AIA Post-Grant Implementation Begins - Is Your Business ......AIA as a method or corresponding apparatus for performing data processing or other operations for financial product or

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©2012 Foley & Lardner LLP • Attorney Advertising • Prior results do not guarantee a similar outcome • Models used are not clients but may be representative of clients • 321 N. Clark Street, Suite 2800, Chicago, IL 60654 • 312.832.4500

AIA Post-Grant Implementation Begins- Is Your Business Strategy Aligned?

August 27, 2012

A Web conference hosted by Foley & Lardner LLP

©2012 Foley & Lardner LLP

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Today’s Highlights

USPTO’s AIA Post-Grant Big Picture Highlights– Overview of AIA Trial Proceeding Structure

– Proceeding-Specific RulesInter Partes Review (IPR)Post-Grant Review (PGR)Transitional Program for Covered Business Method Patents (CBM)

– Umbrella Rules and Practice Guide

Petitioner’s Strategy

Patent Owner’s Strategy

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Teresa Stanek Rea, Deputy Under Secretary of Commerce for IP and Deputy Director of the USPTO

Ms. Rea joined the USPTO in 2011 as Deputy Director. She is a leading attorney in the field of intellectual property with more than 25 years of legal experience and a past president of the American Intellectual Property Law Association (AIPLA). Before joining the USPTO, Ms. Rea was partner at a firm in Washington, D.C. where she focused on intellectual property and dispute resolution related to pharmaceutical, biotechnology and other life science issues. Rea has experience in drafting infringement and validity opinions, as well as experience in interference and licensing matters.

Featured Speakers


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James D. Smith, Chief Administrative Patent Judge, USPTO

Appointed to the Board of Patent Appeals and Interferences on May 8, 2011Has had a long career in the law and in IP, including a brief time as an examiner at the USPTOFormerly served as in-house counsel for Lexmark and Nokia and most recently as Associate General Counsel and Chief IP Counsel of Baxter International

Featured Speakers

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Mr. Baluch advises companies on global IP strategies, including international portfolio management, IP diligence reviews, opinions, licensing, litigation, patent reexamination, and trade secret protection. He is a former director of international IP enforcement in the White House Office of the IP Enforcement Coordinator. Prior to his White House appointment, he was an expert legal advisor to the under secretary and director of the USTPO.

Foley Speaker

Andrew S. Baluch, Special Counsel and Vice Chair, Patent Office Trials Practice


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Mr. Smith serves as chair of the firm’s Patent Office Trials Group and is a member of the IP Litigation Group. He focuses his practice on patent disputes, in particular those having a complex USPTO component. He has advised clients in connection with numerous litigations and more than 80 patent reexamination proceedings.

Moderator

Matthew A. Smith, Partner and Chair, Patent Office Trials Practice

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Administrative Patent TrialsBefore The Patent Trial and Appeal Board

Teresa Stanek Rea, Deputy Under Secretary of Commerce for IP and Deputy Director of the USPTO

James D. Smith, Chief Administrative Patent Judge, USPTO

Overview

• Overview of AIA Trial Proceeding Structure

• Discussion of Proceeding-Specific Rules

– Inter Partes Review (IPR)– Post-Grant Review (PGR)– Transitional Program for Covered Business

Method Patents (CBM)

• Discussion of Umbrella Rules and Practice Guide

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AIA Trial Proceedings

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AIA Trial Proceedings

3 < 3 3 3 1 2 < 3 months

< One YearTrial Begins

Representative timeline:

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Major Differences between IPR, PGR, and CBM

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Threshold Standards for Institution

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IPR: May encompass a 50/50 chance

PGR/CBM: Greater than 50% chance

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Administrative Patent Trials

• In general, a person who is not the patent owner may file an IPR/PGR/CBM petition in the following time periods:

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Inter Partes Review

• All patents are eligible for an IPR. § 6(c)(2)(A) of AIA.

• A person who is not the patent owner and has not previously filed a civil action challenging the validity of a claim of the patent may file an IPR. 35 U.S.C. 315(a)(1); § 42.101.

• An IPR petitioner may request to cancel, as unpatentable, one or more claims of a patent only on a ground that could be raised under § 102 or 103 and only on the basis of prior art consisting of patents or printed publications. 35 U.S.C. 311(b); § 42.104(b)(2).

• An IPR petition cannot be filed until after the later of: 1) 9 months after the grant of a patent or issuance of a reissue of a patent; or 2) the date of termination of any post grant review of the patent. 35 U.S.C. 311(c); § 42.102(a).

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Inter Partes Review

• Petition must:

– Be accompanied by a fee. 35 U.S.C. 312(a)(1); § 42.15 & 42.103.

