Alert November 15, 2017

Issue Nine: PTAB Trial Tracker

Motions to Amend: Burden to Prove Amended Claims are Unpatentable Rests with Petitioner

On October 4, 2017, the Federal Circuit issued its long-awaited en banc opinion in Aqua Products, Inc. v. Matal, regarding the burden of proof for motions to amend claims during an IPR.  (872 F.3d 290 (Fed. Cir. Oct. 4, 2017).) In a badly fractured opinion, a majority of the court held that petitioner has the burden of persuasion with respect to proving that the proposed amended claims are unpatentable. Prior to this decision, the Board had placed the burden with the patent owner, requiring it to prove that the proposed amended claims were patentable over the prior art of record, and over all prior art of which patent owner was aware. (See, e.g., MasterImage 3D, Inc. v. RealD Inc., IPR2015-00040, Paper 42 at 2-3 (PTAB Jul. 15, 2015) (precedential).)

Following this decision, the Board and the Federal Circuit have offered varying levels of relief to patent owners seeking to amend a patent during an IPR. Here is a sampling:

  • In Silver Peak Systems, Inc. v. Matal, No. 2015-2072, the Federal Circuit vacated an appeal and remanded to the PTAB “for further proceedings consistent with Aqua.” (Fed. Cir. Oct. 24, 2017.)
  • In Celanese Int’l. Corp. v. Daicel Corp., IPR2017-00166, the PTAB granted Petitioner authorization to file a twelve page sur-reply to the Patent Owner Reply in support of its Motion to Amend.(PTAB Oct. 17, 2017.)
  • In Samsung Elecs. Co. v. Rosetta-Wireless Corp., IPR2016-00622, the Board denied Patent Owner’s request to file a Motion to Amend after the Board had already issued its Final Written Decision. Patent Owner had argued that prior to the decision in Aqua, it didn’t have a real opportunity to amend the claims. (PTAB Oct. 20, 2017.)
  • In Minerva Surgical, Inc. v. Hologic, Inc., the Board extended its one-year deadline by which it must issue a final written decision to take into account the impact of Aqua Products. The final written decision had been due one day after the Board extended the deadline. (PTAB Oct. 5, 2017.)
  • In F5 Networks, Inc. v. Radware, Ltd., IPR2017-00124, the Board granted Patent Owner permission to “belatedly” file a Motion to Amend after Patent Owner had filed its Response, but before the Petitioner filed its Reply. The Board explained that there were still approximately six months left in the proceeding and “neither the parties nor the Board could have foreseen the timing of the Aqua Products decision.” The Board explicitly allowed Petitioner to introduce additional prior art in opposition to the Motion to Amend, and permitted Petitioner to file a sur-reply limited to 12 pages. (PTAB Nov. 3, 2017.)

Takeaway: Prior to the Aqua Products decision, the Board rarely granted motions to amend. Although the Federal Circuit’s opinion was badly fractured, Judge O’Malley’s opinion for the majority may provide patent owners some comfort. She recognized that a robust amendment process was an important right accorded patent owners in the AIA, which may presage the granting of more motions to amend. As the cases above illustrate, the Board is already taking the reallocation of the burden of proof into consideration, for example by permitting petitioners to have the last brief on a motion to amend, but has not yet formalized any changes to its rules or practices. Until new procedures regarding motions to amend are put in place, patent owners and petitioners should carefully review all their instituted IPRs to see if there is any opportunity to further brief an issue related to amending a patent.

Discretion to Institute Review: Board Provides Guidance Regarding Treatment of Prior Art and Arguments Previously Presented to the Office

The following cases, each of which the Board recently designated as “informative,” demonstrate the Board’s use of its discretion under 35 U.S.C. § 325(d) to deny institution where the petition presents prior art and arguments that were previously considered by the examiner during prosecution of the patent.

