PTAB Addresses Means-Plus-Function Claim in a Post-Williamson World

36713644_sLike every en banc Federal Circuit decision, the Court’s decision in Williamson v. Citrix Online, LLC, No. 2013-1130 (Fed. Cir. June 16, 2015) (en banc) made big headlines. It is, therefore, worth reviewing one of the first PTAB decisions to address the contours of that case in an inter partes review context in Toyota Motor Corp. v. Cellport Sys., Inc., IPR2015-00633, where the Board granted an IPR trial with respect to some claims, but denied as to others.

The first means-plus-function issue related to the claim limitation: “controller means including processing means in the vehicle for controlling the sending and receiving of said information using said wireless device between said first remote station and the vehicle.” More specifically, the Board had to decide the scope of both “controller means” and “processing means.”

The Board recognized that both terms were presumptively means-plus-function limitations pursuant to the Williamson decision. In rendering its claim construction determination, however, the Board agreed with Patent Owner that “controlling means” was not subject to 35 USC § 112, paragraph 6 because: 1) the language of the claim did not link the “controller means” to a specific recited function, and 2) the claim specifies detailed structure sufficient to overcome any recited or implicit function, e.g., controlling. Order at 13. Instead, the Board concluded that the recited function was associated with the “processing means” and “controller means” was simply a controller.

The Board also agreed with Patent Owner relative to the second means-plus-function issue related to limitation: “first standard network communication means.” In evaluating this limitation, the Board first instructed that the proper function for a means-plus-function limitation is the function recited in the claim. As such, the Board accepted Patent Owner’s articulation of the proper function. Then, using this function, the Board evaluated Petitioner’s proposal for corresponding structure and found that the structure identified by Petitioner was not “clearly associated or linked in the Specification to the recited function…” Order at 16.

In view of these claim construction determinations, Petitioner faced an uphill battle in having all claims put into the trial. For example, the Board explained that, for means-plus-function limitations, Petitioner is required to show that both the recited function and the corresponding structure are present in the applied references. Id. at 19. Losing the claim construction ruling made it impossible for Petitioner to win the issue of showing that the “first standard network communication means” was discussed in the Petition.

Motion for Additional Discovery Seeking Details of Kyle Bass-led Coalition Partially Succeeds

14029319_sWe continue to monitor the various strategies and tactics being employed by pharma companies that have been targeted by the “Coalition for Affordable Drugs” – a group led by hedge fund manager Kyle Bass. In a recent decision, the PTAB granted-in-part a pharma company’s attempts to dig into the background of the Bass-led coalition. Coalition for Affordable Drugs II LLC v. NPS Pharma., Inc., IPR2015-00990.

Motions for Additional Discovery have been difficult to win before the PTAB given the Board’s mandate to ensure that IPR proceedings are quick and cost-effective. To achieve that goal, of course, the discovery allowed much be far less than what is normally allowed in district court litigation.

In the NPS Pharma case, Patent Owner sought broad categories of information (in the form of 7 document requests and 2 interrogatories) relating to the entities that are funding Bass’ coalition. The Board rejected these broad discovery efforts, finding them overly broad and, therefore, not in the interest of justice. Order at 6. The Board did, however, agree that a threshold amount of evidence was presented that made some of the discovery necessary. Specifically, the Board allowed discovery into the agreements in the possession of Petitioner that relate to the control or ability to control any aspect of the IPR proceeding by a party that is not designated as a Petitioner or real party-in-interest in the Petition.

It seems likely that, if any such agreements exist, they will be put under seal in the IPR proceeding. However, we will keep a look out for them to see if we can learn more about this Bass-led group that has shaken the pharma industry.

Board Rejects Attempt to Add Testimony to Preliminary Response

33646123_sAs we have discussed, the proposed PATENT Act contains provisions that alter many facets of IPR proceedings. One of those potential changes is a new ability to include affidavits or declarations of supporting evidence and opinions to Patent Owner Preliminary Responses. A recent decision by the Board makes clear, however, that the Board is not going to jump the gun on this change. Masterimage 3D, Inc. v. Reald Inc., IPR2015-00876.

In Masterimage, Patent Owner sought to introduce deposition testimony from Petitioner’s expert that was given in related IPR proceedings. Patent Owner believed the testimony was helpful to the Preliminary Response, though it did not contradict any of the testimony provided in his declaration in this proceeding.

