The America Invents Act (AIA) of 2011 authorized the creation of a set of administrative trials (AIA Trials), including Inter Partes Review (IPR) proceedings, Post Grant Review (PGR) proceedings and transitional Covered Business Method Review (CBM) proceedings. In each of these proceedings, anyone can file a petition to challenge an issued patent, and, after instituting the trial, the Patent Trial and Appeal Board (PTAB) will decide whether the challenged claims should be confirmed or cancelled.
Allvoice Developments US, LLC v. Microsoft Corp., No. 15-538 (“Do patent claims addressed directly to software that is inherently in a computer-readable medium qualify as a ‘manufacture’ under 35 U.S.C. § 101 without express recitation of the medium?”)
OIP Technologies, Inc. v. Amazon.com, Inc., No. 15-642 (Do the rules of civil procedure apply when defendant raises a Section 101 eligibility “defense” in a motion-to-dismiss for failure to state a claim upon which relief can be granted?)
STC, Inc. v. Global Traffic Technologies, No. 15-592 (Whether marking the packaging of a patented article with patent notification satisfies the marking provision of 35 U.S.C. § 287(a) where the patented article itself is undisputedly capable of being marked.)
ePlus, Inc. v. Lawson Software, Inc., No. 15-639 (what happens with a finally-determined permanent injunction after PTO cancels the patent claim?)
Interval Licensing LLC v. Michelle K. Lee, No. 15-716 (Can the Patent and Trademark Office appropriately apply the “broadest reasonable interpretation” standard in construing patent claims in post-grant validity challenges?)
Media Rights Technologies, Inc. v. Capitol One Financial Corporation, et al., No. 15-725 (Claim Construction: whether there a strong presumption against construing terms as subject to 35 U.S.C. § 112p6 that do not recite the term “means.”)
Daiichi Sankyo Company, Ltd. v. Michelle K. Lee, No. 15-652 (Patent Term Adjustment – whether the 180 day deadline applies)
Innovention Toys, LLC v. MGA Entertainment, Inc., et al., No. 15-635 (Stryker/Halo follow-on)
Morgan, et al. v. Global Traffic Technologies LLC, No. 15-602 (unclear)
Arunachalam v. JPMorgan Chase & Co., No. 15-691 (unclear)
The AIA limits the [PTAB’s] jurisdiction with respect to CBM review to challenges based on any ground that could be raised under paragraph (2) or (3) of 35 U.S.C. § 282(b). Paragraph 2 provides that a party may seek to invalidate a patent or claim on any ground specified in part II of Title 35 as a condition for patentability.
The questions presented arise from the Federal Circuit affirming, without comment, the Board’s holding that 35 U.S.C. § 101 is a ground specified in part II of Title 35 as a condition for patentability and therefore constitutes a proper basis for review in a CBM proceeding, and from the Federal Circuit affirming the Board’s application of § 101 to the patent claims at issue.
They are:
1. Whether subject matter eligibility under 35 U.S.C. § 101 is a ground specified as a condition for patentability under 35 U.S.C. § 282(b)(2).
2. Whether the Board errs when it invalidates issued patent claims posing no risk of pre-emption under the abstract idea exception to patent eligibility.
In a precedential opinion, the Federal Circuit has rejected MCM’s foundational challenges against the Inter Partes Review (IPR) system implemented as a result of the America Invents Act of 2011 (AIA).
MCM Portfolio v. HP (Fed. Cir. 2015) (MCM.decision)
In particular, the court held that the IPR system does not violate Article III of the U.S. Constitution nor does it violate the Seventh Amendment of the U.S. Constitution. On the merits, the court then affirmed the PTAB’s decision cancelling MCM’s challenged claims as obvious. The court writes:
The teachings of the Supreme Court in Thomas, Schor, and Stern compel the conclusion that assigning review of patent validity to the PTO is consistent with Article III. . . . . [Furthermore we] are bound by prior Federal Circuit precedent. . . . We see no basis to distinguish the reexamination proceeding in Patlex from inter partes review. . . .
Because patent rights are public rights, and their validity susceptible to review by an administrative agency, the Seventh Amendment poses no barrier to agency adjudication without a jury.
The decision here also essentially forecloses Carl Cooper’s parallel proceedings. However, both parties are likely to request rehearing en banc followed by petitions for writ of certiorari.
USPTO Collected over $3 billion in user fees in FY2015. That figure was below budget. Spending limit is around $3.5 billion, but is limited by revenue. As a benchmark, in FY2010 USPTO collected $2.1 billion in revenue.
USPTO is proposing increase in fees
Ex parte prosecution: filing fee up $120 (filing+search+exam) to $1,720; Independent claims (more than three) up $40 to $460; RCE up $300 to $1,500 or $2,000 for 2nd+ RCE; late IDS – $300 after First Action; $600 after Notice of Allowance; Notice of Appeal – up $200 to $1,000; Appeal – up $500 to $2,500; However, no proposed increase in maintenance fees or extension-of-time fees.
Post Grant: Inter partes review up $7,500 to $30,500 (request + institution fee); Decrease in fee – reduced fee for reexaminations with <45 pages.
Median first action pendency is now 17-months.
Design patent filings continue to steadily rise – as does the backlog of unexamined design patent applications.
USPTO Ex Parte Appeals Backlog Continues to Decline – down to 21,000 pending appeals.
Following a 6-5 split by the Federal Circuit, Cuozzo filed a petition for writ of certiorari – asking two important questions (as paraphrased by me):
During a post-issuance inter partes review (IPR) proceeding, is it proper for the Patent Trial & Appeal Board (PTAB) to construe claims according to their “broadest reasonable interpretation” rather than their proper construction being applied in court?
Is the PTAB’s decision whether to institute an IPR proceeding judicially unreviewable even if the PTAB exceeds its statutory authority in instituting the IPR?
Eight different friend-of-the-court briefs have now been filed and the U.S. Government’s responsive brief is due December 9, 2015.
The majority of the briefs focus solely on the claim construction issue and make three basic arguments:
Policy: IPRs are designed as validity judgments rather than a new examination of the patent; and claim amendments are almost always prohibited. Because IPRs are acting in parallel with court proceedings, the different standards create instability and uncertainty while using the same claim construction as an infringement-court would promote efficiency. All this undermines the PTO’s reasons justifying application of BRI construction rather than standard construction.
Deference: Congress did not give the PTO rulemaking authority to decide to implement BRI in these Inter Partes Review proceedings and as a result, the agency’s interpretation should not be given administrative law deference.
