Source: https://patentlyo.com/tag/aia-trials/page/2
Timestamp: 2019-04-25 12:09:12+00:00

Document:
The America Invents Act (AIA) of 2011 authorized the creation of a set of administrative trials (AIA Trials), including Inter Partes Review (IPR) proceedings, Post Grant Review (PGR) proceedings and transitional Covered Business Method Review (CBM) proceedings. In each of these proceedings, anyone can file a petition to challenge an issued patent, and, after instituting the trial, the Patent Trial and Appeal Board (PTAB) will decide whether the challenged claims should be confirmed or cancelled.
[T]he USPTO is launching an initiative to use nearly five years of historical data and user experiences to further shape and improve Patent Trial and Appeal Board (PTAB) trial proceedings, particularly inter partes review proceedings. The purpose of the initiative is to ensure that the proceedings are as effective and fair as possible within the USPTO’s congressional mandate to provide administrative review of the patentability of patent claims after they issue.
Since being created through the passage of the America Invents Act (AIA), PTAB proceedings have significantly changed the patent landscape by providing a faster, cost-efficient quality check on issued patents. . . .
This initiative will examine procedures including, but not limited to, procedures relating to multiple petitions, motions to amend, claim construction, and decisions to institute. It will evaluate the input already received from small and large businesses, startups and individual inventors, IP law associations, trade associations, and patent practitioners, and will seek to obtain more feedback regarding potential procedural enhancements.
Coke Morgan Stewart, Senior Advisor to the Director [and veteran patent litigator], will be coordinating this effort.
This short opinion by Judge Wallach affirms the PTAB findings that the claims of two Novartis patents are invalid as obvious. See U.S. Patent Nos. 6,316,023 and 6,335,031. Several prior court decisions (including those involving the petitioner here) had upheld the patent’s validity against parallel obviousness challenges.
The most interesting aspects of the decision are found under the surprising heading: Prior Judicial Opinions Did Not Bind the PTAB. When taken out-of-context, we can all agree that the statement is silly and wrong. The PTAB is obviously bound by Supreme Court and other precedent. In my view, the statement is still silly and wrong even when applied in context.
The context: In Novartis Pharm. Corp. v. Noven Pharm., Inc., 125 F. Supp. 3d 474 (D. Del. 2015)), the district court considered Noven’s obviousness argument and fount it lacking merit. Same story in Novartis Pharm. Corp. v. Par Pharm., Inc., 48 F. Supp. 3d 733 (D. Del. June 18, 2014) and Novartis Pharm. Corp. v. Watson Labs., Inc., 611 F. App’x 988 (Fed. Cir. 2015), albeit with different parties.
Nevertheless, even if the record were the same, Novartis’s argument would fail as a matter of law. The PTAB determined that a “petitioner in an inter partes review proves unpatentability by a preponderance of the evidence (see 35 U.S.C. § 316(e)) rather than by clear and convincing evidence as required in district court litigation,” meaning that the PTAB properly may reach a different conclusion based on the same evidence.
A district court may find a patent claim to be valid, and the [USPTO] may later cancel that claim in its own review. . . . This possibility, however, has long been present in our patent system, which provides different tracks—one in the [USPTO] and one in the courts—for the review and adjudication of patent claims. As we have explained . . . , inter partes review imposes a different burden of proof on the challenger. These different evidentiary burdens mean that the possibility of inconsistent results is inherent to Congress’[s] regulatory design.
Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131, 2146 (2016) (citation omitted).
My view: As suggested here, we have a failure of system design – a party who challenges a patent’s validity in court and loses should not later be allowed to re-challenge validity. [Cite the 100’s of cases and articles supporting finality of judgments.] In this situation, the PTAB / Federal Circuit should at least be required to distinguish its factual findings from those of the federal courts.
Obviousness Aside: A quirk of this case not addressed by the court is that it is an obviousness case – and obviousness is a question of law. The differences in invalidation standards for courts and the PTAB are evidentiary standards and do not apply to questions of law. Rather, questions of law should be decided identically in both fora.
The Federal Circuit has denied Google’s petition for rehearing en banc. The patent challenger asked the Federal Circuit to overturn Versata in light of the Supreme Court’s decision in Cuozzo. The issue is well known to attorneys involved in the post-grant review of covered-business-method (CBM) patents.
In Versata, a divided Federal Circuit panel held that the CBM question could be reviewed since – a non-CBM patent is “outside the PTAB’s invalidation authority.” In its briefing, Google argued that Versata was wrong when it was decided, and was extra-wrong following the Supreme Court’s Cuozzo decision that gave substantial force to the non-appealable provision of the statute. Of course, Cuozzo offered a number of ‘outs’ – suggesting generally that there will be times when appeals of initiation decisions may still be allowed.
In what appears to be a unanimous denial, the Federal Circuit has rejected Google’s petition. Judge Hughes wrote a short concurring opinion in dissent – arguing (as he did in the original Versata case) that the statute no-appeal provision should be given more weight.
I continue to believe that Versata was incorrectly decided. I further believe that Cuozzo Speed Technologies, LLC v. Lee, 136 S. Ct. 2131 (2016) confirms that our review of the Patent Trial and Appeal Board’s decision should be limited to the ultimate merits of the patent validity determination and should not, with narrow exception, extend to any decisions related to institution. Those exceptions may include the rare circumstances where the agency acts unconstitutionally or in complete disregard of the limits on its statutory authority.
I expect that the Supreme Court would agree with the Federal Circuit on this particular issue based upon how the court sees eligibility as a threshold and almost jurisdictional issue and the close tie between the CBM definition and patent eligibility. In the eyes of the Supreme Court, these issues are categorically different from the likelihood-of-invalidation question that is the substantive focus of initiation decisions.
Despite my prognostications here, Google is likely to petition for writ of certiorari. Top Supreme Court Litigator Neal Katyal handled the failed petition here that particularly asked two questions: (1) Whether the Federal Circuit has jurisdiction to review a PTAB determination that a patent is a “covered business method” patent. (2) Whether the Federal Circuit should defer to the Patent and Trademark Office’s reasonable interpretation of the definition of a “covered business method” patent.
