Welcome to the 8th Volume of our IPR-PGR Report. Please let us know if you have any questions about the information contained therein, or would otherwise like to discuss Patent Office litigation. We note a few interesting stats from this latest quarter. First, we took a look at success rates for IPR proceedings by broad subject matter class. Of interest is the fact that it is more likely that an IPR petition directed to a chem/bio invention (86%) will be cancelled versus an electrical (82%) or mechanical patent (74%). Second, the claim cancellation rate has crept up a bit again, with only about 19% of claims that are put into an IPR trial surviving the Final Written Decision. Relatedly, the overall claim survival rate has dropped from 41% to 37%. Lastly, we have provided some information regarding the district courts with the highest and lowest win rates for contested motions to stay. Not surprisingly, the Eastern District of Texas is one of the districts that is least likely to stay litigation in view of an IPR.
Welcome to the 8th Volume of our IPR-PGR Report. Please let us know if you have any questions about the information contained therein, or would otherwise like to discuss Patent Office litigation. We note a few interesting stats from this latest quarter. First, we took a look at success rates for IPR proceedings by broad …View full post
Originally posted on January 8, 2013 on IP Law360. Inter partes review (IPR) and post-grant review (PGR) “trials” at the U.S. Patent and Trademark Office have the potential to be game-changers in the way patents are challenged in the future. After several attempts at creating USPTO-based proceedings that are efficient and effective, there is much in …View full post
We welcome the arrival of Inter Partes Review (IPR), as of September 16, 2012, and Post Grant Review (PGR) as of March 16, 2012. It is open for debate as to whether the America Invents Act (AIA) is true patent reform, but what is absolutely clear is that the AIA has changed patent practice forever. …View full post
Testimony from a witness in a prior reexamination, or other, proceeding may be useful information to a party in inter partes review proceedings. The party propounding such testimony should be prepared, however, to produce that witness for deposition in the discovery phase of the IPR, or the testimony may be given little or no weight by the Board. This scenario arose in Mexichem Amanco Holdings S.A. de C.V. v. Honeywell International, Inc. IPR2013-00576, in the context of a Motion for Additional Discovery.
More specifically, the Petition included an expert declaration from a reexamination proceeding that related to the patent-at-issue. Petitioner relied upon the declaration testimony in the past and again in the instant proceeding. Order at 2. In view of that testimony, Patent Owner filed a Motion for Additional Discovery seeking the deposition of the expert.
The Board denied Patent Owner’s Motion for Additional Discovery, finding that it was not necessary in the interest of justice. The main reasoning behind the denial was that the expert witness was not under Petitioner’s control and may even have resided in Japan, making the requested discovery burdensome. Id. at 2.
All was not lost for Patent Owner, however, as the Board noted that, if Petitioner did not produce the witness for cross-examination, the testimony relied upon related would be given little or no weight, in light of Patent Owner not having the opportunity to challenge the testimony. Id. at 2. Accordingly, Patent Owner received a favorable outcome even though the Motion for Additional Discovery was denied.
Whether a Petitioner breached a contract, that limited its ability to challenge a patent, is an issue outside the purview of the PTAB, per a recent decision in Ford Motor Company v. Paice LLC & The Abell Foundation, Inc., IPR2014-00570, involving US Pat. No. 8,214,097. Patent Owner had sought the denial of an IPR petition based on lack of standing.
Patent Owner argued that Petitioner was barred from filing the subject Petition because such action breached an arbitration agreement between the parties which limited Petitioner’s ability to challenge the claims of the ‘097 patent. Patent Owner argued that, because Petitioner was in breach of the contract by filing for inter partes review, Petitioner lacked standing to file the instant Petition. Decision at 5.
The Board’s hands were tied, however, because the disputed contractual matter raised by Patent Owner was outside the purview of the PTAB under authority granted by the AIA. Whether Petitioner had breached the arbitration agreement by filing for inter partes review of the ‘097 patent is for the district courts to decide (indeed, there was a co-pending action that will decide this issue). Since this question of breach had not been settled at the time of the Board’s decision, the Board rejected Patent Owner’s argument that Petitioner should be barred or estopped from filing the instant petition. Id. at 6.
Recent statistics show that motions for joinder are granted about 60% of the time. While parties can, therefore, expect a sympathetic ear regarding these motions, they are not always successful and it is worth noting the shortcomings of one such motion from Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., and Samsung Telecommunications America, LLC v. Arendi S.A.R.L, IPR2014-01143, involving US Pat. No. 7,496,854. In that case, the Board denied a motion for joinder due to several deficiencies in the motion.