Conflict: The broad standard effectively negates the presumption of validity associated with each and every patent right. The broad standard subtly justifies the PTO to avoid the preclusive effect of prior court decisions.
One amicus brief (NYIPLA) also argued that the Federal Circuit should be able to review whether the PTO exceeded its authority in instituting an IPR, despite statutory language stating that the decision is not appealable. NYIPLA argues that the statute simply bars interlocutory appeals, but that the statute does not “narrow the issues that can be raised in an appeal” of a final written decision under §319.
= = = = =
I’ll note here that none of the briefs at the petition stage raise the MCM/Cooper/Affinity arguments that the whole IPR proceedings are unlawful because “a patent, upon issuance, is not subject to revocation or cancellation by any executive agent, including by any part of the USPTO.” Citing McCormick Harvesting Mach. Co. v. Aultman, 169 U.S. 606 (1898). In McCormick, the Supreme Court wrote:
[W]hen a patent has … had affixed to it the seal of the Patent Office, it has passed beyond the control and jurisdiction of that office, and is not subject to be revoked or cancelled by the President, or any other officer of the Government. It has become the property of the patentee, and as such is entitled to the same legal protection as other property. . . . The only authority competent to set a patent aside, or to annul it, or to correct it for any reason whatever [without the patentee’s consent], is vested in the courts of the United States, and not in the department which issued the patent.
I would expect that, if the petition here is successful, some parties will file briefs that collaterally attach the IPR framework and to soften the Supreme Court for the eventual petitions.
The following is a post from Under Secretary of Commerce for Intellectual Property and Director of the USPTO Michelle K. Lee and was published on the PTO Director’s blog.
Patent quality is central to fulfilling a core mission of the USPTO, which as stated in the Constitution, is to “promote the Progress of Science and useful Arts.” It is critically important that the USPTO issue patents that are both correctandclear. Historically, our primary focus has been on correctness, but the evolving patent landscape has challenged us to increase our focus on clarity.
Patents of the highest quality can help to stimulate and promote efficient licensing, research and development, and future innovation without resorting to needless high-cost court proceedings. Through correctness and clarity, such patents better enable potential users of patented technologies to make informed decisions on how to avoid infringement, whether to seek a license, and/or when to settle or litigate a patent dispute. Patent owners also benefit from having clear notice on the boundaries of their patent rights. After and after successfully reducing the backlog of unexamined patent applications, our agency is redoubling its focus on quality.
We asked for your help on how we can best improve quality—and you responded. Since announcing the Enhanced Patent Quality Initiative earlier this year, we received over 1,200 comments and extensive feedback during our first-ever Patent Quality Summit and roadshows, as well as invaluable direct feedback from our examining corps. This feedback has been tremendously helpful in shaping the direction of our efforts. And with this background, I’m pleased to highlight some of our initial programs under the Enhanced Patent Quality Initiative.
First, we are preparing to launch a Clarity of the Record Pilot, under which examiners will include as part of the prosecution record definitions of key terms, important claim constructions, and more detailed reasons for the allowance and rejection of claims. Based on the information we learn from this pilot, we plan to develop best examiner and applicant practices for enhancing the clarity of the record.
We also will be launching a new wave of Clarity of the Record Training in the coming months emphasizing the benefits and importance of making the record clear and how to achieve greater clarity. Recently, we provided examiners with training on functional claiming and putting statements in the record when the examiner invokes 35 U.S.C. 112(f), which interprets claims under the broadest reasonable interpretation standard and secures a complete and enabled disclosure for a claimed invention. Training for the upcoming year includes an assessment of a fully described invention under 35 U.S.C. 112(a) and best practices for explaining indefiniteness rejections under 35 U.S.C. 112(b).
Second, we are Transforming Our Review Data Capture Process to ensure that reviews of an examiner’s work product by someone in the USPTO will follow the same process and access the same facets of examination. Historically, we have had many different types of quality reviews including supervisory patent examiner reviews of junior examiners and quality assurance team reviews of randomly selected examiner work product. Sometimes the factors reviewed by each differed, and the degree to which the review results were recorded. With only a portion of these review results recorded and different criteria captured in those recordings, the data gathered was not as complete, useful, or voluminous as it could have been. As a result, the USPTO has been able to identify statistically significant trends only on a corps-wide basis, but not at the technology center, art unit, or examiner levels. We are working to unify the review process for all reviewers and systematically record the same and all review results through an online form, called the “master review form,” which we intend to share with the public.
What are the implications of this new process and new form? This new process will give us the ability to collect and analyze a much greater volume of data from reviews that we were already doing, but that were not previously captured in a centralized, unified way. As we roll out this new review process the amount of data we collect will significantly increase anywhere from three to five times. This will allow us to use big data analytic techniques to identify more detailed trends across the agency based upon statistically significant data including at the technology center, art unit, and even examiner levels. Also, this new process will give us better insight into not just whether the law was applied correctly, but whether the reasons for an examiner’s actions were spelled out in the record clearly and whether there is an omission of a certain type of rejection. For example, for an obvious rejection we are considering not only whether a proper obvious rejection was made, but whether the elements identified in the prior art were mapped onto the claims, whether there are statements in the record explaining the rejection, and whether those statements are clear.
The end result will be the (1) ability to provide more targeted and relevant training to our examiners with much greater precision, (2) increased consistency in work product across the entire examination corps, and (3) greater transparency in how the USPTO evaluates examiners’ work product. You can read more about these and our many other initiatives, such as our Automated Pre-examination Search pilot and Post Grant Outcomes, which incorporates insight from our Patent Trial and Appeal Board and other proceedings back into the examination process on our new Enhanced Patent Quality Initiative page on our website.
Finally, let me close by emphasizing that our Enhanced Patent Quality Initiative is not a “one-and-done” effort. Coming from the private sector, I know that any company that produces a truly top quality product has focused on quality for years, if not decades. The USPTO is committed to no less. The programs presented here are just a start. My goal in establishing a brand new department within the USPTO was to focus exclusively on patent quality and the newly created executive level position of Deputy Commissioner for Patent Quality will ensure enhanced quality now, and into the future. With your input we intend to identify additional ways we can enhance patent quality as defined by our patent quality pillars of excellence in work products, excellence in measuring patent quality, and excellence in customer service.
