Welcome to the 14th Volume of our quarterly IPR-PGR Report.
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.
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.
Welcome to the 8th Volume of our IPR-PGR Report. Please let us know if you have any questions about the information contained therein, or would otherwise like to discuss Patent Office litigation. We note a few interesting stats from this latest quarter. First, we took a look at success rates for IPR proceedings by broad subject matter class. Of interest is the fact that it is more likely that an IPR petition directed to a chem/bio invention (86%) will be cancelled versus an electrical (82%) or mechanical patent (74%). Second, the claim cancellation rate has crept up a bit again, with only about 19% of claims that are put into an IPR trial surviving the Final Written Decision. Relatedly, the overall claim survival rate has dropped from 41% to 37%. Lastly, we have provided some information regarding the district courts with the highest and lowest win rates for contested motions to stay. Not surprisingly, the Eastern District of Texas is one of the districts that is least likely to stay litigation in view of an IPR.
The Patent Public Advisory Committee issued its Annual Report regarding fiscal year 2014. The PPAC Report contains a number of interesting points, but our review, of course, will focus on the PTAB and post grant proceedings. The PPAC’s review of post grant proceedings started off with a review of numerous key statistics, including:
- The Board comprised 214 judges at the end of FY 2014;
- Of the petitions filed, 71.6% were directed to electrical/computer software patents, 15.6% were mechanical patents, 6.8% were chemical, 5.6% were biotech/pharma, and 0.4% were design patents;
- 2,082 total petitions have been filed since the inception of the AIA, with a peak of 190 petitions filed in June of 2014;
- The Board has issued final written decisions in 129 IPR proceedings and 13 CBM proceedings;
- The 1,494 Petitions filed in FY 2014 made the Board the second busiest patent jurisdiction behind only the Eastern District of Texas (1,511 Complaints) and just ahead of the District of Delaware (1,335 Complaints); and
- For ex parte reexamination buffs, the Board affirmed or affirmed-in-part 67% of appeals, reversed 30%, and remanded or dismissed 3%.
Another interesting aspect of the PPAC Report was its recommendations to the PTO. First, the PPAC recommended continued vigilance in hiring new judges or otherwise handling the increased AIA workflow. Second, the PPAC suggested that the Board not be reluctant to exceed the one-year, statutory timeline for post grant proceedings. And, third, the PPAC recommend that the USPTO become more flexible in claim amendment practice to make them more available to patent owners.
The PPAC was formed as part of the American Inventors Protection Act of 1999 to advise the Director of the PTO on the management of patent operations. The Committee reviews the policies, goals, performance, budget, and user fees of the patent operations and advises the Director on these matters.
As you know, we take statistics pretty seriously here at IPR-PGR.com. After our most recent quarterly IPR Report indicated a claim survival rate of 27% (for claims actually put into an IPR trial), we were surprised to learn that the PTO is reporting a rate that is nearly double our calculated rate – 52%. After doing a little digging, it seems the Patent Office is including in its “survived” claims calculation those claims that were challenged in a petition, but ultimately not ruled upon because the case was terminated (i.e., via settlement between the parties). We do not include those claims in our calculation because it is difficult to discern the reasons why such cases are settled. In fact, we deem it more likely than not that proceedings are terminated because Patent Owners are fearful for the viability of their claims so, if anything, settlement indicates the claims would not have survived.
In the end, there is nothing misleading about the conclusions being drawn by the Patent Office, but like all statistics, they must be taken with a grain of salt.
Welcome to Volume 7 of our IPR-PGR Quarterly Report. Please contact us with any questions about these Patent Office procedures.
We take special note of three interesting statistics this quarter. First, obtaining amended patent claims in these proceedings remains difficult. After 1 motion to amend was granted last quarter, this quarter saw a complete shutout. No additional motions to amend granted. Further, it seems that many new decisions, denying a motion to amend, add additional requirements and hurdles. It will be interesting to see if the argument currently before the Federal Circuit, that the broadest reasonable interpretation standard is inappropriate when a Patent Owner cannot effectively amend claims, is accepted.
Second, district courts continue to demonstrate an increased comfort with the ability of IPR proceedings to simplify issues at trial, including as compared to reexamination proceedings, in an increasing grant rate on motions to stay. While this is still very much a judge and court-specific decision, defendants will succeed on a contested motion to stay almost 2 out 3 times.
Third, we took a broader look at claim survival this quarter, not just looking to the rate at which claims from an IPR “trial” were shown to be unpatentable in Final Written Decisions. We added in claims that were not put into a “trial” at all – raising the claim survival rate to 41%. If only claims that are put into trial are considered, the survival rate is 27.8%.
The Federal Circuit has a mounting pile of appeal briefs relating to IPR practice – will we soon see another tidal wave of change as the patent appeals court weighs in?