uspto_reexamination

Senate Hearing Wednesday June 20th

Following on the heels of the House Judiciary Committee hearing last month, today, the Senate Judiciary Committee will hold a hearing on the implementation of the America Invents Act beginning at 10AM. The hearing will be webcast (here) and is entitled Oversight of the United States Patent and Trademark Office: Implementation of the Leahy-Smith America Invents Act and International Harmonization Efforts.

The agenda identifies Director Kappos as a speaker, others are likely.

preliminary injunction-post grant

AIA Post Grant Trial Mechanisms: Game Changers

Currently, Patentees anticipating a motion to stay a parallel litigation pending patent reexamination will often pursue a preliminary injunction (PI) to bolster their argument that a stay would be prejudicial as between competitors. That is to say, the relatively long, multi-year pendency rates of patent reexamination coupled with a perceived deterioration in market share (not compensable by money damages), was often times enough potential prejudice to influence a judge to deny a stay of the proceeding. …or at least delay any decision to stay until after a decision on the merits of the request for injunctive relief.

Later, when addressing the merits of the PI request, courts would weigh the reexamination evidence against the “likelihood of success on the merits” factor of the well known PI analysis. In some instances, courts would look dis-favorably upon the mere grant of a patent reexamination request. This is because, historically, the grant rate for patent reexamination requests hovered around 93% under the SNQ standard. Likewise, courts would disregard interim rejections of the patent reexamination proceeding as subject to years of further prosecution/appeals.

Yet, these criticisms may no longer apply after September 2012, the effective date of the new contested proceedings of the America Invents Act (AIA).

Starting on September 16 2012, the pendency of the new contested patentability challenges (Inter Partes Review (IPR), Post Grant Review (PGR), Transitional Program for Covered Business Method Patents (TPCBM) will be 12-18 months by statute; a far cry from the 5-7 years for inter partes patent reexamination. At the same time, the standards for initiating the new proceedings have been raised relative to the old SNQ standard to reduce the overall grant rate. Continue Reading Preliminary Injunctions an Even Tougher Sell Post AIA?

Egregious Misconduct Claim Shot Down by District Court

As most patent reexaminations are conducted in parallel to a related litigation, it is important that the USPTO be informed of the progress of a parallel litigation. For this reason, MPEP 2282; 2686 permit the filing of litigation notices by any party to the proceeding, or even a member of the public. The simple failure to inform the USPTO of a parallel court proceeding had, prior to Therasense, been held to be per se material under the former “reasonable examiner” standard. Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223, 1234 (Fed. Cir. 2007)

But what about an arbitration proceeding, does the same duty apply? …and, does the heightened Therasense standard disturb the earlier Nilssen ruling?

These issues were recently explored in Kimberly-Clark Worldwide Inc., v First Quality Baby products et al. As part of the litigation dispute, plaintiff (KC) was subject to a confidential arbitration. In the arbitration, the Patentee and defendant (FQ) took similar positions with respect to that disputed before the USPTO in patent reexamination.

Although the defendant would typically be able to submit the arbitration material of their own accord  as notice of a concurrent proceeding in the patent reexamination (MPEP 2282; 2686), the arbitration materials were confidential. As KC did not submit the materials to the USPTO during the patent reexamination proceeding, the defendants argued the lack of disclosure to the USPTO of the arbitration materials constituted egregious misconduct under Therasense, consistent with the Nilssen case.

In rejecting the defendants inequitable conduct charge, the court explained: (here)

The information that KC failed to disclose to the PTO was nothing more than the opinions of third parties, which had no legal or binding effect. We find no basis to conclude that KC was obligated to disclose to the PTO the fact that these third parties disagreed with the arguments that KC advocated before the PTO. Hence, we are not persuaded that failure to make such disclosures constitutes egregious misconduct.

