Federal Circuit to Reconsider Achates Decision en banc

The Federal Circuit is set to reconsider one of its more controversial decisions en banc, when it decides whether the Achates Reference Publishing, Inc. v. Apple Inc. decision was correctly decided. Specifically, in Wi-Fi One, LLC v. Broadcom Corp., the Court requested supplemental briefing on the following issue:

“Should this court overrule Achates Reference Publishing, Inc. v. Apple Inc., 803 F.3d 652 (Fed. Cir. 2015) and hold that judicial review is available for a patent owner to challenge the PTO’s determination that the petitioner satisfied the timeliness requirement of 35 U.S.C. § 315(b) governing the filing of petitions for inter partes review?”

There have been several justices who have suggested that the Achates decision should be revisited by the entire bench, especially in view of the Supreme Court’s Cuozzo decision. We’ll have an answer soon on whether the broad discretion that has been afforded the PTAB regarding issues related to a decision to institute will continue, or whether the Federal Circuit will allow itself more leeway to consider foundational IPR issues.

Federal Circuit Provides Ammunition to Patentees In Magnum Decision

cafc1Patent Owners gained a bit of a reprieve in the Federal Circuit’s recent decision in In Re Magnum Oil Tool Int’l, Ltd.decided on July 25, 2016. In several key respects, Patent Owners regained some footing in the otherwise daunting IPR process.

As an initial matter, in one of its first post-Cuozzo (Supreme Court edition) decisions, the Federal Circuit determined that, for issues that are central to the Board’s Final Written Decision, the Court is not prohibited by § 314(d) from reviewing those decisions just because they were also addressed in the Decision to Institute. The merits of a final written decision is reviewable, even though the issue was initially decided by the Board at the decision to institute stage. Id. at 12. In the context of the Magnum decision, this meant that the Court had jurisdiction to review all of Patent Owner’s arguments regarding the basis for the Board’s ultimate judgment of unpatentability, including rationale to combine references, even though the Board addressed those arguments in the decision to institute.

The key substantive issue in the case was whether the Board’s decision adequately established a prima facie basis of obviousness. Specifically, Patent Owner argued that no adequate motivation to combine the subject references was articulated. The issue stemmed from the fact that, in the petition, Petitioner put forth a detailed obviousness argument on one set of references (“Ground 1”), but took a more abbreviated approach with a second set of references (“Ground 2”), that “incorporated by reference” the motivation to combine from Ground 1.

In response, the PTO argued that when the Board institutes a ground, it necessarily finds that Petitioner has demonstrated a reasonable likelihood of success and that this finding operates to shift the burden of producing evidence of nonobviousness to Patent Owner. But, the Court rejected the PTO’s contention and clarified that the burden of persuasion is always on the Petitioner to prove unpatentability by preponderance and that burden never shifts to the patentee. The court reasoned that, due to the significant difference between the standards of proof at institution (likelihood of success) and at trial (preponderance), it is inappropriate to shift the burden to the patentee after institution to prove that the claims are patentable.

As to the ultimate conclusion of obviousness, the court concluded that, in light of Petitioner’s failure to explain why a skilled artisan would combine the Ground 2 references, the Board had no basis for its conclusion that Petitioner had met its burden of proving obviousness by preponderance under KSR.  The court emphasized that to satisfy its burden of proving obviousness, Petitioner cannot employ mere conclusory statements because such statements cannot satisfy Petitioner’s burden. Nonetheless, the PTO argued that the Board did not err in making an obviousness argument on behalf of Petitioner based on the Ground 2 references because this argument “could have been included in a properly drafted petition.” The court flatly rejected the PTO’s contention that the Board is free to adopt arguments on behalf of Petitioners that could have been but were not raised by the Petitioner during an IPR, noting again that Petitioner bears the burden of proof. The court acknowledged that the PTO has broad authority to establish procedures in IPR’s but clarified that the authority is not so broad to allow the PTO to raise, address, and decide patentability theories never presented by the Petitioner and not supported by record evidence. Instead, the court emphasized that the Board must base its decisions on arguments advanced by a party and to which the opposing party was given a chance to respond. Accordingly, the court held that the Board’s obviousness conclusion was not based on sufficient evidence since the Board relied on Petitioner’s conclusory statements and improperly argued on behalf of Petitioner why the Ground 2 references could be combined.

