Archive for the ‘reexamination generally’ 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.

 

In re Cuozzo Speed Technologies: Federal Circuit Affirms Board Finding of Unpatentability in First IPR

Thursday, February 5th, 2015

The Federal Circuit affirmed the final determination of the Board in the first inter partes review under the Leahy-Smith America Invents Act (AIA).   Garmin petitioned for IPR of claims 10, 14 and 17 of U.S. Patent No. 6,778,074 owned by Cuozzo Speed Technologies.  The Board found these claims obvious and denied Cuozzo’s motion to amend the ’074 patent by substituting new claims 21, 22, and 23 for issued claims 10, 14, and 17.  The Federal Circuit affirmed the Board’s final determination of obviousness, upheld the Board’s application of the broadest reasonable interpretation standard (BRI), and the Board’s denial of Cuozzo’s motion to amend.

One irony of this case is that Cuozzo challenges the Board’s adoption of BRI as an interpretive standard, yet Cuozzo asserts a construction of the phrase “integrally attached” that is broader than the definition adopted by the Board in the IPR:

Claim 10 includes the following limitation: “a speedometer integrally attached to said colored display.” ’074 patent col. 7 l. 10. Cuozzo argues that the board improper-ly construed the phrase “integrally attached.” The Board construed “integrally attached” as meaning “discrete parts physically joined together as a unit without each part losing its own separate identity.” J.A. 9. Cuozzo contends that the correct construction of “integrally attached” should be broader—“joined or combined to work as a complete unit.” Appellant’s Br. 33. Before the Board, Cuozzo stated that its construction would cover “a display that both functionally and structurally integrates the speedometer and the colored display, such that there only is a single display.” J.A. 10. Cuozzo argues that the Board’s claim construction improperly excludes a single-LCD embodiment of the invention wherein the speedometer and the speed limit indicator are on the same LCD.

Some may be confused by a patent owner who complains of the USPTO’s use of a broader interpretative standard, but simultaneously asserts a broader construction than the USPTO for a phrase.  Cuozzo needed the broader interpretation to argue that its amended claims should have been entered by the Board.   Cuozzo’s amended claims were directed to a particular embodiment of the invention employing a speedometer and speed limit indicator on the same LCD; however, the Board’s interpretation of “integrally attached” excluded that particular embodiment.  The Board relied on its claim construction to deny Cuozzo’s amended claims and the Federal Circuit upheld the Board’s narrower claim construction:

We see no error in the Board’s interpretation. The word “attached” must be given some meaning. As the Board explained, it would “be illogical to regard one unit as being ‘attached’ to itself.” J.A. 9. The specification further supports the Board’s construction that the speedometer and the speed limit are independent—it repeatedly refers to a speed limit indicator independent of any speedometer and states that “the present invention essen-tially comprises a speed limit indicator comprising a speed limit display and an attached speedometer.” ’074 patent col. 2 ll. 52–54. The Board did not err in its claim construction.

The majority opinion (filed by Judge Dyk, and joined by Judge Clevenger) and the dissent (by Judge Newman) reach several additional post-grant topics, which will be discussed in future posts.

Parties Terminate CBM Before They Settle Dispute to Avoid PTAB Decision

Monday, October 14th, 2013

In January of 2013, EZ Shield , Inc sued Harland Clarke Corp. for infringement of U.S. Pat. 8,346,637.  The ‘637 patent relates to a system for reimbursement of consumers  for losses incurred for specific forms of check fraud.  In April of that year Harland Clarke filed a petition for covered business method patent review (CBM2013-00016).  In July, EZ Shield (the Patent Owner) filed its Preliminary Response.  The Preliminary Response details how Harland Clarke (Petitioner) was allegedly a former licensee of the patent and a customer of EZ Shield for more than two years.  The Preliminary Response alleges that Harland Clarke breached its agreement and offered a competing product for sale.  EZ Shield even included a table detailing the alleged patent infringement by Harland Clarke’s competing product.