Nor do we agree with FQ’s assertion that, just as failure to disclose ongoing related litigation is inequitable conduct, see Nilssen v. Osram Sylvania, Inc., 504 F.3d 1223, 1234 (Fed. Cir. 2007), so too must KC’s failure to disclose the arbitration be inequitable conduct. Non-binding arbitration is distinguishable from litigation, on the basis that it lacks binding legal effect. We conclude that FQ’s factual allegations fall short of showing egregious misconduct that is per se material, and therefore, FQ must establish materiality under the but-for standard.

In addition to distinguishing Nilssen on the facts, the Court went on to note that as FQ relied on a per se theory, they did not otherwise demonstrate but-for materiality. Whether or not the lack of disclosure of an ongoing  litigation, absent any other showing, is still per se material under Therasense was not explored by the Court.

While the mere lack of disclosure of arbitration materials may not be per se material under Therasense, that is not to say that a lack of disclosure can never form the basis of a valid inequitable conduct defense. For example, although such materials are not prior art, assuming conflicting positions were taken by the Patentee before the USPTO and the arbitrating body, a violation of 37 C.F.R. § 1.555 (b)(2) may evince a lack of candor akin to the actual facts of the Therasense case. (at least in the current form of Rule 555)

This case was brought to my attention by the great Docket Navigator.

BPAI Hiring & Rule Efforts

The USPTO is now heading into the home stretch of the America Invents Act (AIA) rule making efforts. The USPTO has committed to publishing the final rules relating to the new post grant mechanisms of the AIA by August 16th, at the latest. It is expected that the agency will complete their work on the final rules in July, but, the review of the Office of Management & Budget (OMB) will delay publication another 2-3 weeks.

The final packages are not expected to vary significantly from the February NPRMs. The USPTO has commented publicly that there will be a modification to the proposed fee schedule. It does not appear that the basic structure of the patentability trials (umbrella rules) will change in any major regard.

In other news, the USPTO will open the first satellite office in Detroit on July 13th. The new office, known as the Elijah J. McCoy Satellite Office will be home to a newly hired group of examiners, and even a few Administrative Patent Judges (APJs). It is unclear if the Detroit APJs will be reviewing only locally examined cases.

As to APJs, the hiring to combat the ex parte appeal backlog continues. Likewise, the Office is preparing to transform from the Board of Patent Appeals & Interferences (BPAI) to the Patent Trial & Appeal Board (PTAB) on September 16th. Last week the USPTO swore in 11 new judges and plans to bring in at least two more groups of new judges in July and August. With the recent hires, the Office appears to be making an effort to hire judges with private practice experience. New hires will focus on ex parte appeals in the short term until sufficiently trained. Thereafter, some new horsepower will likely transfer over to the trial section of the PTAB.

As the Board expands, so too does the need for office space. As a result, Electrical Groups 1 and 2 are being moved to the Shirlington Village office location (just outside of Alexandria). Of course, oral hearings will still be conducted in Alexandria. There is no plan to move the trial section from the Alexandria campus.

It is expected that as many as 50-75 petitions for trials will be filed with the USPTO in September alone. (Inter Partes Review and Transitional Program for Covered Business Method Patent (TPCBM) filings). There is also very likely to be a final surge of inter partes patent reexaminations filings prior to the September 16th cut off date.

Congress Mandates Speed, Extends Stautory Estoppel to ITC

The new post grant patent trials of the America Invents Act (AIA) are designed to provide a true alternative to patent litigation. That is to say, current patent reexamination proceedings are typically pending 4-5 years through appeal, if not longer. As a result, patent reexamination is primarily utilized as an additional litigation tool rather than the alternative to patent litigation intended by Congress. Conversely, the new AIA trial proceedings are designed to conclude, by statute, within 12-18 months of initiation.

Whether, choosing Post Grant Review (PGR), Transitional Program for Covered Business Method Patents (TPCBMP), or Inter Partes Review (IPR), the new proceedings will conclude relatively promptly, and estoppel will attach upon a written determination of the Patent Trial and Appeal Board (PTAB). Based on the increased speed, and estoppel result, it is expected that the new proceedings will provide a compelling basis to stay parallel infringement actions.

