Originally appeared in Kaye Scholer's Winter 2016 PTAB Monitor: Developments in Inter Partes Review Practice.
Precedential Standards for PTAB Decisions
Did you know? Only an opinion of the Board designated as “precedential”—of which there are only eight from IPRs or CBMs—is binding on all members of the Board. The PTAB can designate issued opinions (or portions thereof): (1) precedential; (2) informative; (3) representative; and (4) routine. Unless otherwise designated, an opinion is considered “routine.” PTAB Standard Operating Procedure 2 (rev. 9, Sept. 22, 2014).
The Federal Circuit Refused En Banc Review of the PTAB’s Practice of Partial Institution
In SAS Institute Inc. v. Complement Soft LLC, Nos. 15-1346 and 16-1347, 2016 WL 6575090 (Fed. Cir. Nov. 8, 2016), the Federal Circuit denied SAS’s petition for rehearing en banc, which challenged the PTAB’s adoption of regulations that permit the institution of some, but not all, of the challenged claims in an IPR at the sole discretion of the Board.
PTAB Not Forgiving Of Late Petition Filings for Alleged Technical Difficulties
Two petitioners recently learned the hard way that the Board will not be forgiving of petitions that are filed after the one year statutory bar because of alleged technical difficulties. Plaid Technologies Inc. v. Yodlee Inc., IPR2016-00275, Paper 15 (June 9, 2016) (rejecting argument that filing system “froze” and prevented timely filing where the petitioner left no time for error and did not even attempt to serve petition on the patent owner until after deadline); Teva Pharmaceuticals USA Inc. v. MonoSol RX LLC, IPR2016- 00281, Paper 21, (May 23, 2016) (same issue). The Board now recommends that if technical difficulties are encountered that prevent electronic filing, the petition should be emailed to the Board with a motion requesting acceptance of the submission and authorization to charge a deposit account. See PTAB E2E Frequently Asked Questions, at A2, https://www. uspto.gov/patents-application-process/ patent-trial-and-appeal-board/ptab-e2efrequently- asked-questions
Estoppel in IPR
The “reasonably could have raised” standard for estoppel following an IPR precludes a subsequent challenge based on “prior art which a skilled searcher conducting a diligent search reasonably could have been expected to discover.” Recently, in Praxair Distribution Inc. v. INO Therapeutics LLC, the Board applied this standard in rejecting the petitioner’s argument that it should not be estopped from raising “recently discovered” references where the only evidence of the reasonableness of the petitioner’s prior search was an “Exemplary List of Search Results from Cardinal Intellectual Property, Inc.” that did not identify the person that did the searching, the searcher’s skill level or experience in the field, why certain keywords or keyword combinations were used to search, or state whether either of the allegedly new references was encompassed by the initial search results but not selected for the “exemplary” list. IPR2016-00781, Paper 10 at 6, 7-10 (Aug. 25, 2016).
No Appeals for Time-Bar Decisions
The Board’s decision that an IPR petition is not time-barred is not reviewable on appeal. Wi-Fi One, LLC v. Broadcom Corp., No. 15- 1944, D.N. 61 at 5-6 (Fed. Cir. Sept. 16, 2016) (rejecting patent owner’s argument that petitioner lacked standing because its privies had been served with an infringement complaint more than one year prior). Citing its decision in Achates Reference Publishing v. Apple, Inc., 803 F.3d 652 (Fed. Cir. 2015), the Federal Circuit held that 35 U.S.C. § 314(d) prohibits appellate review of the Board’s determination to institute IPR proceedings based on a time bar because the “determination by the director whether to institute an inter partes review under this section shall be final and nonappealable.” Id. at 6.
In a concurring opinion, Judge Reyna urged the Federal Circuit to revisit en banc the Federal Circuit’s decision in Achates. Id. at Concurring Op. 1. While Section 314(d) bars appellate review of decisions to institute review, the patent owner was also seeking appellate review of the Board’s Final Written Decision. Id. at Concurring Op. 2. Further, both Achates and the Supreme Court’s subsequent decision in Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2141-42 (2016) acknowledges that courts have recognized an implicit and narrow exception to statutes barring judicial review where an agency has exceeded the scope of its designated authority. Id. at Concurring Op. 3.
