In Dionex Softron GMBH vs. Agilent Technologies, Inc., the Court of Appeals for the Federal Circuit (“Federal Circuit”) affirmed the Patent Trial and Appeal Board’s (“Board”) decision in an interference proceeding to award priority to Agilent Technologies, Inc. (“Agilent”) over Dionex Softron GmbH (“Dionex”).  In particular, the Federal Circuit affirmed the Board’s application of the “rule of reason” for determining whether there was sufficient corroborating evidence to support an inventor’s testimony regarding the pertinent date of invention.

Background

An interference proceeding is a contest conducted by the Board to determine which party has priority as the first to invent under pre-AIA 35 U.S.C. 135(a).  An inference proceeding exists if the subject matter of a claim of an application is anticipated or rendered obvious in view of the subject matter of a claim of an opposing party’s patent or application. When an interference is declared, there is a description of the interfering subject matter, called a “count’.” Every count must have at least one corresponding claim for each party.

 In order to demonstrate priority as the first inventor to invent, a party must demonstrate both conception and reduction to practice of the claimed invention before the other party. Additionally, “an inventor’s testimony must be corroborated by independent evidence.” Cooper v. Goldfarb, 154 F.3d 1321, 1327 (Fed. Cir. 1998). “However, a ‘rule of reason’ analysis is applied to determine whether an inventor’s testimony regarding reduction to practice has been sufficiently corroborated.” Id. “Sufficient corroboration” does not require “corroboration for every factual evidence contested by the parties” but whether “the evidence as a whole is persuasive.” Id.

An interference proceeding was launched between Agilent and Dionex when Dionex copied Agilent’s amended claims. In the proceeding, Agilent and Dionex separately moved for judgment on the basis of priority due to their respective alleged dates of conception and reduction to practice.  As the later filing party (junior party), Agilent was required to prove priority by a preponderance of the evidence. The Board granted Agilent’s motion and denied Dionex’s motion, finding that Agilent proved conception as of May 1, 2007 and actual reduction to practice as of June 1, 2007- well before Dionex’s earliest alleged conception date of December 4, 2007.

Discussion

On appeal Dionex argued that there was a lack of sufficient evidence to support the Board’s finding of corroboration. Specifically, Dionex argued the corroborating testimony of one of Aglient’s witnesses (“Bäuerle”) was not independent because Bäuerle lacked knowledge regarding features of the invention, such as his failure to demonstrate knowledge of the prototype’s hydraulic configuration and the purpose of “grooves” within the prototype. The Federal Circuit rejected Dionex’s arguments by arguing that Bäuerle was not required to know every detail under the rule of reason.

 Further, the Federal Circuit rejected Dionex’s argument that a document failed to corroborate the co-inventor’s testimony when the document was modified after the purported date of reduction to practice because substantial evidence, including Bäuerle’s testimony, corroborated that the document depicted a prototype meeting the requirements of the claim at the pertinent date.

Lastly, the Federal Circuit rejected Dionex’s argument that a negative interference must be drawn against Agilent due to the failure of one of the co-inventors to testify or lack of corroborating documents that Dionex argued were required to be produced under industry norms.  In particular, the Federal Circuit found that the Board did not abuse its discretion in deciding to not draw a negative inference for the failure to call the co-inventor as a witness when Agilent represented that the testimony would have been cumulative of the other co-inventor’s testimony. Additionally, the Federal Circuit found that the Board was well within its discretion to reject Dionex’s assertion that “industry norms” would have caused Agilent to create documents other than those produced in the interference.

Thus, under the Federal Circuit’s flexible application of the “rule of reason”, the Board has broad discretion to determine whether independent evidence is sufficient to support a priority date during interference proceedings.

As the capabilities of Artificial Intelligence (AI) develop[1], the United States Patent and Trademark Office (USPTO) continues to grapple with a key question: Can an AI be an inventor?

On February 14, 2023, the USPTO posted a notice on Regulations.gov titled “Request for Comments: Artificial Intelligence and Inventorship[2].” This notice, however, is not the USPTO’s first attempt to understand AI’s ever expanding role in innovation.  The USPTO previously requested public comments on AI inventions in 2019, which it responded to in a publication titled “Public Views on Artificial Intelligence and Intellectual Property Policy[3].” Additionally, the USPTO held an AI/ET Partnership meeting in June of 2022 which included a panel discussion titled “Inventorship and the Advent of Machine Generated Inventions.”

