Federal Circuit Reverses Because PTAB Relied Upon Argument First Raised at Oral Argument

cafc1In a decision today from the Federal Circuit, in Dell Inc. v. Acceleron, LLC, 2015-1513, -1514 (March 15, 2016), involving US Patent No. 6,948,021, the PTAB was reversed because its Final Written Decision relied upon a new argument that was first raised by Petitioner in oral argument.

In the underlying IPR, the PTAB determined that claims 14-17 and 34-36 of the ‘021 patent had not been shown to be unpatentable, but determined that claims 3 and 20 were unpatentable. In today’s Federal Circuit decision, the Court affirmed the Board’s determination that claims 14-17 and 34-36 were not shown to be unpatentable, but reversed and remanded relative to the unpatentability determinations of claims 3 and 20.

With regard to claim 20, the Court took the Board to task for failing to give meaning to all of a claim’s terms. The claim term at issue requires a microcontroller with a connection to remotely poll a CPU module. Decision at 11. The Board’s construction, in effect, ignored the “remotely poll” limitation from the claim, meaning that the Board’s claim construction was unreasonable. Id. at 13.

The more groundbreaking aspect of the Court’s decision, however, relates to the Court’s remand of claim 3. The Court held that, because the argument upon which the Board relied was first identified by Petitioner in the oral argument, Patent Owner was denied a fair opportunity to respond to the basis of cancellation. Id. at 13. As such, the Board’s decision was vacated and remanded. This holding is interesting because previous PTAB Final Written Decisions relied upon new evidence and argument advanced for the first time in reply or on appeal, but the Court did not take issue with those PTAB decisions.

More specifically, Patent Owner argued in its Patent Owner response that the “caddies” required by claim 3 were not shown by the “articulating door” from the prior art, that was identified in the Petition. In its reply brief, Petitioner presented the new argument that the caddies were also shown in the prior art’s power-supply mounting mechanisms. At the oral hearing, Petitioner expanded on this argument, arguing that unlabeled “slides” from the prior art mounting mechanisms constituted the claimed caddies. In the Final Written Decision, the Board relied upon this new argument from the oral argument, determining that claim 3 was unpatentable based on the disclosure from the prior art of the slides.

The Court noted the statutory and regulatory bases for the requirement that the Board put a Patent Owner on notice of the bases upon which it determines a claim to be unpatentable. Id. at 13-14. In view of those requirements, “the Board denied [Patent Owner] its procedural rights by relying in its decision on a factual assertion introduced into the proceeding only at oral argument, after [Patent Owner] could meaningfully respond.” Id. at 14.

Because the oral argument does not provide Patent Owner with any opportunity to supply evidence, Patent Owner had no opportunity to comprehensively address this contention. In its Final Written Decision, the Board had dismissed Patent Owner’s argument that this “slide” argument was new, by concluding that Petitioner pointed to the “slides” in its reply. The Federal Circuit disagreed, finding that the key factual assertion was only specifically made at the oral hearing. Thus, in its holding, the Court pointed to the fact that Petitioner has not shown “that there can be no genuine factual dispute” on the issue of anticipation and, as such, vacated the Board’s cancellation of claim 3 remanded the case for further proceedings. Id. 

The Federal Circuit’s decision is a glimmer of hope for Patent Owners. The relatively unfettered discretion the Court has otherwise been affording the Board has (at least temporarily) been limited.

Endo Pharma Patent Survives IPR Trial

19179334_sAmneal Pharmaceuticals came up short in its bid to knock out numerous claims of Endo Pharmaceuticals’ US Patent No. 8,329,216 in a Final Written Decision issued on July 22, 2015, Amneal Pharm., LLC v. Endo Pharm. Inc., IPR2014-00360. The ‘216 patent relates to oral controlled release pharmaceutical formulations comprising oxymorphone and related methods for pain relief. A strong lesson learned in this case is that arguments based on inherency can be difficult and it is important to introduce sufficient evidence to demonstrate that a purported “inherent disclosure” necessarily is present in the prior art. Bare expert testimony is often insufficient.

