Welcome to the 14th Volume of our quarterly IPR-PGR Report.
To date, the PTAB has been stingy in its designation of panel decisions as “precedential.” Indeed, before today, only 3 decisions in the AIA era had been designated as precedential. That number increased dramatically on May 10, 2016, as the PTAB designated five additional, and well-known decisions as precedential. The decisions, with the PTAB’s description thereof, are listed below.
Garmin Int’l v. Cuozzo Speed Techs LLC, IPR2012-00001, Paper 26 (Mar. 5, 2013) – This order discusses the factors considered in evaluating motions for additional discovery in IPR proceedings.
Bloomberg, Inc. v. Markets-Alert Pty, Ltd., CBM2013-00005, Paper 32 (May 29, 2013) – This order discusses the factors considered in evaluating motions for additional discovery in CBM proceedings.
Oracle Corp. v. Click-to-Call Techs, LP, IPR2013-00312, Paper 26 (October 30, 2013) (precedential only as to Section III.A.) – This decision pertains to interpretation of “served with a complaint” for purposes of triggering the one-year time bar set forth in 35 U.S.C. § 315(b).
MasterImage 3D, Inc. v. RealD Inc., IPR2015-00040, Paper 42 (July 15, 2015) – This order provides guidance on patent owner’s burden to show entitlement to substitute claims.
Lumentum Holdings, Inc. v. Capella Photonics, Inc., IPR2015-00739 (Paper 38) (March 4, 2016) – This decision interprets 35 U.S.C. § 312(a)(2).
The PTO issued its long-anticipated rule changes for IPR and PGR proceedings. These rules follow up on immediate changes to the rules that were implemented about a year ago. Generally considered pro-Patent Owner changes to the rule, the new rules mark another phase in the evolution of IPR proceedings that have profoundly impacted the world of patent litigation. Below, we summarize each of the changes.
37 CFR §42.11 Duty of candor; signing papers; representations to the Board; sanctions. This section sets forth the requirements for signing papers before the PTAB and establishes that each paper must be submitted in good faith, similar to the requirements of Rule 11 from the Fed. R. Civ. P. The section also clarifies the procedure for filing a motion for sanctions for violating the good faith requirement.
37 CFR §42.23 Oppositions and replies. This section is amended to point out that a Petitioner reply may respond to arguments made in the corresponding Patent Owner Preliminary Response. The POPR was not included in the previous version of the rule.
37 CFR §42.24 Type-volume or page-limits for petitions, motions oppositions, and replies. For some filings, the length of the document will now be determined based on word count. For others, page limits still apply. Below is a summary of the current limitations:
i) IPR and Derivation Petitions: 14,000 words;
ii) PGR and CBM Petitions: 18,700 words;
iii) Patent Owner Preliminary Responses: 14,000 words;
iv) Patent Owner Responses to Petition: 14,000 words;
v) Replies to Patent Owner Responses to Petitions: 5,600 words;
vi) Motions: 15 pages;
vii) Opposition to Motions: 15 pages;
viii) Replies to Oppositions to Motions: 5 pages;
ix) Motions to Amend: 25 pages;
x) Opposition to Motions to Amend: 15 pages;
xi) Replies to Motions to Amend: 12 pages.
It is notable that, for the above page and word limits, tables of contents, tables of authorities, grounds for standing, mandatory notices, certificates of service or word count, and appendices of exhibits or claim listings do not count toward the limit. Statements of material facts to be admitted or denied do count toward the limit, but a response to such a statement does not count.
37 CFR §42.70 Oral argument. The time for serving demonstrative exhibits has been extended from five to seven business days.
37 CFR §42.100 Procedure; pendency. This section has been amended to allow a party to request that challenged claims be given a district court-type claim construction upon certification that the patent will expire within 18 months from the entry of the “Notice of Filing Date Accorded to Petition.”
37 CFR §42.107 Preliminary response to petition. This section has been amended to eliminate the prohibition against presenting new testimony evidence in the patent owner preliminary response.
37 CFR §42.108 Institution of inter partes review. In view of the change to section 107, this section is changed to make clear that the Board may rely upon any testimony provided with a patent owner preliminary response, but that any question of fact created by such testimony shall be viewed in the light most favorable to the petitioner. Further, upon a showing of good cause, the petitioner may seek to file a reply to the preliminary response.
37 CFR §42.200, 207, and 208. These sections are amended to make similar changes to PGR practice as discussed above in sections 100, 107, and 108 relative to IPR practice.
