Apr 15

Live Testimony for Fact Witness Can Be Appropriate at IPR Oral Hearing

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With the Patent Office considering changes to inter partes review practice to potentially increase the use of live testimony at oral hearings, it is worth reviewing the first case in which the Board allowed such live testimony.  In K-40 Electronics v. Escort, IPR2013-00203, the PTAB granted Patent Owner’s request to present live testimony from the inventor at the oral hearing. Paper 34 at 2. The Board noted its default position that live testimony is often not necessary, but under very limited circumstances, cross examination may be ordered to take place in the presence of an administrative patent judge. See Office Trial Practice Guide, 77 Fed. Reg. 48756, 48768 (Aug. 14, 2012). Paper 34 at 2.

Key to this case was Patent Owner’s attempts to antedate the only references relied upon by Petitioner. The Board found, therefore, that the testimony of the inventor was critical to the determination and the inventor’s credibility could be best judged live. Id. at 2. The Board also discussed that, because the inventor is a fact witness, this favors live testimony, versus a typical expert witness wherein credibility turns on the plausibility of their theories, and not their demeanor. Id. at 3. The Board continued by stating that should Petitioner suspect that the inventor is changing his testimony, he may be impeached with his prior testimony. Id. at 3.

Apr 13

Toward a Bullet-Proof Petition – Motivation to Combine

white puzzle with one piece missing, on blueWhile 8 out of 10 Petitions seeking inter partes review are granted by the PTAB, there remain several key errors that unsuccessful Petitioners make. Among them is the failure to provide sufficient factual basis for a rationale to combine prior art references in an obviousness analysis. That issue arose, in an unsuccessful petition, in Kinetic Technologies, Inc. v. Skyworks Solutions, Inc., IPR2014-00529, where the Board found Petitioner’s motivation to combine arguments inadequate. The case involved US Pat. No. 7,921,320, directed to a single wire serial interface that may be used to control stand-alone power integrated circuits and other devices.  Decision at 3.

Petitioner, in arguing obviousness of the challenged claims, asserted that combining to two prior art references was a matter of combining know elements to yield predictable results, among other conclusory remarks. Petitioner did list several similarities in the circuits of the two references, and provided expert testimony, but did not provide much in the way of details. Id. at 14.

As such, the Board was unpersuaded by Petitioner’s argument for motivation to combine. First, the Board gave little or no weight to the expert testimony, since it was virtually identical in content to the arguments presented in the petition, and lacked facts or data to support the opinion of the expert. Specifically, the Board criticized the expert declaration as filing to “expain the ‘how,’ ‘what,’ and ‘why’ of the proposed combination of references.” Id. at 15. To that end, the Board found that the expert did not explain how the references could be combined, or how such combination would yield a predictable result.  In the final criticism of the expert testimony, the Board noted that the expert failed to explain why the ordinary artisan would have combined elements from the two references in the specific way the ‘320 invention does.

Accordingly, the Board reminded Petitioner that there must be reasoning supporting combination of references in an obviousness challenge, and rejected Petitioner’s argument for motivation to combine references, stating that the argument lacked articulated reasoning with rational underpinning. Id. at 16. As such, the Board determined that Petitioner failed to demonstrate a reasonable likelihood that it would prevail in establishing the challenged claims as unpatentable.

Apr 10

Which Party Should File Motion to Seal in Inter Partes Review?

7629450_sThe PTAB has taken seriously the importance of public accessibility to information underlying an inter partes review proceeding. As such, motions to seal have been trickier to navigate than might have been expected. One aspect of these motions that has caused some confusion is: Who is the proper party to file a motion to seal? In Clio USA, Inc. v. The Procter and Gamble Company, IPR2013-00438, IPR2013-00448, and IPR2013-00450, the Board denied Petitioner’s Motion to Seal because, while Petitioner sought to enter certain evidence into the record, it was Patent Owner’s information and Patent Owner that wanted the information sealed. As such, it was Patent Owner who should have filed the motion to seal.

In the subject proceedings, Petitioner sought to file deposition testimony as an exhibit to the proceeding. Patent Owner asserted, however, that portions of the subject testimony contained confidential information. To protect the confidentiality of that information, Petitioner filed Motions to Seal in each proceeding.  Decision at 2.

The Board denied the motions, noting that the moving party bears the burden of showing good cause that the subject information should be sealed. To that end, because it was Patent Owner who was asserting that deposition testimony was confidential, it was Patent Owner who should have moved to seal, not Petitioner. Accordingly, Petitioner’s Motion to Seal in each proceeding was dismissed.

