Federal Register, Volume 77 Issue 157 (Tuesday, August 14, 2012)

[Federal Register Volume 77, Number 157 (Tuesday, August 14, 2012)]
[Rules and Regulations]
[Pages 48612-48678]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-17900]

[[Page 48611]]

Vol. 77

Tuesday,

No. 157

August 14, 2012

Part II

Department of Commerce

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Patent and Trademark Office

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37 CFR Parts 1, 42 and 90

Rules of Practice for Trials Before the Patent Trial and Appeal Board
and Judicial Review of Patent Trial and Appeal Board Decisions; Final
Rule

Federal Register / Vol. 77, No. 157 / Tuesday, August 14, 2012 /
Rules and Regulations

[[Page 48612]]

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DEPARTMENT OF COMMERCE

Patent and Trademark Office

37 CFR Parts 1, 42 and 90

[Docket No. PTO-P-2011-0082]
RIN 0651-AC70

Rules of Practice for Trials Before the Patent Trial and Appeal
Board and Judicial Review of Patent Trial and Appeal Board Decisions

AGENCY: United States Patent and Trademark Office, Commerce.

ACTION: Final rule.

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SUMMARY: The United States Patent and Trademark Office (Office or
USPTO) is revising the rules of practice to implement the provisions of
the Leahy-Smith America Invents Act (``AIA'') that provide for trials
before the Patent Trial and Appeal Board (Board). This final rule
provides a consolidated set of rules relating to Board trial practice
for inter partes review, post-grant review, the transitional program
for covered business method patents, and derivation proceedings. This
final rule also provides a consolidated set of rules to implement the
provisions of the AIA related to seeking judicial review of Board
decisions.

DATES: Effective Date: The changes in this final rule take effect on
September 16, 2012.

FOR FURTHER INFORMATION CONTACT: Michael P. Tierney, Lead
Administrative Patent Judge, Scott R. Boalick, Lead Administrative
Patent Judge, Robert A. Clarke, Administrative Patent Judge, Joni Y.
Chang, Administrative Patent Judge, Thomas L. Giannetti, Administrative
Patent Judge, Board of Patent Appeals and Interferences, by telephone
at (571) 272-9797.

SUPPLEMENTARY INFORMATION: Executive Summary: Purpose: On September 16,
2011, the AIA was enacted into law (Pub. L. 112-29, 125 Stat. 284
(2011)). The purpose of the AIA and this final rule is to establish a
more efficient and streamlined patent system that will improve patent
quality and limit unnecessary and counterproductive litigation costs.
The preamble of this notice sets forth in detail the procedures by
which the Board will conduct trial proceedings. The USPTO is engaged 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,
and 35 U.S.C. 326(b). This final rule provides a consolidated set of
rules relating to Board trial practice for inter partes review, post-
grant review, the transitional program for covered business method
patents, and derivation proceedings. See 35 U.S.C. 316(b), as amended,
and 35 U.S.C. 326(b).
Summary of Major Provisions: Consistent with sections 3, 6, 7, and
18 of the AIA, this final rule sets forth: (1) The evidentiary
standards, procedure, and default times for conducting trial
proceedings; (2) the fees for requesting reviews; (3) the procedure for
petition and motion practice; (4) the page limits for petitions,
motions, oppositions, and replies; (5) the standards and procedures for
discovery of relevant evidence, including the procedure for taking and
compelling testimony; (6) the sanctions for abuse of discovery, abuse
of process, or any other improper use of the proceeding; (7) the
procedure for requesting oral hearings; (8) the procedure for
requesting rehearing of decisions and filing appeals; (9) the procedure
for requesting joinder; and (10) the procedure to make file records
available to the public that include the procedures for motions to
seal, protective orders for confidential information, and requests to
treat settlement as business confidential information.
Costs and Benefits: This rulemaking is not economically
significant, but is significant, under Executive Order 12866 (Sept. 30,
1993), as amended by Executive Order 13258 (Feb. 26, 2002) and
Executive Order 13422 (Jan. 18, 2007).
Background: To implement the changes set forth in sections 3, 6, 7,
and 18 of the AIA that are related to administrative trials and
judicial review of Board decisions, the Office published the following
notices of proposed rulemaking: (1) Rules of Practice for Trials before
the Patent Trial and Appeal Board and Judicial Review of Patent Trial
and Appeal Board Decisions, 77 FR 6879 (Feb. 9, 2012), to provide a
consolidated set of rules relating to Board trial practice for inter
partes review, post-grant review, derivation proceedings, and the
transitional program for covered business method patents, and judicial
review of Board decisions by adding new parts 42 and 90 including a new
subpart A to title 37 of the Code of Federal Regulations (RIN 0651-
AC70); (2) Changes to Implement Inter Partes Review Proceedings, 77 FR
7041 (Feb. 10, 2012), to provide rules specific to inter partes review
by adding a new subpart B to 37 CFR part 42 (RIN 0651-AC71); (3)
Changes to Implement Post-Grant Review Proceedings, 77 FR 7060 (Feb.
10, 2012), to provide rules specific to post-grant review by adding a
new subpart C to 37 CFR part 42 (RIN 0651-AC72); (4) Changes to
Implement Transitional Program for Covered Business Method Patents, 77
FR 7080 (Feb. 10, 2012), to provide rules specific to the transitional
program for covered business method patents by adding a new subpart D
to 37 CFR part 42 (RIN 0651-AC73); (5) Transitional Program for Covered
Business Method Patents--Definition of Technological Invention, 77 FR
7095 (Feb. 10, 2012), to add a new rule that sets forth the definition
of technological invention for determining whether a patent is for a
technological invention solely for purposes of the transitional program
for covered business method patents (RIN 0651-AC75); and (6) Changes to
Implement Derivation Proceedings, 77 FR 7028 (Feb. 10, 2012), to
provide rules specific to derivation proceedings by adding a new
subpart E to 37 CFR part 42 (RIN 0651-AC74).
Additionally, the Office published a Patent Trial Practice Guide
for the proposed rules in the Federal Register to provide the public an
opportunity to comment. Practice Guide for Proposed Trial Rules, 77 FR
6868 (Feb. 9, 2012) (Request for Comments) (``Practice Guide'' or
``Office Patent Trial Practice Guide''). The Office envisions
publishing a revised Patent Trial Practice Guide for the final rules.
The Office also hosted a series of public educational roadshows, across
the country, regarding the proposed rules for the implementation of
AIA.
In response to the notices of proposed rulemaking and the Office
Patent Trial Practice Guide notice, the Office received 251 submissions
offering written comments from intellectual property organizations,
businesses, law firms, patent practitioners, and others, including a
United States senator who was a principal author of section 18 of the
AIA. The comments provided support for, opposition to, and diverse
recommendations on the proposed rules. The Office appreciates the
thoughtful comments, and has considered and analyzed the comments
thoroughly. The Office's responses to the comments are provided in the
228 separate responses based on the topics raised in the 251 comments
in the Response to Comments section infra.
In light of the comments, the Office has made appropriate
modifications to the proposed rules to provide clarity and to take into
account the interests of the public, patent owners, patent challengers,
and other interested parties, with the statutory requirements and
considerations, such as the effect of the regulations on the economy,
the

[[Page 48613]]

integrity of the patent system, the efficient administration of the
Office, and the ability of the Office to complete the proceedings
timely. The Office has decided to proceed with several separate final
rules to implement the changes set forth in sections 3, 6, 7, and 18 of
the AIA that are related to administrative trials and judicial review
of Board decisions. This final rule adopts the proposed changes, with
modifications, set forth in the Rules of Practice for Trials before the
Patent Trial and Appeal Board and Judicial Review of Patent Trial and
Appeal Board Decisions (77 FR 6879).

Differences Between the Final Rule and the Proposed Rule

The major differences between the rules as adopted in this final
rule and the proposed rules are as follows:
The final rule clarifies that the term ``Board'' also means ``a
Board member or employee acting with the authority of the Board'' for
petition decisions and interlocutory decisions, and it means ``a panel
of the Board'' for final written decisions under 35 U.S.C. 135(d) and
318(a), as amended, and 35 U.S.C. 328(a) (Sec. 42.2).
With respect to the mode of service, the final rule clarifies that
service may be made electronically upon agreement of the parties, or
otherwise, by EXPRESS MAIL[supreg] or means at least as fast and
reliable as EXPRESS MAIL[supreg] (Sec. 42.6(e)).
As to mandatory notices, the requirement for filing the notices as
separate papers has been eliminated (Sec. 42.8(b)).
With respect to recognizing counsel pro hac vice, the final rule
specifies that the Board may recognize counsel pro hac vice during a
proceeding upon a showing of good cause, subject to the condition that
lead counsel be a registered practitioner and to any other conditions
as the Board may impose (Sec. 42.10(c)). The final rule further
provides an example to clarify that, where the lead counsel is a
registered practitioner, a motion for appearance, pro hac vice, by
counsel who is not a registered practitioner may be granted upon
showing that counsel is an experienced litigating attorney and has an
established familiarity with the subject matter at issue in the
proceeding (Sec. 42.10(c)).
In addition, the final rule clarifies that parties and individuals
involved in the proceeding, as opposed to those merely ``associated
with the parties,'' have a duty of candor and good faith to the Office
during the course of a proceeding (Sec. 42.11).
As to citations of authority, the final rule eliminates the
requirements for citing decisions to the United States Reports and the
West Reporter System (Sec. 42.13). Instead, the final rule expresses a
preference for these sources.
While this final rule adopts the proposed base fees for petitions
challenging 20 claims or fewer, the final rule eliminates the fee
escalation in block increments of ten claims by establishing flat fees
per each challenged claim in excess of 20 claims for inter partes
reviews, post-grant reviews, and covered business method patent reviews
(Sec. 42.15(a) and (b)). In a separate rulemaking in which the Office
proposes to set and adjust fees pursuant to section 10 of the AIA, the
Office is proposing a limited subsidization of the petition fees, and a
staged fee structure, which would permit a refund of a portion of the
petition fees in cases where a review is not instituted.
This final rule also clarifies that the excess claims fees set
forth in 35 U.S.C. 41(a)(2) are required where a motion to amend
presents a certain number of additional claims (Sec. 42.15(e) and
(f)).
As to the proposed page limits, the final rule increases the
proposed page limits by ten pages for petitions, patent owner
preliminary responses, and patent owner responses (Sec. 42.24),
eliminates the requirement of presenting claim charts in double spacing
(Sec. 42.6(a)(2)(iii)), and eliminates the requirement for a statement
of material facts with respect to petitions and motions (Sec. 42.22).
These collective modifications will permit parties to have greater
flexibility in presenting their cases and in responding to petitions
and motions.
As to discovery provisions, the final rule clarifies that the
parties may agree to additional discovery between themselves without
prior authorization from the Board (Sec. 42.51(b)(2)). Likewise, the
final rule additionally provides where the parties agree to mandatory
discovery requiring initial disclosures, parties may automatically,
upon the institution, take discovery of the information identified in
the initial disclosures (Sec. 42.51(a)(1)). In this regard, the final
rule also provides that where the parties fail to agree, a party may
seek the mandatory discovery of the initial disclosures by motion
(Sec. 42.51(a)(2)).
As to routine discovery, the final rule eliminates the requirement
to explain the relevance of the information that is inconsistent with a
position advanced by the party, and eliminates the noncumulative
requirement (proposed Sec. 42.51(b)(3)). The final rule further limits
the scope to relevant information, as opposed to any noncumulative
information, that is inconsistent with a position advanced by the party
during the proceeding (Sec. 42.51(b)(1)(iii), previously proposed
Sec. 42.51(b)(3)). In that regard, the final rule also tailors the
scope by stating expressly that the requirement does not make
discoverable anything otherwise protected by legally recognized
privileges, and the requirement only extends to inventors, corporate
officers, and persons involved in the preparation or filing of the
documents (Sec. 42.51(b)(1)(iii)). The final rule further clarifies
that the party must serve, rather than file, the relevant information
(Sec. 42.51(b)(1)(iii)).
Additionally, the final rule provides the parties the flexibility
to agree on the service of exhibits (Sec. 42.51(b)(1)(i)). The final
rule also provides a new provision for production of documents (Sec.
42.51(c)).
As to the taking of testimony, the final rule permits parties to
agree, without prior authorization of the Board, to video recording
testimony (Sec. 42.53(a)), and taking uncompelled deposition testimony
outside the United States (Sec. 42.53(b)(3)). The final rule provides
the default time limits for direct examination, cross-examination, and
redirect examination for compelled deposition testimony, as well as
cross-examination, redirect examination, and re-cross examination for
uncompelled direct deposition testimony (Sec. 42.53(c)). In the case
of direct deposition testimony, the final rule clarifies that if there
is no conference with the Board, the party seeking the direct testimony
must serve the required information and documents at least ten days
prior to the deposition (Sec. 42.53(d)(3)). The final rule provides a
new provision for an additional party seeking to take direct testimony
of a third party witness (Sec. 42.53(b)(5)(iv)). As to admissibility
of evidence, the final rule eliminates the provision for motions in
limine (proposed Sec. 42.64(d)).
As to protective orders governing the exchange and submission of
confidential information, the final rule clarifies that either the
petitioner or patent owner may file a motion to seal containing a
proposed protective order, such as the default protective order set
forth in the Office Patent Trial Practice Guide (Sec. 42.54(a)).
Similarly, the final rule clarifies that confidential information in a
petition may be accessed by the patent owner prior to the institution
by: (1) Agreeing to the terms of the protective order requested by the
petitioner, (2) agreeing to the terms of a protective order that the
parties file jointly, or (3) obtaining entry of a protective order by
the Board (Sec. 42.55).
Regarding decisions by the Board, the final rule clarifies that
while decisions

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on whether to institute a trial (including decisions not to institute a
trial and decisions to institute a trial based on one or some of the
grounds of unpatentability asserted in the petition) are final and
nonappealable to the Federal courts, a party may request a rehearing
before the Board (Sec. Sec. 42.71(c) and (d)). The final rule also
clarifies that a judgment includes a final written decision by the
Board, or a termination of a proceeding (Sec. 42.2). Additionally, the
final clarifies that a judgment, except in the case of a termination,
disposes all issues that were, or by motion reasonably could have been,
raised and decided (Sec. 42.73(a)).
As to the estoppel provisions, the final rule clarifies that a
petitioner who has not settled, or the real party in interest or privy
of such petitioner, is estopped in the Office from requesting or
maintaining a proceeding with respect to a claim for which it has
obtained a final written decision on patentability in an inter partes
review, post-grant review, or a covered business method patent review
on any ground that the petitioner raised or reasonably could have
raised during the trial (Sec. 42.73(d)(1)). Further, the final rule
tailors the provisions to provide that a patent applicant or patent
owner whose claim is canceled is precluded from taking action
inconsistent with the adverse judgment, including obtaining in any
patent: (1) A claim that is not patentably distinct from the finally
refused or cancelled claim; and (2) an amendment of a specification or
drawing that was denied during the trial (Sec. 42.73(d)(3)). In this
regard, the final rule also eliminates the provision precluding
obtaining a patent for a claim that could have been filed (proposed
Sec. 42.73(d)(3)(ii)).
Discussion of Relevant Provisions of the AIA:
This final rule refers to the rules in subparts B through E of part
42 set forth in other final rules (RIN 0651-AC71, RIN 0651-AC74, and
RIN 0651-AC75). Moreover, rather than repeating the statutory
provisions set forth in the AIA for the implementation of inter partes
review, post-grant review, transitional program covered business method
patents, and derivation that are provided in the other final rules, the
instant final rule only summarizes the provisions related to the Board
and judicial review of Board decisions that are not provided in the
other final rules and provides the general framework for conducting
trials.

Patent Trial and Appeal Board

Section 7 of the AIA amends 35 U.S.C. 6 and provides for the
constitution and duties of the Patent Trial and Appeal Board. 35 U.S.C.
6(a), as amended, provides that the Patent Trial and Appeal Board
members will include the Director, Deputy Director, Commissioner for
Patents, Commissioner for Trademarks, and administrative patent judges.
35 U.S.C. 6(a), as amended, further provides that ``administrative
patent judges shall be persons of competent legal knowledge and
scientific ability and are appointed by the Secretary, in consultation
with the Director.'' 35 U.S.C. 6(b), as amended, specifies that the
duties of the Patent Trial and Appeal Board are to: (1) Review adverse
decisions of examiners in patent applications; (2) review appeals of
reexaminations pursuant to 35 U.S.C. 134(b); (3) conduct derivation
proceedings pursuant to 35 U.S.C. 135, as amended; and (4) conduct
inter partes reviews and post-grant reviews pursuant to chapters 31 and
32 of title 35, United States Code. Further, section 7 of the AIA
amends 35 U.S.C. 6 by adding paragraphs (c) and (d). New paragraph (c)
of 35 U.S.C. 6 provides that each appeal, derivation proceeding, post-
grant review including covered business method patent review, and inter
partes review shall be heard by at least three members of the Board,
who shall be designated by the Director.

Judicial Review of Patent Trial and Appeal Board Decisions

The AIA amends title 35, United States Code, to provide for certain
changes to the provisions for judicial review of Board decisions, such
as amending 35 U.S.C. 134, 141, 145, 146, and 306 to change the Board's
name to ``Patent Trial and Appeal Board'' and to provide for judicial
review of the final decisions of the Board in inter partes reviews,
post-grant reviews, covered business method patent reviews, and
derivation proceedings. The AIA also revises the provisions related to
filing an appeal or commencing a civil action in interferences under 35
U.S.C. 141 or 146, respectively.
In particular, section 3(j) of the AIA eliminates references to
interferences. Section 3(j)(1) of the AIA amends each of 35 U.S.C. 145
and 146 by striking the phrase ``Board of Patent Appeals and
Interferences'' each place it appears and inserting ``Patent Trial and
Appeal Board.'' Section 3(j)(2)(A) of the AIA amends 35 U.S.C. 146 by:
(i) striking ``an interference'' and inserting ``a derivation
proceeding''; and (ii) striking ``the interference'' and inserting
``the derivation proceeding.'' Section 3(j)(3) of the AIA amends the
section heading for 35 U.S.C. 134 to read as follows: ``Sec. 134.
Appeal to the Patent Trial and Appeal Board.'' Section 3(j)(4) of the
AIA amends the section heading for 35 U.S.C. 146 to read as follows:
``Sec. 146. Civil action in case of derivation proceeding.'' Section
3(j)(6) of the AIA amends the item relating to 35 U.S.C. 146 in the
table of sections for chapter 13 of title 35, United States Code, to
read as follows: ``146. Civil action in case of derivation
proceeding.''
Section 6(f)(3)(C) of the AIA provides that the authorization to
appeal or have remedy from derivation proceedings in 35 U.S.C. 141(d)
and 35 U.S.C. 146, as amended, and the jurisdiction to entertain
appeals from derivation proceedings under 28 U.S.C. 1295(a)(4)(A), as
amended, shall be deemed to extend to any final decision in an
interference that is commenced before the effective date (the date that
is one year after the enactment date) and that is not dismissed
pursuant to section 6(f)(3)(A) of the AIA.
Section 6(h)(2)(A) of the AIA amends 35 U.S.C. 306 by striking
``145'' and inserting ``144.''
Section 7(c)(1) of the AIA amends 35 U.S.C. 141, entitled ``Appeal
to Court of Appeals for the Federal Circuit.'' 35 U.S.C. 141(a), as
amended, provides that an applicant who is dissatisfied with the final
decision in an appeal to the Patent Trial and Appeal Board under 35
U.S.C. 134(a) may appeal the Board's decision to the United States
Court of Appeals for the Federal Circuit. 35 U.S.C. 141(a), as amended,
further provides that, by filing an appeal to the United States Court
of Appeals for the Federal Circuit, the applicant waives his or her
right to proceed under 35 U.S.C. 145.
Section 7(c)(1) of the AIA amends 35 U.S.C. 141(b) to make clear
that a patent owner who is dissatisfied with the final decision in an
appeal of a reexamination to the Patent Trial and Appeal Board under 35
U.S.C. 134(b) may appeal the Board's decision only to the United States
Court of Appeals for the Federal Circuit.
Section 7(c)(1) of the AIA amends 35 U.S.C. 141(c) to provide that
a party to an inter partes review or a post-grant review who is
dissatisfied with the final written decision of the Patent Trial and
Appeal Board under 35 U.S.C. 318(a), as amended, or 35 U.S.C. 328(a)
may appeal the Board's decision only to the United States Court of
Appeals for the Federal Circuit.
Section 7(c)(1) of the AIA amends 35 U.S.C. 141(d) to provide that
a party to a derivation proceeding who is dissatisfied with the final
decision of the Patent Trial and Appeal Board in the proceeding may
appeal the decision to the United States Court of Appeals for the
Federal Circuit, but such appeal

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shall be dismissed if any adverse party to such derivation proceeding,
within 20 days after the appellant has filed notice of appeal in
accordance with 35 U.S.C. 142, files notice with the Director that the
party elects to have all further proceedings conducted as provided in
35 U.S.C. 146, as amended. 35 U.S.C. 141(d), as amended, also provides
that if the appellant does not, within 30 days after the filing of such
notice by the adverse party, file a civil action under 35 U.S.C. 146,
the Board's decision shall govern the further proceedings in the case.
Section 7(c)(2) of the AIA amends 28 U.S.C. 1295(a)(4)(A) to read
as follows:

(A) the Patent Trial and Appeal Board of the United States
Patent and Trademark Office with respect to a patent application,
derivation proceeding, reexamination, post-grant review, or inter
partes review under title 35, at the instance of a party who
exercised that party's right to participate in the applicable
proceeding before or appeal to the Board, except that an applicant
or a party to a derivation proceeding may also have remedy by civil
action pursuant to section 145 or 146 of title 35; an appeal under
this subparagraph of a decision of the Board with respect to an
application or derivation proceeding shall waive the right of such
applicant or party to proceed under section 145 or 146 of title 35;

Section 7(c)(3) of the AIA amends 35 U.S.C. 143 by striking the
third sentence and inserting the following:

In an ex parte case, the Director shall submit to the court in
writing the grounds for the decision of the Patent and Trademark
Office, addressing all of the issues raised in the appeal. The
Director shall have the right to intervene in an appeal from a
decision entered by the Patent Trial and Appeal Board in a
derivation proceeding under section 135 or in an inter partes or
post-grant review under chapter 31 or 32.

Section 7(c)(3) of the AIA further amends 35 U.S.C. 143 by striking
the last sentence.
Section 7(e) of the AIA provides that the amendments made by
section 7 of the AIA shall take effect upon the expiration of the one-
year period beginning on the date of the enactment of the AIA and shall
apply to proceedings commenced on or after that effective date, with
the following exceptions. First, the extension of jurisdiction to the
United States Court of Appeals for the Federal Circuit to entertain
appeals of decisions of the Patent Trial and Appeal Board in
reexaminations under the amendment made by section 7(c)(2) shall be
deemed to take effect on the date of the enactment of the AIA and shall
extend to any decision of the Board of Patent Appeals and Interferences
with respect to a reexamination that is entered before, on, or after
the date of the enactment of this Act. Second, the provisions of 35
U.S.C. 6, 134, and 141, in effect on the day before the effective date
of the amendments made by section 7 of the AIA shall continue to apply
to inter partes reexaminations requested under 35 U.S.C. 311 before
such effective date. Third, the Patent Trial and Appeal Board may be
deemed to be the Board of Patent Appeals and Interferences for purposes
of appeals of inter partes reexaminations requested under 35 U.S.C. 311
before the effective date of the amendments made by section 7 of the
AIA. And finally, the Director's right under the fourth sentence of 35
U.S.C. 143, as amended by section 7(c)(3) of the AIA, to intervene in
an appeal from a decision entered by the Patent Trial and Appeal Board
shall be deemed to extend to inter partes reexaminations requested
under 35 U.S.C. 311 before the effective date of the amendments made by
section 7 of the AIA.
Section 9(a) of the AIA amends 35 U.S.C. 32, 145, 146,
154(b)(4)(A), and 293 by striking ``United States District Court for
the District of Columbia'' each place that term appears and inserting
``United States District Court for the Eastern District of Virginia.''
Section 9(b) of the AIA provides that amendments made by section 9 of
the AIA shall take effect on the date of the enactment of this Act and
shall apply to any civil action commenced on or after that date.

Discussion of Specific Rules

This final rule provides a consolidated set of rules relating to
Board trial practice for inter partes review, post-grant review,
derivation proceedings, and the transitional program for covered
business method patents by adding a new part 42 including a new subpart
A to title 37 of the Code of Federal Regulations. Interference
proceedings would not be covered by a new part 42 and the rules in part
41 governing contested cases and interferences would continue to remain
in effect so as to not disrupt ongoing interference proceedings.
Additionally, the final rule also provides a consolidated set of rules
to implement the provisions of the AIA relating to filing appeals from
Board decisions by adding a new part 90 to title 37 of Code of Federal
Regulations.
Title 37 of the Code of Federal Regulations, Parts 42 and 90, are
added as follows:

Part 42--Trial Practice Before the Patent Trial and Appeal Board

General

Section 42.1: Section 42.1 would set forth general policy
considerations for part 42.
Section 42.1(a) defines the scope of the rules.
Section 42.1(b) provides a rule of construction for all the rules
in part 42. The rule mandates that all the Board's rules be construed
to achieve the just, speedy, and inexpensive resolution of Board
proceedings. This final rule reflects considerations identified in 35
U.S.C. 316(b), as amended, and 35 U.S.C. 326(b), which state that the
Office is to take into account the integrity of the patent system, the
efficient administration of the Office, and the ability of the Office
to complete the proceedings timely in promulgating regulations.
Section 42.1(c) requires that decorum be exercised in Board
proceedings, including dealings with opposing parties. Board officials
similarly would be expected to treat parties with courtesy and decorum.
Section 42.1(d) provides that the default evidentiary standard for
each issue in a Board proceeding is a preponderance of the evidence.
The rule implements the statute, which directs that unpatentability
issues must be proven by a preponderance of the evidence. 35 U.S.C.
316(e), as amended, and 35 U.S.C. 326(e). The rule is also consistent
with 35 U.S.C. 135(b), as amended, which provides that the Director
shall establish regulations requiring sufficient evidence to prove and
rebut a claim of derivation. See Price v. Symsek, 988 F.2d 1187, 1193
(Fed. Cir. 1993).
Section 42.2: Section 42.2 sets forth definitions for Board
proceedings under part 42.
The definition of affidavit provides that affidavit means
affidavits or declarations under Sec. 1.68. The definition also
provides that a transcript of an ex parte deposition or a declaration
under 28 U.S.C. 1746 may be used as an affidavit.
The definition of Board would rename ``the Board of Patent Appeals
and Interferences'' to ``the Patent Trial and Appeal Board.'' The
definition would also provide that Board means a panel of the Board or
a member or employee acting with the authority of the Board, consistent
with 35 U.S.C. 6(b), as amended. Further, for petition decisions and
interlocutory decisions, Board means a Board member or employee acting
with the authority of the Board. For final written decisions under 35

[[Page 48616]]

U.S.C. 135(d) and 318(a), as amended, and 35 U.S.C. 328(a), Board means
a panel of the Board.
The definition of business day provides that business day means a
day other than a Saturday, Sunday, or Federal holiday within the
District of Columbia.
The definition of confidential information provides that
confidential information means trade secret or other confidential
research, development or commercial information. The definition is
consistent with Federal Rule of Civil Procedure 26(c)(1)(G), which
provides for protective orders for trade secret or other confidential
research, development, or commercial information.
The definition of final provides that final means final for
purposes of judicial review. The definition also provides that a
decision is final only if it disposes of all necessary issues with
regard to the party seeking judicial review, and does not indicate that
further action is required.
The definition of hearing makes it clear that a hearing is a
consideration of the issues involved in the trial.
The definition of involved provides that involved means an
application, patent, or claim that is the subject of the proceeding.
The definition of judgment provides that judgment means a final
written decision by the Board, or a termination of a proceeding. The
definition is consistent with the requirement under 35 U.S.C. 318(a),
as amended, and 35 U.S.C. 328(a), as amended, that the Board issue
final written decisions for reviews that are instituted and not
dismissed. The definition is also consistent with 35 U.S.C. 135(d), as
amended, which provides for final decisions of the Board in derivation
proceedings.
The definition of motion clarifies that motions are requests for
remedies but that the term motion does not include petitions seeking to
institute a trial.
The definition of Office provides that Office means the United
States Patent and Trademark Office.
The definition of panel provides that a panel is at least three
members of the Board. The definition is consistent with 35 U.S.C. 6(c),
as amended, that each derivation proceeding, inter partes review, post-
grant review, and covered business method patent review proceeding
shall be heard by at least three members of the Board.
The definition of party includes at least the petitioner and the
patent owner, as well as any applicant or assignee in a derivation
proceeding.
The definition of petition provides that a petition is a request
that a trial be instituted and is consistent with the requirements of
35 U.S.C. 135(a) and 311, as amended, 35 U.S.C. 321.
The definition of petitioner provides that a petitioner is a party
requesting a trial be instituted. This definition is consistent with
the requirements of 35 U.S.C. 135(a) and 311(a), as amended, and 35
U.S.C. 321(a), which provide that persons seeking the institution of a
trial may do so by filing a petition.
The definition of preliminary proceeding provides that a
preliminary proceeding begins with the filing of a petition for
instituting a trial and ends with a written decision as to whether a
trial will be instituted.
The definition of proceeding provides that a proceeding means a
trial or preliminary proceeding. This definition encompasses both the
portion of the proceeding that occurs prior to institution of a trial
and the trial itself.
The definition of rehearing provides that rehearing means
reconsideration.
The definition of trial provides that a trial is a contested case
instituted by the Board based upon a petition. This definition
encompasses all contested cases before the Board, except for
interferences. The definition excludes interferences so that
interferences will continue, without disruption, to use the rules
provided in part 41. The existence of a contested case is a predicate
for authorizing a subpoena under 35 U.S.C. 24. As with part 41, inter
partes reexaminations under 35 U.S.C. 134(c) are not considered
contested cases for the purposes of part 42. Similarly, written
requests to make a settlement agreement available are not considered
contested cases.
Section 42.3: Section 42.3 sets forth the jurisdiction of the Board
in a Board proceeding.
Section 42.3(a) provides the Board with jurisdiction over
applications and patents involved in a Board proceeding. This is
consistent with 35 U.S.C. 6(b), as amended, which provides that the
Board is to conduct derivation proceedings, inter partes reviews, and
post-grant reviews. Additionally, the rule is consistent with the
Board's role in conducting the transitional program for covered
business method patent reviews pursuant to section 18 of the AIA, as
covered business method patent reviews are subject to 35 U.S.C. 326(c),
which provides that the Board conduct the review.
Section 42.3(b) provides that a petition to institute a trial must
be filed with the Board consistent with any time period required by
statute.
Section 42.4: Section 42.4 provides for notice of trial.
Section 42.4(a) specifically delegates the determination to
institute a trial to the Board.
Section 42.4(b) provides that the Board will send a notice of a
trial to every party to the proceeding.
Section 42.4(c) provides that the Board may authorize additional
modes of notice. Note that the failure to maintain a current
correspondence address may result in adverse consequences. Ray v.
Lehman, 55 F.3d 606, 610 (Fed. Cir. 1995) (finding notice of
maintenance fee provided by the Office to an obsolete, but not updated,
address of record to have been adequate).
Section 42.5: Section 42.5 sets forth the conduct of the trial.
Sections 42.5(a) and (b) permit administrative patent judges wide
latitude in administering the proceedings to balance the ideal of
precise rules against the need for flexibility to achieve reasonably
fast, inexpensive, and fair proceedings. The decision to waive a
procedural requirement (for example, default times for taking action)
is committed to the discretion of the administrative patent judge. By
permitting the judges to authorize relief under parts 1, 41, and 42,
the rule avoids delay and permits related issues to be resolved in the
same proceeding in a uniform and efficient manner.
Section 42.5(c) provides that the Board may set times by order. The
rule also provides that good cause must be shown for extensions of time
and to excuse late actions. Late action will also be excused by the
Board if it concludes that doing so is in the interests of justice.
This requirement to show good cause to extend times and to file belated
papers is consistent with the requirements of 35 U.S.C. 316(a)(11), as
amended, and 35 U.S.C. 326(a)(11), which provide that the Board issue a
final decision not less than one year after institution of the review,
extendable for good cause shown. The rule is also consistent with 35
U.S.C. 135(b), as amended, which provides that the Director shall
prescribe regulations setting forth standards for the conduct of
derivation proceedings.
Section 42.5(d) prohibits ex parte communications about a
proceeding with a Board member or Board employee actually conducting
the proceeding. Under the rule, the initiation of such an ex parte
communication may result in sanctions against the initiating party. The
prohibition includes communicating with any member of a panel acting in

[[Page 48617]]

the proceeding or seeking supervisory review in a proceeding by
contacting the judge's supervisor, without including the opposing party
in the communication. In general, under these rules, it is important to
avoid substantive discussions of a pending trial with a Board member or
Board employee. The prohibition on ex parte communications does not
extend to: (1) Ministerial communications with support staff (for
instance, to arrange a conference call); (2) hearings in which opposing
counsel declines to participate; (3) informing the Board in one
proceeding of the existence or status of a related Board proceeding; or
(4) reference to a pending case in support of a general proposition
(for instance, citing a published opinion from a pending case or
referring to a pending case to illustrate a systemic concern).
Section 42.6: Section 42.6 sets forth the procedure for filing
documents, including exhibits, and service.
Section 42.6(a) provides guidance for the filing of papers. Under
Sec. 42.6(a), papers to be filed are required to meet standards
similar to those required in patent prosecution, Sec. 1.52(a), and in
the filings at the Federal Circuit under Fed. R. App. P. 32. The
prohibition against incorporation by reference minimizes the chance
that an argument would be overlooked and eliminates abuses that arise
from incorporation and combination. In DeSilva v. DiLeonardi, 181 F.3d
865, 866-67 (7th Cir. 1999), the court rejected ``adoption by
reference'' as a self-help increase in the length of the brief and
noted that incorporation is a pointless imposition on the court's time
as it requires the judges to play archeologist with the record. The
same rationale applies to Board proceedings. Cf. Globespanvirata, Inc.
v. Tex. Instruments, Inc., 2005 WL 3077915, * 1 (D. N.J. 2005)
(Defendants provided cursory statements in motion and sought to make
its case through incorporation of expert declaration and a claim chart.
Incorporation by reference of argument not in motion was held to be a
violation of local rules governing page limitations and was not
permitted by the court); S. Indus., Inc. v. JL Audio, Inc., 29 F. Supp.
2d 878, 881-82 (N.D. Ill. 1998) (Parties should not use line spacing,
font size, or margins to evade page limits).
Section 42.6(b) sets electronic filing as the default manner in
which documents in a proceeding are filed with the Board. The
procedures for electronic filings in the rule is consistent with the
procedures for submission of electronic filings set forth in Sec.
2.126(b). Section 2.126(b) is a rule of the Trademark Trial and Appeal
Board (TTAB) which provides that submissions may be made to the TTAB
electronically according to parameters established by the Board and
published on the Web site of the Office.
The use of electronic filing, such as that used with the Board's
Interference Web Portal, facilitates public accessibility and is
consistent with the requirements of 35 U.S.C. 316(a)(1), as amended,
and 35 U.S.C. 326(a)(1), which state that the files of a proceeding are
to be made available to the public, except for those documents filed
with the intent that they be sealed. Where needed, a party may file by
means other than electronic filing but a motion explaining such a need
must accompany the non-electronic filing. In determining whether
alternative filing methods would be authorized, the Office will
consider the entity size and the ability of the party to file
electronically.
Section 42.6(c) requires that exhibits be filed with the first
document in which the exhibit is cited so as to allow for uniformity in
citing to the record.
Section 42.6(d) prohibits the filing of duplicate documents absent
Board authorization.
Section 42.6(e) requires service simultaneous with the filing of
the document, as well as requiring certificates of service. Service may
be made electronically upon agreement of the parties, otherwise service
may be by EXPRESS MAIL[supreg] or by means at least as fast and
reliable as EXPRESS MAIL[supreg]. Additional procedures to be followed
when filing documents may be provided via a standing order of the
Board. See In re Sullivan, 362 F.3d 1324 (Fed. Cir. 2004).
Section 42.7: Section 42.7 provides that the Board may vacate or
hold in abeyance unauthorized papers and limits the filing of duplicate
papers. The rule provides a tool for preventing abuses that can occur
in filing documents and ensures that the parties and the Board are
consistent in their citation to the underlying record.
Section 42.8: Section 42.8 provides for certain mandatory notices
to be provided by the parties, including identification of the real
parties in interest, related matters, lead and back-up counsel, and
service information. The rule requires the identification of lead and
back-up counsel and service information. The mandatory notices
concerning real parties in interest and related matters are consistent
with the requirements of 35 U.S.C. 315, as amended, and 35 U.S.C. 325.
These statutes describe the relationship between the trial and other
related matters and authorize, among other things, suspension of other
proceedings before the Office on the same patent and lack of standing
for real parties in interest that previously have filed civil actions
against a patent for which a trial is requested. Mandatory notices are
also needed to judge any subject matter estoppel triggered by a prior
Board, district court, or U.S. International Trade Commission
proceeding.
Examples of related administrative matters that will be affected by
a decision in the proceeding include every application and patent that
claims, or which may claim, the benefit of the priority of the filing
date of the party's involved patent or application, as well as any ex
parte and inter partes reexaminations for an involved patent.
The identification of the real party-in-interest helps identify
potential conflicts of interest for the Office. In the case of the
Board, a conflict would typically arise when an official has an
investment in a company with a direct interest in a Board proceeding.
Such conflicts can only be avoided if the parties promptly provide
information necessary to identify potential conflicts. The identity of
a real party-in-interest might also affect the credibility of evidence
presented in a proceeding. The Board will consider, on a case-by-case
basis, relevant case law to resolve a real party-in-interest or privy
dispute that may arise during a proceeding, as discussed in further
detail in the Office Patent Trial Practice Guide. Further, in inter
partes and post-grant review proceedings before the Office, the
petitioner (including any real party-in-interest or privy of the
petitioner) is estopped from relitigating any ground that was or
reasonably could have been raised. See 35 U.S.C. 315(e)(1), as amended,
and 35 U.S.C. 325(e)(1). What constitutes a real party-in-interest or
privy is a highly fact-dependent question. See generally 18A Wright &
Miller Fed. Prac. & Proc. Sec. Sec. 4449, 4451; Taylor v. Sturgell,
553 U.S. 880 (2008).
While many factors can lead to a determination that a petitioner
was a real party-in-interest or privy in a previous proceeding, actual
control or the opportunity to control the previous proceeding is an
important clue that such a relationship existed. See, e.g., Taylor, 553
U.S. at 895; see generally 18A Wright & Miller Sec. 4451. Factors for
determining actual control or the opportunity to control include
existence of a financially controlling interest in the petitioner.
Section 42.9: Section 42.9 permits action by an assignee to the
exclusion of an inventor. Orders permitting an assignee of a partial
interest to act to the exclusion of an inventor or co-assignee rarely
will be granted, and such orders will typically issue only when the

[[Page 48618]]

partial assignee was in a proceeding against its co-assignee. Ex parte
Hinkson, 1904 Comm'r. Dec. 342.
Section 42.10: Section 42.10(a) requires a party to designate a
lead counsel and back-up counsel who can conduct business on behalf of
the lead counsel as instances arise where lead counsel may be
unavailable.
Section 42.10(b) provides that a power of attorney must be filed
for counsel not of record in the party's involved patent or
application.
Section 42.10(c) allows for pro hac vice representation before the
Board subject to the condition that lead counsel be a registered
practitioner and to any other conditions as the Board may impose. The
Board may recognize counsel pro hac vice during a proceeding upon a
showing of good cause. For example, where the lead counsel is a
registered practitioner, a motion to appear pro hac vice by counsel who
is not a registered practitioner may be granted upon showing that
counsel is an experienced litigating attorney and has an established
familiarity with the subject matter at issue in the proceeding.
Proceedings before the Office can be technically complex. For
example, it is expected that amendments to a patent will be sought.
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, and incivility.
The rule allows for pro hac vice practice in the new proceedings
authorized by the AIA. Individuals appearing pro hac vice under Sec.
42.10(c) are subject to the USPTO Code of Professional Responsibility
set forth in Sec. Sec. 10.20 et seq. and disciplinary jurisdiction
under Sec. 11.19(a).
Section 42.10(d) provides 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 rule delegates to the Board the authority to conduct
counsel disqualification proceedings while the Board has jurisdiction
over a proceeding. The rule delegates 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 does 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 Board also may refer a matter to the
Office of Enrollment and Discipline for investigation and, if
warranted, further proceedings under Sec. Sec. 11.19 et seq.
Section 42.10(e) provides that counsel may not withdraw from a
proceeding before the Board unless the Board authorizes such
withdrawal.
Section 42.11: Section 42.11 reminds parties, and individuals
involved in the proceeding, of their duty of candor and good faith to
the Office as honesty before the Office is essential to the integrity
of the proceeding.
Section 42.12: Section 42.12 provides for sanctions in trial
proceedings before the Board. 35 U.S.C. 316(a)(6), as amended, and 35
U.S.C. 326(a)(6) require that the Director prescribe sanctions for
abuse of discovery, abuse of process, and any other improper use of the
proceeding in inter partes review, post-grant review, and covered
business method patent review proceedings. The rule is also consistent
with 35 U.S.C. 135(b), as amended, which provides that the Director
shall prescribe regulations setting standards for the conduct of
derivation proceedings.
Section 42.12(a) identifies types of misconduct for which the Board
may impose sanctions. The rule explicitly provides that misconduct
includes failure to comply with an applicable rule, abuse of discovery,
abuse of process, improper use of the proceeding and misrepresentation
of a fact. An example of a failure to comply with an applicable rule
includes failure to disclose a prior relevant inconsistent statement.
Section 42.12(b) recites the list of sanctions that may be imposed
by the Board.
Section 42.13: Section 42.13 provides a uniform system of citation
to authority. The rule codifies existing Board practice and extends it
to trial proceedings. Under the rule, a citation to a single source, in
the priority order set out in the rule, is sufficient, thus minimizing
the citation burden on the public.
Section 42.14: Section 42.14 provides that the record of a
proceeding be made available to the public, except as otherwise
ordered. An exception to public availability is those documents or
things accompanied by a motion to seal the document or thing. The rule
reflects the provisions of 35 U.S.C. 316(a)(1), as amended, and 35
U.S.C. 326(a)(1), which require that inter partes review and post-grant
review files be made available to the public, except that any petition
or document filed with the intent that it be sealed, if accompanied by
a motion to seal, be treated as sealed pending the outcome of the
ruling on the motion to seal.

