[Federal Register Volume 77, Number 28 (Friday, February 10, 2012)]
[Proposed Rules]
[Pages 7041-7060]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-2534]


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DEPARTMENT OF COMMERCE

Patent and Trademark Office

37 CFR Part 42

[Docket No. PTO-P-2011-0083]
RIN 0651-AC71


Changes to Implement Inter Partes Review Proceedings

AGENCY: United States Patent and Trademark Office, Commerce.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The United States Patent and Trademark Office (Office or 
USPTO) proposes new rules to implement the provisions of the Leahy-
Smith America Invents Act that create a new inter partes review 
proceeding to be conducted before the Patent Trial and Appeal Board 
(Board). These provisions of the Leahy-Smith America Invents Act will 
take effect on September 16, 2012, one year after the date of 
enactment, and apply to any patent issued before, on, or after the 
effective date.

DATES: The Office solicits comments from the public on this proposed 
rulemaking. Written comments must be received on or before April 10, 
2012 to ensure consideration.

ADDRESSES: Comments should be sent by electronic mail message over the 
Internet addressed to: [email protected]. Comments may 
also be submitted by postal mail addressed to: Mail Stop Patent Board, 
Director of the United States Patent and Trademark Office, P.O. Box 
1450, Alexandria, VA 22313-1450, marked to the attention of ``Lead 
Judge Michael Tierney, Inter partes Review Proposed Rules.''
    Comments may also be sent by electronic mail message over the 
Internet via the Federal eRulemaking Portal. See the Federal 
eRulemaking Portal Web site (http://www.regulations.gov) for additional 
instructions on providing comments via the Federal eRulemaking Portal.
    Although comments may be submitted by postal mail, the Office 
prefers to receive comments by electronic mail message over the 
Internet because sharing comments with the public is more easily 
accomplished. Electronic comments are preferred to be submitted in 
plain text, but also may be submitted in ADOBE[supreg] portable 
document format or MICROSOFT WORD[supreg] format. Comments not 
submitted electronically should be submitted on paper in a format that 
facilitates convenient digital scanning into ADOBE[supreg] portable 
document format.
    The comments will be available for public inspection at the Board 
of Patent Appeals and Interferences, currently located in Madison East, 
Ninth Floor, 600 Dulany Street, Alexandria, Virginia. Comments also 
will be available for viewing via the Office's Internet Web site 
(http://www.uspto.gov). Because comments will be made available for 
public inspection, information that the submitter does not desire to 
make public, such as an address or phone number, should not be included 
in the comments.

FOR FURTHER INFORMATION CONTACT: Michael Tierney, Lead Administrative 
Patent Judge, Scott Boalick, Lead Administrative Patent Judge, Robert 
Clarke, Administrative Patent Judge, and Lynn Kryza, Senior 
Administrator, Board of Patent Appeals and Interferences, by telephone 
at (571) 272-9797.

SUPPLEMENTARY INFORMATION: On September 16, 2011, the Leahy-Smith 
America Invents Act was enacted into law (Pub. L. 112-29, 125 Stat. 284 
(2011)). The purpose of the Leahy-Smith America Invents Act and these 
proposed regulations 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 
inter partes review proceedings. The USPTO is engaged in 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. The proposed 
rules would provide a set of rules relating to Board trial practice for 
inter partes review.
    Section 6 of the Leahy-Smith America Invents Act is entitled 
``POST-GRANT REVIEW PROCEEDINGS'' (Pub. L. 112-29, 125 Stat. 284, 299-
305 (2011)). Section 6(a) of the Leahy-Smith America Invents Act, 
entitled ``INTER PARTES REVIEW,'' amends chapter 31 of title 35, United 
States Code, also entitled ``INTER PARTES REVIEW.'' In particular, 
section 6(a) of the Leahy-Smith America Invents Act amends 35 U.S.C. 
311-318 and adds 35 U.S.C. 319.
    Section 6(a) of the Leahy-Smith America Invents Act amends 35 
U.S.C. 311, entitled ``Inter partes review.'' 35 U.S.C. 311(a), as 
amended, will provide that, subject to the provisions of chapter 31 of 
title 35, United States Code, a person who is not the owner of a patent 
may file a petition with the Office to institute an inter partes review 
of the patent. 35 U.S.C. 311(a), as amended, will also provide that the 
Director will establish, by regulation, fees to be paid by the person 
requesting the review, in such amounts as the Director determines to be 
reasonable, considering the aggregate costs of the review. 35 U.S.C. 
311(b), as amended, will provide that a petitioner in an inter partes 
review may request to cancel as unpatentable one or more claims of a 
patent only on a ground that could be raised under 35 U.S.C. 102 or 103 
and only on the basis of prior art consisting of patents or printed 
publications. 35 U.S.C. 311(c), as amended, will provide that a 
petition for inter partes review may be filed after the later of 
either: (1) the date that is nine months after the grant of a patent or 
issuance of a reissue of a patent; or (2) if a post-grant review is 
instituted under chapter 32 of title 35, United States Code, the date 
of the termination of that post-grant review.
    The grounds for seeking an inter partes review will be limited 
compared with post-grant review. The grounds for seeking inter partes 
review are limited to issues raised under 35 U.S.C. 102 or 103 and only 
on the basis of prior art consisting of patents or printed 
publications. In contrast, the grounds for seeking post-grant review 
include any ground that could be raised under 35 U.S.C. 282(b)(2) or 
(3). Such grounds for post-grant review include grounds that could be 
raised under 35 U.S.C. 102 or 103 including those based on prior

[[Page 7042]]

art consisting of patents or printed publications. Other grounds 
available for post-grant review include 35 U.S.C. 101 and 112, with the 
exception of compliance with the best mode requirement.
    Section 6(a) of the Leahy-Smith America Invents Act amends 35 
U.S.C. 312, entitled ``Petitions.'' 35 U.S.C. 312(a), as amended, will 
provide that a petition filed under 35 U.S.C. 311, as amended, may be 
considered only if certain conditions are met. First, the petition must 
be accompanied by payment of the fee established by the Director under 
35 U.S.C. 311, as amended. Second, the petition must identify all real 
parties in interest. Third, the petition must identify, in writing and 
with particularity, each claim challenged, the grounds on which the 
challenge to each claim is based, and the evidence that supports the 
grounds for the challenge to each claim, including: (A) Copies of 
patents and printed publications that the petitioner relies upon in 
support of the petition and (B) affidavits or declarations of 
supporting evidence and opinions, if the petitioner relies on expert 
opinions. Fourth, the petition must provide such other information as 
the Director may require by regulation. Fifth, the petitioner must 
provide copies of any of the documents required under paragraphs (2), 
(3), and (4) of 35 U.S.C. 312(a) to the patent owner or, if applicable, 
the designated representative of the patent owner. 35 U.S.C. 312(b), as 
amended, will provide that, as soon as practicable after the receipt of 
a petition under 35 U.S.C. 311, as amended, the Director will make the 
petition available to the public.
    Section 6(a) of the Leahy-Smith America Invents Act amends 35 
U.S.C. 313, entitled ``Preliminary response to petition.'' 35 U.S.C. 
313, as amended, will provide that, if an inter partes review petition 
is filed under 35 U.S.C. 311, as amended, within a time period set by 
the Director, the patent owner has the right to file a preliminary 
response to the petition that sets forth reasons why no inter partes 
review should be instituted based upon the failure of the petition to 
meet any requirement of chapter 31 of title 35, United States Code.
    Section 6(a) of the Leahy-Smith America Invents Act amends 35 
U.S.C. 314, entitled ``Institution of inter partes review.'' 35 U.S.C. 
314(a), as amended, will provide that the Director may not authorize an 
inter partes review to be instituted, unless the Director determines 
that the information presented in the petition filed under 35 U.S.C. 
311 and any response filed under 35 U.S.C. 313 shows that there is a 
reasonable likelihood that the petitioner would prevail with respect to 
at least one of the claims challenged in the petition. 35 U.S.C. 
314(b), as amended, will provide that the Director will determine 
whether to institute an inter partes review under chapter 31 of title 
35, United States Code, pursuant to a petition filed under 35 U.S.C. 
311, as amended, within three months after: (1) Receiving a preliminary 
response to the petition under 35 U.S.C. 313, as amended; or (2) if no 
such preliminary response is filed, the last date on which such 
response may be filed. 35 U.S.C. 314(c), as amended, will provide that 
the Director will notify the petitioner and patent owner, in writing, 
of the Director's determination under 35 U.S.C. 314(a), and will make 
the notice available to the public as soon as is practicable. 35 U.S.C. 
314(c), as amended, will also provide that the notice will include the 
date on which the review will commence. 35 U.S.C. 314(d), as amended, 
will provide that the determination by the Director whether to 
institute an inter partes review under 35 U.S.C. 314 will be final and 
nonappealable.
    Section 6(a) of the Leahy-Smith America Invents Act amends 35 
U.S.C. 315, entitled ``Relation to other proceedings or actions.'' 35 
U.S.C. 315(a)(1), as amended, will provide that an inter partes review 
may not be instituted if, before the date on which the petition for 
review is filed, the petitioner or real party in interest filed a civil 
action challenging the validity of a claim of the patent. 35 U.S.C. 
315(a)(2), as amended, will provide for an automatic stay of a civil 
action brought by the petitioner or real party in interest challenging 
the validity of a claim of the patent and filed on or after the date on 
which the petition for inter partes review was filed, until certain 
specified conditions are met. 35 U.S.C. 315(a)(3), as amended, will 
provide that a counterclaim challenging the validity of a claim of a 
patent does not constitute a civil action challenging the validity of a 
claim of a patent for purposes of 35 U.S.C. 315(a), as amended.
    35 U.S.C. 315(b), as amended, will provide that an inter partes 
review may not be instituted if the petition requesting the proceeding 
is filed more than one year after the date on which the petitioner, 
real party in interest, or privy of the petitioner is served with a 
complaint alleging infringement of the patent. However, the time 
limitation set forth in 35 U.S.C. 315(b), as amended, will not apply to 
a request for joinder under 35 U.S.C. 315(c), as amended.
    35 U.S.C. 315(c), as amended, will provide that if the Director 
institutes an inter partes review, the Director may, in the Director's 
discretion, join as a party to that inter partes review any person who 
properly files a petition under 35 U.S.C. 311 that the Director, after 
receiving a preliminary response under 35 U.S.C. 313 or the expiration 
of the time for filing such a response, determines warrants the 
institution of an inter partes review under 35 U.S.C. 314.
    35 U.S.C. 315(d), as amended, will provide that, notwithstanding 35 
U.S.C. 135(a), as amended, 251, and 252, and chapter 30 of title 35, 
United States Code, during the pendency of an inter partes review, if 
another proceeding or matter involving the patent is before the Office, 
the Director may determine the manner in which the inter partes review 
or other proceeding or matter may proceed, including providing for 
stay, transfer, consolidation, or termination of any such matter or 
proceeding.
    35 U.S.C. 315(e)(1), as amended, will provide that the petitioner 
in an inter partes review of a claim in a patent under chapter 31 of 
title 35, United States Code, that results in a final written decision 
under 35 U.S.C. 318(a), or the real party in interest or privy of the 
petitioner, may not request or maintain a proceeding before the Office 
with respect to that claim on any ground that the petitioner raised or 
reasonably could have raised during that inter partes review. 35 U.S.C. 
315(e)(2), as amended, will provide for estoppel against an inter 
partes review petitioner, or the real party in interest or privy of the 
petitioner, in certain civil actions and certain other proceedings 
before the International Trade Commission if that inter partes review 
results in a final written decision under 35 U.S.C. 318(a).
    Section 6(a) of the Leahy-Smith America Invents Act amends 35 
U.S.C. 316, entitled ``Conduct of inter partes review.'' 35 U.S.C. 
316(a), as amended, will provide that the Director will prescribe 
regulations: (1) Providing that the file of any proceeding under 
chapter 31 of title 35, United States Code, will be made available to 
the public, except that any petition or document filed with the intent 
that it be sealed will, if accompanied by a motion to seal, be treated 
as sealed pending the outcome of the ruling on the motion; (2) setting 
forth the standards for the showing of sufficient grounds to institute 
a review under 35 U.S.C. 314(a); (3) establishing procedures for the 
submission of supplemental information after the petition is filed; (4) 
establishing and governing inter partes review under chapter 31 of 
title 35, United States

[[Page 7043]]

