By Andrew Williams —

The USPTO has been seeking feedback on the PTAB trial proceedings established by the Leahy-Smith America Invents Act.  A Federal Register Notice from June 27, 2014 contained the "Request for Comments on Trial Proceedings Under the America Invents Act Before the Patent Trial and Appeal Board" (79 Fed. Reg. 36474).  In it, the USPTO outlined 17 issues, or questions, for which the Office is most interested in receiving public comments.  The original deadline for submission was September 16, 2014, the two-year anniversary of the PTAB, but the period was extended this week until October 16, 2014.  Nevertheless, 11 comments were filed by the original deadline.  These can roughly be divided up into three categories: (1) companies, (2) individuals, and (3) intellectual property associations.  In this post, we review the first set of comments — those received from companies.

Hospira

Hospira's comments begin by explaining that it is a global specialty pharmaceutical and medication delivery company.  It then responded to each of the 17 questions posed by the Request for Comment found in the Federal Register notice.  Nevertheless, a common theme could be found — Hospira is generally satisfied with how the system has operated thus far and in most instances either advocated that no changes should be made or it deferred to the Board to use its discretion.  Even though it may sound incongruous to submit comments advocating no changes, it did so in anticipation of comments from others.  For example, in response to the question about the Board's practice regarding motions to amend, it is commonly believed that stakeholders are unhappy that the Board has only granted one such motion. Hospira noted that one particular proposal should be rejected –- the shifting of burdens to the petitioner to provide an expert to prove validity of any proposed amendment.  One problem that Hospira identified was that if the petitioner was required to provide an expert, the fixed timeline for PTAB trials would likely need to be adjusted (which is contrary to one of the perceived benefit of the IPR framework –- speed).  Moreover, Hospira noted that it is not unreasonable to require the patent owner to articulate its reasoning via an expert declaration.

Hospira also commented on the factors enumerated in the Garmin v. Cuozzo case (IPR2012-00001) for requesting additional discovery.  Specifically, it noted that the Garmin factors are consistent with another of the perceived benefits of IPR — limited discovery.  With regard to the "multiple proceedings" questions (No. 7-13), Hospira deferred to the Board's exercise of discretion.  Nevertheless, it did argue that later petitioners should not be foreclosed from pursuing different arguments, even with regard to prior art already considered.  Hospira also addressed the topic of mandatory settlement discussions, and opposed any such requirement if it would impact the statutory timeline for IPR proceedings.

Finally, in response to the "General" category of questions, Hospira had an interesting take on the interplay of post-issuance challenges before the PTAB and Hatch-Waxman-type litigations.  Hospira advocated that a PTAB written decision nullifying the claims of a challenged patent should serve to trigger the "failure-to-market" forfeiture provisions for first ANDA filers.  The argument went that, similar to a district court proceeding, the Patent Owner would have had the opportunity to present all of its evidence supporting validity.  Of course, this presumably would only become relevant if all remaining claims of the Orange Book listed patents were invalidity by the PTAB.  Nevertheless, this comment highlights the widely held belief that PTAB proceedings can be beneficial to secondary ANDA filers.

SAS

Two attorneys for SAS served as "commentators" for general question 17.  Specifically, they took issue with the PTAB's practice of instituting inter partes review on only some of the petitioned claims.  Instead, they argued, once the PTAB determines that the "reasonable likelihood" threshold has been met, all claims challenged in the petition should be included in the proceeding.  As it is, with partial institution, the petitioner is denied the right to appeal the non-instituted claims, which is allegedly contrary to the intent of Congress.

