UTCLE Program Covers Patent Landscape

For those seeking some PTAB related discussion/CLE this week, there are a few exciting programs.

Tomorrow through Friday of this week, the USPTO (Alexandria) hosts UTCLE Advanced Patent Law Institute (here). This program will offer a broad range of patent related topics, including extensive discussions of PTAB trial practice and the impact of recent Federal Circuit Decisions this afternoon.

Friday March 10th: For those on the west coast, the Washington State Bar Association will hold its 22nd Annual Intellectual Property Institute in Seattle. (here)  This program will also offer a broad range of IP related topics, including a discussion of best practices for PTAB trials.

In the weeks ahead there are a number of other programs scheduled for both coasts.

March 21st: MIP U.S. Patent Forum 2017 will be held in Palo Alto (here). This program offers a full day program focusing on AIA trial practices.

May 10th-11th: American Conference Institute presents its Third Annual Post-Grant PTO Proceedings in New York City (here). This two-day event will cover a variety of AIA Trial Proceeding topics.

May 16, 2017: MIP PTAB Forum 2017 will be held in New York City. (here)  This is a full-day forum on PTAB trial practices.

I hope to see you at one of these upcoming events.

Practical Impact of Joinder Practice, Stricter Estoppel

IPR estoppel is established under 35 U.S.C. § 315(e)(2), which provides that “the petitioner in an inter partes review of a claim in a patent . . . that results in a final written decision . . . may not assert . . . in a civil action . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” (emphasis added).  Once upon a time, the reasonably could have raised component was thought to refer to art that could have been raised in the initial petition — at least, that was what Congress seemed to intend. Since that time, the Federal Circuit has made clear that this statutory estoppel is linked to the grounds presented at trial, and not those included in the petition and rejected by the Board as redundant.

In Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016), the Court held that statutory estoppel does not apply to grounds denied by the Board as redundant.  The Court reasoned that estoppel cannot flow from grounds that are not part of the trial or any resulting decision from which estoppel can attach.

Rightly or wrongly, district courts have construed Shaw to extend to any potential trial ground not presented in the petition, not just those denied on redundancy grounds. This development has been a boon for original petitioners. But, a recent decision has made clear that petitioners seeking joinder may forfeit the Shaw estoppel benefits.

The present Shaw estoppel benefits are explained in Intellectual Ventures I LLC v. Toshiba Corp., Civ. No. 13-453. In Intellectual Ventures the plaintiff patent owner argued in part that the defendant was estopped from introducing a new invalidity argument.  Slip Op. (DN 559) (D. Del. Dec. 19, 2016).  As discussed previously, plaintiff argued that one of the combinations of publicly available patents and printed publications “could have been raised” in the prior IPR because it was known to the defendant.  The Court’s initial reaction to this contention was favorable: “IV’s argument in this regard is perfectly plausible, in the sense that defendant certainly could have raised these additional obviousness grounds based on public documents at the outset of their IPR petition.”  Slip Op. (DN 559) at 26 (emphasis added).  However, in light of Shaw, the Court expressed that its hands were tied.  “[T]he Federal Circuit has construed the [Section 315(e)(2)] language quite literally.”  Id.  And “[a]lthough extending the above logic to prior art references that were never presented to the PTAB at all (despite their public nature) confounds the very purpose of this parallel administrative proceeding, the court cannot divine a reasoned way around the Federal Circuit’s interpretation in Shaw.”  Id. at 26-27.   Thus, despite the fact that this art reasonably could have been raised (presumably) in a prior related IPR, defendant was permitted to introduce this art for invalidity purposes.  Id. at 27.

More recently, the Shaw estoppel benefits were argued in relation to a petitioner that joined an IPR trial already in progress via a motion for joinder. In Parallel Networks Licensing, LLC v. International Business Machines Corp., (here) Civ. No. 13-2072, Parallel Networks argued that IBM was estopped from introducing obviousness combinations that were known to IBM and thus could have been raised in the previous IPRs.  Slip Op. at 24.  IBM argued that these grounds could not have  been raised because it was copying petitions filed by Microsoft Corp. in order to support its request for joinder with Microsofts’ petitions (necessary in view of IBM being past the one year bar date).  Id. At 25.

