On April 1, 2016, the United States Patent and Trademark Office published final rules in the Federal Register that relate to post grant proceedings. These new final rules went into effect on May 2, 2016, and amend the existing PTAB trial practice rules pertaining to inter partes review (IPR), post grant review (PGR), covered business method (CBM) review, and derivation proceedings brought into being by provisions of the America Invents Act (AIA).
In a nutshell, these new rules change existing practice by allowing new testimonial evidence to be submitted with a patent owner’s preliminary response, adding a Rule 11-type certification for papers filed in a proceeding, allowing a claim construction approach that emulates the approach used by a district court following Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2005) for claims of patents that will expire before entry of a final written decision, and replacing the current page limit with a word count limit for major briefing. These final rules are the culmination of a process started two years ago. For more information on the changes taking effect, please see Patent Office amends PTAB Trial Practice Rules.
Many had hoped that the Office would make it easier for patent owners to successfully amend patent claims in post grant proceedings, but the Office stood firm.
The Coalition for Affordable Drugs, the entity backed by patent renegades Kyle Bass and Erich Spangenberg, recently won two more victories at the Patent Trial and Appeal Board (PTAB). This time Bass and Spangenberg obtained favorable inter partes review (IPR) institution decisions on two petitions filed against the University of Pennsylvania, which challenged patents covering Juxtapid. Juxtapid is a drug that slows cholesterol production thereby making it easier for the body to remove remaining cholesterol from the bloodstream. To read these institution decisions see IPR2015-01835 and IPR2015-01836. Because the Board did not find it necessary to construe claim terms at the institution stage, both decisions are mirror images of one another.
The patents in question, U.S. Patent No. 7,932,268 and U.S. Patent No. 8,618,135, relate to “the surprising discovery that one may treat an individual who has hyperlipidemia and/or hypercholesterolemia with an MTP inhibitor in a manner that results in the individual not experiencing side-effects normally associated with the inhibitor, or experiencing side-effects to a lesser degree.”
Ultimately, the Board determined that the petitioner demonstrated that the claims challenged were likely invalid because they were obvious. The case will now proceed through the administrative trial. There were, however, several issues that came up in the institution decision that warrant consideration.
Finjan Holdings, Inc. (NASDAQ: FNJN), the parent of wholly owned subsidiary Finjan, Inc., recently announced that the Patent Trial and Appeal Board (PTAB) for the United States Patent & Trademark Office (USPTO) denied six of Symantec Corporation’s petitions for inter partes review (IPR) of Finjan patents.
“This is an unprecedented response by the US Patent Office,” stated Phil Hartstein (left), President and CEO of Finjan, upon learning of the decision of the PTAB.
The word “unprecedented” gets thrown around all too frequently, but the use of the word here does seem entirely appropriate. That Finjan would prevail in six separate IPR institution decisions relating to the same patent litigation seems nothing short of extraordinary given that the PTAB is instituting 80% of IPR petitions, and given how slanted IPR rules are against the patent owner, particularly at the institution stage.
On Wednesday, January 20, 2016, I had the opportunity to go on the record with Michelle Lee, who is Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office (USPTO).
During our 30-minute conversation, we discussed a wide range of topics, including the release of the Commerce Department’s Copyright White Paper, which among other things recommends expanding eligibility for statutory damages in certain copyright infringement actions. We also discussed Lee’s recent visit to the Consumer Electronics Show (CES), the power outage that brought down USPTO electronic filing systems, the Office’s patent quality initiative, the new patent classification system, the Patent Trial and Appeal Board (PTAB), and more. For the full transcript of our interview, please see An Exclusive Interview with Michelle Lee.
What follows are the highlights of our interview.
Right before the holidays, on December 22, 2015, the USPTO suffered a major power failure. Everything is back to normal now, but I wanted to ask Director Lee about where we stand and if she could confirm no data had been lost. Director Lee explained things are indeed back to normal and no data was compromised.
LEE: Yes. So we are fully up and running as before, and we have been for a while now. No data was lost, and it was really an unprecedented outage of our online systems caused by an electrical failure to the data center that was owned and operated by contractors. It was not a failure of our IT systems or the result of foul play. And I have to say, Gene, the dedicated team of USPTO employees mobilized and immediately stabilized and restored the systems. They worked around the clock when the outage occurred, during the holidays, to restore customer service and we were, again, fully operational within a matter of days. That’s a real testament to the incredible hard work, the incredible dedication of so many employees here at the PTO working very hard and really wanting to do what’s in the best interest of the stakeholders to get those services up and running. So everything is up and running as normal. We did not lose data. And we’re conducting careful forensics and we’re looking to incorporate what we learn into further improvements to our system. Actually, not our systems, but the third-party systems that feed our systems. So it’s not a lost opportunity, but we’re glad to have it up and running, and I give all the kudos to the team.
On Friday, January 15, 2016, the United States Supreme Court accepted the petitioner’s request to hear Cuozzo Speed Technologies v. Lee, a case that will now require the Court to address two questions about inter partes review (IPR) proceedings.
IPR proceedings were created by the America Invents Act (AIA), which was signed into law by President Barack Obama on September 16, 2011. IPR and the other two forms of post-grant challenge to issued patents — Post Grant Review (PGR) and Covered Business Method (CBM) Review — did not become available as a procedure to challenge patents until September 16, 2012. Thus, these proceedings are quite new and Cuozzo will be the first opportunity for the Supreme Court to weigh in on these controversial administrative proceedings.
According to the statute, “[a] person who is not the owner of a patent may file a petition to institute an inter partes review of the patent.” 35 U.S.C. 311(a). Significantly for this appeal, the statute also says: “The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” 35 U.S.C.314(d). Additionally, although the statute is silent as to the proper claim construction standard to use in post grant proceedings, the United States Patent and Trademark Office (USPTO) has decided to apply the familiar standard used elsewhere throughout the Office, which is the broadest reasonable interpretation (BRI) rather than the so-called “Phillips standard” that is used in district court litigation and narrowly construes claims in an already issued patent. (more…)