In most cases, the distinction between appealable vs. petitionable issues at the USPTO is quite clear. For example, if you believe that a patent examiner has prematurely entered a final rejection, the appropriate avenue for relief is by way of petition. Indeed, the MPEP states such explicitly. MPEP 706.07(c). Yet, not all examination/reexamination disputes are so clear cut. (See earlier discussion on ex parte SNQ review process here)

The distinction between appealable vs. petitionable disputes is especially critical in post grant proceedings such as patent reexamination. This is because failure to appreciate the distinction between the two could potentially forfeit substantive patent rights.

Petitionable issues cannot be appealed to the Board of Patent Appeals and Interferences (BPAI). In other words, a failure to recognize petitionable issues, as they occur, can result in an inability to address them before the Office.

In deciding whether an issue is petitionable vs. appealable, the predecessor court of the CAFC explained, [t]here are a host of various kinds of decisions an examiner makes in the examination proceeding – mostly matters of a discretionary, procedural or non-substantive nature – which have not been and are not now appealable to the board or to this court when they are not directly connected with the merits of issues involving rejections of claims, but traditionally have been settled by petition to the Commissioner. In re Hengehold,440 F.2d 1395, 1403 (CCPA 1971).

Disputes that are “directly connected with the merits of the issues involving rejections of the claims” often times relate to matters of claim language and claim interpretation. Disputes over such matters are common in both application prosecution and patent reexamination. Whether or not these issues are appealable vs. petitionable can be especially confusing.

For example, this week in Ex Parte Taymac Corp. (2011-010682) the Board considered a question relating to a 112 rejection of new claims presented during patent reexamination. During a patent reexamination of U.S. Patent 5,763,831, the examiner rejected the new claims 44-47 as lacking written description support. The Patentee countered that the claim language rejected by the examiner was also found in the original claims, and that MPEP 2258 forbids such a rejection in patent reexamination.

In relevant part, MPEP 2258 provides:

Where new claims are presented or where any part of the disclosure is amended, the claims of the reexamination proceeding, are to be examined for compliance with 35 U.S.C. 112. Consideration of 35 U.S.C. 112 issues should, however, be limited to the amendatory (e.g., new language) matter. For example, a claim which is amended or a new claim which is presented containing a limitation not found in the original patent claim should be considered for compliance under 35 U.S.C. 112 only with respect to that limitation. To go further would be inconsistent with the statute to the extent that 35 U.S.C. 112 issues would be raised as to matter in the original patent claim.  . . If a limitation that appears in an existing patent claim also appears in a claim newly presented in a reexamination proceeding, that limitation cannot be examined as to 35 U.S.C. 112.

(emphasis added)

In addressing the Patentee’s argument, the Board explained that it need not consider the issue since it was a petitionable matter, citing 37 C.F.R. § 41.31(c). Nevertheless, the Board reversed the examiner rejection finding that support did in fact exist.

While ultimately the Board reversed the rejection, a 112 rejection that runs afoul of 35 U.S.C. § 301 seems to be more of a substantive rather than procedural issue. The fact that the MPEP describes a procedure/policy for handling such § 112 rejections, for consistency with the patent reexamination statute (35 U.S.C. § 301), would not seem to render the ultimate issue a procedural/petitionable matter.

Had the Board not found support for the claims on appeal, the Patentee would have been well past the time to petition the examiner’s decision under 37 C.F.R. § 1.181 (outside the two month window). While a later petition under 37 C.F.R. § 1.183 is possible, such relief requires extraordinary circumstances.

Clearly, Patentees and participating Third Party Requesters (IPX) need to closely consider such issues to avoid losing the opportunity for USPTO review.

In inter partes patent reexamination, a participating third party must submit their written comment to a patentee response within 30 days. Since the 30 day deadline is provided by statute, the USPTO has no discretion to extend this period. (35 U.S.C. § 314). This statutory deadline can be especially onerous in those reexaminations that are subject to concurrent litigation as the issues tend to be significantly complex, time intensive and numerous.

