Federal Circuit Weighs in on Evidentiary Challenge in IPR, Reversing PTAB

34447773_sMore often than not, evidentiary issues in IPR proceedings fail to make headlines because the Board will structure its Final Written Decision to avoid evidentiary challenges. Findings that a party’s motion to exclude is denied as moot are common. That makes the Federal Circuit’s decision in REG Synthetic Fuels, LLC v. Neste Oil Oyj (November 8, 2016) all the more interesting. In that decision, the Court reversed the Board’s decision to exclude certain evidence submitted by Patent Owner during the trial.

More specifically, Patent Owner sought to swear behind one of the prior art references presented in the Petition. Among the evidence provided for this purpose was test data from third parties, communications between the inventor and third parties, and minutes from a meeting that the inventor had attended. Id. at 5. Petitioner moved to exclude this evidence on the basis of lack of authentication, hearsay, or as improper reply evidence. The Board granted the motion to exclude.

On appeal, the Court first clarified that priority issues, including conception and reduction to practice, are questions of law predicated on subsidiary factual findings. Id. at 6. The Court addressed the Board’s finding that two emails between the inventor and a third party (Exhibit 2061 in the case) provided necessary corroboration of the patented invention. Id. at 16. Petitioner argued that the emails were hearsay because they contain out of court statements by a third party. Patent Owner responded by arguing that it did not offer the emails to prove the truth of the matter asserted. The Court agreed with Patent Owner, finding that the emails were offered for the non-hearsay purpose to show that the inventor thought he had achieved a quality claimed in the patent-at-issue. “The act of writing and sending the email is, by itself, probative evidence on whether [the inventor] recognized–at the time that he had written the email–” the claimed property. Id. at 17. In short, the exhibit was legally significant because it showed that the inventor communicated the conception of the invention to the third party.

Because the Board excluded relevant evidence in the trial, the case was remanded for further consideration.

PTAB Generously Expands Page Limits in Patent Owner Response

41185418_sThe Board has earned a reputation for rigidly following the procedural rules for IPR proceedings, for good reason. Early on, the Board was likely concerned that an ad hoc web of decisions that granted relief from the variety of rules that govern IPR would create an unwieldly body of decisions. As IPR approaches its 3-year old birthday, however, there are ever growing signs that the Board is willing to consider deviations from core procedural rules, in the right circumstances. For example, in Daicci Sankyo Co., Ltd., v. Alethia Biotherapeutics, Inc., IPR2015-00291, the Board granted Patent Owner’s request for 25 additional pages to argue the prior art status of certain references relied upon by Petitioner. Order at 3. Finding that the particular facts of the case favored an exception to the rules, the Board granted Patent Owner an additional 25 pages “to be used solely for the purposes of addressing the prior art status of references relied on by Petitioner based on prior conception plus reasonable diligence and/or prior actual reduction to practice.” Id. Similarly, Petitioner was granted an additional 12 pages to its reply brief to respond to these arguments.

Also interesting in this decision is the Board’s recitation of what should be addressed relative to this conception issues. Specifically, Patent Owner was instructed to present a “diligence chart” that includes: “1) list all days from the beginning of diligence through the end of diligence, 2) briefly state what happened on each day, and 3) cite the page and line of the motion on which the listed day is discussed; every date gap in the diligence showing must be explained…” Order at 4.

So, the Board demonstrates some leniency in the procedural rules, and also provides interesting guidance regarding what should be provided to the Board to prove diligence.

PTAB Rules Lab Notebooks Insufficient to Prove Conception and Reduction to Practice

31859106_s (1)Swearing behind a reference is an enticing option for a Patent Owner, but the Board has again reminded parties that rigorous—and admissible—proof of conception and reduction to practice is still necessary.

This issue was addressed in Microsoft Corporation v. Surfcast, Inc., a consolidated opinion concerning four IPR petitions filed by Microsoft challenging one patent in which the Board found all claims unpatentable, and denied another motion to amend.  In its final written decision the Board rejected Patent Owner’s attempt to prove prior conception and reduction to practice despite extensive evidence.

Patent Owner tried to antedate a prior art reference via testimony from inventors regarding conception and reduction to practice.  The Patent Owner also proffered corroborating evidence in the form Exhibits consisting of emails between inventors, lab notebook pages, and other assorted papers.  Decision at 15.

