January 1, 2018
CIPA Journal
Unlike federal district court cases where commercial reporters publish only certain opinions, since 1997, the U.S. Patent Trial and Appeal Board (PTAB) has published most1 of its decisions on its website.2 Because of the volume of opinions entered, the PTAB has a procedure for identifying noteworthy decisions that provide guidance to practitioners (and examiners) on how the USPTO is interpreting and applying the law, as well as defining practice during prosecution and post-grant proceedings.3
Opinions (e.g., decisions and orders) in both ex parte appeals and post-grant proceedings receive one of four designations: (1) routine, (2) representative, (3) informative, or (4) precedential.4 All published opinions can be found on the USPTO’s website.5 And by default, all opinions are designated as routine unless later designated as precedential, representative, or informative. While each opinion is binding on the specific case and parties, only precedential opinions have binding authority at the USPTO.6 Routine, representative, and informative opinions have no binding authority on other cases.7 However, representative and informative opinions do provide practitioners with a designated sample of how the PTAB approaches and reaches an outcome on a particular issue.
The Chief Judge of the PTAB designates opinions as representative or informative.8 Any administrative judge of the PTAB can recommend that an opinion should be designated as informative or representative. When determining whether an opinion should be informative, the Chief Judge considers whether the opinion sets out the PTAB norms on recurring issues, provides guidance on issues of first impressions, or provides guidance on PTAB rules and practices.9
Any member of the PTAB as well as the appellant, the patentee, the petitioner, or a third party may recommend that the Chief Judge designate an opinion as precedential. After an opinion is nominated, the Chief Judge circulates the opinion to all PTAB members and invites them to vote and comment on the opinion. If most of the votes agree that the opinion should be precedential, the Chief Judge notifies the Director of the USPTO. The Director must agree with the designation for an opinion to become precedential. While an opinion may be made precedential for any reason, those resolving conflicts or addressing novel questions generally receive first consideration.10
To date in 2017, the PTAB has designated two precedential opinions: Ex parte McAward11 and General Plastics Industrial Co. v. Canon Kabushiki Kaisha.12 In McAward, the PTAB reaffirmed the USPTO’s approach to indefiniteness in the wake of the Supreme Court’s Nautilus, Inc. v. Biosig Instruments, Inc. decision.13 In General Plastics, the PTAB identified the factors that it considers when evaluating follow-on petitions under 35 U.S.C. §314(a) in post-grant review proceedings like IPRs and PGRs.14
In 2017, the PTAB also designated three opinions as informative: (1) Unified Patents Inc. v. Berman,15 (2) Cultec, Inc. v. Stormtech LLC,16 and (3) Hospira, Inc. v. Genentech, Inc.17 All three of the informative designations relate to the PTAB’s approach in denying institution of claims under 35 U.S.C. §325(d) in post-grant review proceedings when petitioners raise the same prior art or present arguments that were previously presented to the USPTO.
Ex parte McAward involves an appeal from a final office action rejecting claims of a pending application as indefinite under 35 U.S.C. §112.18 The PTAB took this case as an opportunity to reaffirm the USPTO’s approach to evaluating indefiniteness of claims during prosecution and to stress the rationale behind the USPTO’s approach following the Supreme Court’s decision in Nautilus, which applied to indefiniteness in Court proceedings.
