PTAB Boardside Chat Provides Statistics About Multiple IPR Petition Filings

On October 24, 2017, PTAB Chief Judge David Ruschke and Lead Judge William Saindon conducted a webinar covering filing statistics for IPR petition filings, and in particular how multiple petitions have fared statistically in the PTAB.  They also announced three informative decisions relating to the 35 USC § 325(d) issue:

  • IPR2016-01571 – Unified Patents, Inc. v. Berman
  • IPR2017-00739 – Hospira, Inc. v. Genentech
  • IPR2017-00777 – Cultec, Inc. v. Stormtech LLC

The slides of the October Boardside Chat can be found here.

Some of the takeaways from the October Boardside Chat are:

  • The PTAB wants each petitioner to explain why it filed a subsequent IPR petition, and will be especially careful about petitions filed after a decision on institution.  (See the informative decisions, above.)   This is to avoid the situation where a petitioner uses a first petition as a “roadmap” to make a subsequent petition filing.
  • Petitioners need to review the following seven factors and the precedential General Plastics decision (General Plastic Industrial Co. v. Canon Kabushiki Kaisha, IPRs: 2016-01357, 2016-01358, 2016-01359, 2016-01360, 2016-01361)
      1. whether the same petitioner previously filed a petition directed to the same claims of the same patent;
      2. whether at the time of filing of the first petition the petitioner knew or should have known of the prior art asserted in the second petition;
      3. whether at the time of filing of the second petition the petitioner already received the patent owner’s preliminary response to the first petition or received the Board’s decision on whether to institute review in the first petition;
      4. length of time that elapsed between the time the petitioner learned of the prior art asserted in the second petition and the filing of the second petition;
      5. whether the petitioner provides adequate explanation for the time elapsed between the filings of multiple petitions directed to the same claims of the same patent;
      6. finite resources of the Board; and
      7. requirement under 35 U.S.C. § 316(a)(11) to issue a final determination not later than 1 year after the date on which the Director notices institution of review.

       

      Judge Ruschke invited stakeholders to provide feedback and further questions for any other statistical information that might be of use for the patent bar to advise its clients.  It was clear from the tenor of the discussion that the PTAB wanted to set the record straight on serial IPR petition practice, and to quell some the concerns raised by certain commentators about heavy-handed post-grant proceedings using multiple IPR petitions.

       

Posted in America Invents Act, Boardside Chat Report, inter partes review, IPR, serial petitions, Uncategorized | Tagged , , , | Leave a comment

10 Minute Webinar on IPR Claim Amendments In View of Aqua Products

If you are interested in knowing more about amendments in IPR proceedings and the practical impact of the Federal Circuit’s en banc Aqua Products decision, click here to view a brief 10 minute presentation.

Posted in Aqua Products, Federal Circuit Review of PTAB Proceedings, inter partes review, Motion to Amend, PTAB, Uncategorized, Webinar | Tagged , , , , , , , | Leave a comment

Federal Circuit’s Aqua Products Decision Clarifies Burden on IPR Petitioner to Challenge Amended Claims

On October 4, 2017, the Federal Circuit issued a lengthy decision in Aqua Products v. Matal, spanning five opinions and 148 pages, which addressed the proper allocation of the burden of proof when amended claims are offered during inter partes review proceedings (“IPRs”).  Aqua Prods. v. Matal, 2017 U.S. App. LEXIS 19293.

The case concerns U.S. Patent No. 8,273,183, relating to a self-propelled cleaning apparatus for cleaning a submerged surface of a pool or tank, assigned to Aqua Products, Inc, (“Aqua”).  In the underlying IPR proceeding (IPR2013-00159), the Board denied Aqua’s motion to amend various claims of the ’183 patent.  The PTAB had followed its prior practice for deciding motions to amend, which placed a substantive burden of proving patentability on the patent owner.  MasterImage 3D, Inc. v. RealD Inc., No. IPR2015–00040, at *2–4 (P.T.A.B. July 15, 2015) (clarifying Idle Free Sys., Inc. v. Bergstrom, Inc., No. IPR2012–00027, at *4 (P.T.A.B. June 11, 2013)).  Aqua appealed the final written decision of the Board and a panel of the Federal Circuit concluded that the Board did not abuse its discretion in denying Aqua’s amendments.  Aqua requested en banc rehearing, which was granted and the court vacated the panel decision.

Upon en banc rehearing the case, the court interpreted 35 U.S.C. § 316(e) as placing the burden to prove all propositions of claim unpatentability on the petitioner, including amended claims.  To the extent they are inconsistent with its decision in Aqua Products, the court overruled its prior decisions in Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292 (Fed. Cir. 2015); Prolitec, Inc. v. ScentAir Techs., Inc., 807 F.3d 1353 (Fed. Cir. 2015), petition for reh’g pending; Synopsys, Inc. v. Mentor Graphics Corp., 814 F.3d 1309 (Fed. Cir. 2016); and Nike, Inc. v. Adidas AG, 812 F.3d 1326 (Fed. Cir. 2016).  The court vacated the final written decision of the Board insofar as it denied the patent owner’s motion to amend the patent, and remanded it for the Board to issue a final decision under § 318(a) assessing the patentability of the proposed substitute claims without placing the burden of persuasion on the patent owner.