Apr 08

Pharmaceutical Filings on the Upswing as Power of IPR Becomes More Well-Known

11012665_s (1)The Wall Street Journal has taken note of recent IPR filings by hedge fund manager Kyle Bass against certain pharmaceutical patent portfolios. Our Matt Cutler was quoted in one of the articles. The other can be found HERE.

Mr. Bass seems to be an early pioneer in realizing the power of inter partes review, and has opened the eyes of investors in the pharma industry. While Mr. Bass suggests that his actions are intended to open up the pharma industry to more competition by eliminating bad patents, today’s WSJ article quotes sources that believe his motives are more dubious – creating negative news for certain pharma companies that help with short sale bets against those companies.

Whether his bets are long or short, however, Mr. Bass has hit on a strategy that recognizes the strong, negative impact IPR has had to date on pharmaceutical patents. Our data shows that 87% of pharma patent claims that are subject to an IPR trial are ultimately deemed unpatentable. This is among the highest claim kill rates for any technology area.

As a result, we expect pharma-related IPR filings to continue to grow, and not just from hedge fund managers looking to make a quick buck.

Apr 06

Timing Is Everything When It Comes To Interlocutory Appeals of CBMR-Related Motions To Stay

GavelThe issue of when interlocutory appellate jurisdiction vests with the Federal Circuit under Section 18 of the AIA to review a district court’s decision on a motion to stay in view of a related CBMR was recently addressed in Intellectual Ventures II LLC, v. JPMorgan Chase & Co., et al., 2014-1724.

The filing of a motion to stay federal patent litigation in view of a related IPR or CBMR is commonplace.  Generally, a district court’s decision on such a motion is not immediately appealable under the final judgment rule governing appellate jurisdiction.  However, Section 18 of the AIA carves out a statutory grant of jurisdiction to the Federal Circuit to hear immediate interlocutory appeals of decisions on motions to stay “relating to a [CBMR] proceeding for that patent [asserted in the district court]…”  In Intellectual Ventures, the Federal Circuit held that a CBMR “proceeding” does not begin when the petition is filed, but, instead, only begins once the PTAB institutes review.  Therefore, the Federal Circuit’s jurisdiction to hear an interlocutory appeal of a decision on a motion to stay a case having a related CBMR only vests once the PTAB institutes review.

The underlying case is pending in the Southern District of New York, where Intellectual Ventures has asserted multiple patents against JPMorgan and other defendants.  About a year after the case was filed, JPMorgan filed a motion to stay based on its anticipated filing of four CBMR petitions.  Shortly thereafter, JPMorgan in fact filed two CBMR petitions (but did not file the other two promised petitions).  Applying the four-factor test set forth in AIA § 18(b)(1), the district court denied JPMorgan’s motion to stay.  JPMorgan filed an interlocutory appeal to the Federal Circuit, asserting that the Federal Circuit had jurisdiction under AIA § 18(b).  JPMorgan argued that (i) a CBMR “proceeding” begins as soon as a party files a CBMR petition, and (ii) alternatively, even if a CBMR “proceeding” does not commence until the PTAB institutes such a proceeding, a petition for a proceeding (or even the anticipation of the filing of a petition) is sufficiently “related” to a proceeding to give rise to jurisdiction under § 18(b)(2).  The Federal Circuit analyzed the statutory language of the AIA as well as the congressional record and concluded that a CBMR “proceeding” commences only when the PTAB institutes review.  The Federal Circuit also dismissed JPMorgan’s second argument, concluding that the clear language of AIA §18(b) only gives the Federal Circuit jurisdiction over a decision on a motion to stay “that is related to an actual CBMR proceeding, not a decision on a motion to stay that is related to anything that relates – however remotely – to a hoped-for CBMR proceeding.”  (emphasis in original)  Though not at issue in this case, the Federal Circuit noted that its decision does not preclude district courts from deciding motions to stay prior to the institution of a CBMR proceeding.

While the timing of when to file a motion to stay in view of a related IPR or CBMR is always a strategic consideration, this case underscores that the immediate interlocutory jurisdiction in the context of related CBMR “proceedings” adds an extra layer of consideration.

Apr 03

IPR Incorporation by Reference Argument Not Enough to Save Priority Claim

26168884_sMany patent challengers have found “incorporation by reference” arguments to be a tempting way to try to convert an obviousness argument into an anticipation argument, but “incorporation by reference” can also impact whether a reference qualifies as prior art, as was the case in IPR2014-00664, IGB Automotive Ltd. and IG Bauerhin GMBH v. Gentherm GMBH.  In that case, the Board instituted review in part because the challenged patent’s earliest claimed priority document did not sufficiently describe the claimed subject matter, rejecting Patent Owner’s argument that the priority document’s “incorporation by reference” sufficiently bolstered the patent’s disclosure.

