Archive for the ‘clear and convincing evidence’ Category

Federal Circuit Employs Phillips Claim Construction to Measure Claims Amended in Reexamination for Possible Intervening Rights

Monday, February 22nd, 2016

When patent owners sue an accused infringer for patent infringement, one way for the accused infringer to avoid liability is to show noninfringement of the patent claims.  But if the claims are extremely broad, the accused infringer may find it difficult to prove noninfringement and instead may have to rely on a showing of invalidity to avoid liability.  However, a showing of invalidity requires clear and convincing evidence, which is a high standard.  Enter post-grant proceedings, which provide the petitioner (or “requester,” when employing reexamination) a lower evidence standard for patent challenges.

Should the patent be subject to review under post-grant proceedings, the patent owner will likely want to avoid amendment if possible, because amendment that results in substantive changes to the claimed invention can trigger intervening rights, which may provide some reduction of infringement liability for the accused infringer should the claim be substantively narrowed in the post-grant proceeding.  Stakeholders want to know how to determine substantive amendment, triggering intervening rights.  For example, is substantive amendment to be measured by the claim construction standard typically used in the post-grant proceeding (currently “broadest reasonable interpretation,” but pending review by the Supreme Court in Cuozzo), or the claim construction standard used in district court (Phillips)?  The Federal Circuit recently addressed this question when considering amendments made in reexamination for using the Phillips standard in Convolve, Inc. v. Compaq Computer Corp. (Fed. Cir., 2014-1732, Feb. 10, 2016).

Convolve sued Compaq and others in 2000 for infringement of its U.S. Patent No. 6,314,473 relating to minimization of vibrations of a disk drive for quieter operation.  Convolve’s patent ultimately was reexamined and in 2008 certain words were added to the claims during the reexamination.  The court considered whether the amended claims were substantively identical to decide if intervening rights would apply:

“A patentee of a patent that survives reexamination is only entitled to infringement damages for the time period between the date of issuance of the original claims and the date of the reexamined claims if the original and the reexamined claims are ‘substantially identical.’” R & L Carriers, Inc. v. Qualcomm, Inc., [ ]. “[I]t is the scope of the claim that must be identical, not that identical words must be used.” Slimfold Mfg. Co., Inc. v. Kinkead Indus., Inc., [ ]. As a result, amendments made during reexamination do not necessarily compel a conclusion that the scope of the claims has been substantively changed. [ ] This is true even where the claims at issue were amended during reexamination after a rejection based on prior art. Laitram Corp. v. NEC Corp., [ ] Rather, “[t]o determine whether a claim change is substantive it is necessary to analyze the claims of the original and the reexamined patents in light of the particular facts, including the prior art, the prosecution history, other claims, and any other pertinent information.” Laitram[ ].

Accordingly, the Federal Circuit employed a Phillips standard when reviewing the claim amendments:

In determining the scope of the claims, we apply the traditional claim construction principles of Phillips v. AWH Corp.,[ ] (en banc), paying particular attention to the “examiner’s focus in allowing the claims” after amendment. R & L Carriers [ ]; see also Laitram Corp. v. NEC Corp., [ ] (When an amendment is made during the reexamination proceedings to overcome a prior art rejection, that is a “highly influential piece of prosecution history.”).

In one example, the original claims recited “acoustic noise,” but were amended in reexamination to “seek acoustic noise.”  The issue that the Federal Circuit considered is whether this narrowing was a substantive amendment for purposes of its intervening rights analysis.  It could have been deemed the amendment to have been a substantive change, because other types of motor noises could have been ruled out by the amendment, but instead the court considered:

  • the specification, which focused on the seek process and the noise it generates;
  • the claims, which relate “acoustic noise” to the seek time and seek process; and
  • the original prosecution history of the patent, where the patent owner argued that the reason for the amendment.

