Attorney General’s Office May Weigh In on Constitutionality of IPRs involving Pre-AIA Patents

By Tom Engellenner
The 2011 America Invents Act (AIA) provided a variety of new ways to administratively challenge patents, including the now widely used inter partes review (“IPR”) procedure.  In two recent appeals of IPR decisions, Genentech has challenged the constitutionality of IPR proceedings when applied to patents that were already issued as of the date that the AIA was enacted.

Genentech has filed two appeals to the Court of Appeals for the Federal Circuit (“Federal Circuit”) involving decisions by the U. S. Patent Office’s Patent Trial and Appeal Board (“PTAB”) invalidating certain patent rights issued to Genentech on immunotherapy biologics. (Federal Circuit Docket Nos. 18-1933 and 18-1959.)  These patents have been asserted against a number of competitors seeking to market biosimilar products to Genentech’s Avastin® and Herceptin® antibody therapeutics.

The appeals stem from two IPR Petitions filed by Hospira, IPR2016-01771 and IPR2016-01837, that challenged claims of U.S. Patent Nos. 7,622,115 and 7,807,799, respectively. The ’115 Patent issued in November 2009 and the ’799 Patent issued in October, 2010 – both issuance dates being well before the 2011 enactment of the AIA.  The PTAB initiated trials on both patents and ultimately found all of the challenged claims to be invalid over the prior art presented by Hospira.

Genentech’s briefs assert “the retroactive application of inter partes review to a patent issued before that procedure existed is unconstitutional, a taking without just compensation and a denial of due process,” in violation of the Constitution’s Fifth Amendment.

The Federal Circuit has now certified Genentech’s constitutional challenges to the U.S. Attorney General, who has been directed to inform the Court whether the United States intends to intervene in the appeals within 30 days.

Genentech’s position may seem like a “Hail Mary pass” effort to save its patents, especially in light of the U.S. Supreme Court’s decision earlier this year in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712, 138 S. Ct. 1365 (2018) (“Oil States”), where the Court rejected the patent owner’s argument that revoking patent claims as a result of an IPR proceeding is unconstitutional under Article III and the Seventh Amendment.

In the Oil States case, the Court held that the decision to grant a patent is a matter involving public rights and, hence, a challenge to a patent’s validity need not be heard exclusively in an Article III federal court and does not require a jury trial.  (For our detailed analysis of the Oil States decision, click here.)

However, Genentech’s arguments are based on the Fifth Amendment’s prohibition on taking private property for public use without just compensation by a process that did not exist when the property rights were granted. The author of the Oil States decision, Justice Clarence Thomas, emphasized the narrowness of the holding in the Oil States case and made it clear that the case addresses “only the precise constitutional challenges . . . raised here.” Oil States at 1369. Continue reading “Attorney General’s Office May Weigh In on Constitutionality of IPRs involving Pre-AIA Patents”

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.

Federal Circuit Slams PTAB Amendment Policy

By Tom Engellenner
On October 4, 2017, the Court of Appeals for the Federal Circuit, sitting en banc, overruled an earlier panel decision and found that the Patent Trial and Appeal Board (PTAB) had been impermissibly placing the burden of proving the patentability of amended claims on the Patent Owner, rather than the Petitioner.   See, Aqua Products v. Matel, 2015-1177.

In four separate opinions spanning 148 pages, the eleven judges expressed their views on the PTAB amendment practice. Despite differing rationales, it is clear that a majority of the Federal Circuit judges were exasperated by the way the U.S. Patent and Trademark Office (USPTO) has been considering claim amendments in the new administrative trial procedures provided by the America Invents Act (AIA).

As Judge O’Malley noted in the plurality opinion, the PTAB had granted only 6 amendments in inter partes review (IPR) proceedings as of February, 2017 – a period of almost five years since the inauguration of IPR proceedings during which over 6500 petitions were filed.

A great deal of the Aqua Products opinion was devoted to the so-called Chevron standard of review.  Under Chevron and Aura v. Robbins, 519 U.S. 452 (1997), a court reviewing a federal agency’s construction of a statute must first determine whether the statute is at all ambiguous.  If the statute is not ambiguous, the agency’s interpretation is entitled to no weight.  On the other hand, if the statute is ambiguous, the agency’s interpretation is reviewed under a “clearly erroneous” standard.  To complicate things further, the Chevron standard of review is only applicable if the agency has reached its interpretation via a formal rule-making process, i.e. by notice in the Federal Register and taking public comments into account.

Judge O’Malley, joined by four other judges, concluded that the pertinent sections of the AIA (35 U.S.C. 316(d) and 316(e)) were not ambiguous and Congress clearly intended to give Patent Owners a right to amend their claims in AIA proceedings and that the burden of proving invalidity of the amended claims lay with the Petitioner. Judges Reyna and Dyk concluded that the statute was ambiguous on this point but the USPTO had not engaged in formal rule-making and, hence, no Chevron deference was warranted and the most reasonable interpretation of the statute was that Congress intended that the Petitioner should have the burden of proving amended claims were not patentable.  The remaining four judges would have given the USPTO Chevron deference and upheld the PTAB policy of placing the burden of persuasion on the patentability of amended claims with the Patent Owner.

For some patent owners (e.g., plaintiffs in patent infringement suits), the Aqua Products decision may not be of strategic importance.  Roughly 85 percent of IPR petitions are filed by defendants who have been sued for patent infringement.  Since amending claims in a post-grant review proceeding can extinguish a plaintiff’s right to past infringement damages in an underlying federal court litigation, many patent owners may still be reluctant to amend their claims.

However for other patent owners, Aqua Products may change the calculus of how a patent owner responds to a challenge to its patent.  One thing for sure, the ability to amend a patent should put to the test the USPTO oft-repeated position that the PTAB’s use of the broadest reasonable interpretation almost never affects the outcome of an AIA proceeding.  Patent owners faced with what they consider to be an unreasonably broad interpretation of a claim element will now have an ability to correct the record – and defend their patents on their own terms.