Below is a sample of the questions posed to the public. Comments will be accepted until May 15, 2023.

  • How is AI, including machine learning, currently being used in the invention creation process?
  • How does the use of an AI system in the invention creation process differ from the use of other technical tools?
  • If an AI system contributes to an invention at the same level as a human who would be considered a joint inventor, is the invention patentable under current patent laws?
  • What statutory changes, if any, should be considered as to U.S. inventorship law, and what consequences do you foresee for those statutory changes?
  • Are there any laws or practices in other countries that effectively address inventorship for inventions with significant contributions from AI systems?

The notice also indicates the “Journal of the Patent and Trademark Office Society” is planning on publishing an issue focused on inventorship and AI-enabled innovation. The USPTO is encouraging scholars from a variety of subject matters, including computer science, law, and economics, to submit to the publication. Submissions are due directly to the journal at editor@jptos.org by July 1, 2023.

[1]ChatGPT is an AI chatbot phenomenon which can write songs and answer intricate questions. See e.g., Kelvin Chan, What can ChatGPT maker’s new AI model GPT-4 do?, AP NEWS (Mar. 15, 2023)( https://apnews.com/article/chatgpt-gpt4-artificial-intelligence-chatbots-307e867e3fe4464be9c4f884909f3977.

[2] Request for Comments: Artificial Intelligence and Inventorship, 88 FR 9492.

[3] Public Views on Artificial Intelligence and Intellectual Property Policy, USPTO (Oct. 2020), https://www.uspto.gov/sites/default/files/documents/USPTO_AI-Report_2020-10-07.pdf.

CyWee Group Ltd. (“CyWee”) has been bouncing between the Federal Circuit and Patent Trial and Appeal Board (“Board”) with its administrative challenges after two inter partes review (“IPR”) proceedings invalidated the claims of its patents. Now, the Federal Circuit has resolved CyWee’s remaining procedural challenges, affirming the Board’s decisions in CyWee Grp. Ltd., v. Google LLC, 59 F.4th 1263 (Fed. Cir. 2023).

For some context, a bit of information about the procedural history of the two IPRs at issue may be helpful. Google LLC (“Google”) challenged CyWee’s patents in two IPRs in 2018. CyWee filed a preliminary patent owner response in each proceeding and the Board instituted each IPR within three months of the preliminary responses.  Because other parties joined the IPRs after institution, the Board extended its typical 12 month deadline for a final written decision to 13 months.  The Board issued its final written decision determining all challenged claims as unpatentable for obviousness within the new deadline.

CyWee appealed the decisions, challenging the constitutionality of the administrative patent judges under the Appointments Clause. The Federal Circuit had addressed this in its then-binding precedential Arthrex decision and rejected CyWee’s arguments.  Shortly after the decision, the Supreme Court issued its Arthrex decision, United States v. Arthrex, Inc., 210 L. Ed. 2d 268 (June 21, 2021), which would allow the Acting Director of the patent office to decide whether to rehear any of the cases.

CyWee requested rehearing of the IPR decisions by the Director.  The request for rehearing was referred to the Commissioner for Patents, who denied rehearing and ordered the Board’s decisions as the final decisions of the agency.

Again, CyWee appealed the decisions, raising additional procedural problems with the Director’s review of the decisions.  The Federal Circuit rejected all of the additional challenges, foreclosing future avenues parties unsatisfied with IPR results may pursue.

First, the court rejected all of CyWee’s constitutional arguments that the Commissioner had authority to perform the review and the Appointments Clause challenges regarding the institution decisions.  The Federal Circuit found that its prior decisions in Arthrex, Inc. v. Smith & Nephew, Inc., 35 F.4th 1328 (Fed. Cir. 2022) and In re Palo Alto Networks, Inc., 44 F.4th 1369 (Fed. Cir. 2022) compelled such a result.