It concluded:

On their face, the original claims recite only “acoustic noise,” which could encompass any manner of acoustic noise, including that generated from the spindle. But when read in conjunction with the remaining claim limitations and in light of the specification and prosecution history, a person of ordinary skill in the art would understand the claims to be limited to seek acoustic noise.

Consequently, the Federal Circuit decided the claim amendments resulted in substantively identical claims before and after amendment, and therefore intervening rights do not apply:

In sum, we conclude that the addition of the term “seek” before “acoustic noise” did not alter the scope of the claim.  [] Here, the language of the claims, read in light of the specification and prosecution history, especially the applicant’s 2001 remarks and amendment, compel a conclusion that the claims as originally drafted were limited to seek acoustic noise despite the lack of an express recitation in the claims.

The Federal Circuit reversed the lower court’s grant of summary judgment of noninfringement based on the lower court’s determination that liability was precluded by intervening rights.

The Federal Circuit concluded that the claim scope prior to the amendment would have been interpreted to be the same as the scope after amendment using a Phillips construction based on the specification, claims, and prosecution history.  Had the court instead relied upon the broadest reasonable interpretation from reexamination as its gauge, the claims would presumably have been deemed substantively different and the district court summary judgment would have been affirmed.  Convolve allows patent owners an opportunity to avoid intervening rights when amended claims would obtain the same Phillips claim construction as the claims prior to amendment.

 

Federal Circuit Reinforces PTAB’s Authority to Institute Trial on Selected Claims in Synopsis v. Mentor Graphics Appeal

Thursday, February 11th, 2016

Newcomers to post-grant proceedings are often surprised by the PTAB’s claim-by-claim approach to patent challenges under the America Invents Act.  When reporting statistics about IPRs, commentators tend to ignore these considerations:

  • First, an IPR petition can be drafted to challenge all or some of the claims of a patent.  So the set of challenged claims can be less than the set of issued patent claims.
  • Second, if the PTAB decides to institute trial, it will exercise its authority to identify exactly which claims it will institute for trial.
  • Third, of the claims instituted for trial, should the case result in a final written decision, all or some of those claims may be found unpatentable and any remaining claims may pass through the process unscathed.

A recent Federal Circuit majority opinion reinforced the PTAB’s interpretation that the AIA gave it authority to institute trial on less than all of the challenged claims.  In Synopsis, Inc. v. Mentor Graphics the majority found that the PTAB could exercise its authority to institute trial on a subset of the challenged claims and to enter its final written decision on the instituted claims.  (Synopsis, Inc. v. Mentor Graphics v. Lee,  Fed. Cir., 2014-1516, 2/10/16).  Synopsis argued that the AIA required the PTAB to provide a patentability determination of every challenged claim.  But the Federal Circuit disagreed, finding instead that the PTAB need only issue its final written decision on the claims instituted for challenge.

Judge Pauline Newman dissented, arguing that the PTAB’s interpretation it is contrary to the AIA and to the AIA’s purpose to provide an alternative and efficient forum for resolving patent validity issues, and that it leads to duplicative proceedings in the PTAB and the district courts.  Her interpretation of the AIA urges a final written decision for each of the claims challenged.  However, absent a petition for cert, the PTAB’s institution and final written practices will not be reversed any time soon based on Synopsis.

 

Federal Circuit Interprets Board’s Broadest Reasonable Interpretation Standard – Part I

Wednesday, June 17th, 2015

We know from the Federal Circuit’s decision in In re Cuozzo Speed Technologies, that the broadest reasonable interpretation (BRI) standard applies in IPRs, but in a recent appeal decision, the Federal Circuit has announced limits to the application of BRI.

Microsoft had filed two separate IPR petitions challenging certain claims of U.S. Patent No. 6,757,717, which were later joined.  The Board ultimately found all but one of the challenged claims unpatentable as being either anticipated or obvious.  The Board also denied Proxycomm’s motion to amend its claims, concluding it hadn’t established the patentability of its claims.  Microsoft Corp. v. Proxyconn, Inc., IPR2012-00026 and IPR2013-00109.