37 CFR §42.300. This section makes the same change to covered business method patents as is made to IPR practice in section 100, relative to claim construction.
Lastly, the commentary accompanying this rule package is interesting reading. The PTO explains its consideration of other issues, including additional discovery and real party-in-interest issues, including how these issues will be handled in the future.
Welcome to the 12th volume of our IPR-PGR Report, reporting on the statistics that underlie Inter Partes Review and Post Grant Review proceedings. This quarter marked the second in a row in which the number of IPR filings per week decreased, signaling a potential slow down in the popularity of IPRs. At the same time, more claims are surviving at the institution stage. Lastly, the Eastern District of Texas has taken a commanding lead as the jurisdiction in which litigants are least likely to obtain a stay pending the resolution of an IPR (23%).
Today, USPTO Director, Michelle Lee, explained the anticipated, second set of proposed changes to be made to IPR proceedings as inter partes review approaches its 3rd birthday. The first set of changes was discussed HERE. We set forth below a brief summary of the changes that have arrived. The proposed rule package will now be subject to a round of comments (due before October 19, 2015).
- In general, the Board shied away from adopting bright-line rules, and instead focused on the need for considering issues on a case-by-case basis. Highlights of the new regulations include:
- The Board will continue to apply the broadest reasonable interpretation standard for claim construction of unexpired claims, rather than the Phillips standard;
- However, the Board will apply Phillips-type claim construction to claims what will expire before a final written decision;
- Concerning motions to amend, the Office confirmed that the patent owner must show patentability of substitute claims over the prior art of record (including art provided in light of the patent owner’s duty of candor);
- Patent Owners will be allowed to file testimonial evidence with its preliminary response, but there will be no depositions until trial is instituted, and, for purposes of deciding whether to institute trial, factual disputes will be resolved in favor of petitioner;
- Regarding additional discovery, the Board will continue to apply the Garmin factors, subject to additional guidance reflected at http://www.uspto.gov/blog/aia/entry/message_from_administrative_patent_judges. The Board’s discussion of this issue implicitly forecasts more flexibility from the Board in applying these factors going forward;
- Concerning the specific issue of additional discovery geared towards Patent Owner’s attempt to develop evidence concerning secondary considerations (e.g., regarding sales of Petitioner’s product), the Board maintains that the Garmin factors are applicable, but did give the Patent Owners the concession that an absolute showing of nexus is not required to obtain additional discovery;
- Patent Owners will be allowed to raise real-party-in-interest or privity challenges at any point in a proceedings;
- The Board reiterated its discretion to stay, transfer, consolidated, or terminate multiple proceedings involving the same claims;
- Despite some requests for more lax adherence to the one-year time limit for IPRs, the “Office will continue to strive” to meet that deadline;
- Concerning live testimony at hearings, the Board will continue its practice of considering requests for oral testimony on a case-by-case basis;
- The Board also signaled that it will provide more guidance on whether parties are limited to certain issues at oral argument, that it plans to upgrade its technology so that hearings can be held in regional offices, and will allow exchange of demonstratives 7 days before a hearing; however, the Board declined to relax the rules concerning content of demonstratives;
- The Board will be switching to word-count limits, rather than page count limits, for the petition, preliminary response, patent owner response, and petitioner’s reply brief (14,000 words instead of 60 pages for petition, patent owner preliminary response, and patent owner response, and 5,600 words instead of 25 pages for replies). As a result, the Board will no longer review claim charts in petitions for argument. For all other briefing, a page limitation will be maintained;
- The Board states that it is working to upgrade its filing system to allow easier access to docket information;
- The Board intends to include a Rule 11-type certification requirement for all filed papers
- With the final version of these proposed rules, the Office will also issue an updated Office Patent Trial Practice Guide.
Lastly, we are very focused on the statistics that underlie IPR proceedings. In introducing the above changes, Director Lee explained some of the reasons why the Office believes IPR practice has been successful to date. That may be the case, but we were surprised by Director Lee’s citation to statistics regarding the results of IPR proceedings. Specifically, the Director stated that only “12 percent of total claims available to be challenged (4,496 of 38,462) were determined by the PTAB to be unpatentable in a final written decision.” Statistics can, of course, be manipulated and here, we fear, the USPTO may lose credibility. Including claims that were not challenged and claims that were resolved by settlement has a clear effect in raising the survival rate of claims subjected to IPR, without a strong basis for doing so. That is helpful for the Director’s narrative, but in our opinion, is unhelpful to ascertain the true effect of IPR and the Director’s reliance on that skewed stat undermines the other arguments made in favor the success of IPR.
