How a USPTO Shutdown Will Affect PTAB Litigation and Prosecution Matters & Strategies

The government shutdown began December 22, 2018, but the United States Patent and Trademark Office (USPTO) and district and appeals courts have remained open. The USPTO is running on an operating reserve fund that is expected to run out the second week in February, at which point the USPTO will also shut down. A short shutdown of the USPTO is unlikely to have an impact on PTAB cases. Even if the shutdown is prolonged, parties will still be able to file at the USPTO, but you might want to rethink your litigation and prosecution strategies. A longer shutdown could have far-reaching effects and create novel legal issues.

WHAT WOULD TRIGGER A SHUTDOWN?

The USPTO is operating on its reserve. Once depleted, the USPTO will shut down. As of September 30, 2018, the operating reserve contained $312 million—enough for between one and two months. On January 24, the USPTO issued a notice stating that its operating reserve will last through the second week of February, though the USPTO has not released the exact date of a USPTO shutdown.

WHAT WOULD A SHUTDOWN LOOK LIKE?

The USPTO has stated that during a shutdown, “a small staff would continue to work to receive new applications and any other examination, post-examination, post-issuance, and PTAB filings; receive payments related to such filings; and maintain IT infrastructure, among other functions.”

Additional insights into the USPTO shutdown procedures are gained from the Department of Commerce’s Plan for Orderly Shutdown Due to Lapse of Congressional Appropriations, which details functions that may continue, even in the absence of an end to the government shutdown, as well as the personnel authorized to carry out those functions. According to the plan, only 113 employees out of the USPTO’s nearly 13,000 would be permitted to remain at work during a USPTO shutdown.

HOW WOULD A SHUTDOWN AFFECT PATENT PROSECUTION?

The USPTO has stated it would continue to “receive new applications and . . . filings” during a USPTO shutdown, which indicates that prosecution deadlines will not be extended. Deadlines were not extended when the USPTO’s e‑filing system (EFS-Web) went down for a week last summer—the USPTO simply told parties to file documents with the office by mail or fax. Because the Plan for Orderly Shutdown includes more than four dozen personnel for performing IT functions, we anticipate that EFS-Web will remain available for filing electronically throughout a USPTO shutdown. Nevertheless, you should still be prepared to file by mail or fax if necessary, as outward-facing technical support will likely be nonexistent.

While deadlines will likely not be extended, we anticipate that prosecution activities would come to a standstill. Patent prosecution and examination is not included in the USPTO’s current shutdown plan announcement, and the current Plan for Orderly Shutdown only includes one Supervisory Patent Examiner for receiving requests for foreign filing licenses, deciding those requests, and issuing such licenses as provided in 35 U.S.C. § 184. The Plan for Orderly Shutdown does not include any additional patent examiners. With prosecution activities halted, patents may not be issued, even if a notice of allowance has been mailed and the issue fee paid, unless the USPTO provides for contractors to handle publication matters.

Given the uncertainties, patent applicants should consider taking certain proactive steps now, particularly for certain types of applications. For instance, if an applicant has pending applications filed under the prioritized examination procedures, a call to the examiner assigned to the case may help to determine the status of the case and whether any progress can be made before a shutdown.

The stage of the patent application examination process may also inform what steps an applicant may want to take with respect to a particular application in preparation for a possible shutdown. As one example, for applications that have received a final office action, applicants may want to submit a response as soon as possible and follow the response with a call to the examiner to try to move the application to allowance before a shutdown occurs, thereby avoiding a request for continued examination. Applicants should consult with their patent prosecution counsel to determine the strategies best suited to their particular applications.

HOW WOULD A SHUTDOWN AFFECT CASES AT THE PTAB?

The impact of a shutdown on the PTAB will depend on the stage of the case and the length of the shutdown. A short shutdown is unlikely to have a significant impact on PTAB cases. The Plan for Orderly Shutdown indicates that two judges and one paralegal will remain working to dispose of discovery disputes. Importantly, the USPTO’s initial guidance suggests that parties will be required to meet the deadlines set forth in their scheduling order. The PTAB has indicated that its electronic filing system will be maintained during the shutdown so that parties can file substantive briefing and exhibits. However, the Plan for Orderly Shutdown indicates that the Board may stay certain cases “to maintain the status quo of property rights between the parties.”

