IN THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT. VERSATA DEVELOPMENT GROUP, INC., Appellant,

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1 Case: CattAagt-IPARTFICIIMNITISeaNdU DcRageerit: 3Viled14i18/201F4ed: 03/18/ IN THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT VERSATA DEVELOPMENT GROUP, INC., Appellant, V. SAP AMERICA, INC. and SAP AG, Appellees, and UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY and DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, Intervenor. Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. CBM BRIEF OF APPELLANT VERSATA DEVELOPMENT GROUP, INC. Mike McKool, Jr. J o e l L. Thollander Principal Counsel S t e v e n J. Poilinger Daniel L. Geyser M c K O O L SMITH, P.C. McKOOL SMITH, P.C W. 6th Street, Suite Crescent Court, Suite 1500 Austin, Texas Dallas, TX ( ) (214) Attorneys for Appellant Versata Development Group, Inc. March 17, 2014 (Additional counsel listed inside cover)

2 Case: CaCelkaa-IPTCRITICIDAUT&OINIIIY Dcitageefit539Filaap3/ffi8/201E4ed: 03/18/2014 D. Alternatively, the Court Should Remand for the PTAB To Reapply 101 Using a Proper Claim Construction. While the claims of the '350 patent are patent eligible even under the PTAB's "broadest" constructions, claim construction can affect the 101 analysis. Bancorp Serv., LLC v. Sun Life Assurance Co. of Canada, 687 F.3d 1266, (Fed. Cir. 2012) ("determination of patent eligibility requires a full understanding of the basic character of the claimed subject matter"). And here, the PTAB erred in applying an overly broad claim construction. Therefore, if the Court concludes that the claims are patent ineligible as construed, it should remand for reconsideration under a different, and narrower, claim construction one that is consistent with the 52

3 Case: CaCelkall-IPPERITICIPANfirteetNIM DRInjeeei:639 Filatiggiffi8/20E4ed: 03/18/2014 district court's unchallenged construction and that further establishes the patent eligibility of the claims. JA The PTAB erred in ignoring stare decisis. Stare decisis demands that an inferior tribunal "follow...the decisions of a superior tribunal." Nat'l Org. of Veterans Advocates, 260 F.3d at Claim construction is subject to this doctrine indeed, the Supreme Court cited the uniformity and finality promised by stare decisis as a compelling reason to treat claim construction as a legal question. Markman v Westview Instr., 517 U.S. 370, (1996). In the prior litigation, the district court already construed the disputed terms of the '350 patent, including the "pricing information" term central to SAP's CBM petition. JA ; JA2018. Versata explained that Supreme Court precedent rendered these constructions binding in this proceeding, JA2441, but the PTAB disagreed on the ground that the Article III district court was, in effect, not a superior tribunal, JA62. That was error. Article III district courts have power to review the PTAB's actions under the APA, 5 U.S.C , and 35 U.S.C. 145, 146. And district courts "render no judgments...that are subject to later review or alteration by administrative action." Chicago & S. Air Lines, Inc. v. Waterman S.S. Corp., 333 U.S. 103, (1948). The district court thus assuredly is "superior" to the PTAB, and its claim constructions should have been respected. This result also 53

4 Case: Catgankall-IPARITICIBANIfteaNliff DcRauyeefi7 39 Filaag:113/ffi8/20E4ed: 03/18/2014 harmonizes with the AIA's "fundamental purpose" to provide an inexpensive alternative to "be used instead of, rather than in addition to, civil litigation." 157 Cong. Rec. S (daily ed. Mar, 8, 2011) (statement of Sen. Schumer). If CBM review is instituted before a court engages in claim construction, then it makes sense for the PTAB to construe the claims, But if the court has already issued constructions, the PTAB's decision to repeat that process generates conflicting results, invites interbranch tension, and unnecessarily wastes the time and resources that the CBM program was designed to save. The PTAB thus erred in disregarding the district court's narrower construction particularly for the "pricing information" term, JA62-67; JA ; JA2441; JA which was stare decisis 2. The PTAB erred in applying BR!. a. The BRI standard is not appropriate for CBM review. In adjudicatory proceedings, the standard enunciated in Phillips v. AHW Corp., governs claim construction. 415 F.3d 1303, (Fed. Cir. 2005) (en bane). In examinational proceedings, this Court has permitted use of the so-called "broadest reasonable interpretation" or "BRI" standard. In re Skvorecz, 580 F.3d 1262, 1267 (Fed. Cir. 2009). But as the Court explained, the BRI protocol is solely an examination expedient, not a rule of claim construction. Its purpose is to facilitate exploring the metes and bounds to which the applicant may be entitled, and thus to aid in 54

5 Case: CatIASE-TIERITICIBANIfteetNIVY DcRzugeea339 Fillizth03/E68/201E4ed: 03/18/2014 sharpening and clarifying the claims during the application stage, when claims are readily changed. Id. Notwithstanding this Court's directive that BRI is "solely an examination expedient," the PTAB held that this protocol should be applied in adjudicatory CBM reviews which are contested trials held before administrative judges because patent holders can theoretically amend their claims. JA That justification falls short. While "claims are readily changed" in examinational proceedings, Skvorecz, 580 F.3d at 1267, that is not true for the new AIA proceedings. Patentees in (re)examinations have the right to make "any amendment," In re Yamamoto, 740 F.2d 1569, 1572 (Fed. Cir. 1984), but patent holders in AIA trials have no such right only a limited opportunity to "file 1 motion to amend the patent," 35 U.S.C. 326(d). And the PTAB is free to deny that motion whenever it decides that the patent owner has not met "the burden to show entitlement to the relief requested." JA38047; 37 C.F.R (c). Further, to the extent the PTAB peimits amendment, it is limited to cancelling claims or substituting one issued claim for one amended claim. 37 C.F.R This motion-practice procedure again highlighting the adjudicatory nature of the new reviews differs radically from the right to amend claims in the examinational context, and fails to justify use of the BRI standard. 55

6 Case: CaCIAS.11-RIERITICIBANEcteENNWT DcRaggefit9 39 FilEitapitli8/20E4ed: 03/18/2014 Even if the PTAB were right to disregard stare decisis, it should have applied the Phillips standard reflecting the view of ordinary skilled artisans, not an artificially "broad[]" construction in this adjudicatory CBM review. b. The PTO lacked authority to apply the BR! standard to this CBM review. The PTAB erred in applying BRI for another reason: the decision to extend that substantive standard to the new reviews exceeded the PTO's limited rulemaking authority under 35 U.S.C. 2(b)(2) and 326. Section 2 sets out the PTO's "[p]owers," authorizing the PTO to "establish regulations [that] govern the conduct of proceedings in the Office." Id. 2(b)(2). This authorization to regulate "conduct," which constitutes "the broadest of the Office's rulemaking powers," permits only "procedural" mlemaking. Cooper Techs. Co V. Dudas, 536 F.3d 1330, 1335 (Fed. Cir. 2008); Tafas v. Doll, 559 F.3d 1345, 1352 (Fed. Cir. 2009). In short, Congress has not granted the PTO substantive mlemaking authority. But in connection with the new AIA reviews, the PTO issued 37 C.F.R (b), which provides that "[a] claim in an unexpired patent shall be given its broadest reasonable interpretation." This new regulation affects substantive outcomes, not merely procedural conduct. Cooper, 536 F.3d at The PTAB did not declare this new rule procedural. JA Instead, it held that 326 governing regulations for the "[c]onduct of post-grant review" provided the PTO 56

7 Case: CagAME-IPPGRITICIBAUTfleaNCT DcitaDgeetRO 39 Filaag8//8/20E4ed: 03/18/2014 with broad mlemaking authority beyond the powers previously granted to the Office in 2. JA58; 35 U.S.C. 326(a). This makes little sense. The Court has already held that the "conduct of proceedings" addressed in 2 covers only procedural regulations. Cooper, 536 at Given this holding, it is incongruous to think that the "[c]onduct of postgrant review" addressed in 326 covers substantive regulations. Furtheimore, nothing in 326 suggests that this new section provides the PTO with authority to override Phillips, alter the legal rules governing claim construction, or import an "examination expedient" into the AIA's new adjudicatory trials. Skvorecz, 580 F.3d at The PTAB is correct that Congress "does not.., hide elephants in mouseholes." JA58. Had Congress intended to dramatically expand the PTO's rulemaking authority to encompass substantive regulations, it would have amended 2(b)(2). Its failure to do so leaves 37 C.F.R. 42,300(b) ultra vires. 3. Even under the BR!, the PTAB misconstrued "pricing information." At the outset of the proceeding, both Versata and SAP agreed that, even under Bill, the term "pricing information" should be construed to require "denormalized numbers." JA2023; JA2244. Such numbers do "not have fixed units and may assume a different meaning and different units" determined by the software during "run time" "depending on the pricing operation that is being performed." JA2245. As the district court recognized, the "specification 57

