Post-Grant Proceedings

The USPTO announced today proposed rulemaking for changing its policy related to claim interpretation in Patent Trial and Appeal Board (“PTAB”) proceedings (not including patent examination). Currently, the broadest reasonable interpretation (“BRI”) standard is applied when analyzing claims. The proposed new rules would result in “the same as the standard applied in federal district courts and International Trade Commission (“ITC”) proceedings;” i.e., “ordinary and customary meaning” according to “a person of ordinary skill in the art in question at the time of the invention,”[1] and “reasonable certainty” for definiteness analysis[2]. In addition, it is proposed that the USPTO/PTAB “will consider any prior claim construction determination concerning a term of the involved claim in a civil action, or an ITC proceeding, that is timely made of record in an IPR, PGR, or CBM proceeding.” Continue Reading USPTO Announces Notice of Proposed Rulemaking for Claim Construction Standard used in PTAB Proceedings

SAS Institute Inc. v. Iancu

As we recently noted in our companion piece Part 1 of 2: Supreme Court and Inter Partes Review, the Supreme Court issued decisions in two intellectual property appeals relating to inter partes review (“IPR”) before the U.S. Patent and Trademark Office. In Oil States Energy Services LLC v. Greene’s Energy Group LLC, No. 16-712, the Court decided 7–2 that the inter partes review process does not violate Article III of the Constitution or the Seventh Amendment. In SAS Institute Inc. v. IANCU, No. 16-969, the Court decided that the Patent Trial and Appeal Board (“PTAB”) must decide the patentability of all of the claims the petitioner has challenged rather than selectively picking and choosing which claims to review. In response to the Court’s decision in SAS, the PTAB has already issued new guidance regarding the institution of IPRs. Continue Reading Part 2 of 2: Supreme Court and Inter Partes Review

Oil States Energy Services LLC v. Greene’s Energy Group LLC

On April 24, 2018, the Supreme Court issued decisions in two intellectual property appeals relating to inter partes review (“IPR”) before the U.S. Patent and Trademark Office. In Oil States Energy Services LLC v. Greene’s Energy Group LLC, No. 16-712, the Court decided 7–2 that the inter partes review process does not violate Article III of the Constitution or the Seventh Amendment. In SAS Institute Inc. v. IANCU, No. 16-969,  the Court decided that the Patent Trial and Appeal Board (“PTAB”) must decide the patentability of all of the claims the petitioner has challenged rather than selectively picking and choosing which claims to review.  In response to the Court’s decision in SAS, the PTAB has already issued new guidance regarding the institution of IPRs. Continue Reading Part 1 of 2: Supreme Court and Inter Partes Review

As a special feature of our blog, we include special guest postings by experts, clients, and other professionals—please enjoy this blog entry which includes guest author Rolf J. Haag.[1]

It has been impossible to miss the surreal volatility in Bitcoin’s per unit price—having gone from $1,000 in January 2017 to almost $20,000 (~$750B mkt. cap) toward the end of last year and retracting to under $8,000 (~$500B mkt. cap) in February 2018. Whether these G-LOC-inducing price undulations are reflective of a radical paradigm shift in the mode of financial transactions, history’s greatest pyramid scheme, or some mix thereof, remains to be seen. Continue Reading Will Blockchain Revolutionize Bio/Pharma R&D, Tech Transfer, and IP?

In an unprecedented move by the U.S. Patent and Trademark Office (USPTO), the Patent Trials and Appeals Board (PTAB) has permitted the filing of amicus briefs on whether the Saint Regis Mohawk Tribe (“Tribe”) should be permitted to terminate the inter partes review of Allergan’s patents contested in IPR2016-00127, IPR2016-01128, IPR2016-01129, IPR2016-01130, IPR2016-01131, and IPR2016-01132. Allergan assigned the patents challenged in these IPRs to the Tribe, while retaining an exclusive license in exchange for ongoing payments. As a sovereign entity, the Tribe seeks to terminate the IPR challenges of these patents, a move which the PTAB had ruled in 2016 shielded the University of Florida Research Foundation as a sovereign entity from IPRs. See Covidien LP v University of Florida Research Foundation Inc., IPR2016-01274, Paper 21 (PTAB Jan. 25, 2016). Amicus briefs of no more than 15 pages are due to be filed by December 1, 2017, and the Petitioners and Tribe are each authorized to file a single response to any amicus brief by December 15, 2017.

This maneuvering has caught the attention of many, including members of Congress and the district court specifically addressing the validity of these patents. In response to a bipartisan committee investigating the Allergan-Tribe deal, Senator McCaskill has already drafted a bill to block tribal claims of sovereign immunity, which could otherwise preclude USPTO review of patents assigned to tribes. Court of Appeals for the Federal Circuit Judge William Bryson, sitting by “designation” in the Eastern District Court of Texas, expressed concerned that Allergan sought to “rent” sovereign immunity from the Tribe. On the other hand, heralded as an innovative defense, patent attorneys now seek such a defense to patent challenges before the USPTO. The Saint Regis Mohawk Tribe has reportedly already taken ownership of patents from SRC Labs and is in discussion with another technology company.