SAS noted that in the past two years, IPR and CBM petitions have been used with increasing frequency.  In response, the Board has taken steps to ensure timely completion of the trials.  One of these is to treat institutions on a claim-by-claim basis, instead of the petition as a whole.  However, SAS points to several places in the statute which would suggest that this is inappropriate.  First, the standard for institution outlined in 35 U.S.C. § 314(a) is whether "there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition."  The use of the "at least one of the claims" language allegedly suggests that the trial would include more claims than the ones that exceed this threshold.  Moreover, the statute repeatedly uses the phrase "challenged patent claim," rather than "instituted patent claim."  For example, 35 U.S.C. § 318(a) provides that the final written decision must address "the patentability of any patent claim challenged by the petitioner."  Interestingly, SAS pointed out that in a CBM case, the Board noted that "[i]f Congress intended to limit the availability of the covered business method patent review on a claim-by-claim basis, . . . it could have used the term 'claim' rather than 'patent.'"  See Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co., CBM2012-00002, Paper 66 at 6 (Jan. 23, 2014).  The same logic applies to IPR institutions, SAS argued.

So, what is the problem with the current claim-by-claim approach?  SAS alleged that partial institution complicates matters for district courts contemplating motions to stay litigation pending IPR trials.  If less than all of the claims are included in the PTAB trial, it might not serve to adequately simplify the issues in the district court.  Moreover, the claims or issues not deemed to have a reasonable likelihood of prevailing are non-appealable, and therefore not entitled to further review.  SAS pointed out that this issue had been raised by IBM when the rules were being developed.  In response, the PTO defended partial review because the statutory estoppel provision applies on a claim-by-claim basis.  Instead, SAS contended, this section demonstrated that Congress knew how to specify claim-by-claim treatment when it wanted to, which it clearly did not in the case of IPR institution.

The solution — the PTAB should continue to address the patentability of all claims in the institution decision.  However, instead of foreclosing review of the other claims, they should be included in the institution.  The burden of providing sufficient attention to the various claims would fall to the parties because the page limits would force them to focus on the best arguments.  Nevertheless, if a party believed that a particular claim was important, it could provide the requisite evidence necessary for a complete record at the Federal Circuit.

GEA Process Engineering, Inc.

GEA Process responded to a single question — "#5 Should a patent owner be able to raise a challenge regarding a real party in interest at any time during trial."  The response — it depends.  The crucial factor, according to GEA Process, is which section of the statute is implicated.  On the one hand, if the challenge is to the Petitioner's standing under 35 U.S.C. § 315 as of the filing date of the petition, GEA Process believes that the patent owner should be allowed to raise this at any time.  However, if the challenge was whether all real parties in interest have been identified, this showing should be made reserved exclusively to the time before institution of the trial.  The distinction made by GEA Process was on jurisdictional grounds.  35 U.S.C. § 315 concerns whether a petitioner had standing, which in Federal court is a jurisdictional question.  As such, it should be allowed to be raised at any time during the trial.  However, 35 U.S.C. § 312, provides for determining whether the petition is complete, not whether someone can bring the suit in the first place.  Therefore, failure to satisfy this section should be waived if not raised before institution.

Think Computer Corporation

Think Computer prefaced its comments by pointing out that one of its two patents is being challenged in a CBM petition.  Also, it is a company that correlates a large amount of USPTO data for public use.  Therefore, it believes it has experienced the PTAB from two different perspectives.  In general, Think Computer is in favor of the PTAB and believes that it can serve a vital purpose.  Think Computer's criticism — the system should be set up such that it would not require an attorney.  Instead of the present system, Think Computer advocated for an error-checking web-based form which would allow even inexperienced individuals to construct arguments.  It also complained about the alleged "common practice" of experts submitting reports written entirely by law firm attorneys.  Think Computer did not address the fact that these experts are also subject to deposition, and that, regardless of who prepares what drafts, if the expert does provide final approval of the report, it will become evident during discovery.

Think Computer's final complaint was with regard to the PTAB docketing system, which was described as "horrendous."  Of course, anyone who has attempted to use it will likely agree with this sentiment.  The PAIR system would have been an obvious alternative, but Think Computer believes that it "is a colossal disaster of its own."  Instead, it suggested that the Patent Office immediately issue an RFQ for both systems and to make a point to use a different vendor.

Patent Docs will report on the additional comments in a future post, and will continue to monitor the PTAB website to see if any additional comments are submitted before the October 16, 2014 deadline.