Posts Tagged ‘inter partes review’

Board Limits Multiple IPR Challenges in Samsung Electronics v. Rembrandt Wireless Technologies

Monday, June 22nd, 2015

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.

Federal Circuit Interprets Board’s Broadest Reasonable Interpretation Standard – Part II

Thursday, June 18th, 2015

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:

FIG 11

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.

PTAB Denies 2Wire IPR Petitions

Wednesday, June 10th, 2015

June 10, 2015

TQ Delta LLC sued Pace Americas, Inc. for patent infringement in the U.S. District Court for the District of Delaware in November 2013.  TQ Delta LLC v. 2Wire Inc., Case no. 1:13-cv-01835-RGA. The complaint was amended to name defendants Pace PLC, Pace Americas, LLC and 2Wire, Inc. in January 2014. TQ Delta ultimately alleged infringement by the defendants of 24 patents it owned. These patents relate to digital subscriber line (“DSL”) technology, including for example asymmetric digital subscriber line (“ADSL”) technology and very-high-bit-rate digital subscriber line (“VDSL”) technology.

On November 7, 2014, 2Wire, Inc. filed six inter partes review (IPR) petitions to challenge certain claims of six different patents owned by TQ Delta LLC that were asserted in the suit. (IPR2015-00239 to -00243 and -00247.)  Each IPR petition included a declaration by a technical expert and numerous exhibits. TQ Delta filed Preliminary Patent Owner Responses to each IPR petition.

On May 29, 2015, the Board denied all six IPR petitions. Why?

Each IPR petition was reviewed on its own merits, but in general the Board found that the Petitioner failed to prove its claims of obviousness:

A patent claim, however, “is not proved obvious merely by demonstrating that each of its elements was, independently, known in the prior art.” Id. at 418. “Rather, obviousness requires the additional showing that a person of ordinary skill at the time of the invention would have selected and combined those prior art elements in the normal course of research and development to yield the claimed invention.” Unigene Labs., Inc. v. Apotex, Inc., 655 F.3d 1352, 1360 (Fed. Cir. 2011).  [. . .] Further, an assertion of obviousness “‘cannot be sustained by mere conclusory statements; instead, there must be some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness.’” Id. (citing In re Kahn, 441 F.3d 977, 988 (Fed. Cir. 2006)).

Petitioner does not explain sufficiently in the Petition why a person of ordinary skill in the art would have had reason to combine the teachings of [the prior art] to achieve the method of [the challenged claims]. Petitioner merely alleges that the claims would have been “obvious” in view of the three items of prior art, and describes how [certain prior art documents] allegedly teach various aspects of the claims. . . .

(See, for example, Decision Denying Institution of Inter Partes Review, IPR2015-00240, Paper 18, pp. 8-9.)

Additionally, the Board found that the Petitioner merely stated conclusory results of the asserted combination, but did not proffer a rationale to modify the components of the prior art documents:

Petitioner’s first statement that it “would have been obvious” to combine [certain prior art references] is conclusory and does not demonstrate a reason to combine. See KSR, 550 U.S. at 417–18; Unigene, 655 F.3d at 1360; In re Chaganti, 554 F. App’x 917, 922 (Fed. Cir. 2014) (“It is not enough to say that there would have been a reason to combine two references because to do so would ‘have been obvious to one of ordinary skill.’ Such circular reasoning is not sufficient—more is needed to sustain an obviousness rejection.” (citation omitted)).

(Id at 9.)

Moreover, the Board explained that the Petition must state these things explicitly, and cannot merely incorporate arguments from the expert declaration to draw its conclusions of obviousness. The Board found that the expert’s analysis was not reflected in the Petition, and relied on that to explain its decision to deny institution.  (Id at 11-12.)

* * *

One of the takeaways from this is that post-grant practitioners have to carefully consider how to best present their case to the Board.  Technical cases may involve a great deal of complex information, which must be organized and presented within the very limited pages afforded by the trial rules.  And, depending on the facts of each case, a Petitioner may not get a second chance to challenge the patent before the Board.

 

Are Your Patent Procurement Guidelines Outdated?

Sunday, May 3rd, 2015

 

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

changes

One Simple Exercise

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

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

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

Why Are These Tools Important?

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

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

Act Now

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

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

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

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

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

Unified Patents’ Institution Decision Gives Insight to PTAB’s Real Party in Interest Analysis

Monday, February 16th, 2015

Those watching decisions from the Patent Trial and Appeal Board (PTAB or Board) have observed a trend where a patent owner challenges an IPR petition based on alleged defects in the petition’s identification of real parties in interest (RPI) to the petitioner.  As seen in earlier posts, improper identification of RPIs can result in denial of the petition, and the one-year bar imposed by 35 U.S.C. § 315(b) can preclude submission of a corrected IPR petition, resulting in a loss of the right to IPR for that petitioner.  (See my earlier post on First Data Corporation v. Cardsoft, LLC, IPR2014-00715, Paper 9, October 17, 2014.)

Identify RPIs Early in the Proceedings

The prompt identification of RPIs in post-grant proceedings is important as a mandatory notice for a number of added reasons.  An RPI that is barred under § 315(b) would bar a petitioner from institution. (35 U.S.C. § 315(b): “An inter partes review may not be instituted if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent. . . .”)  The Board does not want to invest time and energy in petitions that are legally barred from institution, nor does it want to impose responses to them on patent owners.

