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MIP PTAB Forum 2016 - Overview

May 12, Times Square Convene, New York






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Managing IP launched the inaugural MIP PTAB Forum in New York City on May
. Following the success of the MIP US Patent Forum in Washington DC over the last five years, demand called for a specific PTAB event in New York.

After four years of operation, now was the perfect time to analyse trends and developments in PTAB trials. It was also a good opportunity for delegates to discuss: a rise in settlements; the impact of new rule changes; and the relationship with the Federal Circuit and District Courts.

Delegates were invited to attend a full day of discussion to:

  • Hear from, and network with, over 100 leading IP experts in multiple fields
  • Analyse the state of play for PTAB after four years of operation and get updates on changes for the future.
  • Understand the PTAB process and plan for incoming developments to
    get a head start over your competitors
  • Benefit from sector-specific advice to cater to your needs and help
    solve your concerns

Managing IP was also delighted to welcome Chief Acting Judge Nathan Kelley as our keynote speaker to open the day's discussions.

The MIP PTAB Forum 2016 equipped attendees with the knowledge required
to improve their workloads, shed light on strategies for litigating at the PTAB, and delve into pertinent statistics to better understand the latest PTAB developments.


Key takeaways

Keynote address: Judge Nathan Kelley, acting chief judge, PTAB

  • Kelley said when he started at the PTAB he was reminded of his job as a teenager at McDonald’s, in that the PTAB has a strict timeline for proceedings.
  • Kelley said the Board tries to find cases to make precedential to provide guidance, given the small case history. This takes some time because “the precedential decision process is a little time consuming”, requiring Board and statutory member approval. Seven decisions have been made precedential in the past five months, including five in May. 
  • Kelley defended the Board’s record on motions to amend. He pointed to a PTAB report released this month that found that 192 motions to amend had been filed, 118 of them had been reviewed by the Board, and six had been granted or granted-in-part. 
  • He said – despite “blogs that say motions to amend are summarily denied, and that they are denied because we don’t like patentees or we don’t like claims” – that this is similar to how prosecution works. 
  • Kelley said: “Most of the denials – more than 81% of them – were non-procedural, where we simply disagree with the patentee. To me that is exactly what prosecution looks like. Yes, you have an unfettered right to amend in prosecution. But you are not amending your patent, you are amending your application.”

PTAB after four years: State of play

  • Sterne Kessler’s Eldora Ellison said people are starting to use post-grant reviews (PGRs), with 23 filed so far. Half of those have been in the life sciences space. 
  • Interestingly, so far the institution rate is much higher than it is for IPRs at around 90% for cases and just under 90% for claims. “So they are getting good traction so far,” said Ellison. She added the recent Shaw Industries case at the Federal Circuit may make challengers more willing to bring PGRs because it suggested the estoppel scope many not be as large as feared.
  • Sterne Kessler’s Lori Gordon said of the recent PTAB rule changes, that “one of the big concerns among practitioners is how the declaration rule is going to play out in front of the PTAB and when and how often the PTAB is going to authorize replies.”
  • Gordon said that in the covered business method (CBM) area an interesting case was Blue Calypso, which addressed what makes a patent eligible for CBM. The Federal Circuit said the standard is really what is claimed in the patent not what is in the specification. “CBM eligibility is in front of the Federal Circuit a lot so I expect we’ll see a lot of refinement of that over the next year,” said Gordon.
  • Judge Scott Boalick provided some tips for going before PTAB judges. ”It is surprising when you see briefs that seem to use up the page counts or word limit seemingly just because they can put that many words in – they feel a need to put that many words in and it clutters up what could be otherwise a clear argument or lack of focus,” he said.  He added it helps to focus on fewer grounds but do a more thorough job of explaining why the ground are meritorious rather a scattershot approach.

How to prepare for the rule changes in 2016

  • Brian Biddinger of Ropes & Gray gave an overview of the biggest changes to the PTAB rules. These are testimonial evidence with preliminary response; Phillips claim construction for expiring patents; page limits replaced by word counts for key papers; and Rule 11-type certification. 
  • On adding testimony with preliminary response, Biddinger said: “I’m not sure it changes a whole lot. We have always said you need to put a lot of care and attention into it, because it is your whole case. I’m not sure that the fact the patent owner can come back with some testimonial evidence in their preliminary response will have much impact.”
  • The change to word counts received a lot of attention. PTAB Judge Rama Elluru said lawyers are very creative so the Board was getting some very cleverly formatted papers. “There were some times when the formatting didn’t look like Times Roman. We also had paralegals looking for argument in claim charts, because that would mean you are getting away with more pages than allowed. That was a lot of resources going toward making sure page limits were being enforced.”
  • With the shift to word counts, the question of what happens to words in pictures comes up because word processing programs don’t count them. “It shouldn’t be a problem, assuming that parties don’t take pictures of images with big blocks of arguments underneath and put that in paper. If parties do abuse the rule I think we will be policing that,” Elluru said.
  • Biddinger commented: “The word count is supposed to be comparable to the pages. We think there is actually a slight reduction from the word count in terms of available volume now.” But he added that being able to put arguments in claim charts is a big help and greater use of figures will help lay out arguments more clearly. 