8 Case: Caffelkall-EPPRITICIDAttIctee1N4itt Dcitanjeefftl 39 F110103//8/20E4ed: 03/18/2014 consistently describes 'this invention' as utilizing denormalized numbers the patent discusses 'this invention' in the context of denormalized numbers of tables no less than ten times," providing "convincing evidence that the scope of the invention is limited" in this manner. JA3749, JA SAP featured the alleged absence of "denormalized numbers" in its products as a centerpiece of its prior appeal to this Court, Versata, 717 F.3d at 1263, and urged the PTAB to construe the challenged claims as requiring this limitation in its petition, JA2023. Notwithstanding the uniform view that the claims require "denormalized numbers," the PTAB reached the opposite conclusion. According to the PTAB, under BRI, "this invention" did not require denormalized numbers after all. JA3749, JA63-67, JAl2-17, 3A , Abbott Diabetes, 696 F.3d at 1149 ("[under BRIJ claim language should be read in light of the specification as it would be interpreted by one of ordinary skill"). That was error. The PTAB's toobroad construction of this core term necessarily undermined its "full understanding of the basic character of the claimed subject matter." Bancorp, 687 F,3d at Thus, if the Court elects not to render for Versata, it should remand for a "determination of patent eligibility" under a proper construction. Id. 58

9 Case: CaaAaff-EPTGRIFICIDANITSECANEU DRaugeerit: 5FilecP6001/201E4ed: 05/01/ IN THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT VERSATA DEVELOPMENT GROUP, INC., V. Appellant, SAP AMERICA, INC. and SAP AG, and Appellees, UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY and DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, Intervenor, Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. CBM BRIEF OF APPELLEES SAP AMERICA, INC. AND SAP AG EDWARD R. REINES WEIL, GOTSHAL & MANGES LLP 201 Redwood Shores Parkway Redwood Shores, CA (650) May 1, 2014 ERIKA H. ARNER FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP Freedom Drive Reston, VA (571) J. MICHAEL JAKES MICHAEL A. MORIN FINNEGAN, HENDERSON, FARABOW, GARRETT & DUNNER, LLP 901 New York Avenue, NW Washington, DC (202) Attorneys for Appellees SAP America, Inc. and SAP AG

10 Case: CaDAS.11-EPAIRITICIDANIcteMEGfRaugeefiff 59 FilERaA/6T/201E4ed: 05/01/ Versata's claim-construction arguments are moot, and in any event the PTO's construction was proper. a. Versata's claim-construction arguments cannot save it because the claims are unpatentable either way. Review of the PTO's claim constructions is unnecessary here because (1) Versata's construction arguments are unrelated to its challenges to the PTO's unpatentability finding under 101, and (2) the PTO found the claims unpatentable 25 See MySpace, Inc. v. Graphon Corp., 672 F.3d 1250, (Fed. Cir. 2012). 52

11 Case: CaCIASIMPARITICIDAKiffte0610' DcRageeta559RIERaglgi/883/20E4ed: 05/01/2014 under both the BRI standard and Versata's proposed constructions. See supra Part III.D.2. Claim construction is thus moot. The only construction Versata specifically challenges on appeal and the only construction the PTO adopted that differs from the ones the district court adopted in the Texas action is the construction of "pricing information." JA ; JA00063; Blue Br. 54, This construction, however, is unrelated to Versata's challenges to the PTO's holding on unpatentability under 101. Blue Br, This makes claim construction here a purely academic exercise to be avoided. See Superior Indus., Inc. V. Masaba, Inc., No , 2014 WL , at *3 (Fed. Cir. Jan. 16, 2014) (citing Jang v. Bos. Scientific Corp., 532 F,3d 1330, (Fed. Cir. 2008)) (declining to review claim constructions where there was a risk of rendering an advisory opinion on issues that do not affect the substantive controversy). Also, the PTO found that the claims would be unpatentable even using Versata's construction. JA ("[E]ven if we were to limit [pricing information in] the claims to denormalized numbers.., such calculations may also be performed on the general purpose computer, or even by a person.. _"); JA00067, JA Thus, even if the PTO erred in its construction, the error would be harmless because its correction "would not have changed the result." Finjan, Inc. v. Secure Computing Corp., 626 E3d 1197, 1207 (Fed. Cir. 2010) 53

12 Case: CattAall-ETE4FICIBANThie0tNett Dcitageefit959FilERap/6$/201F4ed: 05/01/2014 (quoting TeleIlex, Inc. v. Ficosa N Am. Corp., 299 F.3d 1313, 1328 (Fed. Cir. 2002)). Nor does Versata attempt to show that it would. Blue Br, Versata's request for a remand is likewise misplaced because, even if some error in construction exists, the PTO would have nothing to reconsider, having already found the claims -unpatentable under Versata's constructions. b. Even if this Court wants to consider the PTO's use of BM, there was no error. For over a century, the PTO has applied BM in its proceedings to encourage clear and unambiguous claim drafting. JA This Court, like its predecessor, has consistently upheld this standard of construction for both preissuance and post-issuance proceedings. See, e.g., In re Reuter, 670 F.2d 1015, 1015, 1019 (C.C.P.A. 1981) (applying BRI to reissue proceedings); In re Yamamoto, 740 F.2d 1569, 1571 (Fed. Cir. 1984) (applying BRI to reexamination proceedings). Versata gives no valid reason to upend this century-old practice by deeming BM suddenly inappropriate for PTO review. Blue Br, 54-56, The reason for applying the BRI standard in the PTO is that, unlike in district court, patent owners can amend claims to cure unpatentability. Yamamoto, 740 F.2d at Likewise, in a CBM review, a patent owner can file a motion to amend to propose substitute claims. 35 U.S.C. 326(d)(1), 37 C.F.R Versata argues against BRI because the patent owner has "only a limited opportunity to file 1 motion to amend the patent" and bears "the burden to show 54

13 Case: CaCel1/4311-1PAIRTIICIDANiffte06166( Damp:tea 59 Fildtag)E/H/201F4ed: 05/01/2014 entitlement to the relief requested." Blue Br. 55. But additional motions to amend are permitted upon joint request of the parties, or for good cause shown. 35 U.S.C. 326(d)(2). Because patent owners can amend claims in CIBM review to overcome unpatentability, the BRI standard should apply. The PTO may deny an amendment that fails to respond to the ground of =patentability in the review, enlarges the scope of the claims, or introduces new subject matter. 37 C.F.R (a)(2). Given the time constraints the AIA imposes, it is not surprising that the PTO can deny a wasteful amendment that is unrelated to the ground of unpatentability, or violates the AIA by enlarging claim scope or introducing new matter. See 35 U.S.C. 326(d)(3). Versata suggests that the ability to amend claims in reexamination is unfettered, but restrictions also apply there. See 35 U.S.C. 305; 35 U.S.C. 314(a) (2010). Versata also argues that the PTO lacked authority to apply BRI (Blue Br ), but the PTO has had that authority in PTO proceedings for more than a century, and Versata cites nothing in the AIA or the legislative history indicating Congress's intent to withdraw that authority. In fact, the legislative history shows the opposite. See 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011) (statement of Sen. Kyl) (referring to a provision that allows the PTQ to know when "a patent owner successfully advocated a claim scope in district court that is broader than the 'broadest reasonable construction' that he now urges in an inter partes review"). 55

14 Case: CatIAME-IPPERITICIDALIThiefINGO' DckaogeerM 59 Fil4taA/01/201Red: 05/01/2014 Because the AIA is silent on which standard applies, deference is owed to the PTO's rule on BR!. See Chevron, 467 U.S. at ; 37 C.F.R (b). Applying BRI has long been found reasonable. See, e.g., In re Horton, 54 F.2d 961, (C.C.P.A. 1932). Indeed, it is consistent with the PTO's practice in all other PTO proceedings. JA If a patent owner believes that a claim should be read more narrowly to overcome some basis for unpatentability, it can make that reading explicit in the claim, as the AIA allows. 35 U.S.C. 326(d); see Yamamoto, 740 E2d at ("Applicants' interests are not impaired [by application of the BM standard] since they are not foreclosed from obtaining appropriate coverage for their invention with express claim language." (citing In re Prater, 415 F.2d 1393, 1405 n.31 (C.C.P.A. 1969))). Versata cites cases construing 35 U.S.C. 2(b)(2) (Blue Br ), but fails to acknowledge the abundant case law recognizing that the PTO has long been permitted to apply BM. See In re Morris, 127 F.3d 1048, 1055 (Fed. Cir. 1997) (referring to a "long line of case law that permits the PTO to give claims their 'broadest reasonable interpretation"). Versata also fails to address 326, which gives new authority to the PTO to promulgate rules setting forth "procedures" and certain "standards" for post-grant reviews. See, e.g., 35 U.S.C. 326(a)(2), (5), (9). That Congress broadened the PTO's authority for CBM reviews further supports the PTO's decision to apply BM. 56

