United States: USPTO Amends AIA Rules

On April 1, 2016 the PTO announced that it will enact amendments to the rules governing post-issuance review proceedings (such as inter partes review), which the Office refers to as the AIA rules. 81 Fed. Reg. 18750 (Apr. 1, 2016) (to be codified at 37 C.F.R. pt. 42). The amendments took effect on May 2, 2016. Id.

Among other things, the amendments (1) allow for a Phillips-like claim construction in limited circumstances, (2) allow the patent owner to submit new testimonial evidence in its preliminary response, (3) change the page limits to word counts for major filings, (4) require a certification (similar to Rule 11 of the Federal Rules of Civil Procedure) for all papers, and (5) allow for sanctions. 

The Board Will Conduct a Phillips-Like Claim Construction for Some Claims

The amended rules will allow for a Phillips-like claim construction for patents that will expire 18 months from the entry of the Notice of Filing Date Accorded to Petition. Currently, the Board gives claims in an unexpired patent their broadest reasonable construction in light of the specification of the patent in which the claims appear. See 37 C.F.R. § 42.100(b). Courts, on the other hand, give claims their plain and ordinary meaning in view of the intrinsic record, as the Federal Circuit explained in Phillips v. AWH Corp. A Phillips-style claim construction may result in a narrower claim scope.

The Office feels that giving claims their broadest reasonable construction during post-issuance proceedings increases patent quality. 81 FR 18750 Resp. to Claim Construction Comment 1. When the Board construes the claims broadly, the claims capture more prior art, which the patentee can distinguish through amendment (provided that the patent has not yet expired). The Office feels this process of capturing and distinguishing art increases patent quality by clarifying claim scope for competitors. Id.

But this rationale breaks down for claims that will expire during the proceeding. Therefore, the Office amended the rules to allow for a Phillips-style claim construction if the patent will expire within 18 months from the entry of the Notice of Filing Date Accorded to Petition. See 37 C.F.R. § 42.100(c) (IPR shall conclude within 12 months, extendable for six months).

The amended rules and comments also outline the timing and procedure for obtaining a Phillips-style claim construction. The Board will not automatically apply the Phillips standard to expiring claims. Instead, one of the parties must request a Phillips-style claim construction by motion within 30 days of the filing of the petition. The Office prefers that the Board construe the claims before institution and even before the patent owner files the preliminary response. 81 FR 18750 Resp. to Claim Construction Comment 3. The Board will have discretion to allow the petitioner to brief two claim constructions and to deal with situations where the petitioner briefed one construction and the Board adopted another. 81 FR 18750 Resp. to Claim Construction Comment 2. 

Patent Owners May Submit New Testimonial Evidence in the Preliminary Response

The old rules did not allow a patent owner to submit new testimonial evidence with its preliminary response. See 37 C.F.R. §§ 42.107(c), 42.207(c). This often prevented patent owners from rebutting the petitioner's expert with its own expert declaration or introducing evidence of secondary considerations through expert testimony.

The amended rules give the patent owner the opportunity to submit new testimonial evidence in its preliminary response. But if the patent owner's testimony raises material factual issues, those issues will be resolved in the petitioner's favor. 81 FR 18750 Background on Patent Owner's Preliminary Response.

 Commentators have noted, then, that there seems to be little benefit for the patent owner to file testimony with its preliminary response if the Board will not use the testimony to resolve factual disputes in the patent owner's favor. In response, the Office stated that not all factual disputes are material, suggesting that it would apply something like a summary-judgment standard when deciding whether to find in favor of the patent holder based on a dispute raised on the new testimonial evidence. 81 FR 18750 Patent Owner's Preliminary Response Resp. to Comment 4.

Some commentators argued that material factual disputes should be resolved against the petitioner because the statutes place the burden of proof on the petitioner and not the patent holder. The Office stated that it would be unfair to resolve material factual disputes against the petitioner based on the patent holder's testimonial evidence because (1) the denial of institution is not appealable and (2) the petitioner will not have the chance to cross examine the patent owner's declarant before the Board rules on institution. Id. The Office also pointed out that the Board has discretion to allow limited cross examination of the patent holder's declarant. 81 FR 18750 Patent Owner's Preliminary Response Resp. to Comment 2. This could be used, for example, to streamline proceedings where the material factual disputes are narrow and can be resolved quickly before the institution decision.

If the patent owner does not perceive an advantage to filing new testimonial evidence, the patent owner can omit such evidence without penalty. The Board will not draw a negative inference against a patent owner who does not file testimonial evidence (or does not file a preliminary response at all). 81 FR 18750 Patent Owner's Preliminary Response Resp. to Comment 1.

The Board will decide on a case-by-case basis whether the patent owner's declarant can be cross-examined on testimonial evidence that is advanced in the preliminary response but not in the patent owner's response by applying the standards for additional discovery. 81 FR 18750 Patent Owner's Preliminary Response Resp. to Comment 3. The Board will also decide on a case-by-case basis whether to allow a petitioner to reply to a preliminary response that includes new testimonial evidence. 81 FR 18750 Patent Owner's Preliminary Response Resp. to Comment 5. 

Page Limits Replaced by Word Counts

The Office also replaced page limits with word counts for major filings (petition, preliminary response, response, opposition, and reply). As with the current page limits, the word counts have several exceptions including the tables of contents and authorities, grounds for standing, mandatory notices, certificate of service or word count, and appendix of exhibits or claim listing. 

Rule 11-Type Requirement

Additionally, the amended rules create certification requirements similar to Rule 11 of the Federal Rules of Civil Procedure for papers filed with the Board. All papers must include the filer's signature, who attests that the paper complies with 37 C.F.R. § 11.18(b)(2) (which mirrors FRCP 11). To comply, the filing party must conduct a reasonable investigation, must not file the paper for harassment or delay, positions in the paper must be supported by existing law or a non-frivolous extension of the law, and allegations and denials must have sufficient evidentiary support.

The Office may sanction practitioners and parties (but not law firms) for violations. 81 FR 18750 Rule 11-Type Certification Resp. to Comment 8. According to the new rule, sanctions should be similar to those under 37 C.F.R. § 42.12. The sanctions under 37 C.F.R. § 42.12 include adverse fact finding, expunging or precluding a paper, precluding a party from presenting or contesting a fact, precluding discovery, excluding evidence, awarding expenses and attorneys' fees, requiring disclaimer of patent term, entry of adverse judgment, and dismissal of the petition.

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