2023 Post-Grant Annual Report | Fish & Richardson
2023 was a busy year at the Patent Trial and Appeal Board, as post-grant practice continued to evolve at a rapid pace. At the United States Patent and Trademark Office, there were big developments in Director Review and proposed guidance that could significantly alter post-grant practice. And while filings at the PTAB declined from 2022, the PTAB maintains its place as the busiest forum for patent disputes nationwide.
Fish & Richardson’s 2023 Post-Grant Report takes a deep dive into the cases, trends, and statistics that shaped post-grant practice throughout the year and how they might affect practitioners going forward.
Post-grant at the Federal Circuit
In 2023, the United States Court of Appeals for the Federal Circuit decided several important cases on various issues relevant to practice before the PTAB.
In fiscal year 2023, the court heard nearly 1,300 cases compared to just over 1,400 in FY 2022 and nearly 1,600 in FY 2021. Cases from the USPTO once again dominated, making up 34% of the court’s caseload. Patent cases from U.S. District Courts made up another 25% of the court’s cases, bringing the total percentage of patent cases to 59% of the court’s caseload. The court also continued to side with the PTAB in the vast majority of PTAB appeals, fully affirming the Board in 78% of appeals, while reversing in only about 14%.
Below are summaries of notable decisions highlighting key takeaways and practice tips for post-grant practitioners.
Reasonable expectation of success
An obviousness determination requires a finding that a person having ordinary skill in the art would not only have been motivated to combine prior art references, but also would have had a reasonable expectation of success in making the combination. Reasonable expectation of success pertains to the likelihood of success in combining references to meet the elements of the challenged patent claim.
In Elekta Limited v. ZAP Surgical Systems Inc., 81 F.4th 1368 (Fed. Cir. 2023), Elekta challenged the Board’s finding related to motivation to combine and reasonable expectation of success, which served as the basis for holding certain claims of Elekta’s patent obvious. On appeal, Elekta contended that the Board erred as a matter of law because it failed to articulate any findings on reasonable expectation of success.
The court rejected Elekta’s argument and held that the Board implicitly addressed reasonable expectation of success in the context of motivation to combine. The court stressed that, while a motivation to combine determination requires an explicit analysis, a finding of reasonable expectation of success could be implicit in the consideration or analysis of other, intertwined arguments, including a motivation to combine. The court ultimately concluded that the Board considered and implicitly addressed reasonable expectation of success based on the arguments and evidence presented to the Board on motivation to combine. Specifically, the court referenced Elekta’s argument that the asserted combination of prior art references would result in an inoperable device and an inferior quality product and would teach away from the result sought by the patent.
Practitioners should remember and address the requirement of reasonable expectation of success as part of arguing for or against obviousness. Although the Elekta Limited court held that reasonable expectation of success could be met implicitly, this issue arose because of the lack of the Board’s express findings in connection with this requirement. To avoid this issue, petitioners would be well-served to expressly address reasonable expectation of success in their obviousness analysis.
Prior art
Inventor testimony as evidence of reduction to practice
Under the pre-America Invents Act regime, a patent owner could antedate asserted prior art. This could be done by showing that the inventor(s) conceived the claimed invention prior to the critical date of the prior art and either reduced the invention to practice prior to that critical date or, in the alternative, were reasonably and continuously diligent in reducing the invention to practice until the filing of the application with the patent office.
In Medtronic Inc. v. Teleflex Innovations S.A.R.L., 69 F.4th 1298 (Fed. Cir. 2023), Medtronic appealed the Board’s decision holding that an allegedly invalidating patent reference was not prior art under the pre-AIA statute governing the patentability of challenged patents owned by Teleflex. The Board held that the claimed inventions in the challenged patent were conceived before the alleged prior art patent’s filing date and were then actually reduced to practice or diligently pursued until their constructive reduction to practice. On appeal, Medtronic argued that the Board erred in its finding of actual reduction to practice.
The court rejected Medtronic’s argument that the evidence of actual reduction to practice, which included inventor testimony, was not sufficiently corroborated. The court noted that while inventor testimony may serve as evidence of reduction to practice, it must be corroborated by independent evidence evaluated under a rule of reason considering all pertinent evidence. The court further explained that corroborating evidence could be circumstantial and simply needs to be sufficient to support the inventor’s credibility. In view of the available documentary evidence, the court concluded that the inventors’ testimony was sufficiently corroborated. The court further found that the Board did not err in concluding that the inventors’ prototype comported with the intended purpose of the claimed inventions.