Lastly, the Court addressed the PTO’s argument that Patent Owner should have challenged the Board’s actions in the rehearing request. The court quickly disposed the PTO’s argument, stating that the plain language of 35 USC § 141(c) does not require a party dissatisfied with the Board’s final written decision to first raise the issue in a rehearing request before appealing the issue to the court.

In sum, Magnum is a ray of hope for Patent Owners that have become accustomed to most aspects of IPR practice being construed against them. The Court’s docket contains many upcoming cases that will allow us to learn whether this is an aberration, or a trend.

Board Has Change of Heart On Rehearing

37396761_sA request for rehearing is generally considered the IPR equivalent of an end-of-the-game Hail Mary pass, but just like in football, sometimes it works, as illustrated by the Board’s reversal of its prior decision denying review in Handi Quilter, Inc. & Tacony Corporation v. Bernina International AG, IPR2013-00270.

The Board originally denied review based on its determination that the Petitioner only showed that a person of ordinary skill in the art could have combined the relied-on references, but not why the person of ordinary skill would have done so.  Decision at 2.  Following the Petitioner’s request for a hearing, though, the Board had a change of heart and decided to institute inter partes review.  Under 37 C.F.R. § 42.71(d), “[t]he burden of showing a decision should be modified lies with the party challenging the decision” and the rehearing “request must specifically identify all matters the party believes the Board misapprehended or overlooked.”  Decision at 23.  Petitioners here successfully argued that the Board had previously misapprehended its argument (supported by declaration testimony) that its primary reference (Watabe) itself provided sufficient rationale for why a person of ordinary skill in the art would have looked to the secondary references and combine them with Watabe.  Thus, the Board instituted review.

Rationale from Denied Ground Used By PTAB In Final Written Decision

13329201_s (1)Lost a challenge ground in the Board’s Decision to Institute? The Board has given some hope that such denied grounds may still of use in an IPR proceeding in McClinton Energy Group, LLC v. Magnum Oil Tools International, Ltd., IPR2013-00231, involving US Pat. No. 8,079,413. In this decision on a motion for rehearing, the Board affirmed the propriety of its use of rationale from a denied ground from the Petition to support a final decision of unpatentability.

Earlier in the proceeding, the Board instituted inter partes review of the challenged claims based on six grounds of unpatentability, each of which was based on three references (References A, B, and C). The Petition also contained numerous grounds of unpatentability based in part on a fourth reference (Reference D), all of which were denied by the Board. Decision at 3-4. In the Petition, to support an argument that one of skill in the art would combine references A, B, and C, Petitioner made reference to the rationale for combining of references from denied-grounds relying on Reference D. The Board then relied upon this rationale in determining that all challenge grounds were unpatentable.

In the Motion for Rehearing, Patent Owner argued that by incorporating this argument from a denied ground, the Board was including a new ground of unpatentability in the final written decision and Patent Owner was therefore denied due process. Id. at 4.  The Board disagreed, pointing out that Patent Owner addressed the rationale at issue in the Patent Owner Response. That the same rationale to combined was used in both a sustained challenge ground and a denied challenge ground was not enough to change the thrust of the grounds of unpatentability. Accordingly, the fact that the Board adopted the rationale to combine references presented in a denied-ground of the petition in a granted-ground in final written decision does not create a new ground of unpatentability.  Id. at 5.

PTAB Grants Rare Motion for Reconsideration

iStock_000019749872SmallIn PNY Tech., Inc. v. Phison Elec. Corp., (IPR2013-00472, Paper 16), Patent Owner filed a request for rehearing of the Decision on Institution contesting the Board misinterpreted the governing law regarding inherency. To date, less than 10% of such Motions for Reconsideration have been granted. Because the Board granted the motion-in-part, such a rarity merits further investigation.