A second set of challenges were directed to the timeliness of the institution decisions and final written decisions.  According to CyWee, making the institution decisions and final written decisions within the statutory time limits was insufficient.  CyWee argued that the Director must have the opportunity to review the Board’s decisions and must make such review within the statutory deadlines. The Federal Circuit found these arguments to be meritless. The statutes state when an institution must be made and when a final written decision must be issued. Here, the Director permissibly delegated that authority to the Board and the Board met those requirements.  Nothing in the statutes or associated rules and regulations require the Director’s review of those decisions to be within the same time period, it can be later.  As the delegating official, the Director maintains the power to review the decisions of the delegee.

After Arthrex, it appears that the realm of administrative and constitutional challenges to IPR decisions is continuing to shrink, which may ultimately bring more certainty to the framework underlying the IPR proceedings.

The United States Patent and Trademark Office (USPTO) maintains a list of all PTAB precedential and informative decisions organized by subject matter.[1] These precedential decisions establish “binding authority concerning major policy or procedural issues, or other issues of exceptional importance, including constitutional questions, important issues regarding statutes, rules, and regulations, important issues regarding case law, or issues of broad applicability to the Board.”[2] In December of 2022, the USPTO designated two recent decisions as precedential, Apple Inc. v. Zipit Wireless[3] and Patent Quality Assurance, LLC v. VLSI Technology LLC.[4]

Apple Inc. v. Zipit Wireless, IPR2021-01124

In June of 2021, Apple Inc. filed six petitions for inter partes review (IPR), all of which were instituted by the Board. However, Zipit Wireless filed a Patent Owner Response in only two of the six proceedings.  During one of those two proceedings, an administrative judge asked “whether Patent Owner is ‘not contesting if a final written decision or adverse judgment was entered with respect to those IPRs.’”[5]  In return, Zipit Wireless’ counsel responded, “Correct, Your Honor. If the Board determines that they have met their burden of proof with respect to those claims Zipit hasn’t filed any opposition.”[6]

The Board interpreted this statement as an abandonment of the four remaining IPR proceedings. The Director of the USPTO, however, happened to disagree, remanding the proceedings back to the panel of administrative judges. The Director held the statement was contingent on the Board finding that the challenged claims were unpatentable by the preponderance of the evidence.

Take Away – A practitioner should carefully consider negative statements. Cautious phrasing of an oral statement may prevent the Board from interpreting it as an abandonment.

Patent Quality Assurance, LLC v. VLSI Technology LLC, IPR2021-01229

Patent Quality Assurance, LLC v. VLSI Technology LLC stems from a Jury verdict awarding VLSI $1.5 billion in damages from Intel for patent infringement.[7]  Patent Quality Assurance (PQA) filed a Petition for IPR challenging the relevant claims on the VLSI jury verdict copying “extensively” from an earlier Intel petition.[8] The PQA petition was similar to a previous petition filed by OpenSky[9] but PQA retained the same expert as the original Intel petition.

The Director of the USPTO ordered a sua sponte Director review of the Board’s institution of this proceeding relating to abuse of process.[10]  Here, the Director found PQA failed to comply with mandatory discovery of the Director review and applied sanctions.[11] The Director additionally found PQA’s “conduct has been an abuse of the IPR process, the patent system, and the Office.”[12] Ultimately, PQA was dismissed from the proceeding leaving Intel as the lead petitioner.[13]

Take Away – The appearance of impropriety will attract the attention of the Director of the USPTO. PQA’s attempt to “game” the IPR proceedings simply went a step too far. Future petitioners should use caution when filing an IPR petition after a large third party jury verdict.

[1]Precedential and Informative Decisions, USPTO, https://www.uspto.gov/patents/ptab/precedential-informative-decisions (last visited Jan. 21, 2023).   

[2] Id.

[3] Apple Inc. v. Zipit Wireless, Inc., IPR2021-01124 et al., Paper 14 (December 21, 2022) (designated: January 4, 2023).

[4] Patent Quality Assurance, LLC v. VLSI Technology LLC, IPR2021-01229, Paper 102 (December 22, 2022).

[5] Apple Inc. v. Zipit Wireless, Inc., IPR2021-01124 et al., Paper 14 (December 21, 2022) (designated: January 4, 2023) at 3.

[6] Id.

[7] Patent Quality Assurance, LLC v. VLSI Technology LLC, IPR2021-01229, Paper 102 (December 22, 2022) at 8.