To that end, we will continue our stakeholder outreach and feedback collection efforts in various ways, such as our monthly Patent Quality Chat webinars. The next Patent Quality Chat webinar on November 10 will focus on the programs presented in this blog and our other quality initiatives. I encourage you to join in regularly to our Patent Quality Chats and visit the Enhanced Patent Quality Initiative page on our website for more information. The website provides recordings of previous Quality Chats as well as upcoming topics for discussion. We are eager to hear from you about our Enhanced Patent Quality Initiative, so please continue to provide your feedback to WorldClassPatentQuality@uspto.gov(link sends e-mail). Thank you for collaborating with us on this exciting and important initiative!
Belden v. Berk-Tek (Fed. Cir. 2015) on appeal from IPR2013-00057 (Patent Trial & Appeal Board) .
In an inter partes review appeal, the Federal Circuit has sided with the patent challenger – finding that the PTAB had erred by upholding the patentability of two of Belden’s claims. This case is important largely for its result. The case is also one to be studied for some attempt to tease out the Federal Circuit’s purported legal analysis.
In the IPR of U.S. Patent No. 6,074,503, the PTAB cancelled claims 1-4 as obvious over a combination of prior art references but upheld claims 5-6. In this process, the Federal Circuit must give substantial deference to PTAB factual findings (such as the factual underpinnings of the obviousness analysis) but reviews questions of law (such as the ultimate determination of obviousness) de novo on appeal. Thus, all other things being equal, it is a much less daunting process to base your appeal on an issue of law rather than upon a factual dispute.
In reversing the PTAB’s decision upholding claims 5-6, the Federal Circuit wrote that the Board’s “contrary finding rests on legal errors.” However, the analysis in the analysis that followed, the court appeared to point out a series of incorrect factual conclusions and perhaps suggests that ‘motivation to combine’ should truly be considered a question of law rather than of fact.
There is no meaningful dispute here, and the Board did not deny, that the two pieces of prior art in combination teach or suggest the methods of claims 5 and 6. The dispute concerns motivation to combine. The Petition and the Institution Decision reveal the two related ways in which that issue was presented and considered: whether a skilled artisan would substitute the twisted pairs of CA ’046 into the method of JP ’910; alternatively, whether a skilled artisan making the cable of CA ’046 would look to the JP ’910 method to make it. The brief discussion in the Petition suggests both views of the matter. …
As the Board found, it is “undisputed that CA ’046 discloses ‘a helically twisted cable.’” There is no dispute that the twisted pairs in CA ’046 need to fit into the notches of (i.e., be aligned with) the separator, as shown in the two figures from CA ’046 reproduced above, for the resulting cable to be made. And the Board correctly recognized in its discussion of claims 1 and 2 that JP ’910 clearly teaches the importance of aligning conductors with a separator (core), and suggests doing so with a die to prevent twisting of the separator, before they are all bunched together for twisting in a stranding device. That evidence points clearly toward a motivation of a skilled artisan to arrive at the methods of claims 5 and 6 based on JP ’910 and CA ’046, as the Board reasoned in its preliminary determination in the Institution Decision.
None of the Board’s reasons for concluding otherwise in its Final Written Decision withstands scrutiny through the lens of governing law. The Board’s first reason was that JP ’910 shows only conductors that are not individually insulated, so that “one of ordinary skill…would not have been motivated … simply to substitute twisted pairs of insulated conductors for the bare metal conductors.” But JP ’910 plainly discloses the need to align the conducting wires with the core and how to do so, as the Board recognized in its analysis of claims 1 and 4. The alignment problem and solution do not depend on whether the wires are insulated. The Board’s disregard of the insulation-independent alignment teaching of JP ’910 violates the principle that “[a] reference must be considered for everything it teaches by way of technology and is not limited to the particular invention it is describing and attempting to protect.” EWP Corp. v. Reliance Universal Inc., 755 F.2d 898, 907 (Fed. Cir. 1985) (emphases in original); see In re Applied Materials, Inc., 692 F.3d 1289, 1298 (Fed. Cir. 2012). . . .
The Board, returning to its focus on insulation of individual conductors, further reasoned: “Berk-Tek also has not explained why a person of ordinary skill in the art would have had sufficient reason to use the final jacketing/extrusion step of JP ’910, which serves to insulate electrically the bare-metal conductors of JP ’910, to manufacture a cable comprising twisted pairs of individually insulated conductors that do not require additional electrical insulation.” The Board found no answer to Belden’s statement that the final jacketing step, if the conductors themselves were insulated, would be “‘redundant.’ ” But that logic misconstrues the claim language and overlooks on-point evidence. . . .
In short, the record is one-sided on the proper question of whether JP ’910 taught a solution to the problem of aligning cable components that a skilled artisan would have been motivated to use in making CA ’046’s cables. The Board erred in determining that Berk-Tek had not proven the obviousness of the methods of claims 5 and 6 of the ’503 patent by a preponderance of the evidence.
Following a jury verdict on infringement and validity (October 10) and another verdict on damages awarding $230 million in reasonable royalty (October 19), Judge Conley (W.D.Wisc.) has now quickly disposed of the case by entering judgment in favor of the patentee (WARF) the amount awarded and denying Apple’s motion for judgment as a matter of law. The case is now set for appeal to the Federal Circuit.
During trial the Judge rejected WARF’s willfulness claim – finding that Apple had a pretty good – thought ultimately losing – obviousness argument:
Apple demonstrated at trial that the elements of the asserted claims of the ‘752 patent were all known in the prior art, and many were well-known for those skilled in the art. Indeed, WARF did not meaningfully dispute this. As a result, the only factual dispute as to Apple’s obviousness defense was whether a person of ordinary skill in the art would have combined those elements and had a reasonable chance of doing so successfully.
Under the current requirement of both objectively and subjectively willful behavior, the court found that WARF could not prove with clear and convincing evidence that Apple acted “despite an objectively high likelihood that its actions constituted infringement of a valid patent.”
It turns out that Apple had also presented its obviousness argument to the PTAB in an inter partes review challenge. In that case, the Board refused to grant the IPR petition – finding that Apple “has not shown, under 35 U.S.C. § 314(a), that there is a reasonable likelihood that it will prevail with respect to at least one of the challenged claims.” Back in the lawsuit, Judge Conley rejected WARF’s argument that the PTAB’s denial is relevant. Unfortunately, it appears that the Judge’s ruling is based upon a misunderstanding of PTAB procedure and burdens. In particular, the judge rested his decision upon the incorrect notions that IPR cancellation requires “clear and convincing evidence” and that granting an IPR petition requires proof that the challenger is “likely to prevail” on the merits. The Judge writes:
All PTAB found was that Apple was not likely to prevail on its defense by proving obviousness by clear and convincing evidence. PTAB did not consider whether this defense was objectively reasonable or raised a substantial question. As such, the PTAB finding — like the jury’s finding rejecting the invalidity challenge — does not settle the issue of whether Apple’s defense was objectively reckless.
