Discovery and the One-Year Time Period in AIA Proceedings
By Robert J. Webster
The 2011 America Invents Act (AIA) provides statutory basis for Inter Partes Review proceedings, Derivation proceedings, and for Post-Grant Review proceedings to be handled by the Patent Trial and Appeal Board (PTAB), which is the new name in the AIA for the Board of Patent Appeals and Interferences.
A party can request institution of an administrative Post-Grant Review proceeding to cancel claims from a U.S. Patent which issued within the previous nine months. With respect to Post-Grant Review proceedings, the AIA (Public Law 112-29) provides, among other things, that the Office shall (1) set forth standards and procedures for discovery of relevant evidence, including that such discovery shall be limited to evidence directly related to factual assertions advanced by either party in the proceeding; and(2) prescribe sanctions for abuse of discovery, abuse of process, or any other improper use of the proceeding, such as to harass or to cause unnecessary delay or an unnecessary increase in the cost of the proceeding.
With respect to Inter Partes Review proceedings, the AIA provides, among other things, that the USPTO shall set forth standards and procedures for discovery of relevant evidence, including that such discovery shall be limited to the deposition of witnesses submitting affidavits or declarations; and what is otherwise necessary in the interest of justice; and prescribe sanctions for abuse of discovery, abuse of process, or any other improper use of the proceeding, such as to harass or to cause unnecessary delay or an unnecessary increase in the cost of the proceeding.
With respect to Derivation proceedings, 35 USC §135 is amended to eliminate patent interference proceedings except to the extent that they are limited to the issue of derivation. There are no specific discovery provisions found in amended Section 135 of Title 35 of the United States Code, but because the Rules of Practice for contested cases, which govern discovery in contested cases, including existing patent interference proceedings, will apply to the new derivation proceedings, and because those Rules of Practice explicitly state that a party requesting additional discovery must show that such additional discovery is in the interests of justice, it appears that the “interest of justice” standard followed in those decisions will be used by the PTAB in deciding requests for additional discovery in Derivation proceedings.
Current Patent Contested Proceedings as Prologue
Because the USPTO’s Board of Patent Appeals and Interferences, and its predecessor, the Board of Interferences, have rendered a number of decisions on motions for additional discovery since the USPTO’s Rules of Practice were amended to specifically provide for discovery in 1971, guidance concerning how the Patent Trial and appeal Board will handle discovery issues, including requests for additional discovery in post-grant review proceedings, inter partes review proceedings, and in derivation proceedings under the AIA, is found in numerous Board decisions concerning motions for additional discovery. Summaries and discussions of a number of those Board decisions have appeared in various forums, including the Journal of the Patent and Trademark Office Society, formerly known as the Journal of the Patent Office Society (J.P.O.S.), and a discussion of those Board decisions, based in part on a review of several J.P.O.S. articles which appeared in the mid-1970s appears below. Further guidance in determining how discovery in is likely to be handled by the USPTO’s Trial and Appeal Board may be gleaned from the current USPTO Rules of Practice dealing with contested cased, i.e., 37 CFR Part 412, Subpart D, the USPTO’s Contested Case Practice Guide, and current standing orders of the Interference Trial Section of the Board of Patent Appeals and Interferences.
Similar additional guidance is available by studying how discovery has been handled in other contested patent cases in the USPTO. There are several different contested cases in the USPTO. Arguably, one is an inter partes public use proceeding. Public use proceedings in the PTO are of two types, ex parte, in which the only “party” is the patent applicant, and inter partes, in which a third party petitions for the institution of a public use proceeding in which the parties are the patent applicant and the third party. Although the Rules of Practice do not explicitly include inter partes public use proceedings in the definition of a contested case, that definition only explicitly excludes inter partes reexamination proceedings from being characterized as a contested case., so a case can be made that inter partes public use proceedings, which use the same rules of practice as do patent interference proceedings to handle testimony, are really contested cases in the USPTO.
Typically, it is rare for motions for additional discovery to be filed in inter partes public use proceedings, even when the existence of a public use statutory bar has to be proved, because the third party is in possession of the evidence alleged to show public use, and any evidence on which it is going to rely in the proceeding is served on the patent applicant as part of its initial discovery obligations,. Additionally, inter partes public use proceedings are handled not by an administrative board, but by a Primary Examiner (often assisted by an attorney from the Office of Patent Legal Administration).
