On June 12, 2017, the Supreme Court granted certiorari to review whether the America Invents Act’s provisions on inter partes review (IPR) violate the Seventh Amendment right to jury by extinguishing patent claims through a non-Article III court. Oil States Energy Services LLC v. Greene’s Energy Group LLC.1 The USPTO’s authority to decide IPRs does not stem from Article III of the Constitution. Rather, this authority is firmly rooted in Article I. Article I gives Congress the authority “To promote the Progress of Science and useful Arts, by securing for limited Times to Writers and Inventors the exclusive Right to their respective Writings and Discoveries.” In other words, Article I grants Congress the power to make patent laws. The IPR provision comprises a major part of Congress’ most recent patent legislation, the America Invents Act.
In a short time, the USPTO, via its Patent Trial and Appeal Board (PTAB) has reviewed thousands of IPR petitions and has effectively invalidated several thousand patent claims. Given the importance of patent rights, aggrieved Patent Owners have already raised this constitutionality challenge — without success.
In 2015, the Federal Circuit issued a detailed decision indicating that IPRs do not violate the Seventh Amendment right to jury trial. MCM Portfolio v. Hewlett Packard.2 There, the aggrieved Patent Owner also sought Supreme Court review of the constitutionality question. However, the Supreme Court declined.
Notably, in MCM Portfolio, the Federal Circuit explained the public rights doctrine and its applicability to patents and IPR administrative proceedings, and the inapplicability of the Seventh Amendment in such situations. The Federal Circuit noted:
We followed Supreme Court precedent that affirmed the “constitutionality of legislative courts and administrative agencies created by Congress to adjudicate cases involving “public right.” [ ] We found that “the grant of a patent is primarily a public concern. Validity is often brought into question in disputes between private parties, but the threshold question usually is whether the PTO, under the authority assigned to it by Congress, properly granted the patent.”
. . . .
The Supreme Court has stated that “the Seventh Amendment is generally inapplicable in administrative proceedings, where jury trials would be incompatible with the whole concept of administrative adjudication and would substantially interfere with [the agency’s] role in the statutory scheme.
In the current case, Patent Owner Oil States spends a significant amount of its briefing explaining the “common law,” or in equity origins of patent law, as opposed to legislative basis of IPRs. Patent Owner must adopt this position to have its case fit the Seventh Amendment criteria for a mandatory jury trial.
Not surprisingly, Respondent Greene’s Energy Group relies on the Federal Circuit decision and rationale of MCM Portfolio.
The Supreme Court will likely render its opinion in Spring 2018.
As an additional note, Patent Owner Oil States also requested the higher court to review multiple questions on the PTAB’s conduct of proceedings in the underlying case. These procedural issues include 1) the PTAB’s requirements on Patent Owners for amending patent claims during an IPR and 2) the application of the correct claim construction under “broadest reasonable interpretation.” Given that the Federal Circuit simply affirmed the PTAB decision without a written opinion, it seemed unlikely that the Supreme Court would take up review of these detailed administrative issues, and it did not do so.
1 (Docket 16-712)
2 812 F. 3d 1284 (Fed. Cir. 2015) cert. denied (Docket 15-1330).
Susan P. Pan
Email: firstname.lastname@example.orgMs. Pan specializes in patent portfolio building for large and small companies, including patent preparation, prosecution and appeals. Ms. Pan’s legal expertise also extends to multi-party complex patent litigation before several U.S. federal district courts, the U.S. International Trade Commission, and the U.S. Federal Trade Commission. Ms. Pan counsels clients in patent licensing and valuation, taking into account probabilities of infringement and invalidity.
Board finds Internet advertising patent not eligible for CBM Review under Federal Circuit Secure Access and Unwired Planet standard
The Patent Trial and Appeal Board recently denied Cover Business Method (CBM) review of an Internet advertising display patent assigned to KlausTech. The petitioner, Google, argued that the claim limitation “retaining … a record of the browser identity” should be construed as financial in nature because the specification describes determining compensation for publisher websites and billing advertisers as the only reasons for the retaining the records. See Google Inc. v. KlausTech, Inc., CBM2016-00096, Paper 12 at 5-9 (PTAB April 6, 2017) (Decision Denying Request for Rehearing). However, the Board disagreed, focusing on only the language of the claims themselves:
In Garmin Int’l, Inc. v. Cuozzo Speed Tech. LLC, IPR2012-00001, (PTAB March 5, 2013), the Board set forth five factors—commonly referred to as the Garmin factors—for determining whether “additional discovery” will be granted to a party during a proceeding before the Board, such as an inter partes review (IPR) covered business method review (CBM) or post-grant review (PGR). Briefly, the five Garmin factors are:
