In a year of extraordinary change, the Patent Trial and Appeal Board (PTAB) rose to the challenge
Given the challenges of 2020 – a global pandemic, a deep economic recession, and a turbulent presidential election, among others – a slowdown in activity at the PTAB would not be unexpected. But a comparison of 2019 and 2020 statistics reveals that filings actually increased by about 15%,¹ reversing a decline of about 30% between 2018 and 2019. The United States Patent and Trademark Office (USPTO) attributes this success to a two-year IT stabilization and modernization effort, which allowed the agency to transition 13,000 employees to remote work relatively seamlessly. The PTAB also became one of the first tribunals in the country to conduct virtual hearings, having held over 1,000 all-virtual hearings by year’s end.²
It was otherwise a fairly quiet year for post-grant practice at the PTAB. The PTAB Precedential Opinion Panel issued just one decision (Hunting Titan, Inc. v. DynaEnergetics Europe GMBH, IPR2018-00600), down from three in 2019. In December, the USPTO issued two final rules: the first implementing the SAS rules of institution and eliminating the presumption at institution in favor of the petitioner as to testimonial evidence, and the second allocating the burden of persuasion in motions to amend. It also issued a notice of proposed rulemaking in October concerning its proposed rule to codify its current policies and procedures regarding the PTAB’s discretion to institute AIA trials. And on September 16, the number of AIA trial proceedings available to petitioners shrunk to two with the sunsetting of the Covered Business Method (CBM) Review program. Looking forward, all eyes are on the Supreme Court as it prepares to decide the constitutionality of the appointment of PTAB judges in Arthrex.
Fish & Richardson’s 2020 Post-Grant Report takes a deep dive into the most important cases, trends, and developments that have shaped post-grant practice over the previous year and how they may affect practitioners going forward.
An Assessment of the Motion to Amend Pilot Program
The Board formally announced its new pilot program for motions to amend on March 15, 2019. Fed. Reg. 9497 (Mar. 15, 2019). The pilot program allows the patent owner to seek non-binding preliminary guidance from the Board evaluating its proposed claims against the petitioner’s challenges. The patent owner then has four options: (1) file a revised motion to amend; (2) file a reply to the petitioner’s opposition; (3) allow the petitioner to reply and receive the last word in a patent owner’s sur-reply; or (4) withdraw the motion to amend. These options put the patent owner in control of the proceeding. Yet, more than a year into the pilot program, the jury is still out on whether the program has had the desired effect of “enhanc[ing] the effectiveness and fairness of AIA trial proceedings.” Fed. Reg. 54319, 54322 (Oct. 29, 2018).
Evaluating “effectiveness and fairness” is no easy task. But one measure that might shed light on these issues is the rate at which patent owners have used the new motion to amend procedures compared to the prior regime. If nothing else, filing rate trends can be relevant to the perception of effectiveness and fairness. At this point, based on the PTAB’s published statistics and open data, there is no sign of an increased motion-to-amend filing rate.
Filing rates, while relevant, are inconclusive. Apart from the “effectiveness and fairness” of the PTAB’s procedures, several reasons may be steering patent owners away from pursuing claim amendments at the PTAB. For example, patent owners can obtain amendments in ex parte reexamination, reissue, and open prosecution without active resistance from a motivated adverse party. These alternatives also can be considerably cheaper, more predictable, and have higher success rates — not to mention that reissue and open prosecution may offer opportunities for non-narrowing amendments, unlike amendments at the PTAB.
Looking forward, success rates tend to provide a leading indicator, and here, the early results shed a more favorable light on the pilot program. Per the PTAB’s published statistics, only about 14% of pre-pilot program motions to amend were at least partially granted.¹ By contrast, Director Iancu recently reported a 36% rate of at least partially granted motions when patent owners utilized the pilot program.² There is no question that patent owners, thus far, have found more success under the Board’s new procedures than the old.
The table below provides a breakdown of the patent owners’ strategic choices in 11 pilot program cases with positive outcomes:
Small sample size issues aside, one interesting observation is that several of these positive outcome cases did not involve a revised motion to amend, currently the most popular strategic choice among patent owners. And of the subset that opted against filing a revised motion, only a few received fully positive guidance. In each of the remaining cases, the patent owner decided to address the negative preliminary guidance head-on with argument and evidence, rather than new claim language.
