For Waterproofing Patent, Arguments Against Obviousness Didn’t Hold Water

The Federal Circuit’s decision in Outdry Technologies Corporation, v. Geox S.P.A. discusses some criteria for determining whether or not the explanations provided by the PTAB in an IPR decision are sufficient to support a finding of motivation to combine.

The independent claims of Outdry Technologies Corp.’s US Patent No. 6,855,171 (“the ‘171 patent”) were found to be obvious during IPR proceedings. Outdry’s ‘171 Patent is directed to two claimed processes for waterproofing leather by “directly pressing,” on an internal surface of the leather, a semi-permeable membrane to which a discontinuous pattern of glue dots has been added. One of the claimed leather waterproofing processes of the ‘171 patent requires the glue dots have a particular density. The other requires that the glue dots have a particular size. According to Outdry, directly pressing the glue dot-bearing membrane onto the leather addressed the problem of water pockets forming between the semi-permeable membrane and the leather when only the edges of the semi-permeable membrane are sown or glued to the leather.

In the IPR decision, the PTAB found the claimed leather waterproofing processes of the ‘171 to be obvious in view of US Patents to Thornton and Hayton, and a reference entitled “Chemistry of the Textiles Industry” (“Scott”), each of which discuss using glue dots, or something similar, to adhere a film or waterproof layer to another layer (e.g., a water permeable layer, like leather).  The PTAB determined that the petitioners for the IPR proceedings, Geox, S.p.A., had provided a rational underpinning for combining Scott and Hayton, and that the claimed leather waterproofing processes of the ‘171 Patent would have been obvious in view of Thornton, Hayton and Scott.

Outdry appealed the PTAB’s IPR decision, arguing, among other things, that the motivation to combine Thornton, Scott and Hayton relied upon by the PTAB during the IPR proceedings was insufficient.

In particular, Outdry argued that the PTAB failed to make the required findings supporting the conclusion that a motivation to combine Thornton, Scott and Hayton existed because the PTAB merely relied on Geox’s petition to find a motivation to combine without making its own findings. The CAFC disagreed. The CAFC listed a number of example reasons for which the findings of the PTAB have previously been determined by the CAFC to be insufficient to support a decision that motivation to combine exists, including: failing to cite any evidence, either in the asserted prior-art references or elsewhere in the record, with sufficient specificity for us to determine whether a person of ordinary skill in the art would have been so motivated; merely stating that a combination is “intuitive” or “common sense,” without articulating a rationale; and simply agreeing with arguments in a petitioner’s brief without making any factual findings. However, the CAFC concluded that the PTAB did not make any of the above-referenced errors by articulating, in the IPR decision, Geox’s arguments explaining the motivation to combine the cited references. Further, the CAFC clarified that a PTAB decision that relies on a petitioner’s arguments and includes an explanation supporting the decision to rely on the petitioner’s arguments is acceptable, unlike a PTAB decision that merely adopts a petitioner’s arguments by reference without providing such an explanation.

Outdry also argued that the PTAB’s finding of a motivation to combine was insufficient because the PTAB failed to explain why a person of ordinary skill in the art would be motivated to combine the cited references to solve the water pocket problem addressed by Outdry’s ‘171 Patent. The CAFC was not persuaded by this argument either. The CAFC responded to this argument by citing previous CAFC decisions indicating that a motivation to combine cited references identified in support of a conclusion of obviousness does not have to match a motivation provided by the patent at issue or the patentee.  The CAFC further explained that the identified motivation does not even have to come from the references, themselves.

Accordingly, in Outdry Technologies, the CAFC confirmed that there are standards the PTAB must satisfy when asserting, in an IPR decision, that a motivation to combine exists. Further, the CAFC also explained that these standards are not quite as strict as the Appellant argued they were.

“Catch-All” Phrases Insufficient To Give Proper Notice of Grounds for Petition

In Emerachem Holdings, LLC v. Volkswagen Group of America, Inc., the Federal Circuit made clear that “catch-all” phrases in a Petition for IPR and/or a Board’s Institution Decision are insufficient to put a patent owner on notice of the specific grounds alleged for unpatentability.