I have discussed the first question above. The second question is also an interesting issue of administrative law that may be mooted if Congress enacts the Separation of Powers Restoration Act of 2017.
The method disclosed in the ‘895 Patent relates to vector control of a permanent magnet machine in the rotating frame of reference. The claimed novel feature requires “combining” calculated Q-axis and d-axis currents to produce an “IQdr current demand” in the rotating frame of reference, which can later be further manipulated and back-transformed into the three phase currents in the stationary frame of reference that drive the motor. Combining the Q-axis and d-axis currents to produce a unitary IQdr demand occurs prior to the back-transformation process.
Because Kusaka does not disclose a signal in the rotating frame of reference, it does not disclose an IQdr demand.
Abstract Idea Creep: The decision approach here is important because it holds the line against encroachment of eligibility issues (Section 101) into the anticipation analysis. Notably, the identified inventive step here is essentially requiring a two-step mathematical transformation (with IQdr intemediary) rather than a single-step transformation done in the prior art. Of course, the claims themselves do not indicate how the combination occurs occurs – just requiring “combining” the inputs. I expect that a number of courts thinking about the eligibility analysis would see that step as lacking sufficient concrete inventiveness.
Remand? The court reversed, but did not indicate any remand. That suggests to me that the case is over with the patentee winning the IPR.
Claim Scope: I’m still somewhat confused about whether the claim structure used here is proper under the law. 35 USC 112 states that “A claim in dependent form shall be construed to incorporate by reference all the limitations of the claim to which it refers.” In my mind, one element of claim 12 is that it is a “method” and claim 21 is a “machine . . . configured to perform the method.” As such, claim 21 cannot itself meet the method limitation of claim 12.
combining the IQr demand and the dr-axis injection current demand to produce an IQdr demand that is compensated for any torque contribution of dr-axis-current.
21. A permanent magnet rotating machine and controller assembly configured to perform the method of claim 12.
Does 35 U.S.C. § 318(a), which provides that the Patent Trial and Appeal Board in an inter partes review “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner,” require that Board to issue a final written decision as to every claim challenged by the petitioner, or does it allow that Board to issue a final written decision with respect to the patentability of only some of the patent claims challenged by the petitioner, as the Federal Circuit held?
The basic issue – under the statute, can the PTO (the PTAB acting as the Director’s delegate) institute inter partes review to a subset of the challenged claims? Or, does the requirement for a “final written decision as to every claim challenged” require that the Board grant or deny the petitions as a whole.
Patent litigation is, as we all know, highly concentrated in a small number of districts. Most notably—some might say, notoriously—the rural Eastern District of Texas hears about forty percent of all patent cases nationwide. Many lawyers and scholars consider this case concentration to be a critical flaw in the patent system.
Against this background, TC Heartland doesn’t seem like a case the Supreme Court would hear simply to affirm. As Dennis reported last week, nearly twenty amicus briefs have been filed urging reversal, including one signed by sixty-one law professors and economists. Predictions of a unanimous ruling against the Federal Circuit are not hard to find. Indeed, TC Heartland looks like other recent cases in which the Supreme Court has reversed the Federal Circuit without breaking a sweat: It involves a procedural-type rule so favorable to patent owners that, one could easily assume, it must conflict with the rules in other areas of federal litigation.
The Federal Circuit, in the caselaw on review in TC Heartland, has interpreted the patent venue statute to allow patentees to sue corporations for patent infringement in any district where personal jurisdiction exists. For companies that sell products nationwide, venue is proper almost anywhere, and that enables litigation to cluster in places like East Texas. Surely, the conventional wisdom seems to be, the Supreme Court will not permit the Federal Circuit to make the venue statute a dead letter in most patent cases.
In our forthcoming article, we defend the Federal Circuit’s venue doctrine, and we challenge the notion that Federal Circuit venue law is outside the mainstream. As we explain in detail, the expansive venue options available in patent cases are consistent with historical trends in venue law more generally. For over a century, Congress has steadily expanded plaintiffs’ venue choices, particularly in cases against corporations. In fact, the Wright and Miller treatise has gone so far as to say that Congress has “nearly eliminate[d] venue as a separate restriction in cases against corporations.” Venue in patent cases, simply put, is just like venue in other federal cases.
In the article, we also explain why the Federal Circuit’s interpretation of the venue statute is doctrinally sound. Though the relevant statutes are somewhat complicated and have been amended several times, our defense of the Federal Circuit’s venue law is simple. It is based on the plain language of two sections of the Judicial Code: 28 U.S.C. §§ 1391(c) and 1400(b). Section 1391(c)(2), a subsection of the general venue statute, says that, “[f]or all venue purposes,” corporate defendants “reside” in any district in which they are subject to personal jurisdiction. Section 1400(b), a venue statute specifically for patent infringement cases, says that infringement suits may be brought, among other places, “where the defendant resides.” Reading the two statutes together, a corporation can be sued for patent infringement in any district in which it is subject to personal jurisdiction—just like in all other types of federal cases. That is precisely what the Federal Circuit held in its seminal 1990 decision, VE Holding Corp. v. Johnson Gas Appliance Co.
Of course, there’s more law on this issue than the statutes alone. The petitioner in TC Heartland argues that the question presented is “precisely the same” as in Fourco Glass Co. v. Transmirra Products Corp., a 1957 decision in which the Supreme Court held that the general venue statute—as it read at the time—did not supplement the patent venue statute. The Court in Fourco relied heavily on its 1942 decision, Stonite Products Co. v. Melvin Lloyd Co., in which the Court interpreted an even older version of the venue statute and held that, in patent infringement cases, a defendant “resided” only in the state in which it was incorporated.
The petitioner in TC Heartland, building on the theme of “patent exceptionalism” that has resonated with the Supreme Court in recent years, claims that the Federal Circuit has ignored this authoritative Supreme Court precedent. As we explain in the article, however, even if the Supreme Court decided Fourco correctly (which is not beyond doubt), the general venue statute today is far different than it was at the time of Fourco. Recent amendments to the statute make plain that the definition of corporate residence in the general venue statute does in fact apply to the patent venue statute.
