PTAB Designates New “Informative Opinion”

InformativeWhen the PTAB considers one of its own decisions to be “informative,” it is always worth taking note. On Friday, July 17th, the Board designated its opinion in Arris Group, Inc. v. C-Cation Techs., IPR2015-00635 as informative, and we discuss its content below.

The Arris decision was a rare grant of a Motion for Additional Discovery relating to a the issue of privity between Petitioner and a third party who is barred from filing an IPR petition pursuant to 35 USC § 315(b). As a preliminary issue, the Board addressed Petitioner’s argument that the motion for additional discovery, which sought evidence relative to the 1-year bar of § 315(b), was barred because the privity issue had been resolved as part of an adverse judgment in a previous IPR between the parties. The Board disagreed, finding that the PTAB rules do not dictate that decisions in one proceeding have preclusive effect in subsequent proceedings. Order at 4. Further, res judicata did not apply because the previous IPR dealt with different claims than were at issue in the present IPR. Id. 

Turning to the discovery actually requested, the Board found that it was narrowly tailored and in the interest of justice. Specifically, Patent Owner only sought indemnification agreements referencing Petitioner’s ability to control co-pending litigation with the third party who would be barred from bringing an IPR. Given the narrowly-tailored request, the Board found that production of those agreements was in the interests of justice. The Board’s notification regarding the decision indicated that it was informative because of the narrowly-tailored request from Patent Owner. Given that guidance, we also reproduce the granted request below, for reference:

“Agreement(s) between [Petitioner] and [Third Party] under which [Third Party] requested indemnification for the claims brought against [Third Party] in the Texas Litigation that reference (or are contingent on) [Petitioner’s] ability to control the litigation.”

 

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.

Attorney Argument in Preliminary Response Continues to be Trumped by Expert Evidence from Petition

DroppingChallenging two patents with a common parent application, Butamax Advanced Biofuels was able to get 28 challenged claims of one Gevo patent and 18 challenged claims of a second into separate trials for inter partes review, in cases styled as Butamax Advanced Biofuels LLC v. Gevo, Inc. (IPR2013-00214 and IPR2013-00215), involving U.S. Pat. Nos. 8,304,588 and 8,283,505.

The duo of patents both relate to a “method for recovering C3-C6 alcohols, including isobutanol, from dilute aqueous solutions, such as fermentation broths.”

The Board in both cases dealt with a handful of preliminary issues before delving into the analysis. The first issue regarded whether DuPont should have been named as a real party-in-interest by Patent Challenger. The Board rejected Patent Owner’s argument that inter partes review should be barred because of this issue, reasoning that the mere fact that DuPont and Butamax (who have board of directors’ members in common, among other tangential ties) share a common interest in the two patents does not necessarily make DuPont a real party-in-interest.  The real party-in-interest inquiry is “fact-dependent” and Patent Challenger simply had not set forth persuasive evidence of DuPont’s ability to fund or direct the proceeding.  IPR2013-00214 Order at 4.  This issue is, of course, challenging for a Patent Challenger to prove in light of the Board’s high burden to obtain “additional discovery” that would help provide the persuasive facts for this fact-dependent inquiry.

The Board then rejected Patent Owner’s argument that inter partes review should be barred because the references relied upon and the arguments utilized were previously considered by the Examiner. In discounting Patent Owner’s argument, the Board simply stated that Patent Challenger’s arguments had merit. IPR2013-00214 Order at 5.

To conclude the preliminary matters, the Board rejected Patent Owner’s argument that expert testimony should be discredited because it was provided by an expert with a business relationship with DuPont (an alleged unnamed real party-in-interest), citing the expert’s qualifications and persuasive testimony. IPR2013-00214 Order at 6.

The Board’s analysis of the merits of the petitions contained a few interesting points.  For example, in the 214 proceeding, the Board deemed the preambles of the challenged claims limiting, especially given that a portion of the preamble provided antecedent basis support for certain of the dependent claims. IPR2013-00214 Order at 9.

In the 215 proceeding, the Board considered Patent Owner’s argument that, by modifying one prior art reference’s disclosed process by including as step from another reference, the fundamental principles of operation of the process would be changed.  Thus, per Patent Owner, the proposed modification would render the prior art invention inoperable.  IPR2013-00214 Order at 11.  The Board discounted this argument based on the rational that Patent Owner’s “argument improperly is based on what each reference teaches separately, and not on the teachings of the combined references.”  Id.  More specifically, the Board relied on the Federal Circuit’s decision in In re Keller, 642 F.2d 413, 425 (CCPA 1981) to not require “bodily incorporation” of a secondary reference into a primary reference.