Petitioner moved to join the instant petition with a related proceeding (IPR2014-00206) because the related proceeding involved the same patent, claims, prior art, and ground of unpatentability. Decision at 4. Further, Petitioner argued that the two proceedings have three other similarities: (1) that the claim charts in both petitions are “substantially identical” with respect to the common ground of unpatentability; (2) the instant petition adopts rationale of the Board advanced in the related proceeding; and (3) the instant petition presents no new issues that would complicate the related proceeding. Id. at 5.
The Board disagreed, however, noting several deficiencies and issues in Petitioner’s Motion for Joinder which weighed against joining the proceedings. First, Petitioner failed to set forth in its motion a statement of differences between the instant proceeding and related proceeding with which joinder is sought. Second, Petitioner failed to set forth any statement of the meaning of “substantially identical,” regarding the claim charts in the two proceedings. Third, the Board found that there were, in fact, new issues presented in the instant proceeding, as Petitioner relied upon testimony which introduced argument and evidence not presented in the related proceeding. Id. at 5. Fourth, Petitioner stated that briefing and discovery would be simplified with joinder, but failed to explain how. Lastly, the Board noted that Petitioner’s promise to increase efficiency by working with the petitioner in the related proceeding rang hollow because there was no indication that the petitioner in the related proceeding would work with the instant Petitioner. Id. at 6.
The PTAB is more than willing to join proceedings, but only if the joinder will not effect the fair, efficient, and just administration of the IPR proceedings. Here, Petitioner came up short in its showing regarding why the Board could grant joinder and maintain a fair and efficient proceeding.
Lost a challenge ground in the Board’s Decision to Institute? The Board has given some hope that such denied grounds may still of use in an IPR proceeding in McClinton Energy Group, LLC v. Magnum Oil Tools International, Ltd., IPR2013-00231, involving US Pat. No. 8,079,413. In this decision on a motion for rehearing, the Board affirmed the propriety of its use of rationale from a denied ground from the Petition to support a final decision of unpatentability.
Earlier in the proceeding, the Board instituted inter partes review of the challenged claims based on six grounds of unpatentability, each of which was based on three references (References A, B, and C). The Petition also contained numerous grounds of unpatentability based in part on a fourth reference (Reference D), all of which were denied by the Board. Decision at 3-4. In the Petition, to support an argument that one of skill in the art would combine references A, B, and C, Petitioner made reference to the rationale for combining of references from denied-grounds relying on Reference D. The Board then relied upon this rationale in determining that all challenge grounds were unpatentable.
In the Motion for Rehearing, Patent Owner argued that by incorporating this argument from a denied ground, the Board was including a new ground of unpatentability in the final written decision and Patent Owner was therefore denied due process. Id. at 4. The Board disagreed, pointing out that Patent Owner addressed the rationale at issue in the Patent Owner Response. That the same rationale to combined was used in both a sustained challenge ground and a denied challenge ground was not enough to change the thrust of the grounds of unpatentability. Accordingly, the fact that the Board adopted the rationale to combine references presented in a denied-ground of the petition in a granted-ground in final written decision does not create a new ground of unpatentability. Id. at 5.
Through two years of inter partes review practice, only 8 petitions were filed that were directed to design patents (out of 1773 total petitions). Given this limited number of petitions, lessons are going to be difficult to learn regarding the treatment of design patents in IPR proceedings. As such, we take a look at a failed petition, filed in Dorman Products v. Paccar, IPR2014-00555, wherein the Board had to consider the differences between functionality, pursuant to 35 USC § 171 and obviousness, pursuant to 35 USC § 103.
In determining whether a design patent claim is obvious, the parties agreed that the focus should be on the visual impression of the claimed design, as a whole. Order at 4. That is where the parties agreement, however, ended. In the Petition, Petitioner argued that certain functional elements of the design should not be considered part of the design patent claim. Patent Owner disagreed, arguing that, whether or not the elements are functional, they must still be considered as part of the visual impression created by the design as a whole. Id.
In explaining its rational, the Board stated an ornamental design for an article of manufacture may not be patented if the design is “primarily functional” rather than “primarily ornamental.” Order at 4. Further, of course, a design patent must not be obvious, pursuant to §103. Id. The inquiry into functionality, however, is separate and distinct from the obviousness analysis. Id. at 5. As such, the allegedly functional elements of a design patent must be considered in an obviousness analysis of the visual impression created by the patented design as a whole. Id.
After deciding that the “functional” characteristics issue, the Board turned to the obviousness analysis, citing Apple, Inc. v. Samsung Elecs. Co., 678 F.3d 1314, 1329 (Fed. Cir. 2012), for the proposition that, in an obviousness challenge to a design patent, the ultimate inquiry is “whether the claimed design would have been obvious to a designer of ordinary skill who designs articles of the type involved.” Order at 6.
