Board Dismisses Petition for Failure Name All Real Parties-In-Interest

14409517_s (1)Patent Owners get frustrated when they believe a petition fails to identify all real parties-in-interest.  This is understandable, given the difficulties in obtaining additional discovery on the issue.  However, sometimes Patent Owners get that discovery, and when a Patent Owner does get the evidence it needs, it has a kill shot.  This is again reflected in Corning Optical Comm’ns RF, LLC v. PPC Broadband, Inc., IPRs2014-00440, -00441, and 00736.

There, the Board instituted review of three patents.  The petitions were filed less than a year after a lawsuit was service against Petitioner.  Patent Owner’s argument, though, was that the petition was not entitled to the original filing date because not all real parties-in-interest were named.  Rather, Patent Owner argued, a new filing date would be set only upon submission of updated mandatory notices.  Because the one-year deadline (from service of the complaint) had passed, that would mean that the petitions would be barred under § 315(b).

After institution, the Board authorized a motion for additional discovery directed to whether the Petitioner (Corning) should have identified its parent (Corning Inc.) and sister (Corning Optical Comm. LLC) companies.  The issue was whether those companies funded or controlled the IPRs.  The Board first addressed the issue of whether Patent Owner waited too long in raising the issue.  The Board decided that Patent Owner’s argument was timely, because Patent Owner only gained notice of the issue shortly before alerting the Board, based on discovery in an underlying ITC investigation.  As to the substance of the issue, the Board noted the highly fact-specific nature of the real-party-in-interest analysis.  Here, there was evidence of commingling between the three Corning entities, including because common employees of each were involved in the IPR and because Corning Inc. payed the attorneys’ fees.  As the result, the Board found that “Petitioner’s actions have blurred sufficiently the lines of corporate separation” with Corning NC, such that Corning NC ‘could have controlled the filing and participation of the IPRs.’ Zoll, Case IPR2013-00606, slip op. at 10 (Paper 13). Furthermore, we determine that evidence sufficiently establishes that Corning Inc. funded these IPR proceedings, and also exercised or could have exercised control over Petitioner’s  participation in these proceedings. Trial Practice Guide, 77 Fed. Reg. at 48,759–60; Atlanta Gas,  Case IPR2013-00453, slip op. at 8–9 (Paper 88).”

The Board then determined that the petitions could not be afforded their original filing date because of the failure to name all real parties-in-interest.  Because it was then a year past service of the complaint, any new filing date would result in a bar under § 315(b).  The Board thus dismissed the petitions.

PTAB Designates New “Informative Opinion”

InformativeWhen the PTAB considers one of its own decisions to be “informative,” it is always worth taking note. On Friday, July 17th, the Board designated its opinion in Arris Group, Inc. v. C-Cation Techs., IPR2015-00635 as informative, and we discuss its content below.

The Arris decision was a rare grant of a Motion for Additional Discovery relating to a the issue of privity between Petitioner and a third party who is barred from filing an IPR petition pursuant to 35 USC § 315(b). As a preliminary issue, the Board addressed Petitioner’s argument that the motion for additional discovery, which sought evidence relative to the 1-year bar of § 315(b), was barred because the privity issue had been resolved as part of an adverse judgment in a previous IPR between the parties. The Board disagreed, finding that the PTAB rules do not dictate that decisions in one proceeding have preclusive effect in subsequent proceedings. Order at 4. Further, res judicata did not apply because the previous IPR dealt with different claims than were at issue in the present IPR. Id. 

Turning to the discovery actually requested, the Board found that it was narrowly tailored and in the interest of justice. Specifically, Patent Owner only sought indemnification agreements referencing Petitioner’s ability to control co-pending litigation with the third party who would be barred from bringing an IPR. Given the narrowly-tailored request, the Board found that production of those agreements was in the interests of justice. The Board’s notification regarding the decision indicated that it was informative because of the narrowly-tailored request from Patent Owner. Given that guidance, we also reproduce the granted request below, for reference:

“Agreement(s) between [Petitioner] and [Third Party] under which [Third Party] requested indemnification for the claims brought against [Third Party] in the Texas Litigation that reference (or are contingent on) [Petitioner’s] ability to control the litigation.”