Perhaps the most common contested proceedings in the USPTO dealing with pending patent applications and issued patents are patent interference proceedings authorized under 35 USC §135(a). Numerous texts and journal articles have been written about patent interference practice and procedure, including many articles about discovery practice and procedure, and an understanding of how discovery will be likely handled in post-grant review proceedings can reasonably be expected to be gained from reviewing discovery practice and procedures in Patent Interference proceedings. Discovery in patent interference proceedings includes limited discovery of documents and lists of witnesses on which an opposing party intends to rely in presenting its case, as well as additional discovery. The USPTO Rules of Practice regarding discovery in contested cases have been consistent over the years, starting in May of 1971, when the Commissioner promulgated Rules which authorized the Board to regulate discovery, specifying that only limited discovery is available in a patent interference proceeding. Initial discovery is in the form of the serving of documents and lists of things and witnesses on which a party intends to rely in its case-in-chief and in its rebuttal case. Two types of additional discovery are allowed by the Rules of Practice. The first is discovery from an opposing party of documents and things learned of during cross-examination of an opposing party’s witnesses or during that party’s own period for rebuttal testimony. The second type of additional discovery is what the USPTO Board of Patent Appeals and Interferences (“the Board”) determines to be “in the interest of justice.”
As explained by former Chief Administrative Patent Judge McKelvey – see 58 J.P.O.S. 186, at 195 (1976), the “interest of justice” means what the Board determines it to mean in light of the facts of a given case. The McKelvey article lists a number of examples of requests (or parts of requests) for additional discovery in patent interference proceedings which the Board has determined to be “in the interest of justice,” as well as a number of examples of requests (or parts of requests) for additional discovery in patent interference proceedings have been found to not be in the interest of justice, as follows: The Board has denied requests for additional discovery on the merits if it is deemed to be “too broad.” For example, as McKelvey explains, with respect to additional discovery concerning “derivation”, the Board would probably deny a request by a junior party for “all documents in which the subject matter of the invention in issue is referred to in whole or in part, because it relates to possible derivation as well as the senior party’s case in chief (where the senior party’s witnesses can be cross-examined to obtain discovery in that manner); whereas, the Board might well grant additional discovery if the junior party limits its request to documents written by the senior party after, and relating to, a meeting between the junior party and the senior party.
This example obviously would be relevant to the proposed “derivation” proceedings because “derivation” is a subject matter that can serve to render patent claims unpatentable in a derivation proceeding in the USPTO before the patent issues. In a derivation proceeding, the Board would be expected not to deny the motion as premature because it was filed before the senior party’s case of proving prior invention, because in a derivation proceeding, one would expect any such evidence presented by the patentee to be in rebuttal, after the patent applicant who initiated the derivation proceeding has presented its case for derivation. One could reasonably expect the Board to deny an overly broad derivation discovery request, such as that described above, but to grant a more limited discovery request such as that described above.
McKelvey also explains that, in 1976, the Board (of Interferences) would not grant discovery of evidence related to a matter which was not ancillary to priority. As we know, in 1985, the Board of Interferences was merged with the Board of Appeals into the Board of Patent Appeals and Interferences (Public Law 98-622, effective February 8, 1985), and its jurisdiction broadened from only priority issues and issues which were “ancillary” to priority, to include questions of patentability, which were traditionally considered not to be ancillary to priority. Because post-grant review proceedings will necessarily deal with using prior art to cancel patent claims, the Patent Trial and Appeal Board will be expected to rule on issues which are not ancillary to priority in a post-grant review proceeding. Nevertheless, this previous policy of not permitting discovery with respect to issues not properly handled in a patent interference proceeding would be expected to apply to issues not property handled in a post-grant review proceeding, such as, for example, the issue of fraud or inequitable conduct, which has not been included as a basis for post-grant review by the new AIA statute, but which was (and is currently) handled in patent interference proceedings.
McKelvey also notes that the Board has clearly stated that (1) it would not order additional discovery unless it contained an explanation of how the various discovery sought, e.g., specific interrogatories and specific document categories requested, are related to relevant issues in the proceeding, and (2) a mere broad assertion that discovery is needed for cross-examination, per se, is not considered sufficient to establish that the “interest of justice” requires the discovery.
Nor will the Board order discovery which it considers to be “futile.” For example, if the earliest date in a party’s preliminary statement for an actual reduction to practice is January 5, 2007, and has taken testimony which shows that his earliest date of actual reduction to practice is January 5, 2007, and the senior party seeks additional discovery in the form of an admission that the Junior party’s earliest date of actual reduction to practice as July 1, 2008, then the discovery will be denied as “futile.” Similar practice is expected to be followed regarding handing of requests for additional discovery in post-grant review proceedings.