Fees

Sections 10(d) and (e) of the AIA set out a process that must be
followed when the Office is using its authority under section 10(a) to
set or adjust patent fees. See Pub. L. 112-29, 125 Stat. at 317-18.
This process would not feasibly permit adoption of fees for the
services described herein to be in place by September 16, 2012 (the
effective date of many of the Board procedures required by the AIA and
described herein). Therefore, the Office is instead setting fees for
these services pursuant to its authority under 35 U.S.C. 41(d)(2) in
this rulemaking, which provides that fees for all processing, services,
or materials relating to patents not specified in 35 U.S.C. 41 are to
be set at amounts to recover the estimated average cost to the Office
of such processing, services, or materials. See 35 U.S.C. 41(d)(2).
The Office is also in a separate rulemaking proposing to set or
adjust patent fees subsequently under section 10 of the AIA.
Consequently, the fees set in this Final Rule will be superseded by the
fees ultimately set in the section 10 rulemaking.
Section 42.15: Section 42.15 sets fees for the new trial
proceedings.
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 cost of preparing a petition for post-grant or covered business
method patent review is estimated to be 33.333% higher than the cost of
preparing a petition for inter partes review because the petition for
post-grant or covered business method patent review may seek to
institute a proceeding on additional grounds such as subject matter
eligibility. Therefore, the Office estimates that the cost of preparing
a petition for post-grant or covered business method patent review
would be $61,333. It is expected that petitions for derivation would
have the same complexity and cost as a petition for post-grant review
because derivation

[[Page 48619]]

proceedings raise issues of conception and communication, which have
similar complexity to the issues that can be raised in a post-grant
review, i.e., public use, sale and written description. Thus, the
Office estimates that the cost of preparing a petition for derivation
would also be $61,333.
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 fees for filing a petition for inter partes review
are: $27,200 for requesting review of 20 or fewer claims and $600 for
each claim in excess of 20 for which review is sought. The fees for
filing a petition for post-grant or covered business method patent
review would be: $35,800 to request review of 20 or fewer claims and
$800 for each claim in excess of 20 for which review is sought.
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 an IT fee
that has a base component of $1,705 for requests to review 20 or fewer
claims. The IT component fee would increase $75 per claim in excess of
20. 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 about 100 hours of judge time would be
required. An additional two hours of judge time for each claim in
excess of 20 would be required.
For a petition for post-grant or covered business method patent
review with 20 or fewer challenged claims, it is anticipated that about
130 hours of judge time will be required. An additional slightly under
three hours of judge time for each claim in excess of 20 would be
required.
Section 42.15(a) sets the fee for a petition to institute an inter
partes review of a patent based upon the number of challenged claims,
and reflects the requirements of 35 U.S.C. 311 and 312(a), as amended,
that the Director set fees for the petition and that the petition be
accompanied by payment of the fee established. Basing the fees on the
number of claims challenged allows for ease of calculation and reduces
the chance of insufficient payment. Public comments that the Board
should more strictly group claims in appropriate cases have resulted in
an adjustment from the proposed regulations to a final flat estimated
aggregate cost of $600 per requested claim in excess of 20 for inter
partes review and $800 per requested claim in excess of 20 claim for
post-grant review.
To understand the scope of a dependent claim, the claims from which
the dependent claim depends must be construed along with the dependent
claim. Accordingly, for fee calculation purposes, each claim challenged
will be counted as well as any claim from which a claim depends, unless
the parent claim is also separately challenged. The following examples
are illustrative.
Example 1: Claims 1-30 are challenged where each of claims 2-30 are
dependent claims and depend only upon claim 1. There are 30 claims
challenged for purposes of fee calculation.
Example 2: Claims 21-40 are challenged where each of claims 21-40
are dependent claims and depend only upon claim 1. As claims 21-40
depend from claim 1, claim 1 counts toward the total number of claims
challenged. Thus, there are 21 claims challenged for fee calculation
purposes.
Example 3: Claims 1, 11-20, and 31-40 are challenged. Each of
claims 1 and 31-40 are independent claims. Each of claims 11-20 are
dependent claims and depend upon claim 9, which in turn depends upon
claim 8, which in turn depends upon claim 1. As claims 11-20 depend
upon parent claims 8 and 9, claims 8 and 9 would count as challenged
claims towards the total number of claims challenged. As claim 1 is
separately challenged, it would not count twice towards the total
number of claims challenged. Thus, there are 23 claims challenged for
fee calculation purposes.
Example 4: Claims 1, 11-20, and 31-40 are challenged. Each of
claims 1 and 31-40 are independent claims. Claim 11 depends upon claim
1 and claims 12-20 depend upon claim 11. As each of the challenged
claims is based on a separately challenged independent claim, there are
21 challenged claims.
Section 42.15(b) sets the fee for a petition to institute a post-
grant review or a covered business method patent review of a patent
based upon the number of challenged claims, and would reflect the
requirements of 35 U.S.C. 321, as amended, and 35 U.S.C. 322(a) that
the Director set fees for the petition and that the petition be
accompanied by payment of the fee established. The analysis of the
number of claims challenged for fee calculation purposes would be the
same as for proposed Sec. 42.15(a).
Item (B)(5) of the Rulemaking Considerations section of this
notice, infra, provides the Office's analysis of the cost to provide
the services requested for each of the proceedings.
Section 42.15(c) sets the fee for a petition to institute a
derivation proceeding in the amount of $400. Derivation proceedings
concern allegations that an inventor named in an earlier application,
without authorization, derived the claimed invention from an inventor
named in the petition. 35 U.S.C. 135, as amended, does not require a
fee be charged for a derivation proceeding. Accordingly, the fee is set
to recover the treatment of the petition as a request to transfer
jurisdiction from the examining corps to the Board and not the costs of
instituting and performing the derivation trial.
Section 42.15(d) sets the fee for filing written requests to make a
settlement agreement available in the amount of $400.
Section 42.15(e) and (f) recite the statutory fees due when a
patent owner presents additional claims during a review. See 35 U.S.C.
41(a)(2)(A)(i) and (ii).

Petition and Motion Practice

Section 42.20: Section 42.20(a) provides that relief, other than a
petition to institute a trial, must be in the form of a motion. The
rule is consistent with the requirements of 35 U.S.C. 316(a)(1) and
316(d), as amended, and 35 U.S.C. 326(a)(1) and 326(d) which provide
that requests to seal a document and requests to amend the patent be
filed in the form of a motion.
Section 42.20(b) provides that motions will not be entered absent
Board authorization, and authorization may be provided in an order of
general applicability or during the proceeding. Generally, the Board
expects that authorization would follow the current Board practice
where a conference call would be required before an opposed motion is
filed as quite often the relief requested in such motions can be
granted (or denied) in a conference call with a written order
reflective of the results of the call. This practice has significantly
increased the speed and reduced the costs in contested cases.
Section 42.20(c) places the burden of proof on the moving party. A
motion that fails to justify the relief on its face

[[Page 48620]]

could be dismissed or denied without regard to subsequent briefing.
Section 42.20(d) provides that the Board may order briefing on any
issue appropriate for a final written determination on patentability.
Specifically, 35 U.S.C. 318(a), as amended, and 35 U.S.C. 328(a)
require that where a review is instituted and not dismissed, the Board
shall issue a final written decision with respect to the patentability
of any patent claim challenged by the petitioner and any new claim
added. The rule provides for Board-ordered briefing where appropriate
in order to efficiently and effectively render its final decision on
patentability.
Section 42.21: Section 42.21(a) provides that the Board may require
a party to file a notice stating the relief it requests and the basis
for that relief in Board proceedings. The rule makes clear that a
notice must contain sufficient detail to serve its notice function. The
rule provides an effective mechanism for administering cases
efficiently and placing opponents on notice.
Section 42.21(b) states the effect of a notice. The rule makes it
clear that failure to state a sufficient basis for relief would warrant
a denial of the request.
Section 42.21(c) permits correction of a notice after the time set
for filing the notice, but sets a high threshold for entry of the
correction, i.e., if the entry was in the interests of justice. The
rule is consistent with 35 U.S.C. 316(a)(11), as amended, and 35 U.S.C.
326(a)(11), which require good cause be shown to extend the time for
entering a final decision. In determining whether good cause is shown,
the Board will be permitted to consider the ability of the Board to
complete the proceeding timely should the request be granted. Hence,
requests made at the outset of a proceeding will be more likely to
demonstrate good cause than requests made later in the proceeding.
Section 42.22: Section 42.22 concerns the general content of
motions.
Section 42.22(a) requires that each petition or motion be filed as
a separate paper to reduce the chance that an argument would be
overlooked and reduce the complexity of any given paper. Sections
42.22(a)(1) and (a)(2) provide for a statement of precise relief
requested, and statement of the reasons for relief. Vague arguments and
generic citations to the record are fundamentally unfair to an opponent
and do not provide sufficient notice to an opponent and creates
inefficiencies for the Board.
Section 42.22(b) requires the movant to make showings ordinarily
required for the requested relief in other parts of the Office. Many
actions, particularly corrective actions like changes in inventorship,
filing reissue applications, and seeking a retroactive foreign filing
license, are governed by other rules of the Office. By requiring the
same showings, the rule keeps practice uniform throughout the Office.
Section 42.22(c) provides that a petition or motion may include a
statement of facts with specific citations to the portions of the
record that support a particular fact. Providing specific citations to
the record gives notice to an opponent of the basis for the fact and
provides the Board the information necessary for effective and
efficient administration of the proceeding.
Section 42.22(d) allows the Board to order additional showings or
explanations as a condition for authorizing a motion. Experience has
shown that placing conditions on motions helps provide guidance to the
parties as to what issues and facts are of particular importance and
ensures that the parties are aware of controlling precedent that should
be addressed in a particular motion.
Section 42.23: Section 42.23 provides that oppositions and replies
must comply with the content requirements for a motion and that a reply
may only respond to arguments raised in the corresponding opposition.
Oppositions and replies may rely upon appropriate evidence to support
the positions asserted. Reply evidence, however, must be responsive and
not merely new evidence that could have been presented earlier to
support the movant's motion.
Section 42.24: Section 42.24 provides page limits for petitions,
motions, patent owner preliminary responses, patent owner responses,
oppositions, and replies.
35 U.S.C. 316(b), as amended, and 35 U.S.C. 326(b) provide
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 the
trials timely. The page limits set forth in this rule 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 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 experience with page limits in contested cases motions
practice is consistent with that of the Federal courts. The Board's use
of page limits has shown it to be beneficial without it 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 experience with page limits in contested cases practice
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).
Section 42.24(a) provides specific page limits for petitions and
motions.

[[Page 48621]]

The rule sets a limit of 60 pages for petitions requesting inter partes
reviews and derivation proceedings, 80 pages for petitions requesting
post-grant reviews and covered business method patent reviews, and 15
pages for motions.
The Board's current practice in contested cases is to limit motions
for judgment on priority of invention to 50 pages, miscellaneous
motions to 15 pages and other motions to 25 pages. Hence, non-priority
motions for judgment of unpatentability are currently limited to 25
pages. 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 currently heard by 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.
A petition requesting the institution of a trial proceeding would
be similar to motions currently filed with the Board. Specifically,
petitions to institute a trial seek a final written decision that the
challenged claims are unpatentable, where derivation is a form of
unpatentability. Accordingly, a petition to institute a trial based on
prior art would under current practice be limited to 25 pages, and by
consequence, a petition raising unpatentability based on prior art and
unpatentability under 35 U.S.C. 101 and/or 112 would be limited to 50
pages.
Under the final rule, an inter partes review petition will 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 single prior art motions,
limited to 25 pages in length. The rule provides up to 60 pages in
length for a motion requesting inter partes review. Thus, as the page
limit more than doubles the default page limit currently set for a
motion before the Board, a 60-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.
Under the final rule, a post-grant review petition would be based
upon any grounds identified in 35 U.S.C. 321(b); e.g., failure to
comply with 35 U.S.C. 101, 102, 103, and 112 (except best mode). Under
current practice, a party would be limited to filing two or three
motions, each limited to 25 pages, for a maximum of 75 pages. Where
there is more than one motion for unpatentability based upon different
statutory grounds, the Board's experience is that the motions contain
similar discussions of technology and claim constructions. Such overlap
is unnecessary where a single petition for unpatentability is filed.
Thus, the 80-page limit is considered sufficient in all but exceptional
cases.
Covered business method patent review is similar in scope to that
of post-grant review as there is substantial overlap in the statutory
grounds permitted for review. Thus, the page limit for covered business
method patent reviews of 80 pages is the same as that for post-grant
review.
Petitions to institute derivation proceedings raise a subset of the
issues that are currently raised in contested cases in a motion for
judgment on priority of invention. Currently, motions for judgment on
priority of invention, including issues such as conception,
corroboration, and diligence, are generally limited to 50 pages in
length. Thus, the 60-page limit is considered sufficient in all but
exceptional cases.
The rule provides 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 filing parties and do
not unduly burden the opposing party and the Board. Petitions for
instituting a trial would generally replace the current practice of
filing motions for unpatentability. Most motions for relief are
expected to be similar to the current contested cases miscellaneous
motion practice. Accordingly, the rule provides a 15-page limit for
motions as this is considered sufficient for most motions but may be
adjusted where the limit is determined to be unduly restrictive for the
relief requested. A party may contact the Board and arrange for a
conference call to discuss the need for additional pages for a
particular motion. Except for a motion to waive the page limit
accompanying a petition seeking review, any motion to waive a page
limit must be granted in advance of filing a motion, patent owner
preliminary response, patent owner response, opposition, or reply for
which the waiver is thought to be necessary.
Section 42.24(b) provides page limits for patent owner preliminary
response, patent owner responses, and oppositions. 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 rule would continue the current
practice.
Section 42.24(c) provides page limits for replies. Current
contested cases 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 rule is consistent with
current contested cases practice for procedural motions. The rule
provides a 15-page limit for reply to petitions requesting a trial,
which the Office believes is sufficient based on current practice.
Current contested cases practice has shown that such page limits do not
unduly restrict the parties and, in fact, provide sufficient
flexibility to parties to not only reply to the motion but also help to
focus on the issues.
Section 42.25: Section 42.25 provides default times for filing
oppositions and replies. The expectation, however, is that the Board
would tailor times appropriate to each case as opposed to relying upon
the default times set by rule.

Testimony and Production

As a summary, this final rule provides limitations for discovery
and testimony. Unlike in proceedings under the Federal Rules of Civil
Procedure, the burden of justifying discovery in Board proceedings
would lie with the party seeking discovery.
Proceedings before the Board differ from most civil litigation in
that the proponent of an argument before the Board generally has access
to relevant evidence that is comparable to its opponent's access.
Consequently, the expense and complications associated with much of
discovery can be avoided.

[[Page 48622]]

For instance, since rejections are commonly based on the contents of
the specification or on publicly available references, there is no
reason to presume that the patent owner has better access to evidence
of unpatentability on these grounds than the petitioner. Exceptions
occur particularly when the ground of unpatentability arises out of
conduct, particularly conduct of a purported inventor. In such cases,
discovery may be necessary to prove such conduct, in which case the
proponent of the evidence may move for additional discovery. The Board
may impose conditions on such discovery to manage the proceeding and to
prevent abuse.
Section 42.51: Section 42.51(a) provides for mandatory initial
disclosures. Where parties agree to mandatory discovery requiring the
initial disclosures set forth in the Office Patent Trial Practice
Guide, the parties may automatically, upon the institution of the
trial, take discovery of the information identified in the initial
disclosures. The parties must submit the agreement by no later than the
filing of the patent owner preliminary response or the expiration of
the time period for filing such a response. Where the parties fail to
agree to such discovery, a party may seek such discovery by motion.
Section 42.51(b) provides for limited discovery in the trial
consistent with the goal of providing trials that are timely,
inexpensive, and fair. The rule is consistent with 35 U.S.C. 316(a)(5),
as amended, and 35 U.S.C. 326(a)(5), which provide for discovery of
relevant evidence but limit the scope of the discovery, and 35 U.S.C.
135(b), as amended, which provides that the Director shall prescribe
regulations setting forth standards for the conduct of derivation
proceedings.
Sections 42.51(b)(1)(i) and (ii) provide for routine discovery of
exhibits cited in a paper or testimony and provide for cross
examination of affidavit testimony without the need to request
authorization from the Board. The rule eliminates many routine
discovery requests and disputes. The rule will not require a party to
create materials or to provide materials not cited.
Section 42.51(b)(1)(iii) would ensure the timeliness of the
proceedings by requiring that a party to serve relevant information
that is inconsistent with a position advanced by the party during the
course of the proceeding, concurrent with the filing of the document or
thing that contains the inconsistency. The requirement extends to
inventors, corporate officers, and persons involved in the preparation
or filing of documents in a proceeding.
The Office recognizes that this requirement may differ from the
proposed changes to Sec. 1.56. But, Board experience has shown that
the information covered by Sec. 42.51(b)(1)(iii) is typically sought
through additional discovery and that such information leads to the
production of relevant evidence. However, the practice of authorizing
additional discovery for such information risks significant delay to
the proceeding and increased burdens on both the parties and the
Office. To avoid these issues, and to reduce costs and insure the
integrity and timeliness of the proceeding, the rule makes the
production of such information routine. Lastly, this requirement does
not override legally recognized privileges such as attorney-client or
attorney work product. The rule expressly states that requirement does
not make discoverable anything otherwise protected by legally
recognized privileges such as attorney client or attorney work product.
Section 42.51(b)(2) provides for additional discovery. Additional
discovery increases trial costs and increases the expenditures of time
by the parties and the Board. The parties may agree to additional
discovery between themselves. Where the parties fail to agree, however,
the rule would require a showing that the additional discovery sought
in a proceeding other than a post-grant review is in the interests of
justice, which would place an affirmative burden upon a party seeking
the discovery to show how the proposed discovery would be productive. A
separate rule (Sec. 42.224) governs additional discovery in post-grant
review proceedings.
The interests-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 trials timely. Further, the interests-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.
While the Board will employ an interests-of-justice standard in
granting additional discovery in inter partes reviews and derivation
proceedings, new subpart C will provide that a good cause standard will
be employed in post-grant reviews, and by consequence, in covered
business method patent reviews. Good cause and interests of justice are
closely related standards, but the interests-of-justice standard is
slightly higher than good cause. While a good cause standard requires a
party to show a specific factual reason to justify the needed
discovery, under the interests-of-justice standard, the Board would
look at all relevant factors. Specifically, to show good cause, a party
would be required to make a particular and specific demonstration of
fact. Under the interests-of-justice standard, the moving party would
also be required to show that it was fully diligent in seeking
discovery and that there is no undue prejudice to the non-moving party.
In contrast, the interests-of-justice standard covers considerable
ground, and in using such a standard, the Board expects to consider
whether the additional discovery is necessary in light of the totality
of the relevant circumstances.
Section 42.51(c) provides for production of documents.
Specifically, except as otherwise ordered by the Board, a party
producing documents and things is required to either provide copies to
the opposing party or make the documents and things available for
inspection and copying at a reasonable time and location in the United
States.
Section 42.52: Section 42.52 provides procedures for compelling
testimony. Under 35 U.S.C. 23, the Director may establish rules for
affidavit and deposition testimony. A party in a contested case may
apply for a subpoena to compel testimony in the United States, but only
for testimony to be used in the contested case. See 35 U.S.C. 24.
Section 42.52(a) requires the party seeking a subpoena to first obtain
authorization from the Board; otherwise, the compelled evidence would
not be admitted in the proceeding. Section 42.52(b) would impose
additional requirements on a party seeking testimony or production
outside the United States because the use of foreign testimony
generally increases the cost and complexity of the proceeding for both
the parties and the Board. The Board would give weight to foreign
deposition testimony to the extent warranted in view of all the
circumstances, including the laws of the foreign country governing the
testimony.
Section 42.53: Section Sec. 42.53 provides for the taking of
testimony. To minimize costs, direct testimony would generally be taken
in the form of an affidavit. Cross-examination testimony and redirect
testimony would generally come in the form of a deposition transcript.
Parties may agree to video-recorded testimony, but may not submit such
testimony without prior authorization of the Board. If the nature of
the testimony makes direct observation of witness demeanor necessary or
desirable, the Board may

[[Page 48623]]

authorize or even require that the testimony be presented live or be
video-recorded in addition to filing of the required transcript. Cf.
Applied Research Sys. ARS Holdings N.V. v. Cell Genesys Inc., 68 USPQ2d
1863 (B.P.A.I. 2003) (non-precedential). The proponent of the witness
will be responsible for the cost of producing the witness for the
deposition. The parties will have latitude in choosing the time and
place for the deposition, provided the location is in the United States
and the time falls within a prescribed testimony period. Occasionally,
the Board will require live testimony where the Board considers the
demeanor of a witness critical to assessing credibility.
Section 42.53(c)(1) provides that unless stipulated by the parties
or ordered by the Board, direct examination, cross-examination, and
redirect examination for compelled deposition testimony will be subject
to the following time limits: Seven hours for direct examination, four
hours for cross-examination, and two hours for redirect examination.
Section 42.53(c)(2) provides that unless stipulated by the parties
or ordered by the Board, cross-examination, redirect examination, and
re-cross examination for uncompelled direct deposition testimony will
be subject to the following time limits: seven hours for cross-
examination, four hours for redirect examination, and two hours for re-
cross examination.
Section 42.53(d)(2) provides for the time period for cross-
examination and sets a norm for the conference in Sec. 42.53(d)(1). A
party seeking to move the deposition outside this period would need to
show good cause.
Section 42.53(e) requires that the party calling the witness
initiate a conference with the Board at least five business days before
a deposition with an interpreter is taken. Based on the Board's
experience, non-English language depositions can be highly complex. In
order to ensure such depositions are productive and to minimize
unnecessary cost and delay, prior Board authorization is required.
Section 42.53(f) provides for the manner of taking testimony.
Section 42.53(f)(1) requires that each witness, before giving
deposition testimony, be duly sworn according to law by the officer
before whom the deposition is to be taken. Section 42.53(f)(1) also
requires that the officer be authorized to take testimony under 35
U.S.C. 23.
Section 42.53(f)(2) requires that testimony be taken with any
questions and answers recorded in their regular order by the officer,
or by some other disinterested person in the presence of the officer,
unless the presence of the officer is waived on the record by agreement
of all parties.
Section 42.53(f)(3) requires that any exhibits used during the
deposition be numbered as required by Sec. 42.63(c), and must, if not
previously served, be served at the deposition. Section 42.53(f)(3)
also provides that exhibits objected to be accepted pending a decision
on the objection.
Section 42.53(f)(4) requires that all objections be made at the
time of the deposition to the qualifications of the officer taking the
deposition, the manner of taking it, the evidence presented, the
conduct of any party, and that any other objection to the deposition be
noted on the record by the officer.
Section 42.53(f)(5) requires the witness to read and sign (in the
form of an affidavit) a transcript of the deposition after the
testimony has been transcribed, unless the parties otherwise agree in
writing, the parties waive reading and signature by the witness on the
record at the deposition, or the witness refuses to read or sign the
transcript of the deposition.
The certification of Sec. 42.53(f)(6)(vi) provides a standard for
disqualifying an officer from administering a deposition. The use of
financial interest as a disqualification, however, would be broader
than the employment interest currently barred. Payment for ordinary
services rendered in the ordinary course of administering the
deposition and preparing the transcript would not be a disqualifying
financial interest. An interest acknowledged by the parties on the
record without objection will not be a disqualifying interest.
Except where the parties agree otherwise, Sec. 42.53(f)(7)
requires the proponent of the testimony to file the transcript of the
testimony. If the original proponent of the testimony declined to file
the transcript (for instance, because that party no longer intended to
rely on the testimony), but another party wishes to rely on the
testimony, the party that wishes to file the testimony will become the
proponent and will be permitted to file the transcript as its own
exhibit.
Section 42.54: Section 42.54 provides for protective orders. 35
U.S.C. 316(a)(7), as amended, and 35 U.S.C. 326(a)(7) require that the
Director prescribe rules that provide for protective orders governing
the exchange and submission of confidential information. Section 42.54
provides such protective orders and follows the procedure set forth in
Federal Rule of Civil Procedure 26(c)(1).
Section 42.55: Section 42.55 allows a petitioner filing
confidential information to file, concurrently with the filing of the
petition, a motion to seal as to the confidential information. The
petitioner may serve the patent owner the confidential information and
may file the information under seal. The patent owner may access the
confidential information prior to institution of a trial by agreeing to
the terms of the proposed protective order contained in the motion to
seal. The institution of the trial will constitute a grant of the
motion to seal, unless otherwise ordered by the Board. The rule seeks
to streamline the process of seeking protective orders prior to the
institution of the review while balancing the need to protect
confidential information against an opponent's need to access
information used to challenge the opponent's claims.
Section 42.56: Confidential information that is subject to a
protective order ordinarily will become public 45 days after denial of
a petition to institute a trial or 45 days after final judgment in a
trial. Section 42.56 allows a party to file a motion to expunge from
the record confidential information prior to the information becoming
public. Section 42.56 reflects the considerations identified in 35
U.S.C. 316(b), as amended, and 35 U.S.C. 326(b), which state that the
Office is to take into account the integrity of the patent system in
promulgating regulations. The rule balances the needs of the parties to
submit confidential information with the public interest in maintaining
a complete and understandable file history for public notice purposes.
Specifically, there is an expectation that information be made public
where the existence of the information is referred to in a decision to
grant or deny a request to institute a review or identified in a final
written decision. As such, the rule encourages parties to redact
sensitive information, where possible, rather than seeking to seal
entire documents.
Section 42.61: Section 42.61 provides for the admissibility of
evidence. Section 42.61(a) makes the failure to comply with the rules a
basis for challenging admissibility of evidence. Section 42.61(b) does
not require certification as a condition for admissibility when the
evidence is a record of the Office that is accessible to all parties.
The rule avoids disputes on what otherwise would be technical
noncompliance with the rules. Section 42.61(c) provides that the
specification and drawings of a U.S. patent application or patent are
admissible only to prove what the specification and

[[Page 48624]]

drawings describe. The rule addresses a recurring problem in which a
party mistakenly relies on a specification to prove a fact other than
what the specification says. The rule makes clear that a specification
of an application or patent involved in a proceeding is admissible as
evidence only to prove what the specification or patent describes. If
there is data in the specification upon which a party intends to rely
to prove the truth of the data, an affidavit by an individual having
first-hand knowledge of how the data was generated (i.e., the
individual who performed an experiment reported as an example in the
specification) must be filed. Wojciak v. Nishiyama, 61 USPQ2d 1576,
1581 (B.P.A.I. 2001).
Section 42.62: Section 42.62 adopts a modified version of the
Federal Rules of Evidence. The rule adopts the more formal evidentiary
rules used in district courts in view of the adversarial nature of the
proceedings before the Board. The Federal Rules of Evidence embrace a
well-developed body of case law and are familiar to the courts charged
with reviewing Board decisions in contested cases.
Section 42.63: Section 42.63 provides that all evidence is to be
submitted as an exhibit. For instance, the rule provides that an
exhibit filed with the petition must include the petition's name and a
unique exhibit number, for example: POE EXHIBIT 1001. For exhibits not
filed with the petition, the rule requires the exhibit label to include
the party's name followed by a unique exhibit number, the names of the
parties, and the trial number, in the format of the following example:

OWENS EXHIBIT 2001
Poe v. Owens
Trial IPR2011OCT-00001

Section 42.64: Section 42.64 provides procedures for challenging
the admissibility of evidence. In a district court trial, an opponent
may object to evidence, and the proponent may have an opportunity to
cure the basis of the objection. The rule offers a similar, albeit
limited, process for objecting and curing in a trial at the Board.
Section 42.64(a) provides that objections to the admissibility of
deposition evidence must be made during the deposition. Section
42.64(b) provides guidance as to objections and supplemental evidence
for evidence other than deposition testimony. The default time for
serving an objection to evidence other than testimony would be ten
business days after service of the evidence for evidence in the
petition and five business days for subsequent objections, and the
party relying on evidence to which an objection was served timely would
have ten business days after service of the objection to cure any
defect in the evidence. The Board will not ordinarily address an
objection, unless the objecting party filed a motion to exclude under
Sec. 42.64(c), because the objection might have been cured or might
prove unimportant in light of subsequent developments.
Section 42.65: Section 42.65 provides rules for expert testimony,
tests, and data.
Section 42.65(a) reminds parties that unsupported expert testimony
may be given little or no weight. Rohm & Haas Co. v. Brotech Corp., 127
F.3d 1089, 1092 (Fed. Cir. 1997). United States patent law is not an
appropriate topic for expert testimony before the Board, and expert
testimony pertaining thereto would not be admitted under the rule.
Section 42.65(b) provides guidance on how to present tests and
data. A party should not presume that the technical competence of the
trier-of-fact extends to a detailed knowledge of the test at issue.

Oral Argument, Decision and Settlement

Section 42.70: Section 42.70 provides guidance on oral argument.
Section 42.70(a) provides that a party may request oral argument on
an issue raised in a paper. The time for requesting oral argument would
be set by the Board.
Section 42.70(b) provides that a party serve demonstrative exhibits
at least five business days before the oral argument. Experience has
shown that parties are more effective in communicating their respective
positions at oral argument when demonstrative exhibits have been
exchanged prior to the hearing. Cumbersome exhibits, however, tend to
detract from the user's argument and would be discouraged. The use of a
compilation with each demonstrative exhibit separately tabbed would be
encouraged, particularly when a court reporter is transcribing the oral
argument, because the tabs provide a convenient way to record which
exhibit is being discussed. It is helpful to provide a copy of the
compilation to each member of the panel hearing the argument so that
the judges may better follow the line of argument presented.
Section 42.71: Section 42.71 provides for decisions on petitions
and motions.
Section 42.71(a) provides that a petition or motion may be taken up
in any order so that issues may be addressed in a fair and efficient
manner. This rule is consistent with 35 U.S.C. 316(b), as amended, and
35 U.S.C. 326(b), which state that, among other things, that the
Director shall consider the efficient administration of the Office in
prescribing regulations. Further, such a practice was noted with
approval in Berman v. Housey, 291 F.3d 1345, 1352 (Fed. Cir. 2002).
Section 42.71(b) provides for interlocutory decisions. The rule
makes clear that a decision short of judgment is not final, but a
decision by a panel would govern the trial. Experience has shown that
the practice of having panel decisions bind further proceedings has
eliminated much of the uncertainty and added cost that result from
deferring any final decision until the end of the proceeding. Thus, a
party dissatisfied with an interlocutory decision on motions should
promptly seek rehearing rather than waiting for a final judgment. A
panel could, when the interests of justice require it, reconsider its
decision at any time in the proceeding prior to final judgment. A
belated request for rehearing would rarely be granted, however, because
its untimeliness would detract from the efficiencies that result from
making interlocutory decisions binding.
A decision on whether to institute a trial is final and
nonappealable, consistent with 35 U.S.C. 314(d), as amended, and 35
U.S.C. 324(e). However, pursuant to Sec. 42.71(d), a party may request
a rehearing of that decision.
Section 42.71(d) provides for rehearings and would set times for
requesting rehearing. Since 35 U.S.C. 6(b), as amended, requires a
panel decision for finality, a party should request rehearing by a
panel to preserve an issue for judicial review. The panel would then
apply the deferential abuse-of-discretion standard to decisions on
rehearing.
Section 42.72: Section 42.72 provides for termination of a trial
pursuant to 35 U.S.C. 317(a), as amended, and 35 U.S.C. 327(a), which
provide for termination of a trial with respect to a petitioner upon
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.
Section 42.73: Section 42.73 provides for judgment.
Section 42.73(a) provides that a judgment, except in the case of a
termination, disposes of all issues that were, or by motion reasonably
could have been, raised and decided.
Section 42.73(b) provides guidance as to the conditions under which
the Board would infer a request for adverse judgment.
Section 42.73(c) provides for recommendations for further action by
an examiner or the Director.

[[Page 48625]]

Section 42.73(d) provides for estoppel.
Section 42.73(d)(1) applies to non-derivation proceeding trials and
is consistent with 35 U.S.C. 315(e)(1), as amended, and 35 U.S.C.
325(e)(1), which provide for estoppel in proceedings before the Office
where a final written decision was entered under 35 U.S.C. 318(a), as
amended, or 35 U.S.C. 328(a).
Section 42.73(d)(2) sets forth estoppel provisions in derivation
proceedings. The rule is also consistent with 35 U.S.C. 135(d), as
amended, which provides for the effect of a final decision in a
derivation proceeding. Section 42.73(d)(2) differs from Sec.
42.73(d)(1) to take into account the differences in statutory language
between 35 U.S.C. 135(d) and 315(e)(1), as amended, and 35 U.S.C.
325(e)(2).
Section 42.73(d)(3) applies estoppel against a party whose claim
was cancelled or who requested an amendment to the specification or
drawings that was denied. The rule is consistent with 35 U.S.C.
316(a)(4), as amended, and 326(a)(4), which require that the Office
prescribe regulations establishing and governing the reviews and the
relationship of such reviews to other proceedings under title 35.
Section 42.74: Section 42.74 provides guidance on settling
proceedings before the Board. 35 U.S.C. 135(e) and 317, as amended, and
35 U.S.C. 327 will govern settlement of Board trial proceedings but do
not expressly govern pre-institution settlement.
Section 42.74(a) reflects that the Board is not a party to a
settlement agreement and may take any necessary action, including
determination of patentability notwithstanding a settlement. The rule
is consistent with 35 U.S.C. 135(e), as amended, where the Board is not
required to follow the settlement agreement if it is inconsistent with
the evidence. The rule is also consistent with 35 U.S.C. 317, as
amended, and 35 U.S.C. 327, which provide that the Board may proceed to
a final written decision even if no petitioner remains in the
proceeding.
Section 42.74(b) provides that settlement agreements must be in
writing and filed with the Board prior to termination of the
proceeding. The rule is consistent with 35 U.S.C. 317(b), as amended,
and 327(b), which require the agreement to be in writing and filed
before termination of the proceeding. The rule is also consistent with
35 U.S.C. 135(e), as amended, which provides that parties may seek to
terminate the derivation proceeding by filing a written statement.
Section 42.74(c) provides that a party to a settlement may request
that the settlement be kept separate from an involved patent or
application. The rule is consistent with the requirements of 35 U.S.C.
135(e) and 317(b), as amended, and 35 U.S.C. 327(b).

Certificate

Section 42.80: Section 42.80 provides for issuance and publication
of a certificate after the Board issues a final decision and the time
for appeal has expired or an appeal has terminated. The rule is
consistent with 35 U.S.C. 318, as amended, and 35 U.S.C. 328.

Part 90--Judicial Review of Patent Trial and Appeal Board Decisions

The AIA amends chapter 13 of title 35, United States Code, to
provide for certain changes to the provisions for judicial review of
Board decisions. A new part 90 of title 37, Code of Federal
Regulations, is added to permit consolidation of rules relating to
court review of Board decisions and to simplify reference to such
practices. The rules in part 90 also implement the provisions of the
AIA associated with judicial review of agency actions addressed by the
AIA.
Current Sec. Sec. 1.301 through 1.304, which relate to rules of
practice in patent cases, are removed from part 1 and relocated to part
90. Paraphrasing of the statute in those rules is eliminated in the new
rules in favor of directing the reader to the relevant statutory
provisions. This change avoids the need for the Office to amend the
rules when statutory amendments are made. It also avoids undue public
reliance on the Office's paraphrase of statutory text. The rules in
part 90 better state the existing practice and are not intended to
change the existing practice except as explicitly provided.
Section 90.1: Section 90.1 clarifies the scope of the rules in part
90. The rules in part 90 are limited to rules governing the procedure
by which a party dissatisfied with the final decision in an appeal to
the Patent Trial and Appeal Board under 35 U.S.C. 134 may seek judicial
review of the Patent Trial and Appeal Board decision pursuant to
Chapter 13 of title 35, United States Code. This includes judicial
review of the Patent Trial and Appeal Board decisions arising out of ex
parte prosecution. The rules in part 90 will not apply to other avenues
for judicial review of Office decisions that may be available, such as
appeals from Trademark Trial and Appeal Board decisions pursuant to
Sec. 2.145, civil actions brought pursuant to the Administrative
Procedure Act, or mandamus actions. The title of part 90 indicates that
this part applies only to judicial review of Patent Trial and Appeal
Board decisions.
Section 90.1 clarifies that the rules in effect on July 1, 2012,
will continue to govern appeals from inter partes reexamination
proceedings. Section 7(e) of the AIA maintains the statutory provisions
governing inter partes reexaminations requested under 35 U.S.C. 311, as
amended, and the review provision of 35 U.S.C. 141 for Board decisions
arising out of such reexaminations, as they existed at the time the AIA
was enacted. Accordingly, the Office will continue to apply the
regulations as they existed when the AIA was enacted (or as
subsequently modified prior to July 1, 2012) for those proceedings.
Further, section 3(n)(2) of the AIA provides that the provisions of 35
U.S.C. 135 ``as in effect on the day before the effective date set
forth in paragraph (1) of this subsection'' shall apply to certain
applications. Thus, interference proceedings will still be available
for a limited period for certain applications under the AIA. Regarding
judicial review of Board decisions arising out of such interferences,
section 7(c) and (e) of the AIA makes review by the Federal Circuit
available under 35 U.S.C. 141 only for proceedings commenced before
September 16, 2012. Similarly, section 3 of the AIA makes review of
interference decisions by a district court under 35 U.S.C. 146
available only if the provisions of section 3(n)(1) of the AIA are not
satisfied. That is because if the involved application contains a claim
satisfying the terms of section 3(n)(1) of the AIA (e.g., a
continuation-in-part application), then section 3(j) of the AIA--
changing 35 U.S.C. 146 from review of ``an interference'' to review of
``a derivation proceeding''--applies, and district court review of a
decision arising out an interference proceeding under 35 U.S.C. 135
will not be available. To the extent that an interference proceeding
under 35 U.S.C. 135 is available and judicial review of that decision
is available, the Office will continue to apply the regulations as they
existed when the AIA was enacted (or as subsequently modified prior to
July 1, 2012) to those proceedings. Lastly, note that certain
interferences may be deemed to be eligible for judicial review as
though they were derivation proceedings. See section 6(f)(3) of the
AIA.
Section 90.2: Section 90.2 addresses notice and service
requirements associated with notices of appeal and civil actions
seeking judicial review of Board decisions. The rule combines the
notice and service requirements of

[[Page 48626]]

current Sec. Sec. 1.301, 1.302, and 1.303 for proceedings addressed by
those rules. Paraphrasing of the statute in those rules is eliminated
in Sec. 90.2 in favor of directing the reader to the relevant
statutory provisions to streamline the rules and prevent confusion. The
rule also includes references to pertinent statutory provisions or
court rules that apply in such court proceedings. Section 90.2 further
adds provisions associated with judicial review of Board decisions in
inter partes reviews, post-grant reviews, covered business method
patent reviews, and derivation proceedings. Section 90.2 requires
parties filing a notice of appeal in such proceedings to provide
sufficient information (such as a statement of the issues to be raised
in the appeal) to allow the Director to determine whether to exercise
the right to intervene in the appeal pursuant to 35 U.S.C. 143. The
Office believes that such a requirement imposes no additional burden on
the party filing the notice, other than filing a copy of its brief
statement of the issues, as it must provide a brief statement of the
issues to the Federal Circuit in its docketing statement (see Fed. Cir.
Form 26) and again in its brief (see Fed. Cir. R. 28(a)(5)). The
requirement, therefore, merely requires parties to provide similar
information to the Office at a slightly earlier stage in the
proceedings.
Section 90.2 requires parties filing an appeal under 35 U.S.C. 141,
initiating a civil action pursuant to 35 U.S.C. 146, or electing under
35 U.S.C. 141(d) to proceed under 35 U.S.C. 146, to file a copy of the
notice of appeal, complaint, or notice of election, respectively, with
the Board in the appropriate manner provided in Sec. 41.10(a),
41.10(b), or 42.6(b). The rule also requires that a complaint under 35
U.S.C. 146 be filed with the Board no later than five business days
after filing the complaint in district court. These requirements ensure
that the Board is aware of such proceedings and prevent further action
within the Office consistent with the Board decision at issue in the
appeal or civil action. Section 90.2 further requires that the
complaint be filed with the Office pursuant to Sec. 104.2 within the
same five business day time period. That requirement similarly assures
that the Office has adequate notice of the pending judicial review
proceeding.
Section 90.3: Section 90.3 addresses the time for filing a notice
of appeal under 35 U.S.C. 142 and a notice of election under 35 U.S.C.
141(d), as amended, and the commencement of a civil action.
Section 90.3(a) addresses the time for filing a notice of appeal or
a civil action seeking judicial review of a Board decision. The rule
extends the period for filing a notice of appeal or a civil action
under Sec. 1.304 to sixty-three (63) days. This change avoids
confusion regarding that period, which was two months except when the
two-month period included February 28, in which case the period was two
months and one day. The sixty-three (63) day period results in the
deadline for filing a notice of appeal or a civil action falling on the
same day of the week as the Board decision. Thus, the rule minimizes
calculations regarding extensions of time pursuant to 35 U.S.C. 21(b),
which applies when the time period ends on a Saturday, Sunday, or
Federal holiday in the District of Columbia, by eliminating the
possibility that a Saturday or Sunday would be the final day of the
period.
Section 90.3(a) also removes language regarding the time for cross-
appeals from Sec. 1.304. Instead, the rule refers to the pertinent
rules in the Federal Rules of Appellate Procedure and the Rules for the
United States Court of Appeals for the Federal Circuit to avoid
confusion or inconsistency. The rule also adds a reference to 35 U.S.C.
141(d) for both the relevant time for filing a notice of election under
that statute and the relevant time for commencing a civil action
pursuant to a notice of election under that statute.
Section 90.3(b) and (c) incorporates provisions from Sec. 1.304
addressing computation of time and extension of time.

