IP rights can be vital to the success of medical device companies. Significant legislative changes governing some of these rights may be on the horizon. Senators Coons (Delaware), Durbin (Illinois), Hirono (Hawaii), and Tillis (North Carolina), along with Congressman Ken Buck (Colorado) and Representative Deborah Ross (North Carolina) have introduced the bipartisan, bicameral PREVAIL Act to Congress. The bill is awaiting committee consideration. And like all bills, the PREVAIL Act is subject to amendment prior to passing either chamber of Congress. The bill purports to remedy “[u]nintended consequences of the comprehensive 2011 reform of patent laws [such as] the strategic filing of post-grant review proceedings to depress stock prices and extort settlements, the filing of repetitive petitions for inter partes and post grant review . . . and the unnecessary duplication of work by the district courts” and PTAB. The bill has attracted high profile support, including former Federal Circuit Chief Judge Radar and former Director of the USPTO Andrei Iancu. The PREVAIL Act proposes several significant changes to PTAB proceedings that medical device companies should be aware of. Three are highlighted below:
First, the PREVAIL Act proposes limiting the parties who can bring PTAB proceedings, such as petitions for inter partes review, to those who would have standing to bring a declaratory judgment action in federal court. Currently, any party who is not barred may bring an IPR proceeding. This change would harmonize the requirements for bringing invalidity challenges in federal courts and in the PTAB.
Second, the PREVAIL Act proposes changing the petitioner’s burden of proof at the PTAB to “clear and convincing evidence.” Currently, PTAB proceedings require proving invalidity by a “preponderance of the evidence” (essentially a “more likely than not” standard). The “clear and convincing” standard, which is used for invalidity in federal courts, is often thought of as being between the preponderance of the evidence standard and the beyond reasonable doubt standard from criminal law. Again, this change would harmonize the standards used in federal courts and the PTAB, which proponents of the bill argue will lead to a fairer result for patent owners. Former Chief Judge Radar argued that this change would also limit the ability of alleged infringers to obtain lengthy stays of district court litigation.
Third, the PREVAIL Act proposes to “end duplicative patent challenges” by requiring “a party to choose between making its validity challenges before the PTAB or in another forum, such as federal court. The bill also requires a party that is already involved in a separate proceeding to agree not to pursue the claims in the PTAB petition in that court, or any other forum.” The bill’s proponents advocate that this ends a “problem” where patent challengers get “several bites at the apple by raising the same or similar validity challenges” in multiple forums. As other advocates have noted, this change would put forum selection in the hands of the accused infringer, not the patent owner.
There are many other changes proposed in the PREVAIL Act that, if passed, would represent some of the most significant changes to PTAB proceedings since the introduction of IPRs and other post-grant proceedings a little over a decade ago. Senator Coons’ Office has created a Fact Sheet summarizing many of these changes. Medical device companies should consult their counsel for how these proposed changes may impact their business. The full text of the PREVAIL Act is available here.