Apparently, the parties were discussing settlement and by late September they decided to contact the Board to discuss the possibility of having it delay its decision on institution of the CBM petition.  On September 27, 2013, the parties conducted a telephone conference call with the Board to discuss the possibility of delaying or suspending the issuance of the Board’s decision on whether to institute review.  On September 30, 2013, the Board denied the joint request to delay or suspend, citing its need to provide a just, speedy and inexpensive resolution of every proceeding (37 C.F.R. § 42.1(b).)  The Board did authorize the parties to file a joint motion to terminate the proceeding with a true copy of the parties’ settlement agreement in connection with the termination of the proceeding as required by 35 U.S.C. § 327(b) and 37 C.F.R. § 42.74(b).

On October 4, 2013, the parties filed a joint motion to terminate with a copy of their Settlement Agreement (Exhibit 2016) under which the parties agreed to terminate the CBM without prejudice to Harland Clarke “in the event that the Parties are unable thereafter to negotiate a mutually agreeable settlement of [the litigation].”  The Board granted the motion on October 7, 2013, and terminated the CBM.

Of course, now that the CBM is terminated we will never know if the Board would have instituted trial or not based on the documents of record.  The Settlement Agreement states that the parties have not yet settled their dispute and that the District Court agreed to stay the litigation until November 22, 2013, so it will be interesting to see whether the parties settle by then.  Obviously, settlement must be imminent or Harland Clarke would not have agreed to termination of the CBM, since it will cost at least another 6 months and an additional PTO filing fee to re-file the CBM should things not work out.  Regardless, this matter demonstrates one advantage of AIA patent trials which allow for early termination by joint motion of the parties, as opposed to reexamination which does not offer that feature.

PTAB CBM: Versata Patent Claims Unpatentable under 35 U.S.C. § 101

Thursday, June 13th, 2013

On June 11, 2013, the Patent Trial and Appeal Board (PTAB) issued a decision holding claims 17 and 26-29 of Versata’s 6,553,350 patent  unpatentable under 35 U.S.C. § 101.  This decision arises from a petition filed on Sep. 16, 2012, in a proceeding that was accelerated when SAP agreed to focus its challenge on its proffered 101 grounds.  As discussed in prior posts, there are parallel actions in the courts, including:  a Federal Circuit decision affirming of portions of a district court decision and remanding the injunctive portion to the district court for correction; and Versata’s challenge of the PTO’s institution of this covered business method (CBM) trial in the Eastern District of Virginia by Versata.

The PTAB explained its decision in detail, and carefully set forth its bases for applying the Broadest Reasonable Interpretation standard:

Versata states that claim construction is a question of law and that claim terms should be accorded only one definition: that which is based on a district court interpretation standard. PO Resp. 62. There are, however, two claim construction standards: the Office’s BRI construction and the district court standard set forth in Phillips v. AWH [415 F.3d 1303, 1313 (Fed. Cir. 2005) (en banc)].  The difference in standards generally arises from the ability of an applicant or patent owner in Office proceedings to amend their claims, and the fact that there is no presumption of validity before the Office.[Whereas a patent is presumed “valid” unless overcome by clear and convincing evidence before a district court, a petitioner’s burden before the Office is limited to proving “unpatentability” by a preponderance of the evidence. Compare 35 U.S.C. § 282(a) and § 326(e).] Through the use of the broadest reasonable interpretation standard, the Office is able to encourage inventors to amend their claims to remove uncertainties and over breadth of claim scope.

For at least a century, the Office has encouraged clear and unambiguous claim drafting by utilizing the broadest reasonable interpretation. For example, a 1906 Commissioner of Patent’s Decision held that there is no better method of construing claims before the Office. Specifically, this early decision explains the rationale for BRI as follows:

No better method of construing claims is perceived than to give them in each case the broadest interpretation which they will support without straining the language in which they are couched. This method would seemingly give more uniform and satisfactory results than are obtained by methods largely in vogue – such, for example, as that of importing limitations from the specification according to the exigencies of the particular situation in which the claim may stand at a given moment. The method suggested also seems to have the advantage according in its results with the probable intentions of the inventor at the time when the claim is drawn. In presenting claims to the Office the object constantly sought is breadth. Where a limited meaning is intended when a claim is drawn, what possible objection can there be to imposing that meaning unmistakably upon the claim by its express terms? That a claim which does not carry its true meaning on its face misleads those affected by the patent instead of guiding them to its true scope is alone sufficient reason why the Patent Office should refuse to recognize proposed limitations of claims which have not been clearly expressed therein.