The Medtronic opinion serves as an important reminder to practitioners that inventor testimony by itself is not sufficient to establish reduction to practice. Patent owners who wish to antedate prior art should conduct careful diligence and supply corroborating evidence that backs up the inventor(s)’ story. On the other hand, petitioners should not lose sight of this requirement during the proceeding and should preserve the issue for appeal.
Patent owner’s burden of production
A petitioner in a post-grant proceeding bears the ultimate burden of persuasion on invalidity, which does not shift to the patent owner. However, when a patent owner attempts to antedate an asserted prior art reference, it assumes a temporary burden of production.
In Parus Holdings Inc. v. Google LLC, 70 F.4th 1365 (Fed. Cir. 2023), Parus Holdings appealed two final written decisions of the Board finding certain claims of the challenged patents obvious. On appeal, Parus Holdings argued that the Board improperly placed the burden of persuasion on the patent owner in connection with proving that one of the asserted references was prior art.
The court disagreed. According to the court, Parus Holdings assumed the temporary burden of production by asserting that the claimed invention deserved an earlier priority date. The court stressed that the burden of production cannot be met simply by throwing “mountains of evidence” at the Board. The “judges are not like pigs, hunting for truffles buried in briefs” and the Board “should not be forced to play archaeologist with the record.” The court explained that the patent owner’s burden of production in this situation cannot be met without some combination of citing relevant evidence and explaining its significance. Because Parus Holdings minimally cited the dozens of exhibits totaling over 1,000 pages without sufficient explanation, the court held that Parus Holdings did not meet its burden of production.
The important takeaway of this decision is that patent owners that assume the burden of production should not only produce evidence, but also provide at least a colorable explanation at a reasonable level of detail as to how the evidence is relevant to the issues at hand. Otherwise, strong evidence might be ignored by the Board and by the court on appeal.
New arguments in reply
A common issue that arises in post-grant appeals involves situations where petitioners raise arguments in their reply briefs before the Board that they arguably did not raise in their petitions. Under the Board’s rules, a petitioner is not allowed to raise new arguments for the first time in reply, so the question often turns on whether the disputed argument is in fact “new.” The Federal Circuit had multiple occasions to weigh in on this issue this year.
In Rembrandt Diagnostics LP v. Alere Inc., 76 F.4th 1376 (Fed. Cir. 2023), the patent owner, Rembrandt, argued that the Board abused its discretion when it relied on allegedly new theories and evidence advanced by Alere in its reply. Importantly, while Rembrandt contended in its sur-reply that Alere raised new theories with respect to one prior art combination, it did not make a similar argument with respect to the two prior art combinations at issue on appeal. Alere argued that it was not relying on any “new” arguments; it was simply responding to arguments Rembrandt made in its patent owner response.
The court agreed with Alere. The court initially found Rembrandt forfeited its new-theories argument by failing to expressly raise this argument with respect to the prior art combinations at issue on appeal. The court nonetheless addressed the merits of Rembrandt’s new-theories argument and again found in Alere’s favor. After addressing the law on both sides of the issue, the court found that this case fell on the side of proper reply arguments and evidence. Specifically, the court held that Alere’s allegedly new arguments were, in fact, responsive to Rembrandt’s arguments and simply expanded on arguments Alere made in its petition.
The court applied a similar rationale in Axonics Inc. v. Medtronic, 75 F.4th 1374 (Fed. Cir. Aug. 7, 2023), to find that the Board abused its discretion in failing to address the petitioner’s arguments and evidence in reply, which were responsive to the patent owner’s arguments, and thus not “new.” In Axonics, Medtronic raised a new claim construction argument in its patent owner response, and in reply, Axonics not only argued that the construction was incorrect but also contended that, even under Medtronic’s new construction, the prior art still disclosed the disputed limitation. In doing so, Axonics relied on “additional disclosures in the prior art references pertaining to the same embodiments relied on in the petition.” The Board adopted Medtronic’s new construction but refused to consider Axonics’ anticipation arguments and evidence under that construction because they were not rooted in its petition.
The Federal Circuit vacated the Board’s decision, holding that Axonics should have been afforded the opportunity to present arguments and evidence under Medtronic’s new construction. The court noted that holding otherwise “would create opportunities for sandbagging by the patent owner in order to create an estoppel” and said it was “reluctant to adopt a construction of the Administrative Procedure Act and the Board’s rules that would permit such gamesmanship.” Notably, the court expressly left open the question of whether a petitioner can rely on new embodiments from the prior art references than those relied on in the petition in response to a new claim construction argument. Because Axonics relied on the same embodiments in its reply arguments, the court did not need to reach that question.
