In 2011, Congress passed the Leahy-Smith America Invents Act, a broad-sweeping reform of the American patent system. Within this landmark piece of legislation, Congress created trial-like administrative proceedings as a cost-effective alternative to litigation. Inter partes review allows third parties to go before the Patent and Trademark Office and attempt to invalidate an already issued patent on the limited grounds that it fails to meet either novelty or nonobvious standards. For a brief, nine-month period following patent issuance, however, a different administrative proceeding governs: post-grant review. With PGR, third parties can bring invalidity challenges that are unavailable to them at IPR—such as the claim that the invention does not encompass patentable subject matter.

This Note aims to understand the effect of limiting administrative subject-matter eligibility challenges to a discrete nine-month window, labeling this phenomenon the “IPR–PGR dichotomy” in the process. It argues that, much like common statutes of limitations, the nine-month barrier incentivizes third parties to bring their subject-matter eligibility claims early. But as a consequence, smaller companies and individual inventors will likely be shut out, with only big businesses able to make use of the advantages PGR presents. As such, the Note advocates for legislative reform that would allow more third parties, including the “little guy,” to bring subject-matter eligibility challenges before the PTO.


“[A]nything under the sun that is made by man . . .” 1 S. Rep. No. 82-1979, at 5 (1952), reprinted in 1952 U.S.C.C.A.N. 2394, 2399; H.R. Rep. No. 82-1923, at 6 (1952), reprinted in 1952 U.S.C.C.A.N. 2394, 2399.

Thirty years after patent law’s recodification in 1952, 2 Act of July 19, 1952, Pub. L. No. 82-593, 66 Stat. 792 (codified as amended at 35 U.S.C. §§ 1–293 (2012)). This statute will henceforth be referred to in this Note as the “1952 Patent Act.” the judicial gloss of the accompanying legislative history suggested these words encapsulate an expansive view of the types of inventions the Patent Act was designed to protect. 3 Both the Supreme Court and the Court of Appeals for the Federal Circuit have endorsed this view of the legislative history accompanying the 1952 Patent Act. See Diamond v. Chakrabarty, 447 U.S. 303, 308–09 (1980) (“Congress plainly contemplated that the patent laws would be given wide scope.”); State St. Bank & Tr. Co. v. Signature Fin. Grp., Inc., 149 F.3d 1368, 1373 (Fed. Cir. 1998) (supporting Supreme Court’s view and noting “it is improper to read limitations . . . on the subject matter that may be patented where the legislative history indicates that Congress clearly did not intend such limitations”), abrogated on other grounds by In re Bilski, 545 F.3d 943, 959–60 (Fed. Cir. 2008) (en banc). But this interpretation belied a hidden truth—not every invention is patent eligible. 4 In fact, the Court in Chakrabarty qualified its interpretation of the legislative history almost immediately. See 447 U.S. at 309 (“This is not to suggest that [the 1952 Patent Act] has no limits or that it embraces every discovery.” (emphasis added)). The question thus becomes: Where exactly does patent law draw the line for eligibility?

Courts had earlier determined that patent protection does not extend to laws of nature, natural phenomena, or abstract ideas—the so-called “judicial exceptions” to patent protection. 5 E.g., id. (noting limitation to patent-eligible subject matter); Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948) (same); see also infra section I.A.2 (descri­bing precedent, including Chakrabarty and Funk Bros., for excluding laws of nature, natural phenomena, and abstract ideas from patent protection). Under this theory, 6 For ease, this Note will refer to the limits of patent-eligible subject matter as the “judicial exceptions.” This terminology is meant to include all types of discoveries (laws of nature, natural phenomena, and abstract ideas) that are not patent eligible. such seminal discoveries as Einstein’s theory of relativity and Newton’s law of gravity are not patent eligible. 7 Courts have often used these examples to illustrate the boundaries of what inventions are patent eligible. See, e.g., Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012) (using Einstein and Newton examples); Chakrabarty, 447 U.S. at 309 (“Einstein could not patent his celebrated law that E=mc2; nor could Newton have patented the law of gravity.”). What precisely qualifies under the judicial exceptions, however, is ill-defined. 8 See Funk Bros., 333 U.S. at 135 (Frankfurter, J., concurring) (“[T]hese are vague and malleable terms infected with too much ambiguity and equivocation.”); cf. infra section I.B.2 (discussing controversy surrounding judicial exceptions). In particular, biotechnology, business methods, and computer software have recently been mired in subject-matter eligibility controversy, with questions concerning the validity of patents within these fields reaching the Supreme Court four times since 2010. 9 See Alice Corp. Pty. v. CLS Bank Int’l, 134 S. Ct. 2347, 2352 (2014) (considering validity of patent for computer-mediated “settlement risk”); Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2110–11 (2013) (contemplating patent eligibility of naturally occurring genes); Mayo, 132 S. Ct. at 1294 (assessing whether method for determining drug-dosage levels merits exclusionary rights); Bilski v. Kappos, 130 S. Ct. 3218, 3223 (2010) (evaluating application for patent explaining “how buyers and sellers of commodities in the energy market can protect, or hedge, against the risk of price changes”).

While the judiciary engaged in delineating the boundaries of patent-eligible subject matter, the legislature undertook broad revision of patent law more generally. In 2011, Congress passed the Leahy-Smith America Invents Act (AIA) 10 Pub. L. No. 112-29, 125 Stat. 284 (2011) (amending scattered sections of 35 U.S.C.). For an overview of the AIA, see generally Andrew S. Baluch et al., America Invents Act: Law and Analysis (2015 ed.); Edward D. Manzo, The America Invents Act: A Guide to Patent Litigation and Patent Procedure (2013 ed.). —perhaps the most meaningful patent reform in fifty years. 11 See, e.g., Joe Matal, A Guide to the Legislative History of the America Invents Act: Part I of II, 21 Fed. Cir. B.J. 435, 435 (2012) (“The AIA is the first comprehensive bill to be enacted since the Patent Act of 1952 . . . , and it arguably makes the most substantial changes to the law since those imposed by the Patent Act of 1836 . . . , which created the system of patent examination.” (footnote omitted)); Patrick Leahy & Orrin Hatch, Meaningful Patent Reform, Wash. Times (Feb. 15, 2008),‌‌news/‌‌‌‌2008/‌feb/‌15/‌meaningful-patent-reform/ [http://‌‌Z5WH-7F8Y] (ad­vocating for AIA’s enactment by stating “current law was last thoroughly updated more than 50 years ago, and much has changed since then”). Congress did, of course, enact changes in the intervening years between the 1952 Act and the AIA, such as implementing reexamination proceedings. See infra section I.C.1 (addressing history of ex parte and inter partes reexaminations). But the AIA implemented truly profound changes. See infra notes 12–14, 16–17 and accompanying text (noting significant provisions of AIA). The reform provision that appears to have garnered the most attention 12 See John Villasenor, March 16, 2013: The United States Transitions to a ‘First-Inventor-to-File’ Patent System, Forbes (Mar. 11, 2013, 11:54 pm),‌america-‌transitions-to-a-first-inventor-to-file-patent-system/ [] (noting change to first-to-file has “gotten significant attention”); cf., e.g., Nathan Hurst, How the America Invents Act Will Change Patenting Forever, Wired (Mar. 15, 2013, 6:30 am), [] (calling first-to-file provision “meat” of AIA); Steve Lohr, Investor Challenges a Sweeping Revision in Patent Law, N.Y. Times (Aug. 26, 2012),‌2012/08/27/technology/mark-stadnyk-challenges-sweeping-revision-in-patent-law.html (on file with the Columbia Law Review) (spilling ink over constitutional challenge to first-to-file provision). transformed the American patent system from one that generally rewards the first to make an invention (“first-to-invent”) to one that gives priority to the first inventor to file (“first-to-file”). 13 AIA sec. 3(a)(2), § 100(i)(1)(B), 125 Stat. at 285; see also Manzo, supra note 10, § 2:1, at 5–6 (explaining move from first-to-invent to first-to-file).

Not only did the AIA significantly affect the patent application process, 14 The legislative history of the AIA nicely summed up the important administrative distinctions between first-to-invent and first-to-file:

“In a first-to-file system, the filing date of the application is most relevant; the filing date of an application is an objective date, simple to determine, for it is listed on the face of the patent. In contrast, in a first-to-invent system, the date the invention claimed in the application was actually invented is the determinative date. Unlike the objective date of filing, the date someone invents something is often uncertain, and, when disputed, typically requires corroborating evidence as part of an adjudication.”

H.R. Rep. No. 112-98, pt. 1, at 40 (2011), reprinted in 2011 U.S.C.C.A.N. 67, 70 (footnote omitted). As may be expected, the effects of this change in system reverberated throughout patent application provisions of the statute. Cf. Baluch et al., supra note 10, ch. 2, at 2-1 to -19 (detailing first-to-file provisions of AIA). One of the most practical consequences was that an administrative mechanism for determining “who invented first” in the event of controversy was no longer necessary. See H.R. Rep. No. 112-98, pt. 1, at 40–42, reprinted in 2011 U.S.C.C.A.N. at 70–72 (noting “interference proceedings”—used to determine dates of invention—would be replaced with “‘derivation’ proceedings,” processes to “ensure that the first person to file the application is actually a true inventor”).
but it also created new mechanisms for third parties to chal­lenge the validity of a patent through the United States Patent and Trademark Office (PTO) 15 The PTO is the governmental agency tasked with issuing patents. About Us,
U.S. Patent & Trademark Office (Oct. 29, 2014, 11:38 am), [] (last modified Feb. 12, 2015, 11:51 am).
after it has been granted. 16 See AIA secs. 6, 18, §§ 311–319, 321–329, 125 Stat. at 299–313, 329–31 (detailing proceedings). Known as “post-grant proceedings,” these administrative measures are: post-grant review (PGR), inter partes review (IPR), and covered business method review (CBMR). 17 For an overview of all three post-grant processes, see generally Baluch et al., supra note 10, §§ 6.01–.02, at 6-3 to -15 (comparing and contrasting PGR and IPR); Manzo, supra note 10, pt. III, at 197–421 (overviewing PTO trial practices); Oblon Spivak, Post-Grant Proceedings Before the Patent Trial and Appeal Board (2013) (discussing all three post-grant proceedings in detail); Jonathan Tamimi, Note, Breaking Bad Patents: The Formula for Quick, Inexpensive Resolution of Patent Validity, 29 Berkeley Tech. L.J. 587, app. at 642–43 tbl.A1 (2014) (summarizing PGR, IPR, and CBMR). Congress also created the Patent Trial and Appeal Board (PTAB) as a new administrative body of the PTO and assigned it responsibility for determining disputes in connection with the new post-grant procedures. 18 AIA sec. 7(a)(1), § 6, 125 Stat. at 313 (establishing PTAB).

In creating PGR and CBMR, Congress opened the door for subject-matter eligibility challenges—claims that a patent is invalid for failing to encompass patentable subject matter—before the PTO. 19 Id. sec. 6(d), § 321(b), 125 Stat. at 306 (allowing subject-matter eligibility challenges for PGR); id. sec. 18(a)(1), 125 Stat. at 329–30 (permitting challenges available at PGR to be brought during CBMR). IPR, on the other hand, excludes consideration of statutory subject-matter questions. 20 Id. sec. 6(a), § 311(b), 125 Stat. at 299 (limiting scope of IPR). Although others have noted the existence of this dichotomy 21 This Note will refer to the availability of subject-matter eligibility challenges at PGR but its exclusion from IPR as the “IPR–PGR dichotomy” or, in some cases, simply as the “dichotomy.” in the scope of review of the various post-grant proceedings, 22 See, e.g., Yasser El-Gamal, Ehab M. Samuel & Peter D. Siddoway, The New Battlefield: One Year of Inter Partes Review Under the America Invents Act, 42 AIPLA Q.J. 39, 42 n.8 (2014) (discussing scope of review of PGR and IPR when introducing post-grant proceedings); Tamimi, supra note 17, app. at 642–43 tbl.A1 (noting IPR–PGR dichotomy while summarizing post-grant proceedings). this Note aims to fill a gap in the scholarship by examining its implications. Part I explores the history of subject-matter eligibility, from the creation of the judicial exceptions to recent Supreme Court attempts to define the parameters of this doctrine. Part II then surveys the time limit on administrative subject-matter eligibility challenges and grapples with its consequences. Finally, Part III proposes potential solutions to the more adverse consequences that the dichotomy triggers.

I. The History of Subject-Matter Eligibility Claims

Although the Patent Act defines four types of inventions and discoveries that qualify as patentable, courts have explicitly created three judicial exceptions. This Part surveys the evolution of the judicial exceptions, with particular focus on the effect of recent Supreme Court jurisprudence. Section I.A walks through the origins of the judicial exceptions. Section I.B then examines four recent Supreme Court decisions concerning subject-matter eligibility and considers whether they have clarified the boundaries of the judicial exceptions. Finally, section I.C addresses Congress’s response to these issues when enacting the AIA.

A. The Origins of the Judicial Exceptions

A basic tenet of patent law is that inventions must be useful, novel, and nonobvious in order to obtain protection. 23 See Michael Risch, Everything Is Patentable, 75 Tenn. L. Rev. 591, 651 (2008) (“The primary application of patent law is to determine whether a new technology is useful, novel, and nonobvious . . . .”). Each of these three prongs has been statutorily defined. See 35 U.S.C. § 101 (2012) (noting inventions worthy of protection are ones that are useful); id. § 102 (describing conditions for meeting novelty requirement); id. § 103 (“A patent for a claimed invention may not be obtained . . . if the differences between the claimed invention and the prior art are such that the claimed invention as a whole would have been obvious . . . .”). Prior to even reaching these considerations, however, an invention must pass the first obstacle of patent eligibility—that is, it must encompass patentable subject matter. 24 See Bilski v. Kappos, 130 S. Ct. 3218, 3225 (2010) (labeling patent-eligibility inquiry “threshold test”); Parker v. Flook, 437 U.S. 584, 593 (1978) (“The obligation to determine what type of discovery is sought to be patented must precede the determination of whether that discovery is, in fact, new or obvious.”). Section 101 of the Patent Act governs this requirement by providing, “Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor . . . .” 25 35 U.S.C. § 101. These words echo Thomas Jefferson’s conception of patentable subject matter, as expressed in the Patent Act of 1793. See Diamond v. Chakrabarty, 447 U.S. 303, 308–09 (1980) (noting Congress largely “left Jefferson’s language intact” when enacting 1952 Patent Act). As earlier noted, courts have long read into § 101 “an important implicit exception. ‘[L]aws of nature, natural phenomena, and abstract ideas’ are not patentable.” 26 Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012) (alteration in Mayo) (quoting Diamond v. Diehr, 450 U.S. 175, 185 (1981)).

