2017: A Year of CAFC Feedback & Agency Refocus

With so much attention being paid to Oil States, it was easy to lose sight of many of the more noteworthy Patent Trial & Appeal Board (PTAB) related decisions of 2017. Last year brought significant feedback from both the Federal Circuit and Board on a number important aspects of administrative trial practice. From important issues of appellate standing, the use of ancillary petition art, to a crack down on follow-on petitions and recycled prior art, both the Board and Federal Circuit delivered a host of critical clarifications.

While a bit later than usual…below are my Top 5 PTAB Trial-related Developments of 2017.

At #5 is a decision of interest to PTAB practitioners as well as patent prosecutors.

5. Ex parte McAward, Appeal 2015-006416 (PTAB Aug. 25, 2017) (Section I. B.) (here)

This PTAB precedential decision 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 the PTAB’s decision to pronounce a different standard than that expressed in Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014), was met with shock by some, this is just a restatement of the Board’s status quo since the Packard decision.

The more interesting issue looking into 2018 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. 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.

Perhaps in 2018 the Federal Circuit will revisit its Packard analysis with respect to AIA trial proceedings.

At #4 is a decision that further clarified the flexibility of AIA trial proceedings with respect to the Administrative Procedure Act (APA)

4. Novartis v. Torrent Pharmaceuticals (here)

The PTAB’s Institution Decision in Novartis denied grounds including a prior art reference known as “Sakai.” The PTAB found that while Sakai showed that certain ingredients could be predictably combined in liquid form, it did not teach a solid formulation as claimed. But, other grounds were accepted for trial that addressed the solid formulation feature. For these grounds, Sakai was nevertheless relied upon for demonstrating the knowledge in the art as to the predictability of the combination of key ingredients. In the Final Written Decision (FWD) following the trial, the claims were cancelled, and the Board referenced the rationale of Sakai as supporting its conclusion.

Novartis argued the Board violated the Administrative Procedure Act (APA) when it relied on Sakai in the Final Written Decision without affording Novartis proper notice and a chance to be heard. In essence, Novartis took the position that Sakai was effectively “ruled out” of the trial when the grounds including it were denied. The Court disagreed that the denied ground including Sakai somehow disqualified the reference as evidence.

Coming in at #3 are two cases addressing Article III standing from PTAB appeals

3. Phigenix, Inc. v. ImmunoGen, Inc. (here) — Personal Audio, LLC v. Electronic Frontier Foundation (here)

The Federal Circuit made clear that Article III standing is necessary for petitioners to appeal from adverse decisions in AIA trial proceedings in Phigenix. This decision followed an earlier decision, Consumer Watchdog v. Wisconsin Alumni Research Foundation (Warf) finding the same Article III standing requirement for the now defunct inter partes patent reexamination. Thus, Phigenix was expected given that differences in AIA trial proceedings and patent reexamination are inconsequential with respect to the standing debate (and in virtually all other respects). Left open was the question of appellee standing, this was answered in Personal Audio. Here, the Appellee, Electronic Frontier Foundation (EFF), is a non-profit organization that seeks to protect the public interest of consumers of digital technology. EFF sought Inter Partes Review (IPR) of Personal Audio’s patent and was successful in securing the cancellation of the challenged patent claims. On appeal, the question of EFF’s standing as appellee was raised by the Court, and additional briefing was ordered (including amicus filings).

In a few short paragraphs, the Court dispensed the EFF standing issue concluding that “with Article III satisfied as to the appellant, EFF is not constitutionally excluded from appearing in court to defend the PTAB decision in its favor.”

At # 2 is a case that is unlikely to have much impact for practitioners, but earns its spot solely for the amount of attention it garnered in 2017.

2. In re Aqua Products (here)

Aqua Products held that it is improper for the PTAB to place the burden of persuasion on the Patentee relative to the patentability of new/amended claims. Going forward, this burden of persuasion will rest with Petitioners (as it does for originally challenged claims 35 USC § 316(e)). While the Court did not affirmatively hold that the burden rests with petitioners, and left it open for the Board to perhaps alter its rules to push the burden back on Patent Owners; I would not expect that to happen. (Recent speculation on this potential change stems from a petition for rehearing of Bosch Auto. Serv. Sol’ns, LLC v. Matal , 878 F.3d 1027 (Fed. Cir., Dec. 22, 2017). However this clarification was likely sought to ensure that the agency’s decisions prior to Aqua would continue to be vacated rather than mistakenly reversed.)

As I have pointed out repeatedly, amendment is almost never an option for patentees at the PTAB. As such, I do not expect that this decision will have much of an impact in 2018.

The #1 case for PTAB practitioners in 2017 came from the Board itself, and was part of a significant push to refocus petition practice away from “follow-on” petitions as well as recycled art (325(d)).

1. General Plastic Industrial Co., Ltd. v. Canon Kabushiki Kaisha, Case IPR2016-01357 (PTAB Sept. 6, 2017) (Paper 19), Section II.B.4.i.(here)

This expanded panel decision explains that applying factors to evaluate the equities of permitting follow-on petitions in AIA proceedings is a proper exercise of the Board’s discretion under 35 U.S.C. § 314 and provides a non-exhaustive list of factors that the Board considers in evaluating follow-on petitions.

1. Whether the same petitioner previously filed a petition directed to the same claims of the same patent;

2. Whether at the time of filing of the first petition the petitioner knew of the prior art asserted in the second petition or should have known of it;

3. Whether at the time of filing of the second petition the petitioner already received the patent owner’s preliminary response to the first petition or received the Board’s decision on whether to institute review in the first petition;

4. The length of time that elapsed between the time the petitioner learned of the prior art asserted in the second petition and the filing of the second petition;

5. Whether the petitioner provides adequate explanation for the time elapsed between the filings of multiple petitions directed to the same claims of the same patent;

6. The finite resources of the Board; and

7. The requirement under 35 U.S.C. § 316(a)(11) to issue a final determination not later than 1 year after the date on which the Director notices institution of review.

General Plastics should not be confused with questions under 35 U.S.C. § 325(d). The Board designated a number of decisions on 325(d) informative/precedential in 2017. These case at least deserve honorable mention on the 2017 list

Honorable mentions:

Unified Patents, Inc. v. Berman, Case IPR2016-01571 (PTAB Dec. 14, 2016) (Paper 10)

Hospira, Inc. v. Genentech, Inc., Case IPR2017-00739 (PTAB July 27, 2017) (Paper 16)

Cultec, Inc. v. Stormtech LLC, Case IPR2017-00777 (PTAB Aug. 22, 2017) (Paper 7)

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