United States: Mainland Or Mirage: Strategic Considerations For The USPTO's Motion To Amend Pilot Program

For years, many patent owners navigating AIA proceedings have complained that existing procedures prevented them from amending their claims. Seeking to address some of these concerns, the USPTO recently released an optional pilot program for motions to amend (MTA) that applies to AIA trial proceedings instituted on or after March 15, 2019.1Assuming this program achieves its goal of facilitating claim amendment, both patent owners and petitioners may want to recalibrate their strategies—patent owners on whether to pursue amendments; and petitioners on whether to pursue an AIA challenge in the first place. Legal issues beyond the scope of the claims, like the doctrine of intervening rights, can make the desired destination illusory.

Overview of the USPTO's Pilot Program for Motions to Amend

The USPTO's pilot program provides two new amendment options: "The first option is that a patent owner may choose to receive preliminary guidance from the Board on its MTA."2The preliminary, nonbinding guidance allows the Board to assess arguments from both sides concerning the likelihood of successfully amending. If this option is selected, "The Board's preliminary guidance will focus on the limitations added in the patent owner's MTA and will not address the patentability of the originally challenged claims."3

The second option allows the patent owner to further amend claims in a revised MTA.4  A patent owner may file a revised MTA after receiving petitioner's opposition to the original MTA and/or after receiving the Board's preliminary guidance (if requested).5  "A revised MTA includes one or more new proposed substitute claims in place of previously presented substitute claims to address issues identified in the preliminary guidance and/or the petitioner's opposition."6  A Revised MTA may include substitute claims, new arguments and evidence germane to the input received, or material previously presented in the original MTA.7

Notwithstanding selection of either of these options, the USPTO still expects to complete these proceedings within the statutorily prescribe deadline of one year after institution, leading to some increased timing pressures on litigants. The USPTO states that this pilot program will be in effect for about one year, as a test period and to gain insight on the effectiveness of these procedural changes. It may be terminated or continued, depending on the results.8

Strategic Considerations of the Pilot Program for Patent Owners and Petitioners

Although the pilot program provides a new procedure for amending claims, legal issues like intervening rights can greatly affect the benefits of the amendment to the patent owner. Intervening rights—or the lack thereof—can also greatly affect the value to the petitioner of filing an AIA proceeding. Each side should weigh these considerations before setting its course.

The doctrine of intervening rights was created to protect a party who is making, using, offering for sale, importing, or selling products and "finds its previously lawful activities rendered newly infringing under a modified patent." There are two types of intervening rights: absolute intervening rights—those that protect an accused infringer from new or amended claims when the accused product was made or used before the issuance of the claims; and equitable intervening rights—those that protect an accused infringer from new or amended claims when the accused product was made or used after the issuance, but where the accused infringer made substantial preparations for the infringing activities prior to issuance.10

Where the infringing product has been identified, patent owners may wish to consider whether amending a claim under the pilot procedure risks eliminating their remedies in other venues against the product. For example, a vast majority of IPR proceedings have copending district court litigations with identified infringing products11and may therefore be impacted by intervening rights.12  The risk of intervening rights against current products may be counterbalanced, however, by the value of the amended claims covering future products. The type of amendment may also matter. A patent owner may avoid intervening rights "where the accused product or activity infringes a claim that existed in the original patent and remains 'without substantive change.'"13  This analysis focuses on "whether the scope of the claims [is] identical, not merely whether different words are used."14

Risks associated with intervening rights do not just apply to patent owners. If the petitioner lacks the protection of intervening rights, filing an AIA challenge may reveal its best unpatentability attacks and allow the patent owner to amend her claims around them without forgoing any remedies. (And the new pilot procedure may put added discovery and briefing strain on the petitioner, forcing it to put forward evidence and positions in the context of opposing the amendment seriatim, arguments for which the eventual estoppel effect remains unknown.)

One situation with potential risk may occur if a petitioner files a PTAB proceeding (and thus opens the door to an amendment) while its product is incomplete. Whether or not equitable intervening rights apply would be based on various factors, such as:

  1. whether "substantial preparation" was made by the potential infringer before issuance;
  2. whether the potential infringer continued manufacturing before issuance on advice of its patent counsel;
  3. whether there were existing orders or contracts;
  4. whether noninfringing goods can be manufactured from the inventory used to manufacture the potential infringing product and the cost of conversion;
  5. whether there is a long period of sales and operations before the patent issued from which no damages can be assessed; and whether the potential infringer has made profits sufficient to recoup its investment.15

Petitioners with equitable problems may also want to carefully weigh filing an AIA challenge and inviting strategic amendments. Equitable intervening rights derive from a court's equitable powers and an accused infringer must have clean hands to use this doctrine.16  Courts have held, for example, that a party who has committed willful infringement cannot rely upon the doctrine of intervening rights.17  Petitioners with such issues may not be able to invoke the equity of the court for intervening rights relief.

Conclusion

Patent owners and petitioners should consider the effect of intervening rights on AIA proceedings when considering whether to amend claims or file AIA proceedings. Although the path may seem cleared under the new pilot program, facts unrelated to claim scope may lead to dramatically different destinations.

Footnotes

1 84 Fed. Reg. 9497 (Mar. 15, 2019).

2 Id.

3 Id.

4 Id.

5 Id.

6 Id. at 9499.

7 Id. at 9501.

8 Id. at 9497.

9 Marine Polymer Techs., Inc. v. HemCon, Inc., 672 F.3d 1350, 1361 (Fed. Cir. 2012).

10 See id. at 1362; 35 U.S.C. § 252 ; 35 U.S.C. § 307(b) ; 35 U.S.C. § 318(c).

11 USPTO Patent Public Advisory Committee Quarterly Meeting, PTAB Update (Nov. 9, 2017), available at https://www.uspto.gov/sites/default/files/documents/20171109_PPAC_PTAB_Update.pdf.

12 Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1346 (Fed. Cir. 1998).

13 Seattle Box Co. v. Indus. Crating & Packing, Inc., 731 F.2d 818, 827–28 (Fed. Cir. 1984).

14 Laitram Corp. v. NEC Corp., 163 F.3d 1342, 1346 (Fed. Cir. 1998).

15 Visto Corp. v. Sproqit Techs., Inc., 413 F. Supp. 2d 1073, 1090 (N.D. Cal. 2006).

16 See Mfr.'s Fin. Co. v. McKey, 294 U.S. 442, 449 (1935) ("[One] who seeks equity must do equity.").

17 See Shockley v. Arcan, Inc., 248 F.3d 1349, 1361 (Fed. Cir. 2001) ("The record, with its finding of willful infringement, amply supports the district court's discretion to deny Arcan access to equity.").

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