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”

Allergan’s Mohawk Gambit Fails at the PTAB

By Tom Engellenner
The Patent Trial and Appeal Board (PTAB) has not taken kindly to a move by the Irish drug company Allergan to shield its key patents on its dry-eye drug Restasis from challenge at the U.S. Patent Office by assigning these patents to the Saint Regis Mohawk Tribe in return for a commitment by the tribe, as new owner of the patents, to invoke “sovereign immunity.”  In a decision rendered last Friday (February 23, 2017), the PTAB panel handling these cases rejected the Tribe’s claim to immunity and denied the new patent owner’s motion to terminate.

However, the PTAB panel decision denying the motion to terminate in these IPR cases (Mylan Pharmaceuticals, et al. v. Allergan, Inc., PR2016-01127, etc.) is surprising because the panel declined to take the easy way out, that being to follow the reasoning of a recent PTAB ruling in another sovereign immunity case, Ericsson Inc. v. Regents of the University of Minnesota, IPR2017-01186.

The enlarged PTAB panel in the Ericsson case (which included the PTAB’s Chief Judge and three other additional panel members selected by the Chief Judge) found that sovereign immunity was waived when a Patent Owner chose to enforce its patent rights in a federal district court action.  The easiest resolution would have been to extend the Ericsson reasoning to find a waiver of immunity equally applies to sovereign assignees of patents already in litigation.

Instead, the panel in the Mylan cases chose a frontal assault on tribal immunity.  The Mylan panel held that the AIA was an act of Congress of general applicability and “general acts of Congress apply to Indians . . . in the absence of clear expression to the contrary.”  The panel also appears to have adopted the position that IPR trials are in rem proceedings, not exercises of personal jurisdiction over private entities holding private property rights – a theory that has not been embraced in any of the previous IPR decisions involving sovereign immunity claims asserted by state university patent owners.

The Mylan panel also found that, even assuming arguendo that the Mohawk Tribe was entitled to assert immunity, the proceedings can continue without the tribe’s participation because the Mohawks had granted essentially all rights under the patent back to the original owner, Allergan.  The Mylan panel stopped short of concluding that the transaction was a sham transaction, but essentially found that none of the rights retained by the Tribe following its exclusive license back to Allergan amounted to anything substantial and that the Tribe was not an indispensable party because “Allergan has at least an identical interest to the Tribe.”

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.