Chief Judge Guidance: SAS Impact, Motions to Amend, and Claim Construction

By: Jeffrey C. Wu, Ph.D. and S. Christian Platt

On June 5, 2018, Chief Judge David Ruschke and Vice Chief Judge Tim Fink of the Patent Trial and Appeals Board (PTAB) participated in a webinar providing new guidance on three topics: (1) the new claim construction standard for PTAB proceedings, (2) a new informative order and updates on Motions to Amend, and (3) changes to PTAB proceedings following the Supreme Court’s decision in SAS Institute, Inc. v. Iancu, 138 S.Ct. 1348 (2018) (“SAS”).

The webinar was particularly noteworthy in that the PTAB provided answers to frequently asked questions about SAS on the PTAB website along with the presentation.

Proposed New Claim Construction Standard

The PTAB announced a proposed rule change for a new claim construction standard in PTAB proceedings. Under the new standard, a claim “shall be construed using the same claim construction standard that would be used to construe such claim in a civil action to invalidate a patent under 35 U.S.C. 282(b), including construing the claim in accordance with the ordinary and customary meaning of such claim as understood by one of ordinary skill in the art and the prosecution history pertaining to the patent.”  Furthermore, “any prior claim construction determination concerning a term of the claim in a civil action, or a proceeding before the International Trade Commission, that is timely made of record in the inter partes review proceeding will be considered.”

Chief Judge Ruschke clarified that this new claim construction standard, if adopted, would be applied retroactively, explaining that the PTAB intends that any proposed rule changes adopted in a final rule would be applied to all pending AIA trial proceedings. The deadline for public comments on the new claim construction standard is July 9, 2018.

Motions to Amend

The PTAB announced that it was designating Western Digital v. SPEX Techs, IPR2018-00082 -00084 (PTAB Apr. 25, 2018) (Paper 13), as an informative case for Motions to Amend, which provided guidance regarding statutory and regulatory requirements for a motion to amend in light of Aqua Products, Inc. v. Matal, 872 F.3d 1290 (Fed. Cir. 2017).  The PTAB also clarified that two earlier cases are no longer designated as authority: MasterImage 3D, Inc. v. RealD Inc., IPR2015-00040, Paper 42 (PTAB July 15, 2015) and Idle Free Sys., Inc. v. Bergstrom, Inc., IPR2012-00027, Paper 26 (PTAB June 11, 2013).

Chief Judge Ruschke noted that the post-Aqua Products era has been noteworthy for a significant jump in Motion to Amend filings.  The first half of Fiscal Year 2018 (FY18) has already had as many filings as were filed in each of the last three years.

PTAB Proceedings After SAS

Chief Judge Ruschke noted that about 45% of open PTAB proceedings would be affected by SAS as they had not been instituted on all grounds raised in the petition — requiring correction to bring institution of all claims and all grounds.

Effect of SAS on PTAB Proceedings Generally

Following SAS, the judges explained that the PTAB will institute on all challenges raised in the petition or not institute at all (i.e., it will be a binary decision).  That is, there will be no partial institution based on claims or grounds.  The USPTO is considering changes to rules, such as 37 CFR §§ 42.108 and 42.208 (that allow for institution on some claims) to reflect the requirement of institution of all claims and all grounds.

In light of the increased workload, the PTAB judges encouraged Patent Owners and Petitioners to narrow the issues.  For example, the judges noted that this could involve disclaiming some of the patent claims.

On-Going Partially-Instituted Proceedings

The judges stated that statutory extensions would not be automatic.  Thus far, the PTAB has already granted at least 12 extensions following SAS.  Many of these cases were near the issuance of a final written decision when SAS was decided.  Moving forward, even if a statutory extension is granted, it may not be for the full 6 months.  The PTAB noted that in many cases, a 1 or 2 month extension would be sufficient.  Extensions might also be granted in open cases where there were too many grounds for a final written decision covering all grounds prior to the expiration of the original statutory deadline.

The judges will consider extending the statutory deadline for a final written decision in cases affected by SAS.  For example, it will invite the parties to meet and confer on a revised schedule, if needed.  Following conferral, the panel will consider the stage of the proceeding, the parties’ requests for additional briefing, and time needed by the parties and the panel to address additional claims and/or grounds. The panel will then decide if an extension is warranted and will make a recommendation to the Chief Judge.

With regards to retaking depositions of witnesses regarding claims and/or grounds that were originally denied, the PTAB stated that under certain circumstances, a witness could potentially be deposed again for the limited purpose of addressing claims and/or grounds that were added to the proceeding. This additional deposition would only be considered following a meet and confer between the parties and the panel’s approval depending on whether such depositions would comport with judicial and administrative efficiency and economy.

Challenges Denied for Statutory Reasons

The judges stated that it did not anticipate vacating prior institution decisions for claims previously denied under 35 USC § 325(d) (estoppel for prior art or arguments previously presented) or 35 USC § 112(f) (failure to provide a construction).  Although challenges subjected to § 325(d) would be addressed in the Final Written Decision, panels would take into account evidence that the same or substantially the same art or argument was previously before the Office and give such evidence due weight in addressing the challenge.  Depending on the circumstances, panels might allow parties additional briefing to (1) provide a construction, (2) address how the panel should apply the prior art to the claim limitation even if insufficient structure has been identified, and (3) address how the panel should reach a determination with respect to that claim in the Final Written Decision.

For claims originally denied institution on the basis of estoppel under 35 USC § 315(e) (raising a ground that could have been raised earlier), the judges stated that the panel will add such claims to the proceeding. However, § 315(e) states that a petitioner may not “maintain a proceeding” as to estopped claims. Therefore, even though such claims are technically in the proceeding, the panel would decide such claims in favor of the Patent Owner. This would not preclude a different petitioner from challenging the same claims.

Institution Decisions Post-SAS

Chief Judge Ruschke and Vice Chief Judge Fink stated that institution decisions would continue to include findings that certain challenges failed to meet the reasonable likelihood standard.  When a panel finds certain challenges do not meet the reasonable likelihood standard at the institution stage in view of the parties’ arguments, the panel would indicate its view in the decision to institute, even if the result is to institute on all challenges.  This would allow the parties to better pick their battles and to determine which issues the panel felt were most significant.

Challenges that Could Be Denied for Statutory Reasons

In view of the possibility of voluminous or excessive grounds, the PTAB warned against engaging in such tactics.  The judges noted that panels would be instructed to evaluate the challenges and determine whether, in the interests of efficient administration of the Office and integrity of the patent system (see 35 USC § 316(b)), the entire petition should be denied under 35 USC § 314(a) (failing to meet the reasonable likelihood burden).

The judges clarified that it did not contemplate a fixed threshold or percentage for a sufficient number of challenges that would lead to an institution decision. Instead, the panel would evaluate the challenges and determine whether, in the interests of efficient administration of the USPTO and integrity of the patent system (see 35 USC § 316(b)), the entire petition should be denied under 35 USC § 314(a).  Thus, the Board would take a holistic approach instead of relying on a mathematic formula.