USPTO Director Vidal issues key decisions regarding abuse of process in proceedings before the Patent Trial and Appeal Board

Maier & Maier

Two key decisions have been issued from the Patent Trial and Appeal Board (Board) this Thursday regarding abuse of process.

The first, Patent Quality Assurance, LLC, v. VLSI Technology LLC, IPR2021-01229, Paper 102, is a precedential decision where the Director of the USPTO Kathi Vidal held that Petitioner Patent Quality Assurance (PQA) abused the Inter-Partes Review (IPR) process by using the proceeding for the purposes of extortion.

According to the decision, PQA failed to offer a verifiable, legitimate basis for filing its petition, which was filed only after a district court awarded large monetary damages keyed to the subject ‘373 patent. The Director identified that petitions unrelated to any pending litigation may raise concerns of petitioners who file “petitions, filed for the primary purpose of obtaining a cash settlement” from patent owners in order to settle and terminate the proceed.

The Director also found that PQA made material misrepresentations in order to ensure that another petition would be denied so that PQA’s petition, which was a replica of an earlier petition filed by Intel Corp., could proceed. The Director concluded that “To safeguard the proper functioning of the patent system, and the confidence therein, it is incumbent on me and the USPTO to protect against that harm.”

In a second, related decision, OpenSky Industries LLC v. VLSI Technology LLC, IPR2021-01064, Paper 121, the Director sanctions Petitioner OpenSky by precluding them from participating the proceeding based on their abuse of the IPR process in addition to sanctionable conduct including discovery misconduct, violation of an express order, and unethical conduct.

The standard applied to PQA and OpenSky was one of “compelling merits”. This requires that the petitioner present a compelling, meritorious challenge, which requires a “reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition.” 35 U.S.C. §314(a).

Our team at Maier & Maier is proud of our success in both petitioning and defending IPRs and other cases in front of the Board.

Maier & Maier Wins Contested Institution Decision for Petitioner in Inter Partes Review

Maier & Maier

The Maier & Maier litigation team scored another victory at the Patent Trial and Appeal Board (PTAB), securing an institution order on behalf of the Petitioner, Eve Energy Co., Ltd. (“Eve”).  Despite Patent Owner Varta Microbattery GmBH’s Patent Owner Preliminary Response, the PTAB has determined that Maier & Maier, on behalf of Eve, demonstrated a reasonable likelihood that it will prevail with respect to at least one of the challenged claims.

On behalf of Eve, Maier & Maier challenged claims of U.S. Patent No. 9,496,581 on obviousness grounds.  Maier & Maier’s strategic use of testimonial evidence appears to have greatly benefited its position, while the Patent Owner Preliminary Response was limited to attorney argument without testimonial evidence.  In reaching its decision, the PTAB also agreed with Eve’s asserted level of ordinary skill in the art and Eve’s assertions regarding claim construction.

On August 9, 2021, the PTAB ordered that the inter partes review be instituted for all challenged claims.

If you or your company need similar assistance, please contact Maier & Maier’s litigation team here.

Arthrex: Supreme Court Upholds PTAB Judges

Maier & Maier

After facing extreme uncertainty at the Federal Circuit, the Patent Trial and Appeal Board’s (“PTAB”) judges have avoided calamity as the Supreme Court upheld their appointment process as constitutional in Arthrex v. Smith & Nephew. In their final decision, the Court held that while their appointment was upheld, the review process for their decisions was not and remanded the case down to the acting USPTO Director for further consideration.

The case began in an inter partes review proceeding at the PTAB and was appealed to the Federal Circuit on the basis that the Administrative Patent Judges comprising the Board are principal officers, who need Presidential appointment with the advice and consent of the Senate. This was premised on the lack of review their decisions receive from the USPTO Director, who is a duly appointed principal officer. According to 35 U. S. C. §6(c), “only the Patent Trial and Appeal Board may grant rehearings”. By insolating the APJs from Director’s review, Arthrex argued that they were converted to principal officers and their appointment was unconstitutional.

At the Federal Circuit, the panel agreed. Because the review process vested the APJ’s with power that exceeded that of an inferior officer, their appointment by the U.S. Secretary of Commerce was insufficient to satisfy the constitutional requirement. To cure this, the Federal Circuit declared that the tenure provision of the APJ’s was unconstitutional. This allowed the USPTO Director to fire them at their discretion and imbued the Director with a form of review over their processes. By giving the Director this authority, the Federal Circuit believed the APJ’s were satisfactorily inferior officers and their appointment could be upheld.