1. Policy Underpinnings of the Judicial Exceptions. — Patent protection is authorized by the Constitution, which empowers Congress “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” 27 U.S. Const. art. I, § 8, cl. 8. Patent laws seek to accomplish this laudable progress by granting patent holders the right to exclude others from access to protected inventions, thus providing an incentive to inventive activity. 28 See Chakrabarty, 447 U.S. at 307 (noting Congress grants patents “as an incentive for . . . inventiveness and research efforts”); cf. Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 480 (1974) (“The productive effort thereby fostered [by patent law] will have a positive effect on society through the introduction of new products and processes of manufacture into the economy, and the emanations by way of increased employment and better lives for our citizens.”). However, that right must be balanced with recognition that exclusionary rights impede competition. 29 Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 146 (1989). After all, “imitation and refinement through imitation are both necessary to invention itself and are the very lifeblood of a competitive economy.” 30 Id.

Each of the judicial exceptions grows out of, and reflects, the concern that overly broad rewards may unduly preempt the vital work of others. Thus, the Supreme Court asserted that allowing patents on “‘basic tools of scientific and technological work’ . . . might tend to impede innovation more than it would tend to promote it.” 31 Mayo, 132 S. Ct. at 1293 (quoting Gottschalk v. Benson, 409 U.S. 63, 67 (1972)). As a result, no matter how revolutionary discoveries may appear—or how much exertion one expends in the process—the foundations of the American patent system dictate that laws of nature, natural phenomena, and abstract ideas should be left to the public domain for the benefit of scientific progress. 32 See Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2117–18 (2013) (finding neither “groundbreaking, innovative, or even brilliant discovery” nor “extensive effort alone” satisfies § 101). But this limitation must also be well defined. As the Court noted, “too broad an interpretation of this exclusionary principle could eviscerate patent law. For all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” 33 Mayo, 132 S. Ct. at 1293. Examining the precedent establishing and defining the judicial exceptions is thereby a useful exercise in understanding their scope.

2. Establishing the Judicial Exceptions: Early Jurisprudence. — The genesis of the judicial exceptions is evident throughout early patent cases, which determined that principles, abstract ideas, scientific truths, and mathematical formulae are not eligible for patent protection. 34 See MacKay Radio & Tel. Co. v. Radio Corp. of Am., 306 U.S. 86, 94 (1939) (“[S]cientific truth, or the mathematical expression of it, is not [a] patentable invention . . . .”); O’Reilly v. Morse, 56 U.S. (15 How.) 62, 112–21 (1854) (noting abstract ideas are not patentable); Le Roy v. Tatham, 55 U.S. (14 How.) 156, 174–75 (1853) (“It is admitted, that a principle is not patentable. A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right.”). In 1948, the Supreme Court stated: “He who discovers a hitherto unknown phenomenon of nature has no claim to a monopoly of it which the law recognizes. If there is to be invention from such a discovery, it must come from the application of the law of nature to a new and useful end.” 35 Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948) (emphasis added).

In the 1970s, the Supreme Court began wrestling with the patentability of computer programs using mathematical formulae and whether such programs fell within the abstract ideas exception. 36 Note that the Supreme Court did not focus § 101 jurisprudence, which governs the judicial exceptions, solely on mathematical formulae around this time period. The Court also delved into subject-matter eligibility’s reach with respect to biotechnology. See Diamond v. Chakrabarty, 447 U.S. 303, 305, 310 (1980) (determining bacterium genetically engineered to break down crude oil was “not nature’s handiwork, but [inventor’s] own”). It tackled the issue three times from 1972–1981. 37 See Diamond v. Diehr, 450 U.S. 175, 192–93 (1981) (finding patent application for method of curing rubber was not “attempt to patent a mathematical formula, but rather . . . an industrial process”); Parker v. Flook, 437 U.S. 584, 594–95 (1978) (denying patent protection to method of updating alarm limits during catalytic conversion processes); Gottschalk v. Benson, 409 U.S. 63, 71–72 (1972) (holding patent for method for converting binary-coded decimal numerals into pure binary numerals would “in practical effect . . . be a patent on the algorithm itself”). Through this trilogy of cases, the Court determined that a mathematical algorithm itself was an unpatentable abstract idea. 38 See, e.g., Benson, 409 U.S. at 71–72 (invalidating patent application as it “would wholly pre-empt the mathematical formula”). If, however, a mathematical formula is used as part of an industrial process to “transform[] or reduc[e] an article to a different state or thing,” then it is patent eligible. 39 Diehr, 450 U.S. at 192. A method for curing rubber that happens to utilize a mathematical formula, for example, is a “function which the patent laws were designed to protect.” Id. at 192–93. But see Flook, 437 U.S. at 594 (finding patent invalid not only on basis of using algorithm but also because no “inventive concept” existed in implementing formula). Over time, the “machine-or-transformation test” secured the notion that an abstract idea or law of nature is eligible for patent protection when used in a process if it is either sufficiently linked to a machine or transforms an object. 40 Stefania Fusco, Perspectives, Is In re Bilski a Déjà Vu?, 2009 Stan. Tech. L. Rev. ¶ 1, ¶ 2, []. The origins of this test are from the proceedings in Benson, whereby the government asked the court to explicitly adopt the machine-or-transformation test as the necessary test. See Reply Brief for the Petitioner at 9, Benson, 409 U.S. 63 (No. 71-485), 1972 WL 136228, at *6 (“[W]e submit that the cases follow such a rule—implicitly or explicitly—and that they cannot be rationalized otherwise.”). This trilogy of cases, however, did not represent the end of Supreme Court jurisprudence on the issue of subject-matter eligibility.

B. Supreme Court Activism: The Effect of Recent Judicial Exception Jurisprudence

For a time after the 1970s trilogy, the Supreme Court seemed content to leave defining the boundaries of the judicial exceptions to the Federal Circuit. 41 In 1998, for example, instead of the machine-or-transformation test, the Federal Circuit required that a law of nature “produce[] ‘a useful, concrete and tangible result’” in order to qualify for patent protection. State St. Bank & Tr. Co. v. Signature Fin. Grp., Inc., 149 F.3d 1368, 1373 (Fed. Cir. 1998), abrogated by In re Bilski, 545 F.3d 943 (Fed. Cir. 2008) (en banc). Ten years later, however, the Federal Circuit readopted the machine-or-transformation test. See In re Bilski, 545 F.3d at 960 (“[We] reaffirm that the machine-or-transformation test outlined by the Supreme Court is the proper test to apply.”), aff’d on other grounds sub nom. Bilski v. Kappos, 130 S. Ct. 3218 (2010). But see infra notes 58–59 and accompanying text (noting Supreme Court did not adopt machine-or-transformation test as bright-line rule in response to In re Bilski). Then, “[a]fter almost thirty years of silence on the topic,” 42 William J. Casey, Note, The Sum of the Parts Is Greater than the Whole: Why Courts Determining Subject Matter Eligibility Should Analyze the Patent-Eligible and Unpatentable Portions of the Claim Separately Instead of Treating the Claim as a Whole, 5 Hastings Sci. & Tech. L.J. 107, 107 (2013). the Supreme Court again focused its attention on § 101—and has yet to stop. But despite the existence of this new precedent, ambiguity continues to surround the judicial exceptions.

1. Four Cases in Five Years: The Supreme Court Reconsiders Subject-Matter Eligibility. — The Supreme Court first reexamined subject-matter eli­gibility in Bilski v. Kappos, when it considered an application for a business method patent describing a process for “protect[ing] against the risk of price fluctuations” in the energy market. 43 130 S. Ct. at 3223. In Bilski, the Court refers to business method patents as “methods of doing business,” although it acknowledges that no explicit definition exists. Id. at 3228. Here, the Court addressed two separate issues: (1) whether business method patents, as a general matter, are patent eligible under § 101 and (2) whether the invention at issue was a patentable process. 44 See id. at 3228–31 (addressing both questions). The Court answered the first question in the affirmative, declining to create a categorical exception for business methods. 45 See id. at 3228–29 (declining to “adopt[] categorical rules that might have wide-ranging and unforeseen impacts”). Then, rather than make a broad pronouncement on the limits of § 101’s scope, the Court reached and decided the second question on narrower grounds, holding the specific invention at issue invalid for covering the abstract concept of hedging—a long-standing financial practice of protecting against risk. 46 Id. at 3231.

Two years later, in Mayo Collaborative Services v. Prometheus Laboratories, Inc., the Supreme Court examined the validity of a patent on a method for determining the correct dose of a potentially toxic drug used to treat autoimmune diseases. 47 132 S. Ct. 1289, 1294 (2012). The method linked the desired dose to the presence and amount of the drug’s metabolites, the natural result of the body’s breaking down the drug in the patient’s blood. 48 The Court referred here to the concept of metabolism. See id. (“The claims purport to apply natural laws describing the relationships between the concentration in the blood of . . . [drug] metabolites and the likelihood that the drug dosage will be ineffective or induce harmful side-effects.”). The Court therefore deemed these relationships a “natural law.” 49 See id. at 1296–97 (describing why patents at issue “set forth laws of nature”). Moreover, the patent failed to apply an “‘inventive concept[]’ sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the natural law itself.” 50 Id. at 1294 (quoting Parker v. Flook, 437 U.S. 584, 594 (1978)). The Court explained that the method did nothing more than take a law of nature and add “additional steps consist[ing] of well-understood, routine, conventional activity already engaged in by the scientific community.” Id. at 1297–98.

Shortly thereafter, in Ass’n for Molecular Pathology v. Myriad Genetics, Inc., the Supreme Court scrutinized a patent on genes that, if mutated, can heighten the risk of breast and ovarian cancer. 51 133 S. Ct. 2107, 2110–11 (2013). Unlike the earlier cases, all of which involved claims to processes, this claim was to composition of matter. Also, unlike Bilski, where the validity of the issue was decided narrowly, here the Court handed down a potentially far-reaching decision regarding the subject-matter eligibility of genes generally. 52 See id. at 2120 (“We . . . hold that genes and the information they encode are not patent eligible under § 101 simply because they have been isolated from the surrounding genetic material.”). According to the opinion, these patents simply recite a genetic sequence whose “location and order . . . existed in nature” before their discovery; consequently, naturally occurring genes do not qualify for patent protection under the judicial exceptions. 53 Id. at 2116–19. The Court did, however, distinguish as patent eligible man-made genetic sequences with non-coding regions of genes removed, also known as complementary DNA (cDNA). See id. at 2119 (“[T]he lab technician unquestionably creates something new when cDNA is made.”).

Finally, in Alice Corp. Pty. v. CLS Bank International, the Supreme Court held that a method of using a computer to mitigate settlement risk failed to claim patentable subject matter. 54 See 134 S. Ct. 2347, 2352, 2357 (2014) (defining settlement risk as “risk that only one party to an agreed-upon financial exchange will satisfy its obligation”). The Court determined that the patents at issue attempted to claim the unpatentable abstract idea of intermediated settlement and that the application of a computer was insufficiently “transformative” to make it patent eligible under the machine-or-transformation test. 55 The notion of “intermediated settlement” was defined by the Court as “the use of a third party to mitigate settlement risk.” Id. at 2356. The Court then went on to state: “[T]he claims at issue amount to ‘nothing significantly more’ than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer.” Id. at 2360 (quoting Mayo, 132 S. Ct. at 1298). With Alice, the Court invalidated the patent at issue in each of the four subject-matter eligibility cases it considered post-2010. At minimum, this suggests what qualified under the judicial exceptions five years ago was unclear. Whether such doubt persists today is another question.

2. Ambiguity and Scholarship in the Wake of Bilski, Mayo, Myriad, and Alice. — Although the Supreme Court rekindled an interest in subject-matter eligibility questions, the extent of § 101’s reach remains uncertain. Commentators have continued to note ambiguities surrounding the precise boundaries of the judicial exceptions. 56 See, e.g., Stephen Pulley, Comment, An “Exclusive” Application of an Abstract Idea: Clarification of Patent-Eligible Subject Matter After Bilski v. Kappos, 2011 BYU L. Rev. 1223, 1225 (“Because the Supreme Court has denied bright-line rules for patent eligibility, it may be impossible to answer all the questions in this realm with perfect clarity.” (footnote omitted)); Eric J. Rogers, Note, Patenting Medical Diagnostics Methods: The Mort Strikes Back, 17 J. Tech. L. & Pol’y 111, 189–90 (2012) (“[T]he Court’s most recent decision regarding subject-matter eligibility, Mayo and Bilski, failed to provide a clear legal standard for determining when a patent claim has crossed the line into an abstract idea or law-of-nature exception.”); Bryan Wisecup, Comments and Casenotes, Mayo v. Prometheus: Reorganizing the Toolbox for Patent Eligible Subject Matter and Uses of Natural Laws, 81 U. Cin. L. Rev. 1651, 1668 (2013) (criticizing Mayo decision for failing to “add clarity to the boundary of subject matter eligibility for laws of nature” and noting “[i]nventors and practitioners are still not able to distinguish between what is and is not permissible incorporation of a law of nature”). And the Justices of the Supreme Court have as well. 57 For example, though concurring in the judgment in Bilski v. Kappos, Justice Stevens admonished the Court for “never provid[ing] a satisfying account of what constitutes an unpatentable abstract idea.” 130 S. Ct. 3218, 3236 (2010) (Stevens, J., concurring in the judgment). Indeed, Justices’ criticism of the judicial exceptions is nothing new, preceding even the 1952 Patent Act. See Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 134–35 (1948) (Frankfurter, J., concurring) (“It only confuses the issue, however, to introduce such terms as ‘the work of nature’ and the ‘laws of nature.’ For these are vague and malleable terms infected with too much ambiguity and equivocation.”).

