AIA Trials & the Non-Story of Patent Owner Preliminary Responses
Since the effective date of the America Invents Act’s new inter partes reviews on September 16, 2012 patent stakeholders have wanted to know: what’s the scoop regarding these and other post-grant proceedings? One consistent, telling source of information has been the Patent Trial and Appeal Board’s website, https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/statistics, which periodically publishes AIA trial statistics. While some have been phobic of the new formats for post-grant proceedings, many urban legends were put to bed with simple facts. For example, one will recall that in August of 2015 I wrote that the claim survival odds were 74% in IPRs based upon published data from the Board. Just Intellectuals eNewsletter, Aug. 2015 ed. Meaning that then it was more likely than not that one’s claims would not be cancelled, especially not in total. Moreover, it was and still is significantly probable that parties will settle a post-grant proceeding. Id. & USPTO PTAB Trial Statistics, June 2017, pp9-10. Assuming settlement still indicates a meeting of the minds, one might say that both parties have a good change of leaving an AIA trial reasonably satisfied.
A few months ago, the Patent Trial and Appeal Board changed the format of its trial statistics publication to highlight the utility of patent owner preliminary responses. USPTO PTAB Trial Statistics, June 2017 versus April 2017. One will recall that effective May 2, 2016, the Board adopted amendments to its trial practice rules that included the allowance of new testimonial evidence in a patent owner preliminary response. Amendments to the Rules of Practice for Trials Before the Patent Trial and Appeal Board, 81 Fed. Reg. 63, pp 18750-18766 (April 1, 2016).
As background, the Code of Federal Regulations allows for a patent owner against which a petition for post-grant proceedings has been filed to file a preliminary response before an institution decision has been made. See e.g., 37 CFR §§ 42.107(a) & 42.207(a). This can save patent owners the expense of trial if successful at the pre-institution stage. The standard for instituting a post-trial proceeding is such that the petitioner need demonstrate that it is more likely than not that at least one of the challenged claims is unpatentable. The patent owner’s preliminary response gives the patent owner a chance to “set[] forth the reasons why no [post-trial proceeding] should be instituted….” or in other words, why it is unlikely that any of the challenged claims will be cancelled or found unpatentable. The May 2016 Board rule changes now allow for patent owners to use testimonial evidence (along with other proofs) to combat petitions. 37 CFR §§ 42.108(c) & 42.208(c). There are many reasons why a patent owner might want to incorporate testimonial evidence into a preliminary response should the three-months response period permit. For example, the patent owner may wish to establish the state of the art at the time of filing, whether the results of the claimed invention were unpredictable, the existence of other secondary considerations, assist with claim construction or to distinguish the claimed invention from teachings in the prior art. Accordingly, this “new testimonial evidence” can be valuable scale-tipping proof. As a matter of course, petitioners almost always file expert declarations with their petitions, so, the rule changes were expected to even the playing field a bit at the pre-institution stage, though any issues of material fact will be viewed in a light most favorable to the petitioner.
Now, after great debate, much anticipation and waiting over a year to see what is the story with the new rules on patent owner preliminary responses, the recently published data by the Board meagerly answers us as follows: … uh, I don’t know? Take a look.
The Board’s above graph shows the percentage of post-grant trial petitions where the patent owner filed a response both before and after the rule change. As shown, it is almost identically as likely that a patent owner will file a preliminary response with the availability of testimonial evidence as it was before the rule change. In some technology areas, there has been a slight decrease, like electrical/computer, showing a 2% decrease, but in others there has been a slight increase, like in chemical, showing a 6% increase. So, it does not appear that the option to provide testimony has changed the average patent owner’s willingness to file a preliminary response. However, since the implementation of the new rule, a significant number of preliminary responses have used testimonial evidence, with utility spanning from 32% to 59% of the cases depending upon technology area. What explains the bio/pharm and chemical owners’ additional willingness to use testimonial evidence pre-institution is unknown, perhaps it is budgetary or related to the density of the material?
Another slide in the Board’s June 2017 Trial Statistics publication (p7) shows how institution rates are generally declining from 87% in 2013 to 64% this year. But it is doubtful that this decline has much to do with a patent owner’s ability to provide testimony in their preliminary responses since the decline started in FY2014 (two years before the rule took affect) and there is only a one percent difference between the fiscal years preceding and succeeding the rule change. Even pre-institution settlement appears unaffected by the rule change, steadily lingering around the 15% mark for the last three years.
Some remaining good questions for the Board are: what are the institution rates when the patent owner does or does not file a preliminary response and does or does not incorporate new testimonial evidence in said response? This may be useful client development evidence for patent practitioners to use when explaining the desirability of filing preliminary responses with testimonial evidence to outhouse counsel. In short, we simply need more from the Board, more information to assess what is the story with this new initiative and whether it even makes sense to take advantage of the new rules.
