Patent Trial and Appeal Board Sanctions: What You Need to Know
In inter partes review, covered business method and post-grant review proceedings, the Patent Trial and Appeal Board (PTAB) may impose sanctions on a party if that party is found to have committed misconduct during a review. Sanctions can include monetary penalties, exclusion from participation in the review, and even referral of the matter to the Department of Justice for criminal prosecution.
The United State Patent and Trademark Office (USPTO) explained that the final rule provides greater detail on its expectations for counsel and parties participating in post grant proceedings and also provides a procedure for sanctions motions that did not previously exist.
PTAB Sanctions What You Need To Know
According to the USPTO, the PTAB may now sanction a party or attorney for misconduct in three ways:
1. By imposing monetary sanctions under 35 U.S.C. 324(e);
2. By excluding a party from participation in the proceeding pursuant to 35 U.S.C. 325(e)(1); or
3. By referring the matter to the Director for possible criminal prosecution under 35 U.S.C. 325(e)(2).
The PTAB may also sanction a party or attorney by issuing an order to show cause why sanctions should not be imposed.
The USPTO has issued new guidance on PTAB sanctions in the form of a Federal Register notice. The guidance is effective as of March 1, 2019.
Inter Partes Review
According to the USPTO, the PTAB may impose sanctions for a variety of misconduct, including making false statements or submissions, failing to comply with an order of the PTAB, harassing a witness or party, or engaging in abusive litigation tactics.
The USPTO also noted that the PTAB may consider whether a party has acted in bad faith when determining whether to impose sanctions.
In order to request that the PTAB impose sanctions, a party must file a motion for sanctions with the PTAB. The PTAB will then determine whether to grant or deny the motion. If the PTAB
Protective Order Violations
The board also has authorized motions for sanctions relating to protective order violations. One authorization was based on alleged disclosure of confidential information in violation of the standard protective order. Another was based on an alleged “violation of a protective order in a related district court case,” where the board determined “that briefing will facilitate development of the record on these issues.”
The PTAB has wide discretion in imposing sanctions and will consider a number of factors, including the severity of the misconduct, whether the misconduct was intentional or inadvertent, and whether the party has a history of engaging in similar misconduct.
PTAB sanctions can be severe, and can even result in criminal prosecution. The PTAB has the authority to impose monetary penalties of up to $500,000 per violation. In addition, the PTAB can exclude a party from participation in the proceeding, and can refer the matter to the Department of Justice for criminal prosecution.
Trial Practice and Procedure General 37 CFR § 42.12 – Sanctions. CFR prev | next § 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; (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 Intimidate.
Sua Sponte Sanctions
The PTAB has issued sanctions sua sponte in at least three instances. In one, a panel imposed the ultimate sanction — dismissal — due to the petitioner’s disregard for board orders, reflected by 64 and 74 day delays in proposing corrections to two defective petitions without contacting the board or seeking leave to do so. The PTAB’s decision was stayed, without prejudice, to allow the petitioner time to seek rehearing or writ of certiorari from the Federal Circuit.
In another case, the PTAB sua sponte imposed issue preclusion against a petitioner that it found had failed to meaningfully engage in an IPR it had instituted, in part due to the petitioner’s repeated dilatory tactics. The PTAB imposed the preclusion after finding that the petitioner had previously engaged in similar behavior in another IPR.
Finally, in a case involving Amgen Inc., the PTAB sua sponte imposed sanctions against a law firm representing Amgen for making “vexatious and harassing” filings. The PTAB found that the firm had filed multiple motions that were “repetitive, unnecessary, and unduly burdensome,” and had made “baseless personal attacks” on opposing counsel. The PTAB imposed a number of sanctions against the firm, including prohibiting it from filing any further motions in the IPR without leave of the PTAB.
If you are facing PTAB sanctions, it is important to consult with an experienced patent attorney. An attorney can help you understand the allegations against you and develop a defense strategy. With PTAB sanctions, as with any other type of legal proceeding, it is important to have experienced representation to protect your rights.
Patent Owner’s Response
In Mylan Pharma. Inc. v. Saint Regis Mohawk Tribe , a panel of administrative patent judges ruled against a patent owner who failed to follow the procedural and scheduling rules of the PTAB. The facts in Mohawk are straightforward. On January 2, 2018, Saint Regis Mohawk Tribe, the patent owner, sought an oral hearing on its request for discovery “into the identity and impartiality of the merits panel assigned to this case.” In other words, the Tribe wanted discovery from the Board itself , not a party to the proceedings or third party.
The PTAB had earlier denied the Tribe’s motion for leave to file a supplemental brief on the same issue. On February 28, 2018, the PTAB issued an Order Granting in Part and Denying in Part Patent Owner’s Motion to Amend., Mohawk , Paper 37 (PTAB Feb. 28, 2018). In that order, the PTAB stated that it would not permit the Tribe to file another motion for leave to file a supplemental brief, and reminded the Tribe that it was not entitled to an evidentiary hearing. Prior authorization, the Board remarked that, “counsel for the Tribe ignored our rules (once again) and preemptively filed its paper.”
The PTAB’s February 28 order did not deter the Tribe. On March 1, 2018, the Tribe filed yet another request for an evidentiary hearing on the issue of PTAB partiality. The PTAB issued its order sanctioning the Tribe on March 5, 2018.
In a recent decision, the PTAB found that a petitioner’s failure to disclose all real parties in interest and its simultaneous use of shell companies to submit multiple petitions for the same patent was sanctionable. In re Nuance Commc’ns, Inc., IPR2018-01039, Paper 55 (PTAB July 2, 2019). The PTAB imposed a $5,000 fine and ordered the petitioner to pay the Patent Owner’s reasonable
attorneys’ fees incurred in connection with the PTAB proceeding.
AIA trial proceedings
are meant to be completed within one year, and the PTAB has a number of tools at its disposal to keep parties on track.
AIA Proceedings means post-issuance patent challenges and other proceedings under the U.S. Leahy-Smith America Invents Act (“AIA”).
The PTAB has imposed sanctions in a number of recent cases. In PPG Indus., Inc. v. Valspar Corp. , the PTAB dismissed a petition for inter partes review (IPR) as sanction for the petitioner’s failure to comply with PTAB rules and orders. PPG Indus., Inc. v. Valspar Corp. , IPR2017-01261, Paper 41 (PTAB Mar. 7, 2018). The PTAB had previously ordered the petitioner to file a corrected petition that complied with PTAB rules, but the petitioner failed to do so. The PTAB found that the petitioner’s conduct was “inappropriate and unprofessional,” and that dismissal was warranted given the “history of noncompliance” with PTAB rules and orders.
The PTAB may institute an IPR only if it determines that there is a “reasonable likelihood” that the petitioner will prevail with respect to at least one of the claims challenged in the petition. 35 U.S.C. 314(a). If the PTAB institutes review, it must issue a final written decision within one year of the date of institution. 35 U.S.C. 328(a).
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