Leahy-Corbin Proposals for “Restoring the America Invents Act”

By Sarah Geers –

We recently reported on bipartisan legislation introduced by Senators Patrick Leahy (D) and John Cornyn (R) to significantly revamp certain features of the America Invents Act (AIA), ten years after its debut.  This proposed legislation, entitled the “Restoring the America Invents Act,” seeks to curb the recent rise in discretionary denials at the PTAB, clarify procedures for review of decisions by the PTO Director, expand the grounds available for IPR review, address issues of standing for appellate review for certain petitioners, and prohibit the PTO from issuing claims that are not patentably distinct from invalidated claims, among other proposals.  We take a closer look at these and other proposed changes below.

Loss of discretion to deny institution.  The proposal would modify the statutory threshold for institution of inter parties review (IPR) or post-grant review (PGR) under 35 U.S.C. § 314(a) and § 324(a) to require institution if there is a reasonable likelihood that the petition would prevail, “subject only to the discretion of the Director under section 325(d)(4).”  The proposal would further modify Section 325(d) to add subsection (d)(4), which would restrict the Director’s discretion to reject a petition to only the cases where “the same or substantially the same prior art or arguments previously were presented to the Office.”

Review by the Director.  The Leahy-Cornyn proposal would add a new subsection to 35 U.S.C. § 6 controlling the review of PTAB decisions by the Director (a direct response to the recent Arthrex decision).  New Section 6(d) permits the Director to “review, and modify or set aside” final decisions on the initiative of the Director or at the request of a party to the decision.  Any review by the Director must be issued in a separate, public written opinion that sets forth its rationale.  The proposal also requires the Director to promulgate rules addressing the timeline and available bases for Director review.  Any decision by the Director under this new subsection would be considered a “final written decision” for purposes of appellate review under Section 141.  In addition, proposed new 35 U.S.C. §§ 318(e) and 328(e) would require the Director to decide any request for reconsideration, rehearing, or review within 120 days after issuance of a final written decision (which can be extended up to 60 days “for good cause shown”).

Expanded grounds for petition.  The proposal would expand the scope of grounds for IPR under 35 U.S.C. § 311(b) to add statutory or obviousness-type double patenting as a new ground, and would additionally expand the bases for grounds to include admissions made in the patent specification, drawing, or claims (in addition to prior art consisting of patents or printed publications).

New standing provisions.  New 35 U.S.C. §§ 319(b) (IPR) and 329(b) (PGR) would provide a presumption of “injury in fact” for a party appealing a decision of the PTAB if (1) the party reasonably expects that another person would assert estoppel against that party as the result of a final written decision or (2) the party suffers any other injury that is fairly traceable to the final written decision that could be redressed through appellate review.  Moreover, if a court finds that a party nevertheless lacks standing to appeal a final written decision, that party is not estopped under Sections 315(e)/325(e) with respect to the underlying IPR/PGR.

Modified estoppel provisions.  The nature of estoppel arising from post-grant proceedings under 35 U.S.C. §§ 315(e)(1) (IPR) and 325(e)(1) (PGR) would also change under the Leahy-Cornyn proposals.  With respect to estoppel against a petitioner, amended Sections 315(e) and 325(e) would delay the applicability of petitioner estoppel until after the time for appeal has expired or any appeal is terminated.  Amendments to Sections 315(e)(2) and 325(e)(2) would also clarify that petitioner estoppel only applies with respect a final written decision “that the claim is not unpatentable” (i.e., where the petitioner’s challenge is unsuccessful on the merits).  With respect to estoppel against a patent owner, new Sections 315(e)(1)(B) and 325(e)(1)(B) provide that the PTO may not issue claims that are not patentably distinct from any claim that was found to be unpatentable or canceled in any proceeding before the PTO, including IPRs and PGRs.

Fewer bars to IPR.  Under the Leahy-Cornyn proposal, the filing of a complaint challenging validity of a patent would not bar IPR review under 35 U.S.C. § 315(a) if the complaint has been dismissed without prejudice.  Moreover, the 1-year time bar under Section 315(b)—requiring an accused infringer to file its IPR petition within 1 year of service of the complaint—would also be modified to exclude cases where the complaint was dismissed without prejudice.  Amended Section 315(b) would also make clear that petitions challenging new or amended claims issued from reexamination must also be filed within 1 year of assertion in a civil action.

Stay of civil actions.  Section 315(a)(2) as currently in force provides for an automatic stay of civil actions filed by a petitioner to challenge claims already challenged in IPR.  The Leahy-Cornyn proposal would add new stay provisions addressing civil actions brought by a patent owner asserting infringement of a patent challenged in IPR or PGR.  New Section 315(b)(2)(A) (IPR) and Section 325(a)(4)(A) (PGR) would dictate the factors considered by the court in deciding whether to stay the parallel infringement proceeding.  These factors would be: (1) whether the outcome of the IPR/PGR would simplify/streamline the infringement action; (2) whether discovery is already complete at the time of filing; (3) whether the stay decision would result in undue prejudice or present a clear tactical advantage; and (4) whether the stay decision would reduce the burden of litigation on the parties and court.  New Section 315(b)(2)(B) (IPR) and Section 325(a)(4)(B) (PGR) would also provide for immediate interlocutory review by the Federal Circuit of any stay decision.

Consolidation of proceedings.  The proposal would also modify 35 U.S.C. §§ 315(d) (IPR) and 325(d) (PGR) to require the parties and Director to take action with respect to parallel proceedings or prosecution before the PTO.  Under these proposed modifications, the parties are required to notify the Director of any other proceedings before the PTO involving the challenged patent, and of any pending continuation applications.  The Director must then issue a decision regarding how the parallel actions should proceeding (including the possibility of stay, transfer, consolidation, or termination).  In doing so, the Director may not, however, extend any statutory deadlines or terminate an inter partes proceeding in favor of an ex parte proceeding.  A rebuttable presumption of consolidation of proceedings filed “reasonably close in time” would apply.

Claim amendment.  With respect to amendment of claims, the Leahy-Cornyn proposal would modify 35 U.S.C. § 316(e) (IPR) and § 326(e) (PGR) to add new subsections 316(e)(2) and 326(e)(2) that place the burden of proving patentability by a preponderance of the evidence, “including under sections 101, 102, 103, and 112,” on the patent owner and provide that substitute claims may be examined by the PTAB or by examination by the PTO within the time limits of the applicable IPR or PGR.

Additional proposals.  The Restoring the America Invents Act would also enact changes throughout the patent code to clarify that “a person” includes a “governmental entity” for purposes of AIA post-grant proceedings.  In addition, new Sections 316(c)(2) (IPR) and 326(c)(2) (PGR) would prohibit any ex parte communication regarding a pending matter between a PTAB judge and any officer with review, supervisory, or disciplinary authority over that judge.  Amended Sections 318(b) and 328(b) would require the Director to issue and publish certificates no later than 60 days after being informed by the parties that the time for appeal has passed or any appeal has been terminated.