PTAB Rules of Practice for Instituting on All Challenged Patent Claims and All Grounds and Eliminating the Presumption at Institution Favoring Petitioner as to Testimonial Evidence, 79120-79129 [2020-27048]

Agencies

• DEPARTMENT OF COMMERCE
• Patent and Trademark Office

[Federal Register Volume 85, Number 237 (Wednesday, December 9, 2020)]
[Rules and Regulations]
[Pages 79120-79129]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27048]


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DEPARTMENT OF COMMERCE

Patent and Trademark Office

37 CFR Part 42

[Docket No. PTO-P-2019-0024]
RIN 0651-AD40


PTAB Rules of Practice for Instituting on All Challenged Patent 
Claims and All Grounds and Eliminating the Presumption at Institution 
Favoring Petitioner as to Testimonial Evidence

AGENCY: United States Patent and Trademark Office, Department of 
Commerce.

ACTION: Final rule.

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SUMMARY: The United States Patent and Trademark Office (USPTO or 
Office) revises the rules of practice for instituting review on all 
challenged claims or none in inter partes review (IPR), post-grant 
review (PGR), and the transitional program for covered business method 
patents (CBM) proceedings before the Patent Trial and Appeal Board 
(PTAB or Board) in accordance with the U.S. Supreme Court decision in 
SAS Institute Inc. v. Iancu (SAS). Consistent with SAS, the Office also 
revises the rules of practice for instituting a review, if at all, on 
all grounds of unpatentability for the challenged claims that are 
asserted in a petition. Additionally, the Office revises the rules to 
conform to the current standard practice of providing sur-replies to 
principal briefs and providing that a reply and a patent owner response 
may respond to a decision on institution. The Office further revises 
the rules to eliminate the presumption that a genuine issue of material 
fact created by the patent owner's testimonial evidence filed with a 
preliminary response will be viewed in the light most favorable to the 
petitioner for purposes of deciding whether to institute a review.

DATES: Effective date: The changes in this final rule are effective 
January 8, 2021.
    Applicability date: This final rule applies to all IPR and PGR 
petitions filed on or after January 8, 2021.

FOR FURTHER INFORMATION CONTACT: Michael Tierney, Vice Chief 
Administrative Patent Judge, by telephone at 571-272-9797.

SUPPLEMENTARY INFORMATION:

Executive Summary

    Purpose: The final rule revises the rules of practice for IPR, PGR, 
and CBM proceedings that implemented provisions of the Leahy-Smith 
America Invents Act (AIA) providing for trials before the Office.
    The U.S. Supreme Court held in SAS that a decision to institute an 
IPR under 35 U.S.C. 314 may not institute on fewer than all claims 
challenged in a petition. See SAS Institute Inc. v. Iancu, 138 S. Ct. 
1348 (2018). The Court held that the Office has the discretion to 
institute on either all of the claims challenged in the petition or to 
deny the petition. Previously, the Board exercised discretion to 
institute an IPR, PGR, or CBM on all or some of the challenged claims 
and on all or some of the grounds of unpatentability asserted in a 
petition. For example, the Board exercised discretion to authorize a 
review to proceed on only those claims and grounds for which the 
required threshold had been met, thus narrowing the issues for 
efficiency in conducting a proceeding.
    In light of SAS, the Office provided guidance that, if the Board 
institutes a trial under 35 U.S.C. 314 or 324, the Board will institute 
on all claims and all grounds included in a petition of an IPR, PGR, or 
CBM. To implement this practice in the regulation, this final rule 
revises the rules of practice for instituting an IPR, PGR, or CBM to 
require institution on either all challenged claims (and all of the 
grounds) presented in a petition or none. Under the amended rule, 
therefore, in all pending IPR, PGR, and CBM proceedings before the 
Office, the Board will either institute review on all of the challenged 
claims and grounds of unpatentability presented in the petition or deny 
the petition.
    The second change is conforming the rules to certain standard 
practices before the PTAB in IPR, PGR, and CBM proceedings. 
Specifically, this final rule amends the rules to set forth the 
briefing requirements of sur-replies to principal briefs and to provide 
that a reply and a patent owner response may respond to a decision on 
institution.
    Finally, this final rule amends the rules to eliminate, when 
deciding whether to institute an IPR, PGR, or CBM review, the 
presumption in favor of the petitioner for a genuine issue of material 
fact created by testimonial evidence submitted with a patent owner's 
preliminary response. As with all other evidentiary questions at the 
institution phase, the Board will consider all evidence to determine 
whether the petitioner has met the applicable standard for institution 
of the proceeding.
    Costs and Benefits: This rulemaking is not economically significant 
under Executive Order 12866 (Sept. 30, 1993).

Background

    On September 16, 2011, the AIA was enacted into law (Pub. L. 112-
29, 125 Stat. 284 (2011)), and within one year, the Office implemented 
rules to govern Office practice for AIA trials, including IPR, PGR, 
CBM,\1\ and derivation proceedings pursuant to 35 U.S.C. 135, 316, and 
326 and AIA 18(d)(2). 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 48612 (Aug. 14, 2012); Changes to 
Implement Inter Partes Review Proceedings, Post-Grant Review 
Proceedings, and Transitional Program for Covered Business Method 
Patents, 77 FR 48680 (Aug. 14, 2012); and Transitional Program for 
Covered Business Method Patents--Definitions of Covered Business Method 
Patent and Technological Invention, 77 FR 48734 (Aug. 14, 2012). 
Additionally, the Office published a Patent Trial Practice Guide to 
advise the public on the general framework of the regulations, 
including the structure and times for taking action in each of the new 
proceedings. See

[[Page 79121]]

