FEDERAL REGISTER
`
`Vol. 77
`
`Tuesday,
`
`No. 157
`
`August 14, 2012
`
`Part II
`
`Department of Commerce
`
`Patent and Trademark Office
`
`37 CFR Parts 1, 42 and 90
`Rules of Practice for Trials Before the Patent Trial and Appeal Board and
`Judicial Review of Patent Trial and Appeal Board Decisions; Final Rule
`
`DMC Exhibit 2126_0O1
`
`

`
`48612
`
`Federal Register/Vol. 77, No. 157/ Tuesday, August 14, 2012/ Rules and Regulations
`
`DEPARTMENT OF COMMERCE
`
`Patent and Trademark Office
`
`37 CFR Parts 1, 42 and 90
`[Docket No. PTO—P—2011—0082]
`RIN 0651 —AC70
`
`Rules of Practice for Trials Before the
`Patent Trial and Appeal Board and
`Judicial Review of Patent Trial and
`Appeal Board Decisions
`AGENCY: United States Patent and
`Trademark Office, Commerce.
`ACTION: Final rule.
`
`SUMMARY: The United States Patent and
`Trademark Office (Office or USPTO) is
`revising the rules of practice to
`implement the provisions of the Leahy-
`Smith America Invents Act (“AIA”) that
`provide for trials before the Patent Trial
`and Appeal Board (Board). This final
`rule provides a consolidated set of rules
`relating to Board trial practice for inter
`partes review, post-grant review, the
`transitional program for covered
`business method patents, and derivation
`proceedings. This final rule also
`provides a consolidated set of rules to
`implement the provisions of the AIA
`related to seeking judicial review of
`Board decisions.
`
`DATES: Effective Date: The changes in
`this final rule take effect on September
`16, 2012.
`FOR FURTHER INFORMATION CONTACT:
`
`Michael P. Tierney, Lead
`Administrative Patent Iudge, Scott R.
`Boalick, Lead Administrative Patent
`Iudge, Robert A. Clarke, Administrative
`Patent Iudge, Ioni Y. Chang,
`Administrative Patent Iudge, Thomas L.
`Giannetti, Administrative Patent Iudge,
`Board of Patent Appeals and
`lnterferences, by telephone at (571) 272-
`9797.
`SUPPLEMENTARY INFORMATION: EXQCLIIIVEB
`
`Summary: Purpose: On September 16,
`2011, the AIA was enacted into law
`(Pub. L. 112-29, 125 Stat. 234 (2011)).
`The purpose of the AIA and this final
`rule is to establish a more efficient and
`
`streamlined patent system that will
`improve patent quality and limit
`unnecessary and counterproductive
`litigation costs. The preamble of this
`notice sets forth in detail the procedures
`by which the Board will conduct trial
`proceedings. The USPTO is engaged iii
`a transparent process to create a timely,
`cost-effective alternative to litigation.
`Moreover, the rulemaking process is
`designed to ensure the integrity of the
`trial procedures. See 35 U.S.C. 316(b), as
`amended, and 35 U.S.C. 326(b). This
`final rule provides a consolidated set of
`
`rules relating to Board trial practice for
`inter partes review, post-grant review,
`the transitional program for covered
`business method patents, and derivation
`proceedings. See 35 U.S.C. 316(b), as
`amended, and 35 U.S.C. 326(b).
`Summary of Major Provisions:
`Consistent with sections 3, 6, 7, and 18
`of the AIA, this final rule sets forth: (1)
`The evidentiary standards, procedure,
`and default times for conducting trial
`proceedings; (2) the fees for requesting
`reviews; (3) the procedure for petition
`and motion practice; (4) the page limits
`for petitions, motions, oppositions, and
`replies; (5) the standards and
`p*ocedures for discovery of relevant
`evidence, including the procedure for
`taking and compelling testimony; (6) the
`sanctions for abuse of discovery, abuse
`0 ‘ process, or any other improper use of
`tlre proceeding; (7) the procedure for
`requesting oral hearings; (8) the
`‘ocedure for requesting rehearing of
`ecisions and filing appeals; (9) the
`‘ocedure for requesting joinder; and
`10) the procedure to make file records
`vailable to the public that include the
`‘ocedures for motions to seal,
`"U"U
`‘otective orders for confidential
`information, and requests to treat
`settlement as business confidential
`information.
