First published in CIPA Journal

The new post-grant proceedings before the U.S. Patent and Trademark Office (USPTO), contesting the validity of issued patents, have been in effect for eighteen months. During this time, the USPTO's Patent Trial and Appeals Board has issued numerous interim orders and, now starting in 2014, the Board is issuing a steady string of final written decisions. In this article, we discuss some of the Board's rulings and provide some insights on possible strategies and general lessons learned.

As we have noted in previous articles, these new U.S. proceedings are substantially different from European oppositions. All trials are held before a three-judge panel and the Board is consistently treating them as adjudicative proceedings very similar to how an appeals court handles cases with briefing and oral argument on the written record. By statute, the Board must reach a final decision within twelve months after it institutes a proceeding.1 And the Board frequently references this requirement when deciding interim matters (e.g., requests for rehearing, motions for discovery, instituting grounds of rejection), generally relying on it to streamline and narrow the issues between the parties during a given proceeding.

  1. First, an Update on the Statistics

Since September 2012, over 1000 petitions requesting the Board review issued claims in a U.S. patent have been filed.2In fiscal year 2013 (October 2012 to September 2013), 563 petitions were filed. In the first five months of fiscal year 2014 (October 2013 to February 2014), over 468 petitions have been filed. At this pace, fiscal year 2014 will have over 1000 petitions filed, double that of fiscal year 2013.

About 70% of the petitions filed so far (including those that have been instituted) involve Electrical/Computer patents. Petitions for patents in the mechanical fields are a distant second and continue to represent only about 15% of the total filings. Petitions for patents in the chemical and biotechnology/pharmaceutical fields, respectively, represent about 8% and 6%.

Across all technologies, the Board is instituting review, for at least some of the challenged claims, in over 80% of the petitions. This is becoming an important statistic. As we discuss in more detail below, the Board has confirmed very fewclaims as patentable, cancelling the vast majority of challenged claims, and no amended claims have been entered and allowed.

  1. Restrictions on Filing a Petition

By statute, a petitioner must file a petition for inter partes review within one year of being served with a complaint for infringement.3 The Board has dealt with this issue on several occasions. In early 2013, just months after the new inter partes proceedings became available, the Board made two significant decisions that it has referenced and cited in later cases, effectively treating them as precedential.

In the first, Macauto v. BOS GmbH & KG, the Board held that the petitioner was not barred from filing its petition, even though the patent owner served the petitioner's parent company4 with an infringement complaint more than one year earlier, because the patent owner voluntarily dismissed the lawsuit without prejudice.The Board looked for guidance from U.S. Court of Appeals for the Federal Circuit cases dealing with the effect of voluntary dismissals on subsequent litigations. According to the Board, the voluntary dismissal by the patent owner left the parties as though the action had never been brought and, thus, the one-year bar did not apply.

The petitioner in Macauto (defendant in the litigation) apparently also signed and returned a waiver of service for the infringement complaint as permitted under U.S. federal litigation practice. Parties often request and rely on a waiver from a defendant to sufficiently serve an infringement complaint under the procedural rules. However, to complete service and establish a service date, the plaintiff must file the waiver with the court. The patent owner in Macauto (plaintiff in the litigation) did not. According to the Board, by not filing the waiver, the patent owner did not establish service for purposes of the one-year bar date. The Board noted that this failure was a separate, independent reason for concluding that the petitioner was not barred from filing the petition, and the Board instituted the patent trial.

In the second case, Motorola Mobility LLC v. Arnouse, the patent owner filed an infringement complaint more than one year before the petitioner filed its petition, but the patent owner again did not complete service of the complaint.6 The patent owner merely provided a copy of the complaint to the petitioner; it did not provide a summons or service of process. The patent owner argued that this was sufficient to invoke the one-year bar. The petitioner countered by arguing that according to U.S. federal litigation practice, a defendant is not "served" unless the plaintiff complies all of the formal requirements for completing service. Here again, the Board looked to applicable case law from the Federal Circuit as well as the U.S. Supreme Court for guidance and set out a detailed analysis of the issue. According to the Board, merely receiving an infringement complaint does not start the one-year time period; the plain meaning of the statute requires more than merely delivering or sending the complaint, it requires formal service of process. Thus, the petitioner was not barred from filing the petition and the Board instituted the patent trial.

