Federal Circuit to Consider Motions to Amend En Banc

On August 12, 2016, in In re Aqua Products, Inc., the Federal Circuit granted a petition for rehearing en banc to address the standard for motions to amend claims during America Invents Act trials. Presently, Patent Owners may amend claims by cancelling challenged claims and “propos[ing] a reasonable number of substitute claims,” provided that the substitute claims do “not enlarge the scope of the claims of the patent or introduce new matter.”

Since the moving party bears the burden of proof for any motion in an AIA trial, the Patent Owner must show patentability of the claims, provide written support for the claims, and provide a proposed claim construction. Given this high burden, motions to amend are rarely used, and even more rarely granted. According to USPTO statistics, only 6 out of 112 (5.4%) motions to amend were granted. Several Federal Circuit panel decisions have endorsed these procedures.

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The PTAB’s Claim Constructions Will Likely Have Minimal Impact in the District Court

Network Connection CablesIt is an understatement that claim construction is important to the ultimate merits of non-infringement and invalidity. In many district courts, a claim construction decision is not issued until the parties are well into fact discovery, which could be a year or so from filing. With inter partes review (IPR), however, a decision construing claim terms by the Patent Trial and Appeal Board (PTAB) could occur as little as six months from the filing of a petition for invalidity. This has led some to question whether and how the PTAB’s claim constructions could later impact a district court litigation. A recent case from the Federal Circuit in PPC Broadband, Inc. v. Corning Optical Communications RF, LLC, 815 F.3d 734 (Fed. Cir. Feb. 22, 2016), seems to indicate that any influence will be minimal, given the different claim construction standards applied by a district court and the PTAB.

In PPC Broadband, Corning filed IPRs asserting that several patents were obvious over the prior art. The PTAB construed certain claim terms and found the claims invalid for obviousness. On appeal, PPC Broadband asserted (among other things) that the PTAB erred in construing the claims. The Federal Circuit held that although the claim term “continuity member” / “electrical continuity member” was not correctly construed under Phillips, it was properly construed under the broader PTAB standard. Id. at 741, 743. As such, the court affirmed the construction of this term.

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Federal Circuit Rejects PTAB Burden-Shifting Framework

oil drillThe USPTO has long applied a burden-shifting framework during prosecution of U.S. patent applications. Under that framework, the USPTO examiner bears an initial burden of providing a prima facie case of obviousness. After that, the burden shifts to the applicant, who may submit additional evidence of non-obviousness. This approach is said to further the goals of compact prosecution, and “relieves both the examiner and applicant from evaluating evidence beyond the prior art and the evidence in the specification as filed until the art has been shown to render obvious the claimed invention.” (MPEP 2142). Office personnel must weigh the proffered evidence and arguments in making a final obviousness determination, but the burden remains on the applicant to show the proffered evidence is relevant, for example, by establishing a nexus between the evidence and the claimed invention. (See MPEP 2145).

Until recently, the PTAB has adopted a similar approach for inter partes review (IPR) proceedings. The USPTO has taken the view that, after the Board issues an institution decision finding that the petitioner has demonstrated a “reasonable likelihood of success” on an obviousness ground, the burden of producing evidence of non-obviousness shifts to the patentee. This practice, however, has now been rejected by the Federal Circuit.

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As PTAB Hands Down First PGR Decision, the Overall Impact of PGR Practice Is Still an Unknown

Since the implementation of AIA trials in September of 2012, inter partes review (IPR) has increasingly become a popular procedure for invalidating patents, often supplementing district court litigation. As of June 2016, over 4,600 IPR petitions have been filed, compared to 30 post grant review (PGR) petitions. Unlike IPR, only AIA patents are eligible for PGR. Thus the disparity in petition numbers can be attributed to the relatively few AIA patents. As AIA trials are nearing their four-year anniversary, the Patent Trial and Appeal Board recently issued its first written decision in a post-grant review proceeding.

The PGR written decisions resolved two related proceedings, American Simmental Association v. Leachman Cattle of Colorado, PGR2015-00003 and PGR2015-00005. The patents at issue related to the evaluation of the relative market value of livestock based on genetic merit estimates of the herd. Petitioner challenged the patents on the grounds that the claims failed to recite statutory subject matter under 35 U.S.C. § 101, were anticipated under 35 U.S.C. § 102, and that the claims were obvious under 35 U.S.C. § 103 in view of two references. The Board instituted on the §§ 101 and 103 grounds only.

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Federal Circuit Clarifies Scope of Evidence Used In IPRs

As the America Invents Act (“AIA”) approaches its fifth birthday, the contours of one of its popular procedures, Inter Partes Review (“IPR”), continue to take form.  In Genzyme Therapeutics Products Limited Partnership v. Biomarin Pharmaceutical Inc., the Federal Circuit (“CAFC”) clarified what evidence the Board can consider in its final decisions.

