USPTO Issues Final Rules Establishing Post-Grant Trial Procedures Under the AIA

On August 14, 2012, the USPTO issued four final rules packages to implement the new trial proceedings that the Patent Trial and Appeal Board (Board) will conduct under the Leahy-Smith America Invents Act (AIA). The new trial proceedings (inter partes review, post-grant review, and transitional program for covered business method patents) offer competitors new opportunities to challenge granted patents within the USPTO. While this article highlights specific aspects of the rules, patent holders and competitors also will want to consider strategic issues, such as those we have addressed in previous publications (Foley.com/patentreform). The four final rules take effect on September 16, 2012. The USPTO has not yet issued final rules for derivation proceedings, which will go into effect on March 16, 2013.

Post-Grant Trial Rules Packages With AIA Effective Date of September 16, 2012

• Rules of Practice for Trials Before the Patent Trial and Appeal Board and Judicial Review of Patent Trial and Appeal Board Decisions 
• Office Patent Trial Practice Guide 
• Changes to Implement Inter Partes Review Proceedings, Post-Grant Review Proceedings, and Transitional Program for Covered Business Method Patents 
• Transitional Program for Covered Business Method Patents — Definition of Technological Invention

The USPTO also has published final rules relating to preissuance submissions, miscellaneous post-patent provisions, changes to the inventor’s oath/declaration, and supplemental examination. For information on those rules, please see the August 14, 2012 Legal News Alerts available here and here, respectively. Additional patent reform-related articles are available on Foley’s PharmaPatentsBlog and at Foley.com/patentreform.

The following is a detailed summary of the USPTO’s proposed rules for the new post-grant trial proceedings.

Rules of Practice for Trials Before the Patent Trial and Appeal Board (Subpart A)

General procedures common to inter partes review, post-grant review, covered business method review, and derivation proceedings are now codified at 37 CFR 42, subpart A. Notable provisions include: 

