Compelled Testimony and Production in Inter Partes Review and Post Grant Review

Among the main attractions of the new Inter Partes Review (IPR) and Post Grant Review (PGR) proceedings are their psuedo-litigation features.  Included among those key features is the ability to take discovery from the opposing party.  As compared to previous attempts by Congress to create cost-effective Patent Office proceedings for challenging the validity of patents, discovery helps make it less worrisome for patent challengers to submit prior art to the Patent Office for consideration.  That is, patent challengers can feel more comfortable that they will remain in control of their prior art in the IPR and PGR as compared to previous proceedings where such control can be lost. While we previously discussed “Mandatory Initial Disclosures,” this article focuses on discovery provisions from the America Invents Act that allow for obtaining documents and testimony from third parties in inter partes review and post grant review proceedings via “Compelled Discovery,” as oultined in 37 C.F.R. §42.52.

Since 1861, provisions allowing the Patent Office to issue subpoenas compelling the testimony or documents from entities, in “contested cases,” has been part of the Patent Act in 35 U.S.C. §24.   While this provision was previously used in interferences or displinary proceedings, it is clear that Inter Partes Review and Post Grant Review are to be considered “contested cases,” opening up the subpoena power to IPR/PGR litigants.

The proper procedure for invoking this subpoena power is to make a “Motion for Authorization” to the Patent Trial and Appeal Board (PTAB) seeking the discovery.  Of course, the PTAB is going to be interested in learning the relevance of the discovery and any such motion must identify the prospective witness by name or title and, if document production is requested, the nature of the document must be described.  As a reminder, the Office Trial Practice Guide encourages that any motion a party may seek to make in the trial be raised at the joint conference call between the parties and the Administrative Law Judge handling the trial, that call being set to occur within 1 month after the PTAB decides to institute a trial (p48765).

Testimony and documents from outside the United States may also be compelled, but additional requirements must be set forth in the Motion for Authorization.

In the case of ex-US testimony, the Motion for Authorization must include:

1. Identification of the Foreign Country

2.  An explanation as to why the witness can be compelled to testify in the foreign country, which must include, (1) a description of the procedures which will be used to compel the testimony and (2) an estimate of the time it is expected to take the testimony

3.  A demonstration that the Party has made reasonable efforts, including an offer to pay for travel arrangements and associated expenses, to secure agreement of the witness to testify in the United States but has been unsuccessful.

In the case of ex-US production of documents, the Motion for Authorization must include:

1.  Identification of the Foreign Country

2.  An explanation as to why production of the document can be compelled, which must include, (1) a description of the procedures which will be used to compel production and (2) an estimate of the time it is expected to obtain production

3.  A demonstration that the Party has made reasonable efforts, including an offer to pay for associated expenses, to secure agreement to produce the document or thing from the individual or entity having possession, custody or control of the document or thing in United States but has been unsuccessful.

To help gauge the likelihood of the PTAB granting a Motion for Authorization, it is important to keep in mind the Patent Office’s concern regarding excessive costs.  Throughout the Patent Office’s commentary on the rule, the need to minimize costs in these proceedings is mentioned often.  A Motion for Authorization should, therefore, thoroughly explain the disccovery that is sought, the reasons why it is crucial to the proceeding, and why it cannot be obtained through less expensive, less obtrusive means.  This is not to say, however, that the PTAB will look unfavorably upon these motions – though the Patent Office wants to minimize the high costs and significant time associated with discovery, compelled discovery is a significant part of the discovery process in Inter Partes Review and Post Grant Review and should be used as necessary to obtain third party testimony and documents.

Thank you Michigan Intellectual Property Law Association

Thanks to everyone who attended my presentation yesterday in Troy, Michigan regarding Inter Partes Review and Post Grant Review.  As promised, the presentation can be found by clicking HERE.  Be careful – flipping quickly through the presentation at your desk can increase the odds of seasickness!  Please contact me with any questions or suggestions for improvement.