The Board declined to allow the introduction of the testimony at the Preliminary Response stage. Pursuant to the existing IPR regulations, new testimony may be permitted only where a party demonstrates it is in the interests of justice (i.e., where the evidence demonstrates that the trial may not be instituted). Because there was no allegation that the proffered testimony contradicted existing testimony, Patent Owner had not shown that presenting the evidence was in the interests of justice.

PTAB vs. Federal Circuit Update

cafc1To date, the Federal Circuit has weighed in on 15 PTAB decisions from inter partes review proceedings. In 3 of the 15 decisions, the Federal Circuit has issued a substantive opinion:

1) In re Cuozzo Speed Technologies – Affirming the Broadest Reasonable Interpretation claim construction standard;

2) Belden Inc. v. Berk-Tek LLC – Non-precedential decision; and

3) Microsoft Corp. v. Proxyconn, Inc. – First reversal of a PTAB decision, generally because the Board’s claim construction rulings were not reasonable because they did not follow general claim construction principles.

In 12 of those 15 decisions, the Federal Circuit has simply rubber-stamped the Board’s decision via a one sentence Rule 36 Judgment. This is, apparently, the manner in which the Federal Circuit is going to manage its anticipated spike in work due to appeals from decisions of the PTAB. This is a frustrating practice, however, as the growth of the law is stunted by the Federal Circuit’s refusal to address the issues raised in these appeals in any substantive way:

4) SoftView LLC v. Kyocera Corp. – Rule 36 Judgment

5) Clearlamp, LLC v. LKQ Corp. – Rule 36 Judgment

6) Board of Trustees v. Micron Technology, Inc. – Rule 36 Judgment

7) In re: Zillow, Inc. – Rule 36 Judgment

8) Helferich Patent Licensing v. CBS Interactive – Rule 36 Judgment

9) Luv N’Care Ltd. v. Munchkin, Inc. – Rule 36 Judgment

10) Emcore Corp. v. Nichia Corp. – Rule 36 Judgment

11) Mobile Scanning Technologies v. Motorola Solutions, Inc. – Rule 36 Judgment

12) In re Continental Automotive Systems – Rule 36 Judgment

13) Prolitec, Inc. v. Scentair Technologies, Inc. – Rule 36 Judgment

14) Neste Oil Oyj v. Reg Synthetic Fuels, LLC – Rule 36 Judgment

15) Bernina Int’l v. Handi Quilter – Rule 36 Judgment

We will keep this list updated over time.


Amendments to PATENT Act Proposal Takes Aim at IPR Proceedings

8797259_s (1)On Thursday, June 4, 2015, the PATENT Act made it out of committee on a 16-4 vote after amendments were made to the bill that take direct aim at inter partes review proceedings. While there is still a long way to go before this bill becomes a law, this bill is further along than any other, so it is worth taking a closer look at the proposed changes to IPR and PGR proceedings:

(1) Patent Owner Preliminary Responses: Patent Owner Preliminary Responses may now be accompanied by affidavits or declarations of supporting evidence and opinions. A Petitioner may seek leave to reply to new issues raised in the preliminary response.

(2) Institution Decisions: The current version of 35 USC § 325(d), that is included in the portion of the Patent Act that relates to Post Grant Review, has a provision that allows the Director to not institute because the same or substantially the same prior art or arguments were previously presented to the Office. The PATENT Act proposes an addition to 35 USC § 314 that includes similar language in the IPR portion of the statute, whereby the Director can choose not to institute an IPR trial if it does not serve the interests of justice (including if arguments were previously presented). This provision is broader than old 325(d) – is this an opening to dismiss Petitions of the type filed by Kyle Bass?

(3) Institution Decisions Based on Different Evidentiary Standard: It shall be error to institute an IPR on the basis that the evidentiary standard at the Office differs from that in a district court litigation. This provision seems to be aimed at promoting efficiency and certainty in prior decisions by district courts so that they may not be challenged on procedural grounds.

(4) Patent Owner’s Action: IPR Petitions will only be barred under 35 USC § 315(b) if a complaint is served that alleges infringement of a particular patent claim. This allows a Petitioner the ability to add additional patent claims if, after the 1 year bar of 35 USC § 315(b) has expired, an amended complaint or other paper in a pending litigation adds claims to the lawsuit.

(5) Claim Construction Admissions: Parties to IPR and PGR proceedings will now be bound in any subsequent proceeding or civil action with regard to any claim construction arguments, adopted by the PTAB, that were made during the IPR.

(6) Live Testimony at Oral Hearing: Either party to an IPR or PGR will have the right to present live testimony where “the panel finds that such testimony would facilitate resolution of the case because genuine issues of material fact, conflicting expert opinions, or issues of witness credibility exist.”

