Vidal Wants Input on Proper Sanctions for Withholding Evidence from PTAB

U.S. Patent and Trademark Office (USPTO) Director Kathi Vidal issued an Order last week in a sua sponte Director Review proceeding asking the parties to Spectrum Solutions LLC v. Longhorn Vaccines & Diagnostics, LLC and any interested amici to weigh in on the appropriate sanctions remedy when a party withholds evidence in an America Invents Act (AIA) proceeding.

Vidal granted sua sponte Director Review in June of a Patent Trial and Appeal Board (PTAB) decision that found Petitioner Spectrum Solutions had proven both the challenged claims and substitute claims of Longhorn Vaccines’ relevant patents unpatentable under 35 U.S.C. § 103.

In a concurrently-issued Sanctions Order, the PTAB also determined “that Patent Owner failed to meet its duty of candor and fair dealing in its actions before the Board.” Specifically, the Board said Longhorn “conducted, and relied on, biological testing in an attempt to distinguish the asserted Birnboim reference in this and related inter partes reviews, but selectively and improperly withheld material results that were inconsistent with its arguments.” The PTAB thus entered adverse judgment cancelling all challenged claims of U.S. Patent No. 8,084,443 and denying Patent Owner’s Revised Motion to Amend.

Longhorn had argued in response to Spectrum’s Motion for Sanctions that its conduct did not warrant sanctions and that the requested sanctions are “improper and disproportionate given the lack of harm.”

On October 27, Vidal issued an Order explaining that, while she agrees with the Board’s finding that Longhorn withheld factual evidence, “I determine that the Board’s sanctions decision and analysis in these cases, which may be the first of its kind, warrants my review.”

Vidal limited her review to three questions and asked the parties and amici to limit their briefing primarily to these questions as well. The parties are also permitted to respond to amici arguments.

The three questions are:

1. When the Board determines that a party has withheld relevant factual evidence during an AIA proceeding, which USPTO regulations are implicated? Do such regulations include 37 C.F.R. § 1.56?
2. When the Board determines that a party has withheld relevant factual evidence during an AIA proceeding, is it an appropriate sanction for the Board to apply adverse judgment in a final written decision to deem claims unpatentable? Is such a sanction proportionate to the harm caused by the party, taking into account the integrity of the patent system? and
3. When the Board determines that a party has withheld relevant factual evidence during an AIA proceeding, what other sanctions are appropriate, either in addition to, or in place of, applying adverse judgment in a final written decision to deem claims unpatentable?

Amici briefs can be submitted to [email protected] within four weeks of the date of the Order (October 27) and must be limited to 20 pages.