[8] Id. at 10.

[9] See C. Mathis Brazeal, PTAB Sanctions Non-Practicing Entity for Seeking to Abuse the IPR Process in Order to Extort Money, Rothwell Figg’s PTAB LAW BLOG (Nov. 9th, 2022), https://www.ptablaw.com/2022/11/09/ptab-sanctions-non-practicing-entity-for-seeking-to-abuse-the-ipr-process-in-order-to-extort-money/.

[10] Patent Quality Assurance, LLC v. VLSI Technology LLC, IPR2021-01229, Paper 102 (December 22, 2022) at 15.

[11] Id. at 25-27

[12] Id. at 54.

[13] Id. at 66.

Last month, the Federal Circuit’s holding in Google LLC v. Hammond Dev. Int’l, Inc.[1]  illustrated the importance of raising a collateral estoppel argument when the opportunity arises. In Google LLC v. Hammond Dev. Int’l, Inc., the Court decided the patentability of claims directed to subject matter that was previously held unpatentable following an IPR of a different patent.

Google challenged two of Hammond Development International’s patents, U.S. Patent No. 10,270,816 (“the ’816 patent”) and 9,264,483 (“the ’483 patent”) in IPR proceedings. The ’816 patent and the ’483 patent share a specification and relate to a “communication system that allows a communication device to remotely execute one or more applications.[2]” The Patent Trial and Appeal Board (“the Board”) issued its first decision in April of 2021 invalidating all challenged claims of the ’483 patent as being obvious based on a prior art combination. With respect to the ’816 patent, the Board later held Google failed to show claim 14 and its corresponding dependent claims 15-19 were unpatentable.

On appeal, Google asserted claim 18 was invalid based on collateral estoppel in view of the holding in the ’483 patent IPR proceeding.[3] Google asserted claim 18 was invalid because the Board found a similar claim unpatentable in the ’483 patent IPR proceeding.[4] However, Google did not assert estoppel for the remaining claims. Instead, Google asserted independent claim 14 was invalid because its dependent claim, claim 18, was invalid and claims 15-17 and 19 were invalid because the Board found similar claims in the ’483 patent unpatentable.[5]

The Federal Circuit ultimately issued three rulings related to collateral estoppel. First, collateral estoppel was available to Google because the final written decision of the ’483 patent proceeding was issued after Google filed the IPR petition for the ’816 patent. Second, claim 18 was invalid under collateral estoppel because issues of patentability were identical in the two IPRs.[6] Finally, independent claim 14 was invalid because the parties agreed that if claim 18 was unpatentable, then so was claim 14.

The Federal Circuit, however, affirmed the Board’s finding of claims 15-17 and 19 as patentable.  The Court was not convinced by Google’s arguments where they pointed to similar claim language in the other IPR proceeding. But yet the Court went out of their way to state “Google failed to raise any collateral estoppel arguments with respect to these claims.[7]” Without explicitly stating so, the Federal Circuit may be signaling the remaining dependent claims were invalid if only Google asserted a collateral estoppel argument.  

Defendants should consider Google LLC v. Hammond Dev. Int’l, Inc. when challenging multiple patents from the same family. An initial IPR procedure for a single patent may help invalidate claims that are substantially similar from other members of the family. While Google may have excluded such arguments for strategic purposes, the Federal Circuit is certainly inviting future litigants to bring these types of collateral estoppel arguments.

[1] 54 F.4th 1377 (Fed. Cir. 2022).

[2] Id. at 1379.

[3] Google LLC v. Hammond Dev. Int’l, Inc., No. 2021-2218, 2021 WL 5936923, at *33 (Fed. Cir.).

[4] Id. at 35.

[5] Id. at 39-41.

[6] Claim 18 of the ’816 patent recited “a first one of the plurality of application servers configured to execute a first application” and “a second one of the plurality of application servers.” Claim 18 of the ‘483 patent recited “one or more application servers” and requires “the at least one application server.” The Court concluded the scope of the claims were materially identical.

[7] Google LLC v. Hammond Dev. Int’l, Inc., 54 F.4th 1377, 1382 (Fed. Cir. 2022).