– Identify all real parties in interest. 35 U.S.C. 312(a)(2); § 42.8.

– Identify all claims challenged and grounds on which the challenge to each claim is based. 35 U.S.C. 312(a)(3); § 42.104(b).

– Provide a claim construction and show how the construed claim isunpatentable based on the grounds alleged. § 42.104(b).

– Provide copies of evidence relied upon. 35 U.S.C. 312(a)(5); §42.6(c).

– Certify that the petitioner is not estopped from proceeding. § 42.104(a).

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Inter Partes Review

Patent owner preliminary response

• A patent owner may file a preliminary response to the petition to provide reasons why no IPR should be instituted. 35 U.S.C. 313; § 42.107(a).

• Preliminary response is due 3 months from petition docketing date. § 42.107(b).

• Patent owners may provide testimonial evidence in a preliminary response where interests of justice so require, e.g., to demonstrate that petitioner’s real party in interest is estopped from challenging patent claims. See Patent Guide, Section II.C.

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Inter Partes Review

Threshold and Institution

• An IPR petition must demonstrate a reasonable likelihood that petitioner would prevail as to at least one of the claims challenged. 35 U.S.C. 314(a); § 42.108(c).

• Where IPR standards are met, the Board will institute the trial on: 1) claim-by-claim basis; and 2) ground-by-ground basis. §42.108(a) & (b).

– A party may request that panel rehears decision on petition. § 42.71(c) & (d).

• An IPR trial will be completed within one year from institution,except the time may be extended up to six months for good cause. 35 U.S.C. 316(a)(11); § 42.100(c).

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Inter Partes Review

Patent owner response (35 U.S.C. 316(a)(8); § 42.120)

• A patent owner may file a response to petition addressing any ground for unpatentability not already denied by the Board.

• In submitting a response, the patent owner must file, through affidavits or declarations, any additional factual evidence and expert opinions on which the patent owner relies in support of the response.

• The default date for filing a patent owner response is 3 months from institution.

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Inter Partes Review

Motion to Amend (35 U.S.C. 316(a)(9), (b) & (d); §42.121)

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• Authorization is not required to file the initial motion to amend, but conferring with the Board is required.

• The motion to amend may cancel any challenged claim and/or propose a reasonable number of substitute claims.

• Additional motion to amend may be authorized for good cause, e.g., where supplemental information is belatedly submitted.

• Motions to amend may be limited to prevent abuse and to aid in efficient administration and timely completion of the proceeding.

Post-Grant Review

• Most aspects of PGR and IPR are effectively the same.

• There are some differences between a PGR and an IPR, such as:

– With limited exceptions, only those patents issuing from applications subject to first-inventor-to-file provisions are eligible. § 6(f) of AIA.

– PGR allows challenges based on §§ 101, 102, 103, and 112, except best mode. 35 U.S.C. 321(b); § 42.204(b)(2).

– PGR may only be requested on or prior to the date that is 9 months after the grant of a patent or issuance of a reissue patent. 35 U.S.C. 321(c); § 42.202(a).

– Petition must demonstrate that it is more likely than not (i.e., a higher threshold than IPR) that at least one of the claims challenged in the petition is unpatentable. 35 U.S.C. 324(a); § 42.208(c).

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Covered Business Methods

• CBM proceedings employ the PGR standards and procedures subject to certain exceptions. § 18(a)(1) of AIA; § 42.303(a).

• Differences between a CBM and a PGR include:

– Cannot file CBM petition during time a PGR petition could be filed, i.e., 9 months after issuance of a patent. § 18(a)(2) of AIA.

– Petitioner must be sued or charged with infringement. § 18(a)(1)(B) of AIA; § 42.302(a).

– Petitioner has burden of establishing that patent is eligible for CBM review. § 42.304(a).

– Prior Art is limited when challenging a first-to-invent patent. § 18(a)(1)(C) of AIA.

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Covered Business Methods

Eligible patents:

• Both first-to-invent and first-inventor-to-file patents are eligible. §§ 6(f)(2)(A) & 18(a)(1) of AIA.

• Must be a covered business method patent. § 18(d)(1) of AIA; § 42.301.

– Covered business method patent generally defined in the AIA as a method or corresponding apparatus for performing data processing or other operations for financial product or service.

– The definition excludes patents for technological inventions.

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Umbrella Rules

• Per statutory requirements, real parties in interest will have to be identified. See, e.g., 35 U.S.C. 312(a)(2), 322(a)(2); § 42.8(b)(1).

• Practice Guide (Section I. D) provides factors that may be considered in determining whether a party constitutes a real party in interest or privy.

