Nov 25

Federal Circuit Issues Second Reversal in Favor of a Patent Owner

cafc1The Federal Circuit has picked up the pace of issuing actual written opinions regarding PTAB decisions, instead of its previous, steady diet of Rule 36 Judgments. Today, the Court issued its second opinion reversing a Board decision canceling various claims in an inter partes review based on a claim construction issue in Straight Path IP Group, Inc. v. Sipnet EU S.R.O. (Fed. Cir. Nov. 25, 2015). In general, the decision comprises two key parts: 1) a fact-intensive claim construction analysis that turned on the fact that the claim language-at-issue had a plain meaning and the specification was deemed too limited to change that plain meaning; and 2) a warning that the Court will not hear new arguments on appeal.

Claim Construction Analysis: The crux of the claim construction dispute related to a claim limitation that requires “a query as to whether the second process is connected to computer network.”  (emphasis added). Patent Owner argued that the proper claim construction required a present-tense status. Id. at 6. Petitioner argued, and the Board agreed, that the proper claim construction “simply requires being registered with the server.” Id. As characterized by the Court: “what the Board meant was that, to come within the query claim language, all the query from the first unit need do is request whatever the connection server has listed about a second unit’s on-line status, even if the listed information is not accurate at the time of the query, i.e., even if it lists the second unit as online when, at the time, it is in fact not online.” Id. 

The Court’s reversal of the Board’s decision had two components. First, the Court found that the plain language of the claims undermined the Board’s determination. That plain language, “is connected to the computer network” was deemed to plainly seek a determination of whether the unit was connected at that timeId. at 7. As such, it was unreasonable for the Board to conclude that the subject query was satisfied, regardless of its current accuracy. Id. 

Second, the Court faulted the Board for failing to address that “facially clear meaning,” and instead turning immediately to the specification; which analysis of the specification was also incorrect. Id. at 8. The Court instructed that, when the claim language has a plain meaning, “the specification plays a more limited role than in the common situation where claim terms are uncertain in meaning in relevant respects.” Id. Thus, the Board’s analysis, that relied on a single passage from the patent to redefine the claim terms, was inaccurate given that there was no express or implicit redefinition of what “is connected” should mean. Id. at 9.

It is noteworthy that Judge Dyk filed a dissenting opinion, arguing that the majority erred in requiring absolute currency with regard to the real-time limitation of the challenged claims. Instead, Judge Dyk would have relied on the specification, as the Board did, because it is “always highly relevant to the claim construction analysis,” per Phillips. Dissent at 2.

New Argument on Appeal: The Court noted that the second challenge by Patent Owner to the Board’s decision rested on the Board’s failure to construe the term “process.” The Court refused to hear that challenge, though, finding that Patent Owner did not preserve the contention. Specifically, Patent Owner failed to request a construction for that term in its Patent Owner Preliminary Response, Patent Owner Response, or at the Oral Hearing. Failing to do so, the Board could not be found to have committed error in failing to construe the limitation.

Thus, this case is a rare win for a Patent Owner at the Federal Circuit, but more importantly more guidance from the Court on the ever-evolving IPR landscape.

Nov 24

3 Years of Inter Partes Review – By The Numbers

UntitledWelcome to the quarterly Harness Dickey Report on Inter Partes Review. You can learn more about some of these statistics in an article published on IP Law360, found HERE.

Nov 17

PTAB’s Ambiguous Language Is Basis For Federal Circuit Vacating PTAB’s Opinion

cafc1Yesterday, the Federal Circuit remanded a PTAB decision for just the second time.  In Ariosa Diagnostics v. Verinata Health, Inc., the Federal Circuit vacated and remanded the Board’s decision upholding the validity of Verinata’s patent because the Board’s opinion was ambiguous as to whether or not it had appropriately considered a prior art brochure (identified as Exhibit 1010).

Ariosa submitted Exhibit 1010 with its Petition, and Exhibit 1010 was referenced in the declarations filed by Ariosa’s expert witnesses.  However, Exhibit 1010 was not relied upon as invalidating art under §103.  Rather, Ariosa and its experts referenced Exhibit 1010 in a general manner to illustrate the background knowledge that a person of ordinary skill in the art would have possessed at the time of the invention.  Ariosa relied upon three other references to establish a prima facie case of obviousness.

