Disclaimers to avoid post-grant review: a warning

Statutory disclaimers to avoid institution at the Patent Trial and Appeal Board should be used cautiously, warns W Todd Baker of Golden Flag International Law Firm .

A post-grant review (PGR) petition can challenge the validity of a patent that contains at least one claim with priority after March 16, 2013, the date the America Invents Act (AIA) went into effect (AIA claims).

Many patents that are eligible for PGR, however, include claims with priority before this date (pre-AIA claims). So what happens when a patent owner statutorily disclaims all of its AIA claims, while maintaining the pre-AIA claims, in an effort to avoid PGR institution?

The PTAB answered this question for the first time in RetailMeNot v Honey Science, where it held in a non-precedential opinion that a disclaimer of all AIA claims does not defeat the patent’s eligibility for PGR (PGR2019-00060, Paper 17 at 14 [March 10, 2020]).

Background and covered business method review decisions

Before RetailMeNot, it was unclear whether this strategy would work. PGR petitions are an important part of the AIA, but because challengers need to identify as least one claim with post-March 2013 priority, only 321 petitions have been filed to date, compared to 12,277 inter partes review (IPR) petitions (see “Trial Statistics, Patent Trial and Appeal Board” [Sept 16, 2012 through Jun 30, 2021], available here and here).

This relatively small body of PGR case law did not provide sufficient guidance to answer the question at hand, so challengers have looked instead to institution decisions for a related type of PTAB challenge: covered business method review (CMBR).

In CBMR institution decisions, the PTAB has held that it must treat statutorily disclaimed claims as if they never existed when assessing eligibility for CBMR (see CBM2015-00171, paper 10 [citing Guinn v Kopf, 96 F.3d 1419, 1422, Fed Cir 1996]: “A statutory disclaimer under 35 USC § 253 has the effect of cancelling the claims from the patent and the patent is viewed as though the disclaimed claims had never existed in the patent.”); Commvault Systems v Realtime Data, CBM2017-00061, Paper 10 at 6-9 (PTAB Jan 18, 2018).  Consequently, patent owners were able to avoid CBMR altogether by pre-emptively disclaiming claims that recited a financial product or service before the PTAB’s institution decision (eg, Commvault Systems v Realtime Data, CBM2017-00061, Paper 10 at 6-9 [Jan 18, 2018]).

Although the PGR statute is different from the CBMR statute, at least one non-precedential PGR institution decision relied upon just such a CBMR decision in finding that “we must treat [disclaimed claims] as if they never existed in determining whether to institute a post-grant review.” (Axon Enterprise v Digital Ally, PGR2018-00052, Paper 8 at 10 [Oct 1, 2018] (citing Facebook v Skky, CBM2016-00091, Paper 12 at 11 [Sept 28, 2017]).

Although that decision ultimately instituted PGR based on a claim that the patent owner did not disclaim—and did not address the PGR statute—it nevertheless suggested that a disclaimer strategy might also work to avoid PGR institution.

In which case, a patentee would be incentivised to cancel post-AIA claims not central to its patent-enforcement strategy and thereby leave would-be challengers with only two options to attack the validity of the patent: (1) filing an IPR petition, which is limited to challenges under USC §§ 102 and 103 based on patents and printed publications (35 USC § 311); and/or (2) presenting an invalidity case in district court, which applies a relatively higher evidentiary burden (clear and convincing) than the PTAB (preponderance) to show invalidity (Microsoft v i4i Ltd. Partnership, 564 U.S. 91 [2011]; In re Baxter Int'l, 678 F.3d 1357, 1364 [Fed Cir 2012] (“in PTO reexaminations ‘the standard of proof—a preponderance of the evidence—is substantially lower than in a civil case’”).

The RetailMeNot v Honey Decision

The PTAB clarified the viability of this cancellation strategy in PGR2019-00060, where RetailMeNot challenged the validity of Honey’s U.S Patent No. 10,140,625 (“the ’625 Patent”). The ’625 Patent issued from an application filed on November 28, 2017, and that application, in turn, stemmed from three post-AIA applications that all claimed priority to a pre-AIA provisional application filed November 8, 2012. PGR2019-00060, Paper 1 at 8. To demonstrate PGR eligibility, RetailMeNot argued in its petition that claims 8 and 17 of the ’625 Patent were not entitled to priority based on the 2012 provisional application and could instead claim priority “no earlier than March 16, 2017,” making the ’625 Patent eligible for PGR.