Petitioner challenged the authenticity of the evidence, as all corroborating Exhibits consisted of inventor-generated documents and correspondence between inventors.  Patent Owner responded by providing inventor testimony to authenticate the exhibits. This was insufficient, because it meant the Patent Owner was essentially authenticating documents corroborating inventor testimony with further statements by the inventor.  Accordingly, the Board deemed the authentication defective, as it was not sufficiently independent.  Id. at 16-17.

Patent Owner further argued that corroboration was not necessary when a party attempts to prove conception and reduction to practice through use of physical exhibits.  The Board disagreed, that corroboration of the dates in the exhibits purported to establish conception is still required.  Id. at 17.

Perhaps envisioning an appeal, the Board still proceeded to analyze Patent Owner’s evidence of reasonable diligence towards a reduction to practice.  Patent Owner offered invoices from Patent Owner’s law firm, time entries from an interested party, and declarations of two interested parties who weren’t an inventor.  Here again, though, the Board rejected Patent Owner’s documentary evidence because it was not authenticated by a non-interested person (instead, the authentication declarants each had an interest in the outcome of the case).   Id. at 18-19.

The Board further noted that even if the corroboration was adequate, diligence was not proven on the merits.  The expert testimony purporting to support diligence in reduction to practice was by an expert who worked on later-assigned matters out of chronological order, creating a week of inactivity on the subject application and several gaps in activity.  Id. at 20-21.

Accordingly, the Board found that Patent Owner also failed to prove reasonable diligence to a reduction to practice.  Id. at 20.

PTAB Rejects Two Attempts by Patent Owners to Antedate Prior Art

6686163_sThe fact-based nature of conception/reduction to practice issues makes it worthwhile to consider a number of these types of cases as they arise. Here, we discuss such issues from two Board decisions, K-40 Electronics, LLC v. Escort, Inc., IPR2013-00240 and Handi Quilter, Inc. and Tacony Corporation v. Bernina International AG, IPR2013-00364. In both cases, the Board rejected Patent Owner’s attempt to antedate the prior art-at-issue.

The K-40 Electronics case involves US Pat. No. 6,670,905, relating to a radar detector and a location positioning device.  Decision at 3. Patent Owner relied upon declaration testimony from the inventor of the ‘905 patent, which stated that the claims at issue were conceived and reduced to practice prior to the effective art dates of two references relied upon by Petitioner. Of course, to establish reduction to practice, a party must show: (1) construction of an embodiment that meets all claim limitations; (2) determine that the invention would work for the intended purpose; and (3) sufficient evidence to corroborate inventor testimony as to the events.  ‘240 Decision at 11.

The inventor testimony stated that a 1992 prototype of the ‘905 invention was constructed prior to the priority date of the references-at-issue. and used a tape recorder to record geographical location of a radar signal. The inventor alleged that this feature met the claimed limitation of a “position determining circuit.” The Board rejected this contention, citing back to its claim construction determination, finding that a tape recorder did not determine geographic position; rather, a tape recorder was only an electronic notepad to record observations of the invention. Id. at 12-13.  Accordingly, the prototype did not reduce all claim limitations to practice.

Inventor also testified that a different 1996 prototype also had a “position determining circuit” in which software code was drafted to demonstrate global positioning capability.  The inventor was forced to concede, however, that the software did not disclose a position determining circuit. The inventor testified that some of the lines of software were missing and Patent Owner could not find any version of the software that contained the missing code.

This hole in the evidence presented by Patent Owner exposed a critical flaw in its objective evidence corroborating reduction to practice; namely, Patent Owner was using the software to corroborate expert testimony, but simultaneously had to use expert testimony to corroborate missing features of the software. Id. at 14-15. The Board also found several statements by the Inventor regarding claimed features of the invention allegedly being reduced to practice to generally lack adequate evidentiary corroboration. Id. at 15.  Accordingly, with a general lack of evidence, Patent Owner in IPR2013-00240 failed to prove conception and reduction to practice prior to the art date of two references relied upon by Petitioner.  Id. at 17.

The Handi-Quilter case involves US Pat. No. 6,883,446, which relates to a method and apparatus for stitching together fabric layers. ‘364 Decision at 12. Patent Owner generally failed to prove conception of several features of the ‘446 invention.  Specifically, Patent Owner did not provide evidence that the inventor had conceived of the limitation, that required controlling the stitch head or needle arm so that it actuates in response to detected movement, prior to the priority date of the art at issue.  Id. at 12.  In fact, the inventor admitted on the record that he had not decided on a control circuit for the prototype until after the art date of the reference at issue.

