By: Josh L. Young 

On May 2, 2016, new rules governing post-grant administrative trials before the Patent Trial and Appeal Board (“PTAB”) went into effect. 81 Fed. Reg. 18750 (Apr. 1, 2016).

This is the second time the United States Patent and Trademark Office (“PTO”) has enacted new rules since the America Invents Act went into effect on September 16, 2012.  On the whole, the changes to the rules are intended to improve the balance of a system that many believe is unfairly weighted against patent owners. This post highlights the changes implemented by the new rules.

Pre-Institution Filings and Procedure

A party seeking to invalidate a patent through the inter partes review (“IPR”) process files a petition with the PTAB requesting that it institute IPR of the challenged patent.  The petition outlines the case for why the PTAB should institute an IPR proceeding, and why the claimed invention is not patentable.  The petition may be accompanied by supporting evidence, including testimonial evidence from experts or other witnesses.  Before the PTAB decides whether to institute the requested review, the owner of a challenged patent may respond by submitting a Preliminary Response to the Petition, in which the patent owner may argue that IPR should not be instituted. 

Until now, patent owners were not permitted to offer new testimonial evidence in support of their preliminary response.  Under the new rules, patent owners may submit testimonial evidence, including expert testimony, in their preliminary responses.  If the Preliminary Response presents no more than a factual dispute between the evidence submitted in the Petition and the Preliminary Response, the PTAB will resolve the dispute in favor of the challenger.  37 C.F.R. § 42.108(c).  In comments published with the new rules, the PTO has asserted that resolution of conflicts in favor of the Petitioner at the institution phase is justified because institution decisions are final, and non-appealable.

If the Petitioner can show good cause, the Petitioner may request permission from the court to file a reply to the patent owner’s preliminary response in accordance with 37 C.F.R. §§ 42.23 and 42.24(c).  37 C.F.R. § 42.108(c).

The PTO also noted in its comments to the new rules that prior to making its institution decision, in some circumstances a PTAB panel may allow limited discovery, including cross-examination of witnesses.  See 37 C.F.R. 42.51(b)(1)(ii); 37 C.F.R. § 42.108(c).  Pre-institution discovery provides both the petitioner and the patent owner opportunities to achieve or prevent institution. 

Many PTAB practitioners understand that the best opportunity to defeat an IPR challenge to a patent is by convincing the PTAB not to institute review at all.  The new rules affording the patent owner the opportunity to present responsive evidence are a significant step toward correcting what many believe to be an imbalance in the pre-institution phase of IPR proceedings. 

However, the ability of the patent owner to present testimonial evidence does not necessarily mean that such evidence should be submitted pre-institution.  Counsel representing patent owners will still need to consider the strategic implications of presenting a fulsome response to the issues presented in the Petition.  There may be reasons for a patent owner to limit its Preliminary Response to matters that stand a high likelihood of being “silver bullets,” in light of the fact that factual disputes presented in the Petition and Preliminary Response will be resolved in the petitioner’s favor prior to institution. 

Claim Construction for Expiring Patents

Currently, the PTAB applies the broadest reasonable interpretation (“BRI”) standard when construing patent claims in unexpired patents.[1]  This approach differs from that used by district courts, which apply the “ordinary and customary meaning” standard set forth in Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005).  The Phillips standard is understood to produce narrower claim constructions than the “broadest reasonable interpretation” of a patent claim.  Previously, the PTAB only applied the Phillips standard if the challenged patent had already expired. 

Under the new rules, owners of a patent set to expire within 18 months of the IPR notice of filing date may request by motion, in the form set forth in 37 C.F.R. § 42.20, that the PTAB apply “a district court-type claim construction approach,” instead of the BRI standard.  The motion and accompanying certification must be filed within 30 days from the filing of the petition.  37 C.F.R. § 42.100.

At a Boardside Chat Webinar hosted by the PTAB on April 26, 2016, Lead Judge Tierney commented that the practical effect of this change may not be profound.  Lead Judge Tierney noted that the number of cases in which a district court-type claim construction might apply is limited, as most challenged patents are not set to expire within eighteen months of the IPR notice of filing date.  Additionally, most cases do not turn on a claim construction that would differ as between the “broadest reasonable interpretation” standard or the Phillips “ordinary and customary meaning” standard.  Nevertheless, the new rules expand the range of patents that are eligible for treatment under the narrower Phillips claim construction standard. 

Signature, Certification, and Sanctions

The new rules incorporate the signature and certification requirements of 37 C.F.R. § 11.18, which are similar to those set forth in Federal Rule of Civil Procedure 11.  37 C.F.R. § 42.11.  Under § 11.18(a) all documents filed in the PTO must be signed.  Additionally, by presenting a document to the PTO or to a hearing officer in a disciplinary proceeding, the presenter certifies that statements made in a filing are true or believed to be true, warranted by existing law, supported by the evidence, and not made for an improper purpose.  See 37 C.F.R. § 11.18(b); 37 C.F.R. § 42.11(b). 

As under Rule 11, sanctions can be sought by motion against a party that violates this provision.  Also like Rule 11, a sanctions motion cannot be filed until after the offending party is given 21-days to cure a filing alleged to violate the new certification requirements.  37 C.F.R. § 42.11(d)(2).  Lastly, the Board, by its own initiative, can sanction a party that violates this provision.  Id. at 42.11(d)(3).

New Word Count Limits

Previously, the lengths of the parties’ primary submissions were limited by a page count.  The limitations are now based on word count.  37 C.F.R. § 42.24. 

•   Petition, preliminary response, and response: 14,000 words

•   Reply to Patent Owner Response: 5,600 words

This word count excludes the mandatory notices and the certificate of word count, in addition to the items that were already excluded from the page limits: table of contents, table of authorities, certificate of service, and appendix of exhibits or claim listings.  Id.  At the April 26 PTAB Boardside Chat Webinar, Lead Judge Tierney suggested that while patent “figures” that are reproduced in a filing are generally not included in the word count, a particularly wordy figure would likely count toward the word limits. 

The complete changes to the rules governing post-grant proceedings are available here

[1] The application of the BRI standard in IPR proceedings is currently under Supreme Court review in Cuozzo Speed Technologies v. Lee, No. 15-446 argued Apr. 25, 2016).