This decision shows why there is a growing trend in IPR practice to waive the Patent Owner Preliminary Response or, at the least, to not focus on the merits of, for example, an obviousness analysis.  Time and again in the Board’s decision, it discounted the attorney argument of Patent Owner and referred, instead, to the declaration testimony of Patent Challenger’s expert.  Clearly, expert evidence, if properly presented, is provided great weight, as compared to mere attorney argument (and no expert testimony is, of course, allowed in such a Preliminary Response).  As such, Patent Owners are reconsidering the forecast of arguments that could be made in the formal response to the petition, when expert testimony may be provided, given that the Board is not giving much weight to those arguments in the Preliminary Response.

Burden is on Petitioner to Prove Priority Date of Patent Challenged in Inter Partes Review

michael_at_ispSucceeding on a lone ground of unpatentability, Hewlett-Packard was able to get all 4 challenged claims of an MCM patent into a trial for inter partes review in a case styled as Hewlett-Packard Co. v. MCM Portfolio, LLC (IPR2013-00217), involving U.S. Pat. No. 7,162,549.

The ‘549 patent relates to controllers for flash memory cards.  More specifically, the ‘549 patent describes a “flash-memory card reader that accepts flash-memory cards of several different formats using a universal adapter.”

After a brief claim construction analysis, the Board discussed privity under 35 USC § 315(b).  In general, because Petitioner resells products that were accused of infringement in an action served well over a year prior to the filing of the petition in this IPR proceeding, Patent Owner argued that § 315(b) barred the IPR filing.  The Board held that this was not sufficient evidence to prove privity.  For example, Patent Owner provided no persuasive evidence that Petitioner could have exercised control over the alleged privy in related district court litigation.  Just because Petitioner and the alleged privy are successive owners of the same allegedly infringing property is not enough to prove privity.

An additional, procedural ground addressed by the Board was the priority date of the ‘549 patent given that it claims the benefit of a provisional application and is a continuation-in-part of four non-provisional applications.  The Board criticized Petitioner for failing to provide sufficient evidence to support its argument that the ‘549 patent was not entitled to the filing date of an early application, as argued by Patent Owner.  To that end, none of the applications to which the ‘549 patent claims benefit were entered into the record in this case.  Further, testimony from Petitioner’s expert was conclusory and incomplete.  Order at 8-10.  Thus, the Board found that Petitioner’s arguments regarding the later priority date were insufficient and numerous references upon which Petitioner relied were removed from the proceeding.

Petitioner was saved by the fact that its last remaining ground for unpatentability was deemed persuasive by the Board.  As such, Petitioner was able to get 4 challenged claims of the ‘549 patent into a trial for inter partes review.

To Be a Real Party-In-Interest, One Must Control Actions of a Party to an Inter Partes Review

Green grass  fuel pump outMeeting success on almost every asserted ground, Syntroleum was able to get 20 challenged claims of a Neste Oil patent into a trial for inter partes review in a case styled as Syntroleum Corp. v. Neste Oil Oyj (IPR2013-00178), involving U.S. Pat. No. 8,212,094.

The ‘094 patent relates to a “process for the manufacture of diesel range hydrocarbons from bio oils and fats, commonly called ‘biodiesel’.” More specifically, the ‘094 patent discloses a two-step process in which a biological feed stream, diluted with a hydrocarbon, is 1) hydrodeoxygenated; and then 2) isomerized.

The Board first addressed an argument by Patent Owner that the Petition failed to name all real parties-in-interest. Patent Owner alleged that two other corporations, who were named as co-defendants in concurrent litigation brought by Patent Owner, were real parties-in-interest but were not named. The Board rejected this argument, despite the fact that two of those corporations formed the third as a joint venture, shared counsel, and an indemnification agreement among the parties existed.  None of these facts, per the Board, prove that any party is able to control the actions of another.  Order at 6 (“Whether a party that is not named in an inter partes review proceeding is a ‘real party-in-interest’ or ‘privy’ is a ‘highly fact-dependent question,’ taking into account various factors such as whether the non-party ‘exercised or could have exercised control over a party’s participation in a proceeding’ and the degree to which a non-party funds, directs, and controls the proceeding.”), citing, Office Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48759-60.

