Stringent PTAB Amendment Process to Drive Patent Reissue Filings

As discussed previously, patent owners continue to struggle with the motion-based amendment requirements of the USPTO’s Patent Trial & Appeal Board (PTAB). In recent months, patentees subject to Inter Partes Review (IPR) and Covered Business Method (CBM) challenges have begun exploring alternative USPTO avenues for presenting amendments. In particular, patentees are following the advice of the PTAB and initiating patent reissue and reexamination proceedings.

Patentees generally find patent reexamination more attractive than patent reissue. This is due to the special dispatch accorded a patent reexamination, the relatively narrow scope of prior art review, and insulation from 112 and 101 issues. However, as made clear recently, patent reissue may be the only escape for patentees struggling at the PTAB.

As background, the PTAB explained in their Idle Free Systems decision that a motion to amend in an IPR, PGR or CBM is a limited opportunity:

If a patent owner desires a complete remodeling of its claim structure . . .it may do so in another type of proceeding before the Office.  For instance, a patent owner may file a request for ex parte reexamination, relying on the Board’s conclusion of a petitioner’s having shown reasonably likelihood of success on certain grounds of unpatentability as raising a substantial new question of unpatentability.  Idle Free Sys., Inc. v. Bergstrom, Inc., IPR2013-00027, Paper 26 (June 11, 2013).

A recent decision of the USPTO’s Central Reexamination Unit (CRU) tested the reexamination theory expressed above.

In IPR2013-00289, the patentee filed a co-pending request for ex parte patent reexamination. The reexamination request presented the very same grounds of unpatentability as presently at at issue in the IPR (in the manner suggested above). Presumably, the reexamination was initiated by the patentee  to pursue claim amendments. (Reexamination Control No. 90/013,148).

Once the reexamination was filed by the patentee, the petitioner requested its termination arguing the filing was an “end-around” the amendment constraints of the PTAB. In denying the request to terminate the reexam the PTAB noted that the “pursuit of amendments in an ex parte reexamination is not inconsistent with our guidance in this proceeding,” and, quoted the passage above from the Idle Free Systems IPR. (here)

On the same day the PTAB issued its order denying the petitioner’s motion to terminate the reexamination proceeding the CRU denied reexamination (here). The CRU explained, citing to the Official Gazette Notice from March 1, 2005 titled “Notice of Changes in Requirement for a Substantial New Question of Patentability for a Second or Subsequent Request for Reexamination While an Earlier Filed Reexamination is Pending,” that a Reasonable Likelihood of Prevailing (RLP) as accepted the PTAB does not necessarily support the existence of a Substantial New Question of Patentability (SNQ). The CRU explained that unlike an SNQ, there is no aspect of the RLP threshold that requires the ground be “new.” The CRU explained:

The statement from Idle Free appears to be contrary to established Office policy (as detailed above) [discussing the SNQ standard]. Further, the statement is inaccurate at least to the extent that it implies that any finding of RLP perforce raises a substantial new question of patentability.  However, unlike RLP, the SNQ standard requires that the question be new.  Thus, it is possible for an RLP to be raised without meeting the SNQ standard, Further, the statement from Idle Free above appears to imply that the same grounds of unpatentability can be used for any number of reexaminations, which is counter to Office policy as published in the 2005 Notice.

The statement above that an RLP doesn’t have to be new is a bit of an overstatement. 35 U.S.C. 325(d) provides that the PTAB may deny trial on issues previously considered by the Office. Clearly, 325(d) is not required, but discretionary. Still, a challenger is unlikely to prevail on old questions and it is hard to fathom the PTAB inviting such and still finding an RLP. All the CRU really had to say was a later reexamination filed on same co-pending IPR grounds is not new. Fair enough.

With respect to reissue, the CRU explained:

The second statement that PO can pursue new claims in “another type of proceeding” appears to more correctly be applied to reissue proceedings.  Patent owner is attempting to add new, more specific claims to the patent.  This appears to be an admission by PO that the patent is erroneous in that patentee claimed “more or less than he had right to claim in the patent”, in accordance with 35 U.S.C. 251. This is in agreement with In re Tanaka (640 F.3d 1246. 1251, 98 USPQ2d 1331, 1334 (Fed. Cir. 2011), which found an error under 35 U.S.C. 251 may be based upon the addition of a claim or claims that is/are narrower in scope than the existing patent claims, without any narrowing of the existing patent claims.

