PTAB Delivers on Congressional Mandate
As discussed previously, the very first petition for a Covered Business Method Patent Challenge (CBM) was filed on September 16th by SAP (CBM2012-00001). The petition (here) challenged U.S. Patent 6,553,350 of Versata Development Group. In May of 2011, Versata secured a $391 million dollar verdict in the Eastern District of Texas against SAP. The verdict was upheld by the CAFC some weeks ago.
The PTAB expedited the parallel CBM proceeding to oral argument as the issues were narrowed to 101 grounds only. Yesterday, the PTAB cancelled the challenged claims. (here)
The PTAB’s 9 month turnaround in this matter is an impressive feat that should not be lost on Congress as they deliberate further patent reforms. The patentability challenges of the America Invents Act (AIA) are significantly impacting the patent litigation landscape, and it is expected that the second round of proposed reforms will increasingly focus on enhancing these valued litigation alternatives.
Motion Practice Requirements Emphasized by Board
The rules of the new patentability trials of the America Invents Act (AIA) are designed to ensure timely resolution 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. In addition, claim amendments must be presented by motion, in a particular manner. Not surprisingly, patentees are demonstrating that old habits die hard. Read the rest of this entry »
Courts Grapple With Post Grant Patent Practice
A standard component of any patent litigation is a protective order. Such orders will invariably include a “prosecution bar. ” The prosecution bar operates to ensure that individuals accessing confidential data of an opponent are precluded from prosecuting patent applications in the area of the litigated technology (usually for a fixed duration of time). Absent this bar, patent applications/claims could be fashioned by competitive decision makers involved in the litigation based on the confidential information of their rival.
With concurrent PTAB proceedings now commonplace with most patent litigation, the question becomes:
Should a prosecution bar extend to PTAB post grant patent proceedings?
The answer to the above question varies across district courts, and, of course, is highly dependent upon the agreed upon language of the Order. The problem becomes, in many cases, when outdated boilerplate that does not directly reference new proceedings of the PTAB appears in the Order. In some districts the bar is found to extend to PTAB proceedings to the extent amendments are contemplated. Other courts take the stricter view that manipulation of the intrinsic record of a patent is an unfair advantage. These courts appreciate the value in allowing patentees to use confidential information of an accused infringer as a navigation aid to be used throughout a USPTO post grant patent proceeding. (especially where IPR, PGR and CBM are explicitly contemplated by the Order)
Courts have recently emphasized the new “ajudicative” nature of the post grant challenges of the America Invents Act to distinguish them from previous patent reexamination proceedings; especially where old boilerplate language is at issue in the Order. While it is true that the new PTAB proceedings do not have an examination phase, the intrinsic record is still susceptible to the very same alterations as made during any application/patent prosecution. That is to say, amendments and prosecution history estoppel are added to the intrinsic record just as they were before. The only difference is that patent examiners are no longer involved— a largely irrelevant detail.
Indeed, history has demonstrated that the stricter view of the courts is the most prudent. Read the rest of this entry »
Requests for Rehearing May Backfire on Patentees
As detailed earlier this week, a patentee’s decision to file a preliminary response in an IPR/CBM preliminary proceeding is not as straightforward as one would expect. Where such a preliminary response is imprudently pursued by a patentee this misstep can be further compounded by other optional filings post-Trial Order.
Subsequent to the filing of a preliminary response by a patentee the Patent Trial & Appeal Board (PTAB) will issue its decision. If unsatisfied with the Trial Order either party may file a Request for Rehearing as a matter of right within 14 days.
As is the case with the optional patentee preliminary response, just because you can request rehearing doesn’t mean you should. Read the rest of this entry »
Senate Proposes Expansion of USPTO’s Business Method Patent Challenge Proceeding
As I pointed out last week, Congress is considering fixes to the U.S patent system are designed to combat the patent troll problem. Yesterday, S.866 or the “Patent Quality Improvement Act” was introduced by Senator Charles Schumer (D-NY) to amend Sec. 18 of the recently passed America Invents Act (AIA). The Bill proposes to remove the 8-year sunset provision of the Transitional Program for Covered Business Method (CBM) Patents so that it becomes permanent. Additionally, the Bill proposes to remove the language “a financial product or” from the standing definition. In its place, the bill proposes “an enterprise, product, or.” The change would effectively make clear that any e-commerce patent, even if not related to finances per se, is subject to a CBM challenge. (Note that the USPTO has been sued very recently on the importance of this “financial” component of the statute.)
The Bill essentially seeks to codify Senator Schumer’s commentary provided to the USPTO last year on the appropriate scope of a CBM. In his earlier comments to the USPTO, the Senator urged the USPTO to take an expansive read of a covered business method patent such that e-commerce and software patents would be covered.
As I have pointed out in the past, CBM challenges are especially lethal to patent trolls. While the above fix will not apply to trolls excepted under the ”technological invention” component of the CBM definition, it would almost certainly devastate the business model for most e-commerce and software patent trolls. Without the leverage of the high cost of litigation to force settlements, and with the far less expensive and challenger friendly proceedings of the USPTO, contingency based legal representation becomes a very dicey proposition.