In this case, the Board relied upon the “Stiles” reference as disclosing one of the elements of challenged claims 3, 16 and 20, even though the Petition did not specifically rely upon Stiles for those claims (instead applying Stiles to other challenged claims).  Similarly, the Board’s Institution Decision did not specifically identify Stiles as part of the ground for unpatentability of claims 3, 16 and 20.  Petitioner argued that a broad statement in the Petition that “[c]laims 1-14 and 16-20 are obvious under 35 U.S.C. §103(a) over the combination of Campbell [‘558] and either Hirota or Saito, in view of Stiles” was sufficient to put the Patent Owner on notice.  The Petitioner also argued – as did the PTO, which intervened to defend the Board’s decision – that a similar statement in the Institution Decision was sufficient notice.  The Federal Circuit rejected those arguments, finding that such general statements, particularly in the light of very detailed claim charts that failed to identify Stiles for claims 3, 16 and 20, do not provide sufficient notice.  Therefore, the Patent Owner’s right to notice and an opportunity to respond under the America Invents Act were violated.  The Federal Circuit reversed and remanded.

The Federal Circuit also reaffirmed the need for corroboration when relying upon the testimony of an alleged inventor.  Here, the inventors of the challenged patent each submitted declarations to the effect that they were the sole inventors of the subject matter of an asserted prior art reference on which they were listed inventors along with two other inventors.  Therefore, argued the Patent Owner, the alleged prior art did not qualify under 35 U.S.C. §102(e) because it was not “by another.”  The inventors’ declarations, though, were uncorroborated by any other testimony or documents.  The Federal Circuit reaffirmed that, in many cases, the testimony of an inventor must be corroborated, and that the sufficiency of the corroboration will be determined under the totality of the circumstances.

Earthquake Coming? Supreme Court to Weigh Constitutionality of IPRs

[We have two submissions on this potentially seismic development]

On June 12, the Supreme Court took certiorari on probably the biggest IPR case possible: a case challenging the constitutionality of IPRs on separation-of-powers and seventh amendment grounds. This comes just a few weeks after the Supreme Court took certiorari on SAS Inst. v. Lee. The patent owner in Oil States v. Lee has asked the court to consider whether it violates the separation of powers to have an administrative tribunal (the PTAB) making decisions about patent validity—an issue traditionally entrusted to the Article III courts. The patent owner also wants the Court to consider whether a patentee has a right to a jury trial when issues of validity are at stake. The Court has agreed to consider both questions.

The Court of Appeals for the Federal Circuit (CAFC) faced these same questions in MCM Portfolio v. Hewlett-Packard Co., 812 F.3d 1284 (Fed. Cir. 2015). The CAFC held that it was not problematic to have an administrative tribunal like the PTAB decide issues that are also decided by courts and juries because patents involve “public rights” created by Congress. The logic is that because Congress created patent rights in the first place, Congress can create an agency to decide validity questions. MCM sought certiorari and was denied. Similarly, the patentee in Cooper v. Square sought certiorari after the CAFC summarily dismissed an appeal without opinion. The Court denied certiorari on that case as well. Finally, Oil States Energy Services proved that the third time really is a charm by making many of the same arguments as MCM and Cooper, but this time certiorari was granted.

Suffice it to say, the outcome in this case could be huge. If the Court reverses the CAFC (and the Court usually reverses the CAFC when it takes certiorari), then the entire IPR system could be dismantled at a stroke. On the other hand, if the CAFC were reversed in this case, then SAS Inst. v. Lee would be rather pointless. If one wants to sift tea leaves, then, the fact that the Court also took certiorari in SAS Inst. might suggest that the Court does not have in mind to disassemble the IPR system totally. In any event, HDP will be following this case closely, and keeping readers of this blog up to date with subsequent developments in both cases.

Earthquake Coming? Supreme Court to Weigh Constitutionality of IPRs

[We have two submissions on this potentially seismic development]

It’s no secret that patentees have been generally unhappy with both the process and outcomes of AIA reviews.  Now the Supreme Court has agreed to decide whether the entire AIA review system will be eliminated on constitutional grounds.  That case, Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, involves an IPR proceeding finding several claims of a patent were unpatentable; the Federal Circuit affirmed in a Rule 36 order.  The issue centers around whether patents are a private right—in which case they can only be nullified by an Article III court—or whether they are a public right—in which case they can be adjudicated by an executive agency.  In a different case last, the Federal Circuit declined to consider a similar question en banc.

The specific question the Supreme Court will answer in Oil States is:  “Whether inter partes revew—an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents—violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.

The Supreme Court denied certiorari on two other questions presented, which concerned whether the IPR amendment process is inconsistent with Cuozz, and the degree to which the BRI standard requires consideration of traditional claim construction principles, including reading the claims in light of the specification.