Additionally, the Board has traditionally not permitted additional discovery that it determines cannot be expected to lead to admissible evidence. For example, in a patent interference proceeding where a junior party is not permitted to take testimony on prior invention, e.g., because its preliminary statement fails to allege prior invention, the Board would deny permission for additional discovery on the issue of derivation because it would not be admissible. In a post-grant review proceeding, this might occur if the opposing party made a clear, unmistakable and unequivocal admission on the record during the post-grant review proceeding that he did not invent the subject matter of the patent claims prior to the patentee’s effective filing date.
Parties to patent interference proceedings have opposed motions for additional discovery based on privilege, e.g., attorney- client privilege or work product privilege, or that trade secret information would be improperly divulged. The Board has handled these privilege issues by determining whether an attorney or just a registered patent agent who was not an attorney was claiming the privilege, and whether the work involved was just limited to preparation of the application and, presumably not privileged. Similarly, if the alleged trade secret information was disclosed in the patent, then it clearly was not a trade secret. The Board also, occasionally, has held in camera hearings to examine the claims of privilege and trade secrets. These policies would appear to apply without change to similar requests for additional discovery in post-grant review proceedings.
Evidence that these policies remain viable is found in a relatively recent (2004) decision, Sernyk v. DeBonte, 72 USPQ2d 1355 (PTOBPAI 2004), a non-precedential decision by the Board of Patent Appeals and Interferences, in which McKelvey stated that if the basis for a request for discovery or testimony is speculative, discovery or testimony may not be appropriate. The more speculative the case, the less likely discovery is to be authorized. On the other hand, if a party can make out what otherwise appears to be a prima facie case for relief without discovery or testimony, there is seemingly little need for the discovery or testimony. But, if a party can reasonably establish that its opponent or some third party can supply a missing link to make out a prima facie case, then discovery or testimony may be appropriate. McKelvey also stated that where there is a plausible and reasonable basis for establishing a public use, it may be “just” to permit the issue to be developed through the aid of discovery and testimony.
Another factor that is likely to be taken into account by the Board in deciding future motions for Additional Discovery is discovery of electronic media. In this regard, the Board will likely take into consideration, the Court of Appeals for the Federal Circuit’s recently unveiled “Model Order Regarding E-Discovery in Patent Cases.”
Who will decide Requests for Additional Discovery?
It is significant to note that, whereas the Board of Interferences, prior to merger with the Board of Appeals in 1985, typically decided motions for additional discovery with a three member Board panel, whereas the Interference Trial Division appears to decide motions for additional discovery using a three-member panel (as in Sernyk v. DeBonte, cited above), or by a single Board member (Administrative Patent Judge). In most instances, most of the decisions by the Interference Trial Division of the Board of Patent Appeals and Interferences on motions for additional discovery in patent interference proceedings are rendered by a single Administrative Patent judge (APJ) because these motions are treated as interlocutory matters by the Interference Trial Division. Typically, a three member panel of APJs is only convened to decide a motion for additional discovery when the Interference Trial Division of the Board addresses an issue which it deems significant enough to be a precedential decision or a very informative decision.
This is to be compared with proceedings before the International Trade Commission, where discovery motions appear to be decided, typically, by a single Administrative Patent Law Judge, and with contested disciplinary proceedings, governed by 37 CFR, Part 11, which typically have been handled by a single Administrative Patent Judge from the U.S. Department of Commerce, and in which discovery is governed by 37 CFR §11.52.
It should also be compared with the way that motions for discovery appear to be typically handled procedurally by a single managing Trademark Trial and Appeal Board Attorney in cancellation and opposition proceedings before that Board. In this regard, reference is made to the Trademark Manual of Examination Procedure (TMEP), Chapter 400, for detailed guidance in the procedures for handling discovery, including additional discovery, in trademark cancellation and opposition proceedings
Effect of AIA Language
Because the AIA explicitly sets for the “interest of justice” standard for additional discovery in inter partes review proceedings, the Office will have to enact rules of practice using that standard in such proceedings and, because of that, it would appear that patent practitioners can reasonably rely on the practices established over the years in deciding motions for additional discovery in patent interference proceeding to continue regarding post-grant review proceedings.
Despite the fact that the AIA does not explicitly require the “interest of justice” standard for additional discovery in derivation proceedings and in post-grant review proceedings, based on past precedent in handling additional discovery requests in patent interference proceedings, it is reasonable to expect the USPTO to grant additional discovery in those proceedings only if the requested additional discovery is determined to be “in the interest of justice,” and it is not unreasonable to conclude that the USPTO will rely on the practices established over the years in deciding motions for additional discovery in patent interference proceedings, including the “interest of justice” standard, to continue in derivation proceedings under 35 USC §135, in inter partes review proceedings, and in post-grant review proceedings.