In Parallel Networks it was held that, despite IBM’s arguments “there is no ‘mirror image’ rule for joinder,” and noted that the cases cited by IBM explicitly contemplate that requests for joinder can involve petitions that assert different grounds of invalidity.  (Of course, while true in theory — this is not how the system works in practice). Accordingly, Parallel Networks held that allowing IBM to raise arguments that it elected not to raise during the IPR “would give it a second bite at the apple and allow it to reap the benefits of the IPR without the downside of meaningful estoppel,” concluding that IBM is estopped from asserting prior art references and combinations that it reasonably could have raised before the PTAB.

Significantly, Parallel Networks did not cite or otherwise reference the Shaw decision urging the opposite result.

It may be that the Court in Parallel Networks viewed joinder practice as a unique opportunity to join an IPR trial already in progress.  And that, it would seem to an outsider that raising additional grounds would be a common sense exercise; especially if different, stronger art was known. Nevertheless, what was designed to be a straightforward estoppel framework to protect patentees from harassment has become quite unpredictable.

As I have pointed out previously, the PTAB should switch to an “all or nothing” trial institution. That is, if one ground is deemed to meet the threshold standard for institution for a challenged claim, all grounds should be accepted for trial. While Patentees may not appreciate this change in the short term, it will benefit them in the long run.

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

Inaugural PTAB Bar Association Conference Coming to DC

Next week brings the now Sold Out, Inaugural PTAB Bar Conference. The PTAB Bar was founded to help establish best practices for this unique forum, foster communication among stakeholders and the PTAB, and aid practitioners in staying abreast of rule making, procedure and PTAB jurisprudential evolution. The Inaugural Conference of the PTAB Bar Association will be held March 1-3rd at the Ritz Carlton in Washington D.C. (here) The 3-day program offers a boot-camp for new practitioners on Wednesday March 1, followed by a full day program on Thursday, March 2nd, and a half day program on Friday, March 3rd.

Join the Organization to keep abreast of future event, meetings, practice updates and CLE.

Also, next week, for practitioners handling ex parte appeals before the PTAB, AIA trials, or drafting claims to computer implemented inventions, the IPO Chat Channel will offer a timely review of emerging Board decisions on conditional claiming practices this Wednesday, March 1st, entitled: Ex Parte Schulhauser and Claim Drafting
for Computer-Implemented Inventions (register here)

For additional PTAB related events in March, see my earlier post on Spring CLE (here)

I hope to see you at one of these upcoming events.

In re Packard Inextricably Linked to Patent Examination Practices?

Back in 2014, the Federal Circuit determined the standard for a USPTO indefiniteness analysis in In re Packard (here). This standard was more deferential to the agency as compared to the district court’s “reasonable certainty” standard later enunciated in Nautilus v, Biosig Instruments Inc.  When Packard issued, I questioned whether that standard could be argued to apply to post-grant proceedings. This was because the Court’s determination in Packard was deeply rooted in patent examination practices.

More recently, the Patent Trial & Appeal Board (PTAB) has adopted Packard in some of its decisions analyzing claims under 35 U.S.C. § 112 (e.g., PGR20015-00018, Telebrands Corp. v. Tinnus Enterprises LLC). But, decisions of the Federal Circuit since Packard, have made clear that grounds of unpatentability in AIA trial proceedings are not akin to rejections in patent examination.  As explained by the court in In re Magnum Oil Tools Int’l, Ltd. the prima facie procedural mechanisms of patent examination do not comport with proper AIA trial practices.

Will the CAFC pull the rug out from under the PTAB’s application of Packard in AIA trails?

As a reminder, Packard distinguished between the 112(b) standards used in pre-issuance vs post-issuance disputes, the concurring opinion explained it this way:

[A]s a legal matter the USPTO does not have to deal with the presumption of validity the statutes grant to post-issuance patents—sometimes said to hinder [a more liberal test] by courts. Furthermore, unlike courts which have a full prosecution record to consider, the prosecution record before the USPTO is in development and not fixed during examination, and the USPTO does not rely on it for interpreting claims.

The fact that this court has not yet seen fit to apply the same interpretive policy option to post-issuance cases as the USPTO wishes to apply to pre-issuance cases is no reason why the USPTO, given its unique and central role in the patenting process, should not be able to apply it in dealing with pre-issuance patent applications.

Clearly, the presumption of validity is likewise absent from AIA trial proceedings. Nevertheless the majority relied heavily of the back and forth between patent examiners and applicants, explaining:

Congress also provided for examination to be an interactive process, which it commonly is. One or more rejections or objections by an examiner based on identified problems are followed by one or more responses from the applicant that address the identified problems, whether by revising claims or by furnishing information and explanation that shows why the initially perceived problems are not problems after all.  The examination system regularly involves substantive interaction with applicants, relying on their distinctive incentives and abilities to enhance understanding and to help the USPTO ensure compliance with statutory standards.  .   .   .

