Federal Circuit Explores Expert Declaration as IPR Supplemental Evidence

cafc1Getting caught up on a Federal Circuit decision from late last year, we take a look at the Federal Circuit’s decision in Redline Detection, LLC v. Star Environtech, Inc. (2015-1047), decided on December 31, 2015. In this case, the Court sent the strong message that petitioners must put their best foot forward right off the bat – submitting expert declarations with their petitions as part of their prima facie case and not later as supplemental evidence.

Petitioner Redline challenged Star’s patent 6,526,808 in IPR2013-00106. Redline did not file an expert declaration with its petition. Instead, Redline moved to submit the expert declaration as supplemental evidence under 37 CFR 42.123(a) after the PTAB instituted the IPR. The PTAB denied Redline’s motion and later decided that the challenged claims were not obvious. Redline appealed, and the Federal Circuit affirmed.

In the appeal, Redline principally argued that the PTAB should have granted its motion since it timely moved within one month of the institution decision and since the declaration was relevant to the instituted grounds as required by 37 CFR 42.123(a). The Court rejected Redline’s argument that timeliness and relevance automatically required the PTAB to grant Redline’s motion — movant has the burden of proving that it is entitled to the requested relief.

To that end, the Court agreed with the PTAB that Redline did not justify submission of the declaration after filing its petition and after the PTAB’s institution decision, and Redline failed to show why the declaration could not have been submitted with the petition. Instead, Redline admitted to the PTAB that it intentionally delayed filing the declaration since it was cost-effective for its expert to opine only on the instituted grounds rather than all the grounds alleged in the petition. The court noted that, while supplemental evidence may be submitted under 37 CFR 123, 37 CFR 42.104 requires the petitioner to identify in its petition each challenged claim, the statutory grounds on which it is challenged, how it is to be construed, and the relevance of the evidence to the challenge raised. As such, the Court agreed with the PTAB that Redline’s expert declaration was more than just supplemental evidence. Instead, it was evidence supporting Redline’s prima facie case and should have been submitted with the petition under 37 CFR 42.104.

Redline’s other arguments, related to construction of 37 CFR 42.123(a), also did not persuade the Court in view of the overall scheme of regulations promulgated in 37 CFR 42 subparts A and B. The court concurred with the PTAB’s decision in IPR2014-00561 that 37 CFR 42.123(a) is not a routine avenue to pursue, nor does the regulation require acceptance of, supplemental information. The court opined that requiring admission of supplemental information, which Redline’s expert declaration was not, so long as it was timely submitted and relevant to the proceeding would cut against the PTAB’s mandate and alter the intended purpose of IPR proceedings. Accordingly, the court affirmed the PTAB’s denial of Redline’s motion.

The takeaway is that petitioners must put forth their best case, including expert declarations, in their petitions.

Board Explains the Process for Evidentiary Objections—and Illustrates the Severe Penalty for Not Following It

35378580_sPractitioners who are used to district court litigation may be surprised—and tripped up—by the rules for objecting to evidence in IPRs, which differ significantly from the approach used in litigation.  The Board’s Final Written Decision in IPR2014-01204 (Valeo v. Magna Elecs.) serves as a good case study of the IPR rules’ strict process for evidentiary objections.

By way of background, possibly the biggest difference between evidentiary objections in IPRs and litigation is the IPR rules require objections to be filed with the Board within ten business days after the evidence is submitted.  Failure to object within that time waives the objections, and precludes a later motion to exclude the evidence.  After evidentiary objections are served, the proponent of the evidence can, within 10 business days, serve “supplemental evidence” in an effort to overcome the objection.  That supplemental evidence is not filed as a matter of course without the Board’s approval; rather, its use is generally limited to filing in opposition to a motion to exclude.

The Board often requires strict compliance with this procedure, and will strike objections if they do not comply, as illustrated in the Valeo case.  There, the Decision to Institute was entered on January 28, 2015.  That triggered the 10-day deadline for Patent Owner to object to the evidence in the Petition, and Patent Owner timely filed its objections on Feb. 11.  In turn, Petitioner timely served supplemental evidence on Feb. 25.  The next day, Petitioner properly sought permission from the Board to file a motion to file the supplemental evidence as “supplemental information.”  On March 4, the Board granted Petitioner permission to file its motion.  The same day, Patent Owner objected to the supplemental evidence.

