PTAB Grants IPR Motion to Exclude – Knocks Out Exhibits As Untimely

53129743_sThe Board rarely grants motions to exclude, but it did so in Toshiba Corp. v. Optical Devices, LLC, IPR2014-01447 (March 9, 2016).  There, Patent Owner moved to exclude four exhibits; the motion was denied as two of them and granted as to the other two.  Patent Owner objected to the two admissible exhibits (a data sheet and press release) on grounds of lack of authentication, inadmissible hearsay, and/or irrelevance.  The PTAB dispensed with these objections quickly.  Concerning authentication, a trademark notice on the document sufficiently authenticated the material.  The document’s date was not hearsay:  “the fact that a document bears a date is not hearsay.”  As to irrelevance, the PTAB found (as is common) that the Patent Owner’s argument was really about sufficiency of the evidence, which should not be raised in the form of an irrelevance objection.

The two excluded exhibits were a current website containing a link to a downloadable datasheet, and an accompanying authentication declaration from the Internet Archive.  These exhibits submitted for the first time with Petitioner’s reply.  The Board noted these exhibits were not provided in response to evidentiary objections from Patent Owner, nor were they submitted in accordance with the procedures for introducing supplemental evidence or information into proceedings (37 C.F.R. § 42.64(b)(2) and 42.123(a)–(c)), despite Petitioner’s early awareness of Patent Owner’s objections to the alleged public availability of the information.  Because the submission of these exhibits was untimely, the PTAB excluded them.  Notably, the PTAB’s exclusion order was not based on any Federal Rule of Evidence, but rather solely on the Board’s rules concerning the timing of submissions.

Board Explains the Process for Evidentiary Objections—and Illustrates the Severe Penalty for Not Following It

35378580_sPractitioners who are used to district court litigation may be surprised—and tripped up—by the rules for objecting to evidence in IPRs, which differ significantly from the approach used in litigation.  The Board’s Final Written Decision in IPR2014-01204 (Valeo v. Magna Elecs.) serves as a good case study of the IPR rules’ strict process for evidentiary objections.

By way of background, possibly the biggest difference between evidentiary objections in IPRs and litigation is the IPR rules require objections to be filed with the Board within ten business days after the evidence is submitted.  Failure to object within that time waives the objections, and precludes a later motion to exclude the evidence.  After evidentiary objections are served, the proponent of the evidence can, within 10 business days, serve “supplemental evidence” in an effort to overcome the objection.  That supplemental evidence is not filed as a matter of course without the Board’s approval; rather, its use is generally limited to filing in opposition to a motion to exclude.

The Board often requires strict compliance with this procedure, and will strike objections if they do not comply, as illustrated in the Valeo case.  There, the Decision to Institute was entered on January 28, 2015.  That triggered the 10-day deadline for Patent Owner to object to the evidence in the Petition, and Patent Owner timely filed its objections on Feb. 11.  In turn, Petitioner timely served supplemental evidence on Feb. 25.  The next day, Petitioner properly sought permission from the Board to file a motion to file the supplemental evidence as “supplemental information.”  On March 4, the Board granted Petitioner permission to file its motion.  The same day, Patent Owner objected to the supplemental evidence.

On April 10, the Board granted Petitioner’s Motion to File Supplemental Information.  Thus, by operation of the rules, the “supplemental evidence” became evidence on that day.  Patent Owner never renewed its objection.  As a result, the Board ruled that Patent Owner waived its objections to the supplemental information, despite having earlier objected.  The earlier objections were ineffective, according to the Board, because the “rules provide for objections to evidence, but do not provide for objections to supplemental evidence.”

