Lawyers: PTAB changes tackle many questions, more sanctions motions expected


Lawyers: PTAB changes tackle many questions, more sanctions motions expected

Evlakhov Valeriy /

US lawyers have welcomed proposals to improve the Patent Trial and Appeal Board’s (PTAB) trial proceedings, which include allowing patent owners to submit expert evidence to an examiner before it decides whether to institute an inter partes review (IPR).

Yesterday, August 19, the US Patent and Trademark Office (USPTO) published the draft proposals.

Other proposals include requiring practitioners to submit a pleading before filing an IPR that its petition is not abusive. The pleading will be “akin to rule 11 requirements in federal courts”, according to the USPTO.

Rule 11, one of several in the US’s federal rules of civil procedure, provides for sanctions against an attorney or its client for offences such as committing harassment, making frivolous arguments, or not conducting a factual investigation.

According to the proposals, the PTAB will also construe patent claims in the same way as district courts for patents that are set to expire during an IPR. It will, however, continue to apply the broadest reasonable interpretation (BRI) standard for all other cases it handles.

In district court litigation, claims cannot be amended and courts take a narrower view of them, looking at much more evidence such as prosecution history

Neil Smith, a former judge at the PTAB and now a partner at law firm Rimon, said the changes are perceptive and demonstrate that the USPTO is proactive in addressing the concerns of patent owners. 

He added that the proposed changes should deal with “many of the questions that have come up unpredictably in the three years of PTAB practice”.

Allowing patent owners to introduce expert evidence when hit with a petition should shift the assumption of a patent’s invalidity once an IPR is instituted, said Cyrus Morton, partner at law firm Robins Kaplan.

He added that “often the perception is that once the PTAB institutes a trial, they [the PTAB’s judges] think that the patent is invalid, and it will be very difficult to change their minds in the final determination”.

“But now the patent owner has the opportunity to really fight the substance of the petition with an expert declaration right up front. Getting the PTAB to not institute a trial in the first place has always been the best result for the patent owner, and now that result is at least a little more likely,” he said.

On July 31, the PTAB had received more than 3,000 petitions for IPRs since its 2012 implementation, the USPTO said. Fewer than 1,400 claims have been instituted.

The USPTO said the number of petitions filed is more than the body anticipated and that it is pleased that the US Courts of Appeals for the Federal Circuit has affirmed the PTAB’s decisions at a “very high rate”.

The USPTO said that although the PTAB is working well there are still improvements to be made.

Recently, life sciences companies Celgene and Allergan have been frustrated by what they alleged were “abusive” petitions challenging their patents by hedge fund owner Kyle Bass and another hedge fund Ferrum Ferro Capital (FFC), respectively.

The companies have requested that the challengers be fined for what they claim are attempts to extort money using the IPR proceedings.

Both Bass and FFC have rejected these claims and have filed their own countermotions.

Justin Oliver, partner at law firm Fitzpatrick, Cella, Harper & Scinto, said that introducing a “rule 11-type certification” should “open the door for more motions for sanctions”, meaning more motions similar to Celgene’s may be filed in the future.

The decision that the PTAB will construe patent claims in the same way as district courts for patents that are set to expire during an IPR comes after a challenge by Cuozzo Speed Technologies was knocked back by the federal circuit last month.

In a 6-5 majority, the federal circuit rejected a request to hear the case en banc and affirmed the PTAB’s decision to invalidate the patent when applying the BRI standard.

Cuozzo had argued that the PTAB’s construction of patent claims should be consistent with that of district courts.

The USPTO has asked stakeholders to submit views on the proposed changes by October 19. 

USPTO; PTAB ; Patent Trial and Appeal Board, US Patent and Trademark Office, inter partes review; Celgene; Kyle Bass; Allergan