Minor PTAB Rule Change & New 101 Guidelines

Last week, the PTAB issued a minor change to the AIA Trial Rules that became effective last Monday, May 2nd.  

The second sentence of § 42.24(a)(1) was changed to state that the word count or page limit does not include a table of contents, a table of authorities, mandatory notices under § 42.8, a certificate of service or word count, or appendix of exhibits or claim listing. That is, the previous reference to “grounds for standing under § 42.104, § 42.204, or § 42.304” was inadvertently included as administrative items, such as mandatory notices, and in the related discussion in the preamble on pages 18762 and 18763 of the final rule published on April 1, 2016. The correction removes that reference from § 42.24(a)(1).

Also, today, the USPTO will issue new section 101 guidance (here).  New life sciences examples can also be found on the USPTO web page (here)

Full Commission Considers Impact of IPR FWD in Ongoing 337 Investigation

Back in December of 2014, the International Trade Commission (ITC) instituted an investigation at the behest of RealD. The complaint alleged violations of section 337 based upon the importation of certain three-dimensional cinema systems, and components thereof, that infringe certain claims of U.S. Patent Nos. 7,905,602 (“the ‘602 patent”), 7,857,455 (“the ‘455 patent”), 7,959,296 (“the ‘296 patent”), and 8,220,934 (“the ‘934 patent”).  MasterImage 3D, Inc. was the named respondent.

In October of 2014, MasterImage filed seven (7) IPRs against the asserted patents.  Five of these IPRs were denied institution, but two proceeded, one on the ‘934 and the other on the ‘455. Readers may be familiar with “MasterImage” based upon the informative decision on amendment practice.

Thereafter, on December 16, 2015, the presiding ALJ issued a final ID finding a violation of section 337 with respect to all but the ‘602 patent. The ALJ found that the asserted claims of each patent are infringed and not invalid or unenforceable. These findings were appealed to the full Commission. On February 16, 2016, the Commission determined to review the final ID in part and requested additional briefing from the parties on certain issues.  On April 14, 2016, MasterImage filed a letter, notifying the Commission that, on that same day, the USPTO’s Patent Trial and Appeal Board (PTAB) issued a Final Written Decision finding claims 1, 6-10, and 18-20 of the ‘934 patent unpatentable. 

So, now what?
The Commission has extended the target due date to June 1, 2016 for completion of the investigation, and has requested a response to the following question only (initial submissions were due 4/26, replies by 5/3)

1. What is the effect of the PTAB’s Final Written Decision on the Commission’s final determination, including any underlying findings, in this investigation? Please include in your response any effect on the issuance of remedial orders with respect to the asserted claims of the ‘455 and ‘296 patents and claim 11 of the ‘934 patent.

(The scope of the investigation initially included claims 1, 6, 8, 10-12, 15, and 17 of the ‘934 patent) (here)  Claim 11 made it to the ITC’s final ID.

In considering the impact, it is noteworthy that inter partes reexamination estoppel did not extend to the ITC. The IPR statutes were designed to improve the former reexamination system.  As such, the IPR estoppel statutes extend to the ITC; this creates an interesting inference of legislative intent. (While estoppel itself is irrelevant here given the win and claim 11 being denied IPR from the start,  there is still the story that Congress seemingly designed PTAB statutes to impact ITC practice.)

Of course, given that claim 11 of the ‘934 is uncovered by the IPR and included in the final ID, the ITC may side-step a sticky issue here.  That said, this is a situation likely to appear with greater frequency at the ITC going forward. 

Attached (here) is a transcript from Monday’s argument.  

My view is that the a majority of the Court was not buying Cuozzo’s key BRI arguments. Namely, his iterative amendment argument, and his adjudicative distinction. Most of the questions for the government seemed informational (on parallel tracks a patent dispute may take (Roberts)), as opposed to the disputed issues. While issues of policy are always part of a SCOTUS appeal, I don’t see them moving the needle here absent something more.  It was the “more” that will be the problem for Cuozzo..

Some notable exchanges:

Questions to To Cuozzo point out that amendment is possible in IPR, one opportunity should be enough, and policy reasons support BRI . 

