Inter Partes Reexamination

PTAB Precedent (Not Surprisingly) Embraces CAFC Precedent

As I pointed out last week, it is a heavy lift for the Patent Trial & Appeal Board (PTAB) to designate a precedential decision.  For this reason, nothing but the most straightforward of issues can be decided and designated “precedential.”

The PTAB issued a prime example of a seemingly straightforward precedential decision a few days ago in Ex parte McAward, Appeal 2015-006416 (PTAB Aug. 25, 2017), Section I.B. (here). This PTAB precedent makes clear that the USPTO assesses indefiniteness pursuant to the Federal Circuit’s guidance in In re Packard, 751 F.3d 1307, 1310 (Fed. Cir. 2014).

While some have expressed shock at the PTAB pronouncing a different standard than that expressed in Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014), this is just a restatement of the Board’s status quo since the Packard decision. (It is not exactly shocking that the Board is following the guidance of its reviewing court).

The more interesting issue is whether the Court’s reasoning in Packard is equally applicable to AIA trial proceedings? Continue Reading New PTAB Precedent Endorses In re Packard….But For How Long?

Article III Standing for PTAB Appeals Once Again Revisited by Federal Circuit

Last month, the Federal Circuit made clear that Article III standing is necessary for petitioners to appeal from adverse decisions in AIA trial proceedings in Phigenix, Inc. v. ImmunoGen, Inc. (here)  The Phigenix decision follows an earlier decisionConsumer Watchdog v. Wisconsin Alumni Research Foundation (Warf) finding the same Article III standing requirement for the now defunct inter partes patent reexamination.

Yesterday, in PPG Industries, Inc., v. Valspar Sourcing, Inc., the Federal Circuit again addressed the issue of standing in appeals from the Patent Trial and Appeal Board (PTAB). At issue in these consolidated appeals was whether PPG Industries, Inc. (“PPG”) had standing to appeal the PTAB’s decisions in two inter partes reexaminations where the patent owner Valspar Sourcing, Inc. (“Valspar”) was the prevailing party. Showcased in this appeal is evidence deemed to satisfy Article III standing for an appeal from the PTAB.

In finding that PPG did have original standing to bring the appeals, the Court shed some light onto the types of evidence that would be accepted for Article III standing. Namely, the Court held that PPG’s standing evidence demonstrated that it had “a particularized, concrete interest in the patentability” of the patents at issue, which were directed to food and beverage can coatings. Specifically, the Court held that PPG presented evidence that “(1) by the time PPG filed its notice of appeal in this case, it had already launched a commercial can-interior coating for the beverage can industry; and (2) PPG had received at least one inquiry from a customer suggesting that Valspar intended to pursue infringement litigation against PPG related to its can-interior coating.” The Court further noted that PPG’s interest in the outcome of the reexaminations was “enhanced” by the estoppel provisions contained in the inter partes reexamination statute. The Court also pointed out that PPG’s concerns over being sued by Valspar were warranted because Valspar sued PPG on related patents after PPG filed its appeals of the PTAB’s reexamination determinations.

That is, the Court looked to the time of the appeal itself (rather than the underlying PTAB proceeding) as the relevant timeframe to determine Article III standing. Next, the court found that actual business interest within the scope of the patent(s) was a significant consideration when considered alongside the tangible threat of an infringement case. Whether or not statutory estoppel and the business interest alone would have been enough (absent the threat/actual suits) was left for a future case.

Next the court turned to subsequent events, in particular a covenant not to sue on the patents. This covenant was provided from Valspar (unilaterally) to PPG as part of its additional briefing on Article III standing, the covenant recited:

[Valspar] covenant[s] not to sue PPG Industries, Inc. or any of its subsidiaries or customers (collectively,“PPG”) for infringement of any claim of [U.S. Patent No. 7,592,047] or [U.S. Patent No.8,092,876] as of the date of this Covenant Not To Sue based on PPG’s manufacture, importation, use, sale and/or offer for sale of any currently existing products or use of methods and of prior existing products or prior use of methods.

While the Court found that PPG had Article III standing to bring the appeals at the time of their filing, the Court ruled that PPG’s appeals were mooted on appeal because of the covenant.  The Court reasoned that the breadth of the covenant not to sue “necessitate[d]” its conclusion that the case was moot.

USPTO Releases Petition Timelines

The Office of Petitions has launched a new USPTO Patents Petitions Timeline that provides information on petition types that can be filed throughout each stage of the patent prosecution, and reexamination process. For each petition type, users can easily access information on average pendency over the past 12 months of decided petitions, the deciding office, petition grant rates, and link to specific sections of the Manual of Patent Examining Procedure (MPEP) or other parts of the USPTO website that relate to each petition type. (here)

Given the pro forma nature of many prosecution related petitions, of most interest are the more unusual filings, such as petitions to revive abandoned applications.

