Patent Docs

In re Silver — Texas Supreme Court Recognizes Patent Agent Privilege

February 26, 2018

By Josh Rich —

In reversing an appellate court decision that had caused concerns throughout the patent world, the Texas Supreme Court recognized that communications between patent agents and clients could be covered by the attorney-client privilege.[1] In Patent Office proceedings and patent litigation, patent agent-client communications could already be protected; in non-patent litigation, however, it is far less clear — and the prior Texas appellate court decision suggested such communications could be revealed in discovery. By reversing the appellate court decision, the Texas Supreme Court should have patent agents feeling more confident that their representation of clients in patent prosecution is no different than that provided by patent attorneys . . . and their clients breathing a sigh of belief.

In this case, Mr. Silver was the named inventor on a patent application related to a stand-alone tablet designed to allow restaurant customers to order food and pay without having to interact with a waiter or waitress. He hired a patent agent to prosecute the application before the U.S. Patent and Trademark Office, which the agent did successfully. Mr. Silver sold the patent to Tabletop Media, LLC, who then licensed it to restaurant chains.[2] Tabletop allegedly failed to pay him, and Mr. Silver sued Tabletop for breach of contract. In the breach of contract case, brought by Mr. Silver in Texas state court, Tabletop sought production of communications between Mr. Silver and his patent agent.

The trial court compelled production of the communications, and the Texas Court of Appeals refused to overturn the trial court's decision in responding to Silver's petition for writ of mandamus.[3] It did so because it understood Mr. Silver as requesting the court to establish a patent agent-client privilege separate from the attorney-client privilege, which it indicated that it was not empowered to do.[4] One of the appellate court judges dissented from the panel opinion, understanding Mr. Silver's request not as the creation of a new privilege, but as an application of the existing attorney-client privilege to the patent agent-client relationship.[5] Ultimately, the Texas Supreme Court unanimously agreed with the dissent.[6]

In Texas, claims of attorney-client privilege are governed by Texas Rule of Evidence 503. Under that rule, "[a] client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made to facilitate the rendition of professional legal services to the client [between, among others] between the client or the client's representative and the client's lawyer."[7] In that context, a "lawyer" is defined as "a person authorized, or who the client reasonably believes is authorized, to practice law in any state or nation."[8] Thus, the key question was whether a patent agent was a person "authorized to practice law" in a state or nation.

While not controlled by Federal decisions, the Texas Supreme Court's answer to that question was informed by them. Over five decades ago, in Sperry v. State of Florida ex rel. Florida Bar,[9] the Supreme Court had held that a patent agent's prosecution of applications before the U.S. Patent and Trademark Office did not constitute the unauthorized practice of law. Then, in In re Queen's University at Kingston, which was decided just months before the Texas appellate court's decision, the Federal Circuit had determined as a matter of Federal common law that the attorney-client privilege included "a patent-agent privilege extending to [a client's] communications with non-attorney patent agents when those agents are acting within the agent's authorized practice of law before the Patent Office."[10] In both cases, the Federal courts had reached the conclusion based on the belief that a patent agent's role in patent prosecution was not just law-like activity, it was the practice of law itself.

The Texas court also looked to Texas statutes and dictionary definitions for its decision, since Rule 503 does not itself define what "the practice of law" entails. The Texas State Bar Act includes a definition of the practice of law in the context of unauthorized practice of law, but it is not necessarily coextensive with Rule 503.[11] Similarly, both Webster's and Black's provide dictionary definitions. The definition in Black's Law Dictionary includes "preparing papers to bring about various transactions,"[12] which is exactly what patent prosecution involves. Both the Texas statutes and dictionaries also require that a lawyer's services be provided directly to a client, but that unquestionably occurs with patent agents within the scope of patent prosecution.

For the privilege to apply, Rule 503 also requires a lawyer to be authorized to practice by a state or nation. The defendant argued that meant that a person had to be licensed as a lawyer by a state or nation, regardless of authorization by the U.S. Patent and Trademark Office. Again, the Texas court considered the Sperry and Queen's University cases as persuasive authority. But more importantly, it focused on the distinction between being "authorized" to practice law and being "licensed" to practice law. It found the latter to be a subset of the former, not coextensive therewith. Under U.S. Patent and Trademark Office regulations, a patent agent is authorized to practice before it even if he or she is not licensed to do so. Accordingly, the Texas Supreme Court found that a patent agent is a "lawyer" for purposes of the application of the attorney-client privilege in relation to communications regarding patent prosecution.

While it might otherwise seem that the Texas Supreme Court's decision in In re Silver is merely one more case supporting the existence of a patent agent-client privilege,[13] it bears greater importance because it reversed a decision to the contrary. The Texas Appellate Court's decision had raised great concerns that states, in breach of contract or other state law claim litigation, would not extend privilege to such communications. The appellate court's decision had a chilling effect on clients' choice of practitioners: to ensure the application of attorney-client privilege, they were opting for patent attorneys or patent agents supervised by attorneys. Now, with that decision reversed, there is less reason for fear of revelation of communications and greater freedom to discuss patent applications directly with patent agents. Thus, today, all precedent points to patent agent-client communications being privileged.