15 Case:. - E W I C I D N i Damaytellt2 59 FilERW/02/201Eited: 05101/2014 c. I t is well settled that stare deeisis does not bind the PTO to prior district court claim constructions. According to Versata, stare deeisis demands that the PTO adopt the district court's construction of "pricing information." Blue Br The PTO, however, is not bound by the court because the PTO and the court use different modes of interpretation. See, e.g., In re Zletz, 893 F.2d 319, (Fed. Cir. 1989) (reversing the PTO's interpretation that used the mode of interpretation used by courts in litigation; "when claims can be amended, ambiguities should be recognized, scope and breadth of language explored, and clarification imposed"); Yamamoto, 740 F.2d at Since the district court did not interpret "pricing infolination" using BRI, the PTO did not treat the court as a subordinate tribunal, as Versata suggests. Blue Br, 53. Versata argues that the PTO erred by not construing "pricing infonnation" to require "denormalized numbers," but fails to address the PTO's reasoning for not reading that embodiment into the claims, Blue Br, 57-58; JA Instead, Versata just repeats its stare deeisis argument. Blue Br. 58. The PTO properly construed the claims as not limited to "denormalized numbers" because dependent claims recite "denommlized numbers" and the independent claims do not, and the specification describes this feature as only "[o]ne aspect" of the purported 57

16 Case: CafelkagE-IPTERITICI IDANNfteOtNELO' DcRzogeet Filatig5/013/20Eiled: 05/01/2014 invention. JA00013, JA00016; JA02900 at 8:39, JA02907 at 21:53-54; see Prater, 415 F.2d at ,26 Versata's claim-construction arguments, like its other collateral challenges, fail to change the ultimate conclusion that the PTO correctly ruled the '350 claims unpatentable under Although there is conflicting case law on the standard of review applied to the PTO's claim-construction decisions, see Flo Healthcare Solutions, LLC v. Kappos, 697 F.3d 1367, (Fed. Cir. 2012) (additional views of Plager, J.), this Court need not resolve that question here. Under any standard of review this Court has recognized, claim construction is still moot, and the PTO's construction is correct. 58

17 IN THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT VERSATA DEVELOPMENT GROUP, INC., V. Appellant, SAP AMERICA, INC. and SAP AG, and Appellees, UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY and DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, Intervenor. APPEAL FROM THE UNITED STATES PATENT AND TRADEMARK OFFICE, PATENT TRIAL AND APPEAL BOARD IN NO. CBM BRIEF FOR THE INTERVENOR - DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE NATHAN K. KELLEY Solicitor SCOTT C. WEIDENFELLER WILLIAM LAMARCA Associate Solicitors Office of the Solicitor Mail Stop 8 U.S. Patent and Trademark Office P.O. Box 1450 Alexandria, Virginia STUART F. DELERY Assistant Attorng General MARK R. FREEMAN MELISSA N. PATTERSON (202) Attorneys, Appellate Staff Civil Division, Room U.S. Department of Justice 950 Pennglvania Ave., N.V. Washington, D.C

18 Case: CaCIA3I-IPICIRTTICIDANNISeOtNEY DcRageet Filah*B/81/201E4ed: 05/01/2014 C. The Board Properly Applies PTO's Longstanding "Broadest Reasonable Interpretation" Standard In Post-Grant Review Proceedings. Versata argues that PTO cannot employ its longstanding "broadest reasonable interpretation" (BRI) standard in post-grant review proceedings. It is unclear that the interpretative method PTO employed here affected the outcome, since the Board deemed the challenged claims "unpatentable whether we adopt Versata or SAP's construction." JA68. But in any event, Versata's contention is fundamentally misconceived. PTO adopted the BRI standard by regulation pursuant to an express grant of mlemaldng authority, and neither Versata nor its amici identify any plausible basis for setting that rule aside. 1. Congress granted PTO broad authority to "prescribe regulations.. establishing and governing a post-grant review under this chapter," 35 U.S.C. 326(a)(4), and to "issue regulations establishing and implementing a transitional post-grant review proceeding for review of the validity of covered business method patents," AIA 5 18(a)(1). Pursuant to those express delegations of rulemaldng power, and following notice and comment, PTO promulgated a regulation specifying that, in CBM review proceedings, "[al claim in an unexpired patent shall be given its broadest 39

19 Case: CalfelatI-EPARITICIDA1jT&CANEY DRageeta258Filatigh5/82/20E4ed: 05/01/2014 reasonable construction in light of the specification of the patent in which it appears." 37 C.F.R (b) (the BRI mle).13 Such a regulation is entitled to deference if reasonable and is "binding in the courts unless procedurally defective, arbitrary or capricious in substance, or manifestly contrary to the statute." United States v. Mead Coo., 533 U.S. 218, 227 (2001). PTO acted well within its discretion in adopting the BRI rule. As the Board explained, PTO has long used the BRI standard to construe unexpired patents, both during the initial examination process and in the various post-issuance mechanisms Congress has established to reconsider granted patents. See JA It has done so with the blessing of federal courts, including this Court, for nearly a century. See, e.g., Leo Pharm. Products, Ltd. v. Rea, 726 F.3d 1346, 1352 (Fed. Cir. 2013) (inter partes reexamination); In re Yamamoto, 740 F.2d 1569 (Fed. Cit. 1984) (ex parte reexamination); In re Prater, 415 F.2d 1393, (C.C.P.A. 1969) (initial examination); In re Carr, 297 F. 542, (D.C. Cit. 1924) (same). It is difficult to comprehend how it could be arbitrary or capricious for PTO to employ in post-grant review proceedings the same standard that it has employed in similar proceedings for decades. 13Identical regulations control patent claim construction in post-grant review and inter partes review. See 37 C.F.R (b), (b). 40

20 Case: CaCEASII-IPAIRITICIDANIfte1INEY DcRameet5058 Fillfta/831/20E4ed: 05/01/2014 As the Board explained, the policy rationales that have long justified the BRI standard apply with equal force to post-grant review proceedings. JA Unlike district court litigation, the AIA permits an opportunity to seek to amend the patent, including by submitting "a reasonable number of substitute claims" for each challenged claim. See 35 U.S.C. 326(d)(1)(B); see also id (a)(9). For similar reasons, this Court rejected a similar challenge to the BRI standard in In re Yamamoto. See 740 F.2d at And the BRI standard is further justified on the ground that the presumption of validity under 35 U.S.C does not apply in CBM reviews. See 35 U.S.C. 326(e); In re Etter, 756 F.2d at Neither Versata nor its atnici identify any persuasive reason for a different result here. Versata objects that post-grant review proceedings are more adversarial than other types of administrative proceedings Br ; see also 3M Amicus Br But PTO has consistently, and with the approval of this Court, applied the BRI standard in inter partes, as well as ex parte, proceedings. See, e.g., Tempo Lighting, Inc. v. Tivoli, TJ, 742 F.3d 973, 977 (Fed. Cit. 2014); Leo Pharm. Products, 726 F.3d at And in any event, the utility of the BRI standard does not depend on whether 14Versata's reliance on In re S kvorecz, 580 F.3d 1262 (Fed. Cit. 2009), is misplaced. This Court disagreed with PTO's construction of the claims in that case, but did not suggest that the BRI standard is confined to an initial patent examination. Id. at To the contrary, the Court approved the use of the BM standard in the reissue context, and it had no occasion to consider what standard applied to other PTO proceedings Id. 41

21 Case: D c R a e t f f t / 0 1 / a proceeding is adversarial. As the Board explained, the BRI standard serves the same important functions in the post-grant review context that it does in other PTO proceedings, and for the same fundamental reason: the statute contemplates the possibility of claim amendments to clarify the scope of the patent owner's exclusive rights, and the public interest encourages that result. See In re Yamamoto, 740 F.2d at 1572 ("An applicant's ability to amend his claims to avoid cited prior art distinguishes proceedings before the PTO from proceedings in federal district courts on issued patents."). Amici argue that other PTO proceedings offer a more "liberal right to amend." 3M Amicus Br. 10. It is hardly surprising that a post-grant review scheme would not allow unlimited opportunities for amendment; after all, the patent owner has already enjoyed one full opportunity to refine its claims into patentable form What matters is that, unlike in district court litigation, a patent owner in post-grant review proceeding enjoys the opportunity to propose "a reasonable number of substitute claims" responsive to the agency's concerns, 35 U.S.C. 326(d)(1)(B), and thereby clarify the proper scope of the patentee's rights. For the same reason, it does not assist Versata's cause to observe that Congress permitted PTO to consider a variety of evidence not normally available to the agency during initial examination, such as the patent owner's own arguments in prior district court or PTO proceedings. See 3M Amicus Br (citing 35 U.S.C. 301(a)(2), 301(d), 325(d)). That Congress authorized the agency to consider such evidence in 42