Interestingly, the district court under Judge Bryson recently found four of the six patents invalid, a decision which will likely be appealed to the CAFC. However, the PTAB nevertheless will need to answer, inter alia, the question of  whether the Tribe’s right as a sovereign immunity will shield the Allergan patents from IPRs. Due to additional parties joining as Petitioner and the complicated issues surrounding this challenge, the PTAB has extended a deadline to render its final decision in the IPR from December 8, 2016, to April 6, 2018.

The America Invents Act (“AIA”) provides for post grant challenges of U.S. patents in the Patent Trial and Appeal Board (“PTAB”) of the U.S. Patent and Trademark Office. One type of AIA proceeding, Inter Partes Review (“IPR”), came into effect in September 2012, and provides a process for relatively quick determination of invalidity of challenged patent claims based on published prior art. [1] IPR decisions rendered in the past five years have created a body of law addressing a variety of issues related to invalidity challenges before the PTAB. In a recent IPR proceeding, a novel strategy has arisen that posts an interesting question of first impression, whether the assignment of a patent involved in an IPR proceeding to a U.S. Indian tribe can avoid an IPR proceeding based on a sovereign immunity defense. The present blog post summarizes the new issue that the PTAB will be required to decide in the IPR. Continue Reading Indian Tribal Sovereign Immunity Asserted in an IPR

shutterstock_350539772In a recent case involving Apotex’s proposed biosimilar product to Amgen’s Neulasta® (pegfilgrastim), Amgen sought a preliminary injunction to enforce the Biologic Price Competition and Innovation Act (BPCIA) provision that requires an applicant to give notice 180 days before marketing an FDA-licensed product.1 In Amgen v. Sandoz, a divided Federal Circuit held that “the 180-day period runs from post-licensure notice.”2 In that case, the biosimilar applicant defaulted on the statutory process for exchanging patent information and channeling patent litigation (“information exchange”) required by 42 U.S.C. § 262(l), by not providing the reference product sponsor with a copy of the biosimilar application, as required by 42 U.S.C. § 262(l)(2)(A).

In the instant case, Apotex argued that the commercial marketing provision of the BPCIA was not mandatory because it did engage in the information exchange.3 Apotex filed a biologics application for Amgen’s Neulasta® in October 2014, and the FDA accepted the application for review on December 15, 2014.4 Apotex and Amgen engaged in the required information exchange, during which Apotex provided notice of future commercial marketing pursuant to paragraph (l)(8)(A) of the BPCIA, even though Apotex lacked an FDA license.5 In October 2015, Amgen asked the district court to issue a preliminary injunction that would require Apotex to provide paragraph (l)(8)(A) notice “if an when it receives a license, and to delay any commercial marketing from that notice.”6 The district court agreed with Amgen, and granted a preliminary injunction.7

On appeal, a unanimous Federal Circuit affirmed the district court ruling, and determined that the notice provision is mandatory regardless of whether the applicant provides the paragraph (2)(A) notice that begins the information-exchange process.8 The court also rejected Apotex’s argument that its decision would give reference product sponsors 12.5 years of exclusivity, rather than the 12 years envisioned by the statute.9

The court stated:

[I]t is implicit in the Biologics Act that any such delay beyond 12 years should occur less and less as time goes by. Doubtless, there will be some exclusivity periods beyond 12 years in the early years of the Biologics Act, as biosimilars are introduced for reference products licensed well before the Act was adopted in 2010. But as time passes, more and more of the reference products will be newer, and a biosimilar-product applicant, entitled to file an application a mere four years after licensure of the reference product … can seek approval long before the 12-year exclusivity period is up.10

The court concluded that the purpose of paragraph (8)(A) is “to ensure that, starting from when the applicant’s product, uses, and processes are fixed by the license, the necessary decision-making regarding further patent litigation is not conducted under time pressure that will impair its fairness and accuracy,” covers applicants that file paragraph (2)(A) notices as well as those who do not.11

1 42 U.S.C. § 262(l)(8)(A).
2 Amgen v. Sandoz Inc., 794 F.3d 1347, 1357-68 (Fed. Cir. 2015).
3 Amgen v. Apotex Inc., No. 16-1308, slip op. at 4 (Fed. Cir. 2016).
4 Id. at 11.
5 Id. at 11-12
6 Id. at 13.
7 Id. at 14
8 See id. at 15.
9 See id. at 16.
10 Id. at 17.
11 Id.

