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.
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.” Id.at 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.
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, Alarm.com 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.
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.
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.
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.
Attorney Argument in the Claim Charts
In Tissue Transplant Technology Ltd. v. MiMedx Group, Inc., IPR2015-00320, Paper 6 (December 31, 2014), the Board granted the petition a filing date, but found the claim charts objectionable because they contained attorney argument, and gave petitioner five business days to make corrections.
In Starbucks Corporation v. Kroy Holdings, LLC, IPR2015-00260, Paper 5 (December 23. 2005), the Board granted the petition a filing date, but found the claim charts objectionable because they contained attorney argument, and gave petitioner five business days to make corrections.
In Daifuku Co., Ltd. v. Murata Machinery, Ltd., IPR2-15-00083, Paper 5 (November 7, 2014), the Board granted the petition a filing date, but found the claim charts objectionable because they contained attorney argument, and gave petitioner five business days to make corrections
Exhibit Labels
Sometimes the smallest things can thwart you. In FarmedHere, LLC v. Just Greens, LLC, IPR2015-00333, Paper 6 (December 31, 2014), petitioner exhibits were found improper for violating 37 C.F.R. § 42.63(d), which requires each exhibit have an exhibit label with the Petitioner’s name, a unique exhibit number and unique page numbering affixed to the lower right corner of the exhibit’s pages. The Board granted the petition a filing date, and gave petitioner five business days to make corrections
Well perhaps not the mass hysteria that Dr. Venkman anticipated in Ghostbusters, but the granting of a motion to amend is still an unusual occurrence. However, in Riverbed Technology Inc. v. Silver Peak Systems, Inc., IPR2013-00402, Paper 35 (December 30, 2014), the Board granted patent owners motion to cancel the claims in the proceeding, and to add substitute claims 13 and 15. That the substitute claims did not enlarge the claim scope and were adequately supported by the specification was not contested. However, the patent owner also bears the burden of proof to demonstrate patentability of its proposed substitute claims over the prior art. The Board explained:
This does not mean that the patent owner is assumed to be aware of every item of prior art known to a person of ordinary skill in the art. However, the patent owner should explain in its motion why the proposed substitute claims are patentable over not just the prior art of record, but also prior art not of record but known to the patent owner:
The Board found patent owner’s explanation as to why the proposed substitute claims are different from pre-existing data de-duplication systems was both persuasive and supported by the evidence of record. The Board noted that the patent owner accounted for the knowledge of a person of ordinary skill in the art. The Board disagreed with petitioner’s arguments that the patent owner did not address prior art beyond that involved in the proceeding, and rejected petitioner’s complaint that patent owner failed to identify the level of skill in the art or provide supportive expert testimony, noting that expert testimony is not required.
The Board, however, declined to grant patent owner’s motion to substitute amended dependent claims. The Board noted that the only amendments permitted are those responsive to the grounds of unpatentability raised in the petition. The patent owner argued that these amended dependent claims were allowable for the same reasons as the amended claims from which they depend, but this ran afoul of the presumption that only one substitute claim was permitted for each cancelled claim. Even in the rare instances where amendment during inter partes review is permitted, a motion to amend is still a very blunt tool for patent owners trying to protect the invention.
Two other substitute claims were denied under §101. Although §101 is not a proper grounds for an IPR, a patent owner nonetheless bears the burden of establishing the patentability of amended claims.
In Paramount Home Entertainment Inc. v. Nissim Corp., IPR2014-00961, Paper 11 IPR2014-00962, Paper 11 (December 29, 2014), the Board denied institution of inter partes review of claims 1–27 of U.S. Patent No. 7,054,547 for failure to name the real party in interest. Paramount failed to name its parent corporation, Paramount Pictures Corporation violated 35 U.S.C. § 312(a)(2). Paramount Pictures Corporation was not a real party in interest merely because of the parent-subsidiary relationship, but because “Patent Owner presents substantial evidence showing that Paramount Pictures Corporation exercised control over the dispute involving the . . .patent.”. Compare Compass Bank v. Intellectual Ventures II LLC, IPR2014-00724, Paper 12 at 10–11 (November 6, 2014).
Apparently Paramount Pictures Corporation, which was already in litigation with the patent owner, was estopped from bringing a petition, so its omission as a real party in interest may have been strategic, rather than inadvertent. However this is a good reminder to be careful in identifying the real party in interest, and follow the guidelines in the Office Patent Trial Practice Guide 77 Fed. Reg. 48,756, 48,759–60 (Aug. 14, 2012). Relevant factors include:
Whether a party who is not a named participant in a given proceeding is a “real party-in-interest” to that proceeding is a highly fact dependent question.
Institution Decisions (3)
Paramount Home Entertainment Inc. v. Nissim Corp., IPR2014-00961, Paper 11 (December 29, 2014), the Board denied institution of inter partes review of claims 1–5 of U.S. Patent No. 6,304,715 for failure to name the real party in interest.
Paramount Home Entertainment Inc. v. Nissim Corp., IPR2014-00962, Paper 11 (December 29, 2014), the Board denied institution of inter partes review of claims 1–27 of U.S. Patent No. 7,054,547 for failure to name the real party in interest.
In Square, Inc. v. Think Computer Corporation, CBM2014-00159, Paper 9 (December 29, 2014), claims 1–7 and 9-11, 13–17, and 20–22 of U.S. Patent No. 8,396,808 (but not challenged claims 8 and 19).