Regarding changes to claims, only about 10% of IPRs even include a motion to amend, and only about 16% of those motions to amend were granted or granted in part. Accordingly, at least one claim is amended in less than 1% of IPRs. Unsurprisingly, reexaminations have a higher rate of changes to claims (i.e., amendments or additions) than IPRs, with 32% of reexaminations having an amendment (or added claim). And, as discussed above, while changes to claims do not provide the full benefits that claim cancelation provides, they do offer alleged infringers several benefits.
With respect to settlements, as noted above, would-be reexamination requesters are often hesitant to file reexaminations due to a perceived negative impact on settlement, opting instead to file IPR proceedings, which can be terminated based on settlement. Despite the logical rationale in opting for an IPR over a reexamination to further settlement, available data actually shows that IPRs may deter settlements. For example, there is a 75.32% settlement rate for patent litigations generally, while only 27.90% of lawsuits settled during an IPR proceeding. In contrast, about 60.02% of lawsuits settled during a reexamination proceeding. Thus, even though reexaminations may slightly deter district court settlements, they do not do so to the same extent as IPRs.
One notable difference between reexamination and IPR proceedings is the cost associated with filing a request or petition. The fee for filing a petition for IPR (of up to 20 claims and 14,000 words) is $19,000, and the USPTO has recently proposed increasing that cost to $23,750. And with the additional fees associated with claims in excess of 20, additional words, and post-institution fees, that number can increase to well over $30,000. Moreover, this number does not include the cost associated with the preparation of the petition and any further participation in the proceeding (e.g., additional briefing, depositions, and oral argument), which some estimate to be over $300,000 (and more if there is an appeal to the Federal Circuit).
In stark contrast, the fee for filing a request for ex parte reexamination (with no limit on number of claims or words) is $12,600 and is only $6,300 for streamlined reexaminations (requests with less than 40 pages that meet other format requirements). Although requests for reexamination will still require costs for preparation, because of the ex parte nature of these proceedings, there are no additional fees associated with the proceeding. Accordingly, ex parte reexaminations are much more cost-effective than IPRs.
Regarding timing, in an IPR, once a filing date has been assigned, the PTAB must issue a decision granting or denying institution within about six months. As set by statute, a final written decision in an IPR proceeding must issue within one year of the institution decision. The statute provides a six-month extension to this for good cause. Accordingly, assuming the institution decision issues about six months after the petition was filed, a petitioner can be confident that there will be a final decision with respect to their IPR around 18 months of filing the petition.
It will be no surprise that a requester in a reexamination will have less certainty on the length of the proceeding than a petitioner in an IPR. Though there are similar deadlines in the initial stages of a reexamination to the deadlines in an IPR, the deadlines during the later stages are less certain. What may come as a surprise is that, as addressed above, the average pendency of reexaminations for litigated patents is about 15.33 months—almost three months shorter than for IPRs. Further, our study shows that when excluding appeals, that number drops almost five months, with reexaminations resolving in 13.22 months when they are not appealed. While it has long been understood that reexaminations receive priority and are conducted with “special dispatch,” there has been little to no previous reporting on how this special status translates to overall pendency of reexamination proceedings. Although reexaminations carry the potential for longer proceedings than the relatively quick IPRs, the data shows that reexaminations are faster still—particularly when the patent is asserted in district court.
Our study also shows that the shorter pendency of reexaminations often (though, not always) holds through appeals. IPRs and reexaminations have some important differences when it comes to appeals. For example, in an IPR, both parties may appeal, while in a reexamination, only the patent owner may appeal. Additionally, in a reexamination, the patent owner may only appeal to the Federal Circuit after an appeal to the PTAB. However, in an IPR, parties are not required to appeal to the PTAB prior to appealing to the Federal Circuit. Given these differences, a comparison of the appeals process is not exact. However, for the purposes of this study, we compared a request for rehearing in an IPR to an appeal to the PTAB in a reexamination proceeding, and we compared an appeal to the Federal Circuit in a reexamination to an appeal to the Federal Circuit in an IPR.
