Tag Archives: Covered Business Method Review

TRICK OR TREAT: PTAB JUDGE APPOINTMENTS ARE UNCONSTITUTIONAL

By Tom Engellenner
A Halloween decision by the U.S. Court of Appeals for the Federal Circuit ruled has concluded that the way administrative patent judges (APJs) are appointed to the Patent Trial and Appeal Board (PTAB) is unconstitutional and vacated the decision before the court with a remand that the case be heard again by another PTAB panel. The case is Arthrex v. Smith & Nephew No. 2018-2140 (Fed. Cir., Oct. 31, 2019).

The decision 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 Fed. Circuit decision essentially makes all PTAB judges subject to dismissal by the secretary of Commerce without cause.

The Arthrex decision, however, does appear to create a class of litigants who have already received a final written decision on a patent challenge and are still in their pre-appeal period. Those parties — if they choose to appeal and raise this “appointments” issue — may also be able to get their decisions vacated and remanded.

According to the Fed. Cir. decision by Judges Moore, Chen and Reyna, PTAB judges do not receive enough oversight and supervision from the Director of the U.S. Patent and Trademark Office (USPTO) to be considered “inferior” officers under the U.S. Constitution and, hence, exempt from the Senate confirmation process. (“Principal” officers must be appointed by the president and confirmed by the Senate, while “inferior” officers can be appointed by heads of departments.)

The Fed. Cir. Panel chose the “narrowest remedy” by stripping the PTAB administrative judges of their exemption from dismissal without cause, rather than applying its ruling to the entirety of cases rendered so far by the PTAB:

Thus, we conclude that the appropriate remedy to the constitutional violation is partial invalidation of the statutory limitations on the removal of APJs. Continue reading →

PTAB PROPOSES RULES ON BURDEN OF PROOF FOR AMENDMENTS DURING AIA TRIALS

By Tom Engellenner
In a proposed rule published in the Federal Register on October 22, 2019, the U.S. Patent and Trademark Office (USPTO) has finally moved to codify a change in the way its Patent Trial and Appeal Board (PTAB) conducts administrative patent challenge proceedings (inter partes reviews, covered business method patent reviews, and post-grant reviews) established by the 2011 America Invents Act (AIA).

Under the proposed rule, 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 proposed new rule is hardly a change in practice since the PTAB has essentially been following this practice for the past two years after the Court of Appeals for the Federal Circuit rejected its old rule placing the burden of proof for amendments on the patent owner.

During the first five years of administrative trials under the AIA, the tactic of amending claims to overcome prior art was largely an illusory exercise in part at least because of the original USPTO rule. However, an en banc Federal Circuit decision in Aqua Products v. Matel, 872 F. 3d 1290 (Fed. Circ. 2017) threw out the original USPTO rule.

Continue reading →

FEDERAL CIRCUIT FINDS A TECHNOLOGICAL INVENTION IN SIPCO’S TELECOM PATENT AND REVERSES PTAB DECISION THAT THE PATENT IS SUBJECT TO CBM REVIEW

By Reza Mollaaghababa
Under the administrative trial rules of the America Invents Act (AIA) a patent is eligible for covered business method (CBM) review if it only claims “a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service.” 37 C.F.R. 42.301(a). Notwithstanding, such a patent is exempt from CBM review if it includes a “technological invention.” Id.

In determining whether a patent includes a technological invention for the purposes of CBM review, U.S. Patent Office rules require the Patent Trial and Appeal Board (PTAB) consider “whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art, and solves a technical problem using a technical solution.” 37 C.F.R. 42.301(b).

In SIPCO LLC v. Emerson Electric Co. (IPR 2017-0001), the PTAB concluded that SIPCO’s U.S. Patent No. 8,908,842 was not excluded from CBM review under the statutory “technological exception.” The CAFC disagreed and vacated the PTAB’s decision. Continue reading →