Patent Reform Has USPTO’s Trial And Appeal Board At The ‘Centre Of A Storm’

WASHINGTON, DC – Officials and workers at the US Patent and Trademark Office (USPTO) are working day and night, as well as weekends, to meet forthcoming deadlines outlined in the America Invents Act (AIA). And some legal experts warn that they are now experiencing the calm before the storm as those deadlines approach.

The USPTO has already implemented several provisions of the AIA [pdf], including those relating to best mode contemplated by the inventor of carrying our his/her invention, virtual and false marking, fee-setting authority for the agency, prioritised examination and setting a 15 percent transition surcharge on certain patent fees.

The agency is facing deadlines next year for implementing changes relating to inter-partes review (IPR), post-grant review (PGR), supplemental examination and citation of prior art in a patent filing, and for submitting reports on how the AIA will effect international protection for small business, prior user rights, and genetic testing, among other topics. The USPTO is now writing draft rules for inter-partes re-examination and PGR, which will be issued in mid-January to start the rule-making process on those topics.

“So far, we’re on schedule, we’re getting great input,” David Kappos, undersecretary of Commerce and USPTO director said Monday during the Intellectual Property Owners Association’s PTO Day, encouraging all stakeholders to submit comments to his agency to consider during the rule-making process. “It’s extremely important that we get it right.”

The USPTO is executing what it refers to as COPA – Clearing the Oldest Patent Applications out – or focusing on providing first office actions for applications that are more than 16 months old to reduce the “tail” of the patent backlog. The goal is to complete 260,000 first office actions for these applications in FY2012, and to get the pendency down to 10 months for that first action.

To help speed up the patent review process and improve patent quality, the USPTO has trained more than 4,000 examiners and had subject experts from companies and entities like Facebook, Apple, Intel, IBM, Visa, UPS, Toyota, Yahoo, and the University of Texas at Austin come to talk to examiners, said Margaret “Peggy” Focarino, deputy commissioner for patents at the USPTO, soon to be patent commissioner. Five new measures of patent quality have been developed, for a total of seven metrics. The goal is to hire at least 1,500 more examiners in 2012.

As an indication of the speed with which USPTO is working, Kappos in Brussels today told Intellectual Property Watch he had already read two more proposed rules since the Monday conference and is working on a third.

“D-Day” is Coming

Meanwhile, the lawyers are also gearing up for an increased workload.

The AIA created the Patent Trial and Appeal Board (PTAB) within the USPTO to decide questions on issues relating to US patents. The PTAB replaces the current Board of Patent Appeals and Interferences and will be the main forum for PGR and IPR litigations. The PTAB will also deal with appeals of adverse decisions by patent examiners on applications in regular prosecution and on ex parte reexamination proceedings. PTAB appeals are made to the Federal Circuit.

In FY2011, PTAB was responsible for 7,551 opinions and had a decision pendency of 32 months. Hon. James Smith, chief administrative patent judge for the USPTO, said although pendency has not trended well in the past two years, the number of cases being disposed of continues to increase.

“It is remarkable, though, the degree to which the board’s opinion on cases continues to match to our consumers,” Smith said.

“At the board, we feel a special responsibility to help discharge the mission that is the AIA for the patent office. The rules are receiving a lot of thought” and input provided from members and IP community thru AIA microsite at USPTO.gov is being looked at “very carefully to help hone what it is the agency puts out in terms of proposed rule-making,” he added.

Smith said the PTAB is also aggressively vetting potential judges to come on board to help provide timely ex partes decisions; the board has a backlog of 24,040 ex partes cases. There are some “great judge candidates” currently waiting in the wings. The PTAB is also strategising how it can draft decisions more quickly and make them more concise to increase efficiency, as well as boosting staff numbers and increasing training, and enhancing its IT infrastructure.

“We are putting a lot of effort into becoming what Congress has asked of us,” added Hon. James T. Moore, vice chief administrative patent judge.

Robert Sterne, founder and director at Sterne, Kessler, Goldstein Fox, PLLC in Washington, DC, who was involved in the Senate patent reform activity, said it’s vital for the rules and procedures soon-to-be put into place that they protect even the smallest businesses trying to get an invention patented.

“There’s a lot of concern, as many of us know, about what’s been done here,” Sterne said. AIA is viewed by some as “essentially an excuse by big companies to pay the bills, to make it harder for innovators to get their just due for their patent property right, and to essentially create a system that’s too expensive, too time consuming and too long, that our little guy and gal get killed.”

The USPTO needs to institute a “full” discovery process that works, Sterne continued. He wrote to the agency last month, stressing the need for PGR proceedings “to allow the petitioner to obtain the needed information for the available defences with sufficient time for it to be part of the record used by the PTAB in reaching its decision.”

The AIA, in most cases, requires that the PGR proceeding be completed in one year, so the discovery mechanism must be able to be effective within the short window that the petitioner and the patent will have to prove its side of the case, he added. Sterne has recommended a type of “fast-track” PGR discovery system, similar to that used by the US International Trade Commission.

“Each of you have no time to waste in terms of what you’re going to do on D-Day,” Sterne told the IP lawyers and practitioners in the room, referring to 16 September 2012. On that date, several more changes in the patent process go into effect, including:

-The standard is raised for granting a request for inter partes reexamination; there must be a reasonable likelihood that the requester will prevail in at least one of his/her patent claims challenged.

-An inter partes review proceeding occurs when a petitioner requests to cancel as unpatentable one of more claims of a patent. Only a person who is not the owner of a patent who has not previously filed a civil action challenging the validity of a patent claim may file a petition for an inter partes review of the patent. The petition can’t be filed until after nine months after the patent is granted or reissued, or the date of termination of any PGR of the patent, whichever date is later. The guidelines as to who can file for a PGR are similar, but the petition may be filed only within nine months after the patent is granted or reissued.

-The Covered Business Method Patent Program goes into effect. This involves a request to cancel as unpatentable one or more claims of a patent and generally applies the PGR provisions. This program applies to patents issuing from applications filed under a first-inventor-to-file system, and also applies to patents obtained under the current first-to-file system. There are limitations on the type of prior art that can be used. On top of the PGR requirements, petitioners in this program must have been sued or charged with infringement under a covered business method patent. The patent can be filed one year after the date of enactment, but prior to eight years after regulations take effect.

“It’s warfare. It’s true patent warfare,” Sterne said.

“We are basically at the centre of a storm here. But we wouldn’t have it any other way. We want the comments, we need them,” added Hon. Michael Tierney, USPTO administrative patent judge. “I feel like this is the beginning of a never-ending story for the [PTAB] board.”