In American National v. Sleep Number Corporation, the Court of Appeals for the Federal Circuit (“CAFC”) affirmed the Patent Trial and Appeal Board’s (“Board”) decision to allow a patent owner to present proposed amended claims during inter partes review (“IPR”)proceedings that both respond to a ground of unpatentability and make other wording changes unrelated to the IPR proceedings.

Background

Under 35 USC § 316(d), a patent owner may file one motion to amend a challenged patent by cancelling any challenged claims and/or proposing a reasonable number of substitute claims for each challenged claim. The amendments proposed by the patent owner must: (1) be supported in the original disclosure (and any earlier filed disclosure for which the benefit of filing date is sought); (2) respond to a ground of unpatentability involved in the IPR proceedings; and (3) not enlarge the scope of the claims of the patent or introduce new subject matter. 37 C.F.R. § 42.121. The petitioner carries the burden to demonstrate that the amendments proposed by the patent owner are unpatentable. Bosch Automotive Service Solutions, LLC v. Matal, 878 F.3d 1027, 1040 (Fed. Cir. 2017). 

In 2018, American National Manufacturing Inc. (“American National”) filed two petitions for IPR (Nos. IPR2019-00497 and IPR2019-00500). Each petition challenged a patent (U.S. Patent Nos. 8,769,747 and 9,737,154 respectively) owned by Sleep Number Corporation (“Sleep Number”).

In both proceedings, Sleep Number filed a motion to amend contingent on a finding that the challenged claims were unpatentable.  Sleep Number’s proposed amendments each included a limitation that addressed an unpatentability challenge raised by American National.  Some of the amendments further included additional edits that resolved issues under 35 U.S.C. § 112.

Discussion

On appeal, American National argued that allowing a patent owner to refine claims or correct potential § 112 errors violated due process and the Administrative Procedure Act by allowing the patent owner and the Board to address concerns that were never germane to an IPR process.  Specifically, according to American National, it would be “asymmetr[ical]” and “unfair” to allow the patent owner to amend its claims to address § 112 concerns because a petition cannot challenge claims under § 112.

The CAFC, however, disagreed that allowing the patent owner to correct § 112 issues was unfair as petitioners are able to challenge proposed amended claims on grounds beyond §§ 102 and 103 (American National itself raised such challenges during the previous IPR proceedings).

The CAFC further supported its decision by discussing the Board’s holding in Lectrosonics, Inc. v. Zaxcom.  In Lectrosinics, the Board held “once a proposed claim includes amendments to address a prior art ground in the trial, a patent owner also may include additional limitations to address potential § 101 or § 112 issues, if necessary.” The Board reasoned that allowing these amendments “serves the public interest by helping to ensure the patentability of amended claims” and “helps ensure a ‘just’ resolution of the proceedings and fairness to all parties.”

The CAFC agreed with the Board’s reasoning and stated that it did not conflict with the American Invents Act, which only restricts amendments that enlarge the scope of the claims or introduce new matter. Thus, the CAFC held that so long as a proposed claim amendment does not enlarge the scope of the claims, does not add new matter, and responds to a ground of unpatentability in the proceeding, the patent owner may also make additional amendments to a claim without running afoul of the relevant statutes and regulation.

In the Federal Circuit’s recent decision of CUPP Computing AS v. Trend Micro Inc., the Court made the precedential holding that the Patent Trial and Appeal Board (“the Board”) is not bound by a party’s disclaimer in the very IPR proceeding in which it is made, just as a disclaimer in a district court proceeding would not bind the district court in the same proceeding.[1]  The Court’s decision cements its earlier nonprecedential opinion in VirnetX, in which the Court held that the Board “is not required to accept a patent owner’s arguments as disclaimer when deciding the merits of those arguments.”[2]

The Court’s decision is rooted in the principle of keeping patent monopolies with their “legitimate scope.”  The Court reasoned that permitting “patentees to modify their claims by disclaimer would…effectively allow retrospective amendment in the IPR process” and create an opportunity for patentees to “avoid the public-protecting amendment process that Congress prescribed.”[3]

The Court also provided a brief summarization of the precedential nature of disclaimers.  The Court restated that the “doctrine of prosecution disclaimer precludes patentees from recapturing through claim interpretation specific meanings disclaimed during prosecution.”[4] Further, a ““patentee will only be bound to a ‘disavowal that was both clear and unmistakable.”[5] To the contrary, if “the alleged disavowal is ambiguous, or even amendable to multiple reasonable interpretations,” the Court has declined to find prosecution disclaimer.[6]

In sum, the Federal Circuit’s holding in CUPP (1) reaffirms the limited role of a disclaimer within the proceeding in which is it made and (2) restates the potential that a disclaimer binds the patentee to a narrower claim interpretation in a subsequent proceeding. 