Scope of IPR
Two Federal Circuit decisions illustrate the tension created by the latitude given to the PTAB to interpret and apply its own rules and the typically strict application of its rules regarding the submission of new evidence and argument after institution of an IPR. In Genzyme Therapeutic Products LP v. BioMarin Pharma. Inc., 825 F.3d 1360, 1366 (Fed. Cir. 2016), the Federal Circuit rejected the patent owner’s arguments challenging the Board’s decision to invalidate its patents based on evidence and arguments that had not been relied upon in the Board’s Institution Decision: “[T] he introduction of new evidence in the course of the trial is to be expected in inter partes review trial proceedings and, as long as the opposing party is given notice of the evidence and an opportunity to respond to it, the introduction of such evidence is perfectly permissible.”
While it may be acceptable for the Board to allow new evidence and argument after institution, that does not necessarily mean that a petitioner should expect that such new evidence and argument will be allowed. In Intelligent Bio-Systems Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359, 1369-70 (Fed. Cir. 2016), a case in point, the Federal Circuit affirmed the Board’s decision that the claims were not unpatentable after finding that the Board had not clearly erred in refusing to consider new evidence and arguments submitted with petitioner’s reply.
Supreme Court Affirmed Use of Broadest Reasonable Interpretation Standard for Claim Construction in IPR Proceedings
In Cuozzo Speed Techs. LLC v. Lee, the Supreme Court unanimously held that the PTAB’s use of the broadest reasonable interpretation (BRI) standard during IPR proceedings was a “reasonable exercise of the rulemaking authority that Congress delegated to the Patent Office.” 136 S. Ct. 2131 (2016). The basic purpose of an IPR proceeding is to reexamine an earlier agency decision, which is not quite the same as district court litigation in which the Phillips standard is used. Id. at 2143-44. Accordingly, the BRI standard—in use by the Patent Office for more than 100 years— “helps to protect the public” by ensuring precision in drafting claims and preventing a patent from tying up too much knowledge. Id. at 2144.
In May 2016, the Board designated as precedential its Final Written Decision in MasterImage 3D Inc. v. RealD Inc., IPR2015- 00040, Paper 42 (July 15, 2015), wherein the Board clarified its prior holding that in a motion to amend or substitute claims, the patent owner has the burden to demonstrate a patentable distinction over the “prior art of record” and also “prior art known to the patent owner.” In particular, the Board specified that “prior art of record” refers to (a) any material art in the prosecution history; (b) any material art of record in the current proceeding, including grounds which were not instituted; and (c) any material art of record in any other proceeding before the USPTO involving the patent. Id. at 2. The “prior art known to the patent owner . . . should be understood as no more than the material prior art that the patent owner makes of record in the current proceeding pursuant to its duty of candor and good faith to the office under 37 C.F.R. § 42.11, in light of a motion to amend.” Id. at 3.
Supreme Court Refused to Review Constitutionality of PTAB Proceedings
In October 2016, the Supreme Court denied petitions for certiorari that challenged the constitutionality of PTAB proceedings on the basis of the patent owner’s Seventh Amendment right to a jury trial and Article III Separation of Powers. MCM Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284, 1292 (Fed. Cir. 2015), cert. denied, 2016 WL 1724103 (Oct. 11, 2016) (arguing cancellation of patent claims violated Seventh Amendment right to jury trial); Cooper v. Lee, No. 15-955, Pet. for a writ of certiorari, 2016 WL 355184 (Jan. 21, 2016), cert. denied, 2016 WL 361681 (Oct. 11, 2016) (arguing violation of Separation of Powers).
The Board held that it did not have jurisdiction to institute PGR of a patent that did not have an effective filing date post-March 16, 2013, even if the applicant introduced new claims after that date that arguably lacked written description support in the original specification. Adebimpe v. Johns Hopkins Univ., PGR2016-00020, Paper 14 (July 25, 2016).
Identification of Real Parties in Interest is Not a Jurisdictional Requirement
In a precedential opinion, the PTAB denied a motion to terminate proceedings where, following a corporate reorganization, the petitioner failed to file an updated mandatory notice identifying new real parties in interest within 21 days as required by 37 C.F.R. § 42.8(a)(3). Lumentum Holdings, Inc. v. Capella Photonics, Inc., IPR2015-00739, Paper No. 38 at 5 (March 4, 2016). Although the mandatory notice was filed, the patent owner argued that this failure to timely comply deprived the PTAB of jurisdiction to consider the petition under 35 U.S.C. § 312(a), which states that the petition “may be considered only if” the petition identifies all real parties in interest. The PTAB held that Section 312(a) was not jurisdictional because Congress had not clearly stated that it was. Accordingly, “a lapse in compliance with those requirements does not deprive the Board of jurisdiction over the proceeding, or preclude the Board from permitting such lapse to be rectified.” Lumentum Holdings, at 5.