Office Patent Trial Practice Guide, 77 FR 48756 (Aug. 14, 2012) 
(TPG2012). This guide has been periodically updated. See Office Patent 
Trial Practice Guide, August 2018 Update, 83 FR 39989 (Aug. 13, 2018) 
(TPG2018); and Office Patent Trial Practice Guide, July 2019 Update, 84 
FR 33925 (July 16, 2019) (TPG2019). A consolidated Trial Practice 
Guide, incorporating updates to the original August 2012 Practice 
Guide, was published in November 2019. See Consolidated Trial Practice 
Guide, 84 FR 64280 (Nov. 21, 2019) (CTPG).
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    \1\ The transitional covered business method patent review 
program expired on September 16, 2020, in accordance with AIA 
18(a)(3). Although the program has sunset, existing CBM proceedings, 
based on petitions filed before September 16, 2020, are still 
pending.
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    Previously, under 37 CFR 42.108(a) and 42.208(a), the Board 
exercised the discretion to institute an IPR, PGR, or CBM on all or 
some of the challenged claims and on all or some of the grounds of 
unpatentability asserted for each claim presented in a petition. For 
example, the Board exercised the discretion to authorize a review to 
proceed on only those claims and grounds for which the required 
threshold under 35 U.S.C. 314(a) or 324(a) had been met, narrowing the 
issues for efficiency.
    The U.S. Supreme Court held in SAS, however, that a decision to 
institute an IPR trial under 35 U.S.C. 314 may not institute review on 
fewer than all claims challenged in a petition. The Court held that the 
Office has the discretion to institute trial on either all of the 
claims challenged in the petition or to deny the petition. On April 26, 
2018, the Office posted guidance on the impact of SAS on AIA trial 
proceedings at https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/trials/guidance-impact-sas-aia-trial. In 
light of SAS, the guidance states that if the Board institutes a trial 
for an IPR, PGR, or CBM under 35 U.S.C. 314 or 324, the Board will 
institute on all claims and all grounds included in a petition. The 
guidance provides that ``the PTAB will institute as to all claims or 
none,'' and ``[a]t this time, if the PTAB institutes a trial, the PTAB 
will institute on all challenges raised in the petition.'' Id.
    Subsequently, the U.S. Court of Appeals for the Federal Circuit 
(the Federal Circuit) has held that ``[e]qual treatment of claims and 
grounds for institution purposes has pervasive support in SAS.'' PGS 
Geophysical AS v. Iancu, 891 F.3d 1354, 1360 (Fed. Cir. 2018) (noting 
that the Supreme Court in SAS wrote that ``the petitioner is master of 
its complaint and normally entitled to judgment on all of the claims it 
raises,'' SAS, 138 S. Ct. at 1355, and that section 314 ``indicates a 
binary choice--either institute review or don't,'' id., adding that 
``Congress didn't choose to pursue'' a statute that ``allows the 
Director to institute proceedings on a claim-by-claim and ground-by-
ground basis'' as in ex parte reexamination, id. at 1356). The Federal 
Circuit has also held that ``if the Board institutes an IPR, it must 
similarly address all grounds of unpatentability raised by the 
petitioner.'' AC Techs. S.A. v. Amazon.com, Inc., 912 F.3d 1358, 1364 
(Fed. Cir. 2019).
    Consistent with SAS, the Office's guidance, and Federal Circuit's 
case law, this final rule revises Sec. Sec.  42.108(a) and 42.208(a) to 
provide for instituting an IPR, PGR, or CBM trial on all challenged 
claims or none. This final rule also revises these rules for 
instituting a review, if at all, on all of the grounds of 
unpatentability for the challenged claims that are presented in a 
petition. In all pending IPR, PGR, and CBM proceedings before the 
Office, the Board will either institute on all of the challenged claims 
and on all grounds of unpatentability asserted for each claim or deny 
the petition.
    In addition, consistent with the TPG2018, this final rule amends 
Sec. Sec.  42.23, 42.24, 42.120, and 42.220 to permit (1) replies and 
patent owner responses to address issues discussed in the institution 
decisions, and (2) sur-replies to principal briefs (i.e., to a reply to 
a patent owner response or to a reply to an opposition to a motion to 
amend). TPG2018 at 14-15.
    As noted in the TPG2018, in response to issues arising from SAS, 
the petitioner is permitted to address in its reply brief issues 
discussed in the institution decision. Similarly, the patent owner is 
permitted to address the institution decision in its response and a 
sur-reply, if necessary to respond to the petitioner's reply. However, 
the sur-reply may not be accompanied by new evidence other than 
deposition transcripts of the cross-examination of any reply witness. 
Sur-replies may only respond to arguments made in reply briefs, comment 
on reply declaration testimony, or point to cross-examination 
testimony. A sur-reply may also address the institution decision if 
necessary to respond to the petitioner's reply. This sur-reply practice 
essentially replaces the previous practice of filing observations on 
cross-examination testimony.
    In 2012, the Office also promulgated Sec. Sec.  42.107(c) and 
42.207(c), which initially included a prohibition against a patent 
owner filing new testimony evidence with its preliminary response. In 
particular, these rules stated: ``No new testimonial evidence. The 
preliminary response shall not present new testimony evidence beyond 
that already of record, except as authorized by the Board.'' 37 CFR 
42.107(c) and 42.207(c) (2012).
    In April 2016, after receiving comments from the public and 
carefully reviewing them, the Office promulgated a rule to allow new 
testimonial evidence to be submitted with a patent owner's preliminary 
response. Amendments to Rules of Practice for Trials Before the Patent 
Trial and Appeal Board, 81 FR 18750 (April 1, 2016). The Office also 
amended the rules to provide a presumption in favor of the petitioner 
for a genuine issue of material fact created by such testimonial 
evidence solely for purposes of deciding whether to institute an IPR, 
PGR, or CBM review. Id. at 18755-57.
    Stakeholder feedback received in party and amicus briefing as part 
of the Precedential Opinion Panel (POP) review process in Hulu, LLC v. 
Sound View Innovations, LLC, Case IPR2018-01039, Paper 15 (PTAB Apr. 3, 
2019) (granting POP review), indicated that the rule has caused some 
confusion at the institution stage for AIA proceedings. For example, 
certain stakeholders indicated that the presumption in favor of the 
petitioner for genuine issues of material fact created by patent owner 
testimonial evidence also creates a presumption in favor of the 
petitioner for questions relating to whether a document is a printed 
publication. Hulu, Paper 29 at 16. The Office has clarified in Hulu 
that this is not the case--the only presumption in favor of the 
petitioner is set forth in 37 CFR 42.108(c) applying to genuine issues 
of material fact created by testimonial evidence. Id. As to that 
presumption, the Office's experience is consistent with the concerns 
raised by commenters here that the presumption may discourage patent 
owners from filing testimonial evidence with their preliminary 
responses to avoid creating a presumption against the patent owner 
where none would otherwise exist.
    Section 314(a) of 35 U.S.C. provides that ``[t]he Director may not 
authorize an inter partes review to be instituted unless the Director 
determines that the information presented in the petition . . . and any 
response . . . shows that there is a reasonable likelihood that the 
petitioner would prevail with respect to at least 1 of the claims 
challenged in the petition.'' 35 U.S.C. 314(a). That is, the statute 
provides that a petitioner is required to present evidence and 
arguments sufficient to show that it is reasonably likely that it will 
prevail in showing unpatentability. Hulu, Paper 29, at 12-13 (citing 35 
U.S.C. 312(a)(3), 314(a)). For a PGR proceeding, the standard for 
institution is whether it is ``more likely than not'' that the

[[Page 79122]]

petitioner would prevail at trial. See 35 U.S.C. 324(a). In determining 
whether the information presented in the petition meets the standard 
for institution, the PTAB considers the totality of the evidence 
currently in the record. See Hulu, Paper 29, at 3, 19. Thus, a 
petitioner carries the burden in both IPRs and PGRs at the institution 
stage. The Office's experience with the 2016 rule change, however, is 
that having a presumption in favor of the petitioner at the institution 
stage for one class of evidence may lead to results that are 
inconsistent with this statutory scheme.
    Accordingly, the Office has an interest in ensuring that 
testimonial evidence is treated similarly to other evidence for 
purposes of institution and consistently with the statutory scheme. 
This final rule amends the rules of practice to eliminate the 
presumption in favor of the petitioner for a genuine issue of material 
fact created by testimonial evidence submitted with a patent owner's 
preliminary response when deciding whether to institute an IPR, PGR, or 
CBM review. Thus, consistent with the statutory framework, any 
testimonial evidence submitted with a patent owner's preliminary 
response will be taken into account as part of the totality of the 
evidence. Doing so will remove a disincentive to patent owners 
submitting pre-institution testimony, eliminate a source of confusion, 
and align the Board's practice with its treatment of other evidence at 
the time of institution, without adversely impacting petitioners' 
ability to ensure that otherwise meritorious petitions proceed to 
trial. Further, while parties normally do not have an opportunity to 
depose the testifying parties prior to institution, the Board's 
experience is that cross-examination is not necessary to weigh the 
strengths and weaknesses of the testimony for purposes of institution.

