By Andrew Williams --
More than a year ago, then-Deputy Director Michelle K. Lee posted on the Director's Forum Blog that the USPTO was seeking feedback on PTAB trial proceedings established by the Leahy-Smith America Invents Act ("AIA") (see "Deputy Directory Lee Announces the Request for Written Comments to Help Improve PTAB Proceedings"). The Office outlined 17 issues, or questions, on which it was most interested in receiving public comments. On May 19, 2015, the Office published a first "Final Rules" package of amendments that were described as being more ministerial in nature (see "Final 'Ministerial' Rule Amendments for Practice Before the PTAB"). Today, current Under Secretary of Commerce for Intellectual Property and Director of the USPTO Michelle K. Lee announced on her blog that the second rules package would be introduced in the form of a Notice of Proposed Rulemaking, which will publish in the Federal Register on August 20, 2015. These proposed rules, however, are currently available here. She also asked that comments to these proposed rules be submitted by October 19, 2015.
The one thing that is striking after reviewing the questions and issues for which comments were requested, the actual comments (at least as abstracted by the Office) and the responses from the Office, is how little will actually change. In fact, the most common response to all of the comments was that the Office is satisfied with things as they are, whether through the original promulgated rules or through the evolution of procedures and practice via the issuance of final written decisions or other opinions by the Board. This was certainly not because the large majority of comments were wholly positive -- indeed, the comments suggesting that no change be made were few and far between. Instead, most comments were constructive, providing feedback in the areas in which stakeholders believed change was needed. Nevertheless, almost all of the comments about the Board were positive in the approach that it was taking -- seeking feedback from the community and being as deliberate in developing a framework for these relatively new proceedings. Still, it would have been nice to see a few more suggestions or comments adopted.
Patent Owner Preliminary Response
This is not to say that there are no changes being proposed -- to the contrary, there are some significant changes to which all practitioners will need to pay attention. Probably the biggest shift is the allowance of new testimonial evidence to accompany a Patent Owner Preliminary Response. To prevent the pendulum from swinging too far to the patent owner's advantage (if that is even possible), the Board is also proposing that petitioners may seek leave to file a reply to the preliminary response. This will of course alleviate or lessen the concern of patent owners attempting to avoid institution in the first place. However, it will come at a cost of potentially front-loading the proceedings with preliminary filings. The proposed text for the IPR section of the CFR reads as follows (with roughly equivalent language proposed for the PGR proceedings):
§ 42.107 Preliminary response to petition
(a) The patent owner may file a preliminary response to the petition. The response may set forth the reason why no inter partes review should be instituted under 35 U.S.C. 314 and can include supporting evidence. The preliminary response is subject to the word count under § 42.24.
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§ 42.108 Institution of inter partes review.
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(c) Sufficient grounds. Inter partes review shall not be instituted for a ground of unpatentability unless the Board decides that the petition supporting the ground would demonstrate that there is a reasonable likelihood that at least one of the claims challenged in the petition is unpatentable. The Board's decision will take into account a patent owner preliminary response where such a response is filed, but supporting evidence concerning disputed material will be viewed in the light most favorable to the petitioner for purposes of deciding whether to institute an inter partes review. If the patent owner submits supporting evidence with its preliminary response, the petitioner may seek leave to file a reply to the preliminary response in accordance with § 42.24(c).
Another proposal that has the potential to cause a significant change is the switch from page limits for certain papers to limitations on word count (as can be observed in the above-proposed language). Specifically, the Board is proposing to implement a word count limitation for petitions, patent owner preliminary responses, patent owner responses, and petitioner's replies. The rationale provided is to cut down or avoid abuses of page count limits by manipulating claim charts. In fact, the Office suggested that this change will streamline administrative review and reduce the number of non-compliant petitions requiring correction. In other words, petitioners will now be able to include arguments in claim charts, as it will still count in word count limitations. The specific amendments to 37 C.F.R. § 42.24 are:
• Petition requesting inter partes review: 14,000 words.
• Petition requesting post-grant review: 18,700 words.
• Petition requesting covered business method patent review: 18,700 words.
• Petition requesting derivation proceedings: 14,000 words.
• The word counts for a patent owner preliminary response to a petition are the same as the word count for the petition.
