Patent Agent Privilege Under New PTAB Claim Construction
Published By Law360 October 30, 2018

On October 30, 2018, Linda Nattler and Robert Shereda's article, "Patent Agent Privilege Under New PTAB Claim Construction" was published in Law360.

In view of the Phillips standard now being applied to claim construction before the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office, how is the patent agent-client privilege affected?

On Oct. 11, 2018, the director of the USPTO published a final rule in the Federal Register setting a new standard for claim construction in certain proceedings heard by the PTAB.[1] The rule takes effect on Nov. 13, 2018, and shifts the standard for evaluating claims in inter partes review, post-grant review and covered business method challenges from the broadest reasonable interpretation of the claim terms to the Phillips standard. The change aligns the PTAB post-grant proceedings introduced under the Leahy-Smith America Invents Act with the claim construction standards applied in federal district courts, the U.S. Court of Federal Claims, and the U.S. International Trade Commission.

The Phillips standard arose out of the en banc Federal Circuit decision in Phillips v. AWH Corp.[2] It instructs that when issued claims are construed, deference to the usage of a disputed term in the specification of the patent is appropriate, because “[i]n light of the statutory directive that the inventor provide a ‘full’ and ‘exact’ description of the claimed invention [under 35 U.S.C. 112], the specification necessarily informs the proper construction of the claims.”[3] This ruling was a reaction to the fact that outside authorities were frequently consulted in the claim construction phase of district court trials, of which the Federal Circuit stated that “heavy reliance on the dictionary divorced from the intrinsic evidence risks transforming the meaning of the claim term to the artisan into the meaning of the term in the abstract, out of its particular context, which is in the specification.”[4]

The switch from BRI to the Phillips standard in AIA post-grant proceedings was initiated by the USPTO itself, and comes only two years after the U.S. Supreme Court unanimously upheld the USPTO’s authority to set its own rules in post-grant proceedings, including the use of BRI in claim construction, in the June 2016 decision Cuozzo Speed Technologies LLC v. Lee.[5] Though this reversal may seem sudden, the USPTO states in its recently published final rule that after receiving an enormous amount of feedback over the past several years:

[T]he fact that the Office uses a claim construction standard in AIA proceedings that is different from that used by federal courts and the ITC means that decisions construing the same or similar claims in those fora may be different from those in AIA proceedings and vice versa. Minimizing differences between claim construction standards in the various fora will lead to greater uniformity and predictability of the patent grant, improving the integrity of the patent system.[6]

This change is likely to increase judicial efficiency, and should generally favor patent owners, who no longer need to be concerned that their issued claims will be once again scrutinized under BRI.

One interesting facet of the rule change that has perhaps gone unnoticed is the potential impact this will have on opinions and work performed by registered patent agents (who are not attorneys). The question of privilege for communications between a patent agent and a client have been debated for a number of decades. The Supreme Court, in Sperry v. State of Florida,[7] established that the activities of patent agents before the USPTO constitute the practice of law, and that the state of Florida lacked the authority to regulate such activities. This decision established a degree of privilege for patent agent communications, as long as such communications were limited to the activities that USPTO registration allows the agent to practice.

This finding was reiterated recently in the Federal Circuit decision In re: Queens University at Kingston,[8] and in late 2017, 37 C.F.R. §42.57 was promulgated. This rule is entitled “Privilege for patent practitioners” and states that “[a] communication between a client and a USPTO patent practitioner ... that is reasonably necessary and incident to the scope of the practitioner’s authority shall receive the same protections of privilege under Federal law as if that communication were between a client and an attorney authorized to practice in the United States, including all limitations and exceptions.”[9]

The USPTO rules establishing who may practice before the PTAB have always stated that the individual must be a “registered practitioner,” a term that includes not only registered patent attorneys, but patent agents as well. As a result, patent agents have had the authority to act as lead counsel during the normal appeal process, and after implementation of the AIA, have likewise had the ability to act as lead counsel in the new post-grant proceedings.[10]

Under the BRI standard before the PTAB, the factors affecting the scope of the patent agent’s authority on matters of claim interpretation did not differ from the factors that must be considered during the ordinary duty of preparation and prosecution of patent applications. For instance, grounds for challenging issued claims in a PGR include considerations under 35 U.S.C. 101, 102, 103 and 112, as well as double patenting challenges, all of which a patent agent is qualified to handle in the context of patent prosecution.

With the shift to the Phillips standard, patent agents are now able to act in a representative capacity in proceedings that not only empower, but obligate them to counsel clients on claim interpretation under a standard that might have previously risked waiver of privilege. The Phillips standard was formerly solely the domain of patent litigation, and as patent agents are not licensed to represent clients in a district court matter, a communication from an agent to a client which was not clearly prepared under the supervision of an attorney and which applied a Phillips standard analysis might have become discoverable if such work was unrelated to a proceeding before the USPTO.

Patent agents are now in a position to apply two different validity standards during prosecution and in post-grant proceedings. The question now becomes: Can a patent agent who is not acting under the supervision of an attorney prepare invalidity analyses and do related opinion work under the Phillips standard and expect the work product generated to enjoy the same privilege that attaches to communications related to preparation and prosecution of patent applications? Such opinion work, while prepared to assess the odds of prevailing in an IPR, could also be relevant to litigation before the courts because the standard of claim construction is now the same, although the burden of proof is not. While the burden in PTAB proceedings remains the preponderance of evidence, the courts require clear and convincing evidence.[11] Notably, the client-agent privilege may not extend to infringement analyses prepared by a patent agent who is not acting under the supervision of an attorney because infringement is exclusively litigated in the courts.

With clients becoming ever more cost-conscious, firms and in-house departments have begun to rely more heavily on patent agents, who typically charge lower rates than attorneys. Could the application of the Phillips standard to PTAB proceedings make the work performed by patent agents even more relevant in litigation matters? If a work product is “prepared under the Phillips standard,” is it valid to assert a patent agent privilege? Does the privilege only apply if the work product was prepared in preparation for an actual or potential inter partes review? These issues will undoubtedly arise in the coming years as PTAB practice continues to expand.

Linda Nattler is a shareholder and Robert Shereda, Ph.D., is a patent agent at Brinks Gilson & Lione.

The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] Federal Register, 83 FR 51340-51359

[2] Phillips v. AWH Corp., 415 F.3d 1303 (Fed. Cir. 2015)

[3] Id. at 1316

[4] Id. at 1321

[5] Cuozzo Speed Technologies, LLC v. Lee, No. 15-446, 579 U.S. _____ (2016)

[6] Federal Register, 83 FR 51342

[7] Sperry v. State of Florida ex rel. Florida Bar, 373 U.S. 379 (1963)

[8] In re: Queens University at Kingston, 820 F.3d 1287 (2016)

[9] 37 C.F.R. §42.57(a)

[10] 37 C.F.R §42.10(c)

[11] Novartis AG v. Noven Pharmaceuticals Inc., 853 F.3d 1289, 1294 (2017)

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