22 Case: CaOASEMPTERMICIIDANIFfteaN8Y DcRaligeet5t5 58 FileRag8/8V20E4ed: 05/01/2014 administrative proceedings does not imply, let alone require, that PTO must construe patent claims in the same manner as district courts in infringement litigation. 3. Versata's contention that PTO must give claims a narrower construction in CBM proceedings would also hamper PTO's statutory authority to combine different proceedings concerning the same patent. Congress gave PTO the discretion to consolidate a post-grant review proceeding with another PTO proceeding, such as a reissue application or reexamination, involving the same patent. See 35 U.S.C. 325(d). It also directed the agency to consider, in formulating rules for the postgrant review scheme, the "efficient administration of the Office, and the ability of the Office to timely complete proceedings instituted under this chapter." 35 U.S.C. 5326(b). PTO explained that adopting the BRI standard in post-grant review proceedings would mitigate the "inefficiencies" that would arise if PTO were required to apply different claim construction standnrds simultaneously to the same patent. As the agency explained, "Nt would be anomalous for the Board to have to apply two different standards in the merged proceeding." 77 Fed. Reg. at 48,698. That concern would be sufficient by itself to support the BRI rule. Taken together, the agency's explanations for the rule leave no doubt that PTO acted within its broad discretion. 4. Finally, Versata's contention that PTO somehow exceeded its rulemaking authority because the BRI rule is not "procedural" is baseless. See Br ; see also 3M Amicus Br Nothing in the AIA's multiple, express delegations of 43

23 Case: Ca0A3.11-PARITICIBAttiffe4INEY DcRameeta658 FilERWieffi/201E4ed: 05/ rulemaking authority to PTO limit the agency to adopting only "procedural" rules. Congress broadly authorized the agency to prescribe regulations "establishing," "implementing," and "governing" CBM review, as well as determining the "relationship of such review to other proceedings under this title." 35 U.S.C. 326(a)(4); AIA 18(a)(1). There is no serious argument that the BRI rule falls outside those capacious grants of rulemaking power. But even if it were relevant, the BRI rule is "procedural" in the sense in which this Court has discussed PTO's general rulemaking authority in 35 U.S.C. 2(b). See Cooper Technologies, 536 F.3d at 1335 (holding that a PTO rule interpreting phrase "original application" in the inter partes reexamination statute was entitled to Chevron deference). The BRI standard does not prescribe what is patentable and what is not; it prescribes a procedure for the Board to employ in applying the requirements of the Patent Act to the claims before it. It is simply "an examination expedient." In re Skvoret7, 580 F.3d at And it is also the status quo: as PTO observed in promulgating the BRI rule, using the BRI standard in post-grant review proceedings "does not change any substantive rights relative to the current practice," because initial examinations and reexaminations are likewise conducted according to the BRI standard. 77 Fed. Reg. at 48,697 (citing In re Yamamoto, 740 F.2d at 1571). 44

24 Case: Document: 94 Page: 1 Filed: 05/19/ IN THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT VERSATA DEVELOPMENT GROUP, INC., Appellant, V. SAP AMERICA, INC. and SAP AG, Appellees, and UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY and DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, Intervenor. Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. CBM REPLY BRIEF OF APPELLANT VERSATA DEVELOPMENT GROUP, INC. Mike McKool, Jr. Principal Counsel Daniel L. Geyser McKOOL SMITH, P.C. 300 Crescent Court, Suite 1500 Dallas, TX (214) Scott L. Cole Joel L. Thollander Steven J. Pollinger McKOOL SMITH, P.C. 300 W. 6th Street, Suite 1700 Austin, Texas (512) Attorneys for Appellant Versata Development Group, Inc. May 19, 2014 (Additional counsel listed inside cover)

25 Case: Document: 94 Page: 33 Filed: 05/19/2014 C. Alternatively, the Court Should Remand for the PTAB To Reapply 101 Using a Proper Claim Construction. 1. PTO does not even attempt to defend the PTAB's "pricing information" constmction.15 PTO.Br SAP briefly suggests that the doctrine of claim differentiation supports the PTAB's construction, SARBr.57, but fails to acknowledge that the district court found (at SAP's urging) that this doctrine was overcome by the patent's repeated and consistent description of "this invention' as utilizing denormalized numbers." JA3749. A claim construction that ignores the 14 Any computer program might appear to consist of "conventional" steps when considered as independent, isolated one-word caricatures (storing, retrieving, etc.) because, lalt its most basic, a 'computer' is 'an automatic electronic device for perfauning mathematical or logical operations.' Bancorp, 687 F.3d at PTO does not defend the holding, but does argue that this legal conclusion is reviewed for "reasonableness." PTO.Br.12. That is not what the Court said in Baxter, 678 F.3d at 1362 (reviewing PTO claim construction de novo). 25

26 Case: Document: 94 Page: 34 Filed: 05/19/2014 patent's repeated and consistent description of "this invention" is flawed under the application of any standard. V Br, 57-58; JAl , The PTAB should have followed the district court's construction. V.Br PTO again is silent with respect to stare decisis. PTO.Br SAP suggests that the PTAB "did not treat the court as a subordinate tribunal" because it applied the BM standard. SAP,Br.57. But that simply begs the question whether the PTAB applied the correct standard. Furthermore, it makes no sense to say that PTO can avoid the stare decisis effect of superior rulings simply by deciding unilaterally to employ a different standard. If PTO can decide whether and when to treat the ruling of a superior tribunal as stare decisis, then PTO would appear to be the superior tribunal. But that cannot be. Cf. Nat'l Org. of Veterans' Advocates, Inc. v. Sec'y of Veterans Affairs, 260 F.3d 1365, 1374 n.8 (Fed. Cir. 2001) (noting that "an agency is bound to follow higher authority when it acts as an adjudicator"); In re Freeman, 30 F.3d 1459, (Fed. Cir. 1994) (concluding that PTO was bound by a district court's prior interpretation of claims). 3, The PTAB also applied the wrong claim-construction standard. V.Br, As for BRI, Versata (and its amici) have established why the Phillips standard is appropriate here. V.Br.54-57; 3M.Br. But suffice it to say that every opposing argument rests on the assumption that there is no important distinction between the new CBM review and the older examinational proceedings. PTO,Br.39-45; 26

27 Case: Document: 94 Page: 35 Filed: 05/19/2014 SARBr That assumption is flawed: unlike the older proceedings, the new review proceedings are adjudicatoty trials between two parties. Supra, II.A.2. Unlike the older proceedings, the new reviews are intended to be cost-effective alternatives to litigation. Id. This systemic difference requires a corresponding shift in approach. Cf. Nat'l Org. of Veterans' Advocates, 260 F.3d at 1374 n,8 ("an agency is bound to follow higher authority when it acts as an adjudicator"). 3. If the Court finds the PTAB's claim-construction analysis flawed in any respect, then, at a minimum, the Court should remand for a correct 101 analysis using the proper standard and construction. See In re Abbott Diabetes Care, Inc., 696 F.3d 1142, 1150 (Fed. Cir. 2012) (vacating patentability determination and "remand[ingl for the Board to apply the correct claim construction"); INS v. Ventura, 537 U.S. 12, 16 (2002) (per curiam) ("Generally speaking, a court of appeals should remand a case to an agency for decision of a matter that statutes place primarily in agency hands."). SAP argues that the Court should not reach the claim-construction issue because it is not clear how a different construction of "pricing information" would "affect the substantive controversy." SARBr.53. But according to SAP's own authority, the proper remedy in such a circumstance is to remand for additional consideration, fang v. Bos. Scientific Corp., 532 F.3d 1330, (Fed. Cir. 2008). To the extent that SAP is right, therefore, remand would be appropriate. 27

28 Case: Document: 94 Page: 36 Filed: 05/19/2014 SAP also points to the PTAB's conclusory observation that, even if the claims required "denormalized numbers such calculations may also be performed on the general purpose computer, or even by a person." JA31-32; SAP,Br.53. But that (entirely unsupported) statement is plucked from the PTAB's preliminary analysis under 324(a). JA31-32 That analysis was "washed clean" during the proceeding, Hiniker, 150 F.3d at 1367, and the PTAB abandoned this position after trial. While the final written decision contains a similar comment regarding the construction of "data source," JA68 ("even if we are incorrect, it would not alter our 101 analysis"), it conspicuously omits such a qualifier for the construction of "pricing information," JA67. In any event, SAP's authority holds that any "ambiguity" regarding the impact of a claim construction makes remand appropriate. fang, 532 F 3d at IL CONCLUSION The Court should reverse the PTAB's final written decision, holding that: 1) the PTAB lacked authority to adjudicate SAP's petition; or 2) the claims of the '350 patent recite patent-eligible subject matter. Alternatively, the Court should reverse and remand for a new 101 analysis under a proper claim construction. 28