Then, the Board moved to a fairly detailed claim construction analysis, that centered largely on Patent Owner’s attempts to limit various terms in the claim to “commercial-scale” production processes.  Patent Owner sought to introduce this limitation to the claims via the construction of the preamble and the use of a dictionary definition.  The Board declined to incorporate this “commercial-scale” limitation into the claims, however, using the breadth of the dictionary definition cited by Patent Owner against it.  Order at 10.  More specifically, while the dictionary definition had some verbiage that supported Patent Owner’s position, other portions of that definition suggested that Patent Owner’s definition was too narrow.

The remainder of the Board’s decision included straightforward analysis of the anticipation and obviousness of the challenged claims that underlie the Board’s decision to institute trial.

41 for 46: Two IPR Trials Initiated After Detailed Obviousness Analysis by Board

iStock_000000202778XSmallChimei Innolux Corporation (CMI), an early veteran of inter partes review proceedings, had two more petitions for granted. CMI was challenging two Semiconductor Energy Laboratory (SEL) patents in cases styled as Chimei Innolux Corp. v. Semiconductor Energy Lab. Co., Ltd. (IPR2013-00066 and IPR2013-00068), involving U.S. Pat. Nos. 7,876,413 and 8,068,204.  The IPR trials were granted based on all challenged claims of the subject patents.

The ‘413 and ‘204 patents relate to liquid-crystal display (LCD) devices with two opposing substrates bonded to each other with a sealant. More precisely, the two patents disclose a solution to the problem of non-uniform seals which create an uneven gap between the substrates and can lead to deterioration of picture quality. The patents also describe connecting two conducting lines in parallel through the insulating film of the device along with an adjustment layer.

At the outset of both decisions, the Board addressed Patent Challenger’s request that the Board intercede in Patent Owner’s pending patent application and take immediate jurisdiction over all related applications.  Order at 6.  Treating the request as a motion, the Board denied Patent Challenger’s request.  Simply, Patent Challenger did not show that the claims in the pending application were patentably indistinct from the claims at issue in the IPR and, as such, Patent Challenger had failed to show why the Board should intercede.  Id. 

Next, the Board rejected Patent Owner’s argument that inter partes review petitions were improper pursuant to 35 USC §325(d) because the prior art references were already considered during the prosecution of the applications leading to each patent. The Board stated that without demonstrating that substantially the same arguments were made both times, the inter partes review would not be improper. Next, the Board in each case evaluated Patent Owner’s contention that the review should be denied because the petition failed to identify all real parties-in-interest. SEL asserted that several other co-defendants with Patent Challenger in a pending case all agreed to be bound by inter partes review, but the petition failed to identify them as real parties-in-interest. Because the Board did not find that SEL presented any persuasive evidence that these additional parties had any control over the IPR proceeding, it denied SEL’s contention.  More specifically, the Board might have been persuaded by evidence that the third parties authored the Petition, exerted control over its contents, provided funding for the Petition, etc.  CMI I Order at 9.

Having dispensed with SEL’s procedural challenges, the Board continued with a claim construction analysis, centering on the phrase, “contact through an opening,” and more specifically the definition of, “through.” SEL argued that the phrase meant, “made possible by (or by virtue of) the opening.” CMI did not submit its own interpretation, and the Board found SEL’s interpretation of the phrase to be consistent with the ordinary meaning of the phrase, in light of dictionary definitions of the term, “through.” (The American Heritage Dictionary of the English Language).

The Board then moved on to analyze Patent Challenger’s asserted grounds of unpatentability. In each case, Patent Challenger asserted all challenged claims were unpatentable as being obvious over two combinations of prior art references. Using an expert declaration from Patent challenger, the Board proceeded through a fairly straightforward obviousness analysis, concluding that in each case, the challenged claims were obvious over the prior art, with one of the two combinations of references in each case being denied as redundant. As has been previously seen, the Board showed a willingness to grant IPR trial on obviousness grounds using prior art that was already considered during the prosecution of the application that lead to the patent(s) in question.

In summary, the Board granted the petition of Patent Challenger as to all of the challenged claims in the ‘413 and ‘204 patent on obviousness grounds.

Eleventh Inter Partes Review Trial Instituted

The Patent Owner winning streak, for repelling inter partes review challenges, was halted at just one in view of the Board’s institution of an IPR trial in the proceeding styled as Synopsys, Inc. v. Mentor Graphics Corp., (IPR2012-00042), involving US Patent No. 6,240,376. The Board instituted an inter partes review trial with regard to 12 of the 29 proposed claims, using one (anticipation) of the 11 proposed grounds. This record 41 page order is loaded with aspects of IPR practice that are worth noting.