In its decision to institute, the Board found a reasonable likelihood that the challenged claims were unpatentable in view of the Minneman reference. Specifically, the Board found that it was “conceivable” that a limitation of the challenged claims requiring a concave feature was present in Minneman, even though it was not expressly set forth in the reference. Of course, a reference may anticipate inherently if a claim limitation that is not expressly disclosed ‘is necessarily present, or inherent, in the single anticipating reference.’  Further, inherency may not be established by probabilities or possibilities. The mere fact that a certain thing may result from a given set of circumstances is not sufficient.’ Order at 3.

Because it misapplied the law of inherency, basing its decision on a conceivable notion that a claimed feature was present in a prior art reference, rather than a finding that the feature was necessarily present, the Board agreed that it had abused its discretion and granted the motion-in-part.

Rehearing? PTAB Mostly Says “We Heard You Well Enough the First Time…” – Part II

businesswoman with big earsHaving considered the numerous requests for rehearing filed in relation to orders granting an IPR trial (HERE), we now turn to all the other orders relating to requests for rehearing, including the one order that actually granted such a motion:

On Order Denying Institution of Inter Partes Review Trial

Dominion Dealer Solutions, LLC v. Autoalert, Inc., IPR2013-00220 (Paper 13).  Petitioner sought rehearing of decision not to institute IPR based on the grounds that the Board substituted its own view of the facts over expert testimony and overlooked disclosures in the cited references.  The Board discarded the first argument, finding that there is no legal basis for movant’s position that “uncontested factual evidence must be accepted by the Board.”  Movant’s expert’s testimony was contradicted by the record and had no factual support.  Thus, it was given little or no weight.  As to the second point the Board made clear that the Board could not have misapprehended or overlooked evidence or argument that was not discussed meaningfully in the Petition.  Order at 4. The Board will not hear, in a Motion for Rehearing, arguments and evidence that were not before it in the subject motion.

Wowza Media Sys. et al. v. Adoby Sys. Inc., IPR2013-00054 (Paper 16).  Regarding the Board’s finding that the Petition was non-compliant, Petitioner first asked that the Board to merely consider the petition as incomplete, under 37 CFR § 42.106(a)(1).  The Board stated that Petitioner’s motion confused the minimum statutory requirements to receive a filing date with the requirement that a petition prove unpatentability by a preponderance of the evidence.  The latter failure was a deficiency in a substantive, not procedural, requirement of the petition. Order at 3.

Synopsys, Inc. v. Mentor Graphics Corp., IPR2013-00041 (Paper 21). Petitioner argued that the Board failed to apply the broadest reasonable construction to a key claim limitation.  The Board noted, at threshold, that Petitioner did not set forth its own proposed interpretation of that claim limitation, thus the matter was not discussed in the petition.  Using now familiar terminology, the Board held that it could not have misapprehended or overlooked something not adequately explained in the initial petition.  The Board did go on to explain why the decision was correct, in any event.

Denso Corp. v. Beacon Navigation GmbH, IPR2013-00027 (Paper 16). The Board’s decision was based on the fact that the “Petition set forth ‘argument’ in the form of claim charts that merely pointed to various portions of the reference with no narrative explaining how the referenced portions meet the limitations of the claims.”  Order at 2.  In response to the Rehearing Request, the Board found that there was no indication of where the arguments were previously presented.  Order at 3. Despite this fact, the Board did consider Petitioner’s arguments, but found them unpersuasive.

Sata GmbH & Co. KG v. Anest Iwata Corp., IPR2013-00111 (Paper 17).  The Board ruled that it had not misapprehended the inherency argument made by Petitioner in denying certain challenge grounds.  Further, the Board disagreed that Petitioner’s expert testimony must be accepted as true.  Petitioner’s expert did not refer to sufficient facts or point to objective evidence to support his conclusions and, as such, it was entitled to little weight.  Order at 4.