Finally, in Yita LLC v. MacNiel IP LLC, 69 F.4th 1356 (Fed. Cir. Jun. 6, 2023), the Federal Circuit found no abuse of discretion in the Board’s refusal to consider the petitioner’s new argument raised for the first time in a footnote in its reply. The court analogized this case to its previous decision in Intelligent Bio-Systems Inc. v. Illumina Cambridge Ltd., 821 F.3d 1359, 1370 (Fed. Cir. 2016), and held that Yita improperly waited until its reply to present a new obviousness argument that was “meaningfully distinct” from those made in its petition.
The main takeaway from these cases is that the Federal Circuit will look carefully at whether the argument alleged to be new is, in fact, new. Petitioners should aim to preserve as many arguments as possible in their petitions to give themselves an anchor for any further developed arguments in reply. If that’s not possible, then petitioners should try to link any new argument to an argument made by the patent owner in its response. On the other hand, patent owners should carefully review reply briefs for any arguments that are “meaningfully distinct” from arguments made in petitions and be sure to raise any new-theories arguments in their sur-replies.
Administrative Procedure Act
The Administrative Procedure Act requires the Board, during PTAB proceedings, to provide parties an opportunity for the submission and consideration of all facts and arguments. Under the APA, the Board must base its decisions on arguments that were advanced by a party and to which the opposing party was given a chance to respond.
In Apple Inc. v. Corephotonics Ltd., 81 F.4th 1353 (Fed. Cir. 2023), Apple petitioned for inter partes review of a patent owned by Corephotonics. The Board found the challenged claims patentable over the petitioned grounds based on errors the Board perceived in Apple’s expert declaration. Apple argued on appeal that the Board’s conclusion regarding errors in the expert’s declaration was a new argument raised without notice in violation of the APA.
The Federal Circuit agreed with Apple and found that the Board’s determination did not comport with the notice requirement of the APA. The court explained that the Board’s decision was based, in main part, on a typographical error by Apple’s expert, which was mentioned in passing by Corephotonics only once in the background section of its response. The parties did not brief, argue, or even suggest that this error would be dispositive of the issues involved in the proceeding. Based on this treatment, the court concluded that Apple and Corephotonics had no reason to anticipate that the error would be the basis for the Board’s decision. Thus, the court found the Board’s decision did not comport with the notice requirement of the APA. The court further held that the Board’s decision based on sua sponte findings of additional purported mistakes or “inconsistencies” in the expert’s declaration lacked substantial evidence and otherwise failed to resolve the issues the parties presented before the Board.
Based on this holding, practitioners should carefully examine Board decisions for potential arguments that were either not relied upon by the parties in the proceeding, or otherwise raised by the Board sua sponte and without notice.
Other cases raised APA and due process issues concerning the timeliness of the parties’ arguments and the extent to which the Board fully addressed them. In LSI Corp. v. Regents of University of Minnesota, 43 F.4th 1349 (Fed. Cir. 2022), the Federal Circuit found that an appellant improperly forfeited its challenge to the Board with an untimely argument (because it was raised for the first time at the Board hearing), where the appellant had argued on appeal that “it was not necessary to challenge the Board’s untimeliness determination because the board nevertheless reached the merits.” The court found instead that the appellant “forfeited any challenge to the untimeliness holding by failing to challenge it in its opening brief on appeal.” In Provisur Technologies Inc. v. Weber Inc., 50 F.4th 117 (Fed. Cir. 2022), the Federal Circuit found no error in the Board permitting reply evidence to show that the prior art had the same device as the patent specification to rebut a claim that the prior art did not match the claims. Because it was proper rebuttal, the Board did not have to consider whether the petitioner possessed the evidence when it filed its petition, and the patent owner had a sufficient chance to challenge the new evidence. However, the Board erred by failing to address one claim limitation under a faulty belief that the patent owner had not disputed that limitation: “The Board’s adoption of [the petitioner’s] argument and evidence, coupled with its mischaracterization of [the patent owner’s] arguments, precludes us from engaging in meaningful appellate review and, therefore, violates the APA.” Provisur Technologies, 50 F.4th at 124.
In light of these rulings, practitioners should take care to preserve all necessary arguments for appeal.
