LawFlash

PTAB’s Trial Practice Guide Update: Implications for Parties Moving Forward

August 17, 2018

The first update to the Patent Trial and Appeal Board Trial Practice Guide includes guidance that will benefit both petitioners and patent owners, from updates regarding expert testimony and motions to exclude and to strike, to procedures for oral hearing before the Board, among other changes.

Since its publication six years ago, the America Invents Act (AIA) Trial Practice Guide (the Practice Guide or Guide) has remained unchanged. On August 10, 2018, the US Patent and Trademark Office (USPTO or the Office) released its first update to the Guide. The updates address six general areas: (1) expert testimony; (2) factors in the determination of whether to institute a trial; (3) sur-replies to principal briefs as a matter of right; (4) the distinction between motions to exclude and motions to strike, and the proper use of each; (5) procedures for oral hearing before the Patent Trial and Appeal Board (PTAB or the Board); and (6) prehearing conferences.[1] Summaries of this guidance are provided below, along with suggested practice pointers for both petitioners and patent owners.

Replies and Sur-Replies

The Board continues to grapple with the US Supreme Court’s recent holding in SAS Institute, Inc. v. Iancu: Once a petition is instituted, a petitioner “is entitled to a final written decision addressing all of the claims it has challenged.”[2] The Board sees “significant additional work for a given instituted inter partes review” due to SAS, which recently has led to a proposed increase in AIA trial filing fees.[3]

The original Practice Guide stated that a “reply may only respond to arguments raised in the corresponding opposition” (e.g., patent owner’s response).[4] Now, the updates permit petitioners’ reply briefs to address issues discussed in the institution decision.[5] Given that the Board may institute trial on both stronger and weaker grounds in the same petition per SAS, parties are advised to carefully review and respond to Board commentary on the less meritorious grounds in institution decisions.

Of particular importance is the Board’s announcement that “[s]ur-replies to principal briefs (i.e., to a reply to a patent owner response or to a reply to an opposition to a motion to amend) normally will be authorized by the scheduling order entered at institution.”[6] In other words, sur-replies, which the Board once rarely authorized upon motion, are now authorized as a matter of course in scheduling orders.[7] As such, patent owners, and no longer petitioners, get the final word on whether the petitioner has met its burden to show that the challenged claims are unpatentable. Patent owners can respond to arguments made in reply briefs, comment on reply declaration testimony, point to cross-examination testimony, and address the institution decision if necessary to respond to the petitioner’s reply—essentially replacing the previous practice of filing observations on cross-examination testimony.

Considering Nonexclusive Factors in Determining Institution

As a further response to the SAS decision, the Board now invites parties to address specific factors that weigh in favor of or against the director exercising discretion to deny a petition under Sections 314(a), 324(a), and 325(d) of the Guide.

For Sections 314(a) and 324(a), the Practice Guide notes that the director’s discretion must “consider the effect of any such regulation [under this section] on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter” (as specified in Sections 316(b) and 326(b)). For follow-on petitions, the updated Practice Guide indicates that factors articulated in the General Plastics case[8] help the Board to weigh these statutory considerations. But, the updated Practice Guide also notes that the factors articulated in General Plastics, and the considerations under Sections 316(b) and 326(b), also apply outside of the follow-on petition context.

Specifically, the Practice Guide highlights that “[t]here may be other reasons besides the ‘follow-on’ petition context where the ‘effect . . . on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings,’ favors denying a petition even though some claims meet the threshold standards for institution under 35 U.S.C. §§ 314(a), 324(a).”[9] For example, the Board highlights a decision denying institution under Section 314(a) where, “due to petitioner’s delay, the Board likely would not have been able to rule on patentability until after the district court trial date.”[10] The Board’s examples also note that “parties may wish to address in their submissions whether any other such reasons exist in their case that may give rise to additional factors that may bear on the Board’s discretionary decision to institute or not institute, and whether and how such factors should be considered along with the General Plastics factors.”[11]

In the Section 325(d) context, “the Board considers whether the same or substantially the same prior art or arguments were presented previously.” For this evaluation, the Practice Guide directs practitioners to the nonexclusive factors set forth in Becton Dickinson and reiterates that the “efficient administration of the Office” will be considered.[12]

This update may serve as a warning for petitioners to choose grounds wisely; a single, strong ground among several other weak grounds may not be sufficient for the Board to institute trial on a petition. Petitioners should consider explaining why each of the discretionary factors in General Plastics and Becton Dickinson, as applicable, weighs in favor of institution.

Patent owners should consider addressing the considerations under Sections 316(b) and 326(b), including the General Plastics factors, in their preliminary responses. If a petition raises prior art or arguments that the Office previously considered (e.g., during examination, ex parte reexamination), patent owners should analyze the Becton Dickinson factors[13] and explain why the “efficient administration of the Office” warrants against devoting more resources to recycled art and/or arguments.

Prehearing Conferences

Practitioners may now use a new “prehearing conference” procedure to address issues best resolved prior to the oral hearing.[14] For example, during a prehearing conference, the Board may take up motions to strike, motions to exclude, or unresolved issues about demonstratives.[15] Either party may request a prehearing conference no later than three business days before the oral hearing, but the Board prefers a joint request listing the issues.[16] Patent owners and petitioners alike should consider using prehearing conferences to strategically consolidate prehearing issues.

