Some of you have requested a collection of the rule packages from the PTAB. Click on the link below for each document:
On April 1, 2016 the PTO published its final rule on Amendments to the Rules of Practice for Trials Before the Patent Trial and Appeal Board. A small correction to these Amendments was published on April 27. I presented a summary of these rule changes at the AIPLA Spring Meeting in Minneapolis, MN on May 18, 2016. The slides from my presentation are attached.
The comments in the final rule make it clear that the PTAB will be publishing an updated Office Patent Trial Practice Guide to address these new rules and changes in practice since publication of the first Office Patent Trial Practice Guide.
Federal Circuit Employs Phillips Claim Construction to Measure Claims Amended in Reexamination for Possible Intervening RightsFebruary 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.
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.
The passage of the AIA is still relatively recent, yet statistics are starting to emerge that demonstrate the effective use of IPRs to settle patent infringement cases. IAM magazine recently published an interesting report by Unified Patents showing that IPRs have the effect of increasing the median time to settle litigations (from 211 to 420 days), but when viewed from the time that the first IPR filing is made, the median time of the “adjusted duration” (163 days) is shorter than the median time for litigations without IPRs (211 days):
For the 15,000 cases filed between 2012 and 2014 that settled before the end of 2015, the median duration was around 211 days. By contrast, for the much smaller subset of 1,100 cases which were identified as related matters to at least one inter partes review proceeding, the median overall duration was 420 days.
At first glance, this result seems counter-intuitive and contrary to the America Invents Act’s efficiency and cost-saving goals. However, a closer look at this subset of 1,100 related matters reveals that most settled within 180 days of the earliest inter partes review filing date. Specifically, the median adjusted duration for these cases was 163 days as of the end of 2015.
This timing data demonstrates that settlement is statistically likely before an institution decision is made (which can take place as late as 6 months after the filing date of the petition). The report offers a few explanations for the observed data:
One explanation for the increase in pre-institution settlements may be that settling the dispute earlier allows patent owners to eliminate the risk that an adverse decision could be used as grounds for institution in a later case. [ ]
A second explanation may be that defendant petitioners have an increased incentive to settle claims before institution due to the low rate of institution – although this seems less likely.
Other potential reasons why IPRs encourage settlement include:
- Weak patent assertions are more likely to attract IPR petitions by defendants.
- Well-educated defendant petitioners are incentivized to file IPR petitions to combat weak patents.
- As long as there is an inexpensive validity challenge option, weak patent assertions are inherently easier to settle than cases involving strong patents.
- IPR filings quickly inform the parties about the strengths and weaknesses of each other’s case.
- Strong IPR petitions educate the patent owner about any potential weaknesses of the challenged patent.
- Weak IPR petitions inform the patent owner about the weakness of the publication prior art.
- Expectations of each party will converge more quickly if they learn more about their case early in the patent contest.
- IPRs require the parties to communicate relatively early in a patent assertion. These communications provide more opportunities for the parties to understand their case and to discuss and settle the dispute.
Those active in post-grant proceedings know that IPRs also provide a limited mechanism for settlement before the IPR petition is filed. Of course, it is difficult to account for settlements that occur before an IPR petition is filed, but pre-filing settlements were discussed in an earlier post, and will be part of a half hour presentation I will be making for Patexia’s webinar series on March 24, 2016: “Posturing IPRs for Early Settlement.” More information about that seminar can be found by clicking on this link.
Federal Circuit Reinforces PTAB’s Authority to Institute Trial on Selected Claims in Synopsis v. Mentor Graphics AppealFebruary 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.
2016 is starting off with a bang! A number of interesting new developments have occurred as we enter into this new year:
- The Supreme Court will review broadest reasonable interpretation (BRI), courtesy of the petition for cert in Cuozzo
- The Federal Circuit continues to selectively review and provide guidance on PTAB decisions, such as in Ethicon Endo-Surgery v. Covidien LP
- Federal district courts continue to draw from IPR, CBM and PGR proceedings for their decisions, such as in cases like Aylus Networks, Inc. v. Apple Inc.
- The Board is also quite busy, and recently announced two new precedential decisions already this year:
- The volume of AIA Petitions continues to rise (data courtesy the USPTO):
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.
