Post-grant review (PGR) is the least common post-issuance trial proceeding before the Patent Trial and Appeal Board (PTAB). Only 1% of petitions filed for post-issuance trial proceedings since the institution of the America Invents Act have been for PGRs, while 92% and 7% have been for inter partes review (IPR) and covered business method (CBM) proceedings, respectively.[1] For a span of nearly three months this year, the PTAB did not issue a single PGR institution decision.[2] This streak came to an end with the recent issuance of four PGR institution decisions.

The most recent of these institution decisions was a single decision entered in two cases involving the same patent and parties: Merck Sharp & Dohme Corp. v. Wyeth LLC, Nos. PGR2017-00016 and PGR2017-00017. This decision denied institution of a PGR in both cases based on a common dispositive issue—specifically, the PGR ineligibility of Wyeth’s U.S. Patent No. 9,399,060, as Merck Sharp & Dohme failed to establish that this patent issued from an application that, at one point, contained at least one claim with an effective filing date on or after March 16, 2013. See No. PGR2017-00016, Paper 9 at 1 n.1, 5–7.

The recent PGR institution decisions include a decision issued in Crescendo Bioscience, Inc. v. L. Douglas Graham, No. PGR2017-00020. See Paper 8. Crescendo Bioscience and the two Merck Sharp & Dohme cases are part of the recent increase in PGR challenges to pharmaceutical and biological patents.[3] Of the 21 PGR petitions filed to date that implicate a patent from the USPTO Technology Center 1600 for Biotechnology and Organic fields, 11 have been filed in 2017 thus far, compared to seven in 2016, two in 2015, and one in 2014.[4]

In Crescendo Bioscience, the PTAB denied institution of a PGR without entering an adverse judgment because the patent owner, Graham, had filed with the USPTO a statutory disclaimer of the challenged claims after the petition was filed. Graham explained in his Preliminary Response that, as an independent inventor, he disclaimed the challenged claims “to avoid costly litigation,” where two pending continuation applications of the challenged patent were pending. Paper 6 at 1–2 n.1. A patent owner may consider such disclaimers to obviate expending time and resources in a post-grant proceeding if, for example, the patent owner can rely on claims in a continuation application that are less likely to be invalidated than claims in the challenged patent.

Another of the recent PGR institution decisions was issued on October 11, 2017, in Telebrands Corp. v. Tinnus Enterprises, LLC, No. PGR2017-00015. See Paper 16. The parties in this case are prevalent figures in the PGR world, as Telebrands has filed eight PGR petitions against Tinnus, constituting almost 10% of the 81 total PGR petitions filed since the creation of the PTAB.

In this particular PGR, Telebrands challenged Tinnus’s U.S. Patent No. 9,527,612, which is directed to an apparatus for simultaneously filling multiple containers with fluid through a housing and system of hollow tubes, where each container is removably attached to a hollow tube by an elastic fastener such that when the container is filled, it detaches from the hollow tube and is sealed with the fluid inside by the elastic fastener. For example, the apparatus can be used to fill and seal multiple water balloons substantially simultaneously.

Telebrands challenged all four claims of the patent as obvious under 35 U.S.C. § 103 and challenged claim 3 in particular for lack of written description under § 112(a) and for indefiniteness under §112(b). The PTAB denied institution based on the § 103 and § 112(a) grounds. The PGR was instituted, however, because Telebrands demonstrated that it was more likely than not to prevail on its challenge to claim 3 under § 112(b).

The PTAB exercised its discretion under 35 U.S.C. § 325(d) to deny institution of the § 103 grounds because it found that the prior art and arguments asserted by Telebrands were “the same art and arguments … considered by the Examiner during the original prosecution.” Paper 16 at 10. Institution was also denied regarding the § 112(a) grounds, in which Telebrands argued that the written description of the ’612 patent does not mention that the containers “may push against each other” before the filling process and thus does not support the claim 3 limitation: “at least first and second ones of the plurality of containers are disposed sufficiently close to each other such that they press against each other … in a filled state or an unfilled state.” Citing a CCPA opinion from 1967, the PTAB stated that the written description requirement functions like “blaze marks on the trees” to guide one through the woods, and it held that Figure 1 of the ’612 patent and its accompanying description provide sufficient “blaze marks” to guide a person of ordinary skill with reasonable clarity to an embodiment in which the balloons are touching. Of note, this finding was predicated on the “level of skill and the predictability of this art,” as the PTAB acknowledged that it was “dealing with a person having a general knowledge about, and experience with, expandable containers, including, without limitation, balloons, and at least an associate’s degree in mechanical engineering, or the equivalent.” Id. at 18–19.

Institution of the PGR was based on the petition’s showing that the term “filled state” in the following limitation of claim 3 is more likely than not indefinite: “regardless whether the first and second ones of the plurality of containers are in a filled state or an unfilled state.” The PTAB reasoned, in part, that the specification of the ’612 patent teaches that a “filled state” depends, subjectively, on a container reaching a desired size or volume. The specification makes repeated and express use of the word “desired” in this regard, which the PTAB declared “[it] can only characterize as a subjective word.” Id. at 22–23. This preliminary determination regarding the indefiniteness of claim 3 is consistent with the PTAB’s positions with respect to the terms “filled” and “filled state” in PGR2016-00031 and PGR2015-00018, respectively. The PTAB acknowledged that findings in the U.S. District Courts and the Federal Circuit regarding the indefiniteness of claim terms in related patents weigh against its preliminary determination but noted the differences in claims at issue, evidentiary records, and procedural burdens.

Another of the recent PGR institution decisions was also issued on October 11, 2017, but in contrast to Telebrands, the case involves first-time PGR parties: Bayer CropScience LP v. Exosect Limited, No. PGR2017-00018. See Paper 9. This PGR is one of only seven PGRs filed to date that involves a patent from the USPTO Technology Center 1700, which provides for examination of patent applications in the Chemical and Material Engineering fields, and is the only one of these seven to have a filing date or institution decision date in 2017.[5] The patent at issue is Exosect’s U.S. Patent No. 9,380,739, which relates to “[m]ethods and uses of controlling the flowability of a population of seeds and dust drift therefrom by placing individual seeds in contact with particles of a flowability enhancing agent.”

Bayer challenged claims in the ’739 patent as anticipated under § 102, as obvious under § 103, for lack of written description and lack of enablement under § 112(a), and for indefiniteness under § 112(b). Exosect did not file a Preliminary Response. The PTAB instituted the PGR on both of Bayer’s § 112(a) grounds and one of Bayer’s three separate 112(b) grounds.

Aside from timing,[6] why might a party petition to challenge a patent in a PGR rather than the more common IPR proceeding? PGR proceedings can be instituted based on grounds of invalidity under §§ 101, 102, 103, and 112, as well as double patenting.[7] In contrast, an IPR is limited to grounds under §§ 102 and 103 and only on the basis of prior art consisting of patents and printed publications.[8] This distinction can prove meaningful for petitioners such as Telebrands and Bayer CropScience, for example, whose PGR petitions were instituted on § 112 grounds, but denied institution on § 102 and/or § 103 grounds, because these § 112 grounds would not have been permitted in an IPR.

