Recently, the USPTO published their statistics for ex parte appeals, which were discussed during the February 1st Patent Public Advisory Committee (PPAC) quarterly meeting. The average time it takes for the Patent Trial and Appeal Board to issue a decision for an ex parte appeal continues to decrease. This is good news for patent applicants, who in past years had to wait two to three years for a decision. The current average of approximately fifteen and a half months, though still long, will help make timing less of a consideration in deciding whether or not to appeal examiner rejections.
In November of 2017, the USPTO Patent Trial and Appeal Board (PTAB) published Standard Operating Procedure 9 (SOP 9), which addresses how the board will handle cases remanded from the Federal Circuit Court of Appeals to the PTAB. SOP 9 “creates internal norms for the administration” of the PTAB, while “provid[ing] guidance to the parties, the public, and the [PTAB.]” According to SOP 9, PTAB plans to issue “decisions on remanded cases within six months of the PTAB’s receipt of the Federal Circuit’s” order remanding the case.
In order to facilitate this six-month goal, once PTAB is notified the case is being remanded, the Chief Administrative Patent Judge and the Deputy Chief Administrative Patent Judge discuss each remanded case with a panel. Within 30 days of the PTAB receiving the mandate, which releases jurisdiction to the Board, the panel, the Chief Judge, and/or Deputy Chief Judge will meet to discuss the Federal Circuit decision issues and establish procedures for preparing a remand decision (such as timelines, additional briefing, etc.).
Appendix 1 of SOP 9 provides guidance for panels for their remand meetings with the Chief Judge and/or the Deputy Chief Judge. The topics to be discussed during that meeting depend on the facts and circumstances of the case. The meeting participants may provide a short summary of issues to discuss in the meeting, such as procedural history, issues on remand, case briefing, related appeals, procedural instructions from the Federal Circuit, substantive issues the panel may need to address, remand proceeding procedures, the issue of whether to expand the panel based on SOP 1, policy considerations, and whether any decision by the panel could be considered precedential.
Appendix 2 of SOP 9, provides guidance to parties on remand procedural issues. The Appendix states, “procedure and pace of a remand following a Federal Circuit decision will vary, depending on the type of case, legal and factual issues involved, the specific instructions from the Federal Circuit, the recommendations of the parties, and any other particularities of the case.”
For remanded litigation cases, parties must contact the PTAB within ten business days after the Federal Circuit mandate to arrange a panel teleconference. Prior to the teleconference, parties are expected to meet and make a good faith attempt to propose a procedure on remand. For example, is additional briefing necessary? If additional briefing is necessary, other details should also be proposed such as whether filings should be concurrent, which party will open if filings are not concurrent, subject matter limitations, length, briefing schedule, etc. Parties are also expected to meet and confer as to potential evidentiary issues, such as whether parties should be able to supplement the evidentiary record, limitations on the type of additional evidence, additional evidence submission schedule, and any other procedural issues. Although the parties propose procedures, the panel ultimately will decide the procedures for remand based on the scope determined from the Federal Circuit’s reasoning and instructions.
Keep in mind, there is not a statutory time limit for completion of a reopened proceeding. The panel will consider the time and expense involved. For example—in regard to additional briefing—the panel may decide to allow extra briefing due to a change in the law, or a new/revised claim construction not previously considered. However, if parties have had adequate opportunity to address issues raised by remand, then additional briefing may be denied. If a party wishes to re-open the evidentiary record, they “must demonstrate why evidence before the PTAB is inadequate, and good cause as to why additional evidence is necessary.” Again, in keeping with the PTAB’s six-month response goal, the panel will consider how much time will be necessary for additional briefing and additions to the evidentiary record. If new evidence is allowed in, there may also be a need for an additional oral hearing. The additional briefing, evidence, and oral hearings will likely take more time than the six-month goal. SOP 9 includes Default Trial Procedures for Common Remand Scenarios as guidance for practitioners (see image above). This guide indicates the likelihood of the PTAB granting additional briefing, evidence, or oral argument based on the issue addressed on remand.
