Archive for the ‘Uncategorized’ Category

Best Practices and Strategies for Patent Procurement and Enforcement Webinar Series

Wednesday, February 15th, 2017

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

 

PTAB Narrows Its Preliminary Claim Interpretation To Uphold Cellular Patent

Monday, February 13th, 2017

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

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

8. A cellular base station comprising:

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

wherein properties of the primary preamble comprise:

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

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

a small peak-to-average ratio; and

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

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

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

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

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

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

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

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

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.

 

PTAB Trials Rule Package Library

Monday, May 23rd, 2016

Some of you have requested a collection of the rule packages from the PTAB.  Click on the link below for each document:

A – Umbrella Admin Trial Rules (Final Rule 2012)

B – IPR, PGR and CBM (Final Rule 2012)

C – CBM Definition (Final Rule 2012)

D – Office Patent Trial Practice Guide (Final Rule 2012 version)

E – PTO Rule Change to Kill 9 Month IPR Deadzone (Final Rule 2013)

F – AIA Technical Corrections Act (2013)

G – PTAB Quick Fix (2015)

H – Amendments to PTAB Rules (Eff. May 2, 2016)

I – Correction to 2016 PTAB Rules

PTAB Designations for Opinions (2016) 

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.

 

Judge Rader to Retire from the Federal Circuit

Monday, June 16th, 2014

Judge Rader announced his plans to retire from the Federal Circuit at the end of this month. Different sources are reporting that he has indicated an interest in teaching intellectual property to students in various countries. This will also allow him to continue to lecture and travel in the next phase of his career.  We wish him the best of luck in his new pursuits.

Chief Judge Rader Stepping Down from Chief Judge Position, but Still Serving as CAFC Judge

Friday, May 23rd, 2014

From the U.S. Court of Appeals for the Federal Circuit Web Page:

CHIEF JUDGE RANDALL R. RADER TO STEP DOWN AS CHIEF JUDGE ON MAY 30, 2014

Chief Judge Randall R. Rader today announced his intention to step down as chief judge on May 30, 2014. Judge Rader will continue in active service on the court. He will also undertake additional teaching, lecturing and travel. Consistent with statutory succession provisions, Judge Sharon Prost will succeed Judge Rader as the chief judge.

Federal Circuit Dismisses Appeals by Petitioners Who Were Denied Inter Partes Reviews

Friday, April 25th, 2014

The Federal Circuit issued two orders on April 24, 2014 dismissing appeals by petitioners in proceedings where the Patent Trial and Appeal Board (PTAB) denied institution of inter partes review (IPR).  Each appeal is summarized as follows:

St. Jude Medical, Cardiology Div. v. Volcano Corp. & Michelle K. Lee (as Deputy Director) – Appeal of Denial of IPR Petition

St. Jude brought suit against Volcano for patent infringement of five patents in 2010.  St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., No. 10-cv- 631 (D. Del. filed July 27, 2010).  Volcano counterclaimed alleging patent infringement of its U.S. Pat. 7,134,994 in September of 2010.  More than two years later, the district court dismissed all claims relating to the ‘994 patent (based on stipulations by the parties).

About a half year after the district court dismissal, St. Jude filed a petition for IPR of the ‘994 patent.  IPR2013-00109.  But that petition was dismissed by the Board (acting as a delegee of the Director) based on the one-year bar for IPR petitions.  35 U.S.C. § 315(b).  In a case of first impression, the Board determined that a counterclaim alleging infringement of a patent asserted over a year before the filing of the IPR petition triggered the 315(b) bar.  St. Jude appealed the Board’s decision not to institute IPR to the Federal Circuit.  Volcano and the PTO Director moved to dismiss St. Jude’s Federal Circuit appeal.