The issue before the Supreme Court in Nautilus focused on exactly how much imprecision §112 tolerates before a claim is rendered invalid in the context of patent litigation.19 For several years before Nautilus, the Federal Circuit applied its "amenable to construction" and "insolubly ambiguous" standard when determining if patent claims failed to meet the precision required by §112.20 In Nautilus, the Supreme Court rejected the Federal Circuit’s wording of the standard because it could "breed lower court confusion" over the specific requirements that §112 demands. Instead, the Court stated, "that a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention."21 In doing so, the Court reiterated that the relevant standard for indefiniteness remains the standard set by §112 and maintained the existing signposts of the inquiry:
"First, definiteness is to be evaluated from the perspective of someone skilled in the relevant art. Second, in assessing definiteness, claims are to be read in light of the patent’s specification and prosecution history. Third, '[d]efiniteness is measured from the viewpoint of a person skilled in [the] art at the time the patent was filed.'"22
Just a month prior to Nautilus, the Federal Circuit had issued a separate opinion in In re Packard, addressing what standard for indefiniteness the USPTO should apply to pre-issuance claims.23 Although granted claims and pending claims are governed by the same indefiniteness provision in the statute, the USPTO applies a different standard during prosecution than courts apply in litigation. During prosecution of the claims at issue in Packard, both the examiner and the PTAB found certain claims to be indefinite, applying the indefiniteness standard of the Manual of Patent Examining Procedure (MPEP).24 MPEP §2173.05(e) states "[a] claim is indefinite when it contains words or phrases whose meaning is unclear." Affirming the PTAB’s holding, the Federal Circuit noted that claims that are ambiguous or vague are indefinite. In doing so, the Federal Circuit declined to address the applicant’s argument that the "insolubly ambiguous" standard (later clarified by the Supreme Court in Nautilus) that courts apply in patent litigation should also be the standard the USPTO applies to pre-issuance claims.25 This was seen by some as an approval of the USPTO’s different approach evaluating claims for indefiniteness during prosecution.
In McAward, the USPTO maintained its approach to examining claims under §112, applying its "ambiguous or vague" standard to determine whether claims are indefinite. The USPTO reiterated its rationale for applying a different standard to pre-issuance claims. According to the PTAB, when an application is before the USPTO, the purpose of an indefiniteness rejection is to make certain that claims that get issued are clear, unambiguous, and precisely draft ed. In turn, this ensures that a patentee is only given rights commensurate with his or her contribution to the art. Determining definiteness of a claim involves a two-step process.
While the USPTO and courts follow similar two-step approaches26 to determine definiteness, the standard and analysis differ in several aspects and can lead to different outcomes. First, both the USPTO and courts determine the scope of the claims at issue. However, during prosecution, the USPTO gives claims their broadest reasonable interpretation in light of the claim language and the specification as one of ordinary skill in the art would interpret them.27 During litigation, courts apply a different standard, giving claims their ordinary and customary meaning as understood by a person of ordinary skill in the art at the time of the invention.28 This difference can lead to a broader interpretation during prosecution than during litigation.
In the second step, after interpreting the claims, the USPTO and courts assess definiteness. Here, the USPTO and courts differ again. Courts apply the "reasonable certainty" standard, established in Nautilus, to claims in litigation. The USPTO applies the standard set forth in the MPEP and reaffirmed in Packard to pre-issuance claims.29 Because claim interpretation and indefiniteness are intertwined, this inevitably leads to different approaches to indefiniteness taken by courts during litigation and the USPTO during prosecution. In McAward, the PTAB acknowledged that the USPTO’s approach results in a lower threshold for ambiguity in assessing pre-issuance claims compared to the threshold courts apply in litigation.30
The PTAB’s focus in McAward is that the “different approaches to indefiniteness before the USPTO and the courts stem not from divergent interpretations of §112, but from the distinct roles that the USPTO and the courts play in the patent system."31 Before issuance, the record is not yet fixed, and applicants are free to amend claims to provide clarity. By the time a patent reaches litigation, however, the record is set and claim amendments are impossible.32 Accordingly, the PTAB rejected the notion that Nautilus overturned the USPTO’s long-standing approach to indefiniteness. The PTAB also affirmed that the standard outlined in the MPEP and highlighted in Packard continues to apply to pre-issuance claims.33
In a footnote, the PTAB noted that this decision does not address what approach the USPTO follows in post-grant proceedings under the America Invents Act (AIA).34 After McAward, the PTAB discussed indefiniteness evaluated during IPRs (inter partes reviews) in Facebook, Inc. v. Sound View Innovations, LLC. The PTAB recognized that uncertainty still exists as to whether a different standard for definiteness applies before the district court and before the USPTO in post-grant proceedings.35 The uncertainty stems from the fact that the USPTO in IPRs and PGRs (like district courts in litigation) evaluates granted claims. Instead of resolving the uncertainty, the PTAB accepted the district court’s determination of indefiniteness in a related litigation, which applied Nautilus.36
Ex parte McAward reiterated the PTAB’s position that, although indefiniteness is governed by a single statute, courts and the USPTO apply different standards to pre-issuance versus post-issuance claims. McAward, however, is precedential only for the USPTO, and the decision may still be challenged in district court, as it was in Packard. It also remains unsettled which standard applies in AIA post-grant proceedings.
