Guest Post by Charles ("Chico") Gholz. Gholz is the head of the Interference Section at Oblon Spivak, a former chair of the Interference Committee of the AIPLA, and a frequent author on interference law and practice. I asked him to provide some thoughts on the proposed post-grant review proposals in the Patent Reform Act of 2009, telling him that I was especially interested in whether we should try to use the interference procedural structure for the new post-grant challenges.
It is my understanding that "the PTO" (actually, the PTO officials directly involved in administering interference matters—by which I mean Chief Administrative Patent Judge Fleming, Vice-Chief Administrative Patent Judge Moore, and Senior Administrative Patent Judge McKelvey) have expected the cancellation proceedings to be a species of the genus contested case and that, accordingly, they would be governed by Part 41, "Practice Before the Board of Patent Appeals and Interferences," Subpart D, "Contested Cases," of 37 CFR. To those of us in the interference bar, that makes perfect sense, since the cancellation proceedings will be very, very similar to the first phase (formerly known as the "preliminary motions phase") of patent interferences—except that only one party will be filing substantive motions.
However, proposed 35 USC 326 in both bills provides that "The Director shall prescribe regulations…" governing the post-grant review proceedings (what I'm referring to herein as "cancellation proceedings"). Apparently the drafters of the bills (who I suspect are not members of the patent bar, let alone members of the interference bar!) either were unaware of 37 CFR 41 Subpart D or felt that either additional or different rules would be required for the cancellation proceedings.
Whether the cancellation proceedings are to be governed by Subpart D or by a different set of rules is not an insignificant point. Proposed 35 USC 326(a)(3) in both bills would require the Director to prescribe regulations "setting forth procedures for discovery of relevant evidence, including that such discovery shall be limited to evidence directly related to factual assertions advanced by either party in the proceedings, and [that] the procedures for obtaining such evidence shall be consistent with the purpose and nature of the proceeding." However, while that language could be read as mandating real discovery (i.e., discovery similar to the discovery available in district courts), the bills then go on to mandate that, "In carrying out paragraph (3) [i.e., in providing the rules for discovery], the Director shall bear in mind that discovery must be in the interests of justice," which might be read a giving the PTO room to provide for only the extremely limited kind of discovery that is currently available in interferences. See Gholz, Patent Interferences – Big Ticket Litigation With No Effective Discovery, 4 Intellectual Property Today No. 9 at page 10 (1997).
Similarly, proposed 35 USC 326(b) in both bills would provide that "Regulations under subsection (a)(1) [including the regulations governing discovery]…shall provide for discovery upon order of the Director [actually, it would presumably be upon order of the APJ handling the proceedings]," indicating that, in contrast to district court procedure, the burden of showing entitlement to discovery would be on the party seeking discovery, rather than imposing on that party's adversary the burden of showing why discovery should not be obtained.
Proposed 35 USC 326(b) in both bills would also require the Director to issue regulations providing "for filing under seal exempt from publication requirements" and providing for "protective orders governing the exchange and submission of confidential information"—both of which would be sharp departures from current interference practice. See Gholz, Compelled Testimony, Testimony Abroad, and Protective Orders in Interference Proceedings Under the New Rules, 67 JPTOS 239 (1985). However, 35 USC 326(b) then goes on to say that the Director's regulations "shall ensure that any information submitted by the patent owner in support of any amendment entered under section 329 is made available to the public as part of the prosecution history of the patent." Since the "confidential information" is more likely to be submitted by the patent owner than by its adversary, I wonder how often a protective order will actually issue. Or is the point that the protective order will automatically expire upon conclusion of the cancellation proceeding?
Both the House version and the Senate version of proposed 35 USC 334 govern the effect on cancellation proceedings of decisions in other proceedings (only an infringement action in the Senate version, but either an infringement action or an ITC action in the House version). Surprisingly, both versions seem to assume that the decisions of the courts (or the courts and the ITC), on the one hand, and the decisions of the Board, on the other hand, are of identical issues—despite that fact that the party attacking a patent has a lower burden of proof before the Board and therefore might win before the Board even though it would lose before a court or the ITC on identical evidence.
In sum, I'd like to express my hope that the drafters of the two bills will consult with experts on interference law and practice, both in the PTO and in the private bar, before passing either version of the bill.