PTO's Final Rules for Post-Grant Challenges Show Little Change From Original Proposals

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The Patent and Trademark Office issued final rules Aug. 14 on how it will conduct post-grant proceedings for challenging issued patents, as authorized under the America Invent Act.

The agency answered almost 400 comments on its February notices of proposed rulemaking (NPRMs) submitted by a broad spectrum of the patent community. While the PTO made some changes, the procedural framework originally proposed remained largely intact, and the high fees that shocked potential challengers when first proposed were not significantly reduced, except in situations where more than 50 claims of a patent are challenged.

“Although there were no fundamental changes between the proposed rules and the final rules, the PTO did clarify some key issues that should encourage wary companies to take the plunge and give inter partes review a try,” Matthew I. Kreeger of Morrison & Foerster, San Francisco, said, referring to one of the challenges that will become available Sept. 16. “Especially if there is concurrent litigation,” he added, “we're going to see it used as a major tool for patent challengers.”

The final rules take up 162 pages of Federal Register print. BNA redlined the changes from the original NPRMs here and the clean copy of all the procedural rules here.

AIA-Created Procedures.

The AIA (Pub. L. 112-29) added the four procedures addressed in the current rulemaking to the PTO's list of post-grant proceedings that challenge issued patents:

• Post-grant review and inter partes review. Section 6 of the legislation created a new “first window” post-grant review (PGR) procedure allowing challenges within nine months of an issued patent on any ground. It also provided for a revised inter partes review (IPR) procedure with a higher threshold for the PTO to accept a challenge.

Current inter partes reexamination practice will ultimately be phased out, but ex parte reexamination remains an option for both patent owners and third party challengers.

• Review of “covered business method” patents. Section 18 of the AIA set up a new “transitional program” specifically aimed at allowing post-grant review of “covered business method” (CBM) patents. Any party can request a stay of a court proceeding pending completion of such a PGR proceeding.

• Derivation proceedings. With the move to a first-inventor-to-file (FITF) system scheduled for March 16, 2013, interference practice will eventually end. AIA Section 3(i) described the replacement derivation proceeding, allowing inventorship challenges only upon a showing that a current patent owner derived the invention from a third party.

February Rule Proposals Criticized.

Significantly, the AIA also imposed, as to each procedure except derivation, strict time lines for the PTO to reach a decision on each type of challenge. Thus, the PTO's procedural rules must allow only enough time to resolve a challenge within 12 months, while also allowing sufficient opportunities for the parties to respond to one another's arguments.

The PTO issued six notices of proposed rulemaking on the four proceedings Feb. 9 and 10 (28 PTD, 2/13/12). It also published a “Practice Guide for Proposed Trial Rules,”

And it posted the comments it received by April 10 on its “microsite” dedicated to implementation of the AIA.

The PTO received 251 submissions from 78 different entities or groups on one or more of the documents. The comments ranged from assertions that patent challenges under the proposed rules will be “too easy” to claims that they will be “too hard,” depending on the stakeholder's status as likely to own or use patented technology. The same opposing camps have faced off on patent reform since 2006.

Perhaps the agency's harshest critics, though, were the three biggest patent stakeholder organizations--the American Intellectual Property Law Association, the Intellectual Property Owners Association, and the Intellectual Property Law Section of the American Bar Association.

The three groups formed a committee that provided a set of overall comments, citing nine “significant differences” with the PTO's approach. It was clear from the submission that the organizations were disappointed that many of their original suggestions--provided at the agency's request prior to publication of the NRPMs--were not included in the PTO's proposal. And the final rule addressed only some of those significant differences.

Six Rules and a Practice Guide.

In the Aug. 14 Federal Register notices, the original six NPRMs were reduced to three final rules, with provisions to be added as Parts 42 and 90 of Title 37 of the Code of Federal Regulations:

• A set of “umbrella” rules common to all the proceedings was retained as a separate final rule. It is titled “Rules of Practice for Trials before the Patent Trial and Appeal Board and Judicial Review of Patent Trial and Appeal Board Decisions.” 77 Fed. Reg. 48,612. The umbrella rules are implemented as Subpart A, in 37 C.F.R. §§42.1-42.80 and 90.1-90.3.

• Three original NPRMs covered changes to implement IPR, PGR, and CBM proceedings. One final rule, titled “Changes to Implement Inter Partes Review Proceedings, Post-Grant Review Proceedings, and Transitional Program for Covered Business Method Patents,” combines all three, and implements the three proceedings in Subpart B, Rules 42.100 to 42.123, 42.200 to 42.224, and 42.300 to 42.304, respectively. 77 Fed. Reg. 48,680.

