Oil States/CAFC to Unravel “Litigation” Premise

Sovereign immunity from proceedings of the Patent Trial & Appeal Board (PTAB) has become inextricably linked with the Oil States debate now before the Supreme Court. That is, the 7th amendment argument in Oil States and the 11th amendment argument for sovereign immunity at the PTAB are both tied to the same basic, threshold premise — IPR is a trial proceeding akin to an Article III lawsuit.

In Oil States, the “trial argument” is made to distinguish IPR proceedings from patent reexamination. It is argued that because an IPR is more trial-like compared to the earlier, examination based system, a jury trial is now required, consistent with the 7th Amendment.

In the sovereign immunity context, immunity applies if an administrative proceeding is similar to civil litigation. Fed. Mar. Comm’n v. S.C. State Ports Auth., 535 U.S. 743 (2002). But, some judges of the CAFC have already signaled a willingness to unravel this “IPR is a trial” premise, and it is my expectation that Oil States will follow suit. Continue Reading Sovereign Immunity at the PTAB a Temporary Phenomena?

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?

Boardside Chat Today

As discussed yesterday, evidentiary issues are handled quite differently at the PTAB as compared to the district court. Right on cue, the PTAB will host a Boardside Chat today to address common evidentiary issues in AIA trial proceedings from 12-1 p.m. ET.

The webinar panel will include Administrative Patent Judges Medley, Chang, and Cox.  The discussion will cover common evidence issues that occur in AIA trial proceedings before the Board. The program is free to attend.

Webinar access information is below.

Event: PTAB Boardside Chat Webinar

Registration available online

Date and time: Thursday, August 31, 2017 from 12-1 p.m. ET

Duration: 1 hour

Event number: 397 231 324

Event password: Typ6Pg2q

Audio conference: Call-in toll number (US/Canada): 1-650-479-3208

Access code: 397 231 324


Preserving The PTAB Trial Record

An objection operates to preserve errors in admitting evidence. At the PTAB, the manner and timing of making evidentiary objections is governed by agency rule rather than the Federal Rules of Evidence (FRE). 37 C.F.R. § 42.64.  An Offer of Proof, on the other hand, preserves errors in excluding evidence. But, to date, Offers of Proof have not been a recognized mechanism of PTAB trials — not formally anyway.  This is despite the fact that there is no agency rule on point to displace FRE 103, and the FRE apply to PTAB trials. 37 C.F.R.§ 42.64.

That is not to say that PTAB litigants are unable to otherwise preserve the record when evidence is denied entry, or that the need to preserve such is anywhere near as pronounced as compared to the district court. Only that PTAB litigants may have to work a little harder to preserve such issues for appeal. Continue Reading PTAB Offers of Proof?

PTAB Expanded Panels Impact Less Than 1% of All AIA Trials

Last week the Court of Appeals for the Federal Circuit (CAFC) issued its decision in Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co. (here)  The decision affirmed the USPTO’s Patent Trial & Appeal Board cancellation of certain claims of Nidec’s U.S. patent 7,626,349 (IPR2014-01121 & IPR2015-00762). In this regard, the opinion was rather unremarkable. Of particular interest to PTAB critics, however, was the Court’s discussion of the Board’s expanded panel practices in its concurring opinion.

Although conceding it had no impact on the outcome of the case, the concurrence took issue with the Board’s expansion of a rehearing panel for the stated purpose of reversing the earlier decision.  That is, in order to consistently treat questions of issue joinder under 35 U.S.C. § 315(c), the PTAB expanded a panel to include judges that had ruled differently on the same question of statutory interpretation. As a result, the expanded panel reversed the earlier decision and found issue joinder to be embraced by 315(c). The Federal Circuit signaled a strong distaste of such agency practices.

Critics were quick to lambaste the PTAB’s expanded panel process in Nidec as evidence of a crooked process and an anti-patent bias.  Of course, anyone that has followed this blog knows that to be false. Continue Reading PTAB Expanded Panels: Fact Check

Article III Standing Only Necessary for Party Invoking Authority of Federal Courts

Last week, I analyzed the government’s arguments supporting Article III standing for intervenors in Knowles Electronics v. Matal. In that case, the panel questioned whether the government had Article III standing to intervene in a case where the original appellee dropped out. As to the arguments presented by the government, I explained that I found the most compelling argument to be that the agency can piggyback off of the Article III standing of the appellant as the standing inquiry is properly directed at those who invoke the court’s jurisdiction.

