PTAB – A Year In Review of 2018 & A Look Ahead To 2019

2018 was a significant year at the Patent Trial and Appeal Board (PTAB), which included a pair of Supreme Court decisions, a landmark en banc ruling from the Court of Appeals for the Federal Circuit impacting judicial review of real party in interest, and revised standard operating procedure and updates to the trial practice guide from the PTAB.

Foley attorneys George Beck, Chase Brill, and George Quillin together discussed the year’s major developments and how they may impact practice before the PTAB going forward in a web seminar, which can be replayed as “PTAB- A Year In Review 2018.”

Specific topics included:

2018 Trends and Statistics A significant uptake of filings of petitions was seen in November of 2018, which may be caused by the petitioners wanting to file before the change of the claim construction standard. Overall, the percentage share of cases filed at the PTAB continues to grow, and the percentage of different types of petitions filed in 2018 is consistent the previous years. The PTAB institution rate continues to steadily decrease.

SCOTUS on IPRsTwo important cases were issued by the Supreme Court in 2018. In Oil States Energy Services v. Greene’s Energy Group, LLC, 138 S. Ct. 1365 (2018), the Supreme court upheld the constitutionality of IPRs, finding that they do not violate Article III or the Seventh Amendment to the United States Constitution. In SAS Inst., Inc. v. Iancu, 138 S. Ct. 1348 (2018), the Supreme Court held that, when instituting an AIA-trial (IPR, PGR, or CBM), the PTAB  must institute on all presented grounds on all challenged claims. Following this decision, the PTAB has issued orders modifying the scope of pending trials to include non-instituted grounds and challenged claims.

Sovereign Immunity – In Saint Regis Mohawk Tribe v. Mylan Pharm. Inc., 896 F.3d 1322 (Fed. Cir. 2018), the Federal Circuit affirmed the PTAB ruling that tribal immunity does not apply to IPRs (a certiorari petition is pending, No. 18-899).

Real Party in Interest (RPI) – In Wi-Fi One, LLC v. Broadcom Corp., 878 F.3d 1364 (Fed. Cir. 2018), the Federal Circuit held that time bar determinations under §315(b) are subject to appellate judicial review. In Internet Time, LLC v. RPX Corp., 897 F.3d 1252 (Fed. Cir. 2018), the Federal Circuit held that determining whether an unnamed party is an RPI “demands a flexible approach that takes into account both equitable and practice considerations, with an eye toward determining whether the non-party is a clear beneficiary that has a preexisting, established relationship with the petitioner.” Further, in Worlds Inc. v. Bungie, Inc., 903 F.3d 1237 (Fed. Cir. 2018), the Federal Circuit held that the PTAB may initially accept an IPR petitioner’s identification of real-parties-in-interest, but if and when a patent owner produces evidence disputing the identification, the burden is on the petitioner to demonstrate that the correct real-parties-in-interest were identified.

PTAB Amendment Process – In Aqua Prods. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017), the Federal Circuit held that the PTAB may not place the burden of persuasion regarding the patentability of the proposed claim amendments on the patent owners. Following Aqua Prods., the USPTO published a proposal for implementing a new 2-phase procedure for patent owners to make amendments during AIA patent challenges, which essentially gives patent owners a second chance after receiving an initial determination on their proposed amended claims to make further changes.

Changes in PTAB Claim Construction Standard – The USPTO published a final rule changing the standard applied in PTAB trial proceedings, replacing the broadest reasonable interpretation (BRI) standard with the Phillips standard used by US federal courts and the International Trade Commission (ITC). Under the final rule, the PTAB will take into consideration any prior claim construction determination that has been made in a civil action or a proceeding before the ITC, so long as the prior claim construction is properly entered into the record.

Updates to the Trial Practice Guide and revisions to SOPs – The USPTO published an update to the AIA Trial Practice Guide, which includes revisions to six sections of the Trial Practice Guide: (a) use of expert testimony (§ I.G); (b) word count and page limits (§ II.A.3); (c)   considerations of non-exclusive factors in instituting a review (§ II.D.2); (d) providing for sur-replies to principal briefs as a matter of right (§ II.I); (e) challenging admissibility and the proper use of motions to exclude and motions to strike (§ II.K); and (f) oral hearing procedures before the Board (§. II.M). The update also includes a sample scheduling order in Appendix A, showing changes such as replacement of observations on cross-examination with sur-replies that offer patentees the last word on patentability. The USPTO also revised its Standard Operating Procedures 1 and 2, which address the processes for assigning PTAB judges to panels, for designating PTAB decisions precedential, and for seeking rehearing of issues in pending cases, which may have major effects on PTAB practice.