Discussion of Specific Rules

    37 CFR, part 42, is amended as follows:

Section 42.23

    Section 42.23 is amended to permit patent owners and petitioners to 
file sur-replies to principal briefs (i.e., to a reply to a patent 
owner response or to a reply to an opposition to a motion to amend). In 
particular, the title and Sec.  42.23(a) are amended to add ``sur-
replies'' so that the rule is amended as follows: ``42.23 Oppositions, 
replies, and sur-replies. (a) Oppositions, replies, and sur-replies . . 
. and, if the paper to which the opposition, reply, or sur-reply . . . 
''
    Paragraph (b) of Sec.  42.23 is amended to permit petitioners to 
address issues discussed in the institution decision in the reply 
briefs. Specifically, Sec.  42.23(b) is amended to replace the second 
sentence with: ``A reply may only respond to arguments raised in the 
corresponding opposition, patent owner preliminary response, patent 
owner response, or decision on institution.'' Paragraph (b) of Sec.  
42.23 is amended to address the content of a sur-reply by adding the 
following: ``A sur-reply may only respond to arguments raised in the 
corresponding reply, and may not be accompanied by new evidence other 
than deposition transcripts of the cross-examination of any reply 
witness.''

Section 42.24

    The title and Sec.  42.24(c) are amended to provide for word count 
limit for sur-replies so that they are amended as follows: ``Sec.  
42.24 Type-volume or page limits for petitions, motions, oppositions, 
replies, and sur-replies'' and ``(c) Replies and Sur-replies. The 
following word counts or page limits for replies and sur-replies apply 
. . . ''
    Paragraph (c) of Sec.  42.24 is amended to add a new paragraph (4) 
that would limit sur-replies to replies to patent owner responses to 
petitions to 5,600 words.

Section 42.71

    The third sentence of Sec.  42.71(d) is amended to add ``a sur-
reply'' so that a rehearing request may identify matters in a sur-reply 
consistent with Sec. Sec.  42.23 and 42.24 that allow the parties to 
file sur-replies to principal briefs.

Sections 42.108 and 42.208

    Each of Sec. Sec.  42.108(a) and 42.208(a) is amended to state that 
when instituting IPR or PGR, the Board will authorize the review to 
proceed on all of the challenged claims and on all grounds of 
unpatentability asserted for each claim.
    Each of Sec. Sec.  42.108(b) and 42.208(b) is amended to state that 
at any time prior to institution of IPR or PGR, the Board may deny all 
grounds for unpatentability for all of the challenged claims. Denial of 
all grounds is a Board decision not to institute IPR or PGR.
    The second sentence in each of Sec. Sec.  42.108(c) and 42.208(c) 
is amended to delete the phrase ``but a genuine issue of material fact 
created by such testimonial evidence will be viewed in the light most 
favorable to the petitioner solely for purposes of deciding whether to 
institute [a] review.'' Therefore, the second sentence in each of 
Sec. Sec.  42.108(c) and 42.208(c) states the following: ``The Board's 
decision will take into account a patent owner preliminary response 
where such a response is filed, including any testimonial evidence.''

Sections 42.120 and 42.220

    The first sentence of each of Sec. Sec.  42.108(a) and 42.208(a) is 
replaced with the following: ``(a) Scope. A patent owner may file a 
single response to the petition and/or decision on institution.''

Response to Comments

    In the notice of proposed rulemaking, the Office sought comments on 
these proposed changes. PTAB Rules of Practice for Instituting on All 
Challenged Patent Claims and All Grounds and Eliminating the 
Presumption at Institution Favoring Petitioner as to Testimonial 
Evidence, 85 FR 31728 (May 27, 2020). The Office received a total of 40 
comments, including 5 comments from individuals, 30 comments from 
associations, 1 comment from a law firm, and 4 comments from 
corporations. The Office appreciates the thoughtful comments 
representing a diverse set of views from the various public stakeholder 
communities. All of the comments are posted on the PTAB website at 
https://www.uspto.gov/patents-application-process/patent-trial-and-appeal-board/comments-proposed-rules-aia-trial.
    Upon careful consideration of the public comments, and taking into 
account the effect of the rule changes on the economy, the integrity of 
the patent system, the efficient administration of the Office, and the 
ability of the Office to timely complete instituted proceedings, the 
Office adopts the proposed rule changes (with minor deviations in the 
rule language, as discussed below). Any deviations from the proposed 
rule are based upon a logical outgrowth of the comments received.
    The Office's responses address the comments that are directed to 
the proposed changes set forth in the notice of proposed rulemaking. 85 
FR 31728. Any comments directed to topics that are beyond the scope of 
the notice of proposed rulemaking will not be addressed at this time.

Instituting on All Claims and All Grounds

    Comment 1: Most comments strongly supported the proposed rules that 
codify the Board's existing practice for instituting on all challenged 
claims and all grounds presented in a petition when the Board 
institutes a review. Several comments indicated that instituting on all 
challenged claims and grounds is the most efficient course of action to 
fully address the parties' dispute before the Board and to allow 
district courts to

[[Page 79123]]

