For those that may have missed the various CLE programs and USPTO road shows of the past few weeks, video highlights of the AIA Roadshows are posted on the USPTO web site (here). Also, a very comprehensive slide deck covering all AIA changes effective on September 16, 2012 is found (here)
Back in August I explained that the record verdict in the now infamous Apple/Samsung patent row may have been the result of a confused jury foreman. In public statements made shortly after the verdict, the jury foreman explained to Bloomberg (here), that his “aha moment” in assessing the alleged obviousness of Apple patents was when he realized that the Apple software would not work on the processor of the prior art. This was an odd statement considering that the test for obviousness is not whether features may be bodily incorporated into a prior art structure, but rather, what the combined teachings of those references would have suggested to one of ordinary skill in the art. In re Keller, 642 F.2d 413.
Not surprisingly Samsung has seized upon this statement, along with other alleged misconduct/bias as a basis to request a new trial. In their motion, Samsung explains that:
. . .Mr. Hogan’s self-reported conduct during the jury deliberations presents the “reasonable possibility” that extraneous material “could have affected the verdict.” Sea Hawk Seafoods, Inc. v. Alyeska Pipeline Serv. Co., 206 F.3d 900, 906 (9th Cir. 2000). In post-verdict interviews with the media, Mr. Hogan said that he told his fellow jurors an accused device infringes a design patent based on “look and feel” (Estrich Decl. Ex. N), that an accused device infringes a utility patent unless it is “entirely different” (id. Ex. M), that a prior art reference could not be invalidating unless that reference was “interchangeable” (id. Exs. L, N), and that invalidating prior art must be currently in use (id. Ex. O). These incorrect and extraneous legal standards had no place in the jury room.
(emphasis added)
The motion is an interesting read (here). I am guessing that the jury foreman may now be rethinking this experience as one of the “high points of his life.”
It is well established that the USPTO applies a broadest reasonable claim interpretation to patent applications and patents subject to post issuance proceedings. The abbreviation “BRI” is often used as a short hand reference to the full claim interpretation standard, which is the broadest reasonable interpretation in light of the specification, from the perspective of one skilled in the relevant art. (MPEP 2111)
Unfortunately, the shorthand notation “BRI” is often mistaken as the standard. That is to say, the proper test is not simply a “broadest reasonable interpretation” of claims in a linguistic sense. Rather, the broadest reasonable interpretation of the claims that is consistent with the specification of the subject application or patent. While it is true that limitations from a patent specification may not be imported to the claims, the USPTO often times confuses this prohibition with the required consideration of the specification in a proper BRI analysis.
In 2010, the CAFC cautioned the USPTO on reading claims independent of a patent specification during patent reexamination in In re Suitco Surface (CAFC 2010). Earlier this week, the agency was reversed again, due to the guidance of the patent specification in In re Abbott Diabetes Care Inc. (here)
In Abbott, the parties’ primary dispute centered on whether the broadest reasonable construction of “electrochemical sensor” would embrace a sensor including external cables and wires connecting the sensor to its control unit. The USPTO found that the BRI included such wired sensors, the CAFC reversed, explaining:
We agree with Abbott that the Board’s construction of “electrochemical sensor” is unreasonable and inconsistent with the language of the claims and the specification. . .
Here, the specification contains only disparaging remarks with respect to the external cables and wires of the prior-art sensors . . .In fact, the primary purpose of the invention was to provide “a small, compact device that can operate the sensor and provide signals to an analyzer without substantially restricting the movements and activities of the patient.” . . .
Even more to the point, every embodiment disclosed in the specification shows an electrochemical sensor without external cables or wires. Indeed, the only mention of a sensor with external cables or wires in Abbott’s patents is a single statement addressing the primary deficiency of the prior art.
(emphasis added)
Back in March of 2011, an expanded panel of the Board of Patent Appeals & Interferences (BPAI) decided Belkin International et al., v. Optimumpath LLC. Belkin’s appeal stemmed from a denial of a proposed SNQ of an inter partes patent reexamination request of U.S. Patent 7,035,281 (95/001,089). The initial request for inter partes patent reexamination was granted as to claims 1-3 and 8-10, but denied as to claims 4-7 and 11-31.