JUSTICE SOTOMAYOR: I might be moved by your argument if Congress had not given any right for the Board to amend, because that would be consistent with practices in the district court, where district court can’t amend under any circumstance. But basically, Congress here said you can amend once. I’m not sure that that supports your proposition.  
                                                     .          .          .          .
JUSTICE ALITO: Do the Board’s institution decisions always set out what it understands the broadest reasonable interpretation to be? And and if they do, is it must the Board stick with that throughout the proceeding? And in that if that is true, why does the patentholder need more than one opportunity to amend?
                                                      .          .          .          .
JUSTICE KENNEDY: Well, if if the if the patent is invalid under its broadest, reasonable interpretation, doesn’t doesn’t that mean the PTO should never have issued the patent in the first place, and doesn’t that give very significant meaning and structure to this process?

As other have pointed out, Justice Beyer tipped his hand with his reference to patent trolls. Justice Ginsburg also seemed to favor the gov’t position.

On Cuozzo’s examinational vs. the adjudicative distinction the Court did not seem persuaded given other significant differences with IPR and the district courts:

JUSTICE ALITO: Is the standard is the standard of proof for invalidity the same in an infringement action in district court as it is in interpartes review?

On whether or not there is really a difference between BRI and Phillips, Justice Sotomayor commented on the same Philipps tools being at work in BRI:

JUSTICE SOTOMAYOR: Aren’t those tools used in determining the broadest the broadest reasonable reading, meaning how can the PTO decide what a broad reasonable reading is unless it looks at all of those factors and decides that the specifications and all the other things don’t cure, continue to provide ambiguity in the patent?

The Gov’t echoed these same points:

MR. GANNON: Well, I do think that it is the case that in most circumstances, these two different forms of construction are going to end up in the same place.  .   .    .

While difficult to predict an outcome based upon oral argument questioning, the gov’t was not challenged in any significant regard on key isues. On the other hand, Cuozzo’s key arguments seemed to fall flat.  I don’t expect that BRI will be disturbed.

BoardSide Chat Tuesday April 26th

Today the USPTO’s Patent Trial & Appeal Board (PTAB) will host a second April Boardside Chat webinar to address the new AIA trial rules.  The final rule package, goes into effect next week (May 2nd). The free webinar will be hosted by Lead Administrative Patent Judge (APJ) Mike Tierney.  The webinar will include a Q&A portion for submitted questions.

Webinar access information is provided below.

Event:

 PTAB Boardside Chat Webinar
Event address for attendees:

 https://uspto-events.webex.com/uspto-events/onstage/g.php?MTID=e792aa46e57a99d03d7945c393232401e (link is external)
Date and time:

 Tuesday, April 26, 2016 Noon
Eastern Daylight Time (New York, GMT-05:00)
Duration:

 1 hour
Event number:

 994 178 459
Event password:

 123456
Audio conference:
Call-in toll number (US/Canada)
1-650-479-3208
Access code: 994 178 459
Captions Link:  

 http://www.captionedtext.com/client/embed.aspx?EventID=2839522

High Court to Consider Patent Trial & Appeal Board (PTAB) Procedures

At 1PM today, the Supreme Court of the United States will hear arguments in Cuozzo Speed v. Lee.  As previously discussed, in its petition for certiorari  Cuozzo presents two issues for review:

1.     Whether the court of appeals erred in holding that, in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning.

2.     Whether the court of appeals erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board’s decision whether to institute an IPR proceeding is judicially unreviewable.

Cuozzo argues on question (1) that since Inter Partes Review (IPR) is “adjudicative” and not “examinational” that use of the broadest reasonable interpretation (BRI) is improper. In its Reply Brief of April 15th, (here), Cuozzo has doubled-down on this argument despite the fact that The USPTO has employed BRI in patent interference (adjudicative proceeding) for decades.  As done in its opening brief, Cuozzo again attempts to downplay the patent interference inconsistency in a footnote.

My prediction is that BRI is left undisturbed.  Whether by virtue of the rule making authority conveyed to the USPTO in the America Invent’s Act (AIA), or policy grounds (ability to amend), its hard to imagine a different outcome. Especially given the fact that both BRI and Philipps frameworks employ “plain meaning” in any event. (see the colorful debate on IPWatchdog.com on this topic).

As to Question (2), the outcome here is anyone’s guess.  While I tend to agree with Judge Newman that the statute makes more sense from an interlocutory perspective, it will be hard for the Court to stray from the clear terms of the statute.  Cuozzo argues the other side of  “plain meaning” here.

