Archive for the ‘Future of PTAB Trial Practice’ Category

Are Patent-Friendly PTAB Decisions On the Rise?

Monday, February 6th, 2017

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.

 

Patent Trends to Watch in 2016

Friday, January 29th, 2016

2016 is starting off with a bang!  A number of interesting new developments have occurred as we enter into this new year:

AIA 2015 Stats

 

So we will monitor practices by the courts, the PTAB, stakeholders, and patent practitioners to observe the effects and interplay of these decisions and actions over the course of the year.  In particular, it will be interesting to see how the Board and the courts handle claim construction issues knowing that BRI may be revised by the Supreme Court.  Also of great interest is how parallel patent infringement trials will be impacted by the PTAB proceedings on the underlying patents.

 

New PTAB Rule Changes Published Yesterday

Wednesday, May 20th, 2015

A small number of rule changes were published yesterday which affect all involved in post-grant trials at the USPTO.  The fixes make the rules more specific and make for more uniform proceedings.  They are effective May 19, 2015.  A copy of the Federal Register notice can be found here.

Are Your Patent Procurement Guidelines Outdated?

Sunday, May 3rd, 2015

 

I saw a bumper sticker that said:  “Change is inevitable, but growth is optional.”  This is true in many facets of life, and it is true for patent practice.  The changes of the past few years are numerous and far-reaching.  Is your patent portfolio strategy growing with these changes?

changes

One Simple Exercise

If you are responsible for your company’s patent portfolio, try this simple exercise:  look at your patent procurement guidelines to find out when they were last updated.  If they were last revised over two years ago, chances are they do not contemplate options like:

  • Track One filings in the USPTO for faster patent examination,
  • steps to use the USPTO’s After Final Consideration Pilot (AFCP) program to rapidly resolve pending prosecution, and
  • procedures to improve your future patent filings in order to survive claim challenges from IPRs, CBMs, and PGRs under the America Invents Act.

All of these options provide tools that can issue more meaningful and robust patents for your company and trim your patent portfolio’s bottom line.

Why Are These Tools Important?

Each of these tools can provide strategic advantages for your portfolio, depending on your goals.  For example:

  • Track One filings may be used in a campaign of patent filing to rapidly assemble issued patent rights in a strategic area, to bolster an ongoing enforcement campaign, or to offset expected or pending AIA patent challenges.
  • The after final consideration pilot program (AFCP) can be used to avoid needless and expensive RCE practice and to accelerate issue of valuable claims.
  • Drafting measures that enhance your patents’ ability to survive (or even avoid) AIA patent trials will become increasingly important–especially if Congress passes legislation to moderate post-grant review estoppel.  Your company saves hundreds of thousands of dollars each time your patents avoid an AIA patent trial — not to mention the potential recoveries that the patent brings when it is clear to the challenger that it is valid and infringed.

Act Now

Of course, there are many more tools for your procurement guidelines and the ones listed above are only some examples.  Every business requires different tools and approaches to match the patent practices and opportunities of that industry.

It takes time to assemble a good set of guidelines.  Even after the guidelines are complete, know that procedures to generate better patents can take time to implement.

When asked to audit patent filings for various companies, I was surprised by a pattern of reluctance to adopt new filing practices observed with preparation and prosecution counsel.  I heard various excuses to resist change, such as “we have been drafting claims like this for years.”   That was undoubtedly true prior to the AIA; however, the scrutiny that patents receive in AIA patent trials is substantially different than prior reexamination and litigation proceedings.

AIA post-grant proceedings are not going away any time in the foreseeable future.  Therefore, we are in a new patent enforcement paradigm and patent procurement practices have to change to adapt to this new enforcement paradigm.  Make sure that your patent prosecution practices are updated to generate the most effective rights possible.

[Editor’s Note:  Additional installments on patent preparation and prosecution in light of the AIA will be posted in the future.  Subscribe for updates.]