Entry of a Motion Into the IPR Distinguished From Entry of a Claim Into the Patent

The majority opinion distinguished the entry of a motion to amend into the IPR (motions to amend are the vehicle for proposing amended claims in IPR proceedings) from the substantive burden of proof that must be satisfied for entry of an amended claim into the patent:

“. . . any propositions of substantive unpatentability for amended claims are assessed following entry of the amended claims into the IPR proceeding, under the standards that apply to all claims in the proceeding.”

(Page 22, italics in original.)  The court summarized the amendment process:

“. . .  we believe that the only reasonable reading of the burden imposed on the movant in § 316(d) is that the patent owner must satisfy the Board that the statutory criteria in § 316(d)(1)(a)–(b) and § 316(d)(3) are met and that any reasonable procedural obligations imposed by the Director are satisfied before the amendment is entered into the IPR. Only once the proposed amended claims are entered into the IPR does the question of burdens of proof or persuasion on propositions of unpatentability come into play. It is at that point, accordingly, that § 316(e) governs, placing that burden onto the petitioner.”

(Page 24.)

Effects On The Settlement of IPRs

The majority opinion suggested how the the Board could consider a motion to amend in case there is settlement between the parties:

“If a settlement occurs and the IPR is terminated, no certificate incorporating the amendment into the patent ever issues. Section 318(b) makes clear that no certificate either reaffirming a challenged claim or substituting an amended claim for a challenged one issues unless and until the Board chooses to issue a final judgment under § 318(a) in which it assesses the patentability of both categories of claims. . . .

The final sentence of § 317(a) gives the Board the option to proceed to final judgment in any proceeding where the original petitioners choose not to continue their challenge. The Board might do this for any number of reasons. . . .

Should the Board elect to continue to a final written decision in this scenario, § 318(a) requires the Board to undertake a patentability analysis on all original and amended claims in the proceeding. Thus, it is at that point, and not earlier, that the statute contemplates consideration of an amended claim’s patentability. As the Supreme Court recognized in Cuozzo, where the challenger ceases to participate in the IPR and the Board proceeds to final judgment, it is the Board that must justify any finding of unpatentability by reference to the evidence of record in the IPR. . . .”

(Pages 34-35.)

The Board Must Base Its Patentability Determinations on the Entirety of the Record Before It

The court’s inquiry about whether the Board may sua sponte raise patentability challenges to the amended claims was “reserved for another day,” but the court did reiterate the panel decision that the Board may base its patentability determinations of amended claims on the entire record before it, and not limit itself solely on the face of the motion to amend.  (Pages 60-62.)  The court noted the Board’s decision to reject Aqua’s proposed amended claims without consideration of the entirety of the IPR record as an independent basis for vacating and remanding the matter to the Board.

Analysis

Patent owners and petitioners routinely argued issues of patentability of proposed claim amendments prior to Aqua Products.  However, Aqua Products shifted the analysis from whether the patent owner proved patentability, to whether the petitioner demonstrated by a preponderance of the evidence that an amended claim is unpatentable.  Post Aqua Products, petitioners must assume that a motion to amend claims will get more of the Board’s attention, and the petitioner will bear more responsibility to make a full and convincing record of unpatentability of amended claims.  If it turns out that the Board grants more motions to amend post Aqua Products, petitioners will have to more carefully consider the availability of narrowing amendments that the patent owner could assert before recommending an IPR petition strategy.  Similarly, patent owners will have to decide if the guidance provided by Aqua Products will merit more frequent filing of motions to amend or if it is preferable to procure amended claims via reissue or continuation practice.

 

Posted in Adjudicative instead of examinatorial, Broadest Reasonable Interpretation standard, claim challenges, estoppel from administrative proceeding, Federal Circuit Review of PTAB Proceedings, Motion to Amend, preponderance of evidence, reexamination generally, Settlements in Post-Grant Proceedings, Termination of Post-Grant Proceedings | Tagged , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Shire’s Granted Motion to Amend Offers Additional Insight Into PTAB Amendment Practice

When a patent undergoes review at the Patent Trial and Appeal Board (“PTAB”), the Patent Owner has an opportunity to file a motion to amend claims so that a substitute claim can be proposed for each claim sought to be amended.  Stakeholders, and even some jurists, have been critical of the PTAB for denying the majority of motions to amend, but every once in a while one is granted by the PTAB.

In Amerigen Pharmaceuticals Limited. v. Shire LLC (IPR2015-2009), the PTAB granted Shire’s motion to cancel all the claims instituted for trial, with the exception of a single claim that was amended from being multiply dependent on claims that were instituted for trial and claims not instituted for trial to merely being dependent on claims not instituted for trial.

