The Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act was introduced on June 22, 2023, with the aim to reform the U.S. Patent Trial and Appeal Board (PTAB). The PREVAIL Act serves as a supplement to the proposed STRONGER Patents Act, introduced in 2019.
The drafters have identified three key goals of the PREVAIL Act:[1]
- Restore fairness to the PTAB to promote innovation and competitiveness.
- Improve PTAB rules to protect inventors from costly, unnecessary litigation.
- Ensure UPSTO has resources it needs to administer a patent system that promotes innovation.
First, the PREVAIL Act aims to “restore fairness” by altering the requirements of challenges before the PTAB. Currently, the PTAB considers standing for an IPR in the same manner as federal courts[2], but the Act would explicitly require challengers to have been sued or threatened with a patent infringement lawsuit prior to filing a PTAB challenge. Additionally, the Act proposes establishing a rebuttable presumption against joinder for a time-barred party—i.e., a party that did not raise a PTAB challenge within one year of being sued for patent infringement is prohibited from joining a PTAB proceeding brought by another party. The drafters have also identified multiple petitions as a source of increased cost to patent owners. Accordingly, the Act has been drafted to require a party to raise all arguments in one challenge before the PTAB. In practice, this proposed change may create an issue with respect to the length limitations of petitions. Given the technical complexity of many patents, challengers require extensive explanations to present arguments sufficient for institution, and, therefore, multiple petitions can be useful. Thus, if the proposed change is adopted, the USPTO may need to reconsider its current word limit. With respect to the PTAB’s analysis of instituted challenges, the Act proposes changing the burden of proof for invalidity from a “preponderance of the evidence” standard to district courts’ “clear and convincing” standard. Further, the drafters believe that PTAB proceedings require more transparency and, therefore, the Act requires the USPTO Director to issue separate written opinions when rehearing PTAB decisions and prohibits the Director from influencing PTAB panel decisions. While it may be a stretch to presume the Director “meddl[es] in a PTAB panel’s decision” simply because there are no express rules preventing such, it may be beneficial to all patent owners and potential challengers to have the Director’s written opinions publicly available.[3]
Second, the Act intends to prevent unnecessary litigation and the associated costs. A majority of PTAB proceedings—at least 85% according to the Act—have co-pending proceedings in other forums (e.g., federal district court). While the drafters believe that patent challengers “get several bites at the apple” (i.e., able to raise duplicative challenges in both forums), this is slightly misguided as a district court commonly stays the case pending a PTAB decision and any decided upon arguments (and sometimes unraised arguments) are estopped from being brought again before the district court.[4] Granted, district courts are inconsistent as to the application of IPR estoppel, requiring the Federal Circuit to weigh in on a consistent basis.[5] Moreover, estoppel of the challenger’s arguments does not inherently reduce the overall litigation costs. Thus, the PREVAIL Act proposes requiring a party to explicitly choose between making the validity challenges before the PTAB or another forum. Additionally, the Act requires a party that is already involved in a separate proceeding to expressly agree not to pursue their PTAB petition claims in the other forum. To further limit litigation costs and prevent judicial inefficiency, the Act proposes that the PTAB is required to deny any petition or dismiss a proceeding if another forum has already upheld the validity of the patent at issue. Also, the Act would require the PTAB to reject any proposed challenge or request to reexamine a patent when the underlying arguments have previously been considered by the USPTO. To this point, it is unclear whether an examiner’s considerations during prosecution will be sufficient to trigger this automatic bar.
Lastly, the Act aims to rectify some of the Patent Office’s financial concerns and support small businesses. The drafters have surmised that approximately $409.8 million in user fees have been diverted from the Patent Office. Accordingly, the Bill proposes the elimination of fee diversion to other federal agencies and programs by establishing a new revolving fund in the U.S. Treasury to ensure the Patent Office has sufficient funding for timely and quality examination. The Bill also hopes to address financial concerns at the other end of prosecution as small businesses may not always have the resources needed to successfully navigate the patent system. The PREVAIL Act would require the Small Business Administration to draft two reports examining the impact of patents and abusive demand letters on small businesses. Moreover, the Bill is drafted to expand access to patent-searching databases currently available only in-person at public search facilities.
In sum, the PREVAIL Act proposes numerous changes that may increase the efficiency of PTAB proceedings while remedying financial concerns for both the USTPO and patent owners. However, it may be necessary to rein in some of the requirements that potentially alter the functionality of raising a challenge before the PTAB. If patent challengers are restricted to the point where an action before the PTAB becomes less desirable than an invalidity challenge in another forum, then the overall purpose of the PTAB is lost.
Patent owners and challengers should not hold their breath waiting for the Act to come into effect nor should they proceed differently in anticipation of the proposed changes to the PTAB process. The STRONGER Patents Act (which the PREVAIL Act intends to supplement) has remained dormant since its introduction as a bill in July 2019.[6] Comparably, the text of the Prevail Act has yet to be submitted to the Library of Congress;[7] thus, the Act is in its infancy and will likely grow into a different form should it become law.
[1] Prevail Act Fact Sheet, https://www.coons.senate.gov/download/prevail-act-fact-sheet
[2] See Lujan v. Defenders of the Wildlife, 504 U.S. 555, 560-561 (1992) (For a party to have standing, it must show (1) an injury in fact, (2) a causal connection between the injury and the conduct of the defendant, and (3) a likelihood that the injury will be redressed by a favorable decision).
[3] Prevail Act Fact Sheet.
[4] Id.
[5] See, e.g., Ironburg Inventions Ltd. v. Valve Corp., 64 F.4th 1274 (Fed. Cir. 2023).
[6] See Stronger Patents Act of 2019, S. 2082, 116th Cong. § 1 (2019). https://www.congress.gov/bill/116th-congress/senate-bill/2082/text (as of 7/10/2023)
[7] A bill to amend title 35, United States Code, to address matters relating to patent subject matter eligibility, and for other purposes, S.2140 , 118th Cong. (2023). https://www.congress.gov/bill/118th-congress/senate-bill/2140/actions?s=3&r=1&q=%7B%22search%22%3A%5B%22Coons%22%5D%7D (as of 7/10/2023)