To be sure, as a matter of policy, granting plaintiffs unbridled discretion over choice of forum in patent litigation may be problematic. It has incentivized judges, particularly in East Texas, to adopt rules and practices favorable to patent holders in an effort to attract cases. It has encouraged litigants to engage in unseemly tactics to influence prospective jurors. Ultimately, discretion in forum choice can threaten innovation by facilitating nuisance litigation. But, contrary to the prevailing wisdom, these problems are emphatically not the result of a misinterpretation of the venue statute by the Federal Circuit, nor does Federal Circuit venue doctrine reflect any sort of patent exceptionalism.
There are better ways to reform the law of forum selection in patent cases. Congress could amend the venue statute. Or it could reduce the incentive for litigants to forum shop—and the ability of district judges to “forum sell”—by mandating increased procedural uniformity in patent cases. Or the Supreme Court could alter personal jurisdiction doctrine, which, for corporate defendants, is tightly linked to venue. Later this Term, the Court will decide a personal jurisdiction case that could have major consequences for patent litigation.
For a more detailed explanation of these points, read our draft article, which is forthcoming in a terrific symposium issue of the American University Law Review.
Megan La Belle is Associate Professor of Law at Catholic University of America.
Paul Gugliuzza is Associate Professor of Law at Boston University School of Law.
MPHJ’s patent enforcement campaign helped revive calls for further reform of the patent litigation system. The patentee apparently mailed out thousands of demand letters to both small and large businesses who it suspected of infringing its scan-to-email patents. The primary patent at issue is U.S. Patent No. 8,488,173.
Ricoh, Xerox, and Lexmark successfully petitioned for inter partes review (IPR), and the PTAB concluded that the challenged claims (1–8) are invalid as both anticipated and obvious. On appeal, the Federal Circuit has affirmed.
Claim 1 is a fairly long sentence – 410 words, but basically requires a scanner with the ability to both store a local file and also email a file that can be operated with a “go button” followed by “seamless” transmission. The patent itself is based upon a complex family of 15+ prior US filings, most of which have been abandoned, with the earliest priority filing of October 1996.
Although more than 20 years ago, there was prior art even back then. However, the identified prior art process was apparently not entirely “seamless” in operation. On appeal, the patentee asked for a narrowing construction of the claim scope to require “a one-step operation without human intervention.” Unfortunately for MPHJ, the claims are not so clear.
Relying upon the Provisional to Interpret the Claims: Attempting to narrow the claim scope, MPHJ pointed to one of the referenced provisional applications that disclosed a “one step” process requiring the user to simply push “a single button” On appeal, the Federal Circuit agreed that the provisional is relevant, but not how MPHJ hoped. Rather, the court found that the fact MPHJ omitted those limiting statements when it drafted the non-provisional serves as a suggestion that the claims were not intended to be limited either.
We agree that a provisional application can contribute to understanding the claims. . . . In this case, it is the deletion from the ’798 Provisional application that contributes understanding of the intended scope of the final application. . . . We conclude that a person of skill in this field would deem the removal of these limiting clauses to be significant. The [challenged] Patent in its final form contains no statement or suggestion of an intent to limit the claims to the deleted one-step operation. Neither the specification nor the claims state that this limited scope is the only intended scope. Instead, the ’173 Patent describes the single step operation as “optional.” . . . A person skilled in this field would reasonably conclude that the inventor intended that single-step operation would be optional, not obligatory.
MPHJ’s efforts really should be written up as a case-study. Unfortunate for patentees that this is the case members of the public will continue to hear about for years to come.
For patent prosecutors. Here we have another example of how a low-quality provisional filing failed the patentee. Now, you have to recognize that changes you make when filing the non-provisional will be used against you in the claim construction process. While there may be ways to use this strategically, I expect that more patentees will be trapped than benefited.
 Ricoh Ams. Corp. v. MPHJ Tech. Invs., No. IPR2014-00538, 2015 WL 4911675, (P.T.A.B. Aug. 12, 2015).
 See Trs. of Columbia Univ. in New York v. Symantec Corp., 811 F.3d 1359, 1365 (Fed. Cir. 2016) (looking to the provisional application for guidance as to claim construction); Vederi, LLC v. Google, Inc., 744 F.3d 1376, 1383 (Fed. Cir. 2014) (same).
Supreme Court Update: Are Secondary Indicia of Invention Relevant to Eligibility?
The Supreme Court is on recess until Feb 17.
I don’t know if my end-of-April prediction will hold true, but I do expect Neil Gorsuch to become a Justice on the United States Supreme Court. As a 10th Circuit Judge, Gorsuch never decided a patent case, but does have a handful of interesting IP cases.
In its newest petition, DataTreasury takes 101 for a new spin by taking the 101/103 analysis to its next logical level. If we are going to include a 103 analysis as part of the eligibility doctrine then lets go whole hog. Thus, DataTreasury asks: whether a court must consider secondary indicia of invention as evidence in its eligibility analysis? In the case, the Federal Circuit had affirmed the PTAB judgment without opinion under R.36. A second eligibility petition is found in TDE Petroleum Data Solutions, Inc. v. AKM Enterprise, Inc., dba Moblize, Inc. TDE asks the court to “please reconcile Diehr and Alice.” (I’m not literally quoting here). The patent at issue (No. 6,892,812) claims a four-step process of “determining the state of a well operation.” (a) store several potential “states”; (b) receive well operation data from a plurality of systems; (c) determine that the data is valid by comparing it to a threshold limit; and (d) set the state based upon the valid data.
duPont v. Macdermid asks whether summary judgment of obviousness is proper because of the factual disputes at issue. Similarly, in Enplas v. Seoul Semiconductor, the petitioner argues that a finding of anticipation by the PTAB must be supported by findings each and every element of the subject patent claim is disclosed in the prior art. In Enplas, the Federal Circuit affirmed the PTAB on a R.36 Judgment Without Appeal — it difficult for the petitioner to point to the particular deficiencies.
Briefing: Impression Products, Inc. v. Lexmark International, Inc., No. 15-1189 (unreasonable restraints on downstream uses) Oral arguments set for March 21, 2017.
Eligibility: DataTreasury Corporation v. Fidelity National Information Services, Inc., No. 16-883 (secondary indicia as part of eligibility analysis).
