News analysis: Why the new PTAB rules are no laughing matter

In the Western world, the first day of the fourth month is usually reserved for tall stories and childish pranks.

But there was no April Fools’ Day fun from the US Patent and Trademark Office (USPTO) this year. On April 1, US practitioners woke up to the news that their roles were about to change thanks to new rules centring on Patent Trial and Appeal Board (PTAB) cases.

Published in the Federal Register, the new rules stemmed from changes first proposed by the USPTO in August last year and are related to inter partes reviews (IPRs), post-grant reviews (PGRs) and covered business method reviews.

One of the most significant changes is that patent owners will now be allowed to include relevant testimonial evidence with their opposition to a petition. The USPTO says this will enable “more robust responses” to petitions for review.

According to the USPTO, this change will address concerns that patent owners were disadvantaged by previous rules that limited the evidence that could be presented with their preliminary response.

Ben Pleune, partner at law firm Alston & Bird, says: “The new rules will significantly change how companies approach the preliminary phase of post-grant proceedings.

“As the institution rate falls, and the number of preliminary responses rises, this rule change provides patent owners with a new tool to defeat a post-grant challenge before institution.”

A major shift

Joseph Raffetto, counsel at law firm Hogan Lovells, tells WIPR that the allowance of expert testimony may prove to be the most interesting of the new rules.

“This is a major shift from past practice, when patent owners were not permitted to submit this new testimony before institution,” he says, adding that the rule may set up a “battle of the experts” before a case even starts.

Raffetto adds that he would not allow it if he were making the rules.

“Institution is merely a decision on whether a case should begin—not a final decision on the merits,” he says. He adds that he would rather have seen a change whereby companies could appeal against a decision that permits a review.

“The USPTO will now be weighing competing expert testimony before a case even begins. This will occur without the record being fully developed. Given this, it seems important for petitioners to clear appellate recourse where the office errs in balancing this competing expert testimony.”

BRI v Phillips

The rules also clarify that the PTAB will use the Phillips standard, the claim construction standard used by district courts, for patents that will expire during a proceeding. The broadest reasonable interpretation (BRI) standard will be used for all other patents.

Raffetto says while instances of using the Phillips standard will be “relatively narrow”, the USPTO’s rationale for adopting it—that a patent that will expire because “no opportunity to amend exists”—could be used to further restrict the application of the BRI standard over time.

“Opponents of that standard could attempt to use this to urge that the BRI should be limited to motions to amend and that, in all other instances, a Phillips-type analysis should be used,” he says.

Other changes that have been published include adding a rule 11-type certification for papers filed used in district courts. Under that rule attorneys can be sanctioned for not doing an adequate pre-filing investigation.

A proposal to have single judge evaluate IPR trials will not be carried forward after negative responses were received during the consultation process, the USPTO said.

As it stands, the same three-judge panel that hands down a final written decision also makes the decision on whether to institute a trial.

The new rules also replace the limit on the number of pages with a word count limit for petitions and preliminary responses.

Previously the limit was 60 pages for IPR petitions and 80 pages for PGRs. Under the new rules, these papers will be limited to 14,000 words and 18,700 words in the respective proceedings.

The rules went into effect 30 days after they were first published and will be in place at the time of this magazine’s publication.

The first few trials under the new guidelines will be closely monitored, but the sense is that it will be quite some time before the effects are fully understood.