However, while this difference in permitted grounds favors PGRs over IPRs, the different institution standards of these two proceedings act as a counterbalance.  Institution of a PGR requires a petitioner to demonstrate that it is more likely than not that at least one of the challenged claims is unpatentable.[9] For institution of an IPR, on the other hand, a petitioner must demonstrate a reasonable likelihood that he/she would prevail as to at least one of the challenged claims.[10] The USPTO explains that in “[c]omparing the two standards, the ‘reasonable likelihood’ standard is lower than the ‘more likely than not’ standard.”[11] Thus, the § 102 and § 103 grounds that were denied institution in the PGRs discussed above could have potentially met the lower institution standard in an IPR.

In addition to timing, petitioners should evaluate and consider the strength and availability of potential invalidity grounds in developing a strategy for challenging patents in the different post-grant proceedings available before the PTAB.

 

[1] USPTO Trial Statistics through September 2017, available at https://www.uspto.gov/sites/default/files/documents/Trial_Stats_2017-09-30.pdf.

[2] PTAB public search engine, available at https://ptab.uspto.gov/#/public/publicsearch. No PGR institution decision was issued between 7/19/2017 and 10/11/2017.

[3] https://www.ptablaw.com/2017/08/03/ptab-institutes-post-grant-review-pharmaceutical-patent/.

[4] PTAB public search engine, available at https://ptab.uspto.gov/#/public/publicsearch. See also https://www.uspto.gov/patent/contact-patents/patent-technology-centers-management.

[5] Id.

[6] Under 35 U.S.C. § 321, a petition for PGR must be filed no later than 9 months after the patent at issue is granted or reissued. Under 35 U.S.C. § 311, a petition for IPR can only be filed after the later of either: (i) 9 months after the patent at issue is granted or reissued; or (ii) the termination of any PGR of the patent at issue. Generally speaking, it is in a petitioner’s interest to have the patent invalidated sooner rather than later.

[7] 35 U.S.C. § 321; see also USPTO chart of “Major Differences between IPR, PGR, and CBM,” available at https://www.uspto.gov/sites/default/files/ip/boards/bpai/aia_trial_comparison_chart.pptx.

[8] 35 U.S.C. § 311; see also USPTO chart of “Major Differences between IPR, PGR, and CBM,” available at https://www.uspto.gov/sites/default/files/ip/boards/bpai/aia_trial_comparison_chart.pptx.

[9] 35 U.S.C. § 324(a).

[10] 35 U.S.C. § 314(a).

[11] “Message from Chief Judge James Donald Smith, Board of Patent Appeals and Interferences: USPTO Discusses Key Aspects of New Administrative Patent Trials,” available at https://www.uspto.gov/patent/laws-and-regulations/america-invents-act-aia/message-chief-judge-james-donald-smith-board.

Senior U.S. Circuit Judge William Bryson ruled on Monday that all the asserted claims in the six Restasis patents that Allergan PLC (“Allergan”) accused generic-drug manufacturers of infringing were invalid for obviousness.[i] Last month, Allergan transferred the patents for this dry eye drug to the Saint Regis Mohawk Tribe (“Tribe”) in an endeavor to use the Tribe’s sovereign immunity to shield the patents from inter partes review (“IPR”) before the Patent Trial and Appeal Board (“PTAB” or “Board”). Based on the prior art, the evidence of unexpected results, the evidence of objective considerations, and the motivation to combine the prior art references, the court concluded that the defendants in the case had satisfied their burden of showing the asserted Restasis claims would have been obvious.

In a separate order Monday morning, Judge Bryson granted Allergan’s motion to add the Saint Regis Mohawk Tribe as a co-plaintiff to ensure that any judgment in the case would not be subject to a challenge based on the omission of a necessary party, leaving the question of the validity of the assignment of the patent rights from Allergan to the Tribe to be decided in the IPR proceedings.[ii] However, he noted that he had “serious concerns” about the assignment.

“[I]t is clear that Allergan’s motivation for the assignment was to attempt to avoid the IPR proceedings that are currently pending in the PTO by invoking the Tribe’s sovereign immunity as a bar to those proceedings.” If successful, Judge Bryson noted, Allergan’s tactic “could spell the end of the [Patent Office’s] IPR program, which was a central component of the America Invents Act of 2011.”

Judge Bryson is not the only person worried over the tactic employed by Allergan; the assignment has also raised concerns on Capitol Hill. In a letter to the Senate Judiciary Committee, Sens. Maggie Hassan (D-New Hampshire), Sherrod Brown (D-Ohio), Bob Casey (D-Pennsylvania), and Richard Blumenthal (D-Connecticut) called Allergan’s deal “a blatantly anti-competitive attempt to shield its patents from review and keep drug prices high.”[iii] The letter noted that the Board has considered sovereign immunity as an affirmative defense to IPR review in recent PTAB decisions. The senators expressed concern that deals of this type exploit the law and undermine IPR review of patents.

“Allergan’s actions directly circumvent the IPR process,” wrote the senators. “We are deeply concerned with the numerous patent law and anti-competitive implications of Allergan’s deal …. Companies should not be allowed to pay States and Tribes simply to invoke their sovereign immunity.”

The Tribe recently wrote a letter attempting to clarify misperceptions in the media and in the senators’ letter regarding the Restasis deal with Allergan.[iv] Among the various considerations put forth, the Tribe argued that the current IPR system is not working with respect to pharmaceutical patents.

“IPR proceedings were intended to be a cheaper and quicker alternative to federal court over frivolous patent claims,” stated the Tribe. “For Orange Book-listed patent owners, IPR proceedings allow repetitive attacks on patents, lack finality and due process, and use legal standards that are systematically unfavorable to patentees.”

The Tribe noted that the Supreme Court is set to review the constitutionality of IPR proceedings in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, and that “consideration of important questions surrounding the Hatch Waxman Act, the America Invents Act and the intersection of sovereign immunity should benefit from the Supreme Court’s guidance on this issue.”

The PTAB is still considering the Tribe’s motion to dismiss the IPR proceedings based on sovereign immunity. Without waiting to see how the Board rules on the issue of tribal sovereign immunity, Sen. Claire McCaskill (D-Missouri) has introduced a bill that would prevent Indian tribes from asserting sovereign immunity as a defense in IPR proceedings.[v] “This is one of the most brazen and absurd loopholes I’ve ever seen, and it should be illegal,” said Sen. McCaskill in a statement to the Pharmaceutical Research and Manufacturers of America, a pharmaceutical lobby group.[vi]

Although the PTAB has ruled previously that state sovereign immunity applies to IPR proceedings, the Tribe is the first to argue tribal sovereign immunity as a defense. The bill has generated some controversy, as it would only abrogate tribal sovereign immunity in IPR proceedings, while allowing state universities to continue asserting sovereign immunity as a defense.

It is unclear how the PTAB will rule on the issue of tribal sovereign immunity and whether Judge Bryson’s and the senators’ comments will have any effect on the decision. In addition to the IPR proceeding, patent owners thinking of making similar deals with Indian tribes should also keep an eye on Sen.McCaskill’s bill.

 

[i] Allergan, Inc., v. Teva Pharmaceuticals USA, Inc., No. 2:15-CV-1455-WCB (E.D. Tex. Oct. 16, 2017).

[ii] Allergan, Inc., v. Teva Pharmaceuticals USA, Inc., No. 2:15-CV-1455-WCB, 2017 WL 4619790 (E.D. Tex. Oct. 16, 2017).

