Apr 24

“Indirect” Common Inventorship Not Sufficient To Support Priority Claim Under 35 U.S.C. §120

PriorityThe PTAB recently took up the issue of whether, in a family of patents and applications, a later patent in the family is entitled to the benefit of the filing date of an earlier-filed application in the family where the later patent and the earlier application do not themselves share a common inventor, but each application in the chain share a common inventor with at least the immediately preceding application.  Without Federal Circuit precedent directly on point, the PTAB construed the statutory language of 35 U.S.C. §120 to require at least one common inventor between the later patent and the earlier-filed application to which priority is being claimed. Common inventorship between immediately-preceding applications in the chain alone is not sufficient.

In Polaris Wireless, Inc. v. True Position, Inc., IPR2013-00323, the Patent Owner attempted to disqualify an asserted prior art reference by claiming priority to the filing date of an application filed before the publication date of the prior art reference.  The priority application was linked to the patent challenged in the IPR through a series of intermediary continuation applications.  While each of the applications and patents in the family shared a common inventor with at least the application that immediately preceded it, the challenged patent did not share a common inventor with the priority application itself.

Without Federal Circuit precedent directly on point, the PTAB turned directly to the language of  35 U.S.C. §120, and particularly the provision that “…a patent is entitled to the priority date of an earlier filed application if…the applications have at least one common inventor.”  The PTAB concluded that the “earlier filed application” properly refers to the prior filed application with the accordable filing date.  The PTAB further concluded that its interpretation of the statute is “consistent with” (though not directly addressed by) Federal Circuit precedent on 35 U.S.C. §120.

Therefore, under Polaris Wireless, Inc. v. True Position, Inc., a patent is entitled to the priority date of an earlier-filed application only if the patent and the earlier-filed application themselves share a common inventor.

Apr 22

Strategies for Pharma Companies Facing Bass-Like Challenges in IPR Proceedings

18095113_sKyle Bass is at it again. On April 20, 2015, Bass filed his sixth inter partes review (IPR) Petition against a patent covering Pharmacyclics, Inc.’s cancer drug, IMBRUVICA®. Then, on April 22, 2015, Bass filed his seventh IPR Petition against a patent covering Biogen’s multiple sclerosis drug, TECFIDERA®. These IPR filings follow a typical strategy for Mr. Bass – identify companies with a limited number of products (in the case of Pharmacyclics, its website seems to indicate that IMBRUVICA® is its only product) – and attack the core patent(s) covering one or more of those products. By attacking patents on a company’s core products, Mr. Bass is likely best able to negatively affect the company’s stock price in a short-sale strategy.

What should you do if you find yourself in the sights of Bass, or some other IPR challenger? The BIO IP Counsels meeting in St. Louis last week featured a robust discussion of IPR practice and the important steps a company can and should take when facing an IPR challenge to one or more core patents. The following insights and strategy were gleaned from comments made at the BIO meeting:

  • Immediately convene a meeting of the CEO, CFO, government relations, investor relations, internal and external general and IP counsel to develop a coordinated strategy.
  • Get out in front of the issue with your general counsel and/or patent counsel. IPR issues are nuanced and complicated, internal and/or external patent counsel should be made available to analysts to answer specific questions about the IPR process in general, and specific questions about the particular IPR filing in question. Your CEO and/or CFO can be available to comment on more general issues. With a precipitous stock price drop, there will be internal pressure to immediately respond, but if your company representative is unprepared or unknowledgeable about IPR proceedings, it will result in more harm than good.
  • In communications with analysts, focus on educating about the IPR process and positive points. For example:
    • Were only some of the claims of the patent-at-issue challenged?
    • Is regulatory approval a high hurdle that makes patent protection less important?
    • An IPR filing is only a request to re-evaluate the patentability of a patent – are there problems with the IPR petition that will make it easy to defend?
    • An IPR proceeding, with appeals, will take over 2.5 years, so there is no immediate threat to the patents-at-issue.
    • IPR filers, like Bass, DO NOT file Abbreviated New Drug Applications (ANDA) or BLA; therefore, even if they invalidate the patents, they do not have a competitive drug application to be approved.
    • Issued, US patents carry a presumption of validity (35 USC 282(a)) and the IPR filer carries the burden of overcoming this presumption by a preponderance of the evidence.
  • Meet with Congress and be proactive to change the process. Many Representatives and Senators are unfamiliar with the IPR process and the effects it is having on pharmaceutical companies, including by the manipulation of the proceedings by individuals like Bass. For example, Mr. James Harrington, Chief IP Counsel for Shire Pharmaceuticals (another Bass target) elaborated on this point: “Shire Pharmaceuticals is working with BIO, Pharma and Congress to help draft proposed amendments to the IPR process to make the procedure equitable for all industries.  It is important that the pharmaceutical and Biotechnology industries can rely on a strong patent system.”

The message from BIO is clear – the IPR process, and specifically the attacks against chemical/bio patents, is a threat to the patent portfolios of pharma companies. As such, it is important to prepare for further Bass-type challenges. Also, more patent reform seems to be on the horizon, so outreach to members of Congress at this critical stage is essential.

Apr 20

30 Months of IPR Practice – By the Numbers

UntitledWelcome to Volume 9 of our IPR-PGR Report. Please send us an email if you would like a hard copy. After 30 months of IPR practice, some trends are taking shape. Overall, the percentage of petitions put into trial has gradually decreased, down to 76% this quarter, from a high of 96% at the early stages of IPR practice. Despite that decrease, we are finding that the claims that are put into an IPR trial, after a decision to institute, are increasingly not surviving. About 85% of those claims are canceled in a Final Written Decision. Motions to Amend continue to be difficult to obtain, with only a total of 3 such motions having been granted to date. This trend has led many Petitioners to abandon any effort to obtain new claims at all, turning instead to reissue or ex parte reexamination to present fuller claim sets to the Patent Office. The always-interesting stay data from the district courts indicates that the Eastern District of Texas remains an outlier for denying motions to stay. Although motions to stay are granted, on average, 62% of the time, the EDTX has only granted about 15% of the motions brought in that district. We also note that some of these trends have triggered the Patent Office to make certain tweaks to IPR practice, with other major changes on the horizon. You can read about those changes HERE.

Lastly, by way of a practice tip, we note the increasing frequency with which IPR petitions are being filed by companies before they enter the marketplace, to eliminate blocking patents. This technique was used recently, and with great success, by one of our clients, as discussed in this IP Law360 article. Additionally, this technique was recently discussed in a Wall Street Journal article, in which we were quoted, discussing the pharmaceutical industry. Please let us know if you have any questions about this growing strategy.

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.

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