Agency Left to Defend Unsettled Legacy

Upon taking the reins at the USPTO, Director Iancu made clear that he believed the Patent Trial & Appeal Board (PTAB) was cancelling too many patent claims in AIA trial proceedings. Of course the PTAB was simply implementing the statutory framework given to it by Congress – and the Federal Circuit was largely affirming the PTAB’s work. So, the only possible “fix” for the Director was to rebalance the rules/practice to his liking (i.e., in favor of patent owners).

And he changed as much as he could, as fast as he could.

Within weeks of appointment, the Director issued a final rule to change the claim construction standard from the Broadest Reasonable Interpretation (BRI) to the district court Philips standard. Despite years of complaints from PTAB critics, and a SCOTUS case arguing the difference as somehow critical, this change in construction had no measurable impact for patent owners. A number of other mechanisms were added to aid patentees shortly thereafter, such as adding sur-reply briefing and rebuttal time at oral argument. The Director also later created a pilot program designed to aid patent owners in amending claims during AIA trial proceedings. These changes, although incrementally helpful, did not drastically move the needle for patent owners.

Outside of PTAB specific matters, the Director also tried to settle convoluted 101 case law in a manner that favored patent owners. But this solution was not given weight by the Federal Circuit.

Measurable PTAB progress had escaped the Director until the agency started looking at ways to tamp down on abusive serial petition practices via 314(a). At around this same time, the Precedential Opinion Panel (POP) was created to give the Director a weighty voice in decisions on Board precedent, and a vehicle to issue precedent quickly. It was this combination of events that enabled the Director to drive change for purposes of pulling down the institution rate.

Through 314(a) the Board gradually expanded its discretionary reach to include the consideration of parallel litigation proceedings. Given the frequency at which patents challenged at the PTAB are also subject to district court or ITC proceedings, the Director effectively created a new, and significant hurdle for the vast majority of filings. Ultimately, this new hurdle resulted in a drop in the institution rate of 15-20% under Director Iancu as compared to his predecessors. Since that time, the Director has pulled additional levers in the hopes of aiding patent owners, such as selecting a more liberal 112 standard for AIA trials, and limiting the use of admissions (Like the 101 guidelines, such decrees will carry little weight with the Federal Circuit)

Today, the legality of the discretionary practices is the subject of much controversy. At least one lawsuit has been spawned as a result, and one rule package stalled in favor of further fact finding. Likewise, there are a number of stakeholders seeking congressional inquiry on these practices.

Perhaps not coincidentally, on the last day of the Director’s tenure, the Office issued an executive summary on the recent RFC it issued back in October on 314(a) practices. (I don’t recall ever seeing an “executive summary” issued from the USPTO on a matter of rule-making). Not surprisingly given the wording of the questions, the summary explains that the public is in favor of discretionary practices, but hedges on other conclusions, explaining (here):

" Most commentators recognized that the Office must exercise discretion to help ensure that patent owners are not subject to repeated challenges against issued patents. A number of commenters favored the codification of the Office’s current approach to the exercise of discretion. Others favored codification with some modifications. Finally, certain commenters argued that the Office should grant all petitions that meet the institution threshold, while others argued that the Office should not consider repeat challenges at all.

What does this mean for the next Director? Will the new Director continue on the path of activism, or given the lawsuits and pushback take on more of a steward role? Who will the new Director be? All of these questions will be answered in the months ahead.

What will become of pending POP requests and rule making efforts without a politically appointed Director? It is hard to imagine any progress being made in either regard for the first half of 2021.

It might be nice for the PTAB to cease being a moving target for the next 6 months, but somehow…I doubt that happens.

Scott A. McKeown is an author of the Patents Post Grant