This guidance does not detail specific procedures for the different stages of each proceeding, the need for Board involvement at each stage, or the possibility of an extended shutdown. There are roughly 1,600 pending proceedings at the PTAB, all at different stages and requiring differing levels of involvement from the Board. Below are a few strategic considerations for proceedings at particular stages of PTAB proceedings. No matter the stage, it is critical to build as much of a record as is feasible under the conditions and to preserve your arguments.

  • Pre-Institution

Approximately 1,000 PTAB proceedings are currently at the pre-institution stage. The Board is involved pre-institution in three ways. First, a Board paralegal at the PTAB reviews newly filed petitions and issues a Notice of Filing Date Accorded, which starts the clock on the patent owner’s Preliminary Response—typically due three months after the Notice is filed. Second, a panel of three judges determines whether to institute a review within three months after the Preliminary Response due date. Third, a panel of judges assigned to a proceeding resolves requests for authorization to file motions or papers, for example, motions for additional discovery or requests for authorizations to file sur-replies.

Regarding newly filed petitions, the Plan for Orderly Shutdown provides for a single paralegal to remain at the PTAB during a shutdown. In 2018, approximately 33 petitions were filed per week. It is unlikely that a single paralegal would be able to review and issue Notice of Filing Dates for all cases if filings continue at that rate during a shutdown. If a Notice of Filing Date Accorded is not issued for a particular petition, the proceeding hangs in limbo without setting any deadline for patent owner’s preliminary response, which would potentially give the patent owner extra time to develop its arguments. Because of this potential limbo, absent any statutory bar or other strategic motivator, a party might want to delay filing a petition until the shutdown ends. Also, the Notice of Filing Date indicates to the Petitioner if there are any deficiencies in the filed petition. If the deficiency requires re-filing, a Petitioner may not know of the deficiency until the Notice is issued. If the petition is filed near a statutory bar date, the Petitioner may not have the ability to re-file to correct any fatal deficiencies.

Regarding institution decisions, the Director is statutorily required to decide whether to institute within three months after the patent owner files its Preliminary Response. The Plan for Orderly Shutdown indicates that the Board might issue a stay order for these cases, but it is unclear what authority the Board has to issue such an order. It is more likely that we may see stays issued in cases prior to filing of preliminary responses. If the Board institutes trial more than three months after the patent owner Preliminary Response, the patent owner might consider a challenge to the Board’s statutory authority to institute the proceeding after the statutory deadline has passed.

Because the three judges assigned to each proceeding would not be available during the shutdown, any oral arguments scheduled during the PTAB Shutdown would need to be rescheduled. Given the volume of arguments, this could create scheduling difficulties, and we will likely see more arguments scheduled at other offices, including Denver, Dallas, Silicon Valley, and Detroit.

Finally, action on requests for motions or sur-replies is likely to be slower and more complicated during a shutdown. The Board requires parties to request leave to file such motions. These requests would likely need to be addressed by the two non-furloughed judges, who most likely are not assigned to the case. Therefore, we expect that responses to requests will be significantly delayed. If a patent owner or Petitioner requests additional discovery and the Board is not able to rule on the request, the patent owner or Petitioner might need to file its substantive paper without the additional discovery. The parties should be careful to build as much of a record as is feasible under the conditions and to preserve their arguments. At the end of the shutdown, the parties could request additional briefing to incorporate the additional discovery into their arguments. Also, the ability to reach a judge to resolve a discovery dispute during depositions could be difficult. Therefore, parties should build a record to protect their rights if a judge cannot be reached, for example, stating on the record that a deposition open based on the unresolved question or issue for the Board.

  • Instituted Cases

Approximately 50 PTAB proceedings are currently within one month of the statutory one-year deadline for the Board to issue a final written decision. In these cases, the Board might need to exercise its authority under 35 U.S.C. § 316(a)(11) to extend that deadline by as much as six months. However, if the shutdown extends longer than six months, the PTAB may be forced to stay cases to provide adequate time for the assigned panel to consider the merits of the cases. Again, the Plan for Orderly Shutdown indicates that the Board might issue a stay order “to maintain the status quo . . . as the preset deadlines pass,” but the Board’s authority to do so is unclear. Under the AIA, the PTAB’s only express authority to stay an IPR proceeding comes under § 315(d) when there are multiple proceedings involving the same patent. If the PTAB issues a final written decision more than 18 months after institution as a result of a stay order “to maintain the status quo,” the losing party might consider challenging the PTAB’s authority to issue such a decision.