At the outset of its analysis, the PTAB construed “controlled release” and “about” from the claims of the ‘216 patent. The Board adopted Petitioner’s proposed constructions: 1) controlled release = release no more than about 80% of their active pharmaceutical ingredients within 60 minutes (taken from specification); and 2) about = at least the standard statistical error.

Petitioner’s obviousness argument was largely based on the contention that the prior art inherently disclosed a dissolution profile that required “two or three peaks” of blood plasma levels of the active ingredient. The vast majority of the Board’s decision discussed whether Petitioner had sufficiently shown that the prior art necessarily disclosed the claimed dissolution profile. For example, with regard to one of the grounds for unpatentability, Patent Owner attacked this argument by citing to certain clinical studies, including one disclosed to the FDA, that showed that two or three peaks did not necessarily occur. Petitioner sought to rebut this argument by explaining that the data in that clinical study was not tested frequently enough to show multiple peaks, but there was insufficient evidence provided on this point.

The takeaway from this case is that an argument based on inherent disclosure can be fact intensive and requires strong evidence that the limitation necessarily is in the prior art. Often, an expert declaration is not sufficient – certainly not one that merely states conclusorily that the property is inherent. Testing, reference to studies, etc. is required to prove this type of argument.

Board Disqualifies Reference As Not Meeting Requirements of 102(e)

iStock_000011114669SmallWe are reminded once again, by the Board’s decision denying review in Cisco Systems, Inc. v. Constellation Techs., LLC, IPR2014-00914, that 102(b) art is better than 102(e) art.  In Cisco, Petitioner relied on a reference (Riley) it asserted to be 102(e) prior art.  In making that argument, Petitioner had the burden of convincing the Board that the Riley reference was support by the two provisional applications to which it claimed priority.  Petitioner tried to meet that burden through expert declaration testimony.

The Board was not persuaded by the proffered testimony, which the Board found to be conclusory and thus entitled to little, if any, weight.  Decision at 23.  As a result, the earliest available priority date of the reference was after the priority date of the challenged patent.  Thus, the Board denied review as to the grounds which included the Riley reference.

The lesson here, as is the case with many aspects of IPR practice, is that if you need to prove a point, be sure to include specific, detailed analysis.

Objective Basis for Inherency Argument Must Be Contained in IPR Petition

19179334_sA common strategic question in inter partes review proceedings is whether you should proceed on an anticipation ground, arguing that a specific limitation is inherently disclosed, or convert the ground into an obviousness ground, using an explicit disclosure in a secondary reference to demonstrate the unpatentability of a claim. The perils of going with an inherent anticipation argument, of course, include the additional burden of proving that a reference necessarily discloses the feature, even if it is not explicitly disclosed. As such, it is worthwhile considering Spansion Inc., Spansion LLC, and Spansion (Thailand) Ltd., v. Macronix International Co., Ltd., (IPR2014-01116; U.S. Pat. No. 6,522,360) wherein the Board rejected an inherency argument made by Petitioner.

The ‘360 patent relates to a circuit layout on a substrate of a semiconductor wafer that is suitable for reducing defects during a chemical mechanical polishing (CMP) process.  The process has several key paramenters, including having an average polishing pressure during the process. The substrate comprises a plurality of strips, and the circuit layout comprises two structures linked by said strips. Decision at 2-4.

Petitioner argued that a prior art reference inherently disclosed the claim limitation “at least two strips of second circuit structure located on said substrate of said semiconductor wafer, each of said two strips of second circuit structure respectively linking the front end and the rear end of said plurality of strips of said first circuit structure”.  Id. at 8.  The Board disagreed, finding that Petitioner did not sufficiently address the functional language of the claim limitation as inherently disclosed in the reference. Id. at 8-9.  Specifically, the Board found that Petitioner did not provide enough evidence that the prior art process would apply an average polishing pressure across the circuit grid arrangement of the reference.  The Board criticized Petitioner’s reliance on a bare opinion presented in expert testimony, which essentially recited verbatim the patentability analysis presented in the Petition.  In other words, rather than provide objective factual support for the inherency argument, Petitioner’s expert testimony essentially signed off the arguments set forth in the petition.  Accordingly, the Board rejected Patent Challenger’s inherency argument and denied the petition as to the ground which depended on inherent disclosure in the prior art.  Id. at 10.