David Boundy of Cambridge Technology Law LLC, a patent law firm in Cambridge, Massachusetts, practices at the intersection of patent and administrative law, and consults with other firms on PTAB trials and appeals. In 2007–09, David led the teams that successfully urged the Office of Management and Budget to quash the USPTO’s continuations, claims, information disclosure statements, and appeal regulations under the Paperwork Reduction Act.
This paper is a short version of an article in the current issue of ABA Landslide, vol. 9, no. 3, electronic edition. It’s a follow up to my earlier paper on the Cuozzo case, which ran in Patently-O in February 2015.
Cuozzo Speed Technologies v. Lee illustrates an important lesson for the patent bar: federal courts are far more familiar with administrative law than with patent law. Almost every federal court hears several times as many administrative law cases as patent cases. Even the Federal Circuit sees at least as many administrative law issues (involving various federal employees and contracts) as patent law issues. We patent lawyers need better administrative law issue spotting skills, and when a case presents them, we must argue on administrative law grounds with administrative law expertise. Basic principles of good advocacy urge us to argue our cases on the courts’ choice of turf.
Cuozzo is a prime illustration. In Cuozzo, the Supreme Court narrowly decided that the PTO’s decision to institute an inter partes review (IPR) against Cuozzo’s patent was unreviewable. Notably, the Court’s reasoning clarifies that many decisions to institute are judicially reviewable, so long as the issues are cloaked in administrative law terms rather than patent law terms. Cuozzo’s loss stems from Cuozzo’s briefing that failed to mention a dead-on administrative law statute, and that was all but silent on the Supreme Court’s administrative law precedent. Cuozzo creates many future opportunities for informed administrative law advocacy.
The 2011 America Invents Act (AIA) created new patent reviews within the United States Patent and Trademark Office (USPTO): inter partes review (IPR), post-grant review (PGR), and covered business method review (CBM). Congress included preclusion statutes that limit judicial review of USPTO decisions to institute such reviews.
The preclusion statutes for IPR and PGR decisions to institute, 35 U.S.C. § 314(d) and § 324(e) respectively, are essentially similar: “The determination by the Director whether to institute [a review] under this section shall be final and nonappealable.” Compared to other preclusion statutes (discussed in the full Landslide paper), this is decidedly on the weak end of the spectrum of preclusion statutes.
In February 2015, the Federal Circuit gave its first deep consideration to these statutes in In re Cuozzo Speed Technologies LLC. The IPR petition against Cuozzo’s patent had applied reference A to claim 10, and references A, B, and C to claim 17 (which depended from claim 10). However, the Patent Trial and Appeal Board (PTAB) instituted on references A, B, and C against claim 10. The PTAB cited no statute or regulation, only its own naked claim of “discretion” to mix and match among the grounds in the petition.
The IPR ended in cancellation of claim 10, on references A, B, and C.
In June 2016, the Supreme Court issued its further decision. Where all decisions leave open issues, Cuozzo introduces several internal contradictions. Let’s look at the background administrative law case law, and how Cuozzo fits—or misfits.
Section 706(2) is famously deferential to agencies, but it doesn’t insulate agencies totally. Courts set aside agency decisions that fail standards of “reasoned decisionmaking” by failing to explain an important point, giving an irrelevant explanation, omitting consideration of important factors or basing a decision on impermissible factors, deciding without evidence, deciding on legal error, acting beyond jurisdictional authority, and the like.
Procedural lapses usually find review under 5 U.S.C. § 704: “A preliminary, procedural, or intermediate agency action or ruling not directly reviewable is subject to review on the review of the final agency action.” Thus, if an agency’s final decision is infected by error earlier in the process, the final decision can be attacked on the basis of that underlying error.
Courts accept judicial review of underlying issues in agency decisions, even if the final decisions are unreviewable, especially where procedural fairness is at stake.
Review under § 704/§ 706 is a persistent substrate. To preclude review, especially of underlying issues, Congress must speak expressly.
The Cuozzo majority opinion follows the basic contour of 50 years of precedent: preclusion statutes are to be read narrowly. However, on the facts, Cuozzo lost—the Court characterized Cuozzo’s complaint to be a “mine-run claim,” “an ordinary dispute about the application of certain relevant patent statutes,” and “little more than a challenge to the Patent Office’s conclusion, under § 314(a), that the ‘information presented in the petition’ warranted review.” That is, the Supreme Court understood the case to be a good faith difference of opinion in application of validly promulgated law, not a case of an agency tribunal exercising naked “discretion” against a party, making up new rules on the fly with no grounding in any text, and asserting those new rules in a context with no opportunity for rejoinder. Because the Court was not informed of the procedural basis for the case, the Cuozzo opinion stands in striking contrast with the Court’s precedent that requires agencies’ “scrupulous” observance of procedure, and strict “no deference” judicial review for procedural issues.
The Supreme Court majority opinion embeds a number of internal contradictions that leave a great deal of unclear ground. The majority’s holding, if applied to the facts—at least the procedural facts as we patent lawyers understand them—leads to the opposite result.
Most of these contradictions in the majority opinion, and perhaps the final result itself, are invited error. Cuozzo’s brief treats the case as a patent law case, arguing page after page of Title 35 U.S.C. and Federal Circuit patent law cases. Cuozzo’s opening brief cites Supreme Court “preclusion of review” cases only as a cursory afterthought—a single string cite, with no discussion of analogies to precedential cases. The brief compounds the error by citing a 1946 case that had been overruled by the Supreme Court in 2013. The table of authorities in Cuozzo’s opening brief has only a single cite to Title 5 U.S.C., and only one more in the reply brief.
But reviewability is an administrative law issue, and that’s where the Court decided it.
Even though Cuozzo’s briefs are all but irrelevant to the administrative law bases on which the Court decided the case, the reasoning comes so close to going Cuozzo’s way. Cuozzo demonstrates the importance of identifying the turf where a court is likely to decide an issue, and arguing it there. And that may well be administrative law, rather than patent law.
The latter half of the long paragraph, especially the last sentence, opens a wide barn door. The Cuozzo majority’s long paragraph indicates that the full reach of § 706 applies to underlying issues in decisions to institute. Cuozzo tells us that issues that are losers when presented in patent law vocabulary become winners when wrapped in administrative law vocabulary.