• Institution of trial: The director’s authority to institute a trial is delegated to the Board. (§ 42.4(a)) 
• Filing of documents: Page size must be 8.5 inch x 11 inch, 14-point font, double-spaced (except in claim charts, headings, tables of authorities, indices, signature blocks, and certificates of service). (§ 42.6) [Note: The final rules allow claim charts to be single-spaced, thus doubling the amount of space available for claim charts.] 
• Part interest: An owner of a part interest in the patent may act to the exclusion of an inventor or a co-owner if the inventor or co-owner is unable or refuses to prosecute the proceeding, or if it is otherwise shown to be in the interests of justice. (§ 42.9(b)) 
• Counsel: Parties represented by counsel must designate both a “lead” counsel and a “back-up” counsel who can conduct business on behalf of the lead counsel. The Board may recognize counsel pro hac vice upon a showing of good cause (e.g., “counsel who is not a registered practitioner may be granted upon showing that counsel is an experienced litigating attorney and has an established familiarity with the subject matter at issue in the proceeding”). The Board may disqualify counsel during the proceeding. Counsel may not withdraw absent Board authorization. (§ 42.10) [Note: Unlike the proposed rule, the final rule makes the designation of a lead and back-up counsel mandatory, and provides the above example of “good cause.”] 
• Sanctions: The Board may impose sanctions against a party for misconduct. Sanctions can include attorney fees, an order requiring a terminal disclaimer of patent term, or entry of judgment in the trial. (§ 42.12) 
• Petition filing fees: Filing fees to institute a proceeding will be based on the number of claims being challenged. For inter partes review, the fee for challenging one to 20 claims is $27,200 (and $600 for each claim in excess of 20 claims). For post-grant and covered business method patent reviews, the fee for challenging one to 20 claims is $35,800 (and $800 for each claim in excess of 20 claims). The fee for a derivation proceeding would be $400. (§ 42.15) [Note: The final rules reduce the effective per-claim fees for more than 40 claims for inter partes, post-grant, and covered business method patent reviews.] 
• Petitioner reply: The default timeframe for filing a petitioner’s reply is three months from the patent owner’s response to petition. (§ 42.23) [Note: The final Trial Practice Guide increased this timeframe from two to three months.] 
• Page limits: Page limits are set at 60 pages for petitions requesting inter partes review or derivation proceedings, 80 pages for petitions requesting post-grant or covered business method patent reviews, and 15 pages for motions. Oppositions will have the same page limits as the corresponding petition or motion. Replies to patent owner responses to petitions are limited to 15 pages. (§ 42.24) [Note: The final rules increased the page limits for petitions and allow single spacing for claim charts.] 
• Motion deadlines: Motions may only be filed according to a schedule set by the Board. Oppositions are due one month after the motion. Replies are due one month after the opposition. (§ 42.25) 
• Mandatory initial disclosures: Parties may agree to mandatory discovery of initial disclosures. The parties must submit any agreement on initial disclosures no later than the filing of the patent owner preliminary response, and may automatically take discovery of information identified in initial disclosures upon institution of trial. (§ 42.51(a)) [Note: The final rules added this provision regarding initial disclosures.] 
• Routine discovery: Unless previously served or otherwise by agreement of the parties, any exhibit cited in a paper or in testimony must be served with the paper or testimony. Cross-examination of affidavit testimony is authorized within such timeframe as the Board may set. Unless previously served, relevant information that is inconsistent with a position advanced by the party during the proceeding must be served, unless protected by attorney-client or other legally recognized privilege. (§ 42.51(b)) [Note: The final rules narrowed the scope of routine discovery involving inconsistent information.] 
• Additional discovery: Except in post-grant reviews (see § 42.224 below), additional discovery may be authorized when it is shown to be in the interests of justice. (§ 42.51(c)) 
• Compelling testimony and production: A party seeking to compel testimony or production must file a motion for authorization. For testimony or production sought outside the United States, the motion also must explain why the testimony or production can be compelled in the foreign country and demonstrate that the party has made reasonable efforts to obtain the testimony or production in the United States. (§ 42.52) 
• Taking testimony: Uncompelled direct testimony must be submitted in the form of an affidavit, which can be an ex parte deposition transcript. All other testimony must be in the form of a deposition transcript. Parties may agree to video-recorded testimony, and the Board may authorize or require live or video-recorded testimony. The proponent of the direct testimony will typically bear all costs associated with the testimony, not including an opponent’s attorney fees. (§ 42.53) 
• Protective order: A party may file a motion to seal where the motion contains a proposed protective order. The Board may, for good cause, issue an order to protect a party or person from disclosing confidential information. (§ 42.54) 
• Confidential information in a petition: Confidential information in a petition must be filed, but need not be served, concurrent with a motion to seal and a proposed protective order. The patent owner may only access the sealed confidential information prior to the institution of the trial by agreeing to the terms of (1) the protective order requested by the petitioner, (2) a protective order that the parties file jointly, or (3) the default protective order set forth in the Office Patent Trial Practice Guide. (§ 42.55) [Note: The final rules increased patent owners’ flexibility to agree to protective orders other than those proposed by the requester.] 
• Expungement of confidential information: After denial of a petition to institute a trial or after final judgment in a trial, a party may file a motion to expunge confidential information from the record. (§ 42.56) 
• Federal Rules of Evidence: Admissibility of evidence is generally governed by the Federal Rules of Evidence. In determining foreign law, the Board may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. (§ 42.62) 
• Objection, motion to exclude, motion in limine: Objections to the admissibility of deposition evidence must be raised in a timely manner. A motion to exclude evidence must be filed to preserve any objection. (§ 42.64) [Note: The final rules eliminated the need for motions in limine.] 
• Expert testimony, tests, and data: Expert testimony that does not disclose the underlying facts or data is entitled to little or no weight. A party relying on test data must provide an affidavit explaining the test procedure. Testimony on U.S. patent law or examination practice will not be admitted. (§ 42.65) 
• Oral argument: Parties may request oral argument on an issue raised in a paper. The request must specify the issues to be argued. Demonstrative exhibits must be served at least five business days before the oral argument and filed no later than at the time of the oral argument. (§ 42.70) 
• Rehearing: A request for rehearing does not toll the time for taking action and must be filed within either (i) 14 days of a non-final decision or decision to institute a trial as to at least one ground of unpatentability, or (ii) 30 days of a final decision or decision not to institute a trial. (§ 42.71(c)) [Note: The final rules clarified that parties may seek rehearing of decisions to institute a trial.] 
• Estoppel in a derivation: The losing party in a derivation, who could have but did not move for relief on an issue, may not take action in the USPTO after the judgment that is inconsistent with that party’s failure to move, except for any contested subject matter for which the party was awarded a favorable judgment. (§ 42.73(d)(2)) 
• Estoppel against patent applicant or owner: A patent applicant or owner is precluded from obtaining in any patent (i) a claim that is not patentably distinct from a finally refused or canceled claim, or (ii) an amendment of the specification or drawing that was denied in the proceeding, unless the application or patent has a different written description. (§ 42.73(d)(3)) [Note: The final rules narrowed the scope of this estoppel provision by allowing later claims that are patentably distinct, but which arguably could have been raised during the trial.] 
• Settlement: The parties may agree to settle any issue in a proceeding, but they must file in writing any agreement made in connection with or contemplation of the settlement. A party to the settlement may request that the agreement be treated as business confidential information and be kept separate from the patent file. Any person may request that the settlement be made available after paying a $400 fee and showing good cause. (§ 42.74)

