Jul 04

Motion for Additional Discovery Seeking Details of Kyle Bass-led Coalition Partially Succeeds

14029319_sWe continue to monitor the various strategies and tactics being employed by pharma companies that have been targeted by the “Coalition for Affordable Drugs” – a group led by hedge fund manager Kyle Bass. In a recent decision, the PTAB granted-in-part a pharma company’s attempts to dig into the background of the Bass-led coalition. Coalition for Affordable Drugs II LLC v. NPS Pharma., Inc., IPR2015-00990.

Motions for Additional Discovery have been difficult to win before the PTAB given the Board’s mandate to ensure that IPR proceedings are quick and cost-effective. To achieve that goal, of course, the discovery allowed much be far less than what is normally allowed in district court litigation.

In the NPS Pharma case, Patent Owner sought broad categories of information (in the form of 7 document requests and 2 interrogatories) relating to the entities that are funding Bass’ coalition. The Board rejected these broad discovery efforts, finding them overly broad and, therefore, not in the interest of justice. Order at 6. The Board did, however, agree that a threshold amount of evidence was presented that made some of the discovery necessary. Specifically, the Board allowed discovery into the agreements in the possession of Petitioner that relate to the control or ability to control any aspect of the IPR proceeding by a party that is not designated as a Petitioner or real party-in-interest in the Petition.

It seems likely that, if any such agreements exist, they will be put under seal in the IPR proceeding. However, we will keep a look out for them to see if we can learn more about this Bass-led group that has shaken the pharma industry.

Jul 02

Board Has Change of Heart On Rehearing

37396761_sA request for rehearing is generally considered the IPR equivalent of an end-of-the-game Hail Mary pass, but just like in football, sometimes it works, as illustrated by the Board’s reversal of its prior decision denying review in Handi Quilter, Inc. & Tacony Corporation v. Bernina International AG, IPR2013-00270.

The Board originally denied review based on its determination that the Petitioner only showed that a person of ordinary skill in the art could have combined the relied-on references, but not why the person of ordinary skill would have done so.  Decision at 2.  Following the Petitioner’s request for a hearing, though, the Board had a change of heart and decided to institute inter partes review.  Under 37 C.F.R. § 42.71(d), “[t]he burden of showing a decision should be modified lies with the party challenging the decision” and the rehearing “request must specifically identify all matters the party believes the Board misapprehended or overlooked.”  Decision at 23.  Petitioners here successfully argued that the Board had previously misapprehended its argument (supported by declaration testimony) that its primary reference (Watabe) itself provided sufficient rationale for why a person of ordinary skill in the art would have looked to the secondary references and combine them with Watabe.  Thus, the Board instituted review.

Jul 01

Board Disqualifies Reference As Not Meeting Requirements of 102(e)

iStock_000011114669SmallWe are reminded once again, by the Board’s decision denying review in Cisco Systems, Inc. v. Constellation Techs., LLC, IPR2014-00914, that 102(b) art is better than 102(e) art.  In Cisco, Petitioner relied on a reference (Riley) it asserted to be 102(e) prior art.  In making that argument, Petitioner had the burden of convincing the Board that the Riley reference was support by the two provisional applications to which it claimed priority.  Petitioner tried to meet that burden through expert declaration testimony.

The Board was not persuaded by the proffered testimony, which the Board found to be conclusory and thus entitled to little, if any, weight.  Decision at 23.  As a result, the earliest available priority date of the reference was after the priority date of the challenged patent.  Thus, the Board denied review as to the grounds which included the Riley reference.

The lesson here, as is the case with many aspects of IPR practice, is that if you need to prove a point, be sure to include specific, detailed analysis.

Jun 30

Lessons From the Rare Grant of an IPR Motion to Amend

19377657_sAlthough many Patent Owners have complained about the high hurdles for amending claims in an IPR, the Board’s decision in Riverbed Technology, Inc. v. Silver Peak Systems, Inc. IPR2013-00403 shows that the requirements are not impossible to meet.  In Riverbed, the Patent Owner filed a motion to amend which cancelled all existing claims, and proposed six amended claims. The Board found the Idle Free factors to be met as to two of the six proposed amended claims.  This case also illustrates the value in presenting well-grounded arguments (which the Petitioner is unable or unwilling to challenge), as opposed to arguments that stretch the facts.

(1)  No Broadening of Claim Scope.  The Board noted that Patent Owner’s substitute claims contained all limitations of an original claim and only added further limitations, meaning that the claim scope was not enlarged.  (In fact, the amendments were substantial, taking nearly a page of the Board’s decision to reproduce.).  Notably, the Petitioner did not dispute this point.  Decision at 12.