More specifically, the patent-at-issue claimed priority to two provisional applications having different filing dates. Decision at 14.  Patent Owner argued that a prior art reference (Knoll) relied upon by Petitioner was not prior art because it antedated the earlier of the claimed priority documents. Petitioner countered that the earlier provisional did not contain an enabling disclosure for the subject matter of the claims at issue, making the challenged patent’s earliest priority date filing date of the second (later) provisional application. Id. at 14.  If this later priority date were used, then the Knoll reference would qualify as prior art. The Board agreed with Petitioner, finding that the earlier provisional application did not, on its face, adequately describe at least one of the limitations in the challenged claims.  Decision at 15.

Patent Owner presented a back-up argument, asserting the earlier provisional application does support the priority claim based on that provisional’s “incorporation by reference” of other documents that did adequately describe the claim limitations at issue.  The Board rejected this argument, finding that the facts did not meet the strict incorporation by reference standard, which requires that the alleged priority document “both identifies with ‘detailed particularity’ the specific material in the patents asserted to be incorporated by reference, and ‘clearly indicates’ where that material is found in the incorporated patents.”  Decision at 15 (Board’s emphasis, and citing Xenon Environmental, Inc. v. U.S. Filter Corp., 506 F.3d 1370, 1378–79 (Fed. Cir. 2007).

Accordingly, the Knoll reference did qualify as prior art.

 

Apr 02

Another IPR Victory for Harness Dickey – Defeat All Challenged Claims of 3 Patents

law360IP Law360 reported on another big win for the Harness Dickey IPR team, as the PTAB determined that all claims of three challenged patents were unpatentable in cases styled as Laird Technologies v. GrafTech International, IPR2014-00023, -00024, and -00025. IP Law360’s article can be accessed HERE.

Apr 01

PTO Previews Changes to Inter Partes Review Practice

32147971_sJustified or not, there has been a significant and growing chorus of criticism regarding the results of about two-and-one-half years of Inter Partes Review practice before the PTAB. As our soon-to-be-released IPR Report (Volume 9) will show, about 85% of the claims that are addressed in a Final Written Decision are ultimately cancelled.

In response to this criticism, in June 2014, the US Patent and Trademark Office solicited input regarding how the IPR process was working. On March 30th, the PTO announced, via Director Lee’s blog, that changes are coming. While the blog entry merely highlighted some of the changes that will be coming, it is clear that some of the contemplated changes can be significant. In general, the fixes are to come in three phases – the first to be implemented immediately, and the others to be phased in over time.

First Rule Package – Immediate Quick-Fixes (to be implemented in a revised rule package to come, but implemented in scheduling orders starting immediately):

  1. Page Limit for Motions to Amend increased from 15 to 25 pages (and claims to be placed in an appendix instead of the body of the motion); and
  2. Page Limit for Petitioner Reply Brief increased from 15 to 25 pages.

Second Rule Package (mere considerations at this time):

  1. Further modifications to the Motion to Amend process, including
    1. That a motion for a substitutionary amendment will always be allowed to come before the Board for consideration, and
    2. For the amendment to result in the issuance of amended claims, the Patent Owner will not be required to make a prior art representation as to the patentability of the narrowed amended claims beyond the art of record before the Office.
  2. Adjustments to the evidence that can be provided in the Patent Owner Preliminary Response;
  3. Clarification of the claim construction standard as applied to expired patents;
  4. Adjustments to the scope of additional discovery;
  5. How to handle multiple proceedings before the Office involving the same patent;
  6. Use of live testimony at oral hearings, and
  7. Whether the parties should be required to make a certification with their filings similar to a Rule 11 certification in district court litigation.

Third Rule Package (potential changes via amendment to the Trial Practice Guide):

  1. Emphasize the availability of live testimony;
  2. Emphasize the importance of real party-in-interest discovery as to determinations of standing and later estoppel consequences; and
  3. Pilot program whereby a single judge would handle the institution decision and then two new judges would be added to the panel only when and if a trial is instituted to serve as “fresh eyes.”

Mar 26

Board Discusses Difference Between Supplemental Evidence and Information

Glucosamine & MSM labelingStill confused by the difference between supplemental evidence versus supplemental information? Let’s try this again….In Norman International, Inc. v. Andrew J. Toti Testamentary Trust, Russell L. Hinckley, Sr. (Co-Trustee) and Robert F. Miller (Co-Trustee), IPR2014-00283, the Board addressed an issue of admissibility of evidence, focusing on the differences between supplemental evidence and information.

