The USPTO is taking the proposed rule changes on tour, conducting road shows entitled, “Enhancing Patent Quality and Conducting AIA Trials.” The office will be visiting Santa Clara, CA on August 24th, Dallas, TX on August 26th, and then conduct an exhibition at its home office in Alexandria VA on August 28.
On May 19th, the U.S. Patent and Trademark Office (USPTO) issued a series of rule changes related to the 2011 America Invents Act (AIA), offering patent-holders some increased protection from excessive patent defense litigation. The changes were generally described as “quick fix” modifications to the Office Patent Trial Practice Guide, addressing issues that could be immediately resolved by the USPTO, with the promise that more comprehensive rule changes were underway. On Thursday, a 113-page detailed series of amendments were officially added to the Federal Register. While the rule changes will likely be a handful for intellectual property attorneys to digest, they should offer some legal benefits for patent holders. The new rules are designed to reduce the workload of the three-year old Patent Trial and Appeal Board (PATB), a product of the AIA, which has undertaken three-times the amount of patent reviews than had been anticipated since its 2012 creation. The changes come in response to public commenting on the May amendments, and today’s changes will also allow for a 60-day commenting period.
The rule changes were initiated for the most part to reduce the number of patent challenges by so-called patent trolls, shell companies that exist for the sole purpose of challenging patents, making it easier for patent holders to issue a defense. Current rules make defending patents difficult and expensive, with the patent holders usually settling out of court. The most fundamental rule change is a narrowing part of the “broadest reasonable interpretation” for accepting patent challenge claims. To the dismay of many of those who commented on the May 19th changes, the narrowing of the standard to the narrower “Phillips” method of claim construction adopted by the federal court system only applies to patents that are set to expire during the litigation proceedings, which cannot be amended. Although the USPTO chose not to adopt a narrower method of claim construction for all cases, the changes do require parties to make a “Rule 11-type certification” on all paperwork, which requires parties under the threat of sanctions to attest that “to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:”
(1) It is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of the proceeding;
(2) The claims, defenses, and other legal contentions are warranted by existing law or by a non-frivolous argument for extending, modifying, or reversing existing law or for establishing new law;
(3) The factual contentions have evidentiary support; and
(4) The denials of factual contentions are warranted on the evidence.”
Another major change proposed is that patent holders show evidence to the Patent and Trademark Appeals Board (PATB) prior to the board deciding on whether or not to allow the case to proceed. This is a major change as previously, substantive evidence from the patent-holder was not admitted to the record until after the case was set for trial, with the PATB focusing more on procedural accuracy than the actual validity of a petitioner’s claim against a patent-holder in preliminary proceedings. Although the change should prevent more cases from making it to trial, it does mean that patent-holders will have to move more quickly in finding experts and other evidence than before. Despite the allowance of evidence, however, the PATB will continue to rule on the side of the petitioner in cases of disputed evidence, thus curtailing some of the rule’s usefulness for patent-holders. Other changes include a longer period for parties to exchange information prior to a final hearing and changing the requirements on some filings to word count limits as opposed to the old standard of page-limits.
The USPTO is taking the proposed rule changes on tour, conducting road shows entitled, “Enhancing Patent Quality and Conducting AIA Trials.” The office will be visiting Santa Clara, CA on August 24th, Dallas, TX on August 26th, and then conduct an exhibition at its home office in Alexandria VA on August 28. According to USPTO director Michelle K. Lee, the agency plans on adopting the new rules by the end of the year, with the public feedback contributing to the final version of the rule changes. The decision to not narrow the case construction threshold in all cases, adopting it only for expiring patents, was one aspect of the changes that ran counter to the wishes of most commenters. According to Sharon Israel, president of the American Intellectual Property Law Association, “My personal view is they could still go further.” While the changes in evidentiary proceedings may help patent-holders, Hastings IP partner Joseph Palys says, “They kind of gave the patent owners something and then curtailed it a bit,” noting that the burden of proof in pre-trial motions remains on the patent holder.
Bloomberg BNA – J.C. Boggs, Jennifer H. Burdman and William J. Sauers
IP Watchdog – Gene Quinn
National Law Review – Stephen B. Maebius
The Recorder – Scott Graham