Posts Tagged ‘inter partes reexamination’

Are Patent-Friendly PTAB Decisions On the Rise?

Monday, February 6th, 2017

Patent litigation changed with passage of the America Invents Act. Overnight the PTAB became a new venue for challenging patent claims using IPRs, CBMs and PGRs. The initial reaction by the patent bar to the PTAB’s “take charge” approach to instituting review and canceling patent claims was met with approval by businesses under attack by patent trolls and with disdain by patent owners whose patents would have likely sailed through the assertion before the AIA. Some commentators blasted the PTAB for a high percentage of patent claims invalidated in PTAB proceedings.

Those who tried to paint the actions of the PTAB with a broad brush in the first years of IPRs were bound to be both right and wrong. Yes, institution rates were at an all-time high, but factors such as these made the first years of PTAB practice particularly hard to characterize:

  • the patent bar and the PTAB were learning how to litigate these new patent trials for the first time;
  • litigation teams did not have the luxury of seeing how the PTAB viewed patents under review, and to tailor their litigations accordingly; and
  • a number of patents already in litigation were selected based on a pre-AIA (pre-IPR) enforcement economic model:
    • discovery and litigation costs established a minimal nuisance settlement value (now it is the cost of IPR);
    • thinly capitalized patent owners who previously had to outlay only minimal investment in the litigation suddenly had to secure counsel to defend patent rights in these patent reviews for the first time; and
    • the patents under review were drafted to survive district court scrutiny and enjoy the presumption of validity and a clear and convincing standard of review (and many still are).

Public sentiment was a moving target, but so was practice before the PTAB. After witnessing the PTAB’s heightened scrutiny of patentability, rather than file new suits many patent owners decided to wait and watch from the sidelines or take their assertions outside the U.S. Regardless, patent owners quickly learned the benefit of analyzing and selecting patents more likely to survive an IPR, CBM or PGR lodged by a defendant-petitioner before engaging in a patent litigation.

Now, with PTAB institution rates moderating, it remains to be seen whether the Board is easing its scrutiny on patentability or whether higher caliber patent assertions are being lodged in view of that heightened scrutiny.

For example, the PTAB recently rendered some decisions that might give patent owners reason to reconsider:

CASE STUDY 1: IPR2016-01453 – U.S. Patent 7,358,679 – Wangs Alliance Corp. d/b/a WAC Lighting Co. v. Philips Lighting North America Corp., Paper 8, (Feb. 2, 2017)

On February 2, 2017, the Board denied the ’679 IPR Petition filed by Petitioner Wangs Alliance Corp. (“WAC”) challenging Patent Owner Philips’ Lighting patent. The backstory of the dispute between Philips and WAC is quite interesting:

Philips has been embroiled in patent litigation with WAC since May, 2015. Koninklijke Philips N.V. et al. v. Wangs Alliance Corporation, Case No. 14-cv-12298-DJC (D. Mass.). Philips sued WAC for patent infringement of eight patents (not including the ‘679 patent) relating to lighting products and systems relating to LED lighting devices. WAC filed IPR petitions on seven of the eight patents, but obtained institution of only six of the seven IPR petitions. In January 2016, the district court litigation was stayed pending the outcome of the IPRs.

WAC later filed two IPR petitions against the ‘679 patent.  The ’679 patent does not appear in the litigation documents, but WAC identified it as claiming priority to U.S. 7,352,138 (which is in the litigation) and as related to U.S. 7,039,399 (also in the litigation).

The ‘679 patent relates to an LED-based lighting unit that resembles a conventional MR16 bulb having a bi-pin base connector configured to engage mechanically and electrically with a conventional MR16 socket. Claim 1 is representative:

 1. An apparatus, comprising:

at least one LED;

a housing in which the at least one LED is disposed, the housing including at least one connection to engage mechanically and electrically with a conventional MR16 socket; and

at least one controller coupled to the housing and the at least one LED and configured to receive first power from an alternating current (A.C.) dimmer circuit, the A.C. dimmer circuit being controlled by a user interface to vary the first power, at least one controller further configured to provide second power to the at least one LED based on the first power.

WAC’s ’679 IPR petition was denied when the Board adopted a claim construction of “alternating current (A.C.) dimmer circuit” that was narrower than the one proffered by Petitioner WAC.