• Additionally, both petitioner and patent owner will be required to provide a certain level of information necessary to conduct the proceeding including related proceedings, lead and backup counsel, and contact information (email addresses and phone numbers). § 42.8(b).

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Umbrella Rules

Practice Before the Board in the Trial Proceedings

• The lead counsel must be a registered practitioner.

• The Board may recognize counsel pro hac vice during a proceeding upon a showing of good cause, subject to the Office’s Code of Professional Responsibility and any other conditions as the Board may impose. § 42.10(c).

– E.g., counsel is an experienced litigation attorney and has a familiarity with subject matter at issue.

• Similarly, the Board may take action to revoke pro hac vice status, taking into account various factors, including incompetence, unwillingness to abide by the Office’s Code of Professional Responsibility, and incivility. § 42.10.

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Umbrella Rules

Petition Fees (§ 42.15)

• Proposed fee escalation in block increments of 10 claims has not been adopted in the final rule.

• Rather, the final rule establishes a flat fee for each additional challenged claim after 20.

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Umbrella Rules

• Proposed page limits have been increased by 10 pages. The finalrule provides the following (§ 42.24):

• For claim charts, single spacing is permitted. § 42.6(a)(2)(iii).

• Statement of material facts in a petition or motion is optional. §42.22(c).

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Umbrella Rules

Testimony and document production is permitted

• AIA authorizes the Office to set standards and procedures for the taking of discovery. 35 U.S.C. 316(a)(5) & 326(a)(5).

• Discovery rules allow parties to agree to discovery between themselves. § 42.51(a)(1) & (b)(2).

• The final rules provide for mandatory initial disclosures, routine discovery, and additional discovery. § 42.51.

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Umbrella Rules

• Routine discovery – reduces costs to parties by making basic information readily available at the outset of the proceeding. Routine discovery may assist the parties to assess the merits of their respective positions, to avoid harassment in the proceeding, or to reach settlement. § 42.51(b)(1).

– Routine discovery includes documents cited, cross-examination for submitted testimony, and information inconsistent with positions advanced during the proceeding.

– Proposed rule on inconsistent statements has been modified to limit both scope and number of individuals subject to the rule. § 42.51(b)(1)(iii).

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Umbrella Rules

Additional discovery

• The parties may agree to additional discovery between themselves. Otherwise, a party must request any discovery beyond routine discovery.

• A party seeking additional discovery in IPR and derivation must demonstrate that the additional discovery is in the interests ofjustice. 35 U.S.C. 316(a)(5) for IPR; § 42.51(c).

• A party seeking additional discovery in PGR and CBM will be subject to the lower good cause standard. 35 U.S.C. 326(a)(5) for PGR; § 42.224.

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Umbrella Rules

Supplemental information (35 U.S.C. 316(a)(3); § 42.123)

• A request for the authorization to file a motion to submit supplemental information must be made within one month after institution.

• The supplemental information must be relevant to a claim for which the trial has been instituted.

• Any supplemental information filed later than one month after institution must show why the supplemental information reasonably could not have been obtained earlier and that consideration of the information would be in the interests-of-justice.

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Umbrella Rules

Petitioner Estoppels After Final Written Decision

• A petitioner in an IPR/PGR/CBM may not request or maintain a proceeding before the Office with respect to any claim on any ground raised or reasonably could have been raised. 35 U.S.C. 315(e)(1), 325(e)(1); § 42.73(d)(1).

• A petitioner in an IPR/PGR/CBM may not assert in district court or the ITC that a claim is invalid on any ground petitioner raised, and in IPR/PGR, any ground that reasonably could have been raised. 35 U.S.C. 315(e)(2), 325(e)(2); §18(a)(1)(D) of AIA.

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Umbrella Rules

Patent Owner Estoppel (§ 42.73(d)(3))

• A patent owner is precluded from taking action inconsistent with the adverse judgment including obtaining in any patent:

– A claim that is patentably indistinct from a finally refused or canceled claim.

– An amendment of a specification or drawing that was denied during the trial, but this provision does not apply to an application or patent that has a different written description.

• The proposed estoppel provision as to claims that could have been presented was not adopted in the final rule.

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Petitioner’s Strategy


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Balance of Power

How has the balance of power changed with the final rules?– Major changes were relatively neutral.

More flexibility in the Petition document.More flexibility in any motion to amend claims.Narrowing of Patent Owner estoppel (§42.73(d)(3))Timing: +1 month for PO preliminary response, +1 month for Petitioner reply, -1 month for PO response*, +1 month overall.

*as versus the Practice Guide schedule.

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Balance of Power

Overall strategic effect– Major factor: availability of stays pending

IPR– Key decision points:

Late 2012March – May 2013

– Use of decision to institute Trial

March – May 2014


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Petitioner Considerations

(1) Which case to make?