The denial of the SNQ targeting claims 4-7 and 11-31 was petitioned to the Director of the Central Reexamination Unit (CRU). Upon reconsideration, the Director refused to reverse the examiner. On the other hand, Belkin did not petition the denial of SNQs pertaining to the claims being actively reexamined (claims 1-3 and 8-10). During prosecution of the reexamination, the rejection of claims 1-3 and 8-10 was withdrawn by the examiner. Thereafter, Belkin appealed the withdrawn rejection of claims 1-3 and 8-10 together with the denial of the SNQs pertaining to those reexamined claims.
The procedural issue before the Board was whether or not denied SNQs, which pertain to claims being actively reexamined (i.e., claims 1-3 and 8-10) must be petitioned rather than appealed to the BPAI. The Board found that:
[I]f the Director makes the non-appealable determination that no substantial new question of patentability has been raised, then reexamination is not performed for those claims in question with respect to the corresponding prior art references. There cannot have been a final decision (either favorable or unfavorable) on the patentability of the claims in question under 35 U.S.C. § 315(b), the claims not having been reexamined in the first place for lack of a substantial new question of patentability. (emphasis added)
Yesterday the CAFC weighed in on the debate.
Belkin argued (here) that the Board has jurisdiction to consider prior art found not to raise a substantial new question of patentability in inter partes reexamination when reexamination is subsequently granted for the same claim on another reference. Belkin presented reexamination as a two-step procedure: (1) determining whether a substantial new question of patentability exists; and (2) if so, determining whether the claims are patentable over all prior art. Belkin conceded that the first step is not appealable under § 312(c) (as was the case for claims 4-7 and 11-31), but contended that once an SNQ affecting a claim is found, all prior art must be considered on appeal, including prior art found previously not to raise a substantial new question of patentability.
The CAFC sided with the USPTO explaining:
We disagree with Belkin’s position because there was no final decision favorable to patentability regarding the issues based on the [denied SNQs]. First, the Director’s determination that an issue does not raise a substantial new question of patentability is not a decision favorable to patentability. Lack of a substantial new question of patentability is not a favorable decision on patentability. Indeed, it cannot be one, as the decision on the substantial new question preceded the actual reexamination, and merely raised a “question” to be answered. Furthermore, it is explicitly non-appealable under § 312(c). To allow an otherwise non-appealable decision by the Director to become appealable simply by raising it a second time during the later reexamination would impermissibly circumvent the statutory bar on appeals.
In deciding the issue, however, the CAFC did highlight a potential non-petition route to preserve such issues for appeal, explaining:
In this case, the Director determined, in part, that the issues based on the first three references cited by Belkin did not raise a substantial new question of patentability regarding claims 1–3 and 8–10. Under § 312(c), that decision is final and non-appealable. But the Director also determined that one issue based on anticipation by another reference, Peirce, did raise such a question. At that point, the Director was entitled to, and did, order reexamination for resolution of that single question. The scope of the resulting reexamination was then limited to answering that question of patentability, anticipation by Peirce. Belkin, at that point, could only raise the three references if they were necessary to rebut findings of fact by the examiner or as a response to the patent owner relevant to answering that single patentability question. See 37 C.F.R. § 1.948(a). Here, Belkin has not argued that the three references were cited for such a purpose, and the limited record before us does not suggest that they were. Thus, the Board was correct not to consider the previously raised and rejected issues based on the other three references.
(emphasis added)
It is worth noting that the above option was never available to Belkin. This is because the first action was an Action Closing Prosecution (ACP), and the Patentee did not respond. Thus, Belkin had no option to argue the merits before the examiner until appeal briefing. Still, for those legacy inter partes reexamination filings that fall under the old SNQ standard, the above rebuttal option may be the best option for preserving such matters for PTAB review. (note that the SNQ standard changed on September 16, 2011, so the last year of inter partes reexamination filings are free of this confusion).