On Order Denying Motion to Submit Supplemental Information

Redline Detection, LLC v. Star Envirotech, Inc., IPR2013-00106 (Paper 35).  Movant argued that motion should have been granted because it was within regulatory due date for such motions to submit supplemental information.  The Board disagreed, finding that movant had not complied with the underlying requirements of a motion to supplement.  Specifically, (1) what was deemed an intentional delay to provide relevant information was contrary to the efficient administration of the Office (Order at 4-5); (2) the supplemental information went beyond what is relevant to a claim for which trial has been instituted – the relevant standard for a motion to supplement (Order at 5-9); (3) the motion did not comport with due process (Order at 9-11).  Thus, the Board’s decision was deemed not to be an abuse of discretion and the motion for rehearing was denied.

On Order Expunging Non-Compliant Papers

CBS Interactive, Inc., et al. v. Helferich Patent Licensing, LLC et al., IPR2013-00033 (Paper 84).  Movant/Patent Owner requested rehearing of order expunging non-compliant papers.  The Board first noted that the Director promulgated 37 CFR § 42.12 to provide that the Board may impose a sanction for failing to comply with an applicable rule.  The Board had previously denied a motion to add supplemental evidence, but Patent Owner filed a motion for rehearing that included the three exhibits at issue that amounted to an unauthorized motion to supplement.  This was just the latest in many missteps by Patent Owner and the Board, clearly, has had enough.

Board Grants Motion for Rehearing

Illumina v. Trustees of Columbia Univ. in the City of NY, IPR2012-00006 (Paper 43).  In the only granted request for rehearing, the Board agreed that it erred in not authorizing the IPR trial on certain claims based on certain prior art.  The issue related to whether a prior art reference properly incorporated another piece of prior art by reference.  The Board agreed that, in coming to its conclusion, it did not use the correct standard (one of ordinary skill).  Instead, the Board required a heightened standard that would require the exact word at issue.  It is worth noting that the Board also considered an objection relating to the Board’s rejection of duplicative challenges to the claims.  Given the Board’s mandate for “just, speedy, and inexpensive resolution of every proceeding,” the Board found that it did not abuse its discretion in denying the duplicative grounds.

Rehearing? PTAB Mostly Says “We Heard You Well Enough the First Time…” – Part I

iStock_000001361496XSmallAs parties to inter partes review proceedings (and the PTAB for that matter) have felt their way through the first year of IPR proceedings, there have been ample disappointments and, therefore, related Motions for Rehearing.  Indeed, there have been many such motions, and so this article is just Part I of a summary of rehearing decisions, with an eye toward identifying trends and best practices in this type of motion practice.

At threshold, the regulatory basis for Motions for Rehearing is found in 37 CFR § 42.71(d):

37 CFR § 42.71(d): A party dissatisfied with a decision may file a request for rehearing, without prior authorization from the Board.  The burden of showing a decision should be modified lies with the party challenging the decision.  The request must specifically identify all matters the party believes the Board misapprehended or overlooked, and the place where each matter was previously addressed in a motion, an opposition, or a reply.  A request for rehearing does not toll times for taking action.  Any request must be filed: (1) Within 14 days of the entry of a non-final decision or a decision to institute trial as to at least one ground of unpatentability asserted in the petition; or (2) Within 30 days of the entry of a final decision or a decision not to institute a trial.

To date, numerous Motions for Hearing have been requested, but only rarely have such motions been granted.  Through the 1 year anniversary of IPR practice, Motions for Rehearing suffered through a 10% grant rate (1 out of 10).  That percentage is only decreasing.  Thus, to get a better handle on what worked, and what has not, we set forth the below synopsis of numerous such motions.