(7) No More Broadest Reasonable Interpretation: Claims will no longer be construed pursuant to BRI. Instead, the claims “shall be construed as such claim would be in a civil action to invalidate a patent under section 282(b), including construing each claim of the patent in accordance with the ordinary and customary meaning…”

(8) Deference to District Court: If a claim has been previously construed by a district court, the Office is required to consider that claim construction.

(9) Searchable Decisions: The Director must find a way to make all PTAB decisions available “in an easily accessible, searchable form.”

(10) Claim Amendments: If you want to propose substitute claims, you must file that paper within 30 days of the Decision to Institute. Any substitute claim must be more narrow, not introduce new subject matter, and respond to a ground of unpatentability. The Petitioner shall be afforded an opportunity to respond regarding the above requirements.

(11) Burden of Proof Relative to Proposed Amended Claims: If a proposed amended claim meets the three requirements set forth immediately above, the burden of proving its unpatentability lies with Petitioner, by a preponderance of the evidence.

(12) Presumption of Validity: A provision is added to the law that reiterates that “the challenged patent shall be presumed to be valid” and that nothing shall be construed to impact the operation of section 282(a) in proceedings in a court of the United States.

(13) Three Member Panels: Only 1 judge who participated in the institution of the IPR or PGR proceeding may sit on the panel that hears the actual trial. The Director is given 1 year to implement this change.

(14) Good Faith: The Director has 1 year to implement regulations that make it clear that statements made in IPR and PGR proceedings are subject to similar obligations as Rule 11 of the Fed. R. Civ. P.

PTAB Issues Subpoenas in Two IPR Proceedings

19694784_sTo date, the PTAB has sparingly used its power to issue subpoenas in inter partes review proceedings. In two recent cases, Marvell Semiconductor, Inc. v. Intellectual Ventures I LLC, (IPR2014-00553) and LG Chem, Ltd. v. Celgard, LLC (IPR2014-00692), the Board granted requests to compel depositions of third party witnesses. Here, we take a look at the fact patterns that gave rise to this unusual IPR event.

The proper procedure for obtaining a subpoena in inter partes review is to make a “Motion for Authorization” to seek a subpoena the Patent Trial and Appeal Board (PTAB) which identifies the witness and explains the relevance of the testimony.  If the request is granted, the PTAB proceeds to issue an order permitting the moving party to apply for a subpoena pursuant to 35 U.S.C. § 24.

In the Marvell case, Petitioner filed declarations by two experts to support its contention that certain references qualified as prior art, one a librarian and the other from a publishing company. Neither of the witnesses, however, were willing to voluntarily appear for a deposition. Patent Owner disputed that the references were prior art and requested the Board to compel depositions of the two witnesses to allow relevant cross-examination.  ‘553 Order at 2.  Petitioner argued that cross-examination was unnecessary since the declarations were merely limited to authentication of documents.  Id. at 3.  The Board disagreed, finding that the publication date for the references was in dispute.  Accordingly, the Board granted Patent Owner’s request to compel depositions of the two witnesses and permitted Patent Owner to seek a subpoena under 35 U.S.C. § 24. Id. at 3.

In the LG Chem case, Patent Owner submitted testimony with its Response, and Petitioner sought to cross-examine the witness.  ‘692 Order at 2.  The witness was an employee of Patent Owner when the declaration was filed, but had since left and refused to attend the deposition voluntarily. The Board noted three key facts.  First, the deposition of the witness would be considered routine discovery since his original testimony was via declaration.  Second, there was little time remaining for Patent Challenger to submit its reply.  Third, Patent Owner did not oppose compelling a deposition. Id. at 2-3.  Given these three points, the Board waived the requirement that Petitioner file a motion for authorization under 37 C.F.R. § 42.52(a), and granted what the Board deemed to be an oral motion for authorization to compel testimony.  Id. at 3. Authority to serve the subpoena was also granted by the Board.

Board Clarifies When Expanded Panel Can Consider an IPR Issue

21909836_sIn the aftermath of the decision by an expanded panel of PTAB judges in Target Corp. v. Destination Maternity Corp. (deciding, in a 4-3 decision, that both joinder of issues and joinder of parties is allowed in inter partes review proceedings), several parties have pushed various panels of PTAB judges to submit one issue or another to an expanded panel. Today, the PTAB designated two decisions as “Informative Decisions” – each clarifying the circumstances under which an expanded panel may be employed in an IPR proceeding.