Amerigen filed a petition for inter partes review of claims 1-3, 5, 8, 9, 11, 18-21, 23 and 25 of RE42,096 in October, 2015.  Shire filed a preliminary response in January of 2016.  The PTAB instituted trial only on claims 18-21, 23, and 25, which is significant because claim 25 was multiply dependent on “any one of claims 2, 13 [not instituted for trial] or 18 to 20 [instituted for trial].”

In response to the institution decision, Shire filed a reconsideration request that asked for clarity on the status of claim 25 because it depended on claims that were in the trial and claims not in the trial.  Further in response to the institution decision, Shire filed a simple motion to amend that cancelled “instituted claims 18-21 and 23, plus claims 22 and 24 (each of which depends from claim  18).”  (Motion to Amend, 2.)  Shire also proposed substituting new claim 26 for 25 with the changes to the text of claim 25 shown as follows:

26. (Substitute for Claim 25) The pharmaceutical composition of any one of

claims 2[[,]] or 13 or 18 to 20 wherein the pharmaceutically active amphetamine

salt in (a) and (b) comprises mixed amphetamine salts.

Shire did not propose any new arguments or evidence concerning the patentability of claim 26, other than to state:

The proposed amendment cancels all instituted claims and proposes one substitute claim that cancels claim 25 as instituted, to the extent it depends from instituted claims. The amendments respond to the grounds asserted for unpatentability (37 C.F.R. § 1.121(a)(2)(i)) and they do not enlarge the scope of the claims or introduce new subject matter (37 C.F.R. § 1.121(a)(2)(i)).

Amerigen filed an opposition to Shire’s motion to amend, arguing in part:

  • Shire failed to satisfy the requisite showings of patentability over the prior art under Masterimage and Idle Free,
  • Shire did not set forth any prima facie case of patentability of claim 26 for Amerigen to rebut, and
  • Shire did not cite another IPR (IPR2016-01033) relating to claims 2 and 13 [however, these claims were ultimately not instituted for trial in that IPR either].

The PTAB denied Amerigen’s opposition motion and issued its Final Written Decision on March 31, 2017, granting Shire’s motion to amend instead.  The panel clarified that Idle Free places  a burden on the patent owner to show a patentable distinction over the prior art of record and also prior art known to the patent owner “in the instance where a feature is ‘added to each substitute claim, as compared to the challenged claim it replaces.’”   The decision differentiated the instant case:

In this instance, however, multiple dependent substitute claim 26 merely has the effect of eliminating three claims dependent on instituted claims 18–20, and preserving two claims dependent from non-instituted claims 2 and 13. As Patent Owner aptly explains, “[e]ffectively, no claim is being amended, and claims are only being cancelled, because claims 18–24 are being removed, and proposed claim 26 removes three multiple dependent claims (claim 25 as it depends from claims 18–20)” and “[n]o other changes to the claims are being made.” Paper 14, 2.

With the cancellation of claims 18–25, and the entry of substitute claim 26, there would be no claim remaining subject to inter partes review in this proceeding. We agree with Patent Owner that “[t]here is no requirement for Shire to prove, after the Institution Decision, that original non-amended claims are patentable over all potential prior art, especially non-instituted claims.” Paper 21, 4.

Thus, Shire was able to convert claim 25 that was multiply dependent on claims that were in the trial and claims not in the trial, to new claim 26 that is multiply dependent on claims not in the trial, without proof of patentability because no new feature was added to the amended claim.

Could the same result have been accomplished more simply, such as with a motion for adverse judgment?  To do that, Shire would have had to cancel claim 25 and lose the subject matter of what amounted to claim 26.  This is one complication associated with partial institution and multiple dependent claims.  The instant decision provides guidance about how to make amendments that will cancel subject matter in claims instituted for trial, and yet salvage claimed subject matter not involved in the institution of inter partes review.

Posted in claim challenges, inter partes review, Motion to Amend, prior art, PTAB, Uncategorized | Tagged , , , , , , , , , , , , | Leave a comment

ChanBond Avoids Institution of Six Cisco IPR Petitions

ChanBond sued several cable company defendants alleging patent infringement of three wideband signal distribution system patents in the District of Delaware in 2015.  The defendants included Atlantic Broadband Group, Bright House Networks, Cable One, Cablevision, Cequel Communications, Charter Communications, Comcast Communications, Cox Communications, Mediacom Communications, RCN Telecom Services, Time Warner Cable, WaveDivision Holdings, and Wideopen West Finance (District of Delaware case nos. 15-cv-842 to -854).  Non-party Cisco filed eight IPR petitions against the three ChanBond patents in September 2016, and a stay was ordered on March 3, 2017 pending the PTAB’s decisions to institute IPR.