Moreover, the debate does not end with determining precisely what qualifies under the judicial exceptions. The lack of a definitive test to determine when an invention incorporating a law of nature, a natural phenomenon, or an abstract idea is nonetheless eligible for patent protection continues to be problematic. Though the Federal Circuit attempted to impose the machine-or-transformation test as the categorical analysis, 58 In re Bilski, 545 F.3d 943, 959–60 (Fed. Cir. 2008) (en banc), aff’d on other grounds sub nom. Bilski, 130 S. Ct. 3218. the Supreme Court shied away from such a bright-line rule. 59 In Bilski, the Court found that while the machine-or-transformation test may provide an “important clue” to the analysis it was “not the sole test.” 130 S. Ct. at 3227. But the Court then failed to clarify the appropriate test to apply. 60 Following Bilski, the Supreme Court has seemingly invoked other tests. For example, the decision in Mayo appeared to apply an “obviousness-plus” analysis, whereby the Court was searching for an “‘inventive concept’” that did more than “simply state the law of nature while adding the words ‘apply it.’” Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1294 (2012) (quoting Parker v. Flook, 437 U.S. 584, 594 (1978)); see also P. Andrew Riley, Jonathan R.K. Stroud & Jeffrey Totten, The Surprising Breadth of Post-Grant Review for Covered-Business-Method Patents: A New Way to Challenge Patent Claims, 15 Colum. Sci. & Tech. L. Rev. 235, 248 (2014) (naming test applied in Mayo). In apparent recognition of the ambiguity surrounding when a law of nature merits exclusionary rights, the PTO released memoranda after each case to aid examiners considering subject-matter eligibility issues. 61 See Memorandum from Robert W. Bahr, Acting Assoc. Comm’r for Patent Examination Policy, to Patent Examining Corps (July 27, 2010), [] (pro-viding examiners with guidance after Bilski); Memorandum from Andrew H. Hirshfeld, Deputy Comm’r for Patent Examination Policy, to Patent Examining Corps (June 25, 2014), [] (same for Alice); Memorandum from Andrew H. Hirshfeld, Deputy Comm’r for Patent Examination Policy, to Patent Examining Corps (Mar. 4, 2014), [] (same for Myriad); Memorandum from Andrew H. Hirshfeld, Deputy Comm’r for Patent Examination Policy, to Patent Examining Corps (July 3, 2012), [] (same for Mayo).

Scholars have suggested that the judicial exceptions are a moot point, as those patents falling outside § 101’s purview would also be invalid for lack of novelty or for being obvious. 62 See Mayo, 132 S. Ct. at 1303 (noting United States, as amicus curiae, argued provisions other than § 101 could suffice to screen for ineligible patents); Joshua D. Sarnoff, Patent-Eligible Inventions After Bilski: History and Theory, 63 Hastings L.J. 53, 106 (2011) (“[S]ection 103 necessarily should also render ineligible uncreative applications unpatentable as obvious.”). Judges have also pointed out cases decided on subject-matter eligibility grounds could have been examined on novelty or nonobviousness grounds rather than subject-matter eligibility. See In re Bilski, 545 F.3d at 995–97 (Newman, J., dissenting) (noting validity of patent application at issue should be reached on §§ 102, 103, and 112). But this approach does not take into account the efficiency benefits of using subject-matter eligibility as a “threshold test,” including: “reduced costs of ad­ministration, reduced overall burdens on the patent system, and clearer signals that direct investment and innovation to activities that most need patent-system incentives while better protecting the public domain of science, nature, and ideas from encroachment.” 63 Sarnoff, supra note 62, at 106–24. Further, this approach would make the judicial exceptions a “dead letter,” and is “therefore not consistent with prior law.” 64 Mayo, 132 S. Ct. at 1303. For better or worse, the judicial exceptions have garnered significant weight in challenging a patent’s validity and must therefore receive due attention in the patent-litigation context.

C. Subject-Matter Eligibility Challenges Under the AIA

As evidenced by recent Supreme Court cases, challenging a patent on the basis of a lack of patentable subject matter can be an effective means of invalidating a patent. 65 See supra section I.B.1 (discussing Bilski, Mayo, Myriad, and Alice). Of course, courts will not strike down every patent facing § 101 scrutiny. 66 Kevin J. McNamee, A View from the Trenches: Section 101 Patent Eligibility Challenges in the Post-Bilski Trial Courts, NYIPLA Bull., Dec. 2013/Jan. 2014, at 13, 14, [] (noting fifty-six percent of district court and International Trade Commission proceedings upheld validity of patent faced with § 101 challenge). The susceptibility of patents to § 101 challenges, however, may depend on the type of art they comprise. See id. (“[B]usiness method patents and medical diagnostic/treatment patents remain far more vulnerable to § 101 challenges than more traditional, technology-based patents . . . .”). But in the wake of the recent Supreme Court challenges, subject-matter eligibility challenges may become an increasing trend. 67 At least one commentator has expressed this concern, noting recent Supreme Court cases “might make section 101 challenges the ‘next toss-in’ for every defendant’s response to patent infringement suit involving any patented process and ‘swamp’ the lower courts with section 101 jurisprudence.” Rogers, supra note 56, at 188 (quoting MySpace, Inc. v. GraphOn Corp., No. 2011-1149, 2012 WL 716435, at *6–8 (Fed. Cir. Mar. 2, 2012)). Whether or not the drafters of AIA anticipated this development, the statute’s changes implicate subject-matter eligibility challenges.

1. Pre-AIA Subject-Matter Eligibility Challenges. — In creating the AIA, legislators sought to revamp mechanisms of resolving post-grant patent validity questions, especially where the crux of the invalidity claim concerns subject-matter eligibility. 68 See discussion infra section I.C.2 (detailing impetus for revamping post-grant practices); see also supra notes 16–17 and accompanying text (introducing new administrative proceedings for challenging patent after it has been issued). Even before the enactment of the AIA, however, third parties wishing to contest a patent’s legitimacy were not necessarily confined to the courtroom. Specifically, there were two—albeit limited—means of proceeding through the PTO rather than the courts: ex parte and inter partes reexamination. 69 For excellent background on reexamination proceedings, see generally Martin J. Adelman, Randall R. Rader & Gordon P. Klacnik, Patent Law in a Nutshell 43–45 (2008) (detailing pre-AIA post-grant procedures); Oblon Spivak, supra note 17, § 1:2.1, at 8–11 (describing reexamination practices within broader discussion of evolution of post-grant practices before PTO); J. Steven Baughman, Reexamining Reexaminations: A Fresh Look at the Ex Parte and Inter Partes Mechanisms for Reviewing Issued Patents, 89 J. Pat. & Trademark Off. Soc’y 349 (2007) (discussing reexamination proceedings in detail). Ex parte reexamination was first enacted in 1980, 70 See Act of Dec. 12, 1980, Pub. L. No. 96-517, §§ 301–307, 94 Stat. 3015, 3015–17 (codified as amended at 35 U.S.C §§ 301–307 (2012)) (enacting provisions for ex parte reexamination). while inter partes reexamina­tion came into effect nearly two decades later. 71 See American Inventors Protection Act of 1999, Pub. L. No. 106-113, § 4604, 113 Stat. 1501A-552, 1501A-567 to -570 (enacting provisions for inter partes reexamination), amended by AIA, Pub. L. No. 112-29, sec. 6(a), §§ 311–318, 125 Stat. 284, 299–304 (2011). Though both processes allowed challenges on the same limited substantive grounds, they differed procedurally. Under ex parte reexamination, patent owners, as well as third parties, 72 This Note will use the term “third-party challengers” to refer to those seeking to invalidate a patent either on an ex-post or ex-ante basis. were allowed to request that the PTO initiate proceedings. 73 See 35 U.S.C. § 301 (noting any person may solicit PTO to initiate ex parte reexamination proceedings). But once reexamination began, only patent owners were entitled to communicate with the PTO; this essentially left third parties out of the process. 74 See id. § 305 (stating ex parte reexamination proceedings should be conducted “according to the procedures established for initial examination,” while not providing for any third-party participation); see also Baughman, supra note 69, at 352 (remarking “only the patent owner communicat[es] with the USPTO examiner” in ex parte reexaminations). By contrast, in inter partes reexamination, only third parties were allowed to solicit the PTO, 75 35 U.S.C. § 311 (2006), amended by 35 U.S.C. § 311 (2012). and they “enjoy[ed] more ongoing participation”—including the right to respond to decisions from the PTO. 76 Baughman, supra note 69, at 352; see also 35 U.S.C. § 314(b)(2) (2006) (allowing third parties to file written comments), amended by 35 U.S.C. § 314 (2012).

Both procedures were vehicles for the PTO to reconsider—that is, reexamine—a patent’s validity. For a reexamination request to be approved, however, a “substantial new question of patentability” had to be raised by a particular kind of prior art, namely patents and printed publications. 77 See 35 U.S.C. §§ 301–303 (detailing when ex parte reexamination is proper); 35 U.S.C. §§ 311–312 (2006) (same for inter partes reexamination), amended by 35 U.S.C. §§ 311–312 (2012). Consequently, reexamination procedures were restricted to questions of novelty and nonobviousness. 78 See Manzo, supra note 10, § 16.1, at 294 (“This left other types of prior art or other types of challenges, e.g., Section 101 and 112 issues, to be dealt with by courts or administrative agencies where patents are enforced.”); Oblon Spivak, supra note 17, § 1:2.1, at 8–9 (noting reexamination procedures did not allow § 101 aspects to be addressed). This restriction forced those who wished to bring a challenge based on a patent’s lack of patentable subject matter to litigate their disputes—an aspect of patent law Congress sought to change when enacting the AIA. 79 “The legislative history of the AIA also makes clear that Congress intended the PTAB to consider challenges brought under § 101 in post-grant reviews.” David Kappos, PTAB and Patentability Challenges, U.S. Patent & Trademark Office Dirs. Forum: A Blog from USPTO’s Leadership (Sept. 24, 2012, 4:44 pm), [] [hereinafter Kappos, Challenges].

2. Subject-Eligibility Challenges in the Wake of the AIA. — Though ex parte and inter partes reexamination resolved some patent-validity claims, many critics believed these proceedings were not being utilized to their full potential. 80 See Oblon Spivak, supra note 17, § 1:2.1, at 10 (“The fact that inter partes reexamination was not being used as a true alternative to litigation was a significant motivation underlying the call for the creation of a new post-grant review proceeding.”). In response, Congress sought to develop post-grant procedures that would truly be efficient and cost-effective substitutes for litigation. 81 These purposes are evident in the legislative history of the AIA. For example, the American Intellectual Property Association (AIPLA) testified on the expense and length of patent litigation before Congress in 2004. See Patent Quality Improvement: Post-Grant Opposition: Hearing Before the Subcomm. on Courts, the Internet, and Intellectual Prop. of the H. Comm. on the Judiciary, 108th Cong. 29 (2004) (statement of Michael R. Kirk, Executive Director, American Intellectual Property Law Association (AIPLA)) (“Litigation is very expensive . . . , and final decision is not reached for . . . 2 to 3 years.”); cf. Tamimi, supra note 17, at 591 & n.26 (noting AIPLA testimony, along with other congressional hearings held with respect to patent reform). Over the course of several years, Congress proposed various iterations, some of which extended the scope of administrative review to permit comprehensive administrative challenges throughout the life of the patent. 82 See Oblon Spivak, supra note 17, § 1:2.2, at 12–15 (describing various approaches proposed legislation took to key issues, including timing and scope of review); Joe Matal, A Guide to the Legislative History of the America Invents Act: Part II of II, 21 Fed. Cir. B.J. 539, 600–04 (2012) [hereinafter Matal, Guide Part II] (providing history of post-grant procedure legislation). However, support for this approach waned, and Congress eventually embraced substantially more limited post-grant proceedings. 83 Matal, Guide Part II, supra note 82, at 603–04 (noting PTO backtracked on initial support of broad post-grant proceedings and Congress ultimately acquiesced to more limited approach).

The AIA ultimately instituted three new PTO-administered post-grant proceedings: post-grant review, inter partes review, and covered business method patent review. 84 See supra note 17 (noting comprehensive background material on PGR, IPR, and CBMR). Third parties can bring a PGR petition only for patents first issued on applications filed after the AIA’s effective date 85 AIA, Pub. L. No. 112-29, sec. 6(f)(2)(A), 125 Stat. 284, 311 (2011). and must do so within a nine-month window after the patent is granted. 86 35 U.S.C. § 321(c) (2012). After this nine-month period expires, third parties may challenge a patent through IPR. 87 Id. § 311(c); see also 37 C.F.R. § 42.102(a)(1) (2014) (noting time of filing). While PGR is fairly narrow in scope, at IPR all patents can be challenged—including those filed before the institution of the AIA. 88 AIA sec. 6(c)(2)(A), 125 Stat. at 304. The final type of post-grant practice, CBMR, is a transitional program that present legislation will sunset in 2020. 89 Id. sec. 18(a)(3)(A), 125 Stat. at 330; see also Tamimi, supra note 17, app. at 643 tbl.A1 (noting sunset provision of CBMR). CMBR was enacted in response to the Supreme Court’s decision in Bilski, which made clear the dubious validity of the “flood of business method patent filings at the PTO” and established a faster and cheaper path to resolving issues concerning them. 90 See Tamimi, supra note 17, at 592–93 (discussing adoption of CBMR and remarking on contentiousness of debate). CBMR is only available to third parties who have been “sued” or “charged with” infringing a business method patent, defined as one related to financial services. 91 AIA sec. 18(a)(1)(B), (d)(1), 125 Stat. at 330–31; see also 37 C.F.R. § 42.302(a) (“Charged with infringement means a real and substantial controversy regarding infringement of a covered business method patent exists such that the petitioner would have standing to bring a declaratory judgment action in Federal court.”).

In creating these mechanisms, Congress rejected an “examination-based model of reexamination” in favor of a more “adjudicative model . . . , where the third-party requester has the burden of proof.” 92 Oblon Spivak, supra note 17, § 1:2.1, at 10 (footnote omitted). Post-grant proceedings are now conducted in a trial-like setting before a three-member panel of the Patent Trial and Appeal Board. 93 See 35 U.S.C. § 6(b)–(c) (2012) (providing PTAB “shall . . . conduct inter partes reviews and post-grant reviews”); 37 C.F.R. § 42.300 (noting CBMR is trial before PTAB). Proceedings will include filing of documents, conducting discovery, taking witnesses, and even oral hearings. See id. §§ 42.1–.80 (detailing trial practice and procedure for PTAB). The PTAB then issues a written decision no later than one year after the review procedures are initiated. 94 This timeline may be extended by six months if good cause is shown. See 35 U.S.C. § 316(a)(11) (providing timeline for IPR); id. § 326(a)(11) (same for PGR). Importantly, these decisions, if unfavorable to petitioners, subsequently estop them and their privies from later asserting invalidity “on any ground that the petitioner raised or reasonably could have raised” during review. 95 For IPR and PGR, “reasonably could have raised” extends to both any subsequent review in front of the PTO and any civil proceeding. 35 U.S.C. §§ 315(e), 325(e). For CBMR, however, estoppel for civil actions is somewhat narrower, limited to any ground that was actually raised before the PTO. AIA sec. 18(a)(1)(D), 125 Stat. at 330.