On June 16, 2015, the Federal Circuit reversed the Board’s constructions, and thereby vacated and remanded its determinations of unpatentability of certain claims, but upheld its decision to deny Proxyconn’s motion to amend.  Microsoft Corp. v. Proxyconn, Inc. v. Michelle K. Lee,  Intervenor (Fed. Cir. cases 2014-1542 and -1453).  

Some of the interesting points of the Federal Circuit’s decision are:

  • The Federal Circuit followed its earlier decision in Teva Pharmaceuticals USA v. Sandoz, Inc., to review the Board’s ultimate claim constructions de novo and its underlying factual determinations involving extrinsic evidence for substantial evidence.  The Court stated that to the extent the Board relied on extrinsic evidence to construe the claims, it “need not consider the Board’s findings on that evidence because the intrinsic record is clear.”  (Id. at p. 6.)
  • The Federal Circuit clarified that even though BRI was properly adopted by PTO regulation in Cuozzo, that does not allow the Board to “construe claims during IPR so broadly that its constructions are unreasonable under general claim construction principles.”
    • It cited In re Skvorecz and In re Suitco Surface, Inc. to clarify that BRI cannot result in an unfettered or legally incorrect interpretation. (Id. at p. 6.)
    • The Court also advised that “[t]he PTO should also consult the patent’s prosecution history in proceedings in which the patent has been brought back to the agency for a second review,” citing Tempo Lighting Inc. v. Tivoli LLC, In re NTP, Inc. and Suitco.  (Id. at p. 7.)

The Federal Circuit then proceeded to analyze the Board’s claim constructions and decision denying Proxyconn’s motion to amend.  These will be covered in future posts.

Early PTAB Orders Demonstrate Differences Between AIA Patent Trials and District Court Trials

Monday, April 29th, 2013

Patent practitioners are still absorbing some of the differences and advantages that are unique to litigation in the PTAB as opposed to district court litigation.  For example, PTAB proceedings only decide questions of validity and are not directed to rule on questions of infringement or damages, as is the practice in traditional litigation.  Another example is that PTAB trials require that the petitioner provide a lot of technical arguments and factual evidence in the original petition, as opposed to traditional litigation where parties make sure they have a good faith basis to sue and then rely on discovery to later develop the case.  Thus, a petition for review of patentability in PTAB practice is more akin to a summary judgment motion than a complaint in trial practice.  But a PTAB petition is still very different than a summary judgment motion.  And these differences can be exploited to more inexpensively and quickly resolve validity issues.

In considering summary judgment, a judge must decide if there is “no genuine dispute as to any material fact,” as set forth in FRCP Rule 56.  In contrast, the technical patent judges on the Board can decide technical disputes instantly and can resolve disputes of technical and legal nature.  PTAB panels use their technical and patent law experience to quickly identify dispositive issues and focus the parties on how their respective positions are being viewed by the Board early in the proceedings.  This means that PTAB trials will put a premium on identification of technical defects in patents early in the proceedings, as opposed to traditional litigation approaches that favor discovery before attempting summary judgment or that shy away from summary judgment as a mechanism for resolution of complex technical disputes.

Examples of the Board’s unique capabilities are already being demonstrated in recent orders.  For example, in an inter partes review by Chimei Innolux Corporation against Semiconductor Energy Laboratory Co.,Ltd. concerning U.S. Patent No. 8,068,204 (IPR2013-00068), the Board squarely addressed technical disputes between what the petition asserted versus what the patent owner’s preliminary statement set forth when the Board decided to institute trial.