The PTAB also has Remand procedure considerations which guide ex parte and re-examination appeals. Either the PTAB or the Examiner will take the remanded cases as directed by the Federal Circuit if “outstanding rejections can be addressed by the [PTAB] with further explanation of a finding of fact/conclusion of law; [there is] a new ground of rejection based on further findings of fact or the current record; and/or if the reversal requires a need for further prior art searching by Examiner and/or issuance of a patent or reexamination certificate.” If a matter of law or fact is raised by the Federal Circuit, there may be a request by the PTAB for further briefing. However, this should be a rare occurrence.
Though SOP 9 is helpful in understanding the USPTO’s goal for efficiency, is the PTAB’s goal of a six-month decision turn-around serving the Federal Circuit’s purpose of each remand? Or is it merely serving the purpose of moving the docket?
You may be aware that the USPTO has a “Subject Matter Eligibility” webpage with links to resources regarding how patent examiners are to evaluate claims for patent subject matter eligibility under 35 U.S.C. § 101. This month, the USPTO updated their “Quick Reference” sheet of Federal Circuit and Supreme Court “decisions holding claims eligible and identifying abstract ideas,” as well as their chart of subject matter eligibility court decisions (downloadable from the main Subject Matter Eligibility webpage), which was previously referred to as “Appendix 3.”
The Reference sheet organizes the cases by “type” of abstract idea as well as summarizing cases by whether the claims were found to be eligible in Step 2A (i.e., the claim was not directed to a judicial exception) or found eligible in Step 2B (i.e., the claim as a whole amounts to “significantly more” than the judicial exception). The chart provides a concise summary of cases, citations, patent numbers, claim types, judicial conclusion, and whether the case is precedential or not.
Both the reference sheet and the chart can be helpful in arguing Section 101 rejections during patent application prosecution.
On Tuesday, January 16, 2018, the newest round of USPTO fee changes goes into effect from the final rule published in the Federal Register back in November. The USPTO has published a table that makes it easy to see the changes to fees. Notably, nonprovisional patent application filing-search-examination fees go up a total of $120, excess claim fees increase $20 for each claim in excess of 20 and $40 for each independent claim in excess of 3, design patent application examination fees are going up by $140, the design patent issue fee increases by $140, forwarding a Notice of Appeal increases by $240, a first request for continued examination increases by $100, a subsequent request for continued examination increases by $200, and the inter partes review request fee goes up $6,500 (all costs for large entities).
Recently, the USPTO Patent Trial and Appeal Board (PTAB) designated two more decisions as Informative. Both involve 35 U.S.C. § 315(b) regarding the time bar to filing petitions for inter partes reviews. The following is a description of the decisions from the USPTO:
In this decision, the Board denied institution after determining that the Petition was not timely filed under 35 U.S.C. § 315(b), because payment was not received by the Office until after the date the Petition was filed. The Board also denied Petitioner’s motion to assign an earlier filing date to the Petition after determining that Petitioner failed to show good cause for waiving the fee requirement.
In this decision, the Board determined that the Petitioner was timely filed under 35 U.S.C. § 315(b) because filing a motion to amend the complaint in district court, with an amended complaint attached, does not constitute service.
The Board also designated another decision as Precedential – Facebook, Inc. v. Skky, LLC, CBM2016-00091 (PTAB Sept. 28, 2017) (Paper 12), Section II.B.2. As described by the USPTO, “This expanded panel decision explains that covered business method patent review eligibility is determined based on the claims of the patent as they exist at the time of the decision to institute, and claims that a patent owner statutorily disclaims prior to institution will be treated as if they never existed for purposes of institution.”
After their initial shock, lawmakers are fighting back against pharmaceutical company Allergan’s novel plan to protect the validity of its patents by bypassing the Patent Trial and Appeal Board’s (“PTAB”) scrutiny. In September, Allergan transferred the rights to six key patents on the dry-eye drug Restasis to the Saint Regis Mohawk Native American Indian tribe in an effort to use tribal sovereign immunity to shield the Restasis patents from inter partes review (“IPR”) proceedings at the PTAB.
Under the terms of the deal, Allergan transferred ownership of the key Restasis patents to the Saint Regis Tribe, which licensed them back to Allergan. The Tribe then sought to dismiss pending IPR challenges. In return, the Tribe received an upfront payment of $13.75 million and $15 million in additional potential annual royalties.