Of course, the PTAB cancellation is based upon a substantially lower standard – a preponderance of the evidence – not clear and convincing evidence. In addition, the PTAB decision at the petition stage looks only for a “reasonable likelihood” of prevailing rather than simply being “likely” to prevail. (In most cases, the ‘reasonable’ modifier makes it easier to prove a conjecture: compare “certainty” with “reasonable certainty.”)
Although the PTAB decision is not identically written to the willfulness test, it is not clear to me which standard is higher. And, I think that the statistics would play out here to easily show that it is a rare case where a well-pled obviousness argument was rejected by the PTAB at the petition stage and then relied upon by a jury to invalidate a patent.
The comparison:
In the Inter Partes Review, the Patent Office determined that Apple’s obviousness argument lacked a reasonable likelihood of winning on validity, keeping in mind that the patent is not presumed valid and that obviousness must be proven by only a preponderance of the evidence.
For willfulness, the patentee must show that an objective observer would perceive a high likelihood that the patent would be found valid (really, not invalid). Since validity is presumed in court challenges, what happens here is that the willfulness burden shifts to the defense to present a obviousness argument strong enough to convince an objective observer that the patentee had less than a high likelihood of winning on validity, keeping in mind the presumption of validity and requirement of clear-and-convincing evidence of obviousness.
I will pause here to apologize for the complexity of the comparison. You can thank the Federal Circuit for creating these tricky rules to replace what has traditionally (and by statute) been a much more open doctrine. The Supreme Court is addressing these issues in Halo and Stryker.
The point here for me is that Apple was unable to pass the petition stage of an IPR – i.e., they did not have a reasonable chance of winning on the lowered standard for invalidity. At least we can say that they had even less of a shot of winning with the same challenge presented in court with the higher burden. In context, this seems to me that the PTAB decision is quite relevant to the question presented here.
I’ll note here that the district court briefing on the issue was all filed under seal and not available. In addition, the district court has just agreed to seal a large set of trial evidence and demonstrative exhibits. It appears that WARF offered no objection – why would they? Here, at the least the court should order a redaction rather than complete sealing to support the strong public interest in patent cases and in an open court system. See also, Secret Patent Trials are OK; Access to Courts; A Call for Restraint in Sealing Court Records.
I’m very much looking forward to giving the Patent Year-in-Review talk at the AIPLA annual meeting tomorrow. If you’re at the AIPLA conference, I’d love to chat with you tonight at dinner or Saturday morning. Look for the somewhat geeky guy with glasses. 😉
In connection with that talk, AIPLA asked me to put together an essay as well. I posted a copy of that original essay a month ago; surprisingly, there have been developments in patent law since then! So if you’re looking for the updated version, which includes the Federal Circuit’s en banc opinion in SCA Hygiene and the Supreme Court’s grant of certiorari in Halo and Stryker earlier this week, it’s here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2658737
As we sit here today, there are no pending patent cases before the Supreme Court where the court has granted certiorari. That said, there are a large number of pending petitions. These include Cuozzo & Pulse that I have previously discussed. WilmerHale has been covering these, but is a few months behind.
The following are a few recently filed petitions:
Teva Follow-On: FiveTech v. SouthCo: (1) Can the Federal Circuit limit the role of the intrinsic evidence in construing patent claims under the exacting “lexicography and disavowal” standard; (2) Does the “lexicography and disavowal” standard improperly circumscribe the objective standard of the person of ordinary skill in the art in construing claim terms.
Teva Follow-On: Chunghwa Picture Tubes v. Eidos: Whether a district court’s factual finding(s) underlying its construction of a patent claim term must be reviewed for clear error under Rule 52(a)(6) as this Court held in Teva, or is an exception created to clear error review where the appellate court finds the intrinsic record clear after a de novo review of that record, as the Federal Circuit held in this case.
Attorney Fees in Copyright:
Kirtsaeng v. John Wiley (Kirtsaeng II): What is the appropriate standard for awarding attorneys’ fees to a prevailing party under § 505 of the Copyright Act?
Omega v. Costco (Costco II): (1) Can Copyright attorney fees be based on a finding that petitioner engaged in copyright misuse when the issue of misuse was appealed but left undecided on appeal? (2) Can the pursuit of a claim of copyright infringement constitute “copyright misuse” when the allegedly infringing copy is a “pictorial, graphic, or sculptural work” that is reproduced in a “useful” article.
Inter Partes Review Challenges:
Automated Merchandising v. Michelle Lee: (1) Must the federal judiciary await the substantive conclusion of an agency proceeding before it can evaluate whether an express statutory limitation on that agency’s jurisdiction requires that agency to terminate its proceeding? (2) Did the Federal Circuit err in refusing to order the USPTO to terminate the subject inter partes reexaminations under 35 U.S.C. § 317(b)?
Luv N’ Care v. Munchkin: Did the Federal Circuit err by affirming a PTAB administrative judgment based on new issues raised sua sponte by the PTAB at the Final Hearing, thus depriving the patent owner of notice and a meaningful opportunity to respond?
ANDA Loophole Cases:
Mylan v. Apotex: (1) Whether Article III’s case or controversy requirement can be satisfied by a suit which seeks a judgment of non-infringement of a disclaimed patent. (2) Whether Congress can create Article III jurisdiction by imposing statutory consequences that turn on obtaining a judgment of non-infringement of a disclaimed patent.
Daiichi Sankyo v. Apotex: Whether an action seeking a declaration judgment of non-infringement presents a justiciable case or controversy under Article III of the Constitution where the patent at issue was previously disclaimed and thus cannot be enforced.
Design Patent Summary Judgment:Butler v. Balkamp: Is summary judgement proper in a District Court when a factual dispute exists in a Design Patent action and the District Court substitutes its own opinion for that of the ordinary observer?
Reasons to Combine and Obviousness:Arthrex v. KFX Medical: (1) Is the “reason to combine” inquiry a subsidiary question of fact, subject to deferential review on appeal, or a legal question for the court, and reviewed de novo. (2) Should the ultimate legal issue of obviousness be resolved by the court rather than submitted to the jury for resolution.
Cuozzo lost its petition for en banc rehearing in a 6-5 split of Federal Circuit judges. Now, the patentee has raised is challenge to the IPR process to the Supreme Court – asking two questions:
Whether the [Federal Circuit] 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.
Whether the [Federal Circuit] 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.