(2)  Provide Written Description Support. Patent Owner identified support in the original application (referring to paragraphs in the application, not column/line numbers in the issued patent) as to each added limitation of the substitute claims.  Here again, Petition did not dispute that the limitations had written description support.  The Board found that Patent Owner met Idle Free’s written description requirement.  Id. at 12-13.

(3)  Provide Claim Interpretation of New Claim Terms.  Patent Owner provided a table showing three new claim terms, and corresponding broad constructions based on description and figures in the ‘583 specification.  Patent Challenger did not argue that the proposed constructions were incorrect.  The Board agreed with Patent Owner’s proposed constructions, and further adopted the same construction for previously-interpreted claim terms.  Id. at 13-15.

(4) Demonstration of Patentability.   Patent Owner gave a detailed account of known processes (known to the Patent Owner, not just art of record) in the art similar to the substitute claimed process, and even pointed to Patent Challenger’s declaration and references relied upon as examples of the “old” process.  Patent Owner then identified how the new limitations of the substitute claims distinguished over the known process.  Id. at 16-19.  In fact, Patent Owner’s arguments as to claims 28 and 30 were essentially unrebutted by Petitioner.  Id. at 25.  Finally, Patent Owner addressed the knowledge of the ordinary artisan.  Patent Owner pointed again to the new limitations of the substitute claims, and explained how even the strongest art-of-record brought forth by Patent Challenger did not suggest that the specific process defined by the substitute claims was within knowledge of the ordinary artisan at the time of invention.  Id. at 20-22.  Further, Patent Owner provided explanation of how its substitute claimed process solved a problem in the art and was superior to the known process in arguing for nonobviousness.  Id. at 22-24.  The Board thus granted two of the proposed amended claims.

As to the other four proposed claims, though, the Board found Petitioner’s analysis lacking insofar as it failed to show a patentable distinction over the parent claims (the two granted amended claims) or for failure to propose a claim construction for means-plus-function limitations.  The Idle Free test remaining an exacting one.

Jun 25

Board Rejects Attempt to Add Testimony to Preliminary Response

33646123_sAs we have discussed, the proposed PATENT Act contains provisions that alter many facets of IPR proceedings. One of those potential changes is a new ability to include affidavits or declarations of supporting evidence and opinions to Patent Owner Preliminary Responses. A recent decision by the Board makes clear, however, that the Board is not going to jump the gun on this change. Masterimage 3D, Inc. v. Reald Inc., IPR2015-00876.

In Masterimage, Patent Owner sought to introduce deposition testimony from Petitioner’s expert that was given in related IPR proceedings. Patent Owner believed the testimony was helpful to the Preliminary Response, though it did not contradict any of the testimony provided in his declaration in this proceeding.

The Board declined to allow the introduction of the testimony at the Preliminary Response stage. Pursuant to the existing IPR regulations, new testimony may be permitted only where a party demonstrates it is in the interests of justice (i.e., where the evidence demonstrates that the trial may not be instituted). Because there was no allegation that the proffered testimony contradicted existing testimony, Patent Owner had not shown that presenting the evidence was in the interests of justice.

Jun 24

PTAB vs. Federal Circuit Update

cafc1To date, the Federal Circuit has weighed in on 15 PTAB decisions from inter partes review proceedings. In 3 of the 15 decisions, the Federal Circuit has issued a substantive opinion:

1) In re Cuozzo Speed Technologies – Affirming the Broadest Reasonable Interpretation claim construction standard;

2) Belden Inc. v. Berk-Tek LLC – Non-precedential decision; and

3) Microsoft Corp. v. Proxyconn, Inc. – First reversal of a PTAB decision, generally because the Board’s claim construction rulings were not reasonable because they did not follow general claim construction principles.

In 12 of those 15 decisions, the Federal Circuit has simply rubber-stamped the Board’s decision via a one sentence Rule 36 Judgment. This is, apparently, the manner in which the Federal Circuit is going to manage its anticipated spike in work due to appeals from decisions of the PTAB. This is a frustrating practice, however, as the growth of the law is stunted by the Federal Circuit’s refusal to address the issues raised in these appeals in any substantive way:

4) SoftView LLC v. Kyocera Corp. – Rule 36 Judgment

5) Clearlamp, LLC v. LKQ Corp. – Rule 36 Judgment

6) Board of Trustees v. Micron Technology, Inc. – Rule 36 Judgment

7) In re: Zillow, Inc. – Rule 36 Judgment

8) Helferich Patent Licensing v. CBS Interactive – Rule 36 Judgment

9) Luv N’Care Ltd. v. Munchkin, Inc. – Rule 36 Judgment

10) Emcore Corp. v. Nichia Corp. – Rule 36 Judgment

11) Mobile Scanning Technologies v. Motorola Solutions, Inc. – Rule 36 Judgment

12) In re Continental Automotive Systems – Rule 36 Judgment

13) Prolitec, Inc. v. Scentair Technologies, Inc. – Rule 36 Judgment

14) Neste Oil Oyj v. Reg Synthetic Fuels, LLC – Rule 36 Judgment

15) Bernina Int’l v. Handi Quilter – Rule 36 Judgment

We will keep this list updated over time.

