Parties to an AIA Trial Must Read the Fine Print

A Patent Trial and Appeal Board (PTAB) panel has held that arguments not raised in a Patent Owner’s Response are deemed waived, even if the arguments were raised in a Preliminary Response. In Unified Patents Inc. v. Nonend Inventions N.V.,[1] PTAB denied a request for re-hearing from patent owner Nonend Inventions, which argued that the board failed to consider a challenge to the Petitioner’s real parties in interest. The board stated that a request for rehearing requires the identification of a matter overlooked or misapprehended and that Nonend could not meet that threshold.

First, PTAB noted that the Scheduling Order stated, “The patent owner is cautioned that any argument for patentability not raised in the response will be deemed waived.”[2] Nonend argued that a challenge to the real party in interest is not an “argument for patentability” and therefore Nonend was not given fair notice that failure to present those arguments again in the response would waive them.

PTAB further distinguished the argument from a matter overlooked or misapprehended with a citation to In re NuVasive,[3] which found that NuVasive’s failure to challenge public accessibility of a prior art reference during the trial phase amounted to a waiver at PTAB despite NuVasive’s challenge during preliminary proceedings.[4] PTAB further stated that even if the issue had not been waived, it still had not been overlooked or misapprehended because it was addressed in the Decision on Institution.[5]

Key Takeaways:

• Read all communications from PTAB carefully.
• Do not attempt to out-lawyer the board.
• Be clear about what arguments, if any, from the preliminary proceedings you wish to maintain in the trial phase.

At least three potential lessons for AIA parties are packed into the three pages addressing the real parties in interest arguments. First, AIA parties must carefully read all communications from the board. It is tempting to gloss over the Scheduling Order, in particular, as the deadlines are typically summarized in a table at the end of the order and the orders are relatively standard. However, small differences between Scheduling Orders can make a big difference during the trial. Parties who fail to pay close attention to all the details in the order—not just the deadlines—risk waiver of a variety of opportunities.

Second, parties should not attempt to out-lawyer PTAB because parsing the board’s language in a self-interested way can backfire. When in doubt, the board is readily available to answer questions, and most Scheduling Orders openly invite a conference call. Even if Nonend felt confident in its interpretation of the order, asking the “stupid” or obvious question could have avoided the waiver here. Of course, preserving the argument does not mean Nonend would have prevailed—preserving an argument previously rejected by the board, without new argument or evidence, is unlikely to carry the day.

Finally, a growing body of decisions confirms that an issue raised in preliminary proceedings will not be re-evaluated in the trial phase unless presented anew during the trial. Patent Owners, unlike Petitioners, can file a Preliminary Response prior to institution and then a full Response after institution, so it seems possible this rule would not apply in the same way to Petitioners. Nonetheless, all parties would be wise to clearly identify all challenges presented or maintained during the trial phase to avoid even the argument that a particular issue was waived at that phase. This idea sounds simple but requires careful strategy and drafting in view of the word-count restrictions and 37 C.F.R. § 42.6(a)(3), which forbids incorporation by reference.

Apart from waiver, the decision includes another important warning to AIA parties: “a party submitting evidence submits it at their own peril.”[6] The Patent Owner objected to PTAB’s reliance on the Petitioner’s use of the Patent Owner’s evidence, but the board was unmoved.  “While certainly a party would be expected to present evidence that, on balance, would favor their position, the evidence itself is merely objective information that can be used by any party, as appropriate.”[7]

One way AIA trials differ from both patent prosecution and litigation is the unforgiving requirement that parties promptly submit their best arguments and evidence. AIA procedures provide little room to reshape or build up arguments that were not well-presented at the outset and carefully preserved. Petitioners and Patent Owners alike are on notice that success in an AIA trial requires reading the fine print in the regulations, controlling case law and all board communications.