  • Unified Patents, Inc. v. Berman, IPR2016-01571, Paper 10 (PTAB Dec. 14, 2016). In this IPR, Petitioner relied on a prior art reference that the patentee had previously overcome during prosecution. Petitioner also relied on a second reference that was not expressly before the Examiner, but presented the same substantive content as that contained in references the examiner had expressly considered. According to the Board, Petitioner “fail[ed] to present any argument distinguishing the Examiner’s prior consideration of [the reference] or to provide a compelling reason why we should readjudicate substantially the same prior art and arguments as those presented during prosecution and considered by the Examiner.” (Id. at 12.)
  • Hospira, Inc. v. Genentech, Inc., IPR2017-00739, Paper 29 (PTAB July 27, 2017). In this case, Petitioner asserted that the patent claims were not entitled to claim the benefit of any earlier patent applications, and thus intervening prior art anticipated the patent claims. The Board denied institution because during prosecution the Examiner had made the same priority argument but the patentee had successfully overcome it. The Board found that Petitioner presented no new evidence to convince the Board that the Examiner’s determination was unreasonable. (Id. at 18.)
  • Cultec, Inc. v. Stormtech LLC, IPR2017-00777, Paper 7 (PTAB Aug. 22, 2017). In this case, the Board denied institution because the references included in Petitioner’s grounds had either been discussed by the Examiner during prosecution, or were cumulative of references that had been considered by the Examiner. In particular, one prior art reference used in the IPR had been presented to the Examiner (by the same lead counsel for Petitioner) via a Third Party Submission under 37 C.F.R. § 1.290, which provides that “ a third party may submit, for consideration and entry in the record of a patent application, any patents, published patent applications, or other printed publications of potential relevance to the examination of the application . . . .”  (Paper 7 at 8.) Although the Examiner had not used this reference in a claim rejection, the prosecution history indicated that the Examiner had considered the Third Party Submission.  Accordingly, the Board denied institution because the same art and arguments had been previously presented to the office in the Third Party Submission.

The Board also designated a portion of General Plastic Indus. Co. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 19 (Sep. 6, 2017), as “precedential.” The precedential portion repeats the now-familiar factors that the Board considers in determining whether to use its discretion under 35 U.S.C. § 314(a) to deny institution of a follow-on petition filed against a previously-challenged patent. (See, e.g., NVIDIA Corp. v. Samsung Elec. Co., IPR2016-00124, Paper 9 (PTAB May 4, 2016).) The Board noted that while many factors must be considered to protect patent owners from serial challenges on a single patent, the following factors are a “baseline:”

  1. Whether the same petitioner previously filed a petition directed to the same claims of the same patent;
  2. Whether at the time of filing of the first petition the petitioner knew of the prior art asserted in the second petition or should have known of it;
  3. Whether at the time of filing of the second petition the petitioner already received the patent owner’s preliminary response to the first petition or received the Board’s decision on whether to institute review in the first petition;
  4. The length of time that elapsed between the time the petitioner learned of the prior art asserted in the second petition and the filing of the second petition;
  5. Whether the petitioner provides adequate explanation for the time elapsed between the filing of multiple petitions directed to the same claims of the same patent;
  6. The finite resources of the Board; and
  7. The requirement under 35 U.S.C. § 316(a)(11) to issue a final determination not later than 1 year after the date on which the Director notices institution of review.

Takeaway: The Board’s formalization of factors bearing on its discretion to deny institution of follow-on petitions and petitions that present prior art and arguments previously presented to the Office is welcome guidance to petitioners and patent owners alike, and should help ensure uniformity across the many panels of the PTAB. The Board’s highlighting of these cases as informative or precedential appears to signal that the Board may begin to exercise its discretion to not institute more frequently. Accordingly, petitioners relying on prior art or arguments that track those addressed during prosecution must provide reasons why the Board should readjudicate those arguments. Further, as illustrated by Cultec, third party submissions can thwart a petitioner’s later attempt to file for post-grant review. Petitioners should carefully weigh the pros and cons of third party submissions versus post-grant reviews, which provide a more fulsome opportunity to brief arguments. Petitioners also need to be aware of prior petitions filed against the same patent, and must take care to address the General Plastic factors outlined above. Patent owners, for their part, should be intimately familiar with the prior art and arguments addressed during prosecution, and should point out where petitioners are making arguments already overcome during prosecution.

