USPTO AIA Implementation Report Explains Progress, Recommends Changes

Two weeks back, the USPTO provided a report to Congress on the implementation of the America Invents Act (AIA) (as required by the legislation). The 65 page report (here) explains the administrative effort to implement the mechanisms of the AIA, as well as four years of statistics. Of particular interest to me are the recommendations to Congress on adjusting IPR/PGR mechanisms, as well as some of the statistics on such procedures as third party submissions and (the all but forgotten) supplemental examination. 

As to proposed changes for IPR and PGR, the report recommends that the joinder statute be clarified to expressely permit not just party joinder, but issue joinder.  The USPTO explains that:

Section 6 permits the PTAB to join as a party to an IPR any person who properly files a petition that the Director, after receiving a preliminary response or the expiration of the time for filing such a response, determines warrants the institution of an IPR. Section 6 does not state explicitly that a party can join an ongoing trial where the party is already a participant. The USPTO recommends clarifying the joinder provisions to state that same party joinder is permitted. A statutory change would confirm that a party may join claims to an ongoing trial where the party is already a participant. Absent the change, a party could potentially be precluded from challenging newly-asserted claims from related district court litigation. Making the change would encourage efficiency by enabling one proceeding to include more issues, which would be less burdensome on the parties and the USPTO.

This recommendation makes sense given the lack of controlling precedent at the PTAB. (Note: a proposal in the pending Senate legislation suggests altering the 315(b) bar for amended complaints to address the same problem). A change that would greatly simplify joinder would be to omit the aspect of the statute that requires the party seeking party joinder to file an actual copycat petition. A simple paper expressly adopting the positions of the first filer is far more sensible, at least for party joinder. 

Another change relates to issues of real-party-in-interest and privity. 

Additionally, section 6 requires a petition for an IPR to identify all real parties in interest. The USPTO recommends that the statute be amended to allow for timely correction of real party in interest identification where an error in identification arose without deceptive intent. Real party in interest determinations are highly fact-dependent. Courts have avoided rigid definitions or recitation of necessary factors and take the facts into account on a case-by case basis. Errors in identifying real parties in interest sometimes occur without deceptive intent and currently are not correctable. A statutory change is necessary to avoid situations where petitions are denied based on good-faith, inadvertent errors in identifying all real parties in interest.

The PTAB , like most stakeholders, was caught off guard by the focus of this seemingly innocent statutory requirement in many early filings. Given the potential to terminate a proceeding by proving an improper RPI listing (outside of the 12 month window, thus preventing refiling), this issue is pursued in a surprising number of filings.  In some early cases improper RPI listings were simple oversights. But, since that time, petitioners have learned to be wary of this issue. As such, I’m not sure the suggested change is necessary at this point.

The recommendations to change PGR practice mirror those for IPR.

With respect to CBM, the agency points out that the Alice decision is enabling many patents to be defeated under 101 grounds in the district courts. Therefore, the USPTO does not see the continued need for CBM beyond the 2020 sunset date, explaining:

The purpose of the CBM provision was to enable third parties to challenge covered business method patents issued under pre-AIA law for subject matter ineligibility. Since enactment of the AIA, U.S. law has been evolving in the courts. Notably, U.S. judicial practice has evolved in the wake of the Supreme Court decision in Bilski v. Kappos, 561 U.S. 593 (2010), which addressed the subject matter eligibility of business methods and has helped prevent ineligible business methods from being patented. This change in case law renders the need for the CBM provision unnecessary.

While it is true that courts have been especially receptive to 101 challenges since Alice, that is not the case in all districts. Moreover, a CBM challenge under 101 is likely to be far more cost effective at the PTAB. That said, the reason for the original sunset, namely, that few if any patents will exist in 2020 that issued prior to Bilski, remains true.

Finally, some interesting statistics on third party submissions:
Pages from Report on Implementation of the AIA September2015-2 
As can be seen from the statistics above, third party submissions, while far from common, have been filed in a modest number of applications. (It would have been interesting to know how many of these submissions were filed anonymously, I’m guessing most). Whether or not such submissions are a prudent use of invalidating art remains to be seen.

The report also demonstrates the unpopularity of supplemental examination.

Pages from Report on Implementation of the AIA September2015
As a reminder the primary goal of SE was to provide a mechanism to cure potential inequitable conduct issues via a post-grant proceeding. However, the Therasense decision, coupled with the uniquely complex formal requirements of SE filings have rendered such filings unattractive in most circumstances.