A new day at the PTAB?
USPTO Director Andrei Iancu has touted an era of change in post-issuance reviews. In this roundtable a group of experts weigh in on what this means for patent owners and petitioners alike
Over the almost eight years since it was created, the PTAB has become a vital part of the patent dispute landscape in the United States. But with a series of reforms recently applied and a growing collection of precedential opinions, petitioners and patent owners have much to consider as they plan their PTAB strategy.
To assess how these changes are affecting practice at the board we asked a group of specialists – including Finnegan’s Joshua Goldberg, Ken Adamo from the Law Office of Kenneth R Adamo, Brent Babcock from Womble Bond Dickinson and Skiermont Derby’s Sarah Spires – to offer their insight into whether director Andrei Iancu’s bold proclamation is proving correct.
Q: Tell us about your PTAB practice – are there any sectors that you focus on in particular, and who are your typical clients?
Joshua Goldberg (JG): As the leader of Finnegan’s PTAB practice, I work with clients of all sizes and across all technologies. I have personally represented petitioners and patent owners in more than 250 PTAB cases and in ensuing appeals to the Court of Appeals for the Federal Circuit. Many of my cases come in batches of five or more because they are triggered by large International Trade Commission (ITC) and district court litigations. Most relate to electrical and/or mechanical technologies, including the Internet, the Cloud, computers, consumer electronics, semiconductors, automotive, industrial machinery, financial services and gaming technologies. While I often represent large clients against NPEs, I also represent clients of all sizes against direct competitors.
Ken Adamo (KA): We have been practising at the PTAB since the beginning – in fact, we filed some of the very first inter partes reviews (numbers 78 and 79) for one of our clients. We typically represent sophisticated companies, both as petitioners and as patent owners, across most technology sectors, although most of our clients are in the computer, electrical and mechanical technology spaces. Many, though not all, of our PTAB clients are also involved in concurrent co-pending litigation/disputes in another forum, either the US ITC, US district court or a combination of venues. They expect us to provide a unified trial strategy that represents their interests consistently across all forums and to bring the knowledge and experience of experienced trial attorneys. We believe that a successful trial strategy requires an encyclopaedic knowledge and understanding of patent law, as well as the law governing PTAB trial practice and the PTAB’s rules, procedures and case law. Our knowledge and understanding are demonstrated by our successes as well as our PTAB treatise: The Trial Lawyer’s Guide to Post Grant Patent Proceedings and Courtroom Compendium, published by Lexis Nexis.
Brent Babcock (BB): Since joining Womble Bond Dickinson in late 2018, my practice has broadened to encompass all aspects of PTAB work. Historically, I focused my board practice on patent interferences and then, during the America Invents Act transition, I expanded my practice to create a formal PTAB trials practice group, personally handling and arguing dozens of inter partes reviews, post-grant reviews and covered-business methods. Those PTAB cases also led to numerous Federal Circuit appeals, most of which I handled and argued. Now at Womble Bond Dickinson, I continue to handle those same kinds of inter partes reviews before the PTAB. However, in the past year-and-a-half, I have been handling more appeals to the PTAB from ex parte prosecutions and ex parte re-examinations. Many of the PTAB’s administrative patent judges handle both ex parte cases and inter partes reviews. Thus, I am convinced that administrative patent judges appreciate the same level of advocacy and technical analyses in traditional appeals, as well as the newer America Invents Act trials. My clients are in virtually all sectors of technology, including semiconductor fabrication, biotechnology, mechanical/medical devices and electrical/electronic systems.
Sarah Spires (SS): I have been involved in PTAB work since 2013 – shortly after the America Invents Act came into effect – and represent clients in a variety of technological fields. My practice is fairly evenly split between patent owners and petitioners, and I do a fair amount of consulting regarding PTAB practice as well. More than half of my PTAB practice involves pharmaceutical patents, but I also spend a good deal of time working on inter partes reviews within a wider variety of technologies – from telecoms and natural language processing to self-driving car technology. My clients include pharmaceutical companies, hedge funds, telecoms companies, research institutions and a variety of other patent holders and challengers.
Q: In 2019 there was a marked decrease in new filings at the PTAB – how has that affected your practice? Do you believe that the fall is part of a longer-term trend?
