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MIP PTAB Forum 2018

May 3, Convene 810 Seventh, New York
May 8, Sheraton, Palo Alto

Key Takeaways - Palo Alto

State of play and progression at the Patent Trial and Appeal Board
Josh Goldberg, partner, Finnegan Henderson Farabow Garrett & Dunner, addressed the Supreme Court’s SAS v Iancu decision, which stipulated that the PTAB must institute on all or none of the claims challenged. The USPTO responded by issuing guidance saying that its reading was that this did not necessarily mean that the PTAB must institute on all grounds challenged as well but it would do so. Goldberg noted, however: “The chief judge was very clear it was an at-this-time policy.”

Kevin Turner, lead administrative patent judge at the PTAB, said “It’s probably 6-8 months we are going to be dealing with this potentially”. He said if a panel has instituted on only some challenges raised in the petition, the Board may at this time: issue an order instituting on all challenges; or receive a joint request filed by the parties to terminate as to certain challenges.

Turner noted the panel still has the right to terminate the proceeding: “Let’s say there was 20 grounds covered and 20 claims, and we instituted on one ground. Suddenly we have to be faced with the decision of bringing everything else in. I think we are allowing for discretion to say, no, we are not going forward with that particular trial and we would terminate that particular trial based on our resources.” He added: “I don’t know what the Federal Circuit would necessarily say about that. But we have the right to do that at our discretion.”

He continued: “There are also instances where let’s say grounds weren’t instituted because you had means plus function limitations. Now, if those grounds come in we have kind of a difficult question. It is an IPR and Cuozzo has basically said we can’t do indefiniteness, so we have to weigh that and decide whether all grounds come in.”

The forum took place the same day the USPTO issued a notice of rulemaking to change the claim construction standard used by the PTAB to the Phillips standard used in district courts from the broadest reasonable interpretation used by the USPTO in prosecution. Goldberg said: “We could be looking at having Phillips somewhere around three months from now.”
Turner said: “I am assuming it would apply, this is my personal opinion, to all pending cases. There might be certain cases where it might not, maybe post final written decision it would be bound by whatever claim construction and there may be certain other circumstances.”

In the vast majority of cases the Phillips construction would not have led to a different outcome than BRI did. Turner said the PTAB now does not take the district court’s claim construction standard as advisory because it is applying a different standard, but that could change with the harmonisation of standards. “On the flip side, does it mean district courts are going to be looking at the claim construction that is done in the trials and be bound by them? Knowing district court judges, they are probably not going to feel bound by that but maybe they will,” he said.

Strategies for litigating in the changing environment of PTAB
The panel discussed the Oil States and SAS decisions from the Supreme Court. “Certainly, Oil States came out the way people thought it would,” said Jim Davis, partner, Ropes & Gray. On SAS, Scott

McKeown of Ropes & Gray commented: “The surprise was there was so much attention or potential confusion over grounds” and whether SAS requires institution on all grounds. “You can certainly read SAS and come to the conclusion that grounds shouldn’t be in there,” he said.
McKeown added on the impact of SAS: “There’s a little bit of a crush on the Board right now. A lot of parties are waiving briefing or agreeing to withdraw grounds” because the extra expense and time may not be worth it.  “If I am counselling a patent owner and have to win on every claim now, I am less likely to file a fulsome preliminary response. Am I going through every ground and claim like before? Probably not.”

The panellists discussed how SAS will affect institution. They noted that institution decisions are now binary. Discretionary denials based upon workload are unlikely. In terms of results, institution rates are likely to increase and the final written decision is now more likely to kill all claims.
McKeown commented: “A lot of the discussion around SAS was it is additional work. Well, not really. You are doing potentially a lot less work at the institution decision, and now you have additional grounds on the back end. So what you are really doing is shifting work from the front end to the back end. I don’t know that it is additional work, at least outside of these cases that are in a transitional phase where you have to retread ground.”

Davis said it is likely there will be more stays as a result of SAS, particularly if institution rates go up. District court judges often would previously hold off on a stay decision until institution. “But now it seems much more likely that everything will come in together and you won’t have the piecemeal problem we’ve been seeing where some claims are instituted and others are not. You have also seen some patent owners embrace that to agree to the stay, and get it sorted out before the PTAB before investing more money in litigation.”

