New Director’s Interest in Predictability To Drive PTAB Change

As pointed out yesterday over at IPWatchdog, the USPTO Solicitor has withdrawn as Intervenor in the Federal Circuit appeal between Telebrands Corporation and Tinnus Enterprises (stemming from PGR2015-00018, challenging a patent pertaining to the well-known Bunch-o-Balloons® product on indefiniteness grounds). The USPTO intervened in the earlier appeal to defend the indefiniteness standard applied in the PGR. This is because the applied standard was stricter than that enunciated in Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014). The application of a different, stricter standard caught some by surprise that had not realized that the Federal Circuit endorsed that very standard for agency proceedings in In re Packard, 751 F.3d 1307, 1310 (Fed. Cir. 2014).

I pointed out at the time of this appeal that the Packard indefiniteness standard is grounded in ex parte examination policies and practices. As such, it was unclear whether the Court’s holding in Packard could be properly extended to AIA trial proceedings. Yet, the Solicitor’s decision to withdraw as Intervenor in the Tinnus dispute is not a sign that the agency lacks faith in its brief. Rather, the change is indicative of a new direction for PTAB trial proceedings.

The new direction, publicly expressed by recently confirmed Director Iancu over the past few weeks is one of system predictability — especially as it relates to the Patent Trial & Appeal Board (PTAB). The Director flagged the PTAB’s use of the broadest reasonable interpretation (BRI) as driving unpredictability during his confirmation hearings. The apparent intention of the Director is to move toward predictability across the patent assertion landscape by dropping examinational standards (e.g., BRI & Packard) from PTAB proceedings to align them with district court standards. The decision to withdraw agency support of the Packard standard signals the first step in moving away from such examination-type analyses in PTAB trial proceedings.

Looking ahead, it seems that the change from BRI to a Philips construction is a foregone conclusion for PTAB trial proceedings. As such, I expect to see a new rule package issued in the months ahead. All of the major bar organizations have already endorsed this change, and aligning court and PTAB claim constructions will address a significant Patent Owner criticism.

In practice, it would seem likely that the change would apply only to the analysis of issued claims. I assume amended claims would still follow BRI to be consistent with agency justifications for applying BRI. How such a change would impact pending AIA trials, patent reissues and patent reexaminations is uncertain.

The impact of this change on trial outcomes may not be as pronounced as Patent Owners hope. Still, there will be a significant impact on petitioners. Even though the agency may not discern a difference between a BRI and Philips construction in many instances, the courts think very differently. This thinking enabled petitioners to advocate for broader constructions at the PTAB under BRI, and still maintain a different, narrower construction in the courts for non-infringement purposes. That cover would be taken away once the PTAB moves to a Philips construction. Moreover, a binding (arguably anyway) district court construction would be issued by the agency well before most district court trial dockets. For this reason, stakeholders may desire a Markman-like component be added to the trial schedule.

I expect a fair amount of PTAB recalibration in 2018.