It is strange indeed for a decision of the examining corps to call into question a PTAB Order. Nevertheless, it is clear that patentees hoping to leverage patent reexamination will need to do so prior to a PTAB Trial Order. Once the grounds of a petition are accepted by the PTAB, patent reissue may be the only viable option (supplemental examination also utilizes the SNQ standard). How these concurrent amendment efforts will fare under patentee estoppel is another open question.

Supreme Court Considers Patentable Subject Matter Eligibility…Again

The closely watched case of Alice Corp. v. CLS Bank was argued before the Supreme Court of the United States this past Monday. The Court is not expected to radically depart from their significant precedent on patentable subject matter. Yet, the decision will be especially relevant to Covered Business Method (CBM) challenge proceedings before the USPTO’s Patent Trial & Appeal Board (PTAB). Below are some thoughts on the oral argument from my partner Michael Kiklis. Mike has recently authored the treatise entitled The Supreme Court on Patent Law.

During the oral argument this past week, Appellant, patent owner, argued for a coarse eligibility filter relative for § 101 in which little needs to be added to an abstract idea to render it patent eligible. Justice Breyer asked several questions of the appellant focusing on how to determine the difference between an unpatent-eligible abstract idea versus a patent-eligible implementation of that idea. The appellant did not appear to satisfy Justice Breyer’s concern.  Justice Breyer also noted that the Supreme Court has provided a “framework” for deciding § 101 eligibility, and he questioned why the Court should flesh out that framework any further. Interestingly, Justice Scalia engaged in what seemed to be cross-talk to the other Justices by suggesting several times that novelty should not be conflated with patent eligibility under § 101; an opinion popular with most of the bar.

Both the respondent as well as the Solicitor General argued for very narrow subject matter eligibility where computer-related claims must provide technological innovation in the computer or program itself or in some other technology associated with that computer/program. The U.S. Government’s position is a virtual 180 degree reversal from its argument in Mayo v. Prometheus in which it argued that virtually any step added to a law of nature should render the claim patent-eligible.

Overall it was clear that all the Justices completely understood the issues. It was truly a well prepped, hot bench. The question will be whether the Supreme Court continues to embrace a point-of-novelty approach (rolling novelty into a § 101 inquiry) as it did in Prometheus, or whether it will revert to its historical practice of finding abstract ideas and laws of nature patent eligible when they are tied to a practical application. Stakeholders hope for the latter, but fear for the former.

Senate Judiciary Committee Continues Compromise Effort

Although discussing the Patent Transparency and Improvements Act of 2013 in today’s executive business meeting, the Senate Judiciary Committee decided they needed a few more days. The Committee intends to work toward releasing a manager’s amendment next Tuesday, April 8th. Proposed amendments are expected in the coming days and may be posted to the committee web page before Tuesday.

Leahy/Cornyn Compromise Hammered Out?

Last week, the Senate Judiciary Committee generally considered bill S. 1720 entitled Patent Transparency and Improvements Act of 2013 but held over the matter for this week. It seems there was a bit of a stalemate on the topic of litigation fee shifting and expansion of the Covered Business Method (CBM) challenge proceeding at the USPTO. Senator Cornyn (R-TX) appeared to be the most vocal. Yet, the Senate seems intent on working out a deal to keep the legislation moving. So, we may see the most recent version of the Bill later this week, further amendments to come when the bill moves to the Senate floor.

This is all despite the fact that the AIA has altered the patent assertion landscape to the point where the USPTO is being criticized for being too effective…..that would have been an April Fools joke a few years ago.

Roundtables Kick Off in Alexandria on 4/15

In the weeks ahead, the USPTO’s Patent Trial & Appeal Board (PTAB) will present roundtable programs across the country to share information and collect feedback on the new patentability trials of the America Invents Act (AIA). The first stop will be at the USPTO headquarters in Alexandria Virginia on 4/15 (agenda here).

The program will include an update on recent trial statistics, mock teleconferences, and plenary sessions with Administrative Patent Judges (APJs). Additional roundtable locations include, New York City, Chicago, Detroit, Silicon Valley, Seattle, Dallas and Denver.

Bio/Pharma Patentee Challenges Ahead

As discussed last week, the USPTO’s Patent Trial & Appeal Board (PTAB) offers significant benefits to generic drug companies seeking to enter the market of a branded competitor. That is, the PTAB offers a short circuit to expensive district court litigation for challenging high value drug patents.