[1] See CUPP Computing AS v. Trend Micro Inc., No. 2020-2262, 2022 WL 16954357, at *5 (Fed. Cir. Nov. 16, 2022)

[2] VirnetX Inc. v. Mangrove Partners Master Fund, Ltd., 778 F. App’x 897, 910 (Fed. Cir. 2019))

[3] CUPP Computing AS, 2022 WL 16954357, at *5.  

[4] Mass Inst. of Tech. v. Shire Pharms., Inc., 839 F.3d 1111, 1119 (Fed. Cir. 2016)

[5] CUPP Computing, 778 F.App’x at 5* (quoting Mass Inst. of Tech. v. Shire Pharms., Inc., 839 F.3d 1111, 1119 (Fed. Cir. 2016))

[6] Avid Tech., Inc. v. Harmonic, Inc., 812 F.3d 1040, 1045 (Fed. Cir. 2016).

On October 18, 2022, the United States Patent and Trademark Office (USPTO) posted two notices on Regulations.gov seeking public input on the requirements to practice before the USPTO and Patent Trial and Appeal Board (PTAB). The goal is to expand admission criteria so “more Americans, including those from traditionally under-represented and under-resourced communities, can participate in Office practice.”[1]

The first notice, titled “Expanding Opportunities To Appear Before the Patent Trial and Appeal Board,”[2] requests public comments on four topics.

Request 1: Expanding Opportunities To Practice Before the PTAB by Allowing Non-Registered Practitioners To Be Admitted To Practice Before the PTAB. Currently, non-registered practitioners must be admitted pro hac vice in each AIA proceeding, such as Inter Partes Review (IPR) and Post Grant Review (PGR). The USPTO is now considering other procedures and standards for non-registered attorneys. The Notice suggests a fitness-to-practice standard which would only require a familiarity with the rules of the PTAB and no prior disciplinary actions.

Request 2: Expanding Opportunities for Non-Registered Practitioners To Appear as the Lead Counsel. As of today, non-registered practitioners may only serve as back-up counsel at the PTAB. However, the USPTO is requesting comments on whether non-registered attorneys who are admitted to practice before the PTAB may serve as lead counsel. In addition, the USPTO is considering the level of experience needed for a non-registered lead counsel.

Request 3: Other Considerations Regarding Non-Registered Practitioners. The USPTO is requesting comments about whether non-registered practitioners must be accompanied by registered practitioners as their lead or backup counsel.

Request 4: Training and Development Programs and Potential Changes to LEAP. The Legal Experience and Advancement Program (LEAP) provides training to less experienced advocators before the PTAB. The USPTO may provide additional development opportunities to encourage lawyers to practice at the PTAB.

The second notice titled “Expanding Admission Criteria for Registration To Practice in Patent Cases” requests public comments on five topics. [3]

Request 1: Require the USPTO To Periodically Review Applicant Degrees and Add Commonly Accepted Category B Degrees to Category A on a Predetermined Timeframe. The USPTO is seeking comments on how often it should review which degrees demonstrate the requisite scientific and technical qualifications. The USPTO will likely include more degrees into Category A with each review increasing the number of people eligible for the patent bar exam.

Request 2: Modify the Accreditation Requirement for Computer Science Degrees Under Category A To Accept Bachelor of Science Computer Science Degrees. The USPTO is considering whether to accept Bachelor of Science degrees in computer science without considering the ABET accreditation status of the program.

Request 3: Possible Creation of a Separate Design Patent Practitioner Bar. This additional exam would not impact those already registered.

Request 4: Clarifying Instructions in the GRB for Limited Recognition Applicants. The process for limited recognition would not change.