[1] In re Silver, Case No. 16-0682 (Tex. Feb. 23, 2018).
[2] If you've used a Ziosk tablet or Abuelo's, Chili's, or Red Robin, you may be part of Mr. Silver's damages claim.
[3] In re Silver, 500 S.W. 3d 644, 647 (Tex. App. 2016).
[4] Id. at 645.
[5] Id. at 650 (Evans, J., dissenting).
[6] For a more complete discussion of the Texas Appellate Court's decision, and other recent patent agent privilege decisions and regulations, see "Patent Office Ethics Developments: Patent Agent Privilege and Duty of Disclosure," Snippets (Winter 2017).
[7] Tex. R. Evid. 503(b)(1).
[8] Tex. R. Evid. 503(a)(3).
[9] 373 U.S. 379 (1963).
[10] 820 F.3d 1287, 1302 (Fed. Cir. 2016). For an excellent recap of the Queen's University case, see "In re Queen's University at Kingston (Fed. Cir. 2016)".
[11] See Tex. Gov't Code § 81.101.
[12] The Court showed its respect for patent prosecutors by not only acknowledging that patent applications are legal documents, but actually constitute "one of the most difficult legal instruments to draw with accuracy."
[13] In the interim between the Texas Appellate Court's decision and the Texas Supreme Court's decision, the Patent and Trademark Office adopted patent agent privilege as a rule for Patent Trial and Appeal Board proceedings. See "USPTO Issues Final Rule Establishing Patent Agent Privilege".
PTAB Denies St. Regis Mohawk Tribe’s Motion to Terminate IPRs based on Sovereign Immunity

February 25, 2018

By Kevin E. Noonan –

In an extensive, 42-page per curiam opinion, the Patent Trial and Appeal Board (PTAB) surprised no one last Friday by denying the St. Regis Mohawk Tribe's motion to terminate several inter partes review proceedings based on the Tribe's assertion of tribal sovereign immunity. In an effort to avoid undue suspense, the Board provided a pithy summary of its decision at the beginning of the opinion:

Upon consideration of the record, and for the reasons discussed below, we determine the Tribe has not established that the doctrine of tribal sovereign immunity should be applied to these proceedings. Furthermore, we determine that these proceedings can continue even without the Tribe's participation in view of Allergan's retained ownership interests in the challenged patents. The Tribe's Motion is therefore denied.

The Board's decision is consistent with Board rule, 37 C.F.R. § 41.121(b), that the proponent of a motion bears the burden of establishing their right to the relief requested. It is also consistent with the Board's evident policy position from recent decisions (see Ericsson Inc. v. Regents of the University of Minnesota, Case IPR2017-01186 (PTAB Dec. 19, 2017) (Paper 14) ("Ericsson"), and LSI Corp. v. Regents of the University of Minnesota, Case IPR2017-01068 (PTAB Dec. 19, 2017) (Paper 19) ("LSI")) that, once instituted, it will not terminate post-grant review proceedings (absent settlement, and perhaps not even then) on sovereign immunity grounds, unless the Director, Congress, or the courts compel them to do so. And the opinion, in its recitation of the relevant facts, provided the panel with another opportunity to display its pique (see "The PTAB Strikes Back — Issues Order Prohibiting St. Regis Mohawk Tribe from Filing Any Additional Papers in IPR") at the Tribe's representatives, stating:

The Tribal Council Resolution states that the Tribe was approached by the law firm Shore Chan DePumpo LLP "to engage in new business activities related to existing and emerging technologies, which may include the purchase and enforcement of intellectual property rights, known as the 'Intellectual Property Project."

In setting forth the legal basis for its decision, the Board recognized that "[a]s a matter of federal law, an Indian tribe is subject to suit only where Congress has authorized the suit or the tribe has waived its immunity," citing Kiowa Tribe of Okla. v. Mfg. Techs., Inc., 523 U.S. 751, 754 (1998). Nevertheless, the Board applying at least Rule 121(b), refuges in the fact that there is no "controlling precedent or statutory basis" for applying sovereign immunity to IPR. Acknowledging that this is a "case of first impression" (making its mention of a lack controlling precedent at least inherently redundant), the opinion distinguishes Federal Maritime Commission v. South Carolina State Ports Authority, 535 U.S. 743 (2002) ("FMC"), on the grounds that FMC was concerned with State sovereign immunity which is distinct from tribal sovereign immunity by being protected by the Eleventh Amendment and not being subject to abrogation by Congress as tribal immunity is. The Board states that:

The Tribe and its supporting amici, however, have not pointed to any federal court or Board precedent suggesting that FMC's holding with respect to state sovereign immunity can or should be extended to an assertion of tribal immunity in similar federal administrative proceedings.

The opinion also distinguished State sovereign immunity decisions that recognized the immunity for state universities acting as an "arm of the state" (Covidien LP v. Univ. of Fla. Research Found. Inc., Case IPR2016-01274 (PTAB Jan. 25, 2017) (Paper 21); Neochord, Inc. v. Univ. of Md., Case IPR2016-00208 (PTAB May 23, 2017) (Paper 28); and Reactive Surfaces Ltd, LLP v. Toyota Motor Corp., Case IPR2016-01914, (PTAB July 13, 2017) (Paper 36)) on this basis.

