State of play and progression at the Patent Trial and Appeal Board
The forum took place two weeks after the Supreme Court issued its SAS Institute v Iancu ruling, which stipulated the Supreme Court must institute all or none of the claims challenged in a petition. Anna Volftsun, associate counsel, Humanscale commented: “I am interested to see what does happen as a result of SAS. They [the USPTO] have been pretty open with the guidance but the big question is: what will it mean for institution rates. If you have a really bad petition or a good petition you know where you are falling. But if you are in the middle there is a lot more uncertainty. My suspicion is that there are going to be a lot more rejections. Maybe, maybe not.”
Rich Coller, director, Sterne Kessler Goldstein & Fox, added: “I am personally curious about whether there will be a new hiring spree in view of SAS. It sounds like a lot more work for the panels to do.” He added: “My guess is the institution rate will drop. You might say that is bad for petitioners. The flipside, if you are a petitioner now if you just make a showing for one claim, one ground and you get in you have a whole proceeding to convince otherwise.”
Jeremiah Frueauf, director, Sterne Kessler Goldstein & Fox, discussed the potential effects of SAS on institutions. He revealed that 15% of PTAB petitions traditionally had been partially instituted. “There is definitely a queue there that will have to deal with SAS, not only on the claims but also on the grounds,” he commented.
Frueauf also wondered whether SAS would affect petition filing. “We are running behind filing on previous years,” he said. “There is no change this week but will be interesting to see if there is a change in future.”
SAS aside, Coller said it would be helpful for the PTAB to give more guidance. “More guidance is better for everyone,” he said. “The PTAB from time to time will engage in expanded panels, which is helpful. There was some flack, I think it was unfounded, about panels being stacked to dictate a certain outcome. For me personally I would love to see more designations of precedential opinions. I think it is very helpful to provide that guidance.
Strategies for litigating in the changing PTAB environment
Trenton Ward of Finnegan noted that in a webcast the PTAB vice chief said that SAS does not require the PTAB to institute on all grounds but as an agency it will be instituting on all grounds for now. The Supreme Court majority opinion mainly discusses “claims,” not grounds but the majority calls institution a “binary choice – either institute review or don’t”. But, the majority also rejected USPTO argument that the “statute allows the Director to institute proceedings on a claim-by-claim and ground-by-ground basis”. Ward noted, however, that the USPTO’s SAS guidance suggest that final written decisions will address all claims but not necessarily all grounds. The guidance says: “The final written decision will address, to the extent claims are still pending at the time of decision, all patent claims challenged by the petitioner and all new claims added through the amendment process.”
Ward discussed how the PTAB had reacted so far in ongoing cases. For example, it amended the previous institution decision in IPR2017-00213 - Emerson Elec Co v IPCO, which had been instituted May 15 2017, with a decision due one year later. Ward noted that, despite the imminent deadline, the PTAB issued a supplemental institution decision on April 26 amending the institution decision to include all claims and all grounds.
He also noted two new Institution decisions post-SAS. In IPR2018-0082–Western Digital v Spex Tech, there was institution on all claims and all four grounds when only two of the 11 claims were found to meet the reasonable likelihood threshold. The decision expressly stated how the panel is not persuaded certain proposed combinations teach certain claim. In IPR2018-0062–Nanya Tech v Lone Star, the Board instituted on all claims and all grounds even though the only grounds challenging certain claims were found not to meet the reasonable likelihood threshold. The petitioner proposed four grounds against six claims. The Board found the petitioner had not established reasonable likelihood for Grounds 2 and 4, which were the only grounds challenging claims 2 and 7.
Srikala Atluri of Hewlett Packard Enterprise discussed January’s Wi-Fi One v Broadcom decision out of the Federal Circuit. The court held that the time-bar determinations under § 315(b) are appealable, overruling Achates’s contrary conclusion. “I think lots and lots of things that ae now appealable” as a result of Wi-Fi One, said Atluri.
The panel discussed topics for PTAB reform. Melissa Brand, Biotechnology Innovation Organization, said: “More guidance is number one. It is always nice to have.” She said guidance would be good on remands and motions to amend. “There are lots of little things that can be done as opposed to precedential decisions.”
Latest Federal Circuit developments
Charles Macedo, partner at Amster Rothstein & Ebenstein, and Kristan Lansbery, director and patent attorney at Regeneron Pharmaceuticals, discussed appeal grounds for review by the Federal Circuit.