The Settlement Effect of PTAB Proceedings and Recent Patent Office Trial Statistics

Monday, December 29th, 2014

December 29, 2014

The Patent Trial and Appeal Board (PTAB) released statistics for AIA Patent Office trials as of Dec. 18, 2014.  Different commentators have recently reported that the institution rate for these proceedings has dropped to about 60-70 percent, depending on how you calculate it.  Those familiar with PTAB trial practice (IPR, CBM, PGR and derivation proceedings) understand that the trial statistics are moving targets, but they do provide some insight to interesting trends.

Based on the Dec. 18, 2014 data provided by the PTAB, it appears that the rate of denied petitions is approaching the rate of party settlements.  If the denial and settlement data are normalized to the number of filed trials (excluding the filings prior to decision on institution), the statistics show about a 20:20:60 percent relationship between settlements, denied proceedings, and instituted proceedings (ones that do not settle), respectively.  That means for every five petition filings, approximately one proceeding will be denied, one will settle early, and three will complete their trials.

But the filing of a petition is not always required to reach settlement between parties — the threat of a petition can provide all the impetus needed for settlement between parties.  This settlement effect of PTAB proceedings provides another opportunity for parties to attempt to settle their differences prior to the formal filing of an IPR, CBM, PGR or DER petition.  Frequently, the petition will be prepared to posture the matter for final discussion prior to its filing.  Once filed, the petition serves as valuable information for all other stakeholders interested in defeating the Patent Owner and its patent.  So a Patent Owner with some concern about the patentability of its patent has an incentive to settle with the prospective Petitioner before any petition is filed.

Of course, the PTO statistics cannot account for the cases where parties settle without filing a petition (“non-filed settlements”), so if the number of non-filed settlements is significant, then the PTO statistics underestimate the overall efficacy of post-grant proceedings for settlement of disputes between parties.

If you poll attorneys actively filing these petitions about the number of non-filed settlements they have accomplished compared to the number of petitions actually filed, you will get very different anecdotal responses.  Depending on that number, the impact on settlements of disputes in general (both formal proceedings and prior to formal proceedings) can be significant.

The following table shows how the settlement ratios change using different percentages of the number of matters that settle without any petition filing (percentage of non-filing settlements to that of post-filing settlements).  For example, if you estimate that for every 5 filed petitions, about 1 settlement occurs without a filed petition, refer to the 20% entry in the table below to find the aggregate percentage of disputes settled (including both pre-filing and post-filing disputes).  Using this 20% estimate, the aggregate percentage of disputes settled rises to roughly 33%, the percentage of denied cases drops to roughly 15%, and the percentage of matters going through full trial drops to roughly 48%.  This means for every six disputes, roughly two will settle (one with and one without a petition), one will be denied, and three will complete their trials.  Thus, by viewing disputes from a settlement perspective, including settlements obtained without filing a petition, the aggregate denial and institution rates necessarily fall and the efficacy of the challenges from an overall dispute perspective is enhanced, regardless of the win:loss ratio experienced by the parties at trial.

Of course, this is only a crude first approximation of settlement dynamics.  More information is needed to know the magnitude of the settlement effect of patent office trials on party settlements.  That information will be difficult to ascertain due to the confidential nature of such settlements, but each stakeholder can make its own approximation based on its experience.  Regardless, these settlements amplify the efficacy of the PTAB proceedings and their effect can be as significant as the known settlements arising from the PTAB proceedings themselves.

Table 1

Target Corp. Requests Rehearing of Denied IPRs by Expanded PTAB Panel

Friday, October 17th, 2014

October 17, 2014

Last month, the Patent Trial and Appeal Board (PTAB or Board) interpreted the IPR joinder provision, 35 U.S.C. § 315(c), to preclude joinder requests by an existing party to an ongoing proceeding.  (Target Corp. v. Destination Maternity Corp., IPR2014-00508 and IPR2014-00509.)  In these recent decisions, the Board decided that § 315(c) requires “party joinder” and not only “issue joinder.”  Interestingly, before this interpretation was announced the Board had allowed “issue joinder” without requiring joinder of a new party to the proceeding (Microsoft v. Proxyconn, IPR2013- 00109), and after this interpretation was announced at least one panel of the Board applied an analysis that did not appear to adopt this new interpretation (Microsoft Corp. v. Enfish LLC, IPRs 2014-00574, -00575, -00576, and -00577).