The opinion also disregards analogous decisions of other agencies ("[w]e are not bound by those agency decisions") and also curiously distinguishes Bodi v. Shingle Springs Band of Miwok Indians, 832 F.3d 1011, 1021 (9th Cir. 2016), and Contour Spa at the Hard Rock, Inc. v. Seminole Tribe of Fla., 692 F.3d 1200, 1201 (11th Cir. 2012), both cases having declined to Lapides v. Bd. of Regents of the Univ. Sys. of Ga., 535 U.S. 613 (2002), concerning waiver of state's sovereign immunity based on litigation conduct, to tribal immunity). The opinion expressly relies on the Board's precedential decision in Athena Automation Ltd. v. Husky Injection Molding Sys. Ltd., Case IPR2013-00290, slip op. at 12–13 (PTAB Oct. 25, 2013), to assert that in contrast to 19 U.S.C. 1337(c) where "[a]ll legal and equitable defenses may be presented' in International Trade Commission (ITC) investigations" that is not the case for 35 U.S.C. § 311(a).

The Board went further than deigning not to grant the Tribe's motion; no doubt in part to stem the expected tide of similar assignment and licensing arrangements, the Board declared that tribal sovereign immunity does not apply to IPR proceedings. The basis for this decision represents somewhat of a turning of the tables: rather than addressing the Tribe's point that sovereign immunity should lie unless Congress has specifically abrogated it, the Board decision characterizes IPR proceedings as being the product of a "generally applicable statute" that does not implicate sovereign immunity concerns or protections. This determination is based on the applicability (or risk) of IPR proceedings against any patent "regardless of ownership," their being "subject to the conditions and requirements of [the Patent Act]." The opinion cites authority limiting application of tribal immunity for "laws of general applicability," including Donovan v. Coeur d'Alene Tribal Farm, 751 F.2d 1113, 1116 (9th Cir. 1985) (quoting U.S. v. Farris, 624 F.2d 890, 893–94 (9th Cir. 1980), to the effect that such laws must affect "exclusive rights of self-governance in purely intramural matters"; involve "abrogat[ing] rights guaranteed by Indian treaties"; or that there be legislative history that supports a conclusion that Congress did not intend the law to apply to an Indian tribe. Of course, in this instance none of these apply.

Portions of the opinion appear to imply that IPRs are an assertion of "superior sovereign powers" of the Federal government that tribal immunity cannot thwart, citing Quileute Indian Tribe v. Babbitt, 18 F.3d 1456, 1459 (9th Cir. 1994), and that tribal immunity has not prevented assertion by the Federal government of other administrative proceedings, citing Consumer Fin. Prot. Bureau v. Great Plains Lending, LLC, 846 F.3d 1049, 1058 (9th Cir. 2017), and Menominee Tribal Enters. v. Solis, 601 F.3d 669, 674 (7th Cir. 2010). In this the Board disregards at least the distinction that in those cases the action was by the government represented by a government lawyer. The Board also gives little credence to the argument that in an IPR a private third party remains involved, stating that "a private entity's continued involvement as a party in a federal administrative proceeding does not necessarily entitle a tribal entity to assert its immunity in the proceeding."

The opinion contains additional discussion of sovereign immunity as a "common law" concept granting immunity from suit, on the grounds that an IPR is not that sort of suit, and also notes the public interest inherent in IPRs, citing Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2144 (2016). While not basing its decision on the distinction made by several amici (see "Amicus Briefs Filed in Mohawk Tribe's Motion to Dismiss IPRs") between actions in personam and in rem (to the effect that IPRs as an in rem proceeding are not subject to an assertion of sovereign immunity), the Board does note that it has the authority to hold IPR proceedings in cases where the patent owner does not appear and the ability for the Board to continue an IPR even if the parties settle, stating "[t]he Board's authority to proceed without the parties' participation underscores its independent role in ensuring the correctness of granting patentable claims."

Finally, the Board says that the IPR can continue with Allergan alone (i.e., without the Tribe's participation), based on the rights in the patents granted by the license(s) and agreeing with Petitioners that Allergan remains the "patent owner" despite the assignment (while taking pains not to assert that the ownership transfer is a sham). The opinion cites the Federal Circuit for holding that the "party that has been granted all substantial rights under the patent is considered the owner regardless of how the parties characterize the transaction that conveyed those rights," citing Speedplay, Inc. v. Bebop, Inc., 211 F.3d 1245, 1250 (Fed. Cir. 2000), and also Alfred E. Mann Found. for Sci. Research v. Cochlear Corp., 604 F.3d 1354, 1358–59 (Fed. Cir. 2010), for the proposition that "[a] patent owner may transfer all substantial rights in the patents-in-suit, in which case the transfer is tantamount to an assignment of those patents to the exclusive licensee." The Board panel recognizes the following analysis of "the rights transferred and the rights retained under the license agreement, including:

(1) the nature and scope of the right to bring suit; (2) the exclusive right to make, use, and sell products or services under the patent; (3) the scope of the licensee's right to sublicense; (4) the reversionary rights to the licensor following termination or expiration of the license; (5) the right of the licensor to receive a portion of the proceeds from litigating or licensing the patent; (6) the duration of the license rights; (7) the ability of the licensor to supervise and control the licensee's activities; (8) the obligation of the licensor to continue paying maintenance fees; and (9) any limits on the licensee's right to assign its interests in the patent.