The defense of sovereign immunity as a shield against IPRs is not new. In May, the PTAB dismissed an IPR based on a state university’s assertion of 11th Amendment sovereign immunity.1 The decision reiterated2 that state agencies (e.g., state universities, medical schools, and research centers) enjoy sovereign immunity, which bars IPR challenges to patents they own. Although tribes are subject to sovereign immunity through congressional action, not the 11th Amendment, tribal sovereign immunity generally follows state sovereign immunity. However, Allergan’s efforts represent the first time that an entity that possesses immunity proactively approached patent owners and proposed to take ownership of their patents. If the Allergan-Saint Regis deal works, it could allow Allergan to extend its monopoly on Restasis, thereby maintaining its billion-dollar-plus annual revenue from the drug.
A key question in determining the legitimacy of Allergan’s deal is whether the agreement is a “sham.” For the transaction to legally be a sham, it would have to be unlawful or illusory in order to serve as a tax shelter or another deceptive device. The answer to this question lies in the transfer of the bundle of patent rights—and, more specifically, whether the Saint Regis Tribe has enough rights to actually be considered the owner of the patents in question. If Saint Regis is not completely free to use the patents in any way that it wishes, the issue becomes whether the restrictions on Saint Regis are enough to argue that Allergan continues to exercise de facto control over the patents and, therefore, that sovereign immunity should not apply.
Additionally, because tribes are subject to sovereign immunity through congressional action, Congress can equally act to remove tribal immunity. In a letter to the Senate Judiciary Committee, four senators called for Senators Chuck Grassley and Dianne Feinstein of the judiciary committee to investigate Allergan's “anti-competitive attempt to shield its patents from review and keep drug prices high." Senator Claire McCaskill also weighed in, calling the arrangement a "brazen loophole" that should be illegal and submitting a bill in the Senate to prohibit transfers to Native American tribes that are structured to take advantage of tribal sovereign immunity.
News of the Allergan-Saint Regis deal has sparked interest in Native American tribes pursuing similar arrangements. If they follow Saint Regis’s footsteps, Native American tribes could become significant players in the IP value creation market. However, there are still major outstanding questions. If Allergan retains de facto control over the patents, does sovereign immunity still apply to those patents? Are tribes allowed to rent out their sovereign immunity? Will Congress act to limit the application of sovereign immunity in IPR challenges? Until these questions are answered, other tribes and companies may be deterred from making similar patent transfers.
1 NeoChord, Inc. v. Univ. of Md., Baltimore, Case No. IPR2016-00208, Paper 28 (PTAB, May 23, 2017).
2 See also Covidien LP v. University of Florida Research Foundation Inc., IPR 2016-01274; -01275, and -01276 (PTAB January 25, 2017).
The Allergan logo shown above is a registered trademark of Allergan, Inc.
The three informative decisions address different aspects of how PTAB addresses whether to institute an IPR under 35 U.S.C. § 325(d) based on whether the same or substantially the same prior art or arguments previously were presented to the Office. As summarized by the USPTO in its October 24 bulletin, the informative decisions address the following:
In Unified Patents, Inc. v. Berman, Case IPR2016-01571 (PTAB Dec. 14, 2016) (Paper 10), “the Board denied institution of one ground under § 325(d) because the petitioner asserted an obviousness combination that included a reference the examiner considered during prosecution and a second reference that was cumulative of prior art that the examiner considered. The Board also declined to exercise discretion under § 325(d) with respect to a second asserted obviousness combination, where the examiner did not consider the asserted references during prosecution, and the references were not cumulative of the prior art the examiner considered during prosecution.”
In Hospira, Inc. v. Genentech, Inc., Case IPR2017-00739 (PTAB July 27, 2017) (Paper 16)“the Board denied institution under § 325(d) because the examiner considered during prosecution, and found persuasive, the same arguments the petitioner raised regarding the patent owner’s claim to priority. The Board concluded that the examiner’s previous priority determination was dispositive as to each of the asserted grounds of unpatentability.”
And, in Cultec, Inc. v. Stormtech LLC, Case IPR2017-00777 (PTAB Aug. 22, 2017) (Paper 7), “the Board denied institution under § 325(d) because (i) the examiner previously considered two of the asserted references—one reference was raised in a third-party submission that the examiner discussed in rejecting the claims and the other reference the examiner cited and applied throughout prosecution; and (ii) the two additional references upon which the petitioner relied were cumulative of prior art the examiner considered during prosecution.”