Podlesak and Podlesak v. McInnerney, 123(2) O.G. 1989, 1990 (Dec. Com. Pat. 1906, emphasis added). This standard of claim construction and its rationale have been upheld consistently by the Federal courts, including both the Court of Customs and Patent Appeals (“CCPA”) and the Federal Circuit. . . .

The Board then continued on to discuss its constructions and how it held claims 17 and 26-29 “unpatentably abstract.”  The Board concluded:

This is a final written decision of the Board under 35 U.S.C. § 328(a). We hold Versata’s claims 17, and 26-29 to be unpatentable under 35 U.S.C. §101. Specifically, the claims recite unpatentable abstract ideas and the claims do not provide enough significant meaningful limitations to transform these abstract ideas into patent-eligible applications of these abstractions.

The Board ordered that claims 17 and 26-29 of the ’350 patent are cancelled as unpatentable.

You may recall from earlier posts, that SAP also filed an ex parte reexamination to raise the prior art challenges that it passed on in this CBM to accelerate this proceeding to trial on the 101 issues.  Versata had a motion to stay that pending reexamination which the Board declined in light of this final written decision.  The Board ordered that its claim construction in this CBM is binding on the patent owner in the reexamination and that a copy of this decision be placed in the reexamination file.

Now that this PTAB CBM decision is before us, we will monitor the parties’ next steps as this conflict progresses through the various other parallel actions.

A Tale of Two Patent Litigation Stays

Tuesday, May 14th, 2013

This is a story about not one, but two stays.  The first stay is a district court stay pending the outcome of a reexamination of a patent in suit.  The second is an administrative (PTAB) stay of that same reexamination pending the outcome of an AIA patent litigation proceeding based on that same patent.

The District Court Stay

It started when Encap, LLC filed suit against the Scotts Company on July 18, 2011 (Encap, LLC v. The Scotts Miracle-Gro Company, LLC, E.D. Wis. Case No. 1:11-cv-000685-WCG).  The complaint for patent infringement involved Encap’s U.S. Patent 6,209,259 (“the ’259 patent”) and two other patents.  The ’259 patent relates to a combination seed capsule comprising a viable seed and a coating comprising soil conditioning materials.  On March 9, 2012, the Scotts Company filed an ex parte reexamination request to challenge the patentability of the ’259 patent.  That request resulted in an order for ex parte reexamination (Reexamination Control No. 90/012,183) on April 27, 2012.  The ex parte reexamination resulted in a rejection of claims 1-5, 7-11, and 13-14 of the ’259 patent based on a Great Britain Patent 670,461 to Matthews (1949) and U.S. Pat. No. 4,065,287 to Roth (1977).  The rejection included an obviousness rejection based on a combination of Roth and U.S. Pat. No. 5,019,564 to Lowe.  In response, Encap did not amend claims but instead added new claims 15-44.  Ultimately, the district court ordered stay of the litigation in a decision dated August 31, 2012 (according to PACER).

The Reexamination Stay

The Central Reexamination Unit (CRU) handling the ex parte reexamination issued a second non-final office action on December 21, 2012.  Meanwhile, on January 10, 2013, the Scotts Company filed a petition for inter partes review of the ’259 patent in the PTAB (The Scotts Company LLC v. Encap, LLC; IPR2013-00110).  Shortly after that, Encap filed its response for rejection in the ex parte reexamination on February 21, 2013.  Encap filed a supplemental response on March 1, 2013.  A Notice of Defective Paper was issued by the PTO on April 20, 2103 allowing Encap one more month to correct its response, but Encap won’t need that month because on Monday, May 13, 2013, the Patent Trial and Appeal Board (PTAB) ordered a stay of the reexamination prior to deciding on whether to institute trial in the inter partes review.