Although PGR, IPR, and CBMR either overlap or diverge in a number of other procedural and substantive respects, most of these interactions are beyond the scope of this Note. 96 See Tamimi, supra note 17, app. at 642–43 tbl.A1, for a comparison of all three post-grant proceedings in useful table format. Indeed, this Note focuses on the fact that PGR and CBMR allow subject-matter eligibility challenges as grounds for review, 97 See 35 U.S.C. § 321(b) (allowing claims that could be raised under “paragraph (2) or (3) of section 282(b) (relating to invalidity of the patent or any claim)” for PGR); AIA sec. 18(a)(1), 125 Stat. at 329–30 (implementing claim limitations of PGR to CBMR). These cited sections do not explicitly list § 101. Subsequent case law and then-director of the PTO David Kappos clarified that this provision of the AIA includes challenges based on subject-matter eligibility. See SAP Am., Inc. v. Versata Dev. Grp., Inc., No. CBM2012-00001 (MPT), 2013 WL 5947661, at *15–17 (P.T.A.B. Jan. 9, 2013) (determining § 101 was permissible grounds for challenging at CBMR); Kappos, Challenges, supra note 79 (noting PTO’s position subject-matter eligibility challenges can be brought at PGR and CBMR).

Here, it is also important to note that § 101 is not the only type of invalidity challenge that is only available at PGR. For example, for the first nine months of a patent’s life, third parties can challenge a patent on the basis of a failure to comply with § 112 of the Patent Act. Cf. 35 U.S.C. § 282(b) (listing § 112 as available defense). Section 112 lays out important specification requirements such as definiteness and adequate written description. Id. § 112(a)–(b). Limiting these types of challenges to PGR also has broad implications for patent litigation that merit more in-depth discussion than this Note can provide.
while a party may only initiate IPR to hear challenges based on novelty and nonobviousness. 98 35 U.S.C. § 311(b). In practical effect, for the first nine months following patent issuance, third-party challengers are free to bring nearly any challenge based on patent validity. 99 This statement leaves CBMR proceedings aside; the nine-month barrier refers to the length of time a third party can request PGR proceedings. Id. § 321(b)–(c). The subsequent focus of this Note will be on comparing PGR and IPR. Upon passage of this nine-month barrier, however, third parties are limited with respect to what challenges they can bring before the PTO. 100 IPR proceedings are limited to nonobviousness and novelty grounds. Id. § 311(b). As a result, if a third party wishes to challenge a patent’s validity solely on statutory subject-matter grounds, it must proceed through the court system. Part II will explore this dichotomy further by considering the purposes and practical effects of this barrier.

II. Post-Grant Review to Inter Partes Review: Implications of a Nine-Month Barrier

For parties wishing to challenge a patent’s validity solely on the grounds of statutory subject matter, nine months post-issuance represents a barrier; this is the point at which parties can no longer raise the judicial exceptions before the PTO; instead, they must proceed through the courts. 101 See supra section I.C.2 (noting various administrative post-grant challenges instituted in wake of AIA: IPR, PGR, and CBMR). Part II aims to further understand the dichotomy that exists between IPR and PGR for subject-matter eligibility challenges. Section II.A contextualizes the barrier by analyzing the practical timeline of the nine-month limit, comparing and contrasting it to other time restrictions, and examining Congress’s decision to include the additional first-to-file restriction. Section II.B then examines the IPR–PGR dicho­tomy on a more practical level, considering its effect on various parties to patent litigation. Finally, section II.C ponders institutional competence concerns of administrative subject-matter eligibility challenges and questions the effect of the nine-month barrier on patent litigation as a whole.

A. Contextualizing the Nine-Month Barrier

A thorough understanding of the implications of the nine-month barrier begins by appropriately framing the IPR–PGR dichotomy. Such an analysis involves comparing and contrasting the nine-month barrier to similar procedural restrictions and then moving beyond the temporal restriction to examine why Congress imposed an additional limitation to the nine-month barrier—limiting it to first-to-file patents. First, however, this Note considers whether subject-matter eligibility challenges before the PTO are as strictly limited as they initially appear.

1. The Practical Timeline of the Nine-Month Barrier. — This Note labels the time limit for a third party’s subject-matter eligibility challenge before the PTO a “nine-month barrier,” 102 See supra notes 99–100 and accompanying text (describing post-issuance timeframe to when PGR is no longer available as “nine-month barrier”). but the terminology is somewhat misleading if meant to measure the time available to consider a challenge. To be sure, a third-party challenger has only nine months after a patent has issued to file a PGR petition, 103 35 U.S.C. § 321(c). after which subject-matter eligibility claims are foreclosed. 104 Id. § 311(b). But this nine-month barrier does not realistically represent the amount of time a party has to consider challenging a patent’s validity based on subject-matter eligibility. Third parties may only request the PTO institute PGR on a patent that has been granted. 105 Cf. id. § 321(a) (providing only for review “of the patent”—not application). But this does not prevent an attentive third party, 106 An attentive third party may include an inventor monitoring applications to ensure they are not precluded from filing a patent on their invention or companies with extensive patent portfolios who keep themselves well apprised of their competitors’ actions. See id. § 102(a)(2) (barring patent eligibility if invention has already been described in another patent application); Joseph M. Barich, Pre-Issuance Publication of Pending Applications: Not So Secret Anymore, 2001 U. Ill. J.L. Tech. & Pol’y 415, 421 (“Because the entire prosecution history of the patent application becomes transparent after eighteen months, competitors are now able to monitor the patent efforts of another company in ways that were simply not possible under the previous system.”). For a broader discussion on who might be well placed to immediately challenge a patent’s validity, see infra section II.B. aware that a patent application is in the pipeline, from preparing in advance to challenge a patent’s validity through PGR.

The statute mandates the PTO maintain patent applications in secret for eighteen months. 107 35 U.S.C. § 122(a)–(b). Most are then disclosed, and curious patent aficionados can freely access both the application and its ongoing prosecution online. 108 See Patent Full-Text Databases, U.S. Patent & Trademark Office, [] (last modified May 1, 2015) (publishing patent applications); cf. 37 C.F.R. § 1.211 (2014) (“Each U.S. national application for patent filed in the Office . . . will be published promptly after the expiration of a period of eighteen months from the earliest filing date . . . .”). As a result, in practical terms, attentive third parties are not limited to a nine-month window when deciding whether to bring a petition for PGR; the period between application publication and patent issuance is also available. Consequently, the amount of time open to third parties varies depending on the length of time the patent takes to issue.

From 2010 to 2014, the average length of time it took to receive a first office action—an initial determination from the examiner either rejecting the patent application or allowing the patent to issue 109 An office action also allows the examiner to indicate to the applicant in writing the reasons for the action. See MPEP § 707 (9th ed. Mar. 2014) (describing examiner office action). —ranged from 18.2­ to 28 months. 110 2014 U.S. Pat. & Trademark Off. Performance & Accountability Rep. 30, [] [hereinafter U.S. Patent & Trademark Office, Performance]. Moreover, across the same period, the average time from filing until issuance or abandonment of the patent application spanned from 29.1 to 35.3 months. 111 Id. Indeed, “fewer than 10% percent of [patents] filed before 2009 are still pending.” Dennis Crouch, Status of US Patent Applications, Patently-O (Oct. 11, 2014), []. As a result, a patent application will generally be published shortly before the applicant receives her first office action and more than ten months before the application obtains an ultimate resolution. Instead of a nine-month window, therefore, an attentive third party may have over two years 112 To illustrate this point, suppose a patent was filed January 1, 2014. Eighteen months later, on July 1, 2015, this patent application will be published. As explained, it may take another eighteen months (a total of thirty-six months from initial filing) for the patent to issue, and then a third-party challenger has an additional nine months to initiate PGR proceedings. Therefore, an attentive third party would theoretically have from July 1, 2015, until October 1, 2017, to consider filing a PGR petition. to consider the patentability of a potentially problematic patent and to prepare a PGR petition on the basis of a judicial exception. 113 The assumption that an attentive third party will be able to find relevant applications is not immune from criticism. Mark Chandler of Cisco Systems expressed the high-technology sector’s reservations about the notion that relevant patent applications are easily monitored:

“A technology company . . . cannot know at the time a patent is issued . . . whether that patent might become relevant to the company’s business sometime in the future. Indeed, even when a technology business is developing a new device or a new computer program, it often is extraordinarily difficult—notwithstanding the business’s best efforts—to identify all of the existing patents, let alone pending patent applications, that may be relevant to each of the hundreds or even thousands of components that make up that new product.”

Perspectives on Patents: Post-Grant Review Procedures and Other Litigation Reforms: Hearing Before the Subcomm. on Intellectual Prop. of the S. Comm. on the Judiciary, 109th Cong. 45 (2006) (statement of Mark Chandler, Senior Vice President and General Counsel, Cisco Systems). Supposing the truth of this assertion, even an attentive third party may be hard-pressed to take advantage of the time between publication of the patent application and issuance; all parties are therefore left with nine months.
Accordingly, although a statutorily mandated rule, the barrier’s timeline is more flexible in practice.

2. Subject-Matter Eligibility Challenges and Lessons from Statutes of Limitations. — Despite the flexibility it affords in practice, the nine-month barrier bears hallmarks of the similarly procedurally restrictive statutes of limitations. Statutes of limitations are designed to establish a specific point in time “at which a party can no longer bring an action or suit in law or equity.” 114 Peter G. Brassard, Comment, Is There a Statute of Limitations for Skiing on Filled Wetlands? Interpreting 28 U.S.C. § 2462 After United States v. Telluride Co., 23 B.C. Envtl. Aff. L. Rev. 885, 887 (1996). By confining subject-matter eligibility challenges before the PTO to nine months post-issuance, Congress denied parties access to § 101 invalidity claims in a manner that, at least procedurally, mimics statutes of limitations and emphasizes the importance of bringing subject-matter eligibility challenges early.

The policy rationale underlying statutes of limitations is that “it is unjust not to put the adversary on notice to defend within the period of limitation and that the right to be free of stale claims in time comes to prevail over the right to prosecute them.” 115 Order of R.R. Telegraphers v. Ry. Express Agency, Inc., 321 U.S. 342, 349 (1944); see also David D. Siegel, New York Practice: Practitioner Treatise Series § 33, at 43 (5th ed. 1991) (“‘The Statute of Limitations was enacted to afford protection to defendants against defending stale claims after a reasonable period of time had elapsed during which a person of ordinary diligence would bring an action. The statutes embody an important policy of giving repose to human affairs.’” (quoting Flanagan v. Mount Eden Gen. Hosp., 248 N.E.2d 871, 872 (N.Y. 1969), superseded by statute, N.Y. C.P.L.R. 214-a (McKinney 2006), as recognized in LaBarbera v. N.Y. Eye & Ear Infirmary, 230 A.D.2d 303, 306 (N.Y. App. Div. 1997))). Encouraging plaintiffs to bring their claims early also promotes judicial efficiency, summarily granting courts leave to avoid confronting “old or stale litigation.” 116 Brassard, supra note 114, at 888. Moreover, such a bright-line rule conveys “stability and consistency” to the parties of a transaction. 117 Id. If they are too strict, however, statutes of limitations prevent “fair, meritorious claims the chance of even being heard.” 118 Henry G. Miller, Statute of Limitations: An Immoral Defense?, N.Y. St. B. Ass’n J., Mar./Apr. 2011, at 24, 25. Thus, mechanisms have developed to soften their effect. As an example, the discovery rule ensures the clock only begins to run if the claim at issue “has been or should have been discovered with reasonable diligence.” 119 Joseph Cioffi & James R. Serritella, When Is It Too Late for Investors to Bring RMBS-Related Claims?, 130 Banking L.J. 813, 814 (2013). Each individual event can also give rise to a new cause of action, thus tolling a statute of limitations. 120 See Darin Snyder, Marcus Quintanilla & Michael Myers, Statute of Limitations and Trade Secret Claims: Some Answers and Some Questions, Intell. Prop. & Tech. L.J., Aug. 2008, at 1, 2 (“One view held that each instance in which a defendant misused a given [trade] secret gave rise to a new cause of action.”). There is, however, another view whereby “each such instance [is] subsumed with a ‘single claim’” that begins the statute of limitations. Id.

In the intellectual property context, only copyright-infringement 121 See 17 U.S.C. § 507(b) (2012) (“No civil action shall be maintained under the provisions of [the copyright] title unless it is commenced within three years after the claim accrued.”). and trade-secret-misappropriation claims 122 Unif. Trade Secrets Act § 6, 14 U.L.A. 649 (2005) (“An action for [trade-secret] misappropriation must be brought within 3 years after the misappropriation is discovered or by the exercise of reasonable diligence should have been discovered.”). The statute of limitations for trade secrets begins to run on actual or constructive discovery. See Snyder, Quintanilla & Myers, supra note 120, at 2 (finding notice requirement instituted “in order to mitigate the harsh result that a claim could become time barred before the would-be plaintiff had any reasonable way to know that a misappropriation had occurred”). have statutorily mandated time restrictions. Neither trademark- 123 Ronald J. Nessim, Criminal (and Civil) Trademark Infringement: What Statute of Limitations Applies?, 76 J. Pat. & Trademark Off. Soc’y 933, 936 (1994). nor patent- 124 Though the AIA limits recovery if the infringing action occurred over six years before a complaint was filed, it does not preclude parties from bringing the action. 35 U.S.C. § 286 (2012); see also A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1030 (Fed. Cir. 1992) (“[S]ection 286 is not a statute of limitations in the sense of barring a suit for infringement.”). infringement claims are similarly expressly limited. Instead, to prevent patent owners from “sleeping on their rights,” the doctrine of laches is available as an equitable defense for alleged infringers. 125 Aukerman, 960 F.2d at 1031. Laches is not only a bar to monetary remedies but also to legal claims. Id. Laches is also available in trademark law; there, it is not only available at common law but written directly into the statute. 15 U.S.C. § 1115(b)(9) (2012). Of note, whether or not the defense of laches will continue to be available in patent cases is currently before an en banc panel of the Federal Circuit. See SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, No. 2013-1564, 2014 WL 7460970 (Fed. Cir. Dec. 30, 2014) (order granting petition for rehearing en banc). Instead of a bright-line rule, laches “invokes the discretionary power of the district court to limit the defendant’s liability for infringement . . . .” 126 Aukerman, 960 F.2d at 1030. A defendant must prove the following in order to invoke the laches defense in a patent-infringement suit: (1) “[T]he plaintiff delayed filing suit for an unreasonable and inexcusable length of time from the time the plaintiff knew or reasonably should have known of its claim against the defendant, and” (2) “the delay operated to the prejudice or injury of the defendant.” Id. at 1032. A delay of six years brings a rebuttable presumption of laches. Id. at 1035.