Board Denies IPR Challenge Based on Insufficient Chemical Range Overlap

13278506_sDespite a long history of precedence, chemical “range” cases still generate contested issues and inter partes review proceedings are no different. The Board considered an issue relative to an overlap of ranges in E Ink Corporation v. Research Frontiers Incorporated, IPR2014-00422, involving US Pat. No. 6,606,185. Because the prior art cited by Petitioner did not disclose, with sufficient specificity, ranges that overlapped with the claimed ranges of the ‘185 invention, the Petition seeking IPR was denied.

The ‘453 patent relates generally to films comprising heat-reflective particles, and key limitations of the claimed invention recite ranges for particular particle sizes. Of relevance to the range issue of this article, claim 1 of the challenged patent requires “particles hav[ing] an average length in a range between about 1 micron and about 50 nanometers.”

Both Patent Owner and Petitioner acknowledged that the art cited by Petitioner described particle size ranges that overlapped with the ranges claimed in the ‘185 patent.  Specifically, the prior art disclosed “anisometric particles having an average particle size of about 0.2 microns or less, preferably about 0.1 microns or less.” Despite this overlap, Patent Owner argued that (1) the cited art failed to recognize the importance of the claimed lower limit of the ‘185 particle size range; and (2) that the overlap between the art-described ranges and the ‘185 claimed ranges were insufficient for anticipation.

The Board agreed, finding that the cited art did not disclose a lower limit to a particle size range, as required by the ‘185 patent.  The Board also found that the lower limit of the particle size range was key to the ‘185 invention, as Patent Owner emphasized that particle sizes smaller than the lower limit could lead to problems with the invention.  Therefore, because of lack of disclosure of a lower limit to the particle size range, and because the cited art’s range was larger than the ‘185 patent, the Board found that there was no anticipation of the ‘185 claims.

Accordingly, the Board was unpersuaded by Patent Challenger’s range-based anticipation arguments, and denied the petition for inter partes review.

Anticipation Grounds Denied By Board When Elements of Claim Not in Single Embodiment

blank mind map or flowchart on blackboardWith increasing frequency, challenge grounds in IPR Petitions are being denied because Petitioners are attempting to shortcut the proper anticipation analysis by combining teachings from various, distinct embodiments in the prior art, instead of indicating how the prior art discloses, in a single embodiment, each and every limitation of a challenged claim.  See, e.g., Panasonic Corp., et al. v. Optical Devices, LLC, IPR2014-00302, Paper 9 at 13-14 and Symnatec Corp. v. RPost Comunications Ltd., IPR2014-00357, Paper 14 at 20.

When a prior art reference discloses multiple, distinct embodiments, combining teachings from those distinct embodiments requires an obviousness analysis, including a demonstration of why one of ordinary skill would be motivated to combine those disparate teachings.  In contrast, “[f]or anticipation, it is not enough that the prior art reference discloses multiple, distinct teachings that the ordinary artisan might somehow combine to achieve the claimed invention.” Symantec, at 20 (citing In re Arkley, 455 F.2d 586, 587-88 (CCPA 1972); Net MoneyIN, Inc. v. VeriSign, Inc., 545 F.3d 1359, 1371 (Fed. Cir. 2008)).  The lure of a 102 argument where 103 is more appropriate can, apparently, be too strong to pass up on occasion.

Dell Ends Up With a Mixed Bag of Results in 2 IPR Petitions Filed Against Acceleron

Silver Servers Rack - Hosting ThemeIn two separate challenges of a single patent, Dell had lukewarm success with 23 claims being placed in an inter partes review trial, but three claims and multiple grounds also denied by the Board in Dell, Inc. v. Acceleron, LLC (IPR2013-00440 and IPR2013-00443), involving U.S. Pat. No. 6,948,021.

