Source: https://www.federalregister.gov/documents/2012/02/10/2012-2532/changes-to-implement-transitional-program-for-covered-business-method-patents
Timestamp: 2017-10-23 06:37:03
Document Index: 181492886

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Federal Register :: Changes To Implement Transitional Program for Covered Business Method Patents
7080-7095 (16 pages)
0651-AC73
https://www.federalregister.gov/d/2012-2532 https://www.federalregister.gov/d/2012-2532
Comments should be sent by electronic mail message over the Internet addressed to: TPCBMP_Rules@uspto.gov. Comments may also be submitted by postal mail addressed to: Mail Stop Patent Board, Director of the United States Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313-1450, marked to the attention of “Lead Judge Michael Tierney, Covered Business Method Patent Review Proposed Rules.”
Michael Tierney, Lead Administrative Patent Judge, Sally Medley, Administrative Patent Judge, Robert Clarke, Administrative Patent Judge, and Joni Chang, Administrative Patent Judge, Board of Patent Appeals and Interferences, by telephone at (571) 272-9797.
On September 16, 2011, the Leahy-Smith America Invents Act was enacted into law (Pub. L. 112-29, 125 Stat. 284 (2011)). The purpose of the Leahy-Smith America Invents Act and these proposed regulations is to establish a more efficient and streamlined patent system that will improve patent quality and limit unnecessary and counterproductive litigation costs. The preamble of this notice sets forth in detail the procedures by which the Board will conduct transitional covered business method patent review proceedings. The USPTO is engaged in a transparent process to create a timely, cost-effective alternative to litigation. Moreover, the rulemaking process is designed to ensure the integrity of the trial procedures. See 35 U.S.C. 326(b). The proposed rules would provide a set of rules relating to Board trial practice for transitional covered business method review proceedings.
Section 18 of the Leahy-Smith America Invents Act provides that the Director will establish regulations establishing and implementing a transitional program for the review of covered business method patents. Section 18(a)(1) of the Leahy-Smith America Invents Act provides that the transitional proceeding will be regarded as, and will employ the standards and procedures of, a post-grant review under chapter 32 of title 35, United States Code, subject to certain exceptions. For instance, a petitioner in a covered business method patent review may request to cancel as unpatentable one or more claims of a patent on any ground that could be raised under 35 U.S.C. 282(b)(2) or (3) (relating to invalidity of the patent or any claim) (see 35 U.S.C. 321(b)); and the determination by the Director whether to institute a covered business method patent review will be final and nonappealable (see 35 U.S.C. 324(e)). Section 18(a)(1)(A) of the Leahy-Smith America Invents Act provides that 35 U.S.C. 321(c) and 35 U.S.C. 325(b), (e)(2), and (f) will not apply to a transitional proceeding.
Section 18(a)(1)(B) of the Leahy-Smith America Invents Act specifies that a person may not file a petition for a transitional proceeding with respect to a covered business method patent unless the person or person's real party in interest or privy has been sued for infringement of the patent or has been charged with infringement under that patent.
Section 18(a)(1)(C) of the Leahy-Smith America Invents Act further provides that limited prior art shall apply for those challenged covered business method patents granted under first-to-invent provisions. Specifically, section 18(a)(1)(C) provides:
○ discloses the invention more than 1 year before the date of the application for patent in the United States; and
○ would be described by section 102(a) of such title (as in effect on the day before the effective date set forth in section 3(n)(1)) if the disclosure had been made by another before the invention thereof by the applicant for patent.
Section 18 of the Leahy-Smith America Invents Act provides that the Director may institute a transitional proceeding only for a patent that is a covered business method patent. Section 18(d)(1) of the Leahy-Smith America Invents Act specifies that a covered business method patent is a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions. Section 18(d)(2) provides that the Director will issue regulations for determining whether a patent is for a technological invention.
The Leahy-Smith America Invents Act provides that the transitional program for the review of covered business method patents will take effect on September 16, 2012, one year after the date of enactment, and applies to any covered business method patent issued before, on, or after September 16, 2012. Section 18 of the Leahy-Smith America Invents Act and the regulations issued under § 18 are repealed on September 16, 2020. Section 18 and the regulations issued will continue to apply after September 16, 2020, to any petition for a transitional proceeding that is filed before September 16, 2020. The Office will not consider a petition for a transitional proceeding that is filed on or after September 16, 2020.
