Supreme Court to Review Two Key IPR Issues

8345487_sThe Supreme Court granted certiorari today on Cuozzo Speed Technology’s petition to review In re Cuozzo Speed Tech., 793 F.3d 1268 (Fed. Cir. 2015). Cuozzo presented two questions, and the Court has accepted both of them:

(1)   Whether the court of appeals erred in holding that, in IPR proceedings, the board may construe claims in an issued patent according to their broadest reasonable interpretation rather than their plain and ordinary meaning.

(2)   Whether the court of appeals erred in holding that, even if the board exceeds its statutory authority in instituting an IPR proceeding, the board’s decision whether to institute an IPR proceeding is judicially unreviewable.

If the Supreme Court reverses the Federal Circuit’s decision on either of those two grounds, the impacts on future IPR proceedings could be huge. Although there are certainly patent claims that are invalid regardless of whether the “broadest reasonable interpretation” (“BRI”) or the plain and ordinary meaning (the so-called “Philips” construction) is used, there are also claims where the choice of standard is itself outcome determinative. There are, therefore, numerous patentees who should prefer Philips, and potential challengers who should prefer BRI.

Perhaps even more intriguing, however, is the possibility of a reversal on the second question presented: whether the decision to institute is so completely unreviewable as the Federal Circuit has held in (e.g.)Cuozzo or more recently Achates Pub’g. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015). Although the AIA lists a variety of situations in which IPR, PGR, and CBM are not available (35 U.S.C. §§ 315 and 325), the Federal Circuit has effectively insulated the PTAB’s decision to institute a trial from review. As such, even if the PTAB explicitly violates these statutory prohibitions, there is no mechanism by which the procedural defect can be remedied. A decision by the Supreme Court that 35 U.S.C. § 314(d) does not shield IPR institution decisions from review would dramatically shift the relative power balance between challengers and patentees in these AIA trial procedures. This blog will continue to follow this story as it develops.

PTAB Finds Different Claim Terms Have the Same Meaning

20670078_sOne of the classic canons of claim construction is that different claim terms in a patent are presumed to have different meanings.  The Board found an exception to that general rule in Air Liquide Large Indus. v. Praxair Technology, IPR2015-01075, Paper 11.  The technology involved storing hydrogen in a salt cavern. The issue involved the broadest reasonable interpretation of “substantially impermeable barrier” and “permeation barrier,” two terms used in separate independent challenged claims.  Petitioner argued, with specification and expert support, that permeation barrier meant something formed in the cavern walls to reduce the permeation of the cavern after it is formed.

“Substantially impermeable barrier” was not defined in the specification. Petitioner’s expert found it simply meant the walls of the cavern. The PTAB criticized this because it ignored the claim language required the barrier to be “formed” by maintaining a certain pressure. The PTAB thus construed found the term also meant a barrier formed in the cavern from sufficient pressure to become substantially impermeable to hydrogen.

In doing so, the PTAB recognized it was “construing two terms, used in different independent claims…, to refer essentially to the same thing.”  Mindful of the canon against this, the Board found some saving grace:  “We understand there may be a slight difference between the terms, but, on the present record, this distinction does not come into play and, as such, it is proper to construe these terms to be the same insofar as they are both directed to a formed barrier as construed above.”

Federal Circuit Clarity on Key IPR Issues May Be on the Way

cafc1We are entering an interesting phase in the development of inter partes review proceedings as more and more of the contours of these proceedings are being heard by the Federal Circuit. To date, the Federal Circuit has made substantial use of Rule 36, affirming the Board without opinion in 24 of the first 29 IPR appeals it has heard, but more substantive opinions are sure to be on the way.

On November 2nd, oral argument was heard in the case of Shaw Indus. Grp. v. Automated Creel Sys. In that case, Petitioner challenged the Board’s practice of denying grounds contained in IPR petitions on redundancy grounds. In a high percentage of its decisions to institute an IPR trial, the Board will grant trial relative to one or more challenge grounds, but deny others it deems to be horizontally or vertically redundant.

Then, on November 3rd, oral argument was heard in the cases of Synopsis Inc. v. Lee and Synopsys Inc. v. Mentor Graphics Corp. In that case, Petitioner challenged the Board’s practice of only instituting trial on those claims that meet the “reasonable likelihood” standard, instead of granting trial on the entire petition when at least one claim meets that threshold.

Also interesting relative to these cases is the interplay between these issues, which ostensibly are part-and-parcel with the institution decision and the Court’s recent pronouncement, in Achates v. Apple. In that case, the Federal Circuit held that 35 USC 314(d) (“[t]he determination by the Director whether to institute IPR under this section shall be final and nonappealable.”) prevents its review of the 315(b) time bar. Some commentators have suggested that the rationale of that decision extends to any issue decided in the decision to institute. If that view is correct, this would likely preclude the CAFC from reviewing the issues raised int he Synopsis and Shaw Industries cases.

