Rehearing Roundup – December 2014

In International Business Machines Corporation v. Intellectual Ventures II LLC, IPR2014-00672, Paper 14 (December 23, 2014), the Board denied Pettioner’s request for rehearing of the Board’s decision not to institute IPR.

In Handi Quilter, Inc. v. Bernina International AG, IPR2014-00270, Paper 17 (December 31, 2014), the Board granted petitioner’s request for rehearing of the Board’s decision denying institution of inter partes review.


December 31, 2014

New Petitions (3)

Zhuhai Seine Technology Co., Ltd. filed IPR2015-00508 challenging U.S. Patent No: 8,688,008.

Apotex, Inc. filed  IPR2015-00518 challenging U.S. Patent No: 8,324,283.

Micron Technology, Inc. filed IPR2015-00519 challenging U.S. Patent No. 5,839,108.

Dispositions (3)

In Groupon, Inc. v. Online News Link LLC, IPR2014-01326,   IPR2014-01327,   IPR2014-01328,  (December 31, 2014), the Board terminated the inter partes reviews on the joint motion of the parties.

Pennywise and Ground Foolish

In  Redline Detection, LLC v. Star Envirotech, Inc., [2015-1047] (December 31, 2015) the Federal Circuit affirmed the PTAB’s denial of the Redline’s motion to submit supplemental information (an expert declaration) and the PTAB’s determination that Redline failed to show claims 9 and 10 of U.S. Patent No. 6,526,808 were obvious.

Redline filed its petition for IPR on January 2013, which was instituted on July 1, 2013.  On July 30, 2013, Redline filed a Motion for Supplemental Disclosure of New Exhibits, requesting submission of four pieces of evidence. In August 2013, the PTAB denied Redline’s request to submit supplemental information and expunged the submitted evidence.

37 CFR §42.123(a) states:

Motion to submit supplemental information.  Once a trial has been instituted, a party may file a motion to submit supplemental information in accordance with the following requirements:

   (1) A request for the authorization to file a motion to submit supplemental information is made within one month of the date the trial is instituted.

(2) The supplemental information must be relevant to a claim for which the trial has been instituted.

The PTAB concluded Redline did not establish a sufficient basis for submitting new evidence and its “‘supplemental evidence’ is in essence something more than just supplemental evidence.  On Appeal Redline argued that §42.123(a) stated the only conditions on the admission of supplemental evidence, and that the PTAB had no discretion to reject its Expert declaration.  Before the Federal Circuit Redline explained that its failure to submit the expert was a cost savings strategy, so that the Expert did not waste time on grounds for which trial was not instituted.

The Federal Circuit found that the PTAB’s interpretation of its governing regulations was “not plainly erroneous”:

Its interpretation of § 42.123(a) is consistent with the regulation’s plain language and the USPTO’s intent in promulgating § 42.123. The plain language of § 42.123(a) does not exclude the application of other general governing regulations.

The Federal Circuit said that the guiding principle for the PTAB in making any determination is to “ensure efficient administration of the Office and the ability of the Office to complete IPR proceedings in a timely manner,” and that requiring admission of supplemental information so long as it was timely submitted and relevant to the IPR proceeding would cut against this mandate and alter the intended purpose of IPR proceedings.

Redline pointed to Pacific Market Int’l, LLC v. Ignite USA, LLC, IPR2014-00561, Paper 23 at 3 (P.T.A.B. Dec. 2, 2014)) as a case where the Board accepted an expert declaration as supplemental information.  However, the Federal Circuit reiterated that the timeliness and relevancy requirements of §42.123(a) are additional requirements that must be construed within the overarching context of the PTAB’s regulations governing IPR and general trial proceedings.  The Federal Circuit further noted that “the PTAB has discretion to grant or deny motions as it sees fit.” citing 37 C.F.R. § 42.5(a), (b).

The Federal Circuit further pointed out that in Pacific Market the PTAB cautioned that:

“[a]lthough a party may meet the [37 C.F.R. § 42.123] requirements . . . that does not, itself, guarantee that the motion will be granted.” 3 (emphasis added). This provision does not offer “a routine avenue for bolstering deficiencies in a petition raised by a patent owner in a Preliminary Response.  . . . Petitioner should not expect . . . a ‘wait-and-see’ opportunity to supplement a petition after initial comments or arguments have been laid out by a patent owner.” Id.

