Does the PTAB's Western Digital Order Move the Needle?

June 4, 2018 – Article

      This past week the USPTO designated a new informative order (here) providing guidance on motions to amend.  In Western Digital Corporation v. Spex Technologies, IPR2018-00082, -00084, paper 13, the PTAB confirms that amendment practice at the PTAB post Aqua Products is similar to the prior practice in inter partes reexamination (“IPX”) with one major exception – by statute (35 U.S.C. § 316(d)), in a motion to amend, a patent owner in an inter partes review (“IPR”) may only propose a reasonable number of substitute claims.  In contrast, in IPX, patent owners were unfettered in their ability to present new claims of narrowed or clarified scope. 

      What constitutes a reasonable number of substitute claims?  The PTAB explains in Western Digital that, to the extent a patent owner seeks to propose more than one substitute claim for each cancelled claim, the patent owner should explain in a motion to amend the need for the additional claims and why the number of proposed substitute claims is reasonable.  Further, pursuant to 37 C.F.R. § 42.121(a)(2)(i), the PTAB restricts the scope of a permissible substitute claim to an amendment which responds to a ground of unpatentability involved in the trial.  The panel in Western Digital seeks to clarify applicability of this restriction stating:

The rule does not require, however, that every word added to or removed from a claim in a motion to amend be solely for the purpose of overcoming an instituted ground. Additional modifications that address potential 35 U.S.C. § 101 or § 112 issues, for example, are not precluded by rule or statute. Thus, once a proposed claim includes amendments to address a prior art ground in the trial, a patent owner also may include additional limitations to address potential § 101 or § 112 issues, if necessary.

      Will the burden shift provided by Aqua Products coupled with the new guidance highlighted by Western Digital lead to a more robust patent amendment practice in IPR and hence a return to a hybrid litigation/prosecution approach at the PTAB?  Based on the Supreme Court’s recent SAS decision (here) and the PTO’s proposed change to claim construction for PTAB proceedings (here), the answer appears to be no.  

      SAS alone, and its potential interface with the USPTO’s proposed change to claim construction for PTAB proceedings, will increase the likelihood that any patent involved concurrently in an IPR and district court litigation will be subject to a stay at the latter.  Not that increased stays weren’t intended, but did Congress intend to create such an imbalanced system for resolving invalidity (unpatentability) issues?  Since IPR replaced IPX six years ago, inter partes matters at the USPTO have transitioned from a prosecution centric system affording patent owners a robust amendment opportunity to a litigation centric alternative to district court litigation with less protection for patent owners than originally envisioned. 


      In response to SAS, the PTAB will now institute on all claims and all grounds if there is a basis to institute on at least one claim and one ground in the petition.  This policy will negatively affect the ability of patent owners to extract claims from a PTAB trial pre-institution.  Maybe more importantly, this policy will enable petitioners, for all instituted trials, to ensure the district court handling the concurrent litigation that a stay is appropriate since validity issues for all asserted claims will be removed or at least simplified by the PTAB.

      The USPTO’s proposed rule change adopting the Phillips claim construction standard should buttress any motion for stay.  Although theoretically a broader standard, in most cases BRI and Phillips produce few if any differences in construction.  If the PTAB adopts the same claim construction standard as Phillips, parties will have an inability to leverage the fact that the subject claims may have different meaning depending on the type of proceeding.  Further, since PTAB decisions on claim construction will more often than not precede district court Markman decisions, district courts will benefit from and likely be influenced by the PTAB’s analysis and conclusions. 

      Despite shifting the burden of proof to petitioners, early results show that the Aqua Products decision has not appreciably improved the success of motions to amend.  Providing patent owners a more robust claim amendment opportunity in IPR should improve the imbalance; however, Western Digital’s guidance on the PTAB’s “reasonable number of claims” analysis appears to move the needle little.  Providing a less restrictive interpretation of what constitutes “a reasonable number of substitute claims” would provide patent owners with additional protections in proceedings that have generally favored petitioners.  Absent such protections, patent owners will be well served to maintain pending applications for important patent portfolios and utilize ex parte reexam and reissue as tools to buttress claim scope prior to asserting a patent or seeking a license.