Cuozzo’s brief doesn’t squarely present the issue of the PTAB’s transgression of its own jurisdictional boundaries. Section 312(a) reads, “A petition . . . may be considered only if . . . the petition identifies, in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based . . . .” Section 314(a) reads, “The Director may not authorize [institution of an IPR] unless the Director determines that the information presented in the petition . . . shows that there is a reasonable likelihood that the petitioner would prevail . . . .” These are plainly jurisdictional statutes, confining jurisdiction to the grounds in the petition. The APA, in § 706(2)(C), provides that a court shall set aside agency action “in excess of statutory jurisdiction.” Yet, Cuozzo’s brief argues only breaches of the AIA, not the administrative law jurisdictional issues that—the majority tells us—would be reviewable under administrative law principles.
The Supreme Court has been quite strict in enforcing agencies’ jurisdictional boundaries, no matter (in the Cuozzo majority’s words) how compelling “one important congressional objective” might be.
Cuozzo’s brief fleetingly nibbles at the edges of the issue, and even cites one of the important cases in this line (for a different proposition), but never squarely frames the challenge as “in excess of [the agency’s] jurisdiction”—neither brief mentions § 706 at all. And thus Cuozzo lost the issue.
Had the issue been presented squarely as a challenge to PTAB action beyond its jurisdiction, with the patent law issues argued as underlying support for APA § 706(2)(C) “in excess of jurisdiction” grounds, Cuozzo likely would have obtained a favorable result, and the Court majority would not have been left grasping at inconsistent straws to reach its decision.
Several more omissions from Cuozzo’s brief, and internal contradictions in the majority opinion, are discussed in the full Landslide paper. The full paper shows that Cuozzo lost a very winnable case because the opening brief argued patent law principles to the near exclusion of administrative law principles. The patent bar is left with a resultant set of internal contradictions in the Cuozzo decison, with all the problems and opportunities they create. And the Federal Circuit is left with a difficult task of reconciling Cuozzo’s reasoning against its end result.
The full paper gives a number of other examples of questions that come out differently depending on whether they’re argued as patent law issues or administrative law issues. There are many differences between the powers of an Article III court and of an agency tribunal, differences between appellate review of an Article III court vs. judicial review of an agency, differences in the arguments that an appellant and appellee can raise, and differences in limits on raising new issues on appeal. Unfortunately, Cuozzo’s brief did not exploit those differences or cite the applicable administrative law.
The key take-away is that almost every PTAB proceeding and appeal presents a “target rich environment” of administrative law issues. Teams that include administrative law expertise will successfully exploit many opportunities that are invisible to teams without that expertise.
Because of internal tensions in the Cuozzo decision, many issues remain to be decided by the Federal Circuit, and will be decided differently depending on how well parties match their argument turf to courts’ choice of decision turf.
. Cuozzo Speed Techs. v. Lee (Cuozzo III), 136 S. Ct. 2131 (2016).
. In re Cuozzo Speed Techs. LLC (Cuozzo I), 778 F.3d 1271 (Fed. Cir. 2015), reissued without change to the reviewability discussion, Cuozzo II, 793 F.3d 1268 (Fed. Cir. 2015).
. Cuozzo I, 778 F.3d at 1276.
. 5 U.S.C. § 702 (“A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.”); Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971).
. Service v. Dulles, 354 U.S. 363 (1957); Vitarelli v. Seaton, 359 U.S. 535 (1959).
. Lindahl v. Office of Personnel Management,470 U.S. 768, 791 (1985) (internal quotation marks omitted).
. Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 680 (1986).
. Reuters Ltd. v. FCC, 781 F.2d 946, 950–51 (D.C. Cir. 1986); see also Berkovitz v. United States, 486 U.S. 531, 544 (1988) (“The agency has no discretion to deviate from [its procedural regulations].”).
. Cuozzo III, 136 S. Ct. 2131, 2136, 2139, 2142 (2016).
. See Brief for the Petitioner, Cuozzo III (No. 15-446), 2016 WL 737452 at xiv, 52-53, 54 (Feb. 22, 20142016); Reply Brief for the Petitioner at iii, Cuozzo III, 2016 WL 1554733 (Apr. 15, 2016).
. Cuozzo III at 2141–42 (majority opinion).
As public universities continue to obtain more patents, issues of sovereign immunity continue to arise. In a recent decision, the Patent Trial and Appeal Board (PTAB) dismissed a trio of inter partes review proceedings against the University of Florida based upon its claim of sovereign immunity.
The 11th Amendment to the US Constitution limited the “Judicial power of the United States” so that it does not “extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” Although the text of the amendment appear to include several important limitations that might exclude an administrative action (“judicial power; “suit in law or equity”), the Supreme Court has broadly interpreted the statute precluding many adjudicative administrative proceedings. For anyone who is not an American lawyer, you may need to pause here to recognize that each of the 50 American states are treated as sovereign governments and, although the Federal Government sets the “supreme law of the land,” its powers are limited by the U.S. constitution and federalist structure.
The Supreme Court has interpreted this amendment to encompass a broad principle of sovereign immunity, whereby the Eleventh Amendment limits not only the judicial authority of the federal courts to subject a state to an unconsented suit, but also precludes certain adjudicative administrative proceedings, depending on the nature of those proceedings, from adjudicating complaints filed by a private party. Following Supreme Court precedent from other areas of law, the Federal Circuit held in Vas-Cath that Missouri’s sovereign immunity allowed it to avoid an interference proceeding.
The petitioner Covidien argued that the PTAB should think of the IPR as an in rem action directed at the patent rather than at the patent owner. However, the PTAB rejected that argument – finding that the procedural elements of inter partes reviews and estoppel provisions make it look much like contested litigation – the very thing protected by the 11th Amendment.
On the whole, considering the nature of inter partes review and civil litigation, we conclude that the considerable resemblance between the two is sufficient to implicate the immunity afforded to the States by the Eleventh Amendment. Although there are distinctions, such as in the scope of discovery, we observe that there is no requirement that the two types of proceedings be identical for sovereign immunity to apply to an administrative proceeding. Further, we note that there are several similarities between civil litigation and inter partes review that are not unlike those compared in Vas-Cath for interferences.