[iii] https://www.hassan.senate.gov/imo/media/doc/170927.%20Grassley%20Feinstein%20Restasis%20Letter%20FINAL%20SIGNED.PDF

[iv] https://www.srmt-nsn.gov/_uploads/site_files/2017-SRMT-Ltr-to-Grassley-Feinstein-Judiciary.pdf

[v] S. 1948, 115th Cong. § 1 (2017) (available at https://www.congress.gov/115/bills/s1948/BILLS-115s1948is.pdf).

[vi] https://www.mccaskill.senate.gov/media-center/news-releases/mccaskill-to-phrma-are-you-comfortable-with-allergans-action-with-saint-regis-mohawk-tribe

On September 26, 2017, in In re Smith International, Inc., the Federal Circuit reversed the PTAB’s decision affirming an examiner’s final rejection in an ex parte reexamination. During the ex parte reexamination, the examiner rejected claims 28-36, 39-46, 50, 79-81 and 93-99 of U.S. Patent No. 6,732,817 (“’817 patent”) as anticipated or obvious in light of the prior art. The claims of the ‘817 patent are directed towards a downhole drilling tool used in oil and gas operations. Specifically, the main issue in the PTAB’s decision and ultimately the main issue before the Federal Circuit dealt with the claim construction of the term “body.”

Claim 28 provides “An expandable downhole tool for use in a drilling assembly positioned within a wellbore having an original diameter borehole and an enlarged diameter borehole, comprising: a body; and at least one non-pivotable, moveable arm having at least one borehole engaging pad adapted to accommodate cutting structures or wear structures or a combination thereof and having angled surfaces that engage said body to prevent said arm from vibrating in said second position; wherein said at least one arm is moveable between a first position defining a collapsed diameter, and a second position defining an expanded diameter approximately equal to said enlarged diameter borehole.

During the ex parte reexamination, the patent owner argued that the examiner’s rejections were improper because of an incorrect construction of the term “body.” The patent owner argued that the examiner’s construction of the term overlooked the fact that the tool’s “body” is distinct from other parts of the tool, and also overlooked what a person of ordinary skill in the art would have understood the term to mean. See 2016 Pat. App. LEXIS 3764 at 3.

In reexaminations, when construing claim terms, the PTAB applies the broadest reasonable interpretation to the terms in light of the specification and language of the claims. Here, the PTAB disagreed with the patent owner, stating that although the patent describes a “body” as a discrete element, it does not define the term and the patent owner has not acted as its own lexicographer. The PTAB affirmed the examiner’s construction of “body” as a broad term, stating that “it is not at all unreasonable for the ‘body’ as used in the claims without reference to any of the other specific components of the downhole tool, to be a generic term used to encompass all of the various structures included in the downhole tool other than those also specifically recited.” See 2016 Pat. App. LEXIS 3764 at 6-7. After adopting the examiner’s construction, the PTAB also affirmed the examiner’s findings of anticipation and obviousness.

On appeal, the Federal Circuit disagreed with the PTAB’s holding and reversed. The Federal Circuit concluded that the PTAB’s construction of the term “body” was unreasonably broad, stating that even under the broadest reasonable interpretation standard, the PTAB “cannot construe the claims so broadly that its constructions are unreasonable under general claim construction principles.” See Opinion at 12. The Federal Circuit reasoned that there is no dispute that the specification describes and refers to “body” as a component distinct from others and as such, the PTAB’s interpretation was erroneous.

According to the Federal Circuit, the correct analysis for providing a claim term with its broadest reasonable interpretation is an “interpretation that corresponds with what and how the inventor describes his invention in the specification, i.e., an interpretation that is consistent with the specification.” See Opinion at 13. The court makes clear that the analysis is not whether the specification precludes a broad reading of the term adopted by the examiner, nor is it simply choosing an interpretation that is not inconsistent with the specification. See Id.

The Federal Circuit found that the PTAB’s reasoning that the patent owner did not act as its own lexicographer and that the specification did not define the term was flawed. The court reasoned that if it were to follow the PTAB’s logic, any description amounting to less than an express definition or disclaimer would lead to the claims terms being construed by the “broadest possible interpretation,” which is not the standard. See id. Applying the correct claim construction standard, the Federal Circuit concluded that “body” is a component distinct from the other components recited in the claims. Because the PTAB’s findings of anticipation and obviousness were based on an incorrect claim construction, the Federal Circuit held that the PTAB’s findings were not supported by substantial evidence and therefore reversed them.

As a result of the Federal Circuit’s reversal, in the future, the PTAB may be inclined to interpret claim terms more narrowly. If so, patent owners may be affected in that it may become easier for a patent owner to argue against petitioners and examiners contesting the validity of their patents. On the other side, petitioners may face more of a hurdle when attempting to prove anticipation or obviousness in post-grant proceedings based on a broad claim construction.

In Ultratec, the Federal Circuit highlighted several problems with the Patent Trial and Appeal Board’s (“PTAB” or “Board”) permissive rules of trial proceedings and held that the PTAB abused its discretion in the consideration of supplemental information.

By way of background, Ultratec sued Captioncall for infringement of eight patents directed to systems for assisting deaf or hard-of-hearing users to make phone calls.  The case proceeded to trial where the jury found the patents to be valid and infringed and awarded damages of $44.1 million.  In parallel, Captioncall filed IPRs to contest the validity of the patents-in-suit.  The district court stayed all post-judgment proceedings pending final resolution of the IPRs.

Captioncall had retained the same expert witness for the district court litigation and the IPRs.  The expert witness testified about the same issues and references in both proceedings.  According to Ultratec, the expert witness’s trial testimony addressing a prior art reference was inconsistent with his IPR written declarations on that same point.  Ultratec sought to introduce the allegedly inconsistent testimony in the IPRs as supplemental information.

Ultratec first moved to introduce the testimony as supplemental information, but the Board denied and expunged this motion from the record because Ultratec had not first requested authorization to file the motion.

Within one week of the jury trial, Ultratec requested authorization to file a motion to submit the testimony.  The Board held a conference call to consider Ultratec’s request.  The testimony was not reviewed during the conference call and the request was denied without any written record of such.

Two weeks after the conference call, an oral hearing was held and the Board issued final written decisions shortly thereafter.  In holding that every challenged claim in the patents-in-suit was either anticipated or would have been obvious, the Board relied heavily on Captioncall’s expert witness in the decision and cited to the expert witness’s testimony over thirty times to support its findings.

Ultratec moved for reconsideration on a variety of grounds, including the Board’s failure to consider the expert witness’s trial testimony and the failure to provide an explanation of its decision to exclude the new evidence.  The motion for reconsideration was denied.

On appeal, the Federal Circuit reviewed the Board’s consideration of the supplemental information for abuse of discretion.  The Federal Circuit explained that a party seeking to submit supplemental information more than one month after the date the trial is instituted must request authorization to file a motion to submit the information.  37 CFR § 42.123(b).  The request to submit new information must show: (1) why the supplemental information reasonably could not have been obtained earlier, and (2) that consideration of the supplemental information would be in the interest-of-justice.  Id.

The Federal Circuit held that “[t]his record affords but one reasonable conclusion: Ultratec satisfied both of § 42.123(b)’s requirements for allowing Ultratec to file a motion to admit [the expert] trial testimony.”  (Slip op. at 10.)  First, the testimony could not have been obtained earlier because the testimony did not exist during the IPR discovery period and Ultratec requested authorization the week after the trial concluded.  Second, it would be in the interest-of-justice to consider sworn inconsistent testimony of the same expert addressing the same issues in the IPRs.  If indeed inconsistent, the testimony would be highly relevant to the Board’s analysis of the specific issues on which the expert gave contradictory testimony and to the Board’s overall view of his credibility.  The Federal Circuit also explained that the admission and review of the expert testimony would have placed minimal burden on the Board.

