Patent Office Issues New AIA Rules

The U.S. Patent and Trademark Office recently issued an updated set of rules affecting trial practice before the Patent Trial and Appeal Board. In large part, the rules, which went into effect on May 2, 2016, were implemented as proposed on August 20, 2015. In particular, they modify the prior rules governing inter partes review, post-grant review, the transitional program for covered business method patents, and derivation proceedings that implemented provisions of the America Invents Act providing for trials before the Office.

The updated rules affect several different aspects of PTAB trial practice including sanctions, claim construction standards, standards for length of submissions, and — perhaps most notably — the types of evidence usable by the patent owner.

The updated rules amend 37 CFR 42.11 to include a Rule 11-type certification for papers filed with the Board including a provision for sanctions for non-compliance, such as for lack of adequate pre-filing investigation.

The updated rules also change the standard for claim construction in certain cases, while leaving the standard unchanged in the majority of cases. Specifically, for most cases the PTAB will continue to use the same “broadest reasonable interpretation” standard employed by the Office during prosecution, under which petitioners can more easily achieve art-based invalidation due to the broader claim scope. However, in situations where the patent at issue will expire during the PTAB review and cannot be amended, the PTAB will instead use the narrower “Phillips-type” interpretation used by the district courts.

Further, the rules governing the length of submissions have been altered. Instead of imposing a page-based limit on submissions — i.e., petitions, patent owner preliminary responses, patent owner responses, and petitioner replies — the rules now impose a word-based limit. This change incentivizes inclusion of illustrations and diagrams, as these will not count toward the word limits.

Finally, the updated rules now permit patent owners to include testimonial evidence within their preliminary responses arguing against the institution of a review. Since the previous rules permitted petitioners challenging a patent to include such testimonial evidence in their initial petition, the ability of patent owners to respond with testimonial evidence of their own would appear to level the playing field, which many view as skewed in favor of petitioners in light of the estimated 70-75% invalidation rate of PTAB reviews thus far. However, in view of the infeasibility of cross-examining the patent owner’s declarant within the compressed three-month schedules afforded by the reviews, the updated rules contain a limitation that may negate much of the value of including testimonial evidence. Specifically, the updated rules clarify that “if a genuine issue of material fact is created by testimonial evidence, the issue will be resolved in favor of petitioner solely for institution purposes, so that petitioner will have an opportunity to cross-examine the declarant during the trial.” This limitation essentially imposes a summary judgment-like hurdle that the patent owner must overcome if it wishes to prevent institution of the review. Assuming that petitioners will usually be able to point to some factual dispute, the PTAB will likely proceed to institute reviews in most cases, regardless of whether the patent owners introduced testimonial evidence in their preliminary responses.