Practitioners have long sought more predictability and uniformity at the Patent Trial and Appeal Board (PTAB), and it now appears the United States Patent and Trademark Office (USPTO) is taking that issue head on. On September 20, 2018, the USPTO issued Standard Operating Procedure 2 (SOP 2), creating the precedential opinion panel (POP), which streamlines the process for designating PTAB decisions as precedential or informative—though the Director of the USPTO will still maintain the discretion to designate a decision as precedential or informative (SOP 2 at 1; see also footnote 4).
In just the past six weeks, the USPTO has designated eight America-Invents-Act (AIA) trial decisions as precedential or informative. These decisions address key issues, including motions to amend, introduction of new evidence at rehearing, presentation of live testimony during oral argument, joinder of new issues by an existing party to a pending proceeding, and the PTAB’s discretion to deny institution even after the arguments for some challenged claims meet the institution standard.
Motions to Amend
Lectrosonics, Inc. v. Zaxcom, Inc. and Amazon.com, Inc. v. Uniloc Luxembourg S.A.
Two precedential decisions provide instruction for motions to amend under 35 U.S.C. § 316(d): Amazon.com, Inc. v. Uniloc Luxembourg S.A., Case IPR2017-00948 (PTAB Jan. 18, 2019) (Paper No. 34) (precedential) and Lectrosonics, Inc. v. Zaxcom, Inc., Case IPR2018-01129 (PTAB Feb. 25, 2019) (Paper No. 15) (precedential).
In Amazon.com, the PTAB held that it may consider patentability issues (e.g., § 101) beyond § 102 and § 103 when determining the patentability of substitute claims. There, the patent owner submitted substitute claims—which the petitioner challenged under § 101—and argued that only § 102 and § 103 can be used to challenge claims in inter partes reviews (IPRs). The PTAB disagreed, finding that § 311(b)’s preclusion 1 applies only to existing claims and not to substitute claims in a motion to amend.
In Lectrosonics, the PTAB “provided information and guidance regarding motions to amend.” Lectrosonics, slip op. at 2. That guidance addressed (1) contingent motions to amend, (2) the burden of persuasion, (3) what constitutes a reasonable number of substitute claims, (4) whether all amendments to a claim must respond to a ground of unpatentability involved in the trial, and (5) the scope of the substitute claims, as well as some procedural issues.
Contingent motions to amend: The PTAB stated that requests to cancel claims “will not be regarded as contingent.” Id. at 3. But, “a request to substitute claims ordinarily will be treated as contingent.” Id. Thus, “a proposed substitute claim normally will be considered only if a preponderance of the evidence establishes that the original patent claims that it replaces is unpatentable.” Id.
The burden of persuasion: The PTAB stated that “a patent owner does not bear the burden of persuasion to demonstrate the patentability of substitute claims presented in a motion to amend.” Lectrosonics, slip op. at 3-4 (citing Aqua Products, Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017); the November 2017 “Guidance on Motions to Amend in view of Aqua Products”; and Bosch Automotive Service Solutions, LLC v. Matal, 878 F.3d 1027 (Fed. Cir. 2017)). Instead, “the burden of persuasion ordinarily will lie with the petitioner to show that any proposed substitute claims are unpatentable.…” Lectrosonics, slip op. at 4.
Reasonable number of substitute claims: The PTAB stated that there “is a rebuttable presumption that a reasonable number of substitute claims per challenged claim is one (1) substitute claim.” Id. However, “a patent owner may rebut this presumption upon demonstration of a need to present more than one substitute claim per challenged claim” under 37 C.F.R. § 42.121(a)(3). Id. at 4-5.
Responding to a ground of unpatentability: Per 37 C.F.R. § 42.121(a)(2)(i), the PTAB stated that it reviews motions to amend to ensure that the proposed amendments respond to a ground of unpatentability in the trial. Id. at 5. But, the PTAB explained that not every amendment must be for the sole purpose of addressing a ground of unpatentability. Id. Instead, the PTAB stated that some amendments may address other issues, such as § 101 and § 112. Id.
Scope of the substitute claims: The PTAB stated that “[a] motion to amend may not present substitute claims that enlarge the scope of the claims of the challenged patent or introduce new subject matter.” Id. at 6.
Proppant Express Investments, LLC v. Oren Techs., LLC
In Proppant Express Investments, LLC v. Oren Techs., LLC, Case IPR2018-00914 (PTAB Mar. 13, 2019) (Paper No. 38) (precedential), the PTAB held that 35 U.S.C. § 315(c) gives it discretion to join an issue to a pending proceeding by an existing party where fairness requires it and to avoid undue prejudice to that party. For example, if a patent owner were to amend an infringement complaint in district court to assert new claims against the petitioner after the petitioner had filed its petition, the petitioner may file a motion for joinder to include a challenge of the newly asserted claims. When deciding such motions, the PTAB will consider a number of factors, including prohibitions contained in other statutes (such as the one-year time bar under § 315(b)), fairness, gamesmanship attempts by either party, and undue prejudice to a party.