`Costs and Benefits: This rulemaking is
`not economically significant, but is
`significant, under Executive Order
`12866 (Sept. 30, 1993), as amended by
`Executive Order 13258 (Feb. 26, 2002)
`and Executive Order 13422 (Ian. 18,
`2007).
`Background: To implement the
`changes set forth in sections 3, 6, 7, and
`18 of the AIA that are related to
`
`F33’“'UQJU
`
`administrative trials and judicial review
`of Board decisions, the Office published
`the following notices of proposed
`rulemaking: (1) Rules of Practice for
`Trials before the Patent Trial and
`Appeal Board and ]udicial Review of
`Patent 'l'rial and Appeal Board
`Decisions, 77 FR 6879 (Feb. 9, 2012), to
`provide a consolidated set of rules
`relating to Board trial practice for inter
`partes review, post-grant review,
`derivation proceedings, and the
`transitional program for covered
`business method patents, and judicial
`review of Board decisions by adding
`new parts 42 and 90 including a new
`subpart A to title 37 of the Code of
`Federal Regulations (RIN 0651—AC70);
`(2) Changes to Implement Inter Partes
`Review Proceedings, 77 FR 7041 (Feb.
`10, 2012), to provide rules specific to
`inter partes review by adding a new
`subpart B to 37 CFR part 42 (RIN 0651-
`AC71); (3) Changes to Implement Post-
`Grant Review Proceedings, 77 FR 7060
`(Feb. 10, 2012), to provide rules specific
`
`to post-grant review by adding a new
`subpart C to 37 CFR part 42 (RIN 0651-
`AC72); (4) Changes to Implement
`Transitional Program for Covered
`Business Method Patents, 77 FR 7080
`(Feb. 10, 2012), to provide rules specific
`to the transitional program for covered
`business method patents by adding a
`new subpart D to 37 CFR part 42 (RIN
`0651—AC73); (5) Transitional Program
`for Covered Business Method Patents—
`Definition of Technological Invention,
`77 FR 7095 (Feb. 10, 2012), to add a new
`rule that sets forth the definition of
`
`technological invention for determining
`whether a patent is for a technological
`invention solely for purposes of the
`transitional program for covered
`business method patents (RIN 0651-
`AC75); and (6) Changes to Implement
`Derivation Proceedings, 77 FR 7028
`(Feb. 10, 2012), to provide rules specific
`to derivation proceedings by adding a
`new subpart E to 37 CFR part 42 (RIN
`0651—AC74).
`Additionally, the Office published a
`Patent Trial Practice Guide for the
`
`proposed rules in the Federal Register
`to provide the public an opportunity to
`comment. Practice Guide for Proposed
`Trial Rules, 77 FR 6868 (Feb. 9, 2012)
`(Request for Comments) (“Practice
`Guide” or “Office Patent Trial Practice
`Guide”). The Office envisions
`publishing a revised Patent Trial
`Practice Guide for the final rules. The
`
`Office also hosted a series of public
`educational roadshows, across the
`country, regarding the proposed rules
`for the implementation of AIA.
`111 response to the notices of proposed
`rulemaking and the Office Patent Trial
`Practice Guide notice, the Office
`received 251 submissions offering
`written comments from intellectual
`
`property organizations, businesses, law
`firms, patent practitioners, and others,
`including a United States senator who
`was a principal author of section 18 of
`the AIA. The comments provided
`support for, opposition to, and diverse
`recommendations on the proposed
`rules. The Office appreciates the
`thoughtful comments, and has
`considered and analyzed the comments
`thoroughly. The Office’s responses to
`the comments are provided in the 228
`separate responses based on the topics
`raised in the 251 comments in the
`
`Response to Comments section infra.