On the other side of the fence, a patentee is typically given a two month deadline to comment on an action of the USPTO, extendible upon petition (showing of reasonable diligence toward meeting the current due date). As can be appreciated, third parties must respond to the same issues in, at best, half the time provided to the patentee. Indeed, where a healthy number of new claims are added in a response by the patentee, the third party would need to develop additional rejections/art for the new claims. Due to the relative inequities in response periods for opposing sides of an inter partes patent reexamination, patentees enjoy a significant strategic advantage.

As noted above, a third party cannot extend the statutory response time. Yet, surprisingly, unwary patentees indirectly provide this very relief to third parties on a regular basis.

One of the more common petitions in inter partes patent reexamination is a petition for waiver of the page limit requirement. That is to say, submissions in inter partes patent reexamination are limited to 50 pages of substantive comment. (37 C.F.R. § 1.943). As it is not uncommon for initial requests for inter partes patent reexamination to total hundreds of pages, Patentees will often seek waiver of the page limit in order to respond to all issues. The waiver of Rule 943 is sought via petition (37 C.F.R. § 1.183).

Of course, at the time of petitioning, the patentee is by definition submitting a response that exceeds the 50 page limit. In other words, the “response” as submitted does not comport with the statutory definition unless, and until, the petition is granted. As recently demonstrated in 95/001,206 (decision here) such a filing will effectively delay the time for a third party response by several months.

In the ‘206 case, a patentee response was filed on June 7, 2010 along with a petition to waive the page limit requirement. The third party did not file a response by July 7, 2010. The patentee petition was granted on August 11, 2010. In the petition, the USPTO noted that a third party response was due 30 days from the date of the petition decision; thereafter the third party filed their response (some 2 months after July 7, 2010). Subsequently, the patentee filed a further petition seeking to strike the third party response as untimely, in the decision linked above, the USPTO explained:

Certainly, it is not possible to adhere to the page limit requirement in all cases. However, patentees should consider the impact of filing a response that exceeds the page limit together with an appropriate petition. That is to say, the cost of additional pages is effectively an extension of time that would be otherwise unattainable to the third party.

When pursuing inter partes patent reexamination, denial of a Substantial New Question of Patentability (SNQ) by the USPTO can be especially troubling to third party requesters. This is because a third party is estopped from asserting in litigation the “invalidity of any claim finally determined to be valid and patentable on any ground which the third-party requester raised or could have raised during the inter partes reexamination proceedings.” 35 U.S.C. § 315(c).

Denied SNQs raise the fear of potential district court estoppel relative to the prior art underlying the denied SNQ. For this reason, third parties will almost always dispute such denials internal to the USPTO–even where the claims of the patent remain rejected based upon other SNQs of the same request.

But, what is the appropriate vehicle for such a dispute, petition or appeal? The answer to this question will depend upon whether or not the denied SNQ pertains to a claim that is being actively reexamined on other grounds.

As explained by an expanded panel of the Board of Patent Appeals & Interferences (BPAI) yesterday in Belkin International et al., v. Optimumpath LLC, the denial of an SNQ in inter partes patent reexamination is  petitionable, not appealable. In Belkin U.S. Patent 7,035,281 was reexamined (95/001,089). The request was granted as to claims 1-3 and 8-10, but denied as to claims 4-7 and 11-31.

The denial of the SNQs applied to claims 4-7 and 11-31 was petitioned to the Director of the Central Reexamination Unit. Upon reconsideration, the Director refused to reverse the examiner. 

During prosecution, the rejection of claims 1-3 and 8-10 was later withdrawn by the examiner. Thereafter, the third party appealed the withdrawn rejection and the denial of the SNQs. 

On appeal, the BPAI affirmed the examiner’s decision to withdraw the rejection and confirm the patentability of claims 1-3 and 8-10. As to the appeal of the denied SNQs, the BPAI explained that such issues may not be appealed to the Board.

 . . . 35 U.S.C. § 312 states that the Director makes such determinations (of whether a substantial new question of patentability exists) and that the determination “by the Director . . . shall be final and non-appealable.” Only when the Director makes the determination that a substantial new question of patentabilityaffecting a claim of a patent is raised (i.e., that a substantial new question of patentability exists for a particular claim) shall an inter partes reexamination of the claim(s) in question be performed for resolution of the question (35 U.S.C. § 313). Therefore, on the other hand, when the Director makes a determination that a substantial new question of patentability affecting a particular claim is not raised, the Director does not order inter partes reexamination of the patent with respect to those claims. Under those circumstances, no reexamination is performed with respect to those proposed substantial new questions of patentability. Also, as pointed out above, the Director’s determination that no substantial new question of patentability was established for any particular claim(s) is final and non-appealable (35 U.S.C. § 312(c)).