29 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: 1 46 Filed: Page: 04/17/ Filed: 03/24/ IN THE UNITED STATES COURT OF APPEALS FOR THE FEDERAL CIRCUIT VERSATA DEVELOPMENT GROUP, INC., Appellant, v. SAP AMERICA, INC. and SAP AG, Appellees, and UNDER SECRETARY OF COMMERCE FOR INTELLECTUAL PROPERTY and DIRECTOR OF THE UNITED STATES PATENT AND TRADEMARK OFFICE, Intervenor. Appeal from the United States Patent and Trademark Office, Patent Trial and Appeal Board in No. CBM AMICI CURIAE BRIEF OF 3M COMPANY, CATERPILLAR INC., ELI LILLY AND COMPANY, GENERAL ELECTRIC COMPANY, JOHNSON & JOHNSON, THE PROCTER & GAMBLE COMPANY, AMGEN INC., BP AMERICA INC., GLAXOSMITHKLINE LLC, ILLINOIS TOOL WORKS INC., PFIZER INC., QUALCOMM INCORPORATED, AND SANOFI US IN SUPPORT OF NEITHER PARTY March 24, 2014 Barbara A. Fiacco Counsel of Record Donald R. Ware Sarah S. Burg FOLEY HOAG LLP 155 Seaport Boulevard Boston, Massachusetts (617) Counsel for Amici Curiae

30 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 INTRODUCTION Congress established IPRs, PGRs and CBMs as alternatives to district court and ITC litigation to provide less expensive and less time-consuming procedures to determine the validity of issued patents. With IPR proceedings, Congress intended to convert the underutilized and protracted inter partes reexamination proceeding, a mechanism by which the PTO reviewed the validity of issued patents, from an examinational proceeding to an adjudicative proceeding, renamed as inter partes review. H.R. Rep. No , pt. 1, at Similarly, the PGR process was created as a new, early-stage adjudicative proceeding to enable early challenges to patents, while still protecting the rights of inventors and patent owners against new patent challenges unbounded in time - 2 -

31 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 and scope. Id. (emphasis added). CBMs were created as a PGR proceeding for review of the validity of any business method patent. Id. at 54 (emphasis added). Through the Patent Act and the AIA, Congress has given the PTO authority to promulgate procedural rules governing the conduct of the PTO, including the conduct of IPRs and PGRs. But Congress has always retained exclusive authority to create substantive patent law, which is interpreted and applied by the federal courts. In the CBM proceeding below, the Board relied on the PTO s promulgation of 37 C.F.R (b) to construe the challenged claims under a broadest reasonable interpretation ( BRI ) standard. Under this standard, rather than determining the legally operative scope of the claims based on the principles articulated in Phillips v. AWH Corporation, 415 F.3d 1303 (Fed. Cir. 2005) (en banc), the PTO evaluates patent validity based on what it views as the broadest reasonable interpretation of the claims. This interpretation considers the text of the issued claims and any express definitions in the specification, but is otherwise uninformed by the patent s specification and prosecution history. Courts, by contrast, determine claim scope based on ordinary and plain meaning, considering all legally relevant evidence. Prior to this proceeding, the BRI standard had been used only in PTO proceedings where the patentee had the right to amend its claims freely, i.e., to - 3 -

32 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 consider pending claims in examination or unexpired issued claims in reexamination. The BRI standard makes sense in such proceedings, where the unfettered right to amend serves as a procedural safeguard to avoid prejudice to patent applicants and owners who disclose their inventions to the public in order to obtain patent protection. To the extent the BRI standard results in a claim construction broader than what the patent applicant or owner intended, or what the prior art permits, amendments can be made to narrow the claim scope. In contrast, by not conferring on patentees the same right to amend challenged claims in the new post-issuance proceedings, Congress rejected the notion that these proceedings are extensions of the PTO s examination process. The PTO s use of BRI in the new post-issuance proceedings, rather than the wellestablished principles of claim construction for issued patent claims applied by federal courts and the ITC, departs from the fundamental tenet of patent law that issued claims should be interpreted consistently for purposes of adjudicating both validity and infringement. The Board rejected Versata s argument that the PTO, in promulgating this rule, had exceeded its rulemaking authority. The Board implicitly conceded that the BRI Rule is a substantive rule and that, prior to the AIA, the PTO had no substantive rulemaking authority. JA It nonetheless reasoned that the AIA provided the PTO with expanded rule-making authority that exceed[s] that - 4 -

33 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 of merely setting forth procedures, based upon, among other things, the fact that Congress expressly required the PTO to promulgate standards and procedures for discovery and motions to amend claims. JA The Board s application of the BRI standard in this CBM proceeding (and in subsequent post-issuance proceedings) constitutes legal error, for two independent reasons. First, by imposing the standard on PGR, IPR and CBM proceedings, the PTO exceeded its limited rulemaking authority. The PTO had no authority to adopt a rule that affects the substantive scope of issued patent claims let alone a rule that departs from over a century of precedent from the Supreme Court, this Court, and every other federal court that has construed a patent claim to adjudicate its infringement or validity. Second, the legislative history and provisions of the AIA evidence that Congress did not intend to create an incongruous double standard for determining validity and infringement. On the contrary, Congress intended that these new postissuance proceedings be fundamentally adjudicative in nature, unlike examination or reexamination proceedings. Unlike examination proceedings, in which the BRI standard is justified by an applicant s unfettered right to amend claims as part of an iterative dialogue with the examiner, Congress expressly restricted the patentee s ability to amend claims in the new adjudicative proceedings: the patentee may only cancel a challenged claim, and, having done so, propose a reasonable number of - 5 -

34 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 substitute claims (which number has been set by the PTO as one substitute for each challenged claim). Consistent with the goal that post-issuance proceedings provide an efficient alternative to district court and ITC litigation, Congress contemplated that the PTO s claim construction would follow the same approach that governs in district courts and the ITC. In particular, Congress envisioned that the Board would consider the patent s prosecution history both in deciding to institute a postissuance proceeding and in interpreting the challenged claims, not that it would ignore black-letter law that issued claims be construed the same when adjudicating validity and infringement. Allowing the PTO to construe issued patent claims in adjudicative proceedings based on BRI at the same time that district courts and the ITC apply a potentially narrower claim construction standard to adjudicate validity a difference that can be outcome-determinative is inconsistent with sound patent policy. Using different standards to construe the claims of issued patents creates uncertainty as well as opportunities for gamesmanship. The resulting inconsistency will undermine public confidence in the patent system and undo the patent reform Congress meant to accomplish

35 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 ARGUMENT I. Promulgation of the Broadest Reasonable Interpretation Rule Exceeded the PTO s Limited Authority to Issue Procedural Rules. The Board s conclusion that the BRI Rule was promulgated within the PTO s rulemaking authority under the AIA is not entitled to deference under the Chevron doctrine. Adams Fruit Co. v. Barrett, 494 U.S. 638, 649 (1990). The BRI Rule is a substantive rule and therefore its promulgation exceeds the PTO s limited rulemaking authority. This Court should set aside the Board action under the Administrative Procedure Act as not in accordance with law or in excess of statutory jurisdiction, authority, or limitations, or short of statutory right. 5 U.S.C. 706(2)(A), (C). A. The PTO s Reliance on this Court s Precedent to Justify the Broadest Reasonable Interpretation Standard in the AIA Post- Issuance Proceedings is Misplaced. The claims of an issued patent define the invention s metes and bounds. 35 U.S.C. 112(b). It is the job of the courts to interpret the claims and determine the scope of patented inventions. Markman v. Westview Instruments, Inc., 52 F.3d 967, 979 (Fed. Cir. 1995) (en banc) aff d 517 U.S. 370 (1996). [I]t is axiomatic that claims are construed the same way for both invalidity and infringement. Source Search Techs., LLC v. LendingTree, LLC, 588 F.3d 1063, 1075 (Fed. Cir. 2009)

36 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/2014 Filed: 03/24/2014 The ordinary and customary meaning of a claim term is the meaning that the term would have to a person of ordinary skill in the art in question at the time of the invention. Phillips, 415 F.3d at To determine this meaning, courts begin with intrinsic evidence: the claims, specification and prosecution history. Id. Intrinsic evidence is critical because it constitute[s] the public record of the patentee s claim, a record on which the public is entitled to rely. Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576, 1583 (Fed. Cir. 1996). The specification is the single best guide to the meaning of a disputed term. Phillips, 415 F.3d at BRI, by contrast, is the PTO s examination protocol for pending patent claims. This protocol gives claims the broadest reasonable interpretation consistent with the specification but does not utilize other intrinsic evidence, including the prosecution history, or extrinsic evidence. Manual of Patent Examining Procedure ( MPEP ) The PTO also uses BRI in most reissue, ex parte, and inter partes reexamination proceedings, which the PTO treats in the same manner as original applications. 2 Id.; In re Reuter, 670 F.2d 1015, 1019 (C.C.P.A. 1981) (reissue proceedings). 2 When a patent being reexamined has expired, the PTO applies the Phillips claim construction principles based on the rationale that the expired claims are not subject to amendment. MPEP 2258G

