In 2013, then Chief Judge Rader of the United States Court of Appeals for the Federal Circuit coined the phrase “patent death squads” to describe the panels of the Patent Trial and Appeal Board (“PTAB”).1 As of the date of those comments, the PTAB was just beginning to issue final written decisions invalidating most challenged claims in the first wave of Inter Partes Review (“IPR”) and Covered Business Method Review (“CBM”) proceedings (collectively “PTAB Trials”) that had been instituted under the Leahy-Smith America Invents Act.2 Now, one year after Judge Rader’s comments, the statistics have not substantially changed. As of early October 2014, the PTAB has invalidated more than three-quarters of all claims as to which it has instituted an IPR and issued a final written decision.3 Indeed, this past summer, PTAB Chief Judge James Smith conceded that the PTAB statutory mission entails at least a certain amount of “death squadding.”4
In view of these results, many industry participants view the PTAB as a favorable forum for challenging patents of questionable validity that are asserted against them in litigation. However, the willingness of the PTAB to invalidate patents also threatens the value of large patent portfolios held by those same industry participants. It is therefore worth analyzing what strategies can be used by patent owners to protect their patents during PTAB Trials. In particular, we will review strategies that the patent owner can use after receiving a decision to institute a PTAB Trial.
Changing Claim Scope During PTAB Trials
Amending Claims Under the PTAB Trial Rules
The patent owner effectively begins a PTAB Trial with the deck stacked against it. For a trial to be instituted, the PTAB must first conclude that “there is a reasonable likelihood that the petitioner [will] prevail.”5 This requires the panel of PTAB judges considering the petition to determine the scope of the challenged claims and conclude that the claims are likely to be invalidated in the trial. Accordingly, for a patent owner to win, it must effectively convince the judges on the panel to reach the opposite conclusion from the one articulated in the institution decision. This is not an easy task.
One strategy that has facial appeal for a patent owner is to amend the challenged claims in order to distinguish the prior art.6 While this is technically permitted under the PTAB Trial Rules,7 it is in practice, quite difficult. No patent owner, with the sole exception of the U.S. Department of Agriculture, has succeeded in amending any claim before the PTAB.8 To prevail on a motion to amend in an PTAB Trial, a patent owner must show that the claims are supported in the patent specification, and must show not only patentability of the proposed substitute claims over the prior art references raised in the petition but must also show “general patentability over prior art.”9 And, the patent owner must do all of this in a 15-page motion. Given these requirements, patent owners should explore alternative procedural routes for narrowing claim scope during a PTAB Trial.
Altering Claim Scope By Disclaimers
An alternative approach to formal claim amendment is to seek application of an alternative claim interpretation rule in the PTAB. In the absence of special circumstances, the PTAB applies the “broadest reasonable interpretation” (“BRI”) standard of claim interpretation—the same standard typically used in ex parte prosecution before the patent office.10 If an alternative rule were invoked, it may be possible to seek a narrower claim construction, effectively narrowing the claims to avoid prior art. One patent owner attempted to obtain this result by expressly disavowing any claim scope beyond its proffered construction of the disputed claim terms.11 The PTAB rejected this approach.12
A more promising approach to avoid the BRI standard is to file a terminal disclaimer, effectively rendering the patent “expired” going forward,13 which makes the BRI standard inapplicable.14 There has been at least one case in which a patent owner attempted this tactic, filing a terminal disclaimer after the PTAB instituted an IPR. There, the PTAB essentially stayed entry of the terminal disclaimer until after the PTAB Trial was complete.15 In that case, however, the terminal disclaimer was filed long after the trial was initiated; the PTAB placed significant emphasis on the disruption that would be caused by changing the claim construction standard so late in the proceeding.16 A terminal disclaimer filed sooner might be considered more favorably.
Amending Claims Via Ex Parte Reexamination
Another vehicle for amending claims of an issued patent is via an ex partereexamination. Once an ex parte reexamination is instituted, the rules for amending claims are far more liberal than those applied in PTAB Trials. At least one patent owner has tried this approach, requesting reexamination of a claim of its patent that was subject to a pending IPR.17 However, the Central Reexamination Unit (“CRU”) of the Patent Office denied the request, finding that the patent owner failed to make the threshold showing of a substantial new question of patentability, because the same issue was already being considered by the PTAB in the pending IPR.18 The CRU did suggest, however, that a reissue proceeding might be a more appropriate vehicle for a patent owner seeking to add narrower claims to a patent subject to an IPR.19
Amending Claims Via Reissue
Because a patent owner can file a reissue application without having to prove the existence of a substantial new question regarding the patent’s validity, this vehicle may offer the patent owner an alternative path to obtaining amended claims. There are two ways this technique might be used when faced with a PTAB Trial. First, the patent owner might use the reissue to amend the challenged claims. Second, the patent owner might retain the original patent claims, while adding additional claims narrower than those present in the original patent.20
The first approach could disrupt a co-pending PTAB Trial, because the claim scope would be continuously changing until completion of the reissue; meanwhile the patent owner and the reissue examiner would negotiate over the patentability of the proposed amended claims, in a process similar to the originalex parte prosecution process. This would potentially make it difficult for the PTAB to complete the PTAB Trial within the statutory 12 month time period.21In view of this, it seems quite likely that the PTAB would consider exercising its discretion to stay the reissue proceeding.22 Indeed, in one early decision, the PTAB did order a stay of a co-pending reissue.23 However, in that case, the patent owner did not oppose the stay.
The second approach, where the reissue does not seek to amend any claims challenged in the IPR but only adds new claims, seems less problematic for the PTAB. In this scenario, the PTAB could still proceed to determine the patentability of the challenged claims in the PTAB Trial and leave the question of the patentability of the proposed new claims to the examiner handling the reissue application. Indeed, a similar scenario has been presented to the PTAB, which declined to stay the reissue because “the newly presented claims in the reissue application [were] not before [the PTAB].”24 Accordingly, patent owners should give serious consideration to this approach when it appears advisable to add narrower claims to a patent to protect it against complete invalidation in a PTAB Trial.
Additional Tested and Untested Patent Owner Strategies
In addition to changing claim scope to distinguish prior art, some patent owners have found success in the PTAB by focusing on the merits of the prior art arguments. In particular, well-reasoned expert testimony can sometimes prevail.25 One decision where the patent owner prevailed involved reliance on the expert testimony of the author of the prior art reference cited by the petitioner. The PTAB afforded that testimony “significant weight,” and all of the patent owner’s instituted claims were determined to be valid.26
Numerous patent owners have successfully argued against a purported combination of references and managed to convince the PTAB that one of ordinary skill in the art would not have been motivated to combine the cited references to reach the claimed invention.27 In one case in particular, the PTAB praised the demonstratives presented by the patent owner in support of an inoperable combination argument with which it agreed.28
While PTAB Trials clearly present challenges to patent owners, there are several strategies that have been employed by patent owners with some success. Moreover, strategic use of parallel proceedings within the Office, such as reissue applications, should be given serious consideration as part of an effective strategy to protect the value of a patent portfolio when faced with a PTAB Trial.