However, the International Trade Commission (ITC) also has a statutory mandate for expeditiously processing their docket (typically within 15 months). For this reason, the ITC is currently an “anti-stay” forum. Given the likelihood of future parallel tracks of the USPTO and ITC, will the ITC change their “anti-stay” practice to account for the post-AIA world?

To date, the ITC has refused to stay their actions pending the much slower USPTO reexamination proceedings. Likewise, while the estoppel provisions of inter partes patent reexamination have the potential to “simplify” district court actions, militating in favor of a stay of the court proceeding, this estoppel does not extend to the ITC. As the ITC almost never stays 337 actions pending patent reexamination, some non-practicing entitities are beginning to seek out the ITC for this added benefit.

But,the status quo is set to change on September 16, 2012. As of this date, the new post grant patent proceedings of the AIA become available to the public.

The estoppel provisions of the new post grant patent proceedings, namely, IPR, PGR and TPCBMP will extend to the ITC for the first time. Likewise, the new post grant proceedings must, by statute conclude within 12-18 months. In mandating the tight schedule on the PTO Congress hoped to discontinue the current parallel tracks and force patentability disputes to the lower cost forum. One could also argue that by extending the estoppel to the ITC that Congress was sending a special message to that forum with respect to the new mechanisms.

So, assuming an ITC action is filed this coming September, substantially concurrently with a petition for IPR, both would be scheduled to conclude (if allowed to continue independently) at roughly the same time. In the battle of these administrative agencies, who wins?

The estoppel of the USPTO written decision would extend to the ITC, but, the ITC ruling would not disrupt the IPR proceeding in kind. Thus, for example, should the ITC expend resources on an invalidity determination and arrive at a favorable Patentee determination, the USPTO, operating under much more challenger friendly standards could then pull the rug out from under the ITC.

Will the ITC defer to the USPTO on validity and move forward on infringement only, in the interests of their statutory mandate?

My guess would be that the ITC will take a wait and see approach in the short term based on historical practices. However, once it becomes clear that the USPTO is actually concluding trials within the mandated 12-18 month time frame, motions to stay an ITC action pending a post grant proceeding of the USPTO will likely gain significant traction.

For more background into ITC practices see the ITCblog

InconsistencyA successful reexamination from a defendant perspective does not always result in an overt claim change or cancellation. In other words, even where claims are confirmed, statements in the reexamination record that are inconsistent with arguments made in a concurrent litigation may provide key evidence necessary to prevail during a Markman hearing, or offer new, non-infringement positions to defendants.

Late last month, in Kilopass Technology Inc., v. Sidense Corp (NDCA), the Court cited to seemingly inconsistent statements made by a Patentee during the patent reexamination Continue Reading Perceived Patent Reexamination Misstep Haunts Plaintiff

CAFC Standard of Review Driven by Appeal Posture

The appeal of a rejection from the Board of Patent Appeals & Interferences (BPAI) to the Court of Appeals for the Federal Circuit (CAFC) is a relatively uncommon event in the prosecution of patent applications. This is because the cost of such an appeal is rarely advisable in light of the ability to simply request continued prosecution before the Examiner.

On the other hand, post grant proceeding appeals from the BPAI (and soon to be Patent Trial & Appeal Board (PTAB)) to the CAFC are far more commonplace. Unlike application prosecution, where virtually unlimited prosecution is possible via requests for continued examination (RCEs), neither patent reexamination nor the new post grant proceedings of the America Invents Act (AIA) permit such alternatives to appeal. Moreover, amendment of claims during these proceedings is generally disfavored as creating an intervening rights defense, and patents subject to post grant proceedings are almost always high-value assets. Accordingly, as the popularity of post grant proceedings continues to increase, so too do the number of appeals from the USPTO to the CAFC.

When considering decisions of the USPTO, the CAFC employs either a de novo standard of review or substantial evidence standard of review, as appropriate. Not surprisingly, appeals that employ the de novo standard provide a more significant opportunity for reversal than those that do not. For this reason, it is important to understand the Court’s practice in applying one standard over the other.