Beyond the procedural mimicry of the nine-month barrier to statutes of limitations, the IPR–PGR dichotomy serves some of the same policy purposes. 127 See supra notes 115–120 and accompanying text (noting policy rationale of statutes of limitations). First, the nine-month barrier aims to prevent third parties from sleeping on their right to bring a subject-matter eligibility challenge. Evidence suggests third parties are reticent to challenge even bad patents. 128 Cf. Roger Allan Ford, Patent Invalidity Versus Noninfringement, 99 Cornell L. Rev. 71, 90 (2013) (“Patent litigants, like all litigants, are risk averse, with both sides having incentives to license even invalid patents.”); Jay P. Kesan & Andres A. Gallo, Why “Bad” Patents Survive in the Market and How Should We Change?—The Private and Social Costs of Patents, 55 Emory L.J. 61, 70 (2006) (“[I]ncorrectly issued patents can survive in the market without judicial review, even when the invention is neither novel nor nonobvious.”). The nine-month barrier alleviates this problem, encouraging “preemptive strikes.” 129 Although too early to tell with PGR, from September 2012 to November 2013, there were eighty-five total IPRs that were instituted with no associated litigation, in comparison to 610 that were instituted with litigation. Gregory J Gonsalves, TC Beckett & Barry Leff, Trends in Inter Partes Review and Covered Business Method Review, Intell. Asset Mgmt. Mag., Mar./Apr. 2014, at 20, 23, 25,
Magazine/Issue/64/Features/Trends-in-inter-partes-review-and-covered-business-method-review (on file with the Columbia Law Review). This data suggests new post-grant proceedings in general might be used as a preemptive strike.
While a claim of invalidity is a common response to an infringement charge, 130 See Ford, supra note 128, at 77–87 (discussing two main defenses to patent-infringement claim, patent invalidity and noninfringement). a third party may be more apt to proactively bring such an action before the PTO while subject-matter eligibility challenges are available. Second, after nine months, third parties can still raise § 101 issues for the first time before a court once administrative remedies are no longer at their disposal. This tempers the harshness of the nine-month barrier and ensures meritorious claims are resolved, drawing similarities to the discovery rule and other means of tolling statutes of limitations. 131 See supra notes 118–120 and accompanying text (describing measures to soften harshness of statutes of limitations). Finally, restricting administrative subject-matter eligibility challenges may bring much-needed clarity to the judicial exceptions. 132 See supra section I.B.2 (discussing ambiguity of § 101 jurisprudence in wake of recent Supreme Court decisions). Because of the limited timeframe of PGR, third parties are likely to bring only easily resolvable claims to the PTO. As a result, only more complex subject-matter eligibility questions will reach the dockets of Article III judges. 133 Whether judges are the appropriate body to resolve these complex issues is a separate issue this Note will also consider. See infra section II.C.1 (addressing subject-matter eligibility and institutional competence). The IPR–PGR dichotomy may therefore increase judicial efficiency, allowing resolution of more nuanced aspects of the judicial exceptions.

But the nine-month barrier does not perfectly mirror statutes of limitations. Subject-matter eligibility claims are not “stale” after the passage of nine months. 134 See supra notes 115–120 and accompanying text (remarking staleness of claims underlies adoption of statutes of limitations). Third-party challengers are still able to bring these actions before the courts. And alternative claims of invalidity, predicated on novelty or nonobviousness, can still freely be heard by the PTAB; 135 35 U.S.C. § 311(b) (2012). these challenges may even significantly overlap with those invoking the judicial exceptions. 136 See supra note 62 and accompanying text (noting criticism subject-matter eligibility challenges and allegations of obviousness or lack of novelty are redundant). Moreover, subject-matter eligibility claims are a matter of law, 137 CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1369 (Fed. Cir. 2011); accord In re Roslin Inst. (Edinburgh), 750 F.3d 1333, 1335 (Fed. Cir. 2014) (noting § 101 patent eligibility is matter of law); Fort Props., Inc. v. Am. Master Lease LLC, 671 F.3d 1317, 1320 (Fed. Cir. 2012) (same). within the courts’ exclusive purview and independent of reliance upon witnesses or evidence whose authenticity becomes questionable over time. These questions are therefore more immune from the time-sensitive nature of evidence—a driving force behind strict statutes of limitations in other areas of law. 138 See Order of R.R. Telegraphers v. Ry. Express Agency, Inc., 321 U.S. 342, 348–49 (1944) (“Statutes of limitation . . . are designed to promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared.”).

Analogizing to laches is similarly somewhat unsatisfactory. As an equitable remedy, laches, unlike the nine-month barrier, is discretionary, not mandatory. Moreover, both statutes of limitations and laches protect the infringer, 139 See supra notes 125–126 and accompanying text (describing laches). whereas the nine-month barrier operates to the benefit of the patentee. A more comparable cause of action to an administrative subject-matter eligibility challenge is one seeking a declaratory judgment of invalidity. 140 See 28 U.S.C. § 2201 (2012) (describing remedy). Notably, such motions are not subject to time limitations under the Declaratory Judgment Act. 141 “But the passage of time does not counsel against finding declaratory judgment jurisdiction if ‘the relevant circumstances’ surrounding the patentee’s assertion of patent rights ‘have not changed despite the passage of time.’” 3M Co. v. Avery Dennison Corp., 673 F.3d 1372, 1380–81 (Fed. Cir. 2012) (quoting Ass’n for Molecular Pathology v. U.S. Patent & Trademark Office, 653 F.3d 1329, 1346 (Fed. Cir. 2011), aff’d in part, rev’d in part sub nom. Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107 (2013)). Despite the lack of perfect comparison, the parallels between the nine-month barrier and other temporal restrictions highlight the importance of the IPR–PGR dichotomy in encouraging third parties to bring their subject-matter eligibility challenges early.

3. Further Restricting the Nine-Month Barrier: Limiting to First-to-File Patents. — The nine-month barrier is also not the only major limitation Congress has imposed on PGR petitions. As explained, PGR is only available as an administrative option if the patent at issue was first filed after the AIA came into effect. 142 AIA, Pub. L. No. 112-29, sec. 6(f)(2)(A), 125 Stat. 284, 311 (2011). Imposing such an anti-retroactive measure helps ensure the constitutionality of allowing the PTO to hear subject-matter eligibility challenges. The Takings Clause protects private property, such that it cannot “be taken for public use, without just compensation.” 143 U.S. Const. amend. V. The doctrine of takings has led to a rich body of case law with respect to real property. 144 Cf., e.g., Palazzolo v. Rhode Island, 533 U.S. 606, 617 (2001) (“[A] taking nonetheless may have occurred, depending on a complex of factors including the regulation’s economic effect on the landowner, the extent to which the regulation interferes with reasonable investment-backed expectations, and the character of the government action.”); Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1030 (1992) (“When . . . a regulation that declares ‘off-limits’ all economically productive or beneficial uses of land goes beyond what the relevant background principles would dictate, compensation must be paid to sustain it.”); Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 441 (1982) (“We affirm the traditional rule that a permanent physical occupation of property is a taking.”); Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124 (1978) (determining question of whether “economic injuries caused by public action [should] be compensated by the government” depends on “ad hoc, factual inquiries”); Pa. Coal Co. v. Mahon, 260 U.S. 393, 413 (1922) (invoking “extent of the diminution” test); Hadacheck v. Sebastian, 239 U.S. 394, 410–12 (1915) (finding ordinance at issue was sufficient nuisance such that it was within state police power to regulate without just compensation). Its application to intellectual property, however, is unclear and has merited substantial scholarly debate. 145 Compare Adam Mossoff, Patents as Constitutional Private Property: The Historical Protection of Patents Under the Takings Clause, 87 B.U. L. Rev. 689, 724 (2007) (concluding courts have historically ruled patents are constitutionally protected private property), with Davida H. Isaacs, Not All Property Is Created Equal: Why Modern Courts Resist Applying the Takings Clause to Patents, and Why They Are Right to Do So, 15 Geo. Mason L. Rev. 1, 43 (2007) (“[P]atentholders are not entitled to assert takings claims.”). The Federal Circuit has made at least one clarification about the Takings Clause’s applicability to patent law. In Zoltek Corp. v. United States, the court held that patent holders could not bring an action against the government for infringement under the Takings Clause. 442 F.3d 1345, 1350 (Fed. Cir. 2006), vacated as moot, 672 F.3d 1309, 1327 (Fed. Cir. 2012). Adam Mossoff describes the principal argument against applying takings to an inventor’s patent: “The government’s unauthorized use of a patented invention . . . lacks the physical dispossession that triggers a compensable taking of land . . . . [It] does not interfere with a patentee’s own use of the invention, and, more importantly, the patentee can continue to exclude others from using it.” 146 Mossoff, supra note 145, at 721 (emphasis omitted) (footnote omitted). But the Supreme Court has yet to explicitly address whether takings operates more generally in the realm of patent law.

Hypothetically, a party challenging the PTO decision to invalidate a patent on the basis of § 101 would argue that the government is appropriating an individual’s intellectual property for public use—an action requiring “just compensation.” 147 U.S. Const. amend. V. Takings case law, however, does not support this argument. The PTO’s invalidation of a patent on the basis of the judicial exceptions does not deprive an owner of all economically beneficial use and is therefore inappropriately framed as a per se taking. 148 See Palazzolo, 533 U.S. at 617 (relying on Lucas to note regulation, which deprives real property of all value is per se taking). The inventor is still able to profit off the use or sale of the invention and can continue to make personal use of it. 149 This raises a similar anti-takings argument to that expressed by Mossoff. See Mossoff, supra note 145, at 721 (articulating main argument against applying takings to patent law).

Further, the new administrative challenges do not infringe upon a patent owner’s “reasonable investment-backed expectations.” 150 Palazzolo, 533 U.S. at 617 (stating factors courts analyze when regulation “fall[s] short of eliminating all economically beneficial use”). Through ex parte and inter partes reexamination, the PTO has been able to invalidate patents on the basis of novelty or nonobviousness for over fifteen years. 151 See supra notes 70–71 and accompanying text (discussing enactment of ex parte and inter partes reexamination). Thus, current patent owners have advance notice that the PTO could invalidate their patents on the grounds available at IPR. 152 A patent’s term extends to twenty years post-filing. 35 U.S.C. § 154(a)(2) (2012). As a result, current patent owners would have filed after the institution of ex parte reexamination, and most would even have done so after inter partes reexamination came into effect. See supra notes 70–71 and accompanying text (noting ex parte and inter partes reexaminations were enacted in 1980 and 1999, respectively). Inter partes reexamination was also limited to those patents filed after it had been signed into law. American Inventors Protection Act of 1999, Pub. L. No. 106-113, § 4608, 113 Stat. 1501, 1501A-572. By limiting subject-matter eligibility challenges to patents granted after the institution of the AIA, Congress similarly provided that advance notice for grounds available at PGR—such as subject-matter eligibility. 153 It is notable that in Patlex Corp. v. Mossinghoff, a takings claim was unsuccessfully brought in an attempt to strike ex parte reexamination as unconstitutional even though there was retroactive effect. 758 F.2d 594, 602–03 (Fed. Cir. 1985). In that case, “overriding public purposes” were sufficient to ensure the constitutionality of the retroactive provision. Id. at 603. An anti-retroactive provision in PGR makes reaching a determination of whether or not “overriding public purposes” exist unnecessary. AIA, Pub. L. No. 112-29, sec. 6(f)(2)(A), 125 Stat. 284, 311 (2011).

B. Practical Effects: Benefits and Detriments of the Nine-Month Barrier for Third Parties

The statutory limitations and restrictions discussed above have important implications for the IPR–PGR dichotomy. In particular, the nine-month barrier results in differences between the compositions of parties fighting invalidity before the courts and those before the PTO. As of June 18, 2015, only nine PGR requests have been filed, in sharp contrast with 3,083 petitions filed for IPR. 154 U.S. Patent & Trademark Office, Patent Trial and Appeal Board AIA Progress 1 (June 18, 2015), [] [hereinafter U.S. Patent & Trademark Office, AIA Progress]; see also Dennis Crouch, The New Role for Post Grant Review Proceedings (PGR), Patently-O (Oct. 8, 2014), [] [hereinafter Crouch, New Role] (detailing factual circumstances surrounding two PGR petitions). The limited timeframe of PGR is unlikely solely responsible for the present disparity in filing statistics. As just explained, PGR is limited to first-to-file patents while IPR is available for all patents—automatically reducing the number of patents for which PGR is an option, especially for the years immediately following PGR’s availability. 155 See supra notes 85, 88 and accompanying text (noting restriction to patent type for IPR and PGR). But even in the event that PGR does become more heavily utilized in the next few years, 156 The dearth of reexamination petitions being filed was a major impetus to overhauling post-grant proceedings. See supra notes 80–83 and accompanying text (summarizing briefly move from reexaminination to new post-grant proceedings). discrepancies in filing statistics would continue because the limited timeframe still necessarily constricts the number of PGR petitions that can be filed. The result would not only be a gap in the number of petitions but also a distinction in the makeup of third parties bringing an IPR versus PGR petition.

When Congress passed the post-grant provisions of the AIA, it intended to make challenging a patent’s validity more cost effective. 157 See supra note 81 and accompanying text (noting congressional intent of post-grant proceedings). Patent litigation is “the true sport of kings,” with litigation expenditures costing millions of dollars. 158 See Todd Hixon, For Most Small Companies, Patents Are Just About Worthless, Forbes (Oct. 4, 2013, 12:57 am), [] (“Enforcing your patent in the courts is a nightmare. Plan on 3–5 years and $3–$5 million to get to a judgment. And then there is the appeal.”); see also Jim Kerstetter, How Much Is that Patent Lawsuit Going to Cost You?, CNET (Apr. 5, 2012, 10:00 am), [] (delineating theoretical bill breakdown for patent lawsuit). As a result, larger companies benefit from having the resources to more easily manage such extensive bills and see litigation through to trial. 159 See Jeff Canter, It’s Time to Make the Plaintiff Responsible for Predatory Patent Litigation, Forbes (Mar. 13, 2014, 6:25 am), [] (“Companies like Apple and Samsung have charged shoulder first into patent litigation battles for one obvious reason: they have enough money to win and cripple competitors.”). Post-grant proceedings are intended to “level[] the playing field.” 160 “[T]he goal of the new America Invents Act is to create not just the simplest possible patent system, or the most precise patent system, but rather the most innovation-friendly and inventor-friendly patent system that reduces costs, levels the playing field for businesses small and large, and spurs economic growth.” David Kappos, Under Sec’y of Commerce for IP & Dir. of the USPTO, The America Invents Act and a Global Call for Harmonization (Sept. 22, 2011),
2011/kappos_wipo.jsp [].
Costs are estimated in the hundreds of thousands of dollars range—a figure ostensibly more manageable for individuals or smaller companies. 161 See Gonsalves, Beckett & Leff, supra note 129, at 20 (noting cost of post-grant proceedings is “not cheap” but is “still much less expensive than seeking to invalidate a patent in federal court”). Whether “the little guy” 162 As used here, the moniker the “little guy” refers to less influential players in the corporate world: smaller companies, start-up corporations, and individual entrepreneurial inventors. is accorded any competitive advantage in bringing subject-matter eligibility challenges before the PTO, however, is less certain. To explore this question, this section first examines which third parties can bring subject-matter eligibility challenges in post-grant proceedings. It does so by looking at defensive challenges in reaction to an adversarial infringement suit as well as invalidity challenges that are used offensively as a means of proactively invalidating a competitor’s patent. This section then ends by pondering the effect of the nine-month barrier on suits involving non-practicing entities (NPEs).