Why IPR and PGR Matter to Patent Owners

Created in the America Invents Act (AIA), the new Inter Partes Review (IPR) and Post Grant Review (PGR) “trials” at the US Patent Office have the potential to be game-changers in the way patents are challenged in the future.  After several attempts at creating Patent Office-based proceedings that are efficient and effective, there is much in the new IPR and PGR that lend credence to the notion that Congress finally hit on a combination of pure patent litigation and Patent Office procedure that will be attractive to patent challengers.  As a result, patent owners need to be intimately aware of the details and strategy considerations of these proceedings because of certain advantages offered to patent challengers, including:

1.            The burden of proving patent invalidity in an IPR or PGR proceeding is merely a “preponderance of the evidence” – lower than the standard required in Federal court of “clear and convincing evidence”;

2.            Claims in an IPR or PGR proceeding are given their “broadest reasonable interpretation,” consistent with the patent prosecution standard at the Patent Office; this is likely to be a broader interpretation than what would be argued in Federal court, making it easier to read claims on prior art;

3.            While cost, as compared to prior PTO proceedings, will be higher, cost is still considerably lower than patent challenges in Federal court;

4.            The speed of these proceedings – to be completed within 12 months – may be an attractive feature in some circumstances;

5.            The PGR procedure allows challenges to patents based on novelty and obviousness arguments for non-published prior art, such as prior use and prior sale, as well as 101 and 112 issues; and

6.            The ability to have some litigation tools to control the proceedings – depositions, oral hearing, etc. – will make it more palatable to submit good prior art to the Patent Office.

All is not lost, however, for patent owners.  Patent owners may appreciate the speed of the proceedings and the ability to have access to some litigation tools, as discussed above.  In addition, patent owners will find the following features attractive:

1.            Patent challengers, and their privies, are estopped from later raising validity challenges actually raised, or which could reasonably have been raised, in IPR and PGR proceedings (after a final written decision is entered) – this estoppel applies to Federal court litigation, USITC, as well as other proceedings before the Patent Office and attaches much quicker than the previous Patent Office proceedings;

2.            Patent challengers are afforded the ability to make claim amendments to overcome prior art issues, where appropriate (and, as is often the case, these narrowing amendments can result in claims that are stronger from a validity perspective, but not changed from an infringement perspective);

3.            IPR and PGR are not available if a petitioner has already filed a civil action claiming patent invalidity (counter claims do not count); and

4.            IPR and PGR are not available if filed more than one year after a civil action is brought by patent owner.

Only time will tell if IPR/PGR become the long-desired elixir for expensive patent litigation.  There are some who predict they will be little-used proceedings.  Others suggest they may transform patent litigation and serve as a commonly-used substitute for Markman hearings.  We’ll look forward to seeing this new development unfold before our eyes.

“Mandatory” Initial Disclosures

One aspect of the new “litigation” at the US Patent Office (or PTO) that will be interesting to watch is the culture shock that is sure to occur when concepts that are very familiar to patent litigation in Federal court are introduced for the first time to Inter Partes Review (IPR) and Post Grant Review (PGR) proceedings.  Discovery is one such key litigation task that will soon be making its debut at the PTO.  While some of the facets of discovery in IPR and PGR proceedings will be familiar to patent litigators, the Patent Office clearly sought to fashion its own style of discovery and it is worth digging further into this important and new aspect of patent practice.

From a philosophical perspective, the comments to the new Rules of Practice (that guide IPR and PGR proceedings) make clear that the PTO struggled with the concept of ensuring discovery did not become a slog that led to increased cost and burden on the parties, as is common in district court litigation.  It is also clear that the Patent Office viewed flexibility as a key priority; the Patent Office believing that a more flexible discovery process will lead to a more efficient, less expensive process.  Only time will tell if they were successful, but the PTO should be applauded for the apparent consideration it gave to the very important issue of allowing some discovery to improve contested Patent Office proceedings, but not at such a level as to let costs run rampant.