Response to Comments

As discussed previously, the Office received 251 written
submissions of comments from intellectual property organizations,
businesses, law firms, patent practitioners, and others. The comments
provided support for, opposition to, and diverse recommendations on the
proposed rules. The Office appreciates the thoughtful comments, and has
considered and analyzed the comments thoroughly.
The Office's responses to the comments that are directed to
specifically inter partes review proceedings (77 FR 7041), post-grant
review proceedings (77 FR 7060), and transitional post-grant review
proceedings for covered business method patents (77 FR 7080) are
provided in a separate final rule (RIN 0651-AC71). Additionally, the
Office's responses to the comments that are directed to the definitions
of the terms ``covered business method patent'' and ``technological
invention'' are provided in another separate final rule (RIN 0651-
AC75). The Office's responses to other comments that are directed to
the consolidated set of rules relating to Board trial practice and
judicial review of Board decisions are provided as follows:

Policy (Sec. 42.1)

Comment 1: One comment suggested that the rules should clarify that
the burden of persuasion does not shift to the patentee.
Response: Section 42.1(d) provides that the default evidentiary
standard for each issue in a Board proceeding is a preponderance of the
evidence. A petitioner has the burden of proving the proposed ground of
unpatentability as to the challenged patent claims by a preponderance
of evidence. 35 U.S.C. 316(e), as amended, and 35 U.S.C. 326(e). In the
event that a patent owner files a motion to amend the claims, the
patent owner must include a statement of the precise relief requested
and a full statement of the reasons for the relief requested, including
a detailed explanation of the significance of the amended claims (e.g.,
a statement that clearly points out the patentably distinct features
for the proposed new or amended claims). See Sec. 42.22.
Comment 2: One comment stated that the ``just, speedy, and
inexpensive'' standard set forth in Sec. 42.1(b) is inconsistent with
the AIA.
Response: The Office believes that the standard for construction of
the rules to secure the just, speedy, and inexpensive resolution of
every proceeding as provided in Sec. 42.1(b) is consistent with 35
U.S.C. 316(b), as amended, and 35 U.S.C. 326(b) which provide that
``[i]n prescribing regulations under this section, the Director shall
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 timely complete proceedings
instituted under this chapter.'' The Office has taken into account
these considerations identified in the AIA in promulgating the rules
and believes the standards and procedures set forth in this final rule
will enhance efficiency of the review proceedings.
Comment 3: One comment questioned whether Sec. Sec. 1.4(a)(2) and
1.25, related to signature requirements and deposit accounts, will be
amended to incorporate inter partes review, post-grant review, covered
business method review, and derivation proceedings.
Response: Section 42.1 lists several sections of part 1, including
Sec. Sec. 1.4(a)(2) and 1.25, and states that those sections also
apply to proceedings before the Board. Further, the Office, in a
separate

[[Page 48627]]

rulemaking, is amending Sec. 1.4 in view of the AIA. See Changes to
Implement Miscellaneous Post Patent Provisions of the Leahy-Smith
America Invents Act, 77 FR 442 (January 5, 2012) (Notice of proposed
rulemaking). However, no amendment to Sec. 1.25 is necessary.

Definitions (Sec. 42.2)

Comment 4: One comment recommended that the Office should state in
the rules that reexaminations are not considered as ``involved''
proceedings, and inter partes reexaminations are considered as
``contested'' cases.
Response: The rules of practice for reexaminations are set forth in
part 1 of the CFR, rather than part 42. As stated previously in the
discussion for Sec. 42.2, inter partes reexaminations are not
considered contested cases, unless consolidated with a contested case.
Comment 5: One comment suggested that the word ``trial'' should be
replaced with the word ``proceeding.''
Response: This comment is not adopted. The definitions of ``trial''
and ``proceeding'' as set forth in Sec. 42.2 are consistent with the
AIA. As stated previously, a proceeding starts when a petitioner files
a petition for instituting a trial. A trial is a part of the proceeding
that starts when the Board issues a written decision to institute a
review.
Comment 6: One comment suggested that the phrase ``motion means a
request for relief other than by petition'' should be revised to
eliminate ``other than by petition.''
Response: This comment is not adopted because a petition by
definition is not a motion.
Comment 7: One comment suggested changing the definition of
``party'' to include ``assignee of any applicant.''
Response: This comment is adopted to the extent that the definition
of ``party'' set forth in Sec. 42.2, as adopted in this final rule,
includes any ``assignee of the involved application.''
Comment 8: One comment requested clarification of the term
``contested case.''
Response: Inter partes review, post-grant review, covered business
method review, and derivation proceedings are contested cases for the
purposes of part 42.
Comment 9: One comment requested clarification on whether part 42
incorporates the requirements of part 41.
Response: Sections 1.4, 1.7, 1.14, 1.16, 1.22, 1.23, 1.25, 1.26,
1.32, 1.34, and 1.36 of Chapter 37 are incorporated by reference into
part 42. The requirements of part 41, however, have not been
incorporated into part 42.
Comment 10: One comment suggested changing ``rehearing'' to
``reconsideration'' in situations where the reconsideration is not by a
panel.
Response: This comment is not adopted. The definition of
``rehearing'' as set forth in Sec. 42.2 is consistent with 35 U.S.C.
6(c).

Jurisdiction (Sec. 42.3)

Comment 11: Several comments suggested that the phrase ``in a
timely manner'' in proposed Sec. 42.3(b) should be changed to
``consistent with any time period required by statute.''
Response: The comments are adopted.
Comment 12: A comment suggested that proposed Sec. 42.3(a) should
be deleted because the AIA does not authorize the Office to govern
activities of the parties after Board decisions.
Response: Section 42.3 provides that the Board may exercise
exclusive jurisdiction within the Office over every involved
application and patent during the proceeding. The Office believes that
Sec. 42.3(a) is consistent with 35 U.S.C. 6(c) and 315(d), as amended,
and 35 U.S.C. 325(d). Under 35 U.S.C. 6(c), the Board may grant a
rehearing of a Board decision.
Comment 13: One comment suggested that the statement ``[a]ny claim
or issue not included in the authorization for review is not part of
the trial'' in the Office Patent Trial Practice Guide should be added
to proposed Sec. 42.3.
Response: The written decision to institute a trial will define the
scope of the review in each proceeding and it is envisioned that claims
and issues not identified in the written decision will not form a part
of the trial.
Comment 14: One comment requested clarification of the process and
procedure for handling multiple proceedings involving the same patent,
specifically when the Office will stay, transfer, consolidate or
terminate a reexamination or reissue application.
Response: The Office will consider whether to stay, transfer,
consolidate or terminate a copending reexamination or reissue
application that involves the same subject patent on a case-by-case
basis depending on the particular facts of each case. Factors that may
be considered include a request made by a court, a request by the first
petitioner for termination of the first review in view of strength of
the second petition, and whether the petitioner requesting joinder has
offered to pay the patent owner's costs.

Notice of Trial (Sec. 42.4)

Comment 15: One comment suggested that proposed Sec. 42.4 should
be clarified to specify what address the Office will use to send a
party the notice of trial and when these additional modes of notice
would be used, and whether the modes are supplemental or substitutes
for the notice specified in Sec. 42.4(b).
Response: The Office will send the notice to the address of record
and, when necessary, e.g., when the address of record appears to be
outdated, may use an additional mode of notice.
Comment 16: One comment stated that the notice of trial appears to
be redundant because the decision will contain an authorization to act,
obviating any notice of trial.
Response: 35 U.S.C. 314(c), as amended, and 324(d) require the
Director to provide notice of the trial.
Comment 17: One comment suggested that the Board should include in
the notice a statement of the claim construction applied by the Board
in making the decision to institute and that it will be used by the
parties during the trial and also that the Board should take cognizance
of any district court and U.S. International Trade Commission claim
constructions.
Response: Consistent with 35 U.S.C. 314(c), as amended, and 35
U.S.C. 324(d), the Office will provide a written determination of
whether to institute a trial when deciding a petition. Where claim
construction is in dispute, the Office envisions that the Board will
provide an initial claim construction for the trial. Consideration of
constructions applied in other proceedings will be part of the
determination, but whether the same construction will be applied will
be a case-by-case determination.

Conduct of the Proceeding (Sec. 42.5)

Comment 18: Two comments requested guidance as to how extensions of
time should be requested and one suggested that proposed Sec. 42.5
should be modified to state that such requests are made by motion, but
that no opposition is allowed.
Response: The Office envisions that requests for extensions of time
will be made during a conference call with the Board and the opposing
party (i.e., an oral motion would be made). A decision on the request
will be made during the call or shortly thereafter, without the need
for the parties to file any briefing on the issue.
Comment 19: One comment requested clarification of the
circumstances under which the rules may be modified and whether it
could be by motion or only by Board discretion and another suggested
incorporation of an objective standard for when the Board would
undertake this action. This comment also suggested that the proposed
rule be

[[Page 48628]]

changed to ``a member of the Board defined in 35 U.S.C. 6(a).''
Response: This comment is not adopted. Under the rule, the Board
may determine a proper course of conduct where a situation arises that
is not specifically covered or may waive or suspend a rule with
conditions if circumstances warrant. If a party wishes the Board to
provide it relief under the rule, the party must move for the Board to
do so. Sec. 42.20(a). Whether the Board exercises its discretion is
determined on a case-by-case basis.
Comment 20: One comment suggested the times exemplified in the
Office Patent Trial Practice Guide times should be incorporated into
this rule as default times, leaving the Board discretion to alter them
if needed.
Response: Default filing times for the filing of oppositions and
replies are set forth in Sec. 42.25. Under the rule, the time for the
filing of any authorized motions will be set after conferring with the
parties, Sec. 42.25(a), to allow the Board to consider what is
appropriate under the particular circumstances of the proceeding. The
times set out in the Office Patent Trial Practice Guide are intended to
give parties a general idea of how the ordinary proceeding will be
conducted.
Comment 21: One comment requested guidance as to what would be
considered ``good cause'' or ``in the interests of justice,''
justifying an extension of time or a late submission to avoid
inconsistent application of the rule.
Response: Whether a party has met a ``good cause'' or ``interests
of justice'' standard is specific to the particular facts of the
proceeding and must be made on a case-by-case basis. An example where
times may be extended is where, through no fault of either party,
relevant information comes to light that requires briefing that could
not occur in the allotted times for taking action.
Comment 22: One comment suggested adding a provision to the rule
requiring that all substantive communications with the Board are to be
recorded.
Response: Under the rules, there is no prohibition on the parties
providing for a record of any oral communications between the parties
and the Board. Whether resources will allow for the providing of a
record by the Board has not been determined at this time.
Comment 23: One comment stated that proposed Sec. 42.5 is
inconsistent with the AIA, which reserves the ``good cause'' standard
to the special situations of third party access to an agreement in
respect of settlement, and extension of a proceeding to up to 18
months.
Response: The comment is not adopted. The AIA does not explicitly
reserve the ``good cause'' standard only for those situations mentioned
in the statute.
Comment 24: One comment suggested that proposed Sec. 42.5 be
modified to deal with a situation where, if an electronic filing
problem arises and if the due date is not extendable by the parties,
and if a Board member cannot be reached that day, the party that
encounters the problem may notify opposing counsel that it will not be
filing that day but will be filing the next day and will schedule a
conference call the next morning to obtain a one-day extension for both
parties. Another comment suggested that the Board have staff available
after hours to rule on extension requests when the Office electronic
filing system malfunctions.
Response: Under the appropriate circumstances, a party may file in
paper. Sec. 42.6(b)(2)(i). In the Board's experience, an
administrative patent judge will be available during business hours to
consider whether to grant an extension in these circumstances. In the
unlikely event that an administrative patent judge is not available to
rule on the extension, the rules allow for the granting of an extension
the day after the paper is due, which includes situations where
electronic filing problems are shown to have occurred.

Filing of Documents, Including Exhibits; Service (Sec. 42.6)

Comment 25: Some comments suggested that proposed Sec. 42.6(a)
should be made consistent with current Sec. 41.106 on font size and
spacing requirements. One comment also suggested limiting content of
papers based on word count.
Response: The Office adopts proposed Sec. 42.6(a) in this final
rule without any modifications. Both current Sec. Sec. 41.106 and
42.6(a) require double spacing and therefore do not appear to be
inconsistent. The rule regarding font size is based on readability
considerations. The requirement is also consistent with Rule 32(a)(5)
of the Federal Rules of Appellate Procedure. The Office considered a
word count limit, but determined that the best practice, based on fee
setting and IT considerations, is a page limit. Use of a word count is
more difficult and complex to administer than use of a page limit.
Therefore, the suggested change to limit content of papers based on
word count is not adopted.
Comment 26: One comment suggested that proposed Sec. 42.6(a)(4) is
confusing regarding signature requirements, since Sec. Sec. 1.33 and
11.18(a), to which the rule refers, do not contain information
regarding signature requirements. The comment suggested amending the
rule to provide for S-signatures in addition to ink signatures.
Response: The Office adopts proposed Sec. 42.6(a)(4) in this final
rule without any modifications. Section 42.6(a)(4) refers to Sec. Sec.
1.33 and 11.18(a), which in turn do specify signature requirements,
including S-signatures. See Sec. 11.18(a) (referencing Sec.
1.4(d)(1)). Therefore, no change has been made.
Comment 27: One comment suggested that proposed Sec. 42.6(d)
should provide for exceptions and that the rule should be rewritten
such that pleadings may be identified as exhibits.
Response: The rule prevents the parties from filing multiple copies
of the same papers and labeling the same papers with different numbers.
The Office's experience is that the rule will aid in avoiding confusion
and maintaining an efficient record. The Office, therefore, adopts
proposed Sec. 42.6(d) in this final rule without any modifications.
Comment 28: Some comments suggested that the proposed rule be
amended to specify the types of acceptable service. One comment
suggested that service should be by electronic mail. One comment sought
clarification on what is meant by simultaneous service.
Response: The Office has made modifications to Sec. 42.6(e) to
provide that upon the agreement of the parties, service may be made
electronically. The Office anticipates that, in most situations, papers
will be filed electronically. Sec. 42.6(b)(1). Clarification on filing
and electronic service of documents will be provided according to
parameters established by the Board and published on the Web site of
the Office.
Comment 29: One comment suggested that it is not clear whether
``filed separately'' in Sec. 42.6(e)(3)(ii) refers to uploaded as a
separate file in the electronic filing system, filed as a separate
electronic transaction, or filed on a different day or in a different
context.
Response: Filed separately means apart from a document. See Sec.
42.6(e)(4)(ii). The two documents may be filed on the same day and in
the same electronic submission.

Management of the Record (Sec. 42.7)

Comment 30: Several comments requested clarification on whether
proposed Sec. 42.7(b) includes actions in reexaminations and reissue
applications when the subject patent is concurrently under the Board's
jurisdiction in an

[[Page 48629]]

inter partes review, post-grant review, or derivation proceeding. One
comment expressed concern that the proposed rule may be inconsistent
with 35 U.S.C. 305 which requires that all ex parte reexamination
proceedings be conducted with special dispatch. Another comment was in
favor of the proposed rules with respect to jurisdiction and management
of the record.
Response: The Office envisions that the Board will consider the
statutory provisions governing the various proceedings and reconcile
them in an appropriate manner when exercising its discretion to vacate
or hold in abeyance a non-Board action. As to the issue of whether the
proposed rule is inconsistent with the AIA, 35 U.S.C. 315(d), as
amended, provides that

[n]otwithstanding sections 135(a), 251, and 252, and chapter 30,
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.

Likewise, 35 U.S.C. 325(d) provides the same authority for post-grant
review and covered business method patent review. It is important to
note that the Board may exercise the authority under 35 U.S.C. 315(d),
as amended, or 35 U.S.C. 325(d) notwithstanding chapter 30 of U.S.C.
title 35, including the special dispatch provision of 35 U.S.C. 305.
Therefore, Sec. 42.7(b) is consistent with 35 U.S.C. 315(d), as
amended, and 35 U.S.C. 325(d), and is not in conflict with 35 U.S.C.
305. The Board will take the special dispatch requirement into
consideration before vacating or holding in abeyance any non-Board
action directed to a reexamination proceeding.

Mandatory Notices (Sec. 42.8)

Comment 31: One comment objected to the separate paper requirement
in proposed Sec. 42.8(b).
Response: This comment has been adopted. The requirement for filing
the mandatory notices on separate papers has been eliminated in this
final rule.
Comment 32: One comment noted that proposed Sec. 42.8(b)(3) is
inconsistent with proposed Sec. 42.10(a) as one is mandatory and the
other is permissive.
Response: Section 42.10(a), as adopted in this final rule, contains
the mandatory language so that it is consistent with Sec. 42.8(b)(3).
Comment 33: One comment requested clarification on whether service
must be effected by the service information provided in the mandatory
notice under proposed Sec. 42.8(b)(4).
Response: If service is required (e.g., Sec. 42.21), service must
be effected by the service information provided in the mandatory notice
under Sec. 42.8(b)(4), unless otherwise ordered by the Board or agreed
upon by the parties.
Comment 34: One comment suggested that the Office should provide
examples or more information on the ``related matters'' provision of
Sec. 42.8, specifically whether the requirement encompasses non-U.S.
matters.
Response: Similar to current Sec. 41.37(c)(1)(ii) for ex parte
appeals, Sec. 42.8(b)(2) requires each party to identify any other
judicial or administrative matter that would affect, or be affected by,
a decision in the proceeding. Thus, any statement that complies with
current Sec. 41.37(c)(1)(ii) most likely would also comply with Sec.
42.8(b)(2). As stated in the Office Patent Trial Practice Guide,
judicial matters include actions involving the patent in federal court.
Administrative matters that would be affected by a decision in the
proceeding may include every application and patent claiming the
benefit of the filing date of the party's involved patent or
application, as well as any reexaminations for an involved patent.
Further, such matters may also include any prior-filed domestic or
foreign application for which priority is claimed by the party's
involved patent or application.
Comment 35: One comment suggested that the 21-day time period set
forth in proposed Sec. 42.8(a)(3) for updating the mandatory notices
should be shortened to seven days.
Response: This comment is not adopted. The Office encourages the
parties to notify the Office and other parties of any changes as soon
as possible, especially address and counsel changes, so that papers
will be delivered to the correct address and person. The Office,
however, believes that the 21-day time periods will provide sufficient
time for the parties to take appropriate action.

Action by Patent Owner (Sec. 42.9)

Comment 36: One comment suggested that the term ``subject'' as
opposed to ``involved'' should be used throughout proposed Sec. 42.9.
Response: This comment is not adopted. The term ``involved'' is
clearly defined in Sec. 42.2 as ``an application, patent, or claim
that is the subject of the proceeding.'' Therefore, it is not necessary
to replace ``involved'' with ``subject.''
Comment 37: One comment suggested that the word ``inventor'' in
proposed Sec. 42.9(b) should be deleted because if an inventor is not
a part owner, the part owner should be able to act to the exclusion of
that inventor as in proposed Sec. 42.9(a).
Response: This comment is not adopted. The word ``inventor'' in
Sec. 42.9(b) is necessary because Sec. 42.9(a) provides only for an
owner of the entire interest acting to the exclusion of the inventor,
as opposed to an owner of a part interest.

Counsel (Sec. 42.10)

Comment 38: There were a number of comments on the pro hac vice
provision of Sec. 42.10(c). Several comments suggested limiting
representation to registered practitioners in view of the technically,
legally and procedurally complex nature of the proceedings. Other
comments suggested that pro hac vice representation be permitted, but
only in very limited circumstances. Several comments also suggested
that the rule should require that the lead counsel be a registered
practitioner, or that a registered practitioner be involved in the
proceeding. Another comment suggested that the burden to both parties
be considered before permitting pro hac vice representation. Another
comment suggested that any party admitted pro hac vice should expressly
agree to be bound by part 10 of the Office's regulations, to certify
that they had read and are familiar with the relevant statutes, rules
of practice, standing order, and inter partes rules, and that they are
personally able to represent the client competently in the proceeding
under Rule 10.76.
Response: The Office agrees that a motion to appear pro hac vice by
counsel who is not a registered practitioner will be granted in limited
circumstances, e.g., where a practitioner is an experienced litigator
who is familiar with the subject matter involved in the proceeding.
Although the Board may authorize a person other than a registered
practitioner who possesses appropriate qualifications to appear as
counsel in a proceeding, Sec. 42.10(c), as adopted in this final rule,
provides that the lead counsel in such a proceeding must be a
registered practitioner. The admission of a party pro hac vice may be
made subject to conditions as suggested by the comment in appropriate
circumstances. Compliance with all of the suggested conditions in all
cases, however, would not be appropriate such as when the party
requesting admission had previously been admitted in another proceeding
and had demonstrated a high degree of competence.

[[Page 48630]]

Comment 39: Several comments were directed to clarifying the roles
of lead and back-up counsel. One comment contained a proposal for
multiple back-up counsel or that additional attorneys receive access to
communications.
Response: The comment suggesting multiple back-up counsel is not
adopted. Based on the experience of the Office in contested cases,
designating one lead counsel and one back-up counsel by each party
should result in more efficient and effective case management. The
Office expects that lead counsel will, and back-up counsel may,
participate in all hearings and conference calls with the Board and
will sign all papers submitted in the proceeding. In addition, the role
of back-up counsel is to conduct business with the Office on behalf of
lead counsel when lead counsel is not available. Actions not conducted
before the Office (e.g., taking of depositions) may be conducted by
lead or back-up counsel. In response to one comment, for efficiency, it
is expected that all communications from the Office will be directed to
lead counsel only, unless informed in advance that lead counsel is not
available, in which case communications will be with back-up counsel.
The Office envisions that lead and back-up counsel may provide access
to the electronic records to other practitioners representing their
client. It is also envisioned that the access granted to the other
practitioners by the lead or back-up counsel may also be rescinded by
the lead or back-up counsel without consultation with the Board.
Comment 40: Several comments were directed to disqualifications and
withdrawals under Sec. 42.10(d) and (e), and sought clarification of
those provisions in the rules.
Response: The comment is noted, but not adopted. It is important in
contested proceedings that the public record reflect who is acting as
counsel for the parties. Thus, under Sec. 42.10(b) a power of attorney
must be filed designating counsel not already of record in the
prosecution. The withdrawal provision is applicable to lead counsel,
back-up counsel, and all other counsel of record. The Office
understands the concerns of one comment regarding the impact of
disqualification on the proceedings. Motions to disqualify opposing
counsel are disfavored because they cause delay and are sometimes
abused. However, should disqualification of a party's counsel be
necessary, it is expected that the Board will adopt reasonable measures
to protect the party during the transition to new counsel.
Comment 41: One comment requested that situations where counsel
would be disqualified pursuant to Sec. 42.10(d) be provided in the
MPEP or other material.
Response: The determination whether to disqualify counsel is based
on the facts and circumstances of the case, including any response by
counsel to the allegation. Some situations, however, are likely to
trigger consideration of whether to disqualify a counsel, e.g.,
egregious misconduct.
Comment 42: One comment suggested that Sec. 42.10(e) requires an
attorney to invent circumstances requiring disqualification in order to
be permitted to withdraw from representation.
Response: Section 42.10(e) does not require that an attorney be
disqualified by the Board in order for the Board to authorize
withdrawal. Authorization of attorney withdrawal under Sec. 42.10
would be based on the facts in the case including the time remaining
for a response, the ability of new counsel to complete the proceeding
competently and timely, and desire of the real party in interest to be
represented by new counsel.

Duty of Candor (Sec. 42.11)

Comment 43: Several comments expressed concern about the scope of
the proposed rule in comparison to Sec. 1.56 and Sec. Sec. 1.555 and
1.933. Specifically, the lack of nexus between the proceeding and
individuals with a duty of candor and good faith was questioned.
Response: The comment is adopted. Section 42.11, as adopted,
imposes a duty of candor and good faith only if an individual is
involved in the proceeding. The scope of the duty is comparable to the
obligations toward the tribunal imposed by Rule 11 of the Federal Rules
of Civil Procedure.
Comment 44: One comment suggested that it was unclear how
violations of the duty by the petitioner would be enforced,
particularly when the violation is discovered after the proceeding has
terminated.
Response: During the proceeding, an appropriate sanction under
Sec. 42.12 may be sought and at any time, including after the final
written decision, the matter may be submitted to the Office of
Enrollment and Discipline, or an appropriate sanction under Sec. 42.12
may be sought as the Board has both statutory and inherent authority to
enforce its protective order. 35 U.S.C. 316(a)(6), as amended, and 35
U.S.C. 326(a)(6).

Sanctions (Sec. 42.12)

Comment 45: One comment expressed agreement with the Board's using
its sanction authority when necessary to curb abuses in proceedings.
Response: The rule provides that the Board may impose a sanction on
a party for abusing the proceeding. The Office hopes that such a
sanction is rarely needed.
Comment 46: One comment asked for guidance regarding sanctions
including how the sanctioned party can appeal such a sanction, the
basis for the Office's authority to take patent term from a patent
owner (either through a mandatory disclaimer or a judgment) absent a
decision on the merits of a petition, the basis for the Office's
authority to cause estoppel to attach to a petitioner absent a decision
on the merits of a petition, and under what circumstances the Office
will impose sanctions. The comment suggested that the Office consider
additional sanctions directed to an attorney and/or firm responsible
for the misconduct.
Response: Section 42.12 identifies types of misconduct and
sanctions for misconduct. Sections 90.1, 90.2 and 90.3 provide for
judicial review of decisions by the Patent Trial and Appeal Board. If
appropriate, the misconduct may be reported to the Office of Enrollment
and Discipline for consideration of a sanction directed to the attorney
or firm. Based on past experience, the Board expects such instances to
be rare. Authority for the Board's sanctions include 35 U.S.C.
316(a)(6), as amended, and 35 U.S.C. 326(a)(6).

Citation of Authority (Sec. 42.13)

Comment 47: Several comments were critical of the requirements of
citing decisions to the United States Reports and West Reporter System,
and suggested that proposed Sec. Sec. 42.13(a) and (b) be modified as
a preference.
Response: The comment is adopted.
Comment 48: A few comments recommended that the requirement for a
copy of the cited non-binding authority be eliminated because it is a
burden and such an authority is electronically accessible.
Response: This comment is not adopted. Non-binding authority should
be used sparingly. The Office cannot assume that a cited non-binding
authority is readily accessible electronically. A party who wishes to
cite a non-binding authority would already have a copy, and therefore
providing the Office with a copy should not be a burden.

Public Availability (Sec. 42.14)

Comment 49: The comments generally supported proposed Sec. 42.14.
One comment, however, suggested special

[[Page 48631]]

procedures for handling invention dates in derivation proceedings.
Another suggested the simultaneous filing of confidential and non-
confidential/redacted versions of material for which confidentiality is
sought. Another suggested additional procedures to retain
confidentiality after a motion to strike is denied.
Response: The comments are noted, but not adopted. The rule
reflects the Congressional mandate of an open record expressed in the
provisions of the AIA amending 35 U.S.C. 316(a) and adding 35 U.S.C.
326(a). Those provisions require that the Director prescribe
regulations providing that inter partes review and post-grant review
files ``shall be made available to the public,'' except that any
petition or document filed with the intent that it be sealed, if
accompanied by a motion to seal, will be treated as sealed pending the
outcome of the ruling on the motion. The Office anticipates that, in
any particular proceeding, the need for procedures for sealing certain
types of confidential information or certain documents, beyond those
mandated by the statute, will be addressed by a motion to the Board
under Sec. 42.54. It is also envisioned that a motion to seal could be
accompanied by both a request to return the material should the motion
to seal be denied as well as a redacted version of the material
accompanied with a contingent motion to rely on the material as
redacted should the motion to seal be denied.

Fees (Sec. 42.15)

Comment 50: Several comments supported the fee structure and fee
amounts proposed.
Response: The Office adopts the proposed fee structure and base fee
amounts in this final rule, with modifications to the fees for
challenged claims in excess of 20 claims.
Comment 51: Several comments suggested that the Office return or
refund part of the trial proceeding fees paid to recover the cost of
trial after institution in the proceedings if the Director does not
institute a trial or to charge a fee only if a trial progresses to the
point that additional effort is required of the Board.
Response: The comment has been adopted in part in that the Office
is proposing a staged fee structure for trial proceedings in a separate
rulemaking implementing section 10 of the AIA. The Office, however,
cannot adopt the proposal in this final rule. The fees set in this
notice are being set to recover the aggregate cost of conducting the
proceedings using the authority provided in 35 U.S.C. 41(d)(2).
Moreover, unlike 35 U.S.C. 312(c) in effect on September 15, 2012,
there is no additional authority provided in 35 U.S.C. 311-319 in
effect on September 16, 2012, to refund fees paid should review not be
instituted. The Director's authority to refund fees under 35 U.S.C. 42
is limited to fees that were paid by mistake or in excess of that owed.
Moreover, in contrast to 35 U.S.C. 311(b) and 312(c) in effect on
September 15, 2012, the AIA does not provide for refund of any part of
the fee when the Director determines that a review should not be
initiated.
Comment 52: Several comments suggested that the Board
underestimated the number of claims that will stand or fall together
and should consider adopting processes for greater efficiency where
large numbers of claims are presented in a petition. One of the
comments suggested charging on a claim-by-claim basis because the
proposed blocks of claims may result in more claims being requested
after a block of claims is breached.
Response: The comments have been adopted. Section 42.15, as adopted
in this final rule, provides a flat fee of $600 for inter partes
review, and $800 for post-grant review or a covered business method
patent review, for each claim in excess of 20 claims. The modification
to the proposed rule is based on public input that the Office should
expect more claims to stand or fall together. The Office will continue
to monitor the costs associated with a large number of claims to
determine if the fee needs to be reset or if other procedures need to
be adopted.
Comment 53: Several comments suggested that the process be revised
to control costs to the Office by limiting the process before the Board
to considering the initial petition, conducting an oral hearing and
issuing a final decision or by minimizing actions by the Board beyond
those actions.
Response: The final rules have adopted many cost saving features.
The AIA, however, explicitly provides for motion-based proceedings and
requires that the effect on economy rather than merely the Board be
considered in prescribing regulations. 35 U.S.C. 316(d), as amended,
and 35 U.S.C. 326(d) provide for a motions practice before the Board
during the trial, which is inconsistent with the suggestion. 35 U.S.C.
316(b), as amended, and 35 U.S.C. 326(b) require that the effect of any
regulation on the economy be considered, which includes limiting
discovery where appropriate.
Comment 54: Several comments suggested that patent applicant will
likely file a large number of claims to increase the filing fee for the
new trial proceedings.
Response: This comment has been adopted in part. The Office has
reduced the fee for petitions challenging more than 20 claims.
Comment 55: Several comments suggested that the fee for the new
trial proceedings be set at a low level and that no additional fees be
charged for seeking review of more than 20 claims.
Response: The Director's authority to set fees for service under 35
U.S.C. 41(d)(2) does not provide for setting fees below cost. Setting a
single fee regardless of the cost to process a petition is inconsistent
with the requirement of 35 U.S.C. 311(a), as amended, and 35 U.S.C.
321(a) to set more than one fee for each petition, and the requirement
of 35 U.S.C. 312(a)(1), as amended, and 35 U.S.C. 322(a)(1) that the
fee be provided with the petition. The Office is proposing a limited
subsidization of the review proceeding fees in a separate rulemaking
implementing section 10 of the AIA.
Comment 56: A comment suggested that single-claim challenges are
likely based on the statutory estoppel provisions and the fee setting
in order to avoid the escalating fees for additional claims.
Response: The comment directed to the statutory estoppel provisions
is not germane to this notice, which does not concern those provisions.
Further, to the extent the comment was directed to the fee setting, the
suggestion is inconsistent with both the proposed and final regulation
as both impose a single fee for challenging the first 20 claims in a
patent.
Comment 57: Several comments suggested that the fee charged be
based on the number of grounds asserted in a petition rather than the
number of claims challenged.
Response: The comments were not adopted. Determining how many
grounds of unpatentability actually are asserted in a petition cannot
always be determined with certainty, while determining the number of
claims being challenged can be determined definitely. Using an
uncertain process to determine the fee due on filing a petition for
review likely will increase costs and uncertainty for the petitioner,
patent owner and the Office.
Comment 58: One comment questioned how claims should be counted if
review of a dependent claim is requested and if review of its parent
claim(s) is not requested, and how a challenged multiple dependent
claim would be counted.

[[Page 48632]]

Response: The number of claims for which review is requested is
increased by the number of claims from which a claim depends if the
petition seeks review of a dependent claim, but not all of the claims
from which it depends. For example, where patent claim 4 depends from
claim 3, claim 3 depends from claim 2, and claim 2 depends from
independent claim 1, and the petition requests only review of claims 1
and 4, the proper claim count would be 4. Any multiple dependent claim
will be counted as a single claim.
Comment 59: Several comments suggested the Office apply the small
entity discount to the petition fees.
Response: The suggestion is not adopted. The Office's authority to
apply a small entity discount to fees authorized by 35 U.S.C. 41 is
provided in 35 U.S.C. 41(h). This authority does not permit the Office
to provide a small entity discount on fees set under 35 U.S.C.
41(d)(2).
Comment 60: One comment suggested that the fee for filing a
petition for review be discounted if the petition seeks review of
claims that are not separately patentable.
Response: The comment is not adopted. While a patent owner may
effectively waive any argument that a claim is separately patentable,
the petitioner's determination as to which claims stand or fall
together is not binding on the patent owner. For example, a
petitioner's determination that species specific claims 2-10 should
stand or fall with genus claim 1 for purposes of the prior art, and the
same claims which stand or fall with specific claim 10 for purposes of
written description or enablement, may not be credited.
Moreover, even the patent owner's argument that claims stand or
fall with claim 1 may be ineffective where the additional claims have a
later effective filing date. In this situation, it may be appropriate
to find claim 1 patentable, while holding the additional claims
unpatentable.

Petition and Motion Practice, Generally (Sec. 42.20)

Comment 61: One comment suggested that careful and active
management of post-grant proceedings by the Board, particularly in
connection with discovery and management of the amendment process, will
result in early focusing of the issues and prevent the waste of time
and harassment that might otherwise result from the party-managed
discovery common in the Federal courts.
Response: The rules provide for an efficient and controlled
procedure to secure the just, speedy, and inexpensive resolution of
every proceeding coming before the Board. Sec. 42.1(a).
Comment 62: One comment suggested that prior to the first
conference call with the Board contemplated under Sec. 42.20, the
petitioner and the patentee should be required to meet to try to
resolve issues such as claim interpretation, level of skill, whether
the alleged prior art identified is in fact prior art, and what factual
issues the patentee intends to raise to reduce issues that must be
decided within the proceeding.
Response: Under the rules, the parties may agree to meet and
resolve issues among themselves prior to the conference call, where
appropriate, the Board may require the parties to meet and confer prior
to the initial conference call. It has been the Board's experience that
parties' willingness to resolve issues among themselves often results
in a less expensive, faster resolution of the proceeding.
Comment 63: One comment expressed support for active management of
the proceedings, consistent with the statutory purpose of the AIA to
create a mechanism for resolving patentability disputes that is more
efficient and cost-effective than district court litigation.
Response: The rules provide for an efficient and controlled
procedure to secure the just, speedy, and inexpensive resolution of
every proceeding coming before the Board. Sec. 42.1(a).
Comment 64: One comment suggested expanding subsection (b) of the
rule to indicate when authorization is not required, e.g., motions for
rehearing, motions to seal, motions to extend page limits, and when
authorization is required.
Response: The comment is not adopted. Authorization is required for
the filing of each motion either through Board order or as specified by
rule, e.g., a motion to seal (Sec. 42.54(a)) and a motion to expunge
confidential information (Sec. 42.56). As contemplated under the
rules, once a proceeding is initiated, the Board may provide blanket
authorization to file certain types of motions depending on the
particular circumstances of the proceeding. Sec. 42.20(b).
Comment 65: One comment suggested that authorization not be
required for the single motion to amend as permitted by statute.
Response: Under the rules, authorization is not required to file
the single motion to amend the claims permitted by statute. Sec. Sec.
42.121(a) and 42.221(a). The rules instead require that the patent
owner confer with the Board prior to the filing of the motion to
discuss compliance with the statutory requirement that a reasonable
number of substitute claims be proposed. 35 U.S.C. 316(a)(9), as
amended, and 35 U.S.C. 326(a)(9).
Comment 66: One comment suggested that proposed Sec. 42.20 be
modified to state that ``Relief must be requested in the form of a
motion'' and ``A motion, other than a petition to institute a
proceeding, will not be entered without Board authorization.''
Response: The comment is not adopted. Under the rules, relief,
other than a petition, must be requested by a motion. A petition is not
considered a motion since it has distinct requirements.
Comment 67: One comment suggested that proposed Sec. 42.20 not be
adopted in view of estoppel that accompanies the review proceedings and
the briefing included in Sec. 42.20(d) that may unnecessarily burden
participants with redundant briefing issues and that may allow parties
to present new arguments and otherwise add expense to the participants.
Response: This comment is not adopted. Under the rules, additional
briefing ordered by the Board will take into account securing the just,
speedy, and inexpensive resolution of the proceeding. Sec. 42.1(b).
Comment 68: One comment suggests that the Office adopt the practice
under current interference practice where observations and replies are
simply papers authorized by the Standing Order, noting that certain
requirements of the rule, e.g., statement of material facts, would not
seem to be necessary for observations.
Response: The Office envisions that the Scheduling Order will
authorize certain types of papers, including observations. Material
facts are no longer required to be part of a motion. Sec. Sec.
42.22(a)(2) and 42.22(c).
Comment 69: One comment suggests that the rules should specify the
content requirements of a joinder request and set a time period for the
patent owner to file a preliminary response to a joinder request and
that the Office Patent Trial Practice Guide should list exemplary
factors that the Board will consider when exercising its discretion
under 35 U.S.C. 315(c), as amended, and 35 U.S.C. 325(c).
Response: This comment is not adopted. Under the rules, a request
for joinder must be made by way of authorized motion and the final
rules provide for such motions. Sec. 42.122(b). The requirements for a
motion are found in Sec. 42.22. Factors that may be considered in
entertaining a motion for joinder include a request made by a

[[Page 48633]]

court, a request by the first petitioner for termination of the first
review in view of the strength of the second petition, and whether the
petitioner requesting joinder has offered to pay the patent owner's
costs.

Notice of Basis for Relief (Sec. 42.21)

Comment 70: Several comments suggested that the Board should
clarify, in either the preamble or the Office Patent Trial Practice
Guide, that a purpose of requiring a notice of basis for relief under
Sec. 42.21 is to help the Board decide whether it should authorize the
filing of the underlying motion.
Response: The notice serves to provide notice to an opponent and
the Board of the relief a party is seeking. The notice allows the Board
to consider whether the filing of a motion should be authorized and an
opponent to consider whether it would oppose such a filing.
Comment 71: One comment suggested that the Board should be liberal
in its application of Sec. 42.21(c), so as not to elevate formalities
over substance such that so long as the motion is reasonably within the
scope of the notice, the Board will address the motion on its merits.
Response: Under the rule, a notice must include sufficient detail
to place the Board and each party on notice of the precise relief
requested. In the Board's experience, the greater detail provided in
the notice the more likely it is the party will be authorized to file a
motion seeking the relief requested. If a party wishes to file a motion
and is uncertain as to whether it is within the scope of a motion
listed on its notice and authorized to be filed, it should seek
clarification from the Board in the form of a conference call prior to
filing the motion.
Comment 72: Several comments suggested that notice of motions
should be deleted as unnecessary. Section 42.20 already provides that
the motion may not be filed without prior authorization.
Response: The comments are not adopted. The notice provision aids
the Board and an opponent and works in tandem with Sec. 42.20. In the
Board's experience, the notice has been a useful tool for preparation
of conference calls for both the parties and the Board. The notice
provides a written record of the relief requested from the perspective
of the requesting party and allows for a more productive conference
call as the administering judge and the opposing party can consider the
relief that is being requested prior to any call. The notice allows
parties to confer prior to the conference call and perhaps resolve
issues preemptively.
Comment 73: One comment suggested that the rule be revised to
remove the ``interests of justice'' standard at Sec. 42.21(d).
Response: This comment is not adopted. The rule is designed to
discourage a party from withholding notice to the Board or to another
party, either intentionally or inadvertently, such that it is able to
gain an unfair advantage.

