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Protecting Confidential Information Before the Patent Trial and Appeal Board

Monday, April 22, 2013

By Anthony A. Hartmann, Finnegan, Henderson, Farabow, Garrett & Dunner LLP

The Leahy-Smith America Invents Act transformed the Board of Patent Appeals and Interferences into the Patent Trial and Appeal Board. The trial division of the PTAB is tasked with conducting AIA-created post-issuance trial proceedings: inter partes review, derivation proceedings, post grant review, and a transitional program for covered business methods.

These new trial proceedings feature limited discovery, such as mandatory initial disclosures, document production, affidavits, and depositions. With such discovery may come confidential information. Practitioners can reasonably anticipate situations when a petitioner or a patent owner will disclose information that is confidential to itself or others, or will seek discovery that is deemed confidential.

For example, both petitioner and patent owner owe a duty of candor and good faith, and must serve “relevant information that is inconsistent with a position advanced by the party during the proceeding….”1 The confidential information will likely be in the form of lab notebooks, test records, sales and marketing data, competitive product data, and pleadings from related proceedings. These types of documents are particularly relevant to issues addressed in the trial proceedings, such as swearing behind prior art, establishing inventorship, negating inferences of inherency with respect to the prior art, and weighing evidence of secondary indicia of nonobviousness.

Consequently, with the introduction of limited discovery, there is a need to address how to process and control confidential information during trial proceedings before the PTAB, just as with proceeding in federal court and the International Trade Commission. In apparent recognition of this, the AIA provided that:

The Director shall prescribe regulations … providing for protective orders governing the exchange and submission of confidential information.2

Last August, the Patent and Trademark Office issued Final Rules and an Office Patent Trial Practice Guide that included procedures for protecting confidential information in trial proceedings before the PTAB (157 PTD, 8/15/12). Consistent with Fed. R. Civ. P. 26(c)(1)(G), “confidential information” is defined as “trade secret or other confidential research, development, or commercial information.”3

Protective Orders

Central to the protection of confidential information during a PTAB trial proceeding is Rule 42.54, 37 C.F.R. §42.54, governing both the exchange and submission of confidential information. According to this rule, when seeking to limit the scope of discovery, a party may file a motion for a protective order. When seeking to preclude public dissemination of a filing, a party may submit a motion to seal with a copy of a protective order.

Rule 42.54 gives the PTAB wide latitude to control the discovery and dissemination of confidential information, including by issuing sanctions. For example, upon a showing of good cause, the PTAB may deny discovery generally or with respect to certain matters, prescribe alternative methods for discovery, or limit discovery and/or its dissemination. Importantly, the terms of the proposed protective order, governing the treatment of confidential information that has been exchanged or submitted, take effect the moment the motion is filed until the PTAB modifies or lifts the protective order.4

Notably, the PTAB encourages the parties to negotiate a stipulated protective order to “govern[] the protection of confidential information contained in documents, discovery, or testimony adduced, exchanged, or filed with the board.”5 The Trial Practice Guide even provides a default protective order, as well as detailed guidance on the minimum contents of any proposed alternative protective order.6 Absent agreement among the parties, the default protective order will be automatically entered in the proceeding.7

Regardless, any proposed protective order must define what is deemed confidential information, who may see the confidential information, and how to exchange and serve the confidential information.8 The proposed protective order must also provide the means to be taken to protect the confidential information and an acknowledgement to be signed by all recipients of the confidential information.9 The PTAB has recently commented that, “For future reference, the Board requests that parties generally identify how a proposed protective order differs from the Board's default protective order.”10 Providing a red-line copy of the default protective order appears to be an appropriate mechanism.11

Even with this guidance, there are a multitude of issues that practitioners should consider when choosing between the default protective order and a more specialized protective order. The default protective order was not intended to be comprehensive. In fact, the office refused to include features that are common to protective orders because they address issues that were not expected to arise frequently in these contested proceedings, such as, for example, claw-back provisions and multiple tiers of confidentiality.12 Accordingly, practitioners should consider whether these are features relevant to their proceeding, particularly where they may be present in protective orders for related proceedings before the PTAB, another agency, or a federal court.

While the office is correct that many, if not most, proceedings will not need a complex protective order, there are several other considerations that practitioners should investigate when evaluating the form of the protective order:


  • Existence of other protective orders. Practitioners need to consider the terms of any existing protective orders from related matters. In particular, practitioners should avoid adopting a protective order that creates inconsistent obligations for either party. If all or most relevant information has already been produced during discovery in another matter, the parties should consider a protective order that preserves prior confidentiality designations.


Even if there is no agreement to make discovery from the related matter available in the new trial proceeding, discovery requests may lead to that same result. Similarly, other provisions from an existing protective order should be considered for the proposed protective order to maintain consistent obligations.

  • Exchange of confidential information. While the default protective order provides a fairly standard procedure for processing documents with confidential information, the parties may want more, or even less, protections. For example, procedures may be added to provide for the timing when affidavits and depositions must be designated confidential or to define that they are presumptively confidential.


In addition, rather than permit a designation applying to the entirety of a document or transcript, the parties may, for example, agree that designations are to be made on a page-by-page basis.