37 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 The Board s claim interpretation under BRI may be different from the meaning afforded to the claims by a court because, for instance, the Board has no obligation to adopt a claim construction based on a prosecution history disclaimer. Tempo Lighting, Inc. v. Tivoli, LLC, No , 2014 U.S. App. LEXIS 2437, at *11 (Fed. Cir. Feb. 10, 2014). The PTO has acknowledged, in the context of reexamining expired claims, that the claim construction principles articulated in Phillips and applied by the courts result in narrower claim constructions than BRI. See MPEP ( Once the patent expires, a narrow claim construction is applied. ). The PTO stated that the BRI Rule s adoption here does not change any substantive rights relative to the current practice. 77 Fed. Reg , That is incorrect. The PTO relied on In re Yamamoto, 740 F.2d 1569 (Fed. Cir. 1984), to argue that this Court requires the PTO to give patent claims their broadest reasonable construction consistent with the specification in patentability determination proceedings. However, this Court s endorsement of the BRI standard in the Yamamoto decision which involved the appeal of an ex parte reexamination was based on the patentee s ability to amend claims liberally during reexamination. Id. at This reasoning rested upon the long-standing jurisprudence of the Court of Customs and Patent Appeals: - 9 -

38 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 this court has consistently taken the tack that claims unpatented are to be given the broadest reasonable interpretation consistent with the specification during the examination of the patent since the applicant may then amend his claims, the thought being to reduce the possibility that, after the patent is granted, the claims may be interpreted as giving broader coverage than is justified. We are not persuaded by any sound reason why, at any time before the patent is granted, an applicant should have limitations of the specification read into a claim where no express statement of limitation is included in the claim. In re Prater, 415 F.2d 1393, (C.C.P.A. 1969). In sum, the only authority cited by the PTO to justify the BRI Rule involved appeals from examination and reexamination. Such authority cannot support the use of BRI in the new post-issuance proceedings, which involve adjudication of claim validity, not examination, and do not include the same liberal right to amend. B. The BRI Rule Is a Substantive Rule. The BRI Rule provides that [a] claim in an unexpired patent shall be given its broadest reasonable construction in light of the specification of the patent in which it appears. 37 C.F.R (b), (b), (b). It is a substantive rule that affects the scope and meaning of the claims and the ultimate validity of the patent. This Court has stated, [a] rule is substantive when it effects a change in existing law or policy which affect[s] individual rights and obligations. Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336 (Fed. Cir. 2008). In Tafas v. Doll, the Court explained that, while there is no definitive test distinguishing substance and procedure, procedural rules may affect the timing and

39 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/2014 Filed: 03/24/2014 manner in which the applicants submit arguments to the PTO. A rule is substantive, by contrast, if it changes the substantive standards by which the PTO examines an application. 559 F.3d 134, 1356 (Fed. Cir. 2009), vacated and reh'g en banc granted, 328 F. App x 658 (Fed. Cir. 2009), stayed, 331 F. App x 748 (Fed. Cir. 2009). Consistent with this logic, this Court has held that a rule governing the length of patent term was substantive. Merck & Co. v. Kessler, 80 F.3d 1543, 1550 (Fed. Cir. 1996); see also Animal Legal Def. Fund v. Quigg, 932 F.2d 920, 930 (Fed. Cir. 1991) (noting that a substantive declaration with regard to the Commissioner s interpretation of the patent statutes does not fall within the agency s authority to regulate the conduct of proceedings before the PTO). By contrast, this Court has held that rules not affecting validity or the scope of the patent are procedural and within the rulemaking authority of the PTO. Lacavera v. Dudas, 441 F.3d 1380, 1383 (Fed. Cir. 2006) (rule governing attorney appearances before the PTO was procedural); Stevens v. Tamai, 366 F.3d 1325, 1333 (Fed. Cir. 2004) (rule requiring party to submit translation of foreign patent applications was procedural)

40 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 The standard for determining the scope of claims in a post-issuance proceeding is plainly substantive. 3 As this Court recently noted in its en banc decision Lighting Ballast Control LLC v. Phillips Electronics North Am. Corp, [l]egal doctrine in patent law starts with the construction of patent claims, for the claims measure the legal rights provided by the patent. No , 2014 U.S. App. LEXIS 3176, at *24 (Fed. Cir. Feb. 21, 2014). Claim construction is often the difference between infringement and non-infringement, or validity and invalidity. Retractable Techs., Inc. v. Becton, Dickinson & Co., 659 F.3d 1369, 1370 (Fed. Cir. 2011) (Moore, J., dissenting from denial of reh g en banc, joined by Rader, C.J.). The Board s broad interpretation of patent claims under the BRI Rule can be outcome-determinative as to the validity of the claims over the prior art or under section 112. Its use inevitably will result in Board determinations of invalidity when a district court would determine that the same claims, construed more 3 When the PTO first proposed the BRI Rule, the American Bar Association IP Law Section, the American Intellectual Property Law Association and the Intellectual Property Owners Association submitted comments objecting to the BRI Rule as a substantive rule beyond the PTO s rulemaking authority. Comments of the Committee Appointed by the ABA-IPL, AIPLA and IPO on the United States Patent and Trademark Office s Proposed Regulations Relating to Post-Grant Review, Inter Partes Review and the Transitional Program for Covered Business Method Patents Under the Leahy-Smith America Invents Act (Apr. 9, 2012),

41 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 narrowly to have their ordinary and customary meaning in light of the specification, file history, and other relevant evidence are not invalid. Permitting the PTO to construe claims in a post-issuance adjudicative proceeding more broadly than would a court or the ITC threatens legitimate, government-granted property rights of the patent owner. 4 There is nothing procedural about the scope and validity of an issued patent claim. C. The AIA Did Not Confer Broad Powers on the PTO to Engage in Substantive Rulemaking. There is no dispute that [p]rior to the AIA, 35 U.S.C. 2(b)(2) was said to be the broadest of the Office s rulemaking powers, and those powers were limited to the promulgation of procedural rules. JA The Board below rested its authority on the AIA, reasoning that it provides the Office with authority exceeding that of merely setting forth procedures. JA There is no basis in either the statutory language or the legislative history to support the PTO s reasoning or promulgation of the BRI Rule. In support of its conclusion, the Board cited section 326, entitled Conduct of post-grant review, and section 316, entitled Conduct of inter partes review. To begin, use of the phrase Conduct of does not imply the grant of expanded 4 Adopting the legally-controlling claim construction standards used in court and ITC proceedings would, by contrast, be consistent with the AIA and would not substantively affect the scope or validity of issued patents

42 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 rulemaking powers. Conduct is synonymous with procedure, not substance. Indeed, these titles simply echo the language of section 2(b)(2)(A), which gives the PTO authority to promulgate rules govern[ing] the conduct of proceedings in the Office. It has long been held that this language limits the PTO to procedural rulemaking authority. Tafas, 559 F.3d at Nor does the text of sections 316(a)(4) and 326(a)(4) confer substantive rulemaking authority. These sections direct the PTO to promulgate regulations establishing and governing IPR and PGR and the relationship of such review to other proceedings under this title. 35 U.S.C. 316(a)(4), 326(a)(4). [E]stablishing and governing IPR and PGR proceedings refer to the conduct of the post-issuance proceedings, just as the PTO may promulgate rules governing the conduct of examination proceedings under section 2(b)(2)(A). No statutory language authorizes the PTO to promulgate rules about standards for construing claims of issued patents, or otherwise confers authority for substantive rulemaking. Nor do other provisions of section 326 provide authority for promulgating the BRI Rule. Subsections 326 (a)(2), (5), and (9) direct the PTO to promulgate rules setting forth the standards to institute a review, as well as standards and procedures for discovery and motions to amend claims. JA Nothing in these provisions confers substantive rulemaking authority pertaining to claim construction. The argument that specific, narrow rulemaking authority provisions

43 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 grant the PTO authority exceeding that of merely setting forth procedures (id.) is simply improper bootstrapping. The PTO has failed to show that the AIA conferred expanded rulemaking authority to promulgate the BRI Rule. D. Absent Express Congressional Grant of Substantive Rulemaking Authority to the PTO on Claim Construction Standards in AIA Post-Issuance Proceedings, the PTO Has None. In Whitman v. American Trucking Associations, Inc., the Supreme Court stated that Congress does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions it does not one might say, hide elephants in mouseholes. 531 U.S. 457, 468 (2001). The Whitman decision, cited by the Board in its decision, proves Amici s point. See JA The Board did not and could not point to a single provision by which Congress delegated to the PTO the elephant-sized authority to determine a standard for claim construction at odds with that used in adjudicating patent validity. Contrary to the Board s reasoning, Congressional intent to provide expanded rulemaking authority cannot be inferred from unenacted provisions of draft bills providing that [t]he Director [of the PTO] shall prescribe regulations, in accordance of section 2(b)(2). JA The Board s analysis is flawed. First, the Board cited no legislative history explaining the reason for omitting this 5 The House version of H.R. 1249, the AIA, ultimately was enacted, not the earlier Senate bills