Estoppel
The effects of estoppel—whether from litigation into IPR, from IPR into litigation, or between IPRs—remain a focus in complex cases. In Ironburg Inventions Ltd. V. Valve Corp., 64 F.4th 1274 (Fed. Cir. 2023), the court held that a litigating patentee bears the burden of proof to establish that its opponent could have raised a particular ground in IPR and is thus estopped under 35 U.S.C. § 315(e)(2). The standard for estoppel is whether a “skilled searcher” would have found the relevant reference. In Google LLC v. Hammond Development International, Inc., 54 F.4th 1377 (Fed. Cir. 2022), the Federal Circuit ruled that invalidation of claims in a related patent through IPR would create a collateral estoppel for invalidity of claims in a later IPR, where the only difference of substance between the claims did not reach a required level of materiality. In Click-to-Call Technologies LP v. Ingenio, Inc., 45 F.4th 1363 (Fed. Cir. 2022), the court held that a petitioner was not estopped in district court for grounds on which the USPTO refused to institute an IPR, even though the petitioner had an opportunity to ask for remand and full consideration after SAS and failed to ask.
Guidance and rulemaking at the USPTO
In 2023, the USPTO proposed rule changes for practice before the Board, while the PTAB issued several precedential decisions. As Director Kathi Vidal prepares to finish her second year leading the USPTO, the proposed rule changes highlight her efforts to increase consistency and predictability while accounting for the often-competing demands of petitioners and patent owners.
Advance Notice of Proposed Rulemaking
In April, the USPTO issued an Advance Notice of Proposed Rulemaking. The ANPRM was designed to outline proposed rules that would govern AIA proceedings before the PTAB. One critical aspect of the proposed rules relates to the PTAB’s discretion to deny institution of AIA proceedings, with additional proposals addressing privity/real parties-in-interest, petition word count limits, settlement practices, and other issues. The proposed changes are based on comments from stakeholders and the public, including those received in response to the Office’s October 2020 request for comments on discretionary denial of institution. The Office envisions that the ANPRM comments will result in a Notice of Proposed Rulemaking for consideration and adoption.
“In order to create clear, predictable rules where possible, as opposed to balancing tests that decrease certainty,” the Office would provide for discretionary denials of petitions in the following categories (subject to certain conditions, circumstances, and exceptions):
Prior adjudications upholding validity
As a new front in discretionary denials, the ANPRM suggests that the Office is considering a rule that would require discretionary denial of any post-grant challenges filed against patents for which prior final adjudications by a District Court or by the Office in AIA post-grant proceedings upheld the validity of the claims and those claims substantially overlap the challenged claims. Such denials would only be avoidable if:
- The petitioner has standing to challenge the validity of the claims in District Court or intends to pursue commercialization of a product or service in the field of the invention of a challenged claim;
- Was not a real party in interest or privy to the party previously challenging one or more of the challenged claims (unless any earlier challenge was resolved for reasons not materially related to the merits of the petition, e.g., a post-grant proceeding that was discretionarily denied or otherwise was not evaluated on the merits); and
- Meets a heightened burden of compelling merits.
Under this proposal, even if a petitioner meets the first two conditions, a petition being considered for institution after the issuance of a final adjudication on validity would be subject to the heightened burden of compelling merits. As a result, this new avenue of discretionary denial could affect which parties are sued, in what order, and in which forums, possibly creating races to judgement.
Serial petitions
This proposed change would address the filing of “additional petitions [that] are filed by the same petitioner or sufficiently related parties challenging the same patent claims as a first petition after the patent owner has filed a preliminary response to the first petition (‘serial’ or ‘follow-on’ petitions).” To aid the Board’s assessment of the potential impacts on both the efficiency of the IPR process and the fundamental fairness of the process for all parties, the Board’s precedential General Plastic decision identified a number of non-exclusive factors for the Board to consider when exercising its discretion to institute IPR, especially as to “follow-on” petitions challenging the same patent challenged in a previous proceeding.
The new rule would replace factors 1-7 of the General Plastic factors with a new test in which the Board would discretionarily deny — subject to certain exceptions — any serial IPR or post-grant review petition (with at least one challenged claim that is the same as a challenged claim in a previously filed IPR, PGR, or covered business method review petition) that is filed by one of the following:
- The same petitioner
- An RPI or privy to that petitioner
- A party with a “significant relationship” to that petitioner
- A party who previously joined an instituted IPR or PGR filed by that petitioner
The Board would make exceptions where (1) the earlier petition was resolved for reasons not materially related to the merits of the petition (e.g., was discretionarily denied or otherwise was not evaluated on the merits), or (2) exceptional circumstances are shown.
