Proposed PTAB Rule Changes: More of the Same?

27 May 2020 PTAB Trial Insights Blog
Authors: Joseph P. Meara

Today, May 27, 2020, the USPTO published in the Federal Register a new set of proposed rule changes that mostly codify the way contested proceedings are conducted in front of the Patent Trial and Appeal Board. The proposed changes fall into three parts.  A first set of changes conforms the rules to be consistent with the Board’s interpretation and application of the Supreme Court’s decision in SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018). These proposed changes would by rule require institution on all claims and grounds raised in a petition, or no institution at all, in IPRs and other contested proceedings. A second set of changes conforms the rules to the current standard practice of providing sur-replies to principal briefs and providing that a patent owner response and petitioner reply may respond to a decision on institution. A third and new rule change would eliminate the presumption that a genuine issue of material fact created by the patent owner’s testimonial evidence filed with a preliminary response will be viewed in the light most favorable to the petitioner for purposes of deciding whether to institute a review. The public has 30 days to provide its comments on the proposed rules, until June 26, 2020.

In its explanation for the first set of changes, the Office noted that previously, for efficiency’s sake, the Board exercised discretion to institute an IPR, PGR, or CBM on all or some of the challenged claims and on all or some of the grounds of unpatentability asserted for each claim pursuant to 37 U.S.C. 42.108(a) and 42.208(a). The Supreme Court disagreed and ruled that the Board must institute on all claims challenged in the petition, or none.  SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018). Consistent with this opinion and its own subsequent guidance, the Office proposes revising the wording in 37 C.F.R. 42.108(a), (b) and 42.208(a), (b) to remove the Board’s discretion to institute on less than all claims and all grounds. Of course, the Board may still decline to institute trial at all as allowed by statute. The proposed rule change seems merely to codify the Board’s institution practice in the two years since SAS

Likewise, the Office’s proposed rule changes relating to replies and sur-replies essentially codify changes previously introduced in the Office Trial Practice Guide, August 2018 update (83 FR 39989).  Thus, the Office proposes that Rule 42.23(a) be changed to follow the current practice of permitting patent owner to file sur-replies to principal briefs (i.e., petitioner’s reply to patent owner’s response, as well as petitioner’s opposition to a motion to amend).  The proposed revision to Rule 42.23(b) spells out the current limitation that a reply or sur-reply may only respond to arguments raised in the previous brief with one exception.  Patent owner’s response and petitioner’s reply may also address issues discussed in the institution decision; patent owner’s sur-reply may also address the institution decision if necessary to respond to petitioner’s reply. Consistent with the foregoing, Rule 42.24 is proposed to be changed to include sur-replies in the word-count limit, and Rules 42.120(a) and 42.220(a) are proposed to be revised to apply to both the patent owner response and preliminary response.

The third proposed rule change is new.  The Office proposes to revise 42.108(c) and 42.208(c) to eliminate the presumption in favor of petitioner for a genuine issue of material fact created by testimonial evidence submitted with a patent owner’s preliminary response when deciding whether to institute trial.  This presumption dates back to 2016, when testimonial evidence was first permitted in Patent Owner Preliminary Responses.  According to the Office, input it received during party and amicus briefing as part of the Precedential Opinion Panel review in Hulu, LLC v. Sound Innovations, LLC (IPR2018-01039, Paper 15 (PTAB, April 3, 2019) (granting POP review)) led the Office to view the presumption as potentially discouraging patent owners from filing testimonial evidence if they believed it would not be given any weight at the time of institution. The Office states that eliminating the presumption would be consistent with the statutory framework for institution (35 U.S.C. 314(a), 324(a)) under which the Board must consider the totality of the evidence in the record.  If the change is implemented, it will be interesting to see if it incentivizes patent owners to file more preliminary responses with expert declarations.  In the meantime, whether this change would reduce institution rates is sure to be a concern of potential petitioners and almost certainly will generate more discussion than the other proposed rule changes.

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