Answers to these questions will fundamentally alter the inter partes review system. The petition does a good job of walking through the importance of the case and then separately explaining their legal argument.
The Cuozzo petition was filed by a rising star in Supreme Court practice – Jeffrey Wall, who is partner at Sullivan & Cromwell. Wall was a clerk for Justice Thomas and was an Assistant to the Solicitor General for five years. He also has the distinguishing mark of being my law school classmate (as well as Prof. Rantanen).
At the conclusion of its Inter Partes Review Proceeding (IPR), the Administrative Patent Trial and Appeal Board (PTAB) concluded that several claims of Achates’ patents were invalid. U.S. Patents No. 5,982,889 (claims 1-4); and No. 6,173,403 (claims 1-12 and 17-19). (more…)
Guest Post by Kate S. Gaudry, Ph.D and Thomas D. Franklin, Kilpatrick Townsend & Stockton LLP. The opinions expressed in this article are those of the authors and do not necessarily reflect the views of Kilpatrick Townsend & Stockton LLP or its clients. This article is not intended to be and should not be viewed as legal advice.
An increasing number of statistics are available on trends in patent application filings and prosecution outcomes. However, it is uncommon to see the data segregated based on type of application. Specifically, how frequently are continuation applications filed? And does previous prosecution experience with a parent application result in favorable prosecution outcomes?
Answers to these questions may be pertinent when developing strategies as to whether to file a continuation application. Frequent continuation filings may indicate that competitors consider it important to have the claiming flexibility of keeping a family alive or a trend toward filing omnibus applications (disclosing multiple ideas or idea aspects per specification). Meanwhile, any advantage of a continuation must be considered in view of its cost, which depend in part on prosecution expectations.
Accordingly, we requested data from the USPTO that identified, for each fiscal year and technology center (TC), the number of new applications filed (excluding RCEs) that were: (1) a continuation application; (2) a divisional application; (3) a continuation-in-part application; or (4) none of the above. Further, we requested, for each of these application types: (1) the number of patents issued and number of abandonments between July 1, 2014 and July 8, 2015 (to generate a final-disposal allowance rate for this time period); and (2) the average number of office actions issued for each application that received a notice of allowance during this time.
Continuation Applications: Increasingly Common
Overall, in fiscal year 2015, 20% of the filed applications were continuation applications. Divisionals comprised 6% of the data set, and continuation-in-part applications accounted for 3% of the applications. The remaining 72% lacked a priority claim to another non-provisional U.S. application. (FIG. 1)
FIG. 1
FIGs. 2A and 2B respectively show the unnormalized and normalized distributions of filing types per fiscal year. The percentage of applications that were continuations doubled from 9% in 2005 to 18% in 2015.
FIG. 2
The increased popularity of continuation applications is observed across all TCs. (FIG. 3.) The most substantial increases is observed in TCs 2100 (Computer Architecture, Software, and Information Security) and 2600 (Communications), where the contribution of continuation applications to total filings increased by 142% and 132%, respectively, between 2005 and 2015.
FIG. 3
Continuation applications were most common in TCs 1600 (Biotechnology and Organic Chemistry), 2100 (Computer Architecture, Software, and Information Security) and 2400 (Computer Networks, Multiplex Communication, Video Distribution and Security), where continuation applications accounted for 29%, 28% and 30% of the applications, respectively. Continuation applications were least common in TC 3600 (Transportation, Construction, Electronic Commerce, Agriculture, National Security and License & Review), accounting for only 14% of the applications. The infrequency of TC 3600 continuation applications may be due, in part, to the rarity of allowances in the business-method art units.[1]
Continuation and Original Applications have Similar Prosecution Statistics
Potentially, experience with a parent application (and, typically, a same examiner) may guide claiming strategy for a continuation. Thus, perhaps, continuations represent a two-fold cost-savings opportunity: a savings in drafting and in prosecution costs. Assessing the latter potential savings requires evaluating allowance rates and office-action counts of continuation applications. Accordingly, we evaluated prosecution statistics from a recent time period (July 2014-July 2015) for each of the application types.
Overall, the final-disposal allowance rate for continuations is slightly higher than that for original applications (80% versus 74%). (FIG. 4A.) The average office-action count per patent is slightly lower for continuation applications (1.85 versus 1.96). (FIG. 4B.)
FIG. 4
Discussion: Why and How to File Continuations
Continuation applications provide a variety of advantages, including an opportunity to seek a new scope of protection in view of business priorities and to strategically draft claims in view of ongoing or threatened challenges to a patent. This latter upside is becoming increasingly significant as the number of post-grant challenges continues to grow.
Should an applicant decide that the advantages of keeping a family alive are sufficiently important, claiming strategy for the child application must then be identified. Slightly tweaking an allowed claim may result in minimal prosecution costs. However, a fast allowance will lead to an overall cost of the family exploding (assuming repeated continuation filings). Seeking substantially broader protection, meanwhile, may lead to extended and frustrating prosecution. Our data showing that continuation and original applications have similar prosecution statistics suggest that applicants are not consistently choosing an easy or hard continuation-claiming path, though it may be explained by split uses of these types of claim-drafting techniques.
Another approach to continuations is to seek protection of a completely different idea in the specification. This could allow a resulting patent family to provide diverse protections towards different elements of an applicant’s technology. However, a new focus requires that the new idea be supported and enabled by the original specification. In an era where flat fees and legal bidding wars are common, it is our hypothesis that few applicants are willing to pay the higher drafting fees for preparation of such enhanced applications. However, we believe that this is a strategic approach and should be more frequently used.
Consider a case where an applicant is seeking patent protection of two ideas. A traditional approach is that separate patent applications be drafted for each idea. Another approach is to draft a single “omnibus” patent application that describes both ideas. One idea can be the focus of an original filing, and another the focus of a continuation filing. Then, by investing in keeping a single family alive (via the original and continuation filings and/or additional continuation applications), claiming flexibility for each idea is preserved. Further, if ideas within an omnibus application are related, drafting fees may be less than preparing two independent applications. The application may also illuminate synergies and interactions between the ideas, which may further expand claiming possibilities.
Concluding Thoughts
Our data shows that continuation-application filings are becoming increasingly common. Filing continuation applications offers many advantages, particularly now that patents are frequently challenged. However, blindly filing continuation applications will lead to an explosion in costs. Strategic filing of omnibus continuation applications, however, will offer long-term cost savings and prosecution advantages. Therefore, applicants should consider intelligently identifying and organizing sets of ideas into omnibus applications.