KA: We have not observed a marked decrease in our own new PTAB filings but this could be due to the type of clients that we represent and the kinds of dispute they are facing. Generally, it is true that new filings at the PTAB have fallen. This is likely driven, at least in part, by the PTAB’s own success. Certain would-be plaintiffs may be holding back on initiating new patent infringement litigation/investigations amid the risk that defendants may challenge those patents at the PTAB. It is also possible that filings are down because the PTAB has been more critical of follow-on or multiple petition filings over the past two years. It is too early to tell whether the current level of PTAB filings is becoming the new normal. However, the state of PTAB case law is such that new developments, both at the PTAB and from the Federal Circuit/US Supreme Court, are likely to have a direct effect on the quantity of future new filings.
BB: I am handling fewer America Invents Act trials this year than I have handled previously. But for my practice, the uptick in ex parte appeal work has helped to make up the difference. The PTAB decline in filings is attributable to many factors, both extrinsic to the USPTO and intrinsic. Notably, district court patent litigation is generally the ‘dog’, while follow-on PTAB petition filings are the ‘tail’. So the downturn in patent litigation over the past several years has resulted in an expected drop in PTAB petitions (with usually around a nine-month lag). In addition, a number of important court decisions, such as SAS Institute v Iancu, have increased the risks of filing a PTAB petition. Further, with Director Iancu leading the charge, many changes at the PTAB have caused petitioners to evaluate the risks of filing a PTAB petition more carefully. Such changes include: adopting a narrower patent claim construction standard that matches the one used in the district courts; expanding the patent owner’s ability to amend its patent claims, making it easier for a patent owner to save its patent with some (albeit narrower) claims; and adopting guidelines to reduce the number of multiple petitions challenging the same patent. While patent litigation remains the principal driver for PTAB patent challenges, the PTAB continues to provide a forum to dispose of many cases more efficiently and cost-effectively than in a district court proceeding. So we should fully expect to see the PTAB filings levelling off rather than continuing to decline.
SS: Despite the decrease in new PTAB filings in 2019, my firm had the largest increase in PTAB cases of any firm that year. So the decrease in PTAB filings has not yet affected my practice. However, I do believe that the decrease is part of a longer-term trend – not one reflecting fewer patents being challenged at the PTAB, but instead one reflecting the PTAB’s recent discouragement of multiple petitions against the same patent. In July 2019 the PTAB updated its practice guide to strongly discourage petitioners from filing multiple petitions against the same patent. However, even before this, we had been routinely citing PTAB cases faulting petitioners for filing multiple petitions and particularly for failing to rank petitions so the PTAB could decide which to discretionarily deny. In other words, the change had been a long time coming (see ScentAir Techs, Inc v Prolitec, Inc, IPR2013-00179, Paper 18 at 2 (PTAB 23 August 2013);“To avoid a determination that a requested ground of review is redundant of another requested ground, a petitioner must articulate a meaningful distinction in terms of relative strengths and weaknesses with respect to application of the prior art reference disclosures to one or more claim limitations”).
JG: Unlike many firms, which only handle PTAB matters with related litigation and/or for a few large clients, Finnegan maintains a very diversified PTAB practice spread across scores of clients. As a result, the drop in new filings at the PTAB in 2019 had no significant impact on our practice. I believe that much of the industry-wide decrease in new filings at the PTAB in 2019 can be attributed to the fall in new patent litigations in 2018 (district court suits fell 10% from 2017 to 2018), which resulted in fewer inter partes reviews in 2019 challenging patents asserted in litigations in 2018. In addition, at the margins, the board’s more frequent discretionary denials of institution likely led to more litigation defendants filing joint petitions instead of serial petitions or not filing at all, further reducing the overall number. That said, at this point, I suspect we are at or near a steady state. But we could see another step down if the board continues to increase the frequency at which it is using its discretion to deny institution.
Q: What is your top tip to a petitioner considering bringing an inter partes review and what is your best advice to a patent owner that has seen its intellectual property challenged?