One part of this new test that has drawn significant interest is the preclusion of parties with a “significant” or “substantial” relationship to a prior petitioner. The ANPRM states that the substantial relationship test would be “broadly construed” and could lead to a substantial relationship being found where a later petitioner is a member of an organization that filed an earlier IPR or PGR against the patent or “where multiple entities are defending infringement claims in district court litigation or have related interests in challenging the patentability of patent claims.” This latter application of the substantial relationship test could impact how parties consider structuring joint defense agreements or the extent to which they may want to enter into them at all. Exactly how that Board will ultimately evaluate and apply the substantial relationship test is therefore a focus of practitioners and parties.
Petitions raising previously addressed prior art or arguments (subject to the 35 U.S.C. § 325(d) framework)
When determining whether to exercise its discretion to deny institution under § 325(d), the Board applies the two-part framework set forth in Advanced Bionics, which entails (1) determining whether the same or substantially the same art was previously presented to the Office or whether the same or substantially the same arguments were previously presented to the Office, and (2) if either condition of the first part of the framework is satisfied, determining whether the petitioner has demonstrated that the Office erred in a manner material to the patentability of challenged claims. The Board also considers the non-exclusive factors set out in the Becton, Dickinson decision.
The ANPRM’s proposed changes would limit the application of § 325(d) “to situations in which the Office previously addressed the prior art or arguments.” Art or arguments would be deemed to have been previously addressed where the Office evaluated the art or arguments and articulated its consideration of the art or arguments in the record. This includes proceedings pertaining to (1) the challenged patent (in prosecution, reissue, ex parte reexamination, inter partes reexamination, and AIA post-grant proceedings, and appeals of the same), and (2) any parent application or other family member application of a challenged patent, but only if the claims of the parent application or other family member application contain or contained substantially the same limitations as those at issue in the challenged claims. Further, the proposal would limit the finding that prior art is “substantially the same” to situations where “the disclosure in the prior art previously addressed contains the same teaching relied upon in the petition and that teaching was addressed by the Office.”
The Office states that these limitations increase efficiency and lower the cost of proceedings for parties and the Board by providing a clear test that reduces unnecessary briefing.
Parallel petitions
The ANPRM defines “parallel petitions” as those where “more than one petition is filed by the same petitioner (or privy or RPI with a petitioner) at the same time as the first filed petition or up until the filing of the preliminary response in the first filed proceeding.” The proposed changes would direct the Board to deny parallel petitions filed against the same patent by the same petitioner or by a petitioner with a “substantial relationship” with another petitioner challenging the same patent, absent a showing of good cause as to why parallel petitions are necessary. As with the proposed changes to the Board’s handling of serial petitions, one significant focus of this change is its application to parties with a “substantial relationship” and the manner in which such a test would be construed.
The Office is also considering allowing a petitioner to pay additional fees for a higher word-count limit as an alternative to filing multiple petitions. If a petitioner pays the fees for filing a petition with a higher word-count limit, the patent owner preliminary response, patent owner response, reply to patent owner response, and sur-reply may be filed with proportionally higher word-count limits at no additional charge to either party.
Petitions challenging patents subject to ongoing parallel litigation in District Court
The ANPRM proposes several alternative approaches to discretionary denial in light of ongoing parallel litigation. One proposed change incorporates Apple v. Fintiv and its related guidance, including Director Vidal’s June 2022 interim guidance on Fintiv denials with a few additional reforms. Under the June 2022 guidance, the Board will not deny institution of an IPR under Fintiv where:
- A petition presents compelling merits of unpatentability;
- A request for denial under Fintiv is based on a parallel International Trade Commission proceeding; or
- A petitioner stipulates not to pursue in a parallel District Court proceeding the same grounds as those in the petition or any grounds that could have reasonably been raised in the petition (i.e., a Sotera-style stipulation).
Additionally, when the Board applies Fintiv factor 2 (proximity of the District Court trial date), the Board may consider the median time-to-trial data in the district.
While the ANPRM says that the USPTO “currently believes . . . the most appropriate approach is to” maintain the current permissive nature of allowing petitioners to file a Sotera stipulation to avoid discretionary denial, it also indicates that the “Office is additionally considering removing this exception and instead making a Sotera stipulation a necessary but not sufficient basis for institution.” This is perhaps the most profound Fintiv-related proposal in the ANPRM, as it would effectively force almost all petitioners (i.e., all petitioners challenging patents involved in parallel District Court litigation) to stipulate to moving § 315(e) estoppel forward to institution as opposed to at final written decision.