In General Plastics, the PTAB provided a list of factors for evaluating subsequent IPR petitions against the same patent and set forth guidance on when the PTAB may exercise its discretion to deny these follow-on petitions.37
The petitioner in General Plastics filed a first set of IPR petitions challenging the validity of two patents in September 2015. After the PTAB denied institution of these initial petitions on the merits (and denied requests for rehearing), the petitioner filed follow-on petitions challenging the same claims, but asserting new prior art.38 The PTAB declined to institute the follow-on petitions. In exercising its discretion to deny institution, the PTAB considered factors set forth in NVIDIA Corp. v. Samsung Electronics Co.39 that also dealt with follow-on petitions.
Exercising its discretionary authority, the PTAB initially denied the follow-on petitions in November 2016 under 35 U.S.C. §314(a).40 Section 314 states:
"[t]he Director may not authorize inter partes review to be instituted unless the Director determines that… there is a reasonable likelihood that the petition would prevail with respect to at least 1 of the claims challenged in the petition."41
Here, the PTAB applied the NVIDIA factors, finding that they weighed against institution.42
The precedential opinion in General Plastics is the making of an order denying the petitioner’s request for rehearing after the PTAB denied institution of the follow-on petitions. To support its request, the petitioner relied on several arguments. First, the petitioner argued that in denying institution, the PTAB overly concerned itself with the burdens institution would place on the PTAB and the patent owner. The petitioner alleged that the PTAB’s decision ignored the overarching purpose of the AIA post-grant proceedings, which is to improve patent quality by canceling unpatentable claims. Second, the petitioner alleged that the PTAB misapplied the NVIDIA factors "thereby creating an improper de facto bar against all follow-on petitions filed after a decision on a first-filed petition." Specifically, the petitioner argued that the PTAB’s discretion to deny institution is limited to situations where the one-year deadline for issuing a final decision could not be met. Lastly, the petitioner contended that the PTAB erred when it considered the perceived unfair prejudice to the patent owner because NVIDIA does not include this factor.43
In denying rehearing, the PTAB rejected all the petitioner’s arguments and reiterated that it has discretion to grant or deny institution. The PTAB affirmed the factors it considers when deciding whether to institute follow-on petitions under §314 (applied to follow-on petitions) as opposed to §325(d) (that is discussed below regarding arguments previously presented to the USPTO during any type of proceeding including prosecution). These factors under §314 include:
When formulating these factors, the PTAB intended to balance the goals of the AIA with the undue inequities and prejudices to the patent owner, recognizing "the potential for abuse of the review process by repeated attacks on patents.”45 Factors two, four, and five allow the PTAB to assess whether a petitioner should or could have raised the new challenges earlier. The relevant inquiry under factor two is whether a petitioner could have found the (new) prior art references with reasonably diligence. Factor three addresses how a petitioner could potentially benefit from receiving the patent owner’s preliminary response and the institution decision on initial petitions, using them as a roadmap in crafting follow-on petitions. As the PTAB explained:
"[t]he absence of any restrictions on follow-on petitions would allow petitioners the opportunity to strategically stage their prior art and arguments in multiple petitions, using our decisions as a roadmap, until a ground is found that results in the grant of review."46
The PTAB also noted that these seven factors serve as a baseline and additional factors may arise depending on the particular facts of a case.47
Applying the factors to the case at hand, the PTAB noted that the petitioner challenged the same patents and the same claims in the follow-on petitions. The petitioner filed the follow-on petitions nine months after the initial petitions and after having received the Patent Owner Preliminary Response and the PTAB’s institution decision. The petitioner conducted new prior art searches after the PTAB denied institution on the first petitions. The petitioner provided no meaningful explanation for the delay. And the PTAB’s resources could be better used for initial petitions. Consequently, the PTAB held that it did not abuse its discretion in denying institution of the follow-on petitions.48 This precedential opinion highlighted that it remains a goal of the AIA and the USPTO to increase patent quality by canceling unpatentable claims. But achieving this goal cannot come at the expense of the harassment patentees may face if petitioners abuse the system.