Last week, Target Corp. filed rehearing requests in both affected IPR proceedings in an effort to have the Board reconsider its interpretation of  35 U.S.C. § 315(c) with an expanded panel.  Target’s arguments are quite clearly stated in its Motion for Rehearing, some of which include:

  • The AIA was implemented for broad remedial purposes to improve patent quality and to provide a more efficient system for challenging patents that should not have issued.
  • These broad remedial purposes of the AIA empower the PTO to administer IPR proceedings in a way to reduce duplication of efforts and costs.
  • Laws pertaining to patent quality which are “remedial in nature, based on fundamental principles of equity and fairness” can be construed liberally.
  • The PTAB should interpret the joinder provision liberally to allow for consistency of prior decisions, and reduce gamesmanship in parallel district court litigation.

On that last point Target’s motion states:

Target’s Joinder Motion sets forth the unique facts of this case, which reveal that a significant prior art reference long known to the patent owner was withheld from Target in the parties’ parallel district court litigation until several weeks after Target’s one-year deadline under 35 U.S.C. § 315(b). (Paper 3, at 1-6.) Under the Board’s decision here, a patent owner in parallel litigation with a petitioner can readily subvert the purposes of the AIA, see supra Part II.A, and the IPR process by withholding any significant prior art it may be uniquely aware of, or additional asserted claims, until after the petitioner’s one-year deadline under § 315(b).

Of course, joinder motions cannot be filed any time after institution of the prior proceeding — they must be filed within a month after the date of institution of the IPR for which joinder is requested:

§ 42.122 Multiple proceedings and Joinder.

(b) Request for Joinder. Joinder may be requested by a patent owner or petitioner. Any request for joinder must be filed, as a motion under § 42.22, no later than one month after the institution date of any inter partes review for which joinder is requested. The time period set forth in § 42.101(b) shall not apply when the petition is accompanied by a request for joinder.

However, in many cases the possibility of joinder of issues to a petitioner about a year after service of the lawsuit is still quite valuable to the petitioner and has been used to assert improved grounds and to attack newly asserted claims. (Microsoft v. Proxyconn, IPR2013- 00109.)

It will be interesting to see what the PTAB decides to do in Target’s IPR proceedings.  More importantly, it would be a great thing if this rehearing would result in  consistent joinder practice across panels in the future.

PTAB Applies “Issue Joinder” Analysis to Deny Microsoft’s IPR Joinder Requests

Thursday, October 2nd, 2014

October 1, 2014

The reader may recall that last week an expanded PTAB panel announced an interpretation of 35 U.S.C. § 315(c) that essentially ruled out a joinder request for a subsequent IPR petition made by an existing party to the instituted proceeding.  Target Corp. v. Destination Maternity Corp. (IPR2014-00508 and -00509.)  In Target, the Board adopted a “party joinder” interpretation of the § 315(c) IPR joinder statute that provided for new persons to join an instituted IPR, but not for joinder of new issues raised by the same petitioner.

This interpretation was a departure from an earlier interpretation of § 315(c) that allowed a party to the instituted IPR the ability to request joinder of a later-filed petition based on new issues (“issue joinder”).  As noted by the Board in Target:

In other decisions, the Board has granted joinder of an additional petition or proceeding (as opposed to an additional person) to an instituted inter partes review. See Ariosa Diagnostics v. Isis Innovation Ltd., Case IPR2012-00022 (PTAB Sept. 2, 2014) (Paper 66) (“Ariosa”); Samsung Elecs. Co. v. Virgina Innovation Scis., Inc., Case IPR2014-00557 (PTAB June 13, 2014) (Paper 10) (“Samsung”); Microsoft Corp. v. Proxyconn, Inc., Case IPR2013-00109 (PTAB Feb. 25, 2013) (Paper 15); ABB Inc. v. Roy-G-Biv Corp., Case IPR2013-00286 (PTAB Aug. 9, 2013) (Paper 14); Sony Corp. v. Yissum Research Dev. Co. of the Hebrew Univ. of Jerusalem, Case IPR2013-00327 (PTAB Sept. 24, 2013) (Paper 15).

