The Effect of Arbitration Agreements on the America Invents Act's Inter Partes Review Procedure

Abstract

In 2011, Congress created a new administrative pathway through which a party can challenge the validity of a granted patent: inter partes review (IPR). Like preexisting reexamination procedures, IPR is a mechanism through which a private party may ask the U.S. Patent and Trademark Office (PTO) to invalidate or narrow patents that fail to meet the standards of patent eligibility, thus returning subject matter to the public domain and protecting would-be patent infringers from the threat of costly infringement litigation. However, unlike the preexisting procedures, which were essentially extensions of the patent review process involving a back-and-forth between the PTO and patent holder, IPR is adversarial in nature---an IPR is essentially a "mini-trial" between a challenger and a patentee.

Because the new IPR procedure closely resembles litigation between private parties, it may be possible for patent licensees to contract away their right to petition for IPR through arbitration agreements. And because patent licensees may often be the parties most incentivized and prepared to challenge bad patents through IPR, patent owners who can contractually prevent these licensees from using IPR will be able to minimize or even entirely avoid exposure to the risky and challenger-friendly new IPR procedure.

The enforceability of an arbitration agreement purporting to prevent a licensee from petitioning for IPR is unclear. This Note explores this doctrinal ambiguity and questions whether applying the strong federal policy in favor of arbitral dispute resolution to this issue would undermine the congressional intent behind Congress' new IPR procedure.

Keywords: inter partes review, arbitration, america invents act