The study shows that appeals to the PTAB in reexaminations generally last longer (resulting in a cumulative pendency of 27.33 months compared to 22.1 months for IPRs) and occur slightly more frequently than requests for rehearing in IPRs (11.84% in reexaminations compared to 7.51% in IPR proceedings). However, appeals to the Federal Circuit very rarely occur in reexamination proceedings (about 2% of reexaminations). In contrast, about 60% of IPRs are appealed to the Federal Circuit, which extends the pendency of IPR proceedings to 34.8 months. Practically speaking, it is unsurprising that there is a higher rate of Federal Circuit appeals in IPRs than reexaminations given the differences between the reexamination and IPR appellate processes—i.e., reexamination appeals are heard by the PTAB, whereas IPR appeals are heard by the Federal Circuit. Nevertheless, these differences should not be overlooked as both the frequency of appeal and the speed with which the reviewing tribunal resolves such appeals greatly affect the pendency of the case, which is confirmed by the results above. Thus, while there is a slightly higher chance that a reexamination will be appealed to the PTAB, there is a much greater chance that an IPR will be appealed to the Federal Circuit, which takes much longer to resolve than an appeal to the PTAB during reexamination.
Practical Guidance
Based on the foregoing data, there are several factors that a potential challenger should consider before filing a reexamination request.
First and foremost, a potential requester must understand that, unlike IPR, it will not be able to participate in the proceedings after the petition is filed. Although rare exceptions can occur (e.g., an opportunity to reply to a patent owner statement or submit certain papers from related district court litigation), generally the requester should not assume it will have an opportunity to rebut the patent owner’s arguments in the reexamination itself.
Another trade-off is the pace of a reexamination proceeding, which provides several benefits. For example, reexaminations have a higher rate of initial approval (i.e., finding of an SNQ and ordering a reexamination) than IPRs (i.e., institution decisions). Thus, a reexamination requester will likely know whether the proceeding has been ordered before they would know that an IPR has been instituted, which can be beneficial when requesting a stay of district court proceedings. Further, with respect to litigated patents, these proceedings tend to be resolved more quickly than IPR proceedings.
However, the relative ease of obtaining examiner institution should be carefully weighed against the risk of amendment or addition of claims in a reexamination, which is significantly higher than the rate of amendments in IPRs. This risk of amendment can be avoided by challenging only expired patents (which cannot be amended) in reexaminations.
Additionally, in contrast to IPRs where a patent owner has multiple rounds of briefing to present arguments, reexamination generally requires that the patent owner develop any arguments early in the proceeding. For example, if the patent owner chooses not to file a patent owner statement, the patent owner has only one opportunity (the response to the first office action) to persuade the examiner not to reject a claim or to accept any proposed amendments or claims. This may force the patent owner to take a position earlier in the litigation and allow an accused infringer to identify in advance key areas of dispute (for example, with respect to the patent owner’s view of certain terms for construction).
Third-party requesters should also consider the estoppel differences in the two proceedings. Estoppel generally does not apply to arguments raised in reexamination. Current Federal Circuit precedent regarding IPRs suggests that IPR estoppel under 35 U.S.C. § 315(e)(2) may apply to any ground that a petitioner reasonably could have raised when it filed the petition—not only those grounds that the petitioner actually identified. Thus, a third party may present invalidity grounds in reexamination without fear that similar or related invalidity theories (or even unrelated, to the extent they could have reasonably raised) will not be estopped in district court.
In addition, third-party requesters will have more freedom to file challenges in reexaminations. For example, they are not limited by a word count in a reexamination and thus may present any number of grounds. There are also no issues with multiple filings in reexamination, so third-party requesters may file additional reexamination requests, for example, if they were to find better prior art after filing a first reexamination. In contrast, during an IPR proceeding, the petitioner has a word count that must be adhered to, naturally limiting the number of grounds that may be presented. Additionally, because the PTAB may apply discretion to deny subsequent IPRs against the same patent, petitioners are often generally limited to one filing against a patent.
Reexamination as a Viable Alternative to IPR
The decision whether to use reexamination is highly fact-dependent and must be evaluated on a case-by-case basis—however, this study demonstrates that many of the perceived disadvantages of reexaminations likely have been overstated. For example, ex parte reexaminations are more cost-effective, especially considering the fact that they have almost the same rate of cancellations as IPRs and the fact that they typically reach resolution more quickly than IPRs. Further, when considering the advantages that even changes to claims can present for patent challengers (e.g., narrowing claims through responses to office actions, intervening rights that may arise through claim amendment), the effectiveness of reexaminations becomes even more pronounced. As a result, would-be patent challengers would be well-advised to consider incorporating reexaminations into their defensive strategy, as an IPR is not necessary in each and every scenario and may in fact be less desirable, depending on the challenger’s specific objectives.