PTAB Precedent (Not Surprisingly) Embraces CAFC Precedent

As I pointed out last week, it is a heavy lift for the Patent Trial & Appeal Board (PTAB) to designate a precedential decision. For this reason, nothing but the most straightforward of issues can be decided and designated “precedential.”

The PTAB issued a prime example of a seemingly straightforward precedential decision a few days ago in Ex parte McAward, Appeal 2015-006416 (PTAB Aug. 25, 2017), Section I.B. (here). This PTAB precedent makes clear that the USPTO assesses indefiniteness pursuant to the Federal Circuit’s guidance in In re Packard, 751 f . 3d 1307, 1310 (Fed. Cir. 2014).

While some have expressed shock at the PTAB pronouncing a different standard than that expressed in Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014), this is just a restatement of the Board’s status quo since the Packard decision. (It is not exactly shocking that the Board is following the guidance of its reviewing court).

The more interesting issue is whether the Court’s reasoning in Packard is equally applicable to AIA trial proceedings?

Back in 2014, the Federal Circuit determined the standard for a USPTO indefiniteness analysis in In re Packard (here). (Packard was decided while Nautilus was pending before the SCOTUS). The standard pronounced in Packard (i.e., “[a] claim is indefinite when it contains words or phrases whose meaning is unclear.”) is more liberal (i.e., challenger friendly) as compared to the “reasonable certainty” standard later enunciated in Nautilus v, Biosig Instruments Inc.

In arriving at the liberalized standard for agency proceedings, the Federal Circuit distinguished between the 112(b) standards used in pre-issuance vs post-issuance disputes, the concurring opinion explained it this way:

[A]s a legal matter the USPTO does not have to deal with the presumption of validity the statutes grant to post-issuance patents—sometimes said to hinder [a more liberal test] by courts. Furthermore, unlike courts which have a full prosecution record to consider, the prosecution record before the USPTO is in development and not fixed during examination, and the USPTO does not rely on it for interpreting claims.

The fact that this court has not yet seen fit to apply the same interpretive policy option to post-issuance cases as the USPTO wishes to apply to pre-issuance cases is no reason why the USPTO, given its unique and central role in the patenting process, should not be able to apply it in dealing with pre-issuance patent applications.

(Emphasis added)

Clearly, the presumption of validity is likewise absent from AIA trial proceedings. Nevertheless the majority relied heavily of the back and forth between patent examiners and applicants during pre-issuance, patent prosecution, explaining:

Congress also provided for examination to be an interactive process, which it commonly is. One or more rejections or objections by an examiner based on identified problems are followed by one or more responses from the applicant that address the identified problems, whether by revising claims or by furnishing information and explanation that shows why the initially perceived problems are not problems after all. The examination system regularly involves substantive interaction with applicants, relying on their distinctive incentives and abilities to enhance understanding and to help the USPTO ensure compliance with statutory standards. . . .

We earlier approved a procedural mechanism for the USPTO to use in doing this, which we refer to as the “prima facie case.” . . . The USPTO thus meets its obligation to explain adequately the shortcomings it perceives so that the applicant is properly notified and able to respond. Once the applicant is so notified, the burden shifts to the applicant to rebut the prima facie case with evidence and/or argument.

The “prima facie case” determination is a purely procedural device that operates at the examiner level to clarify how the interaction process proceeds. . . .
The same approach to making the examination process work is an appropriate one for addressing the question of indefiniteness. We have elsewhere noted that indefiniteness rejections by the USPTO arise in a different posture from that of indefiniteness challenges to an issued patent. It makes good sense, for definiteness and clarity as for other validity requirements, for the USPTO initially to reject claims based on a well-founded prima facie case of lack of clarity (in its several forms) based on the perspective of one of ordinary skill in the art in view of the entire written description and developing prosecution history. Then, if the applicant does not adequately respond to that prima facie case, to confirm that rejection on the substantive basis of having failed to meet the requirements of § 112(b).

(Emphasis added, internal quotes/citations omitted)

Contrast Packard’s pre-issuance rationale to the discussion of AIA trial practices in Magnum Oil:

In an inter partes review, the burden of persuasion is on the petitioner to prove ‘unpatentability by a preponderance of the evidence,’ 35 U.S.C. § 316(e), and that burden never shifts to the patentee. Indeed, the Supreme Court has never imposed nor even contemplated a formal burden shifting framework in the patent litigation context. We have noted that “a burden-shifting framework makes sense in the prosecution context, where “[t]he prima facie case furnishes a ‘procedural tool of patent examination, allocating the burdens of going forward as between examiner and applicant. As the PTO concedes, however, that burden-shifting framework does not apply in the adjudicatory context of an IPR.

When Packard issued, I questioned whether that standard could be extended to post-grant proceedings. This was because, as noted above,the Court’s determination was grounded in patent examination practices. Since that time, and even prior to the precedential designation of McAward, the PTAB has applied Packard to AIA trials. See PGR20015-00018, Telebrands Corp. v. Tinnus Enterprises LLC.

Going forward, it seems likely that the Federal Circuit will revisit its Packard analysis with respect to AIA trial proceedings. That is, the Court cannot justify the Packard standard in AIA trials based upon non-existent prima facie mechanisms and iterative examination processes. Of course, as with the different claim construction standard upheld in Cuozzo, the Court might justify Packard based upon the opportunity to amend in AIA trial proceedings.

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