Invalidating an issued patent
One result of this reform was an increase in the options available to accused infringers for challenging the validity of patents in administrative proceedings.Patent reform created the Post-Grant Review, Inter-Partes Review and Covered Business Method Review procedures as alternatives to litigation.For companies who relied heavily on patent protection to recoup research and development expenses — like pharmaceutical companies — the difference between having patent protection and no patent protection could be huge to the company’s bottom line.When hedge fund managers learned the likelihood of having patents in post-grant review administrative proceedings found invalid, they realized that money could be made on the process.But the defense of patent invalidity is now changing. And that change threatens to throw a system, which functions best in balance, out of balance once again. It is in litigation where huge resources can be brought with focused attention on every nit and nuance of the patent at issue to truly test the validity of the claims asserted.Pass this test, and show that the accused infringer is practicing the covered technology, and patent infringers succeed. Historically, the interests of those owning a patent were balanced by an accused infringer’s motivation to invalidate the patent at issue.
Born out of the idea that an invalid patent cannot be infringed, accused infringers have defended themselves from claims of patent infringement by arguing that the patent at issue is invalid. Patent and Trademark Office receives an examination and is presumed valid in the eyes of the law, no patent owner can truly take confidence in the validity of their patent until the patent’s validity is tested in the fires of litigation.
The hedge fund managers noticed that the broad regulations allowing for the challenge of patents in these administrative proceedings were open to anyone who wished to participate.
Anyone could challenge patents — all the better to rid the country of worthless, suspect patents.
There was always a chance that by asserting their patent, the patent owners may find their patent assets invalidated — freeing all competitors to practice the once exclusive technology covered by the now extinct patents.
This could give patent owners pause if their patents had any potential validity issues.