I expect that this legislation will garner wide support and become law in the near term.
Senator Schumer Readies Second Round of Patent Reform
Although many of the more significant changes to U.S. patent law provided by the America Invents Act (AIA) are only months old, Congress is already considering a re-calibration of these changes. Over the past few months the patent troll dilemma has been given significant attention by Congress and politicians are now clamoring to fashion legislation to address the problem. While the “SHIELD Act” has been discussed for the better part of the last year, and rewritten in that time frame, lawmakers are well aware that this “loser pays” proposal is significantly flawed and a non-starter in a political sense. As a result a new legislative solution is rumored for consideration by Congress next week. The new bill will propose an expansion of the patentability trial mechanisms of the AIA.
While the legislation is not yet public, Senator Charles Schumer (D-NY) will introduce legislation that will force trolls to the USPTO before they can file a lawsuit. (Senator Schumer was the force behind the Transitional Program for Covered Business Method (CBM) Patents) It is unclear exactly how this “PTO first” control will be mandated. The new legislation is rumored to remove the “transitional” nature of the CBM program and to expand the standing required for a CBM proceeding to include any patent asserted by a patent troll.
One might argue that the legislation is unnecessary since any defendant can already seek review at the USPTO via CBM or Inter Partes Review (IPR). In fact upward of 50% of such filings already relate to troll suits. Yet, the intent here seems to be Read the rest of this entry »
Failure to Consider AIA Patentability Challenges May Be Costly Mistake for Law Firms
The face of patent litigation in the U.S. was forever changed on September 16, 2012. This was the date the post grant patentability trials of the America Invent’s Act first became available to patent challengers. The emergence of the new low cost alternatives to patent litigation creates opportunities for patent challengers to pursue a lower cost resolution to patent disputes on far more favorable terms relative to the district court.
If not adequately considered as an alternative to patent litigation, ignorance of the new AIA proceedings may create malpractice opportunities for unsuccessful litigants against their former law firms. Read the rest of this entry »
Low Demand To Date for Specialized PTAB Review Proceeding
The new post grant patentability trials of the America Invents Act (AIA) are designed to serve as alternatives to costly patent litigation. One of the new post grant options is the very specialized, Transitional Program for Covered Business Method Patents, or “CBM” proceeding. This proceeding, like Inter Partes Review (IPR), is conducted before the administrative patent judges of the USPTO’s Patent Trial & Appeal Board.
As the name implies, a CBM proceeding is limited in scope to “business method” patents. Assuming a subject patent qualifies as a business method, and is asserted against a petitioner in a litigation (or a petitioner is otherwise charged with infringement), a CBM filing is available as an alternative to the litigation. Indeed, Congress devised CBM proceedings to virtually guarantee the stay of the higher cost litigation proceeding. The CBM provision was added to the AIA as a compromise between those that did not want a “second window” for Post Grant Review (PGR) (bio/pharma lobby) and those (financial/software) that felt the change in 101 case law (Bilski) should be applied to the multitude of patents that resulted from the State Street Bank decision.
CBM is an especially powerful tool to combat business method patent assertions, yet only 17 have been pursued to date. Why? Read the rest of this entry »
Public Can Listen to Arguments Telephonically
As discussed last week, the very first petition for a Covered Business Method Patent Challenge (CBM) was filed on September 16th by SAP (CBM2012-00001). The petition (here) challenged U.S. Patent 6,553,350 of Versata Development Group. In May of 2011, Versata secured a $391 million dollar verdict in the Eastern District of Texas against SAP. The verdict is currently on appeal to the CAFC.
The PTAB has expedited this CBM to oral argument as the issues have been narrowed to 101 grounds only.
The USPTO has published the dial-in-number to listen to the argument (here)
(571) 270-3000
meeting ID number 28001#
password 7448#
PTAB Considers Broadcast of First AIA Oral Hearing
The very first petition for a Covered Business Method Patent Challenge (CBM) was filed on September 16th by SAP (CBM2012-00001). The petition (here) challenged U.S. Patent 6,553,350 of Versata Development Group. In May of 2011, Versata secured a $391 million dollar verdict in the Eastern District of Texas against SAP. The verdict is currently on appeal to the CAFC.
Back in January, the PTAB held that SAP’s CBM petition had demonstrated that it was more likely than not that the claims of the ‘350 patent were unpatentable under 35 U.S.C. §§ 101 (Trial Order here). The PTAB agreed to expedite the trial schedule and move the oral hearing to April 17, 2013. (decision here) The six month acceleration in the proceeding was provided in exchange for SAP dropping the prior art defenses, and agreeing to move forward only on their 101 challenge to the Versata patent.
Three weeks back, Versata filed suit against the USPTO challenging the agency’s definition of a “business method,” and the ability to raise 101 as a statutory ground in a CBM. (101 is argued as not being embraced by 35 U.S.C. § 282, complaint here)
At last week’s ABA meeting it was noted that broadcast access (webcast or audio) was being considered for the April 17th hearing (limited to 101 grounds). It appears that at least the patent owner has agreed to the broadcast (statement here).
I will post more information on the broadcast as it becomes available.
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