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.

Board Denies Petition For Failure to Identify All Real Parties-In-Interest

12104019_sMany Patent Owners have attempted to divert IPR challenges by arguing that all real parties-in-interest were not identified in the Petition. Almost all of those efforts have failed. That is what makes Paramount Home Entertainment Inc., et al. v. Nissim Corporation, (IPR2014-000962) an interesting case because the Board dismissed the Petition because Petitioner’s parent company was not named as a real-party-in-interest (“RPI”), when it should have been.

The two parties at issue were Petitioner Paramount Home Entertainment and its parent company, Paramount Pictures Corporation. In its Patent Owner Preliminary Response, Patent Owner presented arguments and evidence that supported a conclusion that Paramount Pictures was an RPI, including that:

(1) Paramount Pictures was a co-plaintiff with its subsidiary (Petitioner) in a co-pending declaratory judgment (“DJ”) lawsuit relative to the patent-in-suit;

(2) Paramount Pictures and the Petitioner shared the same counsel in the pending DJ action;

(3) Petitioner was a wholly-owned subsidiary of Paramount Pictures and both parties were listed in the “Notice of Interested Parties” filed in the DJ action and, per Patent Owner, this demonstrates that Paramount Pictures has “total financial control” over the Petitioner;

(4) Paramount Pictures has exercised control over the dispute with Patent Owner since it arose, including that:

a) Paramount Pictures responded to Patent Owner’s license offer letter without referring Patent Owner to the subsidiary (Petitioner);

b) Paramount Pictures indicated that it engaged in numerous communications with Patent Owner;

c) Paramount Pictures referred to the counsel providing representation in this proceeding and multiple declaratory judgment actions (involving same group of parties as the instant petition) as “my counsel”; and

d) Paramount Pictures traveled to the office of Patent Owner’s attorney to view Patent Owner’s settlement agreement with a third party.  Decision at 8-9.

The Board also noted that Petitioner had not taken any action regarding issues relating to this proceeding independent from its parent company, Paramount Pictures.

Petitioner countered by arguing that the parent, Paramount Pictures, could not have hypothetically infringed the ‘547 and therefore was not a RPI. The Board rejected this argument, noting that standard for whether an entity is an RPI is whether the entity exercises control over a party’s participation in the proceeding, not whether the entity could have hypothetically infringed.  Id. at 10.  Petitioner also argued that Paramount Pictures is already estopped from filing further petitions for IPR under 35 U.S.C. § 315(a)(1).  The Board also rejected this argument, noting that Section 312(a)(2) requires identification of all RPIs, not only ones not estopped from filing petitions. Id. at 10.

Concluding its analysis, the Board determined that substantial evidence supported a conclusion that Paramount Pictures was an RPI. Because Paramount Pictures was an RPI not identified in the Petition, the Petition was deemed non-compliant under 35 U.S.C. § 315(a)(2) (requiring identification of all RPIs) and denied. Id. at 11.

Toward a Bullet-Proof Petition – Motivation to Combine

white puzzle with one piece missing, on blueWhile 8 out of 10 Petitions seeking inter partes review are granted by the PTAB, there remain several key errors that unsuccessful Petitioners make. Among them is the failure to provide sufficient factual basis for a rationale to combine prior art references in an obviousness analysis. That issue arose, in an unsuccessful petition, in Kinetic Technologies, Inc. v. Skyworks Solutions, Inc., IPR2014-00529, where the Board found Petitioner’s motivation to combine arguments inadequate. The case involved US Pat. No. 7,921,320, directed to a single wire serial interface that may be used to control stand-alone power integrated circuits and other devices.  Decision at 3.

Petitioner, in arguing obviousness of the challenged claims, asserted that combining to two prior art references was a matter of combining know elements to yield predictable results, among other conclusory remarks. Petitioner did list several similarities in the circuits of the two references, and provided expert testimony, but did not provide much in the way of details. Id. at 14.

