United States: Changes Ahead For The PTAB In 2018

2018 promises to be an important year for the Patent Trial and Appeal Board. Many in the patent bar will wait with bated breath for the U.S. Supreme Court to determine the future of the PTAB's trial jurisdiction in Oil States. Assuming trials at the PTAB continue, the Supreme Court may substantially alter, in SAS Institute, the process by which the PTAB conducts these trials.

Already in 2018, the Federal Circuit has modified America Invents Act (AIA) trial jurisprudence by delivering its en banc ruling in Wi-Fi One, determining that the PTAB's time-bar determinations are reviewable on appeal after a final written decision. Additionally, the motion-to-amend practice in AIA trials will continue to evolve, as the Federal Circuit provides further guidance beyond its en banc decision in Aqua Products and precedential decision in Bosch. Furthermore, the PTAB may itself alter motion-to-amend practice, either by regulation or by further guidance.

All in all, 2018 promises to be an impactful year for the PTAB. My prediction, however, is that we are likely to look back at this time next year and find that AIA trial proceedings operate much as they do now.

The Supreme Court Will Determine the Fate of AIA Trials

The biggest date in 2017 for the PTAB may be remembered as Nov. 27, 2017, the date on which the Supreme Court heard oral arguments in Oil States Energy Services, LLC v. Green's Energy Group, LLC. In this appeal, the Supreme Court is considering whether inter partes review (IPR) proceedings violate the Constitution by extinguishing private property rights through a non-Article III forum without a jury. Similar to 2017, the biggest PTAB date of 2018 will likely be the day on which the Supreme Court issues a decision in Oil States and deems IPRs to be either constitutional or unconstitutional. The latter would represent a significant disruption in the patent law landscape.

Some were surprised at the level of questioning from the justices during the Oil States oral arguments. A number of the justices, including Justices Roberts, Kennedy, and Breyer expressed concern regarding whether IPRs properly protected the due process rights of the parties involved. Justice Gorsuch went further and suggested that the constitutionality question had already been decided by the Supreme Court in McCormick Harvesting Mach. Co. v. C. Aultman & Co., 169 U.S. 606 (1898), which Gorsuch said held that only Article III courts could set aside a patent. See Hearing Transcript at 15:6–16.

Justices Ginsburg, Sotomayor, and Kagan seemed more comfortable, however, with the ability of the PTAB to serve as an error-correction mechanism for the Patent and Trademark Office's grant of patents. Justice Ginsburg stated that "[t]here must be some means by which the Patent Office can correct the errors that it's made." Id. at 3:25–4:5. Furthermore, Justice Sotomayor placed significance on the ability to appeal an AIA trial decision to the Federal Circuit, stating that "what saves this" is that a patent invalidity finding "can be appealed to court." Id. at 34:5–13. In the likely event that at least Justices Breyer and Kennedy agree with these justices, 2018 will not likely represent the end to AIA trials.

Partial Institution and Related Final Written Decisions Will Likely Continue

The bright spotlight of a Supreme Court constitutionality determination casts a big shadow, as exemplified by the almost forgotten SAS Institute v. Matal, the other PTAB appeal argued before the Supreme Court the same day as Oil States. Although most would agree that the odds of the decision in SAS Institute having an impact are greater than in Oil States, the case has not received the level of attention given to Oil States. For example, 58 amicus briefs were filed in Oil States and only two were filed in SAS Institute.

SAS appealed to the Supreme Court on the basis that the PTAB improperly issued a final decision on less than all of the claims challenged by SAS. If the Supreme Court determines that the statute requires the board to issue a final decision on all claims challenged in the petition, it might substantially alter how the PTAB conducts AIA trials. For example, the PTAB might issue leaner institution decisions, simply determining whether the petitioner has established the 35 U.S.C. § 314 threshold for at least one challenged claim and instituting on all grounds for all claims. This "thumbs up or thumbs down" institution practice could greatly increase the number of issues in many trials, increasing the cost for the parties. Alternatively, the PTAB might simply repeat the determination made denying institution on certain claims in the final written decision, assuming such practice would comport with guidance from the Supreme Court in the SAS Institute decision.

SAS argued before the Supreme Court that 35 U.S.C. § 318(a) requires the "Board to issue a final written decision as to every claim challenged by the petitioner." Justice Alito asked: "Where is there any ambiguity [in 318(a)]?" Hearing Transcript at 35:25–36:7. Justice Ginsburg inquired, however, as to the meaning of the introductory phrase of 35 U.S.C. § 318(a), which states: "[i]f an inter partes review is instituted." Id. at 4:1–3. Perhaps the justices will read the statute to apply only to those claims subject to inter partes review, permitting the board to grant partial institution and render a final decision on only the instituted claims.

Justices Alito and Kagan approached the issue from another perspective, asking what language in the statute prevented the board from streamlining the procedure and instituting on only those claims found to have a reasonable likelihood of success. Id. at 52:17–23; 69:25–70:2. It is likely that a majority of the justices will determine that the statute does not prohibit the PTAB from continuing its practice of partial institution and rendering a final decision on only the instituted claims.