In addition to the proceedings discussed last week, three recent PTAB decisions involving DNA sequencing patents owned by the Trustees of Columbia University in the City of New York, the PTAB cancelled all challenged claims in the three patents, IPR2012-0006 and 00007 and IPR2013-00011. While not technically drug patents, their fate is indicative of what the drug industry faces in PTAB challenges. 

Unlike most patentees, drug companies have an advantage, the FDA statutory scheme governing generic drug applications. By statute, 21 USC 355(j)E(ii) a generic company cannot file an Abbreviated New Drug Application (ANDA) until four years after a New Drug Application (NDA) is approved if the FDA determines it involves a new chemical entity, the NCE exclusivity. While 35 USC 217(e)(1) provides a “safe harbor” allowing the generic companies the ability to develop their generic drug which by law must use the same active drug, § 271(e)(2) makes the filing of an ANDA a technical act of infringement. Thus, the patentee has a minimum of years in which to take action to protect its intellectual property rights, usually the FDA gives an indication that it will approve a new drug prior to the official approval date.

Most patentees prepare for the almost certain ANDA litigation by gathering and reviewing files and interviewing inventors to learn about any potential problems in their patents. Unfortunately it is rare that a patentee takes preventive action regarding the patent claims themselves. With the emergence of the fast-track PTAB challenges, this preventive care is now more critical than ever.

The FDA drug statute, 21 USC 355, provides drug patentees with a rare opportunity to take preventive measures. First, the FDA does not approve drugs per se; the FDA approves the use of a specific compound, the drug, to treat a particular disease, an indication in FDA language. The §355 requires that any ANDA applicant must use the same chemical compound, the drug, as in the approved NDA and must have label identical in all aspects relevant to this discussion, identical that of the approved ethical drug. The drug label specifies the indications for which the drug may be used as well as other information as to the drug’s formula, side effects, contra-indications, etc. Because of these requirements, the ANDA applicant has little chance to design around the approved, except for possibly the inactive excipients in the formulation.

These FDA requirements afford the patentee an opportunity to review their patent portfolio years before litigation to ensure the narrowest possible claims are procured to protect the drug and its indication. Because of the regulatory scheme, pin point claims are very powerful and difficult to design around. By the same token, pin point claims are formidable obstacles even for the challenger friendly confines of the PTAB.

In reviewing a valued portfolio it is now all the more important to cultivate pin point claims as to both the drug and the indication. If only broad claims are present, file a reissue patent application to secure the narrowest possible claims encompassing the drug and the indication (based on the written description and enablement provided in the patent specification). Keep in mind that patent reissue is exceedingly more appealing than attempting amendment before the PTAB.

Indication claims saved Allergan’s exclusivity for its ophthalmic drug Combigan®.  See Allergan, Inc. v. Sandoz Inc., 726 F.3d 1286 (Fed. Cir. 2013) re’hrg and re’hrg en banc denied. In Allergan, the Federal Circuit found Allergan’s claims to Combigan® formulation to be obvious but affirmed the district court’s decision that the narrowly drawn method of use (indication) claims were valid. This resulted in Sandoz being enjoined from launching its generic product until the Allergan patent expires since its label must recite the same indication and dosing as Allergan’s.

The advice for drug patentees and NDA holders, review your patent claims early, preferably no later than the NDA approval. If there are no narrowly drawn claims to the drug or its indication, file a reissue to add them if feasible. For those seeking patents on a new drug, remember you paid for 3 independent claims and 20 claims total, use them. Put in claims to the drug, pharmaceutical compositions containing the drug, and methods of using the drug. These will give you flexibility in the future should it be advisable to add narrower claims by reissue.

Spring CLE Events

For attorneys seeking post grant patent CLE this spring, there are a number of high quality programs scheduled over the next few weeks.

On March 20, 2014, Strafford Legal offers the webinar Parallel Patent Proceedings Before the PTAB and Federal Court Post AIA. This program provides a special emphasis on litigation strategy, including motions to stay and parallel discovery issues.

Closing out March is the return of the highly acclaimed Practicing Law Institute program entitled USPTO Post-Grant Patent Trials 2014. This day long program, dedicated entirely to post grant practice will be held on March 27, 2014 in New York, and again on April 28, 2014 in San Francisco. A live webcast is available for the San Francisco location.

Heading into April, Post-Grant Patent Practice:  Review and Reexamination is offered  March 30-April 1 in Bonita Springs, Florida

Post-Grant Patent Practice:  Reissue, Owner-Request Reexamination, and Supplemental Examination is offered the next day, April 2, in Bonita Springs, Florida.