This notice proposes new rules to implement the provisions of the Leahy-Smith America Invents Act for the transitional program for covered business method patents. As previously discussed, § 18(a)(1) of the Leahy-Smith America Invents Act provides that the Director shall issue regulations establishing and implementing a transitional post-grant review proceeding for the review of covered business method patents. In particular, this notice proposes to add a new subpart D to 37 CFR part 42 to provide rules specific to transitional post-grant review of covered business method patents. Pursuant to § 18(d)(2) of the Leahy-Smith America Invents Act, the Office in a separate rulemaking is proposing the definition of a technological invention (RIN 0651-AC75).
Additionally, the Office in a separate rulemaking is proposing to add part 42, including subpart A, (0651-AC70) that would include a consolidated set of rules relating to Board trial practice. More specifically, the proposed subpart A of part 42 would set forth the policies, practices, and definitions common to all trial proceedings before the Board. The proposed rules in the instant notice and discussion below may reference the proposed rules in subpart A of part 42. Furthermore, the Office in separate rulemakings is proposing to add a new subpart B to 37 CFR part 42 (RIN 0651-AC71) to provide rules specific to inter partes review, a new subpart C to 37 CFR part 42 (RIN 0651-AC72) to provide rules specific to post-grant review, and a new subpart E to 37 CFR part 42 (RIN 0651-AC74) to provide rules specific to derivation. The notices of proposed rulemaking are available on the USPTO Internet Web site at www.uspto.gov.
Title 37 of the Code of Federal Regulations, Chapter I, Part 42, Subpart D, entitled “Transitional Program for Covered Business Method Patents” is proposed to be added as follows:
Section 42.300: Proposed § 42.300 would set forth policy considerations for covered business method patent review proceedings.
Proposed § 42.300(a) would provide that a covered business method patent review is a trial and subject to the rules set forth in subpart A and also subject to the post-grant review procedures set forth in subpart C except for §§ 42.200, 42.201, 42.202, and 42.204. This is consistent with § 18(a)(1) of the Leahy-Smith America Invents Act, which provides that the transitional proceeding shall be regarded as, and shall employ the standards and procedures of, a post-grant review with certain exceptions.
Proposed § 42.300(b) would provide that a claim in an unexpired patent shall be given its broadest reasonable construction in light of the specification in which it appears. This proposed rule would be consistent with longstanding established principles of claim construction before the Office. See, e.g., In re Am. Acad. of Sci. Tech Ctr., 367 F.3d 1359, 1364 (Fed. Cir. 2004); In re Yamamoto, 740 F.2d 1569, 1571 (Fed. Cir. 1984). As explained in Yamamoto, a party's ability to amend claims to avoid prior art distinguishes Office proceedings from district court proceedings and justifies the difficult standard for claim interpretation. Yamamoto, 740 F.2d at 1572.
Proposed § 42.300(c) would provide a one-year timeframe for administering the proceeding after institution, with a six-month extension for good cause. This proposed rule is consistent with 35 U.S.C. 326(a)(11), which sets forth statutory timeframes for post-grant review.
Proposed § 42.300(d) would provide that the rules in subpart D are in effect until September 15, 2020, except that the rules shall continue to apply to any covered business method patent review filed before the date of repeal. This is consistent with § 18(a)(3) of the Leahy-Smith America Invents Act, which provides that the regulations issued are repealed effective upon the expiration of the eight-year period beginning on the date that the regulations take effect.
Section 42.301: Proposed § 42.301 would provide definitions specific to covered business method patent reviews.
Proposed § 42.301(a) would adopt the definition for covered business method patents provided in § 18(d)(1) of the Leahy-Smith America Invents Act. Specifically, the proposed definition would provide that covered business method patent means a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.
Pursuant to § 18(d)(2) of the Leahy-Smith America Invents Act, the Office in a separate rulemaking is proposing the definition of a technological invention, which would be set forth in proposed § 42.301(b).
Section 42.302: Proposed § 42.302 would identify who may file a petition for a covered business method patent review.
Proposed § 42.302(a) would provide that a petitioner may not file a petition to institute a covered business method patent review of the patent unless the petitioner, the petitioner's real party in interest, or a privy of the petitioner has been sued for infringement of the patent or has been charged with infringement under that patent. This proposed rule is consistent with § 18(a)(1)(B) of the Leahy-Smith America Invents Act.
Proposed § 42.302(b) would provide that a petitioner may not file a petition to institute a covered business method patent review of the patent where the petitioner, the petitioner's real party in interest, or a privy of the petitioner is estopped from challenging the claims on the grounds identified in the petition. The proposed rule is consistent with 35 U.S.C. 325(e)(1), which provides for estoppel based upon a final written decision in a post-grant review.
