Comments Emphasize Flaws In PTO Proposal To Remove Pre-Institution Presumption

Recently, the Patent and Trademark Office (PTO) proposed a concerning new rule.  It would create serious due process problems, violate the Administrative Procedure Act (APA) by changing an agency position without justification, increase the cost of inter partes review (IPR), and make it harder to invalidate bad patents in IPR.  

Given all these problems, it shouldn’t be any surprise that most serious commenters—even from the life sciences industries—think the proposed rule is a bad idea.  (CCIA, among others, filed comments explaining many of these flaws.)

The Proposed Rule

Right now, a patent owner is entitled to introduce new evidence in an IPR prior to the institution decision—the point where the judges make an initial determination of whether the petitioner is reasonably likely to prevail on at least one of their claims of invalidity.  But, because PTAB proceedings are efficient and proceed along a tight timeline, there isn’t time for that new evidence to be challenged—petitioners can’t introduce their own new evidence in rebuttal, nor can they cross-examine a witness who provided testimony.

Because petitioners can’t challenge patent owner evidence, the PTO originally put into place a rule that said, for purposes of institution only, new evidence provided by the patent owner will be viewed in the light most favorable to the petitioner.  That’s very similar to the standard for threshold motions in a trial—before evidence is fully available and each side has had a chance to respond to and cross-examine witnesses, judges treat the evidence in the light most favorable to the non-moving party.  And since the patent owner is the one who wants an IPR not to be instituted, petitioners get the benefit of the doubt at institution with respect to patent owner evidence.

That all makes sense.  New and unchallengeable evidence shouldn’t be the basis for an unchallengeable decision that prevents a petitioner from using IPR.  But the PTO is proposing that that evidence be given full weight, even though it hasn’t been subject to challenge.  In a court case, while it’d still be a bad rule, treating evidence that way might be tolerable. After all, even if you lose the threshold question, you’ll still have a chance to show that the evidence is flawed later in the case, winning a renewed motion or winning on the ultimate merits at trial.  

But Patent Trial and Appeal Board (PTAB) institution decisions are unappealable.  Petitioners will never have a chance to cross-examine that evidence.  If it’s flawed, petitioners have no recourse and they have to spend time and money bringing an IPR that may get summarily dismissed even though the patent might be invalid on the merits.  That hardly serves the AIA’s goals of an affordable, quick, and accurate resolution.

The Comments

First off, it’s important to remember two things about notice-and-comment rulemaking.  First, an agency is only required to consider significant comments, ones with substance.  And second, notice-and-comment isn’t a vote; agencies are not required to select the outcome that had more supportive comments.  But, as the D.C. Circuit has noted, when there are lots of comments suggesting the agency is making a mistake, that can signal a clear error of agency judgment.

The PTO received 40 comments in total.  A slight majority favored the proposal.  But many of those favorable comments contained little to no substantive commentary.  Stripping out the non-substantive comments, which the agency isn’t required to respond to, we’re left with 24 significant comments.  And of those 24, 15 oppose the PTO’s proposal.  Those 15 include Thermo Fisher Scientific, one of the largest life sciences and diagnostics companies in the world and a leader in improving COVID testing.  It also includes high-tech manufacturers like Intel, as well as trade associations such as CCIA and US MADE that represent the technology and U.S. manufacturing industries.  And it even includes the Intellectual Property Owners Association, an organization that has not historically supported IPR.  

That’s right—even the largest organization representing the interests of patent owners recognized that the PTO’s proposal is fatally flawed.

So if the PTO moves forward with this proposed rule and justifies it by saying “most commenters favored removing the presumption,” remember that weight of comments isn’t a valid reason to make a rule—and that, once you look at commenters making the kind of comments the agency is required to consider and respond to, the weight of the comments was against the PTO’s proposed rule.

Joshua Landau

Joshua Landau is the Patent Counsel at the Computer & Communications Industry Association (CCIA), where he represents and advises the association regarding patent issues.  Mr. Landau joined CCIA from WilmerHale in 2017, where he represented clients in patent litigation, counseling, and prosecution, including trials in both district courts and before the PTAB.

Prior to his time at WilmerHale, Mr. Landau was a Legal Fellow on Senator Al Franken’s Judiciary staff, focusing on privacy and technology issues.  Mr. Landau received his J.D. from Georgetown University Law Center and his B.S.E.E. from the University of Michigan.  Before law school, he spent several years as an automotive engineer, during which time he co-invented technology leading to U.S. Patent No. 6,934,140.

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