Federal Circuit Explores Expert Declaration as IPR Supplemental Evidence

cafc1Getting caught up on a Federal Circuit decision from late last year, we take a look at the Federal Circuit’s decision in Redline Detection, LLC v. Star Environtech, Inc. (2015-1047), decided on December 31, 2015. In this case, the Court sent the strong message that petitioners must put their best foot forward right off the bat – submitting expert declarations with their petitions as part of their prima facie case and not later as supplemental evidence.

Petitioner Redline challenged Star’s patent 6,526,808 in IPR2013-00106. Redline did not file an expert declaration with its petition. Instead, Redline moved to submit the expert declaration as supplemental evidence under 37 CFR 42.123(a) after the PTAB instituted the IPR. The PTAB denied Redline’s motion and later decided that the challenged claims were not obvious. Redline appealed, and the Federal Circuit affirmed.

In the appeal, Redline principally argued that the PTAB should have granted its motion since it timely moved within one month of the institution decision and since the declaration was relevant to the instituted grounds as required by 37 CFR 42.123(a). The Court rejected Redline’s argument that timeliness and relevance automatically required the PTAB to grant Redline’s motion — movant has the burden of proving that it is entitled to the requested relief.

To that end, the Court agreed with the PTAB that Redline did not justify submission of the declaration after filing its petition and after the PTAB’s institution decision, and Redline failed to show why the declaration could not have been submitted with the petition. Instead, Redline admitted to the PTAB that it intentionally delayed filing the declaration since it was cost-effective for its expert to opine only on the instituted grounds rather than all the grounds alleged in the petition. The court noted that, while supplemental evidence may be submitted under 37 CFR 123, 37 CFR 42.104 requires the petitioner to identify in its petition each challenged claim, the statutory grounds on which it is challenged, how it is to be construed, and the relevance of the evidence to the challenge raised. As such, the Court agreed with the PTAB that Redline’s expert declaration was more than just supplemental evidence. Instead, it was evidence supporting Redline’s prima facie case and should have been submitted with the petition under 37 CFR 42.104.

Redline’s other arguments, related to construction of 37 CFR 42.123(a), also did not persuade the Court in view of the overall scheme of regulations promulgated in 37 CFR 42 subparts A and B. The court concurred with the PTAB’s decision in IPR2014-00561 that 37 CFR 42.123(a) is not a routine avenue to pursue, nor does the regulation require acceptance of, supplemental information. The court opined that requiring admission of supplemental information, which Redline’s expert declaration was not, so long as it was timely submitted and relevant to the proceeding would cut against the PTAB’s mandate and alter the intended purpose of IPR proceedings. Accordingly, the court affirmed the PTAB’s denial of Redline’s motion.

The takeaway is that petitioners must put forth their best case, including expert declarations, in their petitions.

Lessons Learned from a Rare CAFC Opinion on an IPR Matter

cafc1To date, the Federal Circuit has issued Rule 36 affirmances in over 80% of the cases it has heard. Thus, when a new, substantive opinion is issued by the Court, it is an opportunity to learn. On November 5th, the Federal Circuit issued an opinion in Belden Inc. v. Berk-Tek LLC, relating to the Final Written Decision issued in IPR2014-00057. The Federal Circuit affirmed the Board’s decision that claims 1-4 were determined to be unpatentable and reversed the Board’s decision that claims 5 and 6 were not determined to be unpatentable. It was a rough decision for the Patent Owner and some key lessons can be learned from the Court’s analysis:

The Board Can Rely on its Own Reading of the Prior Art: Despite the fact that the Petition was unaccompanied by expert testimony, the Court gave deference to the Board’s determination that claims 1 and 4 were obvious because those findings were supported by substantial evidence. Op. at 12-14. In so doing, the Court noted the discretion the Board can exercise in this type of case: “In the circumstances here, involving a simple point in a mechanical field and one very close piece of prior art, the Board was entitled to rely on its own reading of [the prior art]–supported by the Petition’s observations about it–to find that a skilled artisan would have understood the importance of [the key reference]”. Id. at 14. Thus, although the Petition only briefly addressed this key issue, the Board’s own view of the art can overcome such a shortcoming of the Petition.