  • Defining the persons who have access. Under the default protective order, only individuals who have executed the acknowledgement may see confidential information. However, the classes of such people are quite broad: the parties, representatives of record, in-house counsel, any employee of a party, and any support personnel.13


For certain classes of persons, consider negotiating limits on how many qualify and/or identifying specific persons by name or position. On the other hand, consider whether any member of outside counsel's firm should be permitted access without the need for an acknowledgement.

In addition, consider whether party notification should be added to the protective order. Currently, there is no requirement to notify the opposing party as to who has signed the acknowledgement. This is particularly relevant to experts, who may need to be vetted further for conflicts. In that case, it would be practical to include a wait period after notification before the person can actually view confidential information.


  • Limitations on use outside the proceeding. Via the acknowledgment, the default protective order provides that confidential information will be used only in this proceeding and for no other purpose.14 However, the office has noted that “confidential information may not be used in any other PTO proceeding in which the providing party is not also a party.”15


This suggests that if the producing party is a participant in another proceeding, then the confidential information may be used even if a new third party is associated with the proceeding. While this statement is open to interpretation, practitioners should consider making their protective order clearer regarding the limitations on usage outside the current proceeding.

This leads to the issue of a prosecution bar. The primary justification for a prosecution bar in district court and ITC protective orders is that the patent owner may prosecute claims to cover accused products. Yet, under PTAB trial procedures, the patent owner has the right to amend the claims once and it is lead counsel for the proceeding that will file the amendment. It is doubtful that the PTAB would accept a bar that limits the actions of lead counsel. Nonetheless, if there are related patent applications pending in the U.S. or abroad, a bar may be relevant.

However, while a patent-prosecution bar may resolve certain issues, it does not necessarily resolve the disclosure duties of the patent owner. If the petitioner proposes a prosecution bar, then the patent owner should propose a procedure whereby the patent owner may seek relief from the protective order restrictions in order to comply with the duty of disclosure.


  • Maintaining confidentiality during the proceeding. The default protective order requires that confidential information be maintained in a secure location accessible to only authorized persons. For most parties, that is more than sufficient. Yet, for others, there may be a need, real or perceived, for additional specificity. For example, parties may consider that certain categories of information, such as financial data and source code, need to be maintained on a particular server.

  • Maintaining confidentiality after the proceeding. While the Trial Practice Guide provides that all documents be destroyed one month after final termination of the proceeding, the default protective order does not. Hence, the parties may want to provide further details in this regard. For example, it is common for protective orders to permit outside counsel to retain an archival copy of all pleadings, papers, transcripts, etc., that contain confidential material.


Protecting Confidential Information Before Trial
The need for a practitioner to address whether to accept the default protective order or to craft a specialized protective order may happen even before a trial is instituted. In particular, Rule 42.55 provides for the filing of a motion to seal concurrently with the petition to initiate the trial proceeding. While not expressly stated, the rule is understood to permit the filing without service of the petition on the patent owner.16

The grant of the petition constitutes a grant of the motion to seal. If a petitioner is concerned whether the PTAB would grant the motion to seal, options are available. For example, the petitioner may file and serve a non-confidential petition and concurrently file a motion to supplement the petition, which is contingent upon the grant of a concurrently filed motion to seal. Hence, if the motion to seal is denied, no confidential information becomes available to the public or the patent owner.

Accordingly, under these circumstances, the patent owner cannot immediately access the sealed information, and possibly the entire petition, that has been filed against it. In order to access the confidential information of the petition prior to the institution of the trial proceeding, such as for the preliminary response, the patent owner must either agree to the terms of the proposed protective order, negotiate a new protective order with the petitioner, or a file a motion seeking entry of an alternative protective order, such as the default protective order.17 The office believes that since the patent owner has a three-month period to file its preliminary response, there should be sufficient time to file a motion seeking entry of a modified protective order, if needed.

Protecting Confidential Information After Trial
Once the trial proceeding concludes with a decision from the PTAB, practitioners cannot assume that no further action need be taken to maintain the confidentiality of their information. This is also true when a petition for trial has been denied. Again, there is a distinction between confidential information that has been exchanged by the parties and confidential information that was submitted to the PTAB in a pleading.

Dealing with confidential information that had been exchanged is relatively simple. As with district court litigations, the protective order should be drafted to address whether and to what extent a party may maintain confidential information after the trial proceeding. If not, the Trial Practice Guide provides that, within one month after final termination of a proceeding, including all appeals, the parties will destroy all copies of received confidential information and provide certification of the destruction to each producing part.18

On the other hand, protecting the confidentiality of information submitted to the PTAB is not as simple. Despite the motions to seal and the associated protective orders, any provisions regarding post-trial protection do not control whether a party's confidential information that has been submitted to the PTAB may yet become public.