Since, under 35 U.S.C. § 312 and 35 U.S.C. § 313, reexamination of the patent claims in question cannot proceed when the Director makes a determination that a substantial new question of patentability has not been raised for those claims and that the Director’s determination is non-appealable, no final decision, whether favorable or unfavorable, can be rendered pertaining to those claims. Under 35 U.S.C. § 315(b), a third-party requester may appeal with respect to any “final decision favorable to the patentability” of disputed claims. However, as described above, if the Director makes the non-appealable determination that no substantial new question of patentability has been raised, then reexamination is not performed for those claims in question with respect to the corresponding prior art references. There cannot have been a final decision (either favorable or unfavorable) on the patentability of the claims in question under 35 U.S.C. § 315(b), the claims not having been reexamined in the first place for lack of a substantial new question of patentability. (emphasis added)

The decision continues on to explain that the denial of SNQs is propoerly pursued by petition to the Director (which Belkin filed to no avail; 37 C.F.R. § 1.927). Note that had an SNQ been found but the corresponding rejections not adopted, appeal of non-adopted rejections would have been appropriate.

Of course, a patent owner’s seeking to reverse an accepted SNQ in ex parte patent reexamination may pursue the matter to the BPAI.

Many inter partes patent reexaminations are conducted concurrent to district court litigation (USPTO statistics indicating 70% ). At one point or another, the defendant(s) will seek a stay of the parallel litigation arguing that the inter partes patent reexamination will reduce issues for trial based upon familiar factors. Of course, in arguing against the stay, the Patentee will cite to the statistics indicating that inter partes patent reexamination take years to conclude through appeal.

So, since everyone knows the game, why don’t defendants show some creativity and take matters into their own hands? In other words, there is a rule already in existence by which participants of an inter partes patent reexamination can accelerate the proceeding THEMSELVES. So, why isn’t anyone using it?

37 CFR 1.953(b) provides for an expedited Right of Appeal Notice (RAN). At any time after the Patentee’s response to the initial Office action on the merits in an inter partes patent reexamination, the patent owner and all third party requesters may stipulate that the issues are appropriate for a final action, which would include a final rejection and/or a final determination favorable to patentability, and may request the issuance of a RAN. The request must have the concurrence of the patent owner and all third party requesters present in the proceeding, and must identify all of the appealable issues and the positions of the patent owner and all third party requesters on those issues. If the examiner determines that no other issues are present or should be raised, a RAN limited to the identified issues shall be issued. See also MPEP § 2673.02 (II).

In other words, significant portions of inter partes patent reexamination prosecution can be compacted, by agreement. Of course, litigating parties never agree on anything, which is why this rule is never used. But, if a defendant were to indicate in their motion for stay that they would stipulate to following this procedure, they would in fact be offering to accelerate the proceeding. In this way, the defendant can take some of the “bite” out of the Patentee’s prejudice (i.e., time delay) argument.

In practice very few expedited RANs are sought (I’m not aware of a single one), thus contributing to the prolongation of the inter partes patent reexamination prosecution phase (appeal being a separate phase). If the patent litigation is not stayed and the trial is imminent or underway, the patent owner has little incentive to expedite the inter partes reexamination proceedings. In such circumstances, particularly where the patent owner has not canceled or amended claims for fear of intervening rights applying, expediting the right of appeal where original patent claims are rejected has no benefit. Even where all claims are confirmed or allowed, the patent owner has little incentive to expedite the right of appeal notice to permit the third party requesters to get their appeals heard promptly.

On the other hand, where the concurrent patent litigation is stayed pending the outcome of the inter partes reexamination proceeding, the patent owner may want to expedite the right of appeal notice, especially where all claims are confirmed or allowed. In such circumstance, the third party requesters may lack an incentive to seek an expedited right of appeal notice because of fear of the estoppel provisions of 35 U.S.C. § 315(c). Thus, agreeing to fast track the case to appeal is not without risk for either party.