Further, the Board questioned the reliability of the evidence presented to establish conception and reduction to practice.  The evidence presented was a hand-written sketch of the invention with a date well before that of the reference at issue. Though the hand-written document had a date printed on it, the record showed no corroboration beyond the inventor’s sworn statement that this date was in fact the date the document was created or last-modified.  Id. at 13.  In fact, the document was not seen by anyone besides the inventor until seven years after the date written on the paper.  Further, other testimony attempting to corroborate the inventor’s sworn statement of conception was found to be either unreliable or consisting of bare legal conclusions, not underlying facts. Id. at 14-15. Lastly, demonstrations of the invention by the inventor as detailed by the inventor’s wife weren’t persuasive because the inventor’s wife either did not actually witness the demonstration or the demonstration was only of part of the invention, not all claimed features.  Unsworn statements by the inventor’s sons also weren’t given weight because they weren’t sufficiently independent from the inventor. Id. at 16. Accordingly, the Board found that Patent Owner had failed to prove conception and reduction to practice in attempting to antedate a prior art reference.

Board Considers Proof of Diligent Reduction to Practice

22397198_sPatent Owner’s attempt to disqualify prior art in an inter partes review failed because it could not show diligence from conception to reduction to practice in Medtronic, Inc., et al. v. Troy R. Norred, M.D., IPR2014-00395, U.S. Patent No. 6,482,228.

Patent Owner’s preliminary response sought to remove one of the allegedly-anticipatory references as prior art by providing evidence of conception prior to the effective filing date of the reference and diligence to reduction to practice (the filing of the patent application, in this instance). To remove a reference with an art-date during 1999, Patent Owner argued that the claims at issue of the ‘228 patent were conceived in late 1998 and there was reasonable diligence until reduction to practice. To support the argument, Patent Owner submitted documentary evidence and exhibits to the Board.

The Board was not persuaded, however, finding that the exhibits were not sufficiently linked to each claim limitation to prove reasonable diligence during the period between conception and filing of the patent application. The Board specifically pointed out that though some exhibits pertained to drawings present in the ‘228 patent, those drawings were not relied upon to illustrate claimed features of the invention. Further, the evidence presented did not show several claimed features of the ‘228 invention, including a “tissue valve.” Therefore, reasonable diligence was not proven for all claimed features and the reference at issue was deemed to be prior art.

Corroborating Evidence Insufficient in Final Written Decision Canceling All Claims

iStock_000028428166_SmallOne of the more fact-dependent inquiries in patent disputes is the issue of conception and reduction to practice.  This issue was raised in an inter partes review setting in CBS Interactive Inc. v. Helferich Patent Licensing, LLC, IPR2013-00033, Paper 122 (Final Written Decision), wherein Patent Owner sought to swear behind cited prior art by filing a declaration from the inventor and a handwritten specification claimed to have been written before the critical date. Id. 44.

The art at issue was 35 U.S.C. § 102(e) art — filed “before the invention by the applicant for patent.”  In the inventor’s declaration, he testified that he conceived the subject matter of each challenged claim prior to the filing date of the prior art.  As corroborating proof of this earlier invention, the inventor cited to an undated, handwritten specification allegedly describing the claimed invention. The inventor testified that he completed the handwritten specification prior to the critical date.  Id. at 45.

Of course, an inventor’s testimony, standing alone, is insufficient to prove conception — some form of corroboration is required.  In re NTP, Inc. 654 F.3d 1279, 1291 (Fed. Cir. 2011). Id. at 45. The Board determined that the undated, handwritten specification did not qualify as corroborating evidence because it was undated and unsigned. The inventor’s testimony, that he prepared and completed the specification prior to the critical date, was deemed insufficient to corroborate the date of the specification.  Further, an inventor’s own testimony is not “independent” corroboration of proof that comes from the inventor himself.  Id. at 47.  Failing to swear behind the critical prior art, the Board ultimately determined that all challenged claims were unpatentable.

Petitioners Strike First: PTAB Issues First Final Decision – Claims Unpatentable and Motion to Amend Denied

Business Finish LineWe finally made it!  Almost 16 months after Garmin kicked off this fun IPR roller coaster we have been riding, the PTAB has issued its first Final Written Decision, finding that all three claims-at-issue in the IPR trial styled as Garmin Int’l, et al., v. Cuozzo Speed Tech. LLC, IPR2012-00001 (Paper 59), involving U.S. Patent No. 6,778,074, are unpatentable and that Patent Owner’s motion to amend is denied.