The Federal Circuit found that Redline’s characterization of Pacific Market was “inaccurate and misleading”. The PTAB expressly stated 37 C.F.R. § 42.123(a) is not a routine avenue to pursue, nor does the regulation require an automatic acceptance of, supplemental information. The Federal Circuit said “[t]his is the exact opposite of having an obligation to allow the supplementary information.” The Federal Circuit concluded “Redline fails to appreciate the stark difference between the short, supplemental expert report, which the PTAB reasonably permitted in Pacific Market International, and its de novo expert report submitted for the first time. Pacific Market International is inapposite.”

Expert declarations are an important part of a Petition for inter partes review, used about 90% of the time.  Waiting to submit an expert declaration until after institution to save costs is not an effective strategy.

Federal Circuit Approves Placing Burden on Patent Owner to Show Patentability Over Prior Art Cited in Original Prosecution History

In Prolitec, Inc. v. Scentair Technologies, Inc., [2015-1020] (December 4, 2015), the Federal Circuit affirmed the PTAB’s decision that claims of U.S. Patent No. 7,712,683 were unpatentable as anticipated under 35 U.S.C. §102 alone and as obvious under 35 U.S.C. §103, and denying the patent owner’s motion to amend.

Prolitic argued that the PTAB construed the term “mounted” and “fixed in position” too broadly, arguing with the support of export testimony that the claims should be limited to the preferred embodiments which showed a single use device.  The Federal Circuit rejected these arguments, noting that the description specifically contemplated reusable devices as well.  The Federal Circuit rejected Prolitic’s expert’s testimony that the invention related to single use devices with a permanent mounting, noting that an expert  “cannot rewrite the intrinsic record of the . . .patent to narrow the scope of the patent, saying Phillips instructs that a court should discount any expert testimony ‘that is clearly at odds with the written record of the patent.

Prolitic also appealed the PTAB’s denial of its motion to amend the claims to comport with its proffered constructions.  Prolitec initially argued that it was improper for the Board to place the burden on the patentee to show patentability of the proposed claim amendments, but the Federal Circuit  disposed of this argument in Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292 (Fed. Cir. 2015). Prolitec then tried to argue that it did not have the burden to establish patentability over prior art references cited in the patent’s original prosecution history because they are not prior art of record in the IPR.  The Federal Circuit noted that the in MasterImage 3D, Inc. v. RealD Inc., IPR2015-00040 (PTAB July 15, 2015), the Board stated, that “prior art of record” includes “any material art in the prosecution history of the patent.”  The Federal Circuit found this construction reasonable:

We conclude that the PTO’s approach is a reasonable one at least in a case, like this one, in which the Board’s denial of the motion to amend rested on a merits assessment of the entire record developed on the motion, no just on the initial motion itself. The Board’s position—that the patentee’s burden on a motion to amend includes the burden to show patentability over prior art from the patent’s original prosecution history—is not in conflict with any statute or regulation. Moreover, it is not unreasonable to require the patentee to meet this burden.

The Federal Circuit discerned no reversible error in the Board’s denial of Prolitec’s motion to amend.





Institution Decisions September 21- 27, 2015

In Cree, Inc.v.Honeywell International Inc., IPR2015-00914 (PTAB September 24, 2015), the Board instituted inter partes review of claims 28, 33 – 35, 37, 40 – 44, 46, and 49 – 51, of U.S. Patent No. 6,373,188 but not challenged claims 36 and 45 — 87.5% of the challenged claims.

In Sophos Inc. v. Finjan, Inc., IPR2015-01022 (PTAB September 24, 2015) the Board denied inter partes review of claims 1, 10, 14, and 18 of U.S. Patent No. 8,677,494.


New Filings September 21-27, 2015

On September 22, 20150, Apple, Inc.  filed IPR2015-01934 challenging claims 1-9 of United States Patent No. 8,316,177.

On September 25, 2015, General Plastic Industrial Co., Ltd. filed IPR2015-01954 challenging  claims 1, 7-9, 11, 16-18, 29 and 38 of U.S. Patent No. 8,909,094.

On September 25, 2015, General Plastic Industrial Co., Ltd. filed IPR2015-01954 challenging claims 1, 7-9 and 16 of U.S. Patent No. 9,046,820 .

On September 25, 2015, Coriant Operations, Inc. filed IPR 2015-01969 challenging claims 1-6, 9-13, and 15-22 of U.S. Patent No. RE42,368.

On September 25, 2015, Activision Blizzard, Inc filed IPR 2015-01970 challenging claims 1-19 of U.S. Patent No. 6,701,344 .

