PTAB Developments in 2023: A Mid-Year Recap and What’s to Come

A little over halfway through 2023, and nearing the end of the Patent Trial and Appeal Board’s (PTAB’s) fiscal year, we can take stock of an administrative body that is settling into a decade of precedent while big changes still loom. Unlike prior years, where policy changes resulted in statistical swings for institution rates, outcomes, amendment practice, and the like, this year has been more of an extension of previous trends (though institution rates are still creeping higher).

U.S. Patent and Trademark Office (USPTO) Director Kathi Vidal has been active and sought to address some of the edge or outlier cases, but otherwise it has largely been business as usual for the PTAB. This brief recap summarizes the state of the PTAB in 2023, new precedential decisions, activity in federal court affecting PTAB practice, significant changes in official review, and pending legislation that would affect life at the PTAB.

Precedential Decisions in 2023

After a decade of PTAB proceedings, precedent is starting to crystallize through a wealth of informative and precedential PTAB opinions and Director Review decisions. This year, four more decisions have been designated as precedential:

• CommScope Techs. LLC v. Dali Wireless, Inc.—In a sua sponte Director review, Director Vidal clarified the standard under which the PTAB can institute an IPR, even if the Fintiv factors militate towards denial of the petition. Director Vidal explained that the Fintiv test, under which the Board can exercise its discretion to decline to institute, requires an analysis that cannot be avoided, even where compelling evidence of invalidity is presented. The compelling merits test should only come into play after the Board has found that the first five Fintiv factors weigh in favor of denial. Director Vidal found that the CommScope Board’s decision was deficient for failing to perform any Fintiv analysis, instead going straight to a determination of whether the petition presented a compelling invalidity challenge. Director Vidal vacated the Broad’s decision to institute and remanded for further proceedings.
• Nested Bean, Inc. v. Big Beings US Pty. Ltd.—Director Vidal granted Director review to address the treatment of multiple dependent claims. The Patent Owner contended that 35 U.S.C. § 112 requires the PTAB to consider the patentability of each claim separately, while the Petitioner argued that if any claim of a multiple dependent claim is unpatentable, the entire claim is unpatentable. Director Vidal agreed with the patent owner, finding that the patentability of a multiple dependent claim should be considered separately as to each of the claims from which it depends.
• Xerox Corp. v. Bytemark, Inc.—This precedential opinion explains that declarant testimony merely repeating, verbatim, conclusory assertions of the petition without citing additional evidence or reasoning is to be given little weight. The Board denied institution of IP, finding that the only evidence Petitioner supplied was the opinion of its expert, which was unpersuasive because it was devoid of any evidence or technical reasoning.
• Apple Inc. v. Zipit Wireless, Inc.—In a sua sponte Director review, Director Vidal provided clarity on the standard for abandonment of contest. Petitioner filed six IPR petitions, all of which were instituted. Patent Owner filed response in only two of the proceedings. During the oral hearing, the Board asked Patent Owner whether Patent Owner was contesting the companion cases in which no response was filed. Patent Owner responded, stating “Correct, Your Honor. I]f the Board determines that [Petitioner] has not met [its] burden of proof with respect to those IPRs.” The Board then entered adverse judgments in the companion cases, determining that the Patent Owner abandoned the contests. Director Vidal disagreed, finding that Patent Owner’s statements were not an unequivocal abandonment of the contest of the companion proceedings. The Board’s adverse judgment was vacated and the proceedings were remanded to either issue a show cause order clarifying whether Patent Owner was indeed abandoning the contest or to issue a final written decision addressing the patentability of the challenged claims.

The PTAB and the Federal Courts

Relatedly, there have not been many significant Supreme Court or Federal Circuit decisions affecting PTAB practice this year. One worth noting is Ironburg Inventions Ltd. v. Valve Corp., which clarified the scope of estoppel in post-PTAB Proceedings.

Following an inter partes review (IPR), the U.S. District Court for the Western District of Washington ruled that Valve was estopped from challenging validity based on grounds raised by Valve in its IPR, in addition to the grounds raised in a later-filed third-party IPR based on references Valve was not aware of prior to filing its IPR. At trial, the jury found for Ironburg, and Valve appealed. The Federal Circuit considered two issues in connection with Valve’s appeal on the estoppel issue:

1. The proper standing by which to judge whether a reference is on the petitioner could have reasonably raise in an IPR; and
2. Which party bears the burden of proving a reference is one a petitioner reasonably could have raised.

Both parties agreed that the proper standard was that “an IPR petition ‘reasonably could have raised’ any grounds that ‘a skilled searcher conducting a diligent search reasonably could have been expected to discover.’” The Federal Circuit agreed and adopted this standard.

Regarding the second issue, the Federal Circuit concluded that the district court incorrectly placed the burden on Valve, holding that “the burden of proving, by a preponderance of the evidence, that a skilled searcher exercising reasonable diligence would have identified an invalidity ground rests on the patent holder.”

The POP Comes to an End

During USPTO Director Andrei Iancu’s tenure, the highly publicized Precedential Opinion Panel (POP) was established, which consisted of three panel members (the Director of the USPTO, the Commissioner for Patents, and the Chief Judge for the PTAB) and allowed for review of major policy or procedural issues. Only five POP requests have been granted since its inception.

On July 24, 2023, the USPTO announced that it is retiring the POP and extending the Director Review process of PTAB decisions. As of July 15, 2023, a total of 37 director reviews have been granted.

Director Vidal describes these changes as part of an effort to make the review process “more efficient and effective for America’s innovators.” This policy change is consistent with Director Vidal’s “hands on” approach to shaping PTAB practice while heeding some comments from the appellate courts about potentially problematic aspects of the POP. Director Vidal has already demonstrated a willingness to review Board decisions on both procedural and substantive grounds, and this is likely to continue with the retirement of the POP.

Pending Legislation: Changes on the Horizon?

Congress is considering a significant bill that, if approved, would institute significant changes in how the PTAB operates.

The Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act introduces a number of proposed changes that its authors say would incentivize innovation. The bill would require standing for PTAB challengers (meaning they must have been sued or threatened with a patent infringement lawsuit before filing a PTAB challenge); limit multiple petitions against the same patent; and introduce a “clear and convincing evidence” standard for patent invalidity at the PTAB, among other proposed reforms.

While stakeholders of all stripes will continue to weigh in on the PTAB and its role, function, and process, practitioners will keep a close eye on what has become a centerpiece of patent law practice.

The PTAB in 2023: By the Numbers

• 752 total petitions filed
  • 12 (2%) Post-Grant Review proceedings
  • 740 (98%) Inter Partes Review (“IPR”) proceedings
• Petitions by Sector
  • 70% electrical/computer technology
  • 20% mechanical and business method
  • 7 percent bio/pharma
  • 3% chemical
  • 1% design
• Institution rates are rising:
  • 68% in FY 2023 to date
  • 66% in FY 2022
  • 58% in FY 2021

Image Source: Deposit Photos
Author: Piter2121
Image ID: 234493150