Content of Petitions and Motions (Sec. 42.22)

Comment 74: Several comments suggested that a statement of material
facts should not be required.
Response: The comment has been adopted. The Office has made
modifications to the rule regarding a statement of material facts in
petitions and motions. In particular, the rule has been clarified to
state that a petition or motion may, but is not required to, include a
statement of material facts.
Comment 75: One comment suggested that the rule should be revised
to provide that material facts are presented in an appendix rather than
in a brief.
Response: The comment is not adopted. However, the Office
understands the concerns expressed and has made modifications to the
rule regarding a statement of material facts in petitions and motions.
In particular, the rule has been clarified to state that a petition or
motion may, but is not required to, include a statement of material
facts. Rather than requiring a statement of material facts to be
presented in petitions or motions, whether in the main body or in an
appendix, the submission of a statement of material facts has been made
optional. The Office believes this change gives greater flexibility to
the parties than requiring the statement of material facts to appear in
an appendix.
Comment 76: One comment suggested that all issues relating to
admissibility of evidence should be raised in the petitioner's and
patentee's responses and replies, rather than through later motion
practice.
Response: Issues relating to credibility and the weight of the
evidence may be raised in responses and replies. To the extent a party
seeks to exclude the evidence in dispute, a party is to raise the issue
in a motion to exclude. Motions to exclude help identify and focus the
admissibility issue in dispute and are best handled later in the
proceeding as many issues that arise early in the proceeding are no
longer relevant at the time the motion to exclude is filed.

Oppositions and Replies (Sec. 42.23)

Comment 77: Several comments supported the proposed rule. One
comment stated that proposed Sec. 42.23 should be adopted.
Response: The proposed rule has been adopted in this final rule.
Comment 78: One comment suggested that if the Office retains the
requirement that all papers contain a statement of material facts,
Sec. 42.23 should be revised to clarify which material facts are to be
addressed in oppositions and replies and that Sec. 42.23 be revised to
provide that material facts are to be presented in an appendix rather
than in the body of a brief.
Response: The comment is not adopted because the Office has not
retained the requirement that all papers contain a statement of
material facts. The Office has made modifications to the rule regarding
a statement of material facts in petitions and motions. In particular,
the rule has been clarified to state that a petition or motion may, but
is not required to, include a statement of material facts. Rather than
requiring a statement of material facts to be presented in petitions or
motions, whether in the main body or in an appendix, the submission of
a statement of material facts has been made optional. The Office
believes this change gives greater flexibility to the parties than
requiring the statement of material facts to appear in an appendix.
Comment 79: One comment suggested that the rule should
affirmatively state that a party has the right to file an opposition to
a motion and that the movant has the right to file a reply to an
opposition unless otherwise directed by the Board or the rules.
Response: The comment is not adopted. Section 42.23 permits
oppositions and replies.
Comment 80: One comment suggested modifying Sec. 42.23 to state
that oppositions and replies must include a statement responding to
each material fact.
Response: Section 42.23 provides that oppositions and replies must
include a statement identifying material facts in dispute where the
underlying motion contains such a statement. The Office believes that
it is not necessary to respond to those that are not in dispute. Thus,
section 42.23 also provides that any material fact not specifically
denied may be considered admitted. The Office believes that this
approach is more efficient for parties in identifying disputes of
material fact.

Page Limits for Petitions, Motions, Oppositions, and Replies (Sec.
42.24)

Comment 81: Several comments supported the page limit structure and
the page limits proposed. One comment specifically urged adoption of
Sec. 42.24(c).

[[Page 48634]]

Another comment stated that the precise number of pages is not
critical, except that a reasonable limit needs to be imposed. One
comment stated that the page limits are reasonable. Another comment
stated that a major problem with inter partes reexamination is that
there is no page limit on the size of the request which frustrates the
Office's ability to do its job well and handicaps the patent owner who
must then respond. One comment recognized that certain rules, even if
unpopular, are necessary to contain the costs of litigating the new
trial procedures.
Response: The proposed page-limit structure has been adopted, and
Sec. 42.24, as adopted in this final rule, permits higher page limit
amounts. Not only have certain page limits been increased, but also the
amount of space available for claim charts has been doubled and the
requirement for a statement of material facts has been eliminated.
These collective changes will permit a party to have a great deal of
flexibility in presenting its case and in responding to the opposing
party. Together, these changes are far more effective than a mere
increase of page limits standing alone. In particular, the page limits
are increased to 60 pages for a petition requesting inter partes review
or derivation (a 20% increase) and 80 pages for a petition requesting
post-grant review or covered business method patent review (a 14%
increase). Likewise, because Sec. 42.24(b) provides that page limits
for oppositions are the same as those for corresponding petitions, the
page limits are increased to 60 pages for an opposition to a petition
requesting inter partes review (a 20% increase) and 80 pages for an
opposition to a petition requesting post-grant review (a 14% increase).
As discussed with respect to Sec. 42.6, single spacing may be used for
claim charts rather than double spacing--which results in a doubling of
the space available to present claim charts. In addition, as discussed
with respect to Sec. 42.22, a statement of material facts no longer is
required in petitions or motions.
Comment 82: Several comments suggested that the page limits should
be increased. One comment suggested that the page limits be increased
to approximately 85 pages for inter partes review petitions and 120
pages for post-grant review petitions. Some comments suggested the
Office adopt the page limits of, and one comment suggested the Office
adopt the formatting requirements of, inter partes reexamination.
Response: The comment has been adopted in part. The Office has made
modifications to the proposed page limits. In particular, the page
limits are increased to 60 pages for a petition requesting inter partes
review and 80 pages for a petition requesting post-grant review. As
discussed with respect to Sec. 42.6, single spacing may be used for
claim charts rather than double spacing. In addition, as discussed with
respect to Sec. 42.22, a statement of material facts is no longer
required. These collective changes will permit a party to have a great
deal of flexibility in presenting its case and in responding to the
opposing party. Together, these changes are far more effective than a
mere increase of page limits standing alone.
Comment 83: Several comments suggested that the page limits should
apply equally to petitioner and patent owner. One comment noted that
Sec. 42.204(b)(3) requires the petitioner to state how the challenged
claim is to be construed and suggests that Sec. 42.207 should provide
the patent owner with a corresponding opportunity to rebut the
petitioner's proffered construction. Another comment stated that the
patent owner should be able to use the full number of pages within the
limit even if the petitioner uses fewer than the allowed number of
pages. One comment stated that, because the patent owner is permitted
to have a preliminary response and a response after institution, patent
owner will have twice the number of pages to address the issues. The
comment further stated that the ability of the patent owner to present
a motion to amend will further increase the number of pages for the
patent owner to present its case.
Response: The proposed rules implicitly provided petitioner and
patent owner equal page limits because a patent owner's preliminary
response would have been filed as an opposition, which has the same
page limit as those for corresponding petition. In view of the
comments, Sec. 42.24(b), as adopted in this final rule, adds new
provisions that expressly provide that the page limits for a patent
owner's preliminary response and a patent owner's response are the same
as the page limits for the petition. Section 42.24 does not limit a
party to a page limit based upon the number of pages used by another
party. Also, a patent owner's preliminary response and a patent owner's
response are not ordinarily expected to address the exact same issues.
A patent owner's preliminary response is limited to setting forth the
reasons why no review should be instituted. In the patent owner's
response, any ground for unpatentability not already denied may be
addressed. Under Sec. 42.24(b), a petitioner will be provided with an
equal number of pages to oppose a motion to amend as the patent owner
is provided in making the motion to amend.
Comment 84: One comment suggested that Sec. 42.24 be modified to
address expressly and set forth a page limit for patent owner
responses.
Response: This comment has been adopted. The Office modified the
rule to expressly provide that the page limits for a patent owner's
preliminary response, or response, to a petition are the same as the
page limits for the petition.
Comment 85: Several comments noted that page limits impact the
rights of the parties and the ability of the parties to fully present
arguments, especially in view of the estoppel provisions of 35 U.S.C.
315(e), as amended, and 35 U.S.C. 325(e). One comment stated that page
limits will increase inefficiency and costs by forcing a petitioner to
file multiple co-pending reviews if a petitioner only is able to
effectively address a small subset of claims within the page limits.
Several comments suggested that practitioners will move away from the
proceedings if the page limits are too restrictive.
Response: The Office has made modifications to the proposed rules
regarding page limits. In addition, the Office has made modifications
to the proposed rules regarding the line spacing of claim charts to
permit single spacing rather than double spacing and has eliminated the
requirement for a statement of material facts. These collective changes
will permit a party to have a great deal of flexibility in presenting
its case and in responding to the opposing party. Together, these
changes are far more effective than a mere increase of page limits
standing alone. Furthermore, petitioners and patent owners may seek
waiver of the page limits in appropriate circumstances.
Comment 86: Several comments suggested that the page limits should
be removed. One comment suggested that page limits for claim charts
should be removed. Several comments stated that there should be no page
limit for petitions, noting that there are no page limits for requests
for inter partes reexamination.
Response: The comment is not adopted. In promulgating the rules,
the Office is to consider the integrity of the proceedings, the
efficient operation of the Office, and ability to complete the
proceedings timely. Allowing petitioners to file petitions and/or claim
charts without page limits places a severe burden upon both the patent
owner and the Board, and will affect

[[Page 48635]]

adversely the patent owner's ability to respond effectively to the
patentability challenges and the Board's ability to complete the
proceeding timely. Page limits assist the Board in effectively managing
the proceeding without being unduly restrictive of the parties. The
Office has made modifications to the proposed rules regarding page
limits. In addition, the Office has made modifications to the proposed
rules regarding the line spacing of claim charts to permit single
spacing rather than double spacing and has eliminated the requirement
for a statement of material facts.
Comment 87: Several comments suggested that certain components of
petitions, motions, oppositions, and replies should either be excluded
from the page limits or counted separately. One comment suggested that
required portions should not be counted toward the page limits. Several
comments suggested that separate page limits should apply for claim
charts, claim construction arguments, and statement of material facts.
One comment suggested the Office promulgate a rule that claim charts
not include attorney argument or introduce new evidence.
Response: In promulgating the rules, the Office is to consider the
integrity of the proceedings, the efficient operation of the Office,
and ability to complete the proceedings timely. Although the Office
understands the concerns expressed, allowing petitioners to file
petitions where certain portions are exempt from page limits places a
severe burden upon both the patent owner and the Board, and will affect
adversely the patent owner's ability to effectively respond to the
patentability challenges and the Board's ability to complete the
proceeding timely. Page limits assist the Board in effectively managing
the proceeding without being unduly restrictive of the parties. A rule
prohibiting attorney argument or new evidence in claim charts would be
difficult to enforce without inordinate expenditure of Board resources.
The Office has made modifications to the proposed rules regarding page
limits. In addition, the Office has made modifications to the proposed
rules regarding the line spacing of claim charts to permit single
spacing rather than double spacing and has eliminated the requirement
for a statement of material facts.
Comment 88: Several comments suggested that a word count should be
used in place of a page limit.
Response: The comment is not adopted. A word count is more
difficult and complex to administer than a page limit.
Comment 89: One comment suggested that a substantial fee should be
charged for submissions exceeding the page limit in order to encourage
brevity without adopting a prescriptive rule.
Response: The comment is not adopted. Because the fee amounts for
exceeding page limits in post-institution submissions cannot be known
at the filing of the petition, the proposed fee is inconsistent with
the requirement of 35 USC 312(a)(1) and 322(a)(1) that the fee be
provided with the petition by the petitioner. It is noted that Sec.
42.24(a)(2) provides that the petitioner may seek waiver of the
petition page limits in appropriate circumstances.
Comment 90: Several comments suggested modification be made to the
page limit waiver process. Some comments suggested that, because
petitioner may lose the right to file a petition due to the passing of
a statutory deadline if a motion to waive page limits is denied, the
Office should implement a rule allowing the filing of a page limit
compliant petition within a designated period of time after a motion to
waive page limits is denied. One comment suggested that exceptions to
the page limits should be allowed when numerous claims need to be
addressed. One comment stated that there is no meaningful opportunity
to seek a waiver of page limits in advance of the petition filing. One
comment suggested that ``the interests of justice'' standard for page
limit waivers should be lowered to ``good cause,'' and also suggested
that ``good cause'' should be presumed to exist when there is a payment
of a fee for the review of extra claims.
Response: Section 42.24(a)(2) provides 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 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
to waive the page limits. Generally, the Board would decide the motion
to waive page limits prior to deciding whether to institute the trial.
The Office understands the concerns expressed, however, because both
the page-limited petition and non-page limited petition must accompany
the motion to waive page limits, there is no need for a rule regarding
the filing date of later-filed page limit compliant petitions. Section
42.24(a)(2) provides that any other motion to waive page limits must be
granted in advance of filing the motion, opposition, or reply for which
the waiver is sought. Each motion to waive page limits will be decided
on the particular facts presented on a case-by-case basis. However,
exceptions to the page limits are not anticipated to be granted
commonly. Lowering the standard from ``the interests of justice'' to
``good cause'' likely would result in a large increase in the number of
page limit waivers granted, with corresponding adverse impact on the
ability of the Board to complete the proceeding effectively and timely.
Comment 91: Several comments suggested that the page limits should
be based on the complexity of the proceeding. Several comments
suggested that the page limits should be based, in whole or in part, on
the number of claims challenged and consequently the fees paid. Several
comments suggested that the page limits be based, in whole or in part,
on the number of grounds raised or number of proposed rejections in a
petition. One comment suggested that, to the extent that determining
the number of grounds raised can be subjective, a rule adopting such an
approach should include clear examples of what constitutes a separate
ground of unpatentability. One comment suggested that the Office
require a table of contents identifying each separate ground of
unpatentability with corresponding headings in the body of the
petition. One comment suggested the Office encourage practitioners to
present different grounds of unpatentability in the order in which they
most easily satisfy the threshold.
Response: These comments are not adopted. Providing for additional
pages merely because additional claims are added to a petition where
the pages are used on the primary target claims would reduce the page
limit rule effect in many proceedings and reduce the ability of the
Office to conclude proceedings timely. Where a petitioner can
demonstrate how a waiver of the page limit is in the interests of
justice, a motion to waive the page limit should be considered.
Alternatively, the filing of multiple petitions directed to subsets of
related claims should be considered.
In addition, determining how many grounds of unpatentability
actually are asserted in a petition cannot always be done with
certainty, while a fixed number of pages can be determined with
certainty. Using an uncertain process to determine the page limit for
filing a petition for review or other submission will be difficult to
administer and likely will increase costs and uncertainty for the
petitioner, patent owner and the Office.
However, the Office has made modifications to the proposed rules
regarding page limits. In addition, the

[[Page 48636]]

Office has made modifications to the proposed rules regarding the line
spacing of claim charts to permit single spacing rather than double
spacing and has eliminated the requirement for a statement of material
facts.
Comment 92: Several comments noted that district court litigation
is not analogous to a trial under the AIA. One comment suggested that
interferences are not analogous to trials under the AIA. Some comments
noted that in Federal courts issues are often broken across multiple
briefs and negotiations. Some comments noted that Federal courts often
do not impose limits on claim charts. Another comment noted that
petitions under the AIA seem more analogous to complaints, for which
page limits are rarely, if ever, applied by Federal courts.
Response: The Office recognizes that differences exist between
trials under the AIA and Federal District Court litigation, as well as
interferences. Among other things, Congress intended that trials under
the AIA proceed more rapidly and at lower cost than Federal District
Court litigation. However, the Office believes that the use of page
limits in Federal courts and in contested cases is instructive when
looking to trials under the AIA. The Office does not intend a one-to-
one correspondence with either Federal District Court litigation
practice or contested cases practice. However, page limits have
assisted tribunals in effectively managing proceedings without being
unduly restrictive of the parties.
Comment 93: A comment asked whether pages in an affidavit filed
with a petition, motion, opposition, or reply would be counted toward
the applicable page limit and whether the Office would place page
limits on supporting affidavits.
Response: Section 42.24(a) provides that the page limits for
petitions and motions do not include an appendix of exhibits. Section
42.24(b) provides that the page limits for oppositions are the same as
those for corresponding petitions or motions. Section 42.24(c) provides
that the page limits for replies do not include an appendix of
exhibits. Accordingly, an affidavit filed in an appendix of exhibits to
a petition, motion, opposition, or reply would not be counted toward
the applicable page limits.

Default Filing Times (Sec. 42.25)

Comment 94: One comment recommended that the patent owner should be
permitted to extend the time for response on a very low showing of good
cause because the petitioner would have ample time to build its case.
However, a few comments noted that the example in the Practice Guide
for Proposed Trial Rules provides a nine-month time frame for the
patent owner to prepare its response with a four-month time period to
take discovery, whereas the petitioner has only two months to reply to
the patent owner's response that may include amended claims, secondary
considerations of nonobviousness, and other evidence. One comment
requested a longer time period for a party who is located outside the
United States. In addition, one comment suggested that the Scheduling
Order be issued after the initial conference, where the administrative
patent judge has reviewed and made a determination on what motions will
be authorized, and the parties would work out an acceptable schedule.
One comment suggested that the reviews should be structured to minimize
the number of miscellaneous motions.
Response: At the time of institution, the Board will enter a
Scheduling Order that sets due dates for the proceeding. About one
month from the date of institution, an initial conference call will be
held to discuss the motions that the parties intend to file and to
determine whether any adjustment to the Scheduling Order is needed. The
Scheduling Order may be adjusted depending on the particular facts of
each case, such as whether the patent owner will be filing a motion to
amend or any secondary considerations of nonobviousness, and whether
the petitioner would need additional time for taking discovery or
filing a reply. The Board will conduct the proceeding in a streamlined
manner taking into account the complexity of the proceeding and
ensuring that the trial is completed within one year of institution,
including minimizing any unnecessary miscellaneous motions.
Comment 95: One comment suggested that the oral hearing should not
be scheduled sooner than 45 days from the last reply to provide the
parties sufficient time to prepare.
Response: When a party requests an oral hearing, the party may
recommend a date for the oral hearing. The Board will take into
consideration the party's availability and whether sufficient time is
provided.
Comment 96: One comment suggested that the Office should not take
the full three-month time period to determine whether to institute a
review.
Response: The Office will attempt to decide petitions to institute
a review as quickly as practical before the expiration of the three-
month statutory period.

Discovery (Sec. 42.51)

Comment 97: Several comments expressed concern that the proposed
rules for discovery do not provide sufficient default limits on the
scope and procedures for discovery. Further, several comments expressed
concern that the scope of discovery and procedures would be decided on
a case-by-case basis by the Board and that the Office should eliminate
the need for discovery motions where the parties agreed to the
additional discovery.
Response: The comments are adopted in part. The Office's rules
provide for routine discovery and additional discovery. Routine
discovery is designed to place the parties on a level playing field and
to streamline the process. Additional discovery is that discovery that
goes beyond the routine and, unless the parties agree to the additional
discovery, would require a joint conference call with the Board to
discuss a party's request for the additional discovery.
The Office adopts the suggestions to provide further detail on
routine and additional discovery, including providing default time
limits on the duration of depositions, providing for mandatory initial
disclosures and eliminating discovery requests where the parties are in
agreement. Discovery issues, however, will be decided on a case-by-case
basis where there is a disagreement amongst the parties.
The AIA requires the Director of the USPTO to consider the effect
of the regulations on the economy, the integrity of the patent system,
the efficient administration of the Office, and the ability to complete
inter partes and post-grant review timely in promulgating regulations.
Moreover, 35 U.S.C. 316(a)(5), as amended, and 35 U.S.C. 326(a)(5)
limit the authority of the Director to authorize discovery. In
particular, 35 U.S.C. 316(a)(5), as amended, and 35 U.S.C. 326(a)(5)
limit the authority of the Director to promulgate regulations
authorizing discovery. 35 U.S.C. 316(a)(5), as amended, states that
discovery shall be limited to depositions of witnesses submitting
affidavits and declarations and what is otherwise necessary in the
interests of justice. 35 U.S.C. 326(a)(5) similarly limits the
Director's authority to provide for discovery only if it is limited to
evidence directly related to factual assertions advanced by either
party. The legislative history for these provisions provides that
additional discovery be restricted to particular limited situations
justified by the special circumstances of the case. The legislative
history further states that it

[[Page 48637]]

was anticipated that the Office would be conservative in its grants of
discovery due to the time deadline constraints on the proceedings. 154
CONGRESSIONAL RECORD S9988-9, (daily ed. Sept. 27, 2008) (statement of
Sen. Kyl); see also 157 Cong. Rec. S1376 (daily ed. Mar. 8, 2011)
(incorporating prior 2008 statement). Consistent with the statutory
provisions and the legislative history, the Office's rules provide that
additional discovery will be ascertained on a case-by-case basis taking
into account the special circumstances of the proceeding.
Comment 98: Several comments expressed support for the limited
discovery provided for in the proposed rules to avoid the time-
consuming and costly discovery battles that are typical of district
court litigation. Other comments suggested that discovery was too
limited and that a limited number of automatic discovery mechanisms
should be put forth in the rules.
Response: The comments are adopted in part. The Office has
considered the comments favoring additional automatic discovery against
those cautioning against the increased costs and delays associated with
broader discovery. 35 U.S.C. 316(a)(5), as amended, and 35 U.S.C.
326(a)(5) require the Office to promulgate standards and procedures for
the limited discovery of relevant evidence. 35 U.S.C. 316(a)(6), as
amended, and 35 U.S.C. 326(a)(6) require sanctions will be provided for
abuse of discovery, which cautions against overly broad discovery.
Further, the legislative history states that the Office is anticipated
to be conservative in its grants of discovery due to time constraints
on the proceedings. On balance, the Office believes that the rules
provide the proper standards for discovery where the parties fail to
agree amongst themselves as to additional discovery but the Office
acknowledges the benefits to providing additional discovery where the
parties are in agreement. Accordingly, although the Office does not
adopt a specific number of automatic interrogatories, production
requests and depositions due to concerns over imposing costs and
potential delays upon a party desiring a quicker, lower cost
alternative to district court litigation, the Office has rewritten the
rules to provide for mandatory initial disclosures and additional
discovery where the parties agree to such discovery. Further,
additional discovery will be available even in the event that the
parties do not agree to the scope of the additional discovery, but such
requests will be handled on a case-by-case basis taking into account
the specific facts presented.
Comment 99: One comment suggested that the Office promulgate a rule
that parties may use conference calls with the Board to resolve
disputes regarding their discovery obligations in a timely way.
Response: The comment is adopted in part. A party seeking relief
other than by petition is to request relief via a ``motion,'' which can
be as simple as arranging a conference call with the Board. Sec.
42.20. The Board envisions handling joint conference calls in an
expeditious manner, especially for discovery disputes where the parties
need resolution in order to continue development of their respective
cases. In particular, the Board expects to resolve many issues via
conference calls so as to ensure the timely resolution of the
proceeding in a cost-effective manner.
Comment 100: One comment asked for clarification that the Board
will uphold all recognized privileges and immunities against disclosure
of otherwise discoverable information.
Response: The comment is adopted, although no change to the rule is
required. The Board intends to recognize privileges and immunities
normally available under the Federal Rules of Evidence. See Sec.
42.62.
Comment 101: Several comments requested that patent owners be
assured of at least three months of discovery once review is
instituted.
Response: The comments are adopted. The rules of practice for inter
partes review and post-grant review have been modified to provide
patent owners with a default time of three months after institution to
file a patent owner response. Sec. Sec. 42.120(b) and 42.220(b). The
Office envisions patent owners taking discovery during the three months
after institution so that they may prepare and file their patent owner
response.
Comment 102: Several comments requested that discovery commence
immediately upon institution of the proceedings.
Response: The comments are adopted in part. The Office envisions
that a Scheduling Order will be entered concurrent with a decision to
institute a proceeding. The Scheduling Order will set due dates for the
proceeding taking into account the complexity of the proceeding, but
ensuring that the trial is completed within one year of institution.
The Office envisions that the Scheduling Order will authorize the
patent owner to begin taking routine discovery immediately of the
petitioner's witnesses submitting affidavits or declarations. The
Office, however, does not incorporate a specific time for the
commencement of discovery as there may be certain cases where discovery
would be taken prior to commencement, e.g., additional discovery may be
authorized prior to institution, where patent owner raises sufficient
concerns regarding the petitioner's certification of standing.
Comment 103: Several comments were directed to the sequencing of
discovery as between the petitioner and the patent owner. Certain
comments spoke favorably of sequencing, whereas another comment opposed
sequencing expressing the view that sequencing would unnecessarily
complicate proceedings by requiring the Board to police multiple
discovery deadlines.
Response: The comments favoring sequencing are adopted in part. The
Office Patent Trial Practice Guide contains a proposed Scheduling Order
that utilizes sequenced discovery whereby parties can conduct
meaningful discovery before they are required to submit their
respective motions and oppositions. In choosing to provide sequenced
discovery in the proposed Scheduling Order, the Office took into
account public commentary identifying the benefits associated with such
a procedure. In particular, sequenced discovery allows for convergence
of the issues as the trial progresses, and therefore, reduces the
burdens on the parties and the Board. Rather than including this in the
rules, however, the Office has elected to provide for sequencing in the
Scheduling Order so that the parties may, where appropriate, agree to
another schedule for discovery.
Comment 104: Several comments suggested that certain information
appearing in the Practice Guide for Proposed Trial Rules be
incorporated into the rules. Examples of this are the use of conference
calls and the concept of sequenced discovery.
Response: The Office Patent Trial Practice Guide is intended to
advise the public on the general framework of the regulations. The
guide will be updated to reflect the final rules. Providing general
guidance in a practice guide, as opposed to the rules themselves,
allows for flexibility for efficient case management and is consistent
with the considerations identified in 35 U.S.C. 316(b), as amended, and
35 U.S.C. 326(b) that the rules take into account the efficient
operation of the Office and the ability to complete the proceedings in
a timely manner. The Office expects that the Board will make liberal
use of joint conference calls coupled with expeditious decision making
on procedural issues to ensure the timely completion of the
proceedings.

[[Page 48638]]

Comment 105: A comment asked for clarification whether Sec. 1.56
applied during a proceeding.
Response: Proceedings, not being applications for patents, are not
subject to Sec. 1.56.
Comment 106: Several comments addressed the interplay between the
Office's discovery rules and the statutory estoppel for the
proceedings. One comment asked for guidance in the rules as to how such
provisions would apply where a party was unable to discover evidence or
bring a claim because discovery was limited by the Board or the
applicable rules.
Response: 35 U.S.C. 315(e)(1), as amended, and 35 U.S.C. 325(e)(1)
provide for petitioner estoppel on issues raised or those that
reasonably could have been raised during the proceeding. Where an issue
reasonably could not have been raised during a proceeding, no estoppel
would occur.
Comment 107: One comment stated that live testimony on inequitable
conduct is not to be considered in a trial.
Response: This comment is adopted in part. Inequitable conduct is
not a basis for seeking the institution of a trial before the Board.
However, 35 U.S.C. 316(a)(6), as amended, and 35 U.S.C. 326(a)(6)
provide that the Office may determine and is allowed to prescribe
sanctions for misconduct, such as abuse of process, or any other
improper use of the proceeding, such as to harass or cause unnecessary
delay or an unnecessary increase in the cost of the proceeding.
Comment 108: Several comments requested that the Office provide for
the presentation of rebuttal evidence at the oral hearing and provide
guidance with respect to the interplay between the rebuttal evidence
and hearing under the Administrative Procedures Act.
Response: Generally, rebuttal evidence will be submitted prior to
the hearing such that an opponent will have sufficient time to identify
and brief admissibility challenges to the rebuttal evidence. As such,
hearings typically will reflect an oral argument explaining arguments
already made and supported in the existing record. Occasionally, where
requested, the Board may order live witness testimony before an
administrative patent judge, when it is necessary to resolve discovery
disputes or where witness demeanor is particularly important, but it is
envisioned that such live testimony will occur prior to the hearing,
rather than during the hearing. In an appropriate case, however, where
an appropriate showing has been made, live testimony would be taken at
a hearing before the Board.
Comment 109: Several comments recommended setting discovery limits
by way of rule or in a Standing Order.
Response: The comments are adopted in part. The Office has modified
several discovery rules to provide additional default limits on
discovery. Further, the Office envisions providing guidance on
discovery in the Office's Scheduling Order, which would accompany a
decision to institute a proceeding.
Comment 110: Several comments expressed concern that the mechanism
for obtaining additional discovery was too cumbersome, requiring
authorization from the Board.
Response: The comments are adopted in part. The Office has modified
the proposed rule. Section 42.51, as adopted in this final rule,
permits parties to agree to certain mandatory initial disclosures, from
which the parties would then automatically take discovery of the
information identified in the initial disclosures. Additionally, Sec.
42.51, as adopted, allows parties to agree to additional discovery
between themselves at any time. By allowing the parties to agree to
certain mandatory initial disclosures and additional discovery, the
final rule seeks to streamline the discovery process and reduces the
need for Board involvement on issues where the parties are in
agreement.
Comment 111: Several comments suggested that certain discovery
procedures under the Federal Rules of Civil Procedure should be
available in the new procedures. In particular, several comments
specifically identified Rule 30(b)(6) of the Federal Rules of Civil
Procedure.
Response: The comments are adopted in part. Additional discover
under Sec. 42.51 which is consistent with 35 U.S.C. 316(a)(5), as
amended, and 35 U.S.C. 326(a)(5), is limited. As discussed previously,
Sec. 42.51, as adopted in this final rule, allows parties to agree to
mandatory initial disclosures and additional discovery, thereby
allowing the parties flexibility in their approach to discovery.
Comment 112: Several comments urged the adoption of mandatory
initial disclosures, and automatic discovery mechanisms without having
to receive authorization from the Board. Other comments however, urged
the Office to avoid the use of automatic disclosures as it would
complicate the Office's ability to complete the proceedings within one
year.
Response: The comments are adopted in part. Additional disclosure
under Sec. 42.51 which is consistent with 35 U.S.C. 316(a)(5), as
amended, and 35 U.S.C. 326(a)(5), is limited. Accordingly, providing
for mandatory initial disclosures in all cases, including those where
the parties do not consent to such disclosures, is not consistent with
the statute, or with legislative intent in enacting the AIA as a less
expensive and more efficient alternative to infringement litigation in
Federal court. In any event, Sec. 42.51, as adopted in this final
rule, provides a new provision in paragraph (a), which permits
mandatory initial disclosures by agreement of the parties. Furthermore,
under the revised rule, the parties may agree to additional discovery
at any time. Additionally, where only one party seeks mandatory initial
disclosure, the party may file a motion requesting such initial
disclosures upon a showing that such disclosures are in the interests
of justice for inter partes review and for good cause in post-grant
review. See 35 U.S.C. 316(a)(5), as amended, and 35 U.S.C. 326(a)(5).
Comment 113: Several comments expressed concern that in cases
involving public use and on-sale issues or objective evidence of non-
obviousness, it might be appropriate to require initial disclosures of
all relevant documents and all persons with knowledge of the facts and
other special discovery procedures.
Response: The comment is adopted in part. The final rule provides a
new provision in Sec. 42.51(a), which permits mandatory initial
disclosures by agreement of the parties. Section 42.51(a), as adopted
in this final rule, further provides that where the parties fail to
agree to mandatory initial disclosures, a party may seek such
disclosures by motion. The party would first arrange for a conference
call with the Board to have the issue resolved in an expeditious
manner. A party seeking such initial disclosures would be required to
identify the sought-after discovery and explain the need for the
disclosures, e.g., why the disclosures were necessary in the interests
of justice or good cause, as appropriate, and the party opposing the
request would be provided an opportunity to respond. When determining
whether to grant such a motion, the Office will take into account the
nature of the specific disclosures requested (e.g., public use, on
sale, and objective evidence of non-obviousness), as well as the
party's access to the information sought (e.g., public versus non-
public information). While the Office declines to adopt a per se rule
regarding disclosures of specific categories of information, as fact
patterns will vary from case-to-case, the Office does require the
disclosure of

[[Page 48639]]

information concerning inconsistent statements. Specifically, the
Office requires the disclosure under Sec. 42.51(b)(1)(iii) of non-
privileged evidence that is inconsistent with a position advanced
during the proceeding, such that relevant evidence is brought forward
in a timely manner to ensure the orderly development of the issues and
minimize the likelihood of later disputes.
Comment 114: One comment suggested rewriting proposed Sec.
42.51(b) stating that section (b) is grammatically ambiguous as
subsection (3) begins with a partial sentence whereas subsections (1)
and (2) begin with complete sentences.
Response: The comment is adopted. Sections 42.51(b) (1) and (2), as
adopted in this final rule, are internally consistent and begin with
incomplete sentences, ``(1) Routine discovery'' and ``(2) Additional
discovery.''
Comment 115: One comment states that Section 42.51(b)(1) should be
clarified to allow exhibits cited by an affiant under cross-examination
to be served within a period of time after the cross-examination.
Response: Section 42.51(b)(1), as adopted in this final rule,
provides that unless previously served or otherwise by agreement of the
parties, exhibits must be served with the citing paper or testimony.
Comment 116: One comment suggested that Sec. 42.51(b)(1) should be
deleted and replaced with a requirement that all exhibits be served.
Response: The provision in proposed Sec. 41.51(b)(1) provides that
exhibits cited in a paper or in testimony must be served with the
citing paper or testimony unless previously served. The Office adopts
the proposed provision without any modification in Sec. 41.51(b)(1)(i)
of the final rule, as the suggested modification by the comment would
not require parties to serve concurrent with the citing paper or
testimony.
Comment 117: One comment suggested that cross-examination of
witnesses in proposed Sec. 42.51(b) should not be identified as
discovery.
Response: Under 35 U.S.C. 316(a)(5), as amended, the Office is
required to promulgate standards and procedures for discovery including
the deposition of witnesses submitting affidavits or declarations.
Consistent with the statutory requirement, cross-examination of
witnesses is considered discovery for purposes of the proceedings
before the Board.
Comment 118: Several comments recommended discovery obligations,
such as those provided in proposed Sec. 42.51(b)(3) (which has been
redesignated as Sec. 42.51(b)(1)(iii) in this final rule), be targeted
to the need to disclose information known to the propounding party that
is inconsistent with, or which may tend to rebut positions being taken
by that party. Several comments suggested specific language to help
calibrate the proposed rule so as to avoid overbreadth. Additionally,
other comments suggested eliminating the proposed rule as
counterproductive to the efficiency of the proceeding.
Response: The Office appreciates the thoughtful comments and has
carefully considered those comments that suggested that the rule should
be eliminated as well as those that suggested that the rule should be
modified to better target its scope. To ensure the orderly development
of the issues, and further the efficient resolution of the proceeding,
Sec. 42.51(b)(1)(iii), as adopted in the final rule, requires a party
to provide relevant information that is inconsistent with a position
advanced by the party during the proceeding. The Office, however,
understands the concerns expressed in the comments regarding the broad
scope of the requirement in the proposed rule. Accordingly, Sec.
42.51(b)(1)(iii), as adopted, limits the scope by: (1) Excluding
anything otherwise protected by legally recognized privileges, (2)
eliminating the use of the word ``noncumulative,'' (3) eliminating the
requirement that a party specify the relevance of the information, and
(4) limiting the rule to only inventors, corporate officers, and
persons involved in the preparation of filing of documents in a
proceeding.
The following situations exemplify instances where disclosures are
to be made. Example 1: Where a petitioner relies upon an expert
affidavit alleging that a method described in a patent cannot be
carried out, the petitioner would be required to provide any non-
privileged work undertaken by, or on behalf of, the petitioner that is
inconsistent with the contentions in the expert's affidavit. Example 2:
where a patent owner relies upon surprising and unexpected results to
rebut an allegation of obviousness, the patent owner should provide the
petitioner with non-privileged evidence that is inconsistent with the
contention of unexpected properties.
Comment 119: Several comments expressed a concern that a party
under proposed Sec. 42.51(b)(3) (redesignated as Sec.
42.51(b)(1)(iii)) would have an affirmative duty to characterize the
information disclosed.
Response: The Office understands the concern. Therefore, Sec.
42.51(b)(1)(iii), as adopted in this final rule, does not contain the
proposed requirement that the party specifies the relevance of the
information.
Comment 120: Several comments expressed concern that proposed Sec.
42.51(b)(3) (redesignated as Sec. 42.51(b)(1)(iii)) regarding routine
discovery of information on inconsistent statements did not require
disclosure until after a proceeding had been instituted.
Response: The comments have been adopted. Section 42.51(b)(1)(iii),
as adopted in this final rule, provides that relevant information under
the rule is to be served concurrent with the document or thing that
contains the inconsistency.
Comment 121: Several comments indicated that proposed Sec.
42.51(b)(3) (redesignated as Sec. 42.51(b)(1)(iii)) may discourage the
use of the review proceedings and that disputes might arise as to
whether information was cumulative or inconsistent.
Response: The comments have been adopted in part. Section
42.51(b)(1)(iii), as adopted in this final rule, limits the scope and
the individuals subject to the requirement. For example, the term
``cumulative'' has been removed from the proposed rule. The Office,
however, did not adopt the suggestion to remove the term ``inconsistent
statement'' from the rule. The term ``inconsistent statement'' is one
that is well recognized in the field, as it appears in the Federal
Rules of Evidence, which will have general applicability to the
proceedings (see Sec. 42.62). For example, FRE 613 and 806 permit
courts to admit evidence of a ``declarant's inconsistent statement or
conduct.''
Comment 122: Several comments suggested that the petitioner should
be required to make disclosures of all evidence of which it is aware
that may bear on the resolution of the issues raised in the petition.
In contrast, other comments suggested that the Office should not
require any duty to disclose information beyond Sec. 1.56, while
others suggested that the Office should limit the information to only
that which is material under Therasense. Additionally, other comments
suggested that the information sought could be obtained by employing a
more liberal standard for routine additional discovery.
Response: The Office appreciates the varying points of view on
what, if any, information the Office should require a party to
disclose. Consistent with 35 U.S.C. 316(b), as amended, and 35 U.S.C.
326(b), the Office seeks to ensure that the information sought is
suitably

[[Page 48640]]

targeted to ensure the orderly development of the issues, and further
the efficient resolution of the proceeding. The information sought by
the final rule typically is sought through discovery, which risks
significant delay to the proceeding and increased burdens on both
parties. To avoid these issues, and to reduce costs and ensure the
integrity and timeliness of the proceeding, the production of the
targeted information is made routine. Sec. 42.51(b)(1)(iii).
In promulgating the rule, the Office has considered the various
standards proposed in the comments, e.g., Sec. 1.56, Therasense, all
information relating to secondary considerations, etc. The Federal
Rules of Evidence (FRE) provide for the treatment of inconsistent
statements, e.g., FRE 613 and FRE 806. The Office has generally adopted
the FRE as applying to the proceedings before the Board. The Office
elects to employ the ``inconsistent statement'' standard for the
routine discovery of information, as such terminology is already
employed in the Office's rules of evidence.
Comment 123: One comment requested clarification as to how proposed
Sec. 42.51(b)(3) (redesignated as Sec. 42.51(b)(1)(iii)) would be
policed during the proceeding.
Response: Section 42.51(b)(1)(iii) is a discovery provision. 35
U.S.C. 316(a)(6), as amended, and 35 U.S.C. 326(a)(6) require that the
Office promulgate rules that prescribe sanctions for abuse of
discovery. Section 42.12(a)(5) provides that the Board may impose
sanctions against a party for abuse of discovery.
Comment 124: One comment stated that the relevant statutes, 35
U.S.C. 316(a)(5), as amended, and 35 U.S.C. 326(a)(5) do not permit
discovery of information that typically leads to the production of
relevant evidence.
Response: Section 42.51(b)(1)(iii), as adopted in this final rule,
limits the information that must be served to relevant information that
is inconsistent with a position advanced by the party during the
proceeding.
As to the statutory basis, 35 U.S.C. 316(a)(5), as amended, and 35
U.S.C. 326(a)(5) provide that the Office is to set forth the standards
and procedures for discovery of relevant evidence. Further, 35 U.S.C.
316(a)(5), as amended, does limit additional discovery to that which is
necessary in the interests of justice, but the Office believes that it
is necessary in the interests of justice that a party provide its
opponent with information inconsistent with a position the party has
taken. For example, absent Sec. 42.51(b)(1)(iii), a petitioner could
allege that the claims are unpatentable based upon an intervening prior
art where 35 U.S.C. 120 benefit is allegedly lacking due to an
enablement problem based on selected petitioner test data showing a
lack of enablement. While a patent owner could obtain evidence of a
petitioner's contrary test data through additional discovery once the
trial is instituted, the Office believes that the better course of
action is to have the petitioner provide any inconsistent test data
earlier in the process, such that the patent owner could potentially
address the inconsistency in its preliminary patent owner response.
Additionally, even if 35 U.S.C. 316(a)(5), as amended, and 35
U.S.C. 326(a)(5) did not permit the Office to set a standard for
discovery of inconsistent information, 35 U.S.C. 316(a)(4), as amended,
and 35 U.S.C. 326(a)(4) provide that the Office is to prescribe
regulations establishing and governing the proceedings. Further, 35
U.S.C. 316(a)(6), as amended, and 35 U.S.C. 326(a)(6) require the
Office to prescribe sanctions for abuse of process, including causing
unnecessary delay or an unnecessary increase in the cost of the
proceeding.
Comment 125: One comment requested clarification as to whether
proposed Sec. 42.51(b)(3) (redesignated as Sec. 42.51(b)(1)(iii))
would extend to information that is not otherwise admissible, such as
test data published in a U.S. patent.
Response: Section 42.51(b)(1)(iii), as adopted in this final rule,
specifies the relevant information is to be served, but not filed. The
admissibility of the information served would not be an issue in the
proceeding unless, and until, a party seeks to rely upon the
information served.
Comment 126: One comment suggested modifying the language in
proposed Sec. 42.51(b)(3) (redesignated as Sec. 42.51(b)(1)(iii)) to
state that the information be ``directly related to a position
advanced.''
Response: The comment has been adopted in part. Section
42.51(b)(1)(iii), as adopted in this final rule, limits the scope of
the requirement to relevant information that is inconsistent with a
position advanced by the party during the proceeding.
Comment 127: One comment suggested that proposed Sec. 42.51(b)(3)
(redesignated as Sec. 42.51(b)(1)(iii)) would cause parties to submit
far more information than the Board would find useful and could be used
to circumvent page limits. Another comment suggested that the
information be served on the opposing party and have the receiving
party determine whether the document should be relied upon in the
proceeding.
Response: The Office agrees with the insights provided in the
comments. Section 42.51(b)(1)(iii), as adopted in this final rule,
provides that the information is to be served, as opposed to filed.
Comment 128: One comment suggested that proposed Sec. 42.51(b)(3)
(redesignated as Sec. 42.51(b)(1)(iii)) would require information not
reasonably calculated to lead to relevant information. Examples
include, arguing in the alternative, having a change in strategy due to
information received during the proceeding or taking action
inconsistent with the prosecution history.
Response: Section 42.51(b)(1)(iii), as adopted, does not preclude a
party from arguing in the alternative or changing strategy based upon
new information received, but requires that a prior inconsistent
statement be served on the opponent. It is suggested, however, that a
party seeking to change its strategy, or take action inconsistent with
its prior statements, provide the Office with an explanation for the
change in position, as the fact that a party's position has changed may
be relevant to a disposition of the issues.
Comment 129: Several comments suggested that additional discovery
standards, interests-of-justice and good cause, be made clearer. For
example, one comment suggested that the language of the rule more
closely track the explanations used in the comments accompanying the
proposed rules.
Response: The interests-of-justice standard for additional
discovery is required under 35 U.S.C. 316(a)(5), as amended. The good
cause standard is a slightly lower standard than the interests-of-
justice standard and was selected to reflect the increased need for
discovery given the broader range of issues presented in post-grant
reviews. The good cause standard commonly is used in the discovery
context. For example, Federal Rules of Civil Procedure, Rule 26(b)(1),
provides that for good cause, a court may order discovery of any matter
relevant to the subject matter involved in the action. Accordingly, the
Office chooses not to modify the language of the rule, as the
interests-of-justice terminology is a statutory requirement and the
good cause terminology represents a recognized civil procedure standard
for discovery.
Comment 130: One comment suggested that additional discovery be
permitted when it was needed to respond to a new issue raised by an
opponent.