Decision Denying Motion for Joinder for IPR2014-00508 at p. 3.

The issue joinder interpretation provided a petitioner a mechanism to attempt to “cure” a partial institution based on new grounds of unpatentability or to challenge claims newly added to the litigation since the filing of the original IPR petition.  And this could be done even if the later-filed IPR petition was filed after the § 315(b) one-year bar date.

This week, the Board rejected four IPR petitions with joinder requests based on the earlier ‘issued joinder” interpretation of  § 315(c).  In Microsoft Corp. v. Enfish LLC (IPRs 2014-00574, -00575, -00576, and -00577), the Board denied joinder, but only after it made a full analysis of Microsoft’s joinder request based on the issues raised by Microsoft.  Since Microsoft was the Petitioner in the underlying instituted proceedings, these later-filed IPR petitions and their respective joinder requests were made by the same party (Microsoft), yet the Board did not apply the “party joinder” interpretation announced in Target.  Had the Board used the party joinder interpretation the decisions would have been much shorter.

Microsoft had filed these four IPRs and their respective joinder requests after the one-year IPR bar, so failure to obtain joinder resulted in each later-filed petition being denied based on the § 315(b) one-year bar.

The Target and Microsoft decisions were only four days apart.  It may take more time to determine whether the Board intends to use the issue joinder or party joinder approach to decide future IPR joinder motions.

 

PTAB Joinder Practice Update: Board Interprets 35 U.S.C. § 315(c) to Require Party Joinder

Tuesday, September 30th, 2014

Sep. 30, 2014

In at least two decisions last week, the Patent Trial and Appeal Board (PTAB or Board) interpreted the IPR joinder provision, 35 U.S.C. § 315(c), to preclude a joinder request by an existing party to the proceeding.  The Board had allowed this practice in the past, for example, when a party timely filed its request for joinder with a petition that asserted new grounds of challenging one or more claims of the patent under IPR.  In these most recent decisions, the Board seems to have decided that § 315(c) requires “party joinder.”

In two IPRs styled Target Corp. v. Destination Maternity Corp. (IPR2014-00508 and -00509) the Board provided its rationale for why subsequent IPR petitions by Target could not be joined to the instituted IPR proceedings (IPR2013-00531 and -00533, respectively).  The Decision Denying Motion for Joinder for the -00508 IPR provides this reason (which is referenced by the parallel Decision Denying Motion for Joinder in the -00509 IPR):

The statute does not refer to the joining of a petition. Rather, it refers to the joining of a petitioner (i.e., “any person who properly files a petition . . .”). Id. Further, it refers to the joining of that petitioner “as a party to [the instituted] inter partes review.” Id. Because Target is already a party to the proceeding in IPR2013-00531, Target cannot be joined to IPR2013-00531.

The -00508 IPR Decision included a dissent which summarized prior cases allowing such joinder:

The majority opinion chooses not to address the issues as presented by the parties. Instead, the majority bases its decision to deny the motion entirely on a construction of 35 U.S.C. § 315(c), concluding that the statute enabling joinder does not apply here because it allows only joinder of parties, not joinder of issues. According to the majority, the language in § 315(c) addresses only joinder of a “party” to a proceeding, and does not permit joinder in the situation present in this case, where Petitioner seeks the “joinder” of additional grounds by the same party. The majority opinion acknowledges, however, the Board has consistently allowed joinder of additional grounds by the same party See, e.g., Ariosa Diagnostics v. Isis Innovation Ltd., Case IPR2012-00022 (PTAB Sept. 2, 2014) (Paper 66)(“Ariosa”); Samsung Elecs. Co. v. Virginia Innovation Scis., Inc., Case IPR2014-00557, (PTAB June 13, 2014) (Paper 10); Microsoft Corp. v. Proxyconn, Inc., Case IPR2013-00109 (PTAB Feb. 25, 2013) (Paper 15); ABB Inc. v. Roy-G-Biv Corp.,Case IPR2013-00282 (PTAB Aug. 9, 2013) (Paper 15).