On September 25, 2015, Coriant Operations, Inc. filed IPR 2015-01971 challenging claims 1-4, 9, 10, 13, 17, 19-23, 27, 29, 44-46, 53, and 61-65 of U.S. Patent No. RE42,678.

On September 25, 2015, Activision Blizzard, Inc filed IPR 2015-01972 challenging claims 1-19 of U.S. Patent No. 6,701,344.

On September 25. 2015, Emerson Electric Co., filed IPR2015-1973 challenging claims
13-14, 16-21, 23-35 of U.S. Patent No. 8,013,732.

On September 25, 2015, Amneal Pharmaceuticals LLC filed IPR2015-1976 challenging claims 1-20 of U.S. Patent No. 8,232,250.

On September 25, 2015, Incorporated filed IPR2015-1977  challenging claims 1-9, 14-18, and 22-38 of U.S. Patent 6,924,727.

On September 25, 2015, LG Electronics, Inc. filed IPR2015-1978 challenging claims 1-4, 6-7, 20, 22-23 and 25 of U.S. Patent No. 5,946,634.

On September 25, 2015, Palo Alto Networks, Inc.filed IPR2015-1979 challenging claims 1-8, 10, and 11 of U.S. Patent No. 8,141,154.

On September 25, 2015,Amneal Pharmaceuticals LLC filed IPR2015-1980 challenging claims 1 through 20 of U.S. Patent No. 8,399,413.

On September 25, 2015,Amneal Pharmaceuticals LLC filed IPR2015-1981 challenging claims 1-12 of U.S. Patent No. 8,969,302.

On September 25, 2015,Reflectix, Inc. filed IPR2015-1982 challenging claims 1-7, 9, 11, 13, 15-20, 22-24, 26, 27, 29, 30, 32, 33, 35, 36, 38-40, 42, 43, 45, 46, 48, 49, 51, 52, 54-58,
60, 61, 63, 64, 66, 67 of U.S. Patent No. 8,936,847.

On September 26, 2015, LG Electronics, Inc. filed IPR2015-01983 challenging U.S. Patent No. 8,498,671.

On September 26, 2015, LG Electronics, Inc. filed IPR2015-01984 challenging claims 1, 2, 5, 6, 7, 8, 10, 11, 13, and 16 of U.S. Patent No. 8,434,020.



The Reason For Bringing a Meritorious Petition for Inter Partes Review is Irrelevant; No Sanctions Against Hedge Fund Front

In Coalition for Affordable Drugs VI, LLC v. Celgene Corp., IPR2015-01092, Paper 19 (Septe,ber 25, 2015), the Board denied the patent owner’s motion for sanctions against Petitioner, who it accused of filing the Petition to manipulate patent owner’s stock price.

The Board first addressed patent owners complaint that petitioner was motivated by profit, noting:

Profit is at the heart of nearly every patent and nearly every inter partes review. As such, an economic motive for challenging a patent claim does not itself raise abuse of process issues. We take no position on the merits of short-selling as an investment strategy other than it is legal, and regulated.

The Board next addressed patent owner’s complaint that petitioner had no competitive interest.  The Board contrasted inter partes review, which be be instituted by any person who is not the owner of the patent, with covered business method review which require a party or privy to have been sued or charged with infringement of the patent, and held that Congress did not limit inter partes reviews to parties having a specific competitive interest in the technology covered by the patents.

The Board then address the purpose of the America Invents Act, rejecting the patent owner’s arguments.  The Board said:

The purpose of the AIA was not limited to just providing a less costly alternative to litigation. Rather, the AIA sought to establish a more efficient and streamlined patent system that improved patent quality, while at the same time limiting unnecessary and counterproductive litigation costs. The AIA was designed to encourage the filing of meritorious patentability challenges, by any person who is not the patent owner, in an effort to further improve patent quality.

Noting that that patent owner did not allege that the Petitioner filed a non-meritorious patentability challenge, the Board denied the motion for sanctions


Can an Attorneys’ Fee Award Include IPR Fees?