The Board took great care to understand and sift through extremely technical differences between the claimed subject matter and the prior art as it was characterized by the parties.  This is a highly complicated task, because the patent relates to improvements for substrate bonding and electrical connections in liquid-crystal displays and because the parties were advancing very technical arguments on both sides of the validity issue.  In this early order to institute trial the Board construed a phrase from the claims and used that construction to decide the merits of the positions taken by the petitioner and patent owner.  The Board then considered technical arguments made by both parties, such as whether a reference used in combination in an obviousness challenge teaches away from the combination (page 15), or whether it would have been obvious to employ a known (contact) structure (page 18).  The Board decided that certain arguments were not persuasive and used the order to focus the parties on the issues it ruled upon.  The following excerpt from pages 19-21 of the the order instituting trial demonstrates the attention to detail that the Board is devoting to these proceedings:

SEL responds that “[. . .] a person of ordinary skill in the art does not know whether an insulating film (first insulating film) is formed between the bottom layer of the first wiring line 127 (formed in the step of forming the scanning lines Yj) and the top layer of the first wiring line 127 (formed in the step of forming the data lines Xi).” (Prelim. Resp. 31.) According to SEL, Shiba’s “‘two-layered structure’” might be “sequentially stacked” without an insulating layer therebetween. (Id.) As noted, claim 31 requires such an intervening insulating layer.

SEL’s argument is not persuasive. Shiba implies or suggests that the two wiring layers in the two-layered structure 127, formed in the same manner as the two-layered scanning and data lines as the quoted passage shows, have an insulating layer therebetween just like the scanning and data lines. [cite omitted]  [. . .  .]  Skilled artisans also would have understood that overlapping portions readily could have been “partially connected” together by known methods, including using a connecting hole through such an insulating layer. [cite omitted]

Because the two-layered structure in Shiba’s lines 127 connect to pad 751, SEL maintains that under various hypothetical scenarios, pad 751 also must have a two-layered structure, and as such, with Sukegawa’s transparent layer modified to be on Shiba’s pad as CMI proposes in its ground of unpatentability, the pad structure would become a three-layered structure. . . .  SEL also argues that the Petition inconsistently conflates or interchanges Sukegawa’s transparent layer and the top layer of Shiba’s two-layered wiring structure 127, and thereby fails to show how the combination renders obvious the external connection line and transparent conductive film as recited in claims 31 and 54. (See Prelim. Resp. 25-26.)

It is clear from the analysis set forth by the Board that it is not afraid to weigh in on very technical issues and clarify how it perceives the arguments.  Of course, the preliminary response by the patent owner is considered a first initial response and is not a comprehensive response with evidence.  Therefore, the Board’s institution of trial is based on limited argument and is well before the patent owner has had an opportunity to fully respond.  But this process focuses the parties on issues that the Board (at least initially) perceives to be negative to the patent.  It is a preliminary ruling on the disputed issues by the Board that will shape discovery to come, as opposed to traditional litigation where discovery often leads and shapes the issues brought before the court.

Parties who believe that an asserted patent has validity issues may find it difficult to challenge disputed technical issues in summary judgment motion practice.  Validity issues are frequently accompanied with fact questions and in litigation there is a clear and convincing standard for invalidity that makes it hard to prove invalidity.  And it is unlikely that counsel will recommend a motion for summary judgment before conducting at least some discovery.  In contrast, in patent reviews and reexaminations the burden of proof is based on a preponderance of the evidence and can be done without discovery.  Given the different standards and the costs of e-discovery, there are significant advantages to the PTAB patent review option for defendants with genuine validity arguments.  But one must be careful to choose the PTAB trial option carefully to avoid estoppel should the proceeding not result in destruction of the relevant patent claims.