Copies of decisions designated as informative and precedential can be found on the PTAB's Informative Opinions Page and the PTAB’s Precedential Opinions Page of the USPTO website. Additionally, during PTAB’s "Chat with the Chief" webinar on October 24th, the Patent Office announced plans to streamline the Opinions page for easier access to decisions.
It is the end of the Oklahoma Regionals of the FIRST Robotics Competition (FRC for short), and as I sit here in the “pit” reflecting on this year’s robotics season I feel privileged and honored to have been a small part of team 5578, the Metro Mechanical Monsters from Oklahoma City, OK.
For those who may not be familiar with FRC, FIRST (For Inspiration and Recognition of Science and Technology) is a non-profit organization formed by Dean Kamen (inventor of the Segway) to introduce and promote science, engineering, and technology skills to school-age young people. FRC is the top tier of the FIRST Robotics programs, with high school aged students designing and building competitive robots over a six-week period. Each year there is a unique game with a number of challenges that the students must analyze, then decide which challenges they want to tackle and the requirements for doing so, then design, build, and test a robot that accomplishes those goals.
At the FRC level, all the teams get a “kit of parts” each year, but it is far from a "build your own robot kit.” Instead, the kit consists of materials common to most of the robots such as control system components, a few motors and motor controllers, some sensors and switches, and various other bits and pieces to get the team started. The team must then acquire or fabricate everything else they need to build their robot.
My firm, Dunlap Codding, has been a sponsor of the FRC Oklahoma Regional competition for the last ten years. This is the third year I have had the privilege of working with the Mechanical Monsters, and I couldn’t be more proud of what they have accomplished. For the last couple of years, we have hacked together what could be loosely referred to as “robots” that moved about (most of the time), but were not great at accomplishing the assigned game tasks. As you’d expect, we did not place highly in competition, but we did have fun and we learned what not to do, mostly by doing things wrong.
This year, the students wisely enlisted the help of a more experienced team who graciously included them in their initial strategy session where both teams spent “kickoff day” analyzing this year’s game, talking strategy, and forming a plan for the six-week build period. The students and coaches then came together to design, build, test, re-design, re-build, test again, re-design... well, you get the idea. What inspires me most about this group, is they kept working through the problems that surfaced over, and over, and over again, right up to the last morning of competition, in fact, to field a robot that not only worked but placed 16th overall out of 61 teams in the Oklahoma Regional.
While doing well in the competition was an accomplishment that was celebrated by the team, and rightfully so, it is not the focus of FRC or the coaches and mentors of the Mechanical Monsters. Building a robot and participating in competitions are merely vehicles designed to introduce students to engineering, science, and technology and get them more interested in possibly pursuing a STEM career.
The Mechanical Monsters have already shown an interest in STEM, they are all students of the Metro Technology Center STEM Academy. As participants in the STEM Academy, students leave their home schools to attend the STEM Academy half the day to take classes such as advanced math, chemistry, physics, and pre-engineering—classes that are not available at their home schools. Participation in the FRC gives these students the opportunity to apply many of the things they learn in class in a real-world scenario where they gain invaluable hands-on experience. It is the goal of the coaches, mentors, and instructors at the STEM Academy that the students’ experiences in FRC will enhance what they have learned and solidify their desire to pursue STEM further.
Only time will tell if that goal was accomplished with this year’s group of Monsters, but one thing is sure, we had fun and I will never forget this amazing group of young people.
Video of a couple of Team 5578’s matches at the Oklahoma Regionals:
Today, the Supreme Court vacated a prior Federal Circuit decision when it decided that laches cannot be used as a defense against a claim for damages brought within the Patent Act’s six-year limitation of damages set forth in 35 U.S.C. § 286. SCA Hygiene Products AB et al. v. First Quality Baby Products LLC, 580 U. S. ____ (2017).
This decision stems from a dispute where the Plaintiff, SCA Hygiene Products, waited almost seven years between providing notice of the potential infringement to the Defendant, First Quality, and filing suit against First Quality; however, during the interim, the damages continued to accrue. The District Court reasoned that SCA Hygiene was time barred by laches because it unreasonably delayed in bringing its suit, and the Federal Circuit affirmed that decision.