[1] Gaudry KS. 2015. Post-Alice, Allowances are a Rare Sighting in Business-Method Art Units. IPWatchDog. <http://www.ipwatchdog.com/2014/12/16/post-alice-allowances-rare-in-business-method/id=52675/>
The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition filed under section 311 and any response filed under section 313 shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.
(b)Timing.—The Director shall determine whether to institute an inter partes review under this chapter pursuant to a petition filed under section 311 within 3 months after—
(1) receiving a preliminary response to the petition under section 313; or
(2) if no such preliminary response is filed, the last date on which such response may be filed.
(c)Notice.—
The Director shall notify the petitioner and patent owner, in writing, of the Director’s determination under subsection (a), and shall make such notice available to the public as soon as is practicable. Such notice shall include the date on which the review shall commence.
(d)No Appeal.—
The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.
R+L then petitioned for ex parte reexamination of its asserted patent, and that filing resulted in the asserted claims being amended and then confirmed as patentable;
And, before the reexam was completed, Qualcomm stopped its allegedly infringing activity.
The in the case then is whether the amendment during reexamination allows Qualcomm to entirely avoid liability for pre-reexamination acts through a doctrine known as “intervening right.”
Substantially Identical: The Patent Act provides that back-damages for pre-reexamination infringement is only available if the reexamined claims are “substantially identical” to the original claims. This rule stems from the reissue statute, 35 U.S.C. § 252 (a reissued patent shall have the same effect as the original patent “in so far as the claims of the original and reissued patents are substantially identical”) coupled with the reexamination provision, 35 U.S.C. § 307(b) (“a reexamination proceeding will have the same effect as that specified in section 252 for reissued patents”).
The Substantially Identical test is pretty tough standard. Although it does allow for some amendment, an amended claim will basically fail if the scope of covereage is not identical. As interpreted by the courts, the “substantially identical” standard is judged objectively and it is irrelevant as to whether the patentee thought the change was substantial or not.
The changes: The patent here is directed toward a method of “transferring shipping documentation data … from a transporting vehicle to a remote processing center.” In the original patent, R+L had failed to include the word “comprising” and instead just put a colon following the method claim preamble. In addition, the original claims included a final step of preparing “a loading manifest . . . for further transport of the package on another transporting vehicle.” During reexamination, the patentee added the limitations that it is an “advance” loading manifest “document” for “another transport vehicle.” In issuing the reexamination certificate, the USPTO relied upon this last change because the prior art did not include preparing “an advance loading manifest document for another transporting vehicle.”
The Federal Circuit relied upon the examiner’s statements here to interpret the claims – finding that the amendment did change the claim scope:
The examiner expressly stated he was allowing amended claim 1 because “the manifest discussed by [the prior art] is a manifest for the current shipping vehicle and not an advance loading manifest document for another transporting vehicle.” In other words, the examiner’s focus in allowing the claims was … on the additional limitation that the advance loading manifest be “for another transporting vehicle.” … [T]he examiner’s commentary reveals a method that would be covered by original claim 1 but not amended claim 1: the process of preparing a loading manifest “for the current shipping vehicle.”
In its briefing, R+L acknowledges that the claims were allowed over the prior art because it agreed to add the “for another transporting vehicle” limitation. As R+L stated in its interview summary during reexamination, addition of “loading manifest document for another transportation vehicle” resulted in a tentative agreement that the amendment would overcome the rejections over the prior art. … R+L clearly understood that it was limiting the scope of its claims in another way to get around the prior art.
Thus, amended claim 1 is not “substantially identical” to original claim 1 because original claim 1 encompassed scope that amended claim 1 does not. Accordingly, we conclude that amended claim 1 is not “substantially identical” to original claim 1.
As I mentioned earlier, the reasons for the amendment do not directly impact whether the amendment is substantial or not. However, the above quotation from the opinion shows how those reasons do impact the claim construction which will then impact whether the amendment is substantial.
What’s Important about This Case: The intervening rights doctrine discussed here is not new and the results are not surprising once the claims were construed. The real element of importance of this case seems to be claim construction – and particularly, the heavy reliance placed upon the examiner’s statements during prosecution regarding the claim coverage.
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Although reexaminations are on the decline, the PTAB trials are on the rise. Under the AIA, intervening rights will also be generated whenever a patent claim is amended in an inter partes or post grant (including CBM) review. See 35 U.S.C. § 318(c) and 328(c).
It is hard for me to believe that the America Invents Act of 2011 is now four-years old. Some changes (Joinder, Fees, e.g.) had fairly immediate impact. Although somewhat slower coming on-line, the new Inter Partes Review and Covered-Business-Method Review systems are now major fixtures in patent enforcement-defense strategies.
The final major element of the AIA is actual implementation of transformation of the prior art rules in 35 U.S.C. 102. The new first-to-file law applies to patent applications having at least one claim whose earliest effective priority filing date is on or after March 16, 2013. In the past 30 months since then, hundreds of thousands of AIA patent applications have been filed – and those are beginning to trickle out as issued patents. I pulled-up the PAIR files for 800+ recently issued patents (from the first two weeks of Sept 2015) and looked at the reported AIA-Status of those patents. (Table 1 below)
Table 1:
All Patents
Only Patents Filed Post-AIA
AIA Patents
147
147
Non-AIA Patents
721
262
Total
868
409
Percent AIA
17%
36%
95% CI (+/-)
3%
5%
Of the 868 patents, 147 are “AIA” patents – meaning that none of the claims of the patent (or application) could have effectively an effective filing date before March 16, 2013 (the “AIA-date”). This represents 17% of the total number of patents in my sample and 36% of the number of patents in my sample that were filed after the AIA-date. I also report the 95% confidence interval that is based upon the simple binomial calculation (p(1-p)/n). The chart below considers the same type of data, but uses a time-series stretching back to the beginning of 2015 showing a linear fit to the data.
Where the AIA Status is Defined: My understanding is that the AIA data field in PAIR has been populated as “no” for any application filed prior to the AIA date; populated as “yes” for any application filed after the AIA-date that has no pre-AIA claims for priority or benefit; and finally, for transitional applications filed post-AIA but with a pre-AIA priority claim, populated according to the AIA-question in the Application Data Sheet. [The AIA-status of an application is obviously information material to patentability and so we will likely see some inequitable conduct allegations down the line.]