Code, and the relationship of such review to other proceedings under 
title 35, United States Code; (5) setting forth standards and 
procedures for discovery of relevant evidence, including that such 
discovery will be limited to: (A) The deposition of witnesses 
submitting affidavits or declarations, and (B) what is otherwise 
necessary in the interest of justice; (6) prescribing sanctions for 
abuse of discovery, abuse of process, or any other improper use of the 
proceeding, such as to harass or to cause unnecessary delay or an 
unnecessary increase in the cost of the proceeding; (7) providing for 
protective orders governing the exchange and submission of confidential 
information; (8) providing for the filing by the patent owner of a 
response to the petition under 35 U.S.C. 313, as amended, after an 
inter partes review has been instituted, and require that the patent 
owner file with such response, through affidavits or declarations, any 
additional factual evidence and expert opinions on which the patent 
owner relies in support of the response; (9) setting forth standards 
and procedures for allowing the patent owner to move to amend the 
patent under 35 U.S.C. 316(d), as amended, to cancel a challenged claim 
or propose a reasonable number of substitute claims, and ensure that 
any information submitted by the patent owner in support of any 
amendment entered under 35 U.S.C. 316(d), as amended, is made available 
to the public as part of the prosecution history of the patent; (10) 
providing either party with the right to an oral hearing as part of the 
proceeding; (11) requiring that the final determination in an inter 
partes review will be issued not later than one year after the date on 
which the Director notices the institution of a review under chapter 31 
of title 35, United States Code, except that the Director may, for good 
cause shown, extend the one-year period by not more than six months, 
and may adjust the time periods in this paragraph in the case of 
joinder under 35 U.S.C. 315(c), as amended; (12) setting a time period 
for requesting joinder under 35 U.S.C. 315(c), as amended; and (13) 
providing the petitioner with at least one opportunity to file written 
comments within a time period established by the Director.
    35 U.S.C. 316(b), as amended, will provide that in prescribing 
regulations under 35 U.S.C. 316, the Director will consider the effect 
of any such regulation on the economy, the integrity of the patent 
system, the efficient administration of the Office, and the ability of 
the Office to complete timely proceedings instituted under chapter 31 
of title 35, United States Code.
    35 U.S.C. 316(c), as amended, will provide that the Patent Trial 
and Appeal Board will, in accordance with 35 U.S.C. 6, conduct each 
inter partes review instituted under chapter 31 of title 35, United 
States Code.
    35 U.S.C. 316(d)(1), as amended, will provide that during an inter 
partes review instituted under chapter 31 of title 35, United States 
Code, the patent owner may file one motion to amend the patent in one 
or more of the following ways: (A) Cancel any challenged patent claim; 
and (B) for each challenged claim, propose a reasonable number of 
substitute claims. 35 U.S.C. 316(d)(2), as amended, provides that 
additional motions to amend may be permitted upon the joint request of 
the petitioner and the patent owner to materially advance the 
settlement of a proceeding under 35 U.S.C. 317, as amended, or as 
permitted by regulations prescribed by the Director. 35 U.S.C. 
316(d)(3), as amended, will provide that an amendment under 35 U.S.C. 
316(d) may not enlarge the scope of the claims of the patent or 
introduce new matter.
    35 U.S.C. 316(e), as amended, will provide that in an inter partes 
review instituted under chapter 31 of title 35, United States Code, the 
petitioner has the burden of proving a proposition of unpatentability 
by a preponderance of the evidence.
    Section 6(a) of the Leahy-Smith America Invents Act amends 35 
U.S.C. 317, entitled ``Settlement.'' 35 U.S.C. 317(a), as amended, will 
provide that an inter partes review instituted under chapter 31 of 
title 35, United States Code, will be terminated with respect to any 
petitioner upon the joint request of the petitioner and the patent 
owner, unless the Office has decided the merits of the proceeding 
before the request for termination is filed. 35 U.S.C. 317(a), as 
amended, will also provide that if the inter partes review is 
terminated with respect to a petitioner under 35 U.S.C. 317, no 
estoppel under 35 U.S.C. 315(e), as amended, will attach to the 
petitioner, or to the real party in interest or privy of the 
petitioner, on the basis of that petitioner's institution of that inter 
partes review. 35 U.S.C. 317(a), as amended, will further provide that 
if no petitioner remains in the inter partes review, the Office may 
terminate the review or proceed to a final written decision under 35 
U.S.C. 318(a).
    35 U.S.C. 317(b), as amended, will provide that any agreement or 
understanding between the patent owner and a petitioner, including any 
collateral agreements referred to in the agreement or understanding, 
made in connection with, or in contemplation of, the termination of an 
inter partes review under 35 U.S.C. 317 will be in writing and a true 
copy of such agreement or understanding will be filed in the Office 
before the termination of the inter partes review as between the 
parties. 35 U.S.C. 317(b), as amended, will also provide that at the 
request of a party to the proceeding, the agreement or understanding 
will be treated as business confidential information, will be kept 
separate from the file of the involved patents, and will be made 
available only to Federal Government agencies on written request, or to 
any person on a showing of good cause.
    Section 6(a) of the Leahy-Smith America Invents Act amends 35 
U.S.C. 318, entitled ``Decision of the Board.'' 35 U.S.C. 318(a), as 
amended, will provide that if an inter partes review is instituted and 
not dismissed under chapter 31 of title 35, United States Code, the 
Patent Trial and Appeal Board will issue a final written decision with 
respect to the patentability of any patent claim challenged by the 
petitioner and any new claim added under 35 U.S.C. 316(d). 35 U.S.C. 
318(b), as amended, will provide that if the Patent Trial and Appeal 
Board issues a final written decision under 35 U.S.C. 318(a) and the 
time for appeal has expired or any appeal has terminated, the Director 
will issue and publish a certificate canceling any claim of the patent 
finally determined to be unpatentable, confirming any claim of the 
patent determined to be patentable, and incorporating in the patent by 
operation of the certificate any new or amended claim determined to be 
patentable. 35 U.S.C. 318(c), as amended, will provide that any 
proposed amended or new claim determined to be patentable and 
incorporated into a patent following an inter partes review under 
chapter 31 of title 35, United States Code, will have the same effect 
as that specified in 35 U.S.C. 252 for reissued patents on the right of 
any person who made, purchased, or used within the United States, or 
imported into the United States, anything patented by such proposed 
amended or new claim, or who made substantial preparation therefor, 
before the issuance of a certificate under 35 U.S.C. 318(b). 35 U.S.C. 
318(d), as amended, will provide that the Office will make available to 
the public data describing the length of time between the institution 
of, and the issuance of a final written decision under 35 U.S.C. 
318(a), for each inter partes review.
    Section 6(a) of the Leahy-Smith America Invents Act adds 35 U.S.C. 
319, entitled ``Appeal.'' 35 U.S.C. 319 will

[[Page 7044]]

provide that a party dissatisfied with the final written decision of 
the Patent Trial and Appeal Board under 35 U.S.C. 318(a), as amended, 
may appeal the decision pursuant to 35 U.S.C. 141-144. 35 U.S.C. 319 
will also provide that any party to the inter partes review will have 
the right to be a party to the appeal.
    Section 6(c) of the Leahy-Smith America Invents Act is entitled 
``REGULATIONS AND EFFECTIVE DATE.'' Section 6(c)(1) of the Leahy-Smith 
America Invents Act provides that the Director will, not later than the 
date that is one year after the date of the enactment of the Leahy-
Smith America Invents Act, issue regulations to carry out chapter 31 of 
title 35, United States Code, as amended by section 6(a) of the Leahy-
Smith America Invents Act.
    Section 6(c)(2)(A) of the Leahy-Smith America Invents Act provides 
that the amendments made by section 6(a) of the Leahy-Smith America 
Invents Act will take effect upon the expiration of the one-year period 
beginning on the date of the enactment of the Leahy-Smith America 
Invents Act, and will apply to any patent issued before, on, or after 
that effective date.
    Section 6(c)(2)(B) of the Leahy-Smith America Invents Act provides 
that the Director may impose a limit on the number of inter partes 
reviews that may be instituted under chapter 31 of title 35, United 
States Code, during each of the first four one-year periods in which 
the amendments made by section 6(a) of the Leahy-Smith America Invents 
Act are in effect, if such number in each year equals or exceeds the 
number of inter partes reexaminations that are ordered under chapter 31 
of title 35, United States Code, in the last fiscal year ending before 
the effective date of the amendments made by section 6(a) of the Leahy-
Smith America Invents Act.
    Section 6(c)(3) Leahy-Smith America Invents Act provides a 
transition provision for the granting, conduct, and termination of 
inter partes reexaminations on or after the effective date of the 
Leahy-Smith America Invents Act. The Office in a separate rulemaking 
revised the rules governing inter partes reexamination to implement the 
transition provision that changes the standard for granting a request 
for inter partes reexamination, and to reflect the termination of inter 
partes reexamination effective September 16, 2012. See Revision of 
Standard for Granting an Inter partes Reexamination Request, 76 FR 
59055 (Sept. 23, 2011) (final rule).

Discussion of Specific Rules

    This notice proposes new rules to implement the provisions of the 
Leahy-Smith America Invents Act for instituting and conducting inter 
partes review proceedings before the Patent Trial and Appeal Board 
(Board). As previously discussed, 35 U.S.C. 316(a)(4), as amended by 
the Leahy-Smith America Invents Act, provides that the Director will 
prescribe regulations establishing and governing inter partes review 
and the relationship of the review to other proceedings under title 35 
of the United States Code. In particular, this notice proposes to add a 
new subpart B to 37 CFR part 42 to provide rules specific to inter 
partes review.
    Additionally, the Office in a separate rulemaking is proposing to 
add part 42, (RIN 0651-AC70) including subpart A, that would include a 
consolidated set of rules relating to Board trial practice. More 
specifically, the proposed subpart A of part 42 would set forth the 
policies, practices, and definitions common to all trial proceedings 
before the Board. The proposed rules in the instant notice and 
discussion below may reference the proposed rules in subpart A of part 
42. Furthermore, the Office in separate rulemakings is proposing to add 
a new subpart C to 37 CFR part 42 (RIN 0651-AC72) to provide rules 
specific to post-grant review, a new subpart D to 37 CFR part 42 (RIN 
0651-AC73; RIN 0651-AC75) to provide rules specific to the transitional 
program for covered business method patents, and a new subpart E to 37 
CFR part 42 (RIN 0651-AC74) to provide rules specific to derivation.
    Title 37 of the Code of Federal Regulations, Chapter I, Part 42, 
Subpart B, entitled ``Inter partes Review'' is proposed to be added as 
follows:
    Section 42.100: Proposed Sec.  42.100 would set forth policy 
considerations for inter partes review proceedings.
    Proposed Sec.  42.100(a) would provide that an inter partes review 
is a trial and subject to the rules set forth in subpart A of title 42, 
Code of Federal Regulations.
    Proposed Sec.  42.100(b) would provide that a claim in an unexpired 
patent shall be given its broadest reasonable construction in light of 
the specification in which it appears. This proposed rule would be 
consistent with longstanding established principles of claim 
construction before the Office. In re Am. Acad. of Sci. Tech Ctr., 367 
F.3d 1359, 1364 (Fed. Cir. 2004); In re Yamamoto, 740 F.2d 1569, 1571 
(Fed. Cir. 1984). As explained in Yamamoto, a party's ability to amend 
claims to avoid prior art distinguishes Office proceedings from 
district court proceedings and justifies the difficult standard for 
claim interpretation. Yamamoto, 740 F.2d at 1572.
    Proposed Sec.  42.100(c) would provide a one-year time frame for 
administering the proceeding after institution, with up to a six-month 
extension for good cause. This proposed rule is consistent with 35 
U.S.C. 316(a)(11), as amended, which sets forth statutory time frames 
for inter partes review.
    Section 42.101: Proposed Sec.  42.101 would provide who may file a 
petition for inter partes review.
    Proposed Sec.  42.101(a) would provide that a party or real party 
in interest must file a petition prior to the filing of a civil action 
challenging the validity of a claim of the patent. The proposed rule 
would follow the statutory language of 35 U.S.C. 315(a), as amended, 
which will provide that inter partes reviews are barred by prior filing 
of such a civil action.
    Proposed Sec.  42.101(b) would provide that a petition may not be 
filed more than one year after the date on which the petitioner, the 
petitioner's real party in interest, or a privy of the petitioner was 
served with a complaint alleging infringement. The proposed rule would 
follow the statutory language of 35 U.S.C. 315(b), as amended, which 
will provide a one-year time limit after date of service of complaint.
    Proposed Sec.  42.101(c) would provide that a person may not file a 
petition where the petitioner, the petitioner's real party in interest, 
or a privy of the petitioner is estopped from challenging the claims. 
The proposed rule is consistent with 35 U.S.C. 315(e)(1), as amended, 
which will provide for estoppel arising from a final written decision 
in an inter partes review. The proposed rule is also consistent with 35 
U.S.C. 325(e)(1), which will provide for estoppel arising from a final 
written decision in a post-grant review or a covered business method 
review.
    Section 42.102: Proposed Sec.  42.102 would provide a timeliness 
requirement for filing an inter partes review petition.
    Proposed Sec.  42.102(a) would provide that a petition for inter 
partes review must be filed consistent with the requirements set forth 
in 35 U.S.C. 311(c), as amended. Petitions requesting the institution 
of an inter partes review that are filed nine months after the grant of 
the patent or of the issuance of the reissue patent, but prior to the 
institution of a post-grant review would be considered timely filed. 
Additionally, petitions filed after termination of a post-grant review 
would be considered timely.

[[Page 7045]]

    Proposed Sec.  42.102(b) would provide that the Director may set a 
limit on the number of inter partes reviews that may be instituted 
during each of the first four one-year periods after inter partes 
review takes effect. This proposed rule is consistent with section 
6(c)(2)(B) of the Leahy-Smith America Invents Act (Pub. L. 112-29, 125 
Stat. 284, 304 (2011)), which provides for graduated implementation of 
inter partes reviews. The Office however, does not expect to limit the 
number of petitions at this time.
    Section 42.103: Proposed Sec.  42.103 would set forth the fee 
requirement for filing an inter partes review petition.
    Proposed Sec.  42.103(a) would provide that a fee under Sec.  
42.15(a) must accompany a petition for inter partes review.
    Proposed Sec.  42.103(b) would provide that no filing date will be 
accorded until full payment is received. This proposed rule is 
consistent with 35 U.S.C. 312(a)(1), as amended, which will provide 
that a petition may only be considered if the petition is accompanied 
by the payment of the fee established by the Director.
    Section 42.104: Proposed Sec.  42.104 would provide for the content 
of petitions to institute an inter partes review. The proposed rule is 
consistent with 35 U.S.C 312(a)(4), as amended, which allows the 
Director to prescribe regulations concerning the information provided 
with the petition.
    Proposed Sec.  42.104(a) would provide that a petition must 
demonstrate that the petitioner has standing. To establish standing, a 
petitioner, at a minimum, must certify that the patent is available for 
inter partes review and that the petitioner is not barred or estopped 
from requesting an inter partes review. This proposed requirement would 
attempt to ensure that a party has standing to file the inter partes 
review and would help prevent spuriously-instituted inter partes 
reviews. Facially-improper standing would be a basis for denying the 
petition without proceeding to the merits of the petition.
    Proposed Sec.  42.104(b) would require that the petition identify 
the precise relief requested for the claims challenged. Specifically, 
the proposed rule would require that the petition identify each claim 
being challenged, the specific grounds on which each claim is 
challenged, how the claims are to be construed, why the claims as 
construed are unpatentable under the identified grounds, and the 
exhibit numbers of the evidence relied upon with a citation to the 
portion of the evidence that is relied upon to support the challenge. 
This proposed rule is consistent with 35 U.S.C. 312(a)(3), as amended, 
which requires that the petition identify, in writing and with 
particularity, each claim challenged, the grounds on which the 
challenge to each claim is based, and the evidence supporting the 
challenge. It is also consistent with 35 U.S.C. 312(a)(4), as amended, 
which allows the Director to require additional information as part of 
the petition. The proposed rule would provide an efficient means for 
identifying the legal and factual basis for satisfying the threshold 
for instituting inter partes review and would provide the patent owner 
with a minimum level of notice as to the basis for the challenge to the 
claims.
    Proposed Sec.  42.104(c) would provide that a petitioner seeking to 
correct clerical or typographical mistakes in a petition could file a 
motion to correct the mistakes. The proposed rule would also provide 
that the grant of such a motion would not alter the filing date of the 
petition.
    Section 42.105: Proposed Sec.  42.105 would provide petition and 
exhibit service requirements in addition to the service requirements of 
Sec.  42.6.
    Proposed Sec.  42.105(a) would require that the petitioner serve 
the patent owner at the correspondence address of record for the 
subject patent and permits service at any other address known to the 
petitioner as likely to effect service as well. Once a patent has 
issued, communications between the Office and the patent owner often 
suffer. Ray v. Lehman, 55 F.3d 606 (Fed. Cir. 1995) (patentee's failure 
to maintain correspondence address contributed to failure to pay 
maintenance fee and therefore expiration of the patent). While the 
proposed rule requires service at the correspondence address of record 
in the patent, the petitioner will already be in communication with the 
patent owner in many cases at a better service address than the 
correspondence address of record for the subject patent.
    Proposed Sec.  42.105(b) would address the situation where service 
to the official correspondence address of the patent does not result in 
actual service on the patent owner. When the petitioner becomes aware 
of a service problem, the petitioner would be required to promptly 
advise the Board of the problem. The petitioner might then be required 
to certify that it is not aware of any better address for service of 
the patent owner. The Board may authorize other forms of service, such 
as service by publication in the Official Gazette of the United States 
Patent and Trademark Office or Federal Register.
    Section 42.106: Proposed Sec.  42.106 would provide for the filing 
date requirements of an inter partes review petition.
    Proposed Sec.  42.106(a) would provide requirements for a complete 
petition. 35 U.S.C. 312(a), as amended, states that a petition may only 
be considered when the petition identifies all the real parties in 
interest, when a copy of the petition is provided to the patent owner 
or the owner's representative and the petition is accompanied by the 
fee established by the Director. Consistent with the statute, the 
proposed rule would require that a petition to institute an inter 
partes review will not be accorded a filing date until the petition: 
(1) Complies with Sec.  42.104; (2) is served upon the patent owner at 
the correspondence address of record provided in Sec.  42.105(a); and 
(3) is accompanied by the fee set forth in Sec.  42.15(a).
    Proposed Sec.  42.106(b) would provide petitioners a one month time 
frame to correct defective petitions to institute an inter partes 
review. The proposed rule is consistent with the requirement of 35 
U.S.C. 312(a), as amended, that the Board may not consider a petition 
that fails to meet the statutory requirements for a petition. In 
determining whether to grant a filing date, the Board would review the 
petitions for procedural compliance. Where a procedural defect is 
noted, e.g., failure to state the claims being challenged, the Board 
would notify the petitioner that the petition was incomplete and 
identify any non-compliance issues.
    Section 42.107: Proposed Sec.  42.107 would set forth the procedure 
in which the patent owner may file a preliminary response.
    Proposed Sec.  42.107(a) would provide that the patent owner may 
file a preliminary response to the petition. The rule is consistent 
with 35 U.S.C. 313, as amended, which provides for such a response.
    Proposed Sec.  42.107(b) would provide that the due date for the 
preliminary response to petition is no later than two months from the 
date of the notice that the request to institute an inter partes review 
has been granted a filing date. This proposed rule is consistent with 
35 U.S.C. 313, as amended, which provides that the Director shall set a 
time period for filing the preliminary patent owner response.
    Under 35 U.S.C. 314(b), as amended, the Board has three months from 
the filing of the preliminary patent owner response, or three months 
from the date such a response was due, to determine whether to 
institute the review. A patent owner seeking a shortened period for 
such a determination may wish to file a preliminary patent owner 
response well before the date the preliminary