The ‘021 patent relates to a computer network device having components of CPU modules, a power module, and an Ethernet switch module which incorporates “hot-swappable” connectors. The hot-swappable connectors allow for more efficient and speedy repair of the device.

The first issue of interest in the Board’s decision came as part of the claim construction for “is a stand-alone computer.”  Petitioner sought to broaden the scope of that term, based on a claim differentiation argument, but the Board found no reason to deviate from the plain and ordinary meaning of the term.  ‘440 Order at 6.

Also of interest was Petitioner’s inherency argument relating to the limitation of claim 24 that required a limitation relating to filtering communications to limit collisions caused by communications traffic.  Petitioner argued that such filtering was inherent to Ethernet switches, and supplied a declaration that “simply reiterates this position.”  ‘440 Order at 12.  But the Board was not persuaded by this inherency argument.  The patent at issue teaches that ethernet switch modules perform the claimed filtering, not simply a switch.  Because Petitioner did not allege that a switch was the same as a switch module, the Petition failed to set forth a reasonable likelihood of anticipation of claim 24.

Of brief note from the Board’s obviousness analysis, in what is a growing trend, the Board made special mention of the fact that Petitioner articulated a reason for combining the references underlying its obviousness contentions.  That is, not only did Petitioner demonstrate that the combination met all limitations, it also “articulated a sufficient reason with a rational underpinning for combining the teachings…”  ‘440 Order at 15.

In sum, in the ‘440 proceeding, the Board found that 23 of the 26 challenged claims should be placed into an IPR trial.

Turning to the ‘443 proceeding, Patent Owner’s most critical arguments centered on the priority date for certain claims of the ‘021 patent.  To that end, Petitioner argued that certain claims were not entitled to the filing date of a related provisional application.  ‘443 Order at 7.  In its Preliminary Response, Patent Owner set forth the support from the provisional application for the challenged claims and the Board agreed – finding that the claims were properly supported and were, therefore, entitled to the provisional application filing date.

This finding had a ripple effect on the prior art relied upon by Petitioner.  For example, the Board then turned to a prior art reference, that similarly claimed priority to provisional applications.  Patent Owner argued that the reference was not entitled to the priority date of the provisional applications because the excerpts relied upon by Petitioner were not found in the provisional applications.  The Board agreed, finding it important that neither Petitioner, nor its expert, cited to the provisional applications.  Further, Petitioner did not even provide copies of the applications as exhibits.  ‘443 Order at 10.

In the end, Dell’s efforts resulted in a mixed bag – partial success in having 23 of 26 challenged claims entered into an IPR trial based on one petition, but all challenges rejected in the second petition.

Second Inter Partes Review Final Written Decision – Second Patent Goes Down

plan CIn a case most notable for a decision restricting a patent owner’s ability to amend claims in inter partes review proceedings, the Board issued its second ever Final Written Decision, rendering all claims at issue in the IPR unpatentable and denying Patent Owner’s Motion to Amend Claims in Idle Free Sys., Inc. v. Bergstrom, Inc., IPR2012-00027.  The proceeding involved US Patent No. 7,591,303, directed to vehicle air conditioning systems; namely, operating the system at one capacity when the engine is running, and a second capacity when the engine is not running.

Points of interest in this second Final Written Decision include: 1) The last chapter (before the PTAB, anyway) of the ubiquitous Idle Free decision relating to motions to amend; 2) the Board’s analysis of the one key claim term at issue in the IPR; and 3) consideration of the credibility and admissibility of expert testimony in view of a breach of the IPR deposition rules.

1.  Motion to Amend

The most anticipated portion of this decision, given the significance of this case to motion to amend practice, is the Board’s ruling in denying Patent Owner’s Motion to Amend.  In its renewed Motion to Amend, after having been provided guidance by the Board regarding the requirements of a proper motion to amend, Patent Owner offered three proposed substitute claims.  The Board’s analysis regarding the motion is instructive:

First, the Board considered whether the substitute claims broadened the scope of the original claims.  Order at 28. Because the substitute claims merely added features to the claims for which they substitute, the substitute claims were deemed not to broaden the original patent claims.

