Feature

Two Views of PTAB: Past, Present, and Future

Michael R. Fleming

©2017. Published in Landslide, Vol. 9, No. 3, January/February 2017, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

Recently, the United States Patent and Trademark Office’s (USPTO’s) administrative patent tribunal, now named the Patent Trial and Appeal Board (PTAB), celebrated its 155th anniversary. Over the years, the PTAB has changed from six examiner-in-chiefs in the 1800s to more than 230 administrative patent judges (APJs). Because of this large influx of new APJs, the PTAB has changed operationally. Instead of being located in one geographic location, APJs today are working remotely in various locations in the United States. Instead of hard copies, PTAB papers and documents are electronic. Moreover, the role of the PTAB has expanded greatly from just handling ex parte appeals from examiner’s final patentability decisions to full administrative trials determining patent validity, thereby playing a prominent role in patent litigation. Due to these changes, the PTAB is faced with a myriad of challenges.

The Expansion of the Board

In the late 1940s and early 1950s, the USPTO was inundated with a post-war surge of patent applications. As a result, the number of cases pending at the Board of Patent Appeals and Interferences (BPAI)1 had risen to an unacceptable level. As part of continuing efforts to reduce the backlog at the BPAI, six temporary examiners-in-chief were appointed to serve on the BPAI in 1950.2

In 1952, Congress enacted the Patent Act of 1952, authorizing the BPAI to have up to nine examiners-in-chief and the president of the United States to appoint the examiners-in-chief.3 The 1952 act codified the past practice of having temporary examiners-in-chief by allowing the commissioner to temporarily designate primary patent examiners to act as examiners-in-chief.4 The 1952 act was amended in September 1958 to allow up to 15 examiners-in-chief.5

Several changes in the law led the way for the expansion of the BPAI. In January 1975, Congress amended 35 U.S.C. § 3 to authorize the secretary of commerce to appoint examiners-in-chief instead of the president of the United States.6 In August 1982, Congress amended the first sentence of 35 U.S.C. § 3(a) by deleting the phrase “not more than fifteen” and inserting “appointed under section 7 of the title” immediately after the phrase “examiners-in-chief.”7 Now, title 35 does not limit the number of examiners-in-chief.

After 1982, the BPAI slowly grew. By the time I was appointed to the BPAI in 1994, there were 35 examiners-in-chief. In October 1995, Commissioner Bruce Lehman authorized the examiners-in-chief to use the title administrative patent judge (APJ).8 By the end of 2007, there were 58 APJs, and by the end of 2009, there were just under 100. After the passage of the Leahy-Smith America Invents Act (AIA), the number of APJs swelled to today’s number of more than 230.

Operational Changes

In the early 2000s, the BPAI anticipated that these large numbers would be needed due to the growing ex parte appeal backlog and the likelihood of passage of the AIA, which charged the newly named PTAB with new inter partes and post-grant review proceedings. Starting in 2005, the BPAI began planning for and began recruiting the new APJs. Looking ahead, the BPAI saw the need for changes on how it would carry out its duties.

It has always been a challenge to recruit new APJs due to the modest salary9 and the relatively high cost of living in the Washington, D.C., area. In order for the BPAI to recruit the large numbers of new APJs, it began the remote telework program in 2007 to allow APJs to live and work outside of the D.C. metropolitan area. One of the first APJs to work in the telework program lived and worked in Hawaii. The remote telework program relied on the USPTO’s virtual private network. This required the BPAI to modernize operations by moving from a paper document system to a total electronic document system. This allowed APJs to access working files remotely and to draft and circulate opinions electronically.

Now, as practitioners know, the PTAB operates entirely electronically. Not only do the APJs and the PTAB staff operate electronically, but practitioners also are encouraged to file PTAB papers electronically. There are two trial e-filing systems: one for interferences, the ACTS i-filing system, and the other for AIA proceedings, the PTAB E2E system. Both are web-based portals for allowing the uploading of PDF documents to the PTAB as well as retrieval and downloading of filed papers. Ex parte appeals, appeals from examiner’s final decision, are also filed electronically using the EFS-Web system, a web-based patent application submission tool. The Patent Application Information Retrieval (PAIR) system allows retrieval and downloading of filed papers.