As such, the Board was unpersuaded by Petitioner’s argument for motivation to combine. First, the Board gave little or no weight to the expert testimony, since it was virtually identical in content to the arguments presented in the petition, and lacked facts or data to support the opinion of the expert. Specifically, the Board criticized the expert declaration as filing to “expain the ‘how,’ ‘what,’ and ‘why’ of the proposed combination of references.” Id. at 15. To that end, the Board found that the expert did not explain how the references could be combined, or how such combination would yield a predictable result.  In the final criticism of the expert testimony, the Board noted that the expert failed to explain why the ordinary artisan would have combined elements from the two references in the specific way the ‘320 invention does.

Accordingly, the Board reminded Petitioner that there must be reasoning supporting combination of references in an obviousness challenge, and rejected Petitioner’s argument for motivation to combine references, stating that the argument lacked articulated reasoning with rational underpinning. Id. at 16. As such, the Board determined that Petitioner failed to demonstrate a reasonable likelihood that it would prevail in establishing the challenged claims as unpatentable.

Board Discusses Difference Between Supplemental Evidence and Information

Glucosamine & MSM labelingStill confused by the difference between supplemental evidence versus supplemental information? Let’s try this again….In Norman International, Inc. v. Andrew J. Toti Testamentary Trust, Russell L. Hinckley, Sr. (Co-Trustee) and Robert F. Miller (Co-Trustee), IPR2014-00283, the Board addressed an issue of admissibility of evidence, focusing on the differences between supplemental evidence and information.

Petitioner sought to have an exhibit (“Exhibit 1010”) admitted as supplemental information, pursuant to 37 CFR § 42.123(a). For the Board to authorize filing of a document under § 42.123(a), the moving party (Petitioner in this case) must prove that the documents are supplemental information, not supplemental evidence.  The difference between supplemental information and evidence, under precedent of Handi-Quilter, Inc. v. Bernina Int’l AG, IPR2013-00364, Paper 30 at 3 (PTAB June 12, 2014) is, as follows:

“supplemental evidence—served in response to an evidentiary objection and filed in response to a motion to exclude—is offered solely to support admissibility of the originally filed evidence and to defeat a motion to exclude that evidence, and not to support any argument on the merits (i.e., regarding the patentability or unpatentability of a claim). Supplemental information, on the other hand, is evidence a party intends to support an argument on the merits.”  Decision at 6.

Accordingly, Petitioner bore the burden of proving that Exhibit 1010 supported an argument on the merits for the exhibit to be admitted. Patent Owner opposed by arguing that Exhibit 1010 was served in response to Patent Owner’s evidentiary objection to a different exhibit (“Exhibit 1002”). Specifically, Patent Owner objected to Exhibit 1002 and alleged it lacked the required English translation and affidavit attesting to accuracy of translation, and therefore Patent Owner argued that Exhibit 1010 did nothing more than attempt to remedy the deficiencies in admissibility of Exhibit 1002.  Id. at 5-6.

The Board disagreed with Patent Owner, noting that Exhibit 1002 did contain an English translation, and Exhibit 1010 addressed whether that translation was accurate. Accordingly, the Board found that Exhibit 1010 essentially contained information about what Exhibit 1002 actually disclosed. Since Exhibit 1002 contained a reference which served as a basis for grounds of unpatentability (an argument on the merits), the Board found that Petitioner had met its burden of proving that Exhibit 1010 was supplemental information and therefore allowable. Id. at 7.

Another IPR Petition Comes Up Short for Failing to Adequately Show Rationale to Combine

9710318_sMany Patent Owners are finding success in undermining the challenge grounds of a Petition by arguing that the Petition fails to make an adequate showing that a person of ordinary skill in the art would have combined the relied-on references. That was the case in Zimmer Holdings, Inc. and Zimmer, Inc. v. Bonutti Skeletal Innovations LLC, involved US Pat. No. 7,837,736, where the Board rejected a Petition due to an inadequate combination argument.

Relying on expert testimony, the Petitioner argued that it would have been obvious to the ordinary artisan to substitute a “dovetail joint” described in one reference (Beuchel) for the “abutment and recess” structure described in a second reference (Walker) to arrive at the ‘736 invention.  Specifically, the expert testified that the “dovetail” joints of Beuchel perform the same function as the “abutment and recess” of Walker—i.e., “constrained movement of meniscal components relative to the tray in mobile bearing knee implants.”  With that predicate, the expert posited that substituting the “dovetail” joints in place of the “abutment and recess” joints was simply a matter of design choice.