Of perhaps the greatest interest is the pendency information pertaining to petitions filed during patent reexamination. I have often referred to this practice as the “black arts” as such practice is fraught with uncertainty, and pendency can be quite significant.
The statistics for both ex parte patent reexamination and inter partes patent reexamination are provided below.  While the pendencies are significant for Rule 181-183 filings, keep in mind that since inter partes reexamination requests are no longer accepted. Inter Partes petition workflow (which has always been very significant) should be slowing down. Going forward, I would expect reexamination petitions under Rules 181-183 to improve in timeliness. 

Reexamination Related Petitions

CRU – Central Re-Examination Unit
OPLA – Office of Patent Legal Administration

Petition Type

Avg. Days Pending of Decided Petitions

Grant Rate Percentage

Deciding Office

Extension of time in Ex Parte reexamination under 37 CFR 1.550

        1 88% CRU
Extension of time in Inter Partes reexamination under 37 CFR 1.956

        2 100% CRU
To expunge under 1.59

       77 27% CRU
OPLA
To review denial in Ex Parte reexamination under 1.515

       66 4% CRU
To the Director under 1.181

      150 38% CRU
OPLA
Under 1.182

      151 16% CRU
OPLA
For suspension of the rules under 1.183       78 66% CRU
OPLA

CAFC Cites Inconsistencies in Reexamination Appeal Ruling

Back in June, the Court of Appeals for the Federal Circuit (CAFC) decided Q. I. Press Controls, B.V.,v. Quad/Tech, Inc. (here) The appeal stemmed from an inter partes reexamination of U.S. patent 6,867,423 (95/000,526). Of particular interest in the appeal from the Patent Trial & Appeal Board (PTAB) was the allowance of claims 1-60 in view of the rejection of claims 61-72. That is the Board rejected claims 61-72 on a combination of references never applied to claims 1-60, but, the allowed claims (1-60) and rejected claims (61-72) only differed in minor respects.

On appeal, the requester raised this inconsistency with the CAFC and cried foul (despite never having raised the potential rejection formally for claims 1-60). In reversing the Board, the CAFC stated that the combination must be applied to claims 1-60 as a new rejection under 37 C.F.R. § 41.77(b). In doing so, the CAFC opinion could be interpreted to suggest that a new rejection under 41.77 was no longer discretionary, but mandatory.  

The PTO took issue with this aspect of the opinion. Earlier this month, the CAFC declined the PTO’s rehearing request directed to this concern.

The key language of the June decision is as follows:

[T]he Board has the discretion to issue a new ground of rejection if it has knowledge of one. 37 C.F.R. § 41.77(b) (“[S]hould the Board have knowledge of any grounds not raised in the appeal for rejecting any pending claim, it may include in its opinion a statement to that effect with its reasons for so holding, which statement shall constitute a new ground of rejection of the claim.”). In those instances, the “Board must designate its decision a new ground of rejection and provide the appellant with
an opportunity to respond.”
. . . .
Here, when all these references were before the Board, and this court, an obligation is owed to the public not to permit inconsistent results when a proper challenge to that inconsistency is made on appeal. The Board should have observed the similarities between the claims, noted those similarities between the claims and the references before the Board on appeal, analyzed whether the [combination] would have rendered claims 1–60 obvious, and if so, issued a new ground of rejection. The [combination] was before the Board on appeal because those references were cited by the examiner to invalidate claims 61–72. And, given the minor differences between the claims, the Board “[had] knowledge of . . . grounds not raised in the appeal for rejecting [claims 1–60].”

(emphasis added)
In their rehearing request (here), the PTO expressed concern that the discretion of 41.77 was being ignored, explaining:

Although 37 CF.R. § 41.77(b) expressly states that the Board “may” issue a new ground of rejection if it knows of a ground of rejection not raised in the appeal, the panel determined that the Board “must” designate a new ground of rejection in those circumstances, and ordered the Board to consider a new ground of rejection based on the combination . . .The panel appears to have relied on Rambus v. Rea, 731 F.3d 1248 (Fed. Cir. 2013) as support for its decision. Op. at 18. However, Rambus did not hold that if the Board has knowledge of a new ground of rejection, it must enter a new ground of rejection.  . . Rather, Rambus stands for the unremarkable principle that if a Board’s decision relies on a ground for rejecting a claim that was not raised in the appeal, then it must designate that ground as a new ground of rejection to ensure that the appellant is afforded a fair opportunity to respond.  . . . Nowhere did this Court state in Rambus, or in any other decision identified by the Panel, that the Board is required to issue a new ground of rejection if it has knowledge of a rejection not discussed in the appeal.