[[Page 7046]]

patent owner response is due, including filing a paper stating that no 
preliminary patent owner response will be filed. No adverse inferences 
will be drawn where a patent owner elects not to file a response or 
elects to waive the response.
    Proposed Sec.  42.107(c) would provide that the preliminary patent 
owner response would not be allowed to present new testimony evidence, 
for example, expert witness testimony on patentability. 35 U.S.C. 313, 
as amended, will provide that a preliminary patent owner response set 
forth reasons why no inter partes review should be instituted. In 
contrast, 35 U.S.C. 316(a)(8), as amended, provides for a patent owner 
response after institution and requires the presentation, through 
affidavits or declarations, of any additional factual evidence and 
expert opinions on which the patent owner relies in support of the 
response. The difference in statutory language demonstrates that 35 
U.S.C. 313, as amended, does not require the presentation of evidence 
in the form of testimony in support of a preliminary patent owner 
response and the proposed rule reflects this distinction. In certain 
instances, however, a patent owner may be granted additional discovery 
before filing their preliminary response and submit any testimonial 
evidence obtained through the discovery. For example, additional 
discovery may be authorized where patent owner raises sufficient 
concerns regarding the petitioner's certification of standing.
    Proposed Sec.  42.107(d) would provide that the preliminary patent 
owner response would not be allowed to include any amendment. See 
proposed Sec.  42.121 for filing a motion to amend the patent after an 
inter partes review has been instituted.
    Proposed Sec.  42.107(e) would provide that the patent owner may 
file a statutory disclaimer under 35 U.S.C. 253(a) in compliance with 
Sec.  1.321(a), disclaiming one or more claims in the patent, and no 
inter partes review will be instituted based on disclaimed claims.
    Section 42.108: Proposed Sec.  42.108 would provide for the 
institution of an inter partes review.
    35 U.S.C. 314(a), as amended, states that the Director may not 
authorize an inter partes review to be instituted, unless the Director 
determines that the information in the petition, and any preliminary 
patent owner response, shows that there is a reasonable likelihood of 
success that the petitioner would prevail with respect to at least one 
of the claims challenged in the petition. Proposed Sec.  42.108 is 
consistent with this statutory requirement and identifies how the Board 
may authorize such a review to proceed.
    Proposed Sec.  42.108(a) would provide that the Board may authorize 
the review to proceed on all or some of the challenged claims and on 
all or some of the grounds of unpatentability asserted for each claim. 
Specifically, in instituting the review, the Board would authorize the 
review to proceed on the challenged claims for which the threshold 
requirements for the proceeding have been met. The Board will identify 
which of the grounds the review will proceed upon on a claim-by-claim 
basis. Any claim or issue not included in the authorization for review 
is not part of the review. The Office intends to publish a notice of 
the institution of an inter partes review in the Official Gazette.
    Proposed Sec.  42.108(b) would provide that the Board, prior to 
institution of a review, may deny some or all grounds for 
unpatentability on some or all of the challenged claims. This proposed 
rule is consistent with the efficient administration of the Office, 
which is a consideration in prescribing inter partes review regulations 
under 35 U.S.C. 316(b), as amended.
    Proposed Sec.  42.108(c) would provide that the institution is 
based on a reasonable likelihood standard and is consistent with the 
requirements of 35 U.S.C. 314(a), as amended. A reasonable likelihood 
standard is a somewhat flexible standard that allows the judge room for 
the exercise of judgment.
    Section 42.120: Proposed Sec.  42.120 would set forth the procedure 
in which the patent owner may file a patent owner response.
    Proposed Sec.  42.120(a) would provide for a patent owner response 
and is consistent with the requirements of 35 U.S.C. 316(a)(8), as 
amended.
    Proposed Sec.  42.120(b) would provide that if no time for filing a 
patent owner response to a petition is provided in a Board order, the 
default time for filing the response would be two months from the date 
the inter partes review was instituted. The Board's experience with 
patent owner responses is that two months provides a sufficient amount 
of time to respond in a typical case, especially as the patent owner 
would already have been provided two months to file a preliminary 
patent owner response prior to institution of the inter partes review. 
Additionally, the proposed time for response is consistent with the 
requirement that the trial be conducted such that a final decision is 
rendered within one year of the institution of the review. 35 U.S.C. 
316(a)(11), as amended.
    Section 42.121: Proposed Sec.  42.121 would provide a procedure for 
a patent owner to file motions to amend the patent.
    Proposed Sec.  42.121(a) would make it clear that the first motion 
to amend need not be authorized by the Board. If the motion complies 
with the timing and procedural requirements, the motion would be 
entered. Additional motions to amend would require prior Board 
authorization. All motions to amend, even if entered, will not 
automatically result in entry of the proposed amendment into the 
patent.
    The requirement to consult the Board reflects the Board's need to 
regulate the substitution of claims and the amendment of the patent to 
control unnecessary proliferation of issues and abuses. The proposed 
rule aids in the efficient administration of the Office and the timely 
completion of the review under 35 U.S.C. 316(b), as amended.
    Proposed Sec.  42.121(b) would provide that a motion to amend the 
claims must set forth: (1) The support in the original disclosure of 
the patent for each claim that is added or amended, and (2) the support 
in an earlier filed disclosure for each claim for which benefit of the 
filing date of the earlier filed disclosure is sought.
    Proposed Sec.  42.121(c) would provide that a motion to amend the 
claims will not be authorized where the amendment does not respond to 
the ground of unpatentability involved in the trial or seeks to enlarge 
the scope of the claims or introduce new matter. The proposed rule aids 
the efficient administration of the Office and the timely completion of 
the review under 35 U.S.C. 316(b), as amended, and also is consistent 
with 35 U.S.C. 316(d)(3), as amended, which prohibits enlarging the 
scope of the claims or introducing new matter.
    Under the proposed rules, a patent owner may request filing more 
than one motion to amend its claims during the course of the 
proceeding. Additional motions to amend may be permitted upon a 
demonstration of good cause by the patent owner. In considering whether 
good cause is shown, the Board will take into account how the filing of 
such motions would impact the timely completion of the proceeding and 
the additional burden placed on the petitioner. Specifically, belated 
motions to amend may cause the integrity and efficiency of the review 
to suffer as the petitioner may be required to devote significant time 
and resources on claims that are of constantly changing scope. Further, 
due to time constraints, motions to amend late in the process may not 
provide a petitioner a full and fair opportunity to respond to the 
newly

[[Page 7047]]

presented subject matter. Accordingly, the longer a patent owner waits 
to request authorization to file an additional motion to amend, the 
higher the likelihood the request will be denied. Similarly, motions to 
amend may be permitted upon a joint request of the petitioner and the 
patent owner to advance settlement where the motion does not jeopardize 
the ability of the Office to timely complete the proceeding.
    Section 42.122: Proposed Sec.  42.122 would prescribe a rule 
consistent with the requirements of 35 U.S.C. 315(d), as amended, 
regarding multiple proceedings involving the subject patent. When there 
is a question of a stay concerning a matter for which a statutory time 
period is running in one of the proceedings, it is expected that the 
Director would be consulted prior to issuance of a stay, given that the 
stay would impact the ability of the Office to meet the statutory 
deadline. For example, it is expected that the Board would consult the 
Director prior to the issuance of a stay in an ex parte reexamination 
proceeding where the three month statutory time period under 35 U.S.C. 
303 is running.
    Section 42.123: Proposed Sec.  42.123 would provide for the filing 
of supplemental information. 35 U.S.C. 316(a)(3), as amended, provides 
that the Director will establish regulations establishing procedures 
for filing supplemental information after the petition is filed. 35 
U.S.C. 314(a), as amended, provides that the institution of an inter 
partes review is based upon the information filed in the petition under 
35 U.S.C. 311 and any response filed under 35 U.S.C. 313, as amended. 
As the institution of the inter partes review is not based upon 
supplemental information, the proposed rule would provide that motions 
identifying supplemental information be filed after the institution of 
the inter partes review.

Rulemaking Considerations

    A. Administrative Procedure Act (APA): This notice proposes rules 
of practice concerning the procedure for requesting an inter partes 
review, and the trial process after initiation of such a review. The 
changes being proposed in this notice do not change the substantive 
criteria of patentability. These proposed changes involve rules of 
agency practice and procedure and/or interpretive rules. See Bachow 
Commc'ns Inc. v. FCC, 237 F.3d 683, 690 (DC Cir. 2001) (rules governing 
an application process are procedural under the Administrative 
Procedure Act); Inova Alexandria Hosp. v. Shalala, 244 F.3d 342, 350 
(4th Cir. 2001) (rules for handling appeals were procedural where they 
did not change the substantive standard for reviewing claims); Nat'l 
Org. of Veterans' Advocates v. Sec'y of Veterans Affairs, 260 F.3d 
1365, 1375 (Fed. Cir. 2001) (rule that clarifies interpretation of a 
statute is interpretive).
    Accordingly, prior notice and opportunity for public comment are 
not required pursuant to 5 U.S.C. 553(b) or (c) (or any other law), and 
thirty-day advance publication is not required pursuant to 5 U.SC. 
553(d) (or any other law). See Cooper Techs. Co. v. Dudas, 536 F.3d 
1330, 1336-37 (Fed. Cir. 2008) (stating that 5 U.S.C. 553, and thus 35 
U.S.C. 2(b)(2)(B), does not require notice and comment rule making for 
``interpretative rules, general statements of policy, or rules of 
agency organization, procedure, or practice'') (quoting 5 U.S.C. 
553(b)(A)). The Office, however, is publishing these changes and the 
Initial Regulatory Flexibility Act analysis, below, for comment as it 
seeks the benefit of the public's views on the Office's proposed 
implementation of these provisions of the Leahy-Smith America Invents 
Act.
    B. Regulatory Flexibility Act: The Office estimates that 460 
petitions for inter partes review will be filed in fiscal year 2013. 
This will be the first fiscal year in which inter partes review 
proceedings will be available for an entire fiscal year. The estimate 
for inter partes review petitions is partially based on the number of 
inter partes reexamination requests under 37 CFR 1.915 that have been 
filed in fiscal years 2010 and 2011.
    The Office received 281 requests for inter partes reexamination in 
fiscal year 2010. See Table 13B of the United States Patent and 
Trademark Office Performance and Accountability Report for Fiscal Year 
2010, available at http://www.uspto.gov/about/stratplan/ar/2010/USPTOFY2010PAR.pdf.
    The Office received 374 requests for inter partes reexamination in 
fiscal year 2011. See Table 14B of the United States Patent and 
Trademark Office Performance and Accountability Report for Fiscal Year 
2011, available at http://www.uspto.gov/about/stratplan/ar/2011/USPTOFY2011PAR.pdf.
    Additionally, the Office takes into consideration the recent growth 
rate in the number of requests for inter partes reexamination, the 
projected growth due to an expansion in the number of eligible patents 
under the inter partes review provisions of the Leahy-Smith America 
Invents Act (see Sec.  6(c)), and the more restrictive filing time 
period in 35 U.S.C. 315(b), as amended by the Leahy-Smith America 
Invents Act.
    The Office has reviewed the entity status of patents for which 
inter partes reexamination was requested from October 1, 2000, to 
September 23, 2011. This data only includes filings granted a filing 
date in the particular year rather than fillings in which a request was 
received in the year. The first inter partes reexamination was filed on 
July 27, 2001. A summary of that review is provided in Table 1 below. 
As shown by Table 1, patents known to be owned by a small entity 
represented 32.79% of patents for which inter partes reexamination was 
requested. Based on an assumption that the same percentage of patents 
owned by small entities will be subject to inter partes review, it is 
estimated that 151 petitions for inter partes review would be filed to 
seek review of patents owned by a small entity in fiscal year 2013, the 
first full fiscal year that these proceedings will be available.

                  Table 1--Inter partes Reexamination Requests Filed with Parent Entity Type *
----------------------------------------------------------------------------------------------------------------
                                                                                Number filed
                                                              Inter partes      where parent      Percent small
                        Fiscal year                           reexamination    patent is small   entity type of
                                                             requests filed      entity type          total
----------------------------------------------------------------------------------------------------------------
2011......................................................               329               123             37.39
2010......................................................               255                94             36.86
2009......................................................               240                62             25.83
2008......................................................               155                52             33.55
2007......................................................               127                35             27.56
2006......................................................                61                17             27.87
2005......................................................                59                18             30.51
2004......................................................                26                 5             19.23

[[Page 7048]]

 
2003......................................................                21                12             57.14
2002......................................................                 4                 1             25.00
2001......................................................                 1                 0              0.00
                                                           -----------------------------------------------------
                                                                       1,278               419             32.79
----------------------------------------------------------------------------------------------------------------
* Small entity status determined by reviewing preexamination small entity indicator for the parent patent.