For fact finding, the CAFC applies the more liberal substantial evidence standard. That is to say, when considering whether or not the USPTO’s finding meets the substantial evidence standard, the CAFC considers whether a reasonable mind would accept the underlying evidence as supporting the associated finding. Thus, the Court will affirm a USPTO conclusion if the fact finding is deemed sufficient, even if the individual judges of the Court do not necessarily agree with the conclusion of the agency. As many USPTO appellants quickly realize, when appealing an art based rejection to the CAFC, disputing the fact finding of the Office can be quite an uphill battle.

On the other hand, legal conclusions are reviewed de novo. For example, many of the recent reversals of the BPAI in the area of patent reissue were a result of perceived misapplications of the law by the USPTO.

A recent illustration of the interrelationship between the differing standards was explained in Plasmart v. Kappos (here). In Plasmart, the BPAI reversed the obviousness rejections of an examiner in the inter partes patent reexamination of  U.S. Patent 6,722,674 (directed to a scooter safety improvement). On appeal to the CAFC, the third party requester (Plasmart) questioned the Board’s application of the 103 case law to reverse the rejection of the examiner (i.e., KSR), arguing that the Board failed to account for a “common sense view of the references” as mandated by KSR. In reversing the Board, the CAFC agreed with the Examiner and ruled the claims obvious, explaining:

Although the ultimate determination of obviousness under § 103 is a question of law, it is based on several underlying factual findings, including (1) the scope and content of the prior art; (2) the level of ordinary skill in the pertinent art; (3) the differences between the claimed invention and the prior art; and (4) evidence of secondary factors, such as commercial success, long-felt need, and the failure of others. Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966). “The combination of familiar elements according to known methods is likely to be obvious when it does no more than yield predictable results.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 416 (2007). In other words, when there exists a finite number of identified, predict-able solutions to a known problem, a combination that results in “anticipated success” is likely the product not of innovation, but of ordinary skill and common sense. Id. at 421. That is the case here.

The Board, in reversing the examiner’s rejections, relied only on minor distinctions between the prior art and the claimed invention. . . . .The Board agreed with the examiner that [the secondary reference] discloses a reason for adding universal wheels (the safety driving equipment in [the secondary reference]) to [the primary reference] scooter, but then held that because [the secondary reference] does not place those universal wheels in the exact location as the ’674 patent, it cannot render claim 1 obvious. . . . .

The decision to attach the [secondary reference] safety wheel directly to the twister member instead of the body would have been a common sense alternative design choice and reasonably obvious to one of ordinary skill in designing a safety feature to prevent tipping of the [primary reference] scooter. Such a modification is nothing more than a predictable use of prior art elements (universal wheels in contact with the ground in front of the twister member) to address a known problem (stability), and would thus have been obvious. See KSR, 550 U.S. at 417. We therefore reverse the Board’s holding that claim 1 would not have been obvious over the prior art.

Plasmart is noteworthy as a rare instance in which the USPTO identification of allowable subject matter was appealed to the CAFC.  With the new 12-18 month timeline of Inter Parties Review and Post Grant Review to an appealable, PTAB decision, such appeals will become more frequent going forward. Future appellants may find it helpful, where possible, to pursue USPTO conclusions of law as opposed to USPTO fact finding.

micro-entityEarlier this week, the USPTO issued a Notice of Proposed Rulemaking to implement the micro entity provision of the Leahy-Smith America Invents Act (AIA).  If an applicant qualifies as a micro entity, then the applicant is eligible to pay reduced patent fees once the USPTO exercises its fee setting authority under the AIA (in the months to come).  The fee setting provision in the AIA sets the micro entity discount at 75% of the fees set or adjusted for filing, searching, examining, issuing, appealing, and maintaining patent applications and patents. (proposed rule set here)

Generally, in order to qualify as a micro-entity an innovator must have filed a limited number of previous patent  applications and have an income of (roughly, based on 2011 median household income estimates) less than$150k.