Implications, Trends, And Cases to Watch in 2019 – IPR/CBM petitioners may face stronger headwinds, particular at the institution stage for “follow-on” petitions. Petitioners should also be aware of the estoppel effect on all challenged claims and all grounds in a petition if a trial is instituted. Cases to watch for in 2019 include: Return Mail Inc. v. U.S. Postal Service, No. 17-1594 (argued Feb. 19, 2019 at the Supreme Court), which will address whether the U.S. government has standing to file petitions seeking to invalidate patents under the AIA; and RPX Corp. v. ChanBond LLC, No.17-1686, and JTEKT Corp. v. GKN Automotive Ltd., No. 18-750, both of which have certiorari petitions pending, which raise the question of  whether a non-litigant-defendant petitioner who has not suffered patent-based injury in fact has standing to appeal an adverse IPR decision (in October 2018, the Supreme Court invited the Solicitor General to file a brief in RPX).

Court Dismisses Biosimilar Petitioner's IPR Appeal For Lack of Standing

In Momenta Pharmaceuticals, Inc. v. Bristol-Myers Squibb Co., the Federal Circuit dismissed Momenta’s appeal from an adverse IPR decision for lack of standing after Momenta suspended its potentially infringing biosimilar development activity.  Although Momenta had been pursuing such activity when appellate proceedings began, the court dismissed the appeal for mootness/lack of standing because Momenta had ceased its development program and “no concrete plans [were] afoot” implicating the patent claims challenged in the underlying IPR.[1]

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New Estoppel Concern For Petitioners Raised In BTG v. Amneal

The Court of Appeals for the Federal Circuit is poised to decide a case which may create new estoppel concerns for AIA petitioners under 35 USC § 315(e)(2).   The appeal resulted from a Hatch-Waxman litigation in BTG v. Amneal, in which the lower court found that the patent claims at issue were invalid over the same prior art that was used in a parallel IPR proceeding, which separately led to a PTAB final written decision of unpatentability for those claims (also separately appealed and consolidated with the Hatch-Waxman appeal).  On appeal, the patent owner argued that, immediately upon the PTAB’s rendering of a “final written decision”, § 315(e)(2) thereafter prohibits a petitioner from further asserting unpatentability in parallel litigation on the same grounds that were addressed in the final written decision.  The Federal Circuit invited the USPTO to address whether estoppel should apply in this situation. Continue reading this entry

Will PTAB SOP 2 Promote Uniformity Across The USPTO

The USPTO Patent Trial and Appeal Board (PTAB) recently revised its Standard Operating Procedures, including PTAB SOP 2 which creates a new procedure for Precedential Opinion Panel review and outlines a process anyone can follow to request that a decision be designated as precedential or informative. One impetus behind these revisions is the need to promote uniformity across the Patent Office. Stakeholders can do their part by elevating inconsistent decisions through the POP review process and nominating decisions for precedential designation.

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One-Year Time Bar for IPR Filing Triggered Even When Served Complaint Is Voluntarily Dismissed

In August, the Federal Circuit addressed the 35 U.S.C. § 315(b) one-year time bar to IPR institution in Click-to-Call Technologies, LP v. Ingenio, Inc. In an en banc footnote, the court held that an IPR cannot be instituted when the IPR petitioner has been served with a patent infringement complaint more than one year before filing its IPR petition, even if the underlying district court action has been voluntarily dismissed without prejudice.[1] In so holding, the Federal Circuit rejected the USPTO’s construction of § 315(b), i.e., voluntary dismissal of a civil action leaves the parties as though the action had never been brought.[2] Consequently, Click-to-Call allows patentees to manipulate infringement filings to bar future IPR proceedings, incentivizing accused infringers to file more IPR petitions, notwithstanding voluntary dismissal of the underlying infringement actions. Continue reading this entry