Inter Partes Review (Subpart B)

Rules specific to inter partes review are now codified at 37 CFR 42, subpart B. Notable rules for inter partes review include: 

• Pendency: All inter partes reviews will normally be concluded within one year from institution, but can be extended for good cause by up to six months by the chief administrative patent judge. (§ 42.100(c)) 
• Who may petition: Any person who is not the patent owner may petition for inter partes review unless: (a) before filing the petition, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent; (b) the petition is filed more than one year after the petitioner, the petitioner’s real party in interest, or a privy of the petitioner was served with a complaint alleging infringement of the patent; or (c) 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. (§ 42.101) 
• Filing timeframe: The petition must be filed after the later of: (1) the date that is nine months after the date the patent was issued or reissued, or (2) if a post-grant review is instituted, the date the post-grant review is terminated. (§ 42.102(a)) 
• Limit on petitions: The Director may impose a limit on the number of inter partes reviews in each of the first four years. Petitions filed after the limit has been reached will be deemed untimely. (§ 42.102(b)) 
• Content of petition: The petition must certify that the patent is available for inter partes review and that the petitioner is not estopped from requesting inter partes review challenging the patent claims on the grounds identified in the petition. The petition also must provide a statement of the relief requested, including the specific statutory grounds under 35 U.S.C. 102 or 103 on which the challenge to the claim is based, the patents or printed publications relied upon for each ground, and how each challenged claim is to be construed. (§ 42.104) 
• Service of petition: Petitioner is required to serve the petition and exhibits relied upon on the patent owner. Service may be made electronically or by EXPRESS MAIL. (§ 42.105) [Note: The final rules added the provisions regarding electronic and EXPRESS MAIL service.] 
• Incomplete petition: An incomplete petition, including failure to submit the correct fee, will not be accorded a filing date. The USPTO will dismiss the petition if the deficiency in the petition is not corrected within one month from the notice of an incomplete petition. (§ 42.106(b)) [Note: The final rules declined to adopt comments suggesting that the original filing date should be preserved because of the requirement to file petitions within one year of being served with a complaint alleging patent infringement.] 
• Preliminary response to petition: The patent owner may file a preliminary response within three months from the date the petition is accorded a filing date, or may elect to waive the preliminary response. The preliminary response is limited to explaining why no review should be instituted. It may not contain any new testimony evidence, except as authorized by the Board. It may not include any amendment. The patent owner may disclaim one or more claims in the patent. (§ 42.107) [Note: The final rules added the possibility that new testimony evidence might be authorized, and extended the timeframe of the preliminary response from two to three months.] 
• Institution of inter partes review: The Board will take into account any preliminary patent owner response when determining whether the petition would demonstrate that there is a reasonable likelihood of success that the petitioner would prevail with respect to at least one of the challenged claims. The Board may authorize the review on some or all of the challenged claims, and on some or all of the grounds of unpatentability asserted. (§ 42.108) 
• Patent owner response: Within three months from institution of the review, the patent owner may file a response to the petition addressing any ground for unpatentability not already denied. (§ 42.120) [Note: The final rules reconciled a conflict between the proposed rules (two-month period) and the Office Patent Trial Practice Guide (four-month period) by setting the period to three months.] 
• Amendment of the patent: A patent owner may file one motion to amend a patent after conferring with the Board but no later than the filing of a patent owner response. Additional motions to amend would require prior Board authorization. A motion to amend may be denied where it does not respond to a ground of unpatentability or seeks to enlarge the scope of the claims or introduce new subject matter. There is a presumption that only one substitute claim would be needed to replace each challenged claim, and it may be rebutted by a demonstration of need. (§ 42.121) [Note: The final rules clarify that the first motion does not require prior Board authorization if filed no later than the patent owner response, and adds the presumption regarding only one substitute claim.] 
• Multiple proceedings: The Board may enter any appropriate order regarding another matter involving the patent in the USPTO, including providing for the stay, transfer, consolidation, or termination of any such matter. Joinder may be requested no later than one month after institution of the review. (§ 42.122) [Note: The final rule added the one-month deadline for joinder requests.] 
• Supplemental information: Within one month of the date the trial is instituted, a party may file a motion identifying supplemental information relevant to a claim for which the trial has been instituted. A party seeking to submit supplemental information later than one month after the trial is instituted, or which is not relevant to a claim for which the trial has been instituted, must show why the information could not have been earlier obtained, and that its consideration is in the interests of justice. (§ 42.123) [Note: The final rule, unlike the proposed rule, permits motions after the one-month deadline under certain circumstances.]