As the majority opinion observes, the Board in Ariosa concluded that the language in § 315(c) that allows joinder of “any person who properly joins a petition under section 311” should be construed as not prohibiting the joinder of inter partes review proceedings involving the same party. Here, however, the majority opinion concludes that “the relief described in § 315(c) is something an existing party already has, namely, party status in the instituted inter partes review.” The majority opinion states further in a footnote that

solely focusing upon “any person” does not give full effect to the other words in the statute that limit who “any person” may be. Other language in § 315(c) excludes from “any person” at least two persons from among those who may be joined to a proceeding. More specifically, the phrase “who properly files a petition under section 311” excludes the patent owner, and “as a party,” excludes persons who are already a party.

We note initially that as this issue of statutory construction was not addressed, and thus not briefed, by the parties, the majority should not have denied joinder solely on statutory construction grounds. Apart from and independent of this failure to address the issues presented by the parties, however, we disagree with the majority’s construction of § 315(c), for the reasons discussed below.

Joinder is of particular importance to PTAB practitioners because the AIA imposes strict rules on the timing and content of IPR petition filings to challenge patentability.  It is especially important in IPRs, because a petitioner is barred from filing another petition over a year after service of a complaint alleging infringement under 35 U.S.C. § 315(b).  Before the decisions of the past week, a petitioner had one more chance to argue a different ground of challenge in an IPR using § 315(c) joinder.  Although not guaranteed, on occasion the Board had allowed joinder of a later-filed petition by the same petitioner to an instituted proceeding when the later-filed petition met certain conditions of timeliness and where the later-filed petition will not pose an undue delay or burden on the existing proceeding.  This afforded the petitioner one more opportunity to “tune” challenges when the Board granted partial institution of the claims challenged in the instituted IPR after the one-year bar.  It also afforded the petitioner another chance to challenge claims newly added in a parallel litigation after the one-year IPR bar.  Essentially, the former practice gave the petitioner one more opportunity to consolidate challenges in one proceeding.

If the Board follows the recent decisions precluding joinder requests by a party to the proceeding, petitioners will have to be more diligent to challenge every claim that could be possibly asserted in the parallel litigation.  Petitioners will have to continue to be thorough in exploring the best prior art challenges in the original petition and to assert robust grounds of unpatentability that will withstand the Board’s institution decision.  Accordingly, time will tell if last week’s ruling will be the rule for joinder and whether it will result in more IPR petitions to meet these challenges.  After all, in post-grant practice, that which you do not successfully challenge is likely to be harder to challenge later.

Lex Machina’s 2013 Patent Litigation Report Shows Disparity Between Litigated Patents and those under PTAB Review

Wednesday, May 14th, 2014

Litigation and post-grant proceedings often go hand-in-hand. A new litigation report published by Lex Machina summarizes patent litigation data for 2013 and prior years.  It is an interesting report and very easy to digest.  Two findings caught my eye.  The first one relates to the overall number of patent litigation cases filed in 2013:

Plaintiffs filed 6,092 new patent cases in U.S. District Courts in 2013 . . .

The second finding is the number of U.S. Patents at issue in those filings:

4,917 patents were at issue in all cases filed during 2013.

That second number is surprising, because if understood correctly, the findings indicate that about 5 out of every 6 lawsuits filed in 2013 relate to different patents.  That ratio seems high — especially in view of the AIA litigation joinder provisions.  However, if we assume these numbers are roughly correct, they show a large difference between the number of patents asserted and the petitions filed in the PTAB.

For example, compare Lex Machina’s reported 4,917 patents at issue in 2013 suits with the 1,312 total IPR and CBM petitions on file in the PTAB from September 16, 2012 to May 8, 2014.  These numbers indicate that  at most about 1 out of 3 patents in litigation are the subject of a PTAB petition.  If true, that means several patents in litigation have not been submitted for review by the PTAB.