Applying similar logic to that in its opinion in Petrella v. Metro-Goldwyn-Mayer, Inc., 572 U. S. ___ (2014), the Supreme Court held that as long as the damages incurred within the period of limitations set forth by the statute, the equitable defense of laches does not apply. Specifically, the Court rejected the Federal Circuit’s reasoning that the Patent Act has codified a laches defense, and instead decided that by inserting a statute of limitations, Congress intended to preclude laches, and allow the recovery of damages for infringement committed within six years of filing the claim. The Supreme Court also rejected First Quality’s (and the Federal Circuit’s) position that courts for over a decade had relied on laches to reject claims for damages in patent cases. In its review of the same cases, the Supreme Court stated that the opposite was true – laches was not to be used to bar a claim for damages within the time set forth by Congress.
In closing, the Supreme Court noted the many policy reasons for laches set forth by both First Quality and the amici but indicated that policy alone was not enough to turn over Congress. The Supreme Court stated, “the doctrine of equitable estoppel provides protection against some of the problems that First Quality highlights, namely, unscrupulous patentees inducing potential targets of infringement suits to invest in the production of arguably infringing products.” 580 U. S., at ____ (slip op., at 16).
Thus, using the Court’s guidance in Petrella, there may still be opportunities to bar the claim for infringement and all associated remedies based on the doctrine of estoppel, specifically in situations such as when the “[patent] owner engages in intentionally misleading representations concerning his abstention from suit, and the alleged infringer detrimentally relies on the [patent] owner's deception.” 572 U. S., at ___ (slip op., at 19).
Despite flying with TSA pre-check, random checks in airport security lines seem to be a thing for me. Just last week, a TSA officer randomly wiped down all of my electronics with what looked like a fat piece of litmus paper and then stuck the paper into a futuristic machine for further analysis. Lucky for me, I carry honest electronics.
On March 21, 2017, the USPTO will begin randomly checking declarations of use, not looking to find what trademarks owners possess but instead looking to crack down on what trademark owners are lacking. The USPTO recently published a final rule (82 Fed. Reg. 6259) establishing a random audit program to ensure that trademark owners attempting to renew their trademark registrations are indeed using their trademarks in connection with every good and/or service in what may be a laundry list of goods or services in a single class. So, if you own a trademark registration that identifies multiple goods or services in a single class, be prepared to submit additional evidence of your mark being used in connection with any one of the goods or services identified in your registration.
Specifically, ten percent of Section 8 and 71 Declarations of Use will be subject to the audit. A Section 8 Declaration is a statement made to the USPTO averring that your federally registered trademark has been in use continuously for a period of five years, and a Section 71 Declaration is essentially the same thing but applies to applications generally filed by international applicants under the Madrid Protocol.
Under the current rules, upon filing a Section 8 or 71 Declaration of Use, a registrant is required to submit a specimen showing evidence of the mark being used with at least one good or service in each class identified in the application. This has not changed. However, for a random ten percent of such registrants, the USPTO will next issue an Office Action requiring additional proof for particular goods or services identified in the registration and not already accounted for. Here comes the random pat down. Registrants will have six months to respond by either submitting evidence of use or simply deleting the goods and services from the registration.
The rule was prompted by a pilot program, during which fifty-one percent of the registrations pulled at a security checkpoint for random screening were unable to submit evidence of commercial use for the additional goods and services required. In particular, the USPTO hopes to whittle down registrations filed under the Madrid Protocol, which generally contain a much broader listing of goods and services than do applications filed with the USPTO. The Office also wants to drain the registry of registrations of goods and services that are not in fact being offered with a particular brand name. After all, trademark rights are based on using the mark in commerce.
In sum, you own a trademark registration for LIZZIE BOO for use in connection with shirts, shorts, overalls, jackets, shoes, and hats, all in class 25. You submit a Declaration of Use showing evidence of shirts. Do not be surprised if the USPTO randomly pulls you aside and requires you to submit additional evidence of those overalls. If LIZZIE BOO overalls have been discontinued, well then, drain them from the registration.