What's a Patent Owner To
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Winter 2018 Vol. 16, Issue 1 A review of developments in Intellectual Property Law Motions to Amend at the PTAB after Aqua Products, Inc. v. Matal – What’s a Patent Owner to Do? By Andrew W. Williams, Ph.D. conducted by the Patent Trial and Appeal Board shifting to the patent owner, however, was In 2011, Congress enacted (“PTAB” or “Board”) that analyzed statistics in not found in either the statute or the rules the America Invents Act and all IPRs, CBMs, and PGRs. The third and most promulgated by the Patent Office. Instead, the created new mechanisms recent iteration included data through the Fiscal PTAB interpreted its regulations in an early to challenge issued claims Year 2017 (which ended on September 30, decision, Idle Free Sys., Inc. v. Bergstrom, Inc.1 at the Patent Office. The 2017). The first thing this study revealed is that In Idle Free, the PTAB indicated that the burden goal was to expeditiously motions to amend were filed in only 275 out is on the patent owner to show “a patentable resolve issues of patent of 2,766 completed trials, or 10%. The Board distinction over the prior art of record and also validity in response to the counted a trial as “completed” when it was prior art known to the patent owner.”2 The public outcry that validity terminated due to settlement, when there was Board subsequently relaxed the patent owner’s challenges in the federal courts were too a request for adverse judgement, when it was burden in MasterImage 3D, Inc. v. RealD Inc., difficult, costly, and time-consuming. In these dismissed, or when there was a final written by only requiring the patent owner to identify new proceedings, petitioners were provided decision. Moreover, joined or consolidated trials how its claim amendments were patentable many advantages over similar actions in district were only counted once in the statistics. Then, over the “prior art of record,” which could courts, such as a lower evidentiary standard. out of those 275 trials, a decision on the merits include “any material art in the prosecution In what appeared to be an attempt to even the was only reached for 170 motions to amend history of the patent.”3 Two three-judge panels playing field, Congress provided patent owners with substitute claims. Strikingly, the motions of the Federal Circuit approved of the PTAB’s with the statutory authority to amend claims in were only granted in four cases, with a grant- interpretations of its own regulations, Microsoft these proceedings – a benefit not available in in-part in an additional 10 cases. Corporation v. Proxyconn, Inc. for the Idle Free Federal court. These low numbers have been thought interpretation and Nike v. Adidas (Fed. Cir. However, in practice, this ability to be due, at least in part, to the fact that the 2016) for the MasterImage clarification. As has proven all but illusory. This is plainly Patent Office put the burden on the patent (continued on page 2) demonstrated by the Motion to Amend Studies owner to prove patentability. This burden Page 4 Page 6 Page 10 The Patent Landscape Fair Use and Social Media Patent Infringement Analysis of Cryptocurrency and Sites like BuzzFeed Varies Based on Statutory Blockchain Claim Type (continued from page 1) engages in notice and comment rule-making.”9 will survive such proceedings, and it is likely The only opinion (or part thereof) that that more motions to amend will be filed. But a result, an en banc decision was required at garnered a majority of the Judges was any amended claim will still be susceptible the Federal Circuit to allow them to correct this authored by Judge Reyna. His opinion was to intervening rights. Considering that the practice via appellate review. And this is exactly joined in whole by Judge Dyk, but included majority of patents involved in IPRs are also what the Federal Circuit did last year. a “Part III” that was joined by Chief Judge being asserted in concurrent district court Prost and Judges Taranto, Chen, and Hughes. litigation, claim amendments might not always Aqua Products, Inc. v. Matal Interestingly, these four all dissented from be feasible. the ultimate judgment. This Part III was In Aqua Products, Inc. v. Matal, a highly directed to the burden of production, and fractured en banc Federal Circuit determined The Chief Judge Responds specifically whether the patent owner as the that the PTAB can no longer place the burden On November 21, 2017, PTAB Chief Judge moving party has the burden of production for of establishing the patentability of amended Ruschke issued a memorandum entitled motions to amend. Judge O’Malley belittled claims on the patent owner in IPR proceedings.4 “Guidance on Motions to Amend in view of Part III because it allegedly had no proposed The decision itself contained