 

Jun 16

Federal Circuit Reverses PTAB on IPR Decision For First Time

37860400_sThe Federal Circuit reversed the Patent Trial and Appeal Board for the first time today in an appeal from an inter partes review proceeding. Specifically, the Board’s decision that 8 claims were unpatentable was reversed and the case was remanded to the Board. Harness Dickey was lead counsel for Patent Owner in this successful appeal, so we will not comment on the merits, but attach the decision for your review.

Jun 10

Objective Basis for Inherency Argument Must Be Contained in IPR Petition

19179334_sA common strategic question in inter partes review proceedings is whether you should proceed on an anticipation ground, arguing that a specific limitation is inherently disclosed, or convert the ground into an obviousness ground, using an explicit disclosure in a secondary reference to demonstrate the unpatentability of a claim. The perils of going with an inherent anticipation argument, of course, include the additional burden of proving that a reference necessarily discloses the feature, even if it is not explicitly disclosed. As such, it is worthwhile considering Spansion Inc., Spansion LLC, and Spansion (Thailand) Ltd., v. Macronix International Co., Ltd., (IPR2014-01116; U.S. Pat. No. 6,522,360) wherein the Board rejected an inherency argument made by Petitioner.

The ‘360 patent relates to a circuit layout on a substrate of a semiconductor wafer that is suitable for reducing defects during a chemical mechanical polishing (CMP) process.  The process has several key paramenters, including having an average polishing pressure during the process. The substrate comprises a plurality of strips, and the circuit layout comprises two structures linked by said strips. Decision at 2-4.

Petitioner argued that a prior art reference inherently disclosed the claim limitation “at least two strips of second circuit structure located on said substrate of said semiconductor wafer, each of said two strips of second circuit structure respectively linking the front end and the rear end of said plurality of strips of said first circuit structure”.  Id. at 8.  The Board disagreed, finding that Petitioner did not sufficiently address the functional language of the claim limitation as inherently disclosed in the reference. Id. at 8-9.  Specifically, the Board found that Petitioner did not provide enough evidence that the prior art process would apply an average polishing pressure across the circuit grid arrangement of the reference.  The Board criticized Petitioner’s reliance on a bare opinion presented in expert testimony, which essentially recited verbatim the patentability analysis presented in the Petition.  In other words, rather than provide objective factual support for the inherency argument, Petitioner’s expert testimony essentially signed off the arguments set forth in the petition.  Accordingly, the Board rejected Patent Challenger’s inherency argument and denied the petition as to the ground which depended on inherent disclosure in the prior art.  Id. at 10.

Jun 08

Amendments to PATENT Act Proposal Takes Aim at IPR Proceedings

8797259_s (1)On Thursday, June 4, 2015, the PATENT Act made it out of committee on a 16-4 vote after amendments were made to the bill that take direct aim at inter partes review proceedings. While there is still a long way to go before this bill becomes a law, this bill is further along than any other, so it is worth taking a closer look at the proposed changes to IPR and PGR proceedings:

(1) Patent Owner Preliminary Responses: Patent Owner Preliminary Responses may now be accompanied by affidavits or declarations of supporting evidence and opinions. A Petitioner may seek leave to reply to new issues raised in the preliminary response.

(2) Institution Decisions: The current version of 35 USC § 325(d), that is included in the portion of the Patent Act that relates to Post Grant Review, has a provision that allows the Director to not institute because the same or substantially the same prior art or arguments were previously presented to the Office. The PATENT Act proposes an addition to 35 USC § 314 that includes similar language in the IPR portion of the statute, whereby the Director can choose not to institute an IPR trial if it does not serve the interests of justice (including if arguments were previously presented). This provision is broader than old 325(d) – is this an opening to dismiss Petitions of the type filed by Kyle Bass?

(3) Institution Decisions Based on Different Evidentiary Standard: It shall be error to institute an IPR on the basis that the evidentiary standard at the Office differs from that in a district court litigation. This provision seems to be aimed at promoting efficiency and certainty in prior decisions by district courts so that they may not be challenged on procedural grounds.

(4) Patent Owner’s Action: IPR Petitions will only be barred under 35 USC § 315(b) if a complaint is served that alleges infringement of a particular patent claim. This allows a Petitioner the ability to add additional patent claims if, after the 1 year bar of 35 USC § 315(b) has expired, an amended complaint or other paper in a pending litigation adds claims to the lawsuit.

(5) Claim Construction Admissions: Parties to IPR and PGR proceedings will now be bound in any subsequent proceeding or civil action with regard to any claim construction arguments, adopted by the PTAB, that were made during the IPR.