apply AIA estoppel in the most efficient manner during any subsequent, 
parallel litigation, including making the estoppel provisions of 
section 315(e)(2) more predictable and robust. A number of comments 
also stated that this type of review structure is consistent with the 
Supreme Court's decision in SAS and promotes efficiency by resolving 
all challenges presented in a single proceeding, which will increase 
certainty for patent owners. A few comments further noted that 
instituting on all claims and grounds may strike a balance that helps 
achieve the Congressional objective of providing a fair, comprehensive, 
and efficient alternative to district court litigation, and adopting 
the proposed rules may help promote clarity.
    Response: The Office appreciates the thoughtful comments and agrees 
with them. In this final rule, the Office adopts the proposed rules 
that codify the Board's existing practice that has been in place for 
over two years. Under the amended rules, when instituting a review, the 
Board will authorize the review to proceed on all of the challenged 
claims and on all grounds of unpatentability asserted for each claim.
    Comment 2: A comment stated that the Supreme Court in SAS did not 
squarely address partial-grounds institution and that if the rules were 
implemented rigidly, they would harm patent owners, petitioners, and 
the public affected by the challenged patent. In particular, the 
comment suggested that denying petitions that have some meritorious 
grounds or instituting reviews that have some non-meritorious grounds 
would constitute waste, making this rulemaking economically significant 
under Executive Orders 12866 and 13771.
    Response: The Federal Circuit has held that ``[e]qual treatment of 
claims and grounds for institution purposes has pervasive support in 
SAS.'' PGS Geophysical AS, 891 F.3d at 1360. The Federal Circuit noted 
that the Supreme Court in SAS wrote that ``the petitioner is master of 
its complaint and normally entitled to judgment on all of the claims it 
raises'' and that section 314 ``indicates a binary choice--either 
institute review or don't,'' adding that ```Congress didn't choose to 
pursue' a statute that `allows the Director to institute proceedings on 
a claim-by-claim and ground-by-ground basis' as in ex parte 
reexamination.'' Id. (quoting SAS, 138 S. Ct at 1355-1356). The Federal 
Circuit has also held that ``if the Board institutes an IPR, it must 
similarly address all grounds of unpatentability raised by the 
petitioner.'' AC Techs. S.A., 912 F.3d at 1364.
    As discussed above, this final rule codifies the Board's existing 
practice that has been in place for over two years for instituting on 
all challenged claims and grounds when the Board institutes a review. 
The Office of Management and Budget (OMB) has determined this rule to 
be not economically significant under Executive Order 12866. Further, 
there is no significant economic impact as the rule merely implements 
the law, as mandated by SAS and further supported by subsequent Federal 
Circuit precedent like PGS Geophysical AS, 891 F.3d at 1360. As some of 
the comments have recognized, on balance, the amended rules promote 
clarity and efficiency by addressing in one proceeding all challenges 
asserted in a petition.
    In short, instituting on all challenged claims and grounds is 
consistent with the Supreme Court's decision in SAS, is mandated by the 
Federal Circuit, and is consistent with the Board's existing practice. 
In adopting the proposed rules, the Office has considered the effect of 
the rules on the economy, the integrity of the patent system, the 
efficient administration of the Office, and the ability of the Office 
to timely complete proceedings instituted.
    Comment 3: Some comments encouraged the Office to clarify that the 
preexistence of a claim where no reasonable likelihood of success has 
been demonstrated does not create a presumption against institution 
where there is another claim that does have a reasonable likelihood of 
succeeding. A few comments urged the Office not to apply the rules for 
instituting on all claims and grounds to deny meritorious petitions as 
to some claims or grounds.
    Response: The Office appreciates the thoughtful comments. Even when 
a petitioner demonstrates a reasonable likelihood of prevailing with 
respect to one or more claims, institution of review remains 
discretionary. SAS, 138 S. Ct. at 1356 (``[Section] 314(a) invests the 
Director with discretion on the question whether to institute review . 
. . '' (emphasis omitted)); Harmonic Inc. v. Avid Tech., Inc., 815 F.3d 
1356, 1367 (Fed. Cir. 2016) (``[T]he PTO is permitted, but never 
compelled, to institute an IPR proceeding.''). In exercising that 
discretion, the Board is guided by the statutory requirement, in 
promulgating regulations for IPR, PGR, and CBM, to consider the effect 
of any regulations on ``the efficient administration of the Office 
[and] the ability of the Office to timely complete proceedings,'' 35 
U.S.C. 316(b) and 326(b), as well as the requirement to construe our 
rules to ``secure the just, speedy, and inexpensive resolution of every 
proceeding,'' 37 CFR 42.1(b). The Office's guidance, issued on June 5, 
2018, also explains that the Board may consider the number of claims 
and grounds that meet the reasonable likelihood standard when deciding 
whether to institute a review. SAS Q&As, Part D, Effect of SAS on 
Future Challenges that Could Be Denied for Statutory Reasons (June 5, 
2018), available at https://www.uspto.gov/sites/default/files/documents/sas_qas_20180605.pdf (``[T]he panel will evaluate the 
challenges and determine whether, in the interests of efficient 
administration of the Office and integrity of the patent system (see 35 
U.S.C. 316(b)), the entire petition should be denied under 35 U.S.C. 
314(a).'').
    Comment 4: One comment suggested several changes in the language of 
Sec.  42.108. For example, the comment suggested (1) changing the title 
of Sec.  42.108 from ``Institution of inter partes review'' to 
``Decision whether to institute review''; (2) changing ``When'' to 
``If'' in the phrase ``When instituting inter partes review'' in Sec.  
42.108(a); (3) deleting the phrase ``the Board will authorize'' in 
Sec.  42.108(a); and (4) replacing ``all of the challenged claims'' 
with ``all involved claims.''
    Response: The Office appreciates the comment. The suggested changes 
are not necessary to codify the existing practice for instituting on 
all challenged claims and grounds when the Board institutes a review. 
Notably, the title of Sec.  42.108 is consistent with the title of 35 
U.S.C. 314, which is ``Institution of inter partes review.'' Moreover, 
the term ``challenged claims'' is consistent with 35 U.S.C. 318 and 
328, each of which states ``a final written decision with respect to 
the patentability of any patent claim challenged by the petitioner and 
any new claim added.''

Addressing the Institution Decision

    Comment 5: Most comments strongly supported the proposed rules 
codifying the Board's existing practice that allows the parties to 
address issues raised in the institution decision. Several comments 
recognized that the institution decision is a vehicle by which the 
Board can solicit responsive evidence and arguments on certain issues 
and that allowing the parties to address those issues may lead to 
developing a more complete written record, clarifying the issues, and 
ensuring fairness. A few comments sought clarification about whether a 
patent owner may file a response to either or both the petition and 
decision on institution, and whether a petitioner may file a reply when 
the patent owner elects not to file a response.

[[Page 79124]]

    Response: The Office appreciates the thoughtful comments. In this 
final rule, the Office adopts the proposed rules codifying the Board's 
existing practice that allows the parties to address issues raised in 
the institution decision. Under the amended rules, a patent owner may 
file a single response to address issues raised in either or both the 
petition and institution decision, and a petitioner may file a single 
reply to address issues raised in either or both the patent owner 
response and institution decision. For those rare circumstances in 
which the patent owner elects not to file a response, the patent owner 
must arrange a conference call with the parties and the Board, as 
required by the scheduling order, and the petitioner is expected to 
notify the Board during the conference call whether it intends to file 
a reply to the decision on institution. The absence of a patent owner 
response will not prevent a petitioner from filing a reply where 
appropriate to address the institution decision.
    Comment 6: One comment does not support the rule changes that allow 
the parties to address the issues raised in the institution decision 
because the Board should not take sides in the dispute. Another comment 
suggested that the rules should not provide a basis for parties to re-
litigate the institution decision.
    Response: As noted above, a few comments have recognized that the 
institution decision is a vehicle by which the Board can solicit 
responsive evidence and arguments on certain issues. Notably, a 
decision instituting a review does not make a final determination with 
respect to the patentability of the challenged claims or with respect 
to the claim construction. Allowing the parties to address the issues 
raised in the institution decision may promote developing a more 
complete written record, clarify the issues, and ensure fairness in 
issuing the final written decision on patentability.