On April 10, the Board granted Petitioner’s Motion to File Supplemental Information.  Thus, by operation of the rules, the “supplemental evidence” became evidence on that day.  Patent Owner never renewed its objection.  As a result, the Board ruled that Patent Owner waived its objections to the supplemental information, despite having earlier objected.  The earlier objections were ineffective, according to the Board, because the “rules provide for objections to evidence, but do not provide for objections to supplemental evidence.”

Regarding the substance of admissibility issues, the Federal Rules of Evidence apply to IPRs.  The Valeo case addresses a variety of other evidentiary objections that were effectively lodged, and a few particular points from the decision provide a window into how many PTAB judges approach evidentiary issues:

  1. Arguments about admissibility should not be included in Patent Owner’s Response; such arguments should only be raised in a motion to exclude. (See FWD at 14-15);
  2. On the flip side of that same coin, arguments about sufficiency of the evidence should be presented in the Patent Owner’s Response, not in a motion to exclude under the guise of an objection on relevance grounds. (See FWD at 16);
  3. Hearsay objections are of very limited utility with respect to expert declarations, because the Board does not consider declarations submitted as a part of the IPR to be “out of court statements,” as the declarants may be cross-examined (see FWD at 17);
  4. Objections should be precise and comprehensive. For example, if an objection does not include reference to Rule 403, then the Board may not later allow an argument based on FRE 403.  (See FWD at 20);
  5. Be sure to object to the right document. For example, an FRE 901 objection should be directed to the underlying document, not a declaration that tries to authenticate the underlying document.  Otherwise, the Board may decline to consider the issue (see FWD at 21).

In the Valeo IPR, as usually happens in IPRs, the motion to exclude was denied.

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.

Infringement Contentions From Copending Litigation Not Allowed as Supplemental IPR Information

Glucosamine & MSM labelingThe circumstances under which the Board will entertain the inclusion of “supplemental evidence” in an inter partes review proceeding remains a moving target. It is worth noting, therefore, the case of Mentor Graphics Corp. v. Synopsys, Inc., IPR2014-00287, wherein the Board denied Petitioner’s efforts to include Patent Owner’s infringement contentions from a co-pending district court litigation involving the same patent. Paper 17 at 2. Petitioner claimed that these contentions reflect Patent Owner’s assessment of the claim scope. Id.

The Board found that the only relevance the contentions have is an alleged inconsistency as compared to arguments made by Patent Owner in the IPR. Id. at 3. They further determined that the contentions were served prior to any substantive discovery in the district court litigation and are supplanted by final infringement contentions as well as the District Court’s Order Construing Claims. Id. The Board, therefore, found that, while the district court’s construction may be informative, the preliminary infringement contentions are too tenuous to be relevant to the Board’s application of the broadest reasonable construction standard. Id. Thus, Petitioner’s Motion to Submit Supplemental Information was denied. The Board however noted that Petitioner can bring these contentions forward in its Reply, if appropriate as rebuttal. Id.

Board Grants Rare Motion to Submit Supplemental Information

Glucosamine & MSM labelingIn general, all the evidence a party seeks to rely upon in an inter partes review must be contained in either the Petition (for Petitioner) or Patent Owner Response (for Patent Owner).  37 C.F.R. § 42.123 (b), however, allows for the introduction of supplemental evidence, if such introduction is in the interests of justice.  The Board granted such a request in Cyanotech Corporation v. Board of Trustees of the University of Illinois, IPR2013-00401, Paper 41, allowing two supplemental documents to be added to the IPR.  Given the difficulty of meeting the “interests of justice” standard, we thought it worthwhile to discuss the rationale of this decision.

Pursuant to 37 C.F.R. § 42.123 (b), a motion to submit supplemental information must demonstrate why the information reasonably could not have been obtained earlier, and that consideration of the supplemental information would be in the interests of justice. Id. Patent Owner, in seeking to introduce supplemental evidence, argued that the information at issue could not have been reasonably obtained earlier because the documents at issue were part of a litigation production consisting of over 100,000 pages. Id at 3.