(6) Live Testimony at Oral Hearing: Either party to an IPR or PGR will have the right to present live testimony where “the panel finds that such testimony would facilitate resolution of the case because genuine issues of material fact, conflicting expert opinions, or issues of witness credibility exist.”

(7) No More Broadest Reasonable Interpretation: Claims will no longer be construed pursuant to BRI. Instead, the claims “shall be construed as such claim would be in a civil action to invalidate a patent under section 282(b), including construing each claim of the patent in accordance with the ordinary and customary meaning…”

(8) Deference to District Court: If a claim has been previously construed by a district court, the Office is required to consider that claim construction.

(9) Searchable Decisions: The Director must find a way to make all PTAB decisions available “in an easily accessible, searchable form.”

(10) Claim Amendments: If you want to propose substitute claims, you must file that paper within 30 days of the Decision to Institute. Any substitute claim must be more narrow, not introduce new subject matter, and respond to a ground of unpatentability. The Petitioner shall be afforded an opportunity to respond regarding the above requirements.

(11) Burden of Proof Relative to Proposed Amended Claims: If a proposed amended claim meets the three requirements set forth immediately above, the burden of proving its unpatentability lies with Petitioner, by a preponderance of the evidence.

(12) Presumption of Validity: A provision is added to the law that reiterates that “the challenged patent shall be presumed to be valid” and that nothing shall be construed to impact the operation of section 282(a) in proceedings in a court of the United States.

(13) Three Member Panels: Only 1 judge who participated in the institution of the IPR or PGR proceeding may sit on the panel that hears the actual trial. The Director is given 1 year to implement this change.

(14) Good Faith: The Director has 1 year to implement regulations that make it clear that statements made in IPR and PGR proceedings are subject to similar obligations as Rule 11 of the Fed. R. Civ. P.

Jun 05

Board Denies Petition For Failure to Identify All Real Parties-In-Interest

12104019_sMany Patent Owners have attempted to divert IPR challenges by arguing that all real parties-in-interest were not identified in the Petition. Almost all of those efforts have failed. That is what makes Paramount Home Entertainment Inc., et al. v. Nissim Corporation, (IPR2014-000962) an interesting case because the Board dismissed the Petition because Petitioner’s parent company was not named as a real-party-in-interest (“RPI”), when it should have been.

The two parties at issue were Petitioner Paramount Home Entertainment and its parent company, Paramount Pictures Corporation. In its Patent Owner Preliminary Response, Patent Owner presented arguments and evidence that supported a conclusion that Paramount Pictures was an RPI, including that:

(1) Paramount Pictures was a co-plaintiff with its subsidiary (Petitioner) in a co-pending declaratory judgment (“DJ”) lawsuit relative to the patent-in-suit;

(2) Paramount Pictures and the Petitioner shared the same counsel in the pending DJ action;

(3) Petitioner was a wholly-owned subsidiary of Paramount Pictures and both parties were listed in the “Notice of Interested Parties” filed in the DJ action and, per Patent Owner, this demonstrates that Paramount Pictures has “total financial control” over the Petitioner;

(4) Paramount Pictures has exercised control over the dispute with Patent Owner since it arose, including that:

a) Paramount Pictures responded to Patent Owner’s license offer letter without referring Patent Owner to the subsidiary (Petitioner);

b) Paramount Pictures indicated that it engaged in numerous communications with Patent Owner;

c) Paramount Pictures referred to the counsel providing representation in this proceeding and multiple declaratory judgment actions (involving same group of parties as the instant petition) as “my counsel”; and

d) Paramount Pictures traveled to the office of Patent Owner’s attorney to view Patent Owner’s settlement agreement with a third party.  Decision at 8-9.

The Board also noted that Petitioner had not taken any action regarding issues relating to this proceeding independent from its parent company, Paramount Pictures.

Petitioner countered by arguing that the parent, Paramount Pictures, could not have hypothetically infringed the ‘547 and therefore was not a RPI. The Board rejected this argument, noting that standard for whether an entity is an RPI is whether the entity exercises control over a party’s participation in the proceeding, not whether the entity could have hypothetically infringed.  Id. at 10.  Petitioner also argued that Paramount Pictures is already estopped from filing further petitions for IPR under 35 U.S.C. § 315(a)(1).  The Board also rejected this argument, noting that Section 312(a)(2) requires identification of all RPIs, not only ones not estopped from filing petitions. Id. at 10.

Concluding its analysis, the Board determined that substantial evidence supported a conclusion that Paramount Pictures was an RPI. Because Paramount Pictures was an RPI not identified in the Petition, the Petition was deemed non-compliant under 35 U.S.C. § 315(a)(2) (requiring identification of all RPIs) and denied. Id. at 11.

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