Liberty Mutual Restricts the Scope of Post-Grant Review

November 23, 2012

The Board’s decisions in Liberty Mutual (CBM2012-00003) denying grounds raised in a petition for covered business method patent review are momentous in several respects. The Orders, denying 196 of the 422 grounds of patentability raised against 20 claims, were issued only about 5 weeks after the petition was filed. The Order specifying redundancies objected to by the Board, which significantly restricts the scope of review sought by the petitioner, is signed by nine APJs of the Board’s trial section and is clearly precedential.

The decisions signal a clear intention to streamline post-grant proceedings to an extent that was little imagined during the regulatory review period, by severely limiting the issues considered under the Director’s unappealable discretion to deny review under § 324, even where a petition raises alternate grounds of unpatentability that are equally convincing and qualify for review under the statutory standard.

The Board justified its decision by noting that “numerous redundant grounds would place a significant burden on the Patent Owner and the Board, and it would cause unnecessary delays” and elaborated:

We take this opportunity to note that multiple grounds, which are presented in a redundant manner by a petitioner who makes no meaningful distinction between them, are contrary to the regulatory and statutory mandates, and therefore are not all entitled to consideration. In the present situation, the multiplicity of grounds requires so much of the petition that the Petitioner has failed to expressly identify the differences between any claim and the prior art in the Petitioner’s assertions of obviousness.

In its analysis, the Board employed a confusing distinction between “vertical” and “horizontal” redundancy, that appears to boil down to a refusal to consider grounds based on combinations of primary references with alternative secondary references (“horizontal”), or “a plurality of prior art applied both in partial combination and in full combination” without “a bi-directional explanation” of which ground is the “stronger assertion” (“vertical”).

In practice, the Board required the petitioner to elect one combination of “horizontally redundant” references against the independent claim, and “automatically” applied this same combination to the dependent claims, because the petitioner did not “articulate any relative weakness” of the different secondary references.

With respect to “vertical redundancy” the Board required the petitioner to choose just one ground of unpatentability, or to “articulate why each ground has strength and weakness relative to the other.” In practice, the Board required the petitioner to elect one ground of rejection based either on a “base combination” of references or an additional subcombination. More strikingly, the Board required the petitioner to elect between a combination of prior art publications, or a single primary reference supported by testimony of a technical witness concerning prior public use.

If the Board intends to restrict post-grant trials to only the “strongest” grounds identified by petitioners, and to eliminate consideration of “redundant” arguments, the limits on petition page length may be relatively insignificant. The era of encyclopedic inter partes reexamination requests is clearly over. The Board will be able to complete post-grant trials within the statutory one-year period, but applicants may be required to file separate petitions to achieve effective review where several grounds of unpatentability exist. And clearly, a role remains in the new statutory review scheme for ex parte reexamination.