Azure Networks, LLC v. CSR PLC, 771 F.3d 1336, 1343 (Fed. Cir. 2014) (vacated on other grounds); see also Alfred E. Mann Found. for Sci. Research v. Cochlear Corp., 604 F.3d at 1360–61. The opinion compares the Allergan-Mohawk Tribe license using these factors; here is the scorecard:

With regard to the first factor, the opinion notes that "[e]ach of the challenged patents is listed in the FDA's 'Orange Book.' . . . As such, we find that any viable infringement allegation for the challenged patents would have to necessarily be limited to drug products that require FDA approval . . ." and "[b]ased on the record before us, we find that the Tribe has not retained anything more than an illusory or superficial right to sue for infringement of the challenged patents." The Tribe's rights to make, use, and sell the patented invention was negligible in the Board's view, because "the claims of the challenged patents are directed to pharmaceutical compositions and methods used to treat human medical conditions, [and under these circumstances] we find Allergan's exclusive right to exploit the challenged patents 'or all FDA-approved uses in the United States' to be a substantial right." Allergan's rights under the license are "co-extensive in scope" with the claimed invention and the license thus does not limit Allergan's rights "in any meaningful sense." The opinion further notes that the Tribe's right to sublicense and assign its patents to a third party are restricted, and that "[w]ith respect to 'Contested PTO Proceedings' in particular, which include these inter partes review proceedings, the License provides that '[a]s between the Parties, Allergan shall have . . . the first right, but not the obligation, to defend and control the defense of the validity, enforceability and patentability of the Licensed Patents in such Contested PTO Proceeding.'"

In toto, the Board concluded from this analysis that:

We find these provisions to be significant restrictions on the Tribe's purported ownership rights. "The right to dispose of an asset is an important incident of ownership, and such a restriction on that right is a strong indicator" of whether a license agreement transferred all substantial rights under the patent.

and:

In sum, upon considering the relevant License terms, we find that Allergan obtained all substantial rights in the challenged patents. The Tribe points out that Allergan executed an assignment of the challenged patents to the Tribe, and this assignment was recorded at the PTO. . . . As recognized by the Tribe, however, a recordation of a patent assignment only creates a rebuttable presumption regarding ownership. See SiRF Tech., Inc. v. Int'l Trade Comm'n, 601 F.3d 1319, 1328 (Fed. Cir. 2010).

Importantly, the opinion also states that "[i]n reaching this conclusion, we do not comment on whether the License and the other agreements between the Tribe and Allergan constitute a 'sham' transaction, nor do we need to decide whether the agreements are otherwise improper under the law."

As a consequence, the Board further held that the Tribe is not an indispensible party under Federal Rule of Civil Procedure. This is important because Supreme Court precedent holds, in Republic of Philippines v. Pimentel, that:

"[a] case may not proceed when a required-entity sovereign is not amenable to suit . . . where sovereign immunity is asserted, and the claims of the sovereign are not frivolous, dismissal of the action must be ordered where there is a potential for injury to the interests of the absent sovereign. 553 U.S. 851, 867 (2008) and "once a tribunal recognizes that an assertion of sovereign immunity is 'not frivolous,' it is 'error' for the tribunal to proceed further to address the merits" (Pimentel, 553 U.S. at 864).

The Board distinguished Pimentel on its facts (involving a foreign sovereign), and on the need for courts to assess based on Rule 19(b) rather than the mere non frivolous assertion of sovereign immunity, citing Univ. of Utah v. Max-Planck-Gesellschaft Zur Forderung Der Wissenschaften E.V., 734 F.3d 1315, 1326 (Fed. Cir. 2013). The Board noted that its proceedings are not bound by the FRCP. Even if the Board applied Rule 19, the opinion states the Tribe is not an indispensible party:

Allergan has at least an identical interest to the Tribe—if not more of an interest as the effective patent owner for the reasons discussed above—in defending the challenged patents. Thus, we do not find that the Tribe will be significantly prejudiced in relation to the merits of the patentability challenges in these proceedings if it chooses not to participate based on its alleged tribal immunity because Allergan will be able to adequately represent any interests the Tribe may have in the challenged patents.

The original panel rendered this decision, putting at rest for the moment any inference of possible impropriety at least implied by the Tribe's motion for discovery on this issue (among others); see "Skeptical St. Regis Mohawk Tribe Requests Discovery Regarding Panel Selection Circumstances"). But this clearly is not the end of the matter; it remains to be seen whether the Board quickly follows with a Final Written Decision on the merits (due within the statutorily mandated twelve months on March 31st) or whether the Tribe files a Notice of Appeal on this issue (although the availability of such an appeal, likely to be considered interlocutory in nature, is uncertain; it is unlikely the PTAB will certify the question or otherwise facilitate an early appeal). And there remain efforts in Congress (inter alia, by Senator Claire McCaskill; see "A Bill to abrogate sovereign immunity of Indian tribes as a defense in inter partes review of patents") to abrogate by statute assertion of sovereign immunity by Indian tribes in patent cases. Stayed tuned.
Conference & CLE Calendar

February 25, 2018

February 26, 2018 – "Chinese Patent Developments" (Practising Law Institute) – 4:00 to 5:00 pm (Eastern)

February 27, 2018 – "Patent Inventorship: Best Practices for Determination and Correction — Distinguishing Between Inventor and Contributor; Navigating Joint Inventorship, Disclosure of Ownership, Real Party in Interest" (Strafford) – 1:00 to 2:30 pm (EST)

February 28, 2018 – "Going Global with Patents" (Bereskin & Parr) – 12:00 to 1:00 pm (EST)

March 3, 2018 – "Patent Post-Grant Practice" (John Marshall Law School Center for Intellectual Property, Information & Privacy Law) – 9:00 am to 4:30 pm, Chicago, IL

March 5-6, 2018 – Advanced Patent Law Seminar (Chisum Patent Academy) – Houston, TX

March 7, 2018 – "Inside the European Patent Office: Questions & Answers" (Intellectual Property Law Association of Chicago Patents-International Committee) – 11:45 am to 1:00 pm (CT), Chicago, IL