In its reply brief, Ariosa submitted a second declaration of one of its experts that again referenced Exhibit 1010, but did so in a way that provided little, if any, additional explanation as to the role of Exhibit 1010 in Ariosa’s argument.  The Board declined to consider Exhibit 1010 at all because “neither Petitioner nor Dr. Morton explains why Exhibit 1010 could not have been presented as part of the asserted ground of unpatentability in the first instance with the Petition.”

The Federal Circuit found the language of the Board’s opinion to be ambiguous as to whether the Board declined to consider Exhibit 1010 because (i) it had not been identified at the petition stage as one of the pieces of prior art defining a combination for obviousness as part of the asserted ground of unpatentability, or (ii) Ariosa had failed to adequately explain the relevance of Exhibit 1010.  If the former, then the Board erred, because prior art submitted as part of the original petition can be used to demonstrate the knowledge of skilled artisans without being asserted as part of the §103 combination of art.  If the latter, however, the Board would be justified in giving no weight to Exhibit 1010.  Because the Federal Circuit was unable to determine the underlying reason for the Board giving no weight to Exhibit 1010, the Federal Circuit vacated and remanded the case.

Secondarily, Ariosa challenged the Board’s refusal to consider an embodiment that was disclosed in one of the prior art references that formed Ariosa’s ground for unpatentability, but was not relied upon until Ariosa filed its reply brief.  The Board declined to consider the alternative embodiments because they had not been identified or discussed in the petition or supporting declarations.  The Federal Circuit upheld the Board’s decision in this regard, citing the Board’s discretion to “exclude or give no weight to the evidence where a party has failed to state its relevance or to identify specific portions of the evidence that support the challenge.”  37 C.F.R. §42.104(b)(5).

Nov 11

Board Offers New Technique to Solve an Often-Raised IPR Issue

45686244_sOne panel of the PTAB has introduced a technique that may help solve the oft-raised complaint that a reply brief from Petitioner contains new evidence and/or argument not raised in the Petition. In early decisions, when this issue arose, the Board would simply dismiss the complaint by stating that it would, upon consideration of the entire record after the oral hearing, decide whether or not new evidence or argument had been relied upon. But, in Nintendo of Am. Inc. v. iLife Tech., IPR2015-00105, Paper 23, the Board offered Patent Owner a brief opportunity to point out the purported new evidence that will, frankly, probably make life easier on the Board.

More specifically, the Board addressed a complaint from Patent Owner that Petitioner’s reply brief included new arguments and referred to evidence not previously addressed in the Petition. Id. at 2. The Board introduced a new concept (a “Motion for Attention to New Material”???) that allowed the Patent Owner to file a 2-page brief that lists “the location and a concise description of any portion of the Petitioner’s Reply that Patent Owner wishes to draw to the Board’s attention, but it should not contain argument.” In turn, Petitioner was authorized to file a response to this paper, identifying an itemized list of what from the Patent Owner Response triggered Petitioner to include each item listed by the Patent Owner in its Reply. Again, no argument is allowed.

It is interesting to continue to watch the Board evolve to find new ways to solve the issues that come up so often in IPR proceedings.

Nov 09

Lessons Learned from a Rare CAFC Opinion on an IPR Matter

cafc1To date, the Federal Circuit has issued Rule 36 affirmances in over 80% of the cases it has heard. Thus, when a new, substantive opinion is issued by the Court, it is an opportunity to learn. On November 5th, the Federal Circuit issued an opinion in Belden Inc. v. Berk-Tek LLC, relating to the Final Written Decision issued in IPR2014-00057. The Federal Circuit affirmed the Board’s decision that claims 1-4 were determined to be unpatentable and reversed the Board’s decision that claims 5 and 6 were not determined to be unpatentable. It was a rough decision for the Patent Owner and some key lessons can be learned from the Court’s analysis:

The Board Can Rely on its Own Reading of the Prior Art: Despite the fact that the Petition was unaccompanied by expert testimony, the Court gave deference to the Board’s determination that claims 1 and 4 were obvious because those findings were supported by substantial evidence. Op. at 12-14. In so doing, the Court noted the discretion the Board can exercise in this type of case: “In the circumstances here, involving a simple point in a mechanical field and one very close piece of prior art, the Board was entitled to rely on its own reading of [the prior art]–supported by the Petition’s observations about it–to find that a skilled artisan would have understood the importance of [the key reference]”. Id. at 14. Thus, although the Petition only briefly addressed this key issue, the Board’s own view of the art can overcome such a shortcoming of the Petition.