Amicus Briefs Urge Status Quo at PTAB

Over the past week, amicus briefs supporting the respondent (U.S. Gov’t) have been filed with the Supreme Court in  Cuozzo Speed v. Lee.  These ffilings are linked below, including my own for Unified Patents.

New Evidentiary Opportunity Dissolves Patentee Criticism

Patentees have lamented the inability to submit new, testimonial evidence via preliminary response since the inception of the Patent Trial & Appeal Board (PTAB). It was argued that since AIA trial petitions almost always included testimonial evidence, the inability to respond in kind was procedurally lopsided in favor of challengers.  Because of this perceived imbalance, patentees insisted that trial institution was a foregone conclusion.  Of course, if this patentee criticism were valid, far more trials would conclude favorably to patentees once such evidence is entered (it is permitted later, during trial).

Nevertheless, responsive to this criticism, the PTAB will begin allowing new testimonial evidence with preliminary responses on May 1st.  But, is this new patentee opportunity truly helpful?
For example, Rule 42.107(a) is amended to allow “supporting evidence”:

§ 42.107 Preliminary response to petition.
The patent owner may file a preliminary response to the petition. The response is limited to setting forth the reasons why no inter partes review should be instituted under 35 U.S.C. 314 and can include supporting evidence. The preliminary response is subject to the word count under § 42.24.

(emphasis added)

As mentioned above, if patentee evidence were as game-changing as urged, far more trials would conclude in favor of patentees once all evidence is entered and considered. Yet, the statistics do not show a significantly wide variation between institution rates and final claim cancellation rates.  But, what does a patentee have to lose in taking advantage of every option to stave off a dreaded PTAB institution?

In some cases, a lot.

First, let’s not forget the language added to Rule 42.108(c) where declarants on both sides disagree (as will almost always be the case)

§ 42.108(c) Institution of Inter Partes Review
.     .      .       .      The Board’s decision will take into account a patent owner preliminary response where such a response is filed, including any testimonial evidence, but a genuine issue of material fact created by such testimonial evidence will be viewed in the light most favorable to the petitioner solely for purposes of deciding whether to institute an inter partes review. A petitioner may seek leave to file a reply to the preliminary response in accordance with §§ 42.23 and 42.24(c). Any such request must make a showing of good cause.

(emphasis added)

That is, patentees attempting to rebut factual showings of a petitioner, in the vast majority of cases, will go to trial regardless.  Hastily assembling a declaration in the three months time between petition filing and the time the preliminary response is due — as opposed to the 8-9 months time between the petition filing and patentee trial response — might be far more prudent.  Indeed, preemptively addressing all proposed grounds (pre-trial) with declarant testimony could create unnecessary complications given that the Board may ultimately institute on only a subset of such issues.

Other patentee trade-offs to consider in submitting such evidence:
 
  • The creation of additional document inventory for deposition of patentee’s declarant(s)
  • The creation of up to another 7 hours of deposition (cross-examination) for the patentee expert. (37 CFR §42.51(b)(1)(ii))
  • Previewing the positions of Patentee’s declarant for the deposition of petitioner’s witness. (Absent the filing of testimonial evidence pre-trial, the petitioner’s declarant (deposed after institution but before the Patentee Response and traditional presentation of its direct testimony) has only the preliminary response to guide deposition preparation, assuming one is even filed.

The last point above cannot be emphasized enough — over zealous presentation of declarant testimony prior to trial may enable a well prepared petitioner witness to inject damaging rebuttal testimony at the time of cross-examination. Keep in mind that depositions at the PTAB are very different than district court depositions. This cross-examination testimony goes directly into the record and may be relied upon by petitioner.  On the other hand, a reply declaration by the same petitioner (after the Patentee response) might be considered improper supplementation.

Moving on to the optics of an institution decision in which the PTAB has weighed evidence from both sides, this may also prove quite unfavorable.  Having presented arguments and evidence in a patentee preliminary response, if the trial is instituted anyway, that institution decision (ID) now appears all the more foreboding.  In other words, within 6 months of filing, a panel of three technically trained judges, after hearing arguments and evidence from both sides, still find the claims likely to be unpatentable—quite a sobering development for a patentee.  Sure, the trial is still to come, but the argument that procedure has somehow unfairly colored the ID outcome will be lost to patentees.  At a minimum, the ability to argue the asymmetry in evidence has been of value to patentees facing a stay pending IPR in a co-pending district court case.