Section 42.303: Proposed § 42.303 would provide that a petition for a covered business method patent review may be filed at any time prior to or after the time a petition for a post-grant review of the patent would satisfy the requirements of 35 U.S.C. 321(c). This proposed rule is consistent with § 18(a)(2) of the Leahy-Smith America Invents Act.
Section 42.304: Proposed § 42.304 would provide for the content of petitions to institute a covered business method patent review. The proposed rule is consistent with 35 U.S.C. 322(a)(4), which allows the Director to prescribe regulations concerning the information provided with the petition to institute a covered business patent review.
Proposed § 42.304(a) would provide that a petition under this section must demonstrate that the petitioner has grounds for standing. To establish standing, a petitioner, at a minimum, would be required to certify that the patent is available for covered business method patent review and that the petitioner meets the eligibility requirements of § 42.302. This proposed requirement attempts to ensure that a party has standing to file the covered business method patent review and would help prevent spuriously instituted reviews. Facially improper standing would be a basis for denying the petition without proceeding to the merits of the decision.
Proposed § 42.304(b) would require that the petition identify the precise relief requested for the claims challenged. Specifically, the proposed rule would require that the petition identify each claim being challenged, the specific grounds on which each claim is challenged, how the claims are to be construed, why the claims as construed are unpatentable, and the exhibit numbers of the evidence relied upon with a citation to the portion of the evidence that is relied upon to support the challenge. This proposed rule is consistent with 35 U.S.C. 322(a)(3), which requires that the petition identify, in writing and with particularity, each claim challenged, the grounds on which the challenge to each claim is based, and the evidence supporting the challenge. It is also consistent with 35 U.S.C. 322(a)(4), which allows the Director to require additional information as part of the petition. The proposed rule would provide an efficient means for identifying the legal and factual basis supporting a prima facie case of relief and would provide the patent owner with a minimum level of notice as to the basis for the challenge to the claims.
Proposed § 42.304(c) would provide that a petitioner seeking to correct clerical or typographical mistakes could file a motion to correct the mistakes. The proposed rule would also provide that the grant of such a motion would not alter the filing date of the petition.
A. Administrative Procedure Act (APA): This notice proposes rules of practice concerning the procedure for requesting a covered business method patent review, and the trial process after initiation of such a review. The changes being proposed in this notice do not change the substantive criteria of patentability. These proposed changes involve rules of agency practice and procedure and/or interpretive rules. See Bachow Commc'ns Inc. v. FCC, 237 F.3d 683, 690 (DC Cir. 2001) (rules governing an application process are procedural under the Administrative Procedure Act); Inova Alexandria Hosp. v. Shalala, 244 F.3d 342, 350 (4th Cir. 2001) (rules for handling appeals were procedural where they did not change the substantive standard for reviewing claims); Nat'l Org. of Veterans' Advocates v. Sec'y of Veterans Affairs, 260 F.3d 1365, 1375 (Fed. Cir. 2001) (rule that clarifies interpretation of a statute is interpretive).
B. Regulatory Flexibility Act: The Office estimates that 50 petitions for covered business method patent review will be filed in fiscal year 2013. This will be the first fiscal year in which the review proceeding will be available for an entire fiscal year. The estimated number of covered business method patent review petitions is based on the number of inter partes reexamination requests filed in fiscal year 2011 for patents having an original classification in class 705 of the United States Patent Classification System. Class 705 is the classification for patents directed to data processing in the following areas: financial, business practice, management, or cost/price determination. See http://www.uspto.gov/web/patents/classification/uspc705/sched705.pdf.
The Office has reviewed the entity status of patents for which inter partes reexamination was requested from October 1, 2000, to September 23, 2011. This data only includes filings granted a filing date in the particular year rather than filings in which a request was received in the year. The first inter partes reexamination was filed on July 27, 2001. A summary of that review is provided in Table 1 below. As shown by Table 1, patents known to be owned by a small entity represented 32.79% of patents for which inter partes reexamination was requested. Based on an assumption that the same percentage of patents owned by small entities will be subject to covered business method patent review, it is estimated that 16 petitions for covered business method patent review would be filed to seek review of patents owned by a small entity in fiscal year 2013, the first full fiscal year that these proceedings will be available.
The USPTO estimates that 2.5% of patent owners will file a request for adverse judgment prior to a decision to institute and that another 2.5% will file a request for adverse judgment or fail to participate after initiation. Specifically, an estimated 2 patent owners will file a request for adverse judgment or fail to participate after institution in covered business method proceedings. Based on the percentage of small entity owned patents that were the subject of inter partes reexamination (32.79%) from October 1, 2000 to September 23, 2011, it is estimated that 1 small entity will file such requests or fail to participate in covered business method patent review.
