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.

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.

Later Priority Date for IPR-Challenged Patent Where No Written Description in Parent

4177464_sThe Board denied an interesting attack from Patent Owner who suggested that Petitioner’s argument, that the patent-at-issue was not entitled to the priority date of its parent, was barred in inter partes review proceedings because it is based on 35 U.S.C. § 112. SAP America, Inc. v. Pi-Net International, Inc. IPR2014-00414, involving US Patent No. 8,346,894; and parent patent, US Patent No. 8,037,158.

Petitioner argued that the subject matter of the challenged claims of the ‘894 patent were not disclosed in the parent ‘158 patent in a manner sufficient to meet the requirements of 35 USC §112, first paragraph. Order at 11. As such, per Petitioner, the ‘894 claims were not entitled to the priority date of the ‘158 parent patent.  Specifically, Patent Challenger argued that negative limitations in some of the ‘894 claims were not disclosed in the ‘158 parent specification. Id.

Patent Owner’s Preliminary Response argued that the petition exceeded the scope of inter partes review (which allows only challenges under 35 USC §102 and §103) by including an analysis under §112 in the challenge.

The Board began its analysis by noting that there is a difference between arguing that a claim is unpatentable based on §112 inadequate written description grounds and arguing that a claim is not entitled to a given priority date based on §112 grounds.  Further, Patent Owner provided no arguments on the merits against Petitioner’s assertions of lack of written description in the parent ‘158 patent.  Accordingly, after dismissing inapplicable case law cited by Patent Owner because of this distinction, the Board agreed with Petitioner and found that the ‘894 challenged claims were not entitled to the priority date of the ‘158 patent because the ‘158 patent did not provide an adequate written description of the challenged claims.

131 Declaration That Was Successful in Prosecution Deemed Insufficient in Inter Partes Review

iStock_000019749872SmallThe Board proved willing to overturn a previous patent examiner’s judgment in another type of issue in Iron Dome LLC v. E-Watch, Inc., IPR2014-00439, where, in instituting an inter partes review trial, the Board found that Patent Owner did not properly swear behind a prior art reference, despite the fact that, during earlier prosecution, the Patent Office found that the prior art was properly antedated.

The prior art at issue had an effective filing date of April 25, 1995 qualifying it as prior art under 35 U.S.C. §§ 102(a) and 102(e) because it was not issued or published more than one year prior to the effective filing date as the ‘871 patent, but the effective filing date was earlier than the effective filing date of the ‘871 patent. Id.

During the original prosecution of the patent-at-issue, the Examiner found that the inventor’s submitted declaration sufficiently antedated the prior art reference. Id at 6. The Board took a fresh look at the declaration in the inter partes review, however, and disagreed with the Examiner’s earlier determination. Id at 8. As such, the prior art was relevant in the IPR and the Board determined that there was a reasonable likelihood that the challenged claims were unpatentable in view of that art.

Patent Owner will, of course, have another opportunity with its Patent Owner Response to seek to antedate the prior art at issue, but in the meantime, this is another example of the Board’s willingness to reconsider issues that were purportedly decided during previous examination or reexamination.

IPR Petition Must Be Filed Within One Year of First Infringement Complaint Filed by Patent Owner

hourglassIn a speedy dismissal of Patent Challenger’s arguments, Accord Healthcare was deemed time-barred from bringing an inter partes review, in a case styled as Accord Healthcare, Inc., USA v. Eli Lilly & Co. (IPR2013-00356), involving U.S. Pat. No. 7,772,209.

The relevant underlying facts of this decision included the fact that the petition seeking IPR was filed by Accord on June 13, 2013.  Also, two lawsuits involving the ‘209 patent were filed by Patent Owner against Petitioner.  The first was served on January 23, 2012 – more than one year prior to the filing of the present IPR petition – and the second was served on March 7, 2013 – less than one year prior to the filing of the present petition.  In its Preliminary Response, Patent Owner argued that the petition was barred by 35 USC § 315(b), which requires that any petition seeking inter partes review be filed before the expiration of one year from the date that a complaint alleging infringement of a patent has been served.

35 USC § 315(b) – PATENT OWNER’S ACTION.—An inter partes review may not be instituted if the petition requesting the proceeding is 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. The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).