Rationale to Combine Must Be Based on More than a General Statement: In affirming the unpatentability of claims 2 and 3, the Court noted that the Board made the correct inquiry regarding why a skilled artisan would have had reason to combine the prior art references at issue. Referencing the Board’s recitation of the KSR decision, the Court stated that “[t]he Supreme Court’s passage does not establish that it suffices for obviousness that a variation of the prior art would predictably work, but requires consideration of whether, in light of factors such as ‘design incentives and other market forces,’ the hypothetical skilled artisan would recognize the potential benefits and pursue the variation.” Op. at 15.

Broad Teaching in the Prior Art Can Provide Rationale to Combine: Relative to the decision to reverse the Board regarding the patentability of Claims 5 and 6, the Court found that the Board did not given sufficient weight to the teaching of the prior art and, instead, focused to much on the particular invention it was describing and attempted to protect. Id. at 18. Dismissing the other arguments from the Board to support patentability, the Court decided that, even in view of the substantial evidence deference afforded to the Board on factual issues, “the record is one-sided on the proper question of whether [the first prior art reference] taught a solution to the problem…that a skilled artisan would have been motivated to use in making [the disclosed product from the second prior art reference].” Id. at 20.

The PTAB, because of its Expertise, Does Not Always Need Expert Assistance to Understand Prior Art: Patent Owner argued that the evidence provided in Petitioner’s reply brief, in the form of expert testimony, was necessary to establish a prima facie case of obviousness. The Federal Circuit disagreed, finding that (1) the testimony was responsive to issues raised in the Patent Owner Response (i.e., each point from the declarant responded to a statement from Patent Owner’s declarant), and (2) the evidence was not needed to make out a prima facie case of obviousness. Although the Board often cited to the expert declaration, that did not mean the testimony was necessary for a prima facie case of obviousness. Op. at 23. The Federal Circuit concluded that the prior art itself contained all the information necessary to make out a prima facie case, especially in view of the Board’s technical expertise.

New Expert Testimony in the Petitioner Reply is Here to Stay: Patent Owner’s argument that it did not have a reasonable opportunity to the expert testimony provided in the Petitioner Reply. The Federal Circuit disagreed again, finding that there are numerous ways to respond to such testimony, including (1) cross-examination, with a motion for observation; (2) motion to exclude; (3) dispute the testimony at the oral hearing; (4) move for permission to submit a surreply; and (5) seek a waiver of any regulation that impairs its opportunity to respond.

In the end, this is a strong case for Petitioners to rely upon for all of the above-referenced aspects of the decision.

Nov 05

Don’t Let Protective Orders Trip Up Your IPR Strategy

GavelThe PTAB recently addressed what is a common – but unnecessary – problem created by a protective order issued in a parallel Federal District Court litigation.  In B/E Aerospace Industries, LLC v. MAG Aerospace Industries, LLC,[1] the Patent Owner introduced evidence of commercial success in the Patent Owner’s Response Brief.  In reply, the Petitioner wanted to introduce what it contended was contradictory evidence, namely that any commercial success was based upon features of the commercial product that were not part of the claimed invention.  The problem was that the evidence was embodied in documents produced by the Patent Owner during the parallel Federal District Court litigation, and the Patent Owner marked the documents “Confidential” under the court-entered protective order.  The terms of the protective order prevented use of “confidential” information in matters outside of the case.