[[Page 48641]]

Response: The comment is adopted in part. The Board will evaluate
whether additional discovery is needed on a case-by-case basis, which
would include considering whether the additional discovery was
necessary to respond to a new issue raised.
Comment 131: One comment suggested that proposed Sec. 42.51 be
revised to provide that the interests of justice include a showing that
the evidence requested is not available to the movant after diligent
inquiry, a showing as to why the evidence is necessary to establish a
prima facie case for relief, and that there would be no undue burden to
the non-moving party.
Response: The comment is adopted in part. The interests-of-justice
standard is required by 35 U.S.C. 316(a)(5), as amended. The Board will
evaluate whether additional discovery is necessary in the interests of
justice on a case-by-case basis, which would include consideration of
the factors identified in the comment.
Comment 132: Several comments sought further clarification of the
``interests-of-justice'' standard for obtaining additional discovery in
inter partes review and derivation proceedings under proposed Sec.
42.51(c) (redesignated as Sec. 42.51(b)(2)) and the ``good cause''
standard applicable to post-grant review proceedings under Sec.
42.224.
Response: The interests-of-justice and good cause standards were
set by Congress. Good cause and interests-of-justice standards are
closely related standards, but the interests-of-justice standard is
slightly higher than good cause. While a good cause standard requires a
party to show a specific factual reason to justify the needed
discovery, under the interests-of-justice standard, the Board would
look at all relevant factors. Specifically, to show good cause, a party
would be required to make a particular and specific demonstration of
fact. Under the interests-of justice-standard, the moving party would
also be required to show that it was fully diligent in seeking
discovery, and that there is no undue prejudice to the non-moving
party. In contrast, the interests-of-justice standard covers
considerable ground, and in using such a standard, the Board expects to
consider whether the additional discovery is necessary in light of the
totality of the relevant circumstances.
Comment 133: One comment suggested that the phrase ``[e]xcept in
post grant reviews'' in proposed Sec. 42.51(c)(1) (redesignated as
Sec. 42.51(b)(2)) is unclear and provided a specific edit.
Response: The comment has been adopted in part. Section
42.51(b)(2)(i), as adopted, contains the specific language suggested in
the comment, placed at the end of the sentence, as opposed to the
beginning of the sentence.
Comment 134: One comment suggested that the Board should permit
additional discovery on issues where one party had the luxury of time
to develop fully its position while the other party has not. The
comment also suggested that in evaluating discovery requests the Board
take into account whether the patent owner is opposing a no-document
prior art challenge.
Response: The comments are adopted. The final rule provides that
additional discovery, where the parties cannot agree, will be decided
on a case-by-case basis taking into account the particular facts of the
case. A party may bring the facts identified in the comment to the
Board's attention in requesting the additional discovery, as facts that
weigh in favor of granting a particular request.
Comment 135: One comment suggested rewording proposed Sec.
42.51(c)(2) (redesignated as Sec. 42.51(b)(2)(ii)) to allow production
of documents and things referred to during cross-examination.
Response: Section 42.51(b)(2)(ii), as adopted in this final rule,
allows a party taking cross-examination to obtain production of
documents and things of an opponent's witness, or during authorized
compelled testimony, should the witness have the document or thing at
the cross-examination. The production of documents and things referred
to during cross-examination is considered additional discovery that a
party may request, with the requests handled on a case-by-case basis,
taking into account the various factors, including whether a specific
document was identified, or a broad category of documents was referred
to during cross-examination.
Comment 136: One comment requested clarification as to whether the
discovery in proposed Sec. 42.51(c)(2) (redesignated as Sec.
42.51(b)(2)(ii)) was additional discovery subject to the interests-of-
justice or good cause standards.
Response: Section 42.51(b)(2)(ii) provides for additional
discovery, as it is discovery that is in addition to the routine
discovery that a party would normally be able to obtain. Additional
discovery is subject to the interests-of-justice and good cause
standards. Yet, where a party's witness has a non-privileged document
or thing and has referred to it during their testimony, the interests-
of-justice and good cause standards would generally weigh in favor of
producing the document or thing to the opponent taking the cross-
examination.

Compelling Testimony and Production (Sec. 42.52)

Comment 137: Several comments were directed to discovery of
witnesses and documents in foreign countries. Some comments urged that
foreign witnesses and documents be required to be made available in the
United States, whereas others comments suggested that the Office should
refrain from specifying a site. Others commented that because the AIA
extends the scope of prior art to activities in foreign countries, the
additional requirements for compelling foreign testimony or document
production, as well as any restrictions on the time or location of
taking testimony outside the United States, should be removed.
Response: The comments are adopted to the extent that they are
directed to requiring foreign witnesses to appear and foreign documents
to be produced in the United States, except where the parties agree
otherwise. Specifically, Sec. 42.53(b)(3), as adopted, provides that
uncompelled deposition testimony outside the United States may be taken
by joint agreement of the parties or as the Board specifically directs.
The new provision in Sec. 42.51(c) provides that all document
production will be in the United States, unless otherwise ordered by
the Board.
Foreign discovery is costly and increases the complexity of
proceedings for the parties as well as the Board. Therefore,
notwithstanding the fact that foreign discovery may, in certain cases,
be necessary to develop prior art or other issues in the proceeding, it
should not be routine. Accordingly, the requirement in Sec. 42.52 that
there be a greater showing to compel the production of foreign
witnesses and documents is considered appropriate.
Comment 138: One comment requested that the Office confirm that
where a motion contains the necessary information and the request for
discovery otherwise satisfies the relevant discovery requirements under
proposed Sec. 42.51 and, if applicable, proposed Sec. 42.224, the
motion will be granted.
Response: The Office envisions that a timely request filed under
Sec. 42.52 containing the necessary information and meeting the
requirements for additional discovery will be granted.
Comment 139: One comment sought clarification that the procedures
to compel discovery apply only to discovery from parties to the trial
or

[[Page 48642]]

party-controlled witnesses or documents.
Response: The procedures of Sec. 42.52 apply to non-parties. See
35 U.S.C. 23-24 (authorizing compelled testimony in contested cases in
the USPTO).
Comment 140: Several comments suggested that foreign witnesses and
documents not made available in the United States be inadmissible.
Response: The comment is adopted in part. Foreign discovery,
although important in some cases, may be costly and burdensome, but an
exception is appropriate for those cases where the parties agree to
uncompelled testimony. As to foreign witnesses that are presumably
under the control of a party (e.g., employees, consultants, and
experts), it is reasonable to require that party to produce them in the
United States for cross-examination. As for third-party witnesses whose
testimony is proffered by a party, the proffering party should be
expected to make every effort to produce the witness in the United
States, or at least be willing to bear the expenses of conducting a
foreign deposition. While the failure to make documents and witnesses
available in the United States is a factor in determining whether or
not to exclude the evidence, no such per se rule of inadmissibility is
adopted.

Taking Testimony (Sec. 42.53)

Comment 141: Several comments suggested that the Office set a
default location for testimony in the United States, whereas others
urged the Office to refrain from specifying a site.
Response: The final rule does not set a default location for
testimony other than to provide the default that testimony is to occur
within the United States. The Office weighed the benefits of selecting
a specific default location, but determined that such a selection could
potentially benefit a particular region of the country to the detriment
of others.
Comment 142: Several comments favored setting time limits on
deposition testimony in the rules.
Response: The comments are adopted. In general, in situations where
direct testimony of a witness is being taken by deposition, the Office
believes based on the public's input and the Board's experience in
other proceedings that seven hours is a reasonable default time limit
for the completion of the direct testimony, with four hours for cross-
examination and two for redirect. Sec. 42.53(c). Where direct
testimony is submitted by affidavit, a seven-hour default limit on
cross-examination and four hours for redirect would normally be
appropriate, with an additional two hours for re-cross if necessary.
Id.
Comment 143: Several comments suggested that the parties should be
able to take and submit video-recorded testimony without prior
authorization of the Board.
Response: The comment is adopted in part. Section 42.53(a), as
adopted, allows testimony to be video-recorded where the parties agree
to such. The submission of the video-recorded testimony, however,
remains subject to Board approval, as the submission of potentially
long, unedited video evidence in Office proceedings would be contrary
to the considerations identified in 35 U.S.C. 316(b), as amended, and
35 U.S.C. 326(b) including the efficient operation of the Office and
the timely completion of the proceedings.
Comment 144: One comment requested that proposed Sec. 42.53
provide for the submission of errata sheets and provide guidance on
what is and is not acceptable in an errata sheet.
Response: The Board's experience with errata sheets is that parties
tend to disagree on what is and is not considered an errata sheet. For
example, there have been instances where a party has attempted to
change a deponent's answer from ``yes'' to ``no'' over the objection of
the opponent. Accordingly, the final rules do not provide for the
submission of errata sheets, however, where a party believes that the
submission of an errata sheet is necessary to the proceeding, the party
may arrange for a conference call with the Board to discuss the matter.
Comment 145: Several comments suggested that proposed Sec.
42.53(c)(5) (redesignated as Sec. 42.53(d)(5)) should allow a party
seeking to take testimony outside of the scope of direct for third
party witnesses to provide a counter notice.
Response: The comment is adopted. Section 42.53(d)(5), as adopted,
provides a new provision that allows additional parties to a deposition
to provide a counter notice.
Comment 146: One comment suggested that proposed Sec. Sec.
42.53(c)(3)-(5) be replaced by provisions similar to Rule 30 of the
Federal Rules of Civil Procedure.
Response: In promulgating the rules, the Office has considered the
Federal Rules of Civil Procedure, which pertain to Federal courts. Rule
30 of the Federal Rules of Civil Procedure governs depositions by oral
examination and identifies, among other things, when a deposition may
be taken without leave. Further, 35 U.S.C. 316(a)(5), as amended, and
35 U.S.C. 326(a)(5) provide for discovery before the Office and differ
from that of Federal courts. For example, 35 U.S.C. 316(a)(5), as
amended, provides that depositions, other than for those of affiants
and declarants, must be necessary in the interests of justice.
Additionally, unlike district courts, direct testimony before the
Office is typically in the form of an affidavit or declaration. The
Office chooses not to adopt the Federal Rules of Civil Procedure on
discovery given the different standards for discovery between the
Office and Federal courts, and the goal of providing a quicker, less
costly alternative to Federal District Court litigation. The Office
has, however, considered the Federal Rules of Civil Procedure and
adopted those portions that aid in streamlining and converging the
issues for resolution.
Comment 147: One comment suggested that proposed Sec. Sec.
42.53(c)(1) and (c)(3) (redesignated as Sec. Sec. 42.53(d)(1) and
(d)(3) in this final rule), when read together, leave the due date in
Sec. 42.53(c)(3) undefined. Another comment suggested that the party
seeking the deposition should be required to serve a notice of the
deposition at least ten business days before the deposition.
Response: Section 42.53(d)(4), as adopted in this final rule,
provides that a party seeking a deposition must file a notice of
deposition at least ten business days before a deposition.
Comment 148: One comment suggested that to avoid filing motions to
exclude testimony upon which neither party will rely, the time for
filing motions to exclude should generally be set after the parties'
substantive papers have been filed with the Board.
Response: The Office agrees that the time to file a motion to
exclude should be set after the substantive papers have been filed.
Comment 149: One comment requests clarification as to the meaning
of the phrase ``supplemental evidence relating to the direct
testimony'' in proposed Sec. 42.53(c)(2) (redesignated as Sec.
42.53(d)(2) in this final rule).
Response: The term supplemental evidence refers to additional
proofs relating to the direct testimony.
Comment 150: One comment requests clarification as to whether
exhibits are to be served along with the list of exhibits in proposed
Sec. 42.53(c)(5)(i)(C).
Response: Section 42.53(d)(3)(i) (previously proposed Sec.
42.53(c)(3)(i)) requires that a list and copy of each document be
served.
Comment 151: One comment requests clarification as to whether the
conference identified in proposed Sec. 42.53(d) (redesignated as Sec.
42.53(e) in

[[Page 48643]]

this final rule) must be initiated at least five business days before
the deposition or whether the conference call must merely occur at
least five business days before the deposition.
Response: Section 42.53(e) requires that the request for the
conference call must be made at least five business days before the
deposition.
Comment 152: One comment suggested that proposed Sec. 42.53(e)(7)
be modified such that the parties are not required to pay for
transcripts if they do not want them.
Response: Section 42.53(f)(7) (previously proposed Sec.
42.53(e)(7)) provides that a copy of the transcript will be made
available to all parties. Section 42.53(g) (previously proposed Sec.
42.53(f)) provides that the proponent of the direct testimony will bear
the costs associated with the testimony, such as the costs associated
with providing a transcript. The rule is designed to provide a default
that avoids issues that may arise where one party consistently refuses
to pay for transcripts of its witnesses.
Comment 153: One comment suggested that proposed Sec. Sec.
42.53(e)(4) and 42.53(e)(8) (redesignated as Sec. Sec. 42.53(f)(4) and
(f)(8) in this final rule) should be consolidated.
Response: Sections 42.53(f)(1) through (f)(8) provide a
chronological order to the manner of taking deposition testimony
beginning with (f)(1) and ending with (f)(8) and consolidation of the
rules would be contrary to the chronology of the rules.
Comment 154: One comment seeks confirmation that proposed Sec.
42.53(f) (redesignated as Sec. 42.53(g)) does not include attorney
fees.
Response: Section 42.53(g) requires that the proponent of the
direct testimony pays the costs associated with the testimony for
cross-examination but does not include attorney fees.
Comment 155: One comment suggested that the term
``interrogatories'' as used in proposed Sec. 42.53(e)(2), now final
Sec. 42.53(f)(2), be replaced with the term ``questions.''
Response: The comment is adopted in part. To avoid any possible
confusion, the term interrogatories is removed from the rule.
Comment 156: One comment suggested revising proposed Sec.
42.53(e)(6)(v) (redesignated as Sec. 42.53(f)(6)(v)) to state ``where
the office recorded the deposition and day and hour at the location of
the officer, when the deposition began and ended.''
Response: Section 42.53(f)(6)(v), as adopted, provides that the
officer shall prepare a certificate identifying where the deposition
was taken and the day and hour when the deposition began and ended. The
location is the location of the witness.
Comment 157: One comment suggested that proposed Sec. 42.53(e)(7)
(redesignated as Sec. 42.53(f)(7)) be rewritten to allow the parties
to agree that copies of the transcript need not be provided to all
parties.
Response: The comment is adopted. Section 42.53(f)(7), as adopted,
adds ``Except where the parties agree otherwise.''
Comment 158: One comment requested that the Office make a
ministerial change to point to the exhibit number provision of Sec.
42.63(c) instead of proposed Sec. 42.63(b), which concerns
translations.
Response: The comment is adopted. Section 42.53(f)(3), previously
proposed Sec. 42.53(e)(3), now points to Sec. 42.63(c).
Comment 159: One comment requested clarification as to how expert
testimony was to be submitted into the record and if the expert's
qualifications would be subject to challenge.
Response: Expert testimony will be submitted into the record in the
form of an exhibit. Generally, where a party seeks to rely upon an
expert, the direct testimony will be by declaration with cross-
examination of the expert taken by an opponent. A party challenging an
expert's qualifications may question the expert's qualifications during
cross-examination and can raise the challenges in its oppositions and,
where appropriate, in a motion to exclude evidence.
Comment 160: One comment requested clarification as to whether the
Board would appoint neutral experts as under the Federal Rules of
Evidence 706.
Response: The Office does not envision appointing neutral expert
witnesses and notes that all Board members are required to have both
competent legal knowledge and scientific ability. 35 U.S.C. 6.
Comment 161: Several comments expressed concern about who should
bear the burden and expense of producing witnesses for direct or cross-
examination. The comments related both to domestic and foreign
witnesses.
Response: These comments generally are adopted. The Office
recognizes that deposition testimony is relatively expensive. To
minimize costs, the rules provide that uncompelled direct testimony is
by affidavit. All other testimony (including cross-examination and
redirect) is by deposition. The burden and expense of producing a
witness for redirect or cross-examination should normally fall on the
party presenting the witness. Thus, a party presenting a witness's
testimony by affidavit should arrange to make the witness available for
cross-examination. This would apply to witnesses employed by a party as
well as experts and non-party witnesses. If there are associated
expenses such as expert witness fees or travel, those should be borne
by the party presenting the testimony. Should the witness's testimony
be presented by deposition, the same rules would apply, and the witness
fees and expenses should be borne by the producing party.

Protective Order (Sec. 42.54)

Comment 162: There were numerous comments on the proposed
protective order guidelines and rules. Several comments were directed
to the use of confidential information in other proceedings including
other proceedings in the Office and in the district courts. Several
comments also suggested that the rule should be modified to be more
consistent with the Practice Guide for Proposed Trial Rules.
Response: In view of the comments, the Office has modified the
proposed provision to clarify that a party including a patent owner may
file confidential information by filing a motion to seal containing a
proposed protective order, such as the default protective order set
forth in the Office Patent Trial Practice Guide. Section 42.54, as
adopted, is no longer limited to confidential information sought by
discovery.
The comments seeking to permit the use of confidential information
in other proceedings are not adopted. The Office expects that, unlike
actions for patent infringement in Federal court, the great majority of
evidence in these contested proceedings will be non-confidential. In
proposing a default protective order, therefore, the Office attempted
to strike the proper balance between protecting the discloser's
confidential information in the relatively few number of cases, and the
rights of others to use that information. Thus, the acknowledgment
under the default protective order in the Office Patent Trial Practice
Guide requires an undertaking that a person receiving confidential
information in connection with a proceeding will use the information
only in connection with that proceeding. Section (h) of the guidelines
makes it clear, however, that counsel for a party who receives
confidential information will not be restricted from representing that
party in any other proceeding before the Office. However, confidential
information received in a proceeding may not be used in any other USPTO
proceeding in which the providing party

[[Page 48644]]

is not also a party. This is believed to be adequate protection of the
discloser's rights. Should more or less disclosure be desired the
available remedy is a motion to the Board to amend the standard
protective order. To further protect confidentiality, once entered a
protective order remains in effect unless and until modified by the
Board.
Comment 163: Several comments suggested that a petitioner may gain
an unfair advantage over a patent owner by unilaterally limiting a
patent owner's ability to seek advice and counsel in preparing a patent
owner's preliminary response by drafting an onerous protective order.
Response: Where the parties cannot agree to a protective order, a
conference call with the Board may be arranged to guide the parties.
Moreover, the default time period to provide a preliminary response has
been revised to a three-month period in this notice, which should
provide patent owners with sufficient time to seek modification of the
order and prepare a response.
Comment 164: Several comments proposed additions to the default
order, such as special provisions for software, provisions governing
use of confidential information at depositions, ``claw back''
provisions for inadvertently produced privileged information, and
additional categories of protection for highly confidential
information.
Response: The Office appreciates the comments for additions to the
protective order, but believes that they are more appropriate to
district court patent infringement litigation. The Office does not
expect these situations to arise frequently in these contested
proceedings. But should the parties desire more or less protection than
that provided by the default order, the parties are always free to
stipulate to other protective order terms to the extent provided by
law. The purpose of the default order is to encourage the parties to
reach such agreements promptly, as lengthy disputes over complex
protective order provisions are inconsistent with the legislative goal
of providing a more efficient, less costly alternative.
Comment 165: One comment suggested that the signed acknowledgments
under the default order be served on opposing counsel.
Response: While it might be useful to a party to know who has
access to its confidential information, the usual practice is not to
serve such acknowledgments except in the case of experts. The rationale
is to protect the confidentiality of those working on the case.
Comment 166: One comment suggested that it was not clear that
paragraph 2(A) of the proposed order applies to corporations.
Response: The comment is noted. The cited paragraph refers to
``[p]ersons who are owners of a patent.'' This would include
corporations.
Comment 167: One comment suggested that each party should serve on
the other party a copy of the signed acknowledgment from each party who
obtains access to confidential information.
Response: Barring evidence that the cost to the parties of
providing a copy of the acknowledgment would be outweighed by its
benefit, the Office will not add this requirement. Parties, however,
may agree to a modified protective order including this requirement.
Comment 168: One comment suggested providing an additional category
of protection for highly confidential information that is accessible by
outside counsel. The suggestion added that broader access to this
information should only be grantable after a hearing.
Response: The Board may, for good cause, issue an order that
information only be accessible by outside counsel. See Sec.
42.54(a)(7).

Confidential Information in a Petition (Sec. 42.55)

Comment 169: Several comments were directed to the stated
procedures for handling a motion to seal accompanied by a proposed
protective order filed with the petition. These comments expressed
concern that such motions could give an unfair advantage to the
petitioner because the patent owner would have to agree to the terms of
the proposed order to get access to the sealed information. Several
comments suggested that serving the confidential disclosures by the
petitioner be delayed while protective order issues are resolved.
Response: The comments are adopted in part. The Office has modified
the proposed rule such that the petitioner must file, but need not
serve, the confidential information under seal. Further, the final rule
does not require that the patent owner agree to the terms of the
petitioner's proposed protective order to get access to the sealed
information. Rather, where the petitioner requests entry of a
protective order other than the default protective order in the Office
Patent Trial Practice Guide, the patent owner may access the
information where the patent owner (1) agrees to the terms of the
protective order requested by the petitioner; (2) agrees to the terms
of a protective order that the parties file jointly; or (3) obtains
entry of a protective order (e.g., the default protective order).
Comment 170: One comment suggested that a petitioner should be
permitted to file confidential information in a petition with a proviso
that if the accompanying motion to seal be denied, the confidential
material would be returned and would not be admitted in the proceeding.
Response: A petition may be accompanied with a motion to seal and a
contingent motion to supplement the petition with the confidential
information with the proviso that the material in the contingent motion
to supplement be returned if the motion to seal be denied.
Comment 171: One comment suggested that proposed Sec. 42.55 did
not set forth the manner or procedure for effectuating service under
seal nor indicate how the petitioner would be protected from
intentional or unintentional disclosure. The comment suggested that the
patent owner agreement to the protective order should occur prior to
service.
Response: The suggestion is adopted. Section 42.55, as adopted,
requires filing, but not service, of the confidential material
accompanying a motion to seal and a proposed protective order.

Expungement of Confidential Information (Sec. 42.56)

Comment 172: One comment suggested that the default process should
be that confidential information submitted in a proceeding and
decisions by the Office should be confidential. The comment also
suggested that any confidential material should be destroyed following
the trial unless a petition to unseal is filed within 45 days of
decision by the Office, or that at a minimum that petitions to expunge
should be granted in all but extraordinary circumstances.
Response: 35 U.S.C. 316(a)(1), as amended, and 35 U.S.C. 326 (a)(1)
mandate that the Director in prescribing regulations shall provide that
the file ``shall be made available to the public. * * *'' Section 42.56
allows a party to file a motion to expunge confidential information,
either after denial of a petition to institute a trial or after a final
judgment in a trial. If no motion is filed, or if the motion is denied,
however, the information becomes available to the public. The rule
balances the parties' interest in maintaining confidentiality with the
public's interest in maintaining a complete and open record of the
proceedings and the basis for Board

[[Page 48645]]

decisions. The final rule encourages parties to seek to redact
sensitive information, where possible, rather than seeking to seal
entire documents.
Comment 173: One comment expressed concern that confidential
information subject to a protective order submitted in a proceeding may
become public while a motion to expunge is pending as an opposition may
be filed 30 days after service of a motion to expunge.
Response: The Office believes this situation would not to lead to
disclosure of material that would appropriately be expunged. Normally,
all such information would be made public 45 days after denial of a
petition to institute a trial or 45 days after final judgment in a
trial. Should a motion to expunge be pending as the deadline
approaches, the moving party should immediately bring this to the
attention of the Board and seek to expedite the motion or to notice the
public that access to one or more papers will be delayed.

Admissibility (Sec. 42.61)

Comment 174: One comment suggested that proposed Sec. 42.61(c) was
misleading and difficult to apply as the rule provides that
specifications of U.S. patents and applications are considered hearsay
where a party intends to rely upon the data or drawings to prove the
truth of the data.
Response: United States patents present hearsay issues when offered
to prove the truth of the matters they disclose. As an example, the
disclosure of test data in a patent is hearsay when offered in a trial
to prove what was tested and what the results were. To make this
distinction clear, the rule states that the specification and drawings
of a United States patent or patent application are admissible evidence
only to prove what they describe. As further explained in Sec.
42.61(c), ``[i]f there is data in the specification or the drawing upon
which a party intends to rely to prove the truth of the data, an
affidavit of a person having first-hand knowledge of how the data was
generated must be filed.'' As with any evidentiary matter, the precise
application of the rule in a particular proceeding will be handled
based upon the facts presented.

Applicability of Federal Rules of Evidence (Sec. 42.62)

Comment 175: One comment suggested that the evidentiary rules of
other agencies be considered before adopting the Federal Rules of
Evidence.
Response: The Office has considered the various options available
and decided that the Federal Rules of Evidence are the appropriate
evidentiary rules for the proceedings. The Federal Rules of Evidence
provide a well-developed body of recognized case law that is reasonable
for the Office to draw upon in administering these trial rules.
Moreover, the courts charged with reviewing Board decisions are
familiar with those rules.
Comment 176: One comment suggested that the Office remove the first
definition of the term ``hearing'' from Sec. 42.62(c).
Response: The Office appreciates that the situation identified in
the comment, the need to define the term ``hearing'' under Federal Rule
of Evidence 804(a)(5) will not arise often. The Office, however,
declines to adopt the suggestion to remove the reference to
``hearing,'' as there will be situations, albeit infrequent, that would
implicate FRE 804(a)(5).
Comment 177: One comment suggested that the Office should define
what sections of the Federal Rules of Evidence, which encompasses both
civil and criminal matters, would not be appropriate for the
proceedings under proposed Sec. 42.62(b).
Response: The comment is not adopted. Based on the Board's
experience, patent practitioners generally have known which portions of
the Federal Rules of Evidence are related to patent proceedings. It
would not be helpful, nor necessary, to list expressly all of the non-
relevant evidence rules in the patent rules of practice.
Comment 178: One comment suggested revising proposed Sec. 42.62 to
clarify that the terms ``civil action,'' ``civil proceeding'' and
``action'' in the Federal Rules of Evidence would include both pre- and
post-institution actions.
Response: Section 42.62, as adopted in this final rule, provides
that a reference in the Federal Rules of Evidence to a ``civil
action,'' ``civil proceeding'' and ``action'' means a proceeding before
the Board under part 42 of the rules.

Form of Evidence (Sec. 42.63)

Comment 179: One comment requested guidance on the use of evidence
from other proceedings, including affidavits, deposition, and trial
testimony from administrative and other USPTO proceedings.
Response: Issues involving the use of prior testimony and other
evidence from prior or parallel proceedings are highly fact specific.
There are evidentiary issues governed by the Federal Rules of Evidence.
See, e.g., Fed. R. Evid. 804(b)(1), ``Former Testimony.'' There may
also be confidentiality issues if the information is subject to a
protective order limiting the use of the information. Accordingly, the
Office declines to adopt a per se rule regarding the treatment of
evidence in parallel proceedings.
Comment 180: One comment noted that proposed Sec. 42.63 defines
evidence as including affidavits and transcripts of depositions, but
transcripts of ex parte depositions already are included in the
definition of affidavits.
Response: The Office agrees that the term ``affidavits'' and
transcripts of depositions overlap with respect to ex parte
depositions. The Office believes, however, that the majority of
deposition transcripts will be inter partes. Accordingly, the Office
adopts the proposed provision without any modification.
Comment 181: One comment agreed with proposed Sec. 42.63(b), which
provides that where a party relies upon a document or is required to
produce a document in a language other than English, a translation will
be provided. Another comment, however, suggested that the burden of
translation should be placed on the party that is requesting or relying
on the information in the foreign language.
Response: All proceedings before the Board will be conducted in
English; thus, unless accompanied by an English language translation,
documents in a non-English language will not be considered by the
Board. The intent, however, is not to require a translation into
English language of every document produced under Sec. 42.52, but
translations must be provided for (1) those documents produced in
discovery under Sec. 42.51; and (2) all documents relied on, or
otherwise used, during the proceedings.
Comment 182: Several comments also expressed concern with the
applicability of Sec. 42.6 to exhibits that are pre-existing documents
such as United States patents and to aspects of the exhibit list.
Response: The rules provide that the spacing and type font
requirements of Sec. 42.6 apply only to documents ``created for the
proceeding.''
Comment 183: One comment suggested revising proposed Sec. 42.63(e)
to provide that the exhibit list should note any gaps in the numbering
of actually filed exhibits.
Response: Section 42.63(e) provides that each party will maintain
an exhibit list. The exhibit list will note where an exhibit is not
filed. The Office believes that the rule provides the relief requested
in the comment as the

[[Page 48646]]

notations for exhibit numbers that were created, but no exhibit filed,
will identify any gaps in exhibit numbering.
Comment 184: One comment noted that the rules do not specify that
the exhibit list is submitted or exchanged with the other parties to
the proceeding.
Response: The comment is adopted. Section 42.63(e), as adopted in
this final rule, provides that a current exhibit list is to be served
whenever evidence is served and the current exhibit list is to be filed
when filing exhibits.

Objection; Motion To Exclude (Sec. 42.64)

Comment 185: One comment requested that proposed Sec. 42.64(b)(2),
which provides for the submission of supplemental evidence, allow a
party to submit substitute declarations bearing the same exhibit number
but clearly marked as substitutes and that the list of exhibits simply
list the substitute exhibit.
Response: The comment is adopted, although no modification to the
proposed rule is required. Section 42.64(b)(2) allows parties to submit
substitute declarations as supplemental evidence in the manner
identified in the comment.
Comment 186: Several comments request that the Office provide
additional guidance in the Office Patent Trial Practice Guide as to how
motions to exclude are to be used, and on the procedure for obtaining
additional discovery.
Response: The Office will provide additional guidance on motions to
exclude and the procedure for obtaining additional discovery in the
update to the Office Patent Trial Practice Guide.
Comment 187: Several comments requested clarification as to the
distinction between a motion to exclude evidence and a motion in
limine.
Response: The Office appreciates the comments and Sec. 42.64, as
adopted in this final rule, refers only to motions to exclude.
Comment 188: One comment requests that, to avoid witness coaching,
the Office limit attorney objections during cross-examination to only
``objection, form'' or ``objection, leading.'' Objections other than
the two identified objections would be deemed waived.
Response: The Office expects to publish guidance on cross-
examination practices in the Office Patent Trial Practice Guide. As
noted in the comment, cross-examination should be question-and-answer
process between the examining lawyer and the witness and not between
the examining and defending lawyers. It is the witness, and not the
lawyer, who is testifying.
Comment 189: One comment noted that the title for proposed Sec.
42.64(a) appeared to exclude objections to direct deposition testimony.
Response: The Office has modified the proposed rule. Section
42.64(a), as adopted in this final rule, recites deposition evidence as
its title, which includes both direct and cross-examination testimony.
Comment 190: One comment stated that the ten-business day deadline
in Sec. 42.64(b) for objections to evidence submitted during a
preliminary proceeding was too short a period of time.
Response: It is important to note that 35 U.S.C. 316(a)(11), as
amended, and 326(a)(11) require the Office to promulgate regulations
ensuring that final determinations are to be issued not more than one
year after institution of the review, except for good cause. Further,
35 U.S.C. 316(b), as amended, and 326(b) identify considerations that
are to be taken into account in promulgating the rules including the
efficient operation of the Office and the ability of the Office to
complete the proceedings timely. The Office has set a ten-business day
limitation for objections after institution to ensure the timeliness of
the proceeding as a party may submit supplemental evidence within ten
business days of timely served objections. The Office expects to have
an initial conference call with the parties one month after the trial
has been instituted to discuss the motions that the parties intend to
file and determine if any adjustment needs to be made to the Scheduling
Order. Based upon the time deadlines for completing the proceedings,
the Office retains the ten-business day requirement.

Oral Argument (Sec. 42.70)

Comment 191: One comment generally supported proposed Sec. 42.70.
Response: Proposed Sec. 42.70 is adopted.
Comment 192: One comment suggested that, prior to oral argument,
each party should be required to submit a summary of the issues, facts,
and law to the Board similar to a pre-trial brief in Federal District
Court.
Response: Section 42.70 requires that a request for oral argument
specify the issues to be argued. On a case-by-case basis, the Board may
determine that the additional briefing discussed in the comment is
desired. However, such briefing may not be required in every case
depending upon the particular facts and issues presented. Accordingly,
the suggested pre-argument briefing is not made mandatory and will
remain within the discretion of the Board to order depending on the
particular facts and issues presented in each case.
Comment 193: Several comments stated that it was unclear when oral
argument would be held and suggested that the rule specify when oral
argument would occur. One comment suggested the rule specify when oral
argument would occur in relation to the request. Another comment
suggested that parties be assured that oral argument will not be
scheduled sooner than 45 days following the last reply to be filed in
the proceedings.
Response: Section 42.70 provides that oral argument will be at a
time set by the Board. Once requested, oral argument will be scheduled
by the Board on a case-by-case basis. Generally, it is anticipated that
oral argument will be scheduled at a time after discovery and amendment
motions are completed. Oral argument ordinarily will be scheduled so as
to give the parties ample time to prepare. When a party requests an
oral argument, the party may recommend a date for the oral argument and
may provide additional reasons in support of the recommendation. The
Board will take into consideration the party's availability and whether
sufficient time is provided when scheduling oral argument.
Comment 194: One comment stated that the term oral argument as used
in Sec. 42.70 is more limited than the term oral hearing as used in
the statute, and that a limitation or restriction on the presentation
of live testimony is contrary to the statute which requires that either
party be provided with the right to a hearing. The comment stated that
the Office should explicitly permit and provide adequate time for a
party to present witnesses and allow for cross-examination during the
hearing.
Response: Section 42.70 does not exclude live testimony. The
Office, however, does not expect live testimony to be presented
ordinarily at oral argument. Whether live testimony will be allowed at
the oral argument will be determined by the Board on a case-by-case
basis according to the individual circumstances of the case.
Comment 195: One comment stated that the Office must provide
adequate time for each side to present its issues during the oral
argument. The comment stated that several hours or several days is more
consistent with Congressional intent rather than the Federal Circuit
appellate review model the Office appears to have adopted. Another
comment stated that the short length of oral argument is a serious
problem for parties.

[[Page 48647]]

Response: Section 42.70 does not set a time for oral argument. The
time allocated for oral argument will be set by the Board on a case-by-
case basis according to the individual circumstances of the case. When
a party requests an oral argument, the party may recommend a time to be
allocated for the oral argument and may provide additional reasons in
support of the recommendation. The Board will take recommendations into
consideration when setting the time allocated for oral argument.

Decision on Petitions or Motions (Sec. 42.71)

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

[[Page 48648]]

typically provide sufficient notice to the parties.

Termination of Trial (Sec. 42.72)

Comment 204: One comment suggested that proposed Sec. 42.72 should
enumerate the limited circumstances provided by statute under which a
proceeding may be terminated without rendering a judgment, and stated
that consolidation and appropriateness should not be grounds for
termination.
Response: As amended, 35 U.S.C. 318(a) and 35 U.S.C. 328(a) provide
that if an inter partes review or post-grant review is instituted and
not dismissed, the Board shall issue a final written decision. The
Office recognizes that the AIA expressly provides a few situations
where a review may be terminated (e.g., 35 U.S.C. 317(a), as amended,
and 35 U.S.C. 328(a)). However, the AIA does not expressly provide all
of the situations in which a review may be terminated or dismissed. For
instance, in the rare situation where the issue of whether the
petitioner has standing is raised after institution, the Board would
need the flexibility to terminate or dismiss the review, if
appropriate. Moreover, 35 U.S.C. 315(d), as amended, and 35 U.S.C.
325(d) provide that if another proceeding or matter involving the
patent is before the Office, the Director may determine the manner in
which the review or other proceeding or matter may proceed, including
providing for stay, transfer, consolidation, or termination of any such
matter or proceeding. For instance, when the Board is consolidating two
proceedings, the Board may terminate one of the proceedings and proceed
to a final written decision in the other proceeding. Therefore, Sec.
42.72 is consistent with the AIA, providing the Board the flexibility
to terminate a trial in appropriate situations.
Comment 205: One comment recommended that the Board should be
required to terminate the trial upon the filing of a settlement
agreement of the parties and, if necessary, institute a new ex parte
proceeding to address any substantial new question, so that the parties
could avoid the potential risk of an unpatentability decision and
estoppel.
Response: 35 U.S.C. 317(a), as amended, and 35 U.S.C. 327(a)
provide that if no petitioner remains in the inter partes review or
post-grant review, the Office may terminate the review or proceed to a
final written decision. The rule is consistent with the AIA to provide
the Board with the flexibility to terminate the review or proceed to a
final written decision depending on the particular facts of each
proceeding.