CAFC: What a Person of Skill in the Art “Could” Do is Insufficient Evidence to Support Obviousness Finding

Duke University owns US 7,056,712 (‘712), which claims methods of treating a metabolic disorder known as Pompe disease. In particular, ‘712 claims methods of treating Pompe disease using a recombinant human acid α-glucosidase (hGAA) that is produced using Chinese hamster ovary (CHO) cells. BioMarin petitioned for IPR of ‘712 on two grounds: (1) anticipation by US 7,351,410 (van Bree); and (2) obviousness over WO 97//5771 (Reuser) in view of van Hove et al. (1997). The PTAB found Claims 1–9, 12, 15, 20, & 21 anticipated, and held Claims 1–9, 11, 12, 15, & 18–21 obvious. Duke appealed and the Federal Circuit affirmed in part, and reversed in part in Duke Univ. v. Biomarin Pharm. Inc.2016-1106 (Fed Cir. April 25, 2017).

Regarding anticipation, van Bree teaches administering hGAA to treat Pompe disease, and lists CHO cells as a production system (albeit a disfavored one) for manufacturing the hGAA. Anticipation is a question of fact, and therefore the Federal Circuit (CAFC) only reviews an anticipation finding for substantial evidence. The mention of CHO cells in van Bree—even as a disfavored option—was enough to satisfy the CAFC that anticipation is supported by substantial evidence. The CAFC affirmed the invalidation of Claims 1–8, 12, 15, 20, & 21 for anticipation.

Claim 9, however, was a special case. Claim 9 provides that “the human acid α-glucosidase is a precursor of recombinant human acid α-glucosidase that has been produced in Chinese hamster ovary cell cultures.” The PTAB construed this claim as allowing for mixtures of precursor and full-length hGAA, but the CAFC held that “the human acid α-glucosidase” meant all the hGAA had to be in precursor form. Because van Bree does not mention the precursor form of hGAA, the CAFC reversed the PTAB’s anticipation conclusion for this claim.

For any claim already found anticipated, the CAFC declined to review the PTAB’s obviousness. That meant that the CAFC only had to review the obviousness of Claims 9, 11, 18, & 19. Claims 11 & 18 are dependent claims that had not been argued separately, so in effect the CAFC only had to review obviousness of Claims 9 & 19.

As noted above, the CAFC disagreed with the PTAB’s construction of Claim 9, so the CAFC remanded for reconsideration of obviousness of Claim 9 in view of the new construction. Claim 19 requires that an “immunosuppressant [be] administered prior to any administration of” hGAA. BioMarin had submitted an expert declaration asserting that “[i]f there is a high incidence of patients developing high antibody titers, and immunosuppressant could be administered prophylactically…” (emphasis added). This was the evidence on which the PTAB had relied to show a reasonable expectation of success for Claim 19. The CAFC considered that the fact that the person of ordinary skill could do something is not enough to establish obviousness. Rather, testimony was necessary as to what the person of ordinary skill would do. The CAFC considered that BioMarin’s expert declaration was not substantial evidence necessary to support a reasonable expectation of success. Therefore, the holding of obviousness for Claim 19 was reversed.

The most important take-away from this case is that expert declarations should avoid talking about what the person of ordinary skill “could” do. Instead, declarations should speak of what the person of ordinary skill “would” do, or “did” do.

Supreme Court to Hear Another IPR Case — SAS Institute v. Lee

The Supreme Court has granted certiorari in another inter partes review dispute, this time in SAS Institute v. Lee.  The Court will decide whether the PTAB may properly institute partial review (i.e., institute review on less than all claims in a challenged patent).  The PTAB’s rules—particularly 37 C.F.R. § 42.108(a)—allow the Board to “authorize the review to proceed on all or some of the challenged claims and on all or some of the grounds of unpatentability asserted for each claim.”  However, the statute—particularly 35 U.S.C. § 318(a)—requires that, if review is instituted, then the “Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner….”  The question for the Supreme Court is whether the Board’s partial review option is allowed by this statutory provision.

The Court’s decision will impact the application of IPR estoppel, because estoppel only attaches after review is instituted, and—under the current law—does not apply to claims for which review is not instituted.  If the PTAB is required to issue a final written decision for all claims after review is instituted, then estoppel would affect more claims than under the current state of the law.

PTAB Provides Another Estoppel Datapoint — No Estoppel for Petitioner Using Its Own Documents

In Inter Partes Review (IPR) proceedings, the estoppel provision of 35 U.S.C. § 315(e)(1) prevents the petitioner from challenging the validity of a patent in an IPR on any “ground that the petitioner raised or reasonably could have raised” in an earlier IPR that resulted in a final written decision.  When deciding estoppel issues under 35 U.S.C. § 315(e)(1), the Patent Trial and Appeal Board (PTAB) and courts analyze whether “a skilled searcher conducting a diligent search reasonably could have been expected to discover” the prior art in question.