 

Board Denies Petition For Failure to Identify All Real Parties-In-Interest

12104019_sMany Patent Owners have attempted to divert IPR challenges by arguing that all real parties-in-interest were not identified in the Petition. Almost all of those efforts have failed. That is what makes Paramount Home Entertainment Inc., et al. v. Nissim Corporation, (IPR2014-000962) an interesting case because the Board dismissed the Petition because Petitioner’s parent company was not named as a real-party-in-interest (“RPI”), when it should have been.

The two parties at issue were Petitioner Paramount Home Entertainment and its parent company, Paramount Pictures Corporation. In its Patent Owner Preliminary Response, Patent Owner presented arguments and evidence that supported a conclusion that Paramount Pictures was an RPI, including that:

(1) Paramount Pictures was a co-plaintiff with its subsidiary (Petitioner) in a co-pending declaratory judgment (“DJ”) lawsuit relative to the patent-in-suit;

(2) Paramount Pictures and the Petitioner shared the same counsel in the pending DJ action;

(3) Petitioner was a wholly-owned subsidiary of Paramount Pictures and both parties were listed in the “Notice of Interested Parties” filed in the DJ action and, per Patent Owner, this demonstrates that Paramount Pictures has “total financial control” over the Petitioner;

(4) Paramount Pictures has exercised control over the dispute with Patent Owner since it arose, including that:

a) Paramount Pictures responded to Patent Owner’s license offer letter without referring Patent Owner to the subsidiary (Petitioner);

b) Paramount Pictures indicated that it engaged in numerous communications with Patent Owner;

c) Paramount Pictures referred to the counsel providing representation in this proceeding and multiple declaratory judgment actions (involving same group of parties as the instant petition) as “my counsel”; and

d) Paramount Pictures traveled to the office of Patent Owner’s attorney to view Patent Owner’s settlement agreement with a third party.  Decision at 8-9.

The Board also noted that Petitioner had not taken any action regarding issues relating to this proceeding independent from its parent company, Paramount Pictures.

Petitioner countered by arguing that the parent, Paramount Pictures, could not have hypothetically infringed the ‘547 and therefore was not a RPI. The Board rejected this argument, noting that standard for whether an entity is an RPI is whether the entity exercises control over a party’s participation in the proceeding, not whether the entity could have hypothetically infringed.  Id. at 10.  Petitioner also argued that Paramount Pictures is already estopped from filing further petitions for IPR under 35 U.S.C. § 315(a)(1).  The Board also rejected this argument, noting that Section 312(a)(2) requires identification of all RPIs, not only ones not estopped from filing petitions. Id. at 10.

Concluding its analysis, the Board determined that substantial evidence supported a conclusion that Paramount Pictures was an RPI. Because Paramount Pictures was an RPI not identified in the Petition, the Petition was deemed non-compliant under 35 U.S.C. § 315(a)(2) (requiring identification of all RPIs) and denied. Id. at 11.

Late Addition of a Real-Party-in-Interest Allowed in Inter Partes Review

white puzzle with one piece missing, on blueWhat if you come up short in naming all of the real-parties-in-interest to an inter partes review proceeding?  Will the Board allow you to amend your petition? Four related IPR proceedings required the Board to address this issue in Petroleum Geo-Services Inc., v. WesternGeco LLC (IPR2014-00678, IPR2014-00687, IPR2014-00688, and IPR2014-00689).

Just prior to the date when Patent Owner’s preliminary response was due, Petitioner set up a conference call with the Board to inquire about adding an additional real-party-in-interest (RPI) to its petition.  Petitioner argued that, pursuant to the Board’s ruling in ZOLL v. Philips, IPR2013-00609, Paper 15 (March 20, 2014), because adding additional RPIs would not affect any statutory bar, the Board should allow such addition via an updated mandatory notice and assign the petition a new filing date consistent with the mandatory notice filing.  Further, Petitioner argued, because Patent Owner had already prepared its preliminary response when Petitioner proposed the addition of more RPIs, Petitioner argued that a shortened period of 6 weeks should be given for the Patent Owner to submit the preliminary response.

