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 v. Knauf Insulation, Inc., IPR2016-00130, (P.T.A.B., May 8, 2017) (non-precedential), the PTAB considered an estoppel issue involving the petitioner’s own prior art: two of John Manville’s (JM) marketing brochures.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 v. Knauf Insulation, Inc., IPR2015-01453, (P.T.A.B., Jan. 11, 2017) (non-precedential), which resulted in a final written decision and involved the same patent.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

IPR Estoppel Narrowed Even Further in D. Delaware Ruling

Despite the astounding success for patent challengers to date in IPR proceedings, are you one who has been worried about the effects of the IPR estoppel in future litigation? Has this concern dissuaded you from considering filing an IPR in the past? Fear no more, another decision from a federal court has taken a severely narrow view of the IPR estoppel of 35 USC §315(e)(2) (“The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision….may not assert…in a civil action…that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”).

On December 19th, Judge Robinson, from the District of Delaware, issued an order granting-in-part plaintiff’s motion for summary judgment as to references actually raised during a prior IPR. Intellectual Ventures I LLC et al v. Toshiba Corp., 1-13-cv-00453 (D. Del. Dec. 19, 2016) (J. Robinson). That is, the Court ruled that defendant was not able to move forward in the litigation with a ground for obviousness that was actually raised during the earlier IPR trial between the parties.

Importantly, however, the Court also denied plaintiff’s summary judgment to the extent it sought to prevent defendant from raising grounds for invalidity based on references that were undisputedly available prior to the filing of the IPR and, thus, “could have been raised in the inter partes review.” Id. at 267. In coming to its conclusion, Judge Robinson focused on the language of §315(e)(2) that states that the estoppel applies for grounds that “reasonably could have been raised during that inter partes review.” Id. (emphasis in original). Citing the Federal Circuit’s decision in Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293 (Fed. Cir. 2016), Judge Robinson noted that the Federal Circuit has construed 315(e)(2) “quite literally.” Id. That is, in Shaw, because the PTAB rejected certain grounds as redundant, the Federal Circuit held that the petitioner had not raised those grounds during the IPR. Id. While Judge Robinson understood that extending this logic “to prior art references that were never presented to the PTAB at all (despite their public nature) confounds the very purpose of this parallel administrative proceeding,” she could not “divine a reasoned way around the Federal Circuit’s interpretation in Shaw.

This decision is just another in a growing line of cases where federal courts have interpreted the scope of the IPR estoppel in a much narrower way than many expected. It should only increase the attractiveness of IPR proceedings given that there is little (and dwindling) downside to filing the proceedings.

More Fun with the One-Year Time Bar of § 315(b)

hourglassThe nuances of the time bar of 35 U.S.C. § 315(b) continue to be explored in various IPR decisions.  In Amneal Pharmaceuticals, LLC v. Endor Pharmaceuticals Inc., IPR2014-00360, Paper 15, Patent Owner asserted that the Petition for Inter Partes Review was time-barred under § 315(b) because Petitioner received an amended complaint in co-pending litigation, asserting the patent-at-issue, in conjunction with the filing of a motion for leave to serve an amended complaint.  As explained below, the Board found that the petition was not barred, however, because service of the amended complaint, pursuant to § 315(b), could only have been accomplished after the Court granted leave.  Service of the amended complaint, as part of the motion to amend, is not service under § 315(b).

More specifically, § 315(b) provides that an inter partes review may not be instituted based on a petition “filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”

On December 11, 2012, the ’216 patent issued to Patent Owner. Prelim. Resp. 5. On January 9, 2013, Patent Owner filed an “Unopposed Motion to Amend Complaint Under Rule 15(a)” in an ongoing litigation between Petitioner and Patent Owner.  Attached to the motion was the proposed amended complaint.  On January 14, 2013, the Court granted the motion.  In accordance with that order, on January 17, 2013, Patent Owner filed its Second Amended Complaint. Id at 3. The IPR petition in this proceeding was filed on January 16, 2014 – more than one year from the date that the motion was filed, attaching the complaint, but less than one year from the date that the complaint was actually filed, following the court’s grant of the motion to amend.

As such, Patent Owner requested denial of the Petition, arguing that Petitioner was time-barred from seeking inter partes review of the ’216 patent under § 315(b), because Petitioner was served with a complaint on January 9, 2013, i.e., more than one year before the January 16, 2014, filing date of the Petition in this proceeding. Id. at 4.  In support of its motion, Patent Owner pointed out that, per local rules of the court, electronic filing is equivalent to service.  Thus, according to Patent Owner, when the district court electronically mailed the electronic notice regarding the Motion to Amend Complaint to Petitioner, it “effected service of the Second Amended Complaint on January 9, 2014.” Paper 15 at 4. Because §315(b) refers to being “served,” Patent Owner contends that it does not matter that Patent Owner did not file the Second Amended Complaint until January 17, 2013; instead, it only mattered when Patent Owner served the Second Amended Complaint, which, according to Patent Owner, occurred on January 9, 2013. Id.

The Board was not persuaded by this creative argument from Patent Owner. Instead, the Board agreed with Petitioner that Patent Owner did not “have the legal right to file or serve the Second Amended Complaint (‘SAC’) until the District Court granted it leave to do so on January 14, 2013.” Id. Petitioner cited Federal Rule of Civil Procedure 15(a)(2), which permits a party to file an amended pleading “once as a matter of course,” but requires that “in all other cases, a party may amend its pleading only with the opposing party’s written consent or court’s leave.” Fed. R. Civ. P. 15(a)(2). Under this rule, according to Petitioner, Patent Owner required the district court’s leave to file the SAC. Reply 3. Paper at 4. Thus, Patent Owner filed and served the SAC on January 17, 2013, after the court granted that leave. Id.  The Board agreed.