Rationale to Combine Must Be Based on More than a General Statement: In affirming the unpatentability of claims 2 and 3, the Court noted that the Board made the correct inquiry regarding why a skilled artisan would have had reason to combine the prior art references at issue. Referencing the Board’s recitation of the KSR decision, the Court stated that “[t]he Supreme Court’s passage does not establish that it suffices for obviousness that a variation of the prior art would predictably work, but requires consideration of whether, in light of factors such as ‘design incentives and other market forces,’ the hypothetical skilled artisan would recognize the potential benefits and pursue the variation.” Op. at 15.

Broad Teaching in the Prior Art Can Provide Rationale to Combine: Relative to the decision to reverse the Board regarding the patentability of Claims 5 and 6, the Court found that the Board did not given sufficient weight to the teaching of the prior art and, instead, focused to much on the particular invention it was describing and attempted to protect. Id. at 18. Dismissing the other arguments from the Board to support patentability, the Court decided that, even in view of the substantial evidence deference afforded to the Board on factual issues, “the record is one-sided on the proper question of whether [the first prior art reference] taught a solution to the problem…that a skilled artisan would have been motivated to use in making [the disclosed product from the second prior art reference].” Id. at 20.

The PTAB, because of its Expertise, Does Not Always Need Expert Assistance to Understand Prior Art: Patent Owner argued that the evidence provided in Petitioner’s reply brief, in the form of expert testimony, was necessary to establish a prima facie case of obviousness. The Federal Circuit disagreed, finding that (1) the testimony was responsive to issues raised in the Patent Owner Response (i.e., each point from the declarant responded to a statement from Patent Owner’s declarant), and (2) the evidence was not needed to make out a prima facie case of obviousness. Although the Board often cited to the expert declaration, that did not mean the testimony was necessary for a prima facie case of obviousness. Op. at 23. The Federal Circuit concluded that the prior art itself contained all the information necessary to make out a prima facie case, especially in view of the Board’s technical expertise.

New Expert Testimony in the Petitioner Reply is Here to Stay: Patent Owner’s argument that it did not have a reasonable opportunity to the expert testimony provided in the Petitioner Reply. The Federal Circuit disagreed again, finding that there are numerous ways to respond to such testimony, including (1) cross-examination, with a motion for observation; (2) motion to exclude; (3) dispute the testimony at the oral hearing; (4) move for permission to submit a surreply; and (5) seek a waiver of any regulation that impairs its opportunity to respond.

In the end, this is a strong case for Petitioners to rely upon for all of the above-referenced aspects of the decision.

PTAB Grants Rare IPR “Motion to Compel”

14086935_sMany parties to inter partes review proceedings continue to have their guns pointed directly at their feet, taking erroneous actions that are consistently called out by the PTAB. In the midst of one such error, we explore the Board’s regulations relative to “compelled discovery.” In IPR2014-00041, -43, -51, -54, and -55 (styled as Geo Process Engineering, Inc. v. Steuben Foods, Inc.), an issue arose regarding an omnibus declaration by Patent Owner’s declarant that was not filed. The declarant signed an “omnibus” declaration which pertained to all five inter partes review proceedings pending between the parties. Counsel for Patent Owner then created five separate declarations that were specific to each IPR proceeding.

Oddly, though, counsel did not provide Declarant the opportunity to review the individual declarations before filing. Declarant had to acknowledge in deposition that each individual declaration was different from the others and that each declaration was different than the omnibus declaration (including some red-line edits that remained in the omnibus declaration).  Declarant did testified that the five individual declarations did not contain substantively different testimony than the testimony which Declarant authorized.

In view of these facts, Patent Challenger filed a request to compel the production of the omnibus declaration and allow for cross-examination on that declaration. Both Patent Owner and Declarant himself opposed the request, claiming the omnibus declaration was a draft and subject to work-product protection.

The Board sided with Patent Challenger, finding that the omnibus declaration was not subject to work-product protection under these facts.  The Board stated several factors which persuaded it to grant Patent Challenger’s request, including: (1) Patent Challenger has a strong interest in understanding the differences between the omnibus declaration and each of the five individual declarations in order to evaluate credibility of the declarations; (2) It’s inconsistent for Patent Owner to argue that the omnibus declaration is privileged while simultaneously allowing Declarant to review it for differences between the omnibus declaration and the individual declarations; (3) Declarant’s testimony that there is no substantive difference between the testimony of the omnibus declaration and the five declarations actually filed should not go unchallenged. In the end, the Board granted Patent Challenger’s request to compel the production of the omnibus declaration.

