Guest post by Saurabh Vishnubhakat, Associate Professor of Law at the Texas A&M University School of Law. Prof. Vishnubhakat was an advisor at the USPTO until June, 2015, although his arguments here should not be imputed to the USPTO or to any other organization.
On May 9, the USPTO Patent Trial and Appeal Board (PTAB) designated five opinions as “precedential”—the most significant of the four labels that the agency attaches to its administrative decisions. This action is itself a milestone, as the USPTO has designated only three other opinions as precedential over the last 22 months. So this is a useful moment to examine the process by which PTAB opinions become precedential and to consider what this new body of administrative precedent means for the patent validity review procedures created by the AIA.
What the Current Precedential Opinions Say
The eight PTAB precedential opinions themselves are as follow:
Designated as Precedential in May 2016
- Garmin Int’l v. Cuozzo Speed Techs LLC, IPR2012-00001, Paper 26 (Mar. 5, 2013). Discusses the distinct standards for “routine” and “additional” discovery requests in inter partes review, and explains the factors for evaluating motions for additional discovery.
- Bloomberg, Inc. v. Markets-Alert Pty, Ltd., CBM2013-00005, Paper 32 (May 29, 2013). Compares the more lenient “good cause” standard for additional discovery in covered business method review (as well as post-grant review) with the slightly stricter “interests of justice” standard in inter partes review, and explains the factors for evaluating motions for additional discovery in CBM review.
- Oracle Corp. v. Click-to-Call Techs, LP, IPR2013-00312, Paper 26 (Oct. 30, 2013) (precedential only as to Section III.A). Explains that the “served with a complaint” requirement of 35 U.S.C. § 315(b) does not trigger the one-year bar for filing an IPR petition where the entire complaint in the prior civil action was voluntarily dismissed without prejudice.
- MasterImage 3D, Inc. v. RealD Inc., IPR2015-00040, Paper 42 (July 15, 2015). Clarifies the patent owner’s burden to demonstrate its entitlement to substitute claims that are patentable over the relevant prior art, elaborating on Idle Free Systems, Inc. v. Bergstrom, Inc., IPR2012-00027 (June 11, 2013) (Paper 26) (informative).
- Lumentum Holdings, Inc. v. Capella Photonics, Inc., IPR2015-00739 (Paper 38) (Mar. 4, 2016). Explains that the requirement of 35 U.S.C. § 312(a)(2) to identify all real parties in interest is not jurisdictional, so that a failure to comply neither deprives the PTAB of authority to hear the case nor forbids the PTAB to allow the failure to be rectified.
Designated as Precedential in January 2016
- LG Electronics, Inc. v. Mondis Tech Ltd., IPR2015-00937, Paper 8 (Sept. 17, 2015). Explains that the “served with a complaint” requirement of 35 U.S.C. § 315(b) triggers the one-year bar for filing an IPR petition based on the earlier of two complaints and that a dismissed complaint may still trigger the § 315(b) bar if it was dismissed partially with prejudice and partially without.
- Westlake Services, LLC v. Credit Acceptance Corp., CBM2014-00176, Paper 28 (May 14, 2015). Explains that the CBM estoppel provisions of 35 U.S.C. § 325(e)(1) barring further proceedings before the USPTO apply on a claim-by-claim basis, so that a new petition for CBM review is not necessarily barred if it addresses no claims that were the subject of a prior final written decision.
Designated as Precedential in July 2014
- SecureBuy LLC v. CardinalCommerce Corp., CBM 2014-00035, Paper 12 (Apr. 25, 2014). Applies the plain language of 35 U.S.C. § 325(a)(1) to bar a petition for CBM review where the petitioner (or its real party in interest) previously “filed a civil action challenging the validity of a claim in the patent.”
What the PTAB Designations Mean
PTAB opinions come in four varieties—until recently, it was three—and each serves a different function. The most difficult to designate and so the rarest are precedential opinions, which are binding in all future cases before the PTAB unless and until they are superseded by later binding authority. Two particularly strong motivations for designating an opinion as precedential is to resolve a conflict among multiple PTAB decisions and to address novel questions.