Sur-Replies

    Comment 7: Most comments strongly supported the proposed rules that 
codify the Board's existing practice of allowing sur-replies to 
principal briefs. Several comments indicated that allowing sur-replies 
provides certainty to Board processes. Some comments also noted that 
allowing sur-replies gives a patent owner an opportunity to respond to 
new exhibits or other new information in a petitioner's reply, 
providing balance during AIA proceedings and affording patent owners a 
fair opportunity to be heard. Some comments stated that sur-replies are 
preferable to the previous procedure of authorizing a patent owner to 
file observations on cross-examination testimony in response to 
testimonial evidence submitted with a reply because they provide a more 
complete record.
    Response: The Office appreciates these thoughtful comments. The 
amended rules are intended to conform to existing practice. Consistent 
with the practice as outlined in the TPG2018, and the CTPG published in 
November 2019, the new rules will permit sur-replies to principal 
briefs (i.e., to a reply to a patent owner response or to a reply to an 
opposition to a motion to amend). However, a sur-reply may not be 
accompanied by new evidence other than transcripts of the cross-
examination testimony of any reply witness. Sur-replies are permitted 
only to respond to arguments made in reply briefs, comment on reply 
declaration testimony, or point to cross-examination testimony. A sur-
reply also may address the institution decision if necessary to respond 
to the petitioner's reply. This sur-reply practice essentially replaces 
the previous practice of filing observations on cross-examination 
testimony.
    Comment 8: Some comments expressed concern that the amended rules 
do not expressly provide for a sur-reply as a matter of right, stating 
that this may lead to uncertainty among parties involved in an AIA 
trial proceeding.
    Response: See response to comment 7. Consistent with existing 
practice as provided in the TPG2018 and the CTPG, no prior 
authorization is required to file a sur-reply to a reply to a patent 
owner response or to a reply to an opposition to a motion to amend.
    Comment 9: Some comments expressed concern that the Proposed Rules 
do not place limits on the introduction of new evidence in a sur-reply, 
which could lead to uncertainty and gamesmanship.
    Response: The Office appreciates these thoughtful comments. The 
Office has revised the text of rule 42.23(b) to clarify that the sur-
reply ``may not be accompanied by new evidence other than transcripts 
of the cross-examination testimony of any reply witness.'' This 
conforms to existing practice as stated in the TPG2018 and the CTPG.

Word Limits for Sur-Replies

    Comment 10: Most comments strongly supported the proposed rule 
change to 37 CFR 42.24(c), which imposes a limit of 5,600 words for 
sur-replies to patent owner responses to petitions. Some comments noted 
that this rule provides certainty as well as fairness.
    Response: The Office appreciates these comments. The amended rule 
is intended to conform to existing practice. Consistent with the 
practice as outlined in the TPG2018 and the CTPG, sur-replies are 
subject to the same word or page limit as a reply.
    Comment 11: The Office has also received comments on the existing 
practice of requiring, in response to a paper that contains a statement 
of material fact, a listing of facts that are admitted, denied, or 
cannot be admitted or denied.
    Response: The Office appreciates the comments received; however, 
they are beyond the scope of the current rulemaking. No changes to that 
practice are implemented in the amended rules. The Office will take 
these comments into account as the Office continually seeks to improve 
the AIA review process to maintain fair procedures.
    Comment 12: The Office has also received some comments suggesting 
changes to the word count limit. For example, one comment requested 
that the word count be a function of the number of claims in a 
challenged patent or the length of those claims. Another comment 
expressed concern about perceived unfairness in word counts, wherein 
patent owners may file both a preliminary response and an opposition, 
each containing 14,000 words, in addition to a sur-reply of 5,600 
words, whereas a petitioner is limited to a petition of 14,000 words 
followed by a reply of 5,600 words. This comment suggested that some of 
this disparity could be mitigated if petitioners are allowed to file a 
reply whenever a patent owner files a preliminary response.
    Response: The Office appreciates the comments received; however, 
they are beyond the scope of the current rulemaking. The Office will 
take these comments into account as the Office continually seeks to 
improve the AIA review process to maintain fair procedures.

Eliminating the Presumption at Institution

    Comment 13: Most comments favored adoption of the proposed rule 
eliminating the presumption at institution that a genuine issue of 
material fact created by testimonial evidence will be viewed in a light 
most favorable to petitioner for purposes of deciding whether to 
institute. However, a number of comments opposed adopting the proposed 
rule.
    Response: The Office appreciates the input from the public on this 
issue,

[[Page 79125]]

whether supporting or opposing the proposed rule. The suggestion that 
the present rule be retained is not adopted. The presumption in favor 
of the petitioner where there is a genuine dispute of material fact 
created by testimonial evidence in a patent owner preliminary response 
has created confusion as to how other evidence should be weighed. This 
confusion was resolved in large part in Hulu, but Hulu highlights an 
inconsistency in the treatment of evidence that the proposed rule is 
intended to resolve. In particular, in Hulu, the Board held that 
disputed questions of material fact raised by evidence other than 
testimonial evidence are resolved by the Board at the institution phase 
without a presumption, even where additional evidence or discovery 
might have illuminated them. See Hulu, Paper 29, at 16-20 (addressing 
the standard for proving printed publication pre-institution). The 
proposed rule confirms that no presumption applies in favor of 
institution regardless of the existence or nature of a factual dispute 
in the pre-institution record and regardless of the type of evidence, 
testimonial or otherwise.
    Many of the comments opposing the proposed rule are arguments in 
favor of an institution presumption generally. This would conflict with 
the statute, which makes clear that the burden is on the petitioner to 
meet the applicable standard that it would prevail with respect to at 
least one of the claims challenged in the petition. See 35 U.S.C. 
314(a), 324(a). Moreover, the presumption provided by the existing rule 
has proved unnecessary to resolve the institution question in other 
contexts. Disputed questions of material fact raised by other than 
testimonial evidence are resolved by the Board at the institution phase 
without a presumption. See Hulu, Paper 29, at 16-20 (addressing the 
standard for proving printed publication pre-institution).
    Comment 14: A number of comments supporting the rule change 
asserted that the current presumption in favor of the petitioner is 
biased towards institution and discourages patent owners from 
submitting conflicting testimonial evidence with a preliminary 
response. One comment suggested that, in view of the presumption of 
validity, testimonial evidence should instead be viewed in the light 
most favorable to patentability and that a presumption in favor of the 
patent owner would be appropriate. Another comment suggested that a 
neutral presumption is best in the interest of fairness and reduces the 
risk that innovators will be deprived of their innovations.
    Response: The Office appreciates the comments and agrees that any 
presumption in favor of institution is inappropriate. The Office also 
agrees that under the current rule, a patent owner might not be 
inclined to submit pre-institution testimony that might, under the 
presumption, create an issue of material fact. As in the proposed rule, 
the final rule modifies the existing rule to address these concerns and 
no longer specifies that a genuine issue of material fact created by 
testimonial evidence results in a presumption in favor of a petitioner. 
The rule change removes any bias or appearance of bias in favor of 
petitioner, and provides a balanced approach to ensure that all 
testimonial evidence submitted by the parties is fairly considered.
    Comment 15: Several comments in support of the rule change noted 
that the practice to view testimonial evidence in the light most 
favorable to the petitioner for purposes of instituting a review 
conflicts with the decision of Congress to place the burden of proof on 
the petitioner. One comment noted that, by eliminating the presumption, 
the proposed rule change enables the PTAB to consider the totality of 
the evidence in deciding whether the petition meets the standard for 
institution. Another comment opposing the rule change stated the change 
thwarts Congress's purposes in establishing the AIA by hampering the 
ability to challenge low-quality patents.
    Response: The Office appreciates these thoughtful comments. As set 
forth in the statutes established by Congress, the burden is on the 
petitioner to meet the applicable standard that it would prevail with 
respect to at least one of the claims challenged in the petition. See 
35 U.S.C. 314(a), 324(a). In response to recent feedback received from 
the public, the Office agrees it is inconsistent with the statutory 
framework to view testimonial evidence in the light most favorable to 
petitioners. The presumption has caused confusion at the institution 
stage for AIA proceedings and has proved unnecessary to resolve the 
institution question in other contexts. With the elimination of the 
presumption, the PTAB will consider the totality of the evidence to 
determine whether the petitioner has met the standard for institution 
of the procedure.
    The Office disagrees that elimination of the presumption frustrates 
the intention of Congress. To the contrary, Congress provided that 
institution of IPR is discretionary and conditioned on the petitioner 
meeting the applicable standard for review. Id. Elimination of the 
presumption furthers Congressional intent. In addition, elimination of 
the presumption does not impact the ability of petitioners to file with 
the Office a petition to institute a review of a patent.
    Comment 16: A number of comments opposing the proposed rule 
questioned the fairness of the proposed rule to petitioners. One 
comment expressed concern that under the proposed rule, the patent 
owner would have a ``one-sided ability to enter unchallenged evidence 
prior to institution.'' Other comments expressed concern that crediting 
a patent owner's testimonial evidence without providing cross-
examination or an opportunity to respond may lead to denials of 
institution that cannot be appealed, even where the patent owner's 
factual contentions are mistaken. Several comments expressed the view 
that the lack of cross-examination is especially concerning when the 
patent owner introduces testimony asserting ``secondary 
considerations'' such as unexpected results, commercial success, 
copying by others, and long-felt but unmet need. One comment expressed 
concern that the proposed rule would lead to more discretionary denials 
of institution. One comment expressed concern that the proposed rule 
would reduce patent quality, drive up costs, and invite 
``gamesmanship.''
    Response: The Office appreciates these comments but does not adopt 
them. The Office believes the Board is adequately able to weigh the 
parties' testimonial evidence and fairly resolve factual disputes at 
the institution stage without a presumption crediting the petitioner's 
testimony. For example, testimony must still disclose the underlying 
facts and data upon which it relies, or it will be entitled to little 
weight. See 37 CFR 42.65(a); CTPG, at 35. Moreover, consistent with 
existing practice, limited pre-institution discovery may be granted at 
the discretion of the Board. Nonetheless, although cross-examination of 
pre-institution testimony might be helpful in a few cases, as a general 
matter, the Office believes that its benefits will be outweighed by the 
greater expense to the Office and the parties, where the Board is able 
to reach a decision on institution based on the briefs and documents as 
submitted by the parties.
    Comment 17: Several comments expressed concern that adopting the 
proposed rule would unduly complicate the pre-institution phase for AIA 
trials. This is sometimes described in the comments as creating a 
``trial within a trial.'' One comment expressed concern that the 
proposed rule could give rise to ``almost universal requests'' for pre-
institution discovery and additional