An interesting facet of this decision is that the Board characterized it as a motion to compel, versus the more common motion for additional discovery. The Board did not cite to, for example, 37 CFR 42.52 (“Compelling Testimony and Production”). Further, the production of a document that is in dispute between the parties has, in the past, been considered under the rubric for “additional discovery.” The general belief from commentators to date has been that “compelled discovery” relates to non-parties but there is nothing in Rule 42.52 that specifically limits compelled discovery to third partes. We will have to stay tuned and see if this is merely a vague choice of terminology by the Board, or a trend.

Rare Grant (in Part) of an IPR Motion to Exclude

iStock_000001758213XSmallMotions to Exclude Evidence have been one of the features of inter partes review practice that have, to date, had a less significant effect than expected. Very few motions have been granted, largely because the Board constructs its Final Written Decisions so as to not rely upon any disputed evidence. As such, motions are often denied as moot. Because the grant of such motions is so rare, we address such a grant that was issued in Corning Inc. v. DSM IP Assets B.V., (IPR2013-00043 and IPR2013-00044), wherein Petitioner moved to exclude evidence and portions of an expert’s declaration.

Petitioner argued in its motion that Patent Owner’s expert testimony relied on experiments that contain hearsay. Id. at 3. More specifically, Patent Owner’s expert relied on various documents generated in Patent Owner’s research laboratories that were created after the filing of the petition and report information relating to particular experiments performed by Patent Owner (such as preparation of samples, chromatography data, viscosity measurements, etc.). Id. 

In rebuttal, Patent Owner argued that the documents, while hearsay, are admissible based on the “business record” exception to the hearsay rule. Fed. R. Evid. 803(6). Id.

The Board found the records-at-issue were excluded because they did not fall within the “business rule” exception. Id. Applicable Federal Circuit and Board precedent declines to invoke a Rule 803(6) exception to a laboratory notebook documents and laboratory generated data of properties of compositions experimentally made in laboratories. Further, “conducting specific and unique scientific experimental work is not ‘a regularly conducted activity.'” Id. at 5.

All was not lost, however, for Patent Owner. Despite the fact that Patent Owner cannot have the exhibits admitted under Rule 803(6), its expert was allowed to rely on them in forming his opinion. Id. To that end, Rule 703 provides in part: “An expert may base an opinion on facts or data in the case that the expert has been made aware of or personally observed. If experts in the particular field would reasonably rely on those kinds of facts or data in forming an opinion on the subject, they need not be admissible for the opinion to be admitted.”

Because the documents-at-issue were not shown to be unreliable, the evidence of the experiments is excluded as hearsay, but the expert’s related testimony was admissible. Id. at 8.

Conclusory Declaration Testimony Again Leads to Unsuccessful IPR Petition

SONY DSCSome of the best inter partes review lessons can be learned from decisions denying institution of an inter partes review trial.  Among the chief grounds for denying petitions, failure to provide competent expert testimony in support of a petition, presented itself again in Panasonic Corp., et al. v. Optical Devices, LLC, IPR2014-00302, Paper 9.

In Panasonic, Petitioner asserted two anticipation grounds of unpatentability, relying on two separate references. In support of the anticipation arguments, the Board found that Petitioner improperly picked and chose from various descriptions of each respective reference to allegedly disclose all limitations of the challenged claims, rather than pointing to a single anticipatory embodiment.  The impropriety of this course of action was discussed previously.

Of particular interest in this case was the Board’s treatment of declaration testimony presented by Petitioner.  More specifically, Petitioner’s expert’s declaration simply stated that each of the two allegedly-anticipatory references disclosed all required limitations, including inherently disclosing a critical limitation. The declaration testimony provided little detail or support, however, beyond the bare statements of anticipation. Accordingly, the declaration testimony was judged by the Board to be conclusory, particularly with respect to the inherent disclosure element.  As such, the Board gave the testimony little weight.

In view of the weak anticipation arguments and conclusory declaration testimony, Patent Challenger failed in getting any challenged claims in to an IPR trial.