• An additional document, “Transitional Program for Covered Business Method Patents--Definitions of Technological Invention and Technological Invention,” placed the definitions in Rule 42.301. 77 Fed. Reg. 48,734.

• The proposal titled “Changes to Implement Derivation Proceedings,” in Subpart E, Rules 42.400 to 42.412, was not updated Aug. 14. The derivation proceeding will not be available until March 16, 2013.


The Practice Guide.

The originally proposed Practice Guide was revised and published as well. 77 Fed. Reg. 48,756. This shorter document is intended “to advise the public on the general framework of the regulations, including the structure and times for taking action in each of the new proceedings.”

The guide does not address any of the comments directly, leaving that task to the final rules. It identifies the overall structure of the three post-grant proceedings addressed in these rules:

• A petition is filed that “identifies all of the claims challenged and the grounds and supporting evidence on a claim-by-claim basis.”

• The patent owner has three months to “file a preliminary response to the petition, including a simple statement that the patent owner elects not to respond to the petition.” The NPRM gave only two months to respond.

• The newly named Patent Trial and Appeal Board has three months to determine whether to institute a trial.

• If a trial is instituted, the board will issue a scheduling order “taking into account the complexity of the proceeding but ensuring that the trial is completed within one year of institution.”


Scheduling orders may accommodate an initial conference call; discovery; a patent owner's response or a motion to amend the claims; the petitioner's reply and any opposition to the patent owner's amendment; a patent owner's reply to the petitioner's opposition to claim amendments; motions to exclude an opponent's evidence believed to be inadmissible; and oral arguments.

Stakeholders Interested in Representation Rules.

Stakeholders commented to BNA in interviews Aug. 13-14 on significant changes in the umbrella set of rules. One change that particularly drew their attention involved how the PTAB will handle requests for parties' representation by attorneys not in the patent bar.

The lead counsel must always be a PTO-registered practitioner. “For example, where the lead counsel is a registered practitioner, a motion to appear pro hac vice by counsel who is not a registered practitioner may be granted upon showing that counsel is an experienced litigating attorney and has an established familiarity with the subject matter at issue in the proceeding.” Rule 42.10.

Stuart P. Meyer of Fenwick & West, Mountain View, Calif., told BNA that this will present a problem for some law firms. “Now, each party must designate a USPTO-registered practitioner as its lead counsel, and may only add a non-registered person upon a showing of good cause,” he said. “Thus, litigation-only law firms who do not have registered patent attorneys on staff may need to scramble to address this requirement.”

Matthew A. Smith of Foley & Lardner, Washington, D.C., agreed to an extent. He estimated that 90 percent of the patent bar today prosecutes patents but does not get involved either in litigation in court or in interference practice at the PTO. With the new procedures “litigation-like,” he said, “those people are at a huge disadvantage, but they're the ones presumptively qualified to hear these proceedings.”

However, he expressed a concern that the original proposal--he filed comments with the PTO--seemed to exclude patent litigators in most cases. “The compromise arrived at was that a member of patent bar had to be lead counsel, but there seems to be an avowed intent on behalf of the PTO to allow in qualified patent litigators to perform as backup counsel in the proceedings,” he said. Though that will still leave out some firms that may have excellent litigators but no attorneys in the patent bar, Smith said, “it will have a significant impact.”

Kreeger argued that the compromise was a good one. “Companies involved in an inter partes review need counsel with experience in both litigation and appearing before the PTO,” he said. “We recommend teams consisting of patent bar-qualified litigators and patent prosecution counsel to provide the best possible advice on these highly technical litigation matters. Counsel who have appeared in patent interferences before administrative patent judges in the trial section will be particularly well placed to run inter partes review cases.”

Little Change on Fees.

As to fees, the agency left the base price for PGR, IPR, and CBM challenges at $35,800, $27,200, and $35,800, respectively. But it got rid of its earlier proposed step-wise approach of a set price for 21-30 claims, 31-40 claims, etc. Instead each additional claim challenged above 20 will be $800, $600, and $800, respectively. Rule 42.15.

The reaction to the initial fee proposal was strongly negative (78 PTD, 4/24/12), and the patent community is unlikely to find solace in this revision.

Meyer was certainly not pleased. He compared the $27,200 for IPR to the current fee for inter partes reexamination, which IPR replaces and said that the new fee is higher by a factor of three.

Kreeger nevertheless contended that IPR will be used at least as much as inter partes reexamination is used today, despite the high fee. “If patent challengers find the new system gives them a good and thorough process, as we expect, the prospect of having an expert panel review a patent and reach a final decision in one year will be hard to resist.”