For those seeking some CLE this week, consider the PLI program tomorrow, entitled How to Effectively Prosecute AIA Post Grant Proceedings 2012. The program is available live in San Francisco, or via webcast, tomorrow, October 3rd. Also, be on the look out for the upcoming treatise from PLI entitled Post Grant Proceedings Before the Patent Trial & Appeal Board.
For challengers in an inter partes patent reexamination (IPX), confirmation of patent claims by the examiner can pose a significant set back. That is to say, the challenger would be estopped (35 U.S.C. § 317(b)) from raising invalidity defenses that “could have been raised” relative to the confirmed claims during the IPX proceeding, in a later court proceeding.
Although IPX is no longer available as an option to patent challengers, the rate of affirmance by the PTAB in such situations will still be of significant interest in the years to come thanks to the avalanche of IPX filings submitted to the USPTO earlier this month.
Based upon the outcomes of the IPX decisions issued so far in 2012, challengers have about a 50/50 chance of reversing at least one claim of the examiner confirmation.
The chart below illustrates the outcomes of the 46 IPX decisions in which a claim was confirmed.
So far in 2012 there have been 46 IPX Board decisions where an appeal/cross-appeal concerned either the Examiner’s confirmation of claims 40 or the Examiner’s decision not to adopt additional rejections 6.
Of those cases, confirmed claims were:
-Affirmed in 16 – Affirmed in part in 10 – Reversed in 14
Additional rejections not adopted:
-Affirmed in all 6
Thus, of those 46 decisions, 24 resulted in the reversal of at least one confirmed claim (52%). (Click to Enlarge)
Over the past few weeks, commentators have been buzzing about the ability/inability to challenge a patent on the grounds that the claims are not directed to statutory subject matter (35 U.S.C. § 101). Under the discussed theories, a 101 challenge is not a statutory basis for invalidity, and, as such, is necessarily excluded from the available grounds to initiate Post Grant Review (PGR) and the Covered Business Method (CBM) Challenge. I, for one, never quite followed the logic of this argument as it seemed to ignore the reality of the controlling case law on point (if not the explicit legislative history of the AIA).
This past Monday, USPTO Director Kappos explained (quite correctly in my opinion) that PTAB patentability challenges embrace 101 grounds (ttp://www.uspto.gov/blog/”>here).
The Director explains that:
As we described in our final rules implementing post-grant review and covered business method review in the Federal Register, in our view the “grounds available for post-grant review include 35 U.S.C. 101 and 112, with the exception of compliance with the best mode requirement.” 77 Fed. Reg. 48,680, 48,684 (Aug. 14, 2012). This interpretation is consistent with both the relevant case law and the legislative history.
Both the Supreme Court and the Federal Circuit have concluded that § 101 is a condition for patentability. In Graham v. John Deere Co. of Kansas City, 383 U.S. 1, 12 (1966), the Supreme Court stated that the 1952 Patent Act “sets out the conditions of patentability in three sections,” citing 35 U.S.C. §§ 101, 102, and 103. The Supreme Court has also addressed invalidity under § 101 when it was raised as a defense to an infringement claim under § 282. See Mayo Collab. Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1305 (2012).
If that were not clear enough, the Federal Circuit expressly rejected the argument – raised by the dissenting judge in the case – that § 101 is not a “condition for patentability” under § 282, stating that “the defenses provided in the statute, § 282, include not only the conditions of patentability in §§ 102 and 103, but also those in § 101.” Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1330 n.3 (Fed. Cir. 2012) (internal quotation marks omitted) (citing Aristocrat Techs. Austl. PTY Ltd. v. Int’l Game Tech., 543 F.3d 657, 661 (Fed. Cir. 2008)).The Federal Circuit in Dealertrack also made clear that the use of the term “Conditions for patentability” in the titles of §§ 102 and 103, but not § 101, did not change the result, relying on the Supreme Court’s pronouncement in Pennsylvania Department of Corrections v. Yeskey, 524 U.S. 206, 212 (1998) (quoting Trainmen v. Baltimore & Ohio R.R. Co., 331 U.S. 519, 528-529 (1947)), that a statute’s title “is of use only when it sheds light on some ambiguous word or phrase” in the statute and that it “cannot limit the plain meaning of the text.” Id. (quoting Trainmen v. Baltimore & Ohio R.R. Co., 331 U.S. 519, 528-529 (1947)).
