What the PTAB’s Precedential Decisions on Live Testimony and Substitute Claims Mean for PTAB Litigation

“The recent designations not only provide guidance to prospective litigants in PTAB proceedings, but develop the scope of PTAB litigation as a viable alternative to district court litigation.”

Recently Designated Decisions

On Monday, March 18, 2019, the Patent Trial and Appeal Board (PTAB) designated three decisions as precedential. Two of the three decisions—K40 Electronics LLC v. Escort Inc. (“K40 Electronics”),[AIA, live testimony at oral argument] and DePuy Synthes Products Inc. v. Medidea LLC (“DePuy Synthes Prods”) [AIA, live testimony at oral argument]—explained the limited circumstances in which live testimony may be allowed during PTAB proceedings. The third decision, Amazon.com Inc. v. Uniloc Luxembourg SA (“Amazon.com”) [AIA § 316(d), grounds that can be raised against substitute claims], affirmed that the PTAB has the authority to consider whether substitute claims are patentable on more grounds than just novelty and non-obviousness.

The Designation of a Decision as Precedential

Total precedential decisions

As part of its revised standard operating procedures (SOP2), the PTAB may designate an otherwise routine decision as precedential—a binding authority in subsequent matters involving similar facts or issues. While anyone may nominate a decision as being precedential, the nominated decision must undergo a multi-level review process involving a screening committee, an executive judge’s committee, and the Director of the PTAB. This is not a trivial process. To date, the U.S. Patent and Trademark Office (USPTO) has designated only 15 decisions stemming from trials created by the America Invents Act (AIA) in 2012, including the three discussed here, as precedential. This is a small fraction compared to the number of cases that the U.S. Court of Appeals for the Federal Circuit designates as precedential. As shown in the figure below, there has been an accelerated rate of designating decisions as precedential in 2019 compared to previous years. The recent designation of the three decisions may affect future PTAB proceedings where there are issues as to when a fact witness can be brought for live testimony, or the extent to which substitute claims may be assessed for their patentability.

Standards for Live Testimony

In K40 Electronics, the older of the two decisions involving live testimony, the PTAB assessed whether to grant a patent owner’s motion to have the sole patent inventor present live testimony at a final oral argument. The PTAB then considered various case-specific factors that eventually led to granting this motion. The PTAB noted that the inventor’s live testimony would be “case-dispositive.” For example, the patent owner had relied on a declaration of the inventor to antedate two references used by the petitioner to challenge the patent in dispute. The declaration served to establish a prior reduction to practice. Thus, the demeanor of the witness inventor was critical to evaluating the inventor’s credibility, the PTAB stated. Another factor that favored granting the motion was that the sole inventor was a fact witness. The PTAB reasoned that a fact witness’s demeanor is more indicative of credibility than the demeanor of an expert witness.

The PTAB also addressed the petitioner’s objections. The petitioner argued that granting the motion would establish a “de facto” rule permitting live testimony. The PTAB responded that this would not happen, and reminded the parties that a live testimony is necessary only in limited circumstances. Another one of the petitioner’s objections stated that granting the motion would give the patent owner a chance to “rewrite testimony.” The PTAB was not persuaded, since the sole inventor’s direct testimony was fixed by a previously submitted declaration, and therefore could not be changed. Thus, the facts of K40 Electronics presented the limited circumstance under which the PTAB allowed the sole inventor to present a live testimony.

Based on these stringent standards, the PTAB rejected a request to allow an inventor’s live testimony in DePuy Synthes Prods, the other precedential decision involving live testimony. In a rather brief order, the PTAB ruled that because the inventor had not yet provided declaratory evidence, a live testimony would have presented new, and therefore impermissible, evidence. See Revised Trial Practice Guide (August 2018), Patent Trial and Appeal Board.