March 8, 2018 – "Patent Exclusivity Health Checks for Small Molecules: Are Your U.S. Patents Ready to Maximize ROI? — Phase II Efficacy Trials, Phase III Clinical Trials, NDA Submission, Approval and Marketing" (Strafford) – 1:00 to 2:30 pm (EST)

March 8-9, 2018 – Advanced Patent Law Seminar (Chisum Patent Academy) – Cincinnati, OH

March 13, 2018 – "Top Stories at the PTAB: What You Need to Know" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

March 14, 2018 – Patent Litigation Seminar (New Jersey Intellectual Property Law Association) – 12:00 to 5:00 pm, Iselin, NJ

March 15, 2018 – "On Sale and Public Use Bars to Patentability: Minimizing the Risk of Patent Ineligibility or Invalidation" (Strafford) – 1:00 to 2:30 pm (EDT)

March 15, 2018 – 2018 Business Methods Partnership Meeting (U.S. Patent and Trademark Office) – 1:00 to 4:00 pm (ET), Alexandria, VA
MBHB Webinar on PTAB

February 24, 2018

McDonnell Boehnen Hulbert & Berghoff LLP will be offering a live webinar entitled "Top Stories at the PTAB: What You Need to Know" on March 13, 2018 from 10:00 am to 11:15 am (CT). In this presentation, Patent Docs author and MBHB attorney Andrew Williams and MBHB attorney George "Trey" Lyons, III will examine the Supreme Court's Oil States Energy Services case and the impact it might have on future PTAB practice, and also address the following topics:

• Estoppel, and the impact the Supreme Court might have on protecting patent owners in the future.
• Has claim amendment practice changed since the Aqua Products, Inc. v. Matal decision (and should it be changing more)?
• What issues related to institution decisions are now reviewable in the wake of Wi-Fi One?
• How is the PTAB handling the growing number of remands from the Federal Circuit (and how could this impact your trial and appeal)?
• What is the Board doing to address multiple petitions against the same patent (and should they be doing more)?

While there is no fee to participate, attendees must register in advance. Those wishing to register can do so here. CLE credit is pending for the states of California, Illinois, New Jersey, New York, North Carolina, and Virginia.
IPLAC Presentation on EPO

February 24, 2018

The Intellectual Property Law Association of Chicago (IPLAC) Patents-International Committee will be offering a presentation by Alfred Keyack, EPO Attaché to the United States, entitled "Inside the European Patent Office: Questions & Answers" on March 7, 2018 from 11:45 am to 1:00 pm (CT) at DePaul College of Law in Chicago, IL.

The registration fee for the presentation is $20 (IPLAC members and seniors), $30 (non-members), free (students). Those interested in registering for event can do so here. Additional information regarding the seminar can be found here.
On Sale and Public Use Bars Webinar

February 24, 2018

Strafford will be offering a webinar entitled "On Sale and Public Use Bars to Patentability: Minimizing the Risk of Patent Ineligibility or Invalidation" on March 15, 2018 from 1:00 to 2:30 pm (EDT). Thomas L. Irving of and Doris Johnson Hines of Finnegan Henderson Farabow Garrett & Dunner and Daniel G. Brown of Latham & Watkins will examine the on-sale and public use bars to patentability/validity and the impact of the AIA on these statutory bars. The panel will also discuss recent court treatment and offer best practices to minimize the risk of patent ineligibility or invalidation. The webinar will review the following issues:

• How do AIA changes impact the on sale bar and the public use bar?
• How are courts and PTAB treating the on-sale bar and the public use bar?
• What best practices can counsel employ to adapt patent prosecution and enforcement strategies?

The registration fee for the webcast is $297. Those interested in registering for the webinar, can do so here.
USPTO 2018 Business Methods Partnership Meeting

February 24, 2018

The U.S. Patent and Trademark Office will be holding 2018 Business Methods Partnership Meeting (BMPM) from 1:00 to 4:00 pm (ET) on March 15, 2018. The BMPM was established to create a collaborative forum providing attendees with the opportunity to meet and share ideas, experiences, and insights with management from the Business Methods Technology Center.

The meeting will be held in the USPTO's Madison-North Auditorium, 600 Dulany Street, Alexandria, VA, with webcast viewing sessions at the USPTO regional offices in Dallas, Denver, Detroit, and San Jose. Those wishing to attend the meeting can register here. Additional information regarding the customer partnership meeting can be found here.
Motions to Amend at the PTAB — Does Anyone Have the Burden (And Will That Change)?

February 22, 2018

By Andrew Williams —

Last year, the Federal Circuit decided the Aqua Products, Inc. v. Matal case en banc in what could be considered the epitome of a fractured decision. After 148 pages and five separate opinions, the only agreed-to result could be summed up in two conclusions: (1) that the PTO had not adopted a rule regarding the burden of persuasion, and that (2) because there was nothing that was entitled to deference, "the PTO may not place that burden on the patentee." Nevertheless, Judge Rayne's concurrence-in-part, at Part III, articulated a rule regarding the burden of production, even if there was disagreement whether it was a judgement of the Court or mere "cogitations." This conclusion was that, in the absence of a properly promulgated rule, "the Patent Office must by default abide by the existing language of inter partes review statute and regulations, § 316(d) and 37 C.F.R. § 42.121, which only allocate a burden of production to the patent owner." At the time, we did not know whether the Board would follow Judge Rayne's pronouncement. But in the interim, the picture has become clear.