Reasons for the Reexamination Stay

The Board noted that even though the claims subject to ex parte reexamination include additional claims that are not the subject of the IPR petition, all of the challenged claims are being reexamined.  Additionally, some of Petitioner’s asserted grounds of unpatentability in the IPR are based on the same prior art references that are the bases of the Examiner’s rejections in the reexamination.  In its Order of May 13th (at p. 2), the Board explained the administrative stay of the reexamination as follows:

The Board will not ordinarily stay a reexamination because, in the absence of good cause, reexaminations are conducted with special dispatch. Conducting the reexamination concurrently with the instant proceeding, however, would duplicate efforts within the Office and could potentially result in inconsistencies between the proceedings. Notably, because all the challenged claims also are being reexamined, the Patent Owner could amend those claims, which could change the scope of the challenged claims while the Board is conducting its review. Further, because of the overlap between the asserted prior art references in this proceeding and the bases of the Examiner’s rejections, the patentability of all of the challenged claims could be determined in both the instant proceeding and the reexamination based on the same grounds of unpatentability.

The Board is required to determine whether to institute an inter partes review within 3 months after receiving the preliminary response from the patent owner.  35 U.S.C. § 314(b).  The Patent Owner’s Preliminary Response was filed April 15, 2013 (according to PRPS).  The final determination of any review instituted will normally be issued no later than 1 year from institution. 35 U.S.C. § 316(a)(1), and 37 C.F.R. § 42.100(c).  The Board found that any decision on whether to institute a review or final written decision with respect to the patentability of the challenged claims will likely simplify the issues in the reexamination.

Patent Owner’s Preliminary Response explains that the parallel district court litigation is stayed pending the resolution of the ‘259 ex parte reexamination.  Patent Owner makes it clear that “time is of the essence” in a decision, alleging that “Petitioner continues to sell hundreds of millions of dollars of infringing products each year.”  (Patent Owner Preliminary Response at page 7).

Summary

Petitioner has used ex parte reexamination and an inter partes review to achieve a double stay; one stay in district court pending the ex parte reexamination and another stay of the ex parte reexamination (Central Reexamination Unit) pending the outcome of the PTAB inter partes proceeding.  If trial is instituted in the PTAB, it will be interesting to see how the PTAB handles the situation where an ex parte reexamination which included an amendment adding several new claims is now handled in the PTAB, where claim amendments are typically limited to a one-for-one replacement (absent permission from the Board to include more).

Prosecution Bars and PTAB Practice

Friday, May 10th, 2013

In an earlier post we explored many ways that reexamination differs from post-grant review, inter partes review, and covered business method review. The PTAB has been very clear that reexamination and AIA patent trials are very different.  For example, in ScentAir Technologies v. Prolitec, Inc. (IPR2013-00179 (JL)), the PTAB denied authorization for ScentAir to file a motion to disqualify Prolitec’s counsel in an inter partes review based on a prosecution bar in a protective order from the parallel litigation (paper no. 9).

During the conference call, the PTAB received assurances from counsel for ScentAir that “. . . nothing in the district court’s protective order expressly bars counsel from being counsel of record in an inter partes review before the Patent Trial and Appeal Board, although there is a ‘prosecution bar’ in the protective order prohibiting litigation counsel from drafting or amending claims while prosecuting an application before the U.S. Patent and Trademark Office.”

The Board denied authorization for ScentAir to file a motion for disqualification:

The Board finds informational and key that the protective order at issue specifically bars litigation counsel from prosecution activities without mentioning litigation or trials before the Patent Trial and Appeal Board. An inter partes review is not original examination, continued examination, or reexamination of the involved patent. Rather, it is a trial, adjudicatory in nature and constituting litigation.