Instruction Not to Answer on Relevance Grounds Improper in IPR Depositions

iStock_000001758213XSmallIn Dynamic Drinkware v. National Graphics, IPR 2013-00131, Patent Owner’s counsel prevented Petitioner from questioning a witness by instructing the witness not to answer questions on the ground of relevance. Petitioner contends that such instructions were prohibited, pursuant to the Board’s Testimony Guidelines.  Office Patent Trial Practice Guide, 77 Fed. Reg. at 48,772-73. The panel agreed with Petitioner, finding that counsel should have stated its objections for the record and later moved to exclude the testimony.  Alternatively, if “counsel believed that the examination of [the witness] was being conducted in bad faith, or in a manner that unreasonably annoyed, embarrassed, or oppressed [the witness] or Patent Owner, counsel should have promptly initiated a conference call with the Board.”  Order at 3.  The Board decided not to sanction Patent Owner at this time, but did take Patent Owner up on its offer to produce the witness again for a resumption of the deposition. The panel also stated that Patent Owner should agree to bear the expenses of providing a court reporter for the examination.

Declaratory Testimony from File History is “Affidavit Testimony” Which Requires Deposition

[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]37 CFR 42.51(b)(1)(ii): (b) Routine discovery.  Except as the Board may otherwise order: …(ii) Cross examination of affidavit testimony is authorized within such time period as the Board may set.”[/pullquote]Most declaration testimony in an inter partes review proceeding is newly developed as part of the IPR.  On occasion, however, parties to an IPR have used previously generated declarations in support their positions.  In Ikaria, Inc. v. GeNO LLC, IPR2013-00253, the PTAB considered the issue of whether, when a Patent Owner includes, in its Response, an expert declaration that was submitted during prosecution of the challenged patent, Petitioner is entitled to cross-examine the expert.

In Ikaria, Petitioner argued that, pursuant to 37 CFR § 42.51(b)(1)(ii), the testimony of an expert cited in a Patent Owner’s response was “affidavit testimony.” Therefore, the Rules required cross examination of the expert as part of routine discovery.  Patent Owner disagreed, arguing that the declaration was not prepared for the purposes of this proceeding and, as such, cross-examination was not required.  The Board disagreed, finding that cross-examination was required.

Further complicating matters was the fact that the expert was unable to be deposed due to medical issues. Since a deposition was unable to be arranged to comply with the Rules, Patent Owner filed a motion to expunge the expert declaration from the record.

Communications Between Experts Discoverable in Inter Partes Review

AchievementGiven the rarity of a granted Motion for Additional Discovery, it is worth noting the circumstances of the Board’s decision in Apple Inc. v. Achates Reference Pub., Inc., IPR2013-00080; -00081 (Paper 58), wherein an exchange of email correspondence between the experts hired by Patent Owner was ordered to be produced.

More specifically, Patent Owner filed with its Response the declaration testimony of two expert witnesses.  During depositions of the two witnesses, Petitioner elicited testimony from the witnesses that indicated that the two had exchanged emails regarding the substance of their testimony.  As previously discussed, Petitioner initially sought a ruling from the Board that such email communications constituted “routine discovery.”  The Board denied that request, but authorized a motion for additional discovery.

In its later ruling on the motion for additional discovery, the Board undertook a detailed review of the Garmin factors before deciding that Petitioner had met its burden of obtaining the requested email communications as additional discovery.  We caution that this should not be seen as a trend toward more liberal use of discovery in IPR proceedings.  The Board’s decision was exhaustive on the merits and it is clear that a party seeking discovery in inter partes review proceedings still faces an uphill battle.


First Claims Survive Inter Partes Review Proceedings

HTML web codePatent Owners finally received some good news after a string of pro-Petitioner rulings by the PTAB that saw all challenged claims wiped out in the first 8 Final Written Decisions by the Board.  In Microsoft Corp. v. Proxyconn, Inc., IPR 2012-00026 and 2013-00109, Paper 73, and Synopsis, Inc. v. Mentor Graphics Corp., IPR2012-00042, Paper 60, the Board let the first claims stand after an IPR challenge.  Harness Dickey represented Patent Owner in the Microsoft case, so we will not comment further on that proceeding, but instead, we take a deeper look at what went right for Patent Owner in the Synopsis case.

The first interesting issues from the Synopsis decision were procedural in nature.  First, the Board considered Patent Owner’s argument that the petition was barred because, after the filing of the Petition, Petitioner purchased a company that had been sued by Mentor Graphics more than one year prior to the filing of the Petition. The Board denied this argument, finding that privity is only relevant up until the time a petition is filed — later-acquired privities are irrelevant.  Order at 12.