Outcome here – Dismissed before Institution based on Sovereign Immunity of the patentee. Moving forward it will be interesting to see whether the Federal Circuit is willing to hear an appeal or instead apply the standard law that institution decisions are not subject to appeal.
 See Covidien LP v. University of Florida Research Foundation Inc., Case Nos. IPR 2016-01274; -01275, and -01276 (PTAB January 25, 2017).
 Vas-Cath, Inc. v. Curators of Univ. of Missouri, 473 F.3d 1376 (Fed. Cir. 2007).
 Fed. R. Civ. P. 13(a)(1)(A).
The following is a guest post by Oliver Richards (Fish & Richardson). Mr. Richards is a NYU Law alum and a former clerk for Judge Dyk on the Federal Circuit.
First, this distinction comports with the language of the statute. 314(d) prohibits judicial review of “[t]he determination . . . whether to institute an inter partes review.” The statute should be read to mean what it says. A review of “the” decision to institute in any case is not allowed. General review of any agency regulation is not review of “the determination . . . whether to institute” even if the result of that review overturns the decision in any particular case.
In McNary v. Hatian Refugee Ctr. Inc., 498 US 479 (1991) the Supreme Court drew a similar distinction relating to reviewability of “special agricultural worker” (“SAW”) eligibility decisions of immigration officials under the provisions of the Immigration Reform and Control Act of 1986. In McNary, the Supreme Court was asked whether 8 U.S.C. § 1160(e)—which prohibits “administrative or judicial review of a determination respecting an application for adjustment of status”—deprived a district court of jurisdiction over a suit challenging agency policies and procedures.
In my view, the patent law’s statutory language – “The determination . . . whether to institute” similarly indicates that § 314(d) was intended to apply to only individual determinations, not to prohibit any and all review of PTO procedures and policies relating to institution.
Second, the distinction strikes a fair balance between making sure the PTAB is complying with its statutory mandate and maintaining the efficiency of the IPR system. Perhaps wary of a flood of appeals clogging the courts and the corresponding slow down in IPR determinations, Congress choose efficiency in section 314(d) by prohibiting an appeal relating to every single IPR institution decision. On the other hand, allowing parties to turn to courts to check potentially problematic regulations or practices by the PTAB is an important check on that body’s power. See, e.g., Unwired Planet, LLC v. Google Inc., 841 F.3d 1376, 1382 (Fed. Cir. 2016) (concluding that the PTAB’s definition of a “covered business method patent” exceeded the statute.”) Prohibiting challenges to each and every institution decision but allowing general challenges provides for efficient review of PTAB regulations, policies, and procedures without slowing down the whole IPR system.
Any resolution of the reviewability issue must comply with the statute, must put teeth to Congress’s embrace of efficiency, and at the same time must make sure that the rights of patent holders are adequately protected. The approach I have outlined above, in my view, adequately balances efficiency with appropriate supervision of the PTAB. I’m curious to see what you all think, and I look forward to reading the comments.
Note: The views views expressed here are solely my own and do not necessarily reflect the views of my firm or any clients.
 The CAFC left open the question of whether the APA allowed for challenges to PTAB regulations in district court in Synopsys, Inc. v. Lee, 812 F.3d 1076 (Fed. Cir. 2016). From a practical standpoint, an APA challenge in a district court would seem to be a better option–the parties will have an opportunity to develop a fuller record removed from the facts of any particular IPR, and a district court may well provide a better first look than than the agency that promulgated the challenged regulation.
 NcNary follows other Supreme Court decisions distinguishing between specific challenges to a particular determination and general challenges to regulations. See Bowen v. Michigan Acad. of Family Physicians, 476 U.S. 667, 675 (1986).
 For individual determinations where the PTAB clearly exceeds its statutory authority, mandamus remains available. See, e.g., In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1274 (Fed. Cir. 2015), aff’d sub nom. Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 2131 (2016).
A new Supreme Court justice will likely be in place by the end of April, although the Trump edition is unlikely to substantially shake-up patent law doctrine in the short term.
The Supreme Court has decided one patent case this term. Samsung (design patent damages). Five more cases have been granted certiorari and are scheduled to be decided by mid June 2017. These include SCA Hygiene (whether laches applies in patent cases); Life Tech (infringement under 35 U.S.C. § 271(f)(1) for supplying single component); Impression Products (using patents as a personal property servitude); Sandoz (BPCIA patent dance); and last-but-not-least TC Heartland (Does the general definition of “residence” found in 28 U.S.C. 1391(c) apply to the patent venue statute 1400(b)).
A new eligibility petition by Matthew Powers in IPLearn-Focus v. Microsoft raises eligibility in a procedural form – Can a court properly find an abstract idea based only upon (1) the patent document and (2) attorney argument? (What if the only evidence presented supports eligibility?). After reading claim 1 and 24 (24 is at issue) of U.S. Patent No. 8,538,320, you may see why the lower court bounced this. Federal Circuit affirmed the district court’s ruling without opinion under Federal Circuit Rule 36 and then denied IPLF’s petition for rehearing (again without opinion).
analyze at least the first set and the second set of measurements; and determine whether to change what is to be presented by the display in view of the analysis.
24. A computing system as recited in claim 1, wherein the system capable of providing an indication regarding whether the user is paying attention to content presented by the display.
Civil Procedure – Final Judgment: Johnson & Johnson Vision Care, Inc. v. Rembrandt Vision Technologies, L.P., No. 16-489 (Reopening final decision under R.60).
Eligibility and CBM: DataTreasury Corporation v. Fidelity National Information Services, Inc., No. 16-883 (I have not seen the petition yet, but underlying case challenged whether (1) case was properly classified as CBM and (2) whether PTAB properly ruled claims ineligible as abstract ideas) (Patent Nos. 5,910,988 and 6,032,137).
Guest Post by Professors Arti Rai (Duke) and Colleen Chien (Santa Clara). Professors Rai and Chien both served in the Obama Administration.