Most notably, the Federal Circuit highlighted three problems with the Board’s rules of trial proceedings.

First, the Board lacked the information necessary to make a reasoned decision because the Board’s procedures allowed the Board to deny the request to admit evidence without ever seeing the evidence it was denying.

Second, the Board’s procedures allowed it to make significant evidentiary decisions without providing an explanation or a reasoned basis for its decisions.

Third, the Board’s procedures impeded meaningful appellate review of the agency decision-making.  The Federal Circuit noted that in district court litigation, a party dissatisfied with a ruling excluding evidence is allowed to make an offer of proof to preserve error, but parties in IPRs are not provided with similar protections.  Fed. R. Evid. 103.  In this case, the Federal Circuit found that the Board’s failure to provide a reasoned basis for its denial and exclusion of information regarding this issue from the record contributed to the unreviewability of the Board’s decision-making.

Ultimately, the Federal Circuit held that the Board abused its discretion when it denied the request to admit the expert testimony and failed to explain its decision.  The IPR final written decisions were vacated and remanded.

The Federal Circuit’s identification of problems with various PTAB rules and procedures in this case, combined with the Federal Circuit’s criticism of the PTAB’s joinder practice and use of expanded panels in the recent Nidec case (see our previous article regarding Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co.), indicates a growing concern with the established procedures for IPRs and the Board’s exercising of its discretion in accordance to those procedures.

Given the Patent Trial and Appeal Board’s (“PTAB” or “Board”) reluctance to grant motions to amend claims during AIA post-grant proceedings, patent owners faced with post-grant challenges have attempted to circumvent the challenge of amending claims by filing reissue applications of challenged patents.  By doing so, the patent owner attempts to create two parallel proceedings at the USPTO, whereby the PTAB and an examiner are asked to independently and simultaneously consider the patentability of overlapping or similar subject matter.

Stays of reissue applications filed during post-grant proceedings are routinely granted, with some notable exceptions.  Under 35 U.S.C. § 315(d) and 37 C.F.R. 42.122, the PTAB is authorized to regulate any matter or proceeding before the USPTO that is co-pending with an IPR and involves the same patent.  The Director has authority to stay a reissue proceeding pursuant to 35 U.S.C. § 315(d), which provides:

 (d) Multiple Proceedings.—Notwithstanding sections 135(a), 251, and 252, and chapter 30, during the pendency of an inter partes review, if another proceeding or matter involving the patent is before the Office, the Director may determine the manner in which the inter partes review or other proceeding or matter may proceed, including providing for stay, transfer, consolidation, or termination of any such matter or proceeding.

 Under 37 C.F.R. § 42.122(a), the Board may enter an order to effect a stay:

 Multiple proceedings. Where another matter involving the patent is before the Office, the Board may during the pendency of the inter partes review enter any appropriate order regarding the additional matter including providing for the stay, transfer, consolidation, or termination of any such matter.

In addition, the Board may exercise exclusive jurisdiction within the USPTO over an application underlying a patent involved in an IPR. 37 C.F.R. § 42.3(a). When doing so, the Board may take various actions, including staying that application.  Specifically, the PTAB can order a stay of a reissue application related to a patent that is involved in a co-pending IPR.

Generally, the PTAB’s reasoning for such a stay is to prevent duplicative efforts, to avoid potentially inconsistent results between the proceedings, or to simplify the issues in a reissue application.  See IPR2013-00217, Paper 8 at 2­–3. For example, in two IPRs, the PTAB’s rationale for a stay was that should examination of a co-pending reissue application begin, the USPTO may allow amended versions of the instituted claims, thereby changing the scope of the instituted claims while the PTAB is conducting the IPR. See IPR2015-01826, Paper 18; IPR 2015-01593, Paper 24.

Moreover, the USPTO’s data demonstrates a large divergence between the allowance rate in reissue applications (>60% allowed based on 2012-2016 data)[1] and the claims remaining patentable rate in IPR proceedings (~22% patentable as of December 31, 2016)[2].  Thus, the likelihood of inconsistent results between the proceedings is high.

Another potential basis for a stay is that issuance of a co-pending reissue application would divest the PTAB of its review authority and thus result in a waste of its resources. After all, the PTAB has held that under 35 U.S.C. §§ 251 and 252, once a co-pending reissue application is issued, the original patent—i.e., the patent asserted in the IPR petition—is surrendered and ceases to exist, thereby necessitating termination of the IPR. See IPR2013-00513, Paper 11 (denying institution because after the petition was filed, the original patent asserted in the petition was reissued, resulting in the surrender of the original patent).

Stay of a co-pending reissue application may also be denied for a variety of reasons. The PTAB has denied requests to stay a reissue application, for example, because the patent owner stipulated that it would not amend the issued claims in the reissue proceeding or because the petitioner’s speculation regarding possible claim amendments was insufficient to support a stay and the patent owner sought to add a number of dependent claims to the patent at issue, which it could not do in the IPR proceeding.  See IPR2014-00041, Paper13; IPR2014-01002, Paper 24. However, in reissue applications where the patent owner seeks to maintain at least some identical claims and add new dependent claims, the PTAB has granted stay for the same reasons discussed above.  See IPR2017-00190, Paper 31.A stay in the reissue proceeding is beneficial to the petitioner because under 37 C.F.R. § 42.73(d)(3), a patent owner is estopped from obtaining in the reissue proceeding “[a] claim that is not patentably distinct” from a claim that is canceled in the IPR. Also, a stay of the reissue proceeding thereby delays the grant of a reissued patent, which effectively shortens the patent term because the patent is reissued according to 35 U.S.C. § 251 for only “the unexpired term of the original patent.” Moreover, the petitioner is an active participant in the IPR, as opposed to a bystander for the reissue proceeding.A stay in the reissue proceeding is beneficial to the petitioner because under 37 C.F.R. § 42.73(d)(3), a patent owner is estopped from obtaining in the reissue proceeding “[a] claim that is not patentably distinct” from a claim that is canceled in the IPR. Also, a stay of the reissue proceeding thereby delays the grant of a reissued patent, which effectively shortens the patent term because the patent is reissued according to 35 U.S.C. § 251 for only “the unexpired term of the original patent.” Moreover, the petitioner is an active participant in the IPR, as opposed to a bystander for the reissue proceeding.

A stay in the reissue proceeding is beneficial to the petitioner because under 37 C.F.R. § 42.73(d)(3), a patent owner is estopped from obtaining in the reissue proceeding “[a] claim that is not patentably distinct” from a claim that is canceled in the IPR. Also, a stay of the reissue proceeding thereby delays the grant of a reissued patent, which effectively shortens the patent term because the patent is reissued according to 35 U.S.C. § 251 for only “the unexpired term of the original patent.” Moreover, the petitioner is an active participant in the IPR, as opposed to a bystander for the reissue proceeding.