The PTO rehearing was denied without explanation. But, presumably the panel was satisfied with the below aspect of the opinion, which explained:

We do not hold that the Board should always apply references that are before it affecting some claims to every other claim on appeal, but we do find that in this instance, in which nearly identical claims were found both valid and invalid due to similar combinations of prior art resulting in a Board opinion that was seemingly inconsistent, the Board erred by not considering the [combination] as a new ground for rejection of claims 1–60.

While the case may seem like an outlier in terms of facts, in the predictable arts it is not uncommon to have substantially overlapping claim sets (apparatus, method, system, etc). This case gives requester’s in inter partes reexamination yet another oportunity to defeat challenged claims. While inter partes reexaminations can no longer be requested, there is still a significant number of such proceedings heading to the Board in the months ahead.

USPTO Inter Partes Patent Challenge Statistics Remain Consistent

With two full years of Inter Partes Review (IPR) proceedings on the books, we now have an adequate sample of decisions—158 through 9/26/14. While most IPR decisions are still pending appeal, the results are consistent with earlier inter partes reexamination outcomes.

As of September 2013, 696 inter partes reexamination certificates had been issued. (Not even half of the 1919 such proceedings pursued over the thirteen year history of the now defunct, never ending, reexamination option).  Of the 696 inter partes reexamination certificates printed by September 2013, the results indicate:

Total Inter partes reexamination certificates issued (1999 – 9/13) ……….. (373)
a. Certificates with all claims confirmed (44) ……………………………………….12%
b. Certificates with all claims canceled (or disclaimed) (169) …………………45%
c. Certificates with claims changes (160) ……………………………………………43%

That is, ALL claims were cancelled in 45% of inter partes reexamination cases. Complete patentee victories (all claims confirmed w/o amendment) was relatively uncommon at 12%.

With IPR decisions approaching the 200 mark, it is not surprising to see the same general results as to complete cancellations and confirmation. The primary differences in statistics of the two systems is the number of concluded IPR proceedings with claim changes.

For IPR, the results to date are not much different. That is, ALL claims are cancelled in 53% of cases, ALL claims being confirmed in only 10% of cases. Given the speed of IPR, a surprising number of claims are cancelled by operation of patentees requesting adverse judgment. It remains to be seen if this anomaly will persist going forward. As noted above, with amendments being a rare occurrence in IPR, the absence of decisions issuing with some claim changes is the main difference between the outcomes of the old and new inter partes systems.
IPRstats

AIA Cited by CAFC  as Remedying Known Patent Reexamination Deficiency

As predicted based upon the earlier oral argument, the Federal Circuit closed the door on the potential for discovery in inter partes patent reexamination in Abbott Laboratories v. Cordis Corp. (here) Specifically, the CAFC held that parties to such a patent reexamination proceeding cannot subpoena documents or testimony before the USPTO under 35 U.S.C. § 24.

Interestingly, as was the case earlier in Lingamfelter v. Kappos, the Court utilized the developments of the recent AIA legislation as a lens by which to view the earlier inter partes reexamination statutes, contrasting the earlier legislative intent as:

Congress’s most recent amendment to the Patent Act further demonstrates that Congress intended for subpoenas under section 24 to be made available in those proceedings in which depositions are relied upon by the PTO. In 2011, Congress replaced inter partes reexamination with a new proceeding called inter partes review.  . . . The purpose of this reform was to “convert[] inter partes reexamination from an examinational to an adjudicative proceeding,” and one of its touted “improvements” over the former proceeding is to allow the limited use of depositions.  . . . In particular, Congress provided for depositions of affiants in the proceeding, and also authorized parties to “seek such discovery as the Patent Office determines is otherwise necessary in the interest of justice.”  . . . In the course of implementing these mandates, the PTO has recognized that the AIA authorizes parties to seek section 24 subpoenas in the new proceedings.

The Court also shot down arguments on due process grounds explaining that there is an opportunity to be heard by a disinterested decision maker in patent reexamination. As such the need for extra controls, such as discovery, are not justified by a “serious constitutional problem.”

Reexamination Filing Surge Dismissed as Speculative

Back in September, I explained that the USPTO received an unprecedented number of reexamination filings in the closing days before the September 16th. This surge was a result of several factors: First, the fee for ex parte patent examination was jumping from $2520 to $17,500 as of the 16th;  and, as a result of the one year anniversary of enactment of the America Invents Act (AIA) on the 16th, September 15th was the last day to file a request for inter partes patent reexamination.