Although there is more flexibility in the Petition, focus will be required.

– Narrow the prior art case– Prediction: move away from Examiner-

style "rejections", toward omnibus obviousness challenges

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(2) How does the Petitioner use experts?

Key decision point– Experts in litigation vs. reexamination– Requirement for testimony?– Submitting testimony subjects the expert

to cross-examination.


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(3) Secondary evidence

Secondary evidence may be more important.– It is not just Patent Owner rebuttal evidence.– The Petitioner may wish to develop secondary

evidence of obviousness with the petition.

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(4) Estoppel management

315(e) estoppels are claim-by-claim.– Potential strategy: file on one set of claims first,

then file on other claims after the Institution Decision or Final Written Decision.

– Potential downsides: §315(d), §316(a)(11), §325(d), and delay with respect to litigation.


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Defeat the petition (even as to some claims).Confirm patentability of all original claims.Confirm patentability of original dependent claims.Confirm patentability of new substitute claims (but subject to intervening rights).

Patent Owner Fall Back Strategies

Settlement is available, but before a decision on merits


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Immediate Actions in Response to Petition– 21 days

File mandatory notices (real party-in-interest, related matters, lead and back-up counsel, service information)

– Earlier than 3 monthsAgree to a protective order to gain access to any confidential information in the petitionAsk Board for pre-trial discovery (e.g., standing)Confer with Petitioner about initial disclosures

– 3 monthsFile a Patent Owner Preliminary Response to the petitionFile any agreement reached on initial disclosures

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Preliminary Response to Petition – § 42.107 – Due 3 months after petition– Arguments

Trial Practice Guide, II.C:1. Petitioner is statutorily barred.2. References are not prior art.3. Prior art lacks a material claim limitation.4. The prior art teaches or suggests away. 5. Unreasonable claim interpretation. 6. Section 101 patent-eligibility.

Trial Practice Guide, II.D.2:– “The Board, in determining whether to institute, may take into

account whether the review could be completed timely.”

– New testimonial evidence is limited to what Board has authorized (e.g., petitioner’s standing).


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Request for Rehearing of Petition Decision –§42.71– Due 14 days after decision to institute a trial– Reviewed for abuse of discretion– IPR Threshold: “a reasonable likelihood that at least

one of the claims challenged in the petition is unpatentable.” 35 U.S.C. § 314(a).

“The ‘reasonable likelihood’ test is currently used in evaluating whether a party is entitled to a preliminary injunction, and effectively requires the petitioner to present a prima facie case justifying a rejection of the claims in the patent.” 157 Cong. Rec. S1375 (Mar. 8, 2011) (Sen. Kyl).

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Claim Amendments – § 42.121– Due with patent owner response (default deadline is 3

months after order)– Motion may be denied if:

amendment does not respond to a ground of unpatentability involved in the trial (42.121(a)(2)(i));amendment would enlarge the claim scope or introduce new matter (42.121(a)(2)(ii));amendment proposes more than a “reasonable number of substitute claims” – presumed to be 1 claim (42.121(a)(3));original claims are determined to be patentable (Trial Guide, II.G.3).

– Subject to intervening rights under 35 U.S.C. § 252.– Additional motions to amend as agreed to by both

parties to advance settlement.


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Parallel Prosecution of Same Patent– Reissue?

Claim broadening is allowed within 2 years of grantAdd new dependent claims under In re Tanaka, 640 F.3d 1334 (Fed. Cir. 2011)Availability of civil action under 35 U.S.C. § 145

– Patent Owner initiated Ex Parte Reexam?Non-statutory obviousness-type double patenting

– But … Director has authority “to stay, transfer, consolidat[e], or terminat[e]” under 35 U.S.C. §315(d)

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Additional Resources Foley on Patent Reform:www.foley.com/patentreform

www.pharmapatentsblog.com

USPTO Implementation Guides:www.uspto.gov/patents/init_events/aia_implementation.jsp


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Follow-up Information

Matthew A. Smith, Partner and Chair, Patent Office Trials Practice

• [email protected]

• 202.295.4618

Andrew S. Baluch, Special Counsel and Vice Chair, Patent Office Trials Practice

• [email protected]

• 202.672.5520

Following today’s discussion, these materials will be emailed to attendees and posted online at www.foley.com/news/events.

Foley will apply for CLE credit and email certificates to attendees in approximately 6-8 weeks.

Thank you for joining us today.

Documents

AIA Post-Grant Implementation Begins - Is Your Business ......AIA as a method or corresponding apparatus for performing data processing or other operations for financial product or