Unfortunately, Congress did not extend the  micro-entity discount to embrace the significant fees of the new AIA  post grant proceedings.

Inability to Properly Examine Means-Plus-Function Claims in Patent Reexamination Creates Perplexing Result

Unlike most claims in patent reexamination, means-plus-function claims may not be properly accorded a broadest reasonable claim interpretation. Instead, as outlined by MPEP 2181–2183, the structure and acts described in the underlying patent specification embody the statutorily mandated scope. That is to say, the structure described in the patent specification as linked to the claimed function is essentially incorporated into the claim. Absent this analysis of the specification for structural support, there can be no structural limits to the claim by which to properly compare the prior art. See MPEP 2183 (C)

Yet, for improperly supported, originally issued means-plus-function claims, a rejection pursuant to 35 U.S.C. § 112 2nd paragraph is not possible in patent reexamination. This is because such a rejection would not be based on “patents and printed publications” as mandated by the patent reexamination statutes. In other words, where a means-plus-function claim examined in patent reexamination lacks any structural support in the patent specification, the USPTO is unable to properly examine the claim. (See my 2010 post on this “Tale of Two Statutes” here)

In a decision last week, the Board of Patent Appeals & Interferences (BPAI) was faced with this statutory conundrum in the inter partes patent reexamination of U.S. Patent 6,446,045. (decision here) The ‘045 Patent is owned by Function Media L.L.C. and is currently asserted against Google Inc. (on appeal to the CAFC).

In the reexamination of the ‘045 Patent all claims were rejected in view of applied art.  However, as the BPAI found the means-plus-function claims unsupported, all of the outstanding rejections were reversed as speculative. Taking the estoppel of inter partes patent reexamination into account (35 U.S.C. § 315), did Google win or lose?

Claim 1 of the ‘045 Patent is representative and recites:

1. A method of using a network of computers to contract for, facilitate and control the creating and publishing of presentations, by a seller, to a plurality of media venues owned or controlled by other than the seller, comprising:

a) providing a media database having a list of available media venues;

b) providing means for applying corresponding guidelines of the media venues;

c) providing means for transmitting said presentations to a selected media venue of the media venues;

d) providing means for a seller to select the media venues; and

e) providing means for the seller to input information;

whereby the seller may select one or more of the media venues, create a presentation that complies with said guidelines of the media venues selected, and transmit the presentation to the selected media venues for publication.

(emphasis added)

The BPAI found that none of the above emphasized means-plus-function elements were supported by the ‘045 Patent specification stating,

[W]e find the claim to be fatally ambiguous. The remedy for this sort of ambiguity is not to read limitations in from the Specification (which is not possible in this case anyway) or to read the claim broadly, as the Examiner attempts, but rather to reject the claim as indefinite.      .     .     .     .

For that reason, if this were a patent application or a claim amended during reexamination, we would enter a new ground of rejection under 37 C.F.R. § 41.50(b) on the basis of 35 U.S.C. § 112, second paragraph, and not reach the rejections under 35 U.S.C. §§ 102 and 103, since they would necessarily be based on speculative assumptions as to the meaning and scope of the claims. See In re Steele, 305 F.2d 859, 862-63 (CCPA 1962).

However, in the present case, it would be pointless to enter a new ground of rejection on the basis of indefiniteness because such rejections are beyond the scope of reexamination for issued claims, and as such, the Examiner would be barred by rule from enforcing the rejection. 37 C.F.R. § 1.906(c). Yet, without a discernable claim construction, an anticipation or obviousness analysis cannot be performed since the constructs of 35 U.S.C.§ 112, sixth paragraph, require us to construe the claim “to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.” 35 U.S.C. § 112(6). “[T]he ‘broadest reasonable interpretation’ that an examiner may give means-plus-function [or step-plus function] language is that statutorily mandated in paragraph six.” See In Re Donaldson Co. Inc., 16 F.3d at 1194-95.