In sum, the issues heard by the Federal Circuit this week could substantially change the way IPR practice is handled at the Board….or, the CAFC might punt this issues, holding that is not able to review the issues because they are inherently a part of the institution decision.

Split 5-Judge Panel Allows Issue Joinder as a Way Around the One-Year Filing Deadline

34416501_sThe Board continues to grapple with the issue of joinder where a party seeks to join a petition that would otherwise be time-barred with an earlier-filed petition.  In Zhongshan v. Nidec Motor, an expanded 5-judge panel–with two members dissenting–allowed Petitioner to join a petition with an earlier (partially denied) petition which had been filed by the same petitioner, involving the same prior art.  After allowing joinder, the Board instituted trial on the previously-denied grounds. See IPR2015-00762, now combined with IPR2014-01121, Paper 67.  In short, this expanded panel, like some others before it, decided that 35 U.S.C. § 315(c) allows joinder of issues, not just joinder of parties.  As noted by the dissent, this allows for a way around the one-year time bar imposed by § 315(b).

Some explanation of this proceeding’s relatively complicated procedure history provides helpful context.  Petitioner originally challenged the validity of the patent-in-issue in IPR2014-01121.  Trial in that case was instituted on January 21, 2015, but the petition was denied in part.  The denial was, according to the Board, “not on the merits, but because Petitioner failed to include an attesting affidavit with the English translation” of the prior art, as is required by Rule 42.63(b).  One month later (the deadline imposed by Rule 42.122(b)), Petitioner filed a motion for joinder along with another petition which included the required translation attestation.

The Board initially denied that second petition based on the one-year statutory bar.  Petitioner then sought rehearing, which resulted in this decision from the expanded panel.  Here, a 3-judge majority determined the joinder statute (§ 315(c)) allows joinder of issues, not just parties, even when the joinder allows a petitioner to avoid the one-year deadline. Noting that joinder is discretionary, the Board found that institution here was within the public interest, relying on the fact that the petition did not add new prior art over the first petition, but rather corrected a technical deficiency (as opposed to trying to cure a deficiency in the merits).

The 2-judge dissent argues the institution was contrary to the clear language of §§ 315(b) and (c), particularly arguing that the joinder statute (§ 315(b)) should be considered limited by both the time bar of § 315(c) and by § 314(c)’s limitation to one who can be “join[ed] as a party.”  The dissent also argued that allowing this subversion of the one-year bar is contrary to Congress’s intent to fashion the IPR statute so as to avoid serial filings against patentees (as can happen in reexaminations).

As of this posting, the Zhongshan decision has not been identified as precedential.  So, this may not be the Board’s final word on this issue.

Don’t Count on Avoiding a Redundancy Finding by Filing Multiple IPR Petitions

36457258_sFrom the very outset of inter partes review proceedings, the Board has helped to manage its docket by rejecting challenge grounds in petitions that are redundant to other grounds in the petition. See Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co., CBM2012-00003 (explaining vertical and horizontal redundancy). As a strategy to avoid this type of redundancy finding, Petitioners began to file multiple petitions directed to the same patent, hoping that by paying an extra $23,000+ filing fee, the Board would consider additional grounds against the same patent. That strategy is facing headwinds, however, as demonstrated in the case of LG Elec., Inc. v. ATI Techs., ULCIPR2015-00327, Paper 15 (Sept. 2, 2015) (denying request for rehearing). In that case, the Board (once again) denied a petition relying in part on 35 U.S.C. § 325(d), finding that the overlapping of arguments between two related petitions, and the institution of an IPR of the same claims in the related case, warranted a denial of the petition.

Of the reasons given by the Board for its decision, the one factor that might have tipped the Board’s decision in Petitioner’s favor relates to the purported overlap between the primary references cited in each of the two petitions at issue. If Petitioner had provided some rationale regarding why the primary references do not disclose substantially the same subject matter, the decision might have come out differently. And, of course, if the references really did disclose the same subject matter, a second petition was likely not necessary in the first place.

Regardless, a denial of a decision to institute is non-appealable, so this type of decision by the Board is, effectively, immune from challenge. 35 U.S.C. § 314(d).

PTAB Finds Copyright Notice is Inadmissible Hearsay – Denies Petition for IPR

6686163_sDifferent panels of the Patent Trial and Appeal Board have, for the most part, agreed with each other on many of the key issues that arise in inter partes review proceedings. There are, however, instances of disagreement and an example of this type of disagreement arose in ServiceNow, Inc. v. Hewlett-Packard, Inc., IPR2015-00707, wherein this particular panel of PTAB judges decided that a copyright notice on a prior art reference did not suffice to establish that the reference was publicly available as of the date of the notice.