In Deep Sky Software, Inc., v. Southwest Airlines Co., 10-cv-1234-CAB (S.D. Cal. August 19, 2015), Southwest sought $359,733.17 in attorneys’ under fees under 35 U.S.C. § 285 after Deep Sky’s U.S. Patent No. 6,738,770 was found invalid during reexamination.  Included in this amount were the fees expended on the reexamination.  The district court noted cases where fees were awarded for proceeding before the USPTO, including IA Labs CA, LLC v. Nintendo Co., No. CIV. PJM 10-833, 2012 WL 1565296, at *4 (D. Md. May 1, 2012) aff’d, 515 F. App’x 892 (Fed. Cir. 2013) (awarding fees for work done during reexamination proceedings); Howes v. Med. Components, Inc., 761 F. Supp. 1193, 1198 (E.D. Pa. 1990) (reexamination proceedings); Scott Paper Co. v. Moore Bus. Forms, Inc., 604 F. Supp. 835, 838 (D. Del. 1984) (awarding fees for reissue proceedings); and PPG Indus., Inc. v. Celanese Polymer Specialties Co., 840 F.2d 1565, 1568 (Fed. Cir. 1988) (reissue proceedings).  The Court also noted some cases where such fees were not awarded.

The district court observed that the legal services counsel performed for defendant during reexamination of the patent were related to the suit. Reexamination was initiated during and in reaction to the suit, and the PTO’s cancellation of the patent claims disposed of the complaint here and made Southwest the prevailing party. The court noted that “Just as the parties envisioned when they jointly moved to stay this case, the reexamination proceedings essentially substituted for work that would otherwise have been done before this court.”  The Court concluded that “under the unique circumstances of this case, defendant may recover fees for the reexamination proceedings.”

If fees are awarded for reexaminations, will it be long before a fee award includes the fees involved in an inter partes review?  It seems that if a patent owner’s assertion of a patent is exceptional, a prevailing accused infringer should be entitled to an award of attorneys’ fees for a successful inter partes review of the asserted patent.


That’s Not What They’re For

On July 28, 2015, the patent owner in Coalition for Affordable Drugs VI LLC v Celgene Corporation, IPR2015-01103, filed a motion for sanctions pursuant to 35 USC §316(a)(6) and 37 CFR §42.12, arguing that petitioner was misusing inter partes review to manipulate patent owners share prices, and that their petitions “represent an ongoing abuse of the IPR process.”

The Motion complains that the petitions are driven entirely by an admitted “profit motive” unrelated to the purpose of the American Invents Act (“AIA”), as set forth in the bill itself and its legislative history, and unrelated to any competitive interest in the validity of the challenged patents.  But when a competitor is challenges a patent, it too is motivated by profit — the profit from making and selling a product. The pursuit of profit, then, would not seem to be an altogether improper motive.

The patent owner argues that the true purpose of AIA was to combat trolls, and reign in abusive law suits.  Does this mean that any IPR that is brought against a non-troll is likewise contrary to the purpose of the AIA and sanctionable?  The patent owner asks the Board to dismiss the Petition, but what if the Petitioner, despite its nefarious purpose, is correct about the invalidity of the patent?

The patent owner is “confident in the strength of its patents, and argues it “should not be required to expend extensive resources defending them in the face of . . abuse of process.”  While one can sympathize with patent owner’s plight, if, despite its confidence, the patents are invalid, doesn’t society benefit from the removal of  the patent’s improper restraint on competition, even if it is motivated by filthy lucre?

Congress could have imposed some threshold requirements for PGR’s and IPR’s, as it did for CBMR’s, but didn’t.  When is it wrong to try to profit from the unintended consequences of the actions of Congress?  The Board may answer that question when it decides the patent owners’ motion.




Doubling Down on Idle Free

In Masterimage 3D, Inc. v. Reald Inc., IPR2015-00040, Paper 42 (July 15, 2015), the Board instructed that patent owners seeking to amend their applications should still follow all of the requirements set forth in Idle Free Systems v. Bergstrom, Inc., IPR2012-00027, Paper 26  (June 11, 2013), but made three points of clarification:

First, the burden is not on the petitioner to show unpatentability , but on the patent owner to show patentable distinction over the prior art of record and also prior art known to the patent owner.(The Board further clarified that prior art of records includes all material art in the prosecution history of the patent, all material art in the current proceeding, including art from grounds not instituted, and material art of record in any other proceeding before the Office involving the patent.).

Second, the prior art know the patent owner is the material prior art that the patent owner makes of record in the proceeding pursuant to its duty of candor and good faith to the Office.

Third, once the patent owner sets forth a prima facie case of patentability of the amended claims, the burden shifts to the petitioner to show that the patent owner did not make a prima facie case, or to rebut the prima facie case.

No good news here for patent owners, the Board still has an expensive view of the prior art that should be addressed by the patent owner.