PTAB & the Federal Circuit

  • Acting PTAB Chief Judge Nathan Kelley noted the Federal Circuit had twice said the PTAB must adequately explain its own reasoning for a decision. “The reason I’ve struggled with that a little bit is our decisions are subject to a kind of scrutiny I don’t see district court decisions getting subjected to. I see the federal circuit saying, ‘Why did the Board say that, what were they thinking, what was in the minds of those judges?’ When the Federal Circuit challenges a district court ruling they say things like, ‘Where did you put that in the record?’”
  • Kelley continued: “They are really treating us like an administrative body, and they really want to know what we think, not necessarily what the arguments were that were presented to us. That’s fine but it just represents a continual march down the APA administrative body type of deal that we have been familiar for years.”Scott McKeown of Oblon McClelland Maier & Neustadt noted that the decisions heading to the Federal Circuit are not as high quality as the first few decisions, which addressed “some of the lowest hanging fruit” and on which the Board spent a lot of time. “They had some of the best judges at that time, not to imply that the judges have fallen off in quality, but there is a bigger pool. Necessarily when there is a bigger pool the quality will vary and necessarily there is only so much time in a day so the decisions heading up to the federal circuit don’t have the same amount of polish maybe as some of the earlier ones.
  • As a result, McKeown expects the Federal Circuit to issue a lower percentage of one sentence Rule 36 affirmances of PTAB decisions. “The real story at the Federal Circuit at least for this year is a little bit of a roll back of the Rule 36 practice, just by nature of the amount of workflow coming up and the amount of time the agency has to put into these decisions – they simply had more time a year or two back.”
  • McKeown noted January’s Cutsforth v Motivepower decision in which the Federal Circuit said “the Board did not adequately describe its reasoning for finding the claims obvious.” McKeown said: “It is not necessarily that the judges were wrong, but what has become the trend from what I’ve seen is that Motivepower is cited in every case. But ultimately will it be a winner when you get remanded? Maybe not.”

Data analysis: PTAB by the numbers

  • Justin Oliver of Fitzpatrick Cella Harper & Scinto revealed that IPR rate of denials of petitions is rising over time – 13.5% in fiscal year 2013, 25.8% in fiscal year 2014 and 34.7% in fiscal year.
  • Oliver revealed the statistics at the end of 2015 were: 59.5 of IPR challenged claims were found unpatentable/cancelled and 40.5% upheld; 85.3% of IPR instituted claims were unpatentable/cancelled and 14.7% were upheld.
  • Darryl Towell of Docket Navigator noted that institution rate for claims challenged under Section 102 was 52%, for 103 was 57%, and for 101 was 67%.
  • Final written decisions outcomes for claims challenged under 101 in CBMs is a near death sentence, with 96% found unpatentable, 0.6% found patentable and the rest cancelled by the patent owner. (This compares with 67% of 101 challenges being favorable or partially favorable to patent challenger in district court.)
  • Towell noted a 20% institution rate for claims challenged under Section 112.

Strategies for litigating at the PTAB

  • Charles Macedo of Amster Rothstein & Ebenstein asked whether judges are happier for three separate petitions being filed if required or everything being filed into one petition. PTAB Judge Rama Elluru responded: “What is easiest if it is a well-argued petition, so if it is one or three doesn’t matter.”
  • When asked when it makes sense to say when the Board has overlooked something, Elluru noted the Board has granted rehearing requests. “The only time the request won’t be useful is when it disagrees with the decision,” she said.
  • Elluru noted that initial conference calls were no longer needed, with the PTAB having four years of how proceedings work experience to draw on now. However, she added: “With the new rules I suspect we will have some initial conference calls again.”
  • Macedo said that considerations to address in patent owner responses are: address points raised in the petition and institution decision; use the concessions of the declarant; offer own declarant; make clear explanation of position; include potential demonstratives; and arguments not raised in patent owner response deemed waived.