PTAB Boardside Chat Provides Further Details About New Amendment Procedure

On Nov. 8, 2018, the PTAB provided another presentation in its continuing series of Boardside Chats, during which Acting Chief Judge Scott Boalick, Acting Deputy Chief Judge Jackie Bonilla, and Vice Chief Judge Scott Weidenfeller covered the recently updated Trial Practice Guide (see our recent post entitled “Revamped Trial Practice Guide Holds Surprises”), SOP1 relating to assignment of panels, SOP2 relating precedential designation/de-designation, and perhaps most importantly, the newly proposed amendment procedure (covered in our recent post entitled “USPTO Announces Proposal To Facilitate Amendments In AIA Challenges”) for patent owners during AIA proceedings. Continue reading this entry

Can the Government Challenge Patents via AIA Proceedings? — Return Mail Gets Cert.

Return Mail, Inc. has persuaded the Supreme Court to grant cert. to decide whether the government is a “person” who may petition to institute AIA proceedings.  The government had done just that by naming both itself and the post office as petitioners in CBM2014-00116, captioned The United States Postal Service (USPS) and The United States of America v. Return Mail, Inc. Continue reading this entry

USPTO Announces Proposal To Facilitate Amendments In AIA Challenges

On Oct. 26, 2018, the USPTO published a proposal for implementing a new 2-phase procedure for patent owners to make amendments during AIA patent challenges.  A key difference under the new process would be that patent owners get a second chance after receiving an initial determination on their proposed amended claims to make further changes.  If implemented, this will represent a significant new option for patent owners who do not have pending continuations at the time of an AIA challenge.  The current process for amending claims is very restricted and seldom successfully used by patent owners, despite recent decisions that have relaxed certain requirements for motions to amend (see “CAFC Eases Amendment Process in IPR Proceedings“). Continue reading this entry

Revamped PTAB Trial Practice Guide Holds Surprises

The Patent Trial and Appeal Board (“PTAB”) issued its initial Trial Practice Guide in August 2012, shortly before America Invents Act (“AIA”) post-grant proceedings became available.  That Guide had not been supplemented or updated – other than through substantive decisions of the PTAB  – until the PTAB’s release of a revision on August 10, which takes the form of a supplement that must be read together with the original Guide.  Because the supplemental Guide is not subject to a notice and comment period, it is effective immediately, and the Office notes that future updates to the Guide will be provided “on a section-by-section, rolling basis, rather than a single, omnibus update addressing all aspects of the current Practice Guide.”  The revamped Guide addresses (1) consideration of various non-exclusive factors in the determination of whether to institute a trial, (2) providing for sur-replies to principal briefs as a matter of right, (3) the distinction between motions to exclude and motions to strike, and the proper use of each, (4) procedures for oral hearing before the Board, including the use of live testimony, sur-rebuttal, and default time for the hearing, and (5) providing for a pre-hearing conference and potential early resolution of issues.  All of these areas are important to study and may warrant new strategies, but perhaps the biggest surprise is the Patent Owner’s sur-reply now allowed as a matter of right.

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Constitutionality of PTAB Judge Appointments Challenged In Polaris IPR Appeal

In the wake of Lucia v. SEC, where the Supreme Court held in June 2018 that Administrative Law Judges (ALJs) at the SEC are “officers” subject to the Appointments Clause, there have been challenges to the constitutionality of Administrative Patent Judges (APJs) at the PTAB in IPR proceedings.  In 2008, the Patent Act was amended to require APJ appointment by the Secretary of Commerce.[i] Commentators had argued that APJs were “inferior officers,” and the structural rearrangement proactively cured that potential constitutional defect.  But in a pending appeal of an IPR to the Federal Circuit, at least one litigant has argued further that APJs are not merely inferior officers but “principal officers.”[ii] If that is correct, APJs would require appointment by the President and confirmation by the Senate.[iii] (Alternatively, the principal-officer status might be changed if the PTAB were restructured to give the Director explicit direct oversight of each case. Or the for-cause removal provision might be altered to at-will removal.) This would mean more political control over APJ practices. Any IPRs in which an Appointments Clause challenge had been timely made would likely require a new hearing before a duly appointed panel.  However, the majority’s reasoning in Lucia suggests that the issue would need to be raised while the proceeding was pending and that it would not be retroactive to resolved matters. Continue reading this entry