Under the proposed rules, prior to determining whether to institute a review, the patent owner may file an optional patent owner preliminary response to the petition. Given the new time period requirements to file review petitions relative to patent enforcement proceedings and the desire to avoid the cost of a trial and delays to related infringement actions, it is anticipated that 90% of petitions, other than those for which a request for adverse judgment is filed, will result in the filing of a patent owner preliminary response. Specifically, the Office estimates that 45 patent owners will file a preliminary response to a covered business method petition. Based on the percentage of small entity owned patents that were the subject of inter partes reexamination (32.79%), it is estimated that 15 small entities will file a preliminary response to a covered business method patent review petition filed in fiscal year 2013.
Parties to a covered business method patent review may file requests to treat a settlement as business confidential, and request for adverse judgment. A written request to make a settlement agreement available may also be filed. Given the short time period set for conducting trials, it is anticipated that the alternative dispute resolution options will be infrequently used. The Office estimates that 2 requests to treat a settlement as business confidential, and 10 requests for adverse judgment, default adverse judgment, or settlement notices will be filed. The Office also estimatesthat 2 requests to make a settlement available will be filed. Based on the percentage of small entity owned patents that were the subject of inter partes reexamination (32.79%), it is estimated that 1 small entity will file a request to treat a settlement as business confidential and 3 small entities will file a request for adverse judgment, default adverse judgment notices, or settlement notices in the reviews instituted in fiscal year 2013.
The Office will determine whether to institute a trial within three months after the earlier of: (1) The submission of a patent owner preliminary response, (2) the waiver of filing a patent owner preliminary response, or (3) the expiration of the time period for filing a patent owner preliminary response. If the Office decides not to institute a trial, the petitioner may file a request for reconsideration of the Office's decision. It is anticipated that a request for reconsideration will require 80 hours of professional time to prepare and file, for a cost of $27,200. This estimate is based on the complexity of the issues and desirability to avoid time bars imposed by 35 U.S.C. 325(b).
Parties to a covered business method patent review may file requests to treat a settlement as business confidential, or file a request for adverse judgment. A written request to make a settlement agreement available may also be filed. The procedures to file requests that a settlement be treated as business confidential are proposed in § 42.74(b). The procedures to file requests for adverse judgment are proposed in § 42.73(b). The procedures to file requests to make a settlement agreement available are proposed in § 42.74(c)(2). It is anticipated that requests to treat a settlement as business confidential will require 2 hours of professional time or $680. It is anticipated that requests for adverse judgment will require 1 hour of professional time or $340. It is anticipated that requests to make a settlement agreement available will require 1 hour of professional time or $340. The requests to make a settlement agreement available will also require payment of a fee of $400 specified in proposed § 42.15(d).
Under the proposed rules, a covered business method patent review petition would be based upon most grounds identified in 35 U.S.C. 321(b), e.g., failure to comply with 35 U.S.C. 101, 102 (based on certain references), 103, and 112 (except best mode). Under current practice, a party would be limited to filing two or three motions, each limited to 25 pages, for a maximum of 75 pages. Where there is more than one motion for unpatentability based upon different statutory grounds, the Board's experience is that the motions contain similar discussions of technology and claim constructions. Such overlap is unnecessary where a single petition for unpatentability is filed. Thus, the proposed 70 page limit is considered sufficient in all but exceptional cases.
Fee Setting: 35 U.S.C. 321(a) requires the Director to establish fees to be paid by the person requesting the review in such amounts as the Director determines to be reasonable, considering the aggregate costs of the review. In contrast to current 35 U.S.C. 311(b) and 312(c), the Leahy-Smith America Invents Act requires the Director to establish more than one fee for reviews based on the total cost of performing the reviews, and does not provide for refund of any part of the fee when the Director determine that the review should not be initiated.
II. Alternative Option I. Number of grounds for which review is requested. The Office has experience with large numbers of cumulative grounds being presented in inter partes reexaminations which often add little value to the proceedings. Allowing for a large number of grounds to be presented on payment of an additional fee(s) is not favored. Determination of the number of grounds in a request may be contentious and difficult and may result in a large amount of high-level petition work. As such, the option would have a negative impact on small entities. Moreover, interferences instituted in the 1980s and early 1990s suffered from this problem as there was no page limit for motions and the parties had little incentive to focus on the issues for decision. The resulting interference records were often a collection of disparate issues and evidence. This led to lengthy and unwarranted delays in deciding interference cases as well as increased costs for parties and the Office. Accordingly, this alternative is inconsistent with objectives of the Leahy-Smith America Invents Act that the Director, in prescribing rules for the covered business method patent reviews, consider the effect of the rules on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete the instituted proceedings.