BB: For both petitioners and patent owners, my number one piece of advice can be summarised in one word: focus. Lawyers are taught to spot issues in every scenario that they encounter – indeed, in law school, students are rewarded for spotting as many issues as possible. But in real-world practice, lawyers often have difficulty selecting which issues to pursue and which to jettison. Compounding this difficulty is their typically risk-averse nature, making them reluctant to discard any argument for fear that taking anything off the table could someday be seen by someone as a mistake. Accordingly, lawyers tend to take a shotgun approach to their arguments before the PTAB, whereas the board almost always prefers a more precise rifle-shot approach. Lawyers and their clients, in careful consultation with each other, need to objectively evaluate the strengths and weaknesses of every argument. A weak alternative argument will often be probed by the board and a feeble defence by counsel can lead to a serious loss of credibility, jeopardising the stronger principal argument. The board does not like a so-called ‘spaghetti on the wall’ approach, with counsel presenting myriad interwoven arguments, effectively asking administrative patent judges: “Which argument do you like the best?” The board’s response is generally something like: “It’s your case, you know the arguments better than we do, so you tell us your best argument, and we’ll tell you if we agree.” In that same vein, the board has counselled practitioners to pick their one or two best arguments and go with those. If your best argument does not win, then your weaker arguments would not have won either.
SS: My best tip to a petitioner is to spend the time to get the petition right. I see so many petitions that seem like they were rushed, but in light of General Plastic, you likely only get one chance to bring your petition, so you need to put in the effort before your filing deadline. Also, do not ignore motivation to combine. More often than not, it seems like petitioners spend all their time finding prior art that discloses every claim element but leave motivation to combine as an afterthought. But that afterthought is frequently the cause of institution denials. For patent owners, my best advice is to keep up with and review cases in which institution was denied, and then sit with the petition a while, in view of these cases. The more you review the petition, the more errors and omissions will likely pop out at you. Also, hold the petitioner to its burden of proving motivation to combine. Many petitioners make assumptions with respect to motivation to combine that lack support if tested. Finally, do not ignore the importance of expert depositions. Sometimes the petitioner’s expert will give you much-needed fodder for your oppositions.
JG: For a petitioner considering bringing an inter partes review, try to move quickly but do not lose sight of the details. With institution rates trending downward towards 50%, it is important to remove as many potential reasons for denial as possible. Moving quickly makes a discretionary denial for being the second or third filer less likely but winning at institution is not enough. Petitioners need to pre-emptively address every potential substantive weakness that they can in their petitions if they want to maximise their overall chances of success at both institution and final written decision.
For a patent owner that has seen its intellectual property challenged, keep the ultimate goal in mind and consider the options. If only a handful of claims matter and there are good arguments for those, consider disclaiming the others to avoid institution. Or leave the good arguments out of the preliminary response to increase the chances of institution and an ultimate win at final written decision that will trigger estoppel. If the case is instituted, consider whether and how to amend. Reissue may yield more options.
KA: Petitioners must present a case that is technologically correct, properly supported with expert and documentary evidence, and easy to follow and understand. Over the years, we have seen cases that presented a strong challenge ultimately fail because the explanation was either too complicated or, more often, too conclusory. At bottom, petitioners must remember that the petition is their case in chief; they should not expect to have the opportunity to supplement the record with new issues and/or more evidence that is needed to establish a prima facie case later in the proceeding.
Patent owners should evaluate the challenge and prepare a solid strategy for what arguments to make in the preliminary phase and what arguments to repeat or save for the trial phase. Sometimes a case is best fought on procedural grounds, rather than the substantive merits. But, where the merits are in focus, patent owners should present a tight case making the strongest arguments that span the greatest number of claims. Put another way, patent owners are unlikely to benefit from making a large number of arguments; they are likely better served by presenting only arguments that are well focused and fully developed with supporting evidence and legal argument.
Q: Post-grant reviews remain relatively under-utilised – to what extent do you think that will remain the case?
SS: I believe that post-grant reviews will continue to maintain their significant distance behind inter partes review in popularity. While more and more patents being challenged will be post-America Invents Act patents and thus subject to post-grant reviews, there are practical challenges to bringing post-grant reviews that I believe will continue to dampen their use. Specifically, I believe that the requirement for a post-grant review to be brought within nine months of patent issuance will, as a practical matter, continue to serve as a significant barrier to bringing such reviews. While some companies have the resources to monitor patents being issued by their competitors – pharmaceutical companies engaged in or anticipating abbreviated new drug application (ANDA) litigation being a prime candidate for this – many companies simply do not have the resources or desire to spend their resources monitoring the issuance of patents that may or may not be asserted against them in the future, and then challenging these patents before suit is even brought. In addition, the broader range of grounds available for challenging patentability in post-grant reviews makes the estoppel that could arise from a failed challenge more of a barrier to bringing the challenge.
