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Influence from the Top: Federal Circuit’s Influence on Post-Grant Review Trial Practice

Kenneth R (Ken) Adamo, Kirkland & Ellis, US , Kirkland & Ellis, US

The America Invents Act has significantly changed the patent litigation landscape in the U.S. It created the Patent Trial and Appeal Board ("PTAB") and three new principal post-grant review mechanisms: PGR, IPR, and CBMR ("PTAB Trials"). PTAB Trials are not "trials" in the conventional sense; they are trials on the papers with an oral hearing at the end. The general rules and structure of PTAB Trials are well-known. The U.S. Court of Appeals for the Federal Circuit recently has issued some key decisions that clarify how PTAB Trials are conducted. These decisions address estoppel and redundant grounds, scope of appellate review, motions to exclude and amend, and implications of the Administrative Procedure Act ("APA").

1. Estoppel and Redundant Grounds

Petitioners usually assert multiple grounds of unpatentability as a basis for a PTAB Trial. The PTAB routinely rejects some grounds either on the merits or as redundant. Petitioners have questioned the propriety of that redundancy practice. In Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., the PTAB instituted PTAB Trials on a subset of the asserted grounds, rejecting some as redundant (the "Payne grounds"). The PTAB eventually issued a Final Written Decision finding some claims unpatentable, but not others.

On appeal, Petitioner argued that the PTAB's redundancy practice exceeded its authority. The Federal Circuit disagreed. The PTAB's redundancy practice, according to the court, was proper and has quantifiable benefit given the PTAB's statutory obligation to complete PTAB Trials in a timely and efficient manner.2 The court also clarified the scope of IPR estoppel in response to Petitioner's argument that it was now estopped from raising the Payne grounds in future proceedings. IPR estoppel bars Petitioner from asserting any ground "raised or reasonably could have raised" during the PTAB Trial. As no PTAB Trial was instituted on the Payne grounds, Petitioner "did not raise–nor could it have reasonably raised–the (Payne grounds) during the IPR," and estoppel did not apply.3

2. Scope of Appellate Review

An appeal from the PTAB may contest the PTAB's Final Written Decision, not the PTAB's decision on whether to institute a PTAB Trial. The Federal Circuit in In re Cuozzo Speed Techs., LLC explained that the statute "must be read to bar review of all institution decisions, even after the Board issues a final decision."4 This limitation on appellate review is under review by the U.S. Supreme Court.5 There is one limited exception to this bar. The PTAB may only institute CBMR trials on CBMR-eligible patents. In Versata Dev. Grp., Inc. v. SAP Am. Inc., the Federal Circuit explained that an appeal from a CBMR Final Written Decision may address whether the PTAB "has violated a limit on its invalidation authority," i.e., whether the challenged patent is, in fact, CBMR-eligible, even though initially resolved at institution.6

3. Motions to Exclude

The PTAB rules on motions to exclude during a PTAB Trial. In Belden Inc. v. Berk-Tek LLC, Petitioner filed an IPR petition without an expert declaration and the PTAB instituted a PTAB Trial. Patent Owner submitted a Response and Petitioner submitted a Reply supported by a new expert declaration. Patent Owner filed a motion to exclude that declaration.7 The PTAB found that the declaration was properly responsive and declined to exclude it. Patent Owner appealed after the PTAB cancelled some and confirmed other claims.

On appeal, Patent Owner argued the PTAB denied its procedural rights by denying its motion to exclude because Patent Owner could not respond to the new declaration. The court observed that Patent Owner could have responded to the declaration in multiple ways, including seeking relief from the PTAB's rules. Patent Owner used some, but not all, of the mechanisms available to it. That Patent Owner failed to request other relief was no reason to fault the PTAB.8

4. Motions to Amend

Patent Owners may file a motion to amend the challenged claims in a PTAB Trial. Proposed amendments are not entered as a matter of right: Patent Owner must demonstrate that the proposed amendments are patentable. The Federal Circuit has confirmed the PTAB's motion to amend practice in Microsoft Corp. v. Proxyconn, Inc. There, the PTAB denied Patent Owner's motion to amend, finding its motion did not establish patentability of the new claims.

On appeal, Patent Owner argued that the PTAB erred by requiring its motion to satisfy requirements outside of the PTAB's regulations.9 The Federal Circuit disagreed, finding that the PTAB need only enter those amendments the PTAB determines are patentable and it is appropriate for the Patent Owner to bear the burden to establish patentability.10 A different conclusion would defeat Congress's purpose of using the PTAB to improve patent quality.11

5. New Arguments

As noted, PTAB Trials conclude with an oral hearing. Parties may not present new evidence or argument because the PTAB Trial submissions are already completed by then. In Dell Inc. v. Acceleron, LLC, Petitioner made a new anticipation argument as to one of the challenged claims at the PTAB oral hearing. The PTAB relied on this new argument to find the claim unpatentable.

On appeal, Patent Owner argued that the PTAB erred in finding the claim unpatentable solely on Petitioner's new argument. The Federal Circuit agreed. The APA requires the PTAB to "timely inform" the parties of the matters of fact and law asserted and provide all parties an opportunity "to submit rebuttal evidence."12 These requirements are reflected in the PTAB's Trial Practice Guide. The court concluded that the PTAB denied Patent Owner its procedural rights because Patent Owner could not meaningfully respond to the new argument.13

6. Conclusion

PTAB Trials are becoming part of every U.S. patent dispute. It is important to remember, however, that PTAB Trials are very different from U.S. district court litigation. Trying the two in the same manner is a mistake. Practitioners must consider the PTAB rules and policy when presenting arguments to the PTAB.

  1. This article reflects only the present considerations and views of the authors, which should not be attributed to Kirkland & Ellis LLP, or to any of its or their former or present clients.
  2. 2016 WL 1128083, *3 (Fed. Cir. Mar. 23, 2016).
  3. Id. at *5.
  4. In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1273 (Fed. Cir. 2015).
  5. Cuozzo Speed Techs., LLC v. Lee, 136 S. Ct. 890 (2016).
  6. 793 F.3d 1306, 1320 (Fed. Cir. 2015).
  7. 805 F.3d 1064, 1071 (Fed. Cir. 2015).
  8. Id. at 1081-82.
  9. 789 F.3d 1292, 1305-06 (Fed. Cir. 2015).
  10. Id. at 1307.
  11. Id. at 1307-08; see also Nike, Inc. v. Adidas AG, 812 F.3d 1326, 1350-51 (Fed. Cir. 2016) (confirming it is appropriate for the PTAB to require Patent Owner to establish patentability of new claims over prior art Patent Owner makes of record in a PTAB Trial pursuant to its duty of candor and good faith).
  12. 2016 WL 1019075, *6 (Fed. Cir. Mar. 15, 2016).
  13. Id. at *7.