Patent Owner disagreed, citing 35 U.S.C. § 312(a), which requires that a petition for inter partes review be considered only if all RPIs are identified. Accordingly, per Patent Owner, the petitions at issue should be denied entirely and Petitioner should be forced to re-file.  Additionally, Patent Owner argued that it should be given a full three months to file a preliminary response, because it needed time for adequate discovery with the addition of the new RPI.

The Board noted that since the additional RPI was not omitted from the original petition due to clerical error, the petition was incomplete.  However, the Board allowed the new RPI to be put on-record with an updated mandatory notice.  Accordingly, the petitions were assigned new filing dates of the date of filing of the updated mandatory notice. The Board noted that time was needed for Patent Owner to make appropriate changes to its preliminary amendment and also its motion to seal with the addition of more RPIs.  However, the Board noted that Patent Owner’s preliminary response was likely substantively complete and only needed minor amendment.  Therefore, Patent Challenger’s proposed six-week time limit was appropriate.

First Claims Survive Inter Partes Review Proceedings

HTML web codePatent Owners finally received some good news after a string of pro-Petitioner rulings by the PTAB that saw all challenged claims wiped out in the first 8 Final Written Decisions by the Board.  In Microsoft Corp. v. Proxyconn, Inc., IPR 2012-00026 and 2013-00109, Paper 73, and Synopsis, Inc. v. Mentor Graphics Corp., IPR2012-00042, Paper 60, the Board let the first claims stand after an IPR challenge.  Harness Dickey represented Patent Owner in the Microsoft case, so we will not comment further on that proceeding, but instead, we take a deeper look at what went right for Patent Owner in the Synopsis case.

The first interesting issues from the Synopsis decision were procedural in nature.  First, the Board considered Patent Owner’s argument that the petition was barred because, after the filing of the Petition, Petitioner purchased a company that had been sued by Mentor Graphics more than one year prior to the filing of the Petition. The Board denied this argument, finding that privity is only relevant up until the time a petition is filed — later-acquired privities are irrelevant.  Order at 12.

The second procedural issue of interest relates to the doctrine of assignor estoppel.  This panel of the PTAB agreed with previous panels who have found that the equitable doctrine of assignor estoppel does not provide an exception to the statutory mandate that any person, not the owner of a patent, may file a petition seeking inter partes review.

After those procedural setbacks, however, Patent Owner ultimately prevailed on nine out of 12 challenged claims.   Regarding the Board’s substantive analysis, it is interesting to note that the Board switched in its position regarding the construction of a relevant claim term.  The term, “instrumentation signal,” was not addressed in either Petition or Preliminary Response from a claim construction perspective.  The Board adopted a construction in its Decision to Institute of the term, but then changed its mind in view of Patent Owner’s arguments in its Patent Owner Response.  Order at 18-27.

Ultimately, however, key to the Board’s decision was the fact that Mentor Graphics provided persuasive expert testimony in its Patent Owner Response, and Petitioner had not provided expert testimony.  That imbalance in evidence was a deciding factor in the Board finding that the claims that contained “instrumentation signal” were confirmed as patentable.

As a final note, Patent Owner’s Motion to Amend was denied by the Board because Patent Owner “had not met its burden.”  We will stay tuned to learn whether a Patent Owner can successfully navigate the seemingly insurmountable hurdles to a successful Motion to Amend.

Attorney Argument in Preliminary Response Continues to be Trumped by Expert Evidence from Petition

DroppingChallenging two patents with a common parent application, Butamax Advanced Biofuels was able to get 28 challenged claims of one Gevo patent and 18 challenged claims of a second into separate trials for inter partes review, in cases styled as Butamax Advanced Biofuels LLC v. Gevo, Inc. (IPR2013-00214 and IPR2013-00215), involving U.S. Pat. Nos. 8,304,588 and 8,283,505.