Regarding the substance of admissibility issues, the Federal Rules of Evidence apply to IPRs.  The Valeo case addresses a variety of other evidentiary objections that were effectively lodged, and a few particular points from the decision provide a window into how many PTAB judges approach evidentiary issues:

  1. Arguments about admissibility should not be included in Patent Owner’s Response; such arguments should only be raised in a motion to exclude. (See FWD at 14-15);
  2. On the flip side of that same coin, arguments about sufficiency of the evidence should be presented in the Patent Owner’s Response, not in a motion to exclude under the guise of an objection on relevance grounds. (See FWD at 16);
  3. Hearsay objections are of very limited utility with respect to expert declarations, because the Board does not consider declarations submitted as a part of the IPR to be “out of court statements,” as the declarants may be cross-examined (see FWD at 17);
  4. Objections should be precise and comprehensive. For example, if an objection does not include reference to Rule 403, then the Board may not later allow an argument based on FRE 403.  (See FWD at 20);
  5. Be sure to object to the right document. For example, an FRE 901 objection should be directed to the underlying document, not a declaration that tries to authenticate the underlying document.  Otherwise, the Board may decline to consider the issue (see FWD at 21).

In the Valeo IPR, as usually happens in IPRs, the motion to exclude was denied.

Sloppy Submissions By Patent Owner Earn PTAB Sanctions

iStock_000017847091XSmallHaving a bad day? It can’t be worse than the series of errors a Patent Owner found itself in the middle of in Euro-Pro Operating LLC v. Acorne Enterprises, LLC, (IPR2014-000351 and IPR2014-00352). In those cases, a series of missteps resulted in an order instituting sanctions for the “inconvenience of the Board.”

In each proceeding, Patent Owner attempted to file a Motion to Exclude evidence. In the first submission, a page was missing. Realizing its error, but without authorization from the Board, Patent Owner filed a second version of the motion…but this time, the motion was submitted upside down. Order at 2.

Realizing this second error, Patent Owner emailed the Board asking that the earlier sent files be expunged, without conferring with opposing counsel. The Board subsequently requested that Patent Owner: (1) properly identify which files needed to be expunged; and (2) confer with opposing counsel as to any objection. Patent Owner emailed with instructions regarding what documents were to be expunged, but did not confer with opposing counsel.  Id. at 2.

Certainly of significance in this case was the fact that these were not the first transgressions by Patent Owner. For example, Patent Owner had previously missed two conference calls, filed papers filled with copious typos, and filed papers which did not comply with formatting requirements. Having already warned Patent Owner that continued actions that waste the Board’s time would result in sanctions, the Board cited 37 C.F.R. § 42.12(a)(1) and (7) (allowing for sanctions for failing to comply with rule that causes unnecessary delay or costs) and ordered that Patent Owner may not file a Motion to Exclude in either proceeding at issue regarding evidence already of record. Id. at 3.

See, today isn’t going so bad after all.

Motion to Exclude is Proper Vehicle in IPR to Remove Reference as Evidence

34447773_sPatent Owners have often made the argument that certain art of record in an inter partes review is not actually prior art. The proper way to remove that evidence from the record is via a Motion to Exclude, not merely by making arguments in a Patent Owner Response or at the oral hearing. This issue, and an improper attempt at exclusion, arose in ABB, Inc. v. Roy-G-Biv Corporation, IPR2013-00063, involving US Pat. No. 6,513,058.

Earlier in a previous inter partes review proceeding, Patent Owner had argued that the invention of the ‘058 patent was conceived and reduced to practice prior to the effective art date of the relied-upon prior art references. As such, Patent Owner asserted that the references relied upon in the challenge were not available as prior art. Decision at 5-6. The Board rejected this argument in the earlier IPR as lacking adequate evidentiary support for diligence in reducing the invention to practice. Id. at 6.

In this later proceeding, Patent Owner made additional arguments and cited additional cases, all in an unsuccessful attempt to convince the Board. As a backup argument, Patent Owner argued that Petitioner failed to meet its burden of proof in establishing the publication date of one of the references, and therefore the reference was not eligible as prior art. This challenge, however, was made at the final hearing – not as part of a motion to exclude the prior art reference. Id. at 8.