The Federal Circuit dismissed St. Jude’s appeal, holding that it may not hear appeals from the Director’s denial of petition for inter partes review.  In making its decision, the Court applied 35 U.S.C. § 314(d) and explained that an appeal to the Federal Circuit of a decision on IPR lacks jurisdiction unless the Board institutes trial:

Chapter 31 authorizes appeals to this court only from “the final written decision of the [Board] under section 318(a).” Id. § 319. Likewise, section 141(c) in relevant part authorizes appeal only by “a party to an inter partes review . . . who is dissatisfied with the final written decision of the [Board] under section 318(a).” Id. § 141(c). What St. Jude now challenges, however, is the Director’s non-institution decision under section 314(a) & (b). That is not a “final written decision” of the Board under section 318(a), and the statutory provisions addressing inter partes review contain no authorization to appeal a noninstitution decision to this court.  . . .

The statute thus establishes a two-step procedure for inter partes review: the Director’s decision whether to institute a proceeding, followed (if the proceeding is instituted) by the Board’s conduct of the proceeding and decision with respect to patentability.  . . . The statute provides for an appeal to this court only of the Board’s decision at the second step, not the Director’s decision at the first step.

The Federal Circuit’s position on direct appeals from the Director’s decision whether to institute an inter partes review is summarized in the next paragraph:

In fact, the statute goes beyond merely omitting, and underscoring through its structure the omission of, a right to appeal the non-institution decision. It contains a broadly worded bar on appeal. Under the title, “No Appeal,” Section 314(d) declares that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” Id. § 314(d). That declaration may well preclude all review by any route, which we need not decide. It certainly bars an appeal of the non-institution decision here.

The Court’s holding in St. Jude Medical was also used to dismiss the next appeal which requested mandamus relief:

In re Dominion Dealer Solutions, LLC. – Petition for Writ of Mandamus to the USPTO

Dominion Dealer Solutions filed several IPR petitions to challenge the patentability of several patents owned by AutoAlert, Inc.  IPR2013-00220, -00222, -00223, -00224 and -00225.  The Board denied institution of trial for five of the IPR petitions.  Dominion filed requests for rehearing, but they were also denied by the Board.  Dominion then filed an action in the Eastern District of Virginia to challenge the Board’s decision under the Administrative Procedures Act (see my earlier post).  Dominion also filed a “Petition for Writ of Mandamus to the Director” with the Federal Circuit.

The Federal Circuit denied the petition for mandamus.  In denying Dominion’s appeal, the Federal Circuit referenced the St. Jude Medical decision made that same day:

In another Order issued today, we dismiss an appeal by a patent challenger seeking review of the Director’s decision not to institute an inter partes review. See Order Dismissing Appeal, St. Jude Med., Cardiology Div., Inc. v. Volcano Corp., No. 2014-1183 (Fed. Cir. Apr. 24, 2014). We explain that such a challenger may not appeal the non-institution decision to this court. We conclude that such an appeal is precluded by the statutory provisions addressing inter partes review, including section 314(d)’s broad declaration that the Director’s decision “whether to institute an inter partes review under this section shall be final and nonappealable,” and by our jurisdictional statute. See St. Jude, slip op. at 5-6.

Those conclusions require denial of Dominion’s petition for mandamus relief. At a minimum, given our conclusions about the statutory scheme, Dominion has no “clear and indisputable” right to challenge a noninstitution decision directly in this court, including by way of mandamus. That is all we need to decide.

The Court noted Dominion’s appeal in the Eastern District of Virginia, and its dismissal on April 18, 2014, but concluded “[w]e need not decide that issue here.”

_______

These decisions remind petitioners that they should take every reasonable measure to obtain institution of trial, because appeals of Board decisions denying institution of trial will not easily survive a motion for dismissal in light of the holding in St. Jude Medical. It will be interesting to see whether Dominion will decide to appeal the district court’s dismissal of its APA challenge now that the Federal Circuit has rejected mandamus relief under the St. Jude Medical holding.

Eastern District of Texas Denies SAP’s Motion to Vacate the Judgment in the Versata Patent Infringement Case

Thursday, April 24th, 2014

SAP recently learned that the Eastern District of Texas denied its motion to set aside or stay a district court judgment in favor of Versata for infringement of its U.S. Pat. 6,553,350 (Versata Software, Inc v. SAP America, Inc., No. 2:07-cv-00153 (E.D. Tex)).  On April 20, 2014, Judge Roy S. Payne dismissed SAP’s motion despite its successful patentability challenge of Versata’s ‘350 patent last year in the PTAB.  Could SAP’s win in the first covered business method patent review be too late to rid itself of the judgment?