The prior art at issue included the date “July 2001” on their face and also included a copyright date of “2001.” The Board agreed with Patent Owner that the indications of the availability of the references is inadmissible hearsay to the extent Petitioner relies on the date for the truth of that information. Order at 16. Notable in the Board’s analysis was the fact that the references included a statement that restricted the use and dissemination of the references.

The Board noted that at least one other panel agreed that a copyright notice as evidence that a reference was a printed publication as of a particular date is inadmissible hearsay. Standard Innovation Corp. v. Lelo, Inc., IPR201400148, Paper 41, at 13-16. The Board also noted, however, that other panels have determined that a copyright notice is prima facie evidence of publication. Ford Motor Co. v. Cruise Control Techs. LLC, IPR2014-00291, Paper 44, at 7-8; FLIR Sys., Inc. v. Leak Surveys, Inc., IPR2014-00411, Paper 9, at 18-19.

Ultimately, on the basis of the facts mentioned above, the Board decided that Petitioner had failed to establish that the exhibits at issue were publicly available more than one year prior to the priority date of the patent-at-issue. Order at 17.

 

First One Gets Away from Bass-Backed Group

3119029_sMany in the pharmaceutical industry have been concerned about becoming a target of the Coalition for Affordable Drugs, the group backed by hedge fund manager Kyle Bass.  But yesterday the first target of Bass’s strategy, Acorda Therapeutics, scored a big win when the PTAB declined to institute review in the first two IPRs filed by Bass’s group.

In February Bass’s group filed IPR petitions against two Acorda patents, 8,007,826 and 8,663,685.  Both are listed in the Orange Book for Acorda’s Ampyra tablets used to treat walking difficulty in patients with MS; they are the last-expiring patents listed for that product.

The Board found that both petitions failed to established that the relied-upon art was in fact prior art.  In each IPR petition, the Coalition relied on two poster presentations, one from a conference in September/October 2001, and another from a conference in September 2002.  Each was before the priority date, but the Board agreed with Acorda that neither was established as a “printed publication.”  Because the Coalition did not show that the posters were distributed (rather than presented) or otherwise indexed, the Board considered the factors from In re Klopfenstein, 380 F.3d 1345, 1349 n.4 (Fed. Cir. 2004) to determine whether the presentations nonetheless qualified.  Those factors are:  [1] the length of time the display was exhibited, [2] the expertise of the target audience, [3] the existence (or lack thereof) of reasonable expectations that the material displayed would not be copied, and [4] the simplicity or ease with which the material displayed could have been copied.  According to the Board, the Petitioner failed to make a sufficient showing that these factors were met.

So, the first decisions in the Bass-filed applications did not succeed, but it may not matter. If the speculation is correct, the Coalition already made its money in the stock market.

Board Dismisses Petition for Failure Name All Real Parties-In-Interest

14409517_s (1)Patent Owners get frustrated when they believe a petition fails to identify all real parties-in-interest.  This is understandable, given the difficulties in obtaining additional discovery on the issue.  However, sometimes Patent Owners get that discovery, and when a Patent Owner does get the evidence it needs, it has a kill shot.  This is again reflected in Corning Optical Comm’ns RF, LLC v. PPC Broadband, Inc., IPRs2014-00440, -00441, and 00736.

There, the Board instituted review of three patents.  The petitions were filed less than a year after a lawsuit was service against Petitioner.  Patent Owner’s argument, though, was that the petition was not entitled to the original filing date because not all real parties-in-interest were named.  Rather, Patent Owner argued, a new filing date would be set only upon submission of updated mandatory notices.  Because the one-year deadline (from service of the complaint) had passed, that would mean that the petitions would be barred under § 315(b).

After institution, the Board authorized a motion for additional discovery directed to whether the Petitioner (Corning) should have identified its parent (Corning Inc.) and sister (Corning Optical Comm. LLC) companies.  The issue was whether those companies funded or controlled the IPRs.  The Board first addressed the issue of whether Patent Owner waited too long in raising the issue.  The Board decided that Patent Owner’s argument was timely, because Patent Owner only gained notice of the issue shortly before alerting the Board, based on discovery in an underlying ITC investigation.  As to the substance of the issue, the Board noted the highly fact-specific nature of the real-party-in-interest analysis.  Here, there was evidence of commingling between the three Corning entities, including because common employees of each were involved in the IPR and because Corning Inc. payed the attorneys’ fees.  As the result, the Board found that “Petitioner’s actions have blurred sufficiently the lines of corporate separation” with Corning NC, such that Corning NC ‘could have controlled the filing and participation of the IPRs.’ Zoll, Case IPR2013-00606, slip op. at 10 (Paper 13). Furthermore, we determine that evidence sufficiently establishes that Corning Inc. funded these IPR proceedings, and also exercised or could have exercised control over Petitioner’s  participation in these proceedings. Trial Practice Guide, 77 Fed. Reg. at 48,759–60; Atlanta Gas,  Case IPR2013-00453, slip op. at 8–9 (Paper 88).”

