Legal Alert: What to Know about the Restoring the America Invents Act

On September 29, 2021, Senators Patrick Leahy (D-VT) and John Cornyn (R-Texas) introduced the Restoring the America Invents Act "to address problems for small businesses and ordinary Americans caused by poor-quality patents."  The bill addresses a broad set of issues related to post-grant proceedings before the USPTO's Patent Trial and Appeal Board (PTAB).  These issues include:

• Revamping the Board's Discretion
  • Generally: The Bill changes the standard for institution under 35 U.S.C. 314(a), altering the current permissive language—"may not authorize an inter partes review unless"—to mandatory language—"a petition that meets the requirements of this chapter shall be instituted."  This change impacts the justification offered for the breadth of discretion exercised currently by the Board.  The replaced permissive language has been interpreted as leaving room for broad discretion to deny institution under circumstances deemed inconsistent with the goals of promoting efficiency, fairness, and integrity of the patent system.  By comparison, the mandatory language in the Bill may be interpreted to curtail the breadth of this discretion.
  • Previously Considered Art and Arguments
    • One carve-out in the Bill's new mandatory institution standard is that the Board retains its discretion to deny institution if "the same or substantially the same prior art or arguments previously were presented to the Office."  This language tracks the current version of 35 U.S.C. 325(d), which the Board applies under the standard set forth in Advanced Bionics, LLC v. MED-EL Elektromedizinische Geräte GmbH, Case IPR2019-01469, Paper 6 (Feb. 13, 2020).
  • Co-Pending Litigation
    • The Bill's new mandatory standard for institution is noticeably devoid of a carve-out for co-pending litigation and, thus, would seem to eliminate the foundation found presently within section 314(a) for the Board's current precedent under Apple Inc. v. Fintiv, Inc., Case IPR2020-00019, Paper 11 (March 20, 2020).
  • Serial Petitions
    • The Bill's new mandatory standard for institution also is noticeably devoid of a carve-out for serial petitions and, thus, would seem to limit the Board's current precedent under Plastic Indus. Co. v. Canon Kabushiki Kaisha (§ II.B.4.i), Case IPR2016-01357 et al., Paper 19 (Sept. 6, 2017), which generally disfavors multiple petitions filed by a single party.
  • Concurrent USPTO Proceedings
    • The Bill requires parties in an ongoing proceeding to "notify the Director" if "another proceeding or matter involving the patent is before the Office, or if there is a pending application claiming the benefit of a common filing date to the patent."  And the Director "shall issue a decision" regarding how the other proceeding may advance, "including providing for stay, transfer, consolidation, or termination."
      • The proposed change from the current permissive language—"the Director may determine"—to the mandatory language in the Bill—"the Director shall issue a decision"—could prove significant.  The Bill encourages the Board to take a more active role in managing related proceedings at the Office.
      • Notably, the Bill lists prosecution of continuation applications as one of the matters the Board must actively manage. This could impact the common practice of pursuing claim amendments before an examiner concurrently with ongoing post-grant proceedings.
    • While the Board appears to retain considerable discretion in managing multiple proceedings, the Bill includes "a rebuttable presumption" in favor of consolidation "if the multiple proceedings...are of like type and are filed reasonably close in time."  This provision may apply to scenarios where multiple defendants are sued concurrently and file their respective petitions around the same time.  Under the current regime, if instituted, such cases typically proceed independently.

• Reframing Stays
  • Factors
    • In an apparent attempt to counterbalance the elimination of Fintiv and avoid multiple proceedings involving the same patent progressing in parallel, the Bill articulates several factors that must be considered by district courts when evaluating stay requests based on proceedings at the PTAB. These factors are largely consistent with those already applied in many district courts.
  • Immediate Interlocutory Appeal
    • The Bill provides a right for parties to pursue immediate interlocutory appeal on a denied motion for stay.  On this point, the Bill states that the "United States Court of Appeals for the Federal Circuit shall review the district court's decision to ensure consistent application of established precedent, and such review shall be de novo."  This may impact stay practices in various district courts, particularly given the de novo standard of review that would be applied by the Federal Circuit on these appeals.

