Many patent owners had criticized the PTAB for making it nearly impossible to amend claims — a key tool for saving their patents from invalidity challenges — mainly because of a rule that amendments will be granted only if it is shown that the new claims are patentable over the prior art of record, as well as prior art "known to the patent owner."
As of mid-July, the board had only granted five substantive motions to amend: one motion by the U.S. government, two by Silver Peak Systems Inc., and one each by Neste Oil Oyj and 5th Market Inc., according to Edmund Walsh, a shareholder at Wolf Greenfield & Sacks PC.
The board looked to ease concerns with its July MasterImage decision, which clarified that prior art known to the patent owner does not encompass all prior art in existence, but only prior art that the patent owner is required to disclose under its duty of candor and good faith.
And last week, acting PTAB Chief Judge Nathan Kelley said the MasterImage ruling will encourage more patent owners to try to amend claims, noting that the decision makes clear that it's easier to do than many people think.
“Considering the PTAB’s encouragement of motions to amend and its greater scrutiny of petitions for AIA review, it is clearly trying to dissipate its reputation of being the ‘patent death squad,’” said Alyssa Sandrowitz, counsel at Polsinelli PC. “Because the PTAB has been sending a message that it is more receptive and amendments are possible, we are likely to see an increase in motions to amend.”
The effect of more amendment motions should mean that more end up being granted, which should make way for an uptick in patents that survive the AIA review process, according to Jonathan Kagan, a partner at Irell & Manella LLP.
“I don’t think we’re going to start seeing a 50 percent win rate by patent owners … but I think [the MasterImage decision] highlights and encourages patent owners to use the tool to have patents successfully emerge from an inter partes review,” he said.
At the same time, many attorneys say that the PTAB’s MasterImage holding was hardly a game-changer for patent owners. The case clarifies that prior art “known to the patent owner” is prior art of which the patent owner is aware and has a good faith duty to disclose, but many practitioners were already operating under that standard anyway.
“MasterImage takes the sting out of the process for some patent owners, but when people look at it as they make a strategic decision about how best to defend their patent, there is not going to be a huge number of people deciding that the best way to go is through amendments in an IPR,” Walsh said.
Attorneys say the amendment process at the PTAB still presents a number of hurdles that may give patent owners pause.
Part of what’s challenging for patent owners is they are required to file a motion to amend before they know how the board is going to rule on the claims in the patent, according to Walsh. The motion is due at the same time as the patent owner’s response, which is early in the trial.
Whether the PTAB can reject amendments on grounds other than prior art is a gray area, according to Kagan.
“If you’re seeking to amend a claim, it’s unclear if the PTAB can look at broader issues regarding the patent, such as whether means-plus-function claims identify a corresponding structure in the patent,” he said. “If it finds no corresponding structure for the claim element of an amended claim, that could affect claims not subject to the inter partes review and potentially end up weakening the patent. … It’s one reason not just to rush in and amend.”
Patent owners also still have the burden to show that the proposed amendment is patentable over references that are “material” to the limitation sought, and the PTAB has not fully explained what “material” prior art is, according to Sandrowitz.
It "appears to be a higher burden than that for amendments in the original prosecution, which may still discourage some patent owners,” she said.
And inequitable conduct claims are going to continue to be a concern for patent owners as they try to figure out the relevant prior art they need to disclose to the PTAB, according to Walsh.
“You might be in a position where you’re looking at a pile of stuff to send to the PTAB and you need to make a judgment call of whether this is important or not,” he said. “While the board said you don’t have to prove the state of prior art known to everyone else but just what you know, there are still issues how to implement this as a practical matter.”
In addition, many AIA reviews target patents that are being asserted against accused infringers in concurrent litigation, and patent owners might be reluctant to amend claims in that circumstance, according to Andrew Williams, a partner at McDonnell Boehnen Hulbert & Berghoff LLP.
“It may be that amending a claim to get outside the prior art is done in such a way that adds a limitation that could cause an accused infringer’s activity to fall outside the scope of the newly amended claims,” he said.
In light of these obstacles, patent owners are still going to see many reasons to look at other avenues to defend their patents. If the patent owner thinks it is going to lose claims in the IPR or it has learned something new and needs to update its claims, it may opt to seek a reissue of the patent from the U.S. Patent and Trademark Office, according to Walsh.
“A reissue proceeding is still a viable option and an important strategic consideration for anyone with a patent challenged in an IPR,” he said. “Patent owners will have to weigh the constrained time of an IPR, where they have one shot at a motion to amend, versus a reissue proceeding, where they have many opportunities to work with an examiner.”
In addition, in an IPR, for anything that the patent owner says to the board, the petitioner gets a chance to respond, whereas in a reissue proceeding, a patent owner has the chance to work one-on-one with the examiner without interference from another party, he said. And over the last several years, the patent office has cut down how long it takes to obtain a reissued patent, with an average time that is comparable to an IPR with an appeal, according to Walsh.
If a patent owner has a patent targeted in an AIA review but also has a related continuation application pending at the patent office, the patent owner may prefer to amend claims in the continuation application, according to Darren Donnelly, a partner at Fenwick & West LLP.
“It’s not uncommon for a patent that is the subject of a post-grant challenge to also have one of its sibling patent applications undergoing examination by the patent office,” he said. “If a patent owner in an IPR needs to amend claims and make them narrower, it might pursue claims of the same scope in the sibling application before the patent office.”
Most practitioners think that getting the claims from an examiner is probably the preferred forum compared to the PTAB at this point, according to Donnelly.
“In the patent office, you are entitled to the patent until an examiner shows otherwise, while the PTAB treats a motion to amend the other way around — that until you’ve established you’re entitled to the claim, you’re not going to get it,” he said.
How a patent owner goes about amending patent claims is likely going to come down to the particular details of each case, including how strong its defense is in the IPR, whether a product covered by the patent is being infringed by the petitioner and when the patent expires.
“If it’s an important patent and there’s a lot of money at stake, the patent owner has to consider every possible option and pick the one that gives it the best advantage,” Walsh said.
Until the PTAB starts granting more motions to amend, patent owners are going to continue to have a perception that amendment motions will only be allowed in rare circumstances, according to Williams.
“I don’t think the MasterImage opinion removed the sense of futility that patent owners are sensing with regard to motions to amend,” he said. “The best guidance from the PTAB would be granting more motions to amend. That way, patent owners can use those cases as guideposts on how to move forward.”
--Additional reporting by Ryan Davis. Editing by Jeremy Barker and Emily Kokoll.