shutterstock_533480197On May 9, 2016, the U.S. Court of Appeals for the Federal Circuit upheld the U.S. Patent and Trademark Office (PTO) Patent Trial and Appeal Board (PTAB) inter partes review determination that claims 1-6 and 8 of U.S Patent Number 7,566,537 (the ‘537 patent) were not invalid for obviousness under 35 U.S.C. § 103.1

Intelligent Bio-Systems (IBS) filed a revised petition requesting inter partes of review of some of the claims of the ‘537 patent, owned by Illumina Cambridge Ltd. (Illumina) on August 30, 2013, alleging the claims were invalid as obvious under section 103 in view of certain prior art.2 The ‘537 patent relates to the sequencing by synthesis (SBS) method of labelling nucleotide bases. Claim 1, the only independent claim under review, states:

1. A method of labeling a nucleic acid molecule, the method comprising incorporating into the nucleic acid molecule a nucleotide or nucleoside molecule, wherein the nucleotide or nucleoside molecule has a base that is linked to a detectable label via a cleavable linker and the nucleotide or nucleoside molecule has a ribose or deoxyribose sugar moiety, wherein the ribose or deoxyribose sugar moiety comprises a protecting group attached via the 2′ or 3′ oxygen atom, and said protecting group can be modified or removed to expose a 3′ OH group and the protecting group comprises an azido group.3

There were three prior art references at issue, Ju and Tsien, which PTAB determined “describe[] a process of labeling, and ultimately sequencing, a nucleic acid molecule,” by a polymerase, but did not “disclose protecting a protecting group that comprises an azido group.”4 Zavgorodny, however, taught “that an azidomethyl moiety is a suitable protecting group for … precisely the position requiring protecting in Ju’s [or Tsien’s] process.”5

Before PTAB, Illumina argued that “an ordinary artisan would not expect the azidomethyl group of Zavgorodny to meet the specific criteria or Tsien or Ju,” in particular, the “quantitative and rapid removal [essentially 100% removal]” required by Tsien.6 The Board agreed, deciding that IBS failed to prove the claims were obvious under the prior art.7 IBS challenged the Board’s decision.8

Before the Federal Circuit, IBS argued that the Board erred by imposing a quantitative cleavage requirement into the claims “through the reasonable expectation of success analysis.”9

The Federal Circuit stated:

The reasonable expectation of success requirement refers to the likelihood of success in combining references to meet the limitations of the claimed invention.

The Board seemed to believe that the “reasonable expectation of success” inquiry looked to whether one would reasonably expect the prior art references to operate as those references intended once combined. That is not the correct inquiry—one must have a motivation to combine accompanied by a reasonable expectation of achieving what is claimed in the patent-at-issue. The Board’s reliance on the absence of a reasonable expectation of success was, thus, improper.10

However, the Federal Circuit agreed with the Board’s ultimate decision of nonobviousness.11

[W]hile the Board conflated two different legal concepts—reasonable expectation of success and motivation to combine—it nevertheless made sufficient factual findings to support its judgment that the claims at issue are not invalid. It was IBS’s burden to demonstrate both “that a skilled artisan would have been motivated to combine the teachings of the prior art references to achieve the claimed invention, and that the skilled artisan would have had a reasonable expectation of success in doing so.

Despite the loose language employed by the Board, its factual findings support its conclusion that the claims are not invalid.12

Secondarily, because IBS presented a new argument in its reply brief, the Board refused to consider the brief and accompanying expert declaration “because it found that IBS’s reply was improper under two regulations: first under 37 C.F.R. § 42.23(b), which provides that a ‘reply may only respond to arguments raided in the corresponding opposition or patent owner response,’ and then under 37 C.F.R. § 42.6(a)(3), which states that ‘[a]rguments must not be incorporated by reference from one document into another document.’”13

The Federal Circuit found that the “reply brief and accompanying declaration exceeded the scope of the reply under § 42.23(b), and therefore, that the Board did not abuse its discretion in excluding those documents.”14 Thus, the court found that it did not need to reach a determination as to whether the brief complied with § 42.6(a)(3).15

The Federal Circuit emphasized that:

Unlike district court litigation—where parties have greater freedom to revise and develop their arguments over time and in response to newly discovered material—the expedited nature of IPRs bring with it an obligation for petitioners to make their case in their petition to institute. While the Board’s requirements are strict ones, they are requirements of which petitioners are aware when they seek to institute an IPR.16

1 Intelligent Bio-Systems, Inc. v. Illumina Cambridge Ltd., No. 15-1693, slip op. at 2 (Fed. Cir. May 9, 2016).
2 Id.
3 Id. at 4. emphases in original
4 Id. at 5.
5 Id.
6 Id. at 7.
7 Id.
8 Id. at 10.
9 Id. at 12.
10 Id.
11 Id. at 12.
12 Id. at 13.
13 Id. at 10.
14 Id. at 17.
15 Id.
16 Id. at 16.