Dismissal of District Court Case, Without Prejudice, Removes Time Bar of 35 USC § 315(b)

iStock_000020200155XSmallChallenging claims of a patent which it had already previously challenged, Ariosa Diagnostics was able to get six challenged claims of an Isis Innovation patent into a trial for inter partes review in a case styled as Ariosa Diagnostics v. Isis Innovation, Ltd., (IPR2013-00250), involving U.S. Pat. No. 6,258,540.

The Board began by noting that this IPR petition was related to IPR2012-00022 (discussed HERE), which was also a challenge of the ‘540 patent. The Board also noted that Patent Owner renews its argument that inter partes review is improper because Ariosa had filed a civil action seeking declaratory judgment of noninfringement. Citing reasons presented in the previous challenge of the ‘540 patent, the Board rejected the argument again.

Interesting in the Board’s analysis, though, was a discussion of Patent Owner’s argument that the petition was time barred because the petition was filed more than one year after the date on which Petitioner was served with a complaint alleging patent infringement.  Because that complaint was ultimately dismissed without prejudice, however, the one-year time bar of 35 USC § 315(b) did not apply (citing Macauto U.S.C. v. BOS GMBH & KG, IPR 2012-00004).  

The remainder of the decision is a tale of Petitioner fixing errors from the previous proceeding.  For example, finding that Patent Challenger corrected the deficiencies in its argument for disclosure of a limitation involving amplification of certain genetic primers, the Board granted the Petition as a ground previously rejected. Next, the Board considered another anticipation ground relying upon a reference which relates to fetal DNA and its detection in maternal plasma and serum. Citing the fact that Patent Challenger already established anticipation of the main claim 1 by this reference, the Board granted the Petition as to the dependent claims in the instant Petition.

Reviving and improving arguments from an earlier challenge of the ‘540 patent, Ariosa was able to get six challenged claims of the ‘540 patent into a trial for inter partes review.

32 for 33: PTAB Again Allows Re-Argument of Grounds Denied in Earlier Reexamination

iStock_000019792592XSmallThe PTAB continued its trend of not providing any deference in an inter partes review to previous actions by the Patent Office with respect to a previously-challenged patent in a case styled Vestcom Int’l, Inc. v. Grandville Printing Co. (IPR2013-00031), involving US Pat. No. 8,020,765. Three of the fourteen challenge grounds were granted, with the Board finding the other 11 grounds to be redundant.

The invention of the ‘765 patent relates to a method of printing, distributing, and placing price tags and point-of-purchase signs for use in retail store shelves and displays. According to the ‘765 patent, the invention is particularly useful for “just-in-time” printing, delivery of price tags with minimal lead times, and faster price tag changes at stores – all while reducing labor costs.

As has become its pattern, the Board first construed two key claim limitations.  First, the Board adopted Patent Challenger’s definition for “digital press,” after noting that Patent Owner did not contest the construction.  Second, the Board, sua sponte, construed the term “just-in-time,” finding that its meaning “is not apparent to us.”  Order at 13.  In construing that term, the Board first noted that the ‘765 patent did not contain an explicit or special definition of “just-in-time.”  As such, the Board turned to a dictionary definition, citing to an online resource (xreferplus.com).  Order at 15.

After construing the two claim terms, the Board proceeded to analyze the Patent Owner’s estoppel argument, that Patent Challenger previously filed a request for inter partes reexamination of the ‘765 patent that included 405 proposed grounds of rejection (fourteen of which were identical to those contained in the present petition for inter partes review). In the prior reexamination, the PTO issued a Reexamination Order denying the petition for inter partes reexamination.  Based on this denial, Patent Owner sought a finding that the present petition for inter partes review should be denied.  The Board disagreed.

First, the Board determined that the previously-codified estoppel provisions of inter partes reexamination (35 USC §317(b)) did not apply to inter partes review. Order at 17. Next, the Board determined that the current version of 35 USC §318(a) did not apply because that section only related to final, written decisions based on a petition for inter partes review, not inter partes reexamination. Order at 17-18. Finally, the Board determined that issue preclusion did not apply because the prior Reexamination Order only addressed a different claim not challenged in the present inter partes review and did not include any substantive analysis or draw any conclusions relative to the claims challenged in the present inter partes review, even though those claims were included in the prior request for inter partes reexamination.  That is, because the specific denial of the reexamination petition only applied the art to claim 1, not the claims challenged here, issue preclusion was inappropriate. Order at 18-19. Therefore, the Board held that Patent Challengers were not estopped from presenting identical grounds for unpatentability.

In the end, the Board granted trial on all thee challenged claims based on three obviousness challenge grounds each involving a combination of at least three prior art references. Important to that analysis was the Board’s rejection of Patent Owner’s argument that there was insufficient rationale to combine the references cited by Patent Challenger. In rejecting this argument, the Board noted that Patent Owner did not provide “credible evidence or arguments concerning any technological difficulties” that would prevent the combination.  Order at 24.  Of course, Patent Owner was unable to put forth expert testimony at this stage of the proceeding.

Lastly, the Board denied an argument that secondary considerations militated against a finding of a reasonable likelihood that one or more claims was unpatentable.  Order at 25.  To that end, the Board found that there was no showing of a nexus between the claimed commercial success and the claimed invention.  To establish commercial success, Patent Owner had to show that the success was “directly attributable” to the claimed features.  Further, Patent Owner needed to address whether other factors, including advertising and promotion, contributed to the commercial success.