Post-Grant Review (Subpart C)

Rules specific to post-grant review are now codified at 37 CFR 42, subpart C. Most of the proposed rules governing post-grant review mirror those governing inter partes review. Notable rules governing post-grant review, which differ from inter partes review, include: 

• Who may petition: Any person who is not the patent owner may petition for post-grant review unless, (a) before the date on which the petition for review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent or (b) 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. (§ 42.201) 
• Filing timeframe: No later than nine months after the grant of a patent or, in certain instances, the issuance of a reissue patent. (§ 42.202(a)) 
• Content of petition: The petition must certify that the petitioner has standing to seek post-grant review challenging the patent claims on the grounds identified in the petition, and must provide a statement of the relief requested, including the specific statutory grounds permitted under 35 U.S.C. 282(b)(2) or (3) on which the challenge to the claim is based, and how each challenged claim is to be construed. (§ 42.204) Grounds for seeking post-grant review include §102, §103, §112, and §101, except best mode. 
• Incomplete petition: An incomplete petition, including failure to submit fee, will not be accorded a filing date. The USPTO will dismiss the petition if the deficiency in the petition is not corrected within the earlier of either one month from the notice of an incomplete petition or the expiration of the statutory deadline in which to file a petition for post-grant review. (§ 42.206(b)) 
• Institution of post-grant review: The Board will take into account any preliminary patent owner response when determining (1) whether the petition would, if unrebutted, demonstrate that it is more likely than not that at least one challenged claim is unpatentable, or (2) whether the petition raises a novel or unsettled legal question that is important to other patents or patent applications. (§ 42.208) 
• Discovery: Requests for additional discovery in a post-grant review may be granted upon a showing of “good cause” (instead of the slightly higher “interests of justice” standard in § 42.51(c)). Additional discovery is limited to evidence directly related to factual assertions advanced by either party. (§ 42.224)

Transitional Program for Covered Business Method Patents (Subpart D)

Rules specific to the transitional program for covered business method patents are now codified at 37 CFR 42, subpart D. This subpart expressly incorporates most of the rules governing post-grant review. Notable differences unique to covered business method patents include: 

• Procedure: Post-grant review procedures will generally govern, except that issues specific to proceedings on covered business method patents will only apply to covered business method patent reviews filed before September 15, 2020. (§ 42.300) 
• Definitions: 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.” (§ 42.301(a)) 
  • Technological invention: “In determining whether a patent is for a technological invention . . . the following will be considered on a case-by-case basis: whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.” (§ 42.301(b))
• Who may petition: Any petitioner may petition, but only if the petitioner, the petitioner’s real party in interest, or a privy of the petitioner has been sued for, or charged with, infringement of the patent, unless the petitioner, real party in interest, or privy is estopped from challenging the claims on the grounds identified in the petition. “Charged with infringement” means a real and substantial controversy regarding infringement of a covered business method patent exists such that the petitioner would have standing to bring a declaratory judgment action in Federal court. (§ 42.302) [Note: The final rule added the definition of “charged with infringement.”] 
• Filing timeframe: Any time except during the period in which a petition for a post-grant review would satisfy the requirements of 35 U.S.C. 321(c) (within nine months after the patent grant or reissue). (§ 42.303)

The attorneys of Foley’s Patent Office Trials Practice, which focuses on post-grant USPTO proceedings, continue to provide in-depth insight and analysis of the USPTO’s AIA implementation process on Foley’s patent reform Web page, Foley.com/patentreform, and PharmaPatentsBlog. For additional information, please see:

USPTO’s AIA Final Rules Permit Assignee Filing, Late Inventor Declarations, and Simplify Other Requirements

USPTO AIA Final Rules Provide for New Supplemental Examination Procedure and Third-Party Preissuance Submissions

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Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues. If you have any questions about this Alert or would like to discuss the topic further, please contact your Foley attorney or the following:

Matthew A. Smith
Chair, Patent Office Trials Practice
Washington, D.C.
202.295.4618
[email protected]  

Andrew S. Baluch
Vice Chair, Patent Office Trials Practice
Washington, D.C.
202.672.5520
[email protected]