After the denied en banc rehearing, the Supreme Court disagreed in a splintered decision by the Justices. The opinion of the Court was authored by Justice Roberts and joined for Parts I and II by Justices Gorsuch, Alito, Barrett, and Kavanaugh. The crux of the decision rests on the review process itself being unconstitutional and curing it by remanding the case to the Director for their constitutionally mandated authority to review. As the Court explains, the statute “is unenforceable as applied to the Director insofar as it prevents the Director from reviewing the decisions of the PTAB on his own. The Director may engage in such review and reach his own decision.”

By striking the limitation on the Director, the Supreme Court has upheld the validity of the PTAB and its proceedings and prevented what could have been an extreme period of uncertainty for patent owners with the review process in total flux.

If you have any questions or concerns about how this or any other recent news may affect your portfolio or interests, please reach out to one of our attorneys here.

Supreme Court Rules Government Not A ‘Person’ For PTAB Proceedings

Maier & Maier

Under the 2012 America Invents Act (“AIA”), Congress created three new post-issuances avenues for a “person” to challenge patents before the Patent Trial and Appeal Board (PTAB) in IPR’s, PGR’s, and CBM’s. With this ruling, the Supreme Court has deemed that the Federal Government is not a “person” for these purposes and thus is ineligible to institute these AIA proceedings.

The issue was decided in Return Mail, Inc. v. Postal Service, et al., where Return Mail, Inc. held a patent for a method of processing undeliverable mail, which it asserted against the Postal Service in 2006. After filing for an ultimately unsuccessful ex parte reexamination of the subject patent, the Postal Service brought its challenge before the PTAB to seek CBM review. The Board then instituted review and ultimately found the patent covered ineligible subject matter, which was reviewed and upheld in the Federal Circuit along with the holding that the Postal Service was a ‘person’ for PTAB proceedings, before being overruled by the Supreme court here.

The Decision

The decision was written by Justice Sotomayor, with Roberts, Thomas, Alito, Gorsuch, and Kavanaugh joining. The Court explained that “In the absence of an express statutory definition, the Court applies a ‘longstanding interpretative presumption that ‘person’ does not include the sovereign.”[1] The Court then cites to the fact that the AIA defines person to “include[] corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals,” which notably does not include the Government.[2]

On the other hand, the AIA uses the term person in various forms in the statute and that some of those uses do, in fact, include the government. One example comes from where the statute provides “States ‘shall not be immune . . . from suit in Federal court by any person, including any governmental or nongovernmental entity””.[3] Based on the expressed inclusion of the government for the use of person in this instance, the Court explained this use would include the government.

However, the strength of the presumption could not be overcome by mixed use because those other uses contained additional context which indicated that the government was intended to be included in those other instances. Without any evidence that congress had intended to grant the Government the ability to initiate post-issuance proceedings under the AIA, the Court was unwilling to expand the meaning of the term across the entirety of the statute.

The court also found unpersuasive references to the MPEP where the Government was included as a person for the purposes of filing for ex parte reexamination (as they had here before the CBM filing). Because these proceedings differ significantly in the involvement of parties compared to AIA proceedings, the Court deemed that congress could very well have had reasons for distinguishing the ability to file between non-governmental ‘persons’ and the Government.

The Dissent

The dissent, drafted by Justice Breyer and joined by Ginsburg and Kagan, found the context of the AIA as a whole to be persuasive enough to indicate that Congress intended for the Government to be able to challenge invalidity at the PTAB. The dissenting opinion cited the AIA aims of improving the quality of patents, making it easier to challenge questionable patents, providing rights to those being sued for infringement, among the persuasive factors in its viewpoint.

With the holding, the Court has strengthened the position of Patent Owners at the PTAB, giving them an avenue to avoid further review at a time when they have notably lost the ability to do so with sovereign immunity based on recent Federal Circuit decisions in both Saint Regis and Regents of the University of Minnesota.

[1] Return Mail, Inc. v. Postal Service, et al., 587 U. S. ____, Slip. Op. at 6-7, (2019).

[2] Return Mail, Inc. v. Postal Service, et al., 587 U. S. ____, Slip. Op. at 7, (2019).

[3] Return Mail, Inc. v. Postal Service, et al., 587 U. S. ____, Slip. Op. at 10 n. 3, (2019).