The Genzyme patents relate to enzyme replacement therapy for treating Pompe’s disease, a genetic condition associated with glycogen deficiency.  In 2013, Biomarin filed petitions for IPR of these two patents, based on a number of invalidity grounds and combinations of prior art references.  Genzyme filed a preliminary response to one of Biomarin’s petitions.  The Board instituted review on both Genzyme patents.

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Business as Usual: Supreme Court Affirms Use of BRI in IPRs

By UpstateNYer (Own work) [CC BY-SA 3.0], via Wikimedia Commons

Earlier today, the Supreme Court affirmed the decision by the U.S. Court of Appeals for the Federal Circuit in Cuozzo Speed Technologies, LLC v. Lee on two key issues involving inter partes review (IPR) proceedings.

First, the Court confirmed that the agency’s decision to institute an IPR is generally not appealable. The Court explained that “that is what §314(d) says” when it says that the agency’s initial decision whether to institute an inter partes review is “final and nonappealable.” The Court found this result was consistent with legislative intent because one important congressional objective in creating IPR proceedings was “giving the Patent Office significant power to revisit and revise earlier patent grants.” In response to the dissent’s reference to potential “shenanigans,” the Court did not categorically preclude review of all institution decisions. Rather, the right to review an institution will be limited to general Administrative Procedure Act challenges, such as a due process problem with the entire proceeding or where the agency acts outside of its statutory limits, “for example canceling a claim for ‘indefiniteness under §112’ in inter partes review.”

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Federal Circuit Affirms PTAB’s Denial of Motion to Amend, Upholds PTAB Standard, and Maintains PTAB’s Largely Unbroken Streak

The PTAB rarely grants motions to amend claims of IPR proceedings, largely because of the standard requiring the patent owner to demonstrate the patentability of the amended claims. In a recent case, In re Aqua Products, Inc., 2015-1177 (Fed. Cir. May 25, 2016), the Federal Circuit affirmed this requirement placed on the patent owner. In this case, the PTAB had found that the patent owner did not demonstrate patentability of the amended claims. The case highlights lessons to be applied in motions to amend strategies.

In its motion to amend, Aqua argued for the non-obviousness of the claims over two references Henkin and Myers. Aqua argued that the references do not disclose or suggest a feature of the amended claim and that the references do not provide a person of ordinary skill in the art with a reason to combine the teachings. Aqua’s motion to amend did not specifically include objective indicia of non-obviousness over the combination of Henkin and Myers.

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A Trial Lawyer’s Observations of a PTAB Proceeding

By W.S. Gilbert (d. 1911) [Public domain or Public domain], via Wikimedia Commons

I have been a trial lawyer for 40 years, trying jury and bench trials in federal courts throughout the United States, in many state courts, before the International Trade Commission and other regulatory and arbitral entities – and even before the Iran U.S. Claims Tribunal. I recently completed my first trial at the United States Patent and Trademark Office’s Patent Trial and Appeal Board (PTAB), a proceeding under the Inter Partes Review provisions in the America Invents Act. The experience was unique, and the differences from standard trial are notable. In this post, I highlight five of the differences I found most significant:

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Addressing Prior Art in your Motion to Amend

By Lena Vasiljeva (Flickr) [CC BY 2.0], via Wikimedia Commons

The Inter Partes Review of Shinn Fu Company of America, Inc., et al. vs. The Tire Hanger Corporation (IPR2015-00208) illustrates a rare successful Motion to Amend. By filing a Motion to Amend, the Patent Owner may “persuade the Board that the proposed substitute claim is patentable over the prior art of record, and over prior art not of record but known to the patent owner.”[1] The Board previously explained that “[s]ome representation should be made about the specific technical disclosure of the closest prior art known to the patent owner, and not just a conclusory remark that no prior art known to the patent owner renders obvious the proposed substitute claims.”[2]

In IPR2015-00208, the Board provided some clarification of the extent of representations and discussion needed about the prior art. In particular, the Board explained that there is “no requirement that a patent owner analyze expressly every individual reference cited during prosecution of the challenged patent.”[3]

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RPI Dos and Don’ts

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Failure to properly name all Real Parties-in-Interest (RPI), as required by 35 U.S.C. § 312(a)(2), can be fatal to an IPR. The PTAB may review and dismiss an IPR at any time during the proceedings for failure to properly name all RPIs. Thus, a Petitioner must take caution.

As explained in the PTAB Trial Practice Guide, the inquiry into RPIs seeks to determine whether there is another party “at whose behest the petition has been filed.” There is no explicit rule defining what activities render a party an RPI; it is a case-by-case, fact-based inquiry.

The PTAB Trial Practice Guide explains that a common consideration is “whether the non-party exercised, or could have exercised, control over a party’s participation in a proceeding.” The inquiry is related to actual behavior, rather than a particular relationship. Thus, mere status as a related corporate entity, a co-defendant, or member of a Joint Defense Group will not automatically implicate an RPI issue.

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