Yesterday, two of the three judges (Newman, Clevenger) on the Knowles panel agreed with the above “piggyback” argument in Personal Audio, LLC v. Electronic Frontier Foundation.
While Personal Audio did not address the specific intervenor scenario of Knowles, it did address standing of a party other than the Appellant.

The Appellee, Electronic Frontier Foundation (EFF) , is a non-profit organization that seeks to protect the public interest of consumers of digital technology.  EFF sought Inter Partes Review (IPR) of Personal Audio’s (8,112,504) ‘504 patent after a well-publicized campaign in which the ‘504 patent was used to target podcasting programs around the country. EFF was successful in securing the cancellation of the challenged patent claims at the Patent Trial & Appeal Board (PTAB).  On appeal, the question of EFF’s standing as appellee was raised by the panel, and additional briefing was ordered (including amicus filings).

In a few short paragraphs, the Court dispensed the EFF standing issue (here), concluding:

Here, the party invoking judicial review is Personal Audio; it is apparent that Personal Audio, on cancellation of its patent claims by the PTAB, has experienced an alteration of “tangible legal rights . . . that is sufficiently ‘distinct and palpable’ to confer standing under Article III.” Virginia v. Hicks, 539 U.S. 113, 121 (2003) (internal citations omitted). With Article III satisfied as to the appellant, EFF is not constitutionally excluded from appearing in court to defend the PTAB decision in its favor.

Personal Audio appears to have all but mooted the remaining briefing in Knowles on intervenor standing.

Assignor Estoppel Not an Exception to 311(a)

The Patent Trial & Appeal Board (PTAB) has designated the following decision as precedential: Athena Automation Ltd v. Husky Injection Molding System Ltd., IPR2013-00290, Paper 18 (PTAB Oct. 25, 2013), Section II.A. (here)

Athena holds that the doctrine of assignor estoppel is not an exception to 35 U.S.C. § 311(a), which allows “a person who is not the owner of a patent” to file a petition for inter partes review. This decision was later left undisturbed by a split-panel of the Federal Circuit.  The majority found review of assignor estoppel precluded by operation of the appeal bar (35 U.S.C. § 314(d), relying upon the Court’s earlier decision in Achates Reference Publishing.  Of course, the continued viability of Achates is being reconsidered, en banc, in in Wi-Fi One LLC v. Broadcom (here).  As such, this agency precedent might be revisited by the CAFC down the line.

Failure to Argue Differing Claim Language of Similar Claims Haunts Appellant

PTAB practitioners must always be mindful of the Board’s longstanding practice to treat grouped claims as standing or falling together. That is, claims should be argued separately where the claims are phrased similarly, but with some deliberate grammatical or additional term difference to distinguish scope.  In those cases, it is important to discuss the implications of the grammatical differences. Simply reciting a claim limitation, and asserting that the limitation is/is not found in the prior art, is not taken by the Board as a separate argument for patentability.

That said, such layered arguments may fall prey to the tight space constraints in AIA trial proceedings where more pressing arguments are necessary.

For example, one of the more particularly tricky aspects of AIA trial practice prior to May of 2016— at least for petitioners— was fitting all of petitioners arguments within the fifteen pages allocated for a Petitioner Reply by the PTAB.  As a result of the limited real estate, some petitioner arguments that might have been otherwise made were often cut for space constraints. Fortunately, in May of 2016, the fifteen page limit was increased to twenty-five pages.

Yesterday’s decision of the Federal Circuit emphasized the risks of claim grouping; perhaps a reflection of the earlier AIA trial briefing constraints.

In HTC Corp. v. Cellular Communications Equipment (here), the Court considered the language of similar method and apparatus claims (claims 1 and 24). In analyzing the key claim construction dispute of the apparatus claim, the Court determined that this claim required separate components where the prior art only showed a single component. Arguably, method claim 1 was broader, and failed to include some of the key language driving the Court’s two-component construction for claim 24. However, rather than reach that issue on its own, the Court found that the Appellant had forfeited that argument, explaining:

In the particular circumstances presented, we will not consider giving claim 1, in the respect at issue, a different scope from that of claim 24, which, we have concluded, requires two separate components .  .   .  . In the PTO, [appellant] did not “fairly put [the Board] on notice as to the substance of” any request to distinguish claims 1 and 24 regarding this critical issue of scope. . . .

It is not plausible that [appellant] inadvertently overlooked the potential for a half win, which it might well have deliberately chosen to discourage by taking an all-or-nothing approach. Moreover, the IPR regime at issue places a special premium on efficient Board resolution of patentability challenges. . . . In these circumstances, we will not decide whether claim 1 should be accorded a different scope from that of claim 24 in the respect at issue.