The Board then determined that the petitions could not be afforded their original filing date because of the failure to name all real parties-in-interest.  Because it was then a year past service of the complaint, any new filing date would result in a bar under § 315(b).  The Board thus dismissed the petitions.

PTAB Denies Challenged Grounds as Redundant in View of Grounds in Different Petition

37975151_sThe Board has a well-established reputation for denying grounds in a petition that are deemed redundant to other instituted grounds. In view of that reputation, Petitioners are adapting, seeking to file multiple petitions, putting grounds that might otherwise be deemed redundant into a separate petition in the hopes that they will be considered in that context. The Board, however, is not backing down, finding on occasion that grounds in one petition may be denied as redundant in view of grounds in a separate petition. That situation arose in CoreLogic, Inc. v. Boundary Solutions, Inc., IPR2015-00219, wherein the Board denied certain grounds in the IPR petition as redundant in view of grounds that were instituted in a completely separate IPR.

In coming to this conclusion, the Board remarked that “Petitioner makes no attempt to distinguish the grounds asserted against the claims of the ‘352 patent in this case from those asserted in [the co-pending IPRs].” Id. at 11. Further, the Board pointed out that instituting a trial in an IPR proceeding is permissive, in the discretion of the Patent Office. In short, because Petitioner did not show, and the Board was not convinced, that any additional obviousness grounds add substantively to the already-instituted grounds (albeit from a different petition), the Board denied certain grounds in the ‘219 proceeding.

As such, Petitioners are warned that the redundancy rejections from the Board may not be overcome simply by placing the additional grounds in a separate petition. Instead, Petitioners must be diligent to explain why each additional ground is necessary and adds substantively to the grounds before the Board, even over grounds presented in completely different petitions.

Joinder Provisions of IPR Continue to Save Co-Defendants in Litigation

5097986_sThe joinder provisions of inter partes review proceedings were instituted as a direct response to the ability of parties to settle proceedings before a final written decision is instituted. Via the joinder rules, a second Petitioner can join a previous proceeding to continue a challenge to a patent in the event that the first Petitioner settles with the Patent Owner, and even if the second Petitioner would otherwise be barred pursuant to 35 USC 315(b). This scenario played out in IPR2015-00568, Nintendo of America, Inc. and Nintendo Co., Ltd. v. Babbage Holdings, LLC involving U.S. Pat. No. 5,561,811. A key factor in all joinder cases has been the strong similarity between the petitions in the proceedings that are sought to be joined, to ensure the Board has the ability to maintain a reasonable schedule in the original proceeding.

Petitioner Nintendo filed a Motion to join with another petition challenging the ‘811 patent, field by 505 Games Interactive, Inc. v. Babbage Holdings, LLC (IPR2014-00954). Nintendo’s petition asserted the same ground on which the Board instituted IPR in the ‘954 petition. Decision at 2. Nintendo’s joinder motion also represented that it would take an “understudy role” “unless and until all ‘954 petitioners settle with the patent owner.”

Although the Patent Owner later settled with 505 Games, the Board allowed Nintendo to join, and instituted review. First, Nintendo’s motion was timely filed to satisfy the requirement that the request for joinder be filed no later than one month after the institution date of the ‘954 proceeding (See 37 C.F.R. § 42.122(b)). The Board also noted that this petition was essentially the same as the ‘954 petition in grounds, prior art, expert testimony, and arguments presented, with the lone exception being Nintendo’s petition adopting the Board’s claim constructions in the ‘954 proceeding. Id. at 3.

Patent Owner opposed the motion, arguing that Patent Challenger’s decision to delay 8 months in attempting to join the petitioners in the ‘954 proceeding is prejudicial because Patent Owner settled the ‘954 proceeding under the impression that the IPR would be totally disposed of. Id. at 4. Patent Owner further asserted that Patent Challenger’s intent to at reserve the right to bring forth different positions than those asserted in the ‘954 proceeding would derail the trial schedule due to additional briefing and discovery.

The Board was unpersuaded. The Board stated that Patent Owner’s argument regarding settlements was not persuasive because at the time of the Motion for Joinder in this proceeding, there had been no Motion to Terminate in the ‘954 proceeding. Also, in light of expected termination of the the earlier proceeding, there would be no disruption in the instant trial schedule, given no briefing/discovery coordination will be needed post-termination. Id. at 4-5. Accordingly, the Board joined the two proceedings.