Flying high: the PTAB’s pilot scheme for one-judge reviews

In August the US Patent and Trademark Office (USPTO) published a notice seeking comments on a potential pilot programme aimed at addressing patent owners’ concerns of bias surrounding inter partes review (IPR) proceedings and easing the strain on the Patent Trial and Appeal Board’s (PTAB) resources. Currently, a three-judge panel reviews a petition for an IPR for compliance with statutory requirements. If the panel decides to institute a review of the challenged patent, the same judges preside over the remainder of the IPR proceeding.

In a Federal Register notice published on August 25, the USPTO proposed a different structure. Specifically, under a pilot programme, a single judge would be responsible for evaluating petitions and deciding whether to institute a review. In the event a review is instituted, two additional judges would join the original judge to form a three-judge panel to preside over the remainder of the proceeding.

When the one-judge institution proposal was floated initially in March this year, USPTO director Michelle Lee cited complaints of bias by patent owners as one impetus. Understanding this concern requires some familiarity with the distinct phases of an IPR proceeding and an appreciation for the hurdle a petitioner must clear to advance from one phase to the next.

Two steps

At a high level, the new America Invents Act (AIA) proceedings at the PTAB include an institution phase and a trial phase. The institution phase begins when a petitioner files a petition challenging one or more claims of a patent. The PTAB considers the petition and the patent owner’s preliminary response in deciding whether to institute review of the challenged patent. That is, review is not a matter of right. The PTAB can, and often does, deny institution of a review in whole or in part. This occurs most commonly when the petitioner fails to meet a statutory threshold, which varies depending on the type of proceeding.

“The original examiner provides the panel with context and familiarity with the prosecution history; the two additional examiners provide ‘fresh eyes’ during the appeal process.”

For an IPR, review may not be instituted unless the petition and response show “that there is a reasonable likelihood that the petitioner would prevail with respect to at least one of the claims challenged in the petition.” Upon institution of review, the trial phase begins. The trial phase, as the name suggests, is litigation-like, although there are some key differences between the trial phase at the PTAB and a district court trial.

One important difference is in the evidentiary standard used. The petitioner must demonstrate invalidity, not by clear and convincing evidence as would be required in district court litigation, but by preponderance of the evidence, which continues to be the general evidentiary standard for proceedings at the PTAB.

If a patent owner finds itself in the trial phase of an IPR, at least two of the three trial-phase judges have already decided in the institution phase that there is a “reasonable likelihood” that the petitioner will prevail with respect to at least one of the challenged claims. That is, coming out of the trial phase unscathed requires a patent owner to convince one or two judges to change their minds. Therefore, from a patent owner’s perspective, an invalidity determination at the trial phase can appear to be a fait accompli.

With the preponderance of evidence standard already looming low over the challenged claims, an invalidity determination can arguably be considered close at hand in any PTAB proceeding. On top of this, a patent owner must start the trial phase by persuading one or two judges that the panel got it wrong at the institution phase. More precariously, a patent owner can argue, perhaps implicitly, that the panel got it right at the institution phase—there wasa reasonable likelihood that the petitioner would prevail—but based on the more developed record the petitioner has not established invalidity by a preponderance of the evidence.

Neither position is enviable. In either case, inertia favours the petitioner, and patent owners have complained that they enter the trial phase in a defensive position, needing to undo lingering bias from the institution phase.

So, Lee cited “fresh eyes” as one benefit of the proposed rule change. If one judge authorises institution of review, a patent owner may still have concerns of bias with respect to the instituting judge. The two new judges, however, reduce the risk of perceived bias and should not have preconceived opinions about the case before the trial phase. So, a patent owner can present evidence at the trial phase to at least two neutral judges.

This problem and proposed solution in some ways mirror the appeals process used at the European Patent Office (EPO). At the EPO, for example, an appeal from an examiner’s decision is to a three-member panel, which includes the original examiner and two additional examiners. The original examiner provides the panel with context and familiarity with the prosecution history; the two additional examiners provide ‘fresh eyes’ during the appeal process. Likewise, under the PTAB’s proposed rule, the institution-phase judge should provide useful continuity between the two phases, and the two new judges should provide the sought-after objectivity in the trial phase.

Easing the strain

The published notice also addressed a second major benefit of the proposed pilot programme: it would ease the strain on PTAB resources created by a surge of AIA filings. Since the AIA proceedings became available in 2012, the PTAB has received more than 3,600 petitions. The Federal Register notice stated that resource demand had been met so far by hiring additional judges. In future, however, the notice cautioned that it was uncertain whether the PTAB would be able to make timely decisions and meet statutory deadlines simply by hiring more judges.

So, the proposed pilot programme is in line with the USPTO’s broader goal of creating efficiencies in the AIA proceedings. The two judges who would have been involved in the institution phase of an IPR would be free for other matters, including, for example, ex parte appeals, the institution phases of other IPRs, or involvement with other AIA proceedings.

The pilot programme for one judge has the potential to address several perceived problems with the current IPR process. From the perspective of patent owners, the programme offers a chance to try one’s case before an objective trial-phase panel. This is a welcome change for patent owners that believe the trial-phase panel inherently carries over biases formed in the institution phase.

The PTAB stands to benefit, too. By freeing up two of the three judges that would have been involved in the institution phase of an IPR, the PTAB can allocate scarce judicial resources more efficiently. The resulting ability to make timely decisions should benefit the PTAB and all parties involved in PTAB proceedings.

Jeffrey Whittle is a partner at  Hogan Lovells in Houston. He be contacted at: jeffrey.whittle@hoganlovells.com