multiple opinions Aqua Products.”13 The Chief Judge based his judgement attached to it. Therefore, according (five to be exact) and, not surprisingly, figuring guidance on one aspect of the Aqua Products out the actual outcome is anything but trivial. case, specifically that “the Board will not place Even identifying which judge agreed with the burden of persuasion on a patent owner which opinion is fairly convoluted. The “main” Moreover, the Aqua with respect to the patentability of substitute opinion was authored by Judge O’Malley, claims presented in a motion to amend.”14 In and was joined by Judges Newman, Lourie, Products decision left fact, the guidance suggested that “practice and Moore, and Wallach. It expressed the judgment open the possibility that procedure before the Board will not change,” of the court because Judges Dyk and Reyna other than that motions to amend will be concurred in the result. However, despite 148 the burden of persuasion granted in cases in which the “entirety of pages of opinions, there were only two legal for claim amendments the evidence of record before the Board is conclusions (according to Judge O’Malley) that in equipoise as to the unpatentability of can be gleaned as supporting the judgment of could be placed back one or more substitute claims . .”15 the court. The rest, as Judge O’Malley put it, on the patent owner, As a result, patent owners must still meet were cogitations. the requirements for amending the claims The first legal conclusion stemmed from the provided the Office first as found in 37 C.F.R. § 42.121 (or § 42.211 belief of the majority that 35 U.S.C. § 316(e), goes through proper for PGR proceedings), including only proposing the statute that establishes the evidentiary a reasonable number of substitute claims, not standard for IPRs, was ambiguous with notice and comment enlarging the claim scope or introducing new regard to whether the burden of persuasion rule-making. matter, and making the claim amendments of establishing the unpatentability of responsive to a ground of unpatentability substitute claims should be on the petitioner. involved in the trial. Moreover, the Chief Judge Correspondingly, because it was necessary reminded patent owners (as well as petitioners) to reach “Chevron Step Two,” the court found to her, it amounted to nothing more than dicta. that they have a duty of candor and good faith that “the PTO has not adopted a rule placing Judge Reyna disagreed, arguing that Part III to the Office during the proceedings, pursuant the burden of persuasion with respect to of his opinion did set forth a judgement of to 37 C.F.R. § 42.11. Correspondingly, patent the patentability of amended claims on the the court “on what the Board may and may not owners still have a duty to disclose information patent owner that is entitled to deference.”5 do with respect [to] the burden of production of which they are aware that would be material The second legal conclusion flowed from this, on remand in this case.”10 He concluded that to the patentability of any substitute claims. specifically “in the absence of anything that “the Patent Office must by default abide With regard to how motions to amend will might be entitled to deference, the PTO may by the existing language of inter partes be handled procedurally, Chief Judge Ruschke not place that burden on the patentee.”6 As review statute and regulations, § 316(d) and also indicated that nothing will change. a result, the court vacated the original PTAB 37 C.F.R. § 42.121, which only allocate a Therefore, the rules regarding types, timing, final written decision “insofar as it denied burden of production to the patent owner.”11 and page limits for briefs will not change. In the patent owner’s motion to amend.”7 The In subsequent decisions, the Patent Office addition, the standard scheduling order will case was “remanded for the Board to issue appears to disagree with Judge O’Malley that continue to provide that patent owners may a final decision under § 318(a) assessing the Judge Reyna’s pronouncement was mere dicta file motions to amend on “Due Date 1.” And not patentability of the proposed substitute claims because it has cited to Part III of his opinion surprisingly, patent owners are still required to without placing the burden of persuasion on as authoritative.12 confer with the Board before filing a motion the patent owner.”8 Moreover, the Board was The Aqua Products case, however, might to amend as provided by 37 C.F.R. §§ 42.121(a) instructed to follow the same practice “in all not be the panacea hoped for by patent owners. and 42.221(a). With regard to trials that have pending IPRs unless and until the Director It is possible that more claim amendments already been instituted, the Chief Judge 2 implied that the Board would be open to and comment rule-making.