Monthly Archives: December 2019

2019 PTAB Year in Review – Part III: TRIAL PRACTICE GUIDE UPDATE

By Tom Engellenner
In addition to the pilot program to assist patent owners in presentation of claim amendments and a proposed rule change to shift of burden of persuasion as to amended claims (both of which were discussed previously in Part II of this series), the USPTO made another major policy pronouncement in 2019: a second revision to the Trial Practice Guide – the procedural handbook for all administrative trials under the America Invents Act (AIA): covered business methods (CBR) review, inter partes review (IPR) and post grant review (PGR).

The TPG was first published in 2012 at the same time as the rules governing the AIA trials.  A first update was issued in August 2018.  The second update was published in July 2019.  (The USPTO also published a consolidated guide incorporating the original guidance and the two updates in November 2019.)  The 2019 update to the TPG provides almost no surprises.  It does, however, show how AIA proceedings have evolved since 2012 and provides some hints as to where the PTAB is going.

For example, the updated TPG acknowledges the PTAB’s abandonment of the much-criticized “broadest reasonable interpretation” standard for claim interpretation in favor of the Philip’s standard used in federal courts (ordinary or customary meaning).  The update also notes the PTAB will give “appropriate weight” to claim constructions by other tribunals, suggesting that we should see fewer cases of divergent interpretations of what a claim (or claim element) means at the PTAB when a federal district court has already issued a claim construction order in concurrent patent infringement litigation.

On discovery in AIA trials, the update acknowledges the PTAB practice that a motion for “additional discovery” (beyond the opportunity to cross examine the other party’s expert) will only be granted in IPRs if the motion meets the “interests of justice” standard, guided primarily by the factors set forth in 2013 in the Board’s precedential decision in Garmin Int’l, Inc. v. Cuozzo Speed Techs. LLC, Case (IPR2012- 00001). (In CBMs, the PTAB panels will be guided by similar factors under the “good cause” standard as set forth in 2013 in the Bloomberg Inc. v. Markets-Alert Pty Ltd. case (CBM2013-00005)).  The update notes that a party moving for additional discovery will need to address five of the so-called Garmin factors, principally that the additional discovery is needed based on more than a possibility and mere allegation, unavailable by other means, clear and understandable and not overly burdensome.

“Live testimony” before the PTAB will remain elusive because the TPG update explains that “credibility of experts often turns less on demeanor and more on the plausibility of their theories.” However, the update does hint that PTAB panels may be more receptive to live testimony in derivative proceedings where the allegation is that the purported inventor misappropriated the work of another.   In such cases, the update notes that the demeanor of the witnesses may be more critical to assessing creditability.  The update references the 2014 precedential decision in K-40 Elecs., LLC v. Escort, Inc., (IPR2013-00203) for further guidance on the factors to be considered when considering whether live testimony is warranted.

The July 2019 update also provides additional guidance on the considerations for instituting a trial, parallel petitions challenging the same patent, motions for joinder, motions to amend, and reply briefs.

2019 PTAB Year in Review – Part II: NEW HOPE FOR PATENT OWNER AMENDMENTS

By Tom Engellenner
The en banc Federal Circuit decision in 2017 in Aqua Products v. Matel, 872 F. 3d 1290 (Fed. Circ. 2017) threw out the original USPTO rule that the patent owner had the burden of persuasion regarding patentability of claim amendments. The Aqua Products decision was based somewhat on a technicality – that USPTO had failed to engage in formal rule-making and, hence, its interpretation of the America Invents Act (AIA) was not entitled to deference.

For a while, it was not clear whether the USPTO would proceed with a formal rule-making process and try to maintain its rule on burden of proof.  However, early in 2019, the PTAB issued a “precedential” opinion in Lectrosonics, Inc. v. Zaxcam, Inc., IPR2016-01120 (Feb. 25, 2019) explicitly adopting the new practice of placing the responsibility on the petitioner who challenges a patent to also show that any new claims presented by the patent owner by amendment are invalid.

This was followed by proposed formal rules in October, 2019 codifying the Lectrosonics holding that the petitioner who initiates a patent challenge will not only have the burden of persuading the PTAB that a patent owner’s claims as issued are invalid but will also have the same burden with regard to new claims that the patent owner may present by amendment during the proceeding.  The USPTO is expected to finalize this rule shortly.

At least one patent owner that had initially had its motion to amend denied has taken advantage of the Aqua Products decision.  On remand from the Federal Circuit, the Patent Trial and Appeal Board (PTAB) has granted a motion to amend in a patent directed to methods of treatment using cabazitaxel, a taxane compound. Mylan Labs. Ltd. v. Aventis Pharma S.A., IPR 2016-00712, Paper 112 (Oct. 22, 2019).

The PTO also appears to be taking proactive steps to help patent owners navigate the amendment process. On March 15, 2019, a notice of a pilot program was published for “motion to amend practice and procedures in trial proceedings under the America Invents Act (AIA) before the PTAB.” Continue reading →

2019 PTAB Year in Review – Part I: FEDERAL CIRCUIT APPEAL DECISIONS

By Tom Engellenner
The Federal Circuit heard a steady stream of cases from the Patent Trial and Appeal Board (PTAB) in 2019 as appeals of PTAB final written decisions seem to have become de rigueur.  PTAB appeals are now the largest single component of the Federal Circuit docket with over 600 appeals docketed in FY2019 – almost double the number of appeals that the Federal Circuit received from District Court patent decisions.

Perhaps the most noteworthy Federal Circuit decision of 2019 came in Arthrex v. Smith & Nephew No. 2018-2140 (Fed. Cir. Oct. 31, 2019) where a Federal Circuit panel ruled that the way administrative patent judges (APJs) are appointed to the PTAB was unconstitutional and vacated the decision with a remand that the case be heard again by another PTAB panel.  The decision purportedly cures this problem going forward by severing a portion of the enabling legislation that prevents the administrative judges from being fired except for cause. The Arthrex decision appears to give everyone similarly situated the right to request a remand and rehearing before a different panel.  About 100 or less pending appeals appear to fall in this category.

On December 16, all of the parties to the Arthrex case sought en banc reconsideration of the case.  Smith & Nephew and the USPTO’s solicitor general argued that the appointments clause issue and, hence, unconstitutionality was wrongly decided by the Arthrex panel because APJ’s were not “superior officers” (requiring Senate confirmation).  Arthrex and the government argued that the Director of the USPTO has sufficient control over the PTAB judges, pointing out that the Director can assign APJs to particular matters, remove them from cases, and over-rule institution decisions by issuing sua sponte dismissals.  Arthrex’s en banc rehearing petition, on the other hand, argued that the decision didn’t go far enough and the proper remedy should have been to throw out all decisions rendered in AIA trials so far.  A decision on the en banc rehearing request is unlikely to made until February 2020. If the rehearing petition is granted, an actual en banc decision may not come until 2021.

Another noteworthy Federal Circuit decision came in June, 2019 in Regents of University of Minnesota v. LSI Corporation, No. 18-1559 (Fed. Cir. 2019), where the Federal Circuit made it clear that sovereign immunity does not apply to patent challenges brought pursuant to the 2011 America Invents Act (AIA), regardless of whether the immunity claim is raised by a Native American tribe or a state university trying to avoid patent adjudication. Continue reading →