Cisco’s IPR petitions had mixed results.  The day the stay was ordered the PTAB instituted inter partes review of claims 1,2, 5, 6, 19, 20, 23 and 29 from US Patent 7,941,822 (IPR2016-01744), but denied institution of claims 13 and 14 in a second IPR petition of the ‘822 patent (IPR2016-01746).  (Note:  RPX filed an IPR petition on claims 1-31 of the ‘822 which was instituted for trial and oral arguments were held in January 2017.  A final written decision has not been issued by the PTAB yet.  See IPR2016-00234.)

On March 29, 2017, six IPR petitions for US Patent Nos. 8,341,679 and 8,984,565 were denied institution.  The denial was based on a difference in opinion about the broadest reasonable interpretation for the term “RF channel,” which affected every claim Cisco sought to have reviewed.  (For brevity, only the documents relating to IPR2016-01898 will be referenced in the following discussion, since the other 5 IPR petitions were denied on substantially identical grounds in the remaining five proceedings:  IPR2016-01899, -01900, -01889, -01890, and -01891).

Cisco took the position that “RF channel” encompasses not only radio transmissions in different frequency bands, but also radio transmissions that can be in the same frequency band that use a code multiplex to encode the transmission into different “channels.”  Cisco proposed a construction for “RF channel” that “includes ‘an RF path for transmitting electric signals.'”  (Petition at 13, citing the ‘679 patent at 6:62-65.)  Cisco’s prior art was also directed to Code Division Multiple Access (CDMA) systems which rely on spread spectrum (“a wideband channel,” as stated in Ex. 1002, ¶ 58) as opposed to different transmission bands.

ChanBond filed Preliminary Responses that rejected such a broad interpretation of “RF channel,” asserting “the invention is directed to using multiple separate RF channels to transport a data stream — a specific type of frequency-division multiple access (FDMA).”  (Prelim. Resp. at pp. 6, 14-24.)  ChanBond asserted that Cisco’s CDMA prior art “is the polar opposite of [its specific FDMA] invention.”  (Prelim. Resp. at p. 7.)

The PTAB rejected Cisco’s assertion that multiple channels are multiplexed on the same frequency bands, and that code channels or CDMA channels could be an RF channel within the meaning of the ‘679 patent.  The panel cited an inconsistent statement by Cisco’s expert which described a FDMA and CDMA hybrid system using Walsh codes:  “[t]he mutual orthogonality of Walsh codes allows one particular coded channel to be isolated and decoded from all other coded channels, even though they are all broadcasting on the same RF channel.” (italics added by the panel).  The panel reasoned that this statement referred to a particular frequency band as an “RF channel” and to divisions within the RF channel as “coded channels,” and therefore gave no weight to the expert’s testimony regarding the meaning of “RF channel.”

The PTAB concluded that the term “RF channel” as used in the ‘679 patent “does not include code channels – for example data streams created by CDMA– but instead refers only to frequency bands, such as those created by FDMA.”  (Final Written Decision of IPR2016-01898, p. 13.)  All six of the IPR petitions of the ‘679 and ‘565 patents were denied based on the claim construction issue and because Cisco’s grounds were based CDMA prior art.

It appears that the one year window after service to file IPRs has passed, so it will be interesting to see if a request for rehearing is filed by Cisco to challenge the panel’s decision.  It is not clear if the interpretations proffered by the panel will somehow pose issues for ChanBond to enforce its patents as planned, but it has at least avoided further review of the ‘679 and ‘565 patents for now.

Posted in 315(b) One Year Bar, Broadest Reasonable Interpretation standard, Claim Construction, inter partes review, Litigation, PTAB, PTAB Patent Trials | Tagged , , , , , , , , , , , , , | Leave a comment

Best Practices and Strategies for Patent Procurement and Enforcement Webinar Series

Looking for a holistic view of best practices and strategies for patent procurement and enforcement?  You are invited to attend a free, two-part webinar on best patent practices. Click this link to register.  I will be co-presenting with Christopher Larus of Robins Kaplan to offer best practices for patent generation and patent enforcement. Each webinar is one hour long and we will apply for CLE credits for registered attendees. The webinars are set for February 22 and March 29.  Please join us!

 

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PTAB Narrows Its Preliminary Claim Interpretation To Uphold Cellular Patent

In July, 2014 Ericsson Inc. and Telefonaktiebolaget LM Ericsson (“Ericsson”) petitioned for inter partes review of claims 1, 2, 8-12 and 18-22 of U.S. Patent No. 7,787,431 owned by Intellectual Ventures II  LLC (“IV”).  In February, 2015, the Board instituted trial on claims 1 and 2 based on obviousness grounds, but denied institution of obviousness grounds for claims 8-12 and 18-22.  In a final written decision dated January 29, 2016, claims 1 and 2 of the ’431 patent were determined to be unpatentable.  (IPR2014-01195, Paper 37.)