In the first decision, AOL Inc. v. Coho Licensing LLC, IPR2014-00771, Petitioner sought rehearing by an expanded panel in view of a dissent that was filed in the Board’s decision to institute. In the second decision, Conopco, Inc. v. Procter & Gamble Co., IPR2014-00506, Petitioner sought an expanded panel to rehear the Decision to Institute, including the attendance of the Chief Administrative Patent Judge on the expanded panel.

In both decisions, the respective panels denied the requests for an expanded panel and explained the circumstances under which an expanded panel may be used in IPR proceedings. More specifically, the panel members from the Board do not have the authority to refer an issue to an expanded panel, by request of a party to the proceeding, or otherwise. “The members of the Board deciding an institution matter are not authorized to select themselves or, of their own accord, select other Board members to decide the matter, upon request of a party or otherwise.” Conopco, at 6. Instead, the Board explained, the Standard Operating Procedures indicate that the Chief Judge, acting on behalf of the Director, is given the sole authority to expand a panel “on a suggestion from a judge or panel.” Id.


Strategies for Pharma Companies Facing Bass-Like Challenges in IPR Proceedings

18095113_sKyle Bass is at it again. On April 20, 2015, Bass filed his sixth inter partes review (IPR) Petition against a patent covering Pharmacyclics, Inc.’s cancer drug, IMBRUVICA®. Then, on April 22, 2015, Bass filed his seventh IPR Petition against a patent covering Biogen’s multiple sclerosis drug, TECFIDERA®. These IPR filings follow a typical strategy for Mr. Bass – identify companies with a limited number of products (in the case of Pharmacyclics, its website seems to indicate that IMBRUVICA® is its only product) – and attack the core patent(s) covering one or more of those products. By attacking patents on a company’s core products, Mr. Bass is likely best able to negatively affect the company’s stock price in a short-sale strategy.

What should you do if you find yourself in the sights of Bass, or some other IPR challenger? The BIO IP Counsels meeting in St. Louis last week featured a robust discussion of IPR practice and the important steps a company can and should take when facing an IPR challenge to one or more core patents. The following insights and strategy were gleaned from comments made at the BIO meeting:

  • Immediately convene a meeting of the CEO, CFO, government relations, investor relations, internal and external general and IP counsel to develop a coordinated strategy.
  • Get out in front of the issue with your general counsel and/or patent counsel. IPR issues are nuanced and complicated, internal and/or external patent counsel should be made available to analysts to answer specific questions about the IPR process in general, and specific questions about the particular IPR filing in question. Your CEO and/or CFO can be available to comment on more general issues. With a precipitous stock price drop, there will be internal pressure to immediately respond, but if your company representative is unprepared or unknowledgeable about IPR proceedings, it will result in more harm than good.
  • In communications with analysts, focus on educating about the IPR process and positive points. For example:
    • Were only some of the claims of the patent-at-issue challenged?
    • Is regulatory approval a high hurdle that makes patent protection less important?
    • An IPR filing is only a request to re-evaluate the patentability of a patent – are there problems with the IPR petition that will make it easy to defend?
    • An IPR proceeding, with appeals, will take over 2.5 years, so there is no immediate threat to the patents-at-issue.
    • IPR filers, like Bass, DO NOT file Abbreviated New Drug Applications (ANDA) or BLA; therefore, even if they invalidate the patents, they do not have a competitive drug application to be approved.
    • Issued, US patents carry a presumption of validity (35 USC 282(a)) and the IPR filer carries the burden of overcoming this presumption by a preponderance of the evidence.
  • Meet with Congress and be proactive to change the process. Many Representatives and Senators are unfamiliar with the IPR process and the effects it is having on pharmaceutical companies, including by the manipulation of the proceedings by individuals like Bass. For example, Mr. James Harrington, Chief IP Counsel for Shire Pharmaceuticals (another Bass target) elaborated on this point: “Shire Pharmaceuticals is working with BIO, Pharma and Congress to help draft proposed amendments to the IPR process to make the procedure equitable for all industries.  It is important that the pharmaceutical and Biotechnology industries can rely on a strong patent system.”

The message from BIO is clear – the IPR process, and specifically the attacks against chemical/bio patents, is a threat to the patent portfolios of pharma companies. As such, it is important to prepare for further Bass-type challenges. Also, more patent reform seems to be on the horizon, so outreach to members of Congress at this critical stage is essential.