Currently, the Central Reexamination Unit (CRU) is working through the bolus of filings, still trying to get them all docketed and reviewed within the 90 day statutory period. Seizing upon this influx of work, a Patentee recently argued against staying their district court proceeding pending inter partes patent reexamination — arguing that the USPTO process would now be much slower.

In Polaris Industries v. BRP US Inc. and Bombardier, the Court dismissed this argument, explaining that:

Regarding the length of the reexamination process, Polaris argues that the recent influx of requests for reexamination at the PTO will cause extraordinary delay. The Leahy-Smith America Invents Act (the “Act”) amended the inter partes reexamination process for all requests filed after September 15, 2012. . . . Because of this deadline, the PTO received an unusually large volume of reexamination requests in September 2012.  . . ., Polaris argued that this high volume of requests will cause the PTO’s reexaminations of the ’285 and ’923 patents to extend to 7 to 10 years.

 However, the actual effect of the Act on the PTO’s reexamination process remains to be seen. See Inogen, Inc. v. Inova Labs, Inc., No. SACV 11–1692–JST, 2012 WL 4748803, at *3 (C.D. Cal. Mar. 20, 2012) (noting reluctance to rely on current reexamination statistics given the Act’s amendments). The court in Inogen posited that because the Act raised the threshold for granting requests for inter partes reexaminations (termed “inter partes reviews” under the Act), the PTO may actually grant fewer requests in the future. Id. Given the uncertainty of the PTO’s future workload, Polaris has not provided persuasive evidence that the reexaminations of the ’285 and ’923 patents will be pending for nearly a decade. On the other hand, BRP promptly requested the reexaminations after the dispute between the parties emerged, and BRP has not engaged in improper litigation tactics that might otherwise warrant declining a request for a stay.

As I pointed out previously, there will almost certainly be a short term slowing at the Central Reexamination Unit (CRU) while the bolus of filings is processed; however that affect should be short lived. This is because there are far fewer filings coming in the door now that the fees for ex parte reexamination have been drastically increased and inter partes patent reexamination is no more.  (Note that the new PTAB trial filings do not go to the CRU)

CAFC Finds SNQ Denial Not Subject to Appeal in Inter Partes Patent Reexamination

Back in March of 2011, an expanded panel of the Board of Patent Appeals & Interferences (BPAI) decided Belkin International et al., v. Optimumpath LLC. Belkin’s appeal stemmed from a denial of a proposed SNQ of an inter partes patent reexamination request of  U.S. Patent 7,035,281 (95/001,089). The initial request for inter partes patent reexamination was granted as to claims 1-3 and 8-10, but denied as to claims 4-7 and 11-31.

The denial of the SNQ targeting claims 4-7 and 11-31 was petitioned to the Director of the Central Reexamination Unit (CRU). Upon reconsideration, the Director refused to reverse the examiner. On the other hand, Belkin did not petition the denial of SNQs pertaining to the claims being actively reexamined (claims 1-3 and 8-10). During prosecution of the reexamination, the rejection of claims 1-3 and 8-10 was withdrawn by the examiner. Thereafter, Belkin appealed the withdrawn rejection of claims 1-3 and 8-10 together with the denial of the SNQs pertaining to those reexamined claims.

The procedural issue before the Board was whether or not denied SNQs, which pertain to claims being actively reexamined (i.e., claims 1-3 and 8-10) must be petitioned rather than appealed to the BPAI. The Board found that:

[I]f 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)

Yesterday the CAFC weighed in on the debate.

Belkin argued (here) that the Board has jurisdiction to consider prior art found not to raise a substantial new question of patentability in inter partes reexamination when reexamination is subsequently granted for the same claim on another reference. Belkin presented reexamination as a two-step procedure: (1) determining whether a substantial new question of patentability exists; and (2) if so, determining whether the claims are patentable over all prior art.  Belkin conceded that the first step is not appealable under § 312(c) (as was the case for claims 4-7 and 11-31), but contended that once an SNQ affecting a claim is found, all prior art must be considered on appeal, including prior art found previously not to raise a substantial new question of patentability.

The CAFC sided with the USPTO explaining:

We disagree with Belkin’s position because there was no final decision favorable to patentability regarding the issues based on the [denied SNQs].  First, the Director’s determination that an issue does not raise a substantial new question of patentability is not a decision favorable to patentability.  Lack of a substantial new question of patentability is not a favorable decision on patentability.  Indeed, it cannot be one, as the decision on the substantial new question preceded the actual reexamination, and merely raised a “question” to be answered.  Furthermore, it is explicitly non-appealable under § 312(c).  To allow an otherwise non-appealable decision by the Director to become appealable simply by raising it a second time during the later reexamination would impermissibly circumvent the statutory bar on appeals.