We earlier approved a procedural mechanism for the USPTO to use in doing this, which we refer to as the “prima facie case.” .   .    . The USPTO thus meets its obligation to explain adequately the shortcomings it perceives so that the applicant is properly notified and able to respond. Once the applicant is so notified, the burden shifts to the applicant to rebut the prima facie case with evidence and/or argument.

The “prima facie case” determination is a purely procedural device that operates at the examiner level to clarify how the interaction process proceeds.    .   .   .
The same approach to making the examination process work is an appropriate one for addressing the question of indefiniteness.  We have elsewhere noted that indefiniteness rejections by the USPTO arise in a different posture from that of indefiniteness challenges to an issued patent.  It makes good sense, for definiteness and clarity as for other validity requirements, for the USPTO initially to reject claims based on a well-founded prima facie case of lack of clarity (in its several forms) based on the perspective of one of ordinary skill in the art in view of the entire written description and developing prosecution history. Then, if the applicant does not adequately respond to that prima facie case, to confirm that rejection on the substantive basis of having failed to meet the requirements of § 112(b).

(Emphasis added, internal quotes/citations omitted)

Contrast Packard’s pre-issuance rationale to the discussion of AIA trial practices in Magnum Oil:

In an inter partes review, the burden of persuasion is on the petitioner to prove ‘unpatentability by a preponderance of the evidence,’ 35 U.S.C. § 316(e), and that burden never shifts to the patentee.  Indeed, the Supreme Court has never imposed nor even contemplated a formal burden shifting framework in the patent litigation context.  We have noted that “a burden-shifting framework makes sense in the prosecution context, where “[t]he prima facie case furnishes a ‘procedural tool of patent examination, allocating the burdens of going forward as between examiner and applicant.   As the PTO concedes, however, that burden-shifting framework does not apply in the adjudicatory context of an IPR.

Yesterday, the Federal circuit once again explored the differences between patent examination and AIA trials in the context of procedural mechanisms. In re Depomed (here).  The concurrence emphasized in footnote 4 (in discussing the applicability of burden shifting) that:

To be sure, IPR proceedings are not identical to district court litigation. See Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2143–44 (2016). But as we explained in Cyclobenzaprine and later in Magnum Oil, the similarities most salient to an obviousness analysis discourage burden-shifting.

Given the Court’s distaste for differing standards between the PTAB and district court, and also given that Packard is the Court’s own design, it is my expectation that the Federal Circuit will ultimately re-calibrate PTAB practices to follow Nautilus in AIA trial proceedings.

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 decision, Consumer 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.

Recalibration of Venue Could Change Face of Patent Litigation

As most are well aware, the patent venue statute, 28 U.S.C. § 1400(b), provides that patent infringement actions “may be brought in the judicial district where the defendant resides . . . .” The statute governing “[v]enue generally,” 28 U.S.C. § 1391, has long contained a subsection (c) that, where applicable, deems a corporate entity to reside in multiple judicial districts. In Fourco Glass Co. v. Transmirra Products Corp., 353 U.S. 222 (1957), the Supreme Court held that §1400(b) is not to be supplemented by § 1391(c), and that as applied to corporate entities, the phrase “where the defendant resides” in § 1400(b) “mean[s] the state of incorporation only.” Id. at 226. The Court’s opinion concluded: “We hold that 28 U.S.C. §1400(b) is the sole and exclusive provision controlling venue in patent infringement actions, and that it is not to be supplemented by the provisions of 28 U.S.C. § 1391(c).” Id. at 229.

In the dispute before the High Court in TC Heartland v. LLC D/B/A Heartland Food Products Group V. Kraft Foods Group Brands LLC., the court will consider the argument that Federal Circuit precedent contradicts Fourco.  The decision in TC Heartland could have a significant impact on patent litigation in this country given the disproportionate share of such cases now in Texas courts.

The petitioner briefing and amicus filings are now in, including the one I filed on behalf of Unified Patents.

Merits Briefs

Amicus Briefs

In Support of Petitioner:

In Support of Neither Party:

Inaugural PTAB Bar Association Conference & Much More

For those seeking some PTAB related discussion/CLE in the months ahead, there are a multitude of upcoming programs.

