Federal Circuit Maintains “Substantial Evidence” Standard of Review in AIA Post Grant Proceedings

cafc1The Federal Circuit, today, denied a petition seeking rehearing en banc of its application of the “substantial evidence” standard of review in post grant administrative proceedings, in the case of Merck & Cie v. Gnosis S.P.A., Appeal No. 2014-1779 (from IPR2013-00117). Writing a concurring opinion (in which Judges Wallach and Stoll joined), Judge O’Malley recognized the appeal of a change in the standard, such that the Federal Circuit would apply a less deferential “clear error” standard of review in AIA proceedings. But, Judge O’Malley felt compelled by Supreme Court precedent to maintain the “substantial evidence” standard. In short, Judge O’Malley signaled that the issue should be left to Congress to change, finding that, because Congress failed to expressly change the standard when it created IPR proceedings, the Court is not free to make that change now.

In dissent, Judge Newman wrote that it was inappropriate for the Federal Circuit to continue to apply the highly deferential standard of review and, instead, a full and fair review is more appropriate to the America Invents Act. More specifically, because PTAB proceedings are intended to be an alternative to district court proceedings on the issue of validity/patentability, the “substantial evidence” standard “does not assure the intended identity of result for these PTAB and district court determinations.”

Consider the baton officially passed to Congress to decide whether PTAB proceedings should be reviewed using a less deferential standard. For the foreseeable future, the Board will continue to receive high deference in its factual determinations.

PTO Issues Final Rule Changes to IPR Proceedings

USPTOThe 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.

PTO Previews Changes to Inter Partes Review Practice

32147971_sJustified or not, there has been a significant and growing chorus of criticism regarding the results of about two-and-one-half years of Inter Partes Review practice before the PTAB. As our soon-to-be-released IPR Report (Volume 9) will show, about 85% of the claims that are addressed in a Final Written Decision are ultimately cancelled.

In response to this criticism, in June 2014, the US Patent and Trademark Office solicited input regarding how the IPR process was working. On March 30th, the PTO announced, via Director Lee’s blog, that changes are coming. While the blog entry merely highlighted some of the changes that will be coming, it is clear that some of the contemplated changes can be significant. In general, the fixes are to come in three phases – the first to be implemented immediately, and the others to be phased in over time.

First Rule Package – Immediate Quick-Fixes (to be implemented in a revised rule package to come, but implemented in scheduling orders starting immediately):

  1. Page Limit for Motions to Amend increased from 15 to 25 pages (and claims to be placed in an appendix instead of the body of the motion); and
  2. Page Limit for Petitioner Reply Brief increased from 15 to 25 pages.

Second Rule Package (mere considerations at this time):

  1. Further modifications to the Motion to Amend process, including
    1. That a motion for a substitutionary amendment will always be allowed to come before the Board for consideration, and
    2. For the amendment to result in the issuance of amended claims, the Patent Owner will not be required to make a prior art representation as to the patentability of the narrowed amended claims beyond the art of record before the Office.
  2. Adjustments to the evidence that can be provided in the Patent Owner Preliminary Response;
  3. Clarification of the claim construction standard as applied to expired patents;
  4. Adjustments to the scope of additional discovery;
  5. How to handle multiple proceedings before the Office involving the same patent;
  6. Use of live testimony at oral hearings, and
  7. Whether the parties should be required to make a certification with their filings similar to a Rule 11 certification in district court litigation.

Third Rule Package (potential changes via amendment to the Trial Practice Guide):

  1. Emphasize the availability of live testimony;
  2. Emphasize the importance of real party-in-interest discovery as to determinations of standing and later estoppel consequences; and
  3. Pilot program whereby a single judge would handle the institution decision and then two new judges would be added to the panel only when and if a trial is instituted to serve as “fresh eyes.”

Key PTAB Decisions

Every IPR proceeding is heard, of course, by a panel of three Administrative Patent Judges of the Patent Trial and Appeal Board.  It is becoming increasingly clear, however, that for issues that arise frequently in IPR practice, the Board its taking a more holistic approach and coming together to provide detailed guidelines for certain sticky issues.  Evidence of this apparent, behind-the-scenes collaboration among the APJs is the fact that once the detailed decisions are issued, subsequent 3-judge panels refer often to the decisions.

Additional Discovery

IPR2012-00001; Paper 20

Motions to Amend

IPR2012-00027; Paper 26 (procedural and substantive requirements for meeting burden for filing motion to amend)

IPR 2012-00005; Paper 27 (burden of identifying written descriptive support for proposed substitute claims)

6 Months of Inter Partes Review – By the Numbers

Screen shot IPR Report
Welcome to the inaugural issue of Harness Dickey’s Report on Litigation Practice Before the United States Patent Office.  Our periodic Report provides insight on some of the over 100 characteristics of Inter Partes Review and Post Grant Review proceedings that we track to identify trends and strategies for our clients.

Are you facing threatened, pending, or anticipated patent litigation?  Walk into the strategy meeting armed with hard facts regarding this new procedure that will change the face of patent litigation.  For example, did you know that 96% of petitions seeking inter partes review were granted in the first 6 months of the procedure?  Further, 92% of the challenged claims from such petitions were included in the trial.  How about the fact that federal district courts are staying litigation in view of IPR filings at a 61% clip.

These are just some of the over 100 categories of inter partes review and post grant review practice that we are tracking and have included in our first issue of our Report.  A copy of the Report can be found by clicking HERE.  Please contact us at IPR-PGR@hdp.com if you would like a hard copy of the Report or would like more information about litigation before the USPTO.

Congress Passes America Invents Act Technical Corrections Bill

The House of Representatives today passed a technical corrections bill directed to the America Invents Act.  There are several proposed changes (a summary of which can be found HERE), but only one that directly affects Inter Partes Review and Post Grant Review proceedings.  Namely, the technical corrections bill fixes the “dead zone” in IPR practice that has prevented the initiation of an IPR within the first 9 months after a patent has issued.

Post Grant Review, of course, will become available 0-9 months after issuance of any patent that qualifies as a “first to file” patent under the America Invents Act.  That is, PGR is available for any patent that has an effective date of March 16, 2013 or later.  Given the time required to examine a patent, at the very earliest, the first PGR will not be filed, therefore, until late 2013 or, more likely, early 2014.

In the meantime, Inter Partes Review is, of course, available now, but by the letter of the AIA, a petition seeking IPR can only be filed 9 months after a patent issues, or later.  Thus, for patents that have issued in the last nine months, IPR is technically not available.  This “dead zone” in the legislation was recognized almost immediately and is now being fixed in House Bill 6621.

President Obama is expected to sign HR 6621 into law, making Inter Partes Review available for any non-“first to file” patent at any time, fixing the IPR “dead zone.”