    Based on the number of patents issued during fiscal years 1995 
through 1999 that paid the small entity third stage maintenance fee, 
the number of patents issued during fiscal years 2000 through 2003 that 
paid the small entity second stage maintenance fee, the number of 
patents issued during fiscal years 2004 through 2007 that paid the 
first stage maintenance fee, and the number of patents issued during 
fiscal years 2008 through 2011 that paid a small entity issue fee, 
there are no less than 375,000 patents owned by small entities in force 
as of October 1, 2011.
    Furthermore, the Office recognizes that there would be an offset to 
this number for patents that expire earlier than twenty years from 
their filing date due to a benefit claim to an earlier application or 
due to a filing of a terminal disclaimer. The Office likewise 
recognizes that there would be an offset in the opposite manner due to 
the accrual of patent term extension and adjustment. The Office, 
however, does not maintain data on the date of expiration by operation 
of a terminal disclaimer. Therefore, the Office has not adjusted the 
estimate of 375,000 patents owned by small entities in force as of 
October 1, 2011. While the Office maintains information regarding 
patent term extension and adjustment accrued by each patent, the Office 
does not collect data on the expiration date of patents that are 
subject to a terminal disclaimer. As such, the Office has not adjusted 
the estimated of 375,000 patents owned by small entities in force as of 
October 1, 2011, for accrual of patent term extension and adjustment, 
because in view of the incomplete terminal disclaimer data issue, would 
be incomplete and any estimate adjustment would be administratively 
burdensome. Thus, it is estimated that the number of small entity 
patents in force in fiscal year 2013 will be at least 375,000.
    Based on the estimated number of patents in force, the number of 
small entity owned patents impacted by inter partes review in fiscal 
year 2013 (151 patents) would be less than 0.05% (151/375,000) of all 
patents in force that are owned by small entities. The USPTO 
nonetheless has undertaken an Initial Regulatory Flexibility Act 
Analysis of the proposed rule.
    1. Description of the Reasons That Action by the Office Is Being 
Considered: On September 16, 2011, the Leahy-Smith America Invents Act 
was enacted into law (Pub. L. 112-29, 125 Stat. 284 (2011)). Section 6 
of the Leahy-Smith America Invents Act amends chapter 31 of title 35, 
United States Code, to create a new inter partes review proceeding 
which will take effect on September 16, 2012, one year after the date 
of enactment, and eliminate inter partes reexamination (except for 
requests filed before the effective date of September 16, 2012). For 
the implementation, Sec.  6(c) of the Leahy-Smith America Invents Act 
requires that the Director issue regulations to carry out chapter 31 as 
amended of title 35, United States Code, within one year after the date 
of enactment. Public Law 112-29, Sec.  6(c), 125 Stat. 284, 304 (2011).
    2. Succinct Statement of the Objectives of, and Legal Basis for, 
the Proposed Rules: The proposed rules seek to implement inter partes 
review as authorized by the Leahy-Smith America Invents Act. The Leahy-
Smith America Invents Act requires that the Director prescribe rules 
for the inter partes review that result in a final determination not 
later than one year after the date on which the Director notices the 
institution of a proceeding. The one-year period may be extended for 
not more than six months if good cause is shown. See 35 U.S.C. 
316(a)(11), as amended. The Leahy-Smith America Invents Act also 
requires that the Director, in prescribing rules for the inter partes 
review, consider the effect of the rules on the economy, the integrity 
of the patent system, the efficient administration of the Office, and 
the ability of the Office to complete timely the instituted 
proceedings. See 35 U.S.C. 316(b), as amended. Consistent with the time 
periods provided in 35 U.S.C. 316(a)(11), as amended, the proposed 
rules are designed to, except where good cause is shown to exist, 
result in a final determination by the Patent Trial and Appeal Board 
within one year of the notice of initiation of the review. This one-
year review will enhance the effect on the economy, and improve the 
integrity of the patent system and the efficient administration of the 
Office.
    3. Description and Estimate of the Number of Affected Small 
Entities: The Small Business Administration (SBA) small business size 
standards applicable to most analyses conducted to comply with the 
Regulatory Flexibility Act are set forth in 13 CFR 121.201. These 
regulations generally define small businesses as those with fewer than 
a specified maximum number of employees or less than a specified level 
of annual receipts for the entity's industrial sector or North American 
Industry Classification System (NAICS) code. As provided by the 
Regulatory Flexibility Act, and after consultation with the Small 
Business Administration, the Office has formally adopted an alternate 
size standard as the size standard for the purpose of conducting an 
analysis or making a certification under the Regulatory Flexibility Act 
for patent-related regulations. See Business Size Standard for Purposes 
of United States Patent and Trademark Office Regulatory Flexibility 
Analysis for Patent-Related Regulations, 71 FR 67109 (Nov. 20, 2006), 
1313 Off. Gaz. Pat. Office 60 (Dec. 12, 2006). This alternate small 
business size standard is SBA's previously established size standard 
that identifies the criteria entities must meet to be entitled to pay 
reduced patent fees. See 13 CFR 121.802. If patent applicants identify 
themselves on a patent application as qualifying for reduced patent 
fees, the Office captures this data in the Patent Application Location 
and Monitoring (PALM) database system, which tracks information on each 
patent application submitted to the Office.
    Unlike the SBA small business size standards set forth in 13 CFR 
121.201, the size standard for USPTO is not industry-specific. The 
Office's definition of a small business concern

[[Page 7049]]

for Regulatory Flexibility Act purposes is a business or other concern 
that: (1) Meets the SBA's definition of a ``business concern or 
concern'' set forth in 13 CFR 121.105; and (2) meets the size standards 
set forth in 13 CFR 121.802 for the purpose of paying reduced patent 
fees, namely an entity: (a) Whose number of employees, including 
affiliates, does not exceed 500 persons; and (b) which has not 
assigned, granted, conveyed, or licensed (and is under no obligation to 
do so) any rights in the invention to any person who made it and could 
not be classified as an independent inventor, or to any concern which 
would not qualify as a non-profit organization or a small business 
concern under this definition. See Business Size Standard for Purposes 
of United States Patent and Trademark Office Regulatory Flexibility 
Analysis for Patent-Related Regulations, 71 FR at 67112 (Nov 20, 2006), 
1313 Off. Gaz. Pat. Office at 63 (Dec. 12, 2006).
    As discussed above, it is anticipated that 460 petitions for inter 
partes review will be filed in fiscal year 2013. The Office has 
reviewed the percentage of patents for which inter partes reexamination 
was requested from October 1, 2000, to September 23, 2011. A summary of 
that review is provided in Table 1 above. As demonstrated by Table 1, 
patents known to be owned by a small entity represent 32.79% of patents 
for which inter partes reexamination was requested. Based on an 
assumption that the same percentage of patents owned by small entities 
will be subject to the new review proceedings, it is estimated that 151 
patents owned by small entities would be affected by an inter partes 
review.
    The USPTO estimates that 2.5% of patent owners will file a request 
for adverse judgment prior to a decision to institute and that another 
2.5% will file a request for adverse judgment or fail to participate 
after initiation. Specifically, an estimated 21 patent owners will file 
a request for adverse judgment or fail to participate after institution 
in inter partes review. Based on the percentage of small entity owned 
patents that were the subject of inter partes reexamination (32.79%) 
from October 1, 2000 to September 23, 2011, it is estimated that 7 
small entities will file such requests or fail to participate in inter 
partes review proceedings.
    Under the proposed rules, prior to determining whether to institute 
a review, the patent owner may file an optional patent owner 
preliminary response to the petition. Given the new time period 
requirements to file a petition for review before the Board relative to 
patent enforcement proceedings and the desire to avoid the cost of a 
trial and delays to related infringement actions, it is anticipated 
that 90% of petitions, other than those for which a request for adverse 
judgment is filed, will result in the filing of a patent owner 
preliminary response. Where an inter partes review petition is filed 
close to the expiration of the one-year period set forth in 35 U.S.C. 
315(b), as amended, a patent owner would likely be advantaged by filing 
a successful preliminary response. In view of these considerations, it 
is anticipated that 90% of patent owners will file a preliminary 
response. Specifically, the Office estimates that 406 patent owners 
will file a preliminary response to an inter partes review petition. 
Based on the percentage of small entity owned patents that were the 
subject of inter partes reexamination (32.79%), it is estimated that 
133 small entities will file a preliminary response to an inter partes 
review petition in fiscal year 2013.
    Under the proposed rules, the Office will determine whether to 
institute a trial within three months after the earlier of: (1) The 
submission of a patent owner preliminary response, (2) the waiver of 
filing a patent owner preliminary response, or (3) the expiration of 
the time period for filing a patent owner preliminary response. If the 
Office decides not to institute a trial, the petitioner may file a 
request for reconsideration of the Office's decision. In estimating the 
number of requests for reconsideration, the Office considered the 
percentage of inter partes reexaminations that were denied relative to 
those that were ordered (24 divided by 342, or 7%) in fiscal year 2011. 
See Reexaminations--FY 2011, http://www.uspto.gov/patents/Reexamination_operational_statistic_through_FY2011Q4.pdf. The 
Office also considered the impact of: (1) Patent owner preliminary 
responses under newly authorized in 35 U.S.C. 313, as amended, (2) the 
enhanced thresholds for instituting reviews set forth in 35 U.S.C. 
314(a), as amended, which would tend to increase the likelihood of 
dismissing a petition for review, and (3) the more restrictive time 
period for filing a petition for review in 35 U.S.C. 315(b), as 
amended, which would tend to reduce the likelihood of dismissing a 
petition. Based on these considerations, it is estimated that 10% of 
the petitions for review (45 divided by 449) would be dismissed.
    During fiscal year 2011, the Office issued twenty-one decisions 
following a request for reconsideration of a decision on appeal in 
inter partes reexamination. The average time from original decision to 
decision on reconsideration was 4.4 months. Thus, the decisions on 
reconsideration were based on original decisions issued from July 2010 
until June 2011. During this time period, the Office mailed sixty-three 
decisions on appeals in inter partes reexamination. See BPAI 
Statistics--Receipts and Dispositions by Technology Center, http://www.uspto.gov/ip/boards/bpai/stats/receipts/index.jsp (monthly data). 
Based on the assumption that the same rate of reconsideration (21 
divided by 63 or 33.333%) will occur, the Office estimates that 15 
requests for reconsideration will be filed. Based on the percentage of 
small entity owned patents that were the subject of inter partes 
reexamination (32.79%), it is estimated that five small entities will 
file a request for a reconsideration of a decision dismissing the 
petition for inter partes review in fiscal year 2013.
    The Office reviewed motions, oppositions, and replies in a number 
of contested trial proceedings before the trial section of the Board. 
The review included determining whether the motion, opposition, and 
reply were directed to patentability grounds and non-priority non-
patentability grounds. Based on the review, it is anticipated that 
inter partes reviews will have an average of 6.92 motions, oppositions, 
and replies per trial after institution. Settlement is estimated to 
occur in 20% of instituted trials at various points of the trial. In 
the trials that are settled, it is estimated that only 50% of the noted 
motions, oppositions, and replies would be filed.
    After an inter partes review trial has been instituted but prior to 
a final written decision, parties to a review may request an oral 
hearing. It is anticipated that 411 requests for oral hearings will be 
filed based on the number of requests for oral hearings in inter partes 
reexamination, the stated desirability for oral hearings during the 
legislative process, and the public input received prior to this notice 
of proposed rulemaking. Based on the percentage of small entity owned 
patents that were the subject of inter partes reexamination (32.79%), 
it is estimated that 135 small entities will file a request for oral 
hearing in the inter partes reviews instituted in fiscal year 2013.
    Parties to an inter partes review may file requests to treat a 
settlement as business confidential and requests for adverse judgment. 
A written request to make a settlement agreement available may also be 
filed. Given the short time period set for conducting trials, it is 
anticipated that the alternative dispute resolution options will be 
infrequently used. The Office estimates that 16

[[Page 7050]]

requests to treat a settlement as business confidential and 91 requests 
for adverse judgment, default adverse judgment, or settlement notices 
will be filed. The Office also estimates that 16 requests to make a 
settlement available will be filed. Based on the percentage of small 
entity owned patents that were the subject of inter partes 
reexamination (32.79%), it is estimated that 5 small entities will file 
a request to treat a settlement as business confidential, and thirty 
small entities will file a request for adverse judgment, default 
adverse judgment notices, or settlement notices in the inter partes 
reviews instituted in fiscal year 2013.
    Parties to an inter partes review may seek judicial review of the 
final decision of the Board. Historically, 33% of examiner's decisions 
in inter partes reexamination proceedings have been appealed to the 
Board. It is anticipated that 16% of final decisions of the Board would 
be appealed. The reduction in appeal rate is based on the higher 
threshold for institution, the focused process, and the experience of 
the Board in conducted contested cases. Therefore, it is estimated that 
46 would seek judicial review of the final decisions of the Board in 
inter partes reviews instituted in fiscal year 2013. Furthermore, based 
on the percentage of small entity owned patents that were the subject 
of inter partes reexamination (32.79%), it is estimated that fifteen 
small entities would seek judicial review of final decisions of the 
Board in the inter partes reviews instituted in fiscal year 2013.
    4. Description of the Reporting, Recordkeeping, and Other 
Compliance Requirements of the Proposed Rule, Including an Estimate of 
the Classes of Small Entities Which Will Be Subject to the Requirement 
and the Type of Professional Skills Necessary for Preparation of the 
Report or Record: Based on the filing trends of inter partes 
reexamination requests, it is anticipated that petitions for inter 
partes review will be filed across all technologies with approximately 
50% being filed in electrical technologies, approximately 30% in 
mechanical technologies, and the remaining 20% in chemical technologies 
and design. Under the proposed rules, a person who is not the owner of 
a patent may file a petition to institute a review of the patent, with 
a few exceptions. Given this, it is anticipated that a petition for 
review is likely to be filed by an entity practicing in the same or 
similar field as the patent. Therefore, it is anticipated that 50% of 
the petitions for review will be filed in the electronic field, 30% in 
the mechanical field, and 20% in the chemical or design fields.
    Preparation of the petition would require analyzing the patent 
claims, locating evidence supporting arguments of unpatentability, and 
preparing the petition seeking review of the patent. This notice 
provides the proposed procedural requirements that are common for the 
new trials. Additional requirements are provided in contemporaneous 
trial specific proposed rulemaking. The procedures for petitions to 
institute an inter partes review are proposed in Sec. Sec.  42.5, 42.6, 
42.8, 42.11, 42.13, 42.20, 42.21, 42.22, 42.24(a)(1), 42.63, 42.65, and 
42.101 through 42.105.
    The skills necessary to prepare a petition for review and to 
participate in a trial before the Patent Trial and Appeal Board would 
be similar to those needed to prepare a request for inter partes 
reexamination, to represent a party in an inter partes reexamination, 
and to represent a party in an interference proceeding before the 
Patent Trial and Appeal Board. This level of skill is typically 
possessed by a registered patent practitioner having devoted 
professional time to the particular practice area, typically under the 
supervision of a practitioner skilled in the particular practice area. 
Where authorized by the Board, a non-registered practitioner may be 
admitted pro hac vice, on a case-by-case basis based on the facts and 
circumstances of the trial and party, as well as the skill of the 
practitioner.
    The cost of preparing a petition for inter partes review is 
anticipated to be the same as the cost for preparing a request for 
inter partes reexamination. The American Intellectual Property Law 
Association's AIPLA Report of the Economic Survey 2011 reported that 
the average cost of preparing a request for inter partes reexamination 
was $46,000. Based on the work required to prepare and file such a 
request, the Office considers the reported cost as a reasonable 
estimate. Accordingly, the Office estimates that the cost of preparing 
a petition for inter partes review would be $46,000 (including expert 
costs).
    The filing of a petition for review would also require payment by 
the petitioner of the appropriate petition fee to recover the aggregate 
cost for providing the review. The appropriate petition fee would be 
determined by the number of claims for which review is sought and the 
type of review. The proposed fees for filing a petition for inter 
partes review are: $27,200 for requesting review of 20 or fewer claims, 
$34,000 to request review of 21 to 30 claims, $40,800 to request review 
of 31 to 40 claims, $54,400 to request review of 41 to 50 claims, 
$68,000 to request review of 51 to 60 claims, and an additional $27,200 
to request review of additional groups of 10 claims.
    In setting fees, the estimated information technology cost to 
establish the process and maintain the filing and storage system 
through 2017 is to be recovered by charging each petition $2,270. The 
remainder of the fee is to recover the cost for judges to determine 
whether to institute a review and conduct the review, together with a 
proportionate share of indirect costs, e.g., rent, utilities, 
additional support, and administrative costs. Based on the direct and 
indirect costs, the fully burdened cost per hour for judges to decide a 
petition and conduct a review is estimated to be $258.32.
    For a petition for inter partes review with 20 or fewer challenged 
claims, it is anticipated that 97 hours of judge time would be 
required. For 21 to 30 challenged claims, an additional 24 hours is 
anticipated for a total of 121 hours of judge time. For 31 to 40 
challenged claims, an additional 48 hours is anticipated for a total of 
145 hours of judge time. For 41 to 50 challenged claims, an additional 
97 hours is anticipated for a total of 194 hours of judge time. For 51 
to 60 claims, an additional 145 hours is anticipated for a total of 242 
hours of judge time. The increase in adjustment reflects the added 
complexity that typically occurs as more claims are in dispute.
    The proposed rules would permit the patent owner to file a 
preliminary response to the petition setting forth the reasons why no 
review should be initiated. The procedures for a patent owner to file a 
preliminary response as an opposition are proposed in Sec. Sec.  42.6, 
42.8, 42.11, 42.13, 42.21, 42.23, 42.24(b), 42.51, 42.52, 42.53, 42.54, 
42.63, 42.64, 42.65, 42.107, 42.120, 42.207, and 42.220. The patent 
owner is not required to file a preliminary response. The Office 
estimates that the preparation and filing of a patent owner preliminary 
response would require 100 hours of professional time and cost $34,000 
(including expert costs). The AIPLA Report of the Economic Survey 2011 
reported that the average cost for inter partes reexamination including 
of the request ($46,000), the first patent owner response, and third 
party comments was $75,000 (see I-175) and the median billing rate for 
professional time of $340 per hour for attorneys in private firms (see 
8). Thus, the cost of the first patent owner reply and the third party 
statement is $29,000. The Office finds these costs to be reasonable