On the eve of a new Administration, it is useful to take stock of progress that has been made on patent quality over the last eight years, and particularly since February 2015, when the U.S. Patent and Trademark Office launched its Enhanced Patent Quality Initiative (EPQI). In this contribution, we review progress to date and outline directions for the future.
Patent quality means agency decision making that is appropriate as a matter of both product and process – that is, legally correct, clear, consistent, and efficient. Measuring correctness, clarity, consistency, and efficiency is difficult, however. Achieving these goals can also entail significant resources – a challenge for an agency funded entirely by applicants.
When former USPTO Director David Kappos took the helm in 2009, budgetary strains and application backlog demanded immediate attention. Even so, then-Director Kappos pushed through redesign of the agency’s IT system, gave an across-the-board increase in time to examiners, adjusted count allocation so as to reduce incentives for rework, and emphasized quality improvements through international worksharing, industry training, and the creation of the Common Patent Classification system. Then, with the passage of the American Invents Act of 2011, the agency’s budgetary position stabilized and the stage was set for further focus on quality. The backlog subsided, with the queue of patents reduced by 30% over the last eight years, according to statistics released by the USPTO.
Building on these steps, as well as executive actions to crowdsource prior art and technical training, the USPTO launched the EPQI in 2015. Introduced and championed by Director Michelle Lee, the EPQI comprises a group of initiatives that embrace not only the substantive goal of quality but also take seriously issues of measurement. In total, the EPQI comprises 12 different programs and initiatives. We focus here on four initiatives that have thus far yielded data: the Clarity of the Record Pilot; the Master Review Form for measuring quality; the USPTO’s case study on examiners’ use of Section 101; and the Post-Grant Outcomes Pilot.
The Clarity of the Record Pilot ran from March 5 to August 20, 2016 as an effort to train examiners on best practices with respect to claim interpretation, reasons for allowance, and interview summaries and to determine the impact on this training on their work relative to a control group. Relative to the control group, the 125 trained examiners who examined 2600 cases averaged a 15% improvement in the clarity of their interview summary and a 25% improvement in the clarity of their reasons for allowance. Notably, although examiners in the pilot were allowed as much time as they wanted, they reported using only about 4 more hours per bi-week than the control group.
On the quality measurement front, the PTO is using its new Master Review Form (MRF) to provide both reviewers at the Office of Patent Quality Assurance (OPQA) and Technology Center (TC) supervisors a single, comprehensive record of the accuracy and clarity of patent work products. Historically, OPQA and TC supervisor reviews had used different criteria and only OPQA reviews were systematically recorded for identification of trends across different TCs. Additionally, in contrast with prior quality scores used by the PTO, the quality metrics used in the MRF disaggregate product quality (legal correctness and clarity) from process quality (efficiency and consistency) as well as perceptions of quality.
Current data on product quality, focusing on compliance with the statutory requirements of Section 101; prior art (Sections 102 and 103); and Section 112, is available for reviews conducted in the 4th quarter of FY2016. These data, admittedly self-reported, indicate compliance in about 97% of cases for Section 101; 88% of cases for prior art; and about 94% of cases for Section 112.
The USPTO’s case study on examiners’ use of Section 101, one of six stakeholder-requested case studies that the agency is currently conducting, examined a sample of 816 Office actions with an Alice/Mayo-type rejection issued between January 2016 and August 2016. Overall, the study found that 90% of rejected claims were in fact ineligible under the USPTO’s 101 guidance. However, only 75% of the substantively correct rejections were properly explained. Rates of properly explained rejections rose significantly after the USPTO conducted training on Section 101 in May and June of 2016.
The USPTO Post-Grant Outcomes pilot provided examiners of pending applications that related to patents that were the subject of an AIA trial with the contents of the trial. This common-sense initiative, which ran from April to August 2016, aimed to alert examiners of highly relevant prior art, identify training opportunities, and build a bridge between PTAB and the examining corps. 44% of the 323 examiners surveyed by the USPTO reported that they had referred to references cited in the AIA trial petition when examining the child case.
Going forward, the USPTO is pursuing bold initiatives on automated pre-examination search and on revising time allocations for examiners, the latter which is the subject of a current request for comment. To carry out efficient, correct examination, examiners must have the appropriate amount of time to examine each individual application, which can vary, making these initiatives critical for improving quality.
Going forward, one important question that remains to be fully addressed is the extent to which examination should be an “one size fits all” enterprise. In 2011, the USPTO established a separate Track 1 process for those applicants who need decisions made quickly. Small and micro-sized firms have filed more than fifty percent of the Track 1 applications, even though such entities only represented twenty percent of applicants in 2015. (The heaviest individual users of the system are large firms, however.) For other applicants, it may be appropriate to offer options for deferred, “Track 3” examination.
With a go-ahead from Congress, the USPTO might also make available varied intensity of examination. Thus applications that were more commercially valuable might be subject to heightened review, by peers or others, in exchange for greater protection from post-grant challenges. Conversely, applications that were filed for defensive reasons only could pay lower fees in exchange for a promise to limit patent use.
Another way to ensure that the quality conversation continues in public is to support continued transparency and measurement of progress on patent quality. The focus should be on objective, independently verifiable metrics such as the percentage of cases with examiner-cited non-patent literature, or the percentage of cases resolved through compact prosecution – “once and done.” Facilitating tracking of such metrics not only by examiner but by Art Unit or Technology Center could stimulate some healthy competition and also help identify best practices.
For the new focus on metrics and quality two USPTO administrators in particular deserve credit – the Office of the Chief Economist and the Deputy Commissioner for Patent Quality. Together these positions and these personnel, newly created and appointed during the last 8 years, may indeed end up being some of this Administration’s most enduring legacies on patent quality.
For an alternate viewpoint, read Gene Quinn’s post: Patently Surreal.
Article III of the U.S. Constitution provides for federal judicial power over “cases [and] controversies.” Although not found in the text, the Supreme Court requires existence of an “actual” conflict between the parties — thus prohibiting the courts from issuing advisory opinions. The doctrine of standing requires that a plaintiff/appellant “have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the [defendant/appellee], (3) that is likely to be redressed by a favorable judicial decision.” (quoting Spokeo (2016)). As a Constitional limit on judicial power, standing must always exist during a lawsuit and may be raised sua sponte by a trial or appellate court.