The writing was on the proverbial wall when Chief Judge Ruschke issued his memorandum on November 21, 2017 entitled "Guidance on Motions to Amend in view of Aqua Products" (see "PTAB Motions to Amend Post-Aqua Products — Chief Judge Ruschke Issues Guidance"). The tenor of his message was that there is "nothing to see here" (and that we should all just move along). He indicated that the only actual outcome from Aqua Products was that the Board will no longer "place the burden of persuasion on a patent owner with respect to the patentability of substitute claims presented in a motion to amend." As a result, the Chief Judge explained, the "practice and procedure before the Board will not change," except when the entirety of the evidence is in equipoise, in which case the motion to amend will now be granted.

The guidance did make clear that a patent owner still must satisfy the requirements of 35 U.S.C. § 316(d) and 37 C.F.R. § 42.121. In fact, perhaps tellingly, the Board has been citing to Judge's Rayne's decision at Part III in Aqua Products for this proposition. See, e.g., Apple Inc. v. Personalized Media Communications LLC, IPR2016-01529, Paper 38 at 56 (PTAB Feb. 15, 2018) ("'There is no disagreement that the patent owner bears a burden of production in accordance with 35 U.S.C. § 316(d). Indeed, the Patent Office has adopted regulations that address what a patent owner must submit in moving to amend the patent.' [Aqua Products] at 1341.") But with regard to who has the burden of persuasion, the Board appears to have taken the position that no one actually does. Instead, they have indicated that they will rule on the motion by simply looking at the entirety of the record. For example, in one of the more recent final written decisions, the Board set out what it is required to do when deciding a Motion to Amend:

Accordingly, we base our decision on the substitute claims provided in the Motion to Amend on the entirety of the record before us. Petitioner's arguments regarding the patentability of the substitute or new claims, as well as Patent Owner's Reply thereto, are considered below, after consideration of the procedural requirements of Rule 121 and 35 U.S.C. § 326(d).

Id. at 57. Again, tellingly, there is no mention of which party actually has the burden of persuasion with regard to the motion to amend. This raises the question about whether the Board could deny a motion to amend in cases where the patent owner has satisfied the requirements articulated in 35 U.S.C. § 316(d), but where the petitioner has not opposed the motion (or provided any evidence with regard to the substitute claims). Without any burden on the petitioner, this eventuality would appear to be a possibility.

Of course, not every APJ seems to be on board with this absence of an articulation as to who has the burden. As we recently reported, APJ Michael J. Fitzpatrick filed a concurrence in the Taiwan Semiconductor Manufacturing Company v. Godo Kaisha IP Bridge (IPR2016-01249) final written decision. He stated he was of the belief that the decision should explain who bears the burden(s) because future "patent owners will be left guessing what their motion to amend must contain." His solution would have been to explicitly hold that both the burden of production and the burden of persuasion be on the petitioner. With regard to the burden of persuasion, he indicated that it should be put on the petitioner "because doing so is consistent with the most relevant statutory provision and there is no applicable rule requiring otherwise." He did nevertheless acknowledge that the initial burden of production should be on the patent owner to show that the written description requirement has been met, because (among other reasons) 35 U.S.C. § 316(d)(3) states that "[a]n amendment . . . may not . . . introduce new matter." He also acknowledged that the Aqua Products did not overrule Rule 42.20(c) ("Burden of proof. The moving party has the burden of proof to establish that it is entitled to the requested relief."), and therefore the burden of production is still on the patent owner to establish that a substitute claim is responsive to an instituted ground of unpatentability.

A final interesting note about the Aqua Products case relates to the fact that the Federal Circuit's holding in Aqua Products was not that the Patent Office could not promulgate a rule assigning the burden of persuasion to patent owners. Instead, it was only that such a rule was not promulgated. Correspondingly, it is possible that the Patent Office could take use back to pre-Aqua Products days. There has been no indication from the Office that it intends to do so, but a new Director of the Patent Office has just been confirmed and sworn in, so it remains to be seen what will happen. But in an action that might have tipped the hand of the Office, the Under Secretary of Commerce for Intellectual Property and Director, U.S. Patent and Trademark Office as intervenor in the case of Bosch Automotive Service Solutions, LLC v. Matal recently filed an Intervenor's Petition for Panel Rehearing. The Office is not asking the Federal Circuit to alter its judgment in that case. Rather, it believes that the panel decision incorrectly stated the holding of Aqua Products when it said: "Rather, the petitioner bears the burden of proving that the proposed amended claims are unpatentable 'by a preponderance of the evidence.' 35 U.S.C. § 316(e)." The Office reasoned that, because there were only two take-aways from the Aqua Products case (as articulated above), this reading is an impermissible extension of that holding.

The Office may have a valid point. 35 U.S.C. 316(e) reads: "In an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence." If the above quoted language from the Bosch Automotive case is correct, then the statute is not ambiguous and the Patent Office could not promulgate a rule placing the burden of persuasion on patent owners for motions to amend. However, as the Office points out, a majority of judges in Aqua Products found that this statutory language was ambiguous. Therefore, as the Office's petition puts it:

Thus, Aqua Products simply holds that under the current landscape, the USPTO cannot place the burden of persuasion with respect to patentability of amended claims on the patentee. It recognizes, however, that it might be possible for the USPTO to do so in the future. But the panel's reading of Aqua Products could leave the mistaken impression that the panel foreclosed what Aqua Products expressly left open.