[[Page 7051]]

estimates. The patent owner reply and third party statement, however, 
occur after the examiner has made an initial threshold determination 
and made only the appropriate rejections. Accordingly, it is 
anticipated that filing a patent owner preliminary response to a 
petition for review would cost more than the initial reply in a 
reexamination, an estimated $34,000 (including expert costs).
    The Office will determine whether to institute a trial within three 
months after the earlier of: (1) The submission of a patent owner 
preliminary response, (2) the waiver of filing a patent owner 
preliminary response, or (3) the expiration of the time period for 
filing a patent owner preliminary response. If the Office decides not 
to institute a trial, the petitioner may file a request for 
reconsideration of the Office's decision. It is anticipated that a 
request for reconsideration will require 80 hours of professional time 
to prepare and file, for a cost of $27,200. This estimate is based on 
the complexity of the issues and desire to avoid time bars imposed by 
35 U.S.C. 315(b), as amended, and 35 U.S.C. 325(b).
    Following institution of a trial, the parties may be authorized to 
file various motions, e.g., motions to amend and motions for additional 
discovery. Where a motion is authorized, an opposition may be 
authorized, and where an opposition is authorized, a reply may be 
authorized. The procedures for filing a motion are proposed in 
Sec. Sec.  42.6, 42.8, 42.11, 42.13, 42.21, 42.22, 42.24(a)(5), 42.51, 
42.52, 42.53, 42.54, 42.63, 42.64, 42.65, 42.121, 42.221, 42.123, and 
42.223. The procedures for filing an opposition are proposed in 
Sec. Sec.  42.6, 42.8, 42.11, 42.13, 42.21, 42.23, 42.24(b), 42.51, 
42.52, 42.53, 42.54, 42.63, 42.64, 42.65, 42.107, 42.120, 42.207, and 
42.220. The procedures for filing a reply are proposed in Sec. Sec.  
42.6, 42.8, 42.11, 42.13, 42.21, 42.23, 42.24(c), 42.51, 42.52, 42.53, 
42.54, 42.63, and 42.65. As discussed previously, the Office estimates 
that the average inter partes review will have 6.92 motions, 
oppositions, and replies after institution.
    The AIPLA Report of the Economic Survey 2011 reported that the 
average cost in contested cases before the trial section of the Board 
prior to the priority phase was $322,000 per party. Because of the 
overlap of issues in patentability grounds, it is expected that the 
cost per motion will decline as more motions are filed in a proceeding. 
It is estimated that a motion, opposition, or reply in an inter partes 
review is estimated at $47,600 (including expert costs). Based on the 
work required to file and prepare such briefs, the Office considers the 
reported cost as a reasonable estimate.
    After a trial has been instituted but prior to a final written 
decision, parties to a review may request an oral hearing. The 
procedure for filing requests for oral argument is proposed in Sec.  
42.70. The AIPLA Report of the Economic Survey 2011 reported that the 
third quartile cost of an ex parte appeal with an oral argument is 
$12,000, while the third quartile cost of an ex parte appeal without an 
oral argument is $6,000. In view of the reported costs, which the 
Office finds reasonable, and the increased complexity of an oral 
hearing with multiple parties, it is estimated that the cost per party 
for oral hearings would be $6,800 or $800 more than the reported third 
quartile cost for an ex parte oral hearing.
    Parties to an inter partes review may file requests to treat a 
settlement as business confidential and requests for adverse judgment. 
A written request to make a settlement agreement available may also be 
filed. The procedures to file requests that a settlement be treated as 
business confidential are proposed in Sec.  42.74(c). The procedures to 
file requests for adverse judgment are proposed in Sec.  42.73(b). The 
procedures to file requests to make a settlement agreement available 
are proposed in Sec.  42.74(c)(2). It is anticipated that requests to 
treat a settlement as business confidential will require two hours of 
professional time or $680. It is anticipated that requests for adverse 
judgment will require one hour of professional time or $340. It is 
anticipated that requests to make a settlement agreement available will 
require 1 hour of professional time or $340. The requests to make a 
settlement agreement available will also require payment of a fee of 
$400 specified in proposed Sec.  42.15(d).
    Parties to a review proceeding may seek judicial review of the 
judgment of the Board. The procedures to file notices of judicial 
review of a Board decision, including notices of appeal and notices of 
election provided for 35 U.S.C. 141, 142, 145, and 146, are proposed in 
Sec. Sec.  90.1 through 90.3. The submission of a copy of a notice of 
appeal or a notice of election is anticipated to require six minutes of 
professional time at a cost of $34.
    5. Description of Any Significant Alternatives to the Proposed 
Rules Which Accomplish the Stated Objectives of Applicable Statutes and 
Which Minimize Any Significant Economic Impact of the Rules on Small 
Entities:
    Size of petitions and motions: The Office considered whether to 
apply a page limit and what an appropriate page limit would be. The 
Office does not currently have a page limit on inter partes 
reexamination requests. The inter partes reexamination requests from 
October 1, 2010, to June 30, 2011, averaged 246 pages. Based on the 
experience of processing inter partes reexamination requests, the 
Office finds that the very large size of the requests has created a 
burden on the Office that hinders the efficiency and timeliness of 
processing the requests, and creates a burden on patent owners. The 
quarterly reported average processing time from the filing of a request 
to the publication of a reexamination certificate ranged from 28.9 
months to 41.7 months in fiscal year 2009, from 29.5 months to 37.6 
months in fiscal year 2010, and from 31.9 to 38.0 months in fiscal year 
2011. See Reexaminations--FY 2011, http://www.uspto.gov/patents/Reexamination_operational_statistic_through_FY2011Q4.pdf.
    By contrast, the Office has a page limit on the motions filed in 
contested cases, except where parties are specifically authorized to 
exceed the limitation. The typical contested case proceeding is subject 
to a standing order that sets a 50 page limit for motions and 
oppositions on priority, a 15 page limit for miscellaneous motions 
(Sec.  41.121(a)(3)) and oppositions (Sec.  41.122), and a 25 page 
limit for other motions (Sec.  41.121(a)(2)) and oppositions to other 
motions. In typical proceedings, replies are subject to a 15 page limit 
if directed to priority, 5 page limit for miscellaneous issues, and 10 
page limit for other motions. The average contested case was terminated 
in 10.1 months in fiscal year 2009, in 12 months in fiscal year 2010, 
and in 9 months in fiscal year 2011. The percentage of contested cases 
terminated within two years was 93.7% in fiscal year 2009, 88.0% in 
fiscal year 2010, and 94.0% in fiscal year 2011. See BPAI Statistics--
Performance Measures, http://www.uspto.gov/ip/boards/bpai/stats/perform/index.jsp.
    Comparing the average time period for terminating a contested case, 
10.0 to 12.0 months, with the average time period, during fiscal years 
2009 through 2011, for completing an inter partes reexamination, 28.9 
to 41.7 months, indicates that the average interference takes from 24% 
(10.0/41.7) to 42% (12.0/28.9) of the time of the average inter partes 
reexamination. While several factors contribute to the reduction in 
time, limiting the size of the requests and motions is considered a 
significant factor. Proposed Sec.  42.24 would provide page limits for 
petitions, motions, oppositions, and replies. 35 U.S.C. 316(b), as 
amended, provides

[[Page 7052]]

considerations that are to be taken into account when prescribing 
regulations including the integrity of the patent system, the efficient 
administration of the Office, and the ability to complete timely the 
trials. The page limits proposed in these rules are consistent with 
these considerations.
    Federal courts routinely use page limits in managing motions 
practice as ``[e]ffective writing is concise writing.'' Spaziano v. 
Singletary, 36 F.3d 1028, 1031 n.2 (11th Cir. 1994). Many district 
courts restrict the number of pages that may be filed in a motion 
including, for example, the District of Delaware, the District of New 
Jersey, the Eastern District of Texas, the Northern, Central, and 
Southern Districts of California, and the Eastern District of Virginia.
    Federal courts have found that page limits ease the burden on both 
the parties and the courts, and patent cases are no exception. Eolas 
Techs., Inc. v. Adobe Sys., Inc., No. 6:09-CV-446, at 1 (E.D. Tex. 
Sept. 2, 2010) (``The Local Rules' page limits ease the burden of 
motion practice on both the Court and the parties.''); Blackboard, Inc. 
v. Desire2Learn, Inc., 521 F. Supp. 2d 575, 576 (E.D. Tex. 2007) (The 
parties ``seem to share the misconception, popular in some circles, 
that motion practice exists to require federal judges to shovel through 
steaming mounds of pleonastic arguments in a Herculean effort to 
uncover a hidden gem of logic that will ineluctably compel a favorable 
ruling. Nothing could be farther from the truth.''); Broadwater v. 
Heidtman Steel Prods., Inc., 182 F. Supp. 2d 705, 710 (S.D. Ill. 2002) 
(``Counsel are strongly advised, in the future, to not ask this Court 
for leave to file any memoranda (supporting or opposing dispositive 
motions) longer than 15 pages. The Court has handled complicated patent 
cases and employment discrimination cases in which the parties were 
able to limit their briefs supporting and opposing summary judgment to 
10 or 15 pages.'' (Emphasis omitted)).
    The Board's contested cases experience with page limits in motions 
practice is consistent with that of the federal courts. The Board's use 
of page limits has shown it to be beneficial without being unduly 
restrictive for the parties. Page limits have encouraged the parties to 
focus on dispositive issues, easing the burden of motions practice on 
the parties and on the Board.
    The Board's contested cases experience with page limits is informed 
by its use of different approaches over the years. In the early 1990s, 
page limits were not routinely used for motions, and the practice 
suffered from lengthy and unacceptable delays. To reduce the burden on 
the parties and on the Board and thereby reduce the time to decision, 
the Board instituted page limits in the late 1990s for every motion. 
Page limit practice was found to be effective in reducing the burdens 
on the parties and improving decision times at the Board. In 2006, the 
Board revised the page limit practice and allowed unlimited findings of 
fact and generally limited the number of pages containing argument. Due 
to abuses of the system, the Board recently reverted back to page 
limits for the entire motion (both argument and findings of fact).
    The Board's current page limits are consistent with the 25-page 
limits in the Northern, Central, and Southern Districts of California 
and the Middle District of Florida and exceed the limits in the 
District of Delaware (20), the Northern District of Illinois (15), the 
District of Massachusetts (20), the Eastern District of Michigan (20), 
the Southern District of Florida (20), and the Southern District of 
Illinois (20).
    In a typical proceeding before the Board, a party may be authorized 
to file a single motion for unpatentability based on prior art, a 
single motion for unpatentability based upon failure to comply with 35 
U.S.C. 112, lack of written description, and/or enablement, and 
potentially another motion for lack of compliance with 35 U.S.C. 101, 
although a 35 U.S.C. 101 motion may be required to be combined with the 
35 U.S.C. 112 motion. Each of these motions is currently limited to 25 
pages in length, unless good cause is shown that the page limits are 
unduly restrictive for a particular motion.
    Under the proposed rules, an inter partes review petition would be 
based upon any grounds identified in 35 U.S.C. 311(b), as amended, 
i.e., only a ground that could be raised under 35 U.S.C. 102 or 103 and 
only on the basis of patents or printed publications. Generally, under 
current practice, a party is limited to filing a single prior art 
motion, limited to 25 pages in length. The proposed rule would provide 
up to 50 pages in length for a motion requesting inter partes review. 
Thus, as the proposed page limit doubles the default page limit 
currently set for a motion before the Board, a 50 page limit is 
considered sufficient in all but exceptional cases and is consistent 
with the considerations provided in 35 U.S.C. 316(b), as amended.
    The proposed rule would provide that petitions to institute a trial 
must comply with the stated page limits but may be accompanied by a 
motion that seeks to waive the page limits. The petitioner must show in 
the motion how a waiver of the page limits is in the interests of 
justice. A copy of the desired non-page limited petition must accompany 
the motion. Generally, the Board would decide the motion prior to 
deciding whether to institute the trial.
    Current Board practice provides a limit of 25 pages for other 
motions and 15 pages for miscellaneous motions. The Board's experience 
is that such page limits are sufficient for the parties filing them and 
do not unduly burden the opposing party or the Board. Petitions to 
institute a trial would generally replace the current practice of 
filing motions for unpatentability, as most motions for relief are 
expected to be similar to the current interference miscellaneous motion 
practice. Accordingly, the proposed 15 page limit is considered 
sufficient for most motions but may be adjusted where the limit is 
determined to be unduly restrictive for the relief requested.
    Proposed Sec.  42.24(b) would provide page limits for oppositions 
filed in response to motions. Current contested cases practice provides 
an equal number of pages for an opposition as its corresponding motion. 
This is generally consistent with motions practice in federal courts. 
The proposed rule would continue the current practice.
    Proposed Sec.  42.24(c) would provide page limits for replies. 
Current contested case practice provides a 15 page limit for priority 
motion replies, a 5 page limit for miscellaneous (procedural) motion 
replies, and a 10 page limit for all other motions. The proposed rule 
is consistent with current contested case practice for procedural 
motions. The proposed rule would provide a 15 page limit for reply to 
petitions requesting a trial, which the Office believes is sufficient 
based on current practice. Current contested case practice has shown 
that such page limits do not unduly restrict the parties and, in fact, 
have provided sufficient flexibility to parties to not only reply to 
the motion but also help to focus on the issues. Thus, it is 
anticipated that default page limits would minimize the economic impact 
on small entities by focusing on the issues in the trials.
    The Leahy-Smith America Invents Act requires that the Director, in 
prescribing rules for the inter partes reviews, consider the effect of 
the rules on the economy, the integrity of the patent system, the 
efficient administration of the Office, and the ability of the Office 
to complete timely the instituted proceedings. See 35 U.S.C. 316(b), as 
amended. In view of the actual results of the duration of proceedings 
in inter partes reexamination (without page limits) and contested cases 
(with page limits), proposing procedures with