Petitioner argued that the documents had been produced several months before the Patent Owner Response was due and that Patent Owner’s failure to submit them with the Response was mere attorney negligence. Id. Petitioner further argued that it would suffer prejudice because it would not have time to prepare for the deposition of Patent Owner’s witness, to locate a rebuttal expert, and to prepare its reply.

Given the extensive nature of the document production, the fact that the supplemental information was limited and bore directly on Petitioner’s statements in the IPR, and that any prejudice to the Petitioner was negligible, the motion to submit supplemental information was granted. Id.

Board Addresses Procedure for Making Board Aware of Supplemental Evidence

There has been, to date, much confusion surrounding the propriety and timing of filing “supplemental evidence” with the Board.  In Sealed Air Corporation v. Pergis Innovative Packing, Inc., IPR2013-00554 through IPR2013-00558, the Board clarified the issues upon request of Patent Challenger regarding the proper procedure to file supplemental evidence in response to an evidentiary objection.

[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]

37 CFR § 42.64(b):
(b) Other evidence. For evidence other than deposition evidence:
(1) Objection. Any objection to evidence submitted during a preliminary proceeding must be served within ten business days of the institution of the trial. Once a trial has been instituted, any objection must be served within five business days of service of evidence to which the objection is directed. The objection must identify the grounds for the objection with sufficient particularity to allow correction in the form of supplemental evidence.
(2) Supplemental evidence. The party relying on evidence to which an objection is timely served may respond to the objection by serving supplemental evidence within ten business days of service of the objection.[/pullquote]

Patent Challenger acknowledged the Rules for service of supplemental evidence on an opposing party in response to an evidentiary objection under 37 CFR § 42.64(b)(2), but noted the Rules are silent as to the filing of such evidence with the Board. The Board instructed that, in situations where a party’s objection to evidence can be overcome by later-served supplemental evidence, the objection would not become the basis of a motion to exclude evidence, and therefore the Board would not be made aware of either the objection or the supplemental evidence Accordingly, the Rules do not provide for filing of evidentiary objections or supplemental evidence during the initial stages of a proceeding.

The Board only becomes aware of supplemental evidence when there is an evidentiary dispute which cannot be resolved. In such situations, the objecting party may file a motion to exclude evidence, which can be opposed by the filing of an opposition to the motion to exclude.  This opposition may be accompanied by exhibits containing previously-served supplemental evidence.  Only at this time will the Board be made aware of the supplemental evidence.

In short, objections to evidence and supplemental evidence served within 10 days of such objections, pursuant to 37 CFR § 42.64(b)(2), should only be filed with the Board at the Motion to Exclude stage of the proceeding.

Sur-Reply Authorized By Board in Response to New Expert Testimony in Petitioner Reply by Patent Owner

iStock_000031776768SmallThe PTAB has, to date, been very strict about the timeline of events in an inter partes review proceeding, as well as ensuring the proceedings are streamlined.  That’s what makes the Board’s decision in Zodiac Pool Systems, Inc. v. Aqua Products, Inc., (IPR2013-00159) unique.  In that case, a sur-reply was allowed in response to an expert declaration that was submitted in a reply brief.

More specifically, Patent Challenger included an expert declaration supporting its arguments refuting Patent Owner’s arguments of secondary considerations of non-obviousness. After noting that the reply exceeded the word limit, Patent Owner (who had been denied discovery on related issues) argued that it had no opportunity to respond to any potential inaccurate statements in the declaration.

Patent Owner also requested permission to file a short sur-reply in response to a review of documents produced by Patent Challenger after filing of the reply. The Board approved Patent Owners request, with the stipulation that sur-reply contain only rebuttal of allegations in Patent Challenger’s expert declaration.

