Post-grant patent validity challenges in Canada and the UK

01 May 2018

Most jurisdictions provide at least some procedures for challenging the validity of a granted patent. Sometimes the process for challenging validity is conducted before a patent office, and sometimes the process is conducted in court before a judge (either as a counterclaim, or as a standalone impeachment or declaratory judgment action).



In the United States, the Inter Partes Review (IPR) process, which came into effect in 2012 pursuant to the America Invents Act, has garnered a great deal of attention for being seen as favourable to those challenging patent validity. Indeed, over September 2012 - March 2018, patent validity challengers have in 65% of instituted cases[1] succeeded in having all claims invalidated, and in an additional 16% of instituted cases succeeded in having at least some claims invalidated.[2] Thus, patentees succeed in having all claims survive in only 19% of instituted cases.[3] Moreover, the IPR process has proved frustrating for patentees seeking to enforce their patents in parallel district court litigation, as district courts will frequently stay their litigation pending the resolution of IPR proceedings.

Recently, the Supreme Court of the United States (SCOTUS) heard and decided the Oil States case[4] where the constitutionality of the IPR process was challenged and ultimately upheld.

In view of this recent SCOTUS decision, this article discusses post-grant patent validity challenges in Canada and Europe (with a focus on the U.K.).

SCOTUS decision regarding constitutionality of IPR process

On April 24, 2018, the SCOTUS issued its decision in the Oil States case addressing whether the IPR process is constitutional.

Specifically at issue in Oil States was whether the IPR process violated Article III of the US Constitution. Article III has been interpreted to require that certain disputes must be decided by courts, and Congress may not delegate authority to resolve such disputes to a non-Article III court. An exception to this requirement is where the dispute involves a "public right".

In Oil States, the SCOTUS held that the IPR process "falls squarely within the public rights doctrine". "[T]he decision to grant a patent is a matter involving public rights - specifically, the grant of a public franchise. Inter partes review is simply a reconsideration of that grant, and Congress has permissibly reserved the PTO's authority to conduct that reconsideration. Thus, the PTO can do so without violating Article III. "

Accordingly, those wishing to challenge the validity of US patents will continue to be able to use the IPR process for doing so. In addition to the IPR process, patent validity challengers in the United States may avail themselves of the Post-Grant Review (PGR) process,[5] the Covered Business Method (CBM) process, and more traditional declaratory judgment actions (where jurisdiction can be established).

Post-grant patent validity challenges in Canada

In Canada, there is no equivalent to the Inter Partes Review, Post-Grant Review or Covered Business Method processes.

Canada has two main processes for post-grant challenging of patent validity:

  1. Impeachment action: any "interested party" may bring an action in the Federal Court of Canada to challenge the validity of a granted patent (and/or obtain a declaration of non-infringement). An "interested party" is one who has an interest in having the validity of the patent adjudicated. For example, a current or prospective competitor to the patent owner, or a party concerned that its product or service may infringe the patent, would likely qualify as an interested party. An impeachment action is a full court action in the sense that all parties will exchange pleadings, engage in document and oral discovery, exchange expert reports, and present their cases at trial before a single judge and with live witnesses; and
  2. Re-examination: a re-examination is a specific process conducted before the Canadian Patent Office. In particular, any person may request a re-examination of any claim of a patent by filing with the Commissioner prior art, consisting of patents, published patent applications and other printed publications. The request shall set forth the pertinency of the prior art and the manner of applying the prior art to the claim for which re-examination is requested. After this initial request, the patent challenger is no longer involved in the process. A re-examination board will proceed to determine whether a substantial new question of patentability affecting any claim of the patent concerned is raised by the request for re-examination.

    Where a re-examination board has determined that a request does not raise a substantial new question affecting the patentability of a claim, the requester shall be notified and the decision of the board is final for all purposes and is not subject to appeal or to review by any court.

    Where a re-examination board has determined that a request raises a substantial new question affecting the patentability of a claim, the board shall notify the patentee accordingly. The patentee may then reply with submissions regarding patentability. The patentee may also propose claim amendments provided that the amendments do not broaden the claim scope.

Re-examinations in Canada are rare. There are at least several reasons for this:

  1. Unlike an IPR, a Canadian re-examination is an ex parte process. The patent validity challenger has no involvement in the process following the initial submission of prior art;
  2. Compounding the lack of involvement of the challenger is the patentee's ability to make claim amendments to overcome any asserted prior art;
  3. A re-examination will likely be stayed in Canada in order to permit an impeachment action to proceed. This is in contrast to the situation in the United States, where parallel infringement litigation is frequently stayed. Canadian court decisions[6] have said that full impeachment actions, which include discovery and cross examination, are more comprehensive than re-examination proceedings. As a result, the latter will likely be stayed in order to allow the former to proceed; and
  4. Statistically, over the past two-and-a-half decades, patentees enjoy a success rate in re-examinations of over 60%.[7] This is much different than the situation in the United States, where patentees experience a much lower success rate in IPR proceedings.

Accordingly, outside of exceptional circumstances, any person wishing to challenge a granted patent's validity in Canada will likely be well advised to proceed by way of impeachment action.

