Case Law and Policy Changes in PTAB Practice During 2019

Despite the possibility that the judges of the Patent Trial and Appeal Board (PTAB) may have been unconstitutionally appointed, as held recently by a Federal Circuit panel, it is hard to imagine the Federal Circuit (or the Supreme Court) throwing out nearly a decade of USPTO policies and PTAB jurisprudence relating to administrative patent trials under the 2011 America Invents Act (AIA). Stay tuned for a probable en banc rehearing of the Arthrex decision in 2020. That being said, a lot happened at the PTAB in 2019.

Shift in Burden of Persuasion on Amendments

Early in 2019, the PTAB designated as “precedential” an opinion in the Lectrosonics case explicitly adopting the practice called for by the Federal Circuit in the 2017 Aqua Products case of placing the responsibility on the petitioner who challenges a patent to also show that any amendments presented by the patent owner are also invalid.

This was followed by proposed formal rules in October 2019 codifying the Lectrosonics holding that the petitioner who initiates a patent challenge will not only have the burden of persuading the PTAB that a patent owner’s claims as issued are invalid but will also have the same burden with regard to claim amendments during the proceeding.  The USPTO should finalize this rule shortly.

At least one patent owner that had initially had its motion to amend denied has taken advantage of the Aqua Products decision. On remand from the Federal Circuit, the Patent Trial and Appeal Board (PTAB) has granted a motion to amend in a patent directed to methods of treatment using cabazitaxel.

Pilot Program on Amendment Guidance

The USPTO also appears to be taking proactive steps to help patent owners navigate the amendment process. On March 15, 2019, a pilot program notice was published for “motion to amend practice and procedures.” The pilot program provides patent owners with two options not previously available. First, a patent owner may choose to receive preliminary guidance from the Board on its motion to amend. Second, patent owner may choose to file a revised motion to amend after receiving petitioner’s opposition to the original motion to amend and/or after receiving the PTAB’s preliminary guidance (if requested). If a patent owner does not elect either of these options, the motion to amend practice is essentially unchanged from current practice. The notice sets forth the details of the pilot program, including motion to amend procedures that will be in effect for the duration of the pilot program.

PTAB Chief Judge Scott Boalick discussed during his presentation at the December PTAB Roundtable in Boston, there were 13 motions to amend filed by patent owners in pending AIA trials during FY 2019. Of the 13, ten signed up for the pilot program and almost all of them have also availed themselves of the preliminary guidance option.

It is not clear whether the pilot program will pay off for patent owners. In the first advice issued under the pilot program, the patent owner did avail itself of the pilot program and did receive preliminary feedback from a PTAB panel. Unfortunately for the patent owner, the advice from the PTAB was that the amended claims would still not pass muster due to obviousness, as noted in Mylan v. Sanofi-Aventis, IPR2018-01679 (Oct. 16, 2019, Paper 55).

Trial Practice Guide Update 

In addition to the shift in the burden of persuasion regarding amendments and the pilot program to assist patent owners, the USPTO made another major policy pronouncement in 2019: a second revision to the Trial Practice Guide – the procedural handbook for all administrative trials under the America Invents Act (AIA): covered business methods (CBR) review, inter partes review (IPR) and post grant review (PGR).

The TPG was first published in 2012 at the same time as the rules governing the AIA trials. A first update was issued in August 2018. The second update was published in July 2019.  (The USPTO also published a consolidated guide incorporating the original guidance and the two updates in November 2019.) The 2019 TPG update provides almost no surprises. It does, however, show how AIA proceedings have evolved since 2012 and provides some hints as to where the PTAB is going.

For example, the updated TPG acknowledges the PTAB’s abandonment of the much-criticized “broadest reasonable interpretation” standard for claim interpretation in favor of the Philip’s standard used in federal courts (ordinary or customary meaning). The update also notes the PTAB will give “appropriate weight” to claim constructions by other tribunals, suggesting that we should see fewer cases of divergent interpretations of what a claim (or claim element) means at PTAB when a federal district court has already issued a claim construction order in concurrent infringement litigation.

On discovery in AIA trials, the update acknowledges the PTAB practice that a motion for “additional discovery” (beyond the opportunity to cross examine the other party’s expert) will only be granted in IPRs if the motion meets the “interests of justice” standard, guided primarily by the factors set forth in 2013 Garmin v Cuozzo precedential decision]. In CBMs, the PTAB panels will be guided by similar factors under the “good cause” standard as set forth in the 2013 Bloomberg case [8]. The update specifically notes that a party moving for additional discovery will need to address five of the so-called Garmin factors, principally that the additional discovery is needed based on more than a possibility and mere allegation, unavailable by other means, clear and understandable and not overly burdensome.