All three of the informative designations in 2017 relate to denying institution of claims under 35 U.S.C. §325(d) when the same prior art or arguments were previously presented to the USPTO. While General Plastics dealt with the factors the PTAB considers when deciding institution under §314, the PTAB also has discretion to deny petitions under §325(d). Section 325(d) states:
"[i]n determining whether to institute or order a proceeding under this chapter, chapter 30, or chapter 31, the Director may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the USPTO."49
Unified Patents Inc. v. Berman explains some of the factors the PTAB considers when determining the situations when denying institution under §325(d) is appropriate and explaining some scenarios when it is not. In Cultec, Inc. v. Stormtech LLC, the PTAB demonstrates how §325(d) can relate to prior art and arguments that were previously raised in third-party submissions. And, Hospira, Inc. v. Genentech, Inc., illustrates how §325(d) may apply when priority may be an issue. These informative opinions mark somewhat of a shift in the PTAB’s approach. Until relatively recently, few petitions were denied under §324(d).
Unified Patents Inc. v. Berman50
In Unified Patents, the petitioner filed IPR petitions with the PTAB challenging claims of a patent describing techniques for superimposing images over television scenes. In its preliminary response, the patent owner argued that the PTAB should deny institution under §325(d) because the same or substantially the same prior art or arguments were previously presented to the USPTO during prosecution.51
To determine whether the same prior art or arguments were previously presented, the PTAB reviewed the patent’s prosecution history. For a majority of the claims, the PTAB determined that the USPTO considered the same prior art reference the petitioner asserted in the IPR petitions. Although the issued claims were never rejected over the particular reference, they were added in amendments immediately following an office action rejecting the original claims over the reference. In conjunction with the previously considered reference, the petitioner also asserted a second reference as part of its asserted grounds. The PTAB, however, found that the petitioner relied on the second reference in substantially the same manner as the first reference.52 Therefore, the PTAB denied institution of these grounds.
On the other end of the spectrum, the PTAB instituted review of other grounds against additional claims. For the instituted claims, the petitioner relied on a combination of the first reference discussed above and a new reference, which was not addressed during prosecution. Moreover, the petitioner relied on the additional reference, not the first (previously considered) reference, to disclose the "inventive" teaching identified in the claims. In view of this approach, the PTAB granted institution.53
Cultec, Inc. v. Stormtech LLC
Cultec similarly addresses denying IPR petitions under §325(d), but in the context of references submitted in third-party submissions (a procedure that allows third parties to raise prior art against claims during prosecution). Here, the petitioner filed an IPR petition challenging claims of a patent on a stormwater management system. In response, the patent owner argued that institution should be denied because the USPTO already considered the prior art references and arguments the petitioner alleged.54
The petitioner relied on four prior art references in its asserted grounds. Although, the patent owner only disputed three of these references, the PTAB considered all four. The USPTO considered one of the asserted references during prosecution of a related patent that shared priority with the challenged patent. The reference was originally raised in a third-party submission submitted by the petitioner’s lead counsel. Often, third-party submissions include claim charts linking elements from the prior art to the claim elements. The PTAB noted that the claim charts submitted with the petition were merely expanded versions of the claim charts submitted in the earlier filed third-party submission, and determined that the reference and corresponding arguments were thus already substantially presented to the USPTO.55
The remaining three references suffered a similar fate. The PTAB rejected the arguments based on a second reference because the examiner cited and referred to it throughout the prosecution history.56 As for the other two references, neither were considered during prosecution of the challenged patent, but the PTAB determined they were substantially the same as a reference already considered by the USPTO through the third party submission.57 Consequently, the PTAB exercised its discretion to deny institution because the same or substantially the same prior art or arguments were previously presented to the USPTO.58
Hospira, Inc. v. Genentech, Inc.