In deciding the issue, however, the CAFC did highlight a potential non-petition route to preserve such issues for appeal, explaining:

In this case, the Director determined, in part, that the issues based on the first three references cited by Belkin did not raise a substantial new question of patentability regarding claims 1–3 and  8–10.  Under § 312(c), that decision is final and non-appealable.  But the Director also determined that one issue based on anticipation by another reference, Peirce, did raise such a question.  At that point, the Director was entitled to, and did, order reexamination for resolution of that single question. The scope of the resulting reexamination was then limited to answering that question of patentability, anticipation by Peirce. Belkin, at that point, could only raise the three references if they were necessary to rebut findings of fact by the examiner or as a response to the patent owner relevant to answering that single patentability question.  See 37 C.F.R. § 1.948(a).  Here, Belkin has not argued that the three references were cited for such a purpose, and the limited record before us does not suggest that they were.  Thus, the Board was correct not to consider the previously raised and rejected issues based on the other three references.

(emphasis added)

It is worth noting that the above option was never available to Belkin. This is because the first action was an Action Closing Prosecution (ACP), and the Patentee did not respond. Thus, Belkin had no option to argue the merits before the examiner until appeal briefing. Still, for those legacy inter partes reexamination filings that fall under the old SNQ standard, the above rebuttal option may be the best option for preserving such matters for PTAB review. (note that the SNQ standard changed on September 16, 2011, so the last year of inter partes reexamination filings are free of this confusion).

September 15 Deadline Fast Approaching

Yesterday, the USPTO issued a notice entitled September 15, 2012 Deadline to File Requests for Inter Partes Reexamination Proceedings and Modification of Notice of Failure to Comply Form (here) The notice is essentially a warning to practitioners that although September 15th is the official filing deadline for inter partes patent reexamination filings, the practical filing deadline is likely the week of September 4th.

The Notice explains that Requesters are advised to file any inter partes reexamination requests which they intend to file as soon as possible, in order to provide the United States Patent and Trademark Office (Office) with maximum time to: (i) Receive, process, and review such requests for their compliance with all the filing date requirements for inter partes reexamination; and (ii) notify the requester of any deficiencies in the request via a Notice of Failure to Comply with Inter Partes Reexamination Request Filing Requirements (Notice of Failure to Comply) while providing sufficient time for requester to submit a corrected/replacement request prior to September 16, 2012.

In other words, any issues of non-compliance must be corrected by September 15th. If the corrected/replacement request is not received by the Office as of September 15, 2012, the corrected/replacement request will not be accorded a filing date, even though the original request was timely received by the Office. This is so, regardless of when requester receives notification that the original request is not filing-date compliant.

Although not stated in the notice, paper filings should likely be avoided. This is because such filings also have to be scanned into the EFS system and, as a result, may introduce further delay.

CAFC Avoids Determining Propriety of Third Party Declaration Practice in Inter Partes Patent Reexamination

Yesterday, in Lingamfelter v. Kappos, (here) the CAFC decided that the Patentee had waived the right to contest the propriety of the third party declarations filed in their inter partes patent reexamination. (earlier post here)

The crux of the Patentee’s argument was that the inter partes reexamination statute permits the USPTO to accept “written comments” from Requesters—and “comments” as recited in the relevant statute cannot embrace testimonial “evidence” of declarants.35 U.S.C.§ 314(B)(2) The Patentee further decried the allegedly improper practice as unfair, pointing out that discovery is not permitted; thus there is no way to demonstrate the inaccuracy of the submitted evidence.

The CAFC seemed intrigued by the Patentee’s contentions during oral argument, but ultimately side stepped the issue finding the argument waived, explaining:

We need not address the merit of Lingamfelter’s arguments, however, because in our view, he has waived them. To begin with, Lingamfelter was too late in challenging the introduction of the evidence into the record. He did not object when third party requesters’ evidence was submitted to the examiner at the early stages of the inter partes proceedings (in July 2005), or when the first appeal from the examiner’s decision was presented to the Board (in December 2006). It was not until he elected to reopen the case before the examiner (in February 2010 and more than four years after the proceedings had begun) that he contended the examiner lacked authority to receive the contested evidence from third party requesters. Even at that late stage, however, Lingamfelter still did not sufficiently brief the issues that he raises in this appeal.

While a loss for this Patentee, it seems very likely that the issue will reemerge at the CAFC in the months ahead.