The case here began with Phigenix’ filing its inter partes review (IPR) petition. Since the PTO/PTAB is an administrative agency empowered by statute and Article I of the Constitution, its power is not limited by Article III. Thus, for IPR petitions, the PTO Director need not concern herself with the question of whether the petitioner has standing in the Federal Courts sense. When the case is appealed, however, the appellant must provide the required proof of injury.
In this case, Phigenix is something of a competitor of the patentee ImmunoGen and, although Phigenix does not plan to use the patented invention itself (at this point the company is only a licensor), the appellant argues that the existence of the patent makes ImmunoGen a stronger market competitor – leading to actual economic injury. In the appeal, the Federal Circuit suggests that the injury might be sufficient – but that Phigenix failed to prove its existence.
The conclusory statements in the Gold Declaration and the [attorney] letter as to the hypothetical licensing injury therefore do not satisfy the requirements of Rule 56(c)(4).
Without providing the evidence of injury, the court could not hear the case. The court also reiterated its prior position that the right-to-appeal created by 35 U.S.C. 141(c) does not replace the standing requirement. See Lujan and Consumer Watchdog.
Should this court overrule Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015) and hold that judicial review is available for a patent owner to challenge the PTO’s determination that the petitioner satisfied the timeliness requirement of 35 U.S.C. § 315(b) governing the filing of petitions for inter partes review?
en banc order. Briefs of amicus curiae may be filed without consent.
One Year Filing Deadline: Section 315(b) creates a statute of limitations for inter partes review proceedings – indicating that the petition for IPR must be filed within one-year of “the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” Here, Wi-Fi argues that Broadcom was in privity with entities involved in parallel district court litigation involving challenged patents — creating a time bar under 315(b).
The PTAB rejected Wi-Fi’s argument and call for discovery on the issue — holding that the “privy” requirement could only be met if Broadcom had the right to control the District Court litigation.
The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.
We conclude that [314(d)], though it may not bar consideration of a constitutional question, for example, does bar judicial review of the kind of mine-run claim at issue here, involving the Patent Office’s decision to institute inter partes review. . . .
The question then for court is whether we have a shenanigan here.
When is the PTO’s claim construction “reasonable”?
John D’Agostino’s patents cover processes for creating limited-use transaction codes to improve credit card security. U.S. Patent Nos. 7,840,486 and 8,036,988. The approach basically keeps the card number out of the hands of the merchant (where most scamming occurs). After being sued for infringement, MasterCard filed for inter partes review and successfully challenged many of the claims as obvious and anticipated by Cohen (U.S. Patent No. 6,422,462). On appeal, however, the Federal Circuit has vacated – holding that the PTAB’s claim interpretation was unreasonable.
Claim construction continues its reign as a messy hairball. Rather than looking to the “proper” claim construction as defined by Phillips v. AWH, the PTAB defines claims according to their Broadest Reasonable Construction (BRI). That approach largely follows Phillips, but allows the PTO to select the “broadest” construction for any given limitation from the potential set of reasonable constructions. The express intent here is to broaden the claims in order to make it easier to invalidate them during the IPR process. The idea then is that claims which survive the IPR-scope-puffery-gauntlet will be strong – giving confidence to judges and juries and fear into the hearts of infringers.
Reasonable is a Question of Law: In most areas of law ‘reasonableness‘ is considered a factual conclusion and conclusions regarding reasonableness are given deference on appeal. The Federal Circuit however has ruled that the reasonableness of claim construction in the BRI context is reviewed de novo on appeal. Unfortunately, the court has not provided much helpful guidance in terms of knowing when a given construction is reasonable. Their koan states that – although the BRI construction need not be the correct interpretation, the chosen BRI construction may not be “a legally incorrect interpretation.” (Quoting Skvorecz 2009).
Here, the question was whether the claims required a temporal separation between two communications. The PTAB said no – since it was not expressly required and broadened the claims. On appeal, the court looked at the claims and found that the express language did in fact require two separate communications: A first request that occurs “prior to” the merchant being identified and then a second communication that includes the merchant ID. According to the court, the PTAB’s interpretation (allowing for a single communication) was simply not reasonable.
On remand, the PTAB will decide whether the prior art the claim elements as they are more narrowly defined.
PTO Bound by its own Prior Construction?: Interesting issue ducked by the Federal Circuit involved the prior reexam of the patent where the PTO expressly narrowly construed the same claim scope. Court did not remark on the patentee’s suggestion here that PTO should be bound by its prior express constructions. Seems reasonable to me.
The Supreme Court in Lear, Inc. v. Adkins (1969) held that a licensee can challenge a patent’s validity — overruling the prior presumption of licensee estoppel found by Automatic Radio Mfg. v. Hazeltine Research (1950).
In his recent article, Antitrust Economist (and lawyer) Erik Hovenkamp argues that the “right to challenge a patent” should also be an important consideration in antitrust analysis. Hovenkamp defines these “challenge rights” as “the (statutory) rights of third parties to challenge patents as invalid or uninfringed.” Antitrust comes into play when a license or settlement agreement includes challenge restraints that would contractually prevent the exercise of the challenge rights.
There are obvious collateral problems with the way that Hovenkamp identifies the ability to challenge a patent as a “right” – especially if we call it a property right. However, for antitrust-contract consideration, forbearing the ability-to-challenge at least fits the definition of a legal detriment incurred by the promisee.
Although patent licenses are entitled to substantial safe harbor from antitrust regulations, Hovenkamp argues that challenge restraints should not be so entitled “but rather exist within antitrust’s domain” and barred when impermissible anticompetitive.
A problem with the argument is the way that Hovenkamp lumps-together validity and non-infringement challenges as roughly equivalent. However, I see the two as substantially distinct.
The contractual waiver of challenge rights has risen in importance since the Supreme Court’s decision in MedImmune (2007) (licensee retains right to challenge patent without breaching) and creation of the Inter Partes Review system following enactment of the AIA (2011). Prior to the availability of IPRs (and CBM/PRG), settlement of an infringement lawsuit would effectively preclude later validity challenges even without specific contractual terms. (Res Judicata). However, those estoppel principles do not apply the same way in AIA proceedings.

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