A motion to stay a related reissue proceeding can be sought prior to institution of an IPR and/or subsequent to institution. Requests for stay have had varied outcomes with some being denied and some being granted at both the pre-institution stage and post-institution stage.  However, the stage of the proceeding appears to matter as stays are more often issued post-institution. Indeed, in two cases, the PTAB expressly held that consideration of a stay prior to institution would be “premature.” See IPR2015-01690, Paper 8; IPR2017-00190, Paper 11. Similarly, the PTAB has issued a post-institution stay sua sponte in at least two cases. See IPR2016-01464, Paper 13; IPR2015-01826, Paper 18 (against the contention of both parties).

The below table provides an analysis of IPRs that have involved requests and orders to stay related co-pending reissue proceedings. The table contains a breakdown of these cases based on several factors, including when the reissue application was filed, when a stay was first requested or considered, and whether the patent owner opposed the stay. Based on the data, the following observations can be drawn:

  • A reissue application is more likely to be stayed after the related co-pending IPR has been instituted.
    • In the five cases where a stay was requested prior to institution, a pre-institution stay was granted one time, denied three times, and rendered moot one time. In the case where a stay was granted, the patent owner did not oppose the stay.
    • In the six cases where a reissue application was co-pending prior to institution and a stay was considered after institution, a post-institution stay was granted three times, denied two times, and rendered moot once.
    • In the four cases where a reissue application was co-pending prior to institution and a stay was first requested (or sua sponte considered) after institution, a post-institution stay was granted two times, denied once, and rendered moot once.
    • In the ten cases where a stay was considered after institution but before a final decision, a post-institution stay was granted seven times, denied two times, and rendered moot once.
  • A reissue application is more likely to be stayed if it was filed after the related IPR petition—especially if filed after the related IPR petition has been instituted.
    • A post-institution but pre-final decision motion to stay has not been denied for a reissue application filed after the co-pending IPR petition. In the seven cases where a reissue application was filed after the IPR petition but before a final written decision, a post-institution but pre-final decision motion to stay was granted six times and rendered moot once.
  •  A reissue application is unlikely to be stayed after a final written decision given that the IPR proceeding is no longer pending before the USPTO, unless a motion for rehearing has been filed.

While the data demonstrate a trend toward grant of stays, particularly where the post-grant challenge is instituted, uncertainty as to the PTAB’s likelihood of granting a stay in any particular case remains an issue given the small sample size and mixed results thus far.  The high likelihood of inconsistent results between IPR and reissue proceedings militates towards granting of stays pending the outcome of the PTAB proceeding, particularly in view of the short twelve-month IPR window.

[1] USPTO Annual Report 2016, available at https://www.uspto.gov/sites/default/files/documents/USPTOFY16PAR.pdf.

[2] Patent Trial and Appeal Board Statistics, available at https://www.uspto.gov/sites/default/files/documents/aia_statistics_december2016.pdf.

Just recently, Allergan PLC (“Allergan”) announced that it had transferred the patents for its dry-eye drug Restasis to the Saint Regis Mohawk Tribe to take advantage of its sovereign immunity status and ward off challenges to the patents. Under the deal, the Tribe received an upfront payment of $13.75 million and will receive $15 million a year in royalties for the duration of the six Restasis patents.[i] The patents involved are set to expire on August 27, 2024.

The Saint Regis Mohawk Tribe licensed the patents back to Allergan and is filing a motion to dismiss the inter partes review (IPR) of the Restasis patents before the Patent Trial and Appeal Board (“PTAB” or “Board”) based on their sovereign immunity status. Earlier this year we discussed the PTAB’s holding in Covidien LP v. University of Florida Research Foundation Inc. that sovereign immunity applies to IPR’s, and the Board addressed the issue of sovereign immunity again in Neocard, Inc. v. University of Maryland, Baltimore and Reactive Surfaces Ltd., LLP v. Toyota Motor Corp.[ii] Each of these cases involved public universities who were patent owners that asserted sovereign immunity as a defense to the institution of an IPR.

In Covidien, the University of Florida asserted sovereign immunity, as an arm of the state of Florida, as a defense against an IPR challenge by the medical-device maker Covidien. The PTAB held that sovereign immunity bars the institution of an IPR to challenge the patentability of patents owned by states.

In Neochord, patent-owner University of Maryland and its exclusive licensee filed a motion to dismiss asserting sovereign immunity. The PTAB determined that sovereign immunity applied to the university and that the university had retained rights under the license agreement, transferring less than “substantially all” of its rights to the licensee. Accordingly, the PTAB held that the university was a necessary and indispensable party and found that the IPR could not proceed without the university, dismissing both the university and the exclusive licensee.

In Reactive Surfaces, the PTAB dismissed one of the patent owners in the IPR, the Regents of the University of Minnesota (“Regents”), but denied the motion to dismiss of patent co-owner Toyota Motor Corp. (“Toyota”). The Board rejected an argument by the patent owners that there should be a categorical rule requiring automatic termination of a proceeding upon the dismissal of one party on the grounds of sovereign immunity. Instead, the Board held that “when the absent sovereign party and a remaining party have identical ‘interests in the asserted patents,’ the remaining party adequately represents the interest of the absent sovereign party.”[iii] Finding that the Regents and Toyota held identical interests in the asserted patent, the Board held that Toyota would adequately represent the interests of the Regents and the IPR could proceed in their absence.

In each of the three cases, the PTAB dismissed the universities on the basis of sovereign immunity; however, the Board arrived at different conclusions in regard to the other parties who had rights in the asserted patents. The difference between the treatment of the exclusive licensee in Neochord and the co-owner in Reactive Surfaces seems to be based on whether the parties’ interests in the patent are “identical” to the sovereign’s interest.

Allergan’s Chief Legal Officer said Allergan reviewed the PTAB’s recent cases involving sovereign immunity in reaching its agreement with the Saint Regis Mohawk tribe. The Allergan IPR sets the stage for a possible extension of the university sovereign immunity IPR cases to Indian tribes with sovereign immunity status. The Board could possibly find Allergan and the Saint Regis Mohawk Tribe analogous to the University of Maryland and the exclusive licensee in Neochord, holding that the IPR cannot proceed without the Saint Regis Mohawk Tribe. If the PTAB does issue a holding finding that tribal immunity applies to IPR’s, it could have concerning future ramifications. Other pharmaceutical companies may follow Allergan’s lead in order to protect their patents from IPR challenges. Agreements such as these could potentially undermine the role of IPR challenges at the PTAB. The Allergan deal and the recent sovereign immunity PTAB cases could also prompt Congress to take another look at both tribal and state sovereign immunities laws in the context of intellectual property matters.

 

[i] United States Patent Nos. 8,629,111; 8,633,162; 8,642,556; 8,648,048; 8,685,930 and 9,248,191.

[ii] Covidien LP v. Univ. of Fla. Research Found. Inc., No. IPR2016-1274 (P.T.A.B. Jan. 25, 2017) (Paper 21); Neochord, Inc. v. Univ. of Md., Baltimore, No. IPR2016-208 (May 23, 2017) (Paper 28); Reactive Surfaces Ltd. v. Toyota Motor Corp., No. IPR2016-1914 (P.T.A.B. July 13, 2017) (Paper 36).

[iii] Reactive Surfaces Ltd. v. Toyota Motor Corp., No. IPR2016-1914, at 14-15 (P.T.A.B. July 13, 2017) (Paper 36)

In Nidec Motor Corp. v. Zhongshan Broad Ocean Motor Co. LTD., 2016-2321 (Fed. Cir. August 22, 2017)(designated precedential), the Federal Circuit upheld the PTAB’s finding that a patent directed to an HVAC system was invalid.  However, a concurring opinion criticized the PTAB’s joinder practice and use of expanded panels, indicating that such practices are likely to be scrutinized in future Federal Circuit decisions.