The duo of patents both relate to a “method for recovering C3-C6 alcohols, including isobutanol, from dilute aqueous solutions, such as fermentation broths.”

The Board in both cases dealt with a handful of preliminary issues before delving into the analysis. The first issue regarded whether DuPont should have been named as a real party-in-interest by Patent Challenger. The Board rejected Patent Owner’s argument that inter partes review should be barred because of this issue, reasoning that the mere fact that DuPont and Butamax (who have board of directors’ members in common, among other tangential ties) share a common interest in the two patents does not necessarily make DuPont a real party-in-interest.  The real party-in-interest inquiry is “fact-dependent” and Patent Challenger simply had not set forth persuasive evidence of DuPont’s ability to fund or direct the proceeding.  IPR2013-00214 Order at 4.  This issue is, of course, challenging for a Patent Challenger to prove in light of the Board’s high burden to obtain “additional discovery” that would help provide the persuasive facts for this fact-dependent inquiry.

The Board then rejected Patent Owner’s argument that inter partes review should be barred because the references relied upon and the arguments utilized were previously considered by the Examiner. In discounting Patent Owner’s argument, the Board simply stated that Patent Challenger’s arguments had merit. IPR2013-00214 Order at 5.

To conclude the preliminary matters, the Board rejected Patent Owner’s argument that expert testimony should be discredited because it was provided by an expert with a business relationship with DuPont (an alleged unnamed real party-in-interest), citing the expert’s qualifications and persuasive testimony. IPR2013-00214 Order at 6.

The Board’s analysis of the merits of the petitions contained a few interesting points.  For example, in the 214 proceeding, the Board deemed the preambles of the challenged claims limiting, especially given that a portion of the preamble provided antecedent basis support for certain of the dependent claims. IPR2013-00214 Order at 9.

In the 215 proceeding, the Board considered Patent Owner’s argument that, by modifying one prior art reference’s disclosed process by including as step from another reference, the fundamental principles of operation of the process would be changed.  Thus, per Patent Owner, the proposed modification would render the prior art invention inoperable.  IPR2013-00214 Order at 11.  The Board discounted this argument based on the rational that Patent Owner’s “argument improperly is based on what each reference teaches separately, and not on the teachings of the combined references.”  Id.  More specifically, the Board relied on the Federal Circuit’s decision in In re Keller, 642 F.2d 413, 425 (CCPA 1981) to not require “bodily incorporation” of a secondary reference into a primary reference.

This decision shows why there is a growing trend in IPR practice to waive the Patent Owner Preliminary Response or, at the least, to not focus on the merits of, for example, an obviousness analysis.  Time and again in the Board’s decision, it discounted the attorney argument of Patent Owner and referred, instead, to the declaration testimony of Patent Challenger’s expert.  Clearly, expert evidence, if properly presented, is provided great weight, as compared to mere attorney argument (and no expert testimony is, of course, allowed in such a Preliminary Response).  As such, Patent Owners are reconsidering the forecast of arguments that could be made in the formal response to the petition, when expert testimony may be provided, given that the Board is not giving much weight to those arguments in the Preliminary Response.

Burden is on Petitioner to Prove Priority Date of Patent Challenged in Inter Partes Review

michael_at_ispSucceeding on a lone ground of unpatentability, Hewlett-Packard was able to get all 4 challenged claims of an MCM patent into a trial for inter partes review in a case styled as Hewlett-Packard Co. v. MCM Portfolio, LLC (IPR2013-00217), involving U.S. Pat. No. 7,162,549.

The ‘549 patent relates to controllers for flash memory cards.  More specifically, the ‘549 patent describes a “flash-memory card reader that accepts flash-memory cards of several different formats using a universal adapter.”