In keeping with the notice function of patents, public policy considerations favor creating and maintaining a clear record of the trial, particularly for later claim construction or other post-grant proceedings. The AIA provided that “The Director shall prescribe regulations … providing that the file of any proceeding under this chapter shall be made available to the public….”19 Indeed, the Trial Practice Guide explains:

There is an expectation that information will be made public where the existence of the information is referred to in a decision to grant or deny a request to institute a review or is identified in a final written decision following a trial. . . [Rule 42.56] balances the needs of the parties to submit confidential information with the public interest in maintaining a complete and understandable file history for public notice purposes.20

Not unexpectedly, the office rejected a proposal that the default position be that submitted information remain confidential.21 In fact, the PTAB presumes that confidential information will become public 45 days after final judgment or following denial of a petition. Accordingly, practitioners cannot assume that their granted motions to seal under Rule 42.14 will protect their secrets past final judgment. Rather, they should file motions to expunge the record under Rule 42.56.

Given the statutory and policy interests for a clear public record, however, there is certainly no guarantee that a motion to expunge will be granted. In fact, the office rejected a proposal that “petitions to expunge be granted in all but exceptional circumstances.”22 Since Rule 42.14 does not recite any standards for evaluating motions to expunge, the best predictor of how the PTAB will decide such motions is the Manual of Patent Examining Procedure.

While the MPEP does not address PTAB rules and procedures, Sections 724 to 724.06 of the MPEP provide procedures applying Rule 1.59.23 Rule 1.59 concerns petitions to expunge papers and information from pending patent applications and reexamination proceedings. While Rule 1.59, like Rule 42.56, is silent regarding the standard to evaluate the motion to expunge, MPEP §724.04 focuses on whether the information is deemed “material to patentability” when applying the rule. In practice, if the office relied upon the information in its determination of patentability, then the information is “material” and not expunged under Rule 1.59. If it was considered but not relied upon, the information is not “material” and expunged. This is consistent with the above-discussed policy for Rule 42.56.

Notably, in the context of Rule 1.59, the office distinguishes information that is “favorable to patentability,” such as evidence of commercial success, from information that is “material to patentability.”24 Specifically, the office has found that since there is a duty to disclose information “material to patentability,” only that class of confidential information is covered by Rule 1.59 petitions to expunge. Confidential information that is “favorable to patentability” is not covered and, therefore, cannot be expunged.

Whether or not this same analysis will be applied to a Rule 42.56 motion to expunge remains to be seen. However, given that there is a duty of candor and good faith in these post-issuance trial proceedings (Rule 42.11) and, at least in the context of patent prosecution (Rule 1.56) and reexamination (Rule 1.555), this duty has been defined to “include[] a duty to disclose to the Patent Office all information known to that individual to be material to patentability… ,” there is currently a risk that Rule 42.56 motions to expunge may not be granted with respect to confidential information related to secondary indicia of nonobviousness.

If a petition to expunge is denied, another course of action may be available to practitioners to protect the confidential information. As with patent prosecution and reexamination proceedings, it may be possible to file a motion to substitute a redacted version of the confidential document.25 Of course, the redacted information would likely need to be incidental or unrelated to the information that the PTAB found necessary for its decision. Chances are good that such a motion would be considered, particularly since the office “encourages parties to redact sensitive information, where possible, rather than seeking to seal entire documents.”26

Protecting Confidential Information After Settlement
Parties may settle a dispute at any time, including before institution of the trial proceeding. Once instituted, there is no requirement that a trial proceeding run to completion. Rather, pursuant to Rule 42.72, the PTAB may terminate a trial proceeding upon a joint motion of the parties. In fact, with respect to inter partes review and post-grant review, the trial proceeding shall be terminated on a joint motion, unless the PTAB has decided the merits of the proceeding before the request for termination is filed.27

If the parties seek termination, Rule 42.74 provides the necessary guidance. In particular, the parties need to submit a written copy of the agreement and any collateral agreements referred to in the agreement. If the settlement agreement is deemed confidential, then a motion must be filed concurrently with the settlement agreement. If a motion is filed, then the settlement is maintained as confidential unless a government agency requests in writing or an individual makes a request in writing with a showing of good cause.28 The same requirements appear to apply even if the trial proceeding has not been instituted.29

It is unclear what will constitute a showing of good cause. While the office has said that a Freedom of Information Act request would not necessarily be sufficient,30 that provides little guidance. Yet, there are conceivable scenarios where an individual makes a request in writing with a showing of good cause. For example, a third party accused of infringement may seek access to the agreement arguing that it is the sole relevant information to determining a reasonable royalty.

One way to avoid this situation is for the petitioner to notify the PTAB that it does not intend to participate any further in the trial. “If no petitioner remains …, the Office may terminate the [inter partes review or post-grant review] or proceed to a final written decision under section 328(a).” 35 U.S.C. §§ 317(a), 327(a). Since there is no motion to terminate, there is no requirement to submit the settlement agreement. In this case, however, the parties must be willing to accept any final written decision of the PTAB and accept that only the patent owner has a right to file a motion to expunge.

Conclusion
Accordingly, while most cases will be limited to publicly available information, practitioners, whether petitioners or patent owners, need to be aware of the procedures available to address confidential information and their limitations.

Anthony Hartmann of Finnegan, Henderson, Farabow, Garrett & Dunner, Washington, D.C., focuses his practice on litigating complex patent matters in U.S. federal district courts and at the International Trade Commission.  

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