Takeaways From the Proposed PREVAIL Act
Two proposed bills recently introduced in Congress have the potential to greatly impact the current patent litigation landscape. The bills are titled the Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act and the Patent Eligibility Restoration Act of 2023. Both proposed bills are bipartisan with the stated purpose of improving the U.S. intellectual property system, promoting innovation, and securing economic and national security interests.
In this article, we discuss the PREVAIL Act. (Click here to read our Patent Eligibility Restoration Act discussion.) Among other things, the PREVAIL Act would overhaul the rules and procedures of the Patent Trial and Appeal Board (PTAB). The PTAB is the administrative body of the United States Patent and Trademark Office (USPTO) that conducts inter partes reviews (IPRs) and post-grant reviews (PGRs)—two procedures created by the America Invents Act in 2011.
The PREVAIL Act begins by reciting Findings that emphasize how a strong intellectual property system safeguards the United States’ economic and national security interests in an increasingly competitive global landscape. While the PREVAIL Act has the potential to resolve uncertainty for all parties in a number of areas of PTAB practice, it does so by implementing a number of changes long sought after by patent owners. The bill limits the number of potential challenges to any particular patent, limits who can challenge it, and increases the burden of proof for showing that a patent is invalid in a PTAB proceeding.
The main provisions in the PREVAIL Act would make the following changes:
- Require standing in inter partes reviews (IPRs). Under the PREVAIL Act, anyone challenging a patent in an IPR would have to have been sued or threatened with a lawsuit before filing a petition. This new standing requirement would not apply to PGRs, which are similar to IPRs but must be filed within nine months after a patent issues.
- Remove joinder for time-barred parties. Currently, although a defendant must file an IPR within one year of being sued, a party that misses the deadline can still join an IPR proceeding brought by another party. This bill creates a rebuttable presumption against joinder for such a defendant and prohibits it from maintaining the IPR if the original challenger drops out.
- Apply estoppel as soon as a petition is filed rather than when a final decision issues. Currently, estoppel applies as soon as the PTAB issues a final written decision in a PGR or IPR proceeding. The PREVAIL Act would apply estoppel when a challenge is filed, meaning that the petitioner cannot file a subsequent petition on any ground that the petitioner raised or reasonably could have raised in the prior IPR or PGR petition, with some limited exceptions.
- Standardize PTAB and district court proceedings. Right now, the PTAB applies a “preponderance of the evidence” standard to determine whether a patent is invalid, while a “clear and convincing evidence” standard applies in district court proceedings. The PREVAIL Act would require the PTAB to use the same “clear and convincing evidence” standard. The bill also requires the PTAB to officially adopt the “plain and ordinary meaning” standard for claim construction used in district courts (which codifies the Patent Office rule that already requires this standard).
- Require challengers to pick a single forum. If an IPR is instituted, the petitioner and related parties would be prevented from raising or maintaining in another forum any invalidity arguments against that patent based on earlier patents or printed publications. Similarly, if a PGR (which permits a broader set of invalidity challenges) is instituted, then no invalidity arguments against that patent could be raised or maintained in other forums. The challenger would have to pick a forum for challenging the validity of a patent—either the PTAB or district court, but not both (at least not with regard to any challenge that could have been brought in the PTAB). This new system would effectively prohibit parallel litigation of invalidity in the PTAB and in a district court proceeding, so the PTAB would be precluded from using the existence and timing of co-pending litigation as a basis for denying institution. The bill would also require the PTAB to dismiss any party’s validity challenge where the patent’s validity has been upheld against that party in another forum.
- End multiple USPTO actions. There are a number of available ways to challenge an issued patent within the Patent Office. The PREVAIL Act would prohibit multiple actions in the Patent Office where the subsequent challenge includes the same prior art or arguments that the Patent Office considered during a previous action (even if filed by a different party). In addition, any entity financially contributing to an IPR or PGR would not be permitted to bring a separate challenge on that same patent. It would also require the Director to be made aware of all related Patent Office proceedings to determine whether to stay, transfer, consolidate, or terminate any such proceeding(s).
- Monitor PTAB officials. The bill requires the PTAB Director to establish a code of conduct for PTAB judges, refrain from influencing any PTAB panel decisions, and issue a written opinion if rehearing a PTAB decision. The bill also states that if a review is instituted, the PTAB judge(s) who made the decision whether to institute the requested review would be ineligible to hear the review itself.
- Implement miscellaneous other changes. The bill also proposes ending the diversion of USPTO fees to other agencies and programs, reporting on the impact of abusive demand letters from patent owners on small businesses, expanding access to patent-searching databases, and harmonizing reexamination proceedings with IPR and PGR proceedings.
If this bill passes, petitioners will have to ensure that if they choose to attack the patent’s validity, they do so in the most strategic manner available. Defendants accused of infringement will have to carefully consider which forum to argue invalidity (district court or PTAB), what type of USPTO challenge is most appropriate, and which prior art arguments should be included.
Whether this bill is signed into law or not, modern patent litigation is a complex affair. Anyone involved in a patent infringement lawsuit should hire counsel well-versed in the law and familiar with navigating the interplay between district court litigation and related PTAB proceedings.