By contrast, the largest and least significant set of opinions are routine; all opinions are routine by default, and some further action is necessary to elevate an opinion’s status. Routine opinions are still binding as to the particular case, but should generally not be cited as persuasive authority except as to their particular facts.
In the middle are two more types of non-binding opinions: informative and representative. Informative opinions articulate the PTAB’s norms on recurring issues and offer guidance both on issues of first impression and on PTAB rules and practices. Representative opinions offer a sample of typical decisional outcomes on a given matter. Until recently, the only middle category was informative opinions, which presented guidance on the rules and practices of the PTAB, representative samples of opinion types, or representative samples of outcomes. On September 22, 2014, the PTAB created a new category for representative opinions—ranked below informative opinions.
In short, representative opinions are a descriptive curation of routine opinions. Informative opinions go beyond merely surveying an issue and synthesize some further normative guidance. Precedential opinions go further still and make the synthesis binding.
How the PTAB Designates Opinions
The process for designating opinions resides in the PTAB’s Standard Operating Procedure No. 2 (Rev. 9, Sept. 22, 2014). Any member of the PTAB may nominate an opinion to be designated as representative, informative, or precedential. This includes the Director and Deputy Director of the USPTO and the Commissioners for Patents and Trademarks as ex officio members. Interested parties and members of the public may nominate an opinion within 60 days of its issuance to be designated as precedential. Nominations are received and referred by the Chief Judge of the PTAB.
Upon a nomination to make an opinion precedential, members of the PTAB discuss the proposal for a prescribed period (usually 10 business days) and then vote. Approval by a majority sends the opinion to the Director, whose approval is also necessary. Upon approval by the Director, the opinion is designated as precedential and published (with appropriate notice and opportunity for written objection where confidentiality applies under 37 C.F.R. § 1.14).
For opinions already designated as precedential, any member of the PTAB may suggest that later authority has overcome the opinion’s precedential value. If first the Chief Judge and then the Director both agree, then the opinion loses its precedential force, and a notice of the change is posted in its place among the list of precedential PTAB opinions.
The Chief Judge of the PTAB may designate any opinion as informative or representative so long as it is not already precedential.
Why the PTAB’s Precedents (and Process) Matter
Both the content of the PTAB’s body of precedential opinions and the PTAB’s process have important implications for ex post administrative review of patent validity.
As to content, it is telling that all eight precedential opinions pertain to the procedural structure of IPR and CBM proceedings, particularly insofar as that procedural structure interacts with the structure of patent litigation in the federal courts. The separation of patent powers between the executive and the judiciary is now before the Supreme Court in multiple cases, and this body of precedential opinions should be understood as a signal of the USPTO’s strong interest in shoring up its regime of administrative adjudication.
The opinions in SecureBuy, LG Electronics, and Oracle address when earlier civil actions do and do not bar a petition for PTAB review. Westlake Services addresses estoppel in future CBM review, and there is good reason to expect that the same reasoning will apply to the parallel statutory language that governs IPR estoppel. Lumentum Holdings rejects a jurisdictional view of certain procedural requirements, preserving the PTAB’s broad authority to choose its cases. MasterImage 3D frames a patent owner’s ability to amend claims during review. And Bloomberg and Garmin Int’l address limits on trial-type discovery in both the IPR and the CBM/PGR contexts. Making these procedural and structural decisions into binding authority is, by definition, intended to bring uniformity to the PTAB’s large and increasing body of case law.
The need for such uniformity is particularly strong right now. The Supreme Court in Cuozzo v. Lee is evaluating whether the PTAB’s authority in instituting petitions is truly nonreviewable. The Court in Cuozzo is also considering whether the PTAB’s claim construction standard can properly remain unaligned with federal court standards, a question that turns significantly on the ability of patent owners to amend their claims during review. The trial-like nature of PTAB proceedings is more generally under attack as to whether IPR and CBM review violate the separation of powers doctrine and the Seventh Amendment jury trial right, as the recent cert petition in MCM Portfolio LLC, Petitioner v. Hewlett-Packard Company (No. 15-1330) suggests. In this environment of Supreme Court scrutiny, a persuasive argument that PTAB practice is proceeding with institutional coherence may do much to influence the USPTO’s autonomy in administering the validity and scope of patent rights.