Senators Leahy and Tillis Introduce PTAB Reform Act

On Thursday, June 16, 2022, Senators Patrick Leahy (D-VT), Thom Tillis (R-NC), and John Cornyn (R-TX) introduced the Patent Trial and Appeal Board (PTAB) Reform Act of 2022 (PTAB Reform Act). According to the Senators, the legislation aims to address “predictability, certainty, and fairness at the PTAB.”  And as provided by Senator Leahy’s office, the bill has four main goals: (1) “prevent[ing] abusive serial petitions from harassing patent owners;” (2) “prohibit[ing] [the] PTO from considering inaccurate district court litigation timelines;” (3) “revis[ing] the PTAB structure to conform with the Appointments Clause while preserving PTAB autonomy;” and (4) “address[ing] PTAB certainty and fairness in other areas.”  A description of the bill provided by Senator Leahy’s Office can be found (here), the full text of the bill can be found (here), and a section-by-section summary of the bill can be found (here).

On the issue of serial petitions, the bill would prohibit institution if there was previously a review that included the same patent claims by the same entity or a real party in interest or successor in interest to the petitioner.  The PTAB currently has the discretion to enter such a denial and, in our view, such discretion may be a more appropriate way to handle serial petition abuses, which have greatly diminished since the PTAB’s General Plastics decision.

As to the bill’s second goal, the bill would end the PTAB’s discretionary denial authority under Fintiv and prohibit the PTAB from declining to institute a proceeding based on the status of a parallel litigation or ITC proceeding.  Whether you decry or praise Fintiv may largely depend on whether you find yourself before the PTAB as a petitioner or Patent Owner, and use of Fintiv has dramatically decreased over the past 6 to 9 months.  That being said, the emergence of Fintiv came as a surprise to many practitioners as the IPR statute provides a defendant with one year to get an IPR on file after being served with a complaint, seemingly without a denial mechanism based on the status of a parallel proceeding.

To revise the PTAB’s structure to conform with the Appointments Clause, the bill effectively codifies the Supreme Court’s Arthrex Director review process.   In so doing, however, the bill also explains that any Director review, whether on the Director’s own initiative or at a party’s request, must be issued in a separate written opinion that is made part of the public record and sets forth the reasons for the decision.  This will allow, according to the Senators, “the public [to] know which decisions come from PTAB judges and which come from a politically appointed and accountable Director.”  In addition, and if the bill passes in some form, the Director must, within 18 months, create rules laying out the timeline she has to review PTAB decisions and the bases on which sua sponte review may be conducted.  The Director must also create (for party requested Director review) guidelines including a timeline, the required content, and the bases on which the party may request review.  As we have discussed in our prior April 22 and May 27 posts, the Office and Director Vidal are already in the process of providing additional clarity to the interim Director review process.  Relatedly, the bill imposes a 120-day deadline on rehearing/reviews decision.  Currently, such decisions are covered by internal timing guidelines and not statutory requirements. 

Other aspects of the bill include, for example, reform efforts to address IPR misuses as exemplified by the OpenSky Industries, LLC v. VLSI Technology LLC and Patent Quality Assurance, LLC v. VLSI Technology LLC cases.  The bill requires the Director to prescribe regulations to sanction petitioners who offer to deliberately delay or lose an instituted challenge for consideration, including suggested sanctions of barring that party from filing any IPRs for a year.  Further, the bill would require that supervisors who are not members of a PTAB panel refrain from ex parte communication with a panel regarding a pending matter before them.  More generally, the bill would mandate that PTAB judges follow the same code of conduct as United States judges.

The bill clarifies the sometimes murky standard for appellate standing and explains that a final written decision of the PTAB may be appealed by any dissatisfied party that reasonably expects another person to assert estoppel based on the final written decision.  Finally, the new bill proposes what we imagine may be a controversial provision to cover certain expenses incurred by micro and small entities for having to defend against a post-grant challenge if their patent has not been asserted in litigation.

We will follow the progress of this bill and post updates on our website as they become available.