Ericsson filed a second IPR petition in August, 2015, again challenging claims 8-12 and 18-22.  (IPR2015-01664, August 3, 2015.)  Claim 8 is representative:

8. A cellular base station comprising:

circuitry configured to transmit a broadcast channel in an orthogonal frequency division multiple access (OFDMA) coreband, wherein the core-band is substantially centered at an operating center frequency and the core-band includes a first plurality of subcarrier groups, wherein each subcarrier group includes a plurality of subcarriers, wherein the core-band is utilized to communicate a primary preamble sufficient to enable radio operations, the primary preamble being a direct sequence in the time domain with a frequency content confined within the core-band or being an OFDM symbol corresponding to a particular frequency pattern within the core-band,

wherein properties of the primary preamble comprise:

an autocorrelation having a large correlation peak with respect to sidelobes;

a cross-correlation with other primary preambles having a small cross-correlation coefficient with respect to power of other primary preambles; and

a small peak-to-average ratio; and

wherein a large number of primary preamble sequences exhibit the properties; and

circuitry configured to transmit control and data channels using a variable band including a second plurality of subcarrier groups, wherein the variable band includes at least the core-band.

In its Institution Decision, the Board provided a preliminary construction of “transmit[ting] a broadcast channel in an orthogonal frequency division multiple access (OFDMA) core-band.”  (Institution Decision, p. 11.)  The Board stated: “the plain meaning of transmitting a broadcast channel in a core-band merely requires transmitting some part of the broadcast channel in a core-band and does not exclude transmitting another part of the broadcast channel outside the core-band.” Id.

IV disagreed with the Board’s preliminary construction, asserting that an ordinarily skilled artisan would have understood the limitation to exclude transmitting any portion of the recited broadcast channel outside of the core-band. (Patent Owner Resp., pp. 35–36.)  According to the Board, Ericsson did not agree with or dispute IV’s assertion, and only asserted that IV’s proposed construction adds no clarity and that no construction is necessary.

In its Final Written Decision, the Board decided that its preliminary construction was unreasonably broad in view of IV’s arguments and its expert’s testimony:

Upon further review of the ’431 patent, particularly in view of Patent Owner’s arguments supported by Dr. Zeger’s testimony discussed above, we are persuaded that our preliminary partial construction was unreasonably broad to the extent that construction indicated the transmitting a broadcast channel limitation would be met by the transmission of a broadcast channel that is only partially within the core-band. Thus, we agree with Patent Owner that to show that the transmitting “a broadcast channel in an” OFDMA core-band limitation is met, Petitioner must demonstrate that the prior art teaches or suggests transmitting a broadcast channel, wherein the entire channel is contained within the core-band.

(Final Written Decision, pp. 8-9.)  The Board determined that Ericsson’s prior art combination failed to teach transmitting a broadcast channel in an OFDMA core-band, as recited in independent claims 8 and 18.  The Board found that a particular prior art reference (Yamaura) did transmit in the OFDMA core-band at times, but it did not have sufficient evidence that at other times it did not transmit outside of that band, and therefore it did not teach the recited OFDMA core-band limitation.

Even though the second IPR was instituted for trial on claims 8-12 and 18-22 based on a broad construction of the claims, the claims were not shown to be obvious based on a narrowed interpretation of the claims adopted in the Final Written Decision.

Posted in Broadest Reasonable Interpretation standard, claim challenges, Claim Construction, Expert Witnesses, inter partes review, prior art, PTAB, Uncategorized | Tagged , , , , , , , , | Leave a comment

Are Patent-Friendly PTAB Decisions On the Rise?

Patent litigation changed with passage of the America Invents Act. Overnight the PTAB became a new venue for challenging patent claims using IPRs, CBMs and PGRs. The initial reaction by the patent bar to the PTAB’s “take charge” approach to instituting review and canceling patent claims was met with approval by businesses under attack by patent trolls and with disdain by patent owners whose patents would have likely sailed through the assertion before the AIA. Some commentators blasted the PTAB for a high percentage of patent claims invalidated in PTAB proceedings.

Those who tried to paint the actions of the PTAB with a broad brush in the first years of IPRs were bound to be both right and wrong. Yes, institution rates were at an all-time high, but factors such as these made the first years of PTAB practice particularly hard to characterize:

  • the patent bar and the PTAB were learning how to litigate these new patent trials for the first time;
  • litigation teams did not have the luxury of seeing how the PTAB viewed patents under review, and to tailor their litigations accordingly; and
  • a number of patents already in litigation were selected based on a pre-AIA (pre-IPR) enforcement economic model:
    • discovery and litigation costs established a minimal nuisance settlement value (now it is the cost of IPR);
    • thinly capitalized patent owners who previously had to outlay only minimal investment in the litigation suddenly had to secure counsel to defend patent rights in these patent reviews for the first time; and
    • the patents under review were drafted to survive district court scrutiny and enjoy the presumption of validity and a clear and convincing standard of review (and many still are).