Consequently, we find that proper disposition of this appeal is to reverse the speculative prior art rejections of record without prejudice to its reinstitution if the patent owner files an amendment or reissue application to cure the indefiniteness. While we understand this disposition leaves a critical issue with the claims unresolved, we cannot ignore the fact that paragraph six does not absolve an applicant or appellant from complying with the remaining paragraphs of 35 U.S.C. § 112. See In Re Donaldson Co. Inc., 16 F.3d at 1195; (citing In re Lundberg, 244 F.2d at 547-48, 113 USPQ at 534 (CCPA 1957)).

(emphasis added)

In the per curiam decision, the Board reversed the outstanding art rejections; typically a clear loss for a patent challenger. Yet, while the Board did reverse all rejections, and did not enter a 112 rejection per se, it very clearly memorialized its fact finding in this regard…but to what end?

The ‘045 Patent is separately on appeal to the CAFC from the parallel district court action. Generally, evidence of an as yet incomplete reexamination would not typically be considered by the Court, and is not yet “final” to trigger estoppel.  Still, there is at least some argument that Congress had envisioned fact based estoppel to be an aspect of inter partes patent reexamination in AIPA 4607. (an uncodified provision). Likewise, even absent a legislative intention, the CAFC is free to take official notice of such a noteworthy result.

With the fact finding clearly evident in the BPAI decision as to deficient 112 support, it is likely that the Patent Owner will be appealing a reversal of all rejections…strange.

House Hearing Discusses Possible Technical Amendments

During last week’s hearing before the House Judiciary Committee on the implementation status of the America Invents Act (AIA), most of the invited speakers offered particular comments/suggestions on the USPTO’s implementation efforts. Many of these comments were simply re-presentations of written comments submitted this past Spring.

Others focused on possible technical amendments to the AIA. Interestingly, former Committee Chairman James Sensenbrenner (an opponent of the original legislation) accused Committee members of devising such amendments in secret. However, this accusation was quickly dismissed by other members of the Committee who took the position that no such technical amendment exists…..yet anyway. Of course, possible technical fixes have been rumored for quite some time. (webcast here)

When it comes to post grant proceedings, there are quite a few “fixes” that are needed if the legislation is to achieve the goals of the legislature.

In terms of purely technical fixes, some are relatively straight forward. For example, the ex parte patent (EXP) reexamination statute (35 U.S.C. § 302) states that “any person at any time may request reexamination.” However, as the estoppel provision of Inter Partes Review (IPR) applies to all Office proceedings, a losing challenger of an IPR would be estopped from filing a later EXP. Thus, there would appear to be some inconsistency between the relevant statutes absent a technical amendment to one or the other.

Other fixes relating to IPR estoppel are also necessary to prevent a losing challenger in an inter partes patent reexamination from simply re-filing an IPR upon an adverse decision.

A further technical problem exists with respect to the 9-month window mistakenly applied to first to invent patents, also known as the “dead zone.”

However, perhaps the most important fix to the PGR statutes would not seem to be very “technical” at all. That is, the expansive estoppel provision of Post Grant Review (PGR) renders the entire proceeding largely worthless to the public.

PGR estoppel applies to” issues that were raised or reasonably could have been raised.” While this language is identical to the estoppel provision of IPX, the scope of patentability challenges that may be brought in a PGR proceeding are not limited to patents and printed publications as in IPX. As a result, a challenger that fails to prove unpatentability in a PGR proceeding will be left with, practically speaking, no invalidity defenses as a result of estoppel should the dispute move on to the courts. (save inequitable conduct, and perhaps defenses that would have been unreasonable to raise earlier… whatever that means)

Based on my discussions with many large stakeholders, this all encompassing estoppel is oft cited as the primary reason that PGR is not going to be given serious consideration as an option for patent challengers. For this reason, many are advocating the need to alter the breadth of PGR estoppel to preclude only those issues actually raised during PGR (akin to the TPCBMP estoppel provision). Some have even argued that this fix would be technical in nature. (See page 24 of Eli Lilly statement explaining PGR estoppel drafting error here)

It is expected that Congress will work toward fixing some of the above noted issues via a technical amendment. Stay tuned.