Parallel Litigation and PTAB Review Create Complex Interplay of Patentability and Validity

Sunday, September 30th, 2012

A company called CoreLogic Solutions, LLC owns U.S. Patent No. 5,361,201, relating to a process for appraising real estate property.  The ‘201 patent was filed on Oct. 19, 1992 and issued on Nov. 1, 1994.  Absent some kind of patent term extension, the ‘201 patent will expire soon.  The ‘201 patent is the subject of both a litigation and a covered business-method (CBM) patent review with an accused infringer/petitioner Interthinx, Inc.  The litigation is CoreLogic Information Solutions, Inc. v. Fiserv, Inc., et al., Civil Action No. 2:10-CV-132-RSP (E.D. Texas).  The CBM patent review is CBM2012-00007.  Claim 1 of the ‘201 patent is as follows:

1. A computer-implemented process for appraising a real estate property, comprising the steps of:

collecting training data;

developing a predictive model from the training data;

storing the predictive model;

obtaining individual property data for the real estate property;

generating a signal indicative of an appraised value for the real estate property responsive to application of the obtained individual property data to the stored predictive model;

developing an error model from the training data;

storing the error model; and

generating a signal indicative of an error range for the appraised value responsive to application of the individual property data to the stored error model.

PACER reveals a jury verdict form just entered in the Texas litigation on September 28, 2012, where Interthinx was found to not have infringed claims 1 and 10 of the ‘201 patent, and that Interthinx failed to show claims 1 or 10 invalid.  This jury decision comes only 9 days after the CBM petition was filed in the USPTO/PTAB.

What will happen next is anyone’s guess.  Interthinx may elect to wait and see if a CBM trial is instituted.  It may settle with CoreLogic to avoid appeal.  Or it may do a little of both.  It may also pursue the CBM in an effort to challenge the patent  and extinguish any possible reversal and remand by the Federal Circuit on appeal of the trial court action by CoreLogic.

If the CBM PTAB trial is pursued, it will be interesting to see how the PTAB regards a prior litigation decision, such as the one in this case, given the differences between administrative review and litigation.  The differences in  interpretive standards and burdens of proof are  summarized in the slide below:

We already learned from cases such as  In re Baxter International (Fed. Cir. 2012), that the PTO can find a patent unpatentable even after the Federal Circuit affirmed a lower court decision that the patent was not invalid.  As stated in Baxter:

“[T]he PTO in reexamination proceedings and the court system in patent infringement actions “take different approaches in determining validity and on the same evidence could quite correctly come to different conclusions.’[citing Swanson, quoting Ethicon]”

But that does not mean that the PTAB trial judges will ignore district court decisions and that courts will ignore PTAB decisions.  It remains to be seen how much one process defers to the other.

Comparative Study of Post Issuance Review Options

Friday, September 21st, 2012

Today I had the pleasure of co-presenting at the Midwest IP Institute on various post-issuance proceedings with Kevin Rhodes, Chief Intellectual Property Counsel and President of 3M Innovative Properties Company.  A PDF of our joint presentation is found here.

The presentation provides a comparison between IPR (inter partes review), PGR (post grant review), and CBM (covered business method) patent review.  It contrasts these proceedings to ex parte reexamination (EPX).  The goal was to present the available options for review of patents now that inter partes reexamination is no longer available.

The presentation further covered administrative trials in the PTAB.  A hypothetical was used to demonstrate the use of litigation, IPR, PGR, CMB, and EPX depending on strength of 35 USC § 101 and § 112 arguments as opposed to 35 USC § 102 and § 103 prior art invalidity arguments.  Different scenarios were used to demonstrate the complexity of the analysis.

My thanks to Kevin Rhodes and 3M for allowing me to post these slides.

Claim Interpretation for Post-Grant Review and Inter Partes Review under the AIA – Part I

Wednesday, June 20th, 2012

Today, USPTO Director David Kappos posted a comment advocating the use of  the broadest reasonable interpretation standard (BRI) for claim interpretation in post grant review and inter partes review under the America Invents Act.  This is a topic of great interest among those conducting post-grant review of patents because of numerous conflicts occuring in practice due to different intepretive standards used in reexamination (now also post-grant review and inter partes review) and litigation.

(more…)