Judgment (Sec. 42.73)

Comment 206: One comment suggested that the phrase ``could have
properly been, raised and decided'' in proposed Sec. 42.73(a) should
be revised to include the word ``reasonably.''
Response: This comment is adopted. Section 42.73(a), as adopted in
this final rule, provides that ``[a] judgment, except in the case of a
termination, disposes of all issues that were, or by motion reasonably
could have been, raised and decided.''
Comment 207: A few comments requested additional guidance on the
circumstances when the Board would proceed to a final written decision
if no petitioner remains in the review to facilitate more effective
negotiation for settlement agreements.
Response: The Board will consider the particular facts of each
case. For instance, if the records clearly show that the challenged
claims are unpatentable and the patent owner has not yet filed a patent
owner response and/or amendment, the Board may continue the proceeding
to allow the patent owner an opportunity to file its patent owner
response and/or amendment.
Comment 208: One comment urged the Office to eliminate the concept
of judgment and replace it with certificates and requested
clarification as to the relationships between a judgment, the final
written decision, and certificates.
Response: The comment is not adopted. The concepts of judgment and
certificates are fundamentally different. The term ``judgment'' is
defined as a final written decision by the Board (Sec. 42.2) and a
judgment disposes of all issues that were, or by motion reasonably
could have been, raised and decided (Sec. 42.73). Consistent with 35
U.S.C. 318(b), as amended, and 35 U.S.C. 328(b), Sec. 42.80 provides
that the Office will issue and publish a certificate after the Board
issues a final written decision in a proceeding, and the time for
appeal has expired or any appeal has terminated. Therefore, the concept
of judgment should not be replaced by certificates.
Comment 209: A few comments questioned whether proposed Sec.
42.73(d)(1) exceeds statutory authority, and suggested that the rule be
revised to reflect accurately the limited statutory scope of estoppel.
However, one comment was in support of the proposed rule regarding
petitioner estoppel.
Response: In view of the comments, the Office has modified the
proposed provision of Sec. 42.73(d)(1) to reflect the statutory
language more closely.
Comment 210: One comment stated that the Office is not precluded
from instituting a covered business method review of a patent that
previously was reviewed by a district court or by the Office in a
reexamination.
Response: The comment is consistent with the public law and
codified statutory provisions relating to covered business method
reviews.
Comment 211: A few comments requested the Office provide guidance
on the meaning of ``that the petitioner raised or reasonably could have
raised.'' Another comment suggested that if a party was not able to
obtain adequate discovery on an issue or if the Board does not decide
on the issue during the proceeding, such an issue should not be
considered as an issue that reasonably could have been raised.
Response: The Office will interpret the phrase consistent with the
legislative intent and relevant case law. As noted in the legislative
history, the estoppel provisions in 35 U.S.C. 315(e), as amended, and
35 U.S.C. 325(e) are to prevent abusive serial challenges to patents.
The statutory language ``any ground that the petitioner raised or
reasonably could have raised during that inter partes review'' provided
in 35 U.S.C. 315(e), as amended, is similar to the pre-AIA language in
35 U.S.C. 315(c). In the context of inter partes reexamination, where
the examiner made a final determination not to adopt the grounds of
rejection proposed by a third party requester in the reexamination, the
third party requester may be estopped from asserting the same
references in the district court to establish invalidity of the patent
claims. See, e.g., Bettcher Indus., Inc. v. Bunzl USA, Inc., 661 F.3d
629, 636 (Fed. Cir. 2011). In addition, the legislative history of the
AIA shows why Congress added the modifier ``reasonably'':

The present bill also softens the could-have-raised estoppel
that is applied by inter partes review against subsequent civil
litigation by adding the modifier ``reasonably.'' It is possible
that courts would have read this limitation into current law's
estoppel. Current law, however, is also amenable to the
interpretation that litigants are estopped from raising any issue
that it would have been physically possible to raise in the inter
partes reexamination, even if only a scorched-earth search around
the world would have uncovered the prior art in question. Adding the
modifier ``reasonably'' ensures that could-have-raised estoppel
extends only to that prior art which a skilled searcher conducting a
diligent search reasonably could have been expected to discover.

157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl)
(emphasis added).

Comment 212: One comment suggested that the Office Patent Trial

[[Page 48649]]

Practice Guide or rules should expand upon the claim-by-claim
application of both proposed grounds of rejection and impact of
estoppel, and the Office should consider the effect of estoppel on ex
parte reexaminations as they are based on prior art, not claims.
Response: The Office will provide additional information in the
next revision of the Office Patent Trial Practice Guide, which the
Office plans to update in view of the final rules. As to ex parte
reexaminations, the Office will apply the estoppel in accordance with
35 U.S.C. 315(e), as amended, and 35 U.S.C. 325(e).
Comment 213: A number of comments questioned whether there is
statutory basis for the patent owner estoppel provisions set forth in
proposed Sec. 42.73(d)(3). Several comments specifically stated that
proposed Sec. 42.73(d)(3)(ii) is inconsistent with the AIA and other
statutory provisions, and exceeds the scope of the common law doctrines
of claim preclusion and issue preclusion. Several comments suggested
alternative language for the rule. For instance, two comments suggested
that the proposed rule should be revised to be limited to claims that
are not patentably distinct from the claims held to be unpatentable in
the proceeding. On the other hand, several other comments were in favor
of proposed Sec. 42.73(d)(3). According to those comments, it is
reasonable for the Office to limit recapture of substantially similar
claim limitations, and the estoppel provision is consistent with the
interference estoppel.
Response: In view of the comments, the Office modified the proposed
rule. As adopted in this final rule, Sec. 42.73(d)(3) does not contain
the provision that a patent applicant or owner may not obtain in a
patent ``[a] claim that could have been filed in response to any
properly raised ground of unpatentability for a finally refused or
cancelled claim.'' Additionally, the Office modified the provision that
was proposed in Sec. 42.73(d)(3)(i) to ``[a] claim that is not
patentably distinct from the finally refused or cancelled claim.''
Under 35 U.S.C. 316(a)(4), as amended, and 35 U.S.C. 326(a)(4), the
Office is required to prescribe regulations setting forth the
relationship between the review and other proceedings in the Office
(e.g., examination). Section 42.73(d)(3)(i), as adopted in this final
rule, merely provides estoppel against claims that are patentably
indistinct from those claims that were lost, and claim amendments that
were presented and denied, during a trial. In other words, the patent
owner may subsequently present in a continuing or reissue application
claims that are patentably distinct from such claims. As such, Sec.
42.73(d)(3) set forth in this final rule is consistent with the AIA,
other statutory provisions, the common law related to estoppel, and the
common law related to the recapture rule. See, e.g., In re Deckler, 977
F.2d 1449, 1452 (Fed. Cir. 1992); In re Clement, 131 F.3d 1464, 1468
(Fed. Cir. 1997) (the recapture rule prevents a patentee from regaining
through reissue the subject matter that the patentee surrendered in an
effort to obtain allowance of the claim).
Comment 214: One comment requested clarification on whether
proposed Sec. 42.73(d)(3) applies to derivation proceedings.
Response: Paragraph (d)(3) of Sec. 42.73 applies to derivation
proceedings, inter partes review, post-grant review, and covered
business method review.
Comment 215: A few comments suggested that the Office should
examine the claim on the merits in the subsequent proceeding, rather
than applying the patent owner estoppel.
Response: The Office will examine a claim presented in a subsequent
proceeding on the merits and apply the estoppel if the claim is not
patentably distinct from the finally refused or cancelled claim,
similar to a ground of rejection based on res judicata (see, e.g., MPEP
Sec. 706.03(w)).

Settlement (Sec. 42.74)

Comment 216: Several comments suggested that a standard higher than
a good cause standard be set for a member of the public to obtain
access to a settlement agreement particularly for the settlements in
inter partes review, or post-grant review, or that the good cause
standard should be interpreted to rarely permit access to a settlement
that includes confidential material.
Response: Under 35 U.S.C. 135(e) and 317(b), as amended, and 35
U.S.C. 327(b), the Office is required to make the settlement agreement
available upon a showing of good cause, and therefore, the comments
cannot be adopted.
Comment 217: Several comments suggested that the regulations should
require or set a presumption that the proceeding would be terminated by
the Board if all petitioners in a proceeding have settled.
Response: The comments have not been adopted because 35 U.S.C.
317(a), as amended, and 35 U.S.C. 327(a) provide that if no petitioner
remains in the review as a result of a settlement, the Office may
terminate or proceed to rendering final written decision. Further, 35
U.S.C. 135(e) and (f), as amended, provide some discretion to continue
aspects of a proceeding. The statutory language for inter partes and
post-grant review confers discretion to the Office in determining based
on the facts in a particular review whether to terminate or proceed to
final written decision. In certain circumstances, conditioning
termination on the filing of a related paper may be appropriate. For
example, where the patent owner has agreed that the claims in dispute
are unpatentable, termination appropriately may be conditioned on the
submission of a disclaimer of the claims in dispute.
Comment 218: One comment suggested that the patentability of a
patent should not be subject to settlement.
Response: As provided in 35 U.S.C. 317(a), as amended, and 35
U.S.C. 327(a), if no petitioner remains in the review as a result of a
settlement, the Office may terminate or proceed to rendering final
written decision. The statutory language confers discretion to the
Office in determining based on the facts in a particular review whether
to terminate or proceed to final written decision. Therefore,
patentability is not subject to settlement. Moreover, the termination
of a review because of a settlement has no statutory estoppel effect.
See 35 U.S.C. 317(a), as amended, and 35 U.S.C. 327(a). Similarly, 35
U.S.C. 135(e) and (f), as amended, specifically provide discretion to
consider patentability after an agreement.
Comment 219: One comment suggested that the statutory requirement
to show good cause to provide access to a settlement be defined in the
regulations as met only by compliance with a valid court or agency
order requiring production of the particular agreement or production in
response to an appropriate Freedom of Information Act request.
Response: The comment is not adopted. Under 35 U.S.C. 317(b), as
amended, and 35 U.S.C. 328(b), the Office is required to provide access
to another Federal agency on request; thus, the proposal to require an
order by the other agency is not adopted. The proposal to provide
access when an appropriate Freedom of Information Act request is made
by other than a Federal agency without a showing of good cause, is
inconsistent with 35 U.S.C. 317(b), as amended, and 327(b).
Comment 220: One comment suggested that a settlement must always be
entered by the Office without further conditions or consideration by
the Office. The comment also suggested that proposed Sec. 42.74(a) was
inconsistent with the requirement to enter settlements.

[[Page 48650]]

Response: The suggestion to revise Sec. 42.74(a) is not adopted.
It is agreed that any settlement agreement that is consistent with the
statutory requirements must be entered by the Office. However, 35
U.S.C. 317(a), as amended, and 35 U.S.C. 327(a) specifically provide
that the Office may proceed to a final written opinion even where no
petitioner remains in the review. Accordingly, providing that the Board
may independently determine any question of jurisdiction,
patentability, or Office practice is consistent with the Office's
statutory authority to continue a review in the absence of any
petitioner following entry of a settlement.
Comment 221: One comment suggested that the costs of the proceeding
after settlement by all petitioners should not be recovered from the
fee paid by the petitioner.
Response: 35 U.S.C. 311(a) and 321(a) require that the fee set be
reasonable in view of the aggregate costs of the review. Where the
Office determines that the review should continue to a final written
decision after the last petitioner is removed from the review as a
result of a settlement, the Office continues to be engaged in a review.
Accordingly the fee paid by the petitioner must be set based on the
aggregate costs regardless of any settlement as the Office may continue
the review.
Comment 222: Two comments suggested that parties should be
permitted to file redacted copies of the settlement agreement and that
the copy as redacted would be accessible to the public.
Response: 35 U.S.C. 317(b), as amended, and 35 U.S.C. 327(b)
require that a true copy of the agreement be filed in the Office and
that the agreement would be available to other Federal agencies on
written request or to any person on a showing of good cause. It is
required by 35 U.S.C. 135(e), as amended, that a copy of any agreement
be provided on such request, and similarly provides that the agreement
would be available to other Federal agencies on written request or to
any person on a showing of good cause.

Certificate (Sec. 42.80)

Comment 223: One comment suggested that the Office should modify
the rule to refer to the ``final determination'' rather than a ``final
written decision.''
Response: 35 U.S.C. 318(b), as amended, and 35 U.S.C. 328(b)
require the Office to issue a certificate when the Board issues a final
written decision. Therefore, Sec. 42.80 is consistent with the
statutory provision.
Comment 224: One comment suggested that the Office should deem the
final written decision as the certificate.
Response: The comment is not adopted. 35 U.S.C. 318(b), as amended,
and 35 U.S.C. 328(b) require the Office to issue a certificate when the
Board issues a final written decision. Therefore, Sec. 42.80 is
consistent with the statutory provision.
Comment 225: One comment requested clarification whether the Office
will sua sponte incorporate limitations of base claim and intervening
claims where a dependent claim has been allowed, and if not, provide an
opportunity to the patent owner to rewrite the claim in proper form for
issuance in the certificate.
Response: The Office will not sua sponte rewrite claims. Dependent
patent claims that are determined to be patentable need not be
rewritten even if the parent claim was canceled.

Judicial Review of Board Decision (Sec. 90.1)

Comment 226: One comment suggested that the Office has no authority
to decline to conduct interferences based on 35 U.S.C. 141 and 146.
Response: The Office agrees with the comment that suggested that
the Office does not have ``authority to decline to conduct
interferences, on the basis that Congress has not provided judicial
review to correct the Board's errors under existing 35 U.S.C. 141 and
146.'' The discussion cited by the comment relates solely to part 90 of
the regulations, which governs only the judicial review of
interferences. Thus, the discussion does not purport to address when
the Director will declare an interference or what regulations will
govern the conduct of such an interference. As explained in the notice
of proposed rulemaking (77 FR 6879, 6882), the Office will continue to
apply the pertinent regulations in part 41 governing the declaration
and conduct of interferences in effect on July 1, 2012.

Rulemaking Considerations

The rulemaking considerations for the series of final rules for
implementing the administrative patent trials as required by the AIA
have been considered together and are based upon the same assumptions,
except where differences between the regulations and proceedings that
they implement require additional or different information. Notably,
this final rule is directed to generally procedures for administrative
patent trials including inter partes review, post-grant review, covered
business method patent review, and derivations.
A. Administrative Procedure Act (APA): This final rule revises the
rules of practice concerning the procedure for requesting an inter
partes review, post-grant review, covered business method patent
review, or a derivation, and the trial process after initiation of such
a review or derivation proceeding. This final rule also revises the
rules of practice to consolidate the procedure for appeal of a decision
by the Board and to require that a copy of the notice of appeal, notice
of election, and complaint be provided to the Board. The changes being
adopted in this notice do not change the substantive criteria of
patentability. These changes involve rules of agency practice,
standards 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); JEM Broad. Co. v. F.C.C., 22 F.3d 320, 328 (DC Cir. 1994
(The rules are not legislative because they do not ``foreclose
effective opportunity to make one's case on the merits''). Moreover,
sections 6 and 18 of the AIA require the Director to prescribe
regulations for implementing the new trials.
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.S.C.
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, published these changes for comment as
it seeks the benefit of the public's views on the Office's proposed
implementation of these provisions of the AIA. See Rules of Practice
for Trials Before the Patent Trial and Appeal Board and Judicial Review
of Patent Trial and Appeal Board Decisions, 77

[[Page 48651]]

FR 6879 (Feb. 09, 2012) (notice of proposed rulemaking).
The Office received one written submission of comments from the
public regarding the Administrative Procedure Act. Each component of
that comment directed to the APA is addressed below.
Comment 227: One comment suggested that almost all of the proposed
regulations were legislative and not interpretive rules. That, in turn,
leads the USPTO to omit required steps in the rulemaking process.
Response: At the outset, it should be noted that the Office did not
omit any steps in the rulemaking process. Even though not legally
required, the Office published notices of proposed rulemaking in the
Federal Register, solicited public comment, and fully considered and
responded to comments received. Although the Office sought the benefit
of public comment, these rules are procedural and/or interpretive.
Stevens v. Tamai, 366 F3d. 1325, 1333-34 (Fed. Cir. 2004) (upholding
the Office's rules governing the procedure in patent interferences).
The final written decisions on patentability which conclude the reviews
will not be impacted by the regulations, adopted in this final rule, as
the decisions will be based on statutory patentability requirements,
e.g., 35 U.S.C. 101 and 102.
Comment 228: One comment suggested that even if the rules are
merely procedural, that reliance on Cooper Tech v. Dudas was not
appropriate and therefore notice and comment was required.
Response: These rules are consistent with the AIA requirements to
prescribe regulations to set forth standards and procedures. The rules
are procedural and/or interpretative. Stevens v. Tamai, 366 F3d. 1325,
1333-34 (Fed. Cir. 2004) (upholding the Office's rules governing the
procedure in patent interferences). The Office nevertheless published
notices of proposed rulemaking in the Federal Register, solicited
public comment, and fully considered and responded to comments
received. In both the notice of proposed rulemaking and this final
rule, the Office cites Cooper Techs. Co v. Dudas, 536 F.3d 1330, 1336,
37 (Fed. Cir. 2008), for the proposition that 5 U.S.C. 553, and thus 35
U.S.C. 2(b)(2)(B), does not require notice and comment rulemaking for
``interpretive rules, general statement of policy, or rules of agency
organization, procedure or practice.'' The Office's reliance on Cooper
Technologies is appropriate and remains an accurate statement of
administrative law. In any event, the Office sought the benefit of
public comment on the proposed rules and has fully considered and
responded to the comments received.
B. Final Regulatory Flexibility Act Analysis: The Office estimates
that 420 petitions for inter partes review, 50 petitions for post-grant
review and covered business method patent review combined, and 50
petitions for seeking institution of a derivation (derivation
petitions) will be filed in fiscal year 2013. In fiscal year 2014, it
is estimated that 450 inter partes review, 60 petitions for post-grant
review and covered business method patent review combined, and 50
derivation petitions will be filed. In fiscal year 2015, it is
estimated that 500 inter partes review, 110 petitions for post-grant
review and covered business method patent review combined, and 50
derivation petitions will be filed.
The estimate for inter partes review petitions is based partially
on the number of inter partes reexamination requests under 37 CFR 1.915
that have been filed in fiscal years 2010, 2011 and the first half of
fiscal year 2012. The rate of growth of inter partes reexamination
filing has slowed considerably in 2012 to roughly 2.6% (374 filings in
FY 2011, 192 filings in the first half of FY 2012). Assuming some
increase in growth rate had the AIA not been enacted, it is reasonable
to now estimate that no more than 420 inter partes reexamination
requests would have been filed and that a similar number of inter
partes review will be filed in FY 2013.
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.
The Office received 192 requests for inter partes reexamination in
the first half of fiscal year 2012.
See http://www.uspto.gov/patents/stats/reexam_operational_statistics_FY12Q2.pdf.
Additionally, the Office takes into consideration the recent
moderate 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 section
6(c) of the AIA, and the more restrictive filing time period in 35
U.S.C. 315(b), as amended by the AIA.
In fiscal year 2013, it is expected that no post-grant review
petitions will be received, other than those filed under the
transitional program for covered business method patents. Thus, the
estimated number of post-grant review petitions including covered
business method patent review petitions is based on the number of inter
partes reexamination requests filed in fiscal year 2011 for patents
having an original classification in class 705 of the United States
Patent Classification System. Class 705 is the classification for
patents directed to data processing in the following areas: financial,
business practice, management, or cost/price determination. See http://www.uspto.gov/web/patents/classification/uspc705/sched705.pdf.
The following is the class definition and description for Class
705:

This is the generic class for apparatus and corresponding
methods for performing data processing operations, in which there is
a significant change in the data or for performing calculation
operations wherein the apparatus or method is uniquely designed for
or utilized in the practice, administration, or management of an
enterprise, or in the processing of financial data.
This class also provides for apparatus and corresponding methods
for performing data processing or calculating operations in which a
charge for goods or services is determined.
This class additionally provides for subject matter described in
the two paragraphs above in combination with cryptographic apparatus
or method.
Subclasses 705/300-348 were established prior to complete
reclassification of all project documents. Documents that have not
yet been reclassified have been placed in 705/1.1. Until
reclassification is finished a complete search of 705/300-348 should
include a search of 705/1.1. Once the project documents in 705/1.1
have been reclassified they will be moved to the appropriate
subclasses and this note will be removed.
Scope of the Class
1. The arrangements in this class are generally used for
problems relating to administration of an organization, commodities
or financial transactions.
2. Mere designation of an arrangement as a ``business machine''
or a document as a ``business form'' or ``business chart'' without
any particular business function will not cause classification in
this class or its subclasses.
3. For classification herein, there must be significant claim
recitation of the data processing system or calculating computer and
only nominal claim recitation of any external art environment.
Significantly claimed apparatus external to this class, claimed in
combination with apparatus under the class definition, which perform
data processing or calculation operations are

[[Page 48652]]

classified in the class appropriate to the external device unless
specifically excluded therefrom.
4. Nominally claimed apparatus external to this class in
combination with apparatus under the class definition is classified
in this class unless provided for in the appropriate external class.
5. In view of the nature of the subject matter included herein,
consideration of the classification schedule for the diverse art or
environment is necessary for proper search.

See Classification Definitions (Jan. 2012) available at http://www.uspto.gov/web/patents/classification/uspc705/defs705.htm.
Accordingly, patents subject to covered business method patent
review are anticipated to be typically classifiable in Class 705. It is
anticipated that the number of patents in Class 705 that do not qualify
as covered business method patents would approximate the number of
patents classified in other classes that do qualify.
The Office received 20 requests for inter partes reexamination of
patents classified in Class 705 in fiscal year 2011. The Office in
estimating the number of petitions for covered business method patent
review to be higher than 20 requests due to an expansion of grounds for
which review may be requested including subject matter eligibility
grounds, the greater coordination with litigation, and the provision
that patents will be eligible for the proceeding regardless of filing
date of the application which resulted in the patent. The Office
estimates zero growth in the number of petitions for covered business
method review in fiscal year 2014 and 2015.
It is not anticipated that any post-grant review petitions will be
received in fiscal year 2013 as only patents issuing based on certain
applications filed on or after March 16, 2013, or certain applications
involved in an interference proceeding commenced before September 16,
2012, are eligible for post-grant review. See Public Law 112-29, Sec.
6(f), 125 Stat. 284, 311 (2011). It is estimated that 10 petitions for
post-grant review will be filed in fiscal year 2014 and 60 petitions
will be filed in fiscal year 2015.
The Office expects the number of newly declared interferences to
decrease as some parties file inter partes review petitions rather than
file reissue applications of their own earlier filed patents. Parties
filing such reissue applications may seek a review of another party's
issued patent in an interference proceeding. The Office estimates that
no more than 50 derivation petitions will be filed annually during FY
2013-2015.
The Office has updated its review of the entity status of patents
for which inter partes reexamination was requested from October 1,
2000, to May 18, 2012. This data only includes filings granted a filing
date rather than filings in which a request was received. 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 32.09% 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 146 petitions to
inter partes review would be filed to seek review of patents owned by a
small entity annually in fiscal years 2013-2015. Based on an assumption
that the same percentage of patents owned by small entities will be
subject to post-grant or covered business method patent review, it is
estimated that 24 petitions for covered business method patent review
would be filed to seek review of patents owned by a small entity
annually in fiscal years 2013-2015.
For derivation proceedings, the Office has reviewed the percentage
of applications and patents for which an interference was declared in
fiscal year 2010. Applications and patents known to be owned by a small
entity represent 19.62% of applications and patents for which
interference was declared in FY 2010. Based on the assumption that the
same percentage of applications and patents owned by small entities
will be involved in a derivation proceeding, 20 small entity owned
applications or patents would be affected by derivation proceeding
annually during fiscal years 2013-2015.

Table 1--Inter partes Reexamination Requests Filed with Parent Entity Type *
----------------------------------------------------------------------------------------------------------------
Number filed
Inter partes where parent Percentage of
Fiscal Year reexamination patent is small small entity-type
requests filed entity type of total
----------------------------------------------------------------------------------------------------------------
2012................................................... 226 85 37.61
2011................................................... 369 135 36.59
2010................................................... 255 89 34.9
2009................................................... 237 61 25.74
2008................................................... 155 51 32.9
2007................................................... 127 32 25.2
2006................................................... 61 16 26.23
2005................................................... 59 20 33.9
2004................................................... 26 5 19.23%
2003................................................... 21 12 57.14%
2002................................................... 4 1 25.00%
2001................................................... 1 0 0.00%
1,315 422 32.09
----------------------------------------------------------------------------------------------------------------
* 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
small entity 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 approximately 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 20 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

[[Page 48653]]

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
approximately 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 (135 patents) would be less than 0.05% (135/375,000) of all
patents in force that are owned by small entities. Moreover, post-grant
and covered business method patent review and derivation would have an
even smaller impact.
1. Description of the Reasons that Action by the Office is Being
Considered: The Office is revising the rules of practice to implement
inter partes, post-grant, transitional program for covered business
method patent review and derivation provisions of the AIA, which take
effect September 16, 2012, and March 16, 2013. Public Law 112-29,
Sec. Sec. 3(n) and 6(c) and (f), 125 Stat. 284, 293, 304 and 311
(2011). The AIA requires the Office to issue regulations to implement
the new administrative trials.
2. Statement of the Objectives of, and Legal Basis for, the Final
Rules: The final rule is part of a series of rules that implement the
new administrative trials authorized by the AIA. Specifically, this
final rules implement inter partes review, post-grant review, the
transitional program for covered business method patents, and some of
the aspects of derivation proceedings as authorized by the AIA. The AIA
requires that the Director prescribe rules for the inter partes, post-
grant, and covered business method patent reviews 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, and 35 U.S.C. 326(a)(11). The AIA
also requires that the Director, in prescribing rules for inter partes,
post-grant, and covered business method 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 the instituted proceedings timely. See 35 U.S.C.
316(b), as amended, and 35 U.S.C. 326(b). Consistent with the time
periods provided in 35 U.S.C. 316(a)(11), as amended, and 35 U.S.C.
326(a)(11), the rules are designed to result in a final determination
by the Patent Trial and Appeal Board within one year of the notice of
initiation of the review, except where good cause is shown to exist.
This one-year review will enhance the economy, and improve the
integrity of the patent system and the efficient administration of the
Office.
3. Statement of significant issues raised by the public comments in
response to the IRFA and the Office's response to such issues: The
Office published an IRFA analysis to consider the economic impact of
the proposed rules on small entities. See Rules of Practice for Trials
before the Patent Trial and Appeal Board and Judicial Review of Patent
Trial and Appeal Board Decisions, 77 FR 6879, 6893-96 (Feb. 9, 2012).
The Office received two written submissions of comments from the public
concerning the Regulatory Flexibility Act. Each component of those
comment directed to the Regulatory Flexibility Act is addressed below.
Comment 229: One comment argued that non-office costs and burden
should include the burden on small entity patent owners, petitioners,
and licensees, as well as settlement burdens, disruption of businesses,
or effects on investment, business formation or employment. The comment
further argued that prophylactic application steps (e.g., filing of
reissue applications) were not considered and that the offsets for
inter partes reexamination's elimination were not appropriate.
Response: As explained in the notice of proposed rulemaking, the
Office notes that inter partes reexamination is the appropriate
baseline for estimating economic impacts because the use or outcome of
the prior reexamination process and the new trial are largely the same.
See OMB Circular A4, (e)(3). The Office estimated that the same number
of patents would be subject to inter partes review as would have been
subject to inter partes reexamination. The comment did not argue that
this estimate was unreasonable or provide an alternative estimate.
Considering the similarities in the grounds of review and the number of
patents subject to the proceedings, it is anticipated that the existing
inter partes reexamination process, if not eliminated for new filings,
would have had similar impact on the economy as the new review
proceedings and therefore the impacts noted in the comment would simply
replace existing analogous impacts and effects in inter partes
reexamination. The comment argues that no offset for the replaced
process should be considered although OMB guidance provides otherwise.
See OMB Circular A4. Additionally, although the comment argues that the
new proceedings may result in patent owners taking additional
prophylactic measures that would have their own burdens for small
businesses, any patent owner motivated by the regulations adopted in
this final rule to take prophylactic application steps would similarly
have been motivated to take those steps under the former inter partes
reexamination regime. Thus, the burdens on small entity patent owners,
petitioners, and licensees, as well as settlement burdens, disruption
of businesses, or effects on investment, business formation or
employment that are caused by the final rules would have been similarly
caused by the former inter partes reexamination proceedings as the same
effects and impacts are caused by the two types of proceedings.
Additionally, the Office's estimates of the burden on small
entities are likely overstated. As noted in the notice of proposed
rulemaking, it is anticipated that the current significant overlap
between district court litigation and inter partes reexamination may be
reduced by improvement in the coordination between the two processes.
See Rules of Practice for Trials before the Patent Trial and Appeal
Board and Judicial Review of Patent Trial and Appeal Board Decisions,
77 FR at 6903. Similarly, it is anticipated that the public burden will
be reduced because the longer duration of the inter partes
reexamination process will be reduced owing to the anticipated shorter
duration of the new procedure. Id.
Comment 230: Two comments indicated that the underlying data for
the 98.7 hours of judge time for an inter partes review proceeding was
not provided.
Response: Based on the Office's experience involving similar
proceedings, the Office estimates that, on average, an inter partes
review

[[Page 48654]]

proceeding will require 35 hours of judge time to make a decision on
institution, 20 hours of judge time to prepare for and conduct
hearings, 60 hours of judge time to prepare and issue a final decision,
and 15 hours of judge time to prepare and issue miscellaneous
interlocutory decisions. It is also estimated that 2.5% of proceedings
will settle before a decision of whether to institute is made and
another 2.5% of proceedings will terminate by patent owners filing a
default judgment motion after institution. The Office estimates that
10% of proceedings will not be instituted and another 20% of
proceedings will settle after institution. In settled cases it is
estimated that 50% of the anticipated motions would not be filed. It
should be appreciated that cases that terminate prior to the need to
render a decision on institution, that do request an oral hearing or do
not require a final decision because of an earlier termination result
in an average judge time per proceeding which is less than the time
needed to perform all possible steps in a proceeding.
4. Description and Estimate of the Number of Affected Small
Entities:
A. Size Standard and Description of Entities Affected. The Small
Business Administration's (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 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 at 67112 (Nov 20, 2006), 1313 Off.
Gaz. Pat. Office at 63 (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.
Specifically, the Office's definition of small business concern 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).
B. Overview of Estimates of Number of Entities Affected. The rules
will apply to any small entity that either files a petition for inter
partes review, post-grant review, covered business method patent
review, or derivation proceeding, or owns a patent application or
patent subject to such review. As discussed above (which is
incorporated here), it is anticipated that 420 petitions for inter
partes review, 50 petitions for post-grant review and covered business
method patent review combined, and 50 petitions for derivation
proceedings will be filed in fiscal year 2013. In fiscal year 2014, it
is estimated that 450 inter partes review, 60 petitions for post-grant
review and covered business method patent review combined, and 50
petitions for derivation proceedings will be filed. In fiscal year
2015, it is estimated that 500 inter partes review, 110 petitions for
post-grant review and covered business method patent review combined,
and 50 petitions for derivation proceedings will be filed. The Office
has reviewed the percentage of patents owned by small entities for
which inter partes reexamination was requested from October 1, 2000, to
May 18, 2012. 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 32.09% 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 146 patents owned by small entities would be
affected annually by inter partes review, and that 24 patents owned by
small entities would be affected annually by a post-grant or covered
business method patent review.
For derivation proceedings, the Office has reviewed the percentage
of applications and patents for which an interference was declared in
fiscal year 2010. Applications and patents known to be owned by a small
entity represent 19.62% of applications and patents for which
interference was declared in FY 2010. Based on the assumption that the
same percentage of applications and patents owned by small entities
will be involved in a derivation proceeding, 20 small entity owned
applications or patents would be affected by derivation proceeding
annually during fiscal years 2013-2015.
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 22 patent owners will
annually file a request for adverse judgment or fail to participate
after institution in inter partes review, and an estimated four patent
owners will annually do so in post-grant review and covered business
method patent review proceedings combined. Based on the percentage of
small entity-owned patents that were the subject of inter partes
reexamination (32.09%) from October 1, 2000, to May 18, 2012, it is
estimated that seven small entities will annually file such requests or
fail to participate in inter partes review proceedings, and an
estimated one small entity will annually do so in post-grant review or
covered business method patent review combined.
Under the final 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

[[Page 48655]]

owner likely would 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 401 patent owners will file a preliminary
response to an inter partes review petition, and an estimated 64 patent
owners will file a preliminary response to a post-grant review or
covered business method patent review petition. Based on the percentage
of small entity-owned patents that were the subject of inter partes
reexamination (32.09%), it is estimated that on average 129 small
entities will annually file a preliminary response to an inter partes
review petition, and 21 small entities will annually file a preliminary
response to a post-grant review or covered business method patent
review petition in fiscal year 2013-2015.
Under the final 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, available at 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, and 35
U.S.C. 323, (2) the enhanced thresholds for instituting reviews set
forth in 35 U.S.C. 314(a), as amended, and 35 U.S.C. 324(a), 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, and 35 U.S.C. 325(b), which
would tend to reduce the likelihood of dismissing a petition. Based on
these considerations, it is estimated that approximately 10% of the
petitions for review (51 divided by 516) would be dismissed annually
based on reviews filed during FY 2013-2015.
The Office predicts that it will institute ten derivation
proceedings annually based on petitions seeking derivation filed in
fiscal years 2013-2015. This estimate is based on the low number of
interference proceedings declared, as well as the limited number of
eligible applications.
During fiscal year 2011, the Office issued 21 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 63 decisions on appeals in
inter partes reexamination. See BPAI Statistics--Receipts and
Dispositions by Technology Center, available at 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 30 requests for
reconsideration (91 decisions not to institute times 33.333%) will be
filed. Based on the percentage of small entity-owned patents that were
the subject of inter partes reexamination (32.09%) and the percentage
of small entity-owned patent applications or patents that were the
subject of an interference declared in fiscal year 2010 (19.62%), it is
estimated that six small entities will file a request for a
reconsideration of a decision dismissing the petition for review or
derivation in fiscal year 2013. Further, the Office estimates that it
will issue 321 final written decisions for inter partes reviews, 51
final written decisions for post-grant reviews, including cover
business method patent reviews, 6 final written decisions for
derivation proceedings. Applying the same 33.333% rate, the Office
estimates 126 requests for reconsiderations ((321 + 51 + 6) times
33.333%) will be filed based on the final written decisions. Therefore,
the Office estimates a total of 156 (30 + 126) requests for
reconsiderations.
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. This series of final rules adopts changes to
permit parties to agree to certain changes from the default process
between themselves without filing a motion with the Board. Based on the
changes in the final rules, the estimate of the number of motions has
been revised downwardly so that it is now anticipated that: (1) Inter
partes reviews will have an average of 6 motions, oppositions, and
replies per trial after institution, (2) post-grant reviews and covered
business method patent reviews will have an average of 8 motions,
oppositions, and replies per trial after institution, and (3)
derivation proceedings will have an average of 20 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
trials that are settled, it is estimated that only 50% of the noted
motions, oppositions, and replies would be filed. The Office envisions
that most motions will be decided in a conference call or shortly
thereafter.
After a trial has been instituted but prior to a final written
decision, parties to a review or derivation proceeding may request an
oral hearing. It is anticipated that 484 requests for oral hearings
will be filed annually during FY 2013-2015 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 the notice of proposed rulemaking. Based
on the percentage of small entity-owned patents that were the subject
of inter partes reexamination (32.09%), it is estimated that 160 small
entity patent owners, patent applicants or petitioners will file a
request for oral hearing in the reviews and derivations instituted
annually during fiscal years 2013-2015.
Parties to a review or derivation proceeding 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. Parties to derivation proceedings may also file
arbitration agreements and awards. 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
22 requests to treat a settlement as business confidential; 118
requests for adverse judgment, default adverse judgment, or settlement
notices; and two arbitration agreements and awards will be filed
annually based on petitions filed during fiscal years 2013-2015. The
Office also estimates that 22 requests to make a settlement available
will be filed annually based on petitions filed during fiscal years
2013-2015. Based on the percentage of small entity-owned patents that
were the subject of inter partes reexamination (32.09%) and the
percentage of small entity-owned patent applications or patents that
were the subject of an interference declared in fiscal year 2010
(19.62%), it is estimated that seven small entities will file a request
to treat

[[Page 48656]]

a settlement as business confidential, 38 small entities will file a
request for adverse judgment, default adverse judgment notices, or
settlement notices, and one small entity will file an arbitration
agreement and award in the reviews and derivations instituted annually
based on petitions filed during fiscal years 2013-2015.
Parties to a review or derivation proceeding may seek judicial
review of the final decision of the Board. Historically, 33% of
examiners' decisions in inter partes reexamination proceedings have
been appealed to the Board. Given the increased coordination with
district court litigation, the Office has adjusted its estimate of the
appeal rate to be 120% of the historic rate (40% of decisions). Based
on this rate, 149 additional notices of appeal will be filed based on
the decisions issued in the new trials annually based on petitions
filed during fiscal years 2013-2015. Based on current projections with
additional resources, it is anticipated that the Board will on average
issue 18,570 decisions on appeal of applications during fiscal years
2013-2015. Additionally it is anticipated that on average351 decisions
in reexamination (300) and interferences (51) will be decided in fiscal
years 2013-2015. It is estimated that 1% of decisions on appeals in
applications and 20% of decisions on appeal in reexamination or during
interferences would be appealed. Thus, it is estimated that 256 notices
of appeal (and notices of election) based on decisions on appeal and
during interferences would be filed with the Office in addition to the
149 filed during reviews on average during fiscal years 2013-2015.
Furthermore, based on the percentage of small entity-owned patents that
were the subject of inter partes reexamination (32.09%) and the
percentage of small entity-owned patent applications or patents that
were the subject of an interference declared in fiscal year 2010
(19.62%), it is estimated that 47 small entities would seek judicial
review of final decisions of the Board in the reviews (46) and
derivation proceedings (1) instituted in fiscal year 2013.
5. Description of the Reporting, Recordkeeping, and Other
Compliance Requirements of the Final 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 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. However,
covered business method patent reviews would be limited to covered
business method patents that are not patents for technological
inventions. Under the final rules, a person who is not the owner of a
patent may file a petition to institute a review of that 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 electronics field, 30% in
the mechanical field, and 20% in the chemical or design fields.
Based on the trends of declared contested cases in fiscal year
2011, it is anticipated that petitions for derivation will be filed
across all technologies with approximately 16% in electrical
technologies, approximately 17% in mechanical technologies, and the
remaining 67% in chemical technologies and design. A derivation
petition is likely to be filed by an entity practicing in the same or
similar field as the patent. Therefore, it is anticipated that 16% of
the petitions for review will be filed in the electronic field, 17% in
the mechanical field, and 67% in the chemical or design fields.
This notice provides the procedural requirements that are common
for the new trials. Additional requirements are provided in
contemporaneous trial specific rulemaking. The procedures for petitions
to institute an inter partes review include those set forth 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 procedures
for petitions to institute a post-grant review include those set forth
in Sec. Sec. 42.5, 42.6, 42.8, 42.11, 42.13, 42.20, 42.21, 42.22,
42.24(a)(2), 42.63, 42.65, and 42.201 through 42.205. The procedures
for petitions to institute a covered business method patent review
include those set forth in Sec. Sec. 42.5, 42.6, 42.8, 42.11, 42.13,
42.20, 42.21, 42.22, 42.24(a)(3), 42.63, 42.65, 42.203, 42.205, and
42.302 through 42.304. The procedures for petitions to institute a
derivation proceeding include those set forth in Sec. Sec. 42.5, 42.6,
42.8, 42.11, 42.13, 42.20, 42.21, 42.22, 42.24(a)(4),42.63, 42.65, and
42.402 through 42.406.
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 and to represent a party in an inter partes reexamination
before the Patent Trial and Appeal Board. The 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 depending 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.
The cost of preparing a petition for post-grant or covered business
method patent review is estimated to be 33.333% higher than the cost of
preparing a petition for inter partes review because the petition for
post-grant or covered business method patent review may seek to
institute a proceeding on additional grounds such as subject matter
eligibility. Therefore, the Office estimates that the cost of preparing
a petition for post-grant or covered business method patent review
would be $61,333. It is expected that petitions for derivation would
have the same complexity and cost as a petition for post-grant review
because derivation proceedings raise issues of conception and
communication, which have similar complexity to the issues that can be
raised in a post-grant review, i.e., public use, sale and written
description. Thus, the Office estimates that the cost of preparing a
petition for derivation would also be $61,333.
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 fees for filing a petition for inter partes review
are: $27,200 for requesting review of 20 or fewer claims and $600 for
each claim in excess of 20 for which review is sought. The fees for
filing a petition for post-grant or covered business method patent
review would

[[Page 48657]]

be: $35,800 to request review of 20 or fewer claims and $800 for each
claim in excess of 20 for which review is sought.
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 an IT fee
that has a base component of $1,705 for requests to review 20 or fewer
claims. The IT component fee would increase $75 per claim in excess of
20. 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 about 100 hours of judge time would be
required. An additional two hours of judge time for each claim in
excess of 20 would be required.
For a petition for post-grant or covered business method patent
review with 20 or fewer challenged claims, it is anticipated that about
130 hours of judge time will be required. An additional slightly under
three hours of judge time for each claim in excess of 20 would be
required.
The rules 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 set forth 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 91.6 hours of professional time and cost
$34,000. The AIPLA Report of the Economic Survey 2011 reported that the
average cost for inter partes reexamination including the request
($46,000), the first patent owner response, and third party comments
was $75,000 (see page I-175) and the mean billing rate for professional
time of $371 per hour for attorneys in private firms (see page 8).
Thus, the cost of the first patent owner reply and the third-party
statement is $29,000, the balance of $75,000 minus $46,000. The Office
finds these costs to be reasonable 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.
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 $29,680. 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 include those set forth
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 include
those set forth 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 include
those set forth 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 motions, oppositions, and replies after institution. The
average post-grant or covered business method patent review will have 8
motions, oppositions, and replies after institution. The average
derivation proceeding is anticipated to have 20 motions, oppositions,
and replies after institution. The Office envisions that most motions
will be decided in a conference call or shortly thereafter.
After a trial has been instituted, but prior to a final written
decision, parties to a review or derivation proceeding may request an
oral hearing. The procedure for filing requests for oral argument is
set forth 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 18.3 hours of
professional time ($6,800 divided by $371), or $800 more than the
reported third quartile cost for an ex parte oral hearing.
Parties to a review or derivation proceeding may file requests to
treat a settlement as business confidential, and requests for adverse
judgment, and arbitration agreements and awards. 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 set forth in Sec. Sec. 42.74(c) and 42.409. The procedures to file
requests for adverse judgment are set forth in Sec. 42.73(b). The
procedures to file arbitration agreements and awards are set forth
Sec. 42.410. The procedures to file requests to make a settlement
agreement available are set forth 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 $742. It is
anticipated that requests for adverse judgment will require one hour of
professional time or $371. It is anticipated that arbitration
agreements and awards will require four hours of professional time or
$1,484. It is anticipated that a settlement agreement will require 100
hours of professional time or $37,100 if the parties are not also in
litigation over the patent and one hour or $371 if the parties are in
litigation. It is estimated that 100% of covered business method patent
reviews and 70% of the reviews will have concurrent litigation based on
standing requirement in covered business method patent reviews and the
historical rate during inter partes reexamination. It is anticipated
that requests to make a settlement agreement available will require one
hour of professional time or $371. The requests to make a settlement
agreement available will also require payment of a fee of $400
specified in Sec. 42.15(d). The fee is the same as that currently set
forth in Sec. 41.20(a) for petitions to the Chief Administrative
Patent Judge.
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,

