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.

Motion for Observation of One’s Own Witness Not Allowed in IPR

iStock_000001361496XSmallIn developing the procedures for inter partes reviews, the Patent Office pulled out a rarely-used legal concept called a Motion for Observation Upon Cross-Examination. Used in IPR proceedings to allow a party to direct the PTAB’s attention to cross-examination testimony when there is no other briefing available to the party, it is worth noting some of the contours of this procedure, as it is developed through the Board’s decisions. In Scott Gemtron Corp. v. SSW Holding Co., Inc., IPR2013-00358, the Board denied Patent Owner’s attempt to file such a Motion for Observation on the cross-examination testimony of its own witnesses. Paper 77 at 2.

Patent Owner argued that a Motion for Observation of its own witnesses was appropriate because Petitioner mischaracterized the testimony of these witnesses. Id. at 2. For example, it was argued that Petitioner summarized the witnesses’ testimony incorrectly and cited certain portions of the deposition transcript but failed to cite other portions that allegedly contradict the cited portions. Id. at 2. Patent Owner argued that it was prejudiced because no other substantive paper could be filed to address the alleged mischaracterizations or otherwise bring them to the Board’s attention. Id. at 2.

The Board denied authorization to file a motion for observation on cross-examination because the rule allowing such observations is directed to the party taking the cross-examination. Id. at 3. The Board found it inappropriate to allow a party to file observations on the cross-examination testimony of its own witnesses. Id. All was not lost for the Patent Owner, however, as the Board offered two lifelines.  First, the Board stated it would review the testimony cited by Petitioner in context to determine whether Petitioner’s arguments about that testimony are correct, and thus there is no need for a motion for observation on cross-examination. Id. at 3. Second, the Board instructed that, while oral hearing is not an opportunity for a party to expand upon testimony in a manner not already presented, Patent Owner is allowed to cite other portions of the witnesses’ testimony at oral hearing to demonstrate that Petitioner’s characterization of the witnesses’ testimony is incorrect. Id. at 4.

Quick Look at a Granted Motion for Additional Discovery in IPR

iStock_000013492145XSmallMotions for Additional Discovery in inter partes review proceedings remain difficult to win. Our latest statistics indicate that such motions are only granted at a rate of about 28%. As such, it is worth noting the grant of such a motion in Scott Gemtron Corp. v. SSW Holding Co., Inc., IPR2013-00358.  In that case, Petitioner was granted discovery regarding an otherwise undisclosed document, relied upon by Patent Owner’s expert witness, that supported Patent Owner’s assertions of commercial success. Paper 78 at 3.

As has become clear in IPR practice, discovery in an inter partes review proceeding is far less than what is available in district court patent litigation, as Congress intended inter partes review to be a quick and cost effective alternative to litigation. Id. at 2. A party seeking beyond routine discovery (i.e., deposition of an expert) must do so by motion and must show that it is “necessary in the interest of justice.” 35 U.S.C. § 316(a)(5). Id. at 2.

The Board considers various factors in determining whether additional discovery in an inter partes review proceeding is necessary in the interest of justice, including the fact that, the mere possibility of finding something useful, and mere allegation that something useful will be found, are insufficient to demonstrate that the requested discovery is necessary in the interest of justice. The party requesting discovery should already be in possession of evidence tending to show beyond speculation that in fact something useful will be uncovered. Garmin Int’l, Inc. v. Cuozzo Speed Techs. LLC, IPR2012-00001, Paper 20.

Here, as mentioned, Petitioner sought an undisclosed document, relied upon by Patent Owner’s expert witness, that purported to support Patent Owner’s assertions of commercial success. Paper 78 at 3. In deposition, Petitioner was able to learn about the document from Patent Owner’s expert and that testimony supported a conclusion that it was more than a mere possibility or mere speculation that something useful will be uncovered by producing the document. Paper 78 at 4. Also, because the request was tailored to a single document and, therefore, would not be overly burdensome for Patent Owner to produce, bolstered Petitioner’s motion. Id. at 4. The Board additionally stated, “Determining the factual basis for a declarant’s opinions is a proper inquiry during discovery…” Id. at 4.  Therefore, the Motion for Additional Discovery was granted. Id. at 6.

Rare Grant (in Part) of an IPR Motion to Exclude

iStock_000001758213XSmallMotions to Exclude Evidence have been one of the features of inter partes review practice that have, to date, had a less significant effect than expected. Very few motions have been granted, largely because the Board constructs its Final Written Decisions so as to not rely upon any disputed evidence. As such, motions are often denied as moot. Because the grant of such motions is so rare, we address such a grant that was issued in Corning Inc. v. DSM IP Assets B.V., (IPR2013-00043 and IPR2013-00044), wherein Petitioner moved to exclude evidence and portions of an expert’s declaration.