On the petitioner side, knowing that the amendment to Rule 108(c) favors petitioners with respect to factual dispute, going forward, there may be incremental value in defining all such issues in a statement of material facts. 37 C.F.R. § 42.22(c).  As any such statements must be explicitly denied, or may be deemed admitted, this will frame the arguments of the patentee’s preliminary response in a petitioner friendly manner.

New Trial Practice Rules Effective May 1st

The USPTO has issued new final rules today to make targeted modifications for AIA trial practice before the Patent Trial and Appeal Board (PTAB). (here) These amendments to the rules were initially proposed to the public in August 2015.  The rule changes apply to all AIA petitions filed on or after the May 1st and to any ongoing AIA preliminary proceeding or trial before the Office.

The final rule package also explains that the proposed SIngle APJ Pilot Program has been dropped.

The biggest change introduced by the final rule package is the ability to submit new testimonial evidence with a preliminary response.  Since the timing provision would appear to apply retroactively to pending proceedings (as of May1st), Patentees may be scrambling in the short term to develop such testimony for AIA challenges filed within the last 2-3 months. Whether or not such testimony is advisable will be explored in a post next week.

The full list of changes is as follows:

• Allow patent owners to include, with their preliminary response to a petition, any relevant testimonial evidence, addressing concerns that patent owners are disadvantaged by previous rules that limited the evidence that could be presented with their preliminary response to the petition; 

• Add a Rule 11-type certification for papers filed in a proceeding; 

• Clarify that the PTAB will use the claim construction standard used by district courts for patents that will expire during a proceeding and therefore, cannot be amended, while confirming the use of broadest reasonable interpretation (BRI) for all other patents; and 

• Replace the current page limit with a word count limit for major briefings. 

Now that the Rule changes are complete, the USPTO also is slated to move forward to amend its Office Patent Trial Practice Guide to reflect these rule changes and developments in practice concerning how the USPTO handles motions to amend, additional discovery, real party-in-interest and privy issues, and confidential information. 

Stay tuned.

April Boardside Chat Set for Tuesday, April 5th

Next Tuesday, April 5th (12-1PM (EST)) the PTAB will host another Boardside Chat webinar to address the growing complexity of relationships between AIA trial proceedings, patent reexamination, and patent reissue proceedings.  The free webinar will be hosted by Administrative Patent Judges (APJs) Joni Chang and Sally Medley.  The webinar will include a Q&A portion for submitted questions. Webinar access information is provided below, mark your calendar.

Event:

 PTAB Boardside Chat Webinars
Event address for attendees:
https://uspto-events.webex.com/uspto-events/onstage/g.php?MTID=e792aa46e57a99d03d7945c393232401e (link is external)
Date and time:

 Tuesday, April 5, 2016 12:00 pm
Eastern Daylight Time (New York, GMT-05:00)
Duration:

 1 hour
Event number:

 994 178 459
Event password:

 123456
Audio conference:
Call-in toll number (US/Canada)
1-650-479-3208
Access code: 994 178 459
Captions Link:  

 http://www.captionedtext.com/
client/embed.aspx?EventID=2839522

Justice Dept. Brief Highlights Flaws of Cuozzo BRI Dispute

This past Wednesday the U.S. Department of Justice filed its Respondent Brief in Cuozzo Speed v. Lee. (here)   Amicus filings in support of the Respondent are due to be filed by March 30th.

In its brief, the government emphasizes that limited amendment options have long been a staple of USPTO post grant proceedings such as patent interference and patent reexamination, thus, BRI is just as applicable in Inter Partes Review (IPR) as it is in these other proceedings.  Also pointed out is that IPR includes many mechanisms that are different from litigation (hence it is not a surrogate) — not the least of which are the ability to amend claims and a lower evidentiary standard — and that, in any event, the PTO was given rule making authority for such interstitial matters as claim construction used during IPR.  

On the topic of the appeal bar, the government focuses on matters of statutory construction.

It would seem to me that the second issue (appeal bar) is the more likely candidate for modification by the Court.