PTAB & the District Courts

  • David Steffes of Mastercard said extolled the virtues of IPRs. “I’m a fan of IPR – it is just another arrow in quiver in terms of being able to protect your client. If an IPR is available to me, I’m going to try to work one up and file one, and I’m going to try to get a stay.” Steffes said one situation where it might not seek an IPR is if litigation is “in a fast jurisdiction with a decent non infringement position. This is a situation where the data can be very helpful. We look at the jurisdiction, look at the judge.”
  • Dori Hines of Finnegan gave an overview of the Clearlamp v LKQ case in the Northern District of Illinois in March, which found the defendant/IPR petitioner not estopped under 35 USC § 315(e)(2) from raising in the district court litigation prior art that the court found was not reasonably available during the prior IPR proceeding. “It is really quite an interesting decision,” she said. “It will be interesting to see if the Federal Circuit has a chance to rule on it.”
  • David Steffes noted that an earlier panelist had seemed a “nervous nelly about estoppel”. “I’m not,” he said. “I think it is quite manageable. Where I do become a nervous Nelly is on the PGR front, because I’m not sure what a “diligent searcher” is. Not too many PGRs have been filed at this point.”
  • Steffes welcomed the new rule changes. “I am in favor of the new rule in terms of the patent owner response being able to be more fulsome. I’ve always been a proponent of the patent owner response,” he said. “It is not just throwing spaghetti at the wall but trying to knock an argument out.  They might come back and they might not, but if I can take a shot, why not?
  • Elizabeth Ferrill of Finnegan gave data on instituted claims survival rate by tech center. The rate for “biotech and org chem” is 44.5% – much higher than the second-placed “communications” with 19.9%. “Biotechs were a little late to the party,” she said, adding: “The survival rate is massive.”

Pharma & the PTAB

  • Esther Hong of Stifel gave an overview of investor perspectives of bio/pharma IPRs. She noted that the first IPR filed by the Coalition for Affordable Drugs in February last year caused a 9.7% drop in Acorda’s share price and when it was instituted a 7.8% drop. In contrast, an IPR filed in September last year caused a 3.0% rise in Jazz’s share price and when it was instituted excluding key claims the share price rose 5.5%.
  • Hong concluded: “Investors are reading the petitions and filings and have a better grasp of what is substantive. Investors have become savvier with IPRs and are no longer overreacting. Investors are paying attention.”
  • Atabak Royaee at Boehringer Ingelheim Pharmaceuticals said “IPR seems like a coin toss at this point”. He noted that they are not as quick or cheap as they seem, saying they cost $400,000-$1.5 million for the proceeding and after appeal the bill is more like $500,0000-$2 million. “You are also talking about three years. It is a good thing for us because it is becoming more predictable.”
  • Royaee noted that “a nice trend is only 10% of IPRs filed against pharmaceutical companies are ones that challenge active ingredient drugs. That’s good news for us.” He said it means companies can concentrate on patent families, and can improve prosecution and make sure it is consistent. “It is becoming more and more important that US and Europe prosecution is combined,” he said.
  • Stephen Maebius of Foley & Lardner was asked whether the Rule 11 change in the new PTAB rules would have an effect on third parties trying to profit from IPRs. He pointed to the Board refusing to sanction Kyle Bass. “The Board has said there is nothing sanctionable about somebody trying to profit from IPRs,” he said.

Top cases to know and to watch

  • David Killough of Microsoft questioned the perception that the PTAB’s invalidation rates are high. “High compared to what? It has substantial invalidation rates but that’s because it’s self-selecting.” He noted that in the UK, for example, the survival rate is about 40%. “I would argue [the PTAB invalidation rate] is not high at all but really in line with what you see in rest of industrialized world.”
  • Cases discussed by Gene Lee and Colin Sandercock of Perkins Coie included Cuozzo v Lee. The first question presented to the Supreme Court in the case is: 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. The session discussed Microsoft v Proxyconn at the Federal Circuit in June last year, which said even under the BRI, “[t]he PTO should also consult the patent’s prosecution history in proceedings in which the patent has been brought back to the agency for a second review.”
  • The second question presented in Cuozzo is: 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 session pointed to the Synopsys v Mentor Graphics decision at the Federal Circuit that said IPR institution, non-institution, and partial-institution decisions are unreviewable, and Versata v SAP which decided whether patent is a “CBM” patent is reviewable.



Amster Rothstein & Ebenstein


Fitzpatrick IP

Foley & Lardner
Perkins Coie
Ropes & Gray Sterne Kessler Goldstein & Fox

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