By way of brief procedural history, Petitioner initially sought an IPR trial on 20 claims of the ‘074 patent.  In its decision to institute the trial, however, the Board found that there was a reasonable likelihood of unpatentability with respect to 3 of the 20 challenged claims.  Of course, as the trial progressed, this case gave us the now ubiquitous Garmin factors for proving the required “good cause” to obtain additional discovery.

Turning to the actual decision, we note that the details of the technology involved, and other aspects of the ‘074 patent, were set forth in the Decision to Initiate.  As such, we focus here on what struck us as the most interesting aspects of the Board’s Final Written Decision:

  • In general, the Board’s extensive 50-page decision is detailed, well-sourced, and unambiguous.  The Board refers often to relevant Federal Circuit case law and to the record (such as deposition testimony, briefing, and oral hearing argument) as part of a methodical treatment of all the defenses raised by Patent Owner.
  • The meaning of the term “integrally attached” was a key component of both the Decision to Initiate and the Final Written Decision.  The Board did not change its definition from its initial decision to the final decision, despite Patent Owner’s strong opposition thereto (including at oral argument).
  • While ostensibly working under the “broadest reasonable interpretation” claim construction standard, the Board’s analysis mimics that engaged by a federal court – relying on the intrinsic evidence of the ‘074 patent.  There is nothing discernible from the decision that would indicate how a district court would have come to a different claim construction analysis than that adopted by the Board, despite the ostensibly different standards.
  • In coming to its claim construction decision, the Board discounted the expert testimony provided by Patent Owner because that testimony, regarding what one of skill would have known, was vague.  The Board could not discern “just how much is deemed to be described by the disclosure itself, and how much is filled-in or completed by one with ordinary skill in the art, who possesses ordinary creativity and is not an automaton.”  Order at 14. Further, “[w]hat would have been obvious to one with ordinary skill in the art does not establish what actually is described in the specification.”  Id.  This is an ongoing theme with the Board in their consideration of expert testimony – mere allegations that mimic attorney argument are not enough, even if coming through the mouth of an expert. The Board is requiring a detailed and factual basis for the opinions of these experts.
  • Patent Owner sought to constrain the Board’s construction of “integrally attached” by referring to a district court case that construed “integrally connected.”  The Board explained why the terms were different, in the context of this IPR, but also more broadly suggested that comparison of two terms from different proceedings will not be given much weight in the future.  To that end, the Board pointed out that the patents had different disclosures; the field of invention is not the same; the level of ordinary skill in the art was different; the context in which the terms were used in the claims was not discussed by Patent Owner; and, of course, the terms “connected” and “attached” are different.  Order at 16-17.
  • The Board engaged in an extensive discussion relating to the priority date of the invention, including evidence of earlier conception and reduction to practice.  Among that evidence included a denial of Patent Owner’s use of a speeding ticket as corroborating evidence: “Exhibit 3001 corroborates only that the inventor received a speeding ticket on November 28, 1999, not anything that [inventor] conceived on that day.”  Order at 21.  As to other purported corroborating evidence, Patent Owner did not offer the testimony of a witness who purportedly signed the document and did not properly establish the document as a business record.  Order at 23.
  • The Board went on to discuss the inventor’s reasonable diligence in reducing his invention to practice, finding inadequate justification for two periods of “little activity” – one period spanning 2 months, and the other spanning 5 months.  Order at 25.  As a cautionary note, the Board found that Patent Owner’s excuse for the delay – a difficulty in obtaining money to file for patent protection – may have been satisfactory.  In this case, however, the delay was deemed too long because Patent Owner did not adequately explain such difficulties in obtaining the required money.  Order at 27.  Again, the lack of a factual basis for a position.
  • The Board’s ultimate comparison of the properly construed claims to the prior art was similar to the analysis from its Decision to Institute.  Ultimately, having decided the “integrally attached” claim construction issue, the art disclosed each element of the challenged claims and the Board did not accept Patent Owner’s teaching away arguments.
  • Lastly, the Motion to Amend Claims was denied by the Board because the amended claims did not have adequate support in the specification.  Failing the written description requirement of 35 USC § 112, ¶1, the motion was denied.

In the end, the Board’s first Final Written Decision contains few surprises.  As has been the case in their decisions to institute, and other ancillary decisions, the Board undertook a thorough job of examining the merits, took unambiguous positions on those merits, and rendered a decision that is comprehensive and detailed.  Next stop on this IPR ride: the Federal Circuit.