Patent Challenger argued that its petition was filed less than one year after the date on which the complaint in the second action was filed and, because the two infringement actions involve distinct products, the IPR petition was timely filed.  The Board rejected Petitioner’s argument, stating that the “plain language of the statute does not indicate or suggest that the filing of a later lawsuit renders the service of a complaint in an earlier lawsuit a nullity.”  Order at 3.  Accordingly, the Board denied the Petition.

Hindsight and Teaching Away Arguments Fall Short in Decision to Initiate IPR Trial

iStock_000029749560XSmallIn a short decision, Fellowes was able to get 16 challenged claims of a Speculative Product Design patent into a trial for inter partes review, in a case styled as Fellowes, Inc. v. Speculative Product Design, LLC (IPR2013-00197), involving U.S. Pat. No. 8,204,561.

The ‘561 patent relates to protective cases for mobile phones and other electronic devices. More specifically, the ‘561 patent describes an improvement over existing cases by combining a hard shell with a soft-elastomeric material in a single part to form the case for the device.

Finding no specific claim terms that required construction, the Board considered the proposed obviousness grounds from Patent Challenger; namely a primary reference in combination with two separate secondary references, both of which relate to cases for personal or portable electronic devices. Patent Challenger argued that it would be obvious to one skilled in the art to combine the primary reference, which taught a two-piece case, with the two secondary references, which taught a co-molding process in merging soft and hard-shell components in cases, to form a one-piece case for a personal electronic device. Patent Owner countered that such analysis was nothing more than impermissible hindsight.  Order at 8.  To that end, Patent Owner argued that the disclosure that purported to provide the “teaching” to combine was open ended and not specific enough to teach one of ordinary skill to develop a “successful device.”  Id. at 9.

Patent Owner also argued that the prior art taught away from the limitations of several dependent claims.  Specifically, the dependent claims require that the outer shell of the case be cut away at the corners.  The prior art explicitly taught that the corners should not be cut away.  The Board rejected this argument, as well, finding that the prior art provided evidence that a person of skill would know the advantages and disadvantages of having protective material at the corners.  As such, the reference did not teach away.  Id. at 10.

Thus, after a short and straightforward obviousness analysis, Fellowes was able to get 16 challenged claims of the ‘561 patent into a trial for inter partes review based on its proposed obviousness ground.

Board Agrees that Petition Failed to Set Forth Relevant Claim Construction, But Finds Error Harmless

iStock_000003752861XSmallChallenging a patent previously challenged in another inter partes review (IPR2013-00092), Avaya convinced the Board that claims 6 and 9 of a Network-1 Security Solutions patent should be placed into a trial for inter partes review in a case styled as Avaya, Inc. v. Network-1 Security Solutions (IPR2013-00071), involving U.S. Pat. No. 6,218,930.  In the co-pending matter, claims 6, 8, and 9 were not placed in an inter partes review trial, the Board finding in the -00092 matter that petitioners had not upheld their burden of proof.

The ‘930 patent relates to “the powering of 10/100 Ethernet compatible equipment,” and more specifically, “automatically determining if remote equipment is capable of remote power feed.” Further, the patent states that, “if it is determined that the remote equipment is able to accept power remotely then [power will be provided] in a non-intrusive way.”

The claim construction portion of the Board’s decision was identical to that contained in its decision rendered in the -00092 decision, linked above.  After detailing the four claim construction issues in this proceeding, the Board turned to Patent Owner’s contention that the petition should be denied for failure to comply with 37 CFR § 42.104(b), which requires a petition to set forth how a challenged claim should be construed and how the construed claim is unpatentable.  The Board agreed with Patent Owner that at least one term should have been addressed in the petition, but did not deny the petition on that ground.  Instead, found that such failure was harmless because Patent Owner did not identify any reason why it could not respond to the grounds of unpatentability because of the deficiency.

Following this preliminary matter, the Board analyzed the grounds for unpatentability set forth by petitioner.  Of interest in these grounds was Patent Owner’s argument that one of the prior art references could not be invalidating because that reference was assigned to Cisco Technology, Inc. and Cisco previously settled litigation with Patent Owner.  Per Patent Owner, Cisco “would not have licensed the ‘930 patent for this amount if they believed that the ‘930 patent was invalid in light of” the prior art.  Order at 21.  The Board quickly dispatched this argument, finding that speculation as to Cisco’s views regarding unpatentabilty were not relevant to the Board’s analysis.

In summary, Patent Challenger succeeded where other defendants to the ‘930 patent had previously failed and successfully placed 2 claims of the ‘930 patent into an inter partes review trial.

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.

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.