Recently, in Johns Manville Corp. v. Knauf Insulation, Inc., IPR2016-00130, (P.T.A.B., May 8, 2017) (non-precedential), the PTAB considered an estoppel issue involving the petitioner’s own prior art: two of John Manville’s (JM) marketing brochures.  The patent owner, Knauf, raised the issue of estoppel because JM did not include the marketing brochures as grounds in an earlier IPR, Johns Manville Corp. v. Knauf Insulation, Inc., IPR2015-01453, (P.T.A.B., Jan. 11, 2017) (non-precedential), which resulted in a final written decision and involved the same patent.

This case presents an interesting estoppel question because one might expect the PTAB to place more scrutiny on the petitioner when the prior art at issue is from the petitioner instead of a third party; however, the PTAB Panel in IPR2016-00130 did not change the approach for analyzing IPR estoppel just because the prior art was from JM instead of a third party.

Knauf argued that a reasonable search should have found JM’s marketing brochures before filing IPR2015-01453 because thousands of copies of the marketing brochures had been distributed, and one of JM’s employees, Mr. Mota, had hard copies of the marketing brochures before IPR2015-01453 was filed.  Also, Knauf argued that a skilled searcher should have interviewed Mr. Mota and researched historic versions of the accused products before IPR2015-01453 was filed.

However, JM’s arguments persuaded the PTAB that a skilled and diligent searcher could not have been expected to discover the marketing brochures before JM filed IPR2015-01453.  JM explained the professional searcher it hired to search Internet archives did not find the marketing brochures because the brochures were never posted on-line.   Also, Mr. Mota’s possession of the marketing brochures violated JM’s 7-year document retention policy.  JM also argued that Mr. Mota’s records were disorganized and in hardcopy binders so a skilled searcher could not reasonably have been expected to locate them.

Additionally, JM persuaded the PTAB that a skilled and diligent search would not necessarily include interviewing Mr. Mota before filing IPR2015-01453.  Because Mr. Mota did not work in a division that made the product accused of infringing Knauf’s patent, JM’s counsel argued that it would not have made sense to interview Mr. Mota before filing IPR2015-01453.  JM’s explanation for interviewing Mr. Mota after filing IPR2015-01453 was because Mr. Mota by that time had switched to a division that made the allegedly-infringing product.

In the PTAB’s view, Knauf’s arguments would have extended 35 U.S.C. § 315(e)(1) estoppel to all references that JM “reasonably should have known” about, based on imputing the knowledge and document possession of Mr. Mota to the entire JM organization.  The PTAB was unwilling to extend the scope of estoppel that far because the PTAB determined the “reasonably could have discovered” language in 35 U.S.C. § 315(e)(1), and legislative history of 35 U.S.C. § 315(e)(1), suggested a narrower interpretation of IPR estoppel.   

Even though the Knauf did not get its way on the estoppel issue, Knauf still prevailed on the bigger issue: the PTAB upheld the validity of Knauf’s patent in IPR2016-00130.  This case is useful for showing the approach the PTAB may take when deciding whether IPR estoppel applies to the petitioner’s own documents.

10 Years of KSR: 4 Key Statistical Takeaways

Our thanks to Ron Osborne of Intellectual Property Insurance Services Company and Greg Upchurch from LegalMetric for their help in this analysis of the impact of KSR over the past decade. It is hard to believe that KSR is 10 years old. For the entire article, please follow the following link, which takes you to IP Law360 (subscription required).

https://www.law360.com/articles/916864/10-years-of-ksr-4-key-statistical-takeaways

Federal Circuit Swats Appeal in View of Patent Owner Failures

In the recent decision in Securus Technologies, Inc. v. Global Tel*Link Corporation, the Court of Appeals for the Federal Circuit (CAFC) addressed a number of issues, a couple of which are worth noting as potential pitfalls for a Patent Owner in an inter partes review (IPR) proceeding.

Securus is the result of consolidation of two appeals from Final Written Decisions from the PTAB in IPRs stemming from petitions with respect to Patent Owner’s U.S. Patent No. 7,860,222 (“ the ‘222 Patent”).  The independent claims at issue in the ‘222 Patent were generally directed to a system (and method) for allowing a user to establish bookmarks at “events of interest” in communications between individuals by searching the communications to identify particular words, and placing event identifiers in association with the identified words.

