On April 1, 2016, the U.S. Patent and Trademark Office (USPTO) released a number of amendments to the final rules of trial practices for post-issuance proceedings, i.e., inter parties review, post-grant review, the transitional program for covered business method patents, and derivation proceedings to be effective on May 2, 2016.1 In mid 2014, the USPTO had solicited input from practitioners on ways to make the trial proceedings more effective and fair. The final rules released on April 1, 2016 result from rulemaking related to some of the input. This article discusses some of the changes below.
One change to the rules that applies to all phases of these post-issuance proceedings concerns the duty of candor rule, 37 CFR 42.11, specifically requiring a Rule 11-type certification for papers filed, or later advocated, wherein the person signing the papers must attest to compliance with 37 CFR 11.18(b)(2). For example, the position advanced in the paper filed is warranted by law and not for any improper purpose. Specifically requiring compliance with 37 CFR 11.18(b)(2) could be viewed as redundant because practitioners and parties have been bound by 37 CFR 11.18(b)(2) even before the current change to 37 CFR 42.11. However, it should be noted that what was changed is more than just an explicit requirement of Rule 11-type certification. Rule 42.11 has also been amended to allow the Board to impose sanction for any violation of Rule 42.11, and a party may move for sanction after receiving authorization from the Board, which will authorize the motion if the alleged violation has not been timely cured. However, based on past USPTO experiences, sanctions are expected to be infrequent.2
Currently, claim construction is performed by the Patent Trial and Appeal Board (PTAB) with the broadest reasonable interpretation (BRI).3 However, on April 1, 2016, 37 CFR 42.100(b), 42.200(b) and 42.300(b) were amended to allow either party to move for claim construction using the standard set forth in Phillips4 if the movant certifies that the patent will expire within 18 months from the entry of the Notice of Filing Date Accorded to Petition. The motion must be filed within 30 days from the filing of the petition because the USPTO prefers to resolve the issue of which claim construction standard is applicable before the institution decision.5 PTAB will use BRI in claim construction unless the motion is granted.
The PTAB’s use of BRI was affirmed by the Federal Circuit in Cuozzo, but the Supreme Court will decide on the issue within the next several months.6 If the Supreme Court affirms the use of BRI, whether a party should move for the Phillips-type standard over the BRI has to be analyzed on a case-by-case basis. If the claims are constructed with the potentially narrower Phillips-type standard, rather than BRI, invalidation of the claims based on prior art could be less likely, but the petitioner could have a better non-infringement position in court in case the post-issuance proceeding fails to invalidate all the claims that cover the petitioner’s product or activity. For the patent owner, other than the invalidation potential versus infringement potential discussed above, the potentially narrower Phillips-type standard may cause the product or activity of a licensee to become not covered by a license resulting in less royalty income, which the patent owner may rely upon. Thus, both the petitioner and patent owner need to analyze the pros and cons to determine whether it should file the motion for the Phillips-type standard.
On April 1, 2016, 37 CFR 42.24 was amended by replacing the page limits with word counts in petitions, patent owner preliminary responses, patent owner responses and replies to patent owner responses. However, motions including motions to amend, and replies to oppositions are still subjected to page limits. The USPTO replaced the page limits with word counts to gain administrative efficiencies.7 The use of word counts instead of page limits could improve advocacy by encouraging more concise major briefings. Word counts are also a more precise way, than page numbers, to determine the volume of written information presented in the major briefings that the PTAB panel has to review.
The April 1, 2016 final rules also allow new testimonial evidence to be submitted in the patent owner preliminary response.8 However, in the event the new testimonial evidence would create a genuine issue of material fact, the issue will be resolved in favor of the petitioner only in the stage of institution decision.9 Nevertheless, the patent owner should consider presenting the new testimonial evidence, if available, in the preliminary response because the evidence may help convince the PTAB panel to not institute the post-issuance review if there is no genuine issue of material fact. Even if the panel is not convinced by the new evidence, it would be useful for the patent owner to get a reading from the panel in the Decision for Institution so that the patent owner could decide what other more convincing evidence should be presented in the patent owner response.
Some of these changes would be expected to require adjustments. Strategies used in the past may need to be revised. Nevertheless, hopefully some practitioners would find that at least some of the changes would make the post-issuance proceedings more effective and fair.
2 Id. at 18760.
3 Id. at 18752.
4 Phillips v. AWH Corp., 415 F3d 1303, 1314-1323 (Fed. Cir. 2005) (en banc).
5 81 FR at 18753.
6 In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1278 (Fed. Cir. 2015), cert. granted sub nom., Cuozzo Speed Techs., LLC. v. Lee, 136 S. Ct. 890 (mem.) (2016).
7 81 FR at 18761.
8 Id. at 18755.