Post-grant patent validity challenges in respect of the UK

In basic terms, there are two systems pursuant to which a patent may be granted covering the UK: the national system and the European system. There is some overlap and there are some differences in how patents granted pursuant to these two systems may be challenged post-grant.

1. Challenge to European patents

The European patent system (including the European Patent Office (EPO)) was established by the European Patent Convention. It provides for the centralised application, prosecution and grant of patents, as a bundle of national designations, in and by the EPO. The UK designation of a granted European patent has effect in the UK.

Within nine months of grant of a European patent, any person (natural or legal) may file a written opposition to the grant at the EPO, on one of the prescribed grounds (lack of patentability, insufficiency, added matter; EPC Arts. 99-100). The opposition procedure is inter partes. It is largely a written proceeding but with an opportunity for a short oral hearing, and is determined by the EPO's Opposition Division, with appeal lying to an EPO Board of Appeal.

Where an opposition succeeds, or leads to the amendment of the patent, the patent is revoked or amended in respect of all designations for which it was granted. The EPO's decision can therefore have the effect of over-riding any amendments made to the national designation(s) pursuant to national law and procedure.

Approximately 4% of granted European patents are opposed, and in 2016, 72% of the patents were upheld either as granted or in amended form.[8]

Alternatively or in addition, any person may commence proceedings in the UK court or UK Intellectual Property Office ('UK IPO') claiming for revocation of the UK designation of a European patent, as discussed below under the heading "Challenge to UK patents".

The possibility of concurrent proceedings in the EPO and the UK court (or UK IPO), both contesting the validity of the UK designation of a European patent, is inherent in the system established by the EPC. If there are no other factors, the 'default' option is to stay the UK proceedings. However, in practice commercial factors will be weighed up by the court when deciding where the balance lies in any issue of stay. Infringement issues are within the jurisdiction of the UK court but not that of the EPO, EPO opposition proceedings can take years to conclude, and since the need for commercial certainty may weigh against the grant of a stay, a court ordered stay is unusual.

2. Challenge to UK patents

Any person may claim for revocation of a granted UK national patent or the UK designation of a granted European patent before the court or before the Comptroller-General of Patents Designs and Trade marks (the "Comptroller " i.e. the UK Intellectual Property Office). The 'court' is: in England and Wales, the High Court (Patents Court or IPEC); in Scotland, the Court of Session; in Northern Ireland, the High Court. Such challenges are inter partes and proceed according to the rules of the relevant forum.

The grounds upon which revocation may be sought are set out in s.72 of the UK Patents Act 1977. These are that the invention is not patentable (lacks novelty, inventive step or industrial application or is otherwise excluded from protection), that the specification is insufficient or adds matter, or that the protection conferred by the patent has been extended by an amendment which should not have been allowed. Additionally, a person claiming entitlement may seek revocation on the basis that it was granted to a person not entitled.

In the course of such proceedings, the court may, upon the application of the patentee in accordance with the relevant rules, consider and permit amendment to the patent.

Additionally, the Patents Act, s.74A, provides that the proprietor of a patent or any other person may request the Comptroller to issue an opinion on a prescribed matter in relation to the patent. The prescribed matters are defined in the Patents Rules 2007, section 93, and include questions of patentability, sufficiency, added matter and extension of scope. They also include questions of infringement (or non-infringement).

Such opinions are not binding for any purposes. However, where the Comptroller issues an opinion under s.74A that the patent lacks novelty or lacks inventive step, the Comptroller may revoke the patent, but not before the patentee has had the opportunity to seek (and obtain) a review of the opinion. The patent proprietor must also be given an opportunity to make observations and amend the patent.

The opinion procedure offers a relatively low cost means of (potentially) putting in issue the validity of a patent. A copy of all documents received by the UK IPO will be sent to other interested parties, such as the patent owner and any licensee. In some circumstances, the UK IPO may refuse to issue an opinion.

For UK national patents there is no time-limited post-grant opposition procedure equivalent to that available in the EPO in respect of European patents.


Footnotes

[1] Over September 2012 - March 2018, the rate of institution of IPRs has slowly dropped, from 87% in 2013 to 61% in 2018 (to date). See https://www.uspto.gov/sites/default/files/documents/trial_statistics_20180331.pdf. Note that the data presented herein encompasses IPRs, as well as PGRs and CBMs. However, the vast majority of proceedings (92%) relate to IPRs.
[2] https://www.uspto.gov/sites/default/files/documents/trial_statistics_20180331.pdf.
[3] https://www.uspto.gov/sites/default/files/documents/trial_statistics_20180331.pdf.
[4] Oil States Energy Services, LLC v. Greene's Energy Group, LLC, 584 U.S. ___ (2018).
[5] PGRs are available in the nine months after a patent is granted. Numerous grounds related to patent validity may be asserted. This is in contrast to the IPR process where it may be commenced after a PGR or nine months post-patent grant. Only anticipation and obviousness based on patents or printed publications may be asserted in an IPR.
[6] Camso Inc. v. Soucy International Inc., 2016 FC 1116; and, Prenbec Equipment Inc. v. Timberblade Inc., 2010 FC 23.
[7] The methodology for this statistic assumes that a re-examination resulting in all claims maintained, plus half of all re-examinations involving amendments and/or partial cancellations, are a "win " for the patentee.
[8] EPO Facts and Figures 2017


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