The second procedural issue of interest relates to the doctrine of assignor estoppel.  This panel of the PTAB agreed with previous panels who have found that the equitable doctrine of assignor estoppel does not provide an exception to the statutory mandate that any person, not the owner of a patent, may file a petition seeking inter partes review.

After those procedural setbacks, however, Patent Owner ultimately prevailed on nine out of 12 challenged claims.   Regarding the Board’s substantive analysis, it is interesting to note that the Board switched in its position regarding the construction of a relevant claim term.  The term, “instrumentation signal,” was not addressed in either Petition or Preliminary Response from a claim construction perspective.  The Board adopted a construction in its Decision to Institute of the term, but then changed its mind in view of Patent Owner’s arguments in its Patent Owner Response.  Order at 18-27.

Ultimately, however, key to the Board’s decision was the fact that Mentor Graphics provided persuasive expert testimony in its Patent Owner Response, and Petitioner had not provided expert testimony.  That imbalance in evidence was a deciding factor in the Board finding that the claims that contained “instrumentation signal” were confirmed as patentable.

As a final note, Patent Owner’s Motion to Amend was denied by the Board because Patent Owner “had not met its burden.”  We will stay tuned to learn whether a Patent Owner can successfully navigate the seemingly insurmountable hurdles to a successful Motion to Amend.

Quartet of Final Inter Partes Review Decisions Go Against Patent Owner

Micro ChipThe tide of inter partes review proceedings continues to batter Patent Owners, as the PTAB issued four decisions in cases brought by Intellectual Ventures against Xilinx, rendering all challenged claims at issue unpatentable.  Intellectual Ventures Management, LLC v. Xilinx, Inc., IPR2012-00018, -00019, -00020, and -00023.

The first two decisions, each authored by Judge Arbes, were similar in their content, and revealed two interesting takeaway issues.  IPR2012-00018, -00019. First, in its decision to initiate, the Board construed the term “array of landing pads disposed on an inside surface of the integrated circuit package.”  As the trial progressed from that decision, however, it became clear that what was an “inside surface” needed further elucidation.  As such, the Board undertook further claim construction analysis in the Final Written Decision, rejecting Patent Owner’s contention that “inside surface” required that the ICP completely surrounded the pads.  Instead, and referencing a figure created by Petitioner, and included in its Reply brief, the Board found that a pad could be located on an inside surface and not be completely surrounded by the ICP.  Id at 9-18.  The second significant issue related to Patent Owner’s Motion to Amend.  The Board denied that motion because: 1) there was insufficient testimony or evidence that the new references cited by Petitioner, in combination, would work as Patent Owner suggested (at 40); 2) there was insufficient evidence that the new combination would not have been obvious (at 41); and 3) Patent Owner failed to provide at least some explanation as to why one of skill would not have found the combination obvious (at 42).  As such, all claims were deemed unpatentable, and no amended claims were entered.

The third decision (IPR2012-00020), authored by Judge Medley, was interesting in its discussion of the parties experts.  While both parties submitted expert testimony, in this battle of experts, Petitioner was more persuasive because Patent Owner’s expert only expressed conclusory opinions (at 10).  Relatedly, the Board noted that Patent Owner did not depose Petitioner’s expert or otherwise challenge his testimony in key regards (at 13).  In the end, giving substantial weight to Petitioner’s expert, and less weight to Patent Owner’s expert, resulted in a finding that all challenged claims were unpatentable.

In the fourth decision (IPR2012-00023), authored by Judge Easthom, the Board addressed the issue of whether an expert declaration can fill in holes in a prima facie case of obviousness.  In that case, Patent Owner argued that the art was silent on a key limitation of the claims (a double poly layer) and that Petitioner had attempted to fill that hole in the art only via expert testimony.  The Board did not sustain this argument, however, finding that 35 U.S.C. § 312(a)(3)(B) allows for expert testimony in support of a Petition.  Referencing the Federal Circuit’s KSR decision, the Board made clear that declaration testimony about common sense and general knowledge in the art was appropriate in IPR proceedings.  In general, therefore, until further notice, expert testimony may be used to supply missing claim limitations not shown in a printed publication or patent.  Id. at 36-40.