Smith noted that the fee will now be substantially lower--compared to the original proposal--when a large number of patent claims are being challenged. The February proposal called for a fee of $27,200 for each 10 claims above 60 in an IPR challenge, or at least $2,720 per claim. The reduction to $600 per claim at that level thus could lead to more challenges of a patent in its entirety, even if it has over 100 claims.

Smith also saw another change in the final rules that would lead to additional challenges of high-claim patents.

The final rules increased the page limits on the petitions, responses, and replies by 10. Rule 42.24. Though that increase seems small, Smith said that a key difference was to allow claim charts to be single-spaced. Claim charts will be a significant part of any patent challenge, he said, and the revised rule effectively doubles the allowable space for that portion.

Smith tied this change to the fee change. According to the new rules, if a petitioner has to go beyond the page limit, it has to file two petitions. Not only does that invoke a second base fee, he said, a consolidation of petitions removes the 12-month deadline for PTAB decision turnaround. Members of the board have said they would still try to hold to the deadline even in those cases, Smith acknowledged, “but as a challenger, you don't want that [deadline] to go away,” especially if you have concurrent litigation and are trying to convince a federal judge to grant a stay.

Changes in Discovery Procedures, Estoppel.

The final rules made a considerable number of changes to discovery, defined in Rule 42.51, including a separate section for mandatory disclosures and more limitations on “limited discovery.”

“The PTO made it clear that discovery in inter partes review proceedings will be limited, absent agreement of the parties, “Kreeger said. “This should help alleviate fears by some that the new PTO trial procedures might end up resembling district court litigation in cost and complexity.”

Meyer, though, saw the revised discovery rules as providing more flexibility to APJs to vary the scheduling order, thereby introducing a new concern: “Practitioners will be less certain going into a particular proceeding what constraints will apply, since discretion to change time limits, discovery requirements, and the like has increased compared to what was provided for in the proposed rules.”

Smith remarked on the easing of the rules requiring a party to report “inconsistent information” that might belie an argument it is making as to patent validity, for example. “A rather major change to the disclosure rules is that the party making the mandatory disclosure of inconsistent information is no longer required to state the relevance of the information,” according to Smith. “This avoids the relatively high risk of inaccuracy inherent in such statements, which inaccuracies are in turn fodder for an inequitable conduct defense.”

Smith had one last bit of praise for the PTO's final rules. In the February proposal, Rule 42.73 laid out the estoppel effects of a PTAB judgment, including limits on how a patent owner could later amend claims. “You couldn't go out and get claims in a continuing application based on arguments that you could have raised [in the PTAB proceeding],” he said.

He had argued in his comments on the NPRMs that there was not enough time during the proceeding to amend claims adequately, and he was pleased to see that the final rules eliminated that restriction.

Few Changes to Individual Procedures.

The PGR and IPR proposals are parallel. For example, the required contents of petitions for both proceedings are virtually identical.

Accordingly, it was not surprising that the PTO made parallel changes to the originally proposed procedures. In particular:

• Limitations were added in the provisions allowing the patent owner to amend a patent during the PGR or IPR challenge. Rules 42.121 and 42.221.

• Joinder rules were added. Rules 42.122 and 42.222.

• The situations in which a party may file “supplemental information”--other than the predefined briefing--were defined in more detail. Rules 42.123 and 42.223.


The CBM proceeding is essentially a PGR without the first-window time limit. Its most controversial aspect revolves around the definitions of “covered business method” and “technological invention.”

Despite considerable criticism by the patent community that the PTO had, in its NPRM on the definitions, shirked its responsibility to provide brighter lines on what types of patent claims fall under this program, the agency made no changes in the final rule.

• Rule 42.301(a), the definition of a “covered business method,” tracks the AIA statutory language: “a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.”

• Rule 42.301(b) is terse: “In determining whether a patent is for a technological invention solely for purposes of the Transitional Program for Covered Business Methods (section 42.301(a)), the following will be considered on a case-by-case basis: whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.”


The only substantive changed made to the originally proposed rule on CBM proceedings was a clarification. The AIA bars a CBM challenge “unless the person or the person's real party in interest or privy has been sued for infringement of the patent or has been charged with infringement under that patent.” Commenters sought clarification of what it meant to be “charged with infringement.”

The final rule added the following: “Charged with infringement means a real and substantial controversy regarding infringement of a covered business method patent exists such that the petitioner would have standing to bring a declaratory judgment action in Federal court.”

By Tony Dutra  

Practice Guide at

Final rules at--

• Umbrella:


• CBM definitions:

Consolidated set of 37 C.F.R. Parts 42, 90 rules at

Changes from proposed rules at

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