1. On the Defensive: Post-Grant Proceedings as a Response to an Infringement Suit. — With respect to defensive invalidity challenges, the IPR–PGR dichotomy does not disparately advantage any particular third party, whether they are a large conglomerate or an individual inventor. The nine-month barrier does, however, affect patent owner behavior. Post-grant proceedings are already being used as a response to infringement actions; “in 80 percent of IPRs, the challenged patent was also asserted in litigation between the petitioner and respondent.” 163 Brian J. Love & Shawn Ambwani, Inter Partes Review: An Early Look at the Numbers, 81 U. Chi. L. Rev. Dialogue 93, 103 (2014). Also, recall a suit for infringement must accompany a petition for CMBR. AIA, Pub. L. No. 112-29, sec. 18(a)(1)(B), 125 Stat. 284, 330 (2011). The prevalence of this defensive use of post-grant proceedings is unsurprising given that counterclaims of invalidity frequently accompany assertions of infringement 164 See Ill. Comput. Research LLC v. HarperCollins Publishers, Inc., No. 10 Civ. 9124(KBF), 2012 WL 163801, at *1 (S.D.N.Y. Jan. 19, 2012) (describing “matter of course” procedure for patent litigation, whereby defendants accused of infringement “very frequently” assert counterclaim of invalidity). and the cost-saving nature of the administrative route. But though IPR and PGR are similarly cost effective, 165 The filing fees are comparable for IPR and PGR. 37 C.F.R. § 42.15 (2014) (noting filing fees for both proceedings); see also supra notes 157–161 and accompanying text (noting overall cost savings of post-grant proceedings as compared to trial). they are not equivalently useful as a response to an infringement suit. For IPR, any defendant has a year following notice of an infringement action to institute proceedings. 166 35 U.S.C. § 315(b) (2012). The benefits of this course of action are not without limitation; defendants must still convince the court to stay the infringement claim until the IPR is resolved by the PTAB. Fortunately for defendants, such motions to stay are generally successful. 167 A recent study has supported this view: “Of patent suits proceeding in parallel with an instituted IPR between the same parties, a motion to stay was filed in over 76 percent. Overall, these cases were stayed (at least in part) 82 percent of the time, though rates varied considerably across districts.” Love & Ambwani, supra note 163, at 103. By contrast, the advantages to PGR’s use as a defensive technique are somewhat stymied by restrictions in the ability to halt simultaneous litigation proceedings. 168 See 35 U.S.C. § 325(b) (limiting courts’ ability to stay preliminary injunction motion).

Corporations, often parties to patent litigation, 169 Overwhelmingly, patent litigation involves corporate entities. A study showed that ten years ago, corporations faced off in patent litigation 84.6% of the time with corporations appearing as a defendant in an infringement suit 95.3% of the time. Kimberly A. Moore, Populism and Patents, 82 N.Y.U. L. Rev. 69, 94 tbl.3 (2007). This has continued into 2014, with large technology companies bearing “the brunt of patent litigation.” Brian Howard, Lex Machina Releases First Annual Patent Litigation Year in Review, Lex Machina (May 13, 2014), []. will be especially attuned to cheaper alternatives to costly trials when sued for infringement. This particular use of post-grant proceedings, however, does not overtly advantage large corporations over smaller ones. Where a patentee is sufficiently motivated to file an infringement claim immediately upon patent issuance, defendants are unable to halt a court’s consideration of an adversarial preliminary injunction. 170 35 U.S.C. § 325(b). Because of this inability to stall parallel infringement litigation, any defendant—corporation or not—might be reticent to respond by filing a PGR petition. By contrast, in cases where a suit is not filed immediately upon patent issuance, alleged infringers can pause a costly trial while they pursue an IPR proceeding; thus all defendants are well served by making use of the cheaper alternative to immediately pursuing a counterclaim of invalidity. 171 Cf. supra notes 166–167 and accompanying text (discussing defensive IPR).

The defensive use of post-grant proceedings affects not only the behavior of defendants but also that of patent owners. Specifically, the nine-month barrier incentivizes patent owners to wait nine months to assert their patent. 172 See Crouch, New Role, supra note 154 (“[PGR] provides patent owners at least some incentive to hold-off asserting their patent until after [the nine-month] window has closed (unless the patentee would welcome the review).”). In doing so, the patentee can make the defensive use of post-grant proceedings a moot point for parties who wish to predicate their challenge to the patent’s validity on subject-matter eligibility. 173 While there is no empirical evidence, the limited number of PGR petitions filed thus far strongly suggests this is the case. See supra note 154 and accompanying text (noting disparity between PGR and IPR petitions filed). This leaves third parties to choose among less attractive options: fight the infringement claim through the courts and prolong costly litigation, or settle the suit. Thus, Congress not only limited subject-matter eligibility challenges before the PTO to nine months; it may have for all intents and purposes foreclosed it completely—at least for some third parties. The IPR–PGR dichotomy effectively puts that power into the hands of knowledgeable patentees. Canny patent owners can wait nine months, leaving administrative subject-matter eligibility challenges open only to those who are apt to monitor patents and can therefore bring a petition for PGR offensively. As the next section suggests, such a strategic use of PGR overwhelmingly benefits large, established corpor­ations—creating tension with the original purposes of the AIA.

2. Strategic Subject-Matter Eligibility Challenges: Only for Large Companies. — A significant corporate advantage presented by post-grant proceedings is the ability to invalidate another business’s patent through the PTO. It is a multipurpose tool within a corporation’s arsenal. A company can not only seek a competitive edge by waging a calculated attack on a rival’s patent portfolio but can also attempt to strike exorbitant licensing fees from their balance sheets if those licenses are predicated on weak patents. The offensive use of IPR or PGR also demonstrates a tangible benefit of post-grant proceedings beyond mere cost savings. Asserting patent invalidity purposefully, rather than in response to the threat of litigation, is unlikely to present a case or controversy sufficient to provide the plaintiff-company standing to bring a declaratory action of patent invalidity. 174 Third parties may seek declaratory judgment of patent invalidity even though the patentee has not initiated an infringement suit. Cardinal Chem. Co. v. Morton Int’l, Inc., 508 U.S. 83, 95 (1993). But “the Declaratory Judgment Act requires the existence of an actual case or controversy between the parties before a federal court can constitutionally assume jurisdiction.” Goodyear Tire & Rubber Co. v. Releasomers, Inc., 824 F.2d 953, 955 (Fed. Cir. 1987). Until 2007, the Federal Circuit employed a two-part test to determine whether or not a sufficient case or controversy exists in a patent case: (1) whether the defendant’s conduct “created on the part of a plaintiff a reasonable apprehension that the defendant will initiate suit if the plaintiff continues the allegedly infringing activity” and (2) whether the plaintiff “produced the device or ha[s] prepared to produce that device.” Id. Following the Supreme Court’s decision in MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), however, the Federal Circuit acknowledged a rejection of the “reasonable apprehension of suit” test and instead embraced an “all the circumstances” test. Teva Pharm. USA, Inc. v. Novartis Pharm. Corp., 482 F.3d 1330, 1339 (Fed. Cir. 2007); see also SanDisk Corp. v. STMicroelectronics, Inc., 480 F.3d 1372, 1380 (Fed. Cir. 2007) (noting rejection of “reasonable apprehension of suit” test in MedImmune). As a tactical matter, the administrative route is therefore the more attractive—and perhaps only—option for the company. Evidence suggests corporations recognize this and are already making strategic use of IPR. 175 Although “in 80 percent of IPRs, the challenged patent was also asserted in litigation between the petitioner and respondent,” twenty percent of IPRs were instituted without a realized threat of litigation. Love & Ambwani, supra note 163, at 103. This strategy has not gone unnoticed by commentators: “Inter partes reviews filed in cases where there is no associated litigation are overwhelmingly filed against operating companies (60.6% of the time), presumably in an attempt to secure competitive advantage (clearly not the original motivation behind the change in rules).” Gonsalves, Beckett & Leff, supra note 129, at 23.

Large conglomerates are best poised to employ post-grant proceedings as a strategic maneuver, bringing a petition for IPR or PGR without a looming threat of litigation. Companies are financially dependent upon their intellectual property. 176 “Research indicates that about 70% to 80% of a company’s market capitalization comes in the form of intangible assets, which include intellectual assets such as patents, trademarks, copyrights, and other business knowledge and know-how.” Joseph G. Hadzima, Jr., How to Tell What Patents Are Worth, Forbes (June 25, 2013, 11:13 am), []. Clever, deliberate patent strategy is therefore correlated with company success. 177 See id. (marking success as going public or being acquired). As such, large corporations tend to be more sophisticated with respect to patent law than their smaller counterparts. In addition, big businesses have the infrastructure to monitor what patents are being filed. 178 See Jay M. Mattappally, Comment, Goliath Beats David: Undoing the Leahy-Smith America Invents Act’s Harmful Effects on Small Businesses, 58 Loy. L. Rev. 981, 1019 (2012) (“Only big companies with a stable of in-house counsel and legal staff can afford to constantly monitor the availability of newly issued patents and challenge them in time.”). These resources and requisite knowledge of the patent system ensure large corporations are potentially able to use not only the nine-month period PGR is available but also the time between an application being published and ultimately issued. 179 See supra section II.A.1 (discussing realistic timeline of nine-month barrier). As a result, larger companies can take full advantage of the availability of administrative subject-matter eligibility challenges.

By contrast, smaller companies may not be as readily able to make strategic use of PGR. Perhaps there are those among the little guys who will have an incentive to monitor; 180 For example, a patent owner who brings an infringement action on one patent incentivizes the alleged infringer, even if a little guy, to begin monitoring any applications the patentee may have pending with the PTO. See Crouch, New Role, supra note 154 (suggesting this may be common occurrence). however, start-up companies and individual inventors will be less likely to have the resources to do so as a matter of course. 181 Cf. Robert Jordan, The New Patent Law: End of Entrepreneurship?, Forbes (Nov. 13, 2012, 12:00 pm), [] (“‘[S]tartups with-out cash on hand will not be able to protect their idea.’”). If the third party is also a latecomer, established long after a potentially problematic patent has issued, the matter is exacerbated. 182 Large companies may also be latecomers and face similar bars to using subject-matter eligibility challenges. But in fields such as computer technology, for example, it is start-ups that are left to “carve out fiefs of their own” in an industry dominated by the “big four”: Google, Apple, Facebook, and Amazon. Another Game of Thrones, Economist (Dec. 1, 2012),
mazon-are-each-others‌-throats-all-sorts-ways-‌another-game [].
At that point, no third party can use the judicial exceptions as a tactical maneuver; highlighted, the true issue of the IPR–PGR dichotomy. 183 Of course, the option to seek a declaratory judgment of invalidity on the basis of subject-matter eligibility is still open to smaller companies and individual inventors. As explained, however, a sufficient case or controversy is required to maintain standing—a significant impediment. See supra note 174 and accompanying text (identifying difficulty of using motion for declaratory judgment of invalidity as strategic tool).

Moreover, smaller corporations may be at the mercy of larger corporations that can make full use of the tactical benefits of post-grant proceedings. 184 Some critics have gone much further:

“In the world of patent law, the halls of justice, rather than shielding the little guys, have been turned into a weapon to assault those little guys . . . . [S]mall entities are being threatened with patent lawsuits of seriously questionable merit, but those small entities are forced to acquiesce because the costs of justice are too high.”

Charles Duan, Big Businesses Are Filing Frivolous Patent Lawsuits to Stifle Innovative Small Competitors, Forbes Opinion (Feb. 24, 2014, 7:00 am), [].
If big businesses are filing strategic lawsuits against small companies, they may similarly use post-grant proceedings. Whether benefitting larger companies at the expense of the little guy is economically detrimental, and therefore worthy of concern, admittedly remains unclear. 185 See J.D. Harrison, Who Actually Creates Jobs: Start-ups, Small Businesses or Big Corporations?, Wash. Post (Apr. 25, 2013), [] (detailing conflicting views on “which group should take priority”). But the institution of the nine-month barrier will seemingly create a disparate impact on these smaller entities. Such an effect is, at least, at cross-purposes with the original intent of the AIA to modulate corporate advantages. 186 See supra notes 157–161 and accompanying text (discussing AIA’s intent to level corporate playing field). But it is not the only manner in which PGR potentially falls short of promoting the objectives of the AIA.

3. What About Non-Practicing Entities? — In foreclosing administrative subject-matter eligibility challenges after nine months, third parties are also potentially less able to mount a response before the PTO to certain types of patents asserted by non-practicing entities. 187 NPEs are aptly termed; “[t]he entity is ‘non-practicing’ because it does not manufacture products or otherwise make use of the invention.” Tracie L. Bryant, Note, The America Invents Act: Slaying Trolls, Limiting Joinder, 25 Harv. J.L. & Tech. 687, 690 (2012). Examples of NPEs include: Intellectual Ventures, Transpacific IP Ltd., and Round Rock. See Mark A. Lemley & A. Douglas Melamed, Missing the Forest for the Trolls, 113 Colum. L. Rev. 2117, 2126–27, 2126 n.47 (2013) (citing examples of “patent aggregators”). In crafting the AIA, Congress attempted to address the growing power NPEs were having in patent litigation. Congressman Lamar Smith, an author of the AIA, expressed as much when he said: “[O]ur outdated patent system has become a barrier to innovation and invites lawsuits from holders of questionable patents seeking to extort millions of dollars from companies . . . . We need reforms that discourage frivolous suits, enhance patent quality and streamline international principles.” 188 Press Release, Judiciary Comm., U.S. House of Representatives, Chairman Smith: Patent Reform Creates Jobs (Mar. 30, 2011), (internal quotation marks omitted) []. The new post-grant proceedings, in particular, were hailed as a cost-effective means of defending against infringement suits, particularly those filed by NPEs. 189 See Love & Ambwani, supra note 163, at 94 & n.5 (noting original goal of IPR to fight suits begun by NPEs).

