PTAB Administrative Trials: Where Are We Now?

By Stephen Kunin & W. Todd Baker
September 9, 2016

uspto-madison-mainWith passage of the America Invents Act (AIA) on September 16, 2011 Congress gave the USPTO a year to propose and implement new rules for Patent Trial and Appeal Board trials for covered business methods (CBM), inter partes review (IPR) and post-grant review proceedings (PGR). The PTAB created a Trial Guide and a set of final rules for these new proceedings largely modeled after the then-existing trial practice rules for interferences. Over the first four years of experience with these proceedings the USPTO made revisions to its Trial Guide and rules based on lessons learned and public comments. As expected the first couple of years were a learning experience for both the PTAB and those practicing before the PTAB. The PTAB was initially viewed as a patent “death squad” as a result of high institution rates and final written decisions holding many patent claims to be unpatentable. Institutions rates for IPR have decreased over time from 87% to 66%. Even IPR final written decisions over time have seemed to reach a steady of state of around 54% of trials resulting in a finding of all challenged claims to be unpatentable for electrical and computer patents and 35% for biotechnology and pharmaceutical patents. 90% of AIA petitions are for IPR, 9% for CBM and 1% for PGR.

Petitioners have learned, sometimes through “the school of hard knocks,” that to be successful in IPR not only did they have to find the best prior art to prove claims unpatentable under the long applied standard of the USPTO (a broadest reasonable claim construction standard applying a preponderance of the evidence burden of proof), but also that they should present their “case in chief” buttressed by technical expert declarations in the petition. Petitioners learned quickly that they would be more successful with challenges based on obviousness rather than relying principally on proof of anticipation. Also over time the PTAB became stricter in requiring petitioners to prove printed publication dates through expert testimony or other forms of corroboration.

Real party in interest challenges have been commonplace, but liberalization in joinder practice has served to temper the impact of not having filed a petition within the required one year of the start of prior litigation. The PTAB, however, has become more restrict in applying estoppel against challengers and refusals to merge IPR with other post-grant proceedings such as reexamination and reissue to reduce the opportunities for challengers to get “multiple bites at the apple” by the petitioners against the same patent. Nevertheless, it remains common for petitioners because of page or word limits to file multiple petitions against the same patents through selective claim attacks where the patent contains large numbers of claims and where the petitioner has multiple items of prior art patent and publications to apply under section 102 and 103.

The rules now permit patent owners to submit new testimonial evidence (e.g., expert declarations) with their preliminary responses. However, patent owners must still elect whether to telegraph their defense strategies or seek an early victory at this stage of the process. While successful motions to amend claims by the patent owner remain rare, patent owners have used ex parte reexamination and reissue to successfully amend claims more often than trying to convince the PTAB to grant their motions to amend or substitute claims in IPR. It has been difficult for patent owners to convince the PTAB that objective indicia of nonobvious are present to rebut the petitioners’ prima facie unpatentability case as all too often the required nexus burden is not met.

Recent Federal Circuit reversals of PTAB decisionshave sent a clear message to the PTAB that Administrative Procedure Act (APA) mandated processes to ensure due process is applied cannot be overlooked by the PTAB. The Federal Circuit has criticized the PTAB for not providing clear explanations of the rationales for its decisions; for changing theories in midstream to support its decisions; for not providing adequate procedural due process and for relying too heavily on dictionary definitions in claim construction. In such cases, where the patent owner can demonstrate that he or she was not given an adequate opportunity to present arguments or evidence the PTAB has been careful to ensure that APA safeguards have been put in place.

Covered business method patent challenges have been quite successful with application of the test enunciated by the Supreme Court in Alice Corp. Pty Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014). Few patent owners have been successful in arguing that the claimed invention is a technological invention when it merely employs conventional computer elements. Further the limitation of claimed inventions in the financial service industry has not deterred petitioners who have been successful in focusing on the petitioner’s accused infringing technology rather than whether the claims or supporting patent specification have affirmative financial service limitations. Even some of the early PGR challenges have been successful on the basis of lack of patent eligibility rather than reliance on patents and printed publications.

While the PTAB statistics demonstrate the profound effect that the AIA trials have had on issued patents, it seems to have the greatest impact on non-manufacturing patent assertion entities (PAE). With the increased tendency of district courts showing a willingness to grant stays of the concurrent litigation, the AIA trials have become an effective weapon against PAE. However, nevertheless, it is not surprising that with any dynamic system we have seen a settling process where institution rates have been dropping and the information provided by the PTAB in its publication of informational and precedential decisions has served to provide clarity to those practicing before the PTAB in administrative trials.

Finally, as more decisions of the Federal Circuit issue arising from AIA trial appeals even greater clarity will be forthcoming on the authorities of the PTAB and the limits on their authorities under the APA. Early Federal Circuit decisions were deferential to the PTAB on claim, construction, scope of review and Director’s delegations of authority, but in more recent times the Federal Circuit has been more willing to reverse the PTAB where their actions violated the due process requirements of the APA or were ultra vires.

The Author

Stephen Kunin

Stephen Kunin is a partner with Oblon, McClelland, Maier & Neustadt, L.L.P. Mr. Kunin serves on the Management Committee as General Counsel and co-chairs the firm’s Post-Grant Patent practice group, representing clients in post-grant patent proceedings at the United States Patent and Trademark Office (USPTO). He also serves as an expert witness and consultant on patent policy, practice and procedure. With more than three decades of experience within the USPTO, Mr. Kunin was responsible for promulgating many of the rules with which his clients must now comply, making him a highly sought-after patent consultant and authority on the office’s inner workings. For more information, or to contact Mr. Kunin, please visit his firm profile page .

Stephen Kunin

W. Todd Baker is a partner with Oblon, McClelland, Maier & Neustadt, L.L.P. Mr. Baker is Chair of the firm’s Patent Interferences practice group and a leader in the Post-Grant Patent practice group. With significant experience in both patent reexamination and interference cases, Mr. Baker is uniquely positioned to advise clients on post grant USPTO proceedings such as inter partes review (IPR) and covered business method (CBM) review proceedings, providing alternatives to traditional litigation-based patent validity challenges. Mr. Baker is a recognized leader in the IP community, having served on the Board of Directors of the American Intellectual Property Law Association (AIPLA). For more information, or to contact Mr. Baker, please visit his firm profile page.

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