At the most general level, the PTO chose to implement three types of discovery: (1) “Mandatory Initial Disclosures”; (2) “Routine” Discovery; and (3) “Additional” Discovery.  37 C.F.R. §42.51. This article will focus on the Mandatory Initial Disclosures, with a detailed discussion of the other two discovery types to follow in subsequent posts.

What are Mandatory Initial Disclosures?  The Mandatory Initial Disclosures can take one of two forms.  “Option 1” is modeled on Rule 26(a)(1) of the Federal Rules of Civil Procedure and generally seek to have the parties exchange basic information early in the trial.  For example, the name and contact information for individuals likely to have discoverable information, as well as a copy or description of documents and other information that may be used to support a party’s claims or defenses.   “Option 2” comprises the information from “Option 1,” plus two additional categories of information.  First, if the petition seeks cancellation of any claim based on the existence of an alleged prior non-published public disclosure, further information about the individuals with such information must be provided.  Second, if the petition seeks cancellation of any claim based upon the alleged obviousness of the claim(s), further information about any objective secondary considerations is exchanged.

But just how “mandatory” are these Mandatory Initial Disclosures?  The rule that promulgates these disclosures states that the initial disclosures can be done by agreement or by motion to the Board.  If a motion is required, are the rules really “mandatory”?  The short answer seems to be no.  In the comments section of the Rules of Practice, the Patent Office states that “…providing for mandatory initial disclosures in all cases, including those where the parties do not consent to such disclosures, is not consistent with the statute, or with the legislative intent in enacting the AIA as a less expensive and more efficient alternative to infringement litigation in Federal court.” (Response to Comment 112) (emphasis added).  Thus, the parties can either agree to make initial disclosures or, in the absence of such an agreement, the onus is on the party seeking mandatory initial disclosures to make a motion requesting such disclosure.  In such an instance, the moving party must meet the “motion” standard for each proceeding – “in the interest of justice” for IPR and “for good cause” for PGR.

When are Mandatory Initial Disclosures served?  If the parties agree to submit initial disclosures, such agreement must be filed with the Patent Trial and Appeal Board (PTAB) no later than the filing of the patent owner’s preliminary response, or the expiration of the time period for filing such a response.  The initial disclosures should be filed as exhibits to that agreement.  That sets up an interesting dynamic in that the parties are exchanging information (at least witness names and contact information and categories of relevant documents, if not the documents themselves) before the PTAB even decides whether to institute an IPR/PGR.  Upon institution of a trial, “parties may automatically take discovery of the information identified in the initial disclosures.”  This would include taking the deposition(s) of the listed witnesses and marking as exhibits and producing any documents identified.  One issue that is somewhat vague is whether the patent challenger can begin depositions immediately, as the plain language of this rule seems to indicate, or whether the patent challenger must wait until after the patent owner response is filed and the 3-month patent challenger discovery period begins.  Efficiency seems to dictate that the patent challenger must wait, or else multiple depositions of the same witness may be required.  Further, other commentary from the Patent Office suggests that discovery has been intentionally sequenced to render a more efficient proceeding.

What is the most efficient way to make a motion to the PTAB to require a party to provide Initial Disclosures?  Consistent with the Patent Office’s stated desire to make the discovery process flexible, efficient, and cost-effective, the best way to have this issue brought before the PTAB is to arrange for a conference call with the PTAB.  On such a call, the moving party should be prepared to identify the sought-after discovery and explain the need for the disclosures.  In a PGR, the party will be required to meet a “good cause” standard.  In an IPR, the party will be required to meet the slightly higher “in the interests of justice” standard.  In making its decision, the PTAB will take into account the nature of the information requested, the moving party’s access to that information, and the burden on the disclosing party.

So there you have (somewhat) Mandatory Initial Disclosures…the first “litigation” step of our new IPR and PGR proceedings.

Week 2 of Inter Partes Review Status Update

As the second week in the life of Inter Partes Review draws to a close, it’s interesting to consider the entities that have initially made use of the new Patent Office trial and the subject matter of the patents that are being challenged.