WAC argued that “A.C. dimmer circuit” means “a circuit that provides an alternating current (A.C.) dimming signal.” WAC further asserted that it requires only receipt of an A.C. signal and the provision of power (A.C. or D.C.) to a light source. Patent Owner Philips countered that “A.C. dimmer circuit” requires an AC output from the AC dimmer circuit. The Board agreed with Philips, based on arguments and claim constructions from a related IPR (IPR2015-01294 which relates to U.S. 7,038,399), and because Patent Owner argued that “every instance of “A.C. dimmer circuit” in the ’679 patent’s specification describes an A.C. output from the A.C. dimmer circuit. (See Prelim. Resp. 4–5.)

A summary of the Philips patents and their IPR outcomes thus far (note: several decisions are still on appeal) shows that Patent Owner Philips is defending its patents well in these proceedings:

* The ’679 Patent is not appearing in litigation documents, but a claim of priority from U.S. 7,352,138 and a relationship to U.S. 7,039,399 is noted in WAC’s petitions. The ’679 IPR outcome is not yet determined because even though the -01453 IPR petition was unsuccessful the -01455 IPR institution decision remains to be decided and is not expected until later this month. Note: several of these decisions are on appeal, so these are not final results.

Philips’ IPR results are comparable to historical statistics when it comes to the number of IPRs instituted, but its results are substantially better than the statistical outcomes associated with IPR final written decisions from 2016 data. For example, early Board practice saw a very high percentage of IPR institutions (starting at ~90% in 2013 and dropping to ~70% in 2016). Upon institution, a patent owner’s chances of losing all claims if the IPR were to reach a final written decision would be roughly 70%.

In this Philips case study, the percentage of IPRs instituted remains relatively consistent with IPR institution outcomes (ignoring the ‘679 IPRs because they are not yet final, we get 5 out of 7 IPRs were instituted or ~70% ); however only one of the institutions resulted in a cancellation of all claims, which is much closer to 17% than the 2016 expected 67% cancellation rate for IPRs instituted which end in a final written decision (again, the results of the Federal Circuit appeals will not be known for some time). However, the data also shows a mixed claim decision outcome in 2 out of 6 IPRs (~33%), which equates to roughly double the typical percentage of mixed claim decisions (typically ~15%). Of course, mixed claim decisions are very hard to evaluate, because one has to know which claims are more likely to be infringed with substantial damages to know if the mixed result was a winner or a loser for a patent owner.

The Philips patent IPR outcomes are not yet final, but as of today Philips is substantially ahead of the 2016 percentages.

Let’s consider another case study:

 

CASE STUDY 2: IPR2015-01769, — U.S. Patent 7,793,433 — Zero Gravity Inside, Inc. v. Footbalance System OY, , Paper 49, (Feb. 3, 2017)

Footbalance System OY sued Zero Gravity Inside, Inc. et al. alleging patent infringement in May, 2015 and filed amended complaints, including a third one filed on October 21, 2016. Footbalance alleged patent infringement of its US Patents 7,793,433 and 8,171,589. The patents related to apparatus and method for producing an individually formed insole.

In response, Zero Gravity filed two IPR petitions challenging claims of each patent on August 19, 2015. Both IPR challenges failed.

The ’589 IPR petition alleged obviousness of claims 1-3, but was not instituted in a Decision Denying Inter Partes Review dated January 13, 2016 (IPR2015-01770, Paper No. 17, January 13, 2016).

The ’433 IPR petition was instituted based on alleged obviousness of claims 1-7, but on February 3, 2017, the Board found that Petitioner Zero Gravity failed to show by a preponderance of the evidence that claims 1-7 of the ’433 patent were unpatentable under 35 U.S.C. § 103. Footbalance managed to maintain its claims despite institution of the IPR.

The Board decided Petitioner failed to show that the prior art taught “wherein the at least one layer of thermoplastic material is configured to reach out from under a heel of a foot only to the metatarsophalangeal joint of the foot”, as recited in Claim 1 (“the MTP limitation”).