One week before submitting the Patent Owner’s Preliminary Response (POPR), Honey filed a statutory disclaimer of claims 8 and 17 with the US Patent and Trademark Office (USPTO), and on the basis of that disclaimer, Honey argued during a teleconference with the PTAB panel that the ’625 Patent was no longer eligible for PGR.

RetailMeNot disagreed, arguing that the plain language of AIA § 3(n)(1)—defining PGR-eligible patents as those issuing from “any application for patent ... that contains or contained at any time” a claim with an effective filing date on or after March 16, 2013—means that disclaimer of post-AIA claims cannot remove PGR eligibility from a patent that would be eligible for PGR but for that disclaimer.

According to RetailMeNot, a patent with recently disclaimed post-AIA claims still comes from an application that, at one time, contained those claims. This is distinguishable from the CBMR statute, which does not include the “contained at any time” language and instead says that it “shall apply to any covered business method patent issued before, on, or after th[e] effective date.”

Thus, according to RetailMeNot, the CBMR statute, unlike the PGR statute, limits eligibility to patents as they exist at the time of an institution decision.

The PTAB panel agreed with RetailMeNot—despite finding no “persuasive authority addressing the issue presented”—and held that notwithstanding Honey’s disclaimer, the ’625 Patent remained eligible for PGR (PGR2019-00060, Paper 17 at 13-14; see also id at 34 (discretionarily denying institution on other grounds pursuant to § 325(d)).

The panel reasoned that “the filing of a statutory disclaimer of claims 8 and 17 [did] not act to remove the ’625 patent from eligibility for post-grant review because the ’237 application, from which the ’625 patent issued, necessarily contained these same claims during prosecution.”

The panel further found that it was not bound by Axon (PGR2018-00052) or Facebook (CBM2016-00091), neither of which considered the relevant statutory language in “AIA § 3(n)(1), at issue here, [which] explicitly considers claims that may have existed at some previous time.”

Moreover, the panel noted the potential adverse impact of allowing parties to cancel claims to avoid the PTAB’s PGR jurisdiction.

In such a system, a patent owner could disclaim the claims that formed the basis for examination under the AIA to obtain a reissue or re-examination under pre-AIA law. This would be contrary to Congressional intent, as the AIA was crafted to ensure that applicants are allowed “to flip their applications forward into the first-to-file system, but [are prevented] from flipping [them] backward into the first-to-invent universe once they are already subject to first-to-file rules.”

The panel also rejected Honey’s argument that 37 CFR § 42.207(e)—which states that “no post-grant review will be instituted based on disclaimed claims”—necessitated a different result (PGR2019-00060, Paper 17 at 14).

That provision, the panel reasoned, provides that disclaimed claims will not be substantively reviewed, but has no effect on the determination of PGR eligibility. And the panel further found that this interpretation of § 42.207(e) is consistent with the comment to the Final Rule provided by the USPTO that “Section 42.207(e) provides that the patent owner may file a statutory disclaimer under 35 USC 253(a) in compliance with § 1.321(a), disclaiming one or more claims in the patent, and no post-grant review will be instituted to review disclaimed claims.”

Finally, the panel rejected the holding of Guinn v Kopf that disclaimed claims are treated as though they never existed. The panel found that this “judicially created construct” does not extend “to those same claims as contained in the application for purposes of AIA § 3(n)(1)” (PGR2019-00060, Paper 17 at 13–14).

Conclusion

The PTAB’s RetailMeNot decision has thus clarified that disclaimed patent claims can be used to establish eligibility for PGR. Thus, even though the PTAB has yet to release a precedential decision on the issue, practitioners should avoid pursuing disclaimer or cancellation in an effort to circumvent PGR jurisdiction, particularly since doing so will unnecessarily relinquish claim scope.

Further, PTAB practitioners should understand that viable strategies for the recently phased out CBMR practice do not always apply to PGR practice (and vice versa) in view of their separate statutory bases.

This does not mean, however, that statutory disclaimers should be disregarded altogether as a defensive tool. Prior to institution, a statutory disclaimer can be used to remove weaker challenged claims from the proceeding, increasing the likelihood that stronger claims avoid institution at the PTAB.

Practitioners should therefore carefully consider whether a statutory disclaimer can be used to that end but be mindful not to relinquish claim scope in vain to avoid PGR eligibility.