History of the Patent Infringement Suit and PTAB CBM Proceeding

The patent infringement suit by Versata started when it sued SAP for alleged infringement of its U.S. Patent Nos. 6,553,350 and 5,878,400 in 2007 (Versata Software, Inc v. SAP America, Inc., No. 2:07-cv-00153 (E.D. Tex)).

A first jury trial was held in 2009, and a second jury trial was held in 2011.  In the first trial, the jury found both patents directly infringed and inducement of infringement of one claim of the ’350 patent.  Shortly after the first trial, the Court granted JMOL of noninfringement of the ’400 patent.  A second trial was held on the ’350 patent and a jury found the ’350 patent infringed, resulting in a $392 million judgment and an injunction dated September 9, 2011 (stayed pending appeal).

SAP filed its petition for covered business method patent review on the first day it was available via the AIA:  September 16, 2012.  The petition included grounds for challenging the ’350 patent under 35 USC §§ 101, 112, and 102.  This was the the first covered business method patent review under the America Invents Act (CBM2012-000001).

About a month later, SAP filed a notice of appeal of the district court decision in the Federal Circuit (filed on October 11, 2011).  Briefing was completed some months later, and oral arguments were held on February 4, 2013.  About a month before the oral arguments (January 9, 2013), the PTAB instituted trial on the challenges under 35 USC §§ 101 and 102, but declined review on the challenges under 35 USC § 112.  So as of January, 2013, the dispute was being pursued both in the Federal Circuit and in the PTAB.

Based on a series of communications between the parties and the PTAB, SAP agreed to drop its challenge under 35 USC § 102 in exchange for an expedited trial on its challenges under 35 USC § 101.  The PTAB trial was held on April 17, 2013, where both parties presented their arguments concerning 35 USC § 101.

On May 1, 2013, the Federal Circuit affirmed the lower court jury decision on infringement and damages awards and vacated part of the trial court’s permanent injunction and remanded for further proceedings based on the opinion.

In June of 2013, the Patent Trial and Appeal Board (PTAB) decided that Versata’s U.S. Pat. 6,553,350 was unpatentable under 35 U.S.C. § 101.

After the Patent Office decided that the claims challenged in the related covered business method patent review were unpatentable, SAP motioned for a stay of proceedings in the Federal Circuit.  In a simple, one page document, the Federal Circuit denied that motion for stay on July 5, 2013 without providing further comment or opinion.  The Supreme Court denied certiorari of SAP’s petition on January 21, 2014.

Current Stay Motion

A “Motion of SAP America, Inc. and SAP AG For Relief From Judgment Under Fed. R. Civ. P. 59(e) or 60(b) Or For A Stay” was filed on January 21, 2014, and renewed on March 27, 2014 in the E.D. Tex. action.  Judge Payne’s denial of the stay observed:

The Court finds that all four of these [stay] factors counsel against a stay in this case. There are no remaining issues in this case to simplify. The trial has been held and the appeal is completed. A stay would clearly unduly prejudice the nonmoving party and provide a clear tactical advantage for the moving party. Moreover, a stay would not reduce the burden of litigation on the parties or the Court. Finally, the fact that the Federal Circuit has already denied Defendants’ request for a stay pending completion of the PTAB proceedings weighs heavily against Defendants’ request. Accordingly, the request for a stay is DENIED.