The majority explained that forfeiture determinations are fact specific, and emphasized the fact that appellant took a position before it (at oral argument) that claims 1 and 24 were not being argued as having a different scope on appeal.

The dissent took issue with the forfeiture determination only, explaining that the majority decision was “incorrect and troubling for future cases.”  The dissent insisted that the petitioner had argued claim 1 separately:

For example, in its IPR petition to the Board, [appellant] presented a detailed claim chart and specific disclosures found in the [prior-art references] that, in its view, made each limitation obvious for each claim at issue; in particular, HTC presented a different set of disclosures found in the prior art with respect to claim 1’s diverting limitation than to claim 24’s diverting limitation. .  .  . In another example, in the Petitioner’s Reply to the Board, [appellant] argued that “CCE’s statement that . . . D’Aviera does not disclose anything . . . that could perform the intervening diverting step is misguided. The language of claim 1 does not preclude the same structure from performing the diverting step and the controlling step.”

(emphasis in original)

While AIA trial petitions routinely cite to differing portions of a reference for similar claims, it remains unclear how this may/may not have been changed by the Board at institution.

As to appellants Reply arguments, it is worth noting that the Court considered a simialr issue in In re Lovin, 652 5 F.3d 1349, 1357 (Fed. Cir. 2011) (holding that the Board reasonably interpreted its rules of practice as requiring “more substantive arguments in an appeal brief than a mere recitation of the claim elements and a naked assertion that the corresponding elements were not found in the prior art” to constitute a separate argument).   While an analysis of a rule construction as opposed to a forfeiture scenario, the Court has previously endorsed the Board’s view of such citations as not being a separate argument.

While space constraints for Petitioner Reply’s are less worrisone than a year ago, petitioner’s faced with cutting brief content might cite to HTC to justify an extension to the page limit; especially in those cases where a Patentee is arguing a significant number of individual claims.

Patent Owner Sur-Replies on the Uptick

Back in June of 2016, the Federal Circuit issued its opinion in Genzyme Therapeutic Products LP v. BioMarin Pharmaceutical Inc.(here).  At the time I explained that Genzyme was a game-changer.  This was because it made clear that the trial portion of an AIA proceeding was an opportunity for both sides to build a record — not a mere analysis of the four corners of the trial petition.  As stated simply by the Court in Genzyme, “[t]he purpose of the trial in an inter partes review proceeding is to give the parties an opportunity to build a record by introducing evidence—not simply to weigh evidence of which the Board is already aware.” (emphasis added)

As a reminder, an instituted AIA trial (absent a motion to amend) includes a single brief from each party, the petitioner filing the last brief as the party bearing the burden of demonstrating unpatentability.

Since Genzyme, the Board has become far more comfortable with petitioners citing to new exhibits in petitioner replies (assuming such exhibits/arguments are in support of existing positions as opposed to altogether new theories).  At roughly the same time Genzyme issued, and since, the Board has been faulted for violating the Administrative Procedure Act (APA). For example, for failing to give parties a fair opportunity to respond to issues. (e.g., SAS Institute Inc., v. ComplementSoft LLC)  These developments are helping drive a more liberal perspective at the Board as to additional briefing possibilities for Patent Owners.

A review of trial practices immediately before Genzyme, as compared to today, illustrates an increased willingness on the part of the PTAB to permit Patent Owner sur-replies at the close of the trial, effectively giving Patent Owners the last word in trial briefing.

As shown in the graph below (using the Spring of ’16 (pre-Genzyme) and ’17 as sample windows) Patent Owners are seeing an uptick in sur-replies. While this uptick may appear modest at first blush, there were 35 fewer cases available in the 2017 sample.

(While the charts above show cases (red) in which a formal order was issued denying a sur-reply request, as panels routinely issue such decisions via email, this aspect of the chart is unreliable)

Where sur-replies are granted, it is routinely for one of two scenarios: (1) The patentee bears the burden on an issue, such as antedating; or (2) The sur-reply is sought to address alleged new arguments/exhibits of the Petitioner Reply, as shown in the chart below.


Going forward this trend will is likely to continue. For this reason, some formal guidance from the Board would appear in order to clarify when a Patent Owner may be entitled to a sur-reply as a matter of right (i.e., for matters in which the Patent Owner carries the burden).  Such guidance would quell unnecessary disputes, and reduce the need to request panel attention to referee the same.

