2015 PTAB petitioner trends and 2016 predictions

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In 2015 the Patent Trial and Appeal Board began to see an increasing influx of follow-on petitions from failed patent challengers. That is, whether the result of a first petition denial or an adverse final written decision, the Board dealt with an increasing number of “second bites at the apple”. As a result, noteworthy practice trends were revealed, particularly with respect to understanding and applying different estoppel provisions. Looking forward into 2016, a greater number of PTAB appeals will begin reaching the Federal Circuit. This growing workflow is expected to drive more remands and reversals as the Federal Circuit adjusts to steady-state operation of PTAB appeals for the first time. Further, the Supreme Court could open the door for even more appeals depending on the outcome of the Cuozzo Speed Technologies v Lee case.

With almost 4,500 inter partes review (IPR), covered business method (CBM), and post grant review (PGR) petitions filed as of December 31 2015, the Patent Trial and Appeal Board (PTAB or Board) has proven to be a cost-effective and speedy alternative for challenging patent validity.

As the PTAB now has moved through its relatively modest 2012-13 trial inventory, it has reached steady-state workload levels of 100+ new petitions per month, and almost as many final written decisions.

Noteworthy trends were revealed in 2015 through the constantly growing body of PTAB case law; especially as they relate to "re-work." Although there were numerous interesting cases in an academic sense, and important issue-specific decisions, discussed below are three cases that first addressed important issues of petitioner estoppel. These cases illustrate common struggles of follow-on petitioners. Looking forward into 2016, as PTAB appeals to the Federal Circuit reach a steady-state, the Board's impressive record of Rule 36 affirmances is likely to falter.

The PTAB expounded on different AIA estoppel provisions in 2015, and three cases in particular provide important insight for follow-on petitioners.

In Conopco dba Unilever v The Procter & Gamble Co the PTAB denied Unilever's request for a rehearing and panel expansion of a decision declining to institute IPR for a second petition filing in accordance with 35 USC § 325(d). (IPR2014-00628, Paper No. 23 March 20 2015).

Unilever filed its second IPR petition of a subject patent after its first petition was denied on the merits. The PTAB denied the second petition as a matter of discretion under 35 USC § 314, explaining that "the Board may, but not must" initiate an IPR when a petitioner demonstrates a reasonable likelihood of prevailing at trial with respect to at least one claim. In the rehearing decision, the Board noted that the second petition raises substantially the same prior art or argument that Unilever presented in the first petition, and that this "was just one of several circumstances that persuaded us to deny review" based on 35 USC § 325(d). In pertinent part, 35 USC § 325(d) states that "[i]n determining whether to institute …the Director may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office."

The Board explained that it did not abuse its discretion under 314(a) and 325(d) by considering the fact that the new prior art references were known to Unilever when it filed the first petition, because granting review with the knowledge that Unilever knew of these references "would incentivize petitioners to hold back prior art for successive attacks, should a first petition be denied." According to the PTAB, Unilever's approach would allow petitioners to file follow-on petitions attempting to correct deficiencies noted by the Board in denying petitions, and would "allow petitioners to unveil strategically their best prior art and arguments in serial petitions, using our decisions on institution as a road map, until a ground is advanced in review – a practice that would tax Board resources, and force patent owners to defend multiple attacks." The Board also emphasized that 325(d) should be read broadly, and although there were differences between the art and arguments raised in the two petitions, the Board has discretion to consider them substantially the same and reject a second petition on that basis.

While each trial petition is analysed as to its particular facts, Conopco was cited quite frequently in 2015 and will likely continue to be important in 2016 as estoppel provisions provide a mechanism for the PTAB to reduce "do-over" workload by limiting the numbers of petitions filed as well as trials instituted.

In Apotex v Wyeth the PTAB declined to institute IPR based on estoppel set forth in 35 USC § 315(e)(1). (IPR2015-00873, Paper No. 8, September 16 2015).

The patent at issue was the subject of an earlier IPR that resulted in a final written decision (a pre-requisite of 315(e)(1)), and the patent owner argued that the petitioner was estopped by 315(e)(1) from requesting IPR because the prior art in the second IPR could have been raised in the first IPR. 35 USC § 315(e)(1) states:

The first IPR included a ground based on four references, and the second IPR included a ground based on the same four references plus a fifth. The PTAB agreed with the patent owner and denied institution, noting that record demonstrated that the petitioner was aware of all five references in the first IPR, as the petition cited to all five (although the fifth was not included specifically in any of the asserted grounds). Because these references were cited for the same teachings in the second petition, the PTAB determined that this ground could reasonably have been raised during the first IPR, and the petitioner was estopped from asserting it now under 315(e)(1).

"Conopco was cited quite frequently in 2015 and will likely continue to be important in 2016 as estoppel provisions provide a mechanism for the PTAB to reduce “do-over” workload"

Notably, the first IPR included a different ground that was not instituted, but found redundant, and the second IPR included that same ground. Here, the PTAB stated that estoppel did not apply because 315(e)(1) only applies to grounds that the petitioner "raised or reasonably could have raised during" the IPR, and because IPR does not begin until the Office decides to institute trial, grounds "raised during the preliminary proceeding, but not made part of the instituted trial, are not raised 'during' an inter partes review and cannot be the basis for estoppel under 35 USC § 315(e)(1)." Regardless, this ground was denied on the merits.

