Is the IPR tide about to turn at the Patent Trial and Appeal Board?

Starting on September 16, 2012, on the first anniversary of the signing of the America Invents Act, the Patent Trial and Appeal Board (PTAB) was born. The jurisdiction of the PTAB is greatly expanded compared to the previous Board of Patent Appeals and Interferences (BPAI). Most specifically, the PTAB now conducts administrative trials within the patent office.

These trials are required by the new procedures ushered in by the AIA, namely Inter Partes Review (IPR), Post-Grant Review (PGR) and Covered Business Method (CBM) Review. These three new varieties of patent challenge allow a petitioner to challenge the propriety of one or more issued patent claims once they have been granted by the Patent Office. For a variety of reasons, the most popular post grant proceeding by far has been IPR. In short this is because PGR is available only to challenge issued patents that were examined under AIA 102, which given the backlog of patent applications means exceptionally few patents can at this point be challenged in PGR. CBM is likewise not particularly popular simply because it is limited to business method patents that lack a technological component.

According to the statute, “[a] person who is not the owner of a patent may file a petition to institute an inter partes review of the patent.” 35 U.S.C. 311(a). This simple statute and the enabling regulations have lead to a great deal of consternation throughout the patent community. While post grant proceedings may have had the best intentions, which were to provide a cheaper, faster alternative to district court litigation to resolve issues of patent validity, there have been numerous challenges to the procedures.

Despite the fact that 35 U.S.C. 282 promises a presumption of validity for issued patents, in proceedings at the PTAB patent owners are given no presumption of validity. Further, despite the fact that patents are property rights, as confirmed by a long line of Supreme Court cases that equate patents to property rights in land and 35 U.S.C. 261 which says patents have the attributes of personal property, an Article II executive tribunal is stripping rights while certain decisions remain unreviewable by an Article III tribunal ever. These and many other procedural matters, including the inability to amend claims despite the right to amend embodied in 35 U.S.C. 316(d) and the exceptionally low threshold required to institute an IPR proceeding, have lead commentators to question the fairness of the proceedings and whether due process is being afforded to patent owners.

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But the tide may be about to turn. Recently the United States Supreme Court added several cases to its docket for this term, with one of those cases being Cuozzo Speed Technologies v. Lee, a case that will require the Supreme Court to address two critically important questions associated with inter partes review (IPR) proceedings. The first question dealing with the proper claim construction standard and the second dealing with whether a decision to institute an IPR is insulated from judicial review. See Supreme Court accepts Cuozzo.

Normally the Supreme Court does not take a Federal Circuit appeal to compliment the Court on how well they have resolved a particular matter, so it seems safe to bet that the Federal Circuit will be reversed on one or both of the issues take. At the very least the Supreme Court can be expected to make broad statements of law and principle and remand the case for further consideration. In either event patent owners would welcome the outcome. In the meantime as we wait for a decision it will also be interesting to watch and see if the PTAB begins to moderate and whether the Federal Circuit shifts their jurisprudence, as they have been known to do from time to time while awaiting a decision from the Supreme Court.

Subsequently to the Supreme Court taking Cuozzo, a petition for certiorari was filed with the Supreme Court challenging the decision of the Fourth Circuit in Cooper v. Lee. This latest challenge to the post grant proceedings at the USPTO raises a constitutional question about whether an Article II tribunal can declare an issued patent claim invalid. The petition for certiorari cites a long line of Supreme Court cases that says that only a federal district court may invalidate an issued patent, and which further equates patents to real property that cannot be taken without just compensation.

Meanwhile, the Federal Circuit continues to issue decisions relating to inter partes review. While it occurred before the two previous events mentioned, on December 31, 2015, finding in Redline Detection, LLC v. Star Environtech, Inc. that a timely filed motion containing supplemental information, which is authorized both by statute and rule, can be refused by the PTAB. See Timely filed supplemental information not considered by PTAB. Patent owners have struggled for some time knowing that despite what the statute says the PTAB does not recognize a right to amend patent claims in an IPR, rather the PTAB interprets 35 U.S.C. 316(d) as merely giving the patent owner the right to file a motion to amend, which the PTAB can reject.

Now in Redline the petitioner gets a taste of that swift PTAB justice (or lack thereof).  The AIA authorizes the filing of supplemental information with the PTAB during the course of an IPR, see 35 U.S.C. § 316(a)(3), and the USPTO promulgated regulations pursuant to that authority. In particular, see 37 CFR 42.123(a) allows for supplemental information to be submitted within one month of the institution. Nevertheless, the PTAB said, and the Federal Circuit agreed, that they do not have to accept and consider timely filed supplemental information without an explanation as to why it wasn’t filed earlier. One problem for the PTAB and Federal Circuit is that neither the statute nor regulations require such an explanation in order for the petitioner to exercise the right to submit supplemental information.

The Redline case, like so many others, shows just how much of a wild west inter partes review is at the Patent Office. PTAB judges do not implement the rules and laws uniformly, and joke is being made out of due process. Why? Because these proceedings need to be completed within 12 months, so the PTAB cuts corners and simply doesn’t believe they can offer the process that patent owners, and increasingly petitioners, deserve. This is making post grant proceedings seem more like a kangaroo court or some hang ’em high court right out of a Clint Eastwood western.