March 1st-3rd: The Inaugural Conference of the PTAB Bar Association will be held in Washington D.C. (here) This program will offer a boot-camp for new practitioners on Wednesday March 1, followed by a full day program on Thursday, March 2nd, and a half day program on Friday, March 3rd. Don’t miss the uniquely focused discussion of PTAB ethics and potential inequitable conduct risks on Friday.

March 7th: – Best Practices for Proving a Document is a Printed Publication in an Appeal or AIA Trial (PTAB –Boardside Chat) (to be rescheduled)

March 9th-10th: The UTCLE Advanced Patent Law Institute will be held at the USPTO’s Alexandria campus. (here) This program will offer a broad range of patent related topics, including extensive discussions of PTAB trial practice and the impact of recent Federal Circuit Decisions.

March 10th: For those on the west coast, the Washington State Bar Association will hold its 22nd Annual Intellectual Property Institute in Seattle. (here)  This program will also offer a broad range of IP related topics, including a discussion of best practices for PTAB trials.

March 21st: MIP U.S. Patent Forum 2017 will be held in Palo Alto (here). This program offers a full day program focusing on AIA trial practices.

May 10th-11th: American Conference Institute presents its Third Annual Post-Grant PTO Proceedings in New York City (here). This two-day event will cover a variety of AIA Trial Proceeding topics.

May 16, 2017: MIP PTAB Forum 2017 will be held in New York City. (here)  This is a full-day forum on PTAB trial practices.

I hope to see you at one of these upcoming events.

Burden of Production on Article III Standing to Bolster 315(b) Disputes at CAFC?

Two weeks back, the Federal Circuit made clear that Article III standing is necessary for petitioners to appeal from adverse decisions in AIA trial proceedings. Phigenix, Inc. v. ImmunoGen, Inc. (here)  The Phigenix decision follows an earlier decision, Consumer Watchdog v. Wisconsin Alumni Research Foundation (Warf) finding the same Article III standing requirement for the now defunct inter partes patent reexamination. Thus, Phigenix was expected given that differences in AIA trial proceedings and patent reexamination are inconsequential with respect to the standing debate (and in virtually all other respects).

While Phigenix is well on the radar of public interest groups and like organizations that seek to institute an AIA trial proceeding on patents of interest, the impact of this decision could complicate appeals for certain operating companies should the en banc decision in Wifi One play out as expected.

As a reminder, the Federal Circuit has recently granted en banc review in Wi-Fi One LLC v. Broadcom.  In WiFi One the Court will consider whether judicial review is available for a patent owner to challenge the PTO’s determination that the petitioner satisfied the timeliness requirement of 35 U.S.C. § 315(b) governing the filing of petitions for inter partes review. Reading the tea leaves, it seems the court is inclined to answer that question in the affirmative.

Assuming WiFi One goes as expected, and 315(b) disputes become reviewable, the burden of production spelled out in Phigenix could be a boon for certain such disputes.

In Phigenix, the burden of production was explained as:

Because standing involves threshold questions over a court’s authority to hear a dispute, an appellant must identify the relevant evidence demonstrating its standing “at the first appropriate” time, whether in response to a motion to dismiss or in the opening brief, Imposing on an appellant the dual obligations of producing the evidence and producing the evidence early in the litigation comports with the reality that such evidence is “necessarily peculiar to” the appellant and “ordinarily within its possession.” Thus, if there is no record evidence to support standing, the appellant must produce such evidence at the appellate level at the earliest possible opportunity.

(internal citations omitted)

The Court also explained the types of evidence that may be introduced at the appellate level:

[T]he [appellant] must supplement the record to the extent necessary to explain and substantiate its entitlement to judicial review. In so doing, an appellant may submit arguments and any affidavits or other evidence” to demonstrate its standing. Taken together, an appellant must either identify . . . record evidence sufficient to support its standing to seek review or, if there is none because standing was not an issue before the agency, submit additional evidence to the court of appeals, such as by affidavit or other evidence.

(internal quotation marks/citations omitted)

Putting this all together, and again, assuming WiFi One goes as expected, this appellate production could bolster the record in certain privity disputes. For example, in AIA trials where a larger supplier is attacking a problem patent of its customers, should the supplier seek to appeal an adverse decision to the CAFC, Phigenix production might be triggered. In that scenario, the supplier-appellant may be battling a patent that its customers were sued on outside of the 315(b) window.  In such scenarios (not all that uncommon), supplier-appellants may have to choose between walking away from the appeal, or perhaps, bolster a privity argument of the patentee by way of additional production on injury/relationship to its customers.