Finally, where there are circumstances that may warrant the filing of an expedited right of appeal notice, such as where a parallel litigation is stayed, the USPTO should consider a sua sponte waiver of 37 C.F.R. 1.955. This would permit a joint interview for the purpose of reaching agreement on the issues appropriate for final action and identification of all of the appealable issues. Such would advance the inetrests of the special dispatch requirements of 35 U.S.C. § 314(c). Such a procedure would be in a similiar vein to that of the pilot program seeking waiver of the Patent Owner Statement in ex parte patent reexamination.

Last week, the litigation between Cellectis S.A. and Precision Biosciences Inc., (E.D. N.C) No: 5.08-CV-00119-H was stayed pending the outcome of inter partes patent reexamination proceedings involving the patents at issue in the litigation, namely, U.S. Patents 6,610,545 and 7,309,605. In the decision to stay the case, the same familiar factors were analyzed. Of particular interest is the court’s discussion of the “undue prejudice” factor.

In discussing the undue prejudice factor, the court noted that both of the patents at issue will expire in May of 2012. By pointing this out, the court surmised that should the case be stayed, any improper shifting of market share (due to infringement) would be transient at best in view of the relatively imminent patent expiration. Thus, the court found that the balance of equities favored staying the case. With regard to patent expiration, the court explained:

[I]t is uncertain whether the PTO’s reexamination will be completed before the patents expire and highly unlikely that any appeal of the PTO’s decision will be resolved prior to the expiration of the patents.

In pointing out this fact, the court unknowingly emphasized a sad reality for Cellectis. By amending the ‘605 Patent, Cellectis has effectively surrendered this patent by operation of USPTO pendency.

On November 17, 2009, the only independent claim of the ‘605 patent (claim 1) was amended to recite first  ”chromosomal DNA” and “providing an isolated, viable cell . . .” On July 7, 2010, in response to an Action Closing Prosecution (ACP) of June 17, 2010, the independent claim was again amended to recite a further step of “repairing a double stranded break…” new claims 19-21 were also added in July. These features and new claims have been argued as distinguishing with respect to the submitted art of the inter partes patent reexamination. (In the ‘545 Patent, one of the independent claims, claim 7 was amended)

With appeal briefing, and BPAI processing still to come it is a practical certainty that there will not be a BPAI decision in this case prior to expiration of the ‘605 and ‘545 patents in the Spring of 2012. Importantly, upon expiration, any pending claim amendments are considered withdrawn (37 CFR 1.530 (j)) since such claim changes cannot be added by reexamination certificate thereafter. Thus, at the time of expiration, amended claims revert to unamended form, and any newly added claims simply go away…..seemingly, along with the ‘605 Patent.

Even assuming the BPAI somehow sided with Cellectis prior to expiration, the certain CAFC appeal by the third party would doom any opportunity to publish a reexamination certificate in time to actually issue the amended claims. (this calculation does not even account for the three month delay from the Notice of Intent to Issue a Reexamination Certificate (NIRC) to physical printing of the certificate).

At the time of expiration, a patent is construed more narrowly, yet one would assume the briefing will be based upon the amended claims.

Certainly, the USPTO has taken steps to speed up the processing of inter partes reexamination. Still, as this case demonstrates, there is a great deal of work still to be done. In the most recent BPAI data from the inter partes reexamination dashboard, the average BPAI pendency is shown as less than 10 months from the time of initial appeal docketing (shown in green as opposed yellow (bad) or red (really bad)). Disappointingly, the same 10 month metric is used with respect to run-of-the-mill, patent application appeals, yet patent reexaminations are supposed to be accorded special dispatch? (application BPAI pendency for July here). As pointed out by others in emails to me last week, including Hal Wegner and Paul Morgan, a 10-month benchmark is not at all encouraging.

With most patent reexaminations now being conducted concurrent to a district court or ITC proceeding, a common question of such plaintiffs is “what becomes of the patent reexamination once the litigation settles?”

In the case of ex parte patent reexamination, the answer is simple, the reexamination continues unaffected. On the other hand, if the pending reexamination is an inter partes patent reexamination, the answer will depend on the nature of the settlement.