KA: Post-grant reviews can be used to challenge an America Invents Act patent on any ground of unpatentability, including Sections 101, 102, 103 and 112. Unlike inter partes reviews, post-grant reviews are not limited to anticipation and obviousness based on patents and printed publications. The breadth of potential grounds of unpatentability – a feature that marks why post-grant reviews can be highly useful tools – is also the likely reason why they are under-utilised. A post-grant review that is instituted and results in a final written decision carries with it strong estoppel implications; the petitioner, a real party in interest or privy of the petitioner will be estopped from presenting an invalidity defence or further challenging any claim previously challenged on any ground that the petitioner raised or reasonably could have raised. In other words, an unsuccessful petitioner will be left with a limited invalidity defence, if any, in another forum. The risk of broad estoppel is likely to remain a consideration going forward. That said, post-grant reviews can be highly useful in the right circumstances.
JG: One reason that post-grant reviews are infrequently used is that only America Invents Act patents are eligible for them. But post-grant reviews will likely remain infrequently used even when more patents are America Invents Act patents for two reasons. First, the deadline for filing post-grant reviews comes too fast. The vast majority of PTAB filings are filed by defendants in litigations and most litigations are not filed early enough to allow the defendant sufficient time before nine months from the patent’s issuance to file a post-grant review. Second, even if the defendant could file the post-grant review quickly enough, it would be reluctant to do so because of the estoppel risk. Unlike for inter partes reviews, the estoppel for post-grant reviews can preclude the defendant from raising any invalidity grounds in district court. This risk, combined with the limited time available to file a post-grant review, generally makes them unappealing to most potential petitioners.
BB: The number of post-America Invents Acts (ie, first-to-file) patents eligible for post-grant reviews is certainly increasing every week, and more and more of these patents are being asserted in district court litigation. So these statistics alone should help to increase the percentage of post-grant review filings relative to inter partes reviews filings. However, the significantly larger scope of potential estoppel effects for post-grant reviews remains a key deterrent to filing a post-grant review petition rather than an inter partes review petition. When the best prior art consists of printed publications, which is often the case, then an inter partes review provides a more limited proceeding without the more expansive estoppel risks of a post-grant review. Of course, if the timing of the petition filing is critical for a newly issued patent (eg, attempting to obtain a stay of co-pending litigation), then filing a post-grant review during the exclusive nine-month window may be a preferable strategy, even factoring in the more expansive estoppel considerations. In the foreseeable future, however, it is likely that the more limited inter partes reviews proceedings will continue to be preferred to post-grant review proceedings.
Q: How has the Supreme Court’s decision in SAS Institute affected PTAB strategy?
JG: Patent owners are trying to use SAS to their advantage, arguing that petitions must be denied in their entireties because only some of the claims do not warrant institution. Recognising that everything or nothing in a petition must now be instituted under the Supreme Court’s decision in SAS, petitioners are frequently separating their arguments into multiple petitions to protect the stronger arguments from the weaker arguments. For example, if a petitioner is arguing that a claim is indefinite in district court, the petitioner might address that claim in a separate petition before the PTAB in case the PTAB decides that it cannot institute on the claim because of the indefiniteness. In this eventuality, the PTAB would still be able to institute the petition with the stronger arguments.
BB: The Supreme Court’s decision in SAS has made petitioners more wary about filing an America Invents Act challenge. Before this landmark case, petitioners were generally comfortable including several grounds and many patent claims in their petitions. In the event that the board partially denied the petition on certain grounds and/or claims, in accordance with prevailing authority, no estoppel would attach to those denied grounds or claims because they were not part of the PTAB trial. Post-SAS, however, if the PTAB grants the petition, then all grounds and claims will be part of the trial, and thus estoppel will attach to everything in the petition. This heightened estoppel risk has caused practitioners and their clients to weigh the pros and cons of filing a PTAB petition more carefully. In addition, because the board now takes an all-or-nothing approach to the institution decision, there is an increased risk that it might invoke its discretion to deny the petition under Sections 314(a) and/or 325(d) because, while some grounds/claims may support institution, too many may not. In that event, the panel may determine that the considerable expenditure of board resources to conduct a trial on all of the petition’s grounds/claims is not justified.