Of course, this begs the question whether the Office is currently planning on promulgating such a rule. On the one hand, it can be argued that the Office simply wants the Court to be as precise as possible, and therefore this is no indication of its intent to undo Aqua Products. However, on the other hand, why expend the energy and resources of the Office to request this small change unless it does have plans to promulgate a new rule. It remains to be seen what will happen, but it may no longer be a surprise if we see a Notice of Proposed Rulemaking from the Patent Office in the near future.
USPTO News Briefs

February 21, 2018

By Donald Zuhn –-

USPTO and EAPO Establish PPH Pilot Program

In a notice issued in the Official Gazette (1446 OG 52) last month, the U.S. Patent and Trademark Office announced that it was implementing a Patent Prosecution Highway (PPH) pilot program with the Eurasian Patent Office of the Eurasian Patent Organization (EAPO). PPH programs permit applicants who receive a positive ruling on patent claims from one participating office to request accelerated prosecution of corresponding claims in another participating office.

Because the EAPO is not currently a Global or IP5 PPH participating office, the USPTO noted that it would be partnering with the EAPO on a bilateral basis only. The three-year pilot program began on January 1, 2018 and may be extended if necessary to adequately assess the feasibility of the PPH program.

Requirements for participation in the USPTO-EAPO PPH can be found here.

USPTO Releases Revised MPEP

The U.S. Patent and Trademark Office announced via a Patent Alert e-mail last month that the Ninth Edition, Revision 08.2017 of the Manual of Patent Examining Procedure (MPEP) has been released. The new version of the MPEP includes changes to chapters 200, 700-1000, 1200, 1400, 1500, 1800, 2000-2300, 2500, and 2700. According to the Office's Alert, Appendices L and R have been revised to include laws and rules as of August 31, 2017, and Appendices T and AI have been revised to reflect the PCT Articles, Rules, and Administrative Instructions that were in force as of July 1, 2017. The new version of the MPEP can be accessed at the USPTO's MPEP webpage.

USPTO to Offer Sessions on Structured Text Features

Last fall, the U.S. Patent and Trademark Office announced that EFS-Web-registered and Private PAIR users could now file structured text via EFS-Web and access structured text submissions, structured text Office actions, and XML downloads via Private PAIR (see "USPTO News Briefs," October 25, 2017). As a result, EFS-Web-registered users can submit application parts in DOCX format, and Private PAIR users have the option to download XML or DOCX versions of PDF documents.

In a Patent Alert e-mail sent last month, the Office announced that members of the eCommerce Modernization (eMod) team will be conducting DOCX Info Sessions in which information regarding the new structured text features, including the ability to file structured text via EFS-Web and access structured text submissions, structured text office actions, and XML downloads via Private PAIR will be shared. The sessions, which will be one hour in length and limited to 20 attendees, will include a demonstration. According to the session registration page, four session dates and times are currently available: March 7, 2018 at 2:00 pm ET; March 21, 2018 at 2:00 pm ET; April 5, 2018 at 2:00 pm ET; and April 18, 2018 at 11:30 am ET.
Who’s in Charge Here? Or Is the PTAB Bound by USPTO Guidances?

February 19, 2018

By Kevin E. Noonan –

In a decision from an appeal before the Patent Trial and Appeal Board following rejection of claims to an isolated nucleic acid apparently (to applicants) falling within the scope of U.S. Patent and Trademark Office Guidance setting forth Office policy for implementing the Supreme Court's decision in AMP v. Myriad Genetics is this assertion by the Board:

Appellants cite as support the USPTO's 2014 . . . ("Interim Guidance"). In particular, Appellants points to Claim 2 of Example 7 in the Interim Guidance . . . —"Isolated nucleic acid comprising a sequence that has at least 90% identity to SEQ ID No. 1 and contains at least one substitution modification relative to SEQ ID No. 1"—which was found in the Interim Guidance to be patent eligible. We are not persuaded. As an initial matter, we are not bound by the Interim Guidance. Furthermore, we find the instant claims distinguishable from the example in the Interim Guidance, which requires a specific type of mutation (substitution) and specifies that "[n]o substitution modifications of [the gene at issue] are known to occur in nature."

Ex parte Lukyanov, U.S. Appl. Ser. No. 11/607,828 (appeal decided 05/25/2017) (emphasis added).

In contrast, another panel of the Board found the following claim patent-eligible based on another Guidance:

1. A method for detecting and quantitating in a biological fluid sample from a human [a biomarker having a specific SEQ ID NO], comprising
    (a) contacting the sample with a labeled monoclonal or polyclonal antibody which specifically binds to said [biomarker] and
    (b) detecting and quantitating the resulting [biomarker]: antibody complex using an immunoassay, wherein said immunoassay
        (i) is not a radioimmunoassay, and
        (ii) has a limit of detection of about 50 pmol/L.