[[Page 7053]]

reasonable page limits would be consistent with the objectives set 
forth in the Leahy-Smith America Invents Act. Based on our experience 
on the time needed to complete a non-page limited proceeding, the 
option of non-page limited proceedings was not adopted.
    Fee Setting: 35 U.S.C. 311(a), as amended, requires the Director to 
establish fees to be paid by the person requesting the review in such 
amounts as the Director determines to be reasonable, considering the 
aggregate costs of the review. In contrast to current 35 U.S.C. 311(b) 
and 312(c), the Leahy-Smith America Invents Act requires the Director 
to establish more than one fee for reviews based on the total cost of 
performing the reviews, and does not provide for refund of any part of 
the fee when the Director determine that the review should not be 
initiated.
    35 U.S.C. 312(a)(1), as amended, further requires that the fee 
established by the Director under 35 U.S.C. 311(a), as amended, 
accompany the petition on filing. Accordingly, in interpreting the fee 
setting authority in 35 U.S.C. 311(a), as amended, it is reasonable 
that the Director should set a number of fees for filing a petition 
based on the anticipated aggregate cost of conducting the review 
depending on the complexity of the review, and require payment of the 
fee upon filing of the petition.
    Based on experience with contested cases and inter partes 
reexamination proceedings, the following characteristics of requests 
were considered as potential factors for fee setting as each would 
likely impact the cost of providing the new services. The Office also 
considered the relative difficulty in administrating each option in 
selecting the characteristics for which different fees should be paid 
for requesting review.
    I. Adopted Option. Number of claims for which review is requested. 
The number of claims often impacts the complexity of the request and 
increases the demands placed on the deciding officials. Cf. In re Katz 
Interactive Call Processing Patent Litig., 639 F.3d 1303, 1309 (Fed. 
Cir. 2011) (limiting number of asserted claims is appropriate to 
efficiently manage a case). Moreover, the number of claims for which 
review is requested can be easily determined and administered, which 
avoids delays in the Office and the impact on the economy or patent 
system that would occur if an otherwise meritorious request is refused 
due to improper fee payment. Any subsequent petition would be time 
barred in view 35 U.S.C. 315(b), as amended.
    II. Alternative Option I. Number of grounds for which review is 
requested. The Office has experience with large numbers of cumulative 
grounds being presented in inter partes reexaminations which often add 
little value to the proceedings. Allowing for a large number of grounds 
to be presented on payment of an additional fee(s) is not favored. 
Determination of the number of grounds in a request may be contentious 
and difficult and may result in a large amount of high-level petition 
work. As such, the option would have a negative impact on small 
entities. Moreover, interferences instituted in the 1980s and early 
1990s suffered from this problem as there was no page limit for motions 
and the parties had little incentive to focus the issues for decision. 
The resulting interference records were often a collection of disparate 
issues and evidence. This led to lengthy and unwarranted delays in 
deciding interference cases as well as increased costs for parties and 
the Office. Accordingly, this alternative is inconsistent with 
objectives of the Leahy-Smith America Invents Act that the Director, in 
prescribing rules for the inter partes reviews, consider the effect of 
the rules on the economy, the integrity of the patent system, the 
efficient administration of the Office, and the ability of the Office 
to timely complete the instituted proceedings.
    III. Alternative Option II. Pages of argument. The Office has 
experience with large requests in inter partes reexamination in which 
the merits of the proceedings could have been resolved in a shorter 
request. Allowing for unnecessarily large requests on payment of an 
additional fee(s) is not favored. Moreover, determination of what 
should be counted as ``argument'' as compared with ``evidence'' has 
often proven to be contentious and difficult as administered in the 
current inter partes reexamination appeal process.
    In addition, the trial section of the Board recently experimented 
with motions having a fixed page limit for the argument section and an 
unlimited number of pages for the statement of facts. Unlimited pages 
for the statement of facts led to a dramatic increase in the number of 
alleged facts and pages associated with those facts. For example, one 
party used approximately 10 pages for a single ``fact'' that merely cut 
and pasted a portion of a declarant's cross-examination. Based upon the 
trial section's experience with unlimited pages of facts, the Board 
recently reverted back to a fixed page limit for the entire motion 
(argument and facts). Accordingly, this alternative is inconsistent 
with objectives of the Leahy-Smith America Invents Act that the 
Director, in prescribing rules for the inter partes patent reviews, 
consider the effect of the rules on the economy, the integrity of the 
patent system, the efficient administration of the Office, and the 
ability of the Office to complete timely the instituted proceedings.
    IV. Alternative Option III. The Office considered an alternative 
fee setting regime in which fees are charged at various steps in the 
review process, a first fee on filing of the petition, a second fee if 
instituted, a third fee on filing a motion in opposition to amended 
claims, etc. The alternative fee setting regime would hamper the 
ability of the Office to complete timely reviews, would result in 
dismissal of pending proceedings with patentability in doubt due to 
non-payment of required fees by third parties, and would be 
inconsistent with 35 U.S.C. 312, as amended, that requires the fee 
established by the Director be paid at the time of filing the petition. 
Accordingly, this alternative is inconsistent with objectives of the 
Leahy-Smith America Invents Act that the Director, in prescribing rules 
for inter partes reviews, consider the effect of the rules on the 
economy, the integrity of the patent system, the efficient 
administration of the Office, and the ability of the Office to complete 
timely the instituted proceedings.
    V. Alternative Option IV. The Office also considered setting 
reduced fees for small and micro entities and to provide refunds if a 
review is not instituted. The Office may set the fee to recover the 
cost of providing the services under 35 U.S.C. 41(d)(2)(a). Fees set 
under this authority are not reduced for small entities, see 35 U.S.C. 
42(h)(1), as amended. Moreover, the Office does not have authority to 
refund fees that when paid were not paid by mistake or in excess of 
that owed. See 35 U.S.C. 42(d).
    Discovery: The Office considered a procedure for discovery similar 
to the one available during district court litigation. Discovery of 
that scope has been criticized sharply, particularly when attorneys use 
discovery tools as tactical weapons, which hinders the ``just, speedy, 
and inexpensive determination of every action and proceeding.'' See 
Introduction to An E-Discovery Model Order, available at http://www.cafc.uscourts.gov/images/stories/announcements/Ediscovery_Model_Order.pdf. Accordingly, this alternative would have been inconsistent 
with objectives of the Leahy-Smith America Invents Act that the 
Director, in prescribing rules for the inter partes reviews, consider 
the effect of the rules on the economy, the integrity of the patent 
system, the

[[Page 7054]]

efficient administration of the Office, and the ability of the Office 
to complete timely the instituted proceedings.
    Additional discovery increases trial costs and increases the 
expenditures of time by the parties and the Board. To promote effective 
discovery, the proposed rule would require a showing that additional 
requested discovery is in the interests of justice, placing an 
affirmative burden upon a party seeking the discovery to show how the 
proposed discovery would be productive. The Board's interference 
experience, however, is that such showings are often lacking and 
authorization for additional discovery is expected to be rare.
    The proposed interest of justice standard for additional discovery 
is consistent with considerations identified in 35 U.S.C. 316(b), as 
amended, including the efficient administration of the Board and the 
Board's ability to complete timely trials. Further, the proposed 
interest of justice standard is consistent with 35 U.S.C. 316(a)(5), as 
amended, which states that discovery other than depositions of 
witnesses submitting affidavits and declarations be what is otherwise 
necessary in the interests of justice.
    The Office has proposed a default scheduling order to provide 
limited discovery as a matter of right and also the ability to seek 
additional discovery on a case-by-case basis. In weighing the need for 
additional discovery, should a request be made, the economic impact on 
the opposing party would be considered which would tend to limit 
additional discovery where a party is a small entity.
    Pro Hac Vice: The Office considered whether to allow counsel to 
appear pro hac vice. In certain cases, highly skilled, but non-
registered, attorneys have appeared satisfactorily before the Board in 
contested cases. The Board may recognize counsel pro hac vice during a 
proceeding upon a showing of good cause. Proceedings before the Office 
can be technically complex. Consequently, the grant of a motion to 
appear pro hac vice is a discretionary action taking into account the 
specifics of the proceedings. Similarly, the revocation of pro hac vice 
is a discretionary action taking into account various factors, 
including incompetence, unwillingness to abide by the Office's Rules of 
Professional Conduct, prior findings of misconduct before the Office in 
other proceedings, and incivility.
    The Board's past practice has required the filing of a motion by a 
registered patent practitioner seeking pro hac vice representation 
based upon a showing of: (1) How qualified the unregistered 
practitioner is to represent the party in the proceeding when measured 
against a registered practitioner, and (2) whether the party has a 
genuine need to have the particular unregistered practitioner represent 
it during the proceeding. This practice has proven effective in the 
limited number of contested cases where such requests have been 
granted. The proposed rule, if adopted, would allow for this practice 
in the new proceedings authorized by the Leahy-Smith America Invents 
Act.
    The proposed rules would provide a limited delegation to the Board 
under 35 U.S.C. 2(b)(2) and 32 to regulate the conduct of counsel in 
Board proceedings. The proposed rule would delegate to the Board the 
authority to conduct counsel disqualification proceedings while the 
Board has jurisdiction over a proceeding. The rule would also delegate 
to the Chief Administrative Patent Judge the authority to make final a 
decision to disqualify counsel in a proceeding before the Board for the 
purposes of judicial review. This delegation would not derogate from 
the Director the prerogative to make such decisions, nor would it 
prevent the Chief Administrative Patent Judge from further delegating 
authority to an administrative patent judge.
    The Office considered broadly permitting practitioners not 
registered to practice by the Office to represent parties in trial as 
well as categorically prohibiting such practice. A prohibition on the 
practice would be inconsistent with the Board's experience, and more 
importantly, might result in increased costs particularly where a small 
entity has selected its district court litigation team for 
representation before the Board and has a patent review filed after 
litigation efforts have commenced. Alternatively, broadly making the 
practice available would create burdens on the Office in administering 
the trials and in completing the trial within the established time 
frame, particularly if the selected practitioner does not have the 
requisite skill. In weighing the desirability of admitting a 
practitioner pro hac vice, the economic impact on the party in interest 
would be considered which would tend to increase the likelihood that a 
small entity could be represented by a non-registered practitioner. 
Accordingly, the alternatives to eliminate pro hac vice practice or to 
permit it more broadly would have been inconsistent with objectives of 
the Leahy-Smith America Invents Act that the Director, in prescribing 
rules for the inter partes reviews, consider the effect of the rules on 
the economy, the integrity of the patent system, the efficient 
administration of the Office, and the ability of the Office to complete 
timely the instituted proceedings.
    Threshold for Instituting a Review: The Office considered whether 
the threshold for instituting a review could be set as low as or lower 
than the threshold for ex parte reexamination. This alternative could 
not be adopted in view of the statutory requirements in 35 U.S.C. 314, 
as amended.
    Default Electronic Filing: The Office considered a paper filing 
system and a mandatory electronic filing system (without any 
exceptions) as alternatives to the proposed requirement that all papers 
are to be electronically filed, unless otherwise authorized.
    Based on the Office's experience, a paper-based filing system 
increases delay in processing papers, delay in public availability, and 
the chance that a paper may be misplaced or made available to an 
improper party if confidential. Accordingly, the alternative of a 
paper-based filing system would have been inconsistent with objectives 
of the Leahy-Smith America Invents Act that the Director, in 
prescribing rules for the inter partes reviews, consider the effect of 
the rules on the economy, the integrity of the patent system, the 
efficient administration of the Office, and the ability of the Office 
to complete timely the instituted proceedings.
    An electronic filing system (without any exceptions) that is 
rigidly applied would result in unnecessary cost and burdens, 
particularly where a party lacks the ability to file electronically. By 
contrast, if the proposed option is adopted, it is expected that the 
entity size and sophistication would be considered in determining 
whether alternative filing methods would be authorized.
    6. Identification, to the Extent Practicable, of All Relevant 
Federal Rules Which May Duplicate, Overlap, or Conflict with the 
Proposed Rules:
    37 CFR 1.99 provides for the submission of information after 
publication of a patent application during examination by third 
parties.
    37 CFR 1.171-1.179 provide for applications to reissue a patent to 
correct errors, including where a claim in a patent is overly broad.
    37 CFR 1.291 provides for the protest against the issuance of a 
patent during examination.
    37 CFR 1.321 provides for the disclaimer of a claim by a patentee.
    37 CFR 1.501 and 1.502 provide for ex parte reexamination of 
patents. Under these rules, a person may submit to the Office prior art 
consisting of patents or printed publications that are pertinent