In Hospira, the petitioner filed an IPR petition challenging claims of a patent directed to the treatment of certain breast cancers. The patent owner contended that the PTAB should deny institution because the challenged claims were entitled to an earlier priority date already established during prosecution, which disqualified all the petitioner’s references as prior art.59
In its asserted grounds, the petitioner alleged that the claims were anticipated in view of three separate references. During prosecution, the USPTO first rejected claims as invalid for lack of enablement, because the specification allegedly contained no support for certain limitations in the claims. Because of this lack of enablement, the claims were not entitled to the priority date of the parent application and therefore were rejected as anticipated by one of the references the petitioner asserted in its petition. After the patent owner amended the claims during prosecution, the USPTO repeated the rejections, but the challenged claims were eventually allowed in part because and the USPTO determined that they were entitled to the earlier priority date. In effect, the examiner withdrew the anticipation rejection because the applied reference no longer qualified as prior art given the earlier priority date.60
Similar to the arguments the examiner made during prosecution, the petitioner attempted to argue that the claims were not entitled to the earlier priority date. The PTAB, however, rejected these arguments noting that the petitioner did not provide any further evidence to convince the PTAB that the USPTO’s earlier determination was unreasonable. According to the PTAB, the same or substantially the same arguments were previously presented to the USPTO. Because the challenged claims were entitled to the earlier priority date, none of the petitioner’s references qualified as prior art, making denial of institution appropriate.61 The PTAB also noted that:
"discretion under §325(d) involves a balance between several interests… [T]he PTAB weighs petitioners’ desires to be heard against the interest of patent owners, who seek to avoid harassment and enjoy quiet title to their rights."62
Precedential and informative decisions in 2017 stem from different aspects of the USPTO, ex parte examination, and IPRs, and address different issues relating to patentability. Reiterating the USPTO’s approach to indefiniteness, the PTAB explained that courts and the USPTO apply different standards not because they interpret the statute differently, but because pre-issuance claims and records are still amenable to change. Practitioners should be aware that the USPTO may take a stricter view of definiteness during prosecution because claims can be amended to overcome alleged ambiguities. While amending may be an easier choice—instead of arguing—practitioners should be mindful that amending may implicate prosecution estoppel during later litigation. Accordingly, practitioners should consider the USPTO’s approach to indefiniteness when drafting original claims and amending claims.
In what may be following more of a recent trend of lower institution rates,63 the PTAB also provided guidance to petitioners and patent owners regarding the factors it considers when exercising its discretion to deny IPR petitions. Petitioners should consider the prior art and arguments made in the prosecution history of the patent and even related patents when developing the grounds and arguments for their petitions. Patent owners should do the same when preparing their preliminary responses to why the PTAB should deny institution. In view of recent statistics, any claim that is not instituted is a success because if instituted, claims are very likely to be found unpatentable.64
Endnotes
1 Publication of an opinion depends on whether the application at issue is entitled to confidentiality under 35 U.S.C. §122. PATENT TRIAL AND APPEAL BD., Standard Operating Procedure 2 (Revision 9), 1 (2014) [hereinafter SOP 2].
2 Id. at 1.
3 Id. at 1-2.
4 Id. at 1-2.
5 https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/decisions
6 Id. at 2-4.
7 Id. at 4.
8 Id. at 4. The Chief Judge is appointed to lead the Board.
9 Id. at 3-4.
10 Id. at 2.
11 Ex parte McAward, Appeal 2015-006416 (PTAB Aug. 25, 2017).
12 General Plastics Indus. Co. Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper No. 19 (PTAB Sept. 6, 2017).
13 Ex parte McAward, at 6 n.3.
14 General Plastics, at 16.
15 Unified Patents Inc. v. Berman, IPR2016-01571, Paper No. 10 (Dec. 14, 2016).
16 Cultec, Inc. v. Stormtech LLC, IPR2017-00777, Paper No. 7 (PTAB Aug. 22, 2017).
17 Hospira, Inc. v. Genentech, Inc., IPR2017-00739, Paper No. 16 (PTAB July 17, 2017).
18 Ex parte McAward, at 3.
19 Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120, 2128 (2014).