KA: The court’s SAS decision, as well as the USPTO’s guidance on how it will apply SAS, has resulted in an all-or-nothing approach. The PTAB will either institute a trial on all challenged claims and all asserted grounds, or none. SAS-based denials highlight the need for petitioners to put their best foot forward. As SAS did away with the exception to estoppel, established by the Federal Circuit in Shaw, petitioners no longer need to load a petition with multiple, sometimes unnecessary, grounds simply in an effort to escape estoppel. Instead, they should focus on identifying the best grounds and take the time and space to fully develop that challenge. It has also become apparent that petitioners should concentrate on what claims truly need to be challenged. In other words, there is often no need to challenge every claim in a patent, especially where certain claims present no infringement risk. Where the number of claims that do need to be challenged is relatively large, petitioners should consider splitting the overall challenge across multiple parallel petitions to provide for the additional words needed to fully develop the challenge.
SS: There is no doubt that SAS has had a dramatic impact on PTAB strategy. Previously, petitioners rarely challenged some claims of a patent but not others, since there was little to lose in taking a shot at all claims. The worst that would happen is that institution would be denied as to the weaker challenges brought. Now, petitioners have a worst-case scenario of winning institution based on their stronger challenges and bringing their weaker challenges along for a ride that may well result in a final written decision favouring the patent owner on those weaker challenges. Even worse, this final written decision would come with estoppel that may hinder any subsequent challenge as to those claims in district court litigation.
However, I believe that the even greater effect of SAS has been in the PTAB’s implementation of SAS through a policy that requires granting or denying institution as to all grounds. This has largely eliminated the previous strategy of bringing numerous grounds against the same claims, for fear that the PTAB will deny institution on a strong ground to avoid having to also render a decision on numerous weak grounds. Petitioners now must pick their battles.
Q: To what extent have the rules and precedential decisions concerning serial petitions helped to address patent owners’ complaints over facing multiple reviews of the same patent?
BB: The issue of so-called ‘serial petitions’ is complex and the PTAB has found it difficult to reconcile the diametrically opposed views of petitioners and patent owners – understandably so. Petitioners would generally like multiple bites at the same apple, while patent owners generally believe that a single bite by the first petitioner is sufficient. While the board has set out a series of non-exhaustive factors for each panel to consider when facing a second petition directed to the same patent, at the end of the day, it is up to the panel to weigh the factors and employ its own discretion to determine how to proceed. This somewhat amorphous approach to institution decisions has led to considerable uncertainty for practitioners and clients alike. Certainly, some situations are reasonably straightforward, such as when the same petitioner challenges the same patent a second time with essentially the same art and arguments. But many situations are not so simple, and they often do not fall neatly into the categories contemplated by the board. For example, when one litigation co-defendant quickly files an inter partes review, which the board denies on the merits, should that denial inure to the detriment of other similarly situated co-defendants? Today’s answer is “probably yes” (see Valve Corp v Elec Scripting Prod, Inc, Case IPR2019-00062 (PTAB 2 April 2019) (Paper 11)). Unfortunately, the board’s (sometimes implicit) assumptions about purported road maps and delayed timing appear to ignore many practice realities, including – importantly – the quality of the petition and its presentation of the petitioner’s arguments and evidence. Skilled advocacy is a critical component of PTAB success, and the PTAB appears to consider all PTAB counsel and their experts to be fungible commodities. That perception is largely inaccurate and should be corrected.
JG: Multiple reviews of a single patent are still possible but the rules and precedential decisions concerning serial petitions have significantly reduced the number of reviews being instituted for each patent, sometimes to zero. Some patent owners may still dislike the fact that they must rely on the PTAB’s discretion to prevent multiple reviews, but a change in the law would likely be required to address that concern. I represent both petitioners and patent owners, and recently it is the petitioners that seem to be more concerned about multiple petition issues. They often question why they should be prevented from filing their own inter partes review petition within one year of service of a complaint just because another defendant chooses to move more quickly, possibly because the other defendant was sued earlier.
SS: I believe that the rules and precedential decisions concerning serial petitions have gone a long way towards addressing patent owners’ complaints over facing multiple reviews of the same patent at the PTAB. The various PTAB panels have been applying the General Plastic factors fairly consistently and, at least in the more egregious cases, have been denying the institution of serial petitions. The challenges that remain are, first, when because of SAS, petitioners do not file against all claims of a patent and then that or another petitioner files another petition that includes the unchallenged claims. In those instances, the later petition is often allowed to proceed. The second challenge is the fact that even after a patent owner has received a final written decision in its favour, the district courts have generally been applying estoppel very loosely. Consequently, the patent owner is still having to defend against a validity challenge in the district court similar to the one that it successfully defeated in the PTAB. This is particularly problematic since, in the PTAB, the patent owner will have identified the weaknesses in the petitioner’s argument, which the petitioner can then shore up for its presentation of invalidity before the district court.