Attorney-Client Privilege: Board Extends Privilege to Patent Agents and Foreign Patent Practitioners

On November 7, 2017, the Board issued a new rule that extends the attorney-client privilege to communications between clients and their domestic or foreign patent attorneys and patent agents. (82 Fed. Reg. 51570, 51570.) The rule states that any “communication between a client and a USPTO patent practitioner or a foreign jurisdiction patent practitioner that is reasonably necessary and incident to the scope of the practitioner’s authority shall receive the same protections of privilege under Federal law as if that communication were between a client and an attorney authorized to practice in the United States, including all limitations and exceptions.” (Id. at 51575.) The rule defines “foreign jurisdiction patent practitioner” as “a person who is authorized to provide legal advice on patent matters in a foreign jurisdiction, provided that the jurisdiction establishes professional qualifications and the practitioner satisfies them.” (Id.) The rule is intended to protect from discovery not only communications about the post-grant proceeding, but also “communications made when seeking patents at the USPTO or foreign IP offices, such as when prosecuting applications or contemplating whether to file.” (Id. at 51571.)

The rule, which is codified as 37 CFR 42.57, becomes effective on December 7, 2017, and will apply to IPRs, post-grant reviews, covered business method patent reviews, and derivation proceedings.

Takeaway: This new rule extends privilege protection to certain communications between a client and a patent agent or a foreign patent practitioner, such as those made during prosecution or when determining whether to file a patent, in the U.S. or abroad. The Board noted that protecting these types of communications is the primary purpose of this new rule, as they are more commonly implicated in PTAB discovery than communications about the PTAB proceeding itself. While protection for these types of communications is certainly welcome, keep in mind that the privilege protection is not absolute. Rather, the rule applies only to communications “reasonably necessary and incident to the scope of the practitioner’s authority.” 

Joinder: Board Extends One-Year Deadline in Cases of Joinder

In two different IPRs, because of joinder, the Board extended its statutory 1-year deadline for issuance of the final written decision.

In Dell Inc. v. Realtime Data LLC, IPR2016-00972, the Board extended by six months its one-year deadline to issue the Final Written Decision following institution due to joinder of two other petitions to this IPR. In both of the decisions granting joinder, the Board had stated that joinder would likely not require any modification to the schedule, and the oral hearing was held just two weeks after the date originally scheduled by the Board in the IPR. (See IPR2016-01617, Paper 15 at 6, and IPR2017-00365, Paper 6 at 7.) The Board cited 37 CFR § 42.100(c), which the Board says allows an extension of time in the case of joinder. (Paper 69, PTAB Nov. 2, 2017.)

The Board also extended by six months its one-year deadline to reach a final written decision in Apple, Inc. v. Evolved Wireless LLC, IPR2016-00758.  (Paper 44, PTAB Oct. 12, 2017.) Six IPRs had been either consolidated with, or joined to, the ’758 IPR. In this case, the Board noted in the institution decisions of some of the later-joined proceedings that the schedule would need to be modified to accommodate the joinder, and that all of the parties had agreed to a modified schedule. (See IPR2016-00758, Paper 44 at note 3.)

Takeaway: As the Board’s docket has become busier, it has begun to take advantage of 37 CFR § 42.100(c), which states that in cases of joinder, the Board can adjust the 1-year deadline for issuance of the final written decision. Parties for whom a timely final written decision is important should consider opposing any motions for joinder in an effort to avoid an extension of the deadline for the final written decision.

Filing Fees: Fee Increase for Post Grant Reviews Petitions

Effective January 16, 2018, the filing and post-institution fees for post grant reviews are increasing by approximately 30%. The new fees will be:

  • Request for IPR: $15,500 for the first twenty claims, and $300 for each claim in excess of twenty; post-institution fee for IPR: $15,000 for the first fifteen claims, and $600 for each claim in excess of fifteen.
  • Request for PGR or CBM: $16,000 for the first twenty claims, and $375 for each claim in excess of twenty; post-institution fee for PGR or CBM: $22,000 for first fifteen claims, $825 for each claim in excess of fifteen.