The legislative history of the AIA also makes clear that Congress intended the PTAB to consider challenges brought under § 101 in post-grant reviews. For example, a key House Committee Report states that “the post-grant review proceeding permits a challenge on any ground related to invalidity under section 282.” H.R. Rep. No.112-98, at 47 (2011). On the Senate side, Senator Kyl also included “section 101 invention issues” among those “that can be raised in post-grant review.” 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011).
So, the courts and Congress have indicated quite clearly, in our view, that the PTAB should consider patentability challenges brought under § 101 in post-grant and covered business method reviews. Unless the courts or Congress tell us otherwise, we will do so.
Two weeks back I discussed the “patentee estoppel” impact of Rule 42.73(d)(3)(1). As a reminder, when a patent claim is cancelled or finally refused in a validity trial proceeding of the Patent Trial & Appeal Board (PTAB), the Patentee is thereafter precluded from taking an inconsistent action before the USPTO. This preclusion includes, obtaining in any patent, a claim that is not patentably distinct from the finally refused or cancelled claim.
In the earlier post, I discussed how the final refusal or cancellation of a patent claim could have a devastating impact on active continuation patent application portfolios. This is because when a parent patent has a broad, generic claim cancelled or refused in a post grant trial of the PTAB, the Patentee is estopped from pursuing a continuation (or reissue) application presenting claims of indistinct scope. Absent a proactive strategy, such a result would significantly undermine the investment in continuation application portfolios of large patent filers.
Perhaps even more disturbing, is the infectious nature of this estoppel relative to other, issued patents of an unsuccessful Patentee.
42.73(d)(3)(i), is arguably just as applicable to a later filed patent reexamination.
For example, let’s assume there is a portfolio of 5 patents all of which stem from straight continuation filings of a parent (i.e., same specification and no divisional applications), and there are no pending continuation applications. A challenger could choose to attack the broadest claim of the patent portfolio via a PTAB trial. If successful, then, a string of patent reexamination filings would be submitted on the same, or very similar art as the previous PTAB trial. Let’s add another wrinkle and assume the patents include terminal disclaimers between and among the 5 patents of the portfolio. An expansive reading of 42.73(d)(3)(i) may not only prevent new claims or amendments in those later reexamination proceedings based upon their indistinct claims, but could prevent the reexamination filings from being defended by the Patentee at all. (Note that patentably distinct claims cannot be presented during patent reexamination since broadening is not permitted)
As a reminder, the text of 42.73(d)(3) is as follows:
(3) Patent applicant or owner. A patent applicant or owner is precluded from taking action inconsistent with the adverse judgment, including obtaining in any patent:
A claim that is not patentably distinct from a finally refused or cancelled claims; or
(iii) An amendment of a specification or of a drawing that was denied during the trial proceeding, but this provision does not apply to an application or patent that has a different written description.
(emphasis added)
The USPTO could take the position that “obtaining in any patent” does not refer to claims already obtained in an issued patent. Still, even under such a strict interpretation the Patentee would almost certainly be prevented from amending or adding new claims during the patent reexamination as a result of the infectious PTAB estoppel. For portfolios that have closely linked patents (such as the example above), taking on the broadest claim in a PTAB proceeding may be the simplest and cleanest method to destroy a sizeable portfolio. Thereafter, the challenger would present a series of relatively lower cost patent reexamination filings, perhaps presenting estoppel as a rejection based on the patent subject to the earlier PTAB proceeding– much the same way a double patenting rejection would be presented.
42.73(d)(3)(i) was not part of the AIA statutes. Rather, the USPTO adopted the Patentee estoppel concept from the “interference estoppel” of patent interferences. In patent interferences, the codification of such a “loser” estoppel principle made sense. That is to say, in a priority contest, the losing party should not be able to, after an unfavorable result in a patent interference, simply re-present the conflicting claims in another Office proceeding.