According to the Final Written Decision, Petitioner first asserted that the MTP joint extended approximately ¾ of the way down the foot, but Patent Owner countered that a person of skill in the art would understand the MTP limitation requires a precise anatomic location of the MTP joint and not an approximation or average, such as ¾ the length of the foot. The Board found that Petitioner then shifted its argument to assert that the prior art, which taught a pad before the ball of the foot was “so close to the requirements of the MTP limitation that the MTP limitation would still have been obvious to a POSA in light of either of these teachings.” Paper 48, 8-9 (italics in original). The Board was not persuaded:

Petitioner’s contentions in the Petition are not persuasive because they are not based upon the broadest reasonable construction of the MTP limitation. As discussed above, we construe the MTP limitation to require a layer formed to extend to, but no further than, the location of the MTP joint of a specific foot. [ ]. Petitioner, however, does not sufficiently show that an insole having a ¾-length moldable support layer teaches a layer formed to extend to, but no further than, the location of the MTP joint of a specific foot. [ ]

Petitioner’s contentions in its Reply also are not persuasive. Dieckhaus discloses that thermoplastic layer 6 “extends from the back or heel portion of the insole, to approximately just short of the ball section of the foot” [ ].  Approximately just short of the ball section of the foot is not the location of the MTP joints (i.e., the location of the heads of the metatarsal bones and the corresponding proximal phalanx). [ ] Further, Petitioner does not sufficiently show that it would have been obvious to one of ordinary skill in the art to modify Dieckhaus’s thermoplastic layer 6 to extend to, but no further than, the location of the MTP joint of a specific foot. Petitioner’s assertion that such a modification would have been obvious because Dieckhaus’s disclosure is “so close” is a mere conclusory statement. “To satisfy it burden of proving obviousness, a petitioner cannot employ mere conclusory statements. The petitioner must instead articulate specific reasoning, based on evidence of record, to support the legal conclusion of obviousness.” In re Magnum Oil Tools Int’l, Ltd., [cites omitted].

The Footbalance litigation is still in its very early stages, so it is too early to tell how the litigation may turn out, but the Board did not cancel claims from either patent.

These recent outcomes do not establish a trend, but they do show that some patent owners are succeeding despite the heightened scrutiny of PTAB proceedings.  They also show that the PTAB will provide relief to patent owners at both institution and final written decision stages of the PTAB trial.  They also give lessons on better patent drafting, which will be the subject of future posts.

 

Patent Trends to Watch in 2016

Friday, January 29th, 2016

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

AIA 2015 Stats

 

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

 

See You at the AIPLA 2014 Spring Meeting!

Wednesday, April 30th, 2014

I am presenting at the AIPLA Spring Meeting on May 15, 2014 in Philadelphia and hope to see you there.  My task is to provide strategies for filing inter partes reviews, covered business method reviews and post-grant reviews.  I hope to see you there!

I just got back from the PLI Post-Grant Conference held in San Francisco.  The new world of patent litigation has only just begun and we are seeing many interesting ways that the AIA post-grant provisions are changing the way we view and value patents.  This year already has brought a lot of patent-related decisions from the PTAB, Federal Circuit, and Supreme Court.  There will be a lot to process in the months to come.  Stay tuned.

Joint Motions to Terminate Patent Reviews Late in Trial Proceedings

Friday, December 13th, 2013

One of the advantages of patent reviews under the America Invents Act is that the parties may settle before completion of the proceedings and file a joint motion to terminate these proceedings.  The Patent Trial and Appeal Board (PTAB or Board) may consider the joint motion and terminate the entire proceeding.  It has done so in several instances.

But the Board has made it clear that when settlement results in a joint motion to terminate,  it has the power to terminate the proceedings with respect to the Petitioner and maintain the proceedings with respect to the Patent Owner.  The statute governing settlement in inter partes reviews is 35 U.S.C. § 317 (a parallel one for post-grant reviews is found in 35 U.S.C. § 327):

§ 317. Settlement

(a) IN GENERAL.—An inter partes review instituted under this chapter shall be terminated with respect to any petitioner upon the joint request of the petitioner and the patent owner, unless the Office has decided the merits of the proceeding before the request for termination is filed. If the inter partes review is terminated with respect to a petitioner under this section, no estoppel under section 315(e) shall attach to the petitioner, or to the real party in interest or privy of the petitioner, on the basis of that petitioner’s institution of that inter partes review. If no petitioner remains in the inter partes review, the Office may terminate the review or proceed to a final written decision under section 318(a).

(b) AGREEMENTS IN WRITING.—Any agreement or understanding between the patent owner and a petitioner, including any collateral agreements referred to in such agreement or understanding, made in connection with, or in contemplation of, the termination of an inter partes review under this section shall be in writing and a true copy of such agreement or understanding shall be filed in the Office before the termination of the inter partes review as between the parties. At the request of a party to the proceeding, the agreement or understanding shall be treated as business confidential information, shall be kept separate from the file of the involved patents, and shall be made available only to Federal Government agencies on written request, or to any person on a showing of good cause.