Not Yet Litigated: Although there are now several thousand AIA patents issued, there have been no court cases yet involving an AIA patent or patent application. Likewise, we have no Post Grant Review (PGR) final decisions and we have no PTAB decisions from ex parte cases involving AIA applications. Those will come, but meanwhile many patent attorneys will continue to operate with some ambiguity regarding how Section 102 will be interpreted going forward. Important big questions: Do non-enabling commercial uses; confidential sales; and confidential offers-to-sell still qualify as invalidating prior art? What activities will count as “otherwise available to the public?” How narrowly will the narrowed grace period of 102(b)(1) be interpreted? (e.g., does the grace period only apply to pre-filing disclosures of the claimed invention itself as suggested by the text or instead can any pre-filing disclosure by or from the inventor qualify?) What is the impact of elimination of Section 102(f)?
Guest Post by Ted Sichelman, Professor of Law and Director of the Technology Entrepreneurship and Intellectual Property Clinic and Center for Intellectual Property Law & Markets at the University of San Diego School of Law, and Shawn Miller, Lecturer in Law and Teaching Fellow in Law, Science & Technology at Stanford Law School
As Patently-O has described in detail (e.g., here and here), patent litigation rates have been in flux over the last several years. First, in 2010, rates nominally went up because of false marking suits. Then, in 2011, following passage of the America Invents Act (AIA), patent litigation rates appeared to increase (and the media made much ado over this). Yet, the only thing that changed immediately after the AIA was how we counted patent litigation numbers because of new joinder rules. Indeed, the AIA’s joinder rules actually lowered total defendant counts a bit. Next came inter partes review (IPR) and covered business method (CBM) review, which appear to have substantially decreased litigation rates in 2013 and 2014. Then came Alice Corp. v. CLS Bank and its progeny, which some have claimed decreased litigation rates throughout 2014. And now rates seem to be back up in 2015—why, nobody is sure.
To further understand the drivers of patent litigation, Alan Marco (Chief Economist at the USPTO) and the two of us recently conducted the first rigorous study of the effects of the economy as a whole (the “macroeconomy”) on patent litigation rates over the period 1970-2009 (we stopped at 2009 to avoid the counting mess I just described). The study will be published this month in the Journal of Empirical Legal Studies (a draft is available here).
As background, we examined changes in the rates of total litigation, litigation per issued patent, and litigation per in-force patent. To do so, we used a new USPTO dataset that provides the most accurate numbers on total in-force patents by year gathered to date. Figure 1 below shows the number of in-force patents between 1971 and 2009 (the vertical bars represent periods of recession).
Figure 1. U.S. In-Force Patents (1971-2009) [from USPTO data].
Indeed, although many have noted that the litigation rates per issued patent have been fairly stable, Figure 2 below shows that the litigation rates per in-force patent have risen quite dramatically since the early- to mid-1990s (at least from 1970s rates—Ron Katznelson has argued that rates per in-force patent in the 1920s to the mid-1930s are fairly comparable to the recent rates, at least through the 2000s).
Figure 2. U.S. Patent Litigation Per In-Force Patent (1971-2009)
(Total Patent Litigation in Gold (with annual filings on left y-axis) and Litigation Per In-Force Patent in Blue (with annual values on right y-axis)).
We then performed numerous time-series regressions against important macroeconomic variables like GDP, R & D spending, interest rates, and related factors, controlling for in-force patents and other key variables. Our major findings (over the last 20-25 years) are as follows:
In economic upswings (i.e., increasing productivity, low interest rates, low economy-wide financial risk), patent litigation rates generally fall.
In recessions, whether rates rise or fall depends on the availability of credit.
When credit is freely available in a downturn, overall patent litigation rates generally rise.
However, when credit is scarce (like in the most recent recession), overall patent litigation rates generally fall.
We explain the first finding on a “substitution” theory—namely, when selling products and services is highly profitable, companies and investors are less concerned about earning revenue from patent litigation. We speculate that our second finding is driven by the increasing reliance by plaintiffs on external funding. Indeed, the availability of credit has only played a significant role in patent litigation rates since roughly the mid-1990s, when licensing-driven litigation began to rise—first by practicing entities such as IBM and Texas Instruments and, later, by non-practicing entities (NPEs).
Over the last five years, the mean U.S. real GDP growth rate has been about 2-3% per year. Ignoring other factors, and assuming our model applies on a going forward basis since 2009, this increase in productivity has very roughly amounted to a 6-9% decrease in annual patent litigation counts over the same period. In general, it is likely that a sizeable portion of the decrease in patent litigation rates over the last several years has been not merely due to the rise of IPRs and CBMs, and the issuance of Alice Corp. v. CLS Bank, but also to the economy as a whole. So the next time the economy worsens, if credit remains relatively available, all other factors equal, it is likely that patent litigation rates will rise significantly—not by a huge amount, but enough to notice. Whether the current increase in patent litigation is somehow related to a declining macroeconomy, only time will tell.
Please note that the views expressed herein solely express our personal views and do not express the views of the U.S. Patent & Trademark Office.
On summary judgment, the district court found Ivera’s asserted patent claims invalid as obvious under 35 U.S.C. § 103. On appeal, the Federal Circuit has reversed – finding that Ivera’s submitted expert testimony raised genuine issues of material fact.
Ivera’s patents are directed to a more reliable mechanism for disinfecting connectors (such as an IV port). The idea is basically a screw-on cap full of disinfectant.
The patented cap at issue here is an improvement on the original idea found in several prior art references. In particular, Ivera added a vent in the cap “to allow evaporation of the cleaning agent from the inner cavity and to inhibit a buildup of pressure in the cap when the cleaning material is compressed by the site of the medical implement.”
Although the primary prior art reference (Hoang) did not disclose the vent limitations, the district court found – as a matter of law on summary judgment – that a person of skill in the art would have recognized the need for a vent to relieve pressure. I suspect that the district court was swayed by the fact that the patent is also under final-rejection in an inter partes reexamination based upon the same prior art reference. On appeal, the Federal Circuit found that the facts were not so clear.
Law of Obviousness:
“A party seeking to invalidate a patent on obviousness grounds must demonstrate by clear and convincing evidence that a skilled artisan would have been motivated to combine the teachings of the prior art references to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success in doing so.” InTouch Techs., Inc. v. VGO Commc’ns, Inc., 751 F.3d 1327 (Fed. Cir. 2014). Determining whether one of ordinary skill in the art would have been motivated to combine the teachings of different references is a flexible inquiry, and the motivation is not required to be found in any particular prior art reference. KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398 (2007).
Here, the evidence before the district court included declarations from Huang (the inventor of the prior art) and others explaining how the Ivera idea was a significant invention because it broke with the conventional wisdom of having a fluid tight seal. The appellate court saw these submissions as sufficient to raise a genuine dispute of fact that cannot be resolved on summary judgment.
