On August 20, 2015, the USPTO published additional proposed rules of practice for post-grant proceedings (IPR, CBM, and PGR; collectively “PGPs”) before the Patent Trial and Appeal Board (“PTAB”).1 The proposed rules are in response to comments provided by the public and practitioners in an effort to help make the proceedings more transparent and effective.2
Amongst the proposed rules are those that aim to: 1) clarify, and confirm, the use of the broadest reasonable interpretation standard (“BRI”) for claim construction during PGPs; 2) implement a Rule-11-type standard requiring that practitioners certify that their representations before the PTAB are proper and that the violation of such a standard may result in sanctions; and 3) reaffirm the PTAB’s recently revised practice, as clarified in the MasterImage trial,3 of more readily allowing claim amendments by patent owners in PGPs.4
Perhaps the most significant proposal, at least from the patent owner’s perspective, is the ability to include new testimonial evidence, such as expert declarations, in a patent owner’s opposition to a petition to institute a PGP. Up to this point, patent owners have arguably been at a disadvantage at the petition stage of a proceeding because they have been limited to attorney arguments, without the support of expert declarations, in reply to a challenger’s petition. In contrast, the challenger’s petition is almost invariably supported by one, if not many, expert declarations. Challengers also have the added benefit of more time to formulate their arguments. As a result, many argue, the PTAB is more apt to institute a proceeding because the petition, in contrast to the opposition, is backed by expert opinion.
Based on the most recent statistical data from the PTAB, the PTO’s proposed change could end up being a significant tool to help level the playing field for patent owners. As of July 31, 2015, 3,655 post-grant petitions have been filed since 2012 – the majority of which are IPR petitions (3,277 or 90%).5 Life science patents are not immune, as 14% of the total number of post-grant petitions filed in the fiscal year of 2015, targeted patents in the fields of biotech, chemicals, and pharmaceuticals.6
The fate of IPR petitions is instructive. Of the 3,277 IPR petitions filed, 1, 777 have reached a final disposition. Of the 1,777 petitions, 950 (53%) were denied, settled, or dismissed (the data is not clear on how many petitions fall into each category), and trial was instituted on the remaining 827 (47%). Of the 827 petitions that were instituted, 380 (46%) were terminated during trial due to settlement, dismissal, or requests for adverse judgment (again the data does not clarify how many fall into each category) and the remaining 447 (54%) completed trial.
This is where the data gets interesting: of the 447 IPR proceedings that completed trial, 295 of them (66%) resulted in all instituted claims being declared unpatentable and 81 of the petitions (18%) resulted in some of the instituted claims being declared unpatentable. Thus, in the end, only 16% of patents that were challenged in an IPR and completed trial escaped unscathed.7
It is not surprising then, based on this data, that patent owners have felt that PGPs are heavily weighted in favor of challengers and against patentability. So, how does the PTO’s proposed rule change the game? In short, avoiding institution of a PGP is likely a patent owner’s best chance of keeping their patent intact. As shown above, if a petition is instituted and trial begins (IPRs, in particular), the likelihood of challenged claims emerging intact is slim.
The expectation is that by allowing patent owners to include expert declarations, and perhaps other evidence, in their opposition to a petition, the probability of maintaining challenged claims will increase by decreasing the overall number of petitions that are instituted in the first place. Time will tell whether or not such a trend will occur, but it looks like the PTO is listening and trying to even the playing the field – at least from a patent owner’s perspective.
Potential strategies going forward for both challengers and patent owners, assuming the proposed rule is adopted, may include:
Challenger – even stronger petitions with numerous expert declarations; retain as many experts as possible (even if declarations are not used for each one) to deplete the field of experts available to the patent owner; target more vulnerable claims to increase likelihood of petition being granted.
Patent owner – retain experts as soon as possible (even before a petition is filed should you suspect a challenge); file an opposition to the petition with support from expert declarations; invest in knowledgeable and experienced patent prosecution practitioners to ensure strong patents with numerous patents and claims covering your product/method.
2 Id. at 50721.
3 See MasterImage 3D, Inc. v. RealD Inc., No. IPR 2015-00040 (P.T.A.B. Decision July 15, 2015).
4 Before PTAB, 80 Fed. Reg. at 50721-25, 50744; See also Michelle K. Lee, PTAB Update: Proposed Changes to Rules Governing PTAB Trial Proceedings, Director’s Forum: A Blog from USPTO’s Leadership (Aug 19, 2015, 9:03 AM) http://www.uspto.gov/blog/director/entry/ptab_update_proposed_changes_to.
5 See PTAB Statistics (July 31, 2015).