The Board has relied on these two decisions when making decisions in other cases dealing with statutory one-year bar issues. For example, in Scotts Co. v. Encap, LLC, the Board instituted a petition and held that mere notification of a complaint does not trigger the one-year bar, but if the petitioner waives service, the filing of the waiver with the court does trigger the one-year bar.7 In Universal Remote Control, Inc. v. Universal Electronics, Inc., the Board denied a petition and held that service of a second complaint (with respect to the same patent) did not nullify service of a first complaint when the court dismissed the first lawsuit with prejudice.8 In Universal, the first complaint was served more than ten years before the second complaint and the Board distinguished Macauto because the complaint was dismissed with prejudice.

The following exemplary decisions are also in accord with the Board's rationale and holdings in Macauto and Scotts:

  • In 3:21:11 PM Cyanotech Corp. v. The Board Of Trustees of the University of Illinois, the Board held that a civil action that is involuntarily dismissed without prejudice does not trigger the one-year bar.9
  • In Clio v. The Procter and Gamble Co., the Board again held that a civil action voluntarily dismissed without prejudice does not trigger the one-year bar.10
  • In Accord Healthcare v. Eli Lilly and Co., the Board again held that service of a second complaint does not nullify the effect of service of a first complaint.11
  • In BioDelivery Sciences International, Inc. v. MonoSol RX, LLC, the Board held that a reexamination certificate issued after service does not affect the "date" the petitioner was served for purposes of the one-year bar.12

In addition, a petitioner cannot file a petition for inter partes review if it has already filed a civil action challenging the validity of the patent.13 Filing a counterclaim challenging the validity of a claim, e.g., in reply to an infringement complaint, by statute does not constitute a civil action that would otherwise bar a petition.14 Like the one-year bar, the Board has dealt with this issue on several occasions as well.

It is likely that these issues will also be vetted in appeals to the Federal Circuit as the new patent trials work their way through the USPTO. For now, the Board seems consistent with its decisions on when (and when not) the one-year bar is triggered against a petitioner. Patent owners should ensure they complete all the requirements of service when filing infringement complaints so the one-year bar will be triggered. As we discuss in the next sections, the Board has cancelled all but a few claims and has not yet granted any motions to amend. At least to date, the Board is finding the vast majority of challenged claims unpatentable. Thus, patent owners would be in a better position if they can avoid inter partes review.

  1. Making Amendments

Patent owners can make amendments to claims challenged in the new patent trials.15 However, all amendments, or presentations of proposed substitute claims, must be in response to a ground of unpatentability in the trial.16 As the Board has noted, the new trials are not the procedure for patent owners to seek an entirely new claim set according to a different patentability strategy.17 Over the last eighteen months, the Board has issued several orders outlining some additional requirements for making such amendments. Many of these requirements are quite restrictive, and to date the Board has not granted any motion that amended or proposed new claims, except when a patent owner canceled claims.18

In Idle Free Systems, Inc. v. Bergstrom, Inc. (one of the first inter partes reviews), the Board explained that a patent owner must specifically identify the newly added features, and provide facts and reasoning, including proposed claim constructions, to show a patentable distinction for each proposed new claim over the prior art of record and other prior art known to the patent owner.19 By statute and under the rules, a proposed or amended claim cannot enlarge the scope of the claim.20 In light of these restrictions, the Board explained in Idle Free that new or amended claims cannot enlarge the scope of a challenged claim by eliminating any feature and explained that all proposed claims should be traceable to an original challenged claim. The Board went on to explain that the burden is not on the petitioner to show unpatentability of the amended or new claims, but the burden is on the patent owner to show patentability. Patent owners must meet all of these requirements, including the entire text of the new claim being double spaced, within the general fifteen-page limit for motions.21 And the Board has stayed true to this page limit, as well as all of the other formatting requirements, e.g., font size and line spacing, for motions to amend.22