The Board disagreed, because Beuchel’s “dovetail” joints had substantially different structure and function than Walker’s “abutement and recess.”  Decision at 20–21.  Specifically, Beuchel’s “dovetail” joint functioned to limit or prevent rotation, while Walker’s “abutment and recess” functioned to facilitate rotation.  Decision at 21.  Accordingly, the Board found that Petitioner failed to support its substitution argument with “adequate articulated reasoning with rational underpinnings.”  Decision at 21 (citing In re Gal, 980 F.2d 717, 719 (Fed. Cir. 1992) (design choice is not a sufficient rationale for obviousness where the structure recited in claim and the function it performs are different from the prior art).  Accordingly, the Board declined to institute review.  Id.

PTAB Will Not Review Contract Issues Even if They Relate to Standing

14118600_sWhether a Petitioner breached a contract, that limited its ability to challenge a patent, is an issue outside the purview of the PTAB, per a recent decision in Ford Motor Company v. Paice LLC & The Abell Foundation, Inc., IPR2014-00570, involving US Pat. No. 8,214,097. Patent Owner had sought the denial of an IPR petition based on lack of standing.

Patent Owner argued that Petitioner was barred from filing the subject Petition because such action breached an arbitration agreement between the parties which limited Petitioner’s ability to challenge the claims of the ‘097 patent.  Patent Owner argued that, because Petitioner was in breach of the contract by filing for inter partes review, Petitioner lacked standing to file the instant Petition. Decision at 5.

The Board’s hands were tied, however, because the disputed contractual matter raised by Patent Owner was outside the purview of the PTAB under authority granted by the AIA. Whether Petitioner had breached the arbitration agreement by filing for inter partes review of the ‘097 patent is for the district courts to decide (indeed, there was a co-pending action that will decide this issue). Since this question of breach had not been settled at the time of the Board’s decision, the Board rejected Patent Owner’s argument that Petitioner should be barred or estopped from filing the instant petition.  Id. at 6.

IPR Motions for Joinder are Common, But Not Automatic

11155838_sRecent statistics show that motions for joinder are granted about 60% of the time. While parties can, therefore, expect a sympathetic ear regarding these motions, they are not always successful and it is worth noting the shortcomings of one such motion from Samsung Electronics Co., Ltd., Samsung Electronics America, Inc., and Samsung Telecommunications America, LLC v. Arendi S.A.R.L, IPR2014-01143, involving US Pat. No. 7,496,854. In that case, the Board denied a motion for joinder due to several deficiencies in the motion.

Petitioner moved to join the instant petition with a related proceeding (IPR2014-00206) because the related proceeding involved the same patent, claims, prior art, and ground of unpatentability. Decision at 4. Further, Petitioner argued that the two proceedings have three other similarities: (1)  that the claim charts in both petitions are “substantially identical” with respect to the common ground of unpatentability; (2)  the instant petition adopts rationale of the Board advanced in the related proceeding; and (3)  the instant petition presents no new issues that would complicate the related proceeding. Id. at 5.

The Board disagreed, however, noting several deficiencies and issues in Petitioner’s Motion for Joinder which weighed against joining the proceedings. First, Petitioner failed to set forth in its motion a statement of differences between the instant proceeding and related proceeding with which joinder is sought. Second, Petitioner failed to set forth any statement of the meaning of “substantially identical,” regarding the claim charts in the two proceedings. Third, the Board found that there were, in fact, new issues presented in the instant proceeding, as Petitioner relied upon testimony which introduced argument and evidence not presented in the related proceeding. Id. at 5. Fourth, Petitioner stated that briefing and discovery would be simplified with joinder, but failed to explain how. Lastly, the Board noted that Petitioner’s promise to increase efficiency by working with the petitioner in the related proceeding rang hollow because there was no indication that the petitioner in the related proceeding would work with the instant Petitioner.  Id. at 6.

The PTAB is more than willing to join proceedings, but only if the joinder will not effect the fair, efficient, and just administration of the IPR proceedings. Here, Petitioner came up short in its showing regarding why the Board could grant joinder and maintain a fair and efficient proceeding.