But it is uncertain that defendants subject to NPE-initiated litigation will be able to bring an administrative subject-matter eligibility challenge to bear. Unless the NPE acquired the patent at issue immediately upon issuance—an unlikely scenario 190 See Brian J. Love, An Empirical Study of Patent Litigation Timing: Could a Patent Term Reduction Decimate Trolls Without Harming Litigators?, 161 U. Pa. L. Rev. 1309, 1331 (2013) (finding NPEs wait to begin enforcing their patents until “nine years from expiration,” well beyond nine-month timeline of PGR). —the nine-month timeline will be lost. As a result, use of post-grant proceedings (either defensively or offensively) against NPEs will be limited to novelty and non­obviousness. 191 See 35 U.S.C. § 311(b) (2012) (limiting challenges available at IPR). A recent study into the distribution of NPE litigation across technology classes notes the patents at issue are concentrated in “software and related technologies,” with “drugs and medical” also accounting for one percent of suits. 192 See James Bessen, Jennifer Ford & Michael J. Meurer, The Private and Social Costs of Patent Trolls, Regulation, Winter 2011–2012, at 26, 29 & tbl.2 (summarizing characteristics of NPE lawsuits). Similar classes of patents were the focus of the latest Supreme Court patentable-subject-matter jurisprudence. Recall in Mayo, Myriad, and Alice, the patentability of pharmaceutical/medical, genetic, and software patents were all questioned, and rejected, on judicial-exception grounds. 193 See supra section I.B.1 (discussing recent Supreme Court decisions on judicial exceptions). Subject-matter eligibility challenges are therefore a potentially useful tool against NPEs—one which the IPR–PGR dichotomy precludes defendants from bringing before the PTO. In the end, though the nine-month barrier overtly benefits large corporations to the detriment of smaller companies, neither will be able to make use of subject-matter eligibility challenges against NPEs.

C. Other Potential Consequences of the Nine-Month Barrier

Beyond influencing the type of defendant likely to file PGR petitions, other considerations of having time-limited administrative subject-matter eligibility challenges include the effect of having two separate institutions consider post-grant § 101 issues and the nine-month barrier’s potential influence on patent litigation as a whole.

1. Institutional Competence: Who Best Determines What a Law of Nature Is? — The bifurcation of subject-matter eligibility questions runs the risk that two distinct conceptions of § 101 will develop—the courts’ and the PTO’s. While ostensibly both are governed by the same case law, 194 Cf. 28 U.S.C. § 1295(a)(4)(A) (2012) (granting Federal Circuit appellate juris­diction over patent-related matters). narrow or broad readings of the relevant precedents can lead to different interpretations of the boundaries of the judicial exceptions 195 “There are . . . two coexisting doctrines of precedent: a narrow one for getting rid of troublesome decisions, and a broad one for taking advantage of helpful decisions.” David L. Shapiro, In Defense of Judicial Candor, 100 Harv. L. Rev. 731, 734 (1987) (relying on Karl Llewellyn’s argument). —and consequently determine which patents are valid. In practice, however, controversial subject-matter eligibility questions—whether initiated be­fore the courts or before the PTO—will nevertheless be appealed and be decided by the judiciary. In the end, rather than create institutional competence problems, the IPR–PGR dichotomy may in fact serve to promote judicial efficiency.

Any institutional competence concern presupposes that third parties actually make use of the ability to bring subject-matter eligibility challenges before the PTO. The limited number of PGR petitions that have been filed thus far 196 See U.S. Patent & Trademark Office, AIA Progress, supra note 154, at 1 (noting nine PGRs have been filed as of June 18, 2015). is not sufficiently helpful data. But CBMR, the transitional administrative program for business methods that is also open to subject-matter eligibility challenges, 197 See supra notes 89–98 and accompanying text (describing CBMR and comparing and contrasting with IPR and PGR). is already in heavy use. 198 See U.S. Patent & Trademark Office, AIA Progress, supra note 154, at 1 (demonstrating 356 petitions of CBMR have been instituted as of June 18, 2015). And since the AIA-created post-grant proceedings were made available in March 2013, three of the first eleven final CBMR decisions handed down were decided on patentable-subject-matter grounds. 199 See Riley, Stroud & Totten, supra note 60, at 271–72 (listing CBMR final decisions and corresponding statutory provision upon which each decision was based). Moreover, post-grant proceedings disproportionality mine the following three fields: 200 See U.S. Patent & Trademark Office, AIA Progress, supra note 154, at 1 (categorizing AIA petitions by technology). Electrical/Computer, 201 The Electric/Computer category includes Patent Technology Centers 2100, 2400, 2600, and 2800. Id. These Technology Centers are, respectively: Computer Architecture, Software, and Information Security; Computer Networks, Multiplex Communication, Video Distribution, and Security; Communications; and Semiconductors, Electrical and Optical Systems and Components. Patent Technology Centers, U.S. Patent & Trademark Office, [] [hereinafter U.S. Patent & Trademark Office, Centers] (last modified Feb. 17, 2010, 12:34 pm). Mechanical/Business Methods, 202 The Mechanical/Business Methods category includes Patent Technology Centers 3600 and 3700. U.S. Patent & Trademark Office, AIA Progress, supra note 154, at 1. These Technology Centers are, respectively: Transportation, Construction, Electronic Commerce, Agriculture, National Security and License & Review; and Mechanical Engineering, Manufacturing, Products. U.S. Patent & Trademark Office, Centers, supra note 201. and Bio/Pharma. 203 The Bio/Pharma category includes Patent Technology Center 1600. U.S. Patent & Trademark Office, AIA Progress, supra note 154, at 1. This Technology Center is designated for Biotechnology and Organic Chemistry. U.S. Patent & Trademark Office, Centers, supra note 201. Given that the validity of business method, pharmaceutical, genetic, and software patents have all recently been before the Supreme Court, 204 See supra section 1.B.1 (discussing four recent Supreme Court decisions). those seeking to challenge a patent’s validity through the PTO will  likely look to bring § 101 challenges. This is particularly true given not only the cost-saving nature of these proceedings but also the fact that thus far third parties have been extra­ordinarily successful at invaliding patents at issue through both IPR 205 Petitions for IPR are instituted for “at least one challenged claim 84 percent of the time.” Love & Ambwani, supra note 163, at 94. Moreover, of 160 claims on the merits, “the PTAB eliminated all instituted claims almost 78 percent of the time. Among the same group, the PTAB eliminated all claims challenged in the petition 65 percent of the time, giving petitioners a complete victory almost two-thirds of the time that they pursued their IPRs to a final decision.” Id. at 101. and CMBR. 206 With eleven CMBR petitions reaching final decision, the PTAB “cancel[ed] all 236 claims at issue.” Riley, Stroud & Totten, supra note 60, at 271. This is especially significant as the success of three of those petitions was founded on § 101. Id. at 272. Third-party challengers could use PGR to similar effect for subject-matter eligibility questions.

Concerns that the PTO will develop its own conception of § 101, however, may be irrelevant: Final written IPR and PGR decisions are appealable to the Federal Circuit. 207 35 U.S.C. §§ 319, 329 (2012). If that appeal is predicated on subject-matter eligibility, a question of law, the Federal Circuit is under no obligation to accord any deference to the PTO. 208 Subject-matter eligibility challenges are reviewed de novo. CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1369 (Fed. Cir. 2011); accord In re Roslin Inst. (Edinburgh), 750 F.3d 1333, 1335 (Fed. Cir. 2014) (noting standard of review); Fort Props., Inc. v. Am. Master Lease LLC, 671 F.3d 1317, 1320 (Fed. Cir. 2012) (same). This is unlike a question of fact, which is reviewed under an arbitrary-and-capricious standard. Dickinson v. Zurko, 527 U.S. 150, 152 (1999). Notably, the Federal Circuit expressed the view that the PTO should not be accorded deference on questions of fact. See In re Zurko, 142 F.3d 1447, 1459 (Fed. Cir. 1998) (determining heightened level of scrutiny should apply when reviewing decisions of PTO), rev’d sub nom. Zurko, 527 U.S. 150; see also Clarisa Long, The PTO and the Market for Influence in Patent Law, 157 U. Pa. L. Rev. 1965, 1975–79 (2009) (discussing conflict between PTO and Federal Circuit over judicial deference). And even post-Zurko, significant reversal rates continue to exist. Indeed, 13.64% of all patent cases and 32.58% of published patent cases decided post-Zurko through December 2009 were reversed. Jeffrey M. Samuels & Linda B. Samuels, The Impact of Dickinson v. Zurko on Federal Circuit Review of USPTO Board Decisions: An Analytic and Empirical Analysis, 20 Fed. Cir. B.J. 665, 675, 677–78 tbls.2 & 5 (2011). Nor is the Supreme Court, which has a newfound interest in issues of patent law—especially those involving the judicial exceptions. 209 E.g., Peter Lee, Patent Law and the Two Cultures, 120 Yale L.J. 2, 43 (2010) (“The Supreme Court’s deference to Federal Circuit jurisprudence, as well as its general indifference to patent matters, appears to have ended.”); supra section I.B.1 (discussing Supreme Court’s recent attentiveness to patentable subject matter). Ultimately, if the patentable-subject-matter question merits careful consideration and debate, and is sufficiently significant, it will be appealed to a court able to render a decision de novo. As a result, the same outcome will be reached regardless of whether the claim originated in the district court or before the PTO. 210 Further, if the PTO produces a decision based on novel reasoning that the Federal Circuit agrees with, the opinion can simply be affirmed. The Federal Circuit can even do so without producing a written opinion under Rule 36 of the Federal Circuit Rules of Practice. Fed. Cir. R. 36. Moreover, parties will be unlikely to appeal the PTO decisions that concern more straightforward subject-matter eligibility questions. Keeping those cases from Article III judges’ dockets could therefore serve to increase judicial efficiency. It may also, as the next section suggests, result in a spike of patent litigation.

2. Increasing Litigation Under the Subject-Matter Eligibility Challenge. — While overall patent suits may be in decline, 211 Jason Rantanen, Pending Patent Cases in Decline, Patently-O (Nov. 7, 2014), []. there is potential for the nine-month barrier to substantially impact the volume of litigation. If third parties choose to see an IPR through to final written decision, they are barred from subsequently bringing an invalidity action before the courts on grounds that “reasonably could have [been] raised” before the PTO. 212 35 U.S.C. § 315(e). Congress adopted the estoppel provision of IPR as a means of preventing serial suits. 213 See Matal, Guide Part II, supra note 82, at 603–04 (discussing concern throughout AIA drafting process of potential for “serial challenges to patents” and legislature’s adoption of estoppel provisions in response). The IPR–PGR dichotomy, however, allows a third party to “game the system,” skirting the impediment to bringing a subsequent suit. Third parties can first challenge a patent on novelty or nonobviousness grounds through IPR 214 35 U.S.C. § 311(b). at a substantially reduced cost. 215 See supra notes 157–161 and accompanying text (noting cost savings of post-grant proceedings). And, should petitioners lose, they can then proceed to bring a subject-matter eligibility challenge on the same patent before the courts—because it is impossible that they “reasonably [could] have raised” § 101 claims at IPR. Leaving this loophole for third parties to bring a new claim, one that may overlap substantially with novelty and nonobvious­ness claims, 216 See supra note 62 and accompanying text (discussing overlap between subject-matter eligibility and novelty or nonobviousness). may often lead to litigation after IPR is completed. Whether the IPR–PGR dichotomy will increase judicial efficiency and whether serial challenges will become commonplace is still uncertain given the limited number of PGR petitions thus far. 217 See supra note 154 and accompanying text (noting number of IPR and PGR petitions). As Part III addresses, however, Congress could avoid many of the foreseeable negative effects of the IPR–PGR dichotomy through reform of the AIA.

III. Mitigating Negative Consequences of the IPR–PGR Dichotomy

Five years of modification has improved the PGR structure, 218 See Matal, Guide Part II, supra note 82, at 601–05 (detailing history of post-grant proceeding provisions of AIA). but the IPR–PGR dichotomy still risks negative consequences for the field of patent law. Fortunately, Congress may be able to address these consequences while retaining the many positive attributes of PGR. Simply allowing subject-matter eligibility claims before the PTO opens a door previously closed to third parties: a cost-effective defensive and offensive use of the judicial exceptions. 219 See supra sections II.B.1–2 (analyzing two uses of subject-matter eligibility challenges before PTO). And seemingly, limiting subject-matter eligibility challenges to a discrete window is necessary as it incentivizes parties to bring claims in a contentious area of law early. 220 See supra sections II.A.2–3 (contextualizing nine-month barrier). But despite these attributes, two-and-a-half years after taking effect, only nine petitions for PGR have been filed. 221 PGR is limited to first-to-file patents, which only became available as of March 16, 2013. AIA, Pub. L. No. 112-29, secs. 3(n)(1), 6(f)(2)(a), 125 Stat. 284, 293, 311 (2011). As of June 18, 2015, nine PGR petitions have been filed. U.S. Patent & Trademark Office, AIA Progress, supra note 154, at 1. Neither IPR (at 3,083 petitions) nor CMBR (at 356 petitions) are similarly underutilized, 222 U.S. Patent & Trademark Office, AIA Progress, supra note 154, at 1. a particularly telling statistic given CMBR also permits subject-matter eligibility challenges to business method patents. 223 See supra note 97 and accompanying text (noting permissible grounds for challenging validity for CBMR). Already, three CMBR final written decisions have been predicated on § 101 grounds. See supra note 199 and accompanying text (noting as much).