An alternative proposal would direct the Board to apply a “clear, predictable rule” and deny institution of an IPR if the Board determines a trial in the District Court action is likely to occur before the projected statutory deadline for a final written decision. The Office is considering three new non-exclusive factors in addition to the clear, predictable rule that would guide the Board’s discretion in situations in which the petitioner, its real party in interest, or a privy is a party to ongoing District Court litigation:
- Past and future expected investment in the parallel proceeding by the District Court and the parties;
- The degree of overlap between the issues in the petition and the parallel District Court proceeding; and
- Any other circumstances that the parties contend are relevant to the Board’s exercise of discretion.
The first two factors are similar to Fintiv factors 3 and 4, respectively, while the third factor is similar to Fintiv factor 6. As a result, these updated factors would effectively omit Fintiv factor 1 (the likelihood of a stay) and Fintiv factor 5 (whether the petitioner and the defendant in the parallel proceeding are the same party).
In yet another proposal, the ANPRM proposes a grace period in which the Board will not invoke its discretion to deny an IPR petition based on a parallel District Court proceeding if the IPR petition is filed within six months after the date on which the petitioner, an RPI, or a privy thereof is served with a complaint alleging infringement of the patent. Under this proposal, patents asserted in District Courts with a relatively short median time-to-trial would (e.g., the Eastern District of Texas or the Eastern District of Virginia) will not be subject to Fintiv discretionary denial for the first half of the one-year § 315(b) period for filing an IPR or PGR.
Given the wide range of mutually exclusive alternatives proposed with respect to parallel District Court litigation, it remains somewhat unclear where the ultimate rules package will land on Fintiv, but some form of discretionary denial will almost certainly persist.
Separate briefing for discretionary denial
The Office is considering amending the rules to provide for separate briefing on discretionary denial in which the patent owner would file a separate request for discretionary denial to address any relevant factors regarding discretionary denial prior to the deadline for a preliminary response. This would trigger an opportunity for the petitioner to file an opposition and for the patent owner to file a reply.
For more information about the changes proposed in the April 2023 ANPRM, please see our in-depth analysis here.
Precedential decisions
CommScope Techs. LLC v. Dali Wireless Inc. – The Director determined that the Board had failed in performing the Fintiv analysis by analyzing the merits without first analyzing Fintiv factors 1-5. The “compelling merits test” should be applied only after the first give factors are analyzed.
Penumbra Inc. v. RapidPulse Inc. (§ II.E.3) – AIA – Clarified the distinction between pre-AIA 35 U.S.C. § 102(e) and AIA 35 U.S.C. § 102(d) and held that the requirement in Dynamic Drinkware LLC v. Nat’l Graphics, Inc. 800 F.3d 1375, 1378 (Fed. Cir. 2015) that under pre-AIA 35 U.S.C. § 102(e), a reference patent’s claims must have written description support in its provisional application in order to be entitled to the filing date of the provisional application, does not apply to AIA 35 U.S.C. § 102(d).
Nested Bean Inc. v. Big Beings US Pty. Ltd. – The Director granted review to “interpret section 112, fifth paragraph, to require the Board consider separately the limitations of each claim incorporated by reference into the multiple dependent claim.” Page 18. The Director agreed with the Patent Owner in that, when dealing with multiple dependent claims, the PTAB is required to consider the patentability of each claim separately.
Xerox Corp. v. Bytemark Inc. – A petition was supported with an expert declaration that “copies, word-for-word, Petitioner’s conclusory assertions.” Page 5. Director Review supported the Board’s decision that “the cited declaration testimony is conclusory and unsupported, adds little to the conclusory assertion for which it is offered to support, and is entitled to little weight.” Id.
Apple Inc. v. Zipit Wireless Inc. – Of the six IPRs filed, the patent owner responded to two with a patent owner response (not filing responses to the other four IPRs). Director Review determined that the patent owner’s lack of response or statements in oral hearing had not been an “unequivocal abandonment of the contest of these proceedings. Instead, Patent Owner’s non-opposition was contingent on the board determining that petitioner met its burden of proving by a preponderance of the evidence that the challenged claims are unpatentable.” Thus, absent “unequivocal abandonment of the contest” by the patent owner, the Board must evaluate the merits of the petition under the preponderance of the evidence even in the absence of any countervailing arguments from the patent owner.
RPI & privity and its evolution
Of particular interest to many PTAB practitioners was the April 2023 ANPRM’s apparent focus on challenging the status quo as it relates to RPI and privy considerations, as this would implicate a potentially broadened application of the PTAB’s estoppel authority under 35 U.S.C. § 315(e). Among other things, the ANPRM contemplated replacing the current common law formulations of “real party in interest” and “privy” with a broader “substantial relationship” test, which would more broadly encompass parties that are “significantly related” as per Valve I and Valve II.