The Petitioner twice sought an order from the Board for the Patent Owner to produce the subject documents in the IPR, so as to avoid the preclusion effect of the protective order.  The first time, the Board told the parties to “attempt in good faith to agree to submittal of portions of the documents in question.”  Not surprisingly, the Patent Owner would not agree.  Ultimately, the Board denied the Petitioner’s request.  At first questioning whether the request was a proper “discovery” request at all (since the Petitioner was already in possession of the documents),  the Board found that (i) the documents would not be considered “routine discovery,” (ii) the Petitioner had not sought authorization to file a motion for “additional discovery,” and (iii) the Board was not convinced that the requested order “would promote the just and speedy resolution of this case,” citing the fact that the Petitioner’s reply brief was due in about a week and the oral argument was less than six weeks away.

The foundation for the Board’s decision is shaky at best.  It is unclear how the issuance of an order for the Patent Owner to produce a limited and defined set of documents that had already been produced in the parallel Federal Court litigation would affect the “speedy” resolution of the IPR.  It is even more unclear how precluding the introduction of available, material rebuttal evidence promotes the “just” resolution of a case.

In any event, this case demonstrates the tight spot that a party in an IPR can be put in as a result of a protective order in a parallel federal court litigation.  But it is entirely avoidable.  At last count, over 80% of IPRs were filed in response to parallel Federal Court litigation.  In effect, IPRs have become, at least for the time being, an integral part of most patent litigation.  Defendants, when negotiating protective orders in Federal Court litigation, should routinely include provisions permitting use of “confidential” information in related IPR proceedings directed to the patents-in-suit.  This is entirely reasonable and would avoid the headaches evident in the B/E Aerospace case.

[1] IPR2014-01510; IPR2014-01511; IPR2014-01513; Paper 64 (October 13, 2015)

Nov 04

Federal Circuit Clarity on Key IPR Issues May Be on the Way

cafc1We are entering an interesting phase in the development of inter partes review proceedings as more and more of the contours of these proceedings are being heard by the Federal Circuit. To date, the Federal Circuit has made substantial use of Rule 36, affirming the Board without opinion in 24 of the first 29 IPR appeals it has heard, but more substantive opinions are sure to be on the way.

On November 2nd, oral argument was heard in the case of Shaw Indus. Grp. v. Automated Creel Sys. In that case, Petitioner challenged the Board’s practice of denying grounds contained in IPR petitions on redundancy grounds. In a high percentage of its decisions to institute an IPR trial, the Board will grant trial relative to one or more challenge grounds, but deny others it deems to be horizontally or vertically redundant.

Then, on November 3rd, oral argument was heard in the cases of Synopsis Inc. v. Lee and Synopsys Inc. v. Mentor Graphics Corp. In that case, Petitioner challenged the Board’s practice of only instituting trial on those claims that meet the “reasonable likelihood” standard, instead of granting trial on the entire petition when at least one claim meets that threshold.

Also interesting relative to these cases is the interplay between these issues, which ostensibly are part-and-parcel with the institution decision and the Court’s recent pronouncement, in Achates v. Apple. In that case, the Federal Circuit held that 35 USC 314(d) (“[t]he determination by the Director whether to institute IPR under this section shall be final and nonappealable.”) prevents its review of the 315(b) time bar. Some commentators have suggested that the rationale of that decision extends to any issue decided in the decision to institute. If that view is correct, this would likely preclude the CAFC from reviewing the issues raised int he Synopsis and Shaw Industries cases.

In sum, the issues heard by the Federal Circuit this week could substantially change the way IPR practice is handled at the Board….or, the CAFC might punt this issues, holding that is not able to review the issues because they are inherently a part of the institution decision.

Oct 16

Split 5-Judge Panel Allows Issue Joinder as a Way Around the One-Year Filing Deadline

34416501_sThe Board continues to grapple with the issue of joinder where a party seeks to join a petition that would otherwise be time-barred with an earlier-filed petition.  In Zhongshan v. Nidec Motor, an expanded 5-judge panel–with two members dissenting–allowed Petitioner to join a petition with an earlier (partially denied) petition which had been filed by the same petitioner, involving the same prior art.  After allowing joinder, the Board instituted trial on the previously-denied grounds. See IPR2015-00762, now combined with IPR2014-01121, Paper 67.  In short, this expanded panel, like some others before it, decided that 35 U.S.C. § 315(c) allows joinder of issues, not just joinder of parties.  As noted by the dissent, this allows for a way around the one-year time bar imposed by § 315(b).