As to new argument/evidence issues, it is uncommon for a petitioner reply not to have at least one new exhibit. (“new” meaning not appearing in the trial petition).  Given the increasing willingness of the Board to grant sur-replies on this basis, care must be given to ensure that this argument does not become an avenue for abuse.

Patent Owner’s raising affirmative defenses, or AIA statutory issues (perhaps of increasing importance after WiFi One) would be wise to consider sur-reply options going forward. Indeed, the Federal Circuit will often point out that the failure to seek such relief may foreclose otherwise viable arguments on appeal.

“Closely Tied” Language of Cuozzo & Institution-Centric Statutes

The en banc opinion on the scope of the AIA’s appeal bar (35 U.S.C. §§ 324(e)/314(d)) remains outstanding in WiFi One.  Still, we have seen a few opinions from the Federal Circuit as of late that nibble around the edges of this issue.  From these decisions, we see the Court focusing on the statute underlying the appealed issue, and whether or not that statute is tied, in timing or substance, to the institution stage.  The most recent, Credit Acceptance Corp. v. Westlake Services, found another exception to the appeal bar for CBM estoppel. 35 U.S.C. 325(e)(1).

In Credit, (here) the Court emphasized the potential for estoppel at any stage of the proceeding as a factor that tended to show that the estoppel statute was not “closely related” to institution.  The Court also emphasized that 325(e)(1) estoppel would extend to non-AIA proceedings such as patent reexamination, and that estoppel also impacted Article III proceedings.

As to the underlying facts of Credit, petitioner filed two CBM proceedings against different groups of claims of a same patent.  The first CBM concluded before the second on March 24, 2015. In the first CBM decision the Board found claims 1-9, 13, and 34-42 to be unpatentable under §101.  In light of this final written decision, Patentee moved to terminate the second CBM asserting that petitioner was “estopped from challenging claims 10-12 and 14-33 under §325(e)(1)”. (pg 5 of the opinion).  The Board denied CAC’s motion, explaining that estoppel under §325(e)(1) applies on a claim-by-claim basis and that the final decision in the first CBM was only relevant to claims 1-9, 13, and 34-42; therefore, Westlake was not estopped from maintaining its challenged in the second CBM.

The Board then issued a final decision in the second CBM finding claims 10-12 and 14-33 unpatentable under §101.  Patentee appealed the second CBM decision arguing that petitioner should have been estopped from maintaining its challenge (as well as the holding under §101).

After the Supreme Court’s Decision in Cuozzo, the Federal Circuit first had to explain why the Board’s decision to allow Petitioner to maintain its second CBM was not barred under 35 USC §314(d). The Federal Circuit distinguished the case from Cuozzo by honing in on the word “maintain” in §325(e)(1) as opposed to the word “institute” in §314(d):

The estoppel provision at issue here, § 325(e)(1) (like the comparable IPR provision, § 315(e)(1)), is distinct from the issues addressed in Cuozzo. Specifically, § 325(e)(1) does not refer to “institution” decision and in fact is not limited to institution decisions.

Of course, the statute of interest in WiFi One (315(b)) specifically references institution: [a]n inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date. . . . (emphasis added).  If the “closely tied” language were the only guidance provided by Cuozzo, this might be the end of the road for WiFi One.  But, Cuozzo (as explained in Credit) provided a host of additional, potential carve outs:

[W]e need not, and do not, decide the precise effect of § 314(d) on appeals that implicate constitutional questions, that depend on other less closely related statutes, or that present other questions of interpretation that reach, in terms of scope and impact, well beyond “this section.” Thus, . . . we do not categorically preclude review of a final decision where a petition fails to give “sufficient notice” such that there is a due process problem with the entire proceeding, nor does our interpretation enable the agency to act outside its statutory limits by, for example, canceling a patent claim for “indefiniteness under § 112” in inter partes review.

WiFi One would not seem to present a constitutional issue.  Further, the one-year bar directly references institution, and is therefore a “closely related statute” consistent with Credit.  Left to be answered in Wifi One is when the agency’s institution decision may be challenged as being beyond statutory limits of the AIA.  Such statutory limits cannot be for every AIA statute or the appeal bar would be rendered toothless (and would directly contradict Cuozzo’s holding on 312(a)(3)). So, are we left deciding which AIA statutes are more fundamental to ultimate agency authority than others?  If so, it would seem that a statute such as 315(b) that while closely tied to institution defines what the agency “may not” do, might still be a question of statutory limits under Cuozzo.

We will find out soon enough.