USPTO ADOPTS PHILLIPS CLAIM CONSTRUCTION

Maier & Maier

Starting November 13, 2018, all IPR, PGR, and CBM proceedings will conduct their claim construction using the Phillips standard put forth by the Federal Circuit in 2005, turning away from the Broadest Reasonable Interpretation (BRI) standard it currently uses. This brings the PTAB in line with the Federal Courts and the ITC in examination standards.

Under BRI, claims are interpreted using the “broadest reasonable meaning of [a claim’s] words in their ordinary usage as they would be understood by one of ordinary skill in the art, taking into account whatever enlightenment by way of definitions or otherwise that may be afforded by the written description contained in the applicant’s specification.”[1] Under the Phillips standard, claims are given a narrower construction as “the meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention.”[2]

Currently, there are about 150 petitions filed at the PTAB each month, with an institution rate of 40% over the last twelve months (statistics obtained using Insights at PostGrant Portal). It bears watching whether there will be a spike in filings at the PTAB this final month for petitioners who would prefer the BRI standard or a drop-off for those waiting for the new Phillips standard next month.

As Maier & Maier partner, Steve Kunin, explains here, the most significant impacts will not be felt in PTAB proceedings, but in District Court. “Practically speaking in most cases BRI and Phillips claim construction in PTAB AIA proceedings are not materially different; I see the real impact will be in district court proceedings when the patent owner is arguing for a narrow claim construction and can now point to the AIA trials as supporting the position.” Some petitioners may strategically wait for the new standard, as the PTAB construction would be given more deference with the newly aligned standards, and a narrower construction would prove useful in supporting a non-infringement argument.

[1] In re Morris, 127 F.3d 1048, 1054 (Fed. Cir. 1997).

[2] Phillips v. AWH Corp., 415 F.3d 1303, 1313 (Fed. Cir. 2005) (en banc).

USPTO Addresses Expanded PTAB Panels With New Standard Operating Procedures

Maier & Maier

The USPTO’s Patent Trial and Appeal Board (“PTAB”) has issued two revisions to the Standard Operating Procedures with the stated goal of “increasing transparency, predictability, and reliability across the USPTO”.

The first, SOP 1, aims to provide clarity and certainty to the PTAB practice of expanded panels, which has come under criticism in recent years as “panel stacking”. The concern is over the possibility of the PTAB making strategic additions to Board Panels and targeting rehearing proceedings to sway the composition towards a desired outcome, which was even discussed amidst the recent Oil States proceedings in the Supreme Court.

In response to these concerns, the new procedures provide two key provisions: 1. a notice requirement and 2. a specific procedure for expanded panels.

Under the previous practice, the parties might not find out that there was an expanded panel until the decision was issued as there was no requirement to notify the parties. Not so anymore as SOP1 provides that the parties will be notified that the panel will be expanded and identify the Administrative Patent Judges who will be included on the expanded panel.

The updated procedures identify five parties who may suggest an expanded panel: Board members, patent applicants, petitioners, patent owners, and the Patent Business Unit. The Board members in the case submit their requests (or the requests they receive from one of the other eligible parties) along with reasoning (in the form of a  brief for an applicant’s, petitioner’s, or patent owner’s request) in the form of an email to PTABExpandedPanelRequest@uspto.gov. This account will be monitored and requests will be periodically brought to the Chief Judge for recommendation, and the Director for final approval.

It remains to be seen if these new procedures will do enough to curtail the concerns about the practice.

The second update, SOP2, creates a Precedential Opinion Panel (POP) at the PTAB which will “decide issues of exceptional importance” with “binding agency authority”. The POP will be composed of “Director, the Deputy Director, the Commissioner for Patents, the Commissioner for Trademarks, and the administrative patent judges.” The POP will review nominated routine decisions made by panels to designate them as precedential or informative as outlined in detail in the updated SOP. Anyone may nominate a decision to be precedential, and all nominations will be reviewed by a Screening committee before being presented to the POP.

The entirety of the PTAB’s Standard Operating Procedure and any updates thereto are available here.

Maier & Maier Mounts Yet Another Successful Defense at the PTAB

Maier & Maier

In their latest triumph at the PTAB, Maier & Maier PLLC has won a major victory for GREE, Inc. by securing a non-institution decision, overcoming 3 challenges to their social gaming patent asserted by Supercell Oy in PGR2018-0037.