I. PTAB Procedural History

The present case involves U.S. Patent No. 7,626,349 (“’349 patent”) owned by Nidec Motor Corporation (“Nidec”).  The ’349 patent is directed to HVAC systems that provide quieter operation of motors due to improved motor control by applying continuous oscillations in applied voltage to motor coil windings.  Slip op. at 2-3.  Broad Ocean filed an IPR petition (“first petition”) challenging claims 1-3, 8, 9, 12, 16, and 19 of the ’349 patent as obvious over U.S. Patent No. 5,410,230 (“Bessler”) and a doctoral thesis to Peter Franz Kocybik (“Kocybik”).  Broad Ocean also presented another ground asserting that the same challenged claims are anticipated by Japanese Patent Publication  2003-348885 (“Hideji”).  The Board instituted review on the ground of obviousness over Bessler and Kocybik, but did not institute on the ground of anticipation by Hideji, holding that Broad Ocean failed to provide a declaration regarding the accuracy of the translation required for foreign references.  Id. at 3 (citing 37 C.F.R. § 42.63(b)).

In view of the Board’s denial of the ground for anticipation, Broad Ocean subsequently filed a second IPR petition (“second petition”) asserting the same challenged claims as anticipated by Hideji with the required declaration.  The second petition was accompanied by a motion under 35 U.S.C. § 315(c) to join the second petition with the first petition.  A panel of three Administrate Patent Judges (“APJs”) declined to institute review of the second petition, holding that since the second petition was filed more than one year since Broad Ocean had been served with a complaint alleging infringement of the ’349 patent, the second petition was time barred under 35 U.S.C. § 315(b), and the exception to the time bar for requests for joinder (i.e., 35 U.S.C. §§ 315(b), (c)) “did not apply here because … the joinder provision does not permit a party to join issues to a proceeding to which it is already a party.” Id. at 4 (emphasis added).

Broad Ocean subsequently filed a request for rehearing, which was granted by an expanded panel of five APJs formed by the Acting Chief Judge acting on behalf of the PTO Director.  Slip concurring op. at 4.  The expanded panel overturned the previous panel’s decision holding that “§ 315(c) permits the joinder of any person who properly files a petition,” and therefore “encompasses both party joinder and issue joinder, and as such, permits joinder of issues, including new grounds of unpatentability, presented in the petition that accompanies the request for joinder.”  Slip op. 4-5 (emphasis added).  The expanded panel instituted the second petition and granted Broad Ocean’s request to join the second petition with the previously instituted IPR.  The expanded panel eventually issued a final written decision finding the challenged claims unpatentable under 35 U.S.C. § 103 over the combination of Bessler and Kocybik, and also finding the challenged claims unpatentable under 35 U.S.C. § 102 over Hideji.  Id. at 5.

II. Majority Opinion

Nidec appealed the Board’s conclusions regarding the finding of invalidity of the challenged claims of the ’394 patent, as well as the Board’s joinder decision and use of an expanded panel.  The majority opinion, upholding the Board’s decision of invalidity of the challenged claims over the combination of Bessler and Kocybik, declined to rule on whether the Board’s joinder determination was proper, noting that the Federal Circuit’s decision on obviousness, which was raised in the first petition, was not affected by the Board’s joinder determination.  Slip op. at 6.  Furthermore, based on this ruling, the majority opinion did not address (i) the PTO Director’s and Broad Ocean’s arguments that the Board’s joinder decision is non-appealable in view of the bar on judicial review of institution decisions according to 35 U.S.C. § 314(d), or (ii) Nidec’s arguments that the use of expanded panels violates due process.  Id.

III. Concurring Opinion

Judge Dyk and Judge Wallach provided a concurring opinion agreeing with the majority decision to uphold the PTAB’s finding of invalidity.  However, the concurring opinion expressed concern regarding the Board’s joinder determination and the use of expanded panels.

Regarding the Board’s joinder determination, the concurring opinion rejected the notion that the term “any person” in § 315(c) permits issue based joinder allowing a petitioner to join new issues presented in a petition with a previously filed petition.  Instead, the concurring opinion noted that requests for joinder were “plainly designed to apply where time-barred Party A seeks to join an existing IPR timely commenced by Party B when this would not introduce any new patentability issues.”  Slip concurring op. at 3.  Moreover, the concurring opinion noted that it was “unlikely that Congress intended that petitioners could employ the joinder provision to circumvent the time bar by adding time-barred issues to an otherwise timely proceeding, whether the petitioner seeking to add new issues is the same party that brought the timely proceeding …, or the petitioner is a new party.”  Id. (emphasis added).

The concurring opinion further expressed concern regarding the expanded panel in this case, which overturned the Board’s original denial of joinder.  While the concurring opinion acknowledged that expanded panels may be important for achieving uniformity in PTAB decisions, the concurring opinion “question[ed] whether the practice of expanding panels where the PTO is dissatisfied with a panel’s earlier decision is the appropriate mechanism of achieving the desired uniformity.”  Id. at 4.

IV. Future Implications

Notably, the concurring opinion is non-precedential and non-binding on the PTAB.  As such, the PTAB’s current practice of issue based joinder under § 315(c) remains in effect.  However, future petitioners should proceed with caution when relying on the joinder provisions under § 315(c), as the concurring opinion indicates that the PTAB’s practice of issue based joinder may be scrutinized by the Federal Circuit, provided that the Federal Circuit rules that joinder determinations are appealable.  (See Slip. concurring op. at 4)(noting that “as with the joinder issue, we need not resolve this issue here … [, nor] need we address the predicate issue of appealability.”).

At a minimum, the concurring opinion demonstrates the importance for petitioners to present all pertinent issues and evidence in the petition, or at least file petitions early enough to permit the filing of one or more subsequent petitions, in response to an unfavorable institution decision, before the one year time bar lapses.  For example, if a petitioner files an IPR petition within four months of being served a complaint alleging patent infringement, the petitioner will likely receive an institution decision around ten months from being served the complaint, and thus, has approximately two more months to file a subsequent IPR petition, if necessary, before the one year time bar lapses.  Therefore, by filing an IPR petition during the early stages of litigation, petitioners may be able to avoid the need to join a petition filed after the one year bar date with an earlier timely filed petition.

The concurring opinion also indicates that the PTAB practice of expanding panels may come under further scrutiny.  Particularly, the concurring opinion took exception to the PTAB Chief Judge acting on behalf of the PTO Director to expand the panel, thereby leaving open the question regarding whether additional judges were selected to overturn the prior panel’s decision.  (See Slip concurring op. at 4)(questioning whether expanded panels were “the appropriate mechanism of achieving the desired uniformity,” while reiterating Nidec’s argument that the judges for the expanded panel “were chosen with some expectation that they would vote to set aside the earlier panel decision.”).  Accordingly, the concurring opinion may encourage further appeals of decisions by expanded panels that overturn a prior panel’s decision, especially where the PTO Director is involved in forming the expanded panel.