The Wi-Fi One Decision Will Likely Lead to Additional Requests to Expand Appellate Review

On Jan. 8, 2018, the Federal Circuit released its en banc decision in Wi-Fi One. The majority decision, authored by Judge Reyna and joined by nine of his colleagues, overruled the court's previous decision in Achates Reference Publishing Inc. v. Apple Inc. and held that time-bar determinations under 315(b) by the PTAB are reviewable by the Federal Circuit. Wi-Fi One, LLC v. Broadcom Corp., No. 2015-1944, slip op. at 21 (Fed. Cir. Jan. 8, 2018).

The statue provides that "[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable." 35 U.S.C. § 314(d). The Federal Circuit determined that the "natural reading of the statute limits the reach of § 314(d) to the determination by the Director whether to institute IPR as set forth in § 314." Wi-Fi One, slip op. at 15. The Federal Circuit further stated that Section 315(b) controls the director's authority to institute IPR, which is unrelated to the director's preliminary assessment or the director's discretion not to initiate an IPR. Id. at 17. Ultimately, the court determined that Section 315(b) is not "closely related" to the institution decision addressed in Section 314(a) and, therefore, is not subject to Section 314 d)'s bar on judicial review. Id. at 20.

In light of the decision, you can expect increased scrutiny of the PTAB's determinations with respect to the application of the Section 315(b) time bar, including determinations regarding the proper designation of real parties-in-interest. This increase in scrutiny may encourage PTAB panels to be more amenable to pre-institution discovery requests from the parties on the topics of real parties-in-interest and privity. The Federal Circuit's decision may also permit the court to clear up some disagreement at the PTAB, including disagreement among panels as to when the time bar is triggered. The potential for appellate review of this and other pre-institution determinations may enable the Federal Circuit to provide binding precedent on these issues.

The expanded bases for appeal requests in AIA trials in 2018 will not likely be limited to simply time-bar determinations. Given the Federal Circuit's language regarding the "strong presumption in favor of judicial review" (Id. at 9), the decision in Wi-Fi One may open the doors to many more requests for review of PTAB decisions made during the institution phase. Parties seeking appeal will attempt to argue that the PTAB determination being appealed is not "closely related" to the subject matter of Section 314. Parties may also attempt to appeal PTAB determinations as to whether the petitioner is barred by estoppel under Section 315(e).

Motions to Amend Will Continue to be a Flashpoint

Prior to Oil States, motions to amend typically ranked #1 on the list of PTAB hot topics. My prediction is that after Oil States is decided, motions to amend will regain the top spot as the most widely discussed AIA trial issue.

On Oct. 7, 2017, the Federal Circuit issued an en banc decision in Aqua Products holding that the "the PTO may not place that burden [of persuasion with respect to the patentability of amended claims] on the patentee." Aqua Prods., Inc. v. Matal, No.15-1177, slip op. 66 (Fed. Cir. Oct. 4, 2017). Chief Judge Ruschke of the PTAB then issued guidance on Nov. 21, 2017, stating that the board will not place the burden of persuasion on a patent owner with respect to the patentability of substitute claims but instead "the Board will proceed to determine whether the substitute claims are unpatentable by a preponderance of the evidence based on the entirety of the record, including any opposition made by the petitioner." Memorandum titled "Guidance on Motions to Amend in view of Aqua Products," PTAB Chief Judge Ruschke, Nov. 21, 2017. Furthermore, Chief Judge Ruschke stated that the board's standing scheduling order will not change and that, generally speaking, practice and procedure before the board will not change. Id.

On Dec. 22, 2017, however, the Federal Circuit issued a precedential decision in Bosch v. Matal stating: "the petitioner bears the burden of proving that the proposed amended claims are unpatentable 'by a preponderance of the evidence.'" Bosch Automotive Svc. Solutions LLC v. Matal, No. 2015-1928, slip op. at 22 (Fed. Cir. Dec. 22, 2017). Interestingly, the Federal Circuit cited 35 U.S.C. § 316(e) for this proposition but did not cite the Aqua Products decision. See id. In Bosch, the petitioner dropped out of the proceeding and the Federal Circuit remanded to the PTAB on the basis that the board must justify any finding of unpatentability when the challenger ceases to participate in the IPR. Id. at 22–23.

Some may scratch their heads when attempting to reconcile the Bosch decision, the Aqua Products decision, and the PTAB's guidance memorandum. In the least, the post-Aqua landscape will provide fruitful ground for arguments by both petitioners and patent owners alike in 2018.


If somehow all of my 2018 predictions for the PTAB come true, it seems that we will end up in a similar place to where we started: (a) AIA trials will continue, (b) partial institution will continue, (c) parties will continue to seek review of issues alleged to be outside the scope of Section 314(d), and (d) motions to amend will continue to be a subject of controversy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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