Public sentiment was a moving target, but so was practice before the PTAB. After witnessing the PTAB’s heightened scrutiny of patentability, rather than file new suits many patent owners decided to wait and watch from the sidelines or take their assertions outside the U.S. Regardless, patent owners quickly learned the benefit of analyzing and selecting patents more likely to survive an IPR, CBM or PGR lodged by a defendant-petitioner before engaging in a patent litigation.

Now, with PTAB institution rates moderating, it remains to be seen whether the Board is easing its scrutiny on patentability or whether higher caliber patent assertions are being lodged in view of that heightened scrutiny.

For example, the PTAB recently rendered some decisions that might give patent owners reason to reconsider:

CASE STUDY 1: IPR2016-01453 – U.S. Patent 7,358,679 – Wangs Alliance Corp. d/b/a WAC Lighting Co. v. Philips Lighting North America Corp., Paper 8, (Feb. 2, 2017)

On February 2, 2017, the Board denied the ’679 IPR Petition filed by Petitioner Wangs Alliance Corp. (“WAC”) challenging Patent Owner Philips’ Lighting patent. The backstory of the dispute between Philips and WAC is quite interesting:

Philips has been embroiled in patent litigation with WAC since May, 2015. Koninklijke Philips N.V. et al. v. Wangs Alliance Corporation, Case No. 14-cv-12298-DJC (D. Mass.). Philips sued WAC for patent infringement of eight patents (not including the ‘679 patent) relating to lighting products and systems relating to LED lighting devices. WAC filed IPR petitions on seven of the eight patents, but obtained institution of only six of the seven IPR petitions. In January 2016, the district court litigation was stayed pending the outcome of the IPRs.

WAC later filed two IPR petitions against the ‘679 patent.  The ’679 patent does not appear in the litigation documents, but WAC identified it as claiming priority to U.S. 7,352,138 (which is in the litigation) and as related to U.S. 7,039,399 (also in the litigation).

The ‘679 patent relates to an LED-based lighting unit that resembles a conventional MR16 bulb having a bi-pin base connector configured to engage mechanically and electrically with a conventional MR16 socket. Claim 1 is representative:

 1. An apparatus, comprising:

at least one LED;

a housing in which the at least one LED is disposed, the housing including at least one connection to engage mechanically and electrically with a conventional MR16 socket; and

at least one controller coupled to the housing and the at least one LED and configured to receive first power from an alternating current (A.C.) dimmer circuit, the A.C. dimmer circuit being controlled by a user interface to vary the first power, at least one controller further configured to provide second power to the at least one LED based on the first power.

WAC’s ’679 IPR petition was denied when the Board adopted a claim construction of “alternating current (A.C.) dimmer circuit” that was narrower than the one proffered by Petitioner WAC.

WAC argued that “A.C. dimmer circuit” means “a circuit that provides an alternating current (A.C.) dimming signal.” WAC further asserted that it requires only receipt of an A.C. signal and the provision of power (A.C. or D.C.) to a light source. Patent Owner Philips countered that “A.C. dimmer circuit” requires an AC output from the AC dimmer circuit. The Board agreed with Philips, based on arguments and claim constructions from a related IPR (IPR2015-01294 which relates to U.S. 7,038,399), and because Patent Owner argued that “every instance of “A.C. dimmer circuit” in the ’679 patent’s specification describes an A.C. output from the A.C. dimmer circuit. (See Prelim. Resp. 4–5.)

A summary of the Philips patents and their IPR outcomes thus far (note: several decisions are still on appeal) shows that Patent Owner Philips is defending its patents well in these proceedings:

* The ’679 Patent is not appearing in litigation documents, but a claim of priority from U.S. 7,352,138 and a relationship to U.S. 7,039,399 is noted in WAC’s petitions. The ’679 IPR outcome is not yet determined because even though the -01453 IPR petition was unsuccessful the -01455 IPR institution decision remains to be decided and is not expected until later this month. Note: several of these decisions are on appeal, so these are not final results.

Philips’ IPR results are comparable to historical statistics when it comes to the number of IPRs instituted, but its results are substantially better than the statistical outcomes associated with IPR final written decisions from 2016 data. For example, early Board practice saw a very high percentage of IPR institutions (starting at ~90% in 2013 and dropping to ~70% in 2016). Upon institution, a patent owner’s chances of losing all claims if the IPR were to reach a final written decision would be roughly 70%.

In this Philips case study, the percentage of IPRs instituted remains relatively consistent with IPR institution outcomes (ignoring the ‘679 IPRs because they are not yet final, we get 5 out of 7 IPRs were instituted or ~70% ); however only one of the institutions resulted in a cancellation of all claims, which is much closer to 17% than the 2016 expected 67% cancellation rate for IPRs instituted which end in a final written decision (again, the results of the Federal Circuit appeals will not be known for some time). However, the data also shows a mixed claim decision outcome in 2 out of 6 IPRs (~33%), which equates to roughly double the typical percentage of mixed claim decisions (typically ~15%). Of course, mixed claim decisions are very hard to evaluate, because one has to know which claims are more likely to be infringed with substantial damages to know if the mixed result was a winner or a loser for a patent owner.