On April 3rd, the American Bar Association (ABL) Spring Meeting in Arlington Virginia will host Game Over: The Game Changing Impact of the Patent Trial & Appeal Board on Non-Practicing Entities (NPEs).

I hope you can join me and my colleagues at one of these upcoming events.

IPR…Not Just For Trolls

With Congress on the verge of passing still more legislation directed at alleviating the dreaded “patent troll” problem, perhaps Congress should pause to consider what has already been accomplished over the last 18+ months. As pointed at by Gene Quinn at IPwatchdog last week, Congress is in a rush to pass further patent reform legislation in the name of “helping Main Street America.” Yet, since September 16, 2012 the America Invents Act (AIA) has been wildly successful in providing a cheaper, faster, low cost alternative to patent litigation. Inter Partes Review (IPR) in particular has become the favorite anti-troll measure.

Typically, an IPR is pursued against the subject patent so that a stay of the costlier litigation can be obtained. Depending upon the jurisdiction/judge involved, the ability to stay a litigation pending USPTO review has increased significantly since the passage of the AIA. While this change in landscape is welcome news for those battling trolls, IPR is equally concerning for those patentees considered to be true technology innovators. Patents that are being litigated today were drafted 5-10 years ago, on average. In other words, currently asserted patents were drafted to leverage the validity presumption and clear and convincing evidentiary standards of the district court. Expedited PTAB review of these issued patents wasn’t possible at the time of drafting. (While patent reexamination existed it was not considered a serious concern due to its notorious, 5-6 year pendencies).

Now, the PTAB offers unprecedented speed with none of the patentee safeguards of the district court.

While much focus is placed upon the PTAB relative to NPE impact, let’s take a look at what is going on in the medical device/technology sector (current as of March 2013). (Click to Enlarge)

MedtechAs can be seen in the attached chart, practically every major medical device/technology company is currently involved in an IPR.

Patents in the ever emerging fields of medical diagnostics/devices are highly valued tools to ensure continued research and diversification of the market sector. Without the promise of market exclusivity, many such companies would fail to attract critical funding. Likewise, larger, well entrenched competitors would effectively prevent any significant, new competition.

Until patent application drafting philosophies account for the PTAB threat, both NPEs and innovators alike will find themselves vulnerable to PTAB attack.

Perhaps Congress should take a look around before pushing further on patent reform.

Mark-Up Scheduled for Senate Judiciary Committee March 27th

Senator Leahy will dust off his proposed bill S. 1720 entitled Patent Transparency and Improvements Act of 2013 next week. The Bill has been the subject of fairly intense lobbying over the past few months, stalling the otherwise fast track effort. With the mark-up scheduled for Senate Judiciary Committee consideration on March 27th, it is expected that debate on the revised bill will be pushed for early/mid April.

It will be interesting to see the mark-ups and differences between the initial version of the Bill and its House counterpart (Goodlatte bill) — a veritable patent lobby report card.

PTAB Breaks 1000 Threshold for CBM and IPR Filings

Last week, the USPTO issued the official tallies/progress statistics for Inter Partes Review (IPR), Post Grant Review (PGR) and the Covered Business Method (CBM) proceedings. As of March 6, 2014 the Patent Trial & Appeal Board (PTAB) has received 924 IPR petitions and 127 CBM petitions, 1056 petitions in total. Since the last update in January, the PTAB has seen 150 additional petition filings. These numbers are well beyond the 281 filing limit per year Congress envisioned in the America Invents Act. The PTAB is seeing 281 filings roughly every 2-3 months. (Click to Enlarge)

aia_statistics_03_06_2014

aia_statistics_B

Not surprisingly, the vast majority of IPR petitions remain in the predictable arts, significant concentrations being in consumer electronics and mobile communication technologies. (a favorite haunt of non-practicing entities (NPEs))

aia_statistics_CAlthough difficult to gauge from the numbers due to the lag in filing of preliminary responses across yearly boundaries and larger sample in 2014 filing numbers, it seems that patent owner’s are beginning to appreciate the limited value of preliminary responses. The number of waived responses in 2014 has already surpassed 2013 numbers.

aia_statistics_DBased upon the growing sample, the settlement/adverse judgment rate appears to be leveling out at around 15-20%. As more proceedings mature toward written decision the rate may increase. Of course, it is within the discretion of the PTAB to continue to written decision for late stage settlements, especially those attempted after the patent owner response. (See CBM2012-00007)