315(e)(2) Estoppel Application Less Than Straightforward

IPR estoppel is established under 35 U.S.C. § 315(e)(2), which provides that “the petitioner in an inter partes review of a claim in a patent . . . that results in a final written decision . . . may not assert . . . in a civil action . . . that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” (emphasis added).  After Last year, in Shaw Industries Group, Inc. v. Auomated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016) the interpretation of “reasonably could have raised during that inter partes review” has been unnecessarily complicated.

Shaw had petitioned for a writ of mandamus instructing the PTO to institute IPR based on a ground the Board previously denied as redundant.  Id. at 1299.  To satisfy one of three requirements for such a writ, Shaw argued that it had no other adequate means to attain the desired relief because it had brought that ground before the PTO and thus may be estopped from arguing the ground in any future proceeding.  Id.  However, the Court found no reason for Shaw to fear estoppel, holding that “[t]he plain language of the statute prohibits the application of estoppel under these circumstances.”  Id. at 1300.  The Court’s logic was that an IPR does not “begin until it is instituted.”   Id.  According to the Court, under Section 315 and due to its term “during that inter partes review,” an IPR petitioner could not have raised (or have reasonably raised) any ground in a petition for which the PTAB did not institute trial.  Shaw’s proffered invalidity ground had been denied and thus never entered the IPR; therefore, Shaw would not be estopped from its new invalidity argument.  The take-away from Shaw is that Section 315(e) does not estop an IPR petitioner from challenging a patent based on petitioned but non-instituted grounds of unpatentability.

The legislative intent behind 315(e)(2) is quite the contrary.

As Senator Kyl stated in the debates that led up to the passage of the AIA:

The present bill also softens the could-have-raised estoppel that is applied by inter partes review against subsequent civil litigation by adding the modifier “reasonably.” It is possible that courts would have read this limitation into current law’s estoppel. Current law, however, is also amenable to the interpretation that litigants are estopped from raising any issue that it would have been physically possible to raise in the interpartes reexamination, even if only a scorched-earth search around the world would have uncovered the prior art in question. Adding the modifier “reasonably” ensures that could-have-raised estoppel extends only to that prior art which a skilled searcher conducting a diligent search reasonably could have been expected to discover.

(emphasis added)

Of course, there is no mention about the agency decision triggering the scope of estoppel with its institution decision.

More recently, the District of Delaware decided upon a motion for summary judgment in Intellectual Ventures I LLC v. Toshiba Corp., Civ. No. 13-453, in which the plaintiff patent owner Intellectual Ventures argued that the defendant was precluded on the basis of IPR estoppel from introducing a new invalidity argument.  Slip Op. (DN 559) (D. Del. Dec. 19, 2016).  Intellectual Ventures filed a motion for summary judgment to “prevent [the defendant] from asserting invalidity challenges against [its] patent, because defendant was the petitioner in an [IPR] in which the [PTAB] found several claims of the ‘819 patent invalid . . . .”  Id. at 25.  Intellectual Ventures first argued that one obviousness combination raised in the IPR was at issue in this action, and thus, defendant should be estopped from pursuing it.  On this point, the district court agreed.  Id. at 27.  After all, earlier in the case, the Court had held that defendant was estopped from challenging validity on this patent, finding that defendant “chose to take the validity dispute to the PTAB through the IPR procedure rather than litigating validity in this court . . . .”  Slip Op. (DN 150) at 8 (D. Del. May 15, 2015).  So, far, nothing surprising.

In the same motion, Intellectual Ventures also argued that another combination of publicly available patents and printed publications “could have been raised” in the prior IPR.  The Court’s initial reaction to this contention was favorable: “IV’s argument in this regard is perfectly plausible, in the sense that defendant certainly could have raised these additional obviousness grounds based on public documents at the outset of their IPR petition.”  Slip Op. (DN 559) at 26 (emphasis added).  However, in light of Shaw, the Court expressed that its hands were tied.  “[T]he Federal Circuit has construed the [Section 315(e)(2)] language quite literally.”  Id.  And “[a]lthough extending the above logic to prior art references that were never presented to the PTAB at all (despite their public nature) confounds the very purpose of this parallel administrative proceeding, the court cannot divine a reasoned way around the Federal Circuit’s interpretation in Shaw.”  Id. at 26-27.  Despite these misgivings, the Court proceeded to expand Shaw, finding that defendant’s prior art references were not introduced at the IPR and thus were not raised “during that inter partes review.”  Id.  Thus, despite the fact that this art reasonably could have been raised (presumably) in a prior related IPR, defendant was permitted to introduce this art for invalidity purposes.  Id. at 27.