The Philips patent IPR outcomes are not yet final, but as of today Philips is substantially ahead of the 2016 percentages.

Let’s consider another case study:

 

CASE STUDY 2: IPR2015-01769, — U.S. Patent 7,793,433 — Zero Gravity Inside, Inc. v. Footbalance System OY, , Paper 49, (Feb. 3, 2017)

Footbalance System OY sued Zero Gravity Inside, Inc. et al. alleging patent infringement in May, 2015 and filed amended complaints, including a third one filed on October 21, 2016. Footbalance alleged patent infringement of its US Patents 7,793,433 and 8,171,589. The patents related to apparatus and method for producing an individually formed insole.

In response, Zero Gravity filed two IPR petitions challenging claims of each patent on August 19, 2015. Both IPR challenges failed.

The ’589 IPR petition alleged obviousness of claims 1-3, but was not instituted in a Decision Denying Inter Partes Review dated January 13, 2016 (IPR2015-01770, Paper No. 17, January 13, 2016).

The ’433 IPR petition was instituted based on alleged obviousness of claims 1-7, but on February 3, 2017, the Board found that Petitioner Zero Gravity failed to show by a preponderance of the evidence that claims 1-7 of the ’433 patent were unpatentable under 35 U.S.C. § 103. Footbalance managed to maintain its claims despite institution of the IPR.

The Board decided Petitioner failed to show that the prior art taught “wherein the at least one layer of thermoplastic material is configured to reach out from under a heel of a foot only to the metatarsophalangeal joint of the foot”, as recited in Claim 1 (“the MTP limitation”).

According to the Final Written Decision, Petitioner first asserted that the MTP joint extended approximately ¾ of the way down the foot, but Patent Owner countered that a person of skill in the art would understand the MTP limitation requires a precise anatomic location of the MTP joint and not an approximation or average, such as ¾ the length of the foot. The Board found that Petitioner then shifted its argument to assert that the prior art, which taught a pad before the ball of the foot was “so close to the requirements of the MTP limitation that the MTP limitation would still have been obvious to a POSA in light of either of these teachings.” Paper 48, 8-9 (italics in original). The Board was not persuaded:

Petitioner’s contentions in the Petition are not persuasive because they are not based upon the broadest reasonable construction of the MTP limitation. As discussed above, we construe the MTP limitation to require a layer formed to extend to, but no further than, the location of the MTP joint of a specific foot. [ ]. Petitioner, however, does not sufficiently show that an insole having a ¾-length moldable support layer teaches a layer formed to extend to, but no further than, the location of the MTP joint of a specific foot. [ ]

Petitioner’s contentions in its Reply also are not persuasive. Dieckhaus discloses that thermoplastic layer 6 “extends from the back or heel portion of the insole, to approximately just short of the ball section of the foot” [ ].  Approximately just short of the ball section of the foot is not the location of the MTP joints (i.e., the location of the heads of the metatarsal bones and the corresponding proximal phalanx). [ ] Further, Petitioner does not sufficiently show that it would have been obvious to one of ordinary skill in the art to modify Dieckhaus’s thermoplastic layer 6 to extend to, but no further than, the location of the MTP joint of a specific foot. Petitioner’s assertion that such a modification would have been obvious because Dieckhaus’s disclosure is “so close” is a mere conclusory statement. “To satisfy it burden of proving obviousness, a petitioner cannot employ mere conclusory statements. The petitioner must instead articulate specific reasoning, based on evidence of record, to support the legal conclusion of obviousness.” In re Magnum Oil Tools Int’l, Ltd., [cites omitted].

The Footbalance litigation is still in its very early stages, so it is too early to tell how the litigation may turn out, but the Board did not cancel claims from either patent.

These recent outcomes do not establish a trend, but they do show that some patent owners are succeeding despite the heightened scrutiny of PTAB proceedings.  They also show that the PTAB will provide relief to patent owners at both institution and final written decision stages of the PTAB trial.  They also give lessons on better patent drafting, which will be the subject of future posts.

 

Posted in America Invents Act, claim challenges, Claim Construction, Damages, Future of PTAB Trial Practice, inter partes review, Litigation, Post Grant Review, preponderance of evidence, prior art, PTAB, PTAB Patent Trials, Uncategorized | Tagged , , , , , , , , , , , , , , | Leave a comment

PTAB Dismisses Three IPR Petitions Based on Sovereign Immunity

Covidien LP had a license to U.S. Patent 7,062,251, owned by the University of Florida Research Foundation (UFRF, Patent Owner).  UFRF alleged breach of contract by Covidien, and sued Covidien in Florida state court for breach of license.  Covidien counterclaimed for a declaratory judgment that it does not infringe the ’251 patent, and removed the action to federal court.

