Year in Review: Changes in PTAB Practice in 2018

By Tom Engellenner
A number of significant changes occurred in 2018 at the U.S. Patent and Trademark Office (USPTO). To begin with, in February 2018, a new USPTO Director took office.  Director Andrew Iancu, a former patent litigator with law firm experience, appears to have brought a different perspective than that of his corporate predecessors – Michel Lee (Google) and David Kappos (IBM) – to the job at the helm of the USPTO.  In his Senate confirmation hearings, Iancu made it clear that he felt that better balance was needed in the administrative review of issued patents by the USPTO under the America Invents Act (AIA).   He pledged to assess “improvements in the AIA trial standards and processes.”  Iancu identified “institution decisions, claim construction, the amendment process, and the conduct of hearings” as areas that warranted study.  In fact, Director Iancu did a lot more than study these aspects of practice before the Patent Trial and Appeal Board (PTAB) in 2018. Continue reading “Year in Review: Changes in PTAB Practice in 2018”

PTAB Issues Guidelines for Motions to Amend

By Reza Mollaaghababa
An en banc panel of the Court of Appeals for the Federal Circuit (CAFC) in the case of Aqua Products, Inc. v. Matal recently held that in an inter-partes (IPR) proceeding, the burden of persuasion rests with the challenger to persuade the PATB that substitute claims proposed by a patent owner in a motion to amend are unpatentable.  This is a significant shift from the Board’s practice that had required the patent owner to demonstrate that proposed substitute claims are patentable over the art cited by the challenger and the art known to the patent owner.

The PTAB has issued guidelines regarding motions to amend in light of the Aqua Products decision. The guidelines indicate that consistent with the Aqua Products decision, the Board will not place the burden of persuasion on the patent owner with regard to the patentability of substitute claims presented in a motion to amend.  If the patent owner presents a reasonable number of substitute claims that do not enlarge the scope of the original claims and do not introduce new matter, “the Board will proceed to determine whether the substitute claims are unpatentable by a preponderance of the evidence based on the entirety of the record, including any opposition made by the petitioner.”  In particular, “if the entirety of the evidence of record before the Board is in equipoise as to the unpatentability of one or more substitute claims, the Board will grant the motion to amend with respect to such claims, and the Office will issue a certificate incorporating those claims into the patent at issue.”

The guidelines, however, indicate that a motion to amend must still set forth “written description” support and support for the benefit of a filing date in relation to each substitute claim, and respond to grounds of unpatentability involved in the trial.” The guidelines further emphasize that all parties have a duty of candor and in particular the patent owner has a duty “to disclose to the Board information that the patent owner is aware of that is material to the patentability of substitute claims, if such information is not already of record in the case.”  The rules regarding the types, timing and page limits of briefs remain unchanged.  Further, the patent owner must still confer with the Board before filing a motion to amend.

The recognition that the burden for proving unpatentability rests with the challenger even when the patent owner presents substitute claims can potentially result in more motions to amend to be granted. Nonetheless, a patent owner seeking to amend challenged claims may still consider other venues for presenting such amendments. For example, such a patent owner can present amended claims in an ex-parte reexamination or a reissue proceeding. One advantage of such alternative venues for presenting claims amendments is that, unlike in an IPR proceeding, a third party cannot argue against amendments presented in an ex-parte reexamination or a reissue proceeding initiated by a patent owner.

Bass’s First IPR Decision Rendered – Victory for Patent Owner, Shire Lpc

By Tom Engellenner
If Kyle Bass’s Coalition for Affordable Drugs Series II hedge fund was hoping to reap a windfall from short positions in Shire Plc’s stock this week, it was dealt a major setback by a Patent Trial and Appeal Board (PTAB) decision to uphold Shire’s patent on its colitis drug, Lialda®.  In a final written decision on U.S. Patent 6,773,720 (IPR2015-00988, Oct. 5, 2016), the PTAB found that Bass’s group had failed to meet its burden of proof that the challenged claims were obvious over the prior art.

According to the PTAB panel, “[a]t best for Petitioner, the record before us indicates a close call, but certainly not a strong case, regarding a showing of obviousness by the preponderance of evidence based on our analysis of the prior art. To the extent that it is a close call, it is noteworthy that the burden of persuasion is on Petitioner.”  Final decision,. p. 23.

The patent in issue was directed to controlled release formulations of an active ingredient, 5-amino salicylic acid (5-ASA) having an inner matrix chosen from a list of lipophilic materials and an outer matrix of certain hydrophilic materials.  Bass’s group relied on two references for its obviousness argument: Groenendall, which taught that 5-ASA could be delivered in a controlled release manner and Leslie, which taught the use of combined lipophilic and hydrophilic matrices – but not the specific lipophilic compositions listed in the patent’s claim.

The PTAB decision also concluded that even if Lelslie taught a lipophilic matric as recited in the Shire patent’s principal claim, it would not have been obvious to combine the references given the myriad of controlled release formulations:

Petitioner does not explain adequately, however, why one “would have been motivated to look to Leslie” in particular to “improve” the 5-ASA compositions disclosed in Groenendaal when one takes into account the crowded art of controlled release formulations generally.

Shire’s stock closed on Wednesday, October 5th essentially unchanged from the beginning of the week.  Liadla® sales reportedly generated over $600 million last year (about 11 percent of Shire’s total revenue).  The lack of any boost in Shire’s stock price may reflect the bigger battlefield over this drug.  Shire is concurrently fighting several generic drug companies, including Teva, Mylan and Zydus in federal court patent infringement litigations based on the ‘720 patent.

The decision this week is the first final written decision to be handed down by the PTAB on the numerous petitions filed by Bass’s so-called Coalitions for Affordable Drugs (Series I-XI).  These hedge funds had filed 33 petitions in 2015, and 18 were accepted for review.  Decisions are also expected this month on two blood cancer treatment patents owned by Celgene Corp – and a decision on another Bass group petition (against U.S. Patent No. 7,056,886, for Shire’s Gattex, a treatment for short bowel syndrome) should be rendered by Oct. 23, 2016