Posts Tagged: "Patent Trial and Appeal Board"

On appeal, Ariosa challenged the Board’s refusal to consider the background reference because it was not identified as a piece of prior art “defining a combination for obviousness.” The Federal Circuit agreed with Ariosa’s position that the background reference should have been considered by the Board, stating that background art must be considered even though such art is not true “prior art” presented as the basis of obviousness grounds for review. While the Court did agree that Ariosa’s articulation of the background reference’s impact on motivation to combine prior art references was lacking, the Court found the Board’s explanation for its failure to consider the reference equally lacking and thus warranting remand.

The PTAB has seen more than triple the number of inter partes review (IPR) petitions—now the preferred way for a company accused of infringement in court to challenge a patent’s validity—than it projected when the challenge first became available in 2012. But the fact that proceedings can run simultaneously presents challenges.

The early “death squad” hysteria persisted just long enough to catch the interest of hedge funds. The hedge funds saw an opportunity to utilize the PTAB to spook financial markets to their gain. The game plan involved establishing “short” positions in publically traded stocks that have their valuation closely tied to patents, as is the case in the Bio/Pharma sector. Given the PTAB’s early infamy, the bet was that the mere filing of an IPR would spook investors enough to move a stock price to the negative (i.e., quick profit for a short seller). Yet, as hedge funds targeting Bio/Pharma patents have quickly learned, gambling on patent challenges in the unpredictable arts is not a viable, long-term business model.

I understand that patent owners are upset at having the playing field leveled somewhat. They must feel like the rules of the game have changed, and, to be fair, they have to some extent. But a patent is not real property and it’s not an entitlement. It’s a temporary grant of exclusivity by the government in exchange for sharing one’s invention with the public, assuming that the invention is novel and non-obvious. If it turns out that the original patent issuance was wrong, i.e., someone else came up with the invention first, you have to give up that grant.

Covenant Not to Challenge clauses are common in patent licenses, including licenses that are part of post-litigation settlements. clause is seen as a benefit bargained for under a license agreement and constitutes part of the consideration obtained by the licensor for the license. The intended effect of such a clause is to allow the licensor to make an estoppel argument in the event that licensee does challenge the patent, in spite of its agreement not to do so. However, the PTAB thus concluded that without an express grant from Congress, it did not have the authority to recognize contractual estoppel as a bar to an inter partes review.

A couple months ago I commented on Ex parte Khvorova, expressing disappointment in its analysis and concern over what this might mean since it is “the first PTAB decision in molecular biology since patenting in that field got turned upside down.” To follow up on these notions, and to give credit where credit is due, I wanted to briefly comment on Ex parte Boyden, which the PTAB issued September 2, 2015.

PTAB decisions are predominately given one of three classifications: precedential, informative or routine. Only precedential decisions are to serve as binding authority. Informative decisions may serve as an authority but are not binding. Routine decisions may be cited as relevant but are not to be cited as an authority. Recent research indicates that, of the 20,631 ex parte appeal decisions issued in fiscal years 2013 or 2014, less than 0.04% (more specifically, 7 of the 20,631) were precedential or informative.

The United States Supreme Court is commonly known to resolve difficult issues of law. Yet, Alice v. CLS Bank[ii], last year’s unanimous Supreme Court decision, has caused confusion about whether computer-implemented business methods and software innovations are patentable under 35 U.S.C. §101. The question of patentability of software-related innovations – even those involving merely implementations of business-related innovations – seemed…

The Federal Circuit held that the Board correctly placed the burden on Dynamic to prove that Raymond was entitled to the filing date of its provisional application under § 119(e)(1). As the petitioner, Dynamic had the ultimate burden of persuasion to prove unpatentability by a preponderance of the evidence. As for the burden of production, Dynamic satisfied its initial burden by arguing that the claims were anticipated by Raymond under § 102(e)(2). However, this burden then shifted back to Dynamic when the patent owner provided evidence that the claimed invention was reduced to practice before Raymond’s filing date. The burden was then on Dynamic to prove that Raymond was entitled to an earlier effective date.

The PTAB said that the full pilot study had not been made of record, which apparently also meant to the Board that the available description of the pilot study (described in the Kappos reference) was somehow not prior art. This reasoning, if you can call it that given that it was provided in only two short sentences, is extremely troubling. Clearly, the publication of a description of the pilot study would in and of itself be a publication that could be relied upon even if the entirety of the report was not available. Frankly, not considering a published description to be prior art flies in the face of volumes of Federal Circuit decisions on what it means to be a publication. The Kappos reference was a publication and to pretend that something described in that publication is not prior art is unbecoming the dignity of the Board.

In siding with the patent owner the PTAB explained that the petitioner insufficiently made a case that the claimed invention was obvious. A proper obviousness argument must articulate some rational underpinning to support a legal conclusion of obviousness. Unfortunately for Volkswagen, the PTAB saw only conclusions and impermissible hindsight in the IPR Petition. Ultimately, the PTAB was not persuaded that the Petition demonstrated a reasonable likelihood that Petitioner would prevail.

Presently the USPTO has a panel of three APJs decide whether to institute a trial, and then normally has the same three-APJ panel conduct the trial, if instituted. Under the proposed pilot program the single APJ making the IPR institution decision would be on the panel conducting the IPR trial, joined by two other APJs not associated with the IPR institution decision. Regardless of efficiencies, having a single APJ make institution determinations is fraught with due process concerns because decision whether to institute an inter partes review is not appealable.

The USPTO declined to initiate an inter partes review of two patents owned by Acorda Therapeutics, Inc. Acorda patents were challenged by the Coalition for Affordable Drugs, LLC, the entity formed by billionaire hedge fund manager Kyle Bass. I have to wonder whether this decision represents a shift in the worldview of the PTAB or whether they sought out a reason to deny the petition because it was filed by Kyle Bass. Unfortunately, I suspect these two denials have everything to do with who was behind the challenge and little to do with the merits of the challenge.

Even though the Board is generally not bound by the district court’s construction of claim terms, it does not mean that “it has no obligation to acknowledge that interpretation or to assess whether it is consistent with the broadest reasonable construction of the term.” Here, given that PI’s main argument was the proper interpretation of the term “coupled,” which was construed by the district court, the Board had an obligation “to evaluate that construction and to determine whether it was consistent with the broadest reasonable construction of the term.” Because the Board failed to address the district court’s interpretation of the term “coupled” and failed to provide adequate explanation for its decision to reject the claims as anticipated, the Court reversed and remanded.

USPTO proposed rule changes would amend the existing rules relating to trial practice for inter partes review (IPR), post-grant review (PGR), the transitional program for covered business method patents (CBM), and derivation proceedings. By in large, the Office decided to stick with BRI, but not when the challenged patent will soon expire. The USPTO also adopted the comments from those who expressed satisfaction with the Board’s current rules and practices for motions to amend, which means there will be a right to file a motion to amend but no right to amend if these proposed rules go final.