Petitioner argued in its motion that Patent Owner’s expert testimony relied on experiments that contain hearsay. Id. at 3. More specifically, Patent Owner’s expert relied on various documents generated in Patent Owner’s research laboratories that were created after the filing of the petition and report information relating to particular experiments performed by Patent Owner (such as preparation of samples, chromatography data, viscosity measurements, etc.). Id. 

In rebuttal, Patent Owner argued that the documents, while hearsay, are admissible based on the “business record” exception to the hearsay rule. Fed. R. Evid. 803(6). Id.

The Board found the records-at-issue were excluded because they did not fall within the “business rule” exception. Id. Applicable Federal Circuit and Board precedent declines to invoke a Rule 803(6) exception to a laboratory notebook documents and laboratory generated data of properties of compositions experimentally made in laboratories. Further, “conducting specific and unique scientific experimental work is not ‘a regularly conducted activity.'” Id. at 5.

All was not lost, however, for Patent Owner. Despite the fact that Patent Owner cannot have the exhibits admitted under Rule 803(6), its expert was allowed to rely on them in forming his opinion. Id. To that end, Rule 703 provides in part: “An expert may base an opinion on facts or data in the case that the expert has been made aware of or personally observed. If experts in the particular field would reasonably rely on those kinds of facts or data in forming an opinion on the subject, they need not be admissible for the opinion to be admitted.”

Because the documents-at-issue were not shown to be unreliable, the evidence of the experiments is excluded as hearsay, but the expert’s related testimony was admissible. Id. at 8.

Despite Lack of Familiarity with Specific Technology-at-Issue, Industry Expert Not Excluded

iStock_000011114669SmallThe Board continued its reluctance to exclude evidence in inter partes review proceedings in Primera Technology, Inc., v. Automatic Manufacturing Systems, Inc., Final Written Decision, IPR2013-00196 by denying a motion to exclude the expert testimony of Patent Owner’s industry expert. The Board has indicated its desire to be presented with a story regarding the patentability or unpatentability of the patent subject to an IPR. By continuing to deny motions that seek to exclude experts with long tenures in a particular industry, though not necessarily with the specific technology at issue in the IPR, the Board may be indicating a preference for industry experts who can tell a long, detailed story about the relevant technology.

In Primera, Petitioner challenged the credibility of Patent Owner’s expert, seeking to exclude his declaration. Id. at 26. More specifically, Petitioner argued that during his deposition, the expert admitted to having no familiarity with the general state of the art, contrary to his declaration. Id. Petitioner also argued the expert’s testimony was inadmissible under Fed. R. Evid. 702 because he was not qualified as an expert. Id.

The Board examined the expert’s work experience and skill set and denied the relief requested in the motion to exclude. Id. at 28. First, the Board gave credit to the expert for his 21 years of industry experience in various, related technologies. Id. Second, though the expert lacked specific experience with the type of microscope slide printer at issue went to the weight and sufficiency of his testimony, rather than its admissibility. Citing Liquid Dynamics Corp. v. Vaughan Co., 449 F.3d 1209, 1221 (Fed. Cir. 2006). Id.

In the end, the Board denied the motion to exclude.

Declaratory Testimony from File History is “Affidavit Testimony” Which Requires Deposition

[pullquote align=”left|center|right” textalign=”left|center|right” width=”30%”]37 CFR 42.51(b)(1)(ii): (b) Routine discovery.  Except as the Board may otherwise order: …(ii) Cross examination of affidavit testimony is authorized within such time period as the Board may set.”[/pullquote]Most declaration testimony in an inter partes review proceeding is newly developed as part of the IPR.  On occasion, however, parties to an IPR have used previously generated declarations in support their positions.  In Ikaria, Inc. v. GeNO LLC, IPR2013-00253, the PTAB considered the issue of whether, when a Patent Owner includes, in its Response, an expert declaration that was submitted during prosecution of the challenged patent, Petitioner is entitled to cross-examine the expert.

In Ikaria, Petitioner argued that, pursuant to 37 CFR § 42.51(b)(1)(ii), the testimony of an expert cited in a Patent Owner’s response was “affidavit testimony.” Therefore, the Rules required cross examination of the expert as part of routine discovery.  Patent Owner disagreed, arguing that the declaration was not prepared for the purposes of this proceeding and, as such, cross-examination was not required.  The Board disagreed, finding that cross-examination was required.