In Homeland Housewares, LLC, v. Whirlpool Corporation, IPR2014-00877 (Fed. Cir. Aug. 4, 2017) (Judges Prost, Newman, and Dyk), the Federal Circuit reversed a Board decision in an inter partes review of claims 1-16 of the U.S. Patent No. 7,581,688 (“’688 patent”), which found the challenged claims to be not invalid as anticipated by U.S. Patent No. 6,609,821 (“Wulf”).  Homeland Housewares, slip op. at 2.

“The ‘688 patent relates to household blenders.”  Slip op. at 2.  Representative claim 1 requires:

automatically controlling a rotational speed of the cutter assembly to effect a pulsing of the speed of the cutter assembly wherein each pulse comprises:
(A) a constant speed phase, where the operating speed of the cutter assembly is maintained at a predetermined operating speed,
(B) a deceleration phase, where the speed of the cutter assembly is reduced from the operating speed to a predetermined settling speed indicative of the items in the container having settled around the cutter assembly, which is less than the operating speed and greater than zero, and
(C) an acceleration phase, where the speed of the cutter assembly is increased from the settling speed to the operating speed.

Slip op. at 3 (quoting ‘688 patent at 7:4-23) (emphases added).

Wulf discloses an automated blender routine, which is illustrated in Fig. 25 (reproduced below).

At issue was whether the “low” speed of Fig. 25 of Wulf corresponds to the claimed “settling speed.”  If so, Wulf discloses the claimed pulse cycle (and anticipates claim 1) because (A) the “forward high speed 15 seconds” of Wulf would correspond to the claimed “constant speed phase, where the operating speed of the cutter assembly is maintained at a predetermined operating speed,” (B) the “ramp down to low, low for 5 seconds” would correspond to the claimed “deceleration phase, where the speed of the cutter assembly is reduced from the operating speed to a predetermined settling speed indicative of the items in the container having settled around the cutter assembly, which is less than the operating speed and greater than zero,” and (C) the “ramp to high, high for 15 seconds” of Wulf would correspond to the claimed “an acceleration phase, where the speed of the cutter assembly is increased from the settling speed to the operating speed.”  See slip op. at 11-12.

“In its Final Written Decision, the Board declined to provide a construction of ‘settling speed’ and concluded that Homeland had ‘not shown, by a preponderance of the evidence, that any claim of the ’688 patent is anticipated by Wulf.’”  Slip op. at 4.  With respect to Fig. 25 of Wulf, the Board relied on unrebutted expert testimony “that ‘Wulf gives no indication of whether any of these speeds [of Fig. 25] . . . would cause items to settle around the cutter,’ and that Wulf ‘only discloses items settling when the motor stops.’”  Dissenting op. at 5.

According to the Federal Circuit, the Board should have construed “settling speed” because the parties raised an actual dispute regarding the proper scope of the claims.  Slip op. at 5.  The Federal Circuit rejected the constructions proposed by the parties and instead found that “[t]he broadest reasonable construction of ‘a predetermined settling speed’ is a speed that is slower than the operating speed and permits settling of the blender contents.”  Id. at 9 (“our claim construction is not new, but simply represents a midpoint between the two opposing constructions now urged by the parties”).  Based on this construction of “settling speed,” the Federal Circuit concluded that the Board erred in finding that Figure 25 of Wulf does not anticipate the ’688 patent.  Id. at 10.

In particular, the Federal Circuit relied on Wulf’s background description of conventional household blenders and that manually “[p]ulsing the motor on/off or at high and then low speeds permits the material being blended to fall back to the region of the cutting knives thereby improving the blending or mixing of the material.”  Slip op. at 10 (quoting Wulf at 1:36-69).  “Because Wulf uses ‘low speeds’ to refer to speeds at which blending ingredients fall back to the cutters, we conclude that Figure 25’s use of that same term should be understood in the same manner.”  Slip op. at 11.

Judge Newman dissented.  According to Judge Newman, “[t]he Board’s findings were supported by substantial evidence, and require affirmance” while the majority’s “de novo findings are contrary to the record, overstep [the Federal Circuit’s] appellate role, and are incorrect in fact and law.”  Dissent op. at 2.  With respect to claim construction, in Judge Newman’s view, “[t]he The Board did not err in holding that [‘settling speed’] did not require ‘construction.’  Such a holding by the expert PTO Board is not grounds for discarding the Board’s findings and ignoring the expert and documentary evidence presented to and discussed by the Board.”  Id.  With respect to Wulf, Judge Newman stated that “[t]he majority does not acknowledge the basis of the Board’s decision, and instead cites Wulf’s discussion of a 1972 Swanke patent as background information to fill any anticipatory gaps in Wulf.”  Id. at 4.  See also id. at 5 (quoting Crown Operations Int’l, Ltd. v. Solutia Inc., 289 F.3d 1367, 1375 (Fed. Cir. 2002)) (“A patent is invalid for anticipation when the same device or method, having all of the elements contained in the claim limitations, is described in a single prior art reference.”).

Although the Federal Circuit is supposed to review the Board’s findings of fact for substantial evidence, this case shows the willingness of the Federal Circuit (or at least some of its judges) to review both the Board’s conclusions of law and the Board’s findings of fact de novo.

The Patent Trial and Appeal Board (“PTAB”) enjoys a wide range of discretion on a number of issues.  For instance, the PTAB has interpreted 35 U.S.C. § 314(a) as providing the Director with the discretion to institute or not, regardless of whether there is a reasonable likelihood that the petitioner will prevail on at least one claim.  E.g., IPR2014-00581, Paper 8; IPR2014-01203, Paper 13.  There is also additional, independent discretionary authority provided by 35 U.S.C. § 325(d), which permits the PTAB to take into account whether the same or substantially the same prior art or argument were previously presented to the Patent and Trademark Office (“the Office”), and to deny institution on that basis.  Id.  And, of course, the PTAB is effectively immune from appellate review on its decisions to institute.  35 U.S.C. § 314(d); Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016).

Within the decision to institute, there are a number of procedural issues outside the patent-law question of whether there is a reasonable likelihood that the petitioner will prevail on at least one claim (on the merits).  For instance, the PTAB may need to determine whether the petition is timely filed, whether the petition has identified all real parties-in-interest, or whether the petition is barred based on patent-office estoppel.

Complete and unfettered discretion would be undesirable for both petitioners and patent owners.  Having some framework for exercising discretion (e.g., for deciding when a petition is timely filed), allows for greater predictability and allows parties to better make business decisions related to bringing petitions in the first instance and then in proceeding with a case whether by continuing with the petition as petitioner or challenging it as patent owner.  In part to address these concerns, the Office has provided four categories of decisions: routine, informative, representative, and precedential.  See PTAB’s “Standard Operating Procedure 2” document.

Precedential decisions are binding on PTAB panels.  All other decisions are not.  To date, the Office has designated less than ten decisions as being precedential—an exceedingly tiny fraction of the total decisions.

In practice, panels have sometimes converged on a stable framework for at least some instances of exercising discretion.  For example, on the question of whether a dismissal without prejudice resets the one-year bar date, panels have generally held the answer to be “yes” (though it is a fact-specific question).  Of the less than ten opinions designated as precedential, the Office has designated two precedential decisions related to this question (Oracle Corp. v. Click-to-Call Techs, LP, IPR2013-00312, Paper 26 (Oct. 30, 2013) (precedential only as to Section III.A) and LG Electronics, Inc. v. Mondis Tech Ltd., IPR2015-00937, Paper 8 (Sept. 17, 2015)).  Even where decisions are not designated precedential, some are cited so frequently to effectively inform stakeholders about the framework in which the PTAB will exercise its discretion.