Some explanation of this proceeding’s relatively complicated procedure history provides helpful context.  Petitioner originally challenged the validity of the patent-in-issue in IPR2014-01121.  Trial in that case was instituted on January 21, 2015, but the petition was denied in part.  The denial was, according to the Board, “not on the merits, but because Petitioner failed to include an attesting affidavit with the English translation” of the prior art, as is required by Rule 42.63(b).  One month later (the deadline imposed by Rule 42.122(b)), Petitioner filed a motion for joinder along with another petition which included the required translation attestation.

The Board initially denied that second petition based on the one-year statutory bar.  Petitioner then sought rehearing, which resulted in this decision from the expanded panel.  Here, a 3-judge majority determined the joinder statute (§ 315(c)) allows joinder of issues, not just parties, even when the joinder allows a petitioner to avoid the one-year deadline. Noting that joinder is discretionary, the Board found that institution here was within the public interest, relying on the fact that the petition did not add new prior art over the first petition, but rather corrected a technical deficiency (as opposed to trying to cure a deficiency in the merits).

The 2-judge dissent argues the institution was contrary to the clear language of §§ 315(b) and (c), particularly arguing that the joinder statute (§ 315(b)) should be considered limited by both the time bar of § 315(c) and by § 314(c)’s limitation to one who can be “join[ed] as a party.”  The dissent also argued that allowing this subversion of the one-year bar is contrary to Congress’s intent to fashion the IPR statute so as to avoid serial filings against patentees (as can happen in reexaminations).

As of this posting, the Zhongshan decision has not been identified as precedential.  So, this may not be the Board’s final word on this issue.

Sep 16

Harness Dickey Quarterly BioPharma Newsletter

BioFor our BioPharma audience, you might be interested in Harness Dickey’s Quarterly BiioPharma Newsletter, which reports on the impact of the Akamai v. Limelight, Suprema v. ITC, and Amgen v. Sandoz cases on the BioPharma industry.

Sep 15

PTAB Eases Restrictions on Submitting Observations on Cross Examination for Your Own Witness

10496236_sWhen a party submits declaration testimony and the opposing party is not entitled to another brief, “observations on cross-examination” are the opposing party’s mechanism for introducing declaration testimony from that witness.  Early on, the PTAB determined a party generally is not allowed to submit such observations for its own witnesses.  A PTAB panel has now eased this restriction, in Zhongshan Broad Ocean Motor Co. et al. v. NIDEC Motor Corp., IPR2014-01121,-01122 (Sept. 10, 2015) (Paper 34).

There, the Petitioner’s reply briefs cited declaration testimony from Patent Owner’s witness.  Patent Owner was not entitled to another brief, so sought to submit observations on cross examination to provide “context” for the deposition testimony.  A similar request had been made in Schott Gemtron Corp. v. SSW Holding Co. Inc., IRP2013-00358 (May 16, 2014) (Paper77).  In Schott, the panel allowed only very limited observations—e.g., where Petitioner cited the transcript where a witness made a particular statement, but the witness later corrected his testimony and said the opposite.

The Zhongshan panel’s decision was much more favorable to the Patent Owner. The PTAB first noted the Federal Rules of Evidence apply to inter partes reviews.  37 C.F.R. § 42.62(a).  FRE 106 directs “[w]hen a writing or recorded statement or part thereof is introduced by a party, an adverse party may require the introduction at that time of any other part or any other writing or recorded statement which ought in fairness to be considered contemporaneously with it.”  The Schott decision did not discuss or cite FRE 106. Here, though the Board found FRE 106 requires the context of a witness’s statements ought in fairness to be considered “contemporaneously” when evaluating the witness’s testimony (i.e., when the Board prepares for the oral argument).  Based on FRE 106, the Board allowed Patent Owner to file, as an exhibit, a chart identifying portions of the transcript that provide the needed context.  The chart could only include page and line numbers—no additional statements or explanations were authorized.

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