Even if PGR petitions become more commonplace as more patents filed post-AIA are issued, the limited nine-month timeframe will still necessarily curtail the number of PGR petitions filed. Allowing subject-matter eligibility challenges in the fields of biotechnology and computer software, which cannot be addressed by CMBR, has the potential to streamline and even clarify many areas of the judicial exceptions. 224 See supra section II.C.1 (discussing institutional competence and expected resultant effect of having PTO address subject-matter eligibility challenges). Though the Supreme Court has addressed the boundaries of the judicial exceptions four times since 2010, 225 See supra section I.B.1 (analyzing Bilski, Mayo, Myriad, and Alice). these issues are far from resolved. 226 Even in the wake of Alice, there is still uncertainty at the district court level about the patentability of software. Compare Amdocs (Isr.) Ltd. v. Openet Telecom, Inc., 56 F. Supp. 3d 813, 819–25 (E.D. Va. 2014) (rejecting validity of software patent as it claimed abstract idea), with Card Verification Sols., LLC v. Citigroup, Inc., No. 13 C 6339, 2014 WL 4922524, at *4–5 (N.D. Ill. Sept. 29, 2014) (ruling software patent is plausibly eligible for sufficiently transforming abstract idea). The patentability of genetic material also did not stop at Myriad. The Federal Circuit recently held as patent ineligible single-stranded DNA fragments (known as primers) based on a naturally occurring breast cancer gene. In re BRCA1- and BRCA2-Based Hereditary Cancer Test Patent Litig., 774 F.3d 755, 759–61 (Fed. Cir. 2014). In the same case, the court also determined that a method claim for comparing a patient’s BRCA1 sequence to the wild type (naturally occurring) version to identify any mutations the patient may have was also invalid for failing to add “enough” to the abstract idea of “comparing . . . sequences and determining the existence of alterations” to render it patent eligible. Id. at 762–64. Given the enormity of the reforms to patent law recently instituted by the AIA, 227 See supra notes 10–18 and accompanying text (recounting important provisions of AIA). radical changes to the structure of PGR to increase its use may prove ill-advised and unwelcome. 228 For example, a recent post-AIA patent reform bill died in Congress when it reached the Senate. See Ashby Jones, Patent Overhaul Effort Stalls, Wall St. J. (Aug. 17, 2014, 7:13 pm), (on file with the Columbia Law Review) (“The patent overhaul effort has expired.”). This Part therefore first suggests a moderate approach before advocating for more significant reform: section III.A proposes expanding availability of PGR to three years while section III.B recommends enacting a provision that would, for the life of a patent, give a party accused of infringement nine months to bring a PGR petition.

A. Expanding the Timeline: More than a Nine-Month Barrier

Designing the structure of the post-grant proceedings adopted by the AIA proved difficult. Early bills, backed by the PTO, “proposed an all-issues post-grant review that could be invoked throughout the life of a patent.” 229 Matal, Guide Part II, supra note 82, at 601. The impetus behind such broad-sweeping reform was testimony from insiders of the high-technology field; they argued that confining post-grant review to nine months would deprive administrative proceedings of all utility. 230 Id. at 602. But backing for these provisions was short-lived: “[L]ife-of-the-patent post-grant review . . . drew a sharply negative reaction from many businesses, universities, and patent-law professional organizations.” 231 Id. Even the PTO pulled its initial support. 232 See id. at 603 (“[T]he USPTO’s enthusiasm for undertaking additional post-issuance responsibilities waned . . . .”). As a result, PGR was strictly limited in subsequent proposals: first to twelve months and then eventually to the enacted nine-month period. 233 See id. at 604 (noting proposals put forth by both House and Senate from 2007–2010); see also 35 U.S.C. § 321(c) (2012) (codifying ultimately enacted nine-month timeframe).

This legislative history suggests administrative proceedings unrestricted by time and challenge type is an untenable congressional solution. 234 Both houses of the legislature were unable to promote an all-issues post-grant proceeding. Matal, Guide Part II, supra note 82, at 604. The Senate in particular resisted restrictions to post-grant proceedings but was forced to “accede[] to opposition demands.” Id. As a result, subject-matter eligibility challenges before the PTO will not be granted the same freedom accorded motions for declaratory judgment of invalidity. 235 See supra note 141 and accompanying text (remarking motions for declaratory judgment are unrestricted by time). At nine months, PGR is the most severe of the time restrictions that exist in intellectual property law. 236 This remains true even considering attentive third parties may potentially have almost two years to consider filing a petition for PGR. See supra section II.A.1 (discussing timeframe of nine-month barrier). For example, the statutes of limitations in copyright 237 17 U.S.C. § 507(b) (2012). and trade secret 238 Unif. Trade Secrets Act § 6, 14 U.L.A. 649 (2005). law are set at three years. And patent law presumes that a six-year delay in filing an infringement claim requires application of the equitable doctrine of laches. 239 A.C. Aukerman Co. v. R.L. Chaides Constr. Co., 960 F.2d 1020, 1035 (Fed. Cir. 1992). But see supra note 125 (noting laches may soon no longer be available for patent-infringement cases). Though imperfectly symmetrical to the nine-month barrier, 240 See supra section II.A.2 (importing lessons from statutes of limitations to nine-month barrier). these statutes of limitations perhaps represent a suitable benchmark for how long PGR should be available; they at least suggest PGR is inappropriately short.

A three-year PGR process would continue to encourage the early filing of subject-matter eligibility challenges. Because initial motions may be denied on technicalities, “it is wise to commence actions, if at all possible, with at least six or eight months to spare” when faced with any time restriction. 241 Siegel, supra note 115, § 33, at 43. It is noteworthy that, with the current nine-month barrier, this advice counsels third parties to bring their claims within one to three months post-issuance—a near impossible task. Thus, with an extended three-year timeframe, third parties would still be motivated to bring PGR petitions within two-and-a-half years. Further, the number of PGR petitions—and consequently, subject-matter eligibility challenges—would likely rise simply by virtue of the additional time to learn of a patent’s existence. Though large corporations are better suited to making offensive use of PGR, 242 See supra section II.B.2 (discussing strategic use of PGR). even they may have difficulties learning of the patent in time to meet a short, nine-month timeline. 243 See supra note 113 (noting Mark Chandler of Cisco Systems’s testimony to Congress that it is extraordinarily difficult for companies to monitor recently issued patents and patent applications for relevance). Extending PGR to three years reduces that burden, thereby allowing big businesses to more easily bring strategic subject-matter eligibility challenges. Moreover, some smaller businesses and individual inventors may feasibly be able to make tactical use of administrative subject-matter eligibility challenges. In that respect, a three-year PGR timeline may therefore help level the corporate playing field. 244 This was an express purpose behind the enactment of the AIA. See supra notes 157–161 and accompanying text (addressing impetus of AIA to offer cost-saving alternatives to litigation).

A longer timeframe may also mean administrative subject-matter eligibility challenges are more likely to be brought in response to infringement claims. 245 See supra section II.B.1 (acknowledging improbability of PGR being used as defensive maneuver). Product-producing companies prefer to “begin litigating their patents early in the patent term,” possibly as a means “to fend off competitors that are developing or introducing similar products.” 246 Love, supra note 190, at 1316, 1331 (using term “product-producing company” to mean companies that make use of their patent, unlike NPEs). Waiting nine months to assert a patent may be minimally invasive, but patentees actively making use of their invention may be wary waiting three years. Financially speaking, the increased delay might mean an additional two years and three months of lost profits to competitors. Smaller companies especially may be unable to afford continuing losses to an allegedly infringing competitor without receiving licensing fees. As a result, increasing the time allowed to bring a PGR petition may correlate with an increase in defensive subject-matter eligibility challenges.

Whether this increase will be significant, however, is uncertain. 247 Despite the speed with which patent-producing companies begin asserting their patents, they still only initiate suits on average 12.1 years before their patents expire. Id. at 1331 & n.93. With patent terms running twenty years post-filing, patent-producing companies therefore begin enforcement of their patent usually 7.9 years post-filing. 35 U.S.C. § 154(a)(2) (2012). Even with some patents taking as long as three years to issue, the average patent-producing company will still not bring suit before a three-year PGR time limit runs out. See U.S. Patent & Trademark Office, Performance, supra note 110 (noting total patent pendency rate from 2010–2014). With regard to bringing administrative subject-matter eligibility chal­lenges as a response to NPE-instigated suits, the effect may be especially minimal. NPEs are more reticent than product-producing companies to assert patents early, delaying filing suit, on average, until “less than nine years from expiration.” 248 Love, supra note 190, at 1331. As a result, increasing the barrier to three years would make little difference; most NPE-alleged infringers would still be left only with the option of filing a counterclaim of invalidity predicated on subject-matter eligibility through the courts. For some defendants, this may be especially unfortunate as the judicial exceptions could prove an effective tool against NPEs. 249 See supra notes 192–193 and accompanying text (discussing potential usefulness of subject-matter eligibility challenges against NPEs). At the very least, a three-year PGR process would result in a modest overall increase in administrative subject-matter eligibility challenges. To respond to the above concerns, however, Congress can also enact a more sweeping provision: an “infringement exception” to the PGR time barrier, which would cause a more pronounced surge in defensive use of administrative subject-matter eligibility challenges.

B. An Infringement Exception: Allowing Subject-Matter Eligibility in Response to IPR

When “all issues,” life-of-the-patent post-grant review was initially proposed to Congress, it was not without limitations; early bills restricted these proceedings to “any party that had been accused by the patent owner of infringement or who presented a ‘substantial reason to believe’ that the patent caused him ‘significant economic harm.’” 250 Matal, Guide Part II, supra note 82, at 601–02 (footnote omitted) (quoting Patent Reform Act of 2007, S. 1145, 110th Cong. sec. 6(e), § 322(2)(A) (2007); Patent Reform Act of 2007, H.R. 1908, 110th Cong. sec. 6(e), § 322(2)(A) (as introduced); Patent Reform Act of 2006, S. 3818, 109th Cong. sec. 6(a)(1), § 312(2) (2006)). The former option functioned similarly to a statute of limitations restricted by a discovery rule. 251 See supra note 119 and accompanying text (defining discovery rule). Upon notification of an infringement suit, third parties had six months to file a PGR petition; strategic PGRs were limited to nine months. 252 Patent Reform Act of 2005, H.R. 2795, 109th Cong. sec. 9(f)(1), § 323 (2005). Congress ultimately decided against passing such an infringe­ment exception because of opposition to initial proposals and the PTO reversing course on support for early bills. 253 Matal, Guide Part II, supra note 82, at 601–05 (delineating response to initial House bill); see also supra notes 229–233 and accompanying text (explaining how support for initial bill waned). But the need to increase the utility of PGR may call for the legislature to reconsider. 254 This would, of course, require overcoming opposition from “businesses, universities, and patent-law professional organizations.” Matal, Guide Part II, supra note 82, at 602. How such opposition could be overcome is beyond the scope of this Note.

The cost-saving nature of post-grant proceedings suggests institution of the infringement exception would result in a significant spike in PGR’s use, particularly if the asserted patent is vulnerable to a subject-matter eligibility challenge. 255 See supra notes 158–161 and accompanying text (characterizing post-grant proceedings as cheaper alternative to litigation). Large and small companies alike will be able to make use of this defense, perhaps even against NPEs. Thus far, NPEs have not been the target of post-grant proceedings they were expected to be. 256 Gonsalves, Beckett & Leff, supra note 129, at 26 (noting “particularly interesting” finding that IPRs were predominantly filed against operating companies and only twenty-five percent of IPRs were filed against patent-asserting entities). The infringement exception could remedy this concern, as NPE-owned patents may be particularly susceptible to the judicial exceptions. 257 See supra notes 192–193 and accompanying text (noting type of technologies involved in NPE-instigated litigation and relevance to subject-matter eligibility). Notably, the aforementioned hurdle to a defendant’s use of PGR as a response to an infringement action—the inability to stay parallel litigation 258 See supra notes 165–168 and accompanying text (comparing and contrasting use of IPR and PGR as defensive techniques). —would not be a setback with the infringement exception. Courts are only barred from staying consideration of the plaintiff patent-owner’s preliminary injunction motion if the infringe­ment action was “filed within 3 months after the date on which the patent is granted.” 259 35 U.S.C. § 325(b) (2012). Where the infringement exception would increase defensive use of administrative subject-matter eligibility challenges, at nine months post-issuance, the restriction would not apply.

Critics of this approach, particularly the PTO, 260 Cf. Matal, Guide Part II, supra note 82, at 603–04 (“The USPTO began to express concern about its ability to manage the review proceedings proposed by the early bills.”). worry the infringement exception would create a flood of PGR petitions. But, post-grant proceedings predicated on novelty and nonobviousness are already available for the lifetime of the patent. 261 See 35 U.S.C. § 311(b)–(c) (noting scope and filing deadline of IPR). Thus, the overall growth of proceedings before the PTO should not be as extensive as critics fear. 262 This is especially true considering that novelty and nonobviousness challenges may overlap with subject-matter eligibility invalidity claims. See supra note 62 and accompanying text (noting as much). The infringement exception’s effect is also limited in scope; the PTO should only see an increase in the number of administrative challenges predicated on claims unavailable through IPR, such as subject-matter eligibility. 263 Compare 35 U.S.C. § 321(b) (noting scope of PGR), with id. § 311(b) (same for IPR). Thus, the infringement exception should expand the number of defensive-PGR petitions without overwhelming the agency tasked with resolving these claims.

In drafting an “all-issues” post-grant proceeding, the legislature considered two extremes: life-of-the-patent challenges or an extremely limited post-issuance window. 264 See supra notes 229–233 and accompanying text (walking through drafting of PGR). Ultimately, Congress chose the latter. 265 Cf. 35 U.S.C. § 321(c) (granting nine months for bringing PGR petition). The more efficient solution, however, would be the middle ground—a three-year timeline. This would appease critics who argued a nine-month window would render PGR inoperable in practice, 266 See supra note 113 (quoting one such critic). With the limited number of PGRs being filed, those critics may have been right. while acknowle­dging that opening the floodgates of subject-matter eligibility challenges generally may overwhelm the PTO. Additionally, the institution of an infringement exception, though a more drastic measure, will create a more significant surge in PGR use. And though the AIA was passed only four years ago, the legislature has demonstrated willingness to consider further patent reform. While a recent post-AIA bill was unsuccessful in reaching the Executive’s desk, 267 See Jones, supra note 228 (discussing bill’s demise). Congress is already again considering legislative action. 268 See Dennis Crouch, Patent Reform: Innovation Act of 2015, Patently-O (Feb. 5, 2015), [] (overviewing proposed bill known as the Innovation Act); Dennis Crouch, The Strong Patent Act of 2015 from Senator Coons, Patently-O (Mar. 3, 2015), [] (overviewing proposed bill known as the Strong Patents Act). Administrative subject-matter eligibility challenges may yet break through that nine-month barrier.


Since the 2010 Term, the Supreme Court has repeatedly considered patentable-subject-matter questions. Despite these efforts, ambiguity continues to surround the judicial exceptions. With the institution of a post-grant proceeding known as PGR, claims predicated on this inexact area of law can now be heard before the PTO rather than the courts—but only for nine months. The institution of this barrier draws similarities to statutes of limitations, encouraging third parties to bring claims early. Thus far, imposing such a short time limit to administrative subject-matter eligibility challenges has been extremely effective at restricting their use; only nine PGR petitions have been filed since administrative proceedings became available almost two-and-a-half years ago. As a result, the potential benefits of having the PTO address subject-matter eligibility questions are going unrealized. To help, congressional reform is needed. A more restrained approach would see PGR availability extended to three years while a more ambitious legislature may consider enacting an infringement exception for all-issues review. Both are modest when compared to the fundamental changes to patent law imposed by the AIA. But should Congress act, both may serve to bring clarity to a contentious area of law.