KA: The PTAB has been more critical of serial or multiple petition filings over the past two years. The new rules and decisions under 35 USC Sections 314(a) and 325(d) do not eliminate serial or multiple petitions; in our view, that was never the point. Instead, they stress that the PTAB has discretion on how to proceed when faced with serial or multiple petitions. Empirical evidence shows that, first, such filings have dropped and, second, the PTAB has increased the use of its discretion to deny multiple institutions in appropriate situations. Presumably, these trends have addressed concerns expressed by some patent owners. However, there are some situations where a patent owner asserts a large number of claims in a district court litigation, for example, where the rules and decisions expressly acknowledge that serial or multiple petitions may be appropriate. In these instances, the USPTO is attempting to strike a balance between undue burden on the patent owners, on the one hand, and the public’s interest in having legitimate patent challenges heard, on the other.
Q: How has the formation of the Precedential Opinion Panel and subsequent uptick in precedential opinions helped guide practice at the PTAB?
JG: Parties may disagree with certain decisions but the decisions are generally being followed by individual panels, allowing parties to better anticipate how the board will react to different arguments. For example, given the Hulu decision, parties now have much better insight as to what is required to establish that non-patent literature qualifies as prior art at institution. That said, for many substantive issues, the Court of Appeals for the Federal Circuit still has the last word notwithstanding the Supreme Court’s decision in Thryv, Inc v Click-To-Call Technologies.
SS: In my practice, the greatest benefit of the formation of the Precedential Opinion Panel and subsequent uptick in precedential opinions has been the comfort in familiarity that it has given our clients. It has been difficult to explain to clients that are used to the precedential value of case law that, in making predictions about likely outcomes, there is no binding authority to keep one PTAB panel from coming to a conclusion diametrically opposed to the one upon which we are relying. The fact that now, at least in some instances, we can advise clients about an outcome with a reasonable degree of certainty that the test on which we are relying will in fact be applied by our panel is a comforting one.
KA: The Precedential Opinion Panel is a strong, effective tool for the PTAB to eliminate splits among various panels – the presiding panel can issue decisions reflecting the PTAB’s current policy positions. However, decisions from the Precedential Opinion Panel remain subject to Federal Circuit and US Supreme Court review, as with any other PTAB decision. As most recently demonstrated in the Federal Circuit’s decision in Facebook, Inc v Windy City Innovations, LLC, the panel’s decisions on statutory interpretation are given no deference.
BB: The PTAB’s increase in Precedential Opinion Panel decisions and precedential opinions has been a concerted effort by the board to help reduce unpredictability in PTAB proceedings. There can be little legitimate debate that the manner in which the board conducts a trial, both substantively and procedurally, should not be panel-dependent. Practitioners and their clients strive to understand the PTAB’s rules and procedures, and they have (understandably) expressed frustration when two separate three-administrative patent judge panels have decided similar issues differently because prior panel decisions are not binding. Accordingly, increasing panel-binding authority (through both Precedential Opinion Panel decisions and precedential opinions) has at least helped the appearance of fairness and predictability in the proceedings. Whether those binding decisions will ultimately have the desired practical effect remains to be seen.
Q: To what extent have the updated claim amendment procedures helped patent owners in the inter partes review process?
SS: In my practice, patent owners are sometimes considering, but still not using, the updated claim amendment procedures in the inter partes review process. More often than not, a patent is involved in an inter partes review because it is also involved in district court litigation. Often, patent owners do not commit to the expenses of district court patent litigation until enough damages have accrued that they believe the risk versus reward of subjecting themselves to the pains of the legal system is likely to be worth it. But if the patent owner amends its claims in the inter partes review process, it will likely have to contend with the accused infringer’s claims of intervening rights and may well lose any entitlement to pre-amendment damages. In some cases, the future damages calculation may make shoring up the patent’s validity through amendment worth the loss of past damages. However, in my experience, patent owners typically come to the conclusion that the loss of past damages is too great a price to pay to lessen the risk of invalidation through amendment.