Last week, the Board provided an opinion to offer guidance on its view of the scope of petitioner estoppel. The Westlake Services v. Credit Acceptance Corp. decision relates to the scope of estoppel to a Petitioner following a final written decision from a first petition. Westlake Services v. Credit Acceptance Corp., CBM2014-00176, Paper 28 (PTAB May 14, 2015).
This case addresses the question of the scope of Petitioner estoppel when only part of the claims in a CBM proceeding are instituted for trial. In short, the first petition set forth grounds to challenge the patentability of all claims of U.S. Pat. 6,950,807. Only some claims were instituted for trial. Later, the Petitioner filed another petition to challenge claims that were not instituted for trial in the first proceeding. A final written decision was issued by the Board in the first proceeding finding the instituted claims unpatentable under § 101, and the Patent Owner sought to block the second petition based on petitioner estoppel under 35 U.S.C. § 325(e)(1):
The petitioner in a post-grant review of a claim in a patent under this chapter that results in a final written decision under section 328(a), or the real party in interest or privy of the petitioner, may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that post-grant review.
The Patent Owner obtained permission to brief the Board with its reasons why the Petitioner was estopped from filing the second petition. The Patent Owner argued that § 328(a), provides “[i]f a post-grant review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” In this case the Patent Owner wanted estoppel to apply to all claims to prevent Petitioner from coming back for a second bite on the claims that were not instituted for trial. After all, the petition was trying to challenge every claim of the patent and the Board did not institute on several claims. So the Patent Owner relied on this language to assert that the estoppel arising from the Final Written Decision applied to all claims.
Here is the Patent Owner’s logical syllogism:
A. The Petition challenged all claims.
B. § 328(a) provides a Final Written Decision is with respect to “any patent claim challenged by the petitioner.”
C. Therefore, the Final Written Decision applies to all claims, even though institution was only to a subset of the claims.
D. § 325(e) provides estoppel to all claims because the Final Written Decision is to all claims in (C) above.
E. Accordingly, Petitioner is estopped from challenging all claims.
The Board denied the Patent Owner’s logic. Essentially, it determined that § 328(a) and § 325(e) apply on a claim-by-claim basis, and therefore estoppel applies only to the claims instituted for trial. The Board wanted to clarify estoppel applies only to a claim in a patent that “results in a final written decision” under § 328(a). So the Board’s logic is different:
A. The Petition challenged all claims.
B. Trial was instituted to only some claims.
C. The Final Written Decision under § 328(a) is only to the instituted claims.
D. § 325(e) provides estoppel to “a claim in a patent” that “results in a final written decision” under § 328(a), therefore estoppel is only to the instituted claims.
E. Accordingly, Petitioner is estopped from challenging the instituted claims.
The Board’s guidance about the scope of estoppel allows all parties to make informed decisions about how to better litigate their cases.
June 22, 2015
Rembrandt Wireless Technologies sued Samsung and Research in Motion for infringement of U.S. Patent 8,457,228 in June 2013. The ‘228 patent relates to data communications, and in particular to a data communication system in which a plurality of modems use different types of modulation in a network.
In June of 2014, Samsung filed six IPR petitions to challenge various claims of the ’228 patent. (IPR2014-00889 to -00893 and -00895.) Only half of Samsung’s six petitions were instituted for trial, but claim 21 was the only claim of the ’228 patent in the district court litigation that was not instituted for trial in the PTAB. (Rembrandt also asserted U.S. Patent 8,023,580, which was also the subject of six IPR petitions, and had additional claims not instituted for trial.)
In the original IPR challenge of claim 21 (IPR2014-00892), Samsung unsuccessfully asserted a combination of “admitted prior art” (“APA”) with U.S. Patent 5,706,428 (“Boer”). Samsung filed another IPR petition in January 2015 with a motion for joinder to IPR2014-00892 proposing new grounds for the unpatentability of claim 21. (IPR2015-00555.) These new grounds combined a new reference, U.S. Patent 5,537,398 (“Siwiak”), to the originally asserted prior art. But on June 19, 2015, the Board again denied institution of trial of claim 21 and without considering Siwiak:
We do not reach the merits of Petitioner’s additional reasoning in the instant Petition as to why Petitioner asserts that the subject matter of claim 21 would have been obvious over the combination of APA, Boer, and Siwiak. Instead, for the reasons discussed below, we exercise our discretion under 35 U.S.C. § 325(d) to deny institution of inter partes review in this proceeding.
