Supreme Court to Hear Another IPR Case — SAS Institute v. Lee

The Supreme Court has granted certiorari in another inter partes review dispute, this time in SAS Institute v. Lee.  The Court will decide whether the PTAB may properly institute partial review (i.e., institute review on less than all claims in a challenged patent).  The PTAB’s rules—particularly 37 C.F.R. § 42.108(a)—allow the Board to “authorize the review to proceed on all or some of the challenged claims and on all or some of the grounds of unpatentability asserted for each claim.”  However, the statute—particularly 35 U.S.C. § 318(a)—requires that, if review is instituted, then the “Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner….”  The question for the Supreme Court is whether the Board’s partial review option is allowed by this statutory provision.

The Court’s decision will impact the application of IPR estoppel, because estoppel only attaches after review is instituted, and—under the current law—does not apply to claims for which review is not instituted.  If the PTAB is required to issue a final written decision for all claims after review is instituted, then estoppel would affect more claims than under the current state of the law.

PTAB Provides Another Estoppel Datapoint — No Estoppel for Petitioner Using Its Own Documents

In Inter Partes Review (IPR) proceedings, the estoppel provision of 35 U.S.C. § 315(e)(1) prevents the petitioner from challenging the validity of a patent in an IPR on any “ground that the petitioner raised or reasonably could have raised” in an earlier IPR that resulted in a final written decision.  When deciding estoppel issues under 35 U.S.C. § 315(e)(1), the Patent Trial and Appeal Board (PTAB) and courts analyze whether “a skilled searcher conducting a diligent search reasonably could have been expected to discover” the prior art in question.

Recently, in Johns Manville Corp. v. Knauf Insulation, Inc., IPR2016-00130, (P.T.A.B., May 8, 2017) (non-precedential), the PTAB considered an estoppel issue involving the petitioner’s own prior art: two of John Manville’s (JM) marketing brochures.  The patent owner, Knauf, raised the issue of estoppel because JM did not include the marketing brochures as grounds in an earlier IPR, Johns Manville Corp. v. Knauf Insulation, Inc., IPR2015-01453, (P.T.A.B., Jan. 11, 2017) (non-precedential), which resulted in a final written decision and involved the same patent.

This case presents an interesting estoppel question because one might expect the PTAB to place more scrutiny on the petitioner when the prior art at issue is from the petitioner instead of a third party; however, the PTAB Panel in IPR2016-00130 did not change the approach for analyzing IPR estoppel just because the prior art was from JM instead of a third party.

Knauf argued that a reasonable search should have found JM’s marketing brochures before filing IPR2015-01453 because thousands of copies of the marketing brochures had been distributed, and one of JM’s employees, Mr. Mota, had hard copies of the marketing brochures before IPR2015-01453 was filed.  Also, Knauf argued that a skilled searcher should have interviewed Mr. Mota and researched historic versions of the accused products before IPR2015-01453 was filed.

However, JM’s arguments persuaded the PTAB that a skilled and diligent searcher could not have been expected to discover the marketing brochures before JM filed IPR2015-01453.  JM explained the professional searcher it hired to search Internet archives did not find the marketing brochures because the brochures were never posted on-line.   Also, Mr. Mota’s possession of the marketing brochures violated JM’s 7-year document retention policy.  JM also argued that Mr. Mota’s records were disorganized and in hardcopy binders so a skilled searcher could not reasonably have been expected to locate them.

Additionally, JM persuaded the PTAB that a skilled and diligent search would not necessarily include interviewing Mr. Mota before filing IPR2015-01453.  Because Mr. Mota did not work in a division that made the product accused of infringing Knauf’s patent, JM’s counsel argued that it would not have made sense to interview Mr. Mota before filing IPR2015-01453.  JM’s explanation for interviewing Mr. Mota after filing IPR2015-01453 was because Mr. Mota by that time had switched to a division that made the allegedly-infringing product.

In the PTAB’s view, Knauf’s arguments would have extended 35 U.S.C. § 315(e)(1) estoppel to all references that JM “reasonably should have known” about, based on imputing the knowledge and document possession of Mr. Mota to the entire JM organization.  The PTAB was unwilling to extend the scope of estoppel that far because the PTAB determined the “reasonably could have discovered” language in 35 U.S.C. § 315(e)(1), and legislative history of 35 U.S.C. § 315(e)(1), suggested a narrower interpretation of IPR estoppel.   

Even though the Knauf did not get its way on the estoppel issue, Knauf still prevailed on the bigger issue: the PTAB upheld the validity of Knauf’s patent in IPR2016-00130.  This case is useful for showing the approach the PTAB may take when deciding whether IPR estoppel applies to the petitioner’s own documents.

IPR Estoppel Narrowed Even Further in D. Delaware Ruling

Despite the astounding success for patent challengers to date in IPR proceedings, are you one who has been worried about the effects of the IPR estoppel in future litigation? Has this concern dissuaded you from considering filing an IPR in the past? Fear no more, another decision from a federal court has taken a severely narrow view of the IPR estoppel of 35 USC §315(e)(2) (“The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision….may not assert…in a civil action…that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.”).