KA: In November 2018 the PTAB elected to change the prevailing claim construction standard from the broadest reasonable interpretation to the same standard used by district courts: the Phillips claim construction standard. In addition, the new rules allow parties to submit Markman orders from other forums for the PTAB’s consideration. The effect should be that the PTAB’s application of the same claim construction standard will result in more consistent constructions among different proceedings and bring more consistency to the claim amendment process. This consistency may provide more predictability for patent owners in that decisions regarding two legal issues – infringement and patentability – will now, presumably, be resolved under the same claim constructions. It may also result in the PTAB being more likely to adopt a claim construction from a district court and vice versa. This may be helpful in situations where the patent owner and/or petitioner secured a favourable construction, for infringement, validity or both, in a district court and seeks the PTAB to apply it as well. Practically, while the application of the same claim construction is likely to create consistency, it is unclear how, if at all, it will affect the claim amendment process. The PTAB’s two-tiered amendment pilot programme offers multiple ways for patent owners to secure claim amendment. Some preliminary statistics indicate, however, that few patent owners are taking advantage of the pilot. Nevertheless, the fact that the PTAB has introduced additional amendment options makes clear that it is attempting to bring more transparency and address stakeholder concerns about the process.
BB: It is still too early to tell whether the PTAB’s revised procedures for motions to amend will be effective in helping patent owners save some patent claims (albeit narrower ones) through the trial process. The statistics for 2019 reveal that the PTAB’s revised procedures were effective in incentivising patent owners to file more motions to amend. However, because it takes roughly nine months for the board to decide those motions, the all-important number of motions to amend that will be granted remains a statistic-in-progress. By the end of 2020, we should have a better sense of whether the revised procedures have provided any real help to practitioners. While the statutory one-year deadline is an important board focus, the compressed trial schedule for motions to amend is challenging to say the least. It is likely that the additional expense for motions to amend, as well the board’s new ‘rocket-docket’ approach, will remain a significant impediment to patent owners filing such motions, at least until the outcomes of the motions filed in 2019 are statistically analysed this year. And not to overlook the big picture, because of the intervening rights issues presented by amended claims, and the alternative ex parte mechanisms usually available to patent owners for amending their patent’s claims, motions to amend will likely never become a favoured or common practice for patent owners.
JG: It is still in the early days for the updated claim amendment procedures. They are generally helpful to patent owners because they provide more opportunities for amendments and can significantly increase the cost to petitioners of pursuing inter partes review by necessitating multiple rounds of prior art searching and briefing. But the procedures are thus far having no significant impact on the overall inter partes review process because most patent owners are not interested in amending their claims due to parallel litigation. In addition, for patent owners that want to amend their claims, other procedures may still be more desirable. For example, reissues may be pursued before or even after final written decisions in certain circumstances and allow for more significant amendments in an ex parte process.
Q: When you consider all of the changes in full do you agree with Iancu’s assertion that it is “a new day at the PTAB”?
JG: I agree that it is “a new day at the PTAB”. I represent both petitioners and patent owners, so I will not comment on whether it is a good day or a bad day, but the PTAB has definitely become much less scary to patent owners over the past few years. Historically, it was reasonable for petitioners to assume that they would win and patent owners to assume that they would lose. That is no longer the case. With the changes in the claim construction standard, the amendment procedures and, most significantly, the advent of discretionary denials under Section 314, the complexity of PTAB proceedings has increased exponentially. Both petitioners and patent owners need to account for all of these changes and others that are happening all the time if they want to maximise their chances of success. It is no longer good enough to simply pick up a sample paper from a few years ago and modify it to match the substance of a new case.
KA: We believe that Iancu has demonstrated his focus on transparency and improving PTAB trial practice. The PTAB’s new rules and decisions provide more clarity and at least some guidance on how the PTAB is to arrive at a decision (eg, factors that it considers when deciding whether to exercise its discretion when reviewing follow-on petitions). It is unlikely that these rules and decisions are intended to be the ultimate interpretation of the PTAB’s authority. Instead, they are the PTAB’s attempt to provide guidance to practitioners where there is none in the statute or the Congressional record. When additional guidance is provided by the Federal Circuit or even the US Supreme Court, the PTAB has shown itself to be ready to implement whatever changes are necessary.