The Board found that Patent Owner’s argument was untimely, including that the final hearing “is not the place to advance a new theory of the case.” Order at 9. Further, pursuant to 37 C.F.R. § 42.64(b)(1), an objection to the admissibility of a reference must be served within ten business days of the institution of the trial. This must be followed by a motion to exclude the reference. Id. at 8. However, Patent Owner did not raise an objection to the reference nor did it file a motion to exclude.  With these actions now time barred, the Board deemed Patent Owner’s attempt to challenge the art-date of the reference to be untimely. Id. at 9.

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.

Despite Lack of Familiarity with Specific Technology-at-Issue, Industry Expert Not Excluded

iStock_000011114669SmallThe Board continued its reluctance to exclude evidence in inter partes review proceedings in Primera Technology, Inc., v. Automatic Manufacturing Systems, Inc., Final Written Decision, IPR2013-00196 by denying a motion to exclude the expert testimony of Patent Owner’s industry expert. The Board has indicated its desire to be presented with a story regarding the patentability or unpatentability of the patent subject to an IPR. By continuing to deny motions that seek to exclude experts with long tenures in a particular industry, though not necessarily with the specific technology at issue in the IPR, the Board may be indicating a preference for industry experts who can tell a long, detailed story about the relevant technology.

In Primera, Petitioner challenged the credibility of Patent Owner’s expert, seeking to exclude his declaration. Id. at 26. More specifically, Petitioner argued that during his deposition, the expert admitted to having no familiarity with the general state of the art, contrary to his declaration. Id. Petitioner also argued the expert’s testimony was inadmissible under Fed. R. Evid. 702 because he was not qualified as an expert. Id.

The Board examined the expert’s work experience and skill set and denied the relief requested in the motion to exclude. Id. at 28. First, the Board gave credit to the expert for his 21 years of industry experience in various, related technologies. Id. Second, though the expert lacked specific experience with the type of microscope slide printer at issue went to the weight and sufficiency of his testimony, rather than its admissibility. Citing Liquid Dynamics Corp. v. Vaughan Co., 449 F.3d 1209, 1221 (Fed. Cir. 2006). Id.

In the end, the Board denied the motion to exclude.

Board Addresses Procedure for Making Board Aware of Supplemental Evidence

There has been, to date, much confusion surrounding the propriety and timing of filing “supplemental evidence” with the Board.  In Sealed Air Corporation v. Pergis Innovative Packing, Inc., IPR2013-00554 through IPR2013-00558, the Board clarified the issues upon request of Patent Challenger regarding the proper procedure to file supplemental evidence in response to an evidentiary objection.

[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]

37 CFR § 42.64(b):
(b) Other evidence. For evidence other than deposition evidence:
(1) Objection. Any objection to evidence submitted during a preliminary proceeding must be served within ten business days of the institution of the trial. Once a trial has been instituted, any objection must be served within five business days of service of evidence to which the objection is directed. The objection must identify the grounds for the objection with sufficient particularity to allow correction in the form of supplemental evidence.
(2) Supplemental evidence. The party relying on evidence to which an objection is timely served may respond to the objection by serving supplemental evidence within ten business days of service of the objection.[/pullquote]

Patent Challenger acknowledged the Rules for service of supplemental evidence on an opposing party in response to an evidentiary objection under 37 CFR § 42.64(b)(2), but noted the Rules are silent as to the filing of such evidence with the Board. The Board instructed that, in situations where a party’s objection to evidence can be overcome by later-served supplemental evidence, the objection would not become the basis of a motion to exclude evidence, and therefore the Board would not be made aware of either the objection or the supplemental evidence Accordingly, the Rules do not provide for filing of evidentiary objections or supplemental evidence during the initial stages of a proceeding.

The Board only becomes aware of supplemental evidence when there is an evidentiary dispute which cannot be resolved. In such situations, the objecting party may file a motion to exclude evidence, which can be opposed by the filing of an opposition to the motion to exclude.  This opposition may be accompanied by exhibits containing previously-served supplemental evidence.  Only at this time will the Board be made aware of the supplemental evidence.

In short, objections to evidence and supplemental evidence served within 10 days of such objections, pursuant to 37 CFR § 42.64(b)(2), should only be filed with the Board at the Motion to Exclude stage of the proceeding.