The challenged patent (9,662,573) covers a method for controlling a server device, a server device, a computer-readable recording medium and a game system. Supercell challenged the patent on three grounds: §101, §112(a), and §112(b).

The PTAB denied institution of the challenge as to all of the claims.  The PTAB explained their decision on the §101 challenge, stating “we are unpersuaded by Petitioner’s argument that providing these sequential incentives, as claimed, was conventional and known in the prior art.”  The analysis goes on to emphasize that Supercell failed to provide evidence, such as expert testimony or contemporaneous prior art, and also failed to provide relevant case law or persuasive argument to support its contention. Meanwhile for the §112 challenges, Maier & Maier successfully demonstrated that the patent was “cast in clear—as opposed to ambiguous, vague, indefinite—terms” and that Supercell “offered no credible evidence to support its assertion”.

Since Maier & Maier showed that none of the asserted grounds for unpatentability demonstrated a reasonable likelihood of success, as discussed above, the PTAB issued a decision denying institution, dealing Supercell a serious blow in their ongoing patent litigation.

Oracle Corp. v. Click-to-Call Technologies LP

Maier & Maier

Under 315(b) of the AIA (America Invents Act), Inter Partes Review “may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”[1] The Click-to-Call decision revolves around whether the time-bar applies when a complaint has been voluntarily dismissed without prejudice.

In 2001, the patent in this case, U.S. Pat # 5,818,836, had been exclusively licensed to Inforocket, who filed a patent infringement suit asserting the ‘836 patent against Ingenio (then under its previous name, Keen).[2] Ingenio then purchased Inforocket as a wholly-owned subsidiary, and the parties stipulated to dismiss the suit without prejudice.[3] Subsequently the ‘836 patent was acquired by Click-to-Call.  On May 29, 2012, Click-to-Call filed suit asserting the same ‘836 patent against a number of defendents, including Ingenio, leading to the filing of this IPR. [4]

In an opinion designated as precedential by the PTAB, the Board ruled that a voluntary dismissal of a suit creates an exception to the 315(b) time-bar. “The Federal Circuit consistently has interpreted the effect of such dismissals as leaving the parties as though the action had never been brought.”[5] Based on the premise that a voluntary dismissal serves to nullify the existence of a suit, the PTAB held that the one-year time limit for filing an IPR would be nullified along with it.

On appeal, the Federal Circuit disagreed and found that the PTAB committed legal error in its determination.  The Federal Circuit overturned the PTAB ruling. As the decision explains “the provision unambiguously precludes the Director from instituting an IPR if the petition seeking institution is filed more than one year after the petitioner, real party in interest, or privy of the petitioner ‘is served with a complaint’ alleging patent infringement. Simply put, § 315(b)’s time bar is implicated once a party receives notice through official delivery of a complaint in a civil action, irrespective of subsequent events.”[6]

Unlike the 2001 infringement complaint, the PTAB’s precedential time-bar decision has now been entirely nullified.

[1] 35 U.S.C. § 315(b)

[2] Oracle Corp. v. Click-to-Call Technologies LP, IPR2013-00312, Paper 26 at 14 (PTAB Oct. 13, 2013).

[3] Id.

[4] Id.

[5] Id at 17.

[6] Oracle Corp. v. Click-to-Call Technologies LP, Slip Op at 13 (CAFC Aug. 16, 2018).

Tribal Sovereign Immunity Does Not Apply in IPR Proceedings

Maier & Maier

In Saint Regis Mohawk Tribe v. Mylan Pharmaceuticals Inc., Nos. 18-1638 to 18-1643, the Federal Circuit, in a precedential decision, affirmed the PTABs denial of St. Regis’s motion to terminate IPRs filed by Mylan based on tribal sovereign immunity. Tribal immunity does not apply in IPR proceedings because the USPTO is pursuing an adjudicatory agency action.

The Court concluded that “IPR is more like an agency enforcement action than a civil suit brought by a private party…. IPR is more like cases in which an agency chooses whether to institute a proceeding on information supplied by a private party.” Judge Moore writing for the panel majority averred that “[t]he Director’s important role as a gatekeeper and the Board’s authority to proceed in the absence of the parties convinces us that the USPTO is acting as the United States in its role as a superior sovereign to reconsider a prior administrative grant and protect the public interest in keeping patent monopolies ‘within their legitimate scope.'” (quoting Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2144 (2016)).