BB: I have referred to the slew of recent changes as evidence of a pendulum swing at the PTAB. Whether that pendulum swing-back is a new day, or perhaps more aptly a change in the weather, is debatable. The early days of the PTAB saw very high patent kill rates, which led many stakeholders and observers to view it as robustly anti-patent. Of course, such widespread negative sentiment (regardless of its truth) was quite problematic for the USPTO, which is (obviously) in the patent business. The PTAB’s recent changes have appeased many of the critics, which is a good development for the USPTO. Further, while the perception of a less patent-hostile PTAB is important, proof of the PTAB’s patent friendliness is largely in the statistics. From that perspective, the kill rates have fallen measurably, although they remain in the 35% to 40% range. So while the forecast for patent owners has markedly improved, that does not mean that a summer of patent love has arrived.
SS: I suppose whether I agree that it is a new day at the PTAB depends on how different I expect one day to be from the next. I do believe that the PTAB is not the patent death squad that it was considered in its infancy, when the weakest issued patents were all subjected to inter partes review in large swathes. I have seen the PTAB hold petitioners to their burdens of proof in the petitions and deny institution when the patent owner is able to point out the deficiencies in the petitioner’s arguments. However, I have still seen a number of cases that seem a little results-driven, regardless of what I believe to be a failure of proof by the petitioner. For this reason, I believe that it remains to be seen whether the changes at the PTAB will continue to trickle down to the outcomes of the final written decisions.
Q: How might PTAB practice further evolve in the short to medium term?
BB: The PTAB rules regarding discretionary denials (Sections 314(a) and 325(d)) remain key areas of uncertainty in practice before the board. While the PTAB has recently provided more precedential guidance in this regard, the ability for a given three-administrative patent judge panel to invoke (or not invoke) its discretion remains unpredictable. Given the front-loaded nature of a PTAB proceeding (including the significant fees and costs associated with preparing a detailed substantive petition and supporting expert declaration), the prospect of having a panel deny the petition on a discretionary basis – with no right to appeal that denial – is a daunting one for most petitioners, so further developments in this area of PTAB practice would be most welcome. In addition, the practical scope of inter partes review/post-grant review estoppel remains unclear in several respects. Now that we are nearing a decade of PTAB practice, we should expect to see more district court and Federal Circuit decisions that continue to develop the law governing the estoppel effects following a PTAB proceeding. Further, following the board’s revisions to the procedures for filing motions to amend in 2019, we saw a marked increase in the number of such motions filed by patent owners and we should be seeing the decisions on those motions this year. It will be interesting to evaluate whether the PTAB’s new procedures have resulted in more patent owners successfully obtaining amended claims. If not, then we should expect the PTAB to continue to develop new procedures in an effort to improve the success rate.
SS: Petitioners can get creative, so I am sure that they will find new and creative ways to use the PTAB to their advantage. However, the PTAB has done a good job lately at responding to inequities in the process, as evidenced by its July 2019 Practice Guide Update, as well as its increase in precedential and informative decisions. Under the current leadership, I envision these trends continuing such that PTAB proceedings will continue to become more balanced between petitioners and patent owners. Most importantly, I believe that as the Precedential Opinion Panel continues to designate more opinions as precedential or informative, the PTAB process will become more predictable and as a result become a more comfortable and familiar – and for patent owners, less scary – option for all parties. I do not think that the PTAB is likely to achieve Congress’s goal of providing a cheaper, faster alternative to district court litigation any time soon, but how often are any of Congress’s goals actually realised?
KA: There are a number of cases currently before the Federal Circuit and the US Supreme Court that have the potential to redefine some key features of PTAB trial practice. There have also been multiple attempts to amend the America Invents Act, specifically the provisions governing the PTAB, to reflect various lobbying efforts. These attempts have thus far been unsuccessful. At least in the short and medium term, it is appellate review that is most likely to shape PTAB trial practice.
JG: In the short term, the PTAB is going 100% virtual because of covid-19. This will not be that big a change because many hearings already included remote judges. The medium term will likely be dictated by the next director. As we have seen in recent years, the director has significant authority to chart the course of the PTAB, which could grow even further as a result of the Supreme Court’s decision in Thryv, Inc v Click-To-Call Technologies and the Federal Circuit’s decision in Arthrex. While the next director might share Iancu’s views on how the PTAB should wield its discretion under Section 314, they might have a completely different take. It is entirely possible that the PTAB could stop issuing discretionary institution denials under a new director or that it could issue even more. I look forward to navigating the waters.