May 28, 2020Legal
PTAB Proposes New Rule Package – and New Preliminary Proceeding Philosophy

NPRM to Codify Existing Practices with Notable Exception

The United States Patent and Trademark Office (USPTO) issued a notice of proposed rulemaking today to update its rules to conform to SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018).  That is, the rules now follow the holding of SAS to institute an AIA trial proceeding on all challenged claims should the petitioner meet its burden for at least one challenged claim.  Additional include other rule based updates to codify practices introduced by changes to the Trial Practice Guide, such as providing for sur-replies to principal briefs and providing that a patent owner response and reply may respond to a decision on institution.

None of the above rules change existing practices, but the USPTO did offer one notable wrinkle in its Federal Register Notice.

The agency proposes to eliminate the presumption that a genuine issue of material fact is created by a patent owner’s testimonial evidence (filed with a preliminary response) in view of competing petitioner evidence on the same point.  That is, such factual disputes will no longer be viewed in the light most favorable to the petitioner for purposes of deciding whether to institute a review.  Rather, the agency proposes that such Patent Owner testimonial evidence will be taken into account as part of the totality of the evidence.

This is the final step in a dramatic evolution in agency philosophy.

You may recall that at the outset of AIA trial proceedings, testimonial evidence from Patent Owners was not permitted at all.  This was because the agency did not want a “trial within a trial” to occur before institution.  In 2016 the Board adopted its rules to allow for testimonial evidence, but viewed conflicting testimony in a light most favorable to the challenger.  Now, the agency is proposing to accept and weigh evidence (in the absence of any cross-examination, or completed record) on factual issues.  In other words, 8 years later, “trials within trials” are now being proposed.

The Agency explains (here) that this change is necessitated by:

" Stakeholder feedback received in party and amicus briefing as part of the Precedential Opinion Panel (POP) review in Hulu, LLC v. Sound View Innovations, LLC, Case IPR2018-01039, Paper 15 (PTAB Apr. 3, 2019) (granting POP review), indicated that the rule has caused some confusion at the institution stage for AIA proceedings.  For example, certain stakeholders have indicated that the presumption in favor of the petitioner for genuine issues of material fact created by patent owner testimonial evidence also creates a presumption in favor of the petitioner for questions relating to whether a document is a printed publication. Additionally, the Office has concerns that the presumption in favor of the petitioner may be viewed as discouraging patent owners from filing testimonial evidence with their preliminary responses, as some patent owners believe that such testimony will not be given any weight at the time of institution.

The concern over printed publications is a curious one given that the issue is reviewed de novo by the Federal Circuit, and, when doing so, the Court has faulted PTAB analysis as too perfunctory.  The Board weighing such disputes without the benefit of a full record, and where there is no right of appeal for petitioners, does not make the PTAB an attractive venue for such fact intensive disputes.

As to the concern that Patent Owners are shying away from such submissions given the presumption, I don’t find that to be the case in practice.  While certainly a consideration, POPR declarations are unpopular for far more compelling reasons.  First, after SAS, Patent Owners have to win on all issues if attacking the merits.  So, rather than create estoppel or disclaimer risks, Patent Owners are far more interested in trying their hand at discretionary angles that will knock out the petition — especially given the agency’s recent flood of 314(a) determinations.  Second, Patent Owners are reluctant to pull together such evidence in the short time frame necessary to file with a Patent Owner Preliminary Response (POPR).  Finally, many Patent Owners just don’t appreciate what they should be arguing and when because they’ve never been in a forum where obviousness is a serious threat.

Even if the proposed rule is adopted, I wouldn’t expect Patent Owner’s to suddenly embrace the POPR testimonial mechanism outside of disputes over printed publications, or other rare issues that are unrelated to the merits of the proposed grounds.

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

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