Preliminary Guidance More Hinderance Than Help

Patent Owner’s rarely seek to amend claims during PTAB trials. This is because, as most such patents are being simultaneously litigated, amendment introduces a host of complications — not the least of which is creating an intervening rights defense for the patent challenger. This is why amendments are historically seen in about 5-7% of PTAB trials.

For the rare Patent Owner that is inclined to amend, the PTAB offers an Amendment Pilot Program. The Pilot is designed to help Patent Owner refine their amendment positions with two opportunities to amend (non-pilot route permits one amendment submission). Under the Pilot, the Patent Owner can also request the panel’s preliminary assessment (i.e., Preliminary Guidance) of its initial amendment to assist in refining the final amendment submission.

But, practically speaking, Preliminary Guidance is a significant gamble for Patent Owners that is rarely worth taking. And as the Federal Circuit pointed out earlier this week, even when seemingly helpful, it may still prove ultimately unhelpful.

First, I have participated in the amendment process for Petitioners and Patent Owners, in Pilot cases, and in non-pilot cases. In every one of those cases, the same art used to challenge the original claims was also used to challenge the amended claims. And in every case, that challenge was successful. This is a reflection of the very slight changes that are introduced via amendment (usually to maintain an infringement read). This brings me to the first reason why I have yet to request Preliminary Guidance on behalf of a Patent Owner.

When requesting Preliminary Guidance in the above scenarios, the Patent Owner is indirectly soliciting feedback on the case in chief. That is, with the same claim terms and prior art in play, the last thing Patent Owner wants in the middle of a trial is a cursory and “preliminary” opinion that its positions (even as revised with the amendment) still fail. Likewise, and for the same reason, Patent Owner should not welcome feedback from the panel on tight corners relating to claim terms, etc. While Patent Owner might miss out on some feedback blessing one or more of its arguments, the potential downside is just too much of a trade off. And, as I previewed above, even positive, preliminary feedback can prove unproductive.

This week in Medytox, Inc. v. Galderma S.A (here), the Federal Circuit considered Preliminary Guidance from the Pilot that was favorable to a Patent Owner position, but, at the time of Final Written Decision (FWD), rolled back. The Patent Owner argued that this change was a violation of the Administrative Procedures Act (APA), and due process. On appeal, the USPTO pointed out that the guidance is clearly stated as “preliminary,” and even includes a disclaimer that the FWD could go in another direction with further development of the record.

Ok, fair enough, the Pilot feedback is preliminary just as like a Decision to Institute (DI).

But, unlike a DI, the briefing options in the Pilot are more limited and condensed in time. These are not full trial briefs, and, not surprisingly, parties will focus their attention according to the Preliminary Guidance. So, when the Board comes back in the Patent Owner’s favor on a given issue (in this case enablement), the Patent Owner spends the rest of its time focusing on other disputed issues.

This appears to have been lost on the Court, which explained:

Our review of the record indicates that the extrinsic record was developed between the Board’s issuance of its Preliminary Guidance and the FWD . . . The Board’s concerns about the substitute claims were also made clear during oral argument. ¶ Medytox was able to present its case on the issues before the Board, including claim construction, and again when it filed a Request for Director Review or Panel Rehearing.

While one can always point to something related to any issue being mentioned in the record (especially as this issue overlapped with claim construction), the real question to be asked is whether there was a full and fair opportunity to address the change in course. The Court points to oral argument, but the trial record was closed at that point. Likewise, rehearing is not an opportunity to reopen the trial record. I don’t find any of this supporting the Court’s position.

In fairness, however, the Court does emphasize that in addition to the disclaimer in the guidance itself, the Federal Register Notice on the Pilot also makes very clear that preliminary guidance is not final. Still, in a world according to me, if a panel is considering a change in course, briefing should be invited after oral argument.

The takeaway here is that whether favorable or unfavorable to a Patent Owner, Preliminary Guidance is more of a hinderance than a help.