Expert Declaration Not Allowed as Supplemental Information Related to Claim Constructions

iStock_000014024761SmallUnhappy with the Board’s claim constructions, Patent Challenger in Rackspace US, Inc. and Rackspace Hosting, Inc. v. PersonalWeb Technologies, LLC and Level 3 Communications, (IPR2014-00057, IPR2014-00058, and IPR2014-00062) sought to file a motion to submit supplemental information (specifically an expert declaration) to address certain claim constructions.  The Board denied the motion because, among other things, allowing such late entry of evidence would compromise the efficient and inexpensive resolution of inter partes reviews.

Patent Challenger argued that allowance of the expert declaration in support of its own claim constructions was proper because the request was made within one month from the institution date and the information would be relevant to the claims at issue. Patent Owner countered that such supplemental information should have been presented at the time of filing the original petition, and that such a late submission of evidence regarding claim construction would negatively affect Patent Owner, who was in the midst of preparing for discovery and response.

The critical factor in the Board’s decision was the goal of having the proceeding completed within one year of institution (35 USC § 316(a)(11)). The Board also looked to 37 CFR § 42.1(b) which stipulates that the Board’s rules are to be construed to secure efficient and inexpensive resolution of each proceeding. Finding that allowing submission of the supplemental expert declaration would inhibit timely filing of Patent Owner’s responses in each proceeding, the Board refused to allow the supplementary evidence.

The Board continued on to state that submission of supplemental evidence is an improper mechanism for challenging claim construction. Rather, if Patent Challenger was dissatisfied with the Board’s claim construction, Patent Challenger should have filed for rehearing within 14 days of the decision on institution. The Board also agreed with Patent Owner that the proper time to submit an expert declaration in support of claim construction was with the filing of the petition. Lastly, the Board noted that Patent Challenger can challenge the claim constructions in its reply, so there was no reason to allow supplemental information.

Patent Challenger’s last argument was based on two past proceedings in which expert testimony related to access and authenticity of prior art references was allowed as supplemental information. However, the Board found that the two cases were not analogous, as they dealt with issues related to the prior art, not claim construction. Therefore, the Board did not allow submission of supplemental information in support of Patent Challenger’s preferred claim construction.

PTAB Clarifies Procedure for Filing Supplemental Evidence in Response to Objections

37 CFR § 42.64(b)(2): Supplemental evidence. The party relying on evidence to which an objection is timely served may respond to the objection by serving supplemental evidence within ten business days of service of the objection.

As a follow up to our post regarding issues that have arisen to date regarding supplemental evidence, it is worth noting two recent PTAB decisions in which the proper procedure for introducing supplemental evidence in response to an objection was discussed.  In Gnosis SPA, et al. v. S. Ala. Med. Sci. Found., IPR2013-00116 (Paper 29), the Board instructed that evidence provided in response to an evidentiary objection should not be filed.  Instead, that evidence should be served on the opposing party and then, in the event the opposing party files a motion to exclude evidence, the party may seek authorization to file an opposition to the motion to exclude and to file its supplemental evidence.  Order at 3.

In another decision relating to the filing of supplemental evidence, in Nuvasive, Inc. v. Warsaw Orthopedic, Inc., IPR2013-00206 (Paper 23), Patent Owner sought guidance regarding the filing of objections received from Petitioner to evidence set forth in the Patent Owner Preliminary Response.  The Board advised that Patent Owner need not serve supplemental evidence to those objections because such evidence can be presented in the formal response to the Petition.  To that end, the Board noted that “[t]he arguments and evidence that a patent owner makes and relies on for its full response may be quite different from the arguments and evidence it relied on during the preliminary proceeding.  This is in contrast to petitioner’s petition and evidence.  Once a trial is instituted, a a petitioner is not automatically afforded another opportunity to brief its case or to submit evidence that it should have submitted in support of its petition.”  Order at 2-3 (See also note 3: “While a petitioner may seek to file supplemental evidence, it must do so by way of a motion and it must seek authorization to file such a motion.  37 CFR § 42.123.”).

Entry of Supplemental Evidence a Tough Hurdle to Navigate in IPR Proceedings

iStock_000001758213XSmallEarly expectations of inter partes review proceedings were that the PTAB would be reticent to allow supplemental evidence to be entered by either party – there would be no second bites at the apple for participants in IPR trials.  As Board decisions have continued to pile up, it is becoming clear that those early predictions were accurate.  Here, we summarize a number of Orders directed to the issue of supplemental evidence to prove that point.