20 Id. at 2124.
21 Id. (emphasis added).
22 Id. at 2128 (alterations in original) (citations omitted).
23 In re Packard, 751 F.3d 1307, 1309 (Fed. Cir. 2014).
24 Id. at 1310.
25 Id. at 1311.
26 Ex parte McAward, at 5-6.
27 Id. at 5.
28 Phillips v. AWH Corp., 415 F.3d 1303, 1312-13 (Fed. Cir. 2005).
29 Ex parte McAward, at 5-6, 9.
30 Id. at 8.
31 Id.
32 Id. at 8-9.
33 Id. at 10-11.
34 Id. at 11 n.4.
35 Facebook, Inc. v. Sound View Innovations, LLC, IPR2017-00998, Paper No. 13, at 10 (PTAB Sept. 5, 2017).
36 Id. at 14.
37 General Plastics, at 2, 9, 16.
38 Id. at 6-7.
39 (1) whether the same petitioner previously filed a petition directed to the same claims of the same patent; (2) whether at the time of filing of the first petition the petitioner knew of the prior art asserted in the second petition or should have known of it; (3) whether at the time of filing of the second petition the petitioner already received the patent owner’s preliminary response to the first petition or received the Board’s decision on whether to institute review in the first petition; (4) the length of time that elapsed between the time the petitioner learned of the prior art asserted in the second petition and the filing of the second petition; (5) whether the petitioner provides adequate explanation for the time elapsed between the filings of multiple petitions directed to the same claims of the same patent; (6) the finite resources of the Board; and (7) the requirement under 35 U.S.C. §316(a)(11) to issue a final determination not later than one year after the date on which the Director notices institution of review. NVIDIA Corp. v. Samsung Elec. Co., IPR2016-00134, Paper No. 9, at 7 (PTAB May 4, 2016).
40 General Plastics Indus. Co. Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper No. 16, at 2 (PTAB Nov. 14, 2016).
41 35 U.S.C.§314(a).
42 General Plastics Indus. Co. Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper No. 16, at 7-12 (PTAB Nov. 14, 2016).
43 General Plastics, at 12-14.
44 Id. at 16.
45 Id. at 17.
46 Id. at 17 (citing in fn 14, several other cases emphasizing the same concern)
47 Id. at 16-20.
48 Id. at 10-11, 19, 22.
49 35 U.S.C. §325(d).
50 This decision was entered December 2016, but was recently designated "informative" by the Board.
51 Unified Patents, at 2, 9.
52 Id. at 11-12.
53 Id. at 12-13.
54 Cultec, 2-3, 7.
55 Id. at 8-11.
56 Id. at 12.
57 Id. at 12-13.
58 Id. at 13.
59 Hospira, at 2, 7.
60 Id. at 12-13.
61 Id. at 13-19.
62 Id. at 18 (quoting Neil Ziegman, N.P.Z., Inc. v. Stephens, IPR2015-01860, Paper No. 11, at 12-13 (PTAB Feb. 24, 2016)).
63 AIA Trial Statistics, United States Patent and Trademark Office, https://www.uspto.gov/patents-application-process/appealing-patent-decisions/statistics/aia-trial-statistics (last visited Nov. 9, 2017).
64 Daniel F. Klodowski, Elliot C. Cook & David C. Seastrunk, IPR and CBM Statistics for Final Written Decisions Issued in September 2017, AIA BLOG (Oct. 16, 2017), https://www.finnegan.com/en/insights/blogs/america-invents-act/ipr-and-cbm-statistics-for-final-written-decisions-issued-in-september-2017.html.
Originally printed in CIPA Journal in January 2018. 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.
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