1. More Than A Possibility And Mere Allegation;
2. Litigation Positions And Underlying Basis;
3. Information Of Which Equivalent Information Can Be Generated By Other Means;
4. Made Via Easily Understandable Instructions; and
5. Overly Burdensome To Answer.
It was known that the Patent Trial and Appeal Board (“PTAB”) rarely grants a patent owner’s motion to amend claims during inter partes review (IPR) proceedings, and there is no exception in an IPR proceeding involving Veritas Technologies LLC and Veeam Software Corporation (No. IPR2014-00090). In view of the PTAB’s recent denial, Veritas appealed to the Federal Circuit. On August 30, 2016, the Federal Circuit issued its opinion in Veritas Technologies LLC v. Veeam Software Corporation, 120 USPQ2d 1046 (Fed. Cir. 2016) finding the PTAB’s denial of Verita’s motion to amend was “arbitrary and capricious” and vacated the PTAB’s decision. Id. at 1048.
When a particular patent is involved in an inter partes review (IPR) proceeding or other post-grant review proceeding, the USPTO has wide discretion in determining whether to allow an additional proceeding to be instituted or continued. The two governing statutes are 35 U.S.C. §315(d) and 35 U.S.C. §325(d), each of which states that “the Director may determine the manner in which the . . . matter may proceed, including providing for stay, transfer, consolidation, or termination of any such matter.”
In many instances, the Patent Trial and Appeal Board (PTAB) denies institution of a subsequent IPR. In this regard, even when “a petitioner establishes a reasonable likelihood of prevailing with respect to at least one challenged claim,” the PTAB may decide against instituting the subsequent proceeding. Conopco v. Procter & Gamble, IPR 2014-00506, Paper No. 25 at page 4 (Decision Denying Request for Rehearing). Even if a subsequent proceeding regarding a particular patent is requested by a different petitioner, the PTAB has discretion to deny institution for “efficient administration.” See Unified Patents v. PersonalWeb Technologies, IPR 2014-00702, Paper No. 13.
On June 13, 2016, the Patent Trial and Appeal Board (PTAB) entered its first Final Written Decision in a Post Grant Review (PGR) proceeding. The PTAB found that the Petitioner had failed to show unpatentability based on prior art, but the PTAB agreed with the Petitioner that all claims are directed to unpatentable abstract ideas under 35 U.S.C. § 101.
US Patent No. 8,660,88 (the ‘888 patent) is directed to a system, method, and computer-readable medium for evaluating a relative market value of a cattle sale group. In the PGR, the Petitioner relied on two grounds that are not available in an Inter-Parties Review (IPR) proceeding.
The Patent Trial and Appeal Board (“the PTAB”) has a staunch reputation for rarely granting a patent owner’s motion to amend claims during inter partes review proceedings (to date, the Board has only granted six such motions to amend). However, in the matter of Shinn Fu Co. v. Tire Hanger Corp., IPR2015-00208 (decided on April 22, 2016), the PTAB granted The Tire Hanger Corporation’s (“Tire Hanger”) motion to amend the claims of its U.S. Patent No. 6,681,897 (“the ‘897 patent”). The PTAB’s decision allowed Tire Hanger to salvage invalid claims with narrowing claim amendments and provides encouragement to patent owners that more motions to amend may be granted by the PTAB in the future.
The America Invents Act (AIA) provided several mechanisms for reviewing the validity of issued patents. While Inter Partes Review (“IPR”) is commonly used, a review of Covered Business Method (“CBM”) patents is another mechanism for reviewing validity. Moreover, challenging a patent using CBM can be more desirable than in an IPR, since CBM provides the petitioner more bases for review than in an IPR.
Federal Circuit Affirmed: Institutions Decisions Are Not Appealable and Broadest Reasonable Interpretation Is Reasonable
On June 20, 2016, the Supreme Court issued its ruling in Cuozzo Speed Technologies, LLC v. Lee. There were two issues presented in Cuozzo: (1) whether the Board’s institution decision of an IPR is appealable, and (2) whether the broadest reasonable construction standard is appropriate to apply in patent office proceedings. For both of these issues, the Court affirmed the Federal Circuit’s previous ruling.
The outcomes of inter partes review petitions and final written decisions have differed dramatically for claims in pharmaceutical patents, compared to other technologies, particularly for obviousness challenges of claims to chemical compounds. In its final written decisions of Orange Book-listed patents, the Patent Trial and Appeal Board (“PTAB”) has found claims unpatentable 35% of the time, in contrast to a 73% unpatentability rate in final written decisions across all technologies. Likewise, in its institution decisions, the PTAB has granted 70% of petitions for inter partes review, but only 57% of petitions concerning pharmaceutical patents, and only 30% of petitions raising obviousness challenges of chemical compounds.