An en banc panel of the Court of Appeals for the Federal Circuit (CAFC) in the case of Aqua Products, Inc. v. Matal recently held that in an inter-partes (IPR) proceeding, the burden of persuasion rests with the challenger to persuade the PATB that substitute claims proposed by a patent owner in a motion to

Under 35 U.S.C. 315(e)(1), a petitioner in an inter partes review of a claim in a patent that has resulted in a final written decision by the Board may not request or maintain a proceeding before the Patent Office with respect to that claim on any ground that the petitioner raised or reasonably could have

The USPTO has gone ahead and finalized new rules for post-grant proceedings under the America Invents Act (AIA) – despite heavy criticism that the rules do little to alter the lopsided nature of these proceedings. The new rules were published at 81 FR 18750 on April 1, 2016 and go into effect on May 2, 2016.

Technically this “final rulemaking” amends various portions of 37 C.F.R. 42, the rules that govern post-grant proceedings under the AIA, including inter partes review (IPR), covered business method review (CBM), and post-grant review (PGR).

Perhaps the most significant change is that under the new rules the patent owner will be able to submit testimonial evidence, such as an expert declaration, as part of a patent owner’s preliminary response to a patent challenge before the Patent Trial and Appeal Board (PTAB) decides to institute an IPR, CBM, or PGR trial. (Under the existing rules, the Patent Owner usually cannot present testimonial evidence until after the institution decision and the PTAB makes its decision to institute trial after hearing only one side of the story, e.g., from the petitioner’s expert.)

However, 37 CFR 42.108(c) has been revised such that if the patent owner presents testimonial evidence as part of a preliminary response, any “genuine issue of material fact created by such testimonial evidence will be viewed in the light most favorable to the petitioner solely for purposes of deciding whether to institute an inter partes review.” An analogous new rule in 37 CFR 42.208(c) for a post grant review has also been finalized. Under the new rules petitioners may also seek leave to file a reply to any preliminary response filed by the patent owner.

These changes beg the questions: what do the patent owners have left to say after institution if their experts’ opinions have already been considered and found unpersuasive, and will the PTAB judges ever change their minds during trials when the petitioner’s evidence is not viewed in its most favorable light?
Continue Reading New Final Rules for Post-Grant Proceedings Published by USPTO on April Fools Day

It’s time for an update on Kyle Bass’s efforts to rid America of the pharmaceutical patents that support high priced drugs.  Between February and September 2015, at least eleven investment funds organized by J. Kyle Bass and Erich Spangenberg (the Coalitions for Affordable Drugs Series I – XI) filed nearly three dozen different petitions for review of patents held by various drug companies.  The petitions were designed to take advantage of the new inter partes review (IPR) proceedings established under the America Invents Act (AIA) in 2012.

Speculation has been rampant as to how Bass’s investors will benefit.   Most people think that the funds have been shorting (or will short) the shares of the publicly traded pharmaceutical companies that own the patents; wait for the stock values to tumble and then cover their short positions by buying the stocks at a hefty discount caused by their patent challenges.  Others suggest that the funds will invest in generic drug manufacturers that will be able to compete once the drug patents are eliminated.

In the fall of 2015, Bass and Spangenberg appear to have switched gears and began filing petitions in their own names rather than in the names of the various Coalitions for Affordable Drugs (CAD) funds.  Whether this represents an actual change in the funding of the IPR challenges or just a legal nicety (i.e. a conclusion that the underlying CADs need not be named under USPTO rules) is not clear.

The hopes of the pharmaceutical industry that these petitions would be quickly dismissed out of hand have been dashed by the Patent Office.  Despite initial setbacks for the CADs early last year, over half of the petitions (18 out of 33) have now been found to present a reasonable likelihood of success.  In each of these instances, a trial is underway to determine whether the patent is invalid.  Given the high statistical likelihood (over ninety percent) that patents challenged under the AIA are ultimately found at least partially invalid once a trial is completed, the pharmaceutical companies have reason to be worried.
Continue Reading Bass Continues Fishing; Pharma Seeks Sanctuary

Earlier this month, the Patent Trial and Appeal Board (PTAB) added two decisions to its list of “precedential” opinions for the USPTO’s new proceedings for challenging patents under the America Invents Act. The list (which now consists of three decisions out of the over 1000 opinions that have been rendered) is intended to bring to public’s attention cases that the PTAB has concluded settle aspects of the evolving law governing inter partes review (IPR), covered business method (CBM) review, supplemental examination and post grant review (PRG) proceedings.