35 U.S.C. § 325(d) states:
In determining whether to institute or order a proceeding under . . . chapter 31, the Director may take into account whether, and reject the petition or request because, the same or substantially the same prior art or arguments previously were presented to the Office.
To reject the second IPR petition, the Board integrated § 325(d) with 37 C.F.R. § 42.1(b): “[37 C.F.R. § 42] shall be construed to secure the just, speedy, and inexpensive resolution of every proceeding.” The Board explained its denial of the petition:
Petitioner [ ] presents no argument or evidence that Siwiak was not known or available to it at the time of filing IPR ’892. In fact, Petitioner applied Siwiak in proposed grounds of rejection against claim 21 of the ’228 patent in another petition filed the same day as that in the IPR ’892 proceeding. See IPR2014-00889, Paper 2 at 58–60. On this record, we exercise our discretion and “reject the petition” because “the same or substantially the same prior art” previously was “presented to the Office” in the IPR ’892 proceeding. [cites omitted]
Petitioner is requesting, essentially, a second chance to challenge the claims. We, however, are not persuaded that a second chance would help “secure the just, speedy, and inexpensive resolution of every proceeding.” 37 C.F.R. § 42.1(b). Permitting second chances in cases like this one ties up the Board’s limited resources; we must be mindful not only of this proceeding, but of “every proceeding.” [cites omitted]
In this proceeding, however, we are not apprised of a reason that merits a second chance. Petitioner simply presents arguments now that it could have made in IPR ’892, had it merely chosen to do so. In view of the foregoing, and especially in light of the fact that, barring joinder, this petition is time-barred under 35 U.S.C. § 315(b), we exercise our discretion [to deny the petition].
To conserve its limited resources, the Board must be more selective in petitions it will consider. Petitioners must provide reasons why the Board should consider new grounds proffered in a subsequent petition, including why the new grounds could not have been presented in an earlier-filed petition.
In Microsoft Corp. v. ProxyConn, Inc. v. Michelle K. Lee, Intervenor (Fed. Cir. cases 2014-1542 and -1543), the Federal Circuit reversed claim constructions made by the Board in the underlying IPRs. One of the claim constructions that was reversed related to the interpretation of components of a packet-switched network. In particular, the claims recite a gateway that is “connected to the packet-switched network in such a way that network packets sent between at least two other computers pass through [the gateway],” as stated in claim 6 of U.S. Patent No. 6,757,717:
6. A system for data access in a packet-switched network, comprising:
a gateway including an operating unit, a memory and a processor connected to said packet-switched network in such a way that network packets sent between at least two other computers pass through it;
a caching computer connected to said gateway through a fast local network, wherein said caching computer includes an operating unit, a first memory, a permanent storage memory and a processor;
said caching computer further including a network cache memory in its permanent storage memory, means for a digital digest and means for comparison between a digital digest on data in its network cache memory and a digital digest received from said packet-switched network through said gateway.
The Federal Circuit referenced Figure 11 of the patent to show one embodiment where the caching computer is connected to the gateway, and the gateway is connected to receiver and sender computers:
The interpretive issue is whether the “two other computers,” could be any two computers, including the caching computer recited in claim 6 immediately after the gateway. This interpretation is important because the asserted prior art arguably included a gateway connected to at least one other computer and the caching computer, but not a gateway connected to receiver and sender computers and a caching computer. Microsoft argued for the broader interpretation, which included the caching computer as potentially one of the two connected computers. But ProxyConn argued for the narrower interpretation that the “two other computers” referred only to the sender and receiver computers. The Board adopted the broader interpretation, and decided the prior art rendered such claims unpatentable.
The Federal Circuit reversed the Board’s construction, first by analyzing the claim language:
The Board erred in concluding that the “two other computers” could include the caching computer. Beginning with the language of the claims, claim 6 recites a system comprising a gateway, a caching computer, and “two other computers.” ’717 patent col. 10 l. 54–col. 11 l. 12. Not only are the “two other computers” recited independently from, and in addition to, the gateway and caching computers, the word “other” denotes a further level of distinction between those two computers and the specific gateway and caching computers recited separately in the claim.
