CAFC Considers Article III Injury Requirement for Dissatisfied Patent Challengers
Earlier this week, the CAFC heard oral arguments in Consumer Watchdog v. Wisconsin Alumni Research Foundation (Warf). Although seemingly a routine appeal from an inter partes patent reexamination, the Court took interest in the unique procedural posture of this case a few weeks before argument on the merits. Here, the challenged claims of the patent were confirmed as patentable by the USPTO and appealed by the challenger, Consumer Watchdog, to the CAFC. The CAFC ordered late briefing on the question of Article III standing for CW’s appeal. CW brief (here), WARF brief (here)
For simple folk like me, the question of standing would seem to have a relatively straight forward response. That is, appeal from a PTAB decision is provided, by statute (old 35 U.S.C. § 315 (b)(1), to any party dissatisfied with a decision of the PTAB. This appeal right was actually added in 2002 as the original inter partes reexamination passed in 1999 had no such right. Section 13106 of Public Law 107-273, 116 Stat. 1758, 1899-1906 (2002). So, not only was standing conveyed by Congress, it was conveyed only after denying it in the first legislative go-round. (fact pattern seems rather persuasive to me)
While the CAFC was well aware of the statute, they seemed to be seeking more of an “injury” from the appellant to convey Article II standing, or some kind of indication in the legislative history that Congress intended to convey Article III standing. Read the rest of this entry »
Patentees Squeezed Between Competing PTAB Rules
The rules of the new patentability trials of the America Invents Act (AIA) are designed to ensure timely resolution of patentability disputes within the statutorily mandated 12 month time frame. In particular, the Patent Trial & Appeal Board (PTAB) fashioned their new rules to prevent the notorious delays and complications of the previous inter partes patent reexamination system. One way in which the new AIA post grant proceedings are vastly different from the previous inter partes patent reexamination model is the manner in which claim amendments may be proposed.
In the previous inter partes reexamination system, any number of amended claims could be added or submitted prior to the close of prosecution before the examiner. There was no numerical limit on the number of claims that could be submitted. In fact, it was not uncommon practice for patentees to submit hundreds of new claims. By doing so, patentees made it more difficult for the third party to respond to all issues within their 30 day period, and within page limits. Likewise, the addition of such extensive amendments made examiner/APJ processing all the more tedious and time consuming.
In the new AIA proceedings, Inter Partes Review (IPR) and Post Grant Review, the PTAB provides for a reasonable number of substitute claims. 37 C.F.R. § 42.121/221. The “reasonable” aspect has been explained as a one-to-one correspondence in the typical case. Further restricting the ability to amend is the requirement that amendments be presented within the bounds of a 15 page motion to amend. The combination of these controls strictly limits the ability of patentees to amend in any significant regard, which greatly aids the agency in completing the proceedings in a timely manner.
Yet, patentees argue that these strictly enforced procedural controls are inconsistent with the patentee estoppel that attaches to a failed PTAB proceeding.
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Texas Court Stuns Patent Troll Business Model
Texas has become well known, some would say infamous, for their patent friendly federal district courts. Over the years, “patent trolls” have increasingly flocked to Texas District Courts such as the eastern district (Marshall) to leverage these pro-patentee forums.
Since September 16, 2012, new USPTO post grant patent proceedings have been increasingly leveraged as the first true alternative to patent litigation. Here again, Texas courts offered patentees a benefit over many other districts in the U.S. That is, historically, Texas judges have been reluctant to stay litigation pending USPTO reexamination proceedings. To date, most presumed that this historical bias against staying litigation pending USPTO reexamination would continue despite the increase in speed in the new patent challenge proceedings of the America Invents Act (AIA). Yet, as made clear last week, the heightened standard necessary to institute an Inter Partes Review at the USPTO’s Patent Trial & Appeal Board (PTAB), coupled with the recent outcome in Fresenius USA v. Baxter Int’l. (CAFC 2013), has Texas courts rethinking the wisdom of their previous anti-stay stance. Read the rest of this entry »
Innovation Act Heads to Floor Debate for Last Push in 2013
Now that the Goodlatte Bill, also knows as the Innovation Act (H.R. 3309), has been reported out of the Judiciary Committee there will be a second round of amendment opportunities. The new amendments will be collected from house lawmakers on Monday December 2nd, and the Rules Committee is expected to calendar floor debate shortly thereafter (likely Wednesday or Thursday). It is expected that some of the same amendments that failed during committee markup will be reintroduced, along with a raft of others. Post grant patent issues are expected to be hotly debated, especially those pertaining to the potential expansion of Covered Business Method (CBM) patent challenges.
The Innovation Act remains on the fast track heading into the close of 2013. Meanwhile, the Leahy Bill will sit idle for the time being. While significant progress can be made in the next few weeks, it seems unlikely that any legislation will be passed into law until early 2014.
Proposed Change to USPTO Claim Construction Practice Will Moot Markman Debates
One of the issues being debated in the current round of patent reform efforts is the current use of the broadest reasonable claim interpretation (BRI) in USPTO post grant patent proceedings. The rationale for this “broadest” interpretation practice of the USPTO has long been the ability to amend patent claims before the agency. That is — patent claims should be interpreted broadly in a forum where claim scope can be freely adjusted by the patentee (intervening rights aside).
Since the passage of the America Invents Act (AIA), a small, but vocal minority of bar association honchos (primarily those employed by large patent filers) have been shortsightedly advancing the notion that BRI should not be employed in the patent challenge proceedings of the AIA (Inter Partes Review (IPR) and Post Grant Review (PGR)). Instead, they argue that BRI claim construction should be replaced with the claim construction practices of the district court (i.e., Philips v. AWH). Their premise is that the new AIA proceedings are more “adjudicative in nature” as compared to examiner based patent prosecution/reexamination practices. Currently, the proposed legislation is adopting these changes for IPR and PGR proceedings (CBM is excluded).
