United States: Senate Legislation Proposes Changes To Patent Eligibility And PTAB Proceedings

New legislation introduced in the U.S. Senate proposes changes to patent eligibility and inter partes review (IPR) and post-grant review (PGR) proceedings at the U.S. Patent and Trademark Office (USPTO or Office) before the Patent Trial and Appeal Board (PTAB).

Senators Thom Tillis (R-NC) and Chris Coons (D-DE) introduced the "Patent Eligibility Restoration Act of 2023," which proposes changes to patent eligibility under 35 U.S.C. § 101 by eliminating the current judicial exceptions and adding statutory exceptions to eligibility.

Senators Chris Coons (D-DE), Thom Tillis (R-NC), Richard Durbin (D-IL), and Mazie Hirono (D-HI) introduced the "Promoting and Respecting Economically Vital American Innovation Leadership Act" or "PREVAIL Act," which proposes changes to IPR and PGR proceedings, including creating a standing requirement for a petitioner to file a petition for review, limiting how often and when a petitioner can file, specifying when estoppel applies, specifying how the PTAB should treat final determinations by other federal tribunals, and setting the burden of proof that a petitioner must show for claims to be found unpatentable at final written decision.

Each of these acts is discussed below.

I. Patent Eligibility Restoration Act of 2023

The Patent Eligibility Restoration Act of 2023 lists several proposed findings of Congress, including that 35 U.S.C. § 101 "requires significant modification and clarification" and that "[e]fforts by judges of district courts and courts of appeals of the United States to apply the [judicial] exceptions [to 35 U.S.C. § 101] ... have led to extensive confusion and a lack of consistency." Based on these findings, the Act proposes eliminating current judicial exceptions and amending the patent eligibility section, § 101, with statutory exceptions by dividing § 101 into three subsections: § 101(a), which defines patent eligibility; § 101(b), which provides eligibility exceptions; and § 101(c), which includes information concerning determining eligibility.

The proposed language of § 101(a) would read:

Proposed subsection § 101(b)(1) provides five "eligibility exclusions," including: (A) a "mathematical formula that is not part of a claimed invention in a category described in subsection (a)"; (B) a "process that is substantially economic, financial, business, social, cultural, or artistic, even though not less than 1 step in the process refers to a machine or manufacture," unless "the process cannot practically be performed without the use of a machine or manufacture"; (C) a "process that — (i) is a mental process performed solely in the human mind; or (ii) occurs in nature wholly independent of, and prior to, any human activity"; (D) an "unmodified human gene, as that gene exists in the human body"; and (E) an "unmodified natural material, as that material exists in nature."

Proposed subsection § 101(b)(2) sets forth conditions clarifying that "a human gene or natural material [of § 101(b)(1)(D), (E)] shall not be considered to be unmodified" if it is "isolated, purified, enriched, or otherwise altered by human activity," or "otherwise employed in a useful invention or discovery."

Proposed subsection § 101(c) provides that eligibility shall be determined "by considering the claimed invention as a whole" and without regard to, among other things, "whether a claim element is known, conventional, routine, or naturally occurring"; "the state of the applicable art, as of the date on which the claimed invention is invented"; or "any other consideration under section 102, 103, or 112."

II. PREVAIL Act

The PREVAIL Act provides for several changes to IPR and PGR proceedings. The proposed changes to IPR proceedings are discussed here, but the PREVAIL Act generally provides for similar changes to PGR proceedings. Although several of the proposed provisions are summarized below, the Senators also released a Fact Sheet and section-by-section summary of the Act's provisions. The PREVAIL Act appears to seek to address some topics of the rules proposed for rulemaking in the USPTO's Advanced Notice of Proposed Rulemaking.

A. Standing and Real Parties in Interest

The PREVAIL Act proposes amending 35 U.S.C. § 311 to include new subsection (d) related to standing to file an IPR petition, which provides that:

A person may not file with the Office a petition to institute an inter partes review of a patent unless the person, or a real party in interest or a privy of the person, has been —

(A) sued for infringement of the patent; or

(B) charged with infringement of the patent.

The subsection clarifies that "charged with infringement" means "a real or substantial controversy regarding infringement of a patent [] such that the person would have declaratory judgment standing in Federal court." The subsection also provides a list of persons or entities that could be considered to be real parties in interest.

B. Multiple or Repetitive Proceedings

The PREVAIL Act also proposes amending 35 U.S.C. § 315 to include new subsection (c), titled "Single Forum," which would limit the types of validity challenges that can be brought or maintained in district court or the International Trade Commission (ITC) after institution. The proposed revisions would also limit the PTAB's ability to consider the types of validity challenges raised in the parallel proceeding when determining whether to institute IPR.

New subsection 315(c)(1) would provide that:

If an inter partes review is instituted challenging the validity of a patent, the petitioner, a real party in interest, or a privy of the petitioner may not file or maintain, in a civil action ... , or in a proceeding before the [ITC] ... , a claim, a counterclaim, or an affirmative defense challenging the validity of any claim of the patent on any ground described in section 311(b).