Ex parte Bergmann, U.S. Appl. Ser. No. 10/551,298 (appeal decided 07/10/2017):

It seems curious, and the source of inconsistent policy, for the PTAB to take the position that the Board can choose to ignore USPTO Guidances at its leisure (if not its whim) in view of the stance the Office has taken with regard to the importance of maintaining consistency in its policies in other situations. For example, in convening an expanded panel for deciding whether filing a lawsuit asserting a patent waives sovereign immunity as a grounds to dismiss an inter partes review before the Board (it does; see "PTAB Decides Patent Infringement Lawsuit Waives Eleventh Amendment Sovereign Immunity to Inter Partes Review"), the expanded panel, which comprised Deputy Chief Administrative Patent Judge Scott R. Boalick, Vice Chief Patent Judges Jacqueline Wright Bonilla and Scott C. Weidenfeller, and Administrative Patent Judges Jennifer S. Bisk, Robert J. Weinschenk, and Charles J. Boudreau, in addition to the Chief Administrative Patent Judge, expressly set forth its reliance on the Chief Judge's authority under 35 U.S.C. § 6 to expand panels when issues before the Board are of exceptional importance or are "necessary to secure and maintain uniformity of the Board's decisions." And a different Board panel excoriated counsel for the St. Regis Mohawk Tribe for filing a motion for discovery regarding whether there would be any attempt to "stack" the Board against it (see "The PTAB Strikes Back — Issues Order Prohibiting St. Regis Mohawk Tribe from Filing Any Additional Papers in IPR"), despite there being concern before the Federal Circuit (see "Yissum Research Development Co. v. Sony Corp.") and, less directly, the Supreme Court regarding this policy. In the Tribe's motion that provoked the panel's vociferous response, the request cited portions of the Administrative Procedures Act (specifically, 5 U.S.C. § 554(d)) that others have alleged, and it seems reasonable to suspect, might be bruised if not violated by the enlarged panel practices employed by the PTAB, i.e., a prohibition on members of a PTAB panel from being "subject to the supervision or direction of an employee or agent engaged in the performance of investigative or prosecuting functions for an agency." In addition, the request cited the prohibition on ex parte communications under 5 U.S.C. § 557 or, if such communications have occurred, that they be included in the public record.

Article I courts, and the PTAB in particular, have a legitimate goal of providing consistent application of the law to applicants and, in the case of implementing the adversarial avenues the AIA created, developing a consistent body of procedural and substantive law. To this end, for example, the PTAB has designated some (albeit few) cases precedential, thus providing notice to the public regarding how the Office can be expected to conduct the "trials" mandated by the statute.

But the Board's efforts are a larger part of, and expressly dependent on, the authority of the Office through the Director (as Under Secretary of Commerce) "for providing policy direction and management supervision for the Office and for the issuance of patents and the registration of trademarks [] in a fair, impartial, and equitable manner." 35 U.S.C. § 3(2)(A). Those duties include the powers to "establish regulations, not inconsistent with law" for "govern[ing] the conduct of proceedings in the Office." 35 U.S.C. § 2(2)(A). However, those activities "shall be made in accordance with section 553 of title 5," 35 U.S.C. § 2(2)(A), which govern administrative rulemaking. More fundamentally, the Office is established under statute so that while being "subject to the policy direction of the Secretary of Commerce" it "otherwise shall retain responsibility for decisions regarding the management and administration of its operations and shall exercise independent control of its budget allocations and expenditures, personnel decisions and processes, procurements, and other administrative and management functions in accordance with this title and applicable provisions of law." 35 U.S.C. § 1. Finally, nothing in the enabling statute for establishing the PTAB arrogates to that body any powers or authority independent of or superior to the powers vested in the Director over operation of the Office. 35 U.S.C. § 6.

Which brings us to the source of the Interim Guidance ignored by the PTAB in the Lukyanov case, the Office of Legal Administration, which operates within the Office of Patent Examination Policy. According to the USPTO website, the OPLA has the following functions:

The Office of Patent Legal Administration (OPLA) drafts regulations and develops practices for the examination of patent applications, as well as assists in the implementation of these new regulations and practices. In addition, OPLA staff author rule packages published in the Federal Register, create Official Gazette notices, monitor public comments, and formulate Frequently Asked Questions (FAQs). To reflect changes in law, rules, procedures, and policies, OPLA recommends updates to the Manual of Patent Examining Procedure (MPEP) as well as the forms used by the Patent Examining Corps (Corps) and external customers. Lastly, OPLA prepares and delivers training to the Corps.

Other OPLA staff duties include supporting post grant instruments such as reexamination proceedings and reissue applications, and treating applications for patent term extension and patent term adjustment. OPLA has the authority to decide various petitions which have been delegated for consideration. Legal advisors also deliver training on specialized subjects and patent law and procedure for the Office of Patent Training.

Additionally, in its representative capacity of the USPTO, OPLA responds to inquiries about patent law and Office policies and procedures via letters, phone calls, lectures, presentations, and other contacts with members of the public and the patent bar. OPLA also assists in the efforts to negotiate the harmonization of patent laws and other international matters.

What is unclear is the statutory basis for the PTAB's evident conviction that it has the authority to ignore USPTO policies, as evinced by Guidances from the OPLA. As an adjudicatory body it is reasonable for the Board to take the position that is needs the authority to decide how to apply such Guidances from the OPLA a particular case. But in the language of the Lukyanov decision lingers a flavor of an assertion of a higher authority, along the lines of the Board having the responsibility to decide what the law is independent from and superior to the Office's administration. This is consistent with the impression created by the chimerical nature of IPR and other adversarial review procedures established by the AIA, which are sometimes characterized as being in the nature of a trial and other times (when the characterization suits) are analogized to any other administrative procedure. These various roles may have had the effect of engendering a belief that the Board has an obligation greater than its statutory brief, and this reasonably calls into question the legitimacy of its decisions. Many have opined in the wake of new Director Iancu's confirmation on the matters requiring his attention. The proper role of the PTAB in the policy-making hierarchy of the USPTO appears to be one of them.

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