Based on the facts of the case, however, the PTAB denied the petitioner’s joinder motion because it was needed to correct petitioner’s own error. Therefore, when submitting a joinder motion to add a new issue to an existing proceeding, the petitioner should focus on fairness issues beyond its control that warrant the motion, while avoiding justifications based on the petitioner’s mistakes.
Introduction of New Evidence at Rehearing
Huawei Device Co., Ltd. v. Optis Cellular Tech., LLC
In Huawei Device Co., Ltd. v. Optis Cellular Tech., LLC, Case IPR2018-00816 (PTAB Jan. 8, 2019) (Paper No. 19) (precedential), the PTAB explained that a party wishing to introduce new evidence at rehearing must show “good cause” as to why it should be admitted. Id. at 4. To do so, a party should “ideally” request a conference call with the PTAB prior to submitting the request, or alternatively, it may argue such good cause in the rehearing request itself. Absent such a showing, new evidence is not entitled to consideration. Id.
Live Testimony at Oral Hearing
DePuy Synthes Prods., Inc. v. Medidea, L.L.C. and K-40 Elecs., LLC v. Escort, Inc.
Both DePuy Synthes Prods., Inc. v. Medidea, L.L.C., Case IPR2018-00315 (PTAB Jan. 23, 2019) (Paper No. 29) (precedential) and K-40 Elecs., LLC v. Escort, Inc., Case IPR2013-00203 (PTAB May 21, 2014) (Paper No. 34) (precedential) address presenting live testimony at the oral hearing. In DePuy Synthes (slip op. at 2), the patent owner sought to have the patent-at-issue’s inventor address the panel at the oral hearing. The PTAB denied the request because the inventor had not provided “any declaration evidence in this proceeding and he is not otherwise listed as a counsel of record.” Id. In K-40, however, the PTAB permitted live testimony from the sole inventor of the patent-at-issue. There, that inventor was the principal fact witness for the petitioner, and he was attempting to antedate two relied-upon references through declaration testimony.
In allowing the live testimony, the PTAB identified factors to be considered for such requests, including whether the testimony would be case dispositive and whether the witness is a fact witness, rather than an expert witness. The PTAB allowed the live testimony because the issue was case dispositive and the witness was a fact witness.
PTAB Discretion to Deny Institution Pursuant to 35 U.S.C. §§ 314 AND 316
Chevron Oronite Co. LLC v. Infineum USA L.P. and Deeper, UAB v. Vexilar, Inc.
Two decisions designated as informative denied institution when the arguments for only a small number of challenged claims met the threshold standard of demonstrating a reasonable likelihood of unpatentability under 35 U.S.C. § 314(a). In Chevron Oronite Co. LLC v. Infineum USA L.P., Case IPR2018-00923 (PTAB Nov. 7, 2018) (Paper No. 9) (informative), only two out of 20 total challenged claims met the institution standard, and in Deeper, UAB v. Vexilar, Inc., Case IPR2018-01310 (PTAB Jan. 24, 2019) (Paper No. 7) (informative), only two out of 23 total challenged claims met the institution standard.
In Chevron Oronite, the PTAB denied institution because demonstrating a likelihood of prevailing on only two of 20 claims did not justify an “efficient use of the Board’s time and resources” and exercised its discretion under § 314(a) not to institute, citing SAS Inst. Inc. v. Iancu, 138 S. Ct. 1348, 1356 (2018). Chevron Oronite at slip op. 10-11. The PTAB exercised this discretion similarly in Deeper, UAB, reiterating that “even when a petitioner demonstrates a reasonable likelihood of prevailing with respect to one or more claims, institution of review remains discretionary” under § 314(a). Deeper, UAB, slip op. at 41-43. It determined that discretion, coupled with the statutory goal of efficient administration of the USPTO under § 316(b), meant the petition should be denied because demonstrating a reasonable likelihood of prevailing with respect to “only two claims on one asserted ground” was insufficient to institute the challenge of all 23 claims on all four grounds. Id. at 43.
These two decisions—while not precedential—signal that patent owners may have a new defense against institution: arguing that, to the extent a petitioner has satisfied its burden at all, it has only done so with respect to a limited number of claims.
With the designation of eight decisions as precedential or informative since March, the USPTO has made cleaning up the historic lack of consistency at the PTAB a priority. In fact, the POP recently decided to address another key issue: “[w]hat is required for a petitioner to establish that an asserted reference qualifies as ‘printed publication’ at the institution stage?” Hulu, LLC v. Sound View Innovations, LLC, Case IPR2018-01039 (PTAB Apr. 3, 2019) (Paper No. 15). Hopefully, the USPTO will continue to address critical issues via decision designation.
1 Section 311(b) recites: “(b) Scope.–A petitioner in an inter partes review may request to cancel as unpatentable 1 or more claims of a patent only on a ground that could be raised under section 102 or 103 and only on the basis of prior art consisting of patents or printed publications.”