On the other hand, patentability trials of the PTAB have other practical impacts that would preclude such behavior. Patentees losing a PTAB trial could not simply re-present the very same claims in a new Office proceeding as the USPTO has a well established policy of administrative estoppel for such situations. Likewise, few Patentees will simply cancel issued claims in a PTAB proceeding in favor of a newly minted continuation patent clams of an indistinct scope as doing so restarts the clock on recoverable patent damages, Moreover, such claims while perhaps indistinct to the USPTO, typically provide new, non-infringement defenses to competitors of the Patentee.
Patent reexamination has existed since the early 1980s without being constrained by a rule such as 42.73(d)(3). The USPTO may be hard pressed to demonstrate a procedural basis/abuse that demands such a far reaching result. Public comments submitted to the USPTO on the earlier version of this Rule emphasized that the USPTO does not possess substantive rule making authority. It may be that another court challenge along the lines of Tafas v. Dudas is in store for the USPTO.
As pointed out earlier this week, the USPTO began accepting petitions for the new post grant trial proceedings of the America Invents Act (AIA) at 12:01AM Sunday morning. As the USPTO approached the midnight kick off for the new filings it was simultaneously closing the books forever on inter partes patent reexamination; but not before receiving a record number of such requests. It appears that well over 200 requests were filed for inter partes patent reexamination, and well over 100 for ex parte patent reexamination were submitted in the week leading up to Sunday. This is equivalent to almost 9-10 months of filings (based on Fiscal Year 2011 statistics) in 5 days!
There are several reasons for the inter partes patent reexamination surge. First Inter Partes Review is not available to late stage litigants (i.e., complaint older than 12 months). Undoubtedly some of last week’s filers (such as those sued 12+ months earlier than 9/16/12) were simply those taking advantage of their final opportunity to challenge an asserted patent in an inter partes fashion. Still others may have been looking for a bargain. IPR requires at least a $27,200 filing fee, whereas inter partes patent reexamination was $8800. The Discovery of IPR, although limited also adds additional expense. Finally, IPR is a much faster proceeding. This speed accelerates certainty but also accelerates estoppel risk. For this reason, especially cautious challengers may have opted for the far slower inter partes patent reexamination outcome.
In addition to the surge in inter partes patent reexamination filings, over 100 ex parte reexamination filings were submitted. The surge in ex parte patent reexamination was entirely related to fees. Last week, the required fee was $2520. This week the fee jumps to $17,750.
What does this mean for the USPTO?
Over 300 reexamination determinations will become due one week before Christmas. (reexamination must be ordered within 90 days of filing by statute). While the Central Reexamination Unit works through the September filing bubble, there will almost certainly be a chilling effect on the the speed at which current reexamination proceedings advance.
The new Patent Trial & Appeal Board (PTAB) web portal, known as the Patent Review Processing System (PRPS) went live at 12:01AM Sunday morning. At the time of this writing, 7 petitions for Inter Partes Review (IPR) have been filed, as well as 4 petitions for Covered Business Methods (CBM). Another group of petitions will be filed over the next several days.
Of the filings I am able to discuss, the IPR petition of Macauto USA challenging U.S Patent 6,422,291 (assigned to Bos Gmbh) is of interest from a standing perspective (filing here). The parent company of the petitioner, Macauto Taiwan, was first sued by Bos GmBh on the ‘291 Patent back on April 7, 2011. However, the Bos complaint was voluntarily dismissed on November 3, 2011. Apparently, jurisdiction was at issue in the litigation dispute and it is unclear if service of the complaint was ever perfected. The time of service of the complaint is key since the April date would take Macauto USA (assuming privity with Macauto Taiwan) outside the 12 month window for IPR. One would expect that Bos will explore these issues, if applicable, in their preliminary response.
Details on the previous litigation dispute can be found in the May 2012 complaint filed against Macauto USA. (here)