`In light of the comments, the Office
`has 111ade appropriate modifications to
`the proposed rules to provide clarity
`and to take into account the interests of
`
`the public, patent owners, patent
`challengers, and other interested parties,
`with the statutory requirements and
`considerations, such as the effect of the
`regulations on the economy, the
`
`DMC Exhibit 2126_002
`
`

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`Federal Register/ Vol. 77, No. 157/ Tuesday, August 14, 2012/ Rules and Regulations
`
`48647
`
`Response: Section 42.70 does not set
`a time for oral argument. The time
`allocated for oral argument will be set
`by the Board on a case—by—case basis
`according to the individual
`circumstances of the case. When a party
`requests an oral argument, the party
`may recommend a time to be allocated
`for the oral argument and may provide
`additional reasons in support of the
`recommendation. The Board will take
`recommendations into consideration
`
`when setting the time allocated for oral
`argument.
`Decision on Petitions or Motions
`{§ 42.71]
`Comment 196: A few comments
`
`suggested that proposed § 42.2 or 42.71
`should be revised to indicate that a
`
`panel, rather than a single Board
`member, has the authority to decide
`petitions and motions because 35 U.S.C.
`6[c) requires that each inter partes
`review and post-grant review be heard
`by at least three members of the Board.
`Response: The Office agrees that final
`written decisions under 35 U.S.C.
`135[d) and 318[a), as amended and 35
`U.S.C. 328(a) will be entered by a panel.
`For clarification, § 42.2, as adopted in
`this final rule, provides that, for final
`written decisions under 35 U.S.C.
`135(d) and 318[a), as amended, and 35
`U.S.C. 328(a), “Board” means a panel of
`the Board. As to other decisions in a
`
`trial proceeding, however, the AIA does
`not require a panel to decide petitions
`to institute a trial or motions. Further,
`35 U.S.C. 135(a) and 314, as amended,
`and 35 U.S.C. 324 provide that the
`Director shall determine whether to
`
`institute a derivation proceeding, inter
`partes review, and post-grant review,
`respectively. Additionally, 35 U.S.C.
`6(b)(3) and (4) provide that the Board
`shall conduct derivation proceedings,
`inter partes reviews, and post-grant
`reviews. The authorities to determine
`whether to institute a trial and conduct
`
`a trial have been delegated to a Board
`member or employee acting with the
`authority of the Board. As such, § 42.2,
`as adopted in this final rule, also
`provides that, for petition decisions and
`interlocutory decisions, “Board” means
`a Board member or employee acting
`with the authority of the Board.
`Comment 197: One comment
`
`suggested that the standard of review for
`a rehearing of a non-panel decision
`should be de novo because 35 U.S.C.
`
`6[c) requires that each inter partes
`review and post-grant review be heard
`by at least three members of the Board,
`and thereby no deference should be
`accorded. But, several other comments
`were in favor of the standard of review
`
`set forth in proposed §42.71(c).
`
`Response: As discussed previously,
`the AIA does not require a panel to
`decide petitions to institute a trial or
`motions. The authorities to determine
`whether to institute a trial and conduct
`
`a trial have been delegated to a Board
`member or employee acting with the
`authority of the Board. Moreover, 35
`U.S.C. 135[a) and 314[d), as amended,
`and 35 U.S.C. 324(e) provide that the
`determination by the Director whether
`to institute a derivation proceeding,
`inter partes review, or post-grant review
`shall be final and nonappealable.
`Further, 35 U.S.C. 6(c) provides that
`only the Board may grant rehearings.
`Therefore, the de novo standard for
`rehearing a non-panel decision in a trial
`before the Office is not required.
`Comment 198: A few comments
`
`requested clarification on requests for
`rehearing of a decision not to institute
`a review, and suggested that a rehearing
`of such a decision should be decided by
`a different administrative patent judge
`or panel that includes at least the Chief
`Administrative Patent Iudge. One
`comment requested clarification on
`requests for rehearing of a decision to
`institute a review on some of the
`
`proposed grounds of unpatentability,
`but not all, and suggested a rule that
`would provide for rehearings and
`appeals of such a decision. Another
`comment requested clarification on
`whether a decision not to institute is a
`
`final and non-appealable decision.