[[Page 79126]]

briefing, leading to greater costs and burdens to the parties. Another 
comment expressed concern that there are no procedural guidelines in 
place to prevent this. This comment expressed concern that ``over 
complication'' of the pre-institution stage advantages more experienced 
parties, and that the costs and burdens to the Office may increase due 
to pre-institution depositions and additional briefing. Several other 
comments suggested that the rule should give petitioners the 
opportunity to reply if a patent owner submits testimony with the 
preliminary response that raises a genuine issue of material fact. One 
comment expressed the view that the chances of error by the Board are 
greater if institution is decided without the safeguards of discovery, 
cross-examination, additional briefing, and a hearing. Another comment 
opposed the proposed rule because it endorses resolution of disputes of 
fact at the institution phase on an incomplete record and without 
judicial review.
    Response: The Office appreciates these thoughtful comments and 
concerns on this issue. At present, although timely and well-supported 
requests are permitted, as consistent with existing practice, no 
additional briefing or discovery (e.g., depositions of declarants) 
during the institution phase is contemplated as a result of the 
submission of testimony with the preliminary response. In this way, no 
trial within a trial is anticipated, and the parties will not be 
burdened with greater costs. The Board has the benefit of the 
documentary evidence of record, as well as elucidating argument from 
the parties, in evaluating the testimonial evidence. In most cases, in 
the Board's experience, this evidence is sufficient to resolve the 
facts in dispute. For instance, declaration evidence alleging secondary 
considerations would, consistent with normal practice, be given little 
weight absent supporting documentary evidence. Thus, a declaration 
alleging commercial success would not be given much weight on 
institution absent sufficient supporting evidence demonstrating sales 
figures, etc.
    Comment 18: Several comments opposing the proposed rule expressed 
concern about unfairness to the petitioner if the patent owner 
withdraws its reliance on testimony submitted with the preliminary 
response. One comment suggested that the patent owner might be 
``incentivized'' to introduce less supportable testimony prior to 
institution that can be withdrawn if a trial is instituted. Another 
comment expressed concern that, because eliminating the presumption may 
allow a patent owner to introduce disputes of material fact via expert 
testimony on the patentability of the challenged claims that lead to a 
denial of institution, the petitioner should be entitled to take the 
deposition of an expert whose declaration is submitted with the 
preliminary response. The comment stated that if a new expert 
declaration is submitted with the patent owner response, the petitioner 
should also be permitted to take the deposition of that expert as well.
    Response: The Office appreciates but does not adopt the comments. 
Under the current rule, once a trial is instituted, a patent owner may 
choose not to rely on testimony submitted with the preliminary 
response. CTPG, at 51. That would not change under the final rule. Once 
a trial commences, petitioners can also withdraw evidence. See Hulu, 
Paper 29, at 6 (additional evidence regarding the date of publication 
at issue raised more questions than it answered and was withdrawn). If 
both parties can withdraw their reliance on evidence that turns out to 
be weak, there is no unfairness.
    The Office does not believe patent owners will be motivated to 
provide ``less supportable'' testimony from their declarants as a 
result of the rule change. The Office believes parties generally 
recognize that their goals are best served by providing the most 
credible testimony from their declarants. See 37 CFR 42.65(a); CTPG, at 
51. If, after trial is initiated, the patent owner withdraws reliance 
on a declarant and a declaration submitted with the preliminary 
response, that declarant will usually not be subject to a deposition on 
the withdrawn declaration. CTPG, at 51.
    Comment 19: One comment expressed a concern that the new rule 
should not alter the standard for instituting a trial.
    Response: The Office agrees. The final rule does not change the 
standard for instituting trial and does not shift the burden of proving 
unpatentability away from the petitioner.
    Comment 20: One comment opposing the rule change suggested that a 
presumption in favor of the petitioner should continue and should apply 
to all disputed evidentiary issues, including questions of whether a 
document is a printed publication.
    Response: The Office appreciates but does not adopt this comment. 
The final rule eliminates the presumption as to genuine issues of 
material fact. The Hulu decision expressly provides guidance on 
establishing a document as a printed publication. Hulu, Paper 29, at 
11-19.
    Comment 21: Several comments addressed the standard of review under 
the rule. One comment expressed concern that the rule does not make it 
clear how pre-institution testimony will be evaluated. Another stated 
that the rule should specify the burden and asserted that removing the 
summary judgment standard in the proposed rule would make Board 
decisions on disputed facts arbitrary and capricious.
    Response: The Office appreciates but does not adopt the comments. 
The final rule provides no presumption as to disputed issues of 
material fact. However, the decision in Hulu provides guidance on the 
institution standard and evidentiary dynamics, albeit in the context of 
a printed publication issue. Hulu, Paper 29, at 11-19. The Office has 
ample experience in evaluating declaration testimony without cross-
examination in a variety of contexts and does not see the need to 
provide further guidance in the rule itself. Additional guidance on the 
application of the rule change may be provided in future precedential 
and informative Board decisions.
    Comment 22: Several comments opposing the rule change expressed 
concerns that removal of the presumption would violate due process 
requirements because it would allow for a decision not to institute 
based on unchallenged testimonial evidence. One comment asserted the 
change would be unconstitutional because it does not allow a petitioner 
to confront an adverse witness.
    Response: The Office appreciates the comments but disagrees the 
final rule violates due process requirements or is unconstitutional. 
Institution of AIA review proceedings is discretionary, and there is no 
right provided in the statutory framework to challenge testimony at the 
institution stage. See 35 U.S.C. 314(a), 324(a). Under the final rule, 
both the petitioner and patent owner are able to submit testimonial 
evidence. The Office has ample experience in evaluating declaration 
testimony without cross-examination in a variety of contexts. Such 
testimony must be supported as appropriate, or it will be accorded 
little weight. See 37 CFR 42.65(a); CTPG, at 51. The Board will 
consider the totality of the evidence presented to determine if the 
petitioner meets the threshold standard to institute review.
    Comment 23: A number of comments expressed concern that the Office 
did not provide adequate justification for the rule change and asserted 
the rationale for the change is inconsistent with the Office findings 
in the 2016 rulemaking that established the