The USPTO’s proposed rule making to switch to the Phillips claim construction standard was also discussed. “If they are applying the same standard as the district court they are effectively going to have a Markman very early on relative to when you might otherwise have had it in the district court proceedings,” said Davis. “That might help parties solidify issues at an earlier stage.”

McKeown commented: “The Phillips change was initially held up as this great thing for patent owners. But I am not sure it is.” Previously, the fact the PTAB was using a different claim construction standard and not all the claims in dispute may be assessed by the PTAB meant a district court judge would have been more tempted to press on with the case. “You could say, first of all a motion should probably not come in until the institution decision, the reason being we may have some claims that are shaking out and no matter what happens we have to go to trial  on them,” said McKeown. “Well, we won’t have that in a lot of circumstances any more. Then you are left standing in front of district court saying, ‘All of my claims are in [PTAB] trial and by the way this proceeding now uses Phillips but we should keep going here anyway.’ That doesn’t make any sense.”

Changing PTAB law and practice, and the (continued) importance of the petition
Brad Waugh, associate general counsel in Intel’s litigation group, noted the PTAB “has been a valuable system with reliable outcomes”. Addressing SAS, he said: “If we could continue with our good institution rates, I don’t imagine it will move the needle too much for us.” He said: “There is still a lot to like as a petitioner about the IPR proceeding. Under SAS, it is hard to think why the district court wouldn’t give a stay at that time so I think there is a lot to like.”

The panel also discussed multiple petitions. Baker McKenzie partners Brian McCormack and Mackenzie Martin referred to a USPTO study that found 87.2% of patents at the PTAB were challenged by one or two petitions: 67.0% were challenged in one, 20.2% in two, 5.9% in three and 6.9% in more than three petitions.

Waugh said serial petitions are “not something we do at Intel”. He added: “Sometimes we’ll file another petition when we have found better art. But it’s not something in our strategy.”

The panel also discussed the keys to getting a petition right. “One is to have good prior art, and then it is a matter of mapping it to the claims,” said Waugh.

Discussing the proposed claim construction standard change, Waugh said working with litigation counsel will become increasingly important if at this early stage the company has to take a position. “Our model is working with the same counsel for IPR and litigation anyway,” he said.

Latest Federal Circuit developments
Sriranga Veeraraghaven of Xperi updated on the latest PTAB appeals statistics at the Federal Circuit. He revealed that, of 329 appeals to the Federal Circuit from the PTAB, 75% were affirmed, 11% were completely reversed or vacated, 10 were partially reversed or vacated, and 3% were dismissed,

Veeraraghaven added that 47% of appeals are affirmed under Rule 36. Two appeals of this issue were denied by the Supreme Court last year. But a new appeal (Droplets v Iancu) of the issue was filed April 3

The panel discussed what you do about the abuse of new rules. The district court analog is to give the patent holder the chance to explain why claims cannot be winnowed, as per In re Katz Interactive Call Processing Patent Litig in 2011. The panel said parallel procedures might be considered but cumulativeness would need to be decided on the merits, not on discretionary workload grounds.

Evolving procedural challenges associated with AIA
John Blake, vice president, IP strategy, Tivo, discussed the Supreme Court’s Oil States decision. He said some view the decision as encouraging further challenges on due process lines. “Others are saying, no, they are just being precise. But I think you are going to see other challenges on those lines.” Kim Schmitt, managing counsel, litigation group, Intel, noted “we have seen a case on the retroactivity issue go to the Federal Circuit.”

Blake noted that the advent of the PTAB had changed the balance of power. “To my mind the threat of an IPR has emboldened parties to the point where you can’t even have a discussion. You can’t get to point where parties can decide whether to have a licence or not.” Schmitt discussed potential rule changes that may be to the benefit of patent owners. “We will see some pro patent holder changes being made, and a pro patent swing. That will inform some of the change we see in the next six to 12 months.”

Discussing the potential change in claim construction standard, Schmitt said Intel has been against changing to the Phillips standard. Intel is a frequent petitioner at the PTAB. “We think BRI is appropriate. Because the patent owner can always amend, and that may become even easier, so if you don’t like the breadth of construction you can fix it.”