44 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 particular language in the enacted AIA. An unexplained modification of language in earlier drafts of legislation does not necessarily indicate Congress s rejection of the substance of the earlier language. Appalachian Power Co. v. EPA, 135 F.3d 791, 810 (D.C. Cir. 1998). Second, the House Report indicates that Congress affirmatively considered amendments to section 2(b)(2), making only one addition to section 2(b)(2) to confer authority on the PTO to prioritize examination of certain patent applications. H.R. Rep. No , pt. 1, at 89. More generally, the absence of any language in the AIA expanding the PTO s narrow rulemaking authority contrasts with the broad, express authority Congress has granted to other agencies. When Congress intends to delegate rulemaking authority, it makes that purpose clear, as evidenced by Congressional delegations of authority to numerous other agencies. See, e.g., 38 U.S.C. 501 (Secretary of Veterans Affairs authorized to prescribe all rules and regulations which are necessary or appropriate to carry out the laws administered by the Department ); 5 U.S.C. 8347(a) (Office of Personnel Management has authority to prescribe such regulations as are necessary and proper to carry out [the Civil Service Retirement Act] ). There is no broad grant of authority to prescribe any and all rules and regulations the PTO may consider necessary and proper to carry out IPR or PGR. In sections 316 and 326, Congress specifically identified regulations the PTO was

45 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 to promulgate, such as regulations providing for public access to the file of the proceeding in certain proscribed circumstances; establishing standards for the discovery of relevant evidence, including that such discovery shall be limited in certain proscribed ways; and providing either party with the right to an oral hearing as part of the proceeding. 35 U.S.C. 316, 326. The House Report s Sectionby-Section analysis of sections 316(a) and 326(a) does not suggest any grant of rulemaking authority beyond what is expressly identified in those two statutory provisions. See H.R. Rep. No , pt. 1, at 76. Neither the statutory provisions, the legislative history of the AIA as enacted, nor the unenacted provisions in Senate bills, provides any support for the Board s conclusion that the AIA implicitly granted the PTO sweeping new authority to engage in substantive rulemaking. II. The BRI Rule Is Contrary to the Language and Legislative Intent of the AIA. The BRI Rule is not a reasonable interpretation of the AIA and for that second, independent reason, it is invalid. See Dominion Res., Inc. v. United States, 681 F.3d 1313 (Fed. Cir. 2012) (holding Treasury regulation invalid where rule was not a reasonable interpretation of the statute). The PTO s rejection of judicial claim construction standards in favor of the BRI Rule is an unreasonable interpretation of the AIA and undermines Congress intent to create court-like proceedings to adjudicate patent validity. H.R. Rep. No , pt. 1, at

46 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 A. Congress Established PGRs, IPRs, and CBMs as Alternative Adjudicative Proceedings that Would Interpret Patent Claims as Courts Do. The legislative history of the AIA is replete with references to PGR and IPR as adjudicative proceedings, designed to provide cheaper and faster procedures for members of the public to bring invalidity challenges that previously could be heard only in district courts. The House Report draws a clear distinction between PTO examination procedures and adjudicative procedures: [t]he Act converts inter partes reexamination from an examinational to an adjudicative proceeding, and renames the proceeding inter partes review. Id. (emphasis added). It identified improvements to this proceeding, including that petitioners bear the burden of proving that a patent is invalid by a preponderance of the evidence. 6 Id. at 47. The House Report notes that: Unlike reexamination proceedings, which provide only a limited basis on which to consider whether a patent should have issued, the postgrant review proceeding permits a challenge on any ground related to invalidity under section 282. The intent of the post-grant review process is to enable early challenges to patents The Committee believes that this new, early-stage process for challenging patent validity. will make the patent system more efficient and improve the quality of patents and the patent system. 6 This provision underscores that Congress did not delegate authority for substantive changes in patent law; when it intended a different standard to apply than in the courts (where the burden of proof for invalidity is clear and convincing evidence ), it included that standard in the statute

47 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 Id. at 46 (emphasis added). It also explained that the AIA would [e]stablish a new procedure, known as post-grant review, to review the validity of a patent. This option.would take place in a court-like proceeding. Id. at 68 (emphasis added); see also id. at 75 (describing PGR and IPR as adjudicative systems ) (emphasis added). Congress thus removed the examination label and explained that the proceedings would be adjudicative proceedings resembling validity proceedings conducted in courts. Consistent with the goal that these proceedings provide an efficient alternative to district court challenges of issued patents, the AIA contemplates that the prosecution history of patent claims be considered by the Board in deciding to institute a proceeding and in determining the meaning of the challenged claims. Specifically, section 325(d) provides: In determining whether to institute or order a proceeding under this chapter [32 establishing PGRs]. or chapter 31 [establishing IPRs] the Director may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office. 35 U.S.C. 325(d). The AIA also contemplates that the PTO should consider statements of the patent owner filed in a proceeding before a Federal court or the Office in which the patent owner took a position on the scope of any claim of a particular patent in order to determine the proper meaning of a patent claim in a proceeding that is ordered or instituted pursuant to section. 314 [IPR], or

48 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 [PGR]. Id. 301(a)(2) & (d). If Congress had intended the PTO to ignore prosecution history and apply the BRI Rule, these statutory provisions would have been unnecessary. Other provisions of the AIA likewise demonstrate the unreasonableness of the PTO s interpretation of the AIA as authorizing the PTO to construe claims in the new post-issuance adjudicative proceedings as if they were undergoing examination. Reflecting Congress vision of IPR and PGR as adjudicative proceedings, the AIA mandates discovery, depositions, experts, an oral hearing and a final written decision by the Board. Id 316, 318, 326, 328. Congress also placed the burden of proof on the petitioner, just as the patent challenger bears the burden of proof in district court. Id. 316(e), 326(e). Most important, in contrast to initial examination and reexamination, which permit multiple rounds of claim amendments, Congress did not give the patentee the liberal right to amend its patent claims in post-issuance proceedings that the applicant has during examination and reexamination. Rather, the patent owner is restricted to a single opportunity to file a motion to cancel each challenged claim or to propose a reasonable number of substitute claims for each challenged

49 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 claim. 7 Id 316(d), 326(d). Congress envisioned these proceedings as efficient, alternative adjudicative proceedings to assess the merits of third-party challenges to the validity of previously granted claims, not as further examination proceedings. H.R. Rep , pt. 1, at (explaining that inter partes reexamination was eliminated because it was not practical to incorporate adversarial participation into a procedure that allowed repeated amendments of the claims at issue). The BRI standard evolved as a special claim construction protocol used in the examination of pending claims. It is not appropriate for a determination of the validity of issued claims where the patentee has no right to amend its claims. The ordinary and customary meaning of the claims, determined in light of the specification and prosecution history, Phillips, 415 F.3d at 1313, defines the property right of the patent owner not the broadest reasonable interpretation of the claim language determined independently of the specification and prosecution history. Further, the use of BRI in IPR, PGR and CBM proceedings undermines Congress intent with respect to the institution of these new proceedings. Congress 7 In practice, the PTO has, by rule, established a presumption that only one substitute claim would be permitted to replace each challenged claim. 37 C.F.R (a)(3)

50 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 contemplated that the threshold for instituting these proceedings would be higher than for reexamination proceedings, and that the Board would consider statements by the patentee about the meaning of its claims both in prosecuting the original patent and in district court proceedings. By ignoring all of that history, more proceedings will be instituted than Congress intended. Further, the PTO, the patentee and the public will be burdened by the inefficiencies created by another examination of the patent claims untethered to publicly available prosecution history. Patentees will be forced to defend claims broader than they actually obtained (or would assert in district court) at a cost of hundreds of thousands of dollars for each proceeding. This makes no sense. B. The PTO s Attempts to Recast Post-Grant Proceedings as Patentability Determinations is Flawed. The Board has attempted to justify the BRI Rule by characterizing the postissuance proceedings as patentability proceedings that provide patentees the ability to amend. This argument fails. First, the Board seizes on Congress s use of the word patentability in sections 318 and 328, each of which requires the Board to issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner. 35 U.S.C. 318(a), 328(a). According to the PTO, this evidences Congress intent that the proceedings be viewed as examination proceedings, rather than adjudicative proceedings on validity. PTO Final Rule, 77 Fed. Reg. at