Of course, bear in mind that this is just a rough, unscientific approximation because:

  • not every petition in the PTAB relates to a new patent,
  • not every patent being challenged in the PTAB is in litigation, and
  • this crude approach does not attempt to correlate the petitions before the PTAB with a certain year of patent assertion.

Not every patent in suit is eligible for a post-issuance proceeding in the PTAB, so there is no reason to expect that every patent in suit will be the subject of a petition.  But, this data seems to indicate that there is still a large number of litigated patents that could be subject to future post-grant challenges. Readers are invited to contact me with better data than this admittedly rough approximation.  Please send me that information and I will try to post it to give a more accurate representation of patents in litigation versus those challenged in the PTAB.

 

PTAB Provides More Guidance on Discovery

Sunday, July 21st, 2013

On March 5, 2013, the Patent Trial and Appeal Board (PTAB or Board) provided guidance to the bar concerning routine discovery and additional discovery.  (See paper 26 in Garmin v. Cuozzo, IPR2012-00001) This decision set forth five factors which are important in determining what constitutes discovery satisfying the “necessary in the interest of justice” standard under 35 U.S.C. § 316(a)(5).  This decision is but one listed on the PTAB’s web page of Representative Orders, Decisions, and Notices, and as a result it is widely known and referenced by post-grant practitioners.

On July 18, 2013, in this same IPR, the PTAB provided yet more guidance concerning discovery.  (IPR2012-00001, paper 50) This time the guidance relates to depositions, and in particular, the circumstances where corrective filings of deposition testimony may be filed by counsel.

Over a month after cross-examinations of its experts, Cuozzo (the Patent Owner) filed errata sheets in an attempt to correct the cross-examination testimony by its experts.  A joint telephone conference was requested by the parties a few weeks later to resolve their dispute regarding the propriety of the filing of these errata sheets.  The Board conducted a telephone conference on July 16, 2013 and issued an order expunging the errata sheets because they were filed without authorization and were submitted after Garmin (Petitioner) had already responded to the (allegedly erroneous) expert testimony for Cuozzo.  The request also came after Garmin’s window of opportunity to conduct further cross examination of Cuozzo’s witnesses or to submit a revised reply to Cuozzo’s response or opposition to Cuozzo’s motion to amend claims.

The Board reminded practitioners that such requests must be authorized before a motion is filed:

The rules for an inter partes review do not provide for the filing of errata sheets in connection with the deposition testimony of a witness. Thus, a party intending to file an errata sheet, for whatever purpose, especially if it is to change the substantive testimony of a witness, must contact the Board and obtain prior authorization before doing so. One of the comments to the proposed rules for implementing inter partes review, post grant review, and covered business method patent review inquired about errata sheets and what is or is not acceptable in an errata sheet, and the Office’s response is that the rules do not provide for the submission of errata sheets and that a party who believes an errata sheet is necessary may request a conference call with the Board. Rules of Practice for Trials Before the Patent Trial and Appeal Board and Judicial Review of Patent Trial and Appeal Board Decision; Final Rule, 77 Fed. Reg. 48612, 48642 (Aug. 14, 2012)(Response to Comments).

IPR2012-00001, paper 50 at page 3.

The Board did not absolutely rule out the possibility of authorizing entry of errata sheets in future cases, but it set forth this guidance:

We take this opportunity to state that unless unopposed by the other party, a request to make a material change to the substance of cross examination testimony is unlikely to be successful no matter when the request is made. Error in transcription is a different matter.

IPR2012-00001, paper 50 at page 4.

The Board emphasized that a party has the ability on redirect to cure any perceived deficiency of testimony or to elicit a more complete answer.

A picture of future PTAB practice is emerging as more decisions are rendered by the Board.  For an advantage in these proceedings, clients will want counsel that is versed in all of the technical aspects of the challenged invention to understand it and to be able to properly question witnesses and clarify their testimony.  Counsel should also be familiar with Patent Office practice to understand what the Board will allow procedurally, and the information that the Board needs to find in the client’s favor.  Counsel also should have litigation experience and deep legal knowledge to properly grasp the impact of testimony and to make sure that the record is as clear and complete as possible for the Board and any Federal Circuit appeal that may follow.