The subject matter of the ‘376 patent claims is the simulation and prototyping of integrated circuits. The Board started its analysis at a logical starting point – claim construction. At threshold, the Board made a point of emphasizing that no claim construction is necessary for terms if one of skill in the art would recognize the ordinary and customary meaning of those terms.  Citing Biotec Biologische v. Biocorp, Inc., 249 F.3d 1341, 1349 (Fed. Cir. 2001) (finding no error in non-construction of “melting”); Mentor H/S, Inc. v. Med. Device Alliance, Inc., 244 F.3d 1365, 1380 (Fed. Cir. 2001). The Board found that many terms in the challenged claims did not require construction for this reason.

Other terms, however, required construction, including “instrumentation signal,” “gate-level netlist,” “gate-level design,” and “sensitivity list.” To come to its opinion regarding claim scope, the Board relied upon two claim construction principles that are worth noting. First, regarding the first three of the above-listed terms, the Board noted that the terms were not explicitly defined in the specification, but found that the specification (including the examples) did contain useful context that would help define the terms. Thus, using the specification as a claim construction guide, the Board synthesized the various relevant specification excerpts to develop claim constructions of the relevant terms. Second, in defining “sensitivity list,” the Board determined that its construction was informed by certain dictionary definitions relevant to that limitation, citing to both an online definition and an IEEE reference.

Using these defined terms, the Board instituted an inter partes review trial on 12 of the 29 proposed claims, using one of the 11 proposed grounds.

Turning to its decision to institute an IPR trial, the Board first considered Patent Owner’s argument that the petition was statutorily-barred in view of 35 USC §315(b). Per that section of the Patent Act, an inter partes review may not be instituted if the petition was filed more than one year after the service of a federal court complaint alleging infringement of the subject patent. Here, the Patent Owner served a complaint on a third party company over five years earlier. That third party had since become a subsidiary of Patent Challenger and, thus, per Patent Owner, the challenger and third party were in privy with one another, preventing the filing of the petition.  The Board disagreed with this argument, finding that Patent Challenger was not a privy of the third party at the time the third party was served with the federal court complaint. Further, no evidence was even submitted that showed privity between the parties at the time the petition was filed. While Patent Owner argued that the relevant time for the analysis is the date on which the IPR is instituted, the Board again disagreed.  Privity is measured as of the date of the filing of the petition.

Having cleared the statutory bar argument presented by Patent Owner, the Board proceeded to consider each of the 11 grounds of unpatentability set forth in the petition by Patent Challenger. In general, however, the Board based its denial of most proposed anticipation grounds on the all elements rule and denied all obviousness grounds in view of Patent Challenger’s failure to identify with particularity the basis for its obviousness argument. See, e.g., Order at 21 (“Petitioner asserts, in a single sentence, that [the prior art reference], by itself, renders claims 1-5, 8-10, 20-24, 28, 32, and 33 obvious under 35 U.S.C. §103….Petitioner does not explain the reasoning behind this assertion.”).

But, among the arguments submitted by Patent Challenger, was an unpatentability ground that was based on a prior art brochure. The interesting issue was whether the brochure was actually a printed publication because it did not include any indication of when it was created or whether it was publicly disseminated. Patent Challenger had asserted that it was published at least as early as July 9, 1996 because it was filed in an Invention Disclosure Statement on that date. But, Patent Owner responded that inclusion on an IDS was insufficient to provide proof of publication and the file history for the patent did not become public until the patent issued, on November 17, 1998. Based on these facts, the Board agreed with Patent Owner that the brochure was not a printed publication.  Patent Challenger had simply failed to adequately prove that the brochure was publicly-available during the relevant time frame.  Order at 36.

Lastly, it is worth noting that in another portion of the Board’s decision, it denied certain obviousness grounds because “[Patent Challenger] does not address why a person of skill in the art would have combined the two references.” Order at 34. This is yet another indication that it is essential to include expert testimony with any petition to ensure an adequate basis for any proposed unpatentability grounds.

In the end, the Board granted yet another IPR trial, but did so only after an exhaustive review of various challenges by both parties.  Most beneficial for future inter partes review participants is the fact that this analysis yields many insights into IPR practice that will inform later proceedings.