Primarily because the functional characteristics of the design claim were considered in the obviousness analysis, the Board concluded that Petitioner failed to demonstrate a reasonable likelihood that a designer of ordinary skill would have viewed the primary prior art reference to give the same visual impression as the challenged design patent. Id. at 21. As such, the Petition was denied.
A witness credibility battle erupted in Dynamic Drinkware LLC v. National Graphics, Inc., IPR2013-00131, where the Board found that Patent Owner antedated a key prior art reference…despite the fact that the inventor testified on behalf of Petitioner. To uphold its burden of proving an earlier invention, Patent Owner relied on testimony from two fact witnesses who explained the steps undertaken by Patent Owner in conceiving and reducing to practice the claimed invention. Order at 7. In rebuttal, Petitioner relied on testimony from the inventor himself. Id. The inventor testified that while working for Patent Owner and developing the product, “None of the products [were produced]…in a way that was consistent with the claims of the ‘196 patent.” Id. at 10. The inventor further testified his notebook entry “confirms that we still had a long way to go [for commercialization].”
The Board sided with Patent Owner, finding that “[t]here is no requirement that the invention, when tested, be in a commercially satisfactory stage of development.” Steinberg v. Seitz, 517 F.2d 1359, 1363 (Fed. Cir. 1975) “The fact that further refinements of the invention were made is not relevant.” Farrand Optical Co. v. United States, 325 F.2d 328, 333 (2d Cir.1963). Order at 13.
Thus, the testimony from the inventor himself did not persuade the Board that the invention was not reduced to practice prior to the critical date of a key prior art reference. Id. at 17. The Board found Patent Owner’s witnesses properly antedated the reference and, without that prior art, the proposed challenge grounds from the Petition failed.
Patent Owner won a Pyrrhic victory in Facebook v. TLI Communications, IPR2014-00566, wherein the Board denied the Petition, but for a reason that calls into question the future viability of the patent-in-suit. Namely, the Board found that it could not construe the means-plus-function claim limitation at issue and, as such, the claim is indefinite and not amenable to construction.
More specifically, the Board sought to construe “means for allocating classification information” from the patent-at-issue. Order at 7. Petitioner stated that the specification did not disclose any algorithm for performing the allocating function. Id. at 10. Of course, a lack of sufficient disclosure of structure, pursuant to 35 U.S.C. § 112, ¶ 6, renders a claim indefinite, and thus not amendable to construction. Id. 13. The Board quoted the Federal Circuit on this point: “If a claim is indefinite, the claim, by definition, cannot be construed.” Enzo Biochem, Inc. v. Applera Corp., 599 F.3d 1325, 1332 (Fed. Cir. 2010). Because the claims were not amenable to construction, the Board was unable to conclude that there is a reasonable likelihood that Petitioner would prevail in its challenge of claim and dependent claims therefrom, and Institution was denied. Paper 14 at 18. As such, Patent Owner’s patent survives…for now.
With special thanks to my co-author, Laura Sheridan of Google, the linked article takes a detailed look at the first two years of inter partes review practice before the Patent Trial and Appeal Board and seeks to provide insights into some of the most critical areas of the proceedings. Like all change, the implementation of IPR has caused considerable commentary from both supporters and critics. There can be no denying, however, the overwhelming popularity of the proceedings as an alternative to litigation. As the article points out, while the proceedings are not perfect, the statistics and facts underlying IPRs makes clear that they are, at least, fair.
The article is re-published with permission from the Association of Corporate Counsel (http://www.acc.com).
One of the advantages for Petitioners of inter partes review practice, to date, is the PTAB’s willingness to reconsider prior decisions by the Patent Office relating to patentability. Previous Office determinations of patentability in examination, ex parte reexamination, and inter partes reexamination are often given little deference in IPR proceedings. But even the Board can only take so much. In Medtronic, Inc. v. Nuvasive, Inc., IPR2014-00487, Petitioner failed in its third bite at the apple for a patent that was previously challenged by IPR petition. Order at 5.
According to Patent Owner, the Petition was “essentially a duplicate of the previously denied petitions,” and should be denied pursuant to 35 U.S.C. § 325(d). Id. Petitioner argued that the denial of the old Petition had no bearing on this case. Id. at 6. The revised Petition directly responded to a “noted deficiency,” and new evidence and argument were provided to cure that deficiency.
The Board agreed with Patent Owner, beginning its analysis by citing to § 325(d): “[i]n determining whether to institute or order a proceeding under this chapter, chapter 30, or chapter 31, the Director may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office.” 35 U.S.C. § 325(d). Id.
In view of the fact that Petitioner did not provide any persuasive reasoning as to why an inter partes review should be instituted over “the same or substantially the same prior art or arguments” that were presented in the old Petitions, the Petition was denied. Id. at 7.