After a brief claim construction analysis, the Board discussed privity under 35 USC § 315(b).  In general, because Petitioner resells products that were accused of infringement in an action served well over a year prior to the filing of the petition in this IPR proceeding, Patent Owner argued that § 315(b) barred the IPR filing.  The Board held that this was not sufficient evidence to prove privity.  For example, Patent Owner provided no persuasive evidence that Petitioner could have exercised control over the alleged privy in related district court litigation.  Just because Petitioner and the alleged privy are successive owners of the same allegedly infringing property is not enough to prove privity.

An additional, procedural ground addressed by the Board was the priority date of the ‘549 patent given that it claims the benefit of a provisional application and is a continuation-in-part of four non-provisional applications.  The Board criticized Petitioner for failing to provide sufficient evidence to support its argument that the ‘549 patent was not entitled to the filing date of an early application, as argued by Patent Owner.  To that end, none of the applications to which the ‘549 patent claims benefit were entered into the record in this case.  Further, testimony from Petitioner’s expert was conclusory and incomplete.  Order at 8-10.  Thus, the Board found that Petitioner’s arguments regarding the later priority date were insufficient and numerous references upon which Petitioner relied were removed from the proceeding.

Petitioner was saved by the fact that its last remaining ground for unpatentability was deemed persuasive by the Board.  As such, Petitioner was able to get 4 challenged claims of the ‘549 patent into a trial for inter partes review.

To Be a Real Party-In-Interest, One Must Control Actions of a Party to an Inter Partes Review

Green grass  fuel pump outMeeting success on almost every asserted ground, Syntroleum was able to get 20 challenged claims of a Neste Oil patent into a trial for inter partes review in a case styled as Syntroleum Corp. v. Neste Oil Oyj (IPR2013-00178), involving U.S. Pat. No. 8,212,094.

The ‘094 patent relates to a “process for the manufacture of diesel range hydrocarbons from bio oils and fats, commonly called ‘biodiesel’.” More specifically, the ‘094 patent discloses a two-step process in which a biological feed stream, diluted with a hydrocarbon, is 1) hydrodeoxygenated; and then 2) isomerized.

The Board first addressed an argument by Patent Owner that the Petition failed to name all real parties-in-interest. Patent Owner alleged that two other corporations, who were named as co-defendants in concurrent litigation brought by Patent Owner, were real parties-in-interest but were not named. The Board rejected this argument, despite the fact that two of those corporations formed the third as a joint venture, shared counsel, and an indemnification agreement among the parties existed.  None of these facts, per the Board, prove that any party is able to control the actions of another.  Order at 6 (“Whether a party that is not named in an inter partes review proceeding is a ‘real party-in-interest’ or ‘privy’ is a ‘highly fact-dependent question,’ taking into account various factors such as whether the non-party ‘exercised or could have exercised control over a party’s participation in a proceeding’ and the degree to which a non-party funds, directs, and controls the proceeding.”), citing, Office Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48759-60.

Then, the Board moved to a fairly detailed claim construction analysis, that centered largely on Patent Owner’s attempts to limit various terms in the claim to “commercial-scale” production processes.  Patent Owner sought to introduce this limitation to the claims via the construction of the preamble and the use of a dictionary definition.  The Board declined to incorporate this “commercial-scale” limitation into the claims, however, using the breadth of the dictionary definition cited by Patent Owner against it.  Order at 10.  More specifically, while the dictionary definition had some verbiage that supported Patent Owner’s position, other portions of that definition suggested that Patent Owner’s definition was too narrow.

The remainder of the Board’s decision included straightforward analysis of the anticipation and obviousness of the challenged claims that underlie the Board’s decision to institute trial.

44 for 49: Innolux Continues Winning Streak With Additional Inter Partes Review Trial Initiation

iStock_000000202778XSmallInnolux Corporation (CMI), after filing a notice to drop the “Chimei” from its name, had yet another petition for inter partes review granted. CMI has had initial success in challenging nine claims of a Semiconductor Energy Laboratory (SEL) patent in a case styled as Innolux Corporation v. Semiconductor Energy Laboratory Co., Ltd. (IPR2013-00060), involving U.S. Pat. No. 7,697,102.