Around the same time as the ANPRM, the Board in Unified Patents LLC v. MemoryWeb LLC seemed to deviate from prior panels by finding that Unified Patents was in an RPI relationship with Apple and Samsung, each of whom had filed separate IPR petitions against the same patent after Unified Patents filed its petition. Unified Patents LLC v. MemoryWeb LLC, IPR2021-01413, Paper 56 (PTAB March 8, 2023). The Director granted Director Review and ultimately vacated the RPI finding, citing to SharkNinja Operating LLC v. iRobot Corp., a precedential decision in which the Board held that it need not resolve the RPI dispute at institution because the patent owner was not alleging the petition should be barred due to an estoppel or time bar. Unified Patents, Paper 76, 2-4 (citing SharkNinja Operating LLC v. iRobot Corp., IPR2020-00734, Paper 11, 18 (PTAB Oct. 6, 2020) (precedential)). In her Decision, the Director confirmed that SharkNinja extends to final written decisions and that RPI arguments need not be addressed in a final written decision unless an estoppel or time bar is alleged. Id. at 5.
Petitioners should rely on SharkNinja and the Director’s decision if facing an RPI or privity argument that does not involve estoppel or time bar issues. Patent owners should be mindful of this precedent and consider whether to devote resources and word count to arguments related to RPI or privity absent a time bar or estoppel concerns because the Board will not review those arguments. The Federal Circuit has not yet endorsed the Director’s decision, however, so the possibility remains that different courts will interpret the requirements of 35 U.S.C. § 312(a)(2) differently. In any event, the Director’s decision in Unified is likely to further reduce the number of RPI and privity arguments advanced before the Board.
With that said, when a potential time bar or estoppel exists, patent owners should fully assess RPI and privity and consider whether to raise arguments that a petition should be barred based on actions of parties related to, but not identical to, the petitioner. Moreover, parties should carefully monitor for new guidance from the USPTO on RPI and privity issues, particularly in view of the proposals set forth in the ANRPM as noted above. For now, the Director’s decision in the Unified case has clarified that the Board will consider RPI and privity arguments only when a time bar or estoppel has been alleged.
USPTO expands the scope of Director Review
The Director of the USPTO’s authority to review PTAB decisions stems from U.S. v. Arthrex, Inc., 141 S.Ct. 1970 (2021). In Arthrex, the Supreme Court determined unconstitutional the issuance of decisions in post-grant proceedings by administrative patent judges unless subject to review by the Director. Within days of the Arthrex decision, the USPTO implemented an interim Director Review process whereby parties could request that the Director review final written decisions. Although a formalized process is still in the works, the interim Director Review process was significantly revised this year. See, generally, USPTO, Patent Trial and Appeal Board, Revised Interim Director Review Process (July 24, 2023).
Among the revisions, Director Review was expanded to allow review of institution decisions and requests for rehearing of institution decisions, the Director’s authority to sua sponte grant review was clarified, and new processes were established to assist the Director in handling the resulting potential for an increased volume of Director Review requests. These revisions have made Director Review a yet more valuable tool for post-grant practitioners.
Prior to the revised Director Review process, a party’s only recourse for reconsideration of an institution decision was to request rehearing. Requests for rehearing, however, are heard by the same panel of APJs who denied institution. The revised Director Review process provides parties a new opportunity for reconsideration of institution decisions by a fresh set of eyes. But the new opportunity for review of institution decisions involves a high bar – higher than for review of final written decisions. The Director will review institution decisions under the abuse of discretion standard, except in important issues of law or policy, which are reviewed de novo. By comparison, all issues taken up for review on a final written decision are reviewed de novo.
Few requests for Director Review have been granted. As of this writing, review has been granted on 15 of 298 total requests considered. USPTO, Patent Trial and Appeal Board, Status of Director Review Requests (January 17, 2024). Instead, the majority of the Director Review decisions stem from the Director sua sponte initiating review, which has occurred 34 times. Id. The revised process explains that sua sponte review is “typically” reserved for issues of exceptional importance but clarifies that the Director retains authority to initiate review sua sponte of any other issue. Revised Interim Director Review Process, Section 4.C.
Additionally, the revised process allows the Director to delegate review of decisions to a Delegated Rehearing Panel and establishes an Advisory Committee that reviews requests for Director Review and provides recommendations to the Director on whether review should be granted. The DRP and Advisory Committee are expected to help the Director to consider more Director Review requests more quickly.