“Live testimony” before the PTAB will probably remain elusive because the TPG update explains that “credibility of experts often turns less on demeanor and more on the plausibility of their theories.” However, the update does hint that PTAB panels may be more receptive to live testimony in derivative proceedings where the allegation is that the purported inventor misappropriated the work of another.  In such cases, the update notes that the demeanor of the witnesses may be more critical to assessing creditability. The update references the 2014 precedential decision in the K-40 Electronics case  for further guidance on the factors to be considered when considering whether live testimony is warranted.

The Precedential Opinion Panel

The Precedential Opinion Panel (POP), formed in September 2018, began rendering opinions in 2019. The POP is intended to provide two main functions: rehear matters in pending trials and appeals of exceptional importance; and assist the Director in determining whether a previously issued decision should be designated as precedential or informative.  Its decisions are binding authority on the PTAB. In 2019, the POP issued 3 decisions, designated 8 decisions as precedential, and designated another 13 decisions informative.

In the Proppant Express Investments case, the POP addressed discretionary joinder under §315(c). The POP held that (a) a petitioner may be joined to a proceeding in which it is already a named party, and (b) new issues may be added to an existing proceeding, irrespective of whether the petitioner is already a named party. The POP also advised that the one-year time bar under 35 USC §315(b) is one of several factors to consider when exercising its discretion.

In the GoPro v. 360Heroes  case, the POP addressed the one-year time bar under § 315(b). It concluded that § 315(b)’s language, “served with a complaint alleging infringement” is plain and unambiguous. Thus, the service of a pleading alleging patent infringement triggers the one-year time period for filing an IPR petition under 35 U.S.C. § 315(b), regardless of whether the serving party lacked standing to sue or the pleading was otherwise deficient.

Notably, six days after the POP issued the GoPro decision, it also designated as precedential the Cisco Systems v. Chrimar case . In that case, the PTAB held that that § 315(a)(1) bars institution of an inter partes review of a patent in which petitioner voluntarily dismisses its earlier civil action challenging the validity of that patent prior to filing the petition.

In the Hulu v. Sound View case , the POP addressed what is required for a petitioner to establish that an asserted reference qualifies as “printed publication” at the institution stage. The POP explained that the institution standard requires the petition identify with particularity, evidence sufficient to establish a reasonable likelihood that the reference was publicly accessible before the critical date of the challenged patent. That standard is higher than notice pleading, but lower than the preponderance standard.  Further, there is no presumption in favor of institution or in favor of finding a reference to be a printed publication. The POP also advised that it does not hold any particular indicia on the face of a reference to necessarily be sufficient – the indicia are simply considered as a part of the totality of the circumstances.

Exercising Discretion Not to Institute

In a May 2019 decision in Valve Corporation v. Electronic Scripting Products, Inc. made precedential in August 2019 , the PTAB addressed the issue of the PTAB’s discretion to not institute a trial under AIA § 314(a). Notwithstanding that petitioner had not previously challenged the patent, the Board, applying the General Plastic (precedential) factors, found the petitions were serial and repetitive, and thus denied institution. In doing so, the Board determined that the first General Plastic factor (“whether the same petitioner previously filed a petition directed to the same claims of the same patent”) applied to petitioner because petitioner joined a previously instituted IPR. The Board’s application of the General Plastic factors is not restricted to the factual scenario in which a single petitioner has filed multiple petitions.

The POP also designated a 2018 opinion in NHK Spring Co. Ltd. v. Intra-Plex Technologies addressing §§ 314(a) and 325(d) as precedential in May 2019. In exercising its discretion and denying institution, the Board noted that there was no intent to limit discretion under § 314(a), such that it is encompassed by § 325(d). It explained that exercising its discretion to deny the Petition under § 325(d) did not preclude it from considering additional factors that favor denying institution under § 314(a).

Appeals to the Federal Circuit

The Federal Circuit heard a steady stream of cases from the PTAB in 2019, as appeals of PTAB final written decisions seem to have become de rigueur. PTAB appeals are now the largest single component of the Federal Circuit docket, with over 600 appeals docketed in FY2019 – almost double the number of appeals that the Federal Circuit received from District Court patent decisions. In addition to more clarity from the Federal Circuit on PTAB constitutionality issue, look for the Court to decide how much deference (if any) it will give to the PTAB’s “precedential” opinions as they come up for review.

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