Our apologies for our slightly delayed public dissemination of our Quarterly IPR Report. Please click HERE for the report or email us for a hard copy.
It’s hard to believe IPR has grown up so quickly. We look forward to celebrating its 3-year-old birthday next month.
Let us know if you have any questions or comments about the report in the comment section.
The PTAB issued its revised IPR Rules today, finalizing the “quick fix” changes it forecasted in late-March. There are numerous changes that have been made to IPR practice, many of them ministerial in nature. We focus here on the four most significant changes contained in this rule set:
1. Changes to Page Limits in Patent Owner’s Motion to Amend. The requirements for a Patent Owner Motion to Amend have been changed such that the motion may now be up to 25 pages in length (up from 15 pages). An opposition to a Motion to Amend now has a 25-page limit, too. Also, it is no longer a requirement that the amended claims be set forth as part of the motion itself, eating into the page limit. Instead, the proposed amended claims may be presented as a claims appendix and the listing is not subject to the 25-page limit.
2. Changes to Petitioner Reply Brief Page Limit. The page limit for a Petitioner Reply Brief has been extended to 25 pages (from 15 pages). In the past, it had been difficult to respond to a full 60-page Patent Owner Response brief in merely 15 pages.
3. Required Font Changes. Parties must use Times New Roman font in all PTAB filings from this point forward. The type of font to be used in filings to the Board had been fairly open-ended in the original rules. Over the course of a 60-page brief, though, one type of compliant font might result in a brief that is up to several pages shorter than other compliant fonts. Those fonts were, however, difficult to read at times. More uniformity, through the use of Times New Roman, will address this issue.
4. Multiple Back-Up Counsel Allowed. The IPR/PGR Rules as initially enacted, seemed to suggest that only one back-up counsel was allowed. In practice, the Board never limited the parties to merely one counsel and this amendment codifies that practice.
The other, less significant changes to the Rules can be reviewed in the 6-page notice published today in the Federal Register.
Welcome to Volume 9 of our IPR-PGR Report. Please send us an email if you would like a hard copy. After 30 months of IPR practice, some trends are taking shape. Overall, the percentage of petitions put into trial has gradually decreased, down to 76% this quarter, from a high of 96% at the early stages of IPR practice. Despite that decrease, we are finding that the claims that are put into an IPR trial, after a decision to institute, are increasingly not surviving. About 85% of those claims are canceled in a Final Written Decision. Motions to Amend continue to be difficult to obtain, with only a total of 3 such motions having been granted to date. This trend has led many Petitioners to abandon any effort to obtain new claims at all, turning instead to reissue or ex parte reexamination to present fuller claim sets to the Patent Office. The always-interesting stay data from the district courts indicates that the Eastern District of Texas remains an outlier for denying motions to stay. Although motions to stay are granted, on average, 62% of the time, the EDTX has only granted about 15% of the motions brought in that district. We also note that some of these trends have triggered the Patent Office to make certain tweaks to IPR practice, with other major changes on the horizon. You can read about those changes HERE.
Lastly, by way of a practice tip, we note the increasing frequency with which IPR petitions are being filed by companies before they enter the marketplace, to eliminate blocking patents. This technique was used recently, and with great success, by one of our clients, as discussed in this IP Law360 article. Additionally, this technique was recently discussed in a Wall Street Journal article, in which we were quoted, discussing the pharmaceutical industry. Please let us know if you have any questions about this growing strategy.
The Wall Street Journal has taken note of recent IPR filings by hedge fund manager Kyle Bass against certain pharmaceutical patent portfolios. Our Matt Cutler was quoted in one of the articles. The other can be found HERE.
Mr. Bass seems to be an early pioneer in realizing the power of inter partes review, and has opened the eyes of investors in the pharma industry. While Mr. Bass suggests that his actions are intended to open up the pharma industry to more competition by eliminating bad patents, today’s WSJ article quotes sources that believe his motives are more dubious – creating negative news for certain pharma companies that help with short sale bets against those companies.
Whether his bets are long or short, however, Mr. Bass has hit on a strategy that recognizes the strong, negative impact IPR has had to date on pharmaceutical patents. Our data shows that 87% of pharma patent claims that are subject to an IPR trial are ultimately deemed unpatentable. This is among the highest claim kill rates for any technology area.
As a result, we expect pharma-related IPR filings to continue to grow, and not just from hedge fund managers looking to make a quick buck.