In other words, inter partes patent reexamination is subject to statutory estoppel provisions not applicable to ex parte patent reexamination. Depending upon the manner in which the case settles, and whether or not the case is before the ITC, a carefully worded consent judgment can be used to trigger 35 USC § 317 (b), effectively forcing the USPTO to vacate the proceeding by operation of estoppel.

35 USC § 317 (b) provides:

(b) FINAL DECISION.- Once a final decision has been entered against a party in a civil action arising in whole or in part under section 1338 of title 28, that the party has not sustained its burden of proving the invalidity of any patent claim in suit or if a final decision in an inter partes reexamination proceeding instituted by a third-party requester is favorable to the patentability of any original or proposed amended or new claim of the patent, then neither that party nor its privies may thereafter request an inter partes reexamination of any such patent claim on the basis of issues which that party or its privies raised or could have raised in such civil action or inter partes reexamination proceeding, and an inter partes reexamination requested by that party or its privies on the basis of such issues may not thereafter be maintained by the Office, notwithstanding any other provision of this chapter. This subsection does not prevent the assertion of invalidity based on newly discovered prior art unavailable to the third-party requester and the Patent and Trademark Office at the time of the inter partes reexamination proceedings. (emphasis added)

It is important to note that the estoppel provisions of inter partes patent reexamination do not apply to ITC proceedings, see our earlier discussion of this issue.

With respect to district court proceedings, where parties agree to settle, and the defendant is also willing to accede to a consent judgment stating that they have failed to prove invalidity, such may serve as a final judgment. (once the 30 day time to appeal the consent order has passed). In considering the language of the consent order, the USPTO will look to whether or not the claims of the ongoing inter partes reexamination are the same as that at issue in the litigation. For claims of the ongoing reexamination that are not subject to the consent judgment, the reexamination would continue as estoppel would not attach for these claims. (likewise for any newly added claims) Attached is a 2009 petition decision detailing a vacatur of an inter partes patent reexamination. (here)

In practice, defendants rarely agree to such a consent order since such a public humliation is not all desirable. (e.g., especially if the defendant is frequently the target of patent trolls). Likewise, as noted in the petition decision linked above, although the reexamination is vacated by the estoppel as to the particular setttling defendant, the unfinished business of the reexamination may be easily “re-started” by another competitor. Still, in settling patent disputes concurrent with inter partes patent reexamination, plaintiffs may be amenable to such a consent judgement ….for the right price.

Of more interest to me, is a recent petition decision (April 15, 2010) in the inter partes reexamination related to this litigation, 95/000489 (U.S. Patent 6,304,975).

In responding to the first action, the Patentee filed a reply over the 50 page limit identified in ( 37 CFR 1.943). Recognizing this problem, the patentee, at the time of filing the reply, simultaneously petitioned for waiver of the page limit under 37 CFR § 1.183. In response, the Third Party filed an opposition petition under 37 CFR § 1.182 objecting to any waiver of the page limit and filed a petition under 37 CFR § 1.183 to waive the rules to allow for consideration of their § 1.182 petition.

In deciding the patent owner’s petition, the Office of Patent Legal Administration (OPLA) granted the Patentee a waiver of the 50 page limit. Curiously, however, OPLA expunged the third party opposition petitions from the record and took the position that third parties have no right to oppose procedural filings of patent owners in inter partes reexamination proceedings. OPLA reasoned that the inter partes patent reexamination statutes only permit a single response to substantive issues of patentability. While I don’t necessarily disagree with OPLA’s action, I find the reasoning to be curious, as I have never seen an inter partes patent reexamination in which third party opposition petitions were not filed.  In fact, the USPTO’s Electronic File System (EFS) has a selectable document code and corresponding description “Reexamination– Opposition filed in response to petition.” ……….What Gives?

Specifically, the petition decision (found here) provides that:

As noted above, on February 5, 2010, third party requester filed a petition under 37 CFR 1.183 requesting waiver of the rules for entry of its petition under 37 CFR 1.182 filed in opposition to patent owner’s January 29,2010 petition under 37 CFR 1.183.  However, the rules cannot be waived to provide the third party requester the right to file a paper at the present stage in the ‘489 proceeding.