The Director can delegate both reviews stemming from requests for Director Review and reviews that the Director undertakes sua sponte. USPTO, Patent Trial and Appeal Board, Delegated Rehearing Panel (July 24, 2023), The DRP is appointed for each review by the Director and will include three judges selected from the Chief Judge, the Deputy Chief Judge, the Vice Chief Judges, and the Senior Lead Judges. Id., Section 2.A. Although the DRP may issue decisions that fully resolve a given request for Director Review, the Director retains authority to review the DRP’s decisions. Id., Section 2.B.
The Advisory Committee includes at least 11 members and can process large numbers of Director Review requests. Revised Interim Director Review Process, Section 4.A.ii. The members can include personnel from outside the PTAB, including personnel from the Office of the Under Secretary, the Office of the Commissioner for Patents, the Office of the General Counsel, and the Office of Policy and International Affairs. The Advisory Committee can therefore provide valuable additional perspectives on important issues of law or policy. Id. The Director determines whether to grant or deny review based on the request for Director Review, the underlying decision, and the Advisory Committee’s recommendation, and can also delegate review to the DRP. Id., Section 4B.
These revisions to the Director Review process and others have enhanced Director Review for post-grant practitioners as a means for advocating for their clients while paving the road for the Director’s continued use of the process to sua sponte address important issues. As such, more Director Review decisions can be expected moving forward.
The year in biopharma at the PTAB
In 2023, there were 93 post-grant petitions filed involving biopharma patents (e.g., those having issued in USPTO Technology Center 1600). These petitions accounted for about 8% of all petitions filed in 2023. Post-grant filings in the biopharma space were up 3%, which is fairly consistent with filings from the previous three years. The majority of petitions filed in 2023 were IPR petitions, at 81, compared to only 12 PGR petitions. Of the cases that reached an institution decision in 2023, 66% were instituted – down just roughly 13% compared to 2022 (75%) and 2021 (77%).
The most active biopharma petitioners in 2023 were Samsung Bioepis Co. Ltd. (11), Parse Biosciences Inc. (6), and Novartis Pharmaceuticals Corp. (6). The most challenged patent owners were Regeneron Pharmaceuticals Inc. (13), Corteva Agriscience LLC (7), 10X Genomics Inc. (6), Novo Nordisk A/S (5) and Alexion Pharmaceuticals Inc. (5).
Some of the most-challenged biopharma patents in 2023 were related to transgenic plants with herbicide resistance. Corteva Agriscience sued Inari USA in the District of Delaware in September 2023 alleging that Inari obtained and illegally exported Corteva’s patented seeds outside of the U.S., made slight genetic modifications to them, and subsequently is seeking to commercialize them. Following the suit, Inari filed three IPR petitions in November challenging three of Corteva’s patents following an earlier-filed PGR petition against a fourth patent that was instituted in October. Corteva had previously sued Monsanto Company and Bayer CropScience in August 2022, leading to three additional IPR challenges by Monsanto and Bayer against three of the same patents that Inari challenged. The PTAB instituted all three of Monsanto and Bayer’s IPRs on December 19, 2023. Inari’s three IPRs are pending, with institution expected by May 2024.
Activity in the biologics and biosimilars space at the PTAB in 2023 was notably up from 2022, with 22 IPR petitions and two PGR petitions filed, compared to 2022, when 15 IPR petitions and two PGR petitions were filed. In fact, 2023’s filings mark the most filings on biologics and biosimilars since 2017’s record high of 87 IPR petitions filed.
For the second year in a row, Regeneron’s patents related to aflibercept, marketed under the trade names Eylea® and Zaltrap®, saw the most activity before the PTAB in 2023. Eight of Regeneron’s aflibercept patents have been challenged by six different petitioners over the course of the past three years, with several petitioners joining earlier-filed filings: Celltrion (7), Mylan (5), Samsung Bioepis (5), Apotex (3), Biocon Biologics (2), and Chengdu Kanghong Biotechnology (1).In November 2022, the PTAB found the first two Regeneron patents (U.S. Pat. Nos. 9,254,338 and 9,669,069) unpatentable. Regeneron appealed to the Federal Circuit, where briefing is complete and oral argument is expected in the first half of 2024. Six other challenges have been instituted on four additional Regeneron patents challenged by Mylan, Celltrion, and Samsung Bioepis, with final written decisions expected to span from January 2024 through November 2024. Regeneron has also statutorily disclaimed all claims in two patents (U.S. Pat. Nos. 10,857,205 and 10,406,226) following petitions filed by Mylan and Celltrion, respectively.
For more information about post-grant developments in biologics and biosimilars, please see our Biosimilars 2023 Year in Review.
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