Judge Payne also denied the request to vacate under Rule 60(b):

Defendants have taken advantage of a full and fair opportunity to litigate the validity of the patent before this Court, before the jury, and before the Federal Circuit, even pursuing a writ to the United States Supreme Court. To hold that later proceedings before the PTAB can render nugatory that entire process, and the time and effort of all of the judges and jurors who have evaluated the evidence and arguments would do a great disservice to the Seventh Amendment and the entire procedure put in place under Article III of the Constitution. The proceedings before the PTAB are not even final at this time, but this Court does not believe that later finality will change this calculus. Indeed, it is the finality of the judgments issued by the Federal Courts that is at stake here. Unlike the situation before the Court in Fresenius USA, Inc. v. Baxter Intern., Inc., 721 F.3d 1330 (Fed. Cir. 2013), the judgment in this case is final and there are no further issues to be resolved. That fact also clearly distinguishes this case from that before the Fifth Circuit in Bros. Inc. v. W. E. Grace Mfg. Co., 320 F.2d 594 (5th Cir. 1963).

Thus, Judge Payne distinguished the present matter from the Baxter case at least in part because the Baxter judgment was not final.  Apparently, the court is of the opinion that once certiorari was denied by the Supreme Court the district court judgement became final.  It will be interesting to see SAP’s response to this decision in the upcoming months.

Eastern District of Virginia Decides PTAB Decision to not institute IPR is Not Appealable

Monday, April 21st, 2014

A patent owner insists that your company infringes a patent and makes a claim of patent infringement.  You have settled patent infringement assertions before, but this patent seems invalid over known prior art.  You consult with your patent counsel and a decision is made to file a petition for inter partes review (IPR) under the new post-grant challenges afforded by the America Invents Act.

A lot of hard work goes into preparing the IPR petition.  You include a declaration by an expert and multiple prior art grounds of invalidity.  You file your petition, knowing that in six months you will get a decision on whether the Patent Trial and Appeal Board (PTAB) will institute trial.  You get notice that a decision has been made and you read it, only to learn that your petition for IPR has been denied in total.  You believe the decision not to institute is a mistake.  What do you do?

To know your options you consult the statute:

§ 314. Institution of inter partes review

. . .

(d) NO APPEAL.—The determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.

Final and nonappealable?  That does not sound good.  After all, you recall hearing something about requests for reconsideration.  So you consult the CFR:

§ 42.71 Decision on petitions or motions.

. . .

(c) Petition decisions. A decision by the Board on whether to institute a trial is final and nonappealable. A party may request rehearing on a decision by the Board on whether to institute a trial pursuant to paragraph (d) of this section. When rehearing a decision on petition, a panel will review the decision for an abuse of discretion.

(d) Rehearing. A party dissatisfied with a decision may file a request for rehearing, without prior authorization from the Board. The burden of showing a decision should be modified lies with the party challenging the decision. The request must specifically identify all matters the party believes the Board misapprehended or overlooked, and the place where each matter was previously addressed in a motion, an opposition, or a reply. A request for rehearing does not toll times for taking action. Any request must be filed: . . .  (2) Within 30 days of the entry of a final decision or a decision not to institute a trial.

You prepare and file a request for rehearing according to the rules, but the PTAB affirms its earlier decision.  What can you do now?

Petitioners are starting to explore different avenues to attempt to challenge a decision not to institute trial.  Some have filed for relief in the Eastern District of Virginia, some have appealed to the Court of Appeals for the Federal Circuit, and some have made claims in both courts.  A recent decision by the Eastern District of Virginia relies on § 314(d) to hold that appeals of PTAB decisions to not institute trial are  final and nonappealable.

In Dominion Dealer Solutions, LLC, v. Michele K. Lee, 3:13CV699, ____ (E.D. Va. 2014), Judge Robert E. Payne denied  Dominon’s challenge of the PTAB’s decision not to institute trial in five IPR petitions filed by Dominion against patents owned by AutoAlert, Inc.  The court instead granted the PTO’s motion to dismiss based on its interpretation that the PTAB’s decision not to institute trial is final an nonappealable under 35 U.S.C. § 314(d).

As it turns out, the Federal Circuit already has a petition for mandamus from Dominion requesting relief from the PTAB decision to not institute IPR.  It will be interesting to see how the Federal Circuit decides that petition, because that may be an indicator of the Federal Circuit’s approach to other persons that are also seeking a writ of mandamus — some of which we will be discussing in future posts.