The choice to forego a revised motion to amend in response to negative preliminary guidance may seem counterintuitive initially, but less so when considered in context. The pilot program structure is such that the Board’s guidance comes before the patent owner can respond to the petitioner’s opposition. It makes sense, then, that the guidance is negative in the overwhelming majority of cases. The consequences of filing a revised motion to amend provide another critical piece of context. On the filing of a revised motion, the record is fully open to new grounds of challenge from the petitioner, and the patent owner is flying blind as to the Board’s assessment of any new claim language. A revised motion is undoubtedly helpful in the right circumstances, but it is not the only viable choice.
Apart from withdrawing the motion altogether, each of the three options presented to a patent owner following the Board’s preliminary guidance can be effective. Early results suggest that patent owners, while still facing an uphill climb, now have better odds of obtaining amended claims. It remains to be seen whether the increased chances of success will tempt more patent owners to try their hand at motions to amend.
¹https://www.uspto.gov/sites/default/files/documents/20201028_ptab__mta_study_installment_6_tf_iq_813950_final_revised.pdf
²https://www.uspto.gov/blog/director/entry/ptab-s-motion-to-amend
The Latest in Discretionary Denials
2020 was an interesting year for discretionary denial under 35 U.S.C. § 314(a). In May, the Patent Trial and Appeal Board (“PTAB”) designated, as precedential, a decision addressing considerations applicable to the PTAB’s use of discretion to deny institution in view of parallel litigation of the challenged patent. Apple Inc. v. Fintiv, Inc., IPR2020-00019, Paper 11 (PTAB Mar. 20, 2020). The Fintiv decision laid out a six-factor test used to assess a parallel, co-pending proceeding:
- whether the court granted a stay or evidence exists that one may be granted if a proceeding is instituted;
- proximity of the court’s trial date to the Board’s projected statutory deadline for a Final Written Decision;
- investment in the parallel proceeding by the court and the parties;
- overlap between issues raised in the petition and in the parallel proceeding;
- whether the petitioner and the defendant in the parallel proceeding are the same party; and
- other circumstances that impact the Board’s exercise of discretion, including the merits.
The Board explained that “[t]hese factors relate to whether efficiency, fairness, and the merits support the exercise of authority to deny institution in view of an earlier trial date in the parallel proceeding.” Id. at 6. The Board recognized that “there is some overlap among these factors” and evaluates the factors by taking “a holistic view of whether efficiency and integrity of the system are best served by denying or instituting review.” Id.
With the adoption of the Fintiv test as precedential, the PTAB reinforced the use of discretion to deny otherwise timely and meritorious petitions based on the stage of a parallel proceeding. This reinforcement has increased the number of patent owners seeking to gain denial of institution in view of a fast schedule in parallel litigation. In 2020, there appears to be a statistical difference, some of which can be attributed to the rise of discretionary denials:
Indeed, in jurisdictions with expeditious trial schedules, such as the Eastern and Western Districts of Texas and the International Trade Commission (“ITC”), the Fintiv factors may often lean in favor of institution denial (depending upon the promptness of the petitioner’s challenge at the PTAB). For example, if a defendant files an IPR petition ten months after the complaint was served in these forums (which is safely within the “one year” bar set by Congress in 35 U.S.C. § 315), such a defendant may have little chance of demonstrating that factors one, two, or five weigh in favor of institution. Of course, if a defendant files its IPR petition shortly after the litigation complaint is served, this increases the likelihood that the projected date of the Board’s Final Written Decision will occur before the scheduled date of the jury trial:
Factor three also is impacted by fast-moving litigation, although its impact can be mitigated by filing petitions promptly after the litigation has commenced. Moving quickly to file petitions, however, creates its own perils for petitioners because it requires moving forward with limited information about infringement allegations and requires early formulation of case strategy to ensure consistency between forums.
With this in mind, emphasis often is placed on factor four, and petitioners have taken measures to...