Challenging Substitute Claims

While K40 Electronics and DePuy Synthes Prods shed light on the limited circumstances under which live testimony will be permitted, Amazon.com clarified the PTAB’s role in assessing substitute claims. In Amazon.com, a patent owner filed a contingent motion to amend, which would allow a submission of substitute claims if the PTAB were to find the patent owner’s existing claims unpatentable. The PTAB not only determined that the existing claims were unpatentable, but also found that the Patent Owner’s substitute claims were directed to non-statutory subject matter and therefore patent ineligible. The Patent Owner requested a rehearing, arguing that the PTAB was not permitted to consider whether the substitute claims constitute statutory subject matter. Notably, under Section 311(b) of the Patent Act, which forms the basis for Inter Partes Review (IPR), a petitioner can challenge a patent only under grounds for anticipation or obviousness. However, the PTAB held that the law did not preclude the PTAB or the petitioner from considering the patentability of amended claims under other grounds, such as subject matter eligibility. The PTAB emphasized the distinction between existing claims of a patent and substitute claims, as the latter can only be added after “a final written decision and action of the Director.” Thus, the PTAB exerted its authority to deny addition of substitute claims based on grounds other than anticipation or obviousness.

The Effect on PTAB Litigation

The recent designation of these three decisions as precedential appears to be in response to stakeholders’ call for more guidance. For example, examiners and applicants have desperately asked for more guidance on the interpretation of case law pertaining to subject matter eligibility.  The recent designations not only provide guidance to prospective litigants in PTAB proceedings, but develop the scope of PTAB litigation as a viable alternative to district court litigation. For example, patent owners having inventors with a credible reduction-to-practice story may be encouraged to request live testimony if the standards presented in K40 Electronics and DePuy Synthes Prods are met. Likewise, Amazon.com expands the scope of IPR proceedings, as motions to amend can now be challenged on more grounds than just anticipation and obviousness. While the substitute claims in Amazon.com were rejected based on subject matter eligibility, petitioners and the Board are likely to challenge a motion to add substitute claims on other grounds, such as written description and definiteness, in the future.



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Join the Discussion

3 comments so far.

  • [Avatar for Night Writer]
    Night Writer
    March 24, 2019 07:07 pm

    Still think that the enforcement of precedential opinions is a bit wonky.

  • [Avatar for Josh Malone]
    Josh Malone
    March 24, 2019 05:37 pm

    One more point. This is supposed to be an example of balance, yet the DePuy inventor Dr. Masini was denied the opportunity to testify! This is an outrage. The named inventor does not need a stupid declaration. Those are just written by lawyers anyway. This is a blatant example of injustice and anti-American elitism. The inventor did sign an inventor’ oath, execute a power of attorney, and is the foremost expert on the subject matter of the patent. Yet they don’t think his testimony is relevant. Garbage. This would not happen in a real court. This is an easy due process violation should the panel decide to cancel Dr. Masini’s patent.

    Message to inventors: the policy of the USPTO they don’t care if you invent a better artificial knee joint. Keep it a secret.

  • [Avatar for Josh Malone]
    Josh Malone
    March 24, 2019 03:39 pm

    Way way too early to celebrate. This statement is woefully premature:

    The recent designations… develop the scope of PTAB litigation as a viable alternative to district court litigation.

    Live testimony is great step. Throw in discovery, presumption of validity, independent adjudicator, and jury to resolve factual disputes and we would be half way to an alternative to district court.

    The institution decisions of recent weeks show that the new claim construction rule, updated Trial Practice Guide, and personnel changes are not working. The DDR Holdings ‘399 patent was recently instituted despite passing numerous reviews by the agency and Federal Circuit (even adoption in the MPEP as a model for patentability!). Other inventors with practicing entities are scrambling to raise the $850K to fight the agency that is supposed to be protecting them. There is still no evidence and really no expectation that the PTAB can function as an alternative to district court. The PTAB still can cancel any patent any time.

    We should applaud Director Iancu’s vision to restore reliable patent rights and his courage to take on the anti-inventor infringer lobby. But we must demand results. The institution rates and disparity with Article III results are still far from anything remotely reliable.

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