Then the Federal Circuit turned to the specification:
The specification confirms that the phrase “two other computers” is limited to the sender/receiver and computer/receiver. Other than in claim 6 itself, the phrase “two other computers” is used three times in the specification, each time as part of the embodiment containing the gateway and caching computer intermediaries. [cites omitted] And in each instance where it is used, the phrase “two other computers” describes components that are separate and distinct from the gateway and the caching computer. [ ]
For example, the specification states: “Gateway 60 is connected to a wide-area packet-switched network in such a way that network packets sent between at least two other computers 42 and 46 pass through the gateway 60. The caching computer 62 uses a part of its permanent storage memory for network cache memory 66.” [cites omitted] (emphases added). As shown in referenced Figure 11, the “two other computers 42 and 46” in this passage are the sender/computer and receiver/computer, respectively. Read together with labeled Figure 11, this portion of the specification makes clear that the gateway, the caching computer, and the “two other computers” are each separate and distinct components of the overall system. The Board’s construction, which expands the “two other computers 42 and 46” to include the separately identified caching computer, is unreasonably broad in light of the language of the claims and specification.
The Federal Circuit vacated the Board’s findings of unpatentability of claims 6, 7, and 9, and remanded “for proceedings consistent with this opinion.”
Some takeaways from this portion of the appellate decision are:
- The Federal Circuit supports the PTO’s adoption of the broadest reasonable interpretation (BRI) standard for IPRs, consistent with Cuozzo.
- It will actively provide guidance on what constitutes a proper BRI for IPRs.
- A BRI determination may be guided by analysis of the claim language and the patent specification, including the drawings.
We will explore more about the claim constructions and decision on the Patent Owner’s motion to amend in future posts.
We know from the Federal Circuit’s decision in In re Cuozzo Speed Technologies, that the broadest reasonable interpretation (BRI) standard applies in IPRs, but in a recent appeal decision, the Federal Circuit has announced limits to the application of BRI.
Microsoft had filed two separate IPR petitions challenging certain claims of U.S. Patent No. 6,757,717, which were later joined. The Board ultimately found all but one of the challenged claims unpatentable as being either anticipated or obvious. The Board also denied Proxycomm’s motion to amend its claims, concluding it hadn’t established the patentability of its claims. Microsoft Corp. v. Proxyconn, Inc., IPR2012-00026 and IPR2013-00109.
On June 16, 2015, the Federal Circuit reversed the Board’s constructions, and thereby vacated and remanded its determinations of unpatentability of certain claims, but upheld its decision to deny Proxyconn’s motion to amend. Microsoft Corp. v. Proxyconn, Inc. v. Michelle K. Lee, Intervenor (Fed. Cir. cases 2014-1542 and -1453).
Some of the interesting points of the Federal Circuit’s decision are:
- The Federal Circuit followed its earlier decision in Teva Pharmaceuticals USA v. Sandoz, Inc., to review the Board’s ultimate claim constructions de novo and its underlying factual determinations involving extrinsic evidence for substantial evidence. The Court stated that to the extent the Board relied on extrinsic evidence to construe the claims, it “need not consider the Board’s findings on that evidence because the intrinsic record is clear.” (Id. at p. 6.)
- The Federal Circuit clarified that even though BRI was properly adopted by PTO regulation in Cuozzo, that does not allow the Board to “construe claims during IPR so broadly that its constructions are unreasonable under general claim construction principles.”
- It cited In re Skvorecz and In re Suitco Surface, Inc. to clarify that BRI cannot result in an unfettered or legally incorrect interpretation. (Id. at p. 6.)
- The Court also advised that “[t]he PTO should also consult the patent’s prosecution history in proceedings in which the patent has been brought back to the agency for a second review,” citing Tempo Lighting Inc. v. Tivoli LLC, In re NTP, Inc. and Suitco. (Id. at p. 7.)
The Federal Circuit then proceeded to analyze the Board’s claim constructions and decision denying Proxyconn’s motion to amend. These will be covered in future posts.