With over 200 administrative patent judges and over 2000 pending proceedings being handled by a myriad of different panels of judges, precedential decisions are intended to resolve conflicts. However, the process for designating an opinion as “precedential” is quite cumbersome. The process starts by nomination of an opinion by a PTAB judge (or a member of the public within 60 days of the rendering of the opinion). The Chief Judge of the PTAB then circulates the opinion to all members of the PTAB with an invitation to comment (typically within 10 days) and then vote on whether the opinion should be designated as precedential. If a majority of the PTAB judges agrees, the Chief Judge notifies the Director of the Patent Office, who can concur or reject the recommended designation. If the Director concurs, then the opinion labeled as precedential and publishes as such on the USPTO website (http://www.uspto.gov/patents-application-process/appealing-patent-decisions/decisions-and-opinions/precedential).

In the first new precedential opinion, LG Electronics, Inc. v. Mondis Tech Ltd., IPR2015-00937, Paper 8 (PTAB Sept. 17, 2015), the PTAB found LG’s petition for inter partes review was barred by 35 U.S.C. § 315(b), even though LG had filed its petition within one year of being served with an infringement complaint in 2014. The opinion concluded that the one-year bar of section 315(b) applies because petitioner had also been served with an earlier infringement complaint in 2008 on the same patent. There’s a certain irony in this decision because IPR proceedings did not come into existence until 2012 – so LG could never have petitioned for IPR the first time around. The effect of this decision apparently is that anyone sued more than a year before the AIA proceedings became available is effectively barred from petitioning for inter partes (or CBM) review.

The LG opinion notes but does not necessarily endorse an earlier PTAB decision (Oracle Corp. v. Click-to-Call Techs., LP, Case IPR2013-00312, Paper 40 (PTAB Dec. 18, 2013) ) in which a panel held that the 315(b) bar is not triggered by an earlier complaint – more than one-year before the petition – if the action is dismissed without prejudice. The panel in the LG case distinguished the Oracle decision because in the present case the dismissal of Mondis’s 2008 complaint was dismissed partial with prejudice and partially without prejudice.

In the second decision designated as precedential on January 12, 2016, Westlake Services, LLC v. Credit Acceptance Corp., (CBM2014-00176, Paper 28 (PTAB May 14, 2015) the Board interpreted the estoppel provision of 35 U.S.C. § 325(e)(1), ruling that the estoppel that prevents a petitioner from bringing a second CBM or PGR proceeding following “a final written decision” in the statute refers only to a decision on the specific claims on which the proceeding was instituted. Westlake was thus not estopped from bringing a second petition and challenging different claims.
Continue Reading Patent Trial and Appeal Board Adds Two More Cases to its List of Precedential and Informative Decisions

In the case of Square, Inc. v. Unwired Planet, LLC (CMB2015-00148), the PTAB held that the grounds raised by Square, Inc. (Petitioner) to challenge the validity of claims 1-4 of Unwired Planet’s U.S. Patent No. 7,711,100 could have been raised in a previous petition filed by Square, Inc. against the same patent, and hence denied the institution of a covered business method (CBM) review. In particular, the Board relied on the estoppel provision of 35 USC 325(e)(1), to deny the institution of a CBM review. This portion of section 325 mandates that the petitioner, or the real party in interest or privy of the petitioner, in a post-grant review of a claim that results in a final written decision “may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that post-grant review.”

The Petitioner had previously filed a CBM petition challenging claims 1-4 of the ‘100 patent (CBM2014-00156), which relates to methods for coordinating financial transactions via a wireless network, such as a wireless telephone network. In that proceeding, the petitioner argued that the claims at issue were invalid under 35 U.S.C. §101 as drawn to patent ineligible subject matter as well as invalid under 35 U.S.C. §102 and 103 as either anticipated or rendered obvious by a prior art reference (a thesis by Vazvan). The PTAB initiated a trial on the §101 ground but declined to include the §102 and 103 grounds in the trial because it found the evidence of public availability of the Vazvan thesis deficient. Ultimately, in a final written decision, the PTAB held that the challenged claims were not eligible for patenting pursuant to 35 U.S.C. §101.

