LIVE Panelists Predict Little Hope for Major Change from PTAB Rulemaking and Legislation

From Left: Scott McKeown, Vincent Rubino, Brendan McCommas and Stephen McBride

The general consensus of attendees at a panel held during IPWatchdog LIVE 2023, day two, is that the Patent Trial and Appeal Board (PTAB) will never be eliminated. Open questions remain, however, on the effectiveness of PTAB reforms recently proposed by the U.S. Patent and Trademark Office (USPTO). Those rule changes, and similar legislative efforts in Congress, were the subject of “Dissecting PTAB Rulemaking & Legislation: Will it Make Things Any Better?”

An advanced notice of proposed rulemaking (ANPRM) issued by the USPTO this April included a series of proposed changes to PTAB practice, such as limitations on both PTAB proceedings against patents owned by under-resourced inventors and challenges to patents previously having their validity upheld in U.S. district court or the PTAB. A few months later, the Promoting and Respecting Economically Vital American Innovation Leadership (PREVAIL) Act was introduced into the U.S. Senate, which if enacted would require standing for PTAB petition filings and change the burden of proof on validity at the PTAB from a preponderance standard to a clear and convincing standard.

Limited Codification of Discretionary Denials Most Probable Outcome of USPTO’s ANPRM

While the rules package proposed by the USPTO’s April ANPRM is extensive, speakers on the PTAB rulemaking panel at IPWatchdog LIVE expected the agency’s eventual notice of proposed rulemaking (NPRM) to avoid the more ambitious proposals of the ANPRM. Scott McKeown, Shareholder in the Post-Grant Proceedings Practice at Wolf Greenfield, noted that while he didn’t agree with PTAB discretionary denials under Fintiv, he expected the agency to focus on codifying existing practices into agency rules regarding interpretations of 35 U.S.C. § 325(d) and 35 U.S.C. § 314(a). Vincent Rubino, Partner at Fabricant LLP representing mainly patent owners at the PTAB, agreed that the agency will likely codify Fintiv discretionary denial practice.

Providing insight into the agency’s likely path toward PTAB rule changes was Brendan McCommas, Senior Counsel at Husch Blackwell and former USPTO Chief of Staff during the tenure of former Director Andrei Iancu. McCommas noted that while rule changes instituted during the nascent days of the PTAB during the tenure of former USPTO David Kappos were not considered to be economically significant rulemaking, former Director Iancu’s proposal to change claim construction at the PTAB to the Phillips standard faced such hurdles, potentially owing to political pressure to slow the rule changes. While McCommas expected a rules package based on the USPTO’s ANPRM to become effective in early 2024, he added that the process would likely be slowed by the more than 10,000 public comments submitted in response to the ANPRM.

Of the proposals from the ANPRM that the panelists did not anticipate moving forward included the compelling merits standard for institution decisions, which featured prominently in public comments submitted to the USPTO. McKeown, who primarily represents PTAB petitioners, questioned whether patent owners truly wanted a compelling merits standard, as the higher standard at the institution phase could presage a final written decision more likely to invalidate patent claims than the reasonable likelihood standard. Rubino agreed, adding that

while three administrative patent judges (APJ) are on the panel at the institution phase, only one APJ writes the decision while the other two could still be swayed post-institution if they haven’t fully grappled with the validity grounds at issue in the proceeding.

Was Pivot from STRONGER Patents to PREVAIL Act a Purely Political Move?

Moderating the PTAB rulemaking panel was Stephen McBride, Partner at Carmichael IP, who asked the panel which aspects of the PREVAIL Act might gain traction in Congress. McKeown doubted that requiring the PTAB to change APJ panels post-institution would “move the needle” despite the idea that it would eliminate bias on validity stemming from the institution decision. Rubino agreed, noting that the introduction of three new APJs to hear arguments during an inter partes review (IPR) proceeding would introduce new uncertainties into the process that patent owners don’t truly want.

Further debate was raised about the PREVAIL Act’s provisions increasing the PTAB’s evidentiary burden to a clear and convincing standard. McKeown noted that this standard makes better sense when deciding invalidity in U.S. district court, where the benefit of expert agency input is lacking. Rubino disagreed, arguing that the PREVAIL Act’s change to a clear and convincing evidentiary standard would be very welcome news to patent owners, which would make it more difficult for petitioners to win on a prima facie case of obviousness supported by limited expert witness testimony. However, Rubino advocated for more changes at the Federal Circuit, which in his view tends to decide PTAB appeals in favor of petitioners on obviousness grounds. “Having the law changed at the Federal Circuit is what needs to happen,” Rubino said. “Otherwise it’s a slow march toward the Federal Circuit saying that everything is always obvious.”

The U.S. House of Representatives has yet to introduce its own companion bill to the PREVAIL Act, and McCommas noted that it was unlikely that either House Speaker Kevin McCarthy (R-CA) or House IP Subcommittee Chair Darrell Issa (R-CA) would take action on moving a House bill forward. McKeown noted that much of the language and support behind the PREVAIL Act were repurposed from the STRONGER Patents Act, a bill proposed in previous sessions of Congress. “The change from one to the other is pure politics,” McKeown said, adding that the bill has likely been recast as a measure against foreign economic rival China because most constituents in the U.S. don’t care about patent law.

While the PREVAIL Act could wind up in a Congressional stalemate, panelists expected that an NPRM on the USPTO’s PTAB rulemaking would be issued by the agency in the next month or so.