Federal Circuit Gives Life to Patent Claim Amendment Strategies in Inter Partes Review

By Robert Asher. Chair of our Patent Office Litigation Group

Inter partes review (“IPR”) has become the forum of choice for challenging the validity of patent claims. Introduced in 2012 as part of the America Invents Act, this proceeding is conducted by a panel of judges from the Patent Trial and Appeal Board (PTAB), which in turn is an administrative law body of the U.S. Patent and Trademark Office (PTO).

A petitioner presents prior art patents or publications that anticipate or make obvious a patent claim as issued. If the patent owner is unable to adequately distinguish the invention as defined by the language of the patent claim, that owner may move to amend the claim. If the amended claim language satisfies the judges, the patent can survive with newly issued but narrowed coverage defined by the amended claim.

As of April 30, 2016, the PTAB had completely denied 112 of 118 motions to amend in IPRs. Patent owners seeking to amend have clearly faced significant burdens and limitations imposed by the PTAB. Despite this history, we can expect to see an increase in motions to amend claims during inter partes review proceedings as a result of a recent en banc Federal Circuit decision. (The same is true for the less frequently filed post-grant reviews and covered business method reviews).

In Aqua Products v. Matal, the court struck down the PTAB practice of imposing on the patent owner the burden of proving the patentability of amended claims. Instead, the court has placed on the petitioner the burden of proving unpatentability by a preponderance of the evidence.

While a heavy weight has been lifted from its shoulders, the patent owner must still, as the one seeking to amend, meet certain responsibilities, the precise scope of which is not entirely clear.  At a minimum, the court requires in compliance with 35 USC §316(d)(3), the patent owner to show that the claim amendment does not enlarge the scope of any claims or add new matter. While they did not explicit say so, a majority of judges on the court seem open to the PTAB’s requiring a patent owner who seeks to amend a claim to demonstrate a patentable distinction over the unpatentability grounds set forth in the petition.

Bringing a motion to amend will be much easier than in the past because the patent owner is now free in its motion from having to show patentable distinctions over a wide variety of prior art, including any material art in the patent’s prosecution history, or of record in other proceedings before the PTO involving the patent, or that the patent owner makes of record in the current proceeding pursuant to its duty of candor and good faith.

The amendment process will be further eased if the patent owner is able to rely on arguments set forth in its Patent Owner Response (“POR”). Judge O’Malley and the four judges who signed on to her opinion believe it is fairly uncontroversial that a motion to amend must be decided on consideration of the entirety of the IPR record. Assuming this becomes PTAB practice, the patent owner may not need to cram all its supporting evidence into the 25 pages allotted for a motion to amend.

Relieved from distinguishing over countless pieces of prior art and authorized to rely on the arguments and evidence presented in the POR, patent owners will be much better able to adequately argue for  amended claims within the 25 pages. This may enable them to propose additional amended claims which they previously could not present because of lack of space in the pages permitted for their motion.

Petitioners are well advised to consider the potential for amendments to the claims of a patent before filing an IPR petition. Given that the time to respond to a motion to amend will likely be less than three months, it will be useful to get a jump on searching out prior art and excerpts from the art for use against such an amendment should it be presented.

If a patent owner succeeds in amending its claim, it may later urge in court or in the PTO that the petitioner should be estopped from raising challenges it reasonably could have raised during the IPR. The estoppel provisions state “[t]he petitioner in an inter partes review of a claim in a patent…may not assert…that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during the inter partes review.” 35 USC §315(e). More...

Federal Circuit Is Finding More Inventions Patent-Eligible Despite Supreme Court’s Rigid Standard

By Bruce Sunstein. A member of our Patent Practice Group

The Supreme Court’s Prometheus (2012) and Alice (2014) decisions, discussed in these pages here and here, erected a wall of patent ineligibility that has stymied efforts at patenting most diagnostic methods and many categories of computer-related inventions.  While this wall of patent ineligibility is old news, it is noteworthy that the Federal Circuit has made and enlarged a hole in this wall through which some patent applications can now escape rejection.

The wall of patent ineligibility. In Prometheus and Alice, the Court eliminated from eligibility for patent protection any invention directed to what it said was an “implicit exception” in the patent laws.  That exception excludes patents for a law of nature, a natural phenomenon, or an abstract idea. The Court said that an invention of this type would be ineligible for patenting unless the claims in the application for the invention were deemed to define an “inventive concept” that amounts to “significantly more” than the law of nature, natural phenomenon, or abstract idea to which the patent claims are said to be directed.

The Court’s stated rationale for the decisions was that claims directed too closely to one of these concepts would improperly monopolize “the basic tools of scientific and technological work” resulting in a “preemption” of the advance of science and technology  Because the patent law already required patent claims to define a specific practical application of such a concept, the Court’s rationale makes little sense.

The Court has laid out a two-step process to determine whether the “implicit exception” to patent eligibility disqualifies claims in a patent application or a patent: (1) determine whether the patent claims are directed to a law of nature, natural phenomenon, or abstract idea, and (2) if so, determine whether those claims can escape ineligibility by defining an “inventive concept” that amounts to “significantly more” than the ineligible concept. Evaluating patent claims according to this two-step process is fraught with subjectivity.

The Federal Circuit fashions a hole in the wall. Although the Federal Circuit is bound by Supreme Court precedent, the parade of appeals since Alice has of necessity required the Federal Circuit to develop some rules for distinguishing between claims that are patent-eligible and claims that are not. Although the vast majority of decisions in this parade have affirmed ineligibility determinations, the Federal Circuit has decided a number of cases in favor of patent eligibility. DDR Holdings (2015, discussed here), Enfish (May, 2016, discussed here), and six more recent decisions point the way for at least some patent claims to get through the wall of patent ineligibility.

Rapid Litigation Management Ltd. v. CellzDirect, Inc. (July 2016) is the only one of these decisions that concerns the law-of-nature exception to patent eligibility. That case involved hepatocytes, which are a type of liver cell used for testing, diagnosis, and treatment. Before the invention in question, the hepatocyte cells were frozen in order to maintain them in inventory and, when needed, thawed for use. Because freezing damages these cells, it was thereafter necessary to determine which of the thawed cells remained viable. Refreezing the thawed cells was rejected as an option, owing to the damage inflicted by freezing the first time. The invention involved (A) subjecting previously frozen and thawed cells to density gradient fractionation to separate viable cells from non-viable ones; (B) recovering the viable cells; and (C) refreezing the viable cells.

The claims were invalidated in the lower court. In step one of the two-step process, the trial court held that the claims were “directed to an ineligible law of nature: the discovery that hepatocytes are capable of surviving multiple freeze-thaw cycles.” At step two, the court determined that “the patented process lacks the requisite inventive concept,” observing that, upon discovering the cells’ capability of surviving multiple freeze-thaw cycles, the inventors simply “reapplied a well-understood freezing process.”

The Federal Circuit reversed, finding that the claims are not simply directed to the ability of hepatocytes to survive multiple freeze-thaw cycles. Rather, the claims are directed to “a new and useful laboratory technique for preserving hepatocytes. This type of constructive process, carried out by an artisan to achieve ‘a new and useful end,’ is precisely the type of claim that is eligible for patenting.”

In CellzDirect, the technological wrinkle—refreezing of cells thought not to be able to withstand refreezing—made the difference in achieving eligibility status.  The different characterizations of this wrinkle by the Federal Circuit and the lower court highlight the subjective nature of the test that the Supreme Court now requires the lower courts to apply. More...