PTAB Rulemaking: Past, Present, and Future
June 16, 2020
“The America Invents Act left it to the USPTO to establish the rules and procedure of the PTAB. The rules of practice under David Kappos and Michelle Lee were radically skewed to help infringers and hurt inventors. Director Iancu has begun to fix the most egregious of these biased rules. However, we are very far from leveling the playing field.”
Recently, the USPTO published a Notice of Proposed Rulemaking (NPRM) to change the “Trial Practice at the Patent Trial and Appeal Board,” which is contained in Part 42 of Title 37 of the Code of Federal Regulations. This is the fifth rule change since the Patent Trial and Appeal Board (PTAB) was created and the second of Director Iancu’s tenure.
Through the Years
The first rules were issued on September 16, 2012, the one year anniversary of the America Invents Act. David Kappos was Director at the time. The first rules were controversial and heavily biased against inventors. For instance:
claims were construed under the broadest reasonable interpretation;
patent owners were denied the right to present testimony in a preliminary response;
user fees subsidized discounts and rebates to petitioners;
unlimited petitions were permitted;
previously considered prior art and arguments were permitted;
interfering and overruling with district courts was permitted;
discovery was effectively prohibited;
the institution decision was delegated to the PTAB.
It is stunning how lopsided the rules were written. It was arguably deliberately implemented by the USPTO to be a death squad. David Kappos resigned a few weeks following the rule implementation and President Barack Obama’s reelection. The office was officially vacant from Feb 1, 2013 until Michelle Lee was confirmed on March 9, 2015.
The second rules were implemented May 19, 2015, with Michelle Lee as Director. This was a trivial change that increased the page limits for certain filings.
The third rules went into effect May 2, 2016 under Michelle Lee. This change allowed inventors to provide testimonial evidence in a preliminary reply, but astoundingly required that the PTAB (which continued to decide which patents to review on behalf of the Director) view the evidence in the light most favorable to the petitioner. So much for patents being presumed valid. The deck was stacked against the inventors at every opportunity.
By 2017, the corruption and abuse had provoked inventors like me and Roman Chistyakov, who was hit with 125 inter partes reviews (IPRs) by a gang of giant corporations, to burn our patents in protest in front of the USPTO. Michelle Lee resigned, leaving the office vacant again from June 6, 2017, until Andrei Iancu was confirmed on February 6, 2018.
The fourth rules were implemented November 13, 2018 under Andrei Iancu. This was a teeny, eminently reasonable rolling back of the ridiculous broadest reasonable interpretation (BRI) rule – the one where the PTAB stretched the meaning of the words to read on prior art to accuse the inventor of claiming they invented something old. For instance, Chistyakov was accused of claiming to have invented plasma vapor deposition that was discovered in the 1800s, while in reality he had invented a system for depositing a near perfect layer of metal only a few atoms thick. He claimed a plasma “without arcing” which the PTAB construed to mean “a little arcing” to encompass the 1800s technology. Iancu’s common sense baby step to balancing the PTAB was met with a firestorm of opposition from the big tech lobby and their supporters in Congress and the deep state. The resistance was so unhinged that Rep. Zoe Lofgren (D-CA) read talking points criticizing elimination of BRI in direct contradiction of her support for BRI in the prior Congress. Iancu met the irrational resistance with resolve, delivering his fairy tale rebuke in the week following publication of the final claim construction rule.
Rearranging Deck Chairs
That brings us to the current rule change. Another baby step. Honestly, it really seems that we are rearranging deck chairs on the Titanic. I suppose the passengers had some hope of survival, but it doesn’t seem plausible to have expected the ship to be saved. The radical infringers have blown the hull of the patent system to smithereens. Another bilge pump is not going to save it.
Nevertheless, Director Iancu should be supported and encouraged for doing the right thing. This change codifies the SAS decision that requires the PTAB to institute all claims or none. SAS does not require that all grounds be instituted (only all claims), but that still seems like a good policy for inventors. It really doesn’t matter if all claims/grounds or some claims/grounds are instituted, most inventors are going to lose in a trial due to built-in bias and lack of competent representation.
The more significant change this time around is the reversal of the outrageous provision of the May 2, 2016 rules under Michelle Lee that “testimonial evidence will be viewed in the light most favorable to the petitioner…”. It defies belief that five years after the AIA the infringer forces were still advancing a radical attack on patent rights at “America’s Innovation Agency”. This new rule requires instead that the evidence be viewed neutrally. This rule change should be supported. Comments are due by June 26 and can be submitted via the link on the Federal Register website or by email to PTABNPRM2020@uspto.gov.
In summary, the America Invents Act left it to the USPTO to establish the rules and procedure of the PTAB. The rules of practice under David Kappos and Michelle Lee were radically skewed to help infringers and hurt inventors. Director Iancu has begun to fix the most egregious of these biased rules. However, we are very far from leveling the playing field. We should encourage Director Iancu to channel that passion and resolve from that October evening in Dallas when he had put down the crazed revolt against his first rulemaking and threw down the gauntlet to the storytellers.
Above I list eight inequities that were promulgated in the first rulemaking for PTAB practice. The first three have now been addressed. The remaining five all deal with institution. Attempts to fix this through informal guidance and opinions have failed, because they are not binding. For instance, multiple petitions, including serial petitions, continue to occur and drive high rates of institution.
The institution decision is a greenfield for rulemaking. Congress gave complete discretion to the Director (see § 314(a)), along with explicit rulemaking authority (see § 316(b)). It is time for a comprehensive rulemaking to roll back the radical rules of the prior administration and restore balance and equity. Director Iancu was appointed to lead the national innovation policy. We may not be able to save the patent system, but we can try. I for one will have his back if he makes the attempt.