Request 5 General Request for Additional Suggestions on Updating the Scientific and Technical Requirements for Admission To Practice in Patent Matters.

For those interested in commenting, the USPTO is accepting comments until January 17, 2023.

[1]Expanding Opportunities To Appear Before the Patent Trial and Appeal Board, 87 FR 63047.

[2] Id.

[3] Expanding Admission Criteria for Registration To Practice in Patent Cases Before the United States Patent and Trademark Office, 87 FR 63044.

Last month, in OpenSky Industries v. VLSI Technology LLC, IPR2021-01064 (Oct. 4, 2022), the Director of the Patent Trial and Appeal Board (PTAB) issued a precedential decision regarding abuse of process.

The decision from the Director held that Petitioner OpenSky had abused the IPR process by (1) filing an IPR in an attempt to extract payment from both Patent Owner VLSI and joined Petitioner Intel, and (2) offering to undermine the proceeding in exchange for a monetary payment from VLSI.

The Director has the authority to impose sanctions against a party for misconduct. 35 U.S.C. § 316(a); 37 C.F.R. § 42.12(a).  The determination of whether sanctions are appropriate “is a highly fact-specific question and the relevant considerations will vary from case to case.”

In this instance, the Director analyzed the totality of OpenSky’s conduct to find that it “evince[d] a singular focus on using an AIA proceeding to extort money, from any party willing to pay, and at the expense of the adversarial nature of AIA proceedings.”  Specifically, the Director listed six factors supporting its conclusion. Those factors were: (1)OpenSky’s interest in the proceeding, (2) the recent trial verdict against Intel awarding VLSI significant damages, (3) the proximity of OpenSky’s formation to jury award, (4) OpenSky’s attempt to seek compensation from both parties, (5) Opensky’s failure to meaningfully pursue merits, and (6) OpenSky’s filing of a copycat petition.

OpenSky was a non-practicing entity that was unable to point to any potential threat of being sued for patent infringement of the patent-at-issue. While there is not a standing requirement for a Petition in an IPR proceeding, the Director emphasized that questions regarding the Petitioner’s motivation arise when the Petitioner is not under a threat of being sued and is a non-practicing entity.  The Director was ultimately unconvinced (given OpenSky’s conduct) that it had filed its petitions in order to (as it claimed) maintain the integrity of the patent system.

OpenSky was formed after a recent trial verdict against Intel in a U.S. district court. The verdict involved two patents asserted by VLSI, each of which was challenged by IPR petitions filed by OpenSky (including the present petition). Further, OpenSky had no other known business activity other than filing its two petitions against VLSI.

After filing its petition, OpenSky undertook negotiations that sharply differed from “conventional settlement negotiations that take place in an adversarial proceeding.” OpenSky sought payment from both VLSI and Intel. More troubling, though, was that OpenSky, through its counsel, was willing to offer its advocacy to either side depending on who was willing to pay. The Director was particularly troubled by OpenSky counsel’s proposal to VLSI to intentionally undermine the proceeding, stating that OpenSky “violate[d] the duty of good faith and candor to the Board.”

Further, once Intel and VLSI refused OpenSky’s settlement offers, OpenSky further sought payment from Intel by claiming to lack the funds to further pursue the matter. The Director concluded, “OpenSky’s behavior and complaints about budgeting establish that it did not intend to pursue the patentability merits but instead intended to leverage the IPR’s existence only to extract payout from one side or the other.”

Additionally, OpenSky failed to actively pursue the merits of its petition. For example, OpenSky filed a reply brief that Intel had drafted and relied on Intel’s deposition outline. Moreover, OpenSky did not request oral argument and did not meaningful participate in the oral hearing.

Lastly, OpenSky’s petition directly copied an earlier petition filed by Intel against VLSI that was denied institution under the Fintiv factors. The Director emphasized that while filing a “copycat” petition is not always improper, under certain circumstances it can indicate an abuse of process. In this instance, OpenSky (in addition to copying Intel’s petitions) filed a copy of Intel’s expert declaration without notifying the expert or seeking to have the expert to testify.