 

 

Pyrrhic Victory: IPR Petition Denied Because Claims Indefinite

14253925_sPatent Owner won a Pyrrhic victory in Facebook v. TLI Communications, IPR2014-00566, wherein the Board denied the Petition, but for a reason that calls into question the future viability of the patent-in-suit. Namely, the Board found that it could not construe the means-plus-function claim limitation at issue and, as such, the claim is indefinite and not amenable to construction.

More specifically, the Board sought to construe “means for allocating classification information” from the patent-at-issue. Order at 7. Petitioner stated that the specification did not disclose any algorithm for performing the allocating function. Id. at 10. Of course, a lack of sufficient disclosure of structure, pursuant to 35 U.S.C. § 112, ¶ 6, renders a claim indefinite, and thus not amendable to construction. Id. 13. The Board quoted the Federal Circuit on this point: “If a claim is indefinite, the claim, by definition, cannot be construed.” Enzo Biochem, Inc. v. Applera Corp., 599 F.3d 1325, 1332 (Fed. Cir. 2010). Because the claims were not amenable to construction, the Board was unable to conclude that there is a reasonable likelihood that Petitioner would prevail in its challenge of claim and dependent claims therefrom, and Institution was denied. Paper 14 at 18.  As such, Patent Owner’s patent survives…for now.

Third IPR Petition Directed to Same Patent Denied under 35 U.S.C. § 325(d)

17934850_sOne of the advantages for Petitioners of inter partes review practice, to date, is the PTAB’s willingness to reconsider prior decisions by the Patent Office relating to patentability. Previous Office determinations of patentability in examination, ex parte reexamination, and inter partes reexamination are often given little deference in IPR proceedings. But even the Board can only take so much. In Medtronic, Inc. v. Nuvasive, Inc., IPR2014-00487, Petitioner failed in its third bite at the apple for a patent that was previously challenged by IPR petition. Order at 5.

According to Patent Owner, the Petition was “essentially a duplicate of the previously denied petitions,” and should be denied pursuant to 35 U.S.C. § 325(d). Id. Petitioner argued that the denial of the old Petition had no bearing on this case. Id. at 6. The revised Petition directly responded to a “noted deficiency,” and new evidence and argument were provided to cure that deficiency.

The Board agreed with Patent Owner, beginning its analysis by citing to § 325(d): “[i]n determining whether to institute or order a proceeding under this chapter, chapter 30, or chapter 31, the Director may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office.” 35 U.S.C. § 325(d). Id.

In view of the fact that Petitioner did not provide any persuasive reasoning as to why an inter partes review should be instituted over “the same or substantially the same prior art or arguments” that were presented in the old Petitions, the Petition was denied. Id. at 7.

Board Denies Motion to Stay IPR Despite 3 Other Co-Pending Challenges

18363437_sBuried under the weight of four different challenges to its patent, Patent Owner sought relief via a motion to stay one of the pending IPR proceedings. But, in Rackspace US, Inc. and Rackspace Hosting, Inc. v. PersonalWeb Technologies, LLC & Level 3 Communications, IPR2014-00057, involving US Patent No. 5,978,791, the Board declined to exercise its authority (under 35 U.S.C. § 315(d)) to manage multiple proceedings at the PTO involving the same patent and denied Patent Owner’s Motion to Stay.

The ‘791 patent was involved in four separate proceedings at the Patent Office (the instant IPR, IPR2013-00082, a reexamination, and IPR2014-00702).  All four proceedings relied on the same prior art. Several claims of the ‘791 patent were found to be unpatentable in the ‘082 proceeding, that was appealed the final decision to the CAFC.  Additionally, the same claim constructions were adopting in both proceedings.

However, the Board felt constrained in view of the requirement the proceeding be completed within one year, unless good cause was shown. Here, good cause was not sown because there were a few key differences between the instant proceeding and the ‘082 proceeding, including: (1) The ‘791 claim challenged in the instant proceeding was not challenged in the ‘082 proceeding; (2) Patent Owner acknowledged (and the Board agreed) that new witnesses and testimony were present in the instant proceeding; and (3) The instant proceeding relied on different disclosures of the prior art reference which was in common with the ‘082 proceeding.

Based on these factors, the Board found that granting the motion to stay would interfere with its statutory mandate to seek a just, speedy, and inexpensive resolution to the proceeding.