Thus, there appears to be a significant disconnect in practice and intent of 315(e)(2). That is, 315(e)(2) does not estop an IPR petitioner from challenging a patent based on non-instituted grounds of unpatentability or from pursuing an invalidity argument in district court based on prior art that the petitioner did not raise at all—but reasonably could have raised—during the IPR. This essentially rewrites IPR estoppel to the “actually raised” estoppel of CBM.

There would seem to be a distinction between Shaw and the Intellectual Ventures scenario in that the art in Shaw was actually raised, but thwarted by the PTAB’s decision not to move forward. Thus, the Federal Circuit was actually assessing the reasonability aspect of the statute in cases where there was no trial at all, as opposed to a hard and fast rule about art needing to be part of an instituted trial to qualify for estoppel.  (Of course, all of this ignores the obvious problem that if the art was shot down under PTO standards it may not be of much use under a clear and convincing standard).

In any event, the redundancy doctrine is frustrating for petitioners that are already under a word count restriction, and are paying a significant filing fee to have their disputes settled by the agency. It may be time for the PTAB to accept all grounds for trial if one ground is determined to show a reasonable likelihood of prevailing. This would help avoid the re-litigating of issues on the back end of an IPR, as well as the bad facts and unintended consequences of cases like Shaw.

Key Administrative Law Doctrine on the Congressional Chopping Block & Onerous Rule Hurdles

As pointed out in yesterday’s Top 5 PTAB Trial Developments of 2016, the Administrative Procedure Act (APA) is the constitution of Article I courts. In its 70 years of existence, the APA has never been modified. Yet, over time, common law developments have been intermingled with APA considerations — none more prominent than the “Chevron Doctrine.” Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). This judge made doctrine stands for the proposition that where there is silence or ambiguity in a statute conveying agency authority or action, that courts should apply deference to reasonable agency interpretations. Critics of Chevron argue that it cannot be reconciled with the APA, and has led to a highly inconsistent body of case law.

Politicians argue that Chevron allows regulatory agencies to create law independent of judicial review, and leads to an unwarranted expansion of costly bureaucracy.

Today, the House will begin to consider HR. 5, which not only proposes to eliminate the Chevron Doctrine by amending the APA to expressly exclude it, but also proposes to heap a boatload of additional regulatory roadblocks to the promulgation of agency rules.

H.R. 5 is a collection of bills put together in one package that have been around for a few Congresses. But, given the anti-government mandate of the incoming administration, and the republican majority in both houses, H.R 5 appears primed for passage in some form.

A copy of H.R. 5 is found (here).

Prior to the passage of the America Invents Act (AIA), the Chevron Doctrine was of little value to the USPTO. This is because the USPTO’s decisions on substantive patent law are reviewed de novo and the agency has consistently been found to lack substantive rule making authority.Tafas v. Doll, 559 F.3d 1345, 1352 (Fed. Cir. 2009).  This changed, however, with the passage of the America Invents Act (AIA).  In the AIA, the agency was expressly granted rule making authority. Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016).

As exemplified by Cuozzo, some of the more fundamental challenges to the AIA trial mechanisms have been settled independent of Chevron (side-stepped in Cuozzo based on direct rule making authority of the AIA). Others fundamental mechanisms are seemingly on their way to a recalibration in line with popular opinion. (e.g., In re Aqua Products, WiFi-One).  As such, it may be that the loss of the newly acquired Chevron Doctrine is not a meaningful change for an agency that is accustomed to living without it.

Below is H.R.. 5’s proposed change to the APA.

5 USC § 706
To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action and decide de novo all relevant question of law, including the interpretation of constitutional and statutory provisions, and rules made by agencies. Notwithstanding any other provision of law, this subsection shall apply in any action for judicial review of agency action authorized under any provision of law. No law may exempt any such civil action from application of this section.
(b) The reviewing court shall—

The far bigger headache for the agency will likely be the new regulatory requirements of H.R. 5 for issuing new rules. The proposed requirements are onerous, some of which are to determine the cost and benefits of a proposed rule as it relates to “direct, indirect, and cumulative costs and benefits and estimated impacts on jobs (including an estimate of the net gain or loss in domestic jobs), wages, economic growth, innovation, economic competitiveness, and impacts on low income populations.” (emphasis added)  Even sponsors of the bill admit that these proposals are designed to make rule promulgation more difficult and time consuming.

If I am working on rules packages at the PTO, I’m clearing the decks before anything close to this legislation hits the streets.