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Analysing the PTAB in 2016

Managing Intellectual Property
January 30, 2017

Goldberg, Joshua L., Klodowski, Daniel F., Seastrunk, David C.


Authored by Joshua L. Goldberg, Daniel F. Klodowski, and David C. Seastrunk

All post-grant proceedings at the USPTO start with the filing of a petition and progress through two general phases—a pre-institution phase and a post-institution phase. The USPTO's Patent Trial and Appeal Board (PTAB) must decide if the petition raises sufficient grounds to institute trial in view of any arguments submitted by the patent owner in a preliminary response. While the rate of institution varies by technology, in general, it ranges between 55% and 75% on a per-claim basis. In 2016, institution rates continued to decline compared to the lifetime average.

If the PTAB determines the petition warrants institution, it issues a written institution decision and initiates trial. At the conclusion of trial, the PTAB issues a final written decision. To date, and as discussed in more detail below, inter partes review (IPR), covered business method (CBM), and post-grant review (PGR) proceedings have strongly favoured petitioners at the expense of patent owners. Case outcomes vary by technology, but on average, less than 25% of the claims instituted in IPRs and CBMs survive a full trial. In the nine PGR final written decisions issued in 2016, claim survival rates were even lower (17.76%). While survival rates increased over the course of 2016, this still paints a challenging picture for patent owners.

Institution Decisions


Note: based on data retrieved from Lex Machina

According to Lex Machina's database, in 2016, institution rates continued their downward trend compared to the lifetime average. In 1,301 institution decisions issued in 2016, the Board granted institution in 938 (72.10%) cases and denied institution in 363 (27.90%) cases. This number falls 4.50 percentage points short of the lifetime institution rate of 76.6%. The months of May, October, and December saw institution rates exceed the lifetime average, with institution rates between 79.31% and 83.54%. Conversely, April, July, and November were the worst months for petitioners, yielding institution rates between 61.68% and 65.71%.

In determining institution rates, we only consider decisions made by the Board on the merits, and therefore have excluded settlements, procedural terminations, and pre-institution disclaimers by the patent owner of every challenged claim.

Final Written Decisions


Post-grant proceedings have historically been more favourable to petitioners than patent owners, and 2016 was no different. Combining the outcomes of both IPR and CBM final written decisions issued by the PTAB in 2016, the Board cancelled 7,187 (73.99%) of the instituted claims, with just 2,347 (24.16%) of the instituted claims surviving review. Patent owners conceded 180 (1.85%) of the instituted claims through motions to amend or disclaimer. These numbers are slightly more favourable to patent owners than the lifetime statistics, where the Board cancelled 15,037 (77.07%) of the instituted claims, 3,956 (20.27%) of the instituted claims survived, and patent owners conceded 519 (2.66%) of the instituted claims.

On a per-case basis, for all combined IPR and CBM final written decisions issued in 2016, 421 (67.25%) of the decisions resulted in all instituted claims being cancelled, 117 (18.69%)of the decisions resulted in all instituted claims surviving, and 88 (14.06%) of the decisions resulted in a mixed outcome. A mixed outcome occurs where at least one instituted or substitute claim survives or is held patentable, and at least one is cancelled, in a final written decision. Once again, these numbers are slightly more favourable to patent owners when compared to the lifetime statistics, where 932 (70.98%) of the decisions resulted in all instituted claims being cancelled, 203 (15.46%) of the decisions resulted in all instituted claims surviving, and 178 (13.56%) of the decisions resulted in a mixed outcome.

Based purely on statistics, there is a high likelihood that if claims are instituted, they will be cancelled. This reality has led many patent owners to focus their preliminary responses on reducing the number of claims or grounds on which the PTAB institutes trial. Some try to take advantage of the new PTAB rules that went into effect last year, permitting patent owners to submit new testimonial evidence from technical and industry experts before the PTAB decides whether to institute trial.

Substitute Claims

In all post-grant proceedings, patent owners are entitled to propose substitute (i.e., amended) claims either by conceding the unpatentability of the corresponding instituted claims outright along with the proposed substitute claims, or by making the Board's consideration of the substitute claims contingent on the instituted claims first being held unpatentable.

To date, patent owners have struggled to obtain substitute claims. Through December 31, 2016, the PTAB cumulatively held patentable only 36 (4.43%) of 777 proposed substitute claims included in motions to amend in IPR proceedings. Only 3 out of 43 (7.14%) motions to amend were granted in 2016, for a total of 11 allowed substitute claims. Notably, one of the successful motions to amend was granted in a CBM proceeding (CBM2015-00040, consolidated with CBM2015-00160)—which included the first substitute claim to be held patentable out of 183 substitute CBM claims presented to the PTAB.

Against this backdrop, it is perhaps not surprising that the number of patent owners pursuing substitute claims continues to decrease over time. Of the 627 final written decisions issued in 2016, only 43 (6.86%) referenced motions to amend, down from a lifetime average of 138 motions in 1,312 decisions (10.52%). Patent owners struggle to satisfy the PTAB's stringent requirements to sufficiently demonstrate the patentability of the proposed substitute claims—even after the May 2015 rule change increasing the maximum length of a motion to amend from 15 pages to 25 pages. However, amendment practice may be changing to make the practice more favourable to patent owners. For example, in May 2016, the Board approved the practice of grouping prior art references together in a motion to amend according to the references' particular teachings, rather than requiring the patentee to explain each individual reference in detail.

In addition, the Federal Circuit, sitting en banc, recently heard oral arguments in In re Aqua Prods., Inc. to consider the burden of proof in motions to amend before the PTAB. Specifically, the Federal Circuit will address (1) whether the burden of persuasion allocated to the patentee in motions to amend is permissible under the statutory scheme, and (2) whether the PTAB can raise sua sponte challenges to patentability if the petitioner fails to do so. If the court rules in favour of patent owners on one or both of these issues, patent owners may find more success amending claims at the PTAB in the future.

Technology Centres


IPR and CBM petitions are sorted among the various technology centres at the USPTO. In 2016, the top three technology centres by number of final written decisions were, respectively, electrical systems (133 decisions, 21% of total), communications (102 decisions, 16% of total), and transportation and e-commerce (96, 16% of total). Taken together, electrical-based technologies represent 473 out of 622 (76.05%) post-grant proceedings. The smallest technology centres include design patents (2 decisions, less than 1% of total) and chemicals and materials engineering (37, 6% of total). The percentages shown above are historically typical, with each falling within 2% of the lifetime average of decisions issued per tech centre.

Although the PTAB has generally cancelled instituted claims about 75% of the time, the PTAB has not cancelled claims at the same rate across all technologies. For example, instituted claims in technology centre 1600, which covers patents in the fields of biotechnology and organic chemistry (including pharmaceuticals), have had the highest instituted claim survival rate at 54.98% (47.54% lifetime). This is over double the average survival rate for all technologies, and is perhaps explained by the unique unpredictability of this subject matter, differences in patent quality, tight petition page limits for petitioners to address relatively complex legal and factual issues, and the smaller number of decisions relative to other technologies.

Additionally, while the instituted claim survival rate for nearly every technology centre increased in 2016 (reflecting the overall increase in claim survival rate), technology centres 1700 (Chemicals and Materials Engineering) and 2400 (Computer Networks) saw the greatest increase in claim survival rate compared to their respective lifetime averages, showing survival rates of greater than 10% over the cumulative average.

Originally printed in Managing Intellectual Property on January 30, 2017. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.