[[Page 48658]]

including notices of appeal and notices of election provided for in 35
U.S.C. 141, 142, 145, and 146, are set forth 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 $37.10.
6. Description of Any Significant Alternatives to the Final 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 in the administrative trials 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, available at 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, five-page limit for miscellaneous issues, and
ten-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 nine 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, available at 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 contested case 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. Section 42.24 would provide page limits for
petitions, motions, oppositions, and replies. 35 U.S.C. 316(b), as
amended, and 35 U.S.C. 326(b) provide 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 the trials timely. The page limits set forth 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 Herculean effort to uncover
a hidden gem of logic that will ineluctably compel a favorable ruling.
Nothing could be further 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, and reducing costs for the parties and 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.
A petition requesting the institution of a trial proceeding would
be similar to motions currently filed with the Board. Specifically,
petitions to institute a trial seek a final written decision that the
challenged claims are unpatentable, where derivation is a form of

[[Page 48659]]

unpatentability. Accordingly, a petition to institute a trial based on
prior art would, under current practice, be limited to 25 pages, and by
consequence, a petition raising unpatentability based on prior art and
unpatentability under 35 U.S.C. 101 and/or 112 would be limited to 50
pages.
Under the final 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 rule provides up to 60 pages
in length for a motion requesting inter partes review. Thus, as the
page limit more than doubles the default page limit currently set for a
motion before the Board, a 60-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.
Under the final rules, a post-grant review petition would be based
upon any grounds identified in 35 U.S.C. 321(b), e.g., failure to
comply with 35 U.S.C. 101, 102, 103, and 112 (except best mode). Under
current practice, a party would be limited to filing two or three
motions, each limited to 25 pages, for a maximum of 75 pages. Where
there is more than one motion for unpatentability based upon different
statutory grounds, the Board's experience is that the motions contain
similar discussions of technology and claim constructions. Such overlap
is unnecessary where a single petition for unpatentability is filed.
Thus, the 80-page limit is considered sufficient in all but exceptional
cases.
Covered business method patent review is similar in scope to that
of post-grant review, as there is substantial overlap in the statutory
grounds permitted for review. Thus, the page limit for covered business
method patent review petitions is 80 pages, which is the same as that
for post-grant review.
Petitions to institute derivation proceedings raise a subset of
issues that are currently raised in contested cases in a motion for
judgment on priority of invention. Currently, motions for judgment on
priority of invention, including issues such as conception,
corroboration, and diligence, are generally limited to 50 pages. Thus,
the 60-page limit is considered sufficient in all but exceptional
cases.
The final rule provides 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 contested cases miscellaneous
motion practice. Accordingly, the 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.
Section 42.24(b) provides page limits for oppositions filed in
response to motions. Current practice for other contested cases
provides an equal number of pages for an opposition as its
corresponding motion. This is generally consistent with motions
practice in Federal courts. The rule is consistent with the practice
for other contested cases.
Section 42.24(c) provides page limits for replies. Current practice
for other contested cases provide a 15-page limit for priority motion
replies, a five-page limit for miscellaneous (procedural) motion
replies, and a ten-page limit for all other motions. The rule is
consistent with current contested case practice for procedural motions.
The rule provides 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 AIA requires that the Director, in prescribing rules for the
inter partes, post-grant, and covered business method 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 the instituted proceedings timely.
See 35 U.S.C. 316(b), as amended, and 35 U.S.C. 326(b). In view of the
actual results of the duration of proceedings in inter partes
reexamination (without page limits) and contested cases (with page
limits), adopting procedures with reasonable page limits is consistent
with the objectives set forth in the AIA. 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, and 35 U.S.C. 321(a)
require 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 35 U.S.C. 311(b) and 312(c) in effect on September 15, 2012, the AIA
requires the Director to establish more than one fee for reviews based
on the total cost of performing the reviews, and does not provide
explicitly for refund of any part of the fee when the Director
determines that the review should not be initiated.
Further, 35 U.S.C. 312(a)(1), as amended, and 35 U.S.C. 322(a)(1)
require that the fee established by the Director under 35 U.S.C.
311(a), as amended, or 35 U.S.C. 321 accompany the petition on filing.
Accordingly, in interpreting the fee setting authority in 35 U.S.C.
311(a), as amended, and 35 U.S.C. 321(a), 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 manage
a patent case efficiently). Moreover, the number of claims for which
review is requested easily can be determined and administered, which
avoids delays in the Office and the

[[Page 48660]]

impact on the economy or patent system that would occur if an otherwise
meritorious petition is refused due to improper fee payment. Any
subsequent petition could be time barred in view 35 U.S.C. 315(b), as
amended, or 35 U.S.C. 325.
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, contested cases 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 records were often a collection of disparate issues and
evidence. This led to lengthy and unwarranted delays in deciding
contested cases as well as increased costs for parties and the Office.
Accordingly, this alternative is inconsistent with objectives of the
AIA that the Director, in prescribing rules for the inter partes, post-
grant, and covered business method 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 the instituted proceedings timely.
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 ten 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 AIA that the Director, in prescribing rules for
the inter partes, post-grant, and covered business method 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 the instituted proceedings
timely.
IV. Alternative Option III. The Office considered an alternative
fee setting regime in which fees would be charged at various steps in
the review process (rather than collected as a single payment on filing
of the petition) as the proceeding progresses, e.g., 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
reviews timely, 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, and
35 U.S.C. 322 that require the fee established by the Director to be
paid at the time of filing the petition. Accordingly, this alternative
is inconsistent with objectives of the AIA that the Director, in
prescribing rules for inter partes review, post-grant review, and
covered business method patent 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
the instituted proceedings timely.
V. Alternative Option IV. The Office considered setting reduced
fees for small and micro entities and to provide refunds if a review is
not instituted. The Office is setting 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 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 hinder the ``just, speedy,
and inexpensive determination of every action and proceedings.'' 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 AIA that the Director, in prescribing rules for
the inter partes review, post-grant review, and covered business method
patent 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 the instituted
proceedings timely.
Additional discovery increases trial costs and increases the
expenditures of time by the parties and the Board. The Board's
experience in contested cases, however, is that such showings are often
lacking and authorization for additional discovery is expected to be
limited. While an interests-of-justice standard would be employed in
granting additional discovery in inter partes reviews and derivation
proceedings, the post-grant and covered business method patent reviews
would employ a good cause standard in granting additional discovery.
Parties may, however, agree to additional discovery amongst themselves.
To promote effective discovery, the rule would require a showing
that additional requested discovery would be productive in inter partes
reviews and derivation proceedings. An interests-of-justice standard
for additional discovery is for inter partes reviews and derivation
proceedings. This standard is consistent with the considerations
identified in 35 U.S.C. 316(b) and 135(b), as amended, including the
efficient administration of the Board and the Board's ability to
complete trials timely. Further, the interests-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.
Good cause and interests-of-justice are closely related standards,
but the interests-of-justice standard is slightly higher than good
cause. While a good cause standard requires a party to show a specific
factual reason to justify the needed discovery, under the interests-of-
justice standard, the Board would look at all relevant factors.
Specifically, to show good cause, a party would be required to make a
particular and specific demonstration of fact. Under

[[Page 48661]]

the interests-of-justice standard, the moving party would also be
required to show that it was fully diligent in seeking discovery and
that there is no undue prejudice to the non-moving party. The
interests-of-justice standard covers considerable ground, and in using
such a standard, the Board expects to consider whether the additional
discovery is necessary in light of the totality of the relevant
circumstances.
The Office sets forth a default scheduling order to provide limited
discovery as a matter of right and provide parties with 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 Board would
consider the economic impact on the opposing party. This 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 instances, 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. The Board may impose
conditions in recognizing counsel pro hac vice, including a requirement
that counsel acknowledge that counsel is bound by the Office's Code of
Professional Responsibility. Proceedings before the Office can be
technically complex. 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 Code of
Professional Responsibility, 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 rule allows for this practice in the new proceedings
authorized by the AIA.
The rules 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 rule delegates 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 and subsequently
a patent review is 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 AIA that the Director, in
prescribing rules for inter partes, post-grant, and covered business
method 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 the instituted
proceedings timely.
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, and 35 U.S.C. 324.
Default Electronic Filing: The Office considered a paper filing
system and a mandatory electronic filing system (without any
exceptions) as alternatives to the 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 AIA that the Director, in prescribing rules for inter partes
review, post-grant review, and covered business method patent 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 the instituted proceedings timely.
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, with the option, as adopted, it is expected that the entity
size and sophistication would be considered in determining whether
alternative filing methods would be authorized.
7. Identification, to the Extent Practicable, of All Relevant
Federal Rules Which May Duplicate, Overlap, or Conflict with the Final
Rules: The following rules also provide processes involving patent
applications and patents:
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 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

[[Page 48662]]

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 section 6(c)(3)(C) of the AIA.
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.
This notice also revises the rule of practice to consolidate the
procedure for notifying the Office and other parties in the proceeding
when a party seeks judicial review of a Board decision. Parties to a
review or derivation proceeding may seek judicial review of the final
decision of the Board. Historically, 33% of examiners' decisions in
inter partes reexamination proceedings have been appealed to the Board.
Given the increased coordination with district court litigation, the
Office has adjusted its estimate of the appeal rate to be 120% of the
historic rate (40% of decisions). Based on this rate, 149 additional
notices of appeal will be filed based on the decisions issued in the
new trials annually based on petitions filed during fiscal years 2013-
2015. Based on current projections with additional resources, it is
anticipated that the Board will on average issue 18,570 decisions on
appeal of applications during fiscal years 2013-2015. Additionally it
is anticipated that on average 351 decisions in reexamination (300) and
interferences (51) will be decided in fiscal years 2013-2015. It is
estimated that 1% of decisions on appeals in applications and 20% of
decisions on appeal in reexamination or during interferences would be
appealed. Thus, it is estimated that 256 notices of appeal (and notices
of election) based on decisions on appeal and during interferences
would be filed with the Office in addition to the 149 filed during
reviews on average during fiscal years 2013-2015.
The rule also requires that a copy of the notice of appeal or
notice of election and complaint be provided to the Board, thus an
additional 405 (256 + 149) copies would be required.
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 rules for
implementing the new review procedures is approximately $94.1 million
annually for fiscal years 2013-2015. The USPTO considered several
factors in making this estimate.
Based on the petition and other filing requirements for initiating
a review proceeding, the USPTO initially estimated the burden of the
rules on the public to be $213,666,384.60 in fiscal year 2013, which
represents the sum of the estimated total annual (hour) respondent cost
burden ($196,239,188.60) plus the estimated total annual non-hour
respondent cost burden ($17,427,196.00) provided in Item (O)(II) of the
Rulemaking Considerations section of this notice, infra. However, since
the AIA also eliminates inter partes reexamination practice (except for
requests filed before the effective date of September 16, 2012) and
interference practice as to applications and patents that have an
effective filing date on or after March 16, 2013 (with a few
exceptions), the burden of the rules should be offset by the
eliminations of those proceedings and their associated burdens.
It is estimated that 420 new requests for inter partes
reexamination would have been filed in FY 2012, 450 new requests in FY
2014 and 500 new requests in FY 2015 if the AIA had not been enacted
for an annual average of 456. This estimate is based on the number of
proceedings filed in fiscal years 2011 (374), 2010 (280), 2009 (258),
and the first half of FY 2012 (192). Elimination of 456 proceedings
reduces the public's burden to pay filing fees by $4,012,800 (456
filings with an $8,800 filing fee due) and the public's burden to
prepare requests by $20,976,000 (456 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 until close of prosecution will reduce the
public's burden by $89,040,000 (424 proceedings that would be estimated
to be granted reexamination multiplied by $210,000 which is the average
cost cited in the AIPLA Report of the Economic Survey 2011 for per
party costs until close of prosecution reduced by the $46,000 request
preparation cost). Additionally, the burden on the public to appeal to
the Board would be reduced 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 (424) and the historical rate of
appeal to the Board (\1/3\) and an average public cost of $38,000).
Thus, a reduction of $119,386,800 in public burden results from the
elimination of new filings of inter partes reexamination (the sum of
$3,696,000 (the filing fees), $19,320,000 (the cost of preparing
requests), $82,110,000 (the prosecution costs), plus $4,940,000 (the
burden to appeal to the Board)).
The public burden due to a reduction in the number of interferences
declared, from 64 to 51, is estimated at $9,484,400 annually based on
the assumption that the current percentage of interferences decided in
the preliminary phase (80%) would continue on the lower number of
proceedings instituted and based on cost to the public. To calculate
this public burden due to a reduction in the number of interferences
declared ($9,484,400), the following information was used. The average
public burden for a two party interference decided in the preliminary
phase reported in the AIPLA Report of the Economic Survey 2011 is
$644,000 (if decided in the preliminary phase) and $1,262,000 (if
decided after the preliminary phase). It is estimated that had the AIA
not been enacted, 52 interferences would have been decided in the
preliminary phase, and 12 would have been decided after the preliminary
phase, equating to a public burden of $48,632,000 ((52 multiplied by
$644,000 equals $33,488,000), plus (12 multiplied by $1,262,000 equals
$15,144,000) for a total of $48,632,000)). It is estimated that 51
interferences will be instituted in fiscal year 2013, at an average
public burden of $767,600 (80% of $644,000 plus 20% of $ 1,262,000) per
interference, or a total of $39,147,600 (51 multiplied by $767,600).
Accordingly, it is estimated that burden to the public due to the
reduction of interferences would be the total public burden for
interferences of $48,632,000 minus total public burden for estimated
interferences for fiscal years 2013-2015 of $39,147,600, or $9,484,400.
Thus, a total of $119,550,400 in public burden will be eliminated
by the reduction in the number of interferences that would be declared
and by eliminating new filings of inter partes

[[Page 48663]]

reexamination (this total is a sum of the following identified above:
elimination of filing fees ($3,696,000), cost of preparing requests
($19,320,000), prosecution costs until close of prosecution
($82,110,000), burden to appeal to the Board ($4,940,000) in new inter
partes reexamination proceedings, and the reduction in interference
burden ($9,484,400)). Therefore, the estimated aggregate burden of the
rules for implementing the new review proceedings would be
$94,115,984.60 ($213,666,384.60 minus $119,550,400) in fiscal year
2013.
The USPTO expects several benefits to flow from the AIA and these
rules. It is anticipated that the rules will reduce the time for
reviewing patents at the USPTO. Specifically, 35 U.S.C. 316(a), as
amended, and 35 U.S.C. 326(a) provide 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
Reexaminations--FY 2011, available at http://www.uspto.gov/patents/Reexamination_operational_statistic_through_FY2011Q4.pdf.
Likewise, it is anticipated that the rules will minimize
duplication of efforts. In particular, the AIA 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 AIA and the 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, available at www.uscourts.gov/uscourts/Statistics/JudicialBusiness/2010/appendices/C02ASep10.pdf (last visited Nov. 11,
2011) (hosting annual reports for 1997 through 2010). Thus, the Office
estimates that no more than 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
($94,115,984.60) was not offset by a reduction in burden based on
improved coordination between district court patent litigation and the
new inter partes review proceedings.
The Office received two written submissions of comments from the
public regarding Executive Order 12866. Each component of those
comments directed to Executive Order 12866 is addressed below.
Comment 231: Two comments suggested that the proposed rules would
have been classified more appropriately as significant under section
3(f)(4) of Executive Order 12866 because the proposed rules raise novel
legal or policy issues arising out of legal mandates.
Response: As stated in the notice of proposed rulemaking and in
this final rule, the Office of Management and Budget designated the
proposed rules as significant under Executive Order 12866, but not
economically significant. The comment does not present what aspect(s)
of the rule is believed to present novel legal or policy issues.
Comment 232: One comment suggested that the costs, including any
prophylactic application steps resulting from the new proceedings, were
not calculated appropriately when the Office offset the new burdens
with those removed by elimination of the ability to file new inter
partes reexamination under Executive Order 12866 and that when
appropriately calculated, the cost would exceed the $100 million
threshold for declaring the proposed rules significant under section
3(f)(1).
Response: As stated in the notice of proposed rulemaking and in
this final rule, the Office of Management and Budget designated the
proposed rules as significant under Executive Order 12866, but not
economically significant. The Office's baseline costs used to determine
the increased burden of the proposed rules properly used the burden on
the public to comply with inter partes reexamination because those
burdens existed before the statutory change, and that process was
eliminated and replaced by the process adopted by the AIA as
implemented this final rule. See OMB Circular A4, section (e)(3). See
also response to Comment 229.
Comment 233: One comment argued that the $80,000,000 burden
estimate is so close to $100,000,000 threshold, that, particularly in
view of the difficulties in estimating burden, the Office should assume
that it is likely that the proposed rules would have a $100,000,000
impact. One comment suggested that the Office should have conducted a
Regulatory Impact Analysis.
Response: As stated in the notice of proposed rulemaking and in
this final rule, the Office of Management and Budget designated the
proposed rules as significant under Executive Order 12866, but not
economically significant. The comment did not indicate what aspect of
the estimate was likely to be wrong. Furthermore, $80,000,000 is twenty
percent below the $100,000,000 threshold. Moreover, the Office's
estimate did not take into account the reduction in burden due to
decreased litigation. Thus, the Office's estimate is likely an
overstatement of the estimated basis.
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 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 rulemaking 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

[[Page 48664]]

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 set forth 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 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 0651-0069 when the notice of
proposed rulemaking was published. The Office published the title,
description, and respondent description of the information collection,
with an estimate of the annual reporting burdens, 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,'' 77 FR
6879 (Feb. 9, 2012) (notice of proposed rulemaking) (RIN 0651-AC70).
The Office received two comments and made minor revisions to the
requirements in the rule, as well as the burden estimates, as outlined
below. Accordingly, the Office has resubmitted the proposed revision to
the information collection requirements under 0651-0069. The proposed
revision to the information collection requirements under 0651-0069 is
available at OMB's Information Collection Web site (www.reginfo.gov/public/do/PRAMain).
This 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) Petitions to institute a post-grant review (Sec. Sec. 42.5,
42.6, 42.8, 42.11, 42.13, 42.20, 42.21, 42.22, 42.24(a)(2), 42.63,
42.65, and 42.201 through 42.205);
(3) Petitions to institute a covered business method patent review
(Sec. Sec. 42.5, 42.6, 42.8, 42.11, 42.13, 42.20, 42.21, 42.22,
42.24(a)(3), 42.63, 42.65, 42.203, 42.205, and 42.302 through 42.304);
(4) Petitions to institute a derivation proceeding (Sec. Sec.
42.5, 42.6, 42.8, 42.11, 42.13, 42.20, 42.21, 42.22, 42.24(a)(4),
42.63, 42.65, and 42.402 through 42.406);
(5) 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, 42.121, 42.221,
42.123, and 42.223);
(6) 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,
42.120, 42.207, and 42.220);
(7) Replies provided for in 35 U.S.C. 135 and 311-318, as amended,
and new 35 U.S.C. 319 and 321-329 (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);
and
(8) Notices of judicial review of a Board decision, including
notices of appeal and notices of election provided for in 35 U.S.C.
141, 142, 145 and 146 (Sec. Sec. 90.1 through 90.3).
The rules also permit filing requests for oral argument (Sec.
42.70) provided for in 35 U.S.C. 316(a)(10), as amended, and 35 U.S.C.
326(a)(10), 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) and 42.409) provided
for in 35 U.S.C. 317, as amended, and 35 U.S.C. 327, and arbitration
agreements and awards (Sec. 42.410) to a collection of information.
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 48665]]

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.
Chapter 32 of title 35 U.S.C. in effect on September 16, 2012,
provides for post-grant review proceeding allowing third parties to
petition the USPTO to review the patentability of an issued patent
under any ground authorized under 35 U.S.C. 282(b)(2). If a trial is
initiated by the USPTO based on the 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.
Section 18 of the AIA provides for a transitional program for
covered business method patents, which will employ the standards and
procedures of the post-grant review proceeding with a few exceptions.
35 U.S.C. 135 in effect on March 16, 2013, provides for petitions to
institute a derivation proceeding at the USPTO for certain
applications. The new rules for initiating and conducting these
proceedings are adopted in this notice as new part 42 of title 37 of
the Code of Federal Regulations.
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 mean billing rate ($371/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). Since additional grounds for instituting
review are provided in post-grant review or covered business method
patent review compared with inter partes reexamination, the Office
estimates the cost of preparing a petition to institute a review will
be 33.333% more than the estimated cost of preparing a request for
inter partes reexamination, or $61,333.
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. Thus, for inter partes review,
considering the percentage of motions on patentability issues based on
a patent or printed publication on the basis of 35 U.S.C. 102 or 103
would be appropriate as grounds raised in those proceedings would be
directed to the same issues. Similarly, for post-grant review and
transitional proceedings for covered business methods, considering the
percentage of motions on patentability issues would be appropriate as
grounds raised in those proceedings would be directed to the same
issues. 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
such as inter partes review will have a somewhat less than proportional
decrease in costs since the overlapping costs will be spread over fewer
motions as compared with a derivation proceeding.
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.
It is estimated that the cost of a post-grant review or covered
business method patent review would be 75% of the cost of current
contested cases before the trial section of the Board to the end of the
preliminary motion period. The basis for this estimate is similar to
the basis for the inter partes review estimate. Since more
patentability issues may be raised in the petition, the cost for these
trials is expected to be somewhat higher. Again, a 75% weighting factor
should capture the typical costs of a post-grant review or a covered
business method patent review.
The motions that present claims in excess of the number of claims
in the patent and in excess of three dependent or more than 20 total
claims also require payment of statutory fee for presenting such
claims. See 35 U.S.C. 41(a)(2)(i) and (ii). It is estimated that 20
percent of instituted proceedings will have one additional independent
claim and ten additional dependent claims presented in proceedings
filed in FY 2013. Based on the historical data for inter partes
reexamination it is estimated that 32.09% of the patent owners
presenting additional claims will pay small entity fee for the
additional claims. Thus, it is estimated that 23 small entities will
pay an additional $110.00 for an additional independent claim and
$260.00 for ten additional claims in inter partes review proceedings in
FY 2013. It is estimated that 48 non-small entities will pay an
additional $220.00 for an additional independent claim and $520.00 for
ten additional claims in inter partes review proceedings in FY 2013. It
is estimated that three small entities will pay an additional $110.00
for an additional independent claim and $260.00 for ten additional
claims in post-grant review proceedings in FY 2013. It is estimated
that six non-small entities will pay an additional $220.00 for an
additional independent claim and $520.00 for ten additional claims in
post-grant review proceedings in FY 2013. The total excess claim fee
due from patent owners is estimated to be $49,580 in FY 2013.
Derivations will be more like current contested cases before the
trial section of the Board inasmuch as they may have a period which
sets the stage for determining derivation and a derivation period. One-
half of derivations are anticipated to end in the preliminary motion
period, while the other half is anticipated to proceed to decision on
derivation. While it is recognized that fewer than half of all current
contested cases before the trial section of the Board proceed to a
priority decision, derivation contests are often more protracted than
other current contested cases before the trial section of the Board.
The costs associated with derivations through the preliminary motion
period and through the derivation period should be comparable to the
corresponding costs of current contested cases before the trial section
of the Board.
The title, description, and respondent description of the
information collection are shown below with an estimate of the

[[Page 48666]]

annual reporting burdens. 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 changes in this notice is to implement the changes to
Office practice necessitated by sections 3(i), 6, and 18 of the AIA.
The public uses this information collection to request review and
derivation proceedings as well as 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 a review or derivation 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, or 35 U.S.C. 324 or
derivation proceeding under 35 U.S.C. 135, as amended, and to prepare a
final decision under 35 U.S.C. 135 or 318, as amended, or 35 U.S.C.
328.
OMB Number: 0651-0069.
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: 1,040
respondents and 5,059 responses per year.
Estimated Time per Response: The USPTO estimates that it will take
the public from 0.1 to 165.3 hours to gather the necessary information,
prepare the documents, and submit the information to the USPTO.
Estimated Total Annual Respondent Burden Hours: 528,946.6 hours per
year.
Estimated Total Annual (Hour) Respondent Cost Burden:
$196,239,188.60 per year. The USPTO expects that the information in
this collection will be prepared by attorneys. Using the professional
rate of $371 per hour for attorneys in private firms, the USPTO
estimates that the respondent cost burden for this collection will be
approximately $196,239,188.60 per year (528,946.6 hours per year
multiplied by $371 per hour).
Estimated Total Annual Non-Hour Respondent Cost Burden:
$17,427,196.00 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 three 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 $18.95. The USPTO
estimates that the total postage cost associated with this collection
will be approximately $76 per year. The USPTO estimates that the total
fees associated with this collection will be approximately
$17,427,120.00 per year.
Therefore, the total cost burden in fiscal year 2013 is estimated
to be $213,666,384.60 (the sum of the estimated total annual (hour)
respondent cost burden ($196,239,188.60) plus the estimated total
annual non-hour respondent cost burden ($17,427,196.00)).

[[Page 48667]]

Request to make a settlement agreement available...... 1 18 18.00 1 22 22
Notice of judicial review of a Board decision (e.g., 0.1 194 19.4 0.1 405 40.5
notice of appeal under 35 U.S.C. 142)................
-------------------------------------------------------------------------------------------------
Totals............................................ 4,967 559,648.4 5,059 528,946.6
--------------------------------------------------------------------------------------------------------------------------------------------------------

--------------------------------------------------------------------------------------------------------------------------------------------------------
Proposed Proposed Final Final
estimated Proposed fee estimated estimated estimated
Item annual amount annual filing annual Fee amount annual filing
response costs responses costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Petition for inter partes review........................ 460 $35,800 $16,468,000 456 * $31,400 $14,318,400
Petition for post-grant review or covered business 50 47,100 2,355,000 73 * 41,400 3,022,200
method patent review...................................
Petition for derivation................................. 50 400 20,000 50 400 20,000
Reply to inter partes review petition................... 406 0 0 401 0 0
Reply to post-grant review or covered business method 45 0 0 64 0 0
patent review petition.................................
Request for Reconsideration............................. 141 0 0 156 0 0
Motions, replies and oppositions after initiation in 2,453 0 0 2,086 0 0
inter partes review with no excess claims..............
Motions in inter partes review with excess claims by n/a n/a n/a 26 370 9,620
small entity patent owners.............................
Motions in inter partes review with excess claims by n/a n/a n/a 54 740 39,960
other than small entity patent owners..................
Motions, replies and oppositions after initiation in 342 0 0 471 0 0
post-grant review or covered business method patent
review with no excess claims...........................
Motions in post-grant review or covered business method n/a n/a n/a 4 370 1,480
patent review with excess claims by other than small
entity patent owners...................................
Motions in post-grant review or covered business method n/a n/a n/a 9 740 6,660
patent review with excess claims by small entity patent
owners.................................................
Motions, replies and oppositions in derivation 210 0 0 180 0 0
proceeding.............................................
Request for oral hearing................................ 456 0 0 484 0 0
Request to treat a settlement as business confidential.. 18 0 0 22 0 0
Request for adverse judgment, default adverse judgment 101 0 0 118 0 0
or settlement..........................................
Arbitration agreement and award......................... 2 0 0 2 0 0
Request to make a settlement agreement available........ 18 400 7,200 22 400 8,800
Notice of judicial review of a Board decision (e.g., 51 0 0 405 0 0
notice of appeal under 35 U.S.C. 142)..................
-----------------------------------------------------------------------------------------------
Totals.............................................. 4,967 18,851,000 5,059 17,427,120
--------------------------------------------------------------------------------------------------------------------------------------------------------
\*\ Average.

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.
The Office received two written submissions of comments regarding
the Paperwork Analysis Act. Each component of those comment directed
the Paperwork Reduction Act is addressed below.
Comment 234: One comment suggested that inter partes reexamination
is a very poor proxy for these proceedings because there have been very
few completed proceedings relative to all filing of inter partes
reexaminations from 2001 to 2011 and the comment claims that the
completed proceeding are only the least complex of proceedings which
the comment alleges result in a sampling bias.

[[Page 48668]]

Response: While only 305 inter partes reexamination proceedings
have resulted in a certificate, the comment is not correct that only
the least complex of proceedings have been completed. The number of
filings of inter partes reexamination has increased considerably in the
last three full years. See Rules of Practice for Trials before the
Patent Trial and Appeal Board and Judicial Review of Patent Trial and
Appeal Board Decisions, 77 FR at 6893. For example, in the last three
years 824 or 64% of the 1,278 requests filed from 2001 to 2011 were
filed. Considering that the average time from filing to certificate for
the 305 certificates was 36.2 months and the median pendency was 32.9
months, it would have been more appropriate for the comment to consider
the 305 certificates that have issued compared with the filings from
2001 to 2008. During that time period there were 467 requests filed, 14
requests were subsequently denied a filing date, 53 requests were
denied on the merits, 246 had concluded with a certificate by September
30, 2011, and 154 were still pending on September 30, 2011. Of the 154
that were still pending, only one was before the examiner after a non-
final rejection, only three had an action closing prosecution as the
last action, and only three had a right of appeal notice as the last
action. Most of the 154 proceedings were subject to appeal proceedings
or were in the publication process. Accordingly, inter partes
reexamination is an appropriate proxy.
Comment 235: One comment suggested that for matters not
concurrently in litigation, the Office's two hour estimate for public
burden of settlement under the Paperwork Reduction Act was unreasonably
low by a factor of 30-100 and must include the costs to arrive at the
settlement in addition to the cost of submitting the agreement to the
Office. The comment asserts that this burden is fully cognizable under
the Paperwork Reduction Act.
Response: This comment was adopted in part. For inter partes and
post-grant review proceedings where the parties are not also in
district court litigations regarding the patent, the burden has been
increased to 100 hours per settlement as suggested as the highest
estimate in the comment. Based partially on historical data for inter
partes reexamination, it is estimated that 30% of reviewed patents will
not be subject to concurrent litigation.
By statute, any petitioner seeking review of a covered business
method must also be in litigation regarding the patent or have been
charged with infringement. The comment only argued that for parties not
in litigation, the cost of settlement was too low. Therefore, this
comment is not pertinent to this rulemaking and is not adopted.
Any petitioner seeking review of a covered business method under
the transitional program, however, is also in concurrent litigation.
Thus, the estimated burden for settlement in those proceeding has not
be revised in view of the comment.
Comment 236: Two comments requested that the Office set forth the
basis for the number of petitions for review.
Response: As discussed above in item B, the Office considered the
actual number of inter partes reexamination requests filed during FY
2001-2011 and the anticipated number of requests in FY 2012, the number
of such requests of patents classified in Class 705, the number of
interferences, and the differences between reexamination and the new
review. The Office estimated the number of reviews based on the
historical data on the number of filings in the most analogous
proceedings. See Transitional Program for Covered Business Method
Patents--Definition of Technological Invention, 77 FR at 7097.
Comment 237: One comment suggested that a projection for at least
three years of growth in future filings is necessary because the PRA
clearance is for three years. The comment also seeks disclosure of
USPTO's estimation models.
Response: The suggestion has been adopted. The Office estimates
moderate aggregate growth for petitions seeking inter partes review and
post-grant review, as set forth in item B above. Further, the Office
estimates no growth for petitions seeking review under the transitional
program for covered business method patents during the three year
period. Calculations for these numbers are providing in the supporting
statement for this collection. In 2013, the number of eligible patents
will include patents for which currently in litigation. In subsequent
years, the number of eligible patents is expected to be reduced,
because some proceedings will have been settled, while others will have
been stayed pending a review. At the same time, as experience in the
procedure becomes more wide spread, the public would more likely seek a
review. Because these two factors offset each other, the Office is
anticipated zero growth for petitions for the covered business method
patent review.
Comment 238: Two comments noted that the distribution of claims for
the review was not disclosed during the comment period. The comment
asserts that failure to disclose underlying data in the Notice of
Proposed Rulemaking violates the Paperwork Reduction Act (and other
requirements).
Response: The distribution of claims for which review will be
requested was estimated based on the number of claims for which inter
partes reexamination was requested in the first 60 requests filed
during the second quarter of FY 2011 as that data was the most timely
when the proposed rule notices were drafted. That data was publically
available when the notice of proposed rulemaking was published and
remains available today. See http://portal.uspto.gov/external/portal/pair. A summary of that publicly available data is provided as follows:
40 of the 60 proceedings requested review of 20 or fewer claims; eight
of the 60 requested review of between 21 and 30 claims; three of the 60
requested review of between 31 and 40 claims; six of the 60 requested
review of between 41 and 50 claims; one of the 60 requested review of
between 51 and 60 claims; one of the 60 requested review of between 61
and 70 claims; and one of the 60 requested review of between 91 and 100
claims. A second group of 20 proceedings filed after September 15,
2011, were reviewed to determine if the change to the statutory
threshold resulted in a clear change in the number of claims for which
review was requested. A summary of that data is provided as follows: 13
of 20 requested review of 20 or fewer claims; three of 20 requested
review of between 21 and 30 claims; three of 20 requested review of
between 31 and 40 claims; and one of 20 requested review of 53 claims.
Comment 239: One comment suggested that the estimate of the number
of post-grant review proceedings should be doubled based on the
analysis of the University of Houston of patent cases from 2005-2009.
According to the comment, this analysis shows that for every 15
decisions involving printed prior art grounds, there were 13 decisions
involving public use, ``on sale,'' or 35 U.S.C. 112.
Response: The suggestion is not adopted. While the Office agrees
that many decisions involved public use, ``on sale,'' or 35 U.S.C. 112,
the comment and the analysis by the University of Houston did not
consider which decisions did not include a prior art grounds, but did
include a public use, ``on sale,'' or 35 U.S.C. 112 ground. Only the
subset of decisions including the newly available grounds could be used
appropriately in estimating an increased rate of post-grant review
filings relative to inter partes review.

[[Page 48669]]

The comment also did not address how the limited filing window relative
to the filing of district court litigation for post-grant review would
be addressed appropriately if the University of Houston study served as
a basis for the estimates.
Comment 240: One comment suggested that the hourly rate for
practitioners should be raised from $340 (the median hourly rate from
the AIPLA economical survey referenced in the notice of proposed
rulemaking) to $500. The comment asserts that using the median hourly
rate from the AIPLA Economic Survey of $340 is analytically wrong and
that, at a minimum, the higher mean rate of $371 from that survey
should be used.
Response: The suggestion is adopted in part. The Office has adopted
a mean hourly rate of $371 from the AIPLA Economic Survey, rather than
the median hourly rate of $340 from that survey. The suggestion of a
$500 hourly rate cannot be adopted because the comment did not provide
any data to support the validity of hourly rate suggested and the
Office believes, based on its experience, that $371 is a better
estimate of the average hourly rate.
Comment 241: The comments suggested that reliance on the AIPLA
economic survey was inappropriate as the survey is flawed. The comment
asserts that the survey is unreliable for estimating paperwork burden
under the Information Quality Act.
Response: In providing estimates of burden hours, the USPTO
sometimes referenced the AIPLA economic survey report, as a benchmark
for the estimates. While the costs reported in the survey were
considered, the Office, in estimating the cost of the collection, also
considered the work required to prepare and file the submissions.
Under the USPTO's Information Quality Guidelines (ICG), the AIPLA
economic survey report is not a ``dissemination'' of information. The
Guidelines state that ``dissemination'' means an ``agency initiated or
sponsored distribution of information to the public.'' USPTO's ICG,
Section IV, A, 1. Subsection (a) further defines ``agency initiated
distribution of information to the public'' to mean ``information that
the agency distributes or releases which reflects, represents, or forms
any part of the support of the policies of the agency.'' Id. at Section
IV, A, 1, a. The USPTO did not distribute or release the AIPLA economic
survey report.
Likewise, the AIPLA economic survey report does not qualify as an
``agency sponsored distribution of information'' under Subsection (b)
of the Guidelines, which ``refers to situations where the agency has
directed a third party to distribute or release information, or where
the agency has the authority to review and approve the information
before release.'' Id. at Section IV, A, 1, b. The USPTO did not
commission the report, had no input into the structure of the report
and does not rely exclusively upon the results of the report to arrive
at estimates. No correction of the documents is required because the
Office utilized the AIPLA economic survey report in formulating some
burden estimations. No correction is required under the Information
Quality Act.
Comment 242: One comment suggested that the regulations imposed a
substantial paperwork burden without a valid OMB Control Number.
Response: The suggestion is not adopted. OMB Control number 0651-
0069 has been requested appropriately and is pending.
Comment 243: One comment suggested that the USPTO's estimates
systematically ignore burdens and costs associated with the attorney's
client company.
Response: See response to Comment 229.
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

37 CFR Part 1

Administrative practice and procedure, Courts, Freedom of
Information, Inventions and patents, Reporting and recordkeeping
requirements, Small Businesses.

37 CFR Part 42

Administrative practice and procedure, Inventions and patents,
Lawyers.

37 CFR Part 90

Administrative practice and procedure, Inventions and patents,
Lawyers.

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 amends chapter I of title 37 of the Code of
Federal Regulations as follows:

PART 1--RULES OF PRACTICE IN PATENT CASES

0
1. The authority citation for 37 CFR part 1 continues to read as
follows:

Authority: 35 U.S.C. 2(b)(2).

Sec. 1.301 [Removed and reserved]

0
2. Section 1.301 is removed and reserved.

Sec. 1.302 [Removed and reserved]

0
3. Section 1.302 is removed and reserved.

Sec. 1.303 [Removed and reserved]

0
4. Section 1.303 is removed and reserved.

Sec. 1.304 [Removed and reserved]

0
5. Section 1.304 is removed and reserved.

0
6. Part 42 is added to read as follows:

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

Subpart A--Trial Practice and Procedure

Sec.

General

42.1 Policy.
42.2 Definitions.
42.3 Jurisdiction.
42.4 Notice of trial.
42.5 Conduct of the proceeding.
42.6 Filing of documents, including exhibits; service.
42.7 Management of the record.
42.8 Mandatory notices.
42.9 Action by patent owner.
42.10 Counsel.
42.11 Duty of candor.
42.12 Sanctions.
42.13 Citation of authority.
42.14 Public availability.

Fees

42.15 Fees.

Petition and Motion Practice

42.20 Generally.
42.21 Notice of basis for relief.
42.22 Content of petitions and motions.
42.23 Oppositions and replies.
42.24 Page limits for petitions, motions, oppositions and replies.
42.25 Default filing times.

Testimony and Production

42.51 Discovery.
42.52 Compelling testimony and production.
42.53 Taking testimony.
42.54 Protective order.
42.55 Confidential information in a petition.
42.56 Expungement of confidential information.
42.61 Admissibility.

[[Page 48670]]

42.62 Applicability of the Federal Rules of Evidence.
42.63 Form of evidence.
42.64 Objection; motion to exclude; motion in limine.
42.65 Expert testimony; tests and data.

Oral Argument, Decision, and Settlement

42.70 Oral argument.
42.71 Decision on petitions or motions.
42.72 Termination of trial.
42.73 Judgment.
42.74 Settlement.

Certificate

42.80 Certificate.
Subpart B [Reserved]

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).

Subpart A--Trial Practice and Procedure

General

Sec. 42.1 Policy.

(a) Scope. Part 42 governs proceedings before the Patent Trial and
Appeal Board. Sections 1.4, 1.7, 1.14, 1.16, 1.22, 1.23, 1.25, 1.26,
1.32, 1.34, and 1.36 of this chapter also apply to proceedings before
the Board, as do other sections of part 1 of this chapter that are
incorporated by reference into this part.
(b) Construction. This part shall be construed to secure the just,
speedy, and inexpensive resolution of every proceeding.
(c) Decorum. Every party must act with courtesy and decorum in all
proceedings before the Board, including in interactions with other
parties.
(d) Evidentiary standard. The default evidentiary standard is a
preponderance of the evidence.

Sec. 42.2 Definitions.

The following definitions apply to this part:
Affidavit means affidavit or declaration under Sec. 1.68 of this
chapter. A transcript of an ex parte deposition or a declaration under
28 U.S.C. 1746 may be used as an affidavit.
Board means the Patent Trial and Appeal Board. Board means a panel
of the Board, or a member or employee acting with the authority of the
Board, including:
(1) For petition decisions and interlocutory decisions, a Board
member or employee acting with the authority of the Board.
(2) For final written decisions under 35 U.S.C. 135(d), 318(a), and
328(a), a panel of the Board.
Business day means a day other than a Saturday, Sunday, or Federal
holiday within the District of Columbia.
Confidential information means trade secret or other confidential
research, development, or commercial information.
Final means final for the purpose of judicial review to the extent
available. A decision is final only if it disposes of all necessary
issues with regard to the party seeking judicial review, and does not
indicate that further action is required.
Hearing means consideration of the trial.
Involved means an application, patent, or claim that is the subject
of the proceeding.
Judgment means a final written decision by the Board, or a
termination of a proceeding.
Motion means a request for relief other than by petition.
Office means the United States Patent and Trademark Office.
Panel means at least three members of the Board.
Party means at least the petitioner and the patent owner and, in a
derivation proceeding, any applicant or assignee of the involved
application.
Petition is a request that a trial be instituted.
Petitioner means the party filing a petition requesting that a
trial be instituted.
Preliminary Proceeding begins with the filing of a petition for
instituting a trial and ends with a written decision as to whether a
trial will be instituted.
Proceeding means a trial or preliminary proceeding.
Rehearing means reconsideration.
Trial means a contested case instituted by the Board based upon a
petition. A trial begins with a written decision notifying the
petitioner and patent owner of the institution of the trial. The term
trial specifically includes a derivation proceeding under 35 U.S.C.
135; an inter partes review under Chapter 31 of title 35, United States
Code; a post-grant review under Chapter 32 of title 35, United States
Code; and a transitional business-method review under section 18 of the
Leahy-Smith America Invents Act. Patent interferences are administered
under part 41 and not under part 42 of this title, and therefore are
not trials.