Expansion of the Board’s Role

The role of the PTAB has expanded greatly from just handling ex parte appeals and interferences to include full administrative trials determining patent validity. Administrative trial work is not new to the PTAB. The PTAB has a long history of presiding over administrative trials determining interferences. However, the possibility of the director to declare an interference is low. An interference can only be declared between an application and either another application or a patent.10 An interference exists if the subject matter of a claim of one party would, if prior art, have anticipated or rendered obvious the subject matter of a claim of the opposing party, and vice versa.11 As a result, there were relatively few interferences compared to the new AIA post-grant procedures.

The passage of the AIA changed dramatically the role of the PTAB. The AIA provides several new post-grant proceedings for a third party to challenge before the USPTO the validity of an issued United States patent. Legislators crafted inter partes review (IPR), post-grant review (PGR), and covered business method patent review (CBM). An IPR may be filed nine months after the patent’s issue date and may only be brought on the ground that a claim is invalid as anticipated or obvious under 35 U.S.C. § 102 or 103.12 Effective September 16, 2012, IPR replaced inter partes reexamination.13 A PGR may only be filed no later than nine months from the patent’s issue date and may be brought on any ground that a claim is invalid.14 Limiting PGR to the first nine months of the issue date of the patent was meant as a safeguard to protect patent owners from harassment by preventing patent challengers from raising in their petitions 35 U.S.C. §§ 101 and 112 issues, except for this relatively short time period. A CBM is essentially a post-grant review without the post-grant review filing deadline.15 CBM reviews are only for business patents claiming systems and methods performing data processing for the administration or management of a financial product or service.16 CBM reviews are transitional post-grant reviews because, absent subsequent legislation extension, the authority to file CBM petitions will terminate in September 16, 2019.17

As of June 30, 2016, there have been a total of 5,202 AIA petitions filed since September 16, 2012.18 There have been a total of 1,229 AIA petitions filed in FY2016 as of June 30, 2016.19 In contrast, in FY2011, the year before the passage of AIA, there were only 52 interferences declared. As of June 30, 2016, there have been 1,046 IPR trials completed resulting in 11,237 claims canceled, and 128 CBM trials completed resulting in 1,910 claims canceled.20

As these statistics suggest, it has become popular for petitioners to file AIA petitions to invalidate patent claims. Moreover, it appears that petitioners have enjoyed a great of amount of success in their choice. Some have criticized the PTAB for a heavy hand in invalidating patents. This criticism should be tempered when taking into consideration, among other things, that PTAB petitioners have complete discretion whether to expend the resources to prepare and file a petition, and often do so only if they believe they have strong grounds for invalidity.

Examination Best Practices

The PTAB has played an increased role in establishing best practices for determining patentability. Beginning around 2009, the PTAB began publishing all of its opinions on its website. This has provided the public, the Patent Examining Corps, and the PTAB itself with a large body of authority to understand the PTAB’s decision-making process. More importantly, the Manual of Patent Examining Procedure (MPEP) has increasingly cited PTAB decisions to give guidance to examiners.

Because one of the purposes of the post-grant proceedings is to cure the USPTO’s errors, one would expect that the Patent Examining Corps would look to AIA trial proceedings to improve patent examination. In fact, the USPTO has recently launched a pilot program aimed at providing lessons learned from AIA trial proceeding outcomes to the examiners. The Post Grant Outcomes Pilot (Pilot) was developed as part of the Enhanced Patent Quality Initiative.21 The Pilot notifies examiners when they have an application related to an AIA trial proceeding. Also, the Pilot streamlines access to the contents of AIA trial proceedings. Finally the Pilot will determine and disseminate best practices to the examiner by evaluating outcomes of the AIA proceedings.22

Future Challenges

The PTAB is largely dependent on USPTO computer systems and the Internet for its practical day-to-day operations. This dependency on technology poses a risk for the PTAB. So far, the PTAB has managed this risk with little disruption, although disruptive shut-downs have happened from time to time. However, the integrity and continuity of these systems will always pose a challenge for the PTAB. For the PTAB to continue to enjoy this success, it is dependent not only on the skill of the USPTO information technology engineers and technicians, but also on the availability of appropriated funds from Congress in order to strengthen and diversify its equipment and communications channels.

