USPTO Proposes Change In Claim Construction Standard For Post-Grant Proceedings

By Reza Mollaaghababa
On May 9, 2018, U.S. Patent and Trademark Office (PTO) issued a notice of proposed rule for changing the standard for construing claims in unexpired patents in inter partes review (IPR), post-grant review (PGR), and transitional covered business method (CBM) proceedings from current broadest reasonable interpretation (BRI) to the same claim construction standard that is utilized in the federal courts, i.e., the so-called Phillips standard.

Under the Phillips standard, the words of a claim are generally given their ordinary and customary meaning. In contrast, in post-grant review proceedings, the more expansive BRI standard is employed, which expands the scope of prior art that can be applied to invalidate the challenged claims.  The BRI standard  has been in fact outcome determinative in many of the proceedings.

The notice of proposed rule indicates that the U.S. Supreme Court has endorsed the PTO’s ability to choose an approach to claim construction for AIA proceedings. It also indicates that the proposed change in the claim construction standard could lead to greater uniformity and predictability between the claim constructions adopted by the PTAB and the federal courts.  This change will also harmonize the standard used for patentability and infringement, which could otherwise lead to unfair results.  For example, under BRI, it is possible for a patent claim to be invalidated based on a prior art reference although the construction of the same claim in an issued patent under the Phillips standard would not lead to a conclusion of infringement.  Moreover, there have been cases of a patent being found valid and infringed in a district court action but subsequently being found invalid by the PTO under the BRI standard.

The proposed change applies not only to the claims of an unexpired patent but also to claims presented in a motion to amend. “Under the proposed approach, the PTAB would construe patent claims based on the record of the IPR, PGR, or CBM proceeding taking into account the claim language itself, specification, and prosecution history pertaining to the patent.”  Further, consistent with the Phillips standard, extrinsic evidence, such as expert testimony and dictionaries, may be useful in determining what a person of ordinary skill would understand the claim terms to mean; however, extrinsic evidence is viewed as less reliable than intrinsic evidence.

Further, consistent with the Phillips standard, “the doctrine of construing claims to preserve their validity would apply to AIA trials.”  The notice, however, cautions that the doctrine of construing claims to preserve their validity has been limited to cases in which “the court concludes, after applying all the available tools of claim construction, that the claim in ambiguous.”  Further, the Federal Circuit “repeatedly and consistently has recognized that the courts may not redraft claims, whether to make them operable or to sustain their validity.”

The PTO intends that any proposed rule changes adopted in a final rule would be applied to all pending IPR, PGR, and CBM proceedings before the PTAB. The Office is presently soliciting comments on the proposed change, where written comments must be received by July 9, 2018 to ensure consideration.

Estoppel Does Not Attach When Petitioner’s Grounds Are Denied As Redundant

By Reza Mollaaghababa
Under 35 U.S.C. 315(e)(1), a petitioner in an inter partes review of a claim in a patent that has resulted in a final written decision by the Board may not request or maintain a proceeding before the Patent Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review. Nor can such a petitioner raise that ground against that claim in a civil action or in a proceeding before the International Trade Commission. 35 U.S.C. 315(e)(2). In Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., the Court of Appeals for the Federal Circuit (CAFC) recently held that the estoppel provisions of 315(e) do not apply to any ground in an IPR petition that the Board deems as redundant to other ground(s) and thus for which no trial is instituted.

In February 2012, ACS sued Shaw for the infringement of its U.S. Patent No. 7,806,360. Within one year of the service of the complaint, Shaw filed an IPR petition challenging claims 1-20 of the ‘360 patent in which it raised multiple grounds of invalidity. The Board instituted a trial on all challenged claims except for claim 4. With respect to the claims on which a trial was instituted, the Board found certain grounds as redundant relative to others and hence refused to consider those grounds. Subsequently, Shaw filed another IPR petition to challenge claim 4 of the patent based on six new obviousness grounds. The Board instituted a trial based on two of the six grounds and denied the other grounds as redundant. The Board consolidated the two IPRs and issued one final written decision.

In appealing the Board’s decision, Shaw requested that CAFC review the Board’s decision to deny certain grounds as redundant and argued that CAFC had jurisdiction to do so. In particular, Shaw argued that Section 314(d), which indicates that the Board lacks jurisdiction to review the Board’s institution or denial decisions, is not applicable because Shaw was not seeking review of the Board’s institution decision. Rather, it was asking the court “to review the Board’s authority, and correctness in exercising the same, in deeming a subset of asserted grounds redundant of instituted grounds.”

The CAFC disagreed and emphasized that the PTO had the right to exercise its authority in instituting IPR on only some of the grounds. The court explained that there is benefit in the “PTO having the ability to institute IPR on only some of the claims and only some of the proposed grounds, particularly given the Board’s statutory obligation to complete proceedings in a timely and efficient manner.”

The CAFC next addressed Shaw’s request that it issue a writ of mandamus instructing the PTO to reevaluate its redundancy decision and to institute IPR on the redundant grounds. In support of its request for the writ of mandamus, Shaw argued that it may be estopped from raising the redundant grounds in future proceedings.

The CAFC was not persuaded and held that Shaw was not estopped from raising the redundant grounds either in the USPTO or in the courts. The CAFC explained that an “IPR does not begin until it is instituted.” As such, the arguments regarding the redundant claims were not raised during the IPR proceeding and hence are not subject to the estoppel provisions of Section 315 (e).

New Final Rules for Post-Grant Proceedings Published by USPTO on April Fools Day

By Tom Engellenner
The USPTO has gone ahead and finalized new rules for post-grant proceedings under the America Invents Act (AIA) – despite heavy criticism that the rules do little to alter the lopsided nature of these proceedings. The new rules were published at 81 FR 18750 on April 1, 2016 and go into effect on May 2, 2016.

Technically this “final rulemaking” amends various portions of 37 C.F.R. 42, the rules that govern post-grant proceedings under the AIA, including inter partes review (IPR), covered business method review (CBM), and post-grant review (PGR).

Perhaps the most significant change is that under the new rules the patent owner will be able to submit testimonial evidence, such as an expert declaration, as part of a patent owner’s preliminary response to a patent challenge before the Patent Trial and Appeal Board (PTAB) decides to institute an IPR, CBM, or PGR trial. (Under the existing rules, the Patent Owner usually cannot present testimonial evidence until after the institution decision and the PTAB makes its decision to institute trial after hearing only one side of the story, e.g., from the petitioner’s expert.)

However, 37 CFR 42.108(c) has been revised such that if the patent owner presents testimonial evidence as part of a preliminary response, any “genuine issue of material fact created by such testimonial evidence will be viewed in the light most favorable to the petitioner solely for purposes of deciding whether to institute an inter partes review.” An analogous new rule in 37 CFR 42.208(c) for a post grant review has also been finalized. Under the new rules petitioners may also seek leave to file a reply to any preliminary response filed by the patent owner.

These changes beg the questions: what do the patent owners have left to say after institution if their experts’ opinions have already been considered and found unpersuasive, and will the PTAB judges ever change their minds during trials when the petitioner’s evidence is not viewed in its most favorable light? Continue reading “New Final Rules for Post-Grant Proceedings Published by USPTO on April Fools Day”