The ‘102 patent relates to an active matrix liquid crystal display (LCD). In more detail, the LCD has a thin-film transistor that controls voltage to pixel electrodes and extractor terminals which supply power, the latter of which are formed from the same metal layer as the pixel electrodes.

The Board began by considering Patent Owner’s contention that the review should be denied because the petition failed to identify all real parties-in-interest. SEL asserted that several other co-defendants with Patent Challenger in a pending case all agreed to be bound by inter partes review, but the petition failed to identify them as real parties-in-interest. The Board did not adopt Patent Owner’s argument, however, finding that certain statements in pleadings filed with a district court in co-pending litigation was insufficient to prove that the non-listed parties had any control over the IPR proceeding.

The Board then moved to a claim construction analysis, tackling several terms in dispute and relevant to the patentability determination.  In general, the Board based its interpretation on the specification of the ’102 patent, with a strong dose of its mandate to rely upon the “broadest reasonable interpretation” of the claim terms.

Having construed the claims, the Board then analyzed Patent Challenger’s asserted grounds of unpatentability over two combinations of prior art references. In a straightforward obviousness analysis of the first combination of references, the Board did not find Patent Owner’s arguments for nonobviousness over the prior art to be persuasive and granted the petition of Patent Challenger. The Board declined to consider the second combination, based on admitted prior art, because the Board found it to be redundant.

In summary, the Board granted the petition of Patent Challenger as to all of the challenged claims in the ‘102 patent on obviousness grounds.

30 for 31: Prior Art from Original Prosecution Used as a Basis for Institution of Inter Partes Review

iStock_000000202778XSmallThe Patent Trial and Appeal Board continued to give little or no deference to previous decisions by the Patent Office in granting an inter partes review trial in response to a petition filed by Chimei Innolux in a case styled as Chimei Innolux Corp. v. Semiconductor Energy Lab. Co., Ltd. (IPR2013-00038), involving US Pat. No. 7,956,978. Both challenged claims were put into trial based on multiple obviousness grounds.

The ‘978 patent describes LCD devices having two opposing substrates bonded together with a sealing material. The ‘978 patent solves a problem in the prior art by using dummy wiring sections which are nearly equal in height to the other conductive lines to render the seal and consequent gap more uniform.

The Board first addressed two statutory threshold issues. The Patent Owner argued that the petition for inter partes review was improper under section 325(d) because the PTO Examiner previously considered the same prior art references during prosecution of the application leading to the ‘978 patent. The Board rejected this argument because there was no showing of substantially the same arguments, beyond simply using the same prior art references. Order at 6. The Board noted new evidence not considered during the prior examination, including the Patent Challenger’s expert declaration. In general, therefore, a Patent Challenger’s expert declaration, alone, seems like enough to allow prior art previously considered during examination to be used as a basis for inter partes review.

The Board next addressed the Patent Owner’s contentions that the petition should be denied due to a failure to identify all real parties-in-interest, because not all co-defendants in pending litigation were listed. Despite the fact that all co-defendants represented to the district court that they all “participated in filing the instant Petition” and agreed to be bound by this inter partes review, the Board found that insufficient evidence was set forth by Patent Owner to prove that the co-defendants not listed as real parties-in-interest had control over the IPR proceeding. Order at 7.

The Board then proceed through a fairly straight-forward obviousness analysis, failing to find Patent Owner’s objections to the grounds asserted in the petition to be persuasive.  As such, the Board granted an IPR trial on two different obviousness grounds using references cited in the original examination of the application leading to the ‘978 patent, as additionally supported by Patent Challenger’s expert declaration. Maintaining a developing trend in IPR practice, the Board is providing almost no deference to the Patent Office’s previous decisions relating to the patent-in-suit, leaving open the potential for Patent Challengers to re-use prior art references from the original examination.