Even so, the lack of precedential decisions in these areas can lead to uncertainty and the attendant costs associated with uncertainty.  For example, different panels considering the same petition may exercise discretion under 325(d) differently.  While the same is obviously true in a district court setting (e.g., where a judge may be bound by precedent to consider a list of factors in considering whether to stay a case), there is at least some framework that each judge will follow.  In the PTAB, lacking precedential opinions dictating how to exercise discretion, each panel may decide for itself (and may decide differently from one petition to the next).  Some panels will permit a second petition where it explicitly addresses the strengths and weaknesses of the different references.  IPR2017-00221, Paper 9 at 9.  Some panels do not require that.  IPR2014-01203, Paper 13 (noting that case cited by patent owner indicating petition should address strengths and weaknesses of different references was not precedential).  Some panels will find the addition of a secondary reference to an obviousness ground enough to make the petition not constitute “the same or substantially the same” prior art or arguments.  Id.  Other panels disagree.  IPR2014-00581, Paper 8.  As may be expected, such disparity of treatment does not lead to any generalized or unified view of how the PTAB looks at redundancy and discretion under 325(d).  This can lead petitioners astray in deciding what grounds (and how many) to include in a single petition (or multiple petitions), and can also lead patent owners astray in deciding how to challenge such petitions.

The Office has the power to address the problem of uncertainty.  For example, it can designate some opinions as precedential, or parts of decisions as precedential.  It could encourage panels to use rules- or standards-based approaches to exercising discretion, and then after seeing how this played out in practice over a number of decisions, select the most workable solutions.  Alternatively, the Office could promulgate rules through its rule-making authority.  For instance, the Office could identify a multi-factor test of what to consider when exercising its discretionary authority to institute redundant grounds.  Either of these approaches would at least have the benefit of providing more certainty.

In an effort to combat pharmaceutical patent holders, several companies are now filing petitions for post-grant review on the theory that the claims are unpatentable for lacking sufficient written description and enablement. Although the number of post-grant review proceedings remains fairly small in comparison to inter-partes review proceedings, the recent increase in filings by generic drug and biosimilar manufacturers suggests a new trend for challenging pharmaceutical and biological patents.

For example, in Grünenthal GmbH v. Antecip Bioventures II LLC, No. PGR2017-00008, Paper No. 7 (P.T.A.B. July 7, 2017), the PTAB instituted post-grant review of claims 1-17 of U.S. Patent No. 9,283,239 for lack of written description under 35 U.S.C. § 112(a). Specifically, the PTAB concluded that Grünenthal established the reasonable likelihood that the claims are unpatentable because of the lack of sufficient written description of the dosing regimen limitation in claim 1. The PTAB declined to institute review on the grounds of enablement, anticipation, and obviousness.

The ʼ239 patent recites oral dosage forms of bisphosphonate compounds, including zoledronic acid, for use in treating pain or other similar conditions, such as Complex Regional Pain Syndrome. Independent claim 1 recites “a method of treating complex regional pain syndrome comprising orally administering zoledronic acid to a human being in need hereof, wherein the human being receives about 80 to about 500 mg of zoledronic acid within a period of six months.” Id. at 4. The ʼ239 patent issued on March 15, 2016, and claims priority to three AIA non-provisional applications, as well as 11 provisional applications (10 pre-AIA).

Initially in its decision, the PTAB addressed whether the ʼ239 patent was eligible for post-grant review. To be eligible, the challenged patent must have an effective filing date of on or after March 16, 2013. Grünenthal argued that the challenged patent was eligible for review because it was not entitled to the filing date of the earlier pre-AIA provisional applications. For a patent to be entitled to the benefit of an earlier filing date, the claimed invention must be disclosed in the earlier application in compliance with § 112(a) requirements.

Grünenthal argued that certain claim limitations were not disclosed in the pre-AIA provisional applications. The PTAB agreed that the pre-AIA provisional applications failed to disclose the dosing limitation of claim 1 and the percentage limitation of claim 17 in a manner provided by 112(a). With respect to claim 1, the PTAB concluded that the provisional applications failed to describe the particular dosing range claimed. The PTAB noted that some applications only disclosed ranges of “about 0.005mg to about 20 mg” while others disclosed broader ranges of “about 10 mg to 500 mg,” but that none disclosed the claimed range.  Id. at 10-11.

With respect to claim 17, the PTAB similarly concluded the provisional applications failed to disclose the limitation of a “dosage form containing at least 10% zoledronic acid.” Id. at 13. The PTAB rejected Antecip’s argument that the limitation should be inferred from the disclosure of an oral dose of about 100mg, 200mg, or 300 mg of zoledronic acid, noting that “a description of an oral dose of zoledronic acid is neither a description of an oral dosage for nor a description of a concentration of zoledronic acid in an oral dosage form.” Id. at 13.  Ultimately, the PTAB concluded that the ‘239 patent was eligible for post-grant review.

Among its grounds for unpatentability, Grünenthal asserted that the ʼ239 patent claims were unpatentable under § 112(a) for insufficient written description of the dosing limitation, “about 80 to about 500 mg of zoledronic acid within a period of six months.” The dosing limitation was not present in the original application but instead was only first added by amendment during prosecution. The limitation was again later amended by Examiner’s Amendment to avoid prior art.

In reaching its decision, the PTAB followed the same line of reasoning as it did for determining post-grant review eligibility and rejected a number of arguments asserted by Antecip. Antecip argued that although the specification does not explicitly state the claimed dosing regimen as an independent range, § 112(a) does not require explicit disclosure. In support of its argument, Antecip relied on the specification’s general description of several oral dosage ranges for zoledronic acid such as “0.005mg to about 20mg” and “about 100mg to about 2000mg” to provide sufficient written description. Antecip further argued that the upper limit of 500mg of the claimed range was disclosed several times within the specification and that there was overlap with the recited range in independent claim 1.

However, the PTAB was unpersuaded by Antecip’s assertions, noting that the specification contained no mention of the 80 mg lower limit of the claimed range. The PTAB also pointed out that the specification failed to demonstrate any criticality behind the particular range chosen for claim 1. Quoting Purdue Pharma L.P. v. Faulding Inc., 230 F.3d 1320, 1326 (Fed. Cir. 2000), the PTAB stated “neither the text accompanying the examples, nor the data, nor anything else in the specification in any way emphasizes the [recited limitation].” The PTAB concluded that the specification contained no description suggesting the dosing regimen limitation was significant and as such, a person of ordinary skill in the art upon reading the specification would not have been directed to create a dosing range of “about 80mg to about 500 mg.” Therefore, the PTAB agreed with Grünenthal and instituted review of claims 1-17 for lack of written description.

Although the PTAB’s decision appears to be straightforward, this decision demonstrates the importance behind careful construction of a specification. Patent owners need to be sure to draft specifications to disclose a variety of both broad and narrow ranges so as to ensure there is adequate support if amendments are made during prosecution. Additionally, patent owners should take note of the criticality of a recited range, as it will further support the importance of particular claim limitations.

This decision is also the first of several post-grant review decisions the PTAB will issue this year on patents directed towards pharmaceuticals and biologics. We will continue to keep you informed of the PGR proceedings involving pharmaceutical patents as these cases continue to develop.