[[Page 79127]]

presumption. A few comments suggested that any stakeholder confusion 
caused by the rule does not justify abandoning the rule but should 
instead be addressed by precedential decisions or the next revision of 
the Trial Practice Guide.
    Response: As part of ongoing efforts to improve AIA proceedings, 
the Office continuously evaluates its procedures based on feedback from 
the public. Upon evaluation of recent feedback, the Office has 
determined that the presumption causes confusion at the institution 
stage and potentially discourages patent owners from submitting 
testimonial evidence. In addition, the Office's experience is that 
having a presumption in favor of the petitioner at the institution 
stage may lead to results that are inconsistent with the statutory 
scheme, which places the burden on the petitioner.
    Although there were valid reasons for promulgating the original 
rule, the Office has determined that the problems and confusion 
engendered by the rule, discussed above, outweigh those reasons. The 
Office has ample experience in evaluating declaration testimony without 
cross-examination in a variety of contexts. The Office believes, 
therefore, that the Board will remain able to fairly and efficiently 
resolve factual disputes at the institution phase in deciding whether 
to institute the requested trial without the current presumption. The 
Office received numerous comments that support and agree with the 
Office's rationale for the change as eliminating a source of confusion, 
removing a disincentive to patent owners to provide pre-institution 
testimonial evidence, and better according with the statutory standards 
for institution. See 35 U.S.C. 314(a), 324(a). Accordingly, the Office 
has elected to revise its rule.
    Comment 24: A few comments expressed concern with the retroactive 
application of the rule change and requested that the rule not go into 
immediate effect. Several other comments stated that the Office should 
provide an opportunity for further discussion and consideration on this 
proposed rule change.
    Response: The Office acknowledges the concerns with the retroactive 
application of the rule. The change to eliminate the presumption will 
apply only to petitions filed on or after the effective date of the 
rule. The Office appreciates all comments submitted in response to the 
proposed rule and does not believe further discussion is needed.
    Comment 25: A few comments stated the rulemaking fails to comply 
with the procedural requirements imposed by the Administrative 
Procedure Act and Executive Order 12866. The comments assert that the 
rule making is significant--economically significant--and the 30-day 
comment period failed to provide the public a meaningful opportunity to 
respond to the comments.
    Response: The OMB has determined this rule to be not significant 
for purposes of Executive Order 12866. Further, the Office disagrees 
that the final rule will impose additional costs because no additional 
briefing or discovery is contemplated as a result of the rule change.

Rulemaking Considerations

    A. Administrative Procedure Act (APA): This final rule revises the 
rules relating to Office trial practice for IPR, PGR, and CBM 
proceedings. The changes set forth in this final rule do not change the 
substantive criteria of patentability. These changes involve rules of 
agency procedure and interpretation. See Perez v. Mortg. Bankers Ass'n, 
135 S. Ct. 1199, 1204 (2015) (Interpretive rules ``advise the public of 
the agency's construction of the statutes and rules which it 
administers.'') (citation and internal quotation marks omitted); Bachow 
Commc'ns, Inc. v. F.C.C., 237 F.3d 683, 690 (D.C. 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 requirements for 
reviewing claims.); Nat'l Org. of Veterans' Advocates, Inc. v. Sec'y of 
Veterans Affairs, 260 F.3d 1365, 1375 (Fed. Cir. 2001) (Rule that 
clarifies the interpretation of a statute is interpretive.); JEM 
Broadcasting Co. v. F.C.C., 22 F.3d 320, 328 (D.C. Cir. 1994) (Rules 
are not legislative because they do not ``foreclose effective 
opportunity to make one's case on the merits.'').
    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). See 
Perez, 135 S. Ct. 1199, 1206 (Notice-and-comment procedures are 
required neither when an agency ``issue[s] an initial interpretive 
rule'' nor ``when it amends or repeals that interpretive rule.''); 
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), do not 
require notice and comment rulemaking for ``interpretative rules, 
general statements of policy, or rules of agency organization, 
procedure, or practice'') (quoting 5 U.S.C. 553(b)(3)(A)).
    The Office, nevertheless, published the notice of proposed 
rulemaking for comment, as it sought the benefit of the public's views 
on the Office's proposed changes. See 85 FR 31728.
    B. Regulatory Flexibility Act: For the reasons set forth herein, 
the Deputy General Counsel for General Law of the USPTO has certified 
to the Chief Counsel for Advocacy of the Small Business Administration 
that changes adopted in this final rule will not have a significant 
economic impact on a substantial number of small entities. See 5 U.S.C. 
605(b).
    This final rule revises certain trial practice procedures before 
the Board in light of the Supreme Court's ruling in SAS Institute Inc. 
v. Iancu, 138 S. Ct. 1348 (2018), that a decision to institute an IPR 
under 35 U.S.C. 314 may not institute on fewer than all claims 
challenged in a petition. In accordance with that ruling, this final 
rule revises the rules of practice for instituting review on all 
challenged claims or none in IPR, PGR, and CBM proceedings before the 
PTAB. This final rule also revises the rules of practice for 
instituting a review on all grounds of unpatentability for the 
challenged claims that are asserted in a petition. Additionally, this 
final rule revises the rules to conform to the current standard 
practice of providing sur-replies to principal briefs and providing 
that a patent owner response and reply may respond to a decision on 
institution. This final rule further revises the rules to eliminate the 
presumption that a genuine issue of material fact created by the patent 
owner's testimonial evidence filed with a preliminary response will be 
viewed in the light most favorable to the petitioner for purposes of 
deciding whether to institute a review. The changes in this final rule 
are procedural in nature, and any requirements resulting from these 
changes are of minimal or no additional burden to those practicing 
before the Board.
    For the foregoing reasons, the changes in this final rule will not 
have a significant economic impact on a substantial number of small 
entities.
    C. Executive Order 12866 (Regulatory Planning and Review): This 
rulemaking has been determined to be not significant for purposes of 
Executive Order 12866 (Sept. 30, 1993).
    D. Executive Order 13563 (Improving Regulation and Regulatory 
Review): The Office has complied with Executive Order 13563 (Jan. 18, 
2011). Specifically, the Office has, to the extent feasible and 
applicable: (1) Made a reasoned determination that the benefits