They said that as a result of the Supreme Court’s Cuozzo Speed Technologies decision in 2016 the following can still be challenged: 1) appeals that implicate constitutional questions; 2) appeals that depend on other less closely related statutes, or; 3) appeals that present other questions of interpretation that reach, in terms of scope and impact, well beyond “this section”; 4) appeals that implicate due process challenges, e.g., a final decision where a petition fails to give “sufficient notice” such that there is a due process problem with the entire proceeding; 5) appeal that the agency to act outside its statutory limits by, for example, canceling a patent claim for “indefiniteness under §112” in inter partes review; and 6) appeals under the Administrative Procedure Act, which enables reviewing courts to “set aside agency action” that is “contrary to constitutional right,” “in excess of statutory jurisdiction,” or “arbitrary [and] capricious.”
Charles Macedo discussed how SAS and Oil States will affect the Federal Circuit. He said “the SAS decision is consistent with In re Magnum Oil but takes the decision one step further”. The Federal Circuit in Magnum Oil found reviewable on appeal statements made by the Board in the decision to institute that were later relied upon in the final written decision, whereas the Supreme Court in SAS noted: “[W]hile §314(a) invests the Director with discretion on the question whether to institute review, it doesn’t follow that the statute affords him discretion regarding what claims that review will encompass.”
Another area SAS touched on is reviewability of non-instituted grounds. The Federal Circuit in 2016 Shaw Industry v Automated Creel Systems held that the PTAB’s decision not to institute certain asserted grounds as redundant is not reviewable. This is mooted by SAS. The Supreme Court said: “[T]he petitioner in an inter partes review is entitled to a decision on all the claims it has challenged.” Further, “[o]nce th[e] single claim threshold is satisfied, it doesn’t matter whether the petitioner is likely to prevail on any additional claims, the Director need not even consider any other claim before instituting review.”
The panel also talked through grounds for reversal by the Federal Circuit. These are: erroneous claim construction; failure to consider the evidence; inadequate explanation by the Board; erroneous application of law; lack of due process/denial of APA rights; and improper consideration of the arguments.
PTAB by the numbers; data, trends & analysis
Kim McGraw, administrative patent judge, Patent Trial and Appeal Board, talked through trial statistics. She revealed the institution rate so far in fiscal year 2018 is 61% so far, down from 63% in the full fiscal year 2017, 67%, in 2016, 68% in 2015, 75% in 2014 and 87% in 2013.
McGraw also talked through institution rates by technology since 2012. Other than design’s 41% rate from a small sample of 41 decisions, bio/pharma has the lowest institution arte of 62%. “People ask why bio is lower,” said McGraw. “A lot of people say it is around reasonable expectation of success.”
Jason Dorsky, senior associate, Fitzpatrick Cella Harper & Scinto, discussed pharma claims unpatentability statistics.
Justin Oliver, partner, Fitzpatrick Cella Harper & Scinto, noted: “With the SAS case these figures are going to change. It’s going to make the instituted claims slide look like the challenged claims slide.”
Dorsky discussed the average grounds proposed in petitions compare with the average grounds instituted. “In 2013, people were loading up their petitions with grounds,” he noted, but this has fallen since. The average grounds proposed in 2016 was 4.58, down from 9.8 in 2013. In contrast, the grounds instituted has been fairly consistent throughout – with 2.76 grounds in 2016 compared with 3.2 in 2013. “Of course with SAS, these numbers could go back up again,” said Dorsky.
Developments and considerations for life sciences IPRs
Corinne Atton, senior associate, Fitzpatrick Cella Harper & Scinto, noted that of all IPRs filed to date 1% (106) were biologic drug IPRs, 6% (410) were Orange Book drug IPRs and 4% (310) were other bio/pharma IPRs. “There are far more Orange Book IPRs than biologic ones,” noted Atton.
Serge Ilin-Schneider, director, intellectual property, Par Pharmaceutical, said it is hard for generics to take on branded companies’ patent portfolios. “There are so many patents out there that it is very difficult for generics to get in market. I think brands have it alright.”
Fiscal year 2015 saw a big spike in Orange Book IPRs, but this has fallen since. Atton said that companies may have been attracted by the early high institution and invalidation rates generally at the PTAB but then discovered that these rates turned out lower for bio/pharma. “I suspect challengers got very excited about the challenges and then were disappointed,” she said.