Thus, the Director concluded that OpenSky sought to abuse the IPR process in order to extract payment. As part of the sanctions imposed by the Director, OpenSky is precluded from actively participating in the IPR. Further, OpenSky must show cause as to why it should not be ordered to pay compensatory damages to VLSI. Intel was temporarily elevated to the active party in the IPR. Additionally, the Board was instructed to issue an order within two weeks determining  whether the petition, based only on the record before the Board prior to institution, presents a compelling, meritorious challenge.

On October 4, 2022, the United States Patent and Trademark Office (USPTO) announced that it would be extending the Motion to Amend (MTA) Pilot Program at the Patent Trial and Appeal Board (PTAB) for a second time—now set to run through September 16, 2024.[1]

The MTA Pilot Program was initiated on March 15, 2019, following a 5-month period during which the USPTO sought written public comments on a proposed amendment process in AIA trials. The proposed amendment process would involve preliminary guidance from the PTAB on the merits of a MTA and provide an opportunity for a patent owner to file a revised MTA.[2]

The Pilot Program provides two options not previously available: (1) a patent owner may choose to receive preliminary guidance from the Board on a MTA; and (2) a patent owner may choose to file a revised MTA after receiving petitioner’s opposition to the original MTA and/or after receiving the Board’s preliminary guidance (if requested). See id.

Under option (1), the preliminary guidance from the Board typically will be in the form of a short paper (or oral guidance provided in a conference call) that provides preliminary, non-binding guidance from the Board to the parties about the MTA. The focus of the preliminary guidance will be the limitations added in the patent owner’s MTA—notably, it will not address the patentability of the originally challenged claims. See id.

Under option (2), a revised MTA includes one or more new proposed substitute claims in place of previously presented substitute claims. A revised MTA is required to provide amendments, arguments, and/or evidence in a manner that is responsive to the issues raised in the preliminary guidance and/or petitioner’s opposition to the MTA. Additionally, a revised MTA may also include substitute claims, arguments, or evidence previously presented in the original MTA—notably, it may not incorporate any material by reference from the original MTA. See id.

To note, the MTA Pilot Program is optional. If the patent owner so wishes, they are able to pursue a MTA in effectively the same way as the unaltered, pre-Pilot Program process—i.e., if a patent owner does not elect to receive preliminary guidance or to file a revised MTA, the AIA practice is essentially unchanged from the practice prior to the implementation of the MTA Pilot Program. The only slight difference is that the due dates for certain later-filed papers will be extended slightly compared to the prior rules. See id.

The USPTO has published the results of the MTA Pilot Program through March 31, 2022. A few highlights are shown below:[3]

Graph V above depicts the final outcomes of 434 pre-pilot and pilot MTAs that the Board substantively decided. Graph VI above depicts the final outcomes of the pilot MTAs that the Board decided, and reveals an uptick in the percentage granted.

Graph VII above further depicts the uptick in grant rate (calculation includes both granted and granted-in-part).

Graph XIII above compares a patent owner’s next filing based on whether the pilot MTA requested preliminary guidance. As expected, a patent owner is much more likely to file a revised MTA after receiving preliminary guidance compared to not receiving preliminary guidance.

In sum, the results of the study indicate an increased filing of MTAs and revised MTAs following preliminary guidance, as well as increased grant of MTAs during the MTA Pilot Program period.

The USPTO is further considering making the MTA Pilot Program permanent through notice-and-comment rulemaking, subject to stakeholder feedback and suggestions on the program and on amendment practice generally. Given the previous extensions of the program, it is likely that the USPTO will adopt a more permanent form of the MTA Pilot Program.

[1] See Notice Regarding Extension of the Patent Trial and Appeal Board Motion to Amend Pilot Program, 87 FR 60134 (Oct. 4, 2022).

[2] See Request for Comments on MTA Practice and Procedures in Trial Proceedings Under the America Invents Act Before the Patent Trial and Appeal Board, 83 FR 54319 (Oct. 29, 2018); see also Notice Regarding a New Pilot Program Concerning Motion To Amend Practice and Procedures in Trial Proceedings Under the America Invents Act Before the Patent Trial and Appeal Board, 84 FR 9497 (Mar. 15, 2019).

[3] See Report on Motion to Amend Study (updated Mar. 2022). https://www.uspto.gov/patents/ptab/motions-amend-study