The large numbers of new APJs also pose challenges for the PTAB. In the past, the PTAB relied on a mentor system to train a new APJ. A new APJ was assigned to a senior APJ, and the new APJ would work alongside the senior APJ for a period of time. This provided excellent training. However, this works well when you have many senior APJs and only a few newly recruited APJs. It must have been difficult for the senior APJs to train the large influx of new APJs. In the future, the PTAB will have to consider other ways to train new APJs that may resemble traditional classroom training.

Moreover, having more than 200 APJs living and working in different places in the United States makes it difficult to provide consistency between PTAB decisions. When the PTAB was located on one floor of an office building and there were fewer than 40 APJs, consistency was ensured by circulating opinions and monthly APJ meetings. The PTAB recognized this problem and issued Standard Operating Procedure (SOP) 2.23 This allows for the PTAB to designate certain decisions as informative or precedential. These decisions do not create any legally enforceable right but create internal norms for PTAB administration. A decision designated as precedential is a binding authority for the PTAB in subsequent matters involving similar facts or issues. A decision designated as informative is not binding authority but provides a representative outcome on a matter. The purpose of SOP 2 is to aid in ensuring consistency between PTAB decisions. However, a Standard Operating Procedure alone will not get the job done. Because the large number of decisions are issued by a large number of APJs spread across the country, consistency between decisions will pose one of greatest challenges for the PTAB in the future.

Finally, whether these new AIA post-grant procedures are found to be a success will depend largely on whether the PTAB can gain the trust of both the patent owner and the petitioner by conducting these administrative trials in a fair and judicial manner. The PTAB will have the difficult task of providing a quick determination of the validity of the challenged patent by conducting the trial in a manner to ensure due process of law for both the petitioner and the patent owner alike.

Endnotes

1. The then official name of the PTAB.

2. Annual Report of the Commissioner of Patents 1 (1950).

3. Patent Act of 1952, Pub. L. No. 82-593, 66 Stat. 792.

4. Id. at 793.

5. Pub. L. No. 85-933, 72 Stat. 1793 (1958).

6. Pub. L. No. 93-601, 88 Stat. 1956 (1975).

7. Pub. L. No. 97-247, 96 Stat. 317 (1982).

8. Commissioner Confers Title of “Judge” on Patent and Trademark Board Members, 46 Pat. Trademark & Copyright J., no. 1151, Oct. 21, 1995, at 534.

9. APJ starting salaries are often lower than starting salaries for patent attorneys at many of the top patent law firms.

10. 35 U.S.C. § 135(a).

11. 37 C.F.R. § 41.203.

12. 35 U.S.C. § 311.

13. Former 35 U.S.C. chapter 31 (Optional Inter Partes Reexamination Procedures) continues to apply to requests for inter partes reexamination filed before September 16, 2012. See Leahy-Smith America Invents Act (AIA), Pub. L. No. 112-29, 125 Stat. 284 (2011).

14. 35 U.S.C. § 321.

15. AIA § 18(a)(1)(A), 125 Stat. 329.

16. Id. § 18(d)(1), 125 Stat. 331.

17. Id. § 18(a)(3), 125 Stat. 330–31.

18. USPTO, Patent Trial and Appeal Board Statistics 2 (June 30, 2016), https://www.uspto.gov/sites/default/files/ documents/2016-6-30_PTAB.pdf.

19. Id. at 5.

20. Id. at 10–13.

21. Enhanced Patent Quality Initiative, USPTO, https://www.uspto.gov/patent/initiatives/enhanced-patent-quality-initiative-0 (last modified Nov. 15, 2016).

22. Post Grant Outcomes Pilot, USPTO, https://www.uspto.gov/patent/initiatives/post-grant-outcomes-pilot (last modified Nov. 8, 2016).

23. Available at https://www.uspto.gov/sites/default/files/documents/sop2-revision-9-dated-9-22-2014.pdf.

Michael R. Fleming

Michael R. Fleming is of counsel to Irell & Manella LLP. Mr. Fleming is the former Chief Administrative Patent Judge of the Patent Trial and Appeal Board (PTAB) of the United States Patent and Trademark Office (USPTO). Mr. Fleming advises and represents clients on all areas of post-grant proceedings, appeals, and USPTO practices. His primary focus is representing clients in the new post-grant proceedings that were established by the America Invents Act.