As one premise for appeal, Patent Owner argued that the PTAB’s conclusion that independent claim 1 was obvious over the prior art impermissibly relied on an argument raised for the first time in Petitioner’s Reply.  In presenting this argument, however, Patent Owner did not argue that such reliance was prejudicial in any way, nor did Patent Owner argue that they were not afforded a meaningful opportunity to respond.  Rather, Patent Owner argued that the PTAB’s reliance was improper simply because Petitioner did not advance the specific argument in its petition.

As one might expect, the CAFC did not find Patent Owner’s argument persuasive since Patent Owner had not shown that the PTAB’s decision rested on any factual or legal argument for which it was denied notice or an opportunity to be heard during the proceedings.  The CAFC also made a point to note that Patent Owner failed to avail themselves to any procedure for filing a sur-reply, motion to strike, or challenging the allegedly improper argument via conference call.

Patent Owner also appealed the PTAB’s denial of motions to amend seeking to change the antecedent basis for six dependent claims.  However, these motions seemed doomed from the start since the Patent Owner admitted numerous times (14 times in two motions) that the changes were not made in response to a ground of unpatentability raised in the IPRs – a specific ground for denial of an amendment set forth in 37 C.F.R. § 42.121(a)(2)(i).

In sum, a couple of swings-and-misses for the Patent Owner who could have spent a bit more time with the PTAB rule book.

Wasica Decision Reinforces Federal Circuit Guidance on Claim Construction

The Federal Circuit’s recent decision in Wasica Finance v. Continental Automotive Systems touched on a number of well-worn patent issues, but this article focuses on a few key claim construction principles discussed by the CAFC, including that the contents of the specification are highly relevant when performing claim construction, and a claim generally will not be construed in a manner that renders recited terms meaningless or superfluous.

Wasica is the result of the CAFC consolidating two appeals based on two IPRs arising from petitions filed with respect to Patent Owner’s U.S. Patent No. 5,602,524 (“the ‘524 patent”). The claims at issue were directed, generally, to a system for measuring tire pressure. In the system, each tire included a pressure measuring device and a transmitter, and each transmitter transmitted pressure data to a corresponding receiver. A transmission from a transmitter to a corresponding receiver also included an “identification signal” for identifying the transmitter that sent the transmission. A receiver receiving the identification signal stored the identification signal and processed transmissions only from the corresponding transmitter.

As to the first claim construction issue, Patent Owner argued that the PTAB erred in determining that a particular pressure sensor disclosed by the prior art taught a “pressure measuring device” because the pressure sensor only output a binary signal that indicated whether a measured pressure is abnormal. Patent Owner argued that the recited pressure measuring device, when properly construed, must output a tire’s pressure as a numerical value, and that such a numerical value cannot be represented by a single bit of a binary signal. The CAFC sided with the PTAB and rejected the claim construction presented by Patent Owner. The CAFC relied, in part, on the ‘524 patent, itself, which identifies a family of European patents as including examples of manners in which a sensor of the ‘524 patent may output a pressure signal. The CAFC decided that the family of European patents identified by the ‘524 patent disclose switch-based (e.g., binary) pressure sensors and non-numeric pressure signals. The CAFC pointed out that, in accordance with previous decisions, the CAFC generally does not interpret claim terms in a manner that excludes examples disclosed in the specification. Id. at 13.

As to the second claim construction issue, Petitioners argued that the proper claim construction for the term “bit sequence,” from claim 9, was a sequence of “one or more bits.” Patent Owner argued that the plain meaning of “sequence” implies at least two elements. The PTAB agreed with Patent Owner, but on appeal, the CAFC disagreed. The CAFC explained that the recited element required “at least a 4 bit sequence” which included 4 constituent bit sequences, and thus, interpreting a “sequence” as requiring at least two bits would result in a minimum size of 8 bits for the “at least 4 bit sequence.” The CAFC determined that such an interpretation would essentially rewrite “at least 4 bits” from claim 9 to “at least 8 bits.” The CAFC explained that it is highly disfavored to construe terms in a way that renders them void, meaningless, or superfluous. Id. at 28. As further support for reversing the PTAB’s decision regarding the patentability of claim 9, the CAFC pointed to a portion of the ‘524 patent interpreted by the CAFC as disclosing an embodiment in which a bit sequence included a single bit, thereby contradicting the at-least-two-bit interpretation of “bit sequence” sought by Wasica Finance.

In the end, the Patent Owner and Petitioner both took home partial victories, while the rest of us take home additional insight into the Court’s construction of claim limitations.