More recently, the Board continued this trend in BlackBerry Corp. v. MobileMedia Ideas LLC, again denying a patent owner's motion to amend.23 The patent owner did not file a preliminary response before institution, nor did it file a reply to the adopted grounds of rejection after institution. Instead, the patent owner filed a motion canceling all of the challenged claims and proposing substitute claims with numerous amendments. In denying the motion, the Board stated that the patent owner did not provide a reasonable claim construction for each new feature in the substitute claims. The patent owner also eliminated some features from the original claims when proposing the substitute claims. The Board found that the patent owner did not adequately explain how removing the features was responsive to a ground of unpatentability as required by the rules. Furthermore, because the patent owner eliminated features, i.e., the new claims did not include all of the features found in the original claims, the Board also noted that the new claims were not traceable back to the original claims.

  1. Very Few Claims Confirmed as Patentable

So far, the Board has confirmed only eleven claims, out of the hundreds that have been challenged, as patentable, and has done so in just two inter partes reviews. The Board decided both cases recently and both decisions hinged on its construction of certain claim terms and its interpretation of the prior art in light of those constructions. In the first,Microsoft Corp. v. ProxyConn, Inc., the Board found that the petitioner did not show by a preponderance of evidence that a single dependent claim was unpatentable.24 According to the Board, the petitioner's proposed grounds of rejection failed because the prior art did not disclose or teach all of the limitations of the dependent claim as the Board interpreted them. In the second, Synopsys, Inc. v. Mentor Graphics Corp., the Board likewise denied some of the petitioner's proposed grounds of rejection because it found that the prior art did not disclose or teach all of the limitations as the Board interpreted them.25 Notably, some of the claims confirmed by the Board in Synopsys were independent claims.

Despite these recent patent owner successes, the Board has canceled the vast majority of challenged claims. We will continue to watch and see if these trends continue as the Board starts to issue more final decisions. As a possible indication, claims were either canceled or amended in 98% of the patents challenged in inter partes reexaminations that the new inter partes reviews replaced.26 Either way, it is apparent that claim construction is, and seems likely to continue to be, very important in the success of either party in persuading the Board of its positions. Current statistics indicate that in almost 50% of the cases, the Board's own construction of terms is the prevailing interpretation. Petitioners are faring slightly better than patent owners as the Board is adopting proposed constructions from petitioners almost 25% of the time and is adopting proposed constructions from patent owners less than 20% of the time. Notably, the Board is adopting claim constructions from a district court only about 5% of the time. Overall, the Board is predominately looking to the specification to reach its decision on claim construction, putting substantially less weight on expert declarations and prior prosecution. Thus, both parties are well-served to emphasize claim construction and provide detailed comparisons (or distinctions) between the construed claims and the prior art as to how the prior art discloses (petitioners) or fails to disclose (patent owners) the claimed features. And it is likely that the new proceedings will continue to provide petitioners a strong opportunity to invalidate claims and avoid (or at least significantly reduce) actual or possible infringement claims by a patent owner.

  1. Conclusion

As the Board starts issuing a new decision almost daily, we continue to learn more of the pros and cons of these procedures for both petitioners and patent owners. There are a number of other trends and additional Board guidance that is outside the scope of this article. For example, the Board is not instituting on all of the invalidity grounds that petitioners propose and is routinely deeming proposed grounds as "redundant grounds." The Board has started to provide some guidance on the scope of these redundant grounds. The lesson learned: stick with your strongest arguments. In some instances the Board has instituted multiple patent trials on the same patent between the same parties when the petitioner files multiple, separate petitions to avoid the Board deeming some grounds as redundant. Stay tuned: we will continue to provide further guidance on these and other lessons from the Board in the coming months. For more frequent updates, follow Finnegan's AIA Blog that publishes blog posts on many of these