Redline Detection, LLC v. Star Evnirotech, Inc., IPR2013-00016 (Paper 24).  Petitioner sought to introduce four new exhibits, after the Board instituted an IPR trial in the proceeding.  Among the evidence Petitioner sought to include was a declaration of an expert who purported to further explain “several aspects of the references on which the IPR was granted and further helps establish reasons for combining the references…”  Order at 2.  The Board pointed out that, pursuant to 37 CFR § 42.123, supplemental evidence can be filed within one month of the date the trial is instituted, but that does not mean such a motion will be granted “no matter the circumstance.”  Because the evidence sought to be introduced could have been presented with the Petition, the motion was denied.

CBS Interactive, et al. v. Hleferich Patent Licensing, LLC et al,, IPR2013-00033 (Paper 79).  Patent Owner argued that Petitioner submitted evidence with its reply brief that should have been included in the Petition.  The Board noted that, whether a reply contains arguments or evidence outside the scope of a reply is left to the determination of the Board. “The Board will determine whether a reply contains improper arguments or evidence when the Board reviews all of the parties’ briefs and prepares the final written decision.  Should there be improper arguments or evidence presented with a reply, the Board, exercising its discretion, may exclude the reply and related evidence in their entirety, or alternatively, decline to consider the improper arguments and/or related evidence. Briefing from the parties as to whether an argument or evidence is submitted outside the scope of a proper reply rarely is authorized.”  Order at 3.

Research in Motion Corp. v. Mobilemedia Ideas, LLC, IPR2013-00016 (Paper 19).  Petitioner sought authorization to submit additional grounds of unpatentability based on a motion for summary judgment granted in co-pending litigation, wherein two claims of the subject patent were deemed anticipated.  The Board denied the request, finding that the original petition should have included all of the asserted grounds of unpatentability.  37 CFR § 42.104(b).

Blackberry Corp. v. Mobilemedia Ideas, LLC, IPR2013-00036 (Paper 40).  Patent Owner convened a conference call with the Board to discuss the reply to the Petition filed by Petitioner.  In general, Patent Owner argued that the reply, and related exhibits, were improper because they contained new arguments and evidence that did not respond to arguments raised in the response, but should have been filed with the petition.  The Board pointed out that 37 CFR § 42.23(b) sets forth that a reply may only respond to arguments raised in the corresponding opposition or patent owner response and that the Trial Practice Rules state that “a reply that raises a new issue or belatedly presents evidence will not be considered.”  77 Fed. Reg. 48756, 48767.  Petitioner sought leave to re-file its reply, eliminating any such new matter.  The Board allowed that re-filing.

ZTE Corp., et al. v. Contentguard Holdings, Inc., IPR2013-00139 (Paper 27).  In light of the Board’s claim construction in its decision to institute an IPR trial, Petitioner sought to introduce two new references that were deemed “more pertinent to the claimed subject matter than the prior art cited by the petitioner in its petition.”  Order at 2.  The Board held that the PTO rules do not permit “a petitioner to refrain from initially construing a key claim term…wait for the Board to render a construction for the term, and then ask to submit supplemental evidence based on that construction to bolster its position, particularly if that evidence was in the petitioner’s possession at the time of filing of the petition.”  As such, Petitioner was deemed not to have established sufficient basis for submitting the new references.

Illumina, Inc. v. The Trustees of Columbia University in the City of New York, IPR2012-00006 (Paper 82).  Patent Owner argued that Petitioner submitted new evidence in violation of 37 CFR § 42.23(b).  The Board stated that it would make a determination of whether new issues or new evidence was presented in the reply brief.

Kyocera Corp. v. Softview, LLC, IPR2013-00004 (Paper 32).  Patent Owner argued that the evidence cited in its reply brief raised new claim construction issues and new challenges to the patentability of the claims, as well as introduces new prior art and evidence.  As such Patent Owner sought to file a Motion to Strike the reply.  The Board held that such a motion was unnecessary in view of the fact that the Board will decide whether new issues were raised or new evidence introduced.  Order at 2-3.