Petitioner sought to have an exhibit (“Exhibit 1010”) admitted as supplemental information, pursuant to 37 CFR § 42.123(a). For the Board to authorize filing of a document under § 42.123(a), the moving party (Petitioner in this case) must prove that the documents are supplemental information, not supplemental evidence.  The difference between supplemental information and evidence, under precedent of Handi-Quilter, Inc. v. Bernina Int’l AG, IPR2013-00364, Paper 30 at 3 (PTAB June 12, 2014) is, as follows:

“supplemental evidence—served in response to an evidentiary objection and filed in response to a motion to exclude—is offered solely to support admissibility of the originally filed evidence and to defeat a motion to exclude that evidence, and not to support any argument on the merits (i.e., regarding the patentability or unpatentability of a claim). Supplemental information, on the other hand, is evidence a party intends to support an argument on the merits.”  Decision at 6.

Accordingly, Petitioner bore the burden of proving that Exhibit 1010 supported an argument on the merits for the exhibit to be admitted. Patent Owner opposed by arguing that Exhibit 1010 was served in response to Patent Owner’s evidentiary objection to a different exhibit (“Exhibit 1002”). Specifically, Patent Owner objected to Exhibit 1002 and alleged it lacked the required English translation and affidavit attesting to accuracy of translation, and therefore Patent Owner argued that Exhibit 1010 did nothing more than attempt to remedy the deficiencies in admissibility of Exhibit 1002.  Id. at 5-6.

The Board disagreed with Patent Owner, noting that Exhibit 1002 did contain an English translation, and Exhibit 1010 addressed whether that translation was accurate. Accordingly, the Board found that Exhibit 1010 essentially contained information about what Exhibit 1002 actually disclosed. Since Exhibit 1002 contained a reference which served as a basis for grounds of unpatentability (an argument on the merits), the Board found that Petitioner had met its burden of proving that Exhibit 1010 was supplemental information and therefore allowable. Id. at 7.

Mar 25

PTAB Rules Lab Notebooks Insufficient to Prove Conception and Reduction to Practice

31859106_s (1)Swearing behind a reference is an enticing option for a Patent Owner, but the Board has again reminded parties that rigorous—and admissible—proof of conception and reduction to practice is still necessary.

This issue was addressed in Microsoft Corporation v. Surfcast, Inc., a consolidated opinion concerning four IPR petitions filed by Microsoft challenging one patent in which the Board found all claims unpatentable, and denied another motion to amend.  In its final written decision the Board rejected Patent Owner’s attempt to prove prior conception and reduction to practice despite extensive evidence.

Patent Owner tried to antedate a prior art reference via testimony from inventors regarding conception and reduction to practice.  The Patent Owner also proffered corroborating evidence in the form Exhibits consisting of emails between inventors, lab notebook pages, and other assorted papers.  Decision at 15.

Petitioner challenged the authenticity of the evidence, as all corroborating Exhibits consisted of inventor-generated documents and correspondence between inventors.  Patent Owner responded by providing inventor testimony to authenticate the exhibits. This was insufficient, because it meant the Patent Owner was essentially authenticating documents corroborating inventor testimony with further statements by the inventor.  Accordingly, the Board deemed the authentication defective, as it was not sufficiently independent.  Id. at 16-17.

Patent Owner further argued that corroboration was not necessary when a party attempts to prove conception and reduction to practice through use of physical exhibits.  The Board disagreed, that corroboration of the dates in the exhibits purported to establish conception is still required.  Id. at 17.

Perhaps envisioning an appeal, the Board still proceeded to analyze Patent Owner’s evidence of reasonable diligence towards a reduction to practice.  Patent Owner offered invoices from Patent Owner’s law firm, time entries from an interested party, and declarations of two interested parties who weren’t an inventor.  Here again, though, the Board rejected Patent Owner’s documentary evidence because it was not authenticated by a non-interested person (instead, the authentication declarants each had an interest in the outcome of the case).   Id. at 18-19.

The Board further noted that even if the corroboration was adequate, diligence was not proven on the merits.  The expert testimony purporting to support diligence in reduction to practice was by an expert who worked on later-assigned matters out of chronological order, creating a week of inactivity on the subject application and several gaps in activity.  Id. at 20-21.

Accordingly, the Board found that Patent Owner also failed to prove reasonable diligence to a reduction to practice.  Id. at 20.

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