Casey Kraning discusses several Senate bills that have been proposed in the last year and their potential impact on post-grant practice.
Read the full article in The National Law Journal.
Several Senate bills have been proposed over the last year to enact changes to the America Invents Act relating to post-grant practice before the Patent Trial and Appeal Board. This article will compare certain provisions of these bills and discuss the potential impact they may have on post-grant practice should they be enacted, particularly in light of recent guidance from U.S. Patent and Trademark Office Director Kathi Vidal.
The Bills: The Who, What, and When
The first recent bill seeking to make changes to post-grant practice was the Restoring the America Invents Act, introduced in September 2021, by Sens. Patrick Leahy, D-Vermont, and John Cornyn, R-Texas. The bill addressed a broad set of issues, most notably curtailing the PTAB's discretion to deny institution based on parallel litigation, reframing stays pending inter partes review in district court, codifying the U.S. Supreme Court's Arthrex decision by establishing a foundation for director review over PTAB proceedings, and creating a broader basis for a right to appeal.
This June, the same senators teamed up with Sen. Thom Tillis, R-North Carolina, to introduce a new bill titled the Patent Trial and Appeal Board Reform Act of 2022. The bill addresses similar issues as the previous bill, including discretionary denials, director review, and appellate standing. The bill also includes provisions aimed at curbing bad-faith conduct before the PTAB. These provisions are summarized below and compared against the earlier bill.
Tackling Discretionary Denials
Both bills seek to reduce the PTAB's discretion to deny post-grant petitions, but in different ways. For example, both bills would remove the PTAB's discretion to deny institution based on ongoing parallel district court litigation, thus abrogating the PTAB's established precedent under Fintiv. The Restoring the AIA bill would achieve this by replacing the permissive "may" language in 35 U.S.C. §314(a) with the mandatory "shall" language, and creating the right for parties to immediately appeal a denied motion for stay pending IPR in district court, giving the Federal Circuit de novo review to address uniformity of stays in the district court. The PTAB Reform Act, on the other hand, does not address stays, but instead simply instructs that the PTAB "shall not in any respect consider an ongoing civil action" other than to ensure the petition meets the one-year statutory time bar.
If enacted, these provisions would follow in the steps of Vidal's recent Fintiv guidance, which curtailed the PTAB's application of Fintiv by (i) eliminating the applicability of Fintiv to International Trade Commission proceedings; (ii) requiring, regardless of parallel litigation, board panels to institute if there is either a "compelling, meritorious challenge" or (iii) a Sotera-style stipulation precluding petitioner from pursuing any grounds that could reasonably have been raised in the petition; and (iv) permitting board panels to consider median time-to-trial in the parallel litigation rather than the scheduled trial date alone. The bill provisions would go a step further in eliminating Fintiv discretionary denials entirely.
With respect to serial petitions—that is, petitions challenging the same patent, filed by either the same or different petitioners—the bills take contradictory approaches. The new PTAB Reform Act codifies the PTAB's General Plastic precedent limiting repeated petitions, prohibiting institution if a petition had previously been instituted and "includes one or more of the same claims based on a petition that was filed on a different day" by either the same or different petitioner. The Restoring the AIA bill, on the other hand, did not address serial petitions. With the strong "shall" language, however, the earlier bill could allow, if not expressly condone, serial petitions, potentially leading to an increase in such petitions. Notably, Vidal's recent precedential opinion in Code200, UAB v. Bright Data instructed board panels not to discretionarily deny serial petitions if the previous petition was not evaluated on the merits, thus establishing a carve-out for previously unevaluated meritorious petitions.
Finally, both bills maintain the same carve-out currently in place permitting discretionary denials if "the same or substantially the same prior art or arguments previously were presented to the Office."
Codifying Director Review and Extending Appellate Standing
Both bills would codify Arthrex by giving the director the authority to review, modify or set aside PTAB decisions. Additionally, both bills instruct the director to issue a separate written opinion setting forth the reasons for each decision and require the director to create rules laying out the timeline and bases for review within 18 months. This contemplated rulemaking is, in fact, already underway, as the USPTO is currently soliciting comments from the public on the director review process.
Similarly, both bills seek to extend standing for the right to appeal. At minimum, both bills would extend standing to any party that reasonably expects that another person will assert estoppel against it as a result of the final written decision. The earlier Restoring the AIA bill would have also extended standing to a party that could demonstrate a redressable, concrete and particularized injury traceable to the decision. If a party lacked standing, however, the earlier bill would prevent estoppel from attaching to that party.
Relatedly, the earlier bill would have also prevented estoppel from attaching until either appeal rights are exhausted or an appeal decision is issued.
Promoting Transparency and Curbing Bad-Faith Conduct
Both bills would prevent ex parte communications between any Administrative Patent Judge and an officer who has either supervisory authority or disciplinary authority over that APJ who is not a member of the panel "concerning any pending matter." The earlier bill would also have applied this provision to officers with review authority over the APJ.
Finally, the newer PTAB Reform Act would also require the director to prescribe sanctions against petitioners who offer to deliberately delay or lose an instituted challenge for consideration. Notably, Vidal has initiated the director review process to take on this issue in the related OpenSky Industries and Patent Quality Assurance IPRs filed against VLSI Technology last year. Briefing recently concluded and a decision is expected to be forthcoming.
As of the date of publication, both bills remain pending in the Senate, and companion bills have not yet been introduced in the House.