In the future, litigation counsel will have to be more detailed about what activities are subject to a prosecution bar to avoid confusion about whether counsel in the district court litigation may participate in trials before the PTAB.

SAP Files Ex Parte Reexamination Request using Prior Art from Ongoing Litigations

Monday, May 6th, 2013

As you may recall from earlier posts, on September 16, 2012, SAP filed a petition for review of U.S. Pat. No. 6,553,350 to begin the first covered business method patent review (CBM2012-00001) under the America Invents Act.  To advance its PTAB trial date, SAP agreed to limit its argument to 35 U.S.C. 101 challenges set forth in its petition and not assert its prior art  challenges in the CBM.

The PTAB trial was held on April 17, 2103, and we are awaiting a decision in that trial.  The Federal Circuit also just decided the appeal in the parallel district court action last week.  The Federal Circuit affirmed the infringement and damages findings by the lower court, but remanded for correction of the injunction ordered by the lower court.

SAP recently filed papers in the PTAB action indicating that it has requested an ex parte reexamination based on its prior art R/3 documentation of the same ‘350 patent.  Ex parte reexamination requests are still prosecuted in the Central Reexamination Unit and using “special dispatch.”  It will be interesting to see if the CRU will be able to expedite these reexaminations in light of the changes brought by the AIA.  One important change being the shift of future inter partes proceedings to the PTAB (legacy inter partes reexaminations are still being completed in the CRU).

Progressive Casualty Litigation Stayed Pending Outcome of Liberty Mutual CBMs

Wednesday, April 24th, 2013

Progressive Casualty Insurance Co. sued different insurance companies for patent infringement of 5 of its patents in 2010-2012 in the Northern District of Ohio.  (Cases 1:10CV01370 and 1:11CV00082 against Safeco; Case 1:12CV01068 against State Farm; and Case 1:12CV01070 against Hartford.)  One of the defendants is Safeco Insurance Company, which has Liberty Mutual as its parent.  In 2012 and 2013 Liberty Mutual filed ten covered business method patent review (CBM) petitions (two CBM petitions were filed per patent).  Eight of these ten petitions were instituted for trial and two petitions were denied, but each of the five patents has at least one CBM where trial was instituted by the PTAB.

Liberty Mutual and the remaining defendants moved to stay the litigation based on the CBMs instituted.  Progressive opposed the motion to stay.  The District Court heard oral arguments on April 11, 2013, and granted the motion stay on April 17, 2013.

The court used a four-factor test set forth in the AIA section pertaining to CBMs (AIA § 18(b)(1), P.L. 112-29, 125 Stat. 284, 331):

  • (1) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial;
  • (2) whether discovery is complete and whether a trial date has been set;
  • (3) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and
  • (4) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.

It is interesting that the Liberty Mutual litigation was previously stayed pending the outcome of ex parte reexaminations, yet the Court found the benefits of inter partes covered business method review compelling enough to order another stay pending the outcome of the PTAB trials.  Some of these benefits observed by the Court include:

  • CBM proceedings are inter partes rather than ex parte, which allows Liberty mutual “a better platform to advocate its interests.”
  • CBM proceedings are “presided over by a panel of three administrative judges whom are required to have ‘competent legal knowledge and scientific ability,’ 35 U.S.C. § 6(a), as opposed to a single patent examiner.”
  • To institute CBM review, the petitioner must show the claims are likely invalid, 35 U.S.C. § 324(a), which is more onerous than meeting the “substantial new question of patentability” standard required to initiate ex parte reexaminations.
  • The Court also found the short timeline of the CBM proceedings (to be completed within 18 months of institution of trial), to be attractive and likely to decide issues before the Court.

For further information the order for stay provides the details of the Court’s findings and has a detailed table attached at the last page showing the different CBMs and their status.