The PTAB considered, but did not rely on, 325(d) to deny institution, presumably in the interests of fairness given the redundancy determination in the first IPR. The topic of redundancy is an issue to watch in 2016 as some Federal Circuit panels have recently voiced significant concern with its due process implications. This issue may be ripe for mandamus in 2016 given the indirect encouragement of the Court.

In Square v Unwired Planet the PTAB declined to institute IPR on estoppel grounds based on 35 U.S.C. § 325(e). (CBM2015-00148, Paper No. 14, December 28 2015).

The petitioner previously filed a CBM against the same patent where the claims were determined to be unpatentable under 35 USC § 101. Six months before that decision issued, the petitioner filed a second petition attacking the same claims on various obviousness grounds.

The PTAB denied the second petition based on 35 USC § 325(e)(1), which states:

Here, the PTAB determined that the petitioner's grounds could have been raised in the earlier petition, despite the fact that "none of the multiple prior art searches, including searches done by three separate search firms…turned up the Orlen reference before filing." The Board stated "[w]e are not persuaded by Petitioner's contentions that it could not have previously raised the grounds based on Orlen. At most Petitioner shows that Orlen was not discovered prior to the fling of the Petition…not that Orlen reasonably could not have been discovered earlier and raised." In other words, the PTAB considered that the petitioner "reasonably could have discovered Orlen and raised the newly asserted grounds at the time of the earlier petition." Furthermore, the PTAB noted with criticism that the petitioner waited almost eight months after the Orlen reference was discovered and six months after obtaining a declaration related to another reference to file the second CBM, "which prevented any practical possibility of consolidating the reviews."

The Square case is one of the first decisions to explore what "reasonably could have raised" might mean in the context of newly discovered art. In this decision, the Board held it was not enough to simply be unaware of prior art at the time of the first filing. Rather, the Board required an explanation as to why the discovered art could not have been raised earlier. In this case the Board seemed particularly focused on the timing of the second filing (i.e., after the first failed)–an indication that petitioners should recognize that delay in filing a second petition may be viewed as gamesmanship. This issue will remain a hot topic for 2016 as both the PTAB and the district court consider fact-intensive, estoppel scenarios.

As a greater number of appeals begin reaching the CAFC, significantly more remands and reversals are likely. Specifically, in its 2012-13 cases, the PTAB had the luxury of time given the modest workload as compared to later years. Not surprisingly, these appeals had fully developed records. However, as the number of petitions and trials has continued to skyrocket, the PTAB's roughly 100 trial section judges may experience some growing pains.

The Federal Circuit has begun to flag records it finds to be conclusory and lacking fully developed reasoning. In Cutsforth v MotivePower, it vacated and remanded the case "because the Board did not adequately describe its reasoning for finding the claims obvious." Appeal No. 2015-1316 (Federal Circuit, January 22 2016). The Federal Circuit reminded the PTAB that "the Board must articulate its reasoning for making its decision. The Board must develop and explain the basis for its findings. This enables the reviewing court to conduct meaningful review of the proceedings. Broad, conclusory statements are not enough ...."

Similarly, in Ariosa Diagnostics v Verinata Health the Federal Circuit remanded the case to address a perceived ambiguity in the final written decision. (Appeal Nos. 2015-1215, 1226, Federal Circuit, November 16 2015). In the opinion, the CAFC stated "the Board's language leaves open the distinct possibility that the Board incorrectly limited its consideration of Exhibit 1010…," "[w]e may affirm an agency ruling if we may reasonably discern that it followed a proper path, even if that path is less than perfectly clear," "[g]iving the inadequate-explanation reading to the Board's statement about Exhibit 1010, though straining the words somewhat, would fit two related aspects of the Board's decisions," and finally "…the Board did not sufficiently articulate the foregoing grounds for its rejection of Ariosa's reliance on Exhibit 1010 or other grounds independent of the incorrect ground suggested by the Board's language. Perhaps the Board could have done so. But it did not, and we cannot do so for the Board …"

These cases may be harbingers of decisions to come as the CAFC reaches a steady-state of PTAB appeals from 100+ PTAB judges, some of which are relatively new to the job.

Further, it is also possible that the appeal workload will increase based on the Supreme Court's grant of certiorari in Cuozzo Speed Technologies v Lee. The specific questions presented in the Cuozzo Speed Technologies certiorari petition were as follows:

1. Whether the court of appeals erred in holding that, in IPR proceedings, the Board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning.

2. Whether the court of appeals erred in holding that, even if the Board exceeds its statutory authority in instituting an IPR proceeding, the Board's decision whether to institute an IPR proceeding is judicially unreviewable.

The second question could create numerous additional appeal opportunities that – until now – have been foreclosed by the CAFC's position that the PTAB's decision to institute trials is unreviewable. Battles based on such issues as real party in interest and redundancy would take on renewed importance at the PTAB if the potential for appeal is opened by the Supreme Court.

Scott A McKeown

© Scott A McKeown. McKeown is a partner at Oblon McClelland Maier & Neustadt and chair of its post-grant patent group