Not satisfied with the decision invalidating the claims as patent ineligible subject matter, Square, Inc. filed a second petition arguing that claims 1-4 were invalid under 35 U.S.C. §102 and 103 as anticipated or rendered obvious by a different prior art reference (U.S. Patent No. 5,579,535 of Orlen).
Continue Reading No Second Bite Of The Apple for Square, Inc. – PTAB Applies Estoppel Provision Of 35 U.S.C. §325(e)(1) TO CBM Review

The Federal Circuit will apply a relaxed standard for review of the Patent Office’s post grant patent review proceedings and will give a good deal of deference to PTAB “findings of facts.”
Continue Reading Federal Circuit Affirms Invalidity Of A Merck Patent Based On Substantial Evidence Standard

Newly appointed USPTO Director Michelle Lee has responded to public criticism of the post-grant patent review mechanisms provided by the America Invents Act (AIA) by announcing in her blog last week that the government will implement several rule changes. The new rules, which will be implemented in three stages, have not yet been finalized but Director Lee strongly hinted these changes should benefit Patent Owners.

One of the rule changes apparently will make it easier for patent owners to amend their claims that are challenged by petitioners in inter partes review (IPR), covered business method (CBM) review and post grant review (PGR) proceedings.

According to the Director Lee, a first round of “quick fixes” will be released in the spring, followed by a second round of more substantial changes that will be published in the Federal Register for public comment in the summer. A third round of changes will follow involving revisions to the PTAB Trial Practice Guide, which governs the conduct of IPR, CBM and PGR proceedings.
Continue Reading USPTO Responds To Criticism By Promising PTAB Rule Changes That Should Benefit Patent Owners

The America Invents Act (AIA) allows a petitioner to request joinder of an inter partes review (IPR) of a patent with an IPR proceeding previously instituted with respect to that patent so long as the request for joinder is filed “no later than one month after the institution date of any inter partes review for which joinder is requested.” 37 C.F.R. 42.122(b). The joinder provision (35 U.S.C. 315(b)) provides:

If the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under Section 311 that the Director, after receiving a preliminary response under Section 313 or the expiration of the time for filing such a response, determines warrants the institution of an inter partes review under section 314.

In many cases, a petitioner requesting joinder is the same petitioner who had filed the previously-instituted proceeding. Such requests for joinder are typically made to circumvent the time bar imposed by 35 USC 315(b), which bars the institution of an IPR based on a petition that is “filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” This time bar does not, however, apply to a request for joinder.
Continue Reading PTAB Panels Are Divided Regarding Interpretation Of The Joinder Provision

Two of the earliest challenges to patents under the new post grant proceedings established by the America Invents Act (AIA) are now on appeal to the Court of the Appeals for the Federal Circuit and both appeals are taking direct aim at the US Patent and Trademark Office’s decision to adopt a controversial standard for claim construction – the so-called “Broadest Reasonable Interpretation” standard – to govern all of the new AIA proceedings.

Versata v. SAP concerns the very first “covered business method” (CBM) review proceeding (CBM2012-00001) conducted by the USPTO and is on appeal by the Patent Owner, Versata, of the Patent Trial and Appeal Board (PTAB) decision to invalidate certain challenged claims. Cuozzo v. Garmin concerns the first inter partes review (IPR) proceeding and likewise is on appeal from a PTAB decision finding Couzzo’s claims invalid.

Both appellants are challenging the USPTO’s claim construction standard as impermissible substantive rule-making by the agency and arguing that the standard instead should be the same as that applied to issued patents by the federal courts – the so-called Phillips rule that requires judges and juries to give the elements of a claim their “ordinary and customary meaning.” (See, Phillip v AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005))
Continue Reading Does the Broadest Reasonable Interpretation Standard Make Sense?