In his concurrence, Judge Dyk wrote to describe in greater detail the history of inter partes review proceedings, history that confirms that those proceedings are not adjudications between private parties. While private parties play a role, inter partes reviews are fundamentally an agency reconsideration of the original patent grant, similar to ex parte reexamination and inter partes reexamination proceedings, which are not adjudications of private disputes and to which sovereign immunity does not apply.

The Court’s opinion was limited to whether tribal immunity applies in IPRs: “we leave for another day the question of whether there is any reason to treat state sovereign immunity differently.”

PTAB Designates 5 Decisions as Informative

Maier & Maier

The PTAB has designated five new decisions as informative, three on IPR practice procedure and two ex parte decisions (one on issue preclusion and one on claim construction):

Ariosa Diagnostics v. Isis Innovation Ltd., IPR2012-00022, Paper 55 (PTAB Aug. 7, 2013)

Here the Board provides guidance on foreign depositions, both on the location where they are taken and the language in which they are conducted. The Board emphasizes that “the parties are in the best position to determine the procedure by which the deposition is to be conducted” but provides 12 general guidelines for procedures to use for depositions in foreign languages covering such topics as 1). each sides’ right to bring an interpreter, 2). protocol for resolving disagreements between interpreters on their respective interpretations, and 3). notice requirements on documents which will be “sight read” at the deposition. The full list is available in the decision linked above.

Ex parte Jung, 2016-008290 (PTAB Mar. 22, 2017)

In this appeal, the appellant challenged the examiner’s interpretation that the claim language “at least one of a connection branch and a contents connection list” required only ‘a connection branch’ OR ‘a contents connection list’ as opposed to requiring both of their presence. In their reversal, the Board applied the ruling from the Federal Circuit in SuperGuide Corp. v. DirecTV Enterprises, Inc., which explained that the plain meaning of ‘at least one of A and B’ is the conjunctive phrase ‘at least one of A and at least one of B.”[1] The Board explained that the plain meaning could have been rebutted with a demonstration that the other claims, specification, or the prosecution history necessitated a broader interpretation, but, absent such a showing, the examiner erred.

Argentum Pharm. LLC v. Alcon Research, Ltd., IPR2017-01053, Paper 27 (PTAB Jan. 19, 2018)

In this decision, the Board offers an analysis on the ‘good cause’ standard for protective orders.  The Board denied a motion for a protective order without prejudice for failure to demonstrate that “(1) the information sought to be sealed is truly confidential, (2) a concrete harm would result upon public disclosure, (3) there exists a genuine need to rely in the trial on the specific information sought to be sealed, and (4), on balance, an interest in maintaining confidentiality outweighs the strong public interest in having an open record.”[2]

Colas Sols. Inc. v. Blacklidge Emulsions, Inc., IPR2018-00242, Paper 9 (PTAB Feb. 27, 2018)

The decision here applies to § 315 bars to institution in IPRs. Specifically, the Board found institution was barred when a petitioner has previously filed for a declaratory judgment of invalidity on the same patent.  Furthermore, the Board ruled that a motion for joinder could not save a petitioner from the statutory bar under § 315(a)(1). In its reasoning, the Board explains that while a § 315(b) time bar is specifically excluded in instances of joinder under § 315 (c), the statutory bar for § 315(a)(1) provides for no such exemption.

Ex parte Ditzik, 2018-000087 (PTAB Mar. 2, 2018)

Here, the Board upheld an examiner’s use of issue preclusion from a related invalidity finding against the applicant in District Court. In so doing, the Board found the following arguments by the appealing applicant accurate, but unpersuasive with respect to issue preclusion: 1). The fact that the claims are not the same in the proceedings; 2). The procedural possibility for the District Court ruling to be overturned; and 3). The PTO’s absence as a party from the District Court proceeding. While the Board did not find any of the following in this case, it allowed for potential rebuttals to issue preclusion when 1). The standard applied in the prior final decision might have caused a different outcome than before the Board; 2). Evidence available now was demonstrated to not be available at the time of the prior proceeding; or 3). There was otherwise not a ‘full and fair opportunity to litigate’ in the prior proceeding and the Board wishes to exercise its discretion despite the motivations of efficiency and consistency for issue preclusion.

Each decision is linked in the respective heading above for more information and reference, and a full list of all precedential and informative decisions is available here.

[1] 358 F.3d 870, 885-86 (Fed. Cir. 2004).

[2] 37 C.F.R. § 42.54(a).