August 19, 2015

USPTO Announces Second Set of IPR Changes

By Matthew L. Cutler, Principal

Today, USPTO Director, Michelle Lee, explained the anticipated, second set of proposed changes to be made to IPR proceedings as inter partes review approaches its 3rd birthday. The first set of changes was discussed HERE. We set forth below a brief summary of the changes that have arrived. The proposed rule package will now be subject to a round of comments (due before October 19, 2015).

  1. In general, the Board shied away from adopting bright-line rules, and instead focused on the need for considering issues on a case-by-case basis.  Highlights of the new regulations include:

 

  • The Board will continue to apply the broadest reasonable interpretation standard for claim construction of unexpired claims, rather than the Phillips standard;
  • However, the Board will apply Phillips-type claim construction to claims what will expire before a final written decision;
  • Concerning motions to amend, the Office confirmed that the patent owner must show patentability of substitute claims over the prior art of record (including art provided in light of the patent owner’s duty of candor);
  • Patent Owners will be allowed to file testimonial evidence with its preliminary response, but there will be no depositions until trial is instituted, and, for purposes of deciding whether to institute trial, factual disputes will be resolved in favor of petitioner;
  • Regarding additional discovery, the Board will continue to apply the Garmin factors, subject to additional guidance reflected at http://www.uspto.gov/blog/aia/entry/message_from_administrative_patent_judges. The Board’s discussion of this issue implicitly forecasts more flexibility from the Board in applying these factors going forward;
  • Concerning the specific issue of additional discovery geared towards Patent Owner’s attempt to develop evidence concerning secondary considerations (e.g., regarding sales of Petitioner’s product), the Board maintains that the Garmin factors are applicable, but did give the Patent Owners the concession that an absolute showing of nexus is not required to obtain additional discovery;
  • Patent Owners will be allowed to raise real-party-in-interest or privity challenges at any point in a proceedings;
  • The Board reiterated its discretion to stay, transfer, consolidated, or terminate multiple proceedings involving the same claims;
  • Despite some requests for more lax adherence to the one-year time limit for IPRs, the “Office will continue to strive” to meet that deadline;
  • Concerning live testimony at hearings, the Board will continue its practice of considering requests for oral testimony on a case-by-case basis;
  • The Board also signaled that it will provide more guidance on whether parties are limited to certain issues at oral argument, that it plans to upgrade its technology so that hearings can be held in regional offices, and will allow exchange of demonstratives 7 days before a hearing; however, the Board declined to relax the rules concerning content of demonstratives;
  • The Board will be switching to word-count limits, rather than page count limits, for the petition, preliminary response, patent owner response, and petitioner’s reply brief (14,000 words instead of 60 pages for petition, patent owner preliminary response, and patent owner response, and 5,600 words instead of 25 pages for replies). As a result, the Board will no longer review claim charts in petitions for argument. For all other briefing, a page limitation will be maintained;
  • The Board states that it is working to upgrade its filing system to allow easier access to docket information;
  • The Board intends to include a Rule 11-type certification requirement for all filed papers
  • With the final version of these proposed rules, the Office will also issue an updated Office Patent Trial Practice Guide.

Lastly, we are very focused on the statistics that underlie IPR proceedings. In introducing the above changes, Director Lee explained some of the reasons why the Office believes IPR practice has been successful to date. That may be the case, but we were surprised by Director Lee’s citation to statistics regarding the results of IPR proceedings. Specifically, the Director stated that only “12 percent of total claims available to be challenged (4,496 of 38,462) were determined by the PTAB to be unpatentable in a final written decision.” Statistics can, of course, be manipulated and here, we fear, the USPTO may lose credibility. Including claims that were not challenged and claims that were resolved by settlement has a clear effect in raising the survival rate of claims subjected to IPR, without a strong basis for doing so. That is helpful for the Director’s narrative, but in our opinion, is unhelpful to ascertain the true effect of IPR and the Director’s reliance on that skewed stat undermines the other arguments made in favor the success of IPR.