[[Page 79128]]

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 13771 (Reducing Regulation and Controlling 
Regulatory Costs): This final rule is not expected to be an Executive 
Order 13771 (Jan. 30, 2017) regulatory action because this final rule 
is not significant under Executive Order 12866 (Sept. 30, 1993).
    F. Executive Order 13132 (Federalism): This rulemaking does not 
contain policies with federalism implications sufficient to warrant 
preparation of a Federalism Assessment under Executive Order 13132 
(Aug. 4, 1999).
    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).
    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 affect 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 et seq.), prior to issuing any final rule, the USPTO 
will submit a report containing the rule and other required information 
to the United States Senate, the United States House of 
Representatives, and the Comptroller General of the Government 
Accountability Office. The changes in this final rule are not expected 
to result in an annual effect on the economy of $100 million 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 
rulemaking is not 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 final rule 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 (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 (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 et seq.
    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 et seq.
    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 that 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 Office consider the impact of 
paperwork and other information collection burdens imposed on the 
public. This final rule does not involve an information collection 
requirement that is subject to review by the OMB under the Paperwork 
Reduction Act of 1995 (44 U.S.C. 3501-3549). This rulemaking does not 
add any additional information requirements or fees for parties before 
the Board. Therefore, the Office is not resubmitting information 
collection packages to OMB for its review and approval because the 
revisions in this rulemaking do not materially change the information 
collections approved under OMB control number 0651-0069.
    Notwithstanding any other provision of law, no person is required 
to respond to, nor shall any person be subject to, a penalty for 
failure to comply with a collection of information subject to the 
requirements of the Paperwork Reduction Act unless that collection of 
information displays a currently valid OMB control number.

List of Subjects in 37 CFR Part 42

    Administrative practice and procedure, Inventions and patents, 
Lawyers.

    For the reasons set forth in the preamble, the Office amends part 
42 of title 37 as follows:

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

0
1. The authority citation for part 42 continues to read as follows:

    Authority:  35 U.S.C. 2(b)(2), 6, 21, 23, 41, 135, 311, 312, 
316, 321-326; Pub. L. 112-129, 125 Stat. 284; and Pub. L. 112-274, 
126 Stat. 2456.


0
2. Revise Sec.  42.23 to read as follows:


Sec.  42.23  Oppositions, replies, and sur-replies.

    (a) Oppositions, replies, and sur-replies must comply with the 
content requirements for motions and, if the paper to which the 
opposition, reply, or sur-reply is responding contains a statement of 
material fact, must include a listing of facts that are admitted, 
denied, or cannot be admitted or denied. 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, patent owner preliminary response, patent 
owner response, or decision on institution. A sur-reply may only 
respond to arguments raised in the corresponding reply and may not be 
accompanied by new evidence other than deposition transcripts of the 
cross-examination of any reply witness.

0
3. Amend Sec.  42.24 by revising the section heading and paragraph (c) 
introductory text and adding paragraph (c)(4) to read as follows:

[[Page 79129]]

Sec.  42.24  Type-volume or page limits for petitions, motions, 
oppositions, replies, and sur-replies.

* * * * *
    (c) Replies and sur-replies. The following word counts or page 
limits for replies and sur-replies apply and include any statement of 
facts in support of the reply. The word counts or page limits do not 
include a table of contents; a table of authorities; a listing of facts 
that are admitted, denied, or cannot be admitted or denied; a 
certificate of service or word count; or an appendix of exhibits.
* * * * *
    (4) Sur-replies to replies to patent owner responses to petitions: 
5,600 words.
* * * * *

0
4. Amend Sec.  42.71 by revising the third sentence of paragraph (d) 
introductory text to read as follows:


Sec.  42.71  Decision on petitions or motions.

* * * * *
    (d) * * * 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, 
a reply, or a sur-reply. * * *
* * * * *

0
5. Revise Sec.  42.108 to read as follows:


Sec.  42.108  Institution of inter partes review.

    (a) When instituting inter partes review, the Board will authorize 
the review to proceed on all of the challenged claims and on all 
grounds of unpatentability asserted for each claim.
    (b) At any time prior to a decision on institution of inter partes 
review, the Board may deny all grounds for unpatentability for all of 
the challenged claims. Denial of all grounds is a Board decision not to 
institute inter partes review.
    (c) Inter partes review shall not be instituted unless the Board 
decides that the information presented in the petition demonstrates 
that there is a reasonable likelihood that at least one of the claims 
challenged in the petition is unpatentable. The Board's decision will 
take into account a patent owner preliminary response where such a 
response is filed, including any testimonial evidence. A petitioner may 
seek leave to file a reply to the preliminary response in accordance 
with Sec. Sec.  42.23 and 42.24(c). Any such request must make a 
showing of good cause.

0
6. Amend Sec.  42.120 by revising paragraph (a) to read as follows:


Sec.  42.120  Patent owner response.

    (a) Scope. A patent owner may file a single response to the 
petition and/or decision on institution. A patent owner response is 
filed as an opposition and is subject to the page limits provided in 
Sec.  42.24.
* * * * *

0
7. Amend Sec.  42.208 by revising paragraphs (a), (b), and (c) to read 
as follows:


Sec.  42.208  Institution of post-grant review.

    (a) When instituting post-grant review, the Board will authorize 
the review to proceed on all of the challenged claims and on all 
grounds of unpatentability asserted for each claim.
    (b) At any time prior to institution of post-grant review, the 
Board may deny all grounds for unpatentability for all of the 
challenged claims. Denial of all grounds is a Board decision not to 
institute post-grant review.
    (c) Post-grant review shall not be instituted unless the Board 
decides that the information presented in the petition demonstrates 
that it is more likely than not that at least one of the claims 
challenged in the petition is unpatentable. The Board's decision will 
take into account a patent owner preliminary response where such a 
response is filed, including any testimonial evidence. A petitioner may 
seek leave to file a reply to the preliminary response in accordance 
with Sec. Sec.  42.23 and 42.24(c). Any such request must make a 
showing of good cause.
* * * * *

0
8. Amend Sec.  42.220 by revising paragraph (a) to read as follows:


Sec.  42.220  Patent owner response.

    (a) Scope. A patent owner may file a single response to the 
petition and/or decision on institution. A patent owner response is 
filed as an opposition and is subject to the page limits provided in 
Sec.  42.24.
* * * * *

Andrei Iancu,
Under Secretary of Commerce for Intellectual Property and Director of 
the United States Patent and Trademark Office.
[FR Doc. 2020-27048 Filed 12-8-20; 8:45 am]
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