As can be appreciated, large patent filers believe a narrower claim construction at the USPTO will help preserve the patentability of their patents that become subject to post grant patent challenges. Yet, in practice, if this change is implemented, it will have little impact on post grant proceedings. In fact, insisting that the USPTO perform the same analysis as district courts may help invalidate more patents. Read the rest of this entry »
Statistics Demonstrate Robust Demand for PTAB Patent Challenge Proceedings
Last week, the USPTO issued the official tallies/progress statistics for Inter Partes Review (IPR), Post Grant Review (PGR) and the Covered Business Method (CBM) proceedings. As of November 7, 2013 the Patent Trial & Appeal Board (PTAB) has received 627 IPR petitions and 78 CBM petitions, 709 petitions in total. (While the Office is showing one PGR as being filed, this was an incorrectly filed IPR). (Click to Enlarge)
Not surprisingly, the vast majority of IPR petitions are in the predictable arts, significant concentrations being in consumer electronics and mobile communication technologies.
Although difficult to gauge from the numbers due to the lag in filing of preliminary responses across yearly boundaries, it seems that preliminary responses are pursued in roughly 75% of proceedings.
Based upon early numbers, the settlement rate appears to be leveling out at around 25%. As more proceedings mature toward written decision the rate may increase. Of course, it is within the discretion of the PTAB to continue to written decision for late stage settlements. (See CBM2012-00007)
Dominion Dealer Solutions Confuses District Court Practices with PTAB
On March 28, 2013, Dominion Dealer Solutions filed 5 petitions for Inter Partes Review (IPR) against the patents of Auto Alert Inc. Dominion was sued by Auto Alert on October 1, 2012 in Central District of California for infringing 3 of the patents subject to the IPR filings (the other two IPR filings being directed to patents expected to be added to the suit).
On August 15, 2013 the Patent Trial & Appeal Board (PTAB) uncharacteristically denied all five petitions. The PTAB explained that the “real time” features of the claims had not been adequately addressed by the petitioner, or petitioner’s declarant, and that the obviousness analysis was lacking in requisite detail. In essence, the Board found that the mixing and matching of references in the claim charts (common in preliminary invalidity style charts of the district courts) was lacking in explanation as to reference interchangeability. Further the Board found the supporting declaration devoid of a developed rationale for combining the references (i.e., written in a notice style format of the district courts). Dominion sought rehearing arguing that since their declarant provided evidence that was not rebutted by the patentee, that the PTAB could not deny the petition. On October 10th the PTAB denied rehearing explaining that the declaration was indeed considered, but was found lacking in technical reasoning and substance. As the denial of an IPR petition cannot be appealed, the battle was over at the USPTO.
Days later, on October 15th, Dominion filed suit against the USPTO under the Administrative Procedure Act (APA). In their complaint (here) Dominion argues that where an IPR petition includes declaration evidence that stands unrebutted, it is arbitrary and capricious for the USPTO to deny such petitions. Yet, this evidentiary imbalance is present in virtually every PTAB preliminary proceeding by design. Read the rest of this entry »
European Companies Familiar with Opposition Concept
As pointed out last week Japanese innovators have quickly recognized Inter Partes Review (IPR) as a cost effective tool to drive patent disputes to a timely resolution. European patent challengers have also recognized the benefits of IPR. Given the significant use of patent oppositions in Europe, the influx of European patent challengers is not surprising.
The chart below identifies the European entities (and their subsidiaries) actively involved in IPR proceedings. (Click to Enlarge)
Hearing to Consider Issues for Mark-up
Although the Innovation Act (H.R.. 3309) was only introduced last week, as expected, Congress is wasting no time pushing the “patent reform” issue forward. Today at 10AM the House Judiciary Committee will hold a hearing on the content of the Bill entitled: Improving the Patent System to Promote American Innovation and Competitiveness. The hearing will alert the committee of specific concerns prior to mark-up. One notable topic is the Bill’s proposed shift from the broadest reasonable interpretation (BRI) at the USPTO’s Patent Trial & Appeal Board (PTAB) to a district court style claim construction. The initial draft of the Goodlatte Bill referenced the entirety of 35 U.S.C. § 282, and along with it, a presumption that patent claims are valid (§ 282 (a)). This would have been an absolute boon to patent trolls. Fortunately, and as I predicted, the claim construction proposal no longer requires the application of the presumption of validity.
In the second draft, and now H.R. 3309, the general reference to § 282 has been changed to a contextual reference to § 282(b). In essence, the proposal would change little at the USPTO (plain and ordinary meaning is a component of BRI) other than perhaps an increased emphasis on prosecution history consistent with Philipps v. AWH. That said, the proposal still lacks consistency and leaves a possible opening for patent troll mischief.
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Japanese Embrace New Patent Challenge Mechanisms
Generally speaking, inter partes patent reexamination was pursued relatively infrequently by foreign based entities. Unlike their U.S. based counterparts, foreign based companies rarely employed patent reexamination as a tool to resolve patent disputes in a more cost effective manner, and/or to pressure opponents in a parallel litigation. This phenomena was especially odd for Japanese innovators. This is because many of the top ten patent filers are Japanese companies. Clearly these companies were familiar with USPTO proceedings, but remained uncomfortable with the USPTO as a source of potential resolution for patent validity disputes.
Since the passage of the new patentability challenges of the America Invents Act (AIA), the public has overwhelmingly embraced Inter Partes Review (IPR) and Covered Business Method (CBM) proceedings as a viable option to traditional patent limitation—and, unlike inter partes patent reexamination, Japanese innovators are not far behind. Read the rest of this entry »