Estoppel and Discovery Practice in New AIA Proceedings
A significant factor that a must take into consideration in deciding whether to request institution of a post-grant review proceeding is the difference in available discovery in a relatively speedy USPTO Post Grant review proceeding as compared with that available in a proceeding in Federal District Court, also taking into consideration the applicable estoppel provisions. For example, if a third party seeking a post grant review proceeding believes that the patent claims are unpatentable based on a an inadequate disclosure, and the party needs discovery regarding tests it suspects were performed by the patentee that may show that the disclosure was inadequate under the first paragraph of 35 USC §112, if the party does not convince the Board that it is entitled to additional discovery on this issue, it will be estopped from later raising that issue in District Court even though such a court may typically grant additional discovery of such possible tests based on the same showing that the Board decided did not satisfy the “interests of justice” standard. Thus, in determining whether to file a request for post-grant discovery or file a declaratory judgment lawsuit in a Federal District Court, a party should take into consideration the possibility that it may not be able to obtain the discovery it needs to successfully challenge the validity of a particular patent if it proceeds under the post-grant review provisions of the AIA statute.
Challenges Regarding Limits on Duration of New AIA Proceedings
One fact of patent interference practice that is not typically discussed is that, despite the fact that the Board has always expedited consideration of motions for additional discovery, the time from declaration of a patent interference proceeding to final decision on the merits of that patent interference proceeding varied considerably regardless of the short time it took to render a decision on motions for additional discovery. Before the merger of the Board of Interferences with the Board of Appeals in 1985, such motions were decided by a three member panel as soon as the motions for additional discovery and the oppositions thereto were filed. A Patent Interference Examiner, who usually was also a Member of the Board, briefed the other two Board members, and a decision was made after a thorough examination of the motions, oppositions and supporting exhibits, if any. This process typically was completed in one or two days. Thus, the parties to the patent interference proceeding received a decision on a truly expedited basis.
It should also be said that all aspects of Patent interference proceedings have been expedited, few extensions of time being granted throughout a typical proceeding. It is an understatement to say that once started, patent interference proceedings race to the point where the record was filed, and the proceeding was ready for final hearing and a decision on the merits.
However, It should be noted that, despite this expedited aspect of patent interference proceedings, one interesting problem that faced the Board of Interferences, even for some time after it was merged, on February 8, 1985 into the Board of Patent Appeals and Interferences, was that there were only about ten Board Members assigned to handle the hundreds of pending patent interference proceeding which were in effect at that time. Because of this, the time period between when the interference record was filed and the proceeding was ripe for final hearing and decision on the merits, was typically measured in years, and sometimes five years or more.
Now that there are only about 60 pending patent interferences proceedings, the time period between the date that the record is filed and final decision is very short. This reduction ns the number of patent interference proceedings is due to a number of factors, not the least of which is that the fact that the USPTO has, for many years, involved active participation of APJs in determining whether interfering subject matter really is present and whether the claimed subject matter really is patentable to potentially interfering patent applications. Additionally, it has appeared to many practitioners that the USPTO has chosen, in many instances, to let the first filed of possible interfering patent applications to issue and requiring the patentee to file a reissue application to request declaration of a patent interference proceeding, instead of declaring, sua sponte, a Patent Interference proceeding between two allowable patent applications. This practice appears to have started after creation of the Interference Trial Division in the merged Board and appears to have continued to this day.
If experience with patent interference proceedings is a guide, i.e., if, for example, there are fewer than 60 pending post-grant review proceedings per year, the current Patent Interference Trail division may be able to comply with the AIA statute’s requirements and render decisions on the merits in post grant review proceedings within one year or a year and a half after their inception. However, if the number of post grant review proceedings in the USPTO rises to a number about the same as that in the 1970’s and 1980’s, e.g., 600 to700 proceedings, then the Office should expect to significantly increase the number of Board members.
The new AIA statute does provide a mechanism to limit the number of Post Grant review proceedings, in that the statute provides that the Director shall consider the effect of any such regulation on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter. It seems reasonable to expect that the Director may consider placing a limit on the number of post-grant review proceedings it will grant per year, for example, based on several factors, including the number of Board members assigned to handle such proceedings. Once a request for such a proceeding is filed, it has to be evaluated on its merits and, if appropriate, declared, and terminated with a decision on its merits within one year, or a year and a half with good cause. If a limit is placed on the number of post-grant review proceedings that the USPTO will grant, based on its limited ability to expeditiously handle them in the time frame permitted by the AIA, then parties seeking to have a post-grant review instituted will be well advised to prepare a well-reasoned and persuasive request to institute a post-grant review proceeding to increase the chances that it will be instituted, and not simply deferred until the Office can handle it within the time period set by statute.