Other Changes

Use of Expert Testimony. According to the Practice Guide, an expert need not qualify as a person of ordinary skill in the art to be an expert under Federal Rule of Evidence 702.[17] The Practice Guide’s example is an expert that lacks an advanced degree in a particular field but otherwise provides testimony that is helpful to the Board and has experience amounting to “sufficient qualification in the pertinent art.”[18] This guidance is unlikely to change current practice where the Board almost never disqualifies experts, and instead assigns the appropriate weight to expert testimony.

Motions to Exclude Versus Motions to Strike. The Practice Guide specifically addresses motions to exclude and motions to strike in an effort to guide practitioners who often conflate the two procedural mechanisms. A motion to exclude should only “explain why the evidence is not admissible (e.g., relevance or hearsay)”; it should not be used to argue the evidence’s weight or sufficiency.[19] In contrast, a motion to strike, which the Board must first authorize, may be appropriate where a brief raises new issues or otherwise exceeds its proper scope by, for example, presenting new evidence.[20] Consistent with practice, however, the Practice Guide warns that a motion to strike is an “exceptional remedy that the Board expects will be granted rarely.”[21]

Oral Hearing: Live Testimony and Sur-rebuttal. For oral hearings, a petitioner is not permitted to reserve more than 50% of its time for rebuttal absent special circumstances, and patent owners may receive a brief sur-rebuttal upon request.[22] This appears to be an attempt by the Board to prohibit petitioners from declining to present their case in chief, instead reserving 90% or more of their time for rebuttal alone.

Though rarely seen, the Board continues to permit presentation of live testimony at the oral hearing.[23] The Board considers the propriety of live testimony on a case-by-case basis, and the Practice Guide notes that the Board is more likely to grant a request where credibility is best evaluated by assessing the witness’s demeanor in person.[24]

Length and Word Count. Aside from the categories enumerated in the USPTO’s overview, the Practice Guide reminds practitioners that “less is more.” An increased number of arguments, grounds, or hearing demonstratives means an increased likelihood of distraction from stronger arguments and, in fact, “can otherwise cause meritorious issues to be missed or discounted.”[25] As to word count, the Board references decisions that approve parties’ reliance on word-processor word-count tools.[26] But the Practice Guide warns against couching words in images, abusing spaces between words, and using excessive abbreviations, and also urges parties to “raise the [word count] issue with the Board promptly after discovering the issue” if the party feels that “it would suffer undue prejudice from an opposing party’s word count limit violation or abuse.”[27]

Takeaways

In sum, the first update to the PTAB’s Practice Guide includes guidance from which both petitioners and patent owners will benefit. From automatic sur-replies to prehearing conferences, all parties will need to develop best practices for taking advantage of these new procedures. Expect more updates to follow, as the PTAB intends to update the Practice Guide on a “section-by-section, rolling basis.”[28]

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact the authors, Dion M. Bregman, Alexander B. Stein, or Karon N. Fowler, in our Silicon Valley office, or any of the following lawyers from Morgan Lewis’s post-grant proceedings team:

Boston
Joshua M. Dalton

Century City
Andrew V. Devkar

Chicago
Hersh Mehta
Sanjay K. Murthy
Jason C. White

Houston
C. Erik Hawes
Rick L. Rambo

Philadelphia
Louis W. Beardell, Jr.

San Francisco
Brent A. Hawkins

Silicon Valley
Andrew J. Gray IV
Michael J. Lyons

Washington, DC
Robert W. Busby
Jeffrey G. Killian, Ph.D.
Robert Smyth, Ph.D.



 

[1] USPTO, Board Trial Practice Guide August 2018 Update (notice published on Aug. 13, 2018 at Fed. Reg. Vol. 83, No. 156, 39989).

[2] 138 S. Ct. 1348, 1359 (2018).

[3] Letter from Director Iancu to Patent Public Advisory Committee (announcing “roughly 25 percent” increase in AIA trial fees “due to a variety of factors, including the Supreme Court decision in SAS Institute Inc. v. Iancu”).

[4] 77 Fed Reg 157, 48767; see also 37 CFR 42.23(b).

[5] Id. at 14.

[6] Id.

[7] See USPTO, Trial Practice Guide Update at App’x A (Aug. 2018).

[8] Gen. Plastics Co., Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357, Paper 19 at 16-17 (PTAB Sept. 6, 2017) (precedential).

[9] USPTO, Trial Practice Guide Update at 10 (Aug. 2018) (quoting 35 U.S.C. § 316(b) (emphasis added) (citation omitted)).

[10] See NetApp, Inc. v. Realtime Data LLC, Case IPR2017-01195, slip op. at 12-13 (PTAB Oct. 12, 2017) (Paper 9).

[11] Id. at 11.

[12] IPR2017-01586, Paper 8 at 17-18 (Board Dec. 15, 2017) (informative).

[13] See Becton Dickinson & Co. v. B. Braun Melsungen AG, IPR2017-01586, Paper 8 at 17-18 (PTAB Dec. 15, 2017) (informative).

[14] Id. at 19.

[15] Id. at 19-20.

[16] Id. at 19.

[17] USPTO, Trial Practice Guide Update at 2-3 (Aug. 2018).

[18] Id. at 3.

[19] Id. at 16.

[20] Id. at 17-18.

[21] Id. at 18.

[22] Id. at 20.

[23] Id. at 22-23.

[24] Id.

[25] Id. at 7.

[26] Id.

[27] Id. at 7-8.

[28] Id. at 2.