Understanding the Differences Between the USPTO’s ANPRM and the PREVAIL Act

The regulatory framework for the inter partes review (IPR) process has long been the subject of criticism from both patent owners and petitioners. There is a growing consensus that the existing rules need to be revised to address loopholes and unintended consequences that have developed over the 10 years the America Invents Act (AIA) has been in effect. To that end, both the U.S. Patent and Trademark Office (USPTO) and Congress have proposed changes in the regulatory framework. While the two disparate approaches seek to change the IPR playing field, their purpose and approach are significantly different. This article discusses those similarities and differences.

The ANPRM

On April 21, 2023, the Patent Office initiated a formal rulemaking process by issuing an Advance Notice of Proposed Rulemaking (“ANPRM”). The stated purpose of this rulemaking process was to “to better align the practices with the USPTO’s mission to promote and protect innovation and investment in the same, and with the congressional intent behind the American Invents Act (AIA) to provide a less-expensive alternative to district court litigation to resolve certain patentability issues while also protecting against patentee harassment.” The ANPRM also recognizes that codifying certain USPTO practices will benefit the public by ensuring that these practices remain consistent and do not change from administration to administration.

The ANPRM solicited comments from the public on how best to address various common issues at the Patent Trial and Appeal Board (PTAB), and in some cases proposed potential solutions. Those comments are currently being considered for a Notice of Proposed Rulemaking (NPRM), which, after a comment period, would issue as final rules. What the ultimate scope of the NPRM will be, or when it will issue, are open questions, but with elections coming up in November 2024, the window for issuing the NPRM is closing.

The PREVAIL Act

The Promoting and Respecting Economically Vital American Innovation Leadership (“PREVAIL”) Act was introduced by a bipartisan group of senators to “make[ ] commonsense reforms to the PTAB to promote fair treatment for inventors, improve efficiency, and ensure that the USPTO has the resources it needs to effectively administer a patent system that incentivizes American innovation and enables U.S. inventors to compete.” To do so, the PREVAIL Act proposes a number of amendments to the AIA that would make the PTAB fairer for inventors. There is currently no indication of when, or whether, Congress will take this bill up.

What’s the Difference?

While both the ANPRM and PREVAIL Act recommend significant changes in IPR practice, there are significant differences between the two. First, the ANPRM is largely directed to the institution phase, while the PREVAIL Act more broadly addresses issues throughout the life of the IPR. Second, the ANPRM is presented as a buffet of issues and potential solutions without indicating which potential solutions will ultimately be part of the proposed rules, while the PREVAIL Act presents concrete statutory amendments. Finally, while many of the proposals in the ANPRM appear to benefit petitioners, the PREVAIL Act appears to be intended primarily to benefit inventors and patent owners.

However, there are some common issues. In particular, the issue of preventing serial petitions is prevalent throughout both the ANPRM and PREVAIL Act. To that end, the ANPRM sought feedback on (1) what constitutes a ‘‘substantial relationship’’ between entities sufficient to trigger or avoid discretionary denial (e.g., “membership organization[s], where the organization files IPRs or PGRs”), (2) discretionarily denying petitions brought by entities that do not have declaratory judgment standinghave a substantial relationship with an entity that does, or is otherwise practicing in the field of the challenged patent and (3) requiring petitioners to file a stipulation that neither they nor their privy or real parties have filed prior post-grant proceedings on the challenged claims; and that if their post-grant proceeding is instituted, neither they nor their privy or real parties in interest, will challenge any of the challenged claims in a subsequent post-grant proceeding.

The PREVAIL Act similarly proposes several changes to prevent serial petitions, including (1) requiring standing for petitioners, (2) curtailing “joinder” petitions that would otherwise be time barred, (3) applying estoppel at the time the petition is filed (rather than after a final written decision), (4) requiring a party to choose between making its validity challenges before the PTAB or in district court, and (5) requiring the USPTO reject any IPRs or reexaminations that include arguments that were previously considered in another forum. While different in the details from the ANPRM, these suggestions are specifically meant to curb serial petitions.

Where the ANPRM and PREVAIL Act address similar issues (like membership organizations and standing), in general, the ANPRM stays closer to the status quo while the PREVAIL Act goes further in support of patent owners. For example, the PREVAIL Act would require Petitioners to have standing to bring a declaratory judgment action in federal court. While the ANPRM also suggests a standing requirement for filing an IPR petition, the ANPRM’s version has a number of exceptions, including nonprofits and entities that “could be alleged to practice [ ] in the field of the challenged patent… .” Thus, the ANPRM suggests expanding beyond declaratory judgment standing to cover scenarios that are not related to the “litigation alternative” purpose of the AIA.

There are also a number of areas where the ANPRM and PREVAIL Act substantially diverge. For example, the ANPRM suggests codification of recent Director guidance regarding discretionary denial, including potentially requiring institution where the Board determines there are “compelling merits” to the petition and also potentially requiring institution where the petitioner makes a so-called Sotera stipulation. The PREVAIL Act does not address the discretionary denial standard, but instead changes the statutory burden of proof on petitioner from the current “preponderance of the evidence” to “clear and convincing” to synchronize with the district court burden of proof. This is a substantial departure from the spirit of the ANPRM and potentially inconsistent with a separate “compelling merits” analysis.

Thus, while the ANPRM can be seen as an update to PTAB institution rules that seeks in part to address issues raised by both patent owners and petitioners and in part to codify current PTAB practice, the PREVAIL Act seeks to amend the AIA to remedy perceived fairness issues affecting inventors and patent owners.

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Author: roobcio
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