Board Disallows Later IPR Petition Directed at Previously-Challenged Patent

3919013_sIn almost two-and-a-half years of IPR practice, the Board has been more than willing to reconsider arguments that have previously been presented to the Patent Office, via examination, reexamination, or reissue. In fact, it’s news when the Board invokes 35 USC §§ 315(d) or 325(d) to prevent a challenge brought in a Petition. To that end, we note herein how the Board invoked § 315(d), in IPR2014-00783, Customplay, LLC, v. Clearplay, Inc., to deny a petition because it relied on prior art that could have been presented in an earlier petition filed by the same Petitioner regarding the same patent.

In a separate IPR proceeding (IPR2014-00484), Patent Owner challenged the same claims of the patent-at-issue. Decision at 6. The Board instituted review in that prior case, but not for all claims requested by the Petitioner. Id. In the later petition, the Petitioner relied on new arguments concerning the previously-presented art, and a new prior art reference, to attack some of the claims for which review was previously denied.  Decision at 8.

Section 325(d) allows the Board to reject a petition where the “same or substantially the same prior art or arguments were previously presented to the [Patent] Office.”  Here, Petitioner argued that it could not have reasonably raised its current arguments in the first petition because that earlier petition “was predicated on claim constructions and interpretations that are broader than the claim constructions and interpretations” that the Board applied in deciding to institute review.  Decision at 9.

The Board rejected Petitioner’s second petition.  As to the new arguments based on previously-presented art, the Board stated that a “decision to institute review on some claims in a first inter partes review, however, should not act as a how-to guide for the same Petitioner filing a second petition for inter partes review challenging claims that it unsuccessfully challenged in the first petition or claims that it reasonably could have challenged in the first petition.”  Decision at 9.  The Board also rejected the arguments that were based on newly-added prior art, because Petitioner did not argue the new prior art added anything over the previously-presented art, and because the Petitioner did not argue that the newly-added prior art was unavailable to it when it filed the first petition.  Decision at 12.  Accordingly, the petition was denied.  Decision at 13.  See also Conopco, Inc. dba Unilever v. The Procter & Gamble Company, IPR2014-00628.

[UPDATE – It is worth noting that a different panel of the Board came to a different conclusion in Flir Systems, Inc. v. Leak Surveys, Inc., IPR2016-00065, wherein the Board found that, despite the fact that there was considerable overlap in the art considered in an earlier and later Petition, because the manner in which the art was combined differs, the second petition was not barred.]

IPR Obviousness Challenge of Design Patent Denied

7981714_sThrough two years of inter partes review practice, only 8 petitions were filed that were directed to design patents (out of 1773 total petitions). Given this limited number of petitions, lessons are going to be difficult to learn regarding the treatment of design patents in IPR proceedings. As such, we take a look at a failed petition, filed in Dorman Products v. Paccar, IPR2014-00555, wherein the Board had to consider the differences between functionality, pursuant to 35 USC § 171 and obviousness, pursuant to 35 USC § 103.

In determining whether a design patent claim is obvious, the parties agreed that the focus should be on the visual impression of the claimed design, as a whole. Order at 4. That is where the parties agreement, however, ended. In the Petition, Petitioner argued that certain functional elements of the design should not be considered part of the design patent claim. Patent Owner disagreed, arguing that, whether or not the elements are functional, they must still be considered as part of the visual impression created by the design as a whole. Id. 

In explaining its rational, the Board stated an ornamental design for an article of manufacture may not be patented if the design is “primarily functional” rather than “primarily ornamental.”  Order at 4. Further, of course, a design patent must not be obvious, pursuant to §103. Id. The inquiry into functionality, however, is separate and distinct from the obviousness analysis. Id. at 5. As such, the allegedly functional elements of a design patent must be considered in an obviousness analysis of the visual impression created by the patented design as a whole. Id.

After deciding that the “functional” characteristics issue, the Board turned to the obviousness analysis, citing Apple, Inc. v. Samsung Elecs. Co., 678 F.3d 1314, 1329 (Fed. Cir. 2012), for the proposition that, in an obviousness challenge to a design patent, the ultimate inquiry is “whether the claimed design would have been obvious to a designer of ordinary skill who designs articles of the type involved.” Order at 6.

Primarily because the functional characteristics of the design claim were considered in the obviousness analysis, the Board concluded that Petitioner failed to demonstrate a reasonable likelihood that a designer of ordinary skill would have viewed the primary prior art reference to give the same visual impression as the challenged design patent. Id. at 21. As such, the Petition was denied.