`Response: In View of the comments,
`the Office added a paragraph to the rule
`for petition decisions to clarify that a
`party may request a rehearing of a
`petition decision, but the decision is
`nonappealable. §42.71[c) and (d). A
`decision to institute [including a
`decision that denies a ground of
`unpatentability) is a nonfinal decision.
`A request for rehearing a decision to
`institute, thus, must be filed within 14
`days of the entry of the decision. In
`contrast, a decision not to institute is a
`final decision, and therefore a request
`for rehearing such a decision must be
`filed within 30 days of the decision.
`V/Vhen rehearing a petition decision, the
`Office envisions that the decision will
`
`typically be reviewed by a panel of at
`least three administrative patent judges
`that may include the Chief
`Administrative Patent Iudge. Under 35
`U.S.C. 135(a) and 314(d), as amended,
`and 35 U.S.C. 324(e), a determination of
`whether to institute a review is final and
`
`nonappealable to the Federal Courts.
`Comment 199: Two comments
`
`suggested that a request for rehearing of
`a panel decision should be decided by
`a panel having at least one member not
`on the original panel that rendered the
`decision. One comment requested
`
`clarification whether a request for
`rehearing is required. Other comments
`were in support of the rehearing
`practice.
`Response: A request for rel1eari11g of
`a panel decision may be decided by the
`same panel that entered the original
`decision. The Office envisions that the
`
`Board’s rehearing practice for
`proceedings under part 42 will be
`consistent with the current Board
`
`practice used for appeals arising from
`original patent applications, reissue
`applications, eX parte reexamination,
`inter partes reexamination, as well as
`rehearing practice used in interference
`proceedings, and other contested cases.
`Comment 200: One comment stated
`that the Office should set time frames
`for decisions on motions.
`
`Response: Sections 42.100[c) and
`42.200[c) provide that an inter partes
`review, post-grant review, or covered
`business method review shall be
`
`administered such that pendency before
`the Board after institution is normally
`no more than one year. The time can be
`extended by up to six months for good
`cause by the Chief Administrative
`Patent Iudge. As such, the Board will
`decide motions filed in an inter panfes
`review, post-grant review, or covered
`business method review and provide a
`final written decision consistent with
`
`the time periods set forth in §§ 42.100(c)
`and 42.200(c).
`Comment 201: One comment
`
`suggested that interlocutory decisions of
`an individual administrative patent
`judge should be merged automatically
`into the final decision and judgment of
`the panel.
`Response: interlocutory decisions
`generally are related to procedural
`matters (e.g., whether to recognize
`counsel pro hoe Vice), and thereby
`should not necessarily be included in a
`final written decision on the
`
`patentability of the involved claims. In
`appropriate situations, the Board may
`incorporate an interlocutory decision
`into a final written decision.
`Comment 202: One comment
`recommended that a section on the
`“final written decision” be added to the
`rules.
`
`Response: judgment is defined as a
`final written decision by the Board or a
`termination of a proceeding (§ 42.2) and
`is provided for in § 42.73.
`Comment 203: One comment strongly
`agreed that the Board's decision not to
`institute a review should include a
`
`statement as to why the requirements
`were not met.
`
`Response: The Office appreciates the
`comment. The Office envisions that
`decisions not to institute a review will
`
`DMC Exhibit 2126_003
`
`

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`48678
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`Federal Register/Vol. 77, N0. 157 / Tuesday, August 14, 2012 /Rules and Regulations
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`(2) The request must be filed as
`provided in § 104.2 of this title.
`
`Dated: Iuly 16, 2012.
`David I. Kappos,
`Under Secretary of Commerce for Intelleetu a]
`Property and Director ofthe United States
`Patent and Trademark Office.
`[FR DOC. 2012-17900 Filed 8-13-12; 8:45 am]
`BILLING CODE 3510—16—P
`
`DMC Exhibit 2126_004