IP Law Daily USPTO adopts revised trial practice rule relating to AIA institution decisions
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Wednesday, December 9, 2020

USPTO adopts revised trial practice rule relating to AIA institution decisions

By Cheryl Beise, J.D.

New rule mostly codifies current PTAB institution practice, including mandating "all or nothing" institution decisions, but departs from current practice by eliminating the presumption in favor of petitioner’s testimonial evidence.

The USPTO has adopted a final rule amending the rules of practice for instituting an inter partesreview (IPR), post-grant review (PGR), and the transitional program for covered business method patents (CBM) proceedings before the Patent Trial and Appeal Board. The final rule codifies three current PTAB trial practices—instituting review on all claims and all grounds in accordance with the Supreme Court's direction and Federal Circuit mandate, authorizing parties to address issues raised in the institution decision, and permitting the filing of sur-replies in response to principal briefs. However, the new rule implements a substantial change to standard practice by eliminating the presumption in favor of the petitioner at institution when there is conflicting testimonial evidence (85 Fed. Reg. 79120, December 9, 2020).

The final rule—titled, "PTAB Rules of Practice for Instituting on All Challenged Patent Claims and All Grounds and Eliminating the Presumption at Institution Favoring Petitioner as to Testimonial Evidence"—amends 37 C.F.R. part 42 to implement four changes to PTAB institution practice: (1) instituting all claims on all grounds; (2) authorizing the parties to address issues raised in the institution decision; (3) authorizing sur-replies to principal briefs, and (4) eliminating the presumption in favor of the petitioner when there is conflicting testimonial evidence. The final rule will apply to all IPR and PGR petitions filed on or after January 8, 2021.

The final rule substantially adopts the proposed rule the Patent Office published in May (85 Fed. Reg. 31728, May 27, 2020). The Office received a total of 40 comments (available here), including 5 comments from individuals, 30 comments from associations, 1 comment from a law firm, and 4 comments from corporations. Three changes implemented in by the final rule codify existing PTAB practice and are largely supported by stakeholders. However, practitioners had different views about the new rule’s elimination of the presumption in favor of the petitioner’s testimonial evidence at the petition stage.

Instituting on all claims and all grounds. In SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018), the Supreme Court held that "any" in the statutory language of 35 U.S.C. §318(a) requiring the USPTO to "issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner," means "every." Subsequently, applying the Court’s reasoning in SAS, the U.S. Court of Appeals for the Federal Circuit has required the Board to institute review on all grounds or forego institution. In June 2018, the Patent Office issued a guidance to explain its implementation of the all or nothing principle derived from SAS. The post-SAS institution rules have been incorporated into the Consolidated AIA Trial Practice Guide (Nov. 2019).

The final rule aligns AIA trial practice with SAS, Federal Circuit precedent, and current PTAB practice of instituting review on all grounds and all claims or none. According to the Office, this "is the most efficient course of action to fully address the parties' dispute before the Board and to allow district courts to apply AIA estoppel in the most efficient manner during any subsequent, parallel litigation, including making the estoppel provisions of section 315(e)(2) more predictable and robust."

Addressing the institution decision. The new rule codifies existing PTAB practice of allowing the parties to address issues raised in the institution decision. The Office pointed out that several comments recognized that the institution decision is a vehicle by which the Board can solicit responsive evidence and arguments on certain issues and that allowing the parties to address those issues may lead to developing a more complete written record, clarifying the issues, and ensuring fairness.

Allowing sur-replies. The final rule codifies the Board’s current practice of permitting the filing of sur-replies in response to principal briefs (i.e., to a reply to a patent owner response or to a reply to an opposition to a motion to amend). The rule clarifies that a sur-reply may not be accompanied by new evidence other than transcripts of the cross-examination testimony of any reply witness. Several comments indicated that allowing sur-replies provides certainty to Board processes. Some comments also noted that allowing sur-replies to petitioner replies gives a patent owner an opportunity to respond to new exhibits or other new information in a petitioner's reply, providing balance during AIA proceedings and affording patent owners a fair opportunity to be heard. Most comments also supported the imposition of a limit of 5,600 words for sur-replies to patent owner responses to petitions.

Eliminating the presumption at institution. The final rule eliminates the current presumption that a genuine issue of material fact created by testimonial evidence will be viewed in a light most favorable to petitioner for purposes of deciding whether to institute review. According to the Office, this presumption in favor of the petitioner where there is a genuine dispute of material fact created by testimonial evidence has created confusion as to how other evidence should be weighed. The new rule is intended to remove any bias or appearance of bias in favor of the petitioner.

The Office received several comments favoring elimination of this presumption, but others opposing it. Some comments expressed concern that the process would be unfair to petitioners because it could prematurely lead to denial of institution. The Office pointed out, however, that the Board is adequately able to weigh the parties’ testimonial evidence and fairly resolve factual disputes at the institution stage without the presumption. Several comments also expressed concern the rule would unduly complicate the pre-institution phase and effectively "create a trial within a trial." The Office responded by saying that it does not anticipate additional briefing or discovery (e.g., depositions of declarants) during the institution phase as a result of the submission of testimony with the preliminary response.

Practitioner response. Joseph Matal, former USPTO Acting Director and Acting Solicitor, and current partner in the Washington, D.C., office of Haynes and Boone, LLP, told IP Law Daily that he does not expect this final rule to have a significant effect, provided that the change is applied in a way that is consistent with the statute.

"The petitioner is not required to meet a preponderance standard at institution—only to show that there is a reasonable likelihood of unpatentability," Matal said. "If the petition presents a prima facie case that the invention is obvious, and competing declarations manage to create a genuine fact dispute, then almost by definition there is a reasonable likelihood of unpatentability."

Addressing the "trial within a trial" concern raised by some practitioners, Matal said he hopes that this change "does not lead to discovery and a need to decide evidentiary disputes at the institution phase—that is what trials under section 316 are for."

MainStory: TopStory Patent GCNNews USPTO

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