• The word counts for a patent owner response to petition are the same as the word counts for the petition.
• Replies to patent owner responses to petitions: 5,600 words.
The Office is proposing to require at least seven days before oral argument for exchange of exhibits, as opposed to five, to provide additional time for the parties to resolve disputes.
Rule 11-Type Certification
The Office is proposing the addition of a certification requirement that would mirror that of Rule 11 for Federal district court litigation. This would revise Section 42.11 to include a requirement for representations to the Board, and would provide for sanctions for violating this requirement. In some ways, such a requirement has always existed for attorneys because they are beholden to the Office of Enrollment and Discipline. But this proposed rule, and proposed penalty, would go above and beyond the ethical requirements. Specifically, the new section will read:
§ 42.11 Duty of candor; signing papers; representations to the Board; sanctions.
(a) Duty of candor. Parties and individuals involved in the proceeding have a duty of candor and good faith to the Office during the course of a proceeding.
(b) Signature. Every petition, response, written motion, and other paper filed in a proceeding must be signed by at least lead counsel or designated backup counsel under § 42.10 in the attorney's or registered practitioner's name–or by a party personally if the party is unrepresented. The Board may expunge any unsigned submission unless the omission is promptly corrected after being called to the counsel's or party's attention.
(c) Representations to the Board. By presenting to the Board a petition, response, written motion, or other paper–whether by signing, filing submitting, or later advocating it–an attorney, registered practitioner, or unrepresented party certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:
(1) It is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of the proceeding;
(2) The claims, defenses, and other legal contentions are warranted by existing law or be a non-frivolous argument for extending, modifying, or reversing existing law or for establishing new law;
(3) The factual contentions have evidentiary support; and
(4) The denials of factual contentions are warranted on the evidence.
(d) Sanctions - - (1) In general. If, after notice and a reasonable opportunity to respond, the Board determines that paragraph (c) of this section has been violated, the Board may impose an appropriate sanction on any attorney, registered practitioner, law firm, patent agent, or party that violated the rule or is responsible for the violation. Absent exceptional circumstances, a law firm must be held jointly responsible for a violation committed by its partner, associate, or employee.
(2) Motion for sanctions. A motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates paragraph (c) of this section. The motion must be authorized by the Board under § 42.20. Prior to seeking authorization to file a motion for sanctions, the moving party must provide written notice to the other party of the basis for the proposed motion. A motion for sanctions must not be filed or be presented to the Board if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service of such notice or within another time the Board sets. If warranted, the Board may award to the prevailing party the reasonable expenses, including attorney's fees, incurred for the motion.
(3) On the Board's initiative. On its own, the Board may order an attorney, registered practitioner, law firm, or party to show cause why conduct specifically described in the order has not violated paragraph (c) of this section.
(4) Nature of a sanction. A sanction imposed under this rule must be limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated and should be consistent with § 42.12.
(5) Requirement for an order. An order imposing a sanction must describe the sanctioned conduct and explain the basis for the sanction.
(e) Inapplicability to discovery. This rule does not apply to disclosures and discovery requests, responses, and objections.
Claim Construction Standard
Finally, the Board is proposing a change to the Broadest Reasonable Interpretation standard for construing claims, but it is not the change that most of us were hoping for. In fact, the Board affirmed the use of the BRI standard in all but the most limited circumstances. Curiously, instead of responding to the comments that pointed out the BRI was contrary to the intent of Congress, the Board relied heavily on the In re Cuozzo case. In that case, the Federal Circuit found that Congress "implicitly approved" of the BRI standard in enacting the AIA. However, the Court went on to conclude that Congress authorized the Patent Office to prescribe its own regulations, including the claim construction standard. Therefore, reliance on Cuozzo is curious, because that case could easily be read as permitting the Patent Office to adopt a different standard at this time.
Nevertheless, no sweeping changes were proposed. Instead, the Board responded to a comment that the rules should be changed such that the BRI standard would not apply to claims that will expire before a final written decision is issued. Now, the various rules will read: "A claim in an unexpired patent that will not expire before a final written decision is issued shall be given its broadest reasonable construction in light of the specification of the patent in which it appears."
We will provide additional commentary on the proposed rules and the Director's blog post in the upcoming days, and we will of course monitor any developments and report on them as warranted.