[[Page 7055]]

to the patentability of any claim of a patent, and request 
reexamination of any claim in the patent on the basis of the cited 
prior art patents or printed publications. Consistent with 35 U.S.C. 
302-307, ex parte reexamination rules provide a different threshold for 
initiation, require the proceeding to be conducted by an examiner with 
a right of appeal to the Patent Trial and Appeal Board, and allow for 
limited participation by third parties.
    37 CFR 1.902-1.997 provide for inter partes reexamination of 
patents. Similar to ex parte reexamination, inter partes reexamination 
provides a procedure in which a third party may request reexamination 
of any claim in a patent on the basis of the cited prior art patents 
and printed publication. The inter partes reexamination practice will 
be eliminated, except for requests filed before the effective date, 
September 16, 2012. See Sec.  6(c)(3)(C) of the Leahy-Smith America 
Invents Act.
    Other countries have their own patent laws, and an entity desiring 
a patent in a particular country must make an application for patent in 
that country, in accordance with the applicable law. Although the 
potential for overlap exists internationally, this cannot be avoided 
except by treaty (such as the Paris Convention for the Protection of 
Industrial Property, or the Patent Cooperation Treaty (PCT)). 
Nevertheless, the Office believes that there are no other duplicative 
or overlapping foreign rules.
    C. Executive Order 12866 (Regulatory Planning and Review): This 
rulemaking has been determined to be significant for purposes of 
Executive Order 12866 (Sept. 30, 1993), as amended by Executive Order 
13258 (Feb. 26, 2002) and Executive Order 13422 (Jan. 18, 2007).
    The Office estimates that the aggregate burden of the proposed 
rules on the public for implementing the new review procedures is 
approximately $54.1 million for fiscal year 2013. The USPTO considered 
several factors in making this estimate.
    Based on the petition and other filing requirements for initiating 
an inter partes review proceeding, the USPTO initially estimated the 
burden of the proposed rules to be $174,500,217 in fiscal year 2013, 
which represents the sum of the estimated total annual (hour) 
respondent cost burden ($158,025,744) plus the estimated total annual 
non-hour respondent cost burden ($16,474,473) provided in Part O, 
Section II, of this notice, infra. However, since the Leahy-Smith 
America Invents Act also eliminates inter partes reexamination practice 
(except for requests filed before the effective date of September 16, 
2012), the burden of the proposed rules should be offset by the 
elimination of the proceeding and its associated burdens.
    It is estimated that 460 new requests for inter partes 
reexamination would have been filed in FY 2012 if the Leahy-Smith 
America Invents Act had not been enacted. This estimate is based on the 
number of proceedings filed in fiscal years 2011 (374), 2010 (281), and 
2009 (258). Elimination of 460 proceedings reduces the public's burden 
to pay filing fees by $4,048,000 (460 filings with $8,800 filing fee 
due) and the public's burden to prepare the requests by $21,160,000 
(460 filings with $46,000 average cost to prepare). Based on the 
assumption that 93% of the requests would be ordered (consistent with 
the fiscal year 2011 grant rate), the burden to conduct the proceeding 
till close of prosecution will reduce the public's burden by 
$89,880,000 (428 proceedings that would be estimated to be granted 
reexamination multiplied by $210,000 which is average cost cited in the 
AIPLA Report of the Economic Survey 2011 per party cost until close of 
prosecution reduced by the $46,000 request preparation cost). 
Additionally, the burden on the public to appeal to the Board by 
$5,358,000 (based on an estimate that 141 proceedings would be appealed 
to the Board which is estimated based on the number of granted 
proceedings (428) and the historical rate of appeal to the Board (\1/
3\) and an average public cost of $38,000). Thus, $120,446,000 in 
public burden will be eliminated by the elimination of new filings of 
inter partes reexamination (the sum of $4,048,000 (the filing fees), 
$21,160,000 (the cost of preparing requests), $89,880,000 (the 
prosecution costs), plus $5,358,000 (the burden to appeal to the 
Board)).
    Therefore, the estimated aggregate burden of the proposed rules for 
implementing the new review proceedings would be $54,054,217 
($174,500,217 minus $120,446,000) in fiscal year 2013.
    The USPTO expect several benefits to flow from the Leahy-Smith 
America Invents Act and these proposed rules. It is anticipated that 
the proposed rules will reduce the time for reviewing patents at the 
USPTO. Specifically, 35 U.S.C. 316(a), as amended, provides that the 
Director prescribe regulations requiring a final determination by the 
Board within one year of initiation, which may be extended for up to 
six months for good cause. In contrast, currently for inter partes 
reexamination, the average time from the filing to the publication of a 
certificate ranged from 28.9 to 41.7 months during fiscal years 2009-
2011. See Reexamination--FY 2011, http://www.uspto.gov/patents/Reexamination_operational_statistic_through_FY2011Q4.pdf.
    Likewise, it is anticipated that the proposed rules will minimize 
duplication of efforts. In particular, the Leahy-Smith America Invents 
Act provides more coordination between district court infringement 
litigation and inter partes review to reduce duplication of efforts and 
costs. For instance, 35 U.S.C. 315(b), as amended, will require that a 
petition for inter partes review be filed within one year of the date 
of service of a complaint alleging infringement of a patent. By 
requiring the filing of an inter partes review petition earlier than a 
request for inter partes reexamination, and by providing shorter 
timelines for inter partes review compared with reexamination, it is 
anticipated that the current high level of duplication between 
litigation and reexamination will be reduced.
    The AIPLA Report of the Economic Survey 2011 reports that the total 
cost of patent litigation where the damages at risk are less than 
$1,000,000 average $916,000, where the damages at risk are between 
$1,000,000 and $25,000,000 average $2,769,000, and where the damages at 
risk exceed $25,000,000 average $6,018,000. There may be a significant 
reduction in overall burden if, as intended, the Leahy-Smith America 
Invents Act and the proposed rules reduce the overlap between review at 
the USPTO of issued patents and validity determination during patent 
infringement actions. Data from the United States district courts 
reveals that 2,830 patent cases were filed in 2006, 2,896 in 2007, 
2,909 in 2008, 2,792 in 2009, and 3,301 in 2010. See U.S. Courts, 
Judicial Business of the United States Courts, www.uscourts.gov/uscourts/Statistics/JudicialBusiness/2010/appendices/C02ASep10.pdf 
(last visited Nov. 11, 2011) (hosting annual reports for 1997-2010). 
Thus, the Office estimates that a total of approximately 3,300 patent 
cases (the highest number of yearly filings between 2006 and 2010 
rounded to the nearest 100) are likely to be filed annually. The 
aggregate burden estimate above ($54,054,144) was not offset by a 
reduction in burden based on improved coordination between district 
court patent litigation and the new inter partes review proceedings.
    D. Executive Order 13563 (Improving Regulation and Regulatory 
Review): The Office has complied with Executive Order 13563. 
Specifically, the Office has, to the extent feasible and applicable: 
(1) Made a reasoned

[[Page 7056]]

determination that the benefits justify the costs of the rule; (2) 
tailored the rule to impose the least burden on society consistent with 
obtaining the regulatory objectives; (3) selected a regulatory approach 
that maximizes net benefits; (4) specified performance objectives; (5) 
identified and assessed available alternatives; (6) involved the public 
in an open exchange of information and perspectives among experts in 
relevant disciplines, affected stakeholders in the private sector, and 
the public as a whole, and provided online access to the rule making 
docket; (7) attempted to promote coordination, simplification, and 
harmonization across government agencies and identified goals designed 
to promote innovation; (8) considered approaches that reduce burdens 
and maintain flexibility and freedom of choice for the public; and (9) 
ensured the objectivity of scientific and technological information and 
processes.
    E. Executive Order 13132 (Federalism): This rulemaking does not 
contain policies with federalism implications sufficient to warrant 
preparation of a Federalism Assessment under Executive Order 13132 
(Aug. 4, 1999).
    F. Executive Order 13175 (Tribal Consultation): This rulemaking 
will not: (1) Have substantial direct effects on one or more Indian 
tribes; (2) impose substantial direct compliance costs on Indian tribal 
governments; or (3) preempt tribal law. Therefore, a tribal summary 
impact statement is not required under Executive Order 13175 (Nov. 6, 
2000).
    G. Executive Order 13211 (Energy Effects): This rulemaking is not a 
significant energy action under Executive Order 13211 because this 
rulemaking is not likely to have a significant adverse effect on the 
supply, distribution, or use of energy. Therefore, a Statement of 
Energy Effects is not required under Executive Order 13211 (May 18, 
2001).
    H. Executive Order 12988 (Civil Justice Reform): This rulemaking 
meets applicable standards to minimize litigation, eliminate ambiguity, 
and reduce burden as set forth in sections 3(a) and 3(b)(2) of 
Executive Order 12988 (Feb. 5, 1996). This rulemaking carries out a 
statute designed to lessen litigation. See H.R. Rep. No. 112-98, at 45-
48.
    I. Executive Order 13045 (Protection of Children): This rulemaking 
does not concern an environmental risk to health or safety that may 
disproportionately affect children under Executive Order 13045 (Apr. 
21, 1997).
    J. Executive Order 12630 (Taking of Private Property): This 
rulemaking will not effect a taking of private property or otherwise 
have taking implications under Executive Order 12630 (Mar. 15, 1988).
    K. Congressional Review Act: Under the Congressional Review Act 
provisions of the Small Business Regulatory Enforcement Fairness Act of 
1996 (5 U.S.C. 801-808), prior to issuing any final rule, the United 
States Patent and Trademark Office will submit a report containing the 
final rule and other required information to the U.S. Senate, the U.S. 
House of Representatives, and the Comptroller General of the Government 
Accountability Office. The changes in this notice are not expected to 
result in an annual effect on the economy of 100 million dollars or 
more, a major increase in costs or prices, or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or the ability of United States-based enterprises to 
compete with foreign based enterprises in domestic and export markets. 
Therefore, this notice is not expected to result in a ``major rule'' as 
defined in 5 U.S.C. 804(2).
    L. Unfunded Mandates Reform Act of 1995: The changes proposed in 
this notice do not involve a Federal intergovernmental mandate that 
will result in the expenditure by State, local, and tribal governments, 
in the aggregate, of 100 million dollars (as adjusted) or more in any 
one year, or a Federal private sector mandate that will result in the 
expenditure by the private sector of 100 million dollars (as adjusted) 
or more in any one year, and will not significantly or uniquely affect 
small governments. Therefore, no actions are necessary under the 
provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 
1501-1571.
    M. National Environmental Policy Act: This rulemaking will not have 
any effect on the quality of the environment and is thus categorically 
excluded from review under the National Environmental Policy Act of 
1969. See 42 U.S.C. 4321-4370h.
    N. National Technology Transfer and Advancement Act: The 
requirements of section 12(d) of the National Technology Transfer and 
Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because 
this rulemaking does not contain provisions which involve the use of 
technical standards.
    O. Paperwork Reduction Act: The Paperwork Reduction Act of 1995 (44 
U.S.C. 3501-3549) requires that the USPTO consider the impact of 
paperwork and other information collection burdens imposed on the 
public. This proposed rulemaking involves information collection 
requirements which are subject to review by the Office of Management 
and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-3549). The collection of information involved in this notice has 
been submitted to OMB under OMB control number 0651-00xx. In the Notice 
``Rules of Practice for Trials before the Patent Trial and Appeal Board 
and Judicial Review of Patent Trial and Appeal Board Decisions,'' RIN 
0651-AC70, the information collection for all of the new trials 
authorized by the Leahy-Smith America Invents Act were provided. This 
notice provides the subset of burden created by the inter partes review 
provisions. The proposed collection will be available at the OMB's 
Information Collection Review Web site at: www.reginfo.gov/public/do/PRAMain.
    The USPTO is submitting the information collection to OMB for its 
review and approval because this notice of proposed rulemaking will add 
the following to a collection of information:
    (1) Petitions to institute an inter partes review (Sec. Sec.  42.5, 
42.6, 42.8, 42.11, 42.13, 42.20, 42.21, 42.22, 42.24(a)(1), 42.63, 
42.65, and 42.101 through 42.105);
    (2) motions (Sec. Sec.  42.6, 42.8, 42.11, 42.13, 42.21, 42.22, 
42.24(a)(5), 42.51 through 42.54, 42.63, 42.64, 42.65, and 42.121);
    (3) oppositions (Sec. Sec.  42.6, 42.8, 42.11, 42.13, 42.21, 42.23, 
42.24(b), 42.51, 42.52, 42.53, 42.54, 42.63, 42.64, 42.65, 42.107, and 
42.120); and
    (4) replies provided for in 35 U.S.C. 135 and 311-318, as amended, 
and new 35 U.S.C. 319 (Sec. Sec.  42.6, 42.8, 42.11, 42.13, 42.21, 
42.23, 42.24(c), 42.51, 42.52, 42.53, 42.54, 42.63, and 42.65).
    The proposed rules also permit filing requests for oral argument 
(Sec.  42.70) provided for in 35 U.S.C. 316(a)(10), as amended, 
requests for rehearing (Sec.  42.71(c)), requests for adverse judgment 
(Sec.  42.73(b)), requests that a settlement be treated as business 
confidential (Sec.  42.74(b)) provided for in 35 U.S.C. 317, as 
amended.
    I. Abstract: The USPTO is required by 35 U.S.C. 131 and 151 to 
examine applications and, when appropriate, issue applications as 
patents.
    Chapter 31 of title 35, United States Code, in effect on September 
16, 2012, provides for inter partes review proceedings allowing third 
parties to petition the USPTO to review the patentability of an issued 
patent under 35 U.S.C. 102 and 103 based on patents and printed 
publications. If a trial is initiated by the USPTO based on the

[[Page 7057]]

petition, as authorized by the USPTO, additional motions may be filed 
by the petitioner. A patent owner may file a response to the petition 
and if a trial is instituted, as authorized by the USPTO, may file 
additional motions.
    In estimating the number of hours necessary for preparing a 
petition to institute an inter partes review, the USPTO considered the 
estimated cost of preparing a request for inter partes reexamination 
($46,000), the median billing rate ($340/hour), and the observation 
that the cost of inter partes reexamination has risen the fastest of 
all litigation costs since 2009 in the AIPLA Report of the Economic 
Survey 2011. It was estimated that a petition for an inter partes 
review and an inter partes reexamination request would cost the same to 
the preparing party ($46,000).
    In estimating the number of hours necessary for preparing motions 
after instituting and participating in the review, the USPTO considered 
the AIPLA Report of the Economic Survey 2011 which reported the average 
cost of a party to a two-party interference to the end of the 
preliminary motion phase ($322,000) and inclusive of all costs 
($631,000). The Office considered that the preliminary motion phase is 
a good proxy for patentability reviews since that is the period of 
current contested cases before the trial section of the Board where 
most patentability motions are currently filed.
    The USPTO also reviewed recent contested cases before the trial 
section of the Board to make estimates on the average number of motions 
for any matter including priority, the subset of those motions directed 
to non-priority issues, the subset of those motions directed to non-
priority patentability issues, and the subset of those motions directed 
to patentability issues based on a patent or printed publication on the 
basis of 35 U.S.C. 102 or 103. The review of current contested cases 
before the trial section of the Board indicated that approximately 15% 
of motions were directed to prior art grounds, 18% of motions were 
directed to other patentability grounds, 27% were directed to 
miscellaneous issues, and 40% were directed to priority issues. It was 
estimated that the cost per motion to a party in current contested 
cases before the trial section of the Board declines because of overlap 
in subject matter, expert overlap, and familiarity with the technical 
subject matter. Given the overlap of subject matter, a proceeding with 
fewer motions will have a somewhat less than proportional decrease in 
costs since the overlapping costs will be spread over fewer motions.
    It is estimated that the cost of an inter partes review would be 
60% of the cost of current contested cases before the trial section of 
the Board to the end of the preliminary motion period. An inter partes 
review should have many fewer motions since only one party will have a 
patent that is the subject of the proceeding (compared with each party 
having at least a patent or an application in current contested cases 
before the trial section of the Board). Moreover, fewer issues can be 
raised since inter partes review will not have priority-related issues 
that must be addressed in current contested cases before the trial 
section of the Board. Consequently, a 60% weighting factor should 
capture the typical costs of an inter partes review.
    The title, description, and respondent description of the 
information collection are shown below with an estimate of the annual 
reporting burdens for the inter partes review provisions. Included in 
this estimate is the time for reviewing instructions, gathering and 
maintaining the data needed, and completing and reviewing the 
collection of information. The principal impact of the proposed changes 
in this notice of proposed rulemaking is to implement the changes to 
Office practice necessitated by section 6(a) of the Leahy-Smith America 
Invents Act.
    The public uses this information collection to request inter partes 
review and to ensure that the associated fees and documentation are 
submitted to the USPTO.