Second, the Board considered whether the amendments had written description support.  Order at 28.  Preliminarily, the Board found that “[t]he evidence presented by [Patent Owner] is sufficient, if unrebutted, to show written description support…”  Order at 29.  Petitioner opposed the amendments, arguing, via testimony from its expert, that the disclosure did not support the proposed amendments, but the Board discounted this testimony, finding that it did not adequately explain why the amendments lacked written description support.

Third, the Board considered patentability over the prior art.  Order at 31.  The Board agreed with Patent Owner that one of the new amendments was not disclosed in any of the three references that were used to render the original claims unpatentable.  The Board went on to say, however, that distinguishing the proposed substitute claims only from the prior art references applied to the original patent claims, is insufficient.  Order at 33.  As the Board explained “the proposed substitute claims will be added directly to the patent, without examination, if the patent owner’s motion to amend claims is granted.”  Id.  As such, patent owners bear the burden of demonstrating patentability over the prior art in general.  To that end, Patent Owner was required to set forth what it knows about the level of ordinary skill in the art, and what was previously known, “regarding each feature it relies and focuses on.”  Id.  Merely stating that a reference constitutes the “closest prior art” is insufficient, without discussing the level of ordinary skill in the art and what was previously known.  Order at 34.  Patent Owner failed to provide such information, including, for instance, a representation that, to its knowledge, it was the first to have the subject amendment.  Order at 35. Or, if it was not the first, then what would have been known to one of skill in the art regarding that amendment and why the amended claims are patentable in view of such knowledge.  In short, it was important to the Board to know whether the amendments pre-existed and, if so, how they worked – even if the technology was known in a different field.  For example, in the context of this case, such a showing would include how air conditioning systems worked in non-vehicle systems.  Without such information, the Board was unable to grant the proposed amended claims.

Given the Board’s (perhaps necessary) rolling guidance on motions to amend, how many current motions meet all the requirements imposed by the Board that were not detailed in the IPR regulations?  We’ll see…

2.  Claim Construction Analysis and Anticipation Finding

Turning to the substance of the Petition, the Board denied Patent Owner’s argument that “engine off” in the claims requires that all electronic circuits that automatically start the engine must also be off.  The Board held that the claims do not require “vehicle electronics off”; but, rather, merely that the engine is off.  The Board cited to specification excerpts to support its findings.  Order at 7. As such, the Board construed “engine off” as “engine not running.”

Regarding the substantive grounds of unpatentability proposed by Petitioner, the Board found persuasive Petitioner’s prior art and expert evidence, such that Petitioner was deemed to have met its burden of proving, by a preponderance of the evidence, the unpatentability of the subject claims.

More specifically, the prior art of record disclosed an “engine off” state, whereby the air conditioning system worked at a reduced capacity as compared to an “engine on” state.  Because the electronics were not on, however, Bergstrom argued that the art did not meet the limitations of the ‘303 patent claims.  The Board, however, denied that claim construction and found, therefore, that the art of record anticipated the subject claims.  Relatedly, the Board found that the subject claims were rendered obvious by a separate combination of prior art references.  In short, the substance of the argument regarding patentability was fairly straightforward, especially in light of the Board’s claim construction.

3.  Breach of IPR Deposition Rules

As a last interesting component of the Board’s decision, the Board admonished Petitioner in the opinion because counsel for Petitioner had a discussion with Petitioner’s expert during a deposition break, in violation of Office Patent Trial Practice Guide, 77 Fed Reg 48,756, 48,772 (Aug 14, 2012).  Despite this fact, the Board declined to discredit the testimony of Petitioner’s expert, primarily because the witness testified that he and counsel only spoke in generalities, regarding how to answer questions in the deposition.  Despite the fact that the expert did change one of his answers in the deposition, the Board noted that Patent Owner did not articulate how the one changed answer affects any issue of contention.  Order at 25. Instead, the Board stated that it took the conversation into consideration in generally assessing the experts credibility.  For the same reasons, the Board denied Patent Owner’s Motion to Exclude the expert’s testimony, based on the same grounds.  Order at 38.