shutterstock_553962622On April 26, 2016, the Federal Circuit denied a petition for rehearing en banc, filed by Merck and Cie. The Federal Circuit maintained that the “substantial evidence” review standard applies for an appeal from an IPR proceeding.1 Judge O’Malley, with whom Judges Wallach and Stoll concurred in the denial of the petition, stated that in light of §§ 7 and 144 of Title 35, “we review Board decisions ‘on the record of an agency hearing provided by statute,’ and that we should therefore review Board fact-finding for ‘substantial evidence.’”2 The court explained its decision to deny the petition, “[i]n light of In re Gartside, [it] has reviewed all of the Board’s factual findings including those in IPRs, for substantial evidence.”3

Judge O’Malley, stated that the substantial evidence standard of review is seemingly inconsistent with the purpose and content of the America Invents Act (“AIA”). Indeed, according to Judge O’Malley, “[t]o the extent IPR proceedings were intended to replace district court litigation, it would make sense for this court to review factual findings by the Board in these new IPR proceedings under the same standard we employ when reviewing factual findings of district judges – for clear error.”4 However, Judge O’Malley recognized that the court is bound by the Supreme Court precedent in Dickinson v. Zurko5, and its own precedent in In re Gartside.6 Before Dickinson, the Federal Circuit had a “settled practice of reviewing factual findings of the board’s patentability determinations for clear error.”7 In Dickinson, the Supreme Court disagreed, “conclud[ing] that [5U.S.C. § 706 of the APA] does apply [to Board findings], and the Federal Circuit must use the framework set forth in that section.”8

The opinion further stated that the failure to change the standard of review at Federal Circuit is inconsistent with what Congress sought to accomplish by creating IPR proceedings;9 and, unless and until the Congress or the Supreme Court sees fit to expressly change the standard of review, the Federal Court will continue to review factual findings of the Board for substantial evidence.10 Judge O’Malley explained “when authorizing IPR proceedings under the AIA . . . Congress viewed IPR proceedings as cost-efficient substitutes for litigation in federal district courts” and, therefore, it makes sense for the Federal Circuit to review factual findings by PTAB under the AIA with the same standard employed when reviewing factual findings of district judges.11 However, the Court acknowledged, “[b]ecause Congress failed to expressly change the standard of review employed by this court in reviewing Board decisions when it created IPR proceedings via the AIA, we are not free to do so now.”12

The opinion also distinguished inter partes reexamination (which were reviewed under the standard of substantial evidence) from IPR proceedings, and explained that “Congress … enacted substantive and procedural changes that brought IPR proceedings in line with district court in meaningful ways.”13

Judge Newman, consistent with her dissent in the December 2015 decision,14 reiterated that (i) the precedence does not prohibit objective review of PTAB decisions15, (ii) the substantial evidence standard does not conform to the statutory plan,16 and (iii) the PTAB proceeding is a trial between private parties, and requires commensurate review.17 The dissent further stated that the purpose of AIA to provide a substitute for district court proceedings is “thwarted” if on appeal the Federal Circuit simply looks for substitutional evidence on the side of the PTAB decision.18

Given that (i) at least four Federal Circuit judges do not seem to think that the Court’s application of, and failure to change, the substantial evidence standard of review is consistent with the AIA, and (ii) three of the four Judges clearly call on Congress and/or the Supreme Court to address the issue of standard of review to be applied by the Federal Circuit judges, it will be interesting to see whether Merck pursues its petition to alter the standard of review to the Supreme Court.

1 Merck & Cie v. Gnosis S.P.A. et al., Case No. 2014-1779 (Fed. Cir., Apr. 26, 2016).
2 Id. at 3.
3 Id.
4 Id. at 4.
5 Dickinson v. Zurko, 527 U.S. 150 (1999).
6 In re Gartside, 203 F.3d 1305, 1313 (Fed. Cir. 2000).
7 In re Zurko, 142 F.3d 1447, 1458 (Fed. Cir. 1998) (en banc).
8 Dickenson, 527 U.S. at 152.
9 Merck & Cie at 6.
10 Id. at 7.
11 Merck & Cie at 3.
12 Id. at 2.
13 Id. at 5.
14 Merck & Cie v. Gnosis S.p.A., 808 F.3d 829 (Fed. Cir. 2015).
15 Merck & Cie (Fed. Cir., Apr. 26, 2016) at 11-12.
16 Id. at 12-14.
17 Id. at 14-15.
18 Id. at 15.

shutterstock_521023699On 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.

1 Amendments to the Rules of Practice for Trials Before the Patent and Trial and Appeal Board, 81 FR 18750 (April 1, 2016).
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.
9 Id.