Further complicating matters was the fact that the expert was unable to be deposed due to medical issues. Since a deposition was unable to be arranged to comply with the Rules, Patent Owner filed a motion to expunge the expert declaration from the record.

Quartet of Final Inter Partes Review Decisions Go Against Patent Owner

Micro ChipThe tide of inter partes review proceedings continues to batter Patent Owners, as the PTAB issued four decisions in cases brought by Intellectual Ventures against Xilinx, rendering all challenged claims at issue unpatentable.  Intellectual Ventures Management, LLC v. Xilinx, Inc., IPR2012-00018, -00019, -00020, and -00023.

The first two decisions, each authored by Judge Arbes, were similar in their content, and revealed two interesting takeaway issues.  IPR2012-00018, -00019. First, in its decision to initiate, the Board construed the term “array of landing pads disposed on an inside surface of the integrated circuit package.”  As the trial progressed from that decision, however, it became clear that what was an “inside surface” needed further elucidation.  As such, the Board undertook further claim construction analysis in the Final Written Decision, rejecting Patent Owner’s contention that “inside surface” required that the ICP completely surrounded the pads.  Instead, and referencing a figure created by Petitioner, and included in its Reply brief, the Board found that a pad could be located on an inside surface and not be completely surrounded by the ICP.  Id at 9-18.  The second significant issue related to Patent Owner’s Motion to Amend.  The Board denied that motion because: 1) there was insufficient testimony or evidence that the new references cited by Petitioner, in combination, would work as Patent Owner suggested (at 40); 2) there was insufficient evidence that the new combination would not have been obvious (at 41); and 3) Patent Owner failed to provide at least some explanation as to why one of skill would not have found the combination obvious (at 42).  As such, all claims were deemed unpatentable, and no amended claims were entered.

The third decision (IPR2012-00020), authored by Judge Medley, was interesting in its discussion of the parties experts.  While both parties submitted expert testimony, in this battle of experts, Petitioner was more persuasive because Patent Owner’s expert only expressed conclusory opinions (at 10).  Relatedly, the Board noted that Patent Owner did not depose Petitioner’s expert or otherwise challenge his testimony in key regards (at 13).  In the end, giving substantial weight to Petitioner’s expert, and less weight to Patent Owner’s expert, resulted in a finding that all challenged claims were unpatentable.

In the fourth decision (IPR2012-00023), authored by Judge Easthom, the Board addressed the issue of whether an expert declaration can fill in holes in a prima facie case of obviousness.  In that case, Patent Owner argued that the art was silent on a key limitation of the claims (a double poly layer) and that Petitioner had attempted to fill that hole in the art only via expert testimony.  The Board did not sustain this argument, however, finding that 35 U.S.C. § 312(a)(3)(B) allows for expert testimony in support of a Petition.  Referencing the Federal Circuit’s KSR decision, the Board made clear that declaration testimony about common sense and general knowledge in the art was appropriate in IPR proceedings.  In general, therefore, until further notice, expert testimony may be used to supply missing claim limitations not shown in a printed publication or patent.  Id. at 36-40.

Communications Between Experts not “Routine” Discovery in Inter Partes Review Proceedings

iStock_000013492145XSmallThe Board’s views on the metes and bounds of discovery in inter partes review proceedings continue to take shape with each new decision.  In Apple, Inc. v. Achates Reference Publishing, Inc., IPR2013-00080 and 00081 (Paper 49) (December 23, 2013), the Board considered the issue of whether emails exchanged between two expert witnesses for a party are “routine” discovery.

More specifically, in the depositions of Patent Owner’s two expert witnesses, testimony came to light that suggested that the experts each relied upon communications from the other in forming their opinions submitted in the proceeding.  As such, Petitioner called for a conference call with the Board to seek production of the emails as “routine” discovery pursuant to 37 CFR § 42.51(b)(1).  To further consider the issue, the Board instructed the parties to submit the relevant deposition testimony.

Upon consideration of that testimony, and the parties’ arguments, the Board declined to consider the email exchange “routine” discovery. It did, however, grant Petitioner authorization to file a motion for additional discovery, directing Petitioner to the now ubiquitous Garmin decision, that governs motions for additional discovery.

Expert Opinion on Claim Construction Must Include Evidence to be Given Weight by PTAB

Optical fibersCorning was successful in challenging 22 claims of a DSM IP Assets (DSM) patent in a case styled as Corning Incorporated v. DSM IP Assets B.V. (IPR2013-00053), involving U.S. Pat. No. 7,276,543.  The ‘543 patent relates to radiation curable coating compositions for optical fibers. More specifically, the patent describes optical glass fibers with two radiation-cured coatings which exhibit improved cure speed without increased sensitivity to yellowing over time.