New subsection 315(c)(2) would provide that, "[i]n determining whether to institute [IPR] ... , the Director may not reject [an IPR] petition" because the petitioner (or a real party in interest, or a privity of the petitioner) has "fil[ed] or maintain[ed] a claim, a counterclaim, or an affirmative defense challenging the validity of the applicable patent" in a civil action or at the ITC.

The Act also proposes amending Section 315(e) to provide that parties notify the Director of other proceedings involving a challenged patent and also limits the Director's ability to institute IPR proceedings based on the same or substantially the same prior art or arguments previously presented to the Office. In particular, proposed Section 315(e)(2) provides:

"In determining whether to institute a proceeding under this chapter, the Director shall, unless the Director determines that the petitioner has demonstrated exceptional circumstances, reject any petition that presents prior art or an argument that is the same or substantially the same as prior art or an argument that previously was presented to the Office."

C. Estoppel

The PREVAIL Act also proposes changes to estoppel provisions that would limit the ability of a petitioner to file multiple proceedings at the Office and provides certain exceptions if a subsequent petition is based on the petitioner having been later charged with infringement of additional claims of the challenged patent.

The proposed amendments to § 315(f) provide that:

A petitioner that has previously requested an inter partes review of a claim in a patent ... , may not request or maintain another proceeding before the Office with respect to that patent on any ground that the petitioner raised or reasonably could have raised in the petition requesting or during the prior inter partes review ...."

The PREVAIL Act proposes exceptions to this estoppel, when, after the first petition was filed, the petitioner "is charged with infringement of additional claims of the patent," the subsequent petition requests IPR "of only the additional claims that the petitioner ... is later charged with infringing," and the petitioner requests joinder with the previous proceeding and meets certain criteria for joinder set forth in the Act. See proposed § 315(f)(1)(A)-(C).

The Act's estoppel proceedings also provide that any joined party "shall be estopped" under various subsections of Title 35 "to the same extent as if that person, real party in interest, or privy had been the first petitioner in that inter partes review." See proposed § 315(f)(2).

D. Federal Court and ITC Validity Determinations

The PREVAIL Act further proposes preventing the Office from instituting or maintaining an IPR when a district court or the ITC has entered a final judgment that decides a validity challenge to a patent claim challenged in the IPR under the grounds provided in 35 U.S.C. § 311(b) and where the petitioner is a party to the action.

In particular, proposed § 315(g) states that:

An inter partes review of a patent claim may not be instituted or maintained if, in a civil action ... or in a proceeding before the [ITC] ... in which the petitioner, a real party in interest, or a privy of the petitioner is a party, the court, or the [ITC], as applicable, has entered a final judgment that decides a challenge to the validity of the patent claim with respect to any ground described in section 311(b).

E. Additional Provisions

The PREVAIL Act proposes several other provisions, including:

1. Adjusting the evidentiary standards such that (a) for issued patents, the petitioner has "the burden of proving a proposition of unpatentability ... by clear and convincing evidence"; and (b) for substitute claims proposed by a patent owner by amendment, the petitioner has "the burden of persuasion, by a preponderance of the evidence, with respect to a proposition of unpatentability";
2. Providing certain claim construction standards to be used when a motion to amend is filed;
3. Amending the joinder provisions to provide a rebuttable presumption against joinder when the party seeking to join is time-barred and limiting a joined, time-barred party's ability to participate in IPR proceedings;
4. Specifying the types of discovery to include "deposition[s] of witnesses submitting affidavits or declarations," "evidence identifying the real parties in interest of the petitioner," and as "otherwise necessary in the interest of justice";
5. Setting a 45-day timeline for the Director to decide a request for rehearing after institution;
6. Setting a 90-day timeline for the Director to decide a request for rehearing after final written decision;
7. Setting a 120-day timeline for the Director to decide a request for rehearing after remand from appeal;
8. Setting certain procedures for review by the Director;
9. Providing that "[a] member of the Patent Trial and Appeal Board who participates in the decision to institute an inter partes review or a post-grant review of a patent shall be ineligible to hear the review"; and
10. For ex parte reexaminations:
    • Providing a time period to file that is similar to IPR proceedings, such that "[a]n ex parte reexamination may not be ordered if the request for reexamination is filed more than 1 year after the date on which the requester or a real party in interest or a privy of the requester is served with a complaint alleging infringement of the patent";
    • Limiting the Director's ability to institute ex parte reexamination when the "request that presents prior art or an argument that is the same or substantially the same as prior art or an argument that previously was presented to the Office"; and
    • Specifying certain persons considered a real party in interest of the requester.

Both the Patent Eligibility Restoration Act and the PREVAIL Act share some features of bills introduced by previous Congresses and topics of the recent rules proposed for rulemaking in the USPTO's advanced notice of proposed rulemaking. The bills' recent introductions do not provide much guidance yet as to whether Congress will act on them, but the recurrence of some themes from prior bills may indicate continued interest by Congress in IP legislation.

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