The Office considered broadly permitting practitioners not registered to practice by the Office to represent parties in trial as well as categorically prohibiting such practice. A prohibition on the practice would be inconsistent with the Board's experience, and more importantly, might result in increased costs particularly where a small entity has selected its district court litigation team for representation before the Board and has a patent review filed after litigation efforts have commenced. Alternatively, broadly making the practice available would create burdens on the Office in administering the trials and in completing the trial within the established time frame, particularly if the selected practitioner does not have the requisite skill. In weighing the desirability of admitting a practitioner pro hac vice, the economic impact on the party in interest would be considered which would tend to increase the likelihood that a small entity could be represented by a non-registered practitioner. Accordingly, the alternatives to eliminate pro hac vice practice or to permit it more broadly would have been inconsistent with objectives of the Leahy-Smith America Invents Act that the Director, in prescribing rules for the covered business method patent reviews, consider the effect of the rules on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to complete timely the instituted proceedings.
Based on the petition and other filing requirements for initiating a review proceeding, the USPTO initially estimates the burden of the proposed rules on the public to be $22,761,410 in fiscal year 2013, which represents the sum of the estimated total annual (hour) respondent cost burden ($20,405,610) plus the estimated total annual non-hour respondent cost burden ($2,355,800) provided in Part O, Section II, of this notice, infra.
Estimated time for response hours
Interested persons are requested to send comments regarding this information collection by April 10, 2012, to: (1) The Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10202, 725 17th Street NW., Washington, DC 20503, Attention: Nicholas A. Fraser, Desk Officer for the United States Patent and Trademark Office, and via email at nfraser@omb.eop.gov; and (2) The Board of Patent Appeals and Interferences by electronic mail message over the Internet addressed to: TPCBMP_Rules@uspto.gov, or by mail addressed to: Mail Stop Patent Board, Director of the United States Patent and Trademark Office, P.O. Box 1450, Alexandria, VA 22313-1450, marked to the attention of “Lead Judge Michael Tierney, Covered Business Method Patent Review Proposed Rules.”
2. A new subpart D is added to read as follows:
(a) A covered business method patent review is a trial subject to the procedures set forth in subpart A of this part and is also subject to the post-grant review procedures set forth in subpart C except for §§ 42.200, 42.201, 42.202, and 42.204.
(c) A covered business method patent review proceeding shall be administered such that pendency before the Board after institution is normally no more than one year. The time can be extended by up to six months by the Chief Administrative Patent Judge for good cause.
(d) The rules in this subpart are effective until September 15, 2020, except that the rules shall continue to apply to any petition for a covered business method patent review filed before the date of repeal.
In addition to the definitions in § 42.2, the following definitions apply to proceedings under this subpart:
(a) A petitioner may not file with the Office a petition to institute a covered business method patent review of the patent unless the petitioner, the petitioner's real party in interest, or a privy of the petitioner has been sued for infringement of the patent or has been charged with infringement under that patent.
(b) A petitioner may not file a petition to institute a covered business method patent review of the patent where the petitioner, the petitioner's real party in interest, or a privy of the petitioner is estopped from challenging the claims on the grounds identified in the petition.
§ 42.303
§ 42.304
In addition to any other notices required by subparts A and C of this part, a petition must request judgment against one or more claims of a patent identified by patent number. In addition to the requirements of § 42.22, the petition must set forth:
(a) Grounds for standing. The petitioner must demonstrate that the patent for which review is sought is a covered business method patent, and that the petitioner meets the eligibility requirements of § 42.302.
(3) How the challenged claim is to be construed. Where the claim to be construed contains a means-plus-function or step-plus-function limitation as permitted under 35 U.S.C. 112, paragraph 6, the construction of the claim must identify the specific portions of the specification that describe the structure, material, or acts corresponding to each claimed function;
(5) The exhibit number of supporting evidence relied upon to support the challenge and state the relevance of the evidence to the challenge raised including identifying specific portions of the evidence that support the challenge. The Board may exclude or give no weight to evidence where a party has failed to state its relevance or to identify specific portions of the evidence that support the challenge.
(c) A motion may be filed that seeks to correct a mistake in the petition where the mistake is of a clerical or typographical nature. The grant of such a motion does not change the filing date of the petition.
[FR Doc. 2012-2532 Filed 2-9-12; 8:45 am]