The emphasized language of the statute refers to termination with respect to a petitioner, and contemplates a situation where no petitioner remains in an inter partes review.  The corresponding PTAB rule governing settlement is 37 C.F.R. § 42.74:

§ 42.74 Settlement.

  • (a) Board role. The parties may agree to settle any issue in a proceeding, but the Board is not a party to the settlement and may independently determine any question of jurisdiction, patentability, or Office practice.
  • (b) Agreements in writing. Any agreement or understanding between the parties made in connection with, or in contemplation of, the termination of a proceeding shall be in writing and a true copy shall be filed with the Board before the termination of the trial.
  • (c) Request to keep separate. A party to a settlement may request that the settlement be treated as business confidential information and be kept separate from the files of an involved patent or application. The request must be filed with the settlement. If a timely request is filed, the settlement shall only be available: (1) To a Government agency on written request to the Board; or (2) To any other person upon written request to the Board to make the settlement agreement available, along with the fee specified in § 42.15(d) and on a showing of good cause.

The emphasized language of the rule is often cited in decisions to terminate where the Board maintains the proceedings with the Patent Owner.

Two recent decisions provide examples where the Board has terminated the proceedings with respect to the Petitioner, but not with the Patent Owner:

  • In CBM2012-00007 the Board decided to maintain the proceedings with the  Patent Owner despite terminating the Petitioner’s involvement.  Interthinx, Inc. v. Corelogic Solutions, LLC, CBM2012-00007, Paper 47 (November 12, 2013).  In this CBM, the matter was “fully briefed” and ready for oral hearing when the parties informed the Board of impending settlement.  The Patent Owner also identified ongoing litigation.
  • In IPR2013-00016 the Board terminated the Petitioner’s involvement, but maintained the proceeding with the Patent Owner.   Blackberry Corp. and Blackberry Limited v. MobileMedia Ideas, LLC, IPR2013-00016, Paper 31 (December 11, 2013).  In this IPR, the Patent Owner did not file a Patent Owner’s Response, but instead filed a motion to amend the challenged patent with claim amendments.  The Board found that “the trial issues had been fully briefed at the time the parties moved to terminate the proceeding.”

This aspect of PTAB practice is entirely different than reexamination practice, and can be used to the advantage of both Petitioner and Patent Owner, depending on the circumstances of each case.

CLE Event: Review of First Year of Patent Office Trials

Wednesday, December 11th, 2013

The America Invents Act provides us several new ways to challenge issued patents. If you are curious about what we have learned in this first year fourteen months of patent office trials, please tune into my hour webinar tomorrow morning (Dec. 12, 2013) at 9 a.m. central. I will be co-presenting with Steve Schaefer of Fish & Richardson.  The hour will provide a review of inter partes review and covered business method review, observations and trends, notable decisions, and a discussion of discovery in these PTAB proceedings.

More information and registration details can be found at:  http://www.minncle.org/seminardetail.aspx?ID=120851401

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).

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.

Steady Stream of AIA Post-Issuance Review Petitions Filed in PTAB

Friday, October 19th, 2012

It has been a little over one month since post grant patent reviews were authorized by the AIA and the Patent Office Patent Review Processing System (PRPS) shows about 47 petitions on file in the PTAB.

Look at it this way to put things in perspective:

  • The 47 petitions filed over this past month are just shy in number of the total number of inter partes reexamination requests filed  in the first four years of the inter partes reexamination statute (only 53 total inter partes reexamination requests were filed in the years of 2000 to 2004 according to PTO statistics).
  • If this rate of filing continues for the next 11 months, we could see about 500 petitions in the first year period, which is more than the 374 inter partes reexamination requests filed in 2011.
  • Assuming we only see about 250 such petitions this year, that would roughly equate to the number of filings of inter partes reexamination requests filed in 2009 (258).

So regardless of how many filings are made over the year, AIA post-grant proceedings are off to a very fast start compared to the adoption of inter partes reexamination.  This is interesting because there is obvious popularity despite enhanced filing fees, costs of preparation, and estoppel.

Comparative Study of Post Issuance Review Options

Friday, September 21st, 2012

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

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

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

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