The technology centers with the most activity are 2800 (Semiconductors, Electrical and Optical Systems, and Components) – 6 filings; 2100 (Computer Architecture, Software, and Information Security) – 3 filings; and 1600 (Biotechnology and Organic Chemistry) – 3 filings.  So, semiconductors and computer/software are an early focus – not surprising given these are popular spaces for non-practicing entities (NPEs).

The leading IPR petition filers to date are Intellectual Ventures Management, LLC (4 filings all against patents owned by Xilinx), Nissan North America, Inc. (2 filings), Synopsys, Inc. (2 filings), and Illumina, Inc. (2 filings).  As one would expect, the filings made by all petitioners are comprehensive and detailed.  Thus, it is fair to conclude that these early IPR filers all targeted the new IPR proceeding for one reason or another.  This is in stark contrast to the days leading up to the changeover from Inter Partes Reexamination to Inter Partes Review, when hundreds of reexaminations were filed; presumably those entities saw value in the older system.

It is interesting that the entity that filed the most IPR petitions is Intellectual Ventures Management, LLC, a company known for buying patents to seek licensing revenue and, on occasion, brings lawsuits for patent infringement.  IV typically finds itself on the plaintiff side of patent litigation, so it may seem odd  that IV is the leading IPR filer out of the gates.  Digging deeper into the four IPR petitions IV filed, however, tells a more interesting tale.

Part of IV’s business model is to create funds that purchase patent assets and then IV seeks investors for that fund.  Many technology giants are counted as investors in IV, including Apple, Cisco, Google, and many others.  Among the other investors is Xilinx, a manufacturer of programmable memory chips.  According to allegations made by Xilinx in a complaint filed against IV in 2011, Xilinx became an investor in two or more of IV’s funds and then, after IV acquired additional patents in those funds, IV asked Xilinx to increase its investment to cover licenses to those new patents.  In essence, IV used Xilinx’s (and other investors’) money to purchase more patents and then sought to leverage additional money from Xilinx for those patents.

So, as that battle rages on in the Northern District of California, IV has seemingly opened a new front in the larger war – seeking to take down four of Xilinx’s patents.  While it is difficult to gauge IV’s intent from afar, it is interesting to remember that if parties to an IPR achieve a settlement before the Patent Trial and Appeal Board (PTAB) reaches a final written decision, the IPR is ceased.  If these patents are important to Xilinx, it may increase the pressure on Xilinx to settle its war with IV.  We will keep a watch on further developments.

What is Harness Dickey?

Just about 90 years ago, our founder, J. King Harness, set forth a simple but powerful philosophy: Our client is our trusted business partner. This philosophy has been passed down through generations of Harness Dickey attorneys. We never compromise on thoroughness or responsiveness to client needs.  That philosophy is invaluable in times such as this, with the implementation of the most sweeping overhaul of the Patent Act in over 60 years – the America Invents Act.  Harness, Dickey is particularly well-suited to assist with the AIA’s implementation of new “trials” before the Patent Trial and Appeal Board (PTAB) – Inter Partes Review and Post Grant Review.  Harness Dickey’s lawyers, who have made us a world leader in patent prosecution and world beaters in patent litigation, sit right at the appropriate intersection of litigation and patent office practice that is the cornerstone of the new Patent Office trials.

We look forward to you joining the thousands of clients we have guided in all sectors of business and technology, and of all sizes, in advancing your intellectual property interests in Inter Partes Reviews and/or Post Grant Reviews.

Welcome to Litigation Practice at the USPTO

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.  Check back often for updates and blog entries, including a close watch on IPR filings and orders.  In the meantime, enjoy the presentation found HERE of a timeline of events to occur in an inter partes review and post grant review.  There are many, many details that simply cannot be displayed in such a format, as well as precedent to be watched at the Patent Office as the Patent Trial and Appeals Board (PTAB) begins to handle its first cases.  But, this overview provides a fairly in-depth perspective on what patent owners and patent challengers can expect with these new proceedings.  Happy Litigating at the Patent Office!