AIA Patent Trials Differ from Reexamination

Saturday, April 20th, 2013

In the past few months, I have had discussions with many different stakeholders about how AIA post-grant review differs from conventional reexamination.  AIA patent trials (post-grant review or PGR, inter partes review or IPR, and covered business method patent review or CBM) are substantially different than traditional reexamination.  Some of these differences are summarized in the table below (click on the table to enlarge it):

Other than legacy inter partes reexaminations, the Central Reexamination Unit (CRU) is currently only charged with processing ex parte reexaminations.  What remains to be seen is how ex parte reexamination will change as the CRU processes the legacy reexaminations and its docket frees up.

Pro Hac Vice Admission Challenge to Test Extent of Participation of Litigation Team Member with Knowledge under Protective Order in Covered Business Method Patent Review

Tuesday, November 6th, 2012

In the first covered business-method patent review ever filed (CBM2012-000001), SAP America and Versata Development Group are in a dispute as to whether a litigation attorney for Versata should be admitted pro hac vice in the PTAB trial. Apparently there is concern by SAP’s counsel about the attorney’s participation, because the Versata litigator was exposed to sensitive information, including information about SAP’s products, covered under a protective order in the earlier litigation (currently on appeal before the Federal Circuit).  SAP is concerned that the sensitive information (which it asserts is more than is publicly known), would give Versata an unfair advantage in the trial.

In an order entered November 1, 2012 as paper no. 16, the PTAB summarized the arguments and requested further information about the protective order from the parties before making a final determination:

SAP Opposes Versata’s request.  SAP Opposition to Motion for Pro Hac Vice Admission, Paper 15. SAP states that Mr. Cole, as trial counsel in the related litigation, gained access to highly confidential and proprietary information about SAP and its products. The use of this information is said to be governed by a protective order from the district court. SAP expressed a concern that Mr. Cole’s participation in both the district court litigation and the review proceeding puts him in a position where he could affect the scope of the claims of the ’350 patent while knowing how SAP’s products operate beyond that publically known. Id. at 2. SAP also represents that:

[A]llowing Mr. Cole to participate in this proceeding could effectively circumvent the restrictions of the underlying district court’s protective order, which precludes litigation counsel’s use of any SAP protected materials beyond the scope of that litigation.

Id. at 3.

In addition to Mr. Cole, Versata also seeks to employ expert witnesses in this proceeding that had access to SAP’s confidential information in the related litigation. SAP again sought to oppose this reliance representing that the protective order in the related litigation precluded the use of experts and consultants that received information under the district court protective order in proceedings before the Office.

Versata sought to allay SAP’s concerns by stating that they would not seek to file a motion to amend in this proceeding. The Board appreciates Versata’s attempt to lessen any potential prejudice to SAP should Versata be authorized to rely upon Mr. Cole and the requested experts. The Board however, has reviewed Versata’s motion for pro hac vice and has determined that it requires further information regarding the protective order to better understand what, if any, impact the district court’s protective order has upon this proceeding.

Versata’s offer to forego amendment is directed to a frequent concern of patent owners in reexamination proceedings who seek to bar litigation counsel with access to protected information from participating in prosecution activities.  But in responsive briefing, SAP identified a concern beyond mere amendment of the ‘350 patent:

Regarding Section I.c of the Board’s Order, Versata’s offer not to amend its claims does not allay SAP’s concerns regarding participation by Versata’s lead trial counsel in this proceeding. It is well established that, with or without a formal amendment, statements and arguments made during post-grant proceeding can change the meaning of a claim term, and thus scope of that claim. See Marine Polymer Technologies, Inc. v. Hemcon, Inc. 672 F.3d 1350, 1363-64 (Fed. Cir. 2012) (en banc); Am. Piledriving Equip., Inc. v. Geoquip, Inc., 637 F.3d 1324, 1336 (Fed.Cir.2011); CIAS, Inc. v. Alliance Gaming Corp., 504 F.3d 1356, 1362– 63 (Fed.Cir. 2007). Thus, even if Versata does not amend its claims, Mr. Cole can still influence the scope of Versata’s claims through his participation in this proceeding.

It is now up the PTAB to make a decision in this dispute.  It will be interesting to see how that PTAB uses the information concerning the protective order to decide this matter.  We will all stay tuned.