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.