sophisticated buyers that are not easily confused (factor 4); or that multiple suppliers use a similar type of mark to sell similar goods or services (factor 6).

Another good option to consider is revisiting factor 2. See if you can narrow the scope of goods or services covered by your mark. If so, perhaps you can avoid overlapping with the goods and services covered by the other mark.

Selling patents

Selling patents is a bit like selling a house

For selling patents, try to create a family of commercially useful patents that are hard to design around and legally strong.  Know your market!

Although patents are best used to help inventors and startups attract funding and protect their products from copycats, sometimes the barriers to commercialization are just too high. Thus occasionally, alternative patent monetization approaches, such as sales, licensing, or litigation; may be a potential alternative. Here I discuss selling patents in a non-litigation context. Licensing and litigation will be discussed in later articles.

Your patents need to have good commercial potential, or else the game stops right here. The considerations include potential market size, market share, and value added by the patents.  The patents have to be “strong” (e.g. not easily invalidated on the basis of prior art, and not have a lot of loopholes).

To understand selling patents, consider the subject from the standpoint of a potential corporate purchaser. With the exception of “blocking patents” (which are relatively rare), for any given single patent, the corporate technologists will usually say “no problem, we can design around it”, and the corporate legal counsel will usually say, “no problem, we will come up with non-infringement/invalidity arguments”. Given this “no problem” input, if there is only one patent, the corporate decision maker will often decide to “risk it”, and if so, there will be no sale.

By contrast, when the corporate purchaser considers multiple patents, the assurances of the technologists and legal counsel decrease.  Technologist assurances that “we can design around it” become more guarded. Legal counsel, realizing that it may have to challenge multiple patents, will add up the potential costs and risks of multiple potential court cases, and also be less reassuring.  This is why, even for the strongest patents, most patent sales take place in the context of a family of related patents.

Patent valuation, and comparables: Although you may be tempted to put your pinky in your mouth and say “one hundred billion dollars”, market realities should be considered.  Just as there are real estate “comps” (average selling prices of houses in a neighborhood) and real estate valuation schemes, so there are “patent comps” and various techniques to measure patent valuation. Corporate purchasers have to justify their expenses to their upper management or their board of directors.  This justification becomes harder as the patent price moves outside of typical comps and valuation schemes. So it is important to be aware of these comps and valuation schemes, and set your expectations and negotiating strategies accordingly.

Selling methods: There are various methods of selling patents, including direct corporate deals (the traditional method), online auction sales, sales using brokers, and sales to NPE (non-practicing entities – formerly big, lately less active). As in any financial transaction, it is helpful to try to position yourself to negotiate from a position of strength (e.g. have financial means to walk away from bad deals) and to approach the transaction in an informed manner.

Patent demand letters

Frustrated patent troll
Frustrated patent troll

Patent demand letters are stressful.  Before responding or ignoring, evaluate infringement, patent prosecution history, ownership, and litigation history.

Has your startup received a “demand” letter asserting that you are infringing on a patent?  Although real infringement of valid patents does occur, and some of these letters are legitimate, many demand letters are sent in less than 100% good faith. The sender may be betting that the startup will settle quickly to avoid litigation costs, regardless of the actual merits of the situation.

Don’t immediately contact the sender, and don’t ignore the letter either.  Instead, calm down and evaluate the facts, preferably with the help of a patent attorney.  Is there a plausible infringement problem or not?  How to tell the difference?  A few common methods are discussed below.

To start, get: 1) a copy of the issued patents discussed in the demand letter, 2) the USPTO prosecution history of these patents, and 3) information about the allegedly infringing product.  If the letter doesn’t provide actual issued patent numbers, or if the letter only cites patent application numbers, the probability that the letter is bogus becomes higher.

Look at the independent claims for each patent (claim 1 is not always the broadest claim), and see if your allegedly infringing product infringes the entire wording of any independent claim. If so, look at the relevant dependent claims for more detail. If the letter argues contributory infringement, combine your product with the other accused product for this analysis, and check if your marketing literature is promoting this combination.

The patent prosecution history for the patents in question, usually downloadable from the USPTO, can be very relevant. This history will often reference if the patent has been used in litigation before; if the patent has been reevaluated by either reexamination or the Patent Trial and Appeal Board (PTAB); and if the patent applicant had to make significant concessions during the patent prosecution history.

The patent’s USPTO assignment records can be used to better understand the relationship between the sender and the actual patent owner of record. This is often obfuscated. What is this relationship, and is the purported patent owner the real patent owner?

If there is a history of litigation, check it out. Patent litigation usually takes place in Federal Courts.  This is usually available through PACER (Public Access to Court Electronic Records) and a number of other sources. Has the patent owner been filing a lot of lawsuits and then settling before the court reaches a decision, or does the patent owner usually win?

There are many other issues that can be explored as well, but this type of information can help you and your attorney better evaluate what your next steps should be.