In general, however, the lessons to be taken from these rulings include that, if the Board truly missed an argument, it is willing to own up to that mistake and reconsider the argument.  There is no basis, however, for making new arguments or presenting new evidence in the form of a Motion for Rehearing.  This is against the rules and, to emphasize the point, the Board has, on many occasions, denied Motions for Rehearing based on the simple ground that it could not have overlooked or misapprehended an argument or evidence that was not presented to it in the underlying briefing.  The Board will simply not consider belated or new arguments/evidence in a Motion for Rehearing.  To overcome this hurdle to rehearing practice, specifically identify for the Board where, in the underlying briefing, the argument was previously presented.

Turning to the actual decisions, we note that this article only relates to Motions filed in response to an order instituting an IPR trial.  All other orders will be discussed in a later article.

On Order Instituting Inter Partes Review Trial

By Petitioner:

Hewlett-Packard Co. v. Technology Properties Ltd., LLC, IPR2013-00217 (Paper 21).  Petitioner sought rehearing of Board’s decision instituting IPR trial relating to the effective filing date of the patent-at-issue. To that end, in the Motion for Rehearing, Movant argued that there are three reasons why the Board erred regarding the effective date of the patent.  But Movant also admitted that such arguments were not contained in the Petition.  The Board declined to consider, for the first time, Movant’s arguments that were presented in the Motion for Rehearing. Order at 3.

SAP America, Inc. v. Pi-Net Int’l, Inc., IPR2013-00194 (Paper 22).  Petitioner sought rehearing on a ground on which the Board did not grant trial.  At threshold, Patent Owner filed a response to the Motion for Rehearing, but had not first obtained authorization to do so.  As such, the Board did not consider that opposition.  Turning to the merits, the Board found that, for the first time in the Motion for Rehearing, Petitioner made an argument relating to the denied ground.  The Board will not consider such belated arguments.  Order at 3.

Scentair Tech., Inc. v. Prolitec, Inc., 2013-00179 (Paper 18).  Petitioner sought rehearing of grounds that were merely discarded as redundant to other grounds in the Petition.  The Board did not see the potential prejudice identified by Movant.  Any discarded grounds could be brought up anew in response to any amended claims in the context of such a motion.  Further, though Petitioner may not ultimately prevail on the grounds instituted does not mean it was an abuse of discretion not to have instituted on the additional grounds.  To avoid a finding of redundancy, “a petitioner must articulate a meaningful distinction in terms of relative strengths and weaknesses with respect to application of the prior art reference disclosures to one or more claim limitations.”  Order at 3.

ABB, Inc. v. ROY-G-BIV Corp., IPR 2013-00062 (Paper 28) and IPR2013-00074 (Paper 22).  Petitioner sought rehearing of the Board’s decision to initiate because, Petitioner argued, the decision adopted an erroneous interpretation and because review should have been instituted on one of the denied references.  Regarding the claim construction argument, Petitioner sought to supplement its argument in its petition.  This new argument was, of course, deemed improper material for a motion for rehearing.  Order at 3-4.

Motorola Solutions, Inc. v. Mobile Scanning Tech., LLC, IPR2013-00093 (Paper 34).  Petitioner argued that some structure identified by the Board as corresponding to a means-plus-function limitation was not actually necessary to perform the recited function.  Petitioner also sought inclusion of one ground that had been denied in the decision to initiate.  The Board engaged in a detailed analysis supporting its earlier decision before denying the motion for rehearing.

Microstrategy, Inc. v. Zillow, Inc., IPR2013-00034 (Paper 23).  Petitioner requested rehearing of the Board’s decision to initiate an IPR, arguing that eight claims that were left out of the trial should have been included.  The Board had denied placing those eight claims in the trial because the claim chart contained in the petition did not have evidence relating to certain limitations of the claims.  While Petitioner argued in its Motion for Rehearing that evidence relating to those limitations was elsewhere in the petition, the Board disagreed and denied the Motion for Rehearing.

Berk-Tek LLC v. Belden Tech. Inc., IPR2013-00057 (Paper 21).  Petitioner requested rehearing on three grounds that were denied by the Board in its decision.  For two of the grounds, the Board found that Petitioner was simply presenting new argument in its Rehearing Request and denied the request for that reason. The third ground, which was denied due to redundancy, the Board found that, because Petitioner did not itself identify the meaningful distinctions between the various grounds, it could not now be heard to explain why certain grounds should not have been excluded as redundant.  Order at 5.