In the end, the Board’s decision marked a second victory for Petitioners in inter partes review proceedings.  The claims at issue were determined to be unpatentable over the prior art and, because Patent Owner did not show how the substitute claims were patentable over the prior art, its Motion to Amend was denied.

Board’s Broad Reading of Claim Term Results in Institution of IPR Trial

Cloud computing conceptContinuing its successful challenges of Clouding IP patents, Oracle placed all challenged claims of another Clouding IP patent into inter partes review in a case styled as Oracle Corp. v. Clouding IP, LLC (IPR2013-00088), involving U.S. Pat. No. 7,254,621.

The ‘621 patent relates to methods, systems, and computer programming instructions that enable users to remotely access and manipulate information in a way that may not be possible or practical based on inherent limitations of the users’ pervasive devices (i.e., mobile devices and smart appliances).

The key to the Board’s decision was its interpretation of “receiving a data access request,” and that limitation’s impact on the remainder of the claim.  More specifically, Patent Owner contended that the claim allowed for only one data access request.  To that end, the claimed method goes onto require “obtaining the requested data,” “determining what data manipulation operations are available for the requested data,” and “providing references to the determined data…”  Per Patent Owner’s argument, therefore, the antecedent basis in the claim seemed to reference the “receiving a data access request” step from the claimed method.

The Board, however, disagreed.  Because the claim contains an open-ended transitional phrase “comprising,” the claim was construed as open ended and other “data access requests” could occur and still fall within the scope of the claim. To that end, the Board held, “[o]btaining data in response to other data access requests, in addition to the one particular data access request, is not excluded by the claim language at issue.”  Order at 8.

Based on this construction, the Board initiated an inter partes review trial based on 102(e) grounds, finding that, even though the anticipatory reference discloses a process in which multiple links must be selected by a user, the claims were not limited to a single data access request, as discussed above.  As such, the Board found that all of the claim limitations were met by the reference. Following this finding, the Board did not consider the two obviousness grounds presented by Patent Challenger, deeming them redundant.

Overwhelming Prior Art Makes Board’s Job Easy in Grant of IPR Trial

In a concise decision, for a case involving 28 alleged grounds of unpatentability, Berk-Tek was successful in getting all 21 challenged claims of a Belden patent into an inter partes review trial in a case styled as Berk-Tek, Inc. v. Belden, Inc. (IPR2013-00069), involving U.S. Pat. No. 7,663,061.  Patent Owner did not file a preliminary patent owner response.

The ‘061 patent relates to a high performance data cable using twisted pairs of conductors. Specifically, the invention relates to a cable with an interior support around which the twisted pairs are disposed.

Patent Challenger asserted that the challenged claims were unpatentable as obvious over 28 combinations of references and anticipated by two references. One reference in particular, however, formed the basis of many of the proposed grounds for challenge, and was the focus of the Board in its decision.  Among the interesting findings of the Board was the logical rationale surrounding a limitation requiring an absence of an electrically conductive shield in the jacket of the cable.  The prior art reference at issue did not disclose any such shielding and, thus, the non-disclosure of such a shield indicated the absence of a shield.  Order at 11.  The prior art, therefore, met the subject limitation of the challenged claims.

The Board also had no trouble finding that a range of thicknesses set forth in a prior art reference (0.27-0.43 inches) was more than sufficient to disclose the claimed range of 0.300-0.400 inches.  The primary reference did not provide any diameter dimensions, but a secondary reference provided a range that encompassed the claimed range, and also provided a motivation to combine – that in the art of telecommunication cables, the outer diameter is variable and desirably minimized.  Order at 13.

In the end, the Board granted the inter partes review trial based on 3 of the 28 grounds – finding the remaining grounds redundant to those included in the trial.