Sec. 42.3 Jurisdiction.

(a) The Board may exercise exclusive jurisdiction within the Office
over every involved application and patent during the proceeding, as
the Board may order.
(b) A petition to institute a trial must be filed with the Board
consistent with any time period required by statute.

Sec. 42.4 Notice of trial.

(a) Institution of trial. The Board institutes the trial on behalf
of the Director.
(b) Notice of a trial will be sent to every party to the
proceeding. The entry of the notice institutes the trial.
(c) The Board may authorize additional modes of notice, including:
(1) Sending notice to another address associated with the party, or
(2) Publishing the notice in the Official Gazette of the United
States Patent and Trademark Office or the Federal Register.

Sec. 42.5 Conduct of the proceeding.

(a) The Board may determine a proper course of conduct in a
proceeding for any situation not specifically covered by this part and
may enter non-final orders to administer the proceeding.
(b) The Board may waive or suspend a requirement of parts 1, 41,
and 42 and may place conditions on the waiver or suspension.
(c) Times. (1) Setting times. The Board may set times by order.
Times set by rule are default and may be modified by order. Any
modification of times will take any applicable statutory pendency goal
into account.
(2) Extension of time. A request for an extension of time must be
supported by a showing of good cause.
(3) Late action. A late action will be excused on a showing of good
cause or upon a Board decision that consideration on the merits would
be in the interests of justice.
(d) Ex parte communications. Communication regarding a specific
proceeding with a Board member defined in 35 U.S.C. 6(a) is not
permitted unless both parties have an opportunity to be involved in the
communication.

Sec. 42.6 Filing of documents, including exhibits; service.

(a) General format requirements. (1) Page size must be 8\1/2\ inch
x 11 inch except in the case of exhibits that require a larger size in
order to preserve details of the original.
(2) In documents, including affidavits, created for the proceeding:
(i) Markings must be in black or must otherwise provide an
equivalent dark, high-contrast image;
(ii) Either a proportional or monospaced font may be used:
(A) The proportional font must be 14-point or larger, and
(B) The monospaced font must not contain more than four characters
per centimeter (ten characters per inch);
(iii) Double spacing must be used except in claim charts, headings,
tables

[[Page 48671]]

of contents, tables of authorities, indices, signature blocks, and
certificates of service. Block quotations may be 1.5 spaced, but must
be indented from both the left and the right margins; and
(iv) Margins must be at least 2.5 centimeters (1 inch) on all
sides.
(3) Incorporation by reference; combined documents. Arguments must
not be incorporated by reference from one document into another
document. Combined motions, oppositions, replies, or other combined
documents are not permitted.
(4) Signature; identification. Documents must be signed in
accordance with Sec. Sec. 1.33 and 11.18(a) of this title, and should
be identified by the trial number (where known).
(b) Modes of filing. (1) Electronic filing. Unless otherwise
authorized, submissions are to be made to the Board electronically via
the Internet according to the parameters established by the Board and
published on the Web site of the Office.
(2)(i) Filing by means other than electronic filing. A document
filed by means other than electronic filing must:
(A) Be accompanied by a motion requesting acceptance of the
submission; and
(B) Identify a date of transmission where a party seeks a filing
date other than the date of receipt at the Board.
(ii) Mailed correspondence shall be sent to: Mail Stop PATENT
BOARD, Patent Trial and Appeal Board, United States Patent and
Trademark Office, PO Box 1450, Alexandria, Virginia 22313-1450.
(c) Exhibits. Each exhibit must be filed with the first document in
which it is cited except as the Board may otherwise order.
(d) Previously filed paper. A document already in the record of the
proceeding must not be filed again, not even as an exhibit or an
appendix, without express Board authorization.
(e) Service. (1) Electronic or other mode. Service may be made
electronically upon agreement of the parties. Otherwise, service may be
by EXPRESS MAIL[supreg] or by means at least as fast and reliable as
EXPRESS MAIL[supreg].
(2) Simultaneous with filing. Each document filed with the Board,
if not previously served, must be served simultaneously on each
opposing party.
(3) Counsel of record. If a party is represented by counsel of
record in the proceeding, service must be on counsel.
(4) Certificate of service. (i) Each document, other than an
exhibit, must include a certificate of service at the end of that
document. Any exhibit filed with the document may be included in the
certification for the document.
(ii) For an exhibit filed separately, a transmittal letter
incorporating the certificate of service must be filed. If more than
one exhibit is filed at one time, a single letter should be used for
all of the exhibits filed together. The letter must state the name and
exhibit number for every exhibit filed with the letter.
(iii) The certificate of service must state:
(A) The date and manner of service; and
(B) The name and address of every person served.

Sec. 42.7 Management of the record.

(a) The Board may expunge any paper directed to a proceeding or
filed while an application or patent is under the jurisdiction of the
Board that is not authorized under this part or in a Board order or
that is filed contrary to a Board order.
(b) The Board may vacate or hold in abeyance any non-Board action
directed to a proceeding while an application or patent is under the
jurisdiction of the Board unless the action was authorized by the
Board.

Sec. 42.8 Mandatory notices.

(a) Each notice listed in paragraph (b) of this section must be
filed with the Board:
(1) By the petitioner, as part of the petition;
(2) By the patent owner, or applicant in the case of derivation,
within 21 days of service of the petition; or
(3) By either party, within 21 days of a change of the information
listed in paragraph (b) of this section stated in an earlier paper.
(b) Each of the following notices must be filed:
(1) Real party-in-interest. Identify each real party-in-interest
for the party.
(2) Related matters. Identify any other judicial or administrative
matter that would affect, or be affected by, a decision in the
proceeding.
(3) Lead and back-up counsel. If the party is represented by
counsel, then counsel must be identified.
(4) Service information. Identify (if applicable):
(i) An electronic mail address;
(ii) A postal mailing address;
(iii) A hand-delivery address, if different than the postal mailing
address;
(iv) A telephone number; and
(v) A facsimile number.

Sec. 42.9 Action by patent owner.

(a) Entire interest. An owner of the entire interest in an involved
application or patent may act to the exclusion of the inventor (see
Sec. 3.71 of this title).
(b) Part interest. An owner of a part interest in the subject
patent may move to act to the exclusion of an inventor or a co-owner.
The motion must show the inability or refusal of an inventor or co-
owner to prosecute the proceeding or other cause why it is in the
interests of justice to permit the owner of a part interest to act in
the trial. In granting the motion, the Board may set conditions on the
actions of the parties.

Sec. 42.10 Counsel.

(a) If a party is represented by counsel, the party must designate
a lead counsel and a back-up counsel who can conduct business on behalf
of the lead counsel.
(b) A power of attorney must be filed with the designation of
counsel, except the patent owner should not file an additional power of
attorney if the designated counsel is already counsel of record in the
subject patent or application.
(c) The Board may recognize counsel pro hac vice during a
proceeding upon a showing of good cause, subject to the condition that
lead counsel be a registered practitioner and to any other conditions
as the Board may impose. For example, where the lead counsel is a
registered practitioner, a motion to appear pro hac vice by counsel who
is not a registered practitioner may be granted upon showing that
counsel is an experienced litigating attorney and has an established
familiarity with the subject matter at issue in the proceeding.
(d) A panel of the Board may disqualify counsel for cause after
notice and opportunity for hearing. A decision to disqualify is not
final for the purposes of judicial review until certified by the Chief
Administrative Patent Judge.
(e) Counsel may not withdraw from a proceeding before the Board
unless the Board authorizes such withdrawal.

Sec. 42.11 Duty of candor.

Parties and individuals involved in the proceeding have a duty of
candor and good faith to the Office during the course of a proceeding.

Sec. 42.12 Sanctions.

(a) The Board may impose a sanction against a party for misconduct,
including:
(1) Failure to comply with an applicable rule or order in the
proceeding;
(2) Advancing a misleading or frivolous argument or request for
relief;

[[Page 48672]]

(3) Misrepresentation of a fact;
(4) Engaging in dilatory tactics;
(5) Abuse of discovery;
(6) Abuse of process; or
(7) Any other improper use of the proceeding, including actions
that harass or cause unnecessary delay or an unnecessary increase in
the cost of the proceeding.
(b) Sanctions include entry of one or more of the following:
(1) An order holding facts to have been established in the
proceeding;
(2) An order expunging or precluding a party from filing a paper;
(3) An order precluding a party from presenting or contesting a
particular issue;
(4) An order precluding a party from requesting, obtaining, or
opposing discovery;
(5) An order excluding evidence;
(6) An order providing for compensatory expenses, including
attorney fees;
(7) An order requiring terminal disclaimer of patent term; or
(8) Judgment in the trial or dismissal of the petition.

Sec. 42.13 Citation of authority.

(a) For any United States Supreme Court decision, citation to the
United States Reports is preferred.
(b) For any decision other than a United States Supreme Court
decision, citation to the West Reporter System is preferred.
(c) Citations to authority must include pinpoint citations whenever
a specific holding or portion of an authority is invoked.
(d) Non-binding authority should be used sparingly. If the
authority is not an authority of the Office and is not reproduced in
the United States Reports or the West Reporter System, a copy of the
authority should be provided.

Sec. 42.14 Public availability.

The record of a proceeding, including documents and things, shall
be made available to the public, except as otherwise ordered. A party
intending a document or thing to be sealed shall file a motion to seal
concurrent with the filing of the document or thing to be sealed. The
document or thing shall be provisionally sealed on receipt of the
motion and remain so pending the outcome of the decision on the motion.

Fees

Sec. 42.15 Fees.

(a) On filing a petition for inter partes review of a patent,
payment of the following fee is due based upon the number of challenged
claims:

(1) 1 to 20 claims...................................... $27,200.00
(2) For each claim in excess of 20 claims............... 600.00

(b) On filing a petition for post-grant review of a patent, or a
petition for review of a covered business method patent, payment of the
following fee is due based upon the number of challenged claims:

(1) 1 to 20 claims...................................... $35,800.00
(2) For each claim in excess of 20 claims............... 800.00
(c) On the filing of a petition for a derivation 400.00
proceeding a fee of:...................................
(d) Any request requiring payment of a fee under this 400.00
part, including a written request to make a settlement
agreement available:...................................

(e) For presenting each independent claim in excess of 3 and also
in excess of the number of claims in independent form in the patent the
fee set forth in Sec. 1.16(h).
(f) For presenting each claim in excess of 20 and also in excess of
the number of claims in the patent the fee set forth in Sec. 1.16(i).

Petition and Motion Practice

Sec. 42.20 Generally.

(a) Relief. Relief, other than a petition requesting the
institution of a trial, must be requested in the form of a motion.
(b) Prior authorization. A motion will not be entered without Board
authorization. Authorization may be provided in an order of general
applicability or during the proceeding.
(c) Burden of proof. The moving party has the burden of proof to
establish that it is entitled to the requested relief.
(d) Briefing. The Board may order briefing on any issue involved in
the trial.

Sec. 42.21 Notice of basis for relief.

(a) Notice of request for relief. The Board may require a party to
file a notice stating the relief it requests and the basis for its
entitlement to relief. A notice must include sufficient detail to place
the Board and each opponent on notice of the precise relief requested.
A notice is not evidence except as an admission by a party-opponent.
(b) Filing and service. The Board may set the times and conditions
for filing and serving notices required under this section. The Board
may provide for the notice filed with the Board to be maintained in
confidence for a limited time.
(c) Effect. If a notice under paragraph (a) of this section is
required:
(1) A failure to state a sufficient basis for relief may result in
a denial of the relief requested;
(2) A party will be limited to filing motions consistent with the
notice; and
(3) Ambiguities in the notice will be construed against the party.
(d) Correction. A party may move to correct its notice. The motion
should be filed promptly after the party becomes aware of the basis for
the correction. A correction filed after the time set for filing
notices will only be entered if entry would serve the interests of
justice.

Sec. 42.22 Content of petitions and motions.

(a) Each petition or motion must be filed as a separate paper and
must include:
(1) A statement of the precise relief requested; and
(2) A full statement of the reasons for the relief requested,
including a detailed explanation of the significance of the evidence
including material facts, and the governing law, rules, and precedent.
(b) Relief requested. Where a rule in part 1 of this title
ordinarily governs the relief sought, the petition or motion must make
any showings required under that rule in addition to any showings
required in this part.
(c) Statement of material facts. Each petition or motion may
include a statement of material fact. Each material fact preferably
shall be set forth as a separately numbered sentence with specific
citations to the portions of the record that support the fact.
(d) The Board may order additional showings or explanations as a
condition for authorizing a motion (see Sec. 42.20(b)).

Sec. 42.23 Oppositions and replies.

(a) Oppositions and replies must comply with the content
requirements for motions and must include a

[[Page 48673]]

statement identifying material facts in dispute. Any material fact not
specifically denied may be considered admitted.
(b) All arguments for the relief requested in a motion must be made
in the motion. A reply may only respond to arguments raised in the
corresponding opposition or patent owner response.

Sec. 42.24 Page limits for petitions, motions, oppositions, and
replies.

(a) Petitions and motions. (1) The following page limits for
petitions and motions apply and include any statement of material facts
to be admitted or denied in support of the petition or motion. The page
limit does not include a table of contents, a table of authorities, a
certificate of service, or appendix of exhibits.
(i) Petition requesting inter partes review: 60 pages.
(ii) Petition requesting post-grant review: 80 pages.
(iii) Petition requesting covered business method patent review: 80
pages.
(iv) Petition requesting derivation proceeding: 60 pages.
(v) Motions: 15 pages.
(2) Petitions to institute a trial must comply with the stated page
limits but may be accompanied by a motion 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 and must append a copy of proposed petition
exceeding the page limit to the motion. If the motion is not granted,
the proposed petition exceeding the page limit may be expunged or
returned. Any other motion to waive page limits must be granted in
advance of filing a motion, opposition, or reply for which the waiver
is necessary.
(b) Patent owner responses and oppositions. The page limits set
forth in this paragraph do not include a listing of facts which are
admitted, denied, or cannot be admitted or denied.
(1) The page limits for a patent owner preliminary response to
petition are the same as the page limits for the petition.
(2) The page limits for a patent owner response to petition are the
same as the page limits for the petition.
(3) The page limits for oppositions are the same as those for
corresponding motions.
(c) Replies. The following page limits for replies apply and
include the required statement of facts in support of the reply. The
page limits do not include a table of contents, a table of authorities,
a listing of facts which are admitted, denied, or cannot be admitted or
denied, a certificate of service, or appendix of exhibits.
(1) Replies to patent owner responses to petitions: 15 pages.
(2) Replies to oppositions: 5 pages.

Sec. 42.25 Default filing times.

(a) A motion may only be filed according to a schedule set by the
Board. The default times for acting are:
(1) An opposition is due one month after service of the motion; and
(2) A reply is due one month after service of the opposition.
(b) A party should seek relief promptly after the need for relief
is identified. Delay in seeking relief may justify a denial of relief
sought.

Testimony and Production

Sec. 42.51 Discovery.

(a) Mandatory initial disclosures.
(1) With agreement. Parties may agree to mandatory discovery
requiring the initial disclosures set forth in the Office Patent Trial
Practice Guide.
(i) The parties must submit any agreement reached on initial
disclosures by no later than the filing of the patent owner preliminary
response or the expiration of the time period for filing such a
response. The initial disclosures of the parties shall be filed as
exhibits.
(ii) Upon the institution of a trial, parties may automatically
take discovery of the information identified in the initial
disclosures.
(2) Without agreement. Where the parties fail to agree to the
mandatory discovery set forth in paragraph (a)(1), a party may seek
such discovery by motion.
(b) Limited discovery. A party is not entitled to discovery except
as provided in paragraph (a) of this section, or as otherwise
authorized in this subpart.
(1) Routine discovery. Except as the Board may otherwise order:
(i) Unless previously served or otherwise by agreement of the
parties, any exhibit cited in a paper or in testimony must be served
with the citing paper or testimony.
(ii) Cross examination of affidavit testimony is authorized within
such time period as the Board may set.
(iii) Unless previously served, a party must serve relevant
information that is inconsistent with a position advanced by the party
during the proceeding concurrent with the filing of the documents or
things that contains the inconsistency. This requirement does not make
discoverable anything otherwise protected by legally recognized
privileges such as attorney-client or attorney work product. This
requirement extends to inventors, corporate officers, and persons
involved in the preparation or filing of the documents or things.
(2) Additional discovery. (i) The parties may agree to additional
discovery between themselves. Where the parties fail to agree, a party
may move for additional discovery. The moving party must show that such
additional discovery is in the interests of justice, except in post-
grant reviews where additional discovery is limited to evidence
directly related to factual assertions advanced by either party in the
proceeding (see Sec. 42.224). The Board may specify conditions for
such additional discovery.
(ii) When appropriate, a party may obtain production of documents
and things during cross examination of an opponent's witness or during
authorized compelled testimony under Sec. 42.52.
(c) Production of documents. Except as otherwise ordered by the
Board, a party producing documents and things shall either provide
copies to the opposing party or make the documents and things available
for inspection and copying at a reasonable time and location in the
United States.

Sec. 42.52 Compelling testimony and production.

(a) Authorization required. A party seeking to compel testimony or
production of documents or things must file a motion for authorization.
The motion must describe the general relevance of the testimony,
document, or thing, and must:
(1) In the case of testimony, identify the witness by name or
title; and
(2) In the case of a document or thing, the general nature of the
document or thing.
(b) Outside the United States. For testimony or production sought
outside the United States, the motion must also:
(1) In the case of testimony. (i) Identify the foreign country and
explain why the party believes the witness can be compelled to testify
in the foreign country, including a description of the procedures that
will be used to compel the testimony in the foreign country and an
estimate of the time it is expected to take to obtain the testimony;
and
(ii) Demonstrate that the party has made reasonable efforts to
secure the agreement of the witness to testify in the United States but
has been unsuccessful in obtaining the agreement, even though the party
has offered to pay the travel expenses of the witness to testify in the
United States.
(2) In the case of production of a document or thing. (i) Identify
the foreign country and explain why the party believes production of
the document or thing can be compelled in

[[Page 48674]]

the foreign country, including a description of the procedures that
will be used to compel production of the document or thing in the
foreign country and an estimate of the time it is expected to take to
obtain production of the document or thing; and
(ii) Demonstrate that the party has made reasonable efforts to
obtain the agreement of the individual or entity having possession,
custody, or control of the document or thing to produce the document or
thing in the United States but has been unsuccessful in obtaining that
agreement, even though the party has offered to pay the expenses of
producing the document or thing in the United States.

Sec. 42.53 Taking testimony.

(a) Form. Uncompelled direct testimony must be submitted in the
form of an affidavit. All other testimony, including testimony
compelled under 35 U.S.C. 24, must be in the form of a deposition
transcript. Parties may agree to video-recorded testimony, but may not
submit such testimony without prior authorization of the Board. In
addition, the Board may authorize or require live or video-recorded
testimony.
(b) Time and location. (1) Uncompelled direct testimony may be
taken at any time to support a petition, motion, opposition, or reply;
otherwise, testimony may only be taken during a testimony period set by
the Board.
(2) Except as the Board otherwise orders, during the testimony
period, deposition testimony may be taken at any reasonable time and
location within the United States before any disinterested official
authorized to administer oaths at that location.
(3) Uncompelled deposition testimony outside the United States may
only be taken upon agreement of the parties or as the Board
specifically directs.
(c) Duration. (1) Unless stipulated by the parties or ordered by
the Board, direct examination, cross-examination, and redirect
examination for compelled deposition testimony shall be subject to the
following time limits: Seven hours for direct examination, four hours
for cross-examination, and two hours for redirect examination.
(2) Unless stipulated by the parties or ordered by the Board,
cross-examination, redirect examination, and re-cross examination for
uncompelled direct deposition testimony shall be subject to the
following time limits: Seven hours for cross-examination, four hours
for redirect examination, and two hours for re-cross examination.
(d) Notice of deposition. (1) Prior to the taking of deposition
testimony, all parties to the proceeding must agree on the time and
place for taking testimony. If the parties cannot agree, the party
seeking the testimony must initiate a conference with the Board to set
a time and place.
(2) Cross-examination should ordinarily take place after any
supplemental evidence relating to the direct testimony has been filed
and more than a week before the filing date for any paper in which the
cross-examination testimony is expected to be used. A party requesting
cross-examination testimony of more than one witness may choose the
order in which the witnesses are to be cross-examined.
(3) In the case of direct deposition testimony, at least three
business days prior to the conference in paragraph (d)(1) of this
section, or if there is no conference, at least ten days prior to the
deposition, the party seeking the direct testimony must serve:
(i) A list and copy of each document under the party's control and
on which the party intends to rely; and
(ii) A list of, and proffer of reasonable access to, anything other
than a document under the party's control and on which the party
intends to rely.
(4) The party seeking the deposition must file a notice of the
deposition at least ten business days before a deposition.
(5) Scope and content--(i) For direct deposition testimony, the
notice limits the scope of the testimony and must list:
(A) The time and place of the deposition;
(B) The name and address of the witness;
(C) A list of the exhibits to be relied upon during the deposition;
and
(D) A general description of the scope and nature of the testimony
to be elicited.
(ii) For cross-examination testimony, the scope of the examination
is limited to the scope of the direct testimony.
(iii) The notice must list the time and place of the deposition.
(iv) Where an additional party seeks to take direct testimony of a
third party witness at the time and place noticed in paragraph (d)(5)
of this section, the additional party must provide a counter notice
that lists the exhibits to be relied upon in the deposition and a
general description of the scope and nature of the testimony to be
elicited.
(6) Motion to quash--Objection to a defect in the notice is waived
unless the objecting party promptly seeks authorization to file a
motion to quash.
(e) Deposition in a foreign language. If an interpreter will be
used during the deposition, the party calling the witness must initiate
a conference with the Board at least five business days before the
deposition.
(f) Manner of taking deposition testimony. (1) Before giving
deposition testimony, each witness shall be duly sworn according to law
by the officer before whom the deposition is to be taken. The officer
must be authorized to take testimony under 35 U.S.C. 23.
(2) The testimony shall be taken with any questions and answers
recorded in their regular order by the officer, or by some other
disinterested person in the presence of the officer, unless the
presence of the officer is waived on the record by agreement of all
parties.
(3) Any exhibits used during the deposition must be numbered as
required by Sec. 42.63(c), and must, if not previously served, be
served at the deposition. Exhibits objected to shall be accepted
pending a decision on the objection.
(4) All objections made at the time of the deposition to the
qualifications of the officer taking the deposition, the manner of
taking it, the evidence presented, the conduct of any party, and any
other objection to the deposition shall be noted on the record by the
officer.
(5) When the testimony has been transcribed, the witness shall read
and sign (in the form of an affidavit) a transcript of the deposition
unless:
(i) The parties otherwise agree in writing;
(ii) The parties waive reading and signature by the witness on the
record at the deposition; or
(iii) The witness refuses to read or sign the transcript of the
deposition.
(6) The officer shall prepare a certified transcript by attaching a
certificate in the form of an affidavit signed and sealed by the
officer to the transcript of the deposition. Unless the parties waive
any of the following requirements, in which case the certificate shall
so state, the certificate must state:
(i) The witness was duly sworn by the officer before commencement
of testimony by the witness;
(ii) The transcript is a true record of the testimony given by the
witness;
(iii) The name of the person who recorded the testimony, and if the
officer did not record it, whether the testimony was recorded in the
presence of the officer;
(iv) The presence or absence of any opponent;
(v) The place where the deposition was taken and the day and hour
when the deposition began and ended;
(vi) The officer has no disqualifying interest, personal or
financial, in a party; and

[[Page 48675]]

(vii) If a witness refuses to read or sign the transcript, the
circumstances under which the witness refused.
(7) Except where the parties agree otherwise, the proponent of the
testimony must arrange for providing a copy of the transcript to all
other parties. The testimony must be filed by proponent as an exhibit.
(8) Any objection to the content, form, or manner of taking the
deposition, including the qualifications of the officer, is waived
unless made on the record during the deposition and preserved in a
timely filed motion to exclude.
(g) Costs. Except as the Board may order or the parties may agree
in writing, the proponent of the direct testimony shall bear all costs
associated with the testimony, including the reasonable costs
associated with making the witness available for the cross-examination.

Sec. 42.54 Protective order.

(a) A party may file a motion to seal where the motion to seal
contains a proposed protective order, such as the default protective
order set forth in the Office Patent Trial Practice Guide. The motion
must include a certification that the moving party has in good faith
conferred or attempted to confer with other affected parties in an
effort to resolve the dispute. The Board may, for good cause, issue an
order to protect a party or person from disclosing confidential
information, including, but not limited to, one or more of the
following:
(1) Forbidding the disclosure or discovery;
(2) Specifying terms, including time and place, for the disclosure
or discovery;
(3) Prescribing a discovery method other than the one selected by
the party seeking discovery;
(4) Forbidding inquiry into certain matters, or limiting the scope
of disclosure or discovery to certain matters;
(5) Designating the persons who may be present while the discovery
is conducted;
(6) Requiring that a deposition be sealed and opened only by order
of the Board;
(7) Requiring that a trade secret or other confidential research,
development, or commercial information not be revealed or be revealed
only in a specified way; and
(8) Requiring that the parties simultaneously file specified
documents or information in sealed envelopes, to be opened as the Board
directs.
(b) [Reserved].

Sec. 42.55 Confidential information in a petition.

A petitioner filing confidential information with a petition may,
concurrent with the filing of the petition, file a motion to seal with
a proposed protective order as to the confidential information. The
institution of the requested trial will constitute a grant of the
motion to seal unless otherwise ordered by the Board.
(a) Default protective order. Where a motion to seal requests entry
of the default protective order set forth in the Office Patent Trial
Practice Guide, the petitioner must file, but need not serve, the
confidential information under seal. The patent owner may only access
the filed sealed information prior to the institution of the trial by
agreeing to the terms of the default protective order or obtaining
relief from the Board.
(b) Protective orders other than default protective order. Where a
motion to seal requests entry of a protective order other than the
default protective order, the petitioner must file, but need not serve,
the confidential information under seal. The patent owner may only
access the sealed confidential information prior to the institution of
the trial by:
(1) agreeing to the terms of the protective order requested by the
petitioner;
(2) agreeing to the terms of a protective order that the parties
file jointly; or
(3) obtaining entry of a protective order (e.g., the default
protective order).

Sec. 42.56 Expungement of confidential information.

After denial of a petition to institute a trial or after final
judgment in a trial, a party may file a motion to expunge confidential
information from the record.

Sec. 42.61 Admissibility.

(a) Evidence that is not taken, sought, or filed in accordance with
this subpart is not admissible.
(b) Records of the Office. Certification is not necessary as a
condition to admissibility when the evidence to be submitted is a
record of the Office to which all parties have access.
(c) Specification and drawings. A specification or drawing of a
United States patent application or patent is admissible as evidence
only to prove what the specification or drawing describes. If there is
data in the specification or a drawing upon which a party intends to
rely to prove the truth of the data, an affidavit by an individual
having first-hand knowledge of how the data was generated must be
filed.

Sec. 42.62 Applicability of the Federal rules of evidence.

(a) Generally. Except as otherwise provided in this subpart, the
Federal Rules of Evidence shall apply to a proceeding.
(b) Exclusions. Those portions of the Federal Rules of Evidence
relating to criminal proceedings, juries, and other matters not
relevant to proceedings under this subpart shall not apply.
(c) Modifications in terminology. Unless otherwise clear from
context, the following terms of the Federal Rules of Evidence shall be
construed as indicated:
Appellate court means United States Court of Appeals for the
Federal Circuit.
Civil action, civil proceeding, and action mean a proceeding before
the Board under part 42.
Courts of the United States, U.S. Magistrate, court, trial court,
trier of fact, and judge mean Board.
Hearing means, as defined in Federal Rule of Evidence 804(a)(5),
the time for taking testimony.
Judicial notice means official notice.
Trial or hearing in Federal Rule of Evidence 807 means the time for
taking testimony.
(d) In determining foreign law, the Board may consider any relevant
material or source, including testimony, whether or not submitted by a
party or admissible under the Federal Rules of Evidence.

Sec. 42.63 Form of evidence.

(a) Exhibits required. Evidence consists of affidavits, transcripts
of depositions, documents, and things. All evidence must be filed in
the form of an exhibit.
(b) Translation required. When a party relies on a document or is
required to produce a document in a language other than English, a
translation of the document into English and an affidavit attesting to
the accuracy of the translation must be filed with the document.
(c) Exhibit numbering. Each party's exhibits must be uniquely
numbered sequentially in a range the Board specifies. For the
petitioner, the range is 1001-1999, and for the patent owner, the range
is 2001-2999.
(d) Exhibit format. An exhibit must conform with the requirements
for papers in Sec. 42.6 and the requirements of this paragraph.
(1) Each exhibit must have an exhibit label.
(i) An exhibit filed with the petition must include the
petitioner's name followed by a unique exhibit number.
(ii) For exhibits not filed with the petition, the exhibit label
must include

[[Page 48676]]

the party's name followed by a unique exhibit number, the names of the
parties, and the trial number.
(2) When the exhibit is a paper:
(i) Each page must be uniquely numbered in sequence; and
(ii) The exhibit label must be affixed to the lower right corner of
the first page of the exhibit without obscuring information on the
first page or, if obscuring is unavoidable, affixed to a duplicate
first page.
(e) Exhibit list. Each party must maintain an exhibit list with the
exhibit number and a brief description of each exhibit. If the exhibit
is not filed, the exhibit list should note that fact. A current exhibit
list must be served whenever evidence is served and the current exhibit
list must be filed when filing exhibits.

Sec. 42.64 Objection; motion to exclude; motion in limine.

(a) Deposition evidence. An objection to the admissibility of
deposition evidence must be made during the deposition. Evidence to
cure the objection must be provided during the deposition, unless the
parties to the deposition stipulate otherwise on the deposition record.
(b) Other evidence. For evidence other than deposition evidence:
(1) Objection. Any objection to evidence submitted during a
preliminary proceeding must be served within ten business days of the
institution of the trial. Once a trial has been instituted, any
objection must be served within five business days of service of
evidence to which the objection is directed. The objection must
identify the grounds for the objection with sufficient particularity to
allow correction in the form of supplemental evidence.
(2) Supplemental evidence. The party relying on evidence to which
an objection is timely served may respond to the objection by serving
supplemental evidence within ten business days of service of the
objection.
(c) Motion to exclude. A motion to exclude evidence must be filed
to preserve any objection. The motion must identify the objections in
the record in order and must explain the objections. The motion may be
filed without prior authorization from the Board.

Sec. 42.65 Expert testimony; tests and data.

(a) Expert testimony that does not disclose the underlying facts or
data on which the opinion is based is entitled to little or no weight.
Testimony on United States patent law or patent examination practice
will not be admitted.
(b) If a party relies on a technical test or data from such a test,
the party must provide an affidavit explaining:
(1) Why the test or data is being used;
(2) How the test was performed and the data was generated;
(3) How the data is used to determine a value;
(4) How the test is regarded in the relevant art; and
(5) Any other information necessary for the Board to evaluate the
test and data.

Oral Argument, Decision, and Settlement

Sec. 42.70 Oral argument.

(a) Request for oral argument. A party may request oral argument on
an issue raised in a paper at a time set by the Board. The request must
be filed as a separate paper and must specify the issues to be argued.
(b) Demonstrative exhibits must be served at least five business
days before the oral argument and filed no later than the time of the
oral argument.

Sec. 42.71 Decision on petitions or motions.

(a) Order of consideration. The Board may take up petitions or
motions for decisions in any order, may grant, deny, or dismiss any
petition or motion, and may enter any appropriate order.
(b) Interlocutory decisions. A decision on a motion without a
judgment is not final for the purposes of judicial review. If a
decision is not a panel decision, the party may request that a panel
rehear the decision. When rehearing a non-panel decision, a panel will
review the decision for an abuse of discretion. A panel decision on an
issue will govern the trial.
(c) Petition decisions. A decision by the Board on whether to
institute a trial is final and nonappealable. A party may request
rehearing on a decision by the Board on whether to institute a trial
pursuant to paragraph (d) of this section. When rehearing a decision on
petition, a panel will review the decision for an abuse of discretion.
(d) Rehearing. A party dissatisfied with a decision may file a
request for rehearing, without prior authorization from the Board. The
burden of showing a decision should be modified lies with the party
challenging the decision. The request must specifically identify all
matters the party believes the Board misapprehended or overlooked, and
the place where each matter was previously addressed in a motion, an
opposition, or a reply. A request for rehearing does not toll times for
taking action. Any request must be filed:
(1) Within 14 days of the entry of a non-final decision or a
decision to institute a trial as to at least one ground of
unpatentability asserted in the petition; or
(2) Within 30 days of the entry of a final decision or a decision
not to institute a trial.

Sec. 42.72 Termination of trial.

The Board may terminate a trial without rendering a final written
decision, where appropriate, including where the trial is consolidated
with another proceeding or pursuant to a joint request under 35 U.S.C.
317(a) or 327(a).

Sec. 42.73 Judgment.

(a) A judgment, except in the case of a termination, disposes of
all issues that were, or by motion reasonably could have been, raised
and decided.
(b) Request for adverse judgment. A party may request judgment
against itself at any time during a proceeding. Actions construed to be
a request for adverse judgment include:
(1) Disclaimer of the involved application or patent;
(2) Cancellation or disclaimer of a claim such that the party has
no remaining claim in the trial;
(3) Concession of unpatentability or derivation of the contested
subject matter; and
(4) Abandonment of the contest.
(c) Recommendation. The judgment may include a recommendation for
further action by an examiner or by the Director.
(d) Estoppel. (1) Petitioner other than in derivation proceeding. A
petitioner, or the real party in interest or privy of the petitioner,
is estopped in the Office from requesting or maintaining a proceeding
with respect to a claim for which it has obtained a final written
decision on patentability in an inter partes review, post-grant review,
or a covered business method patent review, on any ground that the
petitioner raised or reasonably could have raised during the trial,
except that estoppel shall not apply to a petitioner, or to the real
party in interest or privy of the petitioner who has settled under 35
U.S.C. 317 or 327.
(2) In a derivation, the losing party who could have properly moved
for relief on an issue, but did not so move, may not take action in the
Office after the judgment that is inconsistent with that party's
failure to move, except that a losing party shall not be estopped with
respect to any contested subject matter for which that party was
awarded a favorable judgment.
(3) Patent applicant or owner. A patent applicant or owner is
precluded from taking action inconsistent with the adverse judgment,
including obtaining in any patent:

[[Page 48677]]

(i) A claim that is not patentably distinct from a finally refused
or canceled claim; or
(ii) An amendment of a specification or of a drawing that was
denied during the trial proceeding, but this provision does not apply
to an application or patent that has a different written description.

Sec. 42.74 Settlement.

(a) Board role. The parties may agree to settle any issue in a
proceeding, but the Board is not a party to the settlement and may
independently determine any question of jurisdiction, patentability, or
Office practice.
(b) Agreements in writing. Any agreement or understanding between
the parties made in connection with, or in contemplation of, the
termination of a proceeding shall be in writing and a true copy shall
be filed with the Board before the termination of the trial.
(c) Request to keep separate. A party to a settlement may request
that the settlement be treated as business confidential information and
be kept separate from the files of an involved patent or application.
The request must be filed with the settlement. If a timely request is
filed, the settlement shall only be available:
(1) To a Government agency on written request to the Board; or
(2) To any other person upon written request to the Board to make
the settlement agreement available, along with the fee specified in
Sec. 42.15(d) and on a showing of good cause.

Certificate

Sec. 42.80 Certificate.

After the Board issues a final written decision in an inter partes
review, post-grant review, or covered business method patent review and
the time for appeal has expired or any appeal has terminated, the
Office 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
any new or amended claim determined to be patentable by operation of
the certificate.

0
7. Part 90 is added to read as follows:

PART 90----JUDICIAL REVIEW OF PATENT TRIAL AND APPEAL BOARD
DECISIONS

Sec.
90.1 Scope.
90.2 Notice; service.
90.3 Time for appeal or civil action.

Authority: 35 U.S.C. 2(b)(2).

Sec. 90.1 Scope.

The provisions herein govern judicial review for Patent Trial and
Appeal Board decisions under chapter 13 of title 35, United States
Code. Judicial review of decisions arising out of inter partes
reexamination proceedings that are requested under 35 U.S.C. 311, and
where available, judicial review of decisions arising out of
interferences declared pursuant to 35 U.S.C. 135 continue to be
governed by the pertinent regulations in effect on July 1, 2012.

Sec. 90.2 Notice; service.

(a) For an appeal under 35 U.S.C. 141. (1) In all appeals, the
notice of appeal required by 35 U.S.C. 142 must be filed with the
Director of the United States Patent and Trademark Office as provided
in Sec. 104.2 of this title. A copy of the notice of appeal must also
be filed with the Patent Trial and Appeal Board in the appropriate
manner provided in Sec. 41.10(a), 41.10(b), or 42.6(b).
(2) In all appeals, the party initiating the appeal must comply
with the requirements of the Federal Rules of Appellate Procedure and
Rules for the United States Court of Appeals for the Federal Circuit,
including:
(i) Serving the requisite number of copies on the Court; and
(ii) Paying the requisite fee for the appeal.
(3) Additional requirements. (i) In appeals arising out of an ex
parte reexamination proceeding ordered pursuant to Sec. 1.525, notice
of the appeal must be served as provided in Sec. 1.550(f) of this
title.
(ii) In appeals arising out of an inter partes review, a post-grant
review, a covered business method patent review, or a derivation
proceeding, notice of the appeal must provide sufficient information to
allow the Director to determine whether to exercise the right to
intervene in the appeal pursuant to 35 U.S.C. 143, and it must be
served as provided in Sec. 42.6(e) of this title.
(b) For a notice of election under 35 U.S.C. 141(d) to proceed
under 35 U.S.C. 146. (1) Pursuant to 35 U.S.C. 141(d), if an adverse
party elects to have all further review proceedings conducted under 35
U.S.C. 146 instead of under 35 U.S.C. 141, that party must file a
notice of election with the United States Patent and Trademark Office
as provided in Sec. 104.2.
(2) A copy of the notice of election must also be filed with the
Patent Trial and Appeal Board in the manner provided in Sec. 42.6(b).
(3) A copy of the notice of election must also be served where
necessary pursuant to Sec. 42.6(e).
(c) For a civil action under 35 U.S.C. 146. The party initiating an
action under 35 U.S.C. 146 must file a copy of the complaint no later
than five business days after filing the complaint in district court
with the Patent Trial and Appeal Board in the manner provided in Sec.
42.6(b), and the Office of the Solicitor pursuant to Sec. 104.2.
Failure to comply with this requirement can result in further action
within the United States Patent and Trademark Office consistent with
the final Board decision.

Sec. 90.3 Time for appeal or civil action.

(a) Filing deadline. (1) For an appeal under 35 U.S.C. 141. The
notice of appeal filed pursuant to 35 U.S.C. 142 must be filed with the
Director of the United States Patent and Trademark Office no later than
sixty-three (63) days after the date of the final Board decision. Any
notice of cross-appeal is controlled by Rule 4(a)(3) of the Federal
Rules of Appellate Procedure, and any other requirement imposed by the
Rules of the United States Court of Appeals for the Federal Circuit.
(2) For a notice of election under 35 U.S.C. 141(d). The time for
filing a notice of election under 35 U.S.C. 141(d) is governed by 35
U.S.C. 141(d).
(3) For a civil action under 35 U.S.C. 145 or 146. (i) A civil
action must be commenced no later than sixty-three (63) days after the
date of the final Board decision.
(ii) The time for commencing a civil action pursuant to a notice of
election under 35 U.S.C. 141(d) is governed by 35 U.S.C. 141(d).
(b) Time computation. (1) Rehearing. A timely request for rehearing
will reset the time for appeal or civil action to no later than sixty-
three (63) days after action on the request. Any subsequent request for
rehearing from the same party in the same proceeding will not reset the
time for seeking judicial review, unless the additional request is
permitted by order of the Board.
(2) Holidays. If the last day for filing an appeal or civil action
falls on a Federal holiday in the District of Columbia, the time is
extended pursuant to 35 U.S.C. 21(b).
(c) Extension of time. (1) The Director, or his designee, may
extend the time for filing an appeal, or commencing a civil action,
upon written request if:
(i) Requested before the expiration of the period for filing an
appeal or commencing a civil action, and upon a showing of good cause;
or
(ii) Requested after the expiration of the period for filing an
appeal of commencing a civil action, and upon a showing that the
failure to act was the result of excusable neglect.

[[Page 48678]]

(2) The request must be filed as provided in Sec. 104.2 of this
title.

Dated: July 16, 2012.
David J. Kappos,
Under Secretary of Commerce for Intellectual Property and Director of
the United States Patent and Trademark Office.
[FR Doc. 2012-17900 Filed 8-13-12; 8:45 am]
BILLING CODE 3510-16-P