Avaya Inc. v. Network-1 Security Solutions, Inc., IPR2013-00071 (Paper 32).  Petitioner sought rehearing based on certain challenge grounds that were not included in the trial.  Again, the Board found that the arguments presented in the rehearing request were new.  To the extent the arguments could have been cobbled together from the Petition, “[i]t is not for the Board to attempt to piece together a petitioner’s position based on other, unrelated arguments in a petition…”  Order at 5.

Sony Corp. of Am., el al. v. Network-1 Security Solutions, Inc., IPR2013-00092 (Paper 24).  Petitioner asked that a denied challenge ground be reconsidered.  The Board again found that the argument presented was newly made in the Rehearing Request and, for that reason, the motion was denied.

By Patent Owner:

Veeam Software Corp. v. Symantec Corp., IPR2013-00150 (Paper 17).  Patent Owner sought rehearing based on the fact that the Board should not have granted the trial based on several prior art references.  Specifically, Movant argued that the Board had overlooked arguments presented in the Patent Owner Preliminary Response that the prior art of reference failed to disclose each and every limitation of the challenged claims.  The board agreed that it overlooked the argument at issue, but denied the motion in any event, finding that the arguments did not cause the Board to reach a different conclusion as to the adequacy of the challenges at issue.  Order at 2-3.

Innolux Corp. v. Semiconductor Energy Lab. Co., Ltd., IPR 2013-00066 (Paper 23), IPR2013-00038 (Paper 20), and IPR2013-00028 (Paper 27). Patent Owner argued that the Board’s decision to initiate unreasonably construed a key claim term.  The Board engaged in a detailed analysis of why it did not misapprehend the relevant term.  At the very least, however, Patent Owner now has a clear road map of the Board’s argument to be addressed in its formal response to the petition.

Micron Tech., Inc. v. Board of Trustees of the Univ. of Ill., IPR2013-00006 and -00008.  Patent Owner’s motion was based on a purported misconstruction of a product-by-process claim.  In a one page opinion, the Board disagreed with Patent Owner’s argument, citing to a Federal Circuit opinion that supported its construction of the relevant claim term.

Synopsys, Inc. v. Mentor Graphics Corp., IPR2012-00042 (Paper 23).  Patent Owner argued that the Board’s decision misapprehended an error in the service of the petition as well as the privity requirement of § 315(b).  The Board noted that, for the first time in the Rehearing Request, Patent Owner argued that service is a statutory requirement.  Using now-familiar language, the Board stated that it “could not have overlooked or misapprehended this argument because it was not made in the preliminary response.”  Order at 3. The Board went on to explain why, even on the merits, this argument fails.  Patent Owner’s second ground for rehearing was also newly presented in the Rehearing Request, and also denied.  Order at 6.

Berk-Tek LLC v. Belden Tech. Inc., IPR2013-00057 (Paper 22).  Patent Owner sought rehearing of the Board’s decision to institute a trial.  The Board denied the request, stating that it “did not overlook [Patent Owner’s] argument.  Rather, the argument was unpersuasive.”  Order at 2.  Further, the Board stated that “[m]ere disagreement with the Board’s analysis or conclusion is not a proper basis for rehearing.”  Order at 3.

BAE Sys. Information and Elec. Sys. Integration, Inc. v. Cheetah Omni, LLC, IPR2013-00175 (Paper 20).  In the Board’s decision, it decided that the petition was not time barred because the United States, a party to an earlier litigation, was not a privy with BAE. Patent Owner sought rehearing, but merely presented new arguments and evidence.  The Board, therefore, denied the request.  The Board went onto consider the new evidence and argument, but found that, even in light of the new material, the U.S. and BAE were not privies.Order at 3-4.

More decisions on Motions for Rehearing to come….