51 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/ This attempt to bootstrap the statute s use of patentability into justification for the PTO s BRI Rule in adjudicating a patent s validity is misplaced. The PTO s own statements and actions expose the flaws in this argument. When the AIA was pending before Congress, then-secretary of Commerce Locke described IPR and PGR as proceedings to address validity, not patentability. In his letter to Chairman Smith supporting H.R. 1249, Secretary Locke explained that the proceedings will serve to minimize costs and increase certainty by offering efficient and timely alternatives to litigation as a means of reviewing questions of patent validity. ). H.R. Rep , pt. 1, at (emphasis added). In addition, the PTO s implementation of the BRI Rule for CBM proceedings highlights the inconsistency in its attempt to distinguish patentability and validity. Section 18(a)(1)(C), which extends the scope of PGR proceedings to certain CBM patents, references a petitioner who challenges the validity of 1 or more claims Pub. L. No , 125 Stat. 284, (2011). Despite Congress use of the term validity to define the nature of the CBM proceeding, the PTO promulgated the BRI Rule to extend additionally to CBM proceedings. In sum, the BRI Rule ignores Congress intention that post-issuance proceedings provide an alternative, cost effective forum to adjudicate validity issues

52 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 Second, the PTO has defended its adoption of the BRI Rule by arguing that the patentee may be able to amend its claims during an IPR or PGR proceeding. 77 Fed. Reg , The PTO s argument glosses over the limitations on amendments in post-issuance proceedings under the AIA and the PTO s own rules. By statute, the patentee has no right to amend its claims, only the right to file a motion to cancel a challenged claim or propose a substitute claim. That motion must be submitted no later than the filing of its Patent Owner s Response, having only the Board s reasons for instituting the proceeding as its guide (a), (a); see MPEP 714 et seq. The patentee s motion must show the patentable distinction of the proposed substituted claim over the prior art of record and also prior art known to the patent owner. Idle Free Sys. v. Bergstrom, Inc., 2014 Pat. App. LEXIS 1400, at *48-49 (PTAB Jan. 7, 2014) (emphases in original). In addition, the entire motion, including the claim listing, is limited to 15 pages a very real constraint on the number of claims that can be effectively amended. 37 C.F.R (a), (b). 8 8 Any additional motion to cancel or substitute challenged claims will be allowed only if there is a joint agreement or the patent owner demonstrates good cause, taking into consideration the impact on timely completion of the proceeding and the additional burden placed on the petitioner (c), (c); Trial Practice Guide, 77 Fed. Reg. at 48766; Final Rules, 77 Fed. Reg. at (explaining consideration of good cause ). It is clear that only in rare circumstances will a patent owner have a second chance to seek to substitute a challenged claim

53 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 This falls far short of the procedural safeguards for examination and reexamination proceedings, where the patent applicant or owner has the continuing, unfettered right to amend any or all of its claims, and often does so in consultation with the examiner the safeguards this Court relied upon in upholding the use of BRI in those contexts. See Yamamoto, 740 F.2d at IV. Using Conflicting Claim Construction Standards in Different Adjudicative Tribunals Undermines Sound Patent Policy. Use of the BRI Rule in the PTO s post-issuance proceedings will foster inconsistency and uncertainty, undercutting the role of the examination process and threatening the integrity of the patent system at the expense of public resources. By broadly interpreting the claims untethered to statements made by the patentee during prosecution of the patent that were intended to narrow claim scope, the use of BRI will undermine the public notice function of the patent s prosecution history, which historically has provided the public important information about the scope and meaning of the claim. Biogen Idec, Inc. v. GlaxoSmithKline LLC, 713 F.3d 1090, 1095 (Fed. Cir. 2012). Where the Board has set forth its broadest reasonable interpretation of patent claims in a post-issuance proceeding and they are not determined to be invalid, there is likely to be uncertainty as to which interpretation defines the scope of the claimed invention going forward. Uncertainty as to the scope of claims is costly to the inventive community and discourages innovation. Indeed, the Supreme Court in Markman explained

54 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 that uniformity in the [claim construction] of a given patent was critical in order to avoid a zone of uncertainty which enterprise and experimentation may enter only at the risk of infringement claims [that] would discourage invention only a little less than unequivocal foreclosure of the field. 517 U.S. at 390. Such uncertainty adversely affects patent licensing, design-around, and other critical business decisions, contrary to the goals of the AIA. More generally, it is highly inefficient for the PTO to ignore the months or years of work undertaken by patent examiners and patent applicants during the original examination only to begin on a blank slate, without the benefit of the patentee s statements about the prior art and claim scope and producing results inconsistent with the outcome a court ultimately would reach based on the prosecution history. The development of the examination record represents a substantial investment of resources by both the patentee and the PTO. The average patent prosecution consumes 29.1 months. USPTO FY 2013 Performance and Accountability Report, USPTOFY2013PAR.pdf. Typical charges for preparing and filing an original application range from $7,020 to $11,066. Am. Intellectual Prop. Law Ass n, Report of the Economic Survey I (2013). Costs for filing each amendment range from $2,297 to $3,585. Id. at I

55 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 The BRI Rule would have the PTO simply ignore the prosecution record created after so much time and expense. Consider, for example, a newly-issued claim against which a PGR petition is filed. That claim may have just undergone years of examination, during which the patent owner may have disclaimed claim scope or made statements distinguishing the claim from the same prior art cited in the PGR petition. It makes no sense for the PTO to pretend the prosecution history just created did not exist and start over from scratch, even as to the same art it just considered during prosecution. Yet that is the very result created by the PTO s adoption of the BRI Rule. That result encourages unnecessary challenges to legitimate patent rights. Claims that would be construed in light of the prosecution history and upheld under judicial claim construction rules could be invalidated when subjected to an overly broad reading under the BRI Rule. This is unfair to patent owners and an open invitation to gamesmanship. Moreover, the application of different standards in PTO and district court proceedings means that each proceeding s claim construction has no estoppel effect for subsequent proceedings, further encouraging gamesmanship

56 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 Use of the BRI Rule can also lead, unfairly, to the creation of intervening third party rights. 9 A competitor facing infringement litigation might initiate a post-issuance proceeding in hopes of forcing the patentee to narrow its claims to overcome additional prior art that becomes relevant under the BRI standard. By triggering third-party intervening rights under 35 U.S.C. 252, the patent owner may forfeit valuable, legitimate patent scope (based on a Phillips construction) visà-vis anyone who practiced the invention prior to the issuance of any new or amended claim. The inconsistent results arising from application of the BRI Rule create a strong incentive for parties to challenge patent validity in post-issuance proceedings while patentees seek to enforce the same patent in district court. This Court has recognized the problems associated with construing the same claims of a patent in different forums. In reaffirming that de novo review is appropriate for appellate review of claim construction, the Court emphasized the importance of national uniformity and finality of claim construction: Because differing claim constructions can lead to different results for infringement and validity, the possibility of disparate district court constructions unravels the uniformity in the treatment of a given patent that the Court sought to achieve in Markman II. It 9 Intervening rights will attach to a claim amended in a PGR or IPR proceeding. 35 U.S.C. 318(c), 328(c)

57 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 would restore the forum shopping that the Federal Circuit was created to avoid. Lighting Ballast, 2014 U.S. App. LEXIS 3176, at *34. The BRI Rule exacerbates the problem by creating an avenue for inconsistent treatment of patents. Indeed, former PTO Director David Kappos testified to the House Judiciary Committee that having the USPTO apply a different standard than the courts is leading, and will continue to lead, to conflicting decisions. Statement of David Kappos Before the House Committee on the Judiciary, H.R Innovation Act at 8 (Oct. 29, 2013). The need for uniformity, as between post-issuance proceedings on the one hand, and district court and ITC proceedings on the other, is all the more acute due to the huge number of proceedings before the Board. 10 In November 2013, the PTO reported that the Board had 563 proceedings filed in about a twelve-month period, putting its docket behind only the Eastern District of Texas and the District of Delaware. 10 The PTO has argued that it is unworkable to apply the two different claim construction standards in examinations and post-issuance proceedings. This argument rings hollow: the PTO already applies the two standards. As noted above, for claims in a reexamination that are ineligible for amendment, the PTO follows the usual ordinary and customary meaning claim construction, as instructed in Phillips. MPEP 2258G

58 Case: Case: CASE PARTICIPANTS Document: ONLY 56 Document: Page: Filed: Page: 04/17/ Filed: 03/24/2014 Patent Trial and Appeal Board Update (Nov. 21, 2013), The total number of AIA post-issuance filings as of February 20, 2014 is 1,028. AIA Trial Statistics, Patent Trial and Appeal Board, Many, if not most, of these patents are the subject of concurrent litigation. Various sources report that 80% of all IPRs are also in related co-pending litigation and 100% of CBM proceedings have co-pending litigation. See, e.g., One Year Later: Observations from the First Year of Contested Proceedings at the USPTO, Sterne Kessler Goldstein Fox, 1 (Sept. 16, 2013), Lastly, the PTO s BRI Rule will impose significant burdens on this Court when faced with appeals directed to differing constructions of the same claims by