On December 19th, Judge Robinson, from the District of Delaware, issued an order granting-in-part plaintiff’s motion for summary judgment as to references actually raised during a prior IPR. Intellectual Ventures I LLC et al v. Toshiba Corp., 1-13-cv-00453 (D. Del. Dec. 19, 2016) (J. Robinson). That is, the Court ruled that defendant was not able to move forward in the litigation with a ground for obviousness that was actually raised during the earlier IPR trial between the parties.

Importantly, however, the Court also denied plaintiff’s summary judgment to the extent it sought to prevent defendant from raising grounds for invalidity based on references that were undisputedly available prior to the filing of the IPR and, thus, “could have been raised in the inter partes review.” Id. at 267. In coming to its conclusion, Judge Robinson focused on the language of §315(e)(2) that states that the estoppel applies for grounds that “reasonably could have been raised during that inter partes review.” Id. (emphasis in original). Citing the Federal Circuit’s decision in Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293 (Fed. Cir. 2016), Judge Robinson noted that the Federal Circuit has construed 315(e)(2) “quite literally.” Id. That is, in Shaw, because the PTAB rejected certain grounds as redundant, the Federal Circuit held that the petitioner had not raised those grounds during the IPR. Id. While Judge Robinson understood that extending this logic “to prior art references that were never presented to the PTAB at all (despite their public nature) confounds the very purpose of this parallel administrative proceeding,” she could not “divine a reasoned way around the Federal Circuit’s interpretation in Shaw.

This decision is just another in a growing line of cases where federal courts have interpreted the scope of the IPR estoppel in a much narrower way than many expected. It should only increase the attractiveness of IPR proceedings given that there is little (and dwindling) downside to filing the proceedings.

More Fun with the One-Year Time Bar of § 315(b)

hourglassThe nuances of the time bar of 35 U.S.C. § 315(b) continue to be explored in various IPR decisions.  In Amneal Pharmaceuticals, LLC v. Endor Pharmaceuticals Inc., IPR2014-00360, Paper 15, Patent Owner asserted that the Petition for Inter Partes Review was time-barred under § 315(b) because Petitioner received an amended complaint in co-pending litigation, asserting the patent-at-issue, in conjunction with the filing of a motion for leave to serve an amended complaint.  As explained below, the Board found that the petition was not barred, however, because service of the amended complaint, pursuant to § 315(b), could only have been accomplished after the Court granted leave.  Service of the amended complaint, as part of the motion to amend, is not service under § 315(b).

More specifically, § 315(b) provides that an inter partes review may not be instituted based on a petition “filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.”

On December 11, 2012, the ’216 patent issued to Patent Owner. Prelim. Resp. 5. On January 9, 2013, Patent Owner filed an “Unopposed Motion to Amend Complaint Under Rule 15(a)” in an ongoing litigation between Petitioner and Patent Owner.  Attached to the motion was the proposed amended complaint.  On January 14, 2013, the Court granted the motion.  In accordance with that order, on January 17, 2013, Patent Owner filed its Second Amended Complaint. Id at 3. The IPR petition in this proceeding was filed on January 16, 2014 – more than one year from the date that the motion was filed, attaching the complaint, but less than one year from the date that the complaint was actually filed, following the court’s grant of the motion to amend.

As such, Patent Owner requested denial of the Petition, arguing that Petitioner was time-barred from seeking inter partes review of the ’216 patent under § 315(b), because Petitioner was served with a complaint on January 9, 2013, i.e., more than one year before the January 16, 2014, filing date of the Petition in this proceeding. Id. at 4.  In support of its motion, Patent Owner pointed out that, per local rules of the court, electronic filing is equivalent to service.  Thus, according to Patent Owner, when the district court electronically mailed the electronic notice regarding the Motion to Amend Complaint to Petitioner, it “effected service of the Second Amended Complaint on January 9, 2014.” Paper 15 at 4. Because §315(b) refers to being “served,” Patent Owner contends that it does not matter that Patent Owner did not file the Second Amended Complaint until January 17, 2013; instead, it only mattered when Patent Owner served the Second Amended Complaint, which, according to Patent Owner, occurred on January 9, 2013. Id.

The Board was not persuaded by this creative argument from Patent Owner. Instead, the Board agreed with Petitioner that Patent Owner did not “have the legal right to file or serve the Second Amended Complaint (‘SAC’) until the District Court granted it leave to do so on January 14, 2013.” Id. Petitioner cited Federal Rule of Civil Procedure 15(a)(2), which permits a party to file an amended pleading “once as a matter of course,” but requires that “in all other cases, a party may amend its pleading only with the opposing party’s written consent or court’s leave.” Fed. R. Civ. P. 15(a)(2). Under this rule, according to Petitioner, Patent Owner required the district court’s leave to file the SAC. Reply 3. Paper at 4. Thus, Patent Owner filed and served the SAC on January 17, 2013, after the court granted that leave. Id.  The Board agreed.