In performing its claim construction analysis, the Board agreed with Patent Owner that only one of the submitted terms needed to be interpreted outside their normal meaning.  Accordingly, the Board set forth a detailed explanation of the lone claim term in dispute, “absorption maxima,” in which it found Patent Challenger’s construction overly broad. Central to the Board’s decision in this regard was the fact that Patent Challenger’s expert declaration, that purported to support Patent Challenger’s interpretation, did “nothing more than state the conclusion that ‘[a] skilled scientist would have recognized’ Patent Challenger’s construction was acceptable.  Order at 5.  The Board went on to instruct that a proper foundation for such an expert opinion on claim construction would include evidence upon which the expert based such a conclusion, or other objective evidence supporting the construction.  In the end, the Board seemed to give no weight to the conclusory declaration offered by Patent Challenger in this respect.  As such, the Board agreed with Patent Owner’s interpretation of an absorption maxima, citing the specification of the ‘543 patent which states that it “will be understood that λmax is a point on the curve wherein the tangent to the curve is parallel with the horizontal axis.”

Also interesting from the Board’s decision was its analysis of whether one of the prior art references cited by Patent Challenger did, in fact, qualify as prior art.  Patent Owner argued that the reference did not qualify because, at the time the invention was made, the prior art patent was commonly owned with the patent-at-issue.  The Board rejected Patent Owner’s argument because Patent Owner had not shown sufficiently that the two patents were commonly owned “at the time of the invention.”  Order at 10.  For example, the evidence cited by Patent Owner was dated after the filing of the application that became the ‘543 patent.  The Board did, however, note that, during the trial portion of the proceeding, Patent Owner would have the opportunity to provide additional evidence concerning ownership (including, presumably, testimony on the point).

The remainder of the Board’s opinion follows the format of earlier decisions on petitions brought by Corning that rely heavily on the inherent disclosure of prior art references.  Earlier posts related to those decisions can be found HERE and HERE.

35 for 40: Unsupported Expert Declaration Leads to Denial of Two Petitions for Inter Partes Review

iStock_000015279515XSmallMonsanto had two petitions for inter partes review denied when the Board determined that a supporting expert declaration was entitled to little weight. Monsanto was challenging two Pioneer Hi-Bred patents in cases styled as Monsanto Co. v. Pioneer Hi-Bred Int’l, Inc. (IPR2013-00022 and IPR2013-00023) involving US Patent Nos. 5,518,989 and 6,162,974. The Board denied all challenge grounds for both patents.

The ‘989 and ‘974 patents describe a method of enhancing the quality of maize seed. In particular, the method involves defoliating maize plants after pollination. Generally, the patents describe defoliating the plant at between 600 and 850 growing degree days after pollination. The challenged claims require both defoliating within a specified growing degree day time frame and obtaining enhanced seed vigor.

Patent Challenger relied upon an expert declaration to establish that the prior art references teach and/or provide a reason to defoliate maize plants withing the claimed 600 to 850 growing degree day time frame. Patent Owner disagreed with the expert’s conclusions and contended that the declaration was entitled to little weight, because the expert “withheld data and calculations that underlie his opinions.” The Board agreed that the declaration was entitled to little weight, citing 37 C.F.R. Sec 42.65(a): Expert testimony that does not disclose the underlying facts or data on which the opinion is based is entitled to little or no weight. Order at 7-8.

The Board found that the declaration failed to provide sufficient underlying data such that one of ordinary skill in the art would have a reasonable basis to believe that his growing degree day calculations and conclusions are correct. Absent the expert declaration, Patent Challenger failed to identify sufficient credible evidence to establish that the prior art meets the growing degree day limitation of the claims, because the prior art references do not discuss the number of growing degree days between pollination and defoliation.

The Board also rejected Patent Challenger’s inherency argument — that enhanced seed vigor is obtained from the prior art defoliation techniques. Patent Challenger again was relying on the expert declaration for this argument, but the Board found that the declaration did not provide a sufficient or credible explanation as to why the ordinary artisan would have expected enhanced seed vigor.  This was especially so in light of the fact that the patents-at-issue taught the opposite.

In the end, Patent Challenger did not provide evidence of how the prior art references taught the claim limitations beyond the expert declaration and that declaration was fatally flawed. Once the Board found that there was insufficient underlying data to believe the calculations and conclusions of the expert declaration, Patent Challenger’s case was lost and the Board denied the petitions.