The USPTO’s Second Set of Proposed Changes to IPR Proceedings

Inter partes review became available on September 16, 2012.  Since then, over 3,400 IPR petitions have been filed.  The USPTO implemented a first set of changes, or “quick fixes,” in March, and now, the USPTO seeks to improve IPR via a host of additional proposed changes.  But will they result in any real change?  Only time will tell.

On August 19, 2015, the USPTO issued its second set of proposed changes to IPR proceedings.  They are relevant to pharmaceutical companies given that at least 8-10% of IPR petitions relate to pharma patents.  One unique example that shows why IPR petitions are an important tool for generic companies is Apotex Inc. v. Alcon Pharmaceuticals, Ltd. IPR2013-00012.  Apotex filed this IPR against U.S. Patent No. 6,716,830 (the “‘830 patent”), which covered Alcon’s ophthalmic product Vigamox®.  Apotex and Alcon settled their dispute, but it is notable because Apotex filed its IPR petition against the ‘830 patent—and the PTAB instituted a trial against the ‘830 patent—after the District of Delaware had found the ‘830 patent not invalid in Alcon, Inc. v. Teva Pharms. USA, Inc., 664 F. Supp. 2d 443 (D. Del. 2009).

The USPTO’s second set of proposed changes to inter partes review proceedings were generated in response to the USPTO’s request for comments published in June 2014, which set forth 17 specific questions relating to: (1) claim construction standard; (2) motions to amend; (3) preliminary responses; (4) obviousness; (5) real party in interest; (6) additional discovery; (7) multiple proceedings; (8) extension of 1 year period to issue a final determination; (9) oral hearing; and (10) general/miscellaneous.  See 79 FR at 36476.  The Director of the USPTO Michelle K. Lee posted a blog on the agency’s website summarizing the proposed changes.  Ms. Lee introduced the changes with the following context:

We recognize that, while we believe the proceedings are working well, there are improvements that could be made based on our and the public’s experiences with the proceedings. Along with the PTAB’s refinement and improvement of its proceedings that it has made through specific decisions, today’s proposed rules represent the next step in making improvements to these proceedings.

The proposed changes generally do not impose rigid rules on PTAB panels, so the actual impact of the rules, should they be adopted, is difficult to forecast.  To the extent substantive changes have been proposed, they appear to favor patent owners.  For example, the proposed rules would permit patent owners to file testimonial evidence with their preliminary response.  As it currently stands, patent owners are not allowed to rebut a petitioner’s evidence of alleged invalidity (most often submitted by the petitioner via an expert declaration) with its own evidence until after the PTAB institutes a trial.  This limitation impacts a patent owner’s ability to avoid trial institution, and has led to many patent owners waiving their right to submit a preliminary response altogether.

Another proposed change would permit patent owners to raise real-party-in-interest and privity challenges at any time during the proceeding.  The PTAB has also proposed requiring a Rule 11-type certification for all submissions, which should ensure that all petitioners adequately investigate the merit of their claims prior to submission.  It should also minimize the burden on patent owners of responding to meritless petitions.

Most of the proposed changes would leave their application to the discretion of the PTAB panels.  For example, patent owners have often struggled to obtain and present sufficient evidence to corroborate claims of secondary considerations.  The proposed rules try to address this issue by recognizing that, while the Garmin factors still apply, “it is important to provide a patent owner a full and fair opportunity to develop arguments regarding secondary considerations.”  The proposed rules further recognize “that a conclusive showing of nexus between the claimed invention and the information being sought through discovery is not required at the time the patent owner requests additional discovery.”  This should, in theory, make it easier for patent owners to obtain discovery from petitioners relating to secondary considerations.

The USPTO’s new proposed changes also include relevant guidance about current PTAB rules and procedures, including:

  • PTAB panels will continue to apply the broadest reasonable interpretation standard for claim construction of unexpired claims as opposed to Phillips; however, the Board will apply Phillips-type claim construction to claims what will expire before a final written decision;
  • PTAB panels will require a patent owner, with respect to a motion to amend, to show patentability of substitute claims over the prior art of record;
  • PTAB panels will maintain discretion with respect to stay, transfer, consolidate, or terminate multiple proceedings involving the same claims;
  • PTAB panels will continue to address requests for live testimony at hearings on a case-by-case basis;

The public comment period on the proposed changes will expire on October 19, 2015.  The USPTO will issue a final rule likely implementing these changes, or a modified version of them, at an unidentified later date.

Takeaway:  The USPTO’s second set of proposed changes show that the USPTO is in no rush to take away power and discretion from PTAB panels.  The changes do, however, suggest that the USPTO has heard the rumblings from patent owners that the current IPR rules favor petitioners too much.  As time passes, even without any rigid or significantly material changes to IPRs, petitioners and patent owners should prepare for and anticipate that the pendulum will swing towards patent owners.  But exactly how far that pendulum will swing, or how fast, remains an unknown.