• Conforming to the Appointments Clause
  • The Bill seeks to establish a foundation for Director authority to review, modify, or set aside panel decisions, addressing the Supreme Court's Arthrex The Director is given authority by the Bill to conduct such a review sua sponte or as prompted by a party's request.  The review must issue in a separate written opinion that is appealable to the Federal Circuit.

• Confirming the Independence of PTAB Panels
  • Relatedly, the Bill prevents ex parte communications between "an officer who has review authority, supervisory authority, or disciplinary authority" of any APJ and that APJ "concerning any pending matter before that panel."  While this may not substantially change the current practices at the PTAB, it is at least a public confirmation of transparency and independence with respect to the decisions of PTAB panels.

• Expanding the Basis for Inter Partes Review
  • Admitted Prior Art The Bill indicates that admissions in a patent specification (i.e., applicant admitted prior art) are available to prove anticipation (35 U.S.C. 102) and obviousness (35 U.S.C. 103), in addition to printed publication prior art.
  • Double Patenting The Bill also makes statutory or obviousness-type double patenting a permissible ground for proving unpatentability.
  • Governmental Entities as Petitioners Additionally, the Bill recognizes governmental entities as permissible petitioners by clarifying that the definition of a "person" includes "a governmental entity."

• Creating a Basis for a Right to Appeal?
  • The Bill introduces a presumption of an injury-in-fact for any party that "reasonably expects that another person will assert estoppel against the party...as a result of the final written decision that is the subject of the appeal."  While the provision does not distinguish between patent owners and petitioners—neutrally reciting "a party"—the change would likely have a greater impact on petitioners.  Recent decisions from the Federal Circuit have scrutinized the injury-in-fact evidence presented by petitioner-appellants not involved in co-pending district court litigation.
  • Perhaps anticipating a Constitutional challenge to the injury-in-fact provision, the Bill exempts parties found to lack standing from the estoppel provisions.

• Revamping Amendment Practice
  • The Bill reverses the current state of the law as to which party bears the burden of proof regarding amended claims.  At present, under the Board's Aqua Products precedent, petitioners bear the burden of proving unpatentability.  The Bill reverts the burden of proving patentability to patent owners.
  • Additional provisions require the PTAB to "examine the substitute claim" and the Director to "cause an examination of the substitute claim to be made within the time limits for the applicable inter partes." It remains unclear whether the reference to "examination" will lead to more conventional examination, e.g., with input from the Central Reexamination Unit or the examining corps.

• Adjusting Estoppels
  • The Bill clarifies that parties joined to a proceeding (in addition to their real parties-in-interest and privies) are subject to the same estoppel as the original petitioner.
  • The Bill adjusts the timing of estoppel against petitioners by stating that it does not attach until the right of appeal has been exhausted or a decision on appeal has issued.  The current state of the law is that estoppel attaches to the petitioner when a final written decision is issued.
  • The Bill codifies the patent owner estoppel provisions found presently in the Office regulations.  In doing so, the Bill precludes the Office from issuing "any claim that is not patentably distinct" from a claim found unpatentable or cancelled during review.  Whether the term "cancelled" applies to amendments, disclaimer, or both is not immediately clear.

• Adding Exceptions to the One-Year Time Bar
  • The current articulation of 35 USC 315(b) bars petitions "filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent."  In addition to retaining the original exception of requests for joinder, the Bill introduces two new exceptions.
  • First, in answer to the Supreme Court's Thryv v. Click-to-Call Technologies decision, the Bill states that the time bar "shall not apply...if the complaint is dismissed without prejudice."
  • Second, the Bill adds that any "new or amended claims [that] issue from reexamination" can be challenged no later than one year after the date on which such claims are asserted in the action that triggered the time bar on the original claims.  This new exception addresses a peculiarity of reexaminations by which amendments are not treated as part of a new patent—as with reissue—but instead part of the original patent.