The panel also noted in passing that the examiner during the inter partes review had refused to consider the same declarations because they were filed late in the process — leading to the implication that – if filed earlier – the declarations might have changed the examiner’s viewpoint. The examiner’s reexamination decisions have been appealed to the PTAB and are awaiting judgment.
This case again highlights the power of expert evidence to explain the invention within the context of the prior art.
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I should also note Ivera has a separate infringement case going against Hospira for another cap patent. In that case, the PTAB instituted an IPR (brought by another defendant) that case was settled before final judgment. In a recent determination, the district court ruled on motion-in-limine to exclude evidence of the PTAB’s decision to institute the inter partes review – finding that it has “little probative value” and “would be confusing to the jury and prejudicial.” [OrderInLimine]
In a parallel post, Dennis summarized the numerous amicus briefs filed in support of Sequenom’s petition for rehearing en banc. Below, professors Jeffrey Lefstin (Hastings) and Peter Menell (Berkeley) discuss the core issues raised in their amicus brief.
Don’t Throw Out Fetal-Diagnostic Innovation with the Bathwater:
Why Ariosa v. Sequenom Is an Ideal Vehicle for Constructing a Sound Patent-Eligibility Framework
By Jeffrey A. Lefstin and Peter S. Menell
Over the past five years, the U.S. Supreme Court has reinvigorated patentable subject-matter limitations, issuing four significant decisions after nearly three decades of dormancy. These decisions reflect justifiable concerns about the patenting of abstract business methods and laws of nature. Just as importantly, they reveal internal inconsistencies and confusion about the scope of patentable subject matter and tension with the centuries-old fabric of patent-eligibility jurisprudence. As Justice Breyer remarked at the oral argument in Alice Corp. v. CLS Bank Int’l (2014), the Mayo (2012) decision did no more than “sketch an outer shell of the content” of the patent-eligibility test, leaving much of the substance to be developed by the patent bar in conjunction with the Federal Circuit.
Two of the Supreme Court’s recent patent-eligibility decisions (Bilski and Alice) involve non-technological business methods. Mayo glosses over several key issues, including how to reconcile prior discordant decisions (Flook and Diehr), and whether the requirement of “inventive concept” demands an unconventional application, or merely more than the generic instruction to “apply the law.” And Myriad departs from Mayo in a critical respect in that it authorizes patentability for a conventional transformation of a natural compound.
Unfortunately, the Federal Circuit’s panel decision in Ariosa v. Sequenom elides the critical questions. In view of Congress’s reluctance to weigh in on the scope of patentable subject matter and the Supreme Court’s signals to the patent bar and the Federal Circuit to bring coherence to these rough outlines, Ariosa v. Sequenom marks a critical juncture in the development of a modern patent-eligibility framework. Failure to vet these issues risks undermining the patent system’s role in promoting biomedical research. Beyond Supreme Court review, which is never guaranteed (consider the havoc wreaked by the Court’s passing on State Street Bank), or corrective legislation (which is even more speculative), en banc review by the Federal Circuit presents the last clear chance to avert potentially dire consequences.
Our amicus brief urges the Federal Circuit to grant en banc review in Ariosa v. Sequenom to ventilate the critical issues left unanswered by the Supreme Court’s patent-eligibility decisions. Although some language in Mayo could be interpreted to set forth unconventional or inventive application as a possible test for patent-eligibility, Mayo suggests two other possibilities for an “inventive concept”: non-preemptive application; and non-generic application – that is, more than a statement of a natural law coupled with an instruction to apply it. While the panel was correct to perceive that Mayo describes preemption as the underlying justification for the patent-eligibility doctrine, not the operative test, we believe that the panel was incorrect to conclude that Mayo dictates unconventional or inventive application.
Our brief further shows that the Ariosa panel decision conflicts with several strands of prior Supreme Court decisions. The panel decision jeopardizes valuable innovation in diagnostic research and other biomedical fields as unintended fallout of the Supreme Court’s justifiable desire to discard vague and non-technological business method patents. The primary responsibility for developing patent-eligibility doctrine now rests with the Federal Circuit and this case presents an ideal vehicle for explicating sensible jurisprudential boundaries.
Jeffrey A. Lefstin is Professor of Law at the University of California Hastings College of Law. Peter S. Menell is Koret Professor of Law and a Director of the Berkeley Center for Law & Technology at the University of California at Berkeley School of Law. Their amicus brief in support of en banc review in Ariosa v. Sequenom is available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2652452
Inter Partes Review (IPR) Trials have become an effective tool for cancelling invalid patent claims that lack novelty or fail the nonobviousness test. The IPR process has two main stages: Institution and Trial. At the institution stage, the Patent Trial and Appeal Board (PTAB) must determine whether the third-party challenge is sufficient enough to warrant a full trial on the merits of the challenge. The institution test outlined by the statute is a “reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.”
One design choice for IPRs is whether the judges who decide to institute the IPR should be kept-on to decide the ultimate merits of the trial. In its initial design of the process, the PTO determined that keeping the same judges provided for both efficiency and internal consistency. Thus, under the current rules, the same three APJs who decide whether to institute a trial also conduct the trial and ultimately decide the trial outcome.
A number of losing-patentees have argued that the process creates an improper bias or implicit presumption against the patentee during the trial stage. The basic idea is that a judge who sides with the challenger at the institution stage will be mentally locked-in to supporting the petitioner’s case and at trial will improperly give the presumption to the challenger rather.
The USPTO is now requesting comments on a proposed pilot program that would address these concerns. In particular, the PTO’s proposal is that the institution decision would be made by a single judge. If that judge decides to institute then the trial would be held before that single judge along with two additional APJs added to the panel who were not previously involved in the decision to institute.
The statute requires the two-step process and also requires a set of three APJs to decide the trial, but gives the USPTO authority to determine additional process elements. There are a host of alternative designs and structures available, such as an entirely new panel.
The PTO’s proposal benefits the PTO by requiring only one judge at the institution stage – likely allowing it to handle more cases. Right now, the PTO is looking for comments on the proposal. If those seem favorable, the PTO is likely to move ahead with a pilot program. Comments to PTABTrialPilot@uspto.gov by October 26, 2015.
I am personally concerned about the initiation decision by a single APJ. Generally, you might think that three-judge panels would offer more consistent decisions because more eccentric judges would be outvoted. However, there are team-project problems that can arise with panel decision making– often one or more panel member can check-out mentally and simply rely upon the decisions by a single judge. I do not know which of these (if either) is more likely with PTAB judges.
