United States: PTAB Rules That Section 101 Rejections Are Proper When Raised As Part Of An IPR Motion To Amend

It is quite common for IPR petitioners to raise § 112 defenses in opposition to a motion to amend filed by the patent owner. What’s less common is for the petitioner to argue that the proposed amended claims fail to recite patentable subject matter under § 101. In its January 18, 2019 decision in Amazon.com v. Uniloc (Case IPR2017-00948 (Paper 34)) (nonprecedential), a panel of the PTAB has made clear that it believes such arguments are proper and that the PTAB may reject an amended claim as lacking statutory subject matter.

Uniloc’s U.S. Patent No. 8,566,960 is directed to a system and method for adjustable licensing of digital products by, for example, implementing time-adjustment rules to alter the number of devices allowed to use licensed software. Following institution of Amazon’s IPR, Uniloc coupled its patent owner response with a contingent motion to amend, seeking to replace claims 1, 22, and 25 with substitute claims 26, 27, and 28 (if claims 1, 22, and 25 were found unpatentable). Notably, original claims 1, 22, and 25 were found invalid in a related district court proceeding for failing to recite patentable subject matter.

In opposition to Uniloc’s motion to amend, Amazon argued that just as original claims 1, 22, and 25 lacked patentable subject matter, so too did the newly proposed claims. The PTAB panel agreed and denied entry of the amendment. On rehearing, Uniloc argued that the PTAB lacks statutory authority to refuse claims in an IPR based on § 101. This argument was rejected.

In particular, the panel concluded that while 35 U.S.C. § 311(b) limits the PTAB’s statutory authority to cancel existing claims of a patent in an IPR only under § 102 and § 103, this provision does not address or concern the grounds of unpatentability that can be raised in response to a motion to amend. Additionally, the PTAB panel noted that “the statutory provision providing a right to a motion to amend, 35 U.S.C. § 316(d), does not prevent [the PTAB] from considering unpatentability under sections other than § 102 and § 103 with respect to substitute claims,” including patentable subject matter under § 101. This conclusion is consistent with the PTAB’s guidance in Western Digital (Case IPR2018-00082 (Paper 13) (informative)), which explains that a proposed amendment can go beyond § 102 and § 103 patentability arguments and may also include limitations directed to potential § 101 and § 112 issues. If a patent owner may address § 101 issues when filing a motion to amend, it is not surprising that the Board would conclude that it can also reject proposed claims under § 101.

Going forward, we expect the PTAB to follow the Office’s 2019 Revised Patent Subject Matter Eligibility Guidance when addressing § 101 issues, whether arising in the context of an IPR motion to amend, a post-grant review proceeding, or a covered business method patent proceeding. Indeed, the revised guidelines make clear that “[a]ll USPTO personnel are, as a matter of internal agency management, expected to follow the guidance.”

The PTAB’s decision in Amazon v. Uniloc provides a cautionary tale for patent owners: be mindful of the collateral impact an unsuccessful, contingent motion to amend may have on your existing claims. It is unlikely that adding new limitations to a challenged claim will make that claim abstract if it wasn’t already abstract to begin with. Thus, subject matter eligibility issues decided as part of an IPR motion to amend are likely to turn on the eligibility of the original, existing claim. If the district court had not already found the challenged claims invalid under § 101, the panel’s amendment decision may have provided the district court with a persuasive advisory opinion on that issue. This same fact pattern may arise with § 112 as the PTAB is not limited to analyzing written description, enablement, and indefiniteness issues for new/amended limitations, but may also reach back to portions of the original claim when deciding the motion to amend.

The panel’s decision also highlights the fact that, in many cases, practice before the PTAB is a hybrid between litigation and prosecution. Expertise in handling § 101 and § 112 issues before the Office may prove important, particularly when a motion to amend is filed. Moreover, the PTAB’s proposed pilot program for claim amendments permits patent owners to revise their motion to amend following a preliminary, non-binding decision from the PTAB, further emphasizing the need for practitioners to be able to persuasively respond to § 101 and § 112 rejections made by the PTAB.

Finally, when Uniloc filed its non-provisional patent application in 2008 (pre-AIA), it certainly did not envision that the Office could conclude, post-issuance, that its invention lacked patentable subject matter. Following the Supreme Court’s Oil States decision, it is possible, although perhaps unlikely, that the retroactive application of IPRs is deemed unconstitutional. This case may provide a path for that argument to reach the appellate courts. 

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