Pursuant to 35 U.S.C. § 314(b)(2), the third party requester in an ordered inter partes reexamination proceeding has a statutory right to once file written comments to a patent owner’s response to an Office action on the merits.

Whether a patent owner’s petition under 37 CFR 1.183 for suspension of the rules is grantable is an issue that goes to procedure and a showing of equities, rather than to the merits. While enactment of the inter partes reexamination statute was for the purpose of expanding a third party requester’s participation in the merits of the proceeding, there is no indication whatsoever in the legislative history of the inter partes reexamination statute that the requester was granted any right to challenge the granting of a petition under 1.183 for suspension of the rules in an inter partes reexamination proceeding.  Such a right was not provided in the enactment of the inter partes reexamination statute (or in any of its precursor bills), and there is no evidence to indicate that enacting such a right was ever contemplated by Congress.

37 CFR 1.183 permits waiver of the regulations in an extraordinary situation when justice requires. Requester’s February 5, 2010 petition, however, seeks to waive a requirement set forth in 35 U.S.C. § 314(b)(2), which allows requester comments only in response to a patent owner’s response on the merits. Accordingly, the Office is without statutory authority to consider the substance of third party requester’s February 5, 2010 petition paper. In this respect, third party requester stands on a footing no different from any other member of the public who wishes to challenge a procedural action taken by the Office in a proceeding.  The patent statute simply does not provide for such intervention.

As I mentioned above, the filing of opposition petitions under § 1.183 is almost routine and explicitly supported by EFS. I have even seen some Third Parties go as far as filing a § 1.183 petition to oppose a patent owner’s request for extension of time. Are Third Parties permitted to simply file petitions on procedural matters which do not oppose petitions filed by the Patentee? In other words, is the opposition petition just a tool for the Patentee alone?

If the position of the Office is that Third Party (i.e., Requester) opposition petition filings on procedural issues are improper, a clarification via Federal Register Notice is in order.  Absent such clarification, the influx of seemingly frivolous Third Party petitions will continue as a matter of course in inter partes patent reexamination.

In addition to our previous posts on this topic (Part I & Part II), we will have more thoughts on the PTO guidance in the coming weeks.

A TPR cannot file an inter partes reexamination request: (1) while a first inter partes reexamination is ongoing -35 USC 317(a); (2) where a final decision has been entered against the TPR in a civil action, the TPR cannot request or maintain an inter partes reexamination based on the same issues-35 USC 317(b); (3) where a final decision has been entered against the TPR in an inter partes reexamination that is favorable to the patent owner, the TPR cannot request or maintain an inter partes reexamination based on the same issues-35 USC 317(b); and (4) for a any patent that issued from an original application filed in the U.S. before November 29, 1999-Section 4608 of P.L. 106-113. Estoppel attaches against any TPR in a later civil action if the TPR loses: as to reasserting grounds of invalidity against challenged patent claims-35 USC 315(c) or as to challenging facts established in the reexamination proceedings-Section 4607 of P.L. 106-113.

USPTO reexamination rules were clarified in 2006 to require that in order for a filing date to be accorded to an inter partes reexamination request the request must meet all applicable statutory requirements of 35 USC 311. Final rule-71 Fed. Reg. 44219, August 4, 2006. This provides the Office, the patent owner and the public with a better understanding of the nature of and a focusing of the requester’s challenge. To receive a filing date there must be a statement identifying each substantial new question of patentability (SNQ) and proposed ground of rejection. Every patent claim for which reexamination is requested must be identified. How all cited documents apply to the claims and are applied in a corresponding SNQ/proposed rejection must be explained in detail. For each identified SNQ/proposed rejection, the request must explain how all the cited documents identified for that SNQ/proposed rejection are applied to meet/teach the claim limitations, to thus establish the identified SNQ/proposed rejection. This practice change prohibits general SNQ statements such as-the claims are obvious over any of references A, B, C, and D, taken alone or in combination. It also prohibits citation of references in the request without statements of how the references are applied to the claims.

If the reexamination request is for fewer than all the patent claims, the USPTO will generally review only the claims for which reexamination is requested that raise an SNQ. The USPTO may, however, exercise its discretion to examine nonrequested claims – where the expenditure of added resources is deemed justified. 1311 Off. Gaz. Pat. Office 197 (October 31, 2006).