In June of 2016, Covidien (Petitioner) filed three petitions seeking inter partes review (IPR) of the ’251 patent.  After the IPRs were filed, UFRF sought to dismiss the federal court action on the ground it was entitled to Eleventh Amendment immunity from Covidien’s declaratory judgment counterclaim.  The District Court agreed with UFRF and remanded the action back to state court.  Covidien’s appeal of this decision is pending in the Federal Circuit (Appeal No. 16-2422).

UFRF requested a conference call with the Board to ask for permission to file a motion to dismiss the IPR petitions on the basis of sovereign immunity.  The Board authorized UFRF to file its Motion to Dismiss, Covidien to file its opposition, and for UFRF to file a reply.

The Board went through a lengthy analysis of administrative precedent relating to sovereign immunity and comparisons of IPR practice with litigation.  On January 25, 2017, the Board dismissed the three IPRs finding “Eleventh Amendment immunity bars the institution of an inter partes review against an unconsenting state that has not waived sovereign immunity.”

The Board went through another lengthy analysis to determine that the UFRF is an arm of the State of Florida.

The Board concluded sovereign immunity applies:

For the foregoing reasons, we conclude that Eleventh Amendment immunity applies to inter partes review proceedings, and that UFRF, having shown it is an arm of the State of Florida, is entitled to assert its sovereign immunity as a defense to the institution of an inter partes review of the ’251 patent. Accordingly, the Petitions in IPR2016-01274, -01275, and -01276 are dismissed.

The Board went through great lengths and 39 pages to analyze and document UFRF’s sovereign immunity claim.  One has to wonder if the District Court decision remanding the case to state court weighed heavily on the Board’s decision to find sovereign immunity and dismiss the IPRs.  It will be interesting to see whether the appeal of the District Court remand is maintained and if this Board decision is appealed.  But at least for now, it appears that a state-owned patent will not be subject to IPR unless it has waived sovereign immunity.

Posted in Adjudicative instead of examinatorial, inter partes review, States rights and sovereign immunity | Tagged , , , , , , , , , , , , , , | Leave a comment

Patent Due Diligence and Evaluation After the AIA

Many factors must be considered for due diligence and valuation of a patent portfolio. The patent owner’s desire to have broad claims that capture a large number of infringements must be tempered against its need for claims that will not be deemed invalid in view of prior art.

Before the America Invents Act (AIA), patents were crafted to survive federal court scrutiny.  An assertion of broad claims was more likely than sweating the details about validity because it was harder to prove a patent was invalid than it was to prove it was infringed.

With the enactment of the AIA, the Patent Trial and Appeal Board (PTAB or Board) is empowered to review patent validity in administrative trials (AIA Trials). Patents are more readily invalidated in these AIA Trials using a lower burden of proof than required in federal district court. Furthermore, the Board’s administrative patent law judges have both scientific and patent law training, which enables them to scrutinize patents more carefully than a typical district court judge or jury.

The “new normal” is that a patent’s validity is likely tested in the PTAB (in IPR, CBM, or PGR) before it is enforced in federal district court. Savvy companies are taking extra measures to review their patents carefully before acquiring and asserting them to reduce or avoid the cost and delay that comes with PTAB proceedings.

WHAT ARE THE DOWNSIDES FOR PATENTS THAT ARE NOT AIA-READY?

  • RISK: AIA Trials statistically favor the Petitioner/Defendant. Don’t invest in a portfolio or a litigation that won’t deliver value.
  • DELAY: Patent Office Trials are one more reason for a stay of parallel federal district court proceedings. Justice delayed is justice denied.
  • COST: Patent owners dragged into an IPR, PGR or CBM can expect six figure defense costs with the best-case outcome being that the claims are upheld—which is essentially the patent’s original status.
  • CLAIM CORRECTION UNLIKELY: Amendments are
    rarely allowed in IPRs, CBMs, and PGRs. Don’t expect to fix defective patents without a lengthy proceeding that is conducted after the AIA Trial.
  • HARM TO FUTURE ACTIONS: If claims survive the AIA Trial validity challenge, admissions may be made that could reduce the effectiveness of any district court infringement action.

Poorly crafted patent claims are typically cancelled in an AIA Patent Trial. High quality patents are more likely to bypass review, and those patent owners avoid the cost, delay, and risk of defending weak claims in AIA Trials.

To get a good read of a patent’s ability to survive AIA review, seek the opinion of patent counsel that is experienced in patent prosecution, patent litigation, and post-grant proceedings.

In case you missed it, I put together a simple 2 minute video with 4 tips to make your patent portfolio AIA-ready.

Posted in America Invents Act, claim challenges, covered business methods, inter partes review, Litigation, Patent Portfolio Management, Patent Reform, Post Grant Review, Prosecution Guidelines, PTAB, PTAB Patent Trials | Tagged , , , , , , , , , , , , , , , , , , | Leave a comment