II. Data

    Needs and Uses: The information supplied to the USPTO by a petition 
to institute an inter partes review as well as the motions authorized 
following the institution is used by the USPTO to determine whether to 
initiate a review under 35 U.S.C. 314, as amended, and to prepare a 
final decision under 35 U.S.C. 318, as amended.
    OMB Number: 0651-00xx.
    Title: Patent Review and Derivation Proceedings.
    Form Numbers: None.
    Type of Review: New Collection.
    Likely Respondents/Affected Public: Individuals or households, 
businesses, or other for-profit, not-for-profit institutions, farms, 
Federal Government, and state, local, or tribal governments.
    Estimated Number of Respondents/Frequency of Collection: 920 
respondents and 4,024 responses per year.
    Estimated Time per Response: The USPTO estimates that it will take 
the public from 0.1 to 180.4 hours to gather the necessary information, 
prepare the documents, and submit the information to the USPTO.
    Estimated Total Annual Respondent Burden Hours: 464,781.6 hours per 
year.
    Estimated Total Annual (Hour) Respondent Cost Burden: $158,025,744 
per year. The USPTO expects that the information in this collection 
will be prepared by attorneys. Using the professional rate of $340 per 
hour for attorneys in private firms, the USPTO estimates that the 
respondent cost burden for this collection will be approximately 
$158,025,744 per year (464,781.6 hours per year multiplied by $340 per 
hour).
    Estimated Total Annual Non-hour Respondent Cost Burden: $16,474,473 
per year. There are no capital start-up or maintenance costs associated 
with this information collection. However, this collection does have 
annual (non-hour) costs in the form of filing fees and postage costs 
where filing via mail is authorized. It is estimated that filing via 
mail will be authorized in one inter partes review petition filing and 
3 subsequent papers. There are filing fees associated with petitions 
for inter partes review, post-grant review, and covered business method 
patent review and for requests to treat a settlement as business 
confidential. The total filing fees for this collection are calculated 
in the accompanying table. The USPTO estimates that filings authorized 
to be filed via mail will be mailed to the USPTO by Express Mail using 
the U.S. Postal Service's flat rate envelope, which can accommodate 
varying submission weights, estimated in this case to be 16 ounces for 
the petitions and two ounces for the other papers. The cost of the flat 
rate envelope is $18.30. The USPTO estimates that the total postage 
cost associated with this collection will be approximately $73 per 
year. The USPTO estimates that the total fees associated with this 
collection will be approximately $16,474,473 per year.
    Therefore, the total cost burden in fiscal year 2013 is estimated 
to be $174,500,217 (the sum of the estimated total annual (hour) 
respondent cost burden ($158,025,744) plus the estimated total annual 
non-hour respondent cost burden ($16,474,473)).

[[Page 7058]]



----------------------------------------------------------------------------------------------------------------
                                                      Estimated time for   Estimated annual    Estimated annual
                        Item                           response  (hours)       responses         burden hours
----------------------------------------------------------------------------------------------------------------
Petition for inter partes review....................               135.3                 460            62,238
Reply to initial inter partes review petition.......               100                   406            40,600
Request for Reconsideration.........................                80                   127            10,160
Motions, replies, and oppositions after institution                140                 2,453           343,420
 in inter partes review.............................
Request for oral hearing............................                20                   411             8,220
Request to treat a settlement as business                            2                    16                32
 confidential.......................................
Request for adverse judgment, default adverse                        1                    91                91
 judgment, or settlement............................
Request to make a settlement agreement available....                 1                    16                16
Notice of judicial review of a Board decision (e.g.,                 0.1                  46                 4.6
 notice of appeal under 35 U.S.C. 142)..............
                                                     -----------------------------------------------------------
    Totals..........................................  ..................               4,026           464,781.6
----------------------------------------------------------------------------------------------------------------


----------------------------------------------------------------------------------------------------------------
                                                       Estimated annual                        Estimated annual
                        Item                               responses          Fee amount         filing costs
----------------------------------------------------------------------------------------------------------------
Petition for inter partes review....................                 460             $35,800         $16,468,000
Reply to inter partes review petition...............                 406                   0                   0
Request for Reconsideration.........................                 127                   0                   0
Motions, replies, and oppositions after initiation                 2,453                   0                   0
 in inter partes review.............................
Request for oral hearing............................                 411                   0                   0
Request to treat a settlement as business                             16                   0                   0
 confidential.......................................
Request for adverse judgment, default adverse                         91                   0                   0
 judgment, or settlement............................
Request to make a settlement agreement available....                  16                 400               6,400
Notice of judicial review of a Board decision (e.g.,                  46                   0                   0
 notice of appeal under 35 U.S.C. 142)..............
                                                     -----------------------------------------------------------
    Totals..........................................               4,026  ..................          16,474,400
----------------------------------------------------------------------------------------------------------------

III. Solicitation

    The agency is soliciting comments to: (1) Evaluate whether the 
proposed information requirement is necessary for the proper 
performance of the functions of the agency, including whether the 
information will have practical utility; (2) evaluate the accuracy of 
the agency's estimate of the burden; (3) enhance the quality, utility, 
and clarity of the information to be collected; and (4) minimize the 
burden of collecting the information on those who are to respond, 
including by using appropriate automated, electronic, mechanical, or 
other technological collection techniques or other forms of information 
technology.
    Interested persons are requested to send comments regarding this 
information collection by April 10, 2012, to: (1) The Office of 
Information and Regulatory Affairs, Office of Management and Budget, 
New Executive Office Building, Room 10202, 725 17th Street NW., 
Washington, DC 20503, Attention: Nicholas A. Fraser, the Desk Officer 
for the United States Patent and Trademark Office, and via email at 
[email protected]; and (2) The Board of Patent Appeals and 
Interferences by electronic mail message over the Internet addressed to 
[email protected], or by mail addressed to: Mail Stop 
Patent Board, Director of the United States Patent and Trademark 
Office, P.O. Box 1450, Alexandria, VA 22313-1450, marked to the 
attention of ``Lead Judge Michael Tierney, Inter partes Review Proposed 
Rules.''
    Notwithstanding any other provision of law, no person is required 
to respond to nor shall a person be subject to a penalty for failure to 
comply with a collection of information subject to the requirements of 
the Paperwork Reduction Act unless that collection of information 
displays a currently valid OMB control number.

List of Subjects in 37 CFR Part 42

    Administrative practice and procedure, Inventions and patents, 
Lawyers.

Proposed Amendments to the Regulatory Text

    For the reasons stated in the preamble, the Under Secretary of 
Commerce for Intellectual Property and Director of the United States 
Patent and Trademark Office propose to amend 37 CFR part 42 as proposed 
to be added in the February 9, 2012, issue of the Federal Register as 
follows:

PART 42--TRIAL PRACTICE BEFORE THE PATENT TRIAL AND APPEAL BOARD

    1. The authority citation for 37 CFR part 42 continues to read as 
follows:

    Authority:  35 U.S.C. 2(b)(2), 6, 21, 23, 41, 135, 311, 312, 
316, 321-326 and Leahy-Smith America Invents Act, Pub. L. 112-29, 
sections 6(c), 6(f), and 18, 125 Stat. 284, 304, 311, and 329 
(2011).

    2. Add subpart B to read as follows:
Subpart B--Inter Partes Review

General

Sec.
42.100 Procedure; pendency.
42.101 Who may petition for inter partes review.
42.102 Time for filing.
42.103 Inter partes review fee.
42.104 Content of petition.
42.105 Service of petition.
42.106 Filing date.
42.107 Preliminary response to petition.

Instituting Inter Partes Review

42.108 Institution of inter partes review.

After Institution of Inter Partes Review

42.120 Patent owner response.
42.121 Amendment of the patent.
42.122 Multiple proceedings.
42.123 Filing of supplemental information.

[[Page 7059]]

Subpart B--Inter Partes Review

General


Sec.  42.100  Procedure; pendency.

    (a) An inter partes review is a trial subject to the procedures set 
forth in subpart A of this part.
    (b) A claim in an unexpired patent shall be given its broadest 
reasonable construction in light of the specification of the patent in 
which it appears.
    (c) An inter partes review proceeding 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 Judge.


Sec.  42.101  Who may petition for inter partes review.

    A person who is not the owner of a patent may file with the Office 
a petition to institute an inter partes review of the patent unless:
    (a) Before the date on which the petition for review is filed, the 
petitioner or real party in interest filed a civil action challenging 
the validity of a claim of the patent;
    (b) The petition requesting the proceeding is filed more than one 
year after the date on which the petitioner, the petitioner's real 
party in interest, or a privy of the petitioner is served with a 
complaint alleging infringement of the patent; or
    (c) The petitioner, the petitioner's real party in interest, or a 
privy of the petitioner is estopped from challenging the claims on the 
grounds identified in the petition.


Sec.  42.102  Time for filing.

    (a) A petition for inter partes review of a patent must be filed 
after the later of:
    (1) The date that is nine months after the date of the grant of the 
patent or of the issuance of the reissue patent; or
    (2) If a post-grant review is instituted as set forth in subpart C 
of this part, the date of the termination of such post-grant review.
    (b) The Director may impose a limit on the number of inter partes 
reviews that may be instituted during each of the first four one-year 
periods in which the amendment made to chapter 31 of title 35, United 
States Code, is in effect by providing notice in the Office's Official 
Gazette or Federal Register. Petitions filed after an established limit 
has been reached will be deemed untimely.


Sec.  42.103  Inter partes review fee.

    (a) An inter partes review fee set forth in Sec.  42.15(a) must 
accompany the petition.
    (b) No filing date will be accorded to the petition until full 
payment is received.


Sec.  42.104  Content of petition.

    In addition to the requirements of Sec. Sec.  42.8 and 42.22, the 
petition must set forth:
    (a) Grounds for standing. The petitioner must certify that the 
patent for which review is sought is available for inter partes review 
and that the petitioner is not barred or estopped from requesting an 
inter partes review of the patent.
    (b) Identification of challenge. Provide a statement of the precise 
relief requested for each claim challenged. The statement must identify 
the following:
    (1) The claim;
    (2) The specific statutory grounds under 35 U.S.C. 102 or 103 on 
which the challenge to the claim is based and the patents or printed 
publications relied upon for each ground;
    (3) How the challenged claim is to be construed. Where the claim to 
be construed contains a means-plus-function or step-plus-function 
limitation as permitted under 35 U.S.C. 112, sixth paragraph, the 
construction of the claim must identify the specific portions of the 
specification that describe the structure, material, or acts 
corresponding to each claimed function;
    (4) How the construed claim is unpatentable under the statutory 
grounds identified in paragraph (b)(2) of this section. The petition 
must specify where each element of the claim is found in the prior art 
patents or printed publications relied upon; and
    (5) The exhibit number of the supporting evidence relied upon to 
support the challenge and state the relevance of the evidence to the 
challenge raised, including identifying specific portions of the 
evidence that support the challenge. The Board may exclude or give no 
weight to the evidence where a party has failed to state its relevance 
or to identify specific portions of the evidence that support the 
challenge.
    (c) A motion may be filed that seeks to correct a clerical or 
typographical mistake in the petition. The grant of such a motion does 
not change the filing date of the petition.


Sec.  42.105  Service of petition.

    In addition to the requirements of Sec.  42.6, the petitioner must 
serve the petition and exhibits relied upon in the petition as follows:
    (a) The petition and supporting evidence must be served on the 
patent owner at the correspondence address of record for the subject 
patent. The petitioner may additionally serve the petition and 
supporting evidence on the patent owner at any other address known to 
the petitioner as likely to effect service.
    (b) If the petitioner cannot effect service of the petition and 
supporting evidence on the patent owner at the correspondence address 
of record for the subject patent, the petitioner must immediately 
contact the Board to discuss alternate modes of service.


Sec.  42.106  Filing date.

    (a) Complete petition. A petition to institute inter partes review 
will not be accorded a filing date until the petition satisfies all of 
the following requirements:
    (1) Complies with Sec.  42.104;
    (2) Service of the petition on the correspondence address of record 
as provided in Sec.  42.105(a); and
    (3) Is accompanied by the fee to institute required in Sec.  
42.15(a).
    (b) Incomplete petition. Where a party files an incomplete 
petition, no filing date will be accorded, and the Office will dismiss 
the petition if the deficiency in the petition is not corrected within 
one month from the notice of an incomplete petition.


Sec.  42.107  Preliminary response to petition.

    (a) The patent owner may file a preliminary response to the 
petition. The response is limited to setting forth the reasons why no 
inter partes review should be instituted under 35 U.S.C. 314. The 
response can include evidence except as provided in paragraph (c) of 
this section. The preliminary response is an opposition for purposes of 
determining page limits under Sec.  42.24.
    (b) Due date. The preliminary response must be filed no later than 
two months after the date of a notice indicating that the request to 
institute an inter partes review has been granted a filing date. A 
patent owner may expedite the proceeding by filing an election to waive 
the preliminary patent owner response.
    (c) No new testimonial evidence. The preliminary response shall not 
present new testimony evidence beyond that already of record.
    (d) No amendment. The preliminary response shall not include any 
amendment.
    (e) Disclaim Patent Claims. The patent owner may file a statutory 
disclaimer under 35 U.S.C. 253(a) in compliance with Sec.  1.321(a), 
disclaiming one or more claims in the patent. No inter partes review 
will be instituted based on disclaimed claims.

[[Page 7060]]

Instituting Inter Partes Review


Sec.  42.108  Institution of inter partes review.

    (a) When instituting inter partes review, the Board may authorize 
the review to proceed on all or some of the challenged claims and on 
all or some of the grounds of unpatentability asserted for each claim.
    (b) At any time prior to institution of inter partes review, the 
Board may deny some or all grounds for unpatentability for some or all 
of the challenged claims. Denial of a ground is a Board decision not to 
institute inter partes review on that ground.
    (c) Sufficient grounds. Inter partes review shall not be instituted 
for a ground of unpatentability unless the Board decides that the 
petition supporting the ground would, if unrebutted, demonstrate that 
there is a reasonable likelihood that at least one of the claims 
challenged in the petition is unpatentable. The Board's decision will 
take into account a preliminary patent owner response where such a 
response is filed.

After Institution of Inter Partes Review


Sec.  42.120  Patent owner response.

    (a) Scope. A patent owner may file a response to the petition 
addressing any ground for unpatentability not already denied. A patent 
owner response is filed as an opposition and is subject to the page 
limits provided in Sec.  42.24.
    (b) Due date for response. If no time for filing a patent owner 
response to a petition is provided in a Board order, the default date 
for filing a patent owner response is two months from the date the 
inter partes review was instituted.


Sec.  42.121  Amendment of the patent.

    (a) A patent owner may file one motion to amend a patent but only 
after conferring with the Board. Any additional motions to amend may 
not be filed without Board authorization.
    (b) A motion to amend must set forth:
    (1) The support in the original disclosure of the patent for each 
claim that is added or amended; and
    (2) The support in an earlier filed disclosure for each claim for 
which benefit of the filing date of the earlier filed disclosure is 
sought.
    (c) A motion to amend the claims of a patent will not be authorized 
where:
    (1) The amendment does not respond to a ground of unpatentability 
involved in the trial; or
    (2) The amendment seeks to enlarge the scope of the claims of the 
patent or introduce new subject matter.


Sec.  42.122  Multiple proceedings.

    Where another matter involving the patent is before the Office, the 
Board may during the pendency of the inter partes review enter any 
appropriate order regarding the additional matter including providing 
for the stay, transfer, consolidation, or termination of any such 
matter.


Sec.  42.123  Filing of supplemental information.

    Once a trial has been instituted, a petitioner may request 
authorization to file a motion identifying supplemental information 
relevant to a ground for which the trial has been instituted. The 
request must be made within one month of the date the trial is 
instituted.

    Dated: January 31, 2012.
David J. Kappos,
Under Secretary of Commerce for Intellectual Property and Director of 
the United States Patent and Trademark Office.
[FR Doc. 2012-2534 Filed 2-9-12; 8:45 am]
BILLING CODE 3510-16-P