Schmitt added: “The interesting thing about the proposed rule is that it builds in a presumption of validity, which is extremely unusual. So what we see here is a situation where the PTO will be taking on a presumption of validity, basically construing the claims to preserve validity, which comes out of the district court Phillips standard. It is actually going further than Cuozzo would have done if it had come out the other way.”

The USPTO is accepting written comments on the proposed rulemaking up to July 9. Schmitt urged the audience to read it closely and provide comments. PTAB lead administrative patent judge Matt Clements agreed. “In its current form, the rule doesn’t say one way or another whether it will apply retroactively. So stakeholders should come forth with a view in comments,” he said.

PTAB by the numbers; data, trends & analysis
Joe Mutschelknaus, director, Sterne Kessler Goldstein & Fox, revealed more petitions were filed in 2017 than any other year, driven by a very active first half of the year. However, the three-month rolling average tied its low since 2014 in the second half of 2017. “We saw a dip in the second half of 2017. Primarily we think that was because the first half was so strong.”

Discussing the types of petitions, Mutschelknaus said that the number of post-grant review petitions recently broke 100. Covered business method (CBM) reviews are scheduled to expire in 2020. But a recent GAO report and hearing was positive about the CBM programme, Mutschelknaus revealed, raising the likelihood the programme will be extended.

Brian Love, assistant professor of law and co-director high tech law institute, Santa Clara University, discussed a draft white paper he has written (with Shawn Miller of Stanford Law School and Shawn Ambwani of Unified Patents) looking at what kinds of patents get instituted by the PTAB. Among the results, the examiner seems to be important. Variables that don’t seem to matter are: tech, patent age, forward citations and family size. “One finding was that NPEs/PAEs do worse, potentially suggesting some bias,” said Love.

Charles Boudreau, administrative patent judge at the PTAB, discussed the USPTO’s multiple petition study. “There is a perception that a lot of patent owners being assaulted by multiple petitioner or by some petitioner filing multiple petitions,” he said. But the study revealed that multiple parties are not as effective as commentators suggest.

Interplay between PTAB, District Court litigation and ITC
Discussing SAS, Scott Stevens, partner, Alston & Bird, commented: “I tend to think it will mean in a way more streamlined arguments. Chris Douglas, partner at Alston & Bird, added: “From a petitioner point of view you have a second tool now.”

Douglas said that the proposed change in claim construction standard would mean patent owners should harmonise their arguments at the PTAB and in district courts. “If the rule goes through, as a patent owner you are going to want to make the same arguments, develop the same record in the PTAB as you did in the district court and hope they go the way you want,” he said.

Douglas also discussed the General Plastics precedential decision. “I think people have gotten away from serial petition practice,” he said. General Plastics laid out seven factors for approving follow-on petitions.

Concerns and opportunities for the Patent Trial and Appeal Board
Lori Gordon, partner, King & Spalding, revealed the PTAB has now designated 10 precedential decisions and 18 informative ones.

Gordon discussed a number of cases that are worth watching. One was Click-To-Call, which may “change the way we think about the time-bar.” Click-to-Call is appealing a PTAB decision that invalidated its patent, claiming that Oracle was time-barred from filing a petition.

Another “fascinating case”, said Gordon, is John D'Agostino v MasterCard. The patent owner is claiming that the PTAB erred on remand from a December 2016 ruling by the Federal Circuit when it ruled once again that claims of a credit card transaction security patent were anticipated and obvious. “So they are now asking whether they can appeal a decision on remand,” said Gordon.

Inevitably the SAS decision was discussed. Joel Harris, senior director, intellectual property, Incube Labs, commented: “In light of the decision, it means you will want to write more claims, both independent and dependent. So it becomes onerous on Board to write a decision. You don’t have to run faster than the bear, you just got to run faster than the friend or foe!”

Gordon commented: “I think SAS has upset the apple cart on the precedential decision on estoppel. Patent owner estoppel is going to apply to all claims all grounds. I don’t know how you de-designate a decision but the estoppel one seems like it will have to go.”


Brooks Kushman Finnegan


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