On December 9, 2020, the US Patent and Trademark Office (USPTO) published some final rules in the Federal Register, relating to proceedings under the America Invents Act (AIA). For the most part, these rules codified existing Patent Trial and Appeal Board (PTAB) practice relating to whether and how the PTAB institutes an inter partes review (IPR) or a post-grant review (PGR) proceeding, and to the ability of a petitioner and a patent owner to address a PTAB decision on institution.
In one area, the USPTO amended the rules of practice to change PTAB treatment of testimonial evidence that a patent owner might present in a preliminary response prior to a decision on institution. Now, there will be no presumption in favour of the petitioner if the patent owner’s pre-institution testimonial evidence presents an issue of fact. Instead, the PTAB will consider the totality of the evidence in deciding whether to institute a proceeding.
The amended rules provide consistency of treatment of contrary evidence that a patent owner might present prior to institution of an IPR or PGR proceeding. In addition, the amended rules may make patent owners more willing to present testimonial evidence to oppose institution of an IPR or a PGR.
Background
When IPR and PGR proceedings began under the AIA in September 2012, patent owners were not allowed to present evidence in a preliminary response opposing a petition to institute an IPR or a PGR. Early on, patent owners perceived IPR and PGR proceedings as being tilted heavily in favour of petitioners, placing an undue burden on patent owners.
In April 2016, the USPTO published rules allowing patent owners to present testimonial evidence with their preliminary response. As part of these rules, there was a presumption in favour of the petitioner if the patent owner’s testimonial evidence created a genuine issue of material fact. That presumption only existed for purposes of deciding whether to institute an IPR or PGR. After institution, the presumption would disappear.
The applicable rules, 37 CFR §§42.108(c) and 42.208(c) read, in pertinent part (emphasis added): “The Board’s decision will take into account a patent owner preliminary response where such a response is filed, including any testimonial evidence, but a genuine issue of material fact created by such testimonial evidence will be viewed in the light most favourable to the petitioner solely for purposes of deciding whether to institute a review.”
While the 2016 rules made it possible for patent owners to present testimonial evidence as part of their efforts to prevent institution of an IPR or PGR, the presumption in favour of the petitioner made several patent owners less willing to present such evidence. Without the evidence being given the consideration it would get in an IPR or PGR proceeding, patent owners were concerned about the potential futility of showing their hand too early. Patent owners’ perception of undue burden on them remained.
”The PTAB will consider the totality of the evidence to determine whether a petitioner has met the standard for institution of an IPR or a PGR.”
Frank Bernstein, Squire Patton Boggs
In addition, the presumption in favour of the petitioner on testimonial evidence was inconsistent with the burden that a petitioner faced when relying on a reference as invalidating prior art. In Hulu v Sound View Innovations, the patent owner challenged the prior art status of a document on which the petitioner relied in the petition.
The issue came to a Precedential Opinion Panel (POP), comprising the USPTO director, the Commissioner for Patents, and the chief judge of the PTAB. The POP ordered the parties to brief the issue of what is required for a petitioner to establish that an asserted reference qualifies as a “printed publication” at the institution stage. The POP also invited briefing from amicus curiae, or “friends of the court”. The POP received several amicus curiae briefs.
The PTAB held that there is no presumption in favour of finding a reference to be a printed publication. Rather, the petitioner has the burden to identify evidence sufficient to establish a reasonable likelihood that a reference was publicly accessible before the critical date of the patent being challenged.
So, on one hand, a petitioner enjoyed a presumption as to some evidence, but not as to other evidence. The new amended rules address this inconsistency. In addition, the USPTO expressed concern that patent owners might be discouraged from filing testimonial evidence, out of a concern that such evidence will not be given any weight at the time of institution.
Removing the presumption against a patent owner
With the new amendments, deleting the italicised language, 37 CFR §§42.108(c) and 42.208(c) read: “The Board’s decision will take into account a patent owner preliminary response where such a response is filed, including any testimonial evidence.” With the elimination of the presumption against the patent owner, the PTAB will consider the totality of the evidence to determine whether a petitioner has met the standard for institution of an IPR or a PGR.
In commenting on the amended rules, the USPTO acknowledged that a petitioner carries the burden to meet the standard for institution of an IPR or a PGR, per 35 USC §§314(a) and 324(a). The USPTO also noted that the deleted words, giving a presumption in favour of a petitioner at the institution stage for this class of evidence, may lead to results that are inconsistent with this burden.
For example, as noted earlier, in Hulu the PTAB held that a petitioner has the burden to show that any documents being relied on in an IPR or PGR to show invalidity actually are prior art. Patents and patent publications are treated as prior art because they are publications of government agencies. Other documents, however, do not enjoy such a presumption. If a patent owner challenges a document’s prior art status, that raises a question of fact, but the PTAB does not presume the document is prior art.
”When patent owners do put in testimonial evidence, it will remain to be seen whether the PTAB will grant fewer petitions and institute fewer proceedings as a result.”
In contrast, prior to the new amendment, if a patent owner provided testimonial evidence that created a question of fact regarding the proper interpretation, for purposes of institution the PTAB would find a presumption in favour of the petitioner.
Thus, there was a presumption in favour of the petitioner on one kind of factual issue before institution, but no such presumption in favour of the petitioner on prior art status before institution.
The USPTO said that the change in the rules will enable any testimonial evidence that is part of a patent owner’s preliminary response to be considered as part of the totality of the evidence. This testimonial evidence will be treated similarly to other evidence for purposes of deciding whether to grant an IPR or PGR petition and institute a proceeding.
Takeaways
On their face, the new amended rules appear to level the playing field a little more for patent owners’ pre-institution. The extent to which patent owners will take advantage of the new rules remains to be seen. When patent owners do put in testimonial evidence, it will remain to be seen whether the PTAB will grant fewer petitions and institute fewer proceedings as a result.
It will be interesting to see how patent owners react to the amended rules. Will they submit more testimonial evidence to try to avoid institution in the first instance?
The new rule may make it worth reconsidering how much of its hand a patent owner wants to show at first. After all, IPRs and PGRs are expensive for patent owners. If submitting testimonial evidence can provide a better chance to avoid institution, patent owners may decide to oppose institution more broadly than before.
On the other hand, pre-institution, petitioners face a lower burden than they do post-institution. For an IPR, a petitioner needs to show only that it has a reasonable likelihood of prevailing with respect to at least one of the challenged claims. For a PGR, a petitioner needs to show only that it is more likely than not that it will prevail with respect to one of the challenged claims.
Post-institution, the petitioner has to show invalidity of all of the challenged claims. Unless a patent owner is confident that a petition is weak, it may not make sense to go all out to defend against institution.
Frank L Bernstein is a partner at Squire Patton Boggs. He can be contacted at: frank.bernstein@squirepb.com
Video: Shutterstock / Pasuwan