Another reason to properly name RPIs is that any estoppel that may attach to a petitioner of the proceeding will likewise attach to the RPI as well.  35 U.S.C. § 315(e) states (underlining for emphasis):

(e) ESTOPPEL.—

(1) PROCEEDINGS BEFORE THE OFFICE.—The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(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 inter partes review.

(2) CIVIL ACTIONS AND OTHER PROCEEDINGS.—The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not assert either in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid on any H. R. 1249—19 ground that the petitioner raised or reasonably could have raised during that inter partes review.

The proper naming of RPIs becomes more complicated when a petitioner receives compensation, prior art, suggestions, and/or instructions from others.  The analysis is especially important for petitioners that challenge patents for others, such as in the case of a trade industry association that challenges patents on behalf of its membership.  Those petitioners must carefully follow the Board’s determinations of what constitutes an RPI.  The stakes for petitioners representing a group are high because they represent a number of interested parties.  Therefore, one petition fail is a failure for each party.

The PTAB Trial Practice Guide provides some considerations for performing an RPI analysis.  Office Patent Trial Practice Guide, 77 FR 48756 (Aug. 14, 2012) (see pp. 48759-48760).  Funding of the post-grant activities is one factor.  Another factor is whether a party controls the proceeding, but the Trial Practice Guide notes that there is no simple test based on control:

There are multiple factors relevant to the question of whether a non-party may be recognized as a ‘‘real party in interest’’ or ‘‘privy.’’ [. . .]  A common consideration is whether the non-party exercised or could have exercised control over a party’s participation in a proceeding. See, e.g., id. at 895; see generally Wright & Miller section 4451. The concept of control generally means that ‘‘it should be enough that the nonparty has the actual measure of control or opportunity to control that might reasonably be expected between two formal coparties.’’ Wright & Miller § 4451. Courts and commentators agree, however, that there is no ‘‘bright-line test’’ for determining the necessary quantity or degree of participation to qualify as a ‘‘real party-in-interest’’ or ‘‘privy’’ based on the control concept. [Cites omitted.] Accordingly, the rules do not enumerate particular factors regarding a ‘‘control’’ theory of ‘‘real party-in-interest’’ or ‘‘privy’’ under the statute.

The Trial Practice Guide also discusses res judicata and other estoppel considerations:

Additionally, many of the same considerations that apply in the context of ‘‘res judicata’’ will likely apply in the ‘‘real party-in-interest’’ or ‘‘privy’’ contexts.

The test is fact dependent:

The Office has received requests to state whether particular facts will qualify a party as a ‘‘real party-ininterest’’ or ‘‘privy.’’ Some fact combinations will generally justify applying the ‘‘real party-in-interest’’ or ‘‘privy’’ label. For example, a party that funds and directs and controls an IPR or PGR petition or proceeding constitutes a ‘‘real party-in-interest,’’ even if that party is not a ‘‘privy’’ of the petitioner. But whether something less than complete funding and control suffices to justify similarly treating the party requires consideration of the pertinent facts. See, e.g., Cal. Physicians, 163 Cal.App.4th at 1523–25 (discussing the role of control in the ‘‘privy’’ analysis, and observing that ‘‘preclusion can apply even in the absence of such control’’). The Office will handle such questions on a case-by-case basis taking into consideration how courts have viewed the terms.

The Trial Practice Guide does recognize that mere membership in an industry association does not make a member an RPI of an association that files a petition.  The facts must be considered on a case-by-case basis.

Unified Patents Inc. v. Dragon Intellectual Property, LLC

This brings us to the IPR petition that Unified Patents filed requesting review of claims 1, 2, 7, 8, 10, 13 and 14 of Dragon Intellectual Property, LLC’s (Dragon’s) U.S. Patent No. 5,930,444 (the ’444 patent).  (Unified Patents Inc. v. Dragon Intellectual Property, LLC, IPR2014-01252.) The ’444 patent covers streaming media recording and playback.  Unified Patents named no additional RPI in its petition, stating:

Pursuant to 37 C.F.R. § 42.8(b)(1), Petitioner certifies that Unified Patents is the real party-in-interest, and further certifies that no other party exercised control or could exercise control over Unified Patents’ participation in this proceeding, the filing of this petition, or the conduct of any ensuing trial.

Unified Patents was founded by intellectual property professionals over concerns with the increasing risk of non-practicing entities (NPEs) asserting poor quality patents against strategic technologies and industries. The founders thus created a first-of-its-kind company whose sole purpose is to deter NPE litigation by protecting technology sectors, like content delivery, the technology at issue in the ‘444 Patent. Companies in a technology sector subscribe to Unified’s technology specific deterrence, and in turn, Unified performs many NPE-deterrent activities, such as analyzing the technology sector, monitoring patent activity (including patent ownership and sales, NPE demand letters and litigation, and industry companies), conducting prior art research and invalidity analysis, providing a range of NPE advisory services to its subscribers, sometimes acquiring patents, and sometimes challenging patents at the United States Patent and Trademark Office (USPTO). Since its founding, Unified is 100% owned by its employees; subscribers have absolutely no ownership interest.

Unified has sole and absolute discretion over its decision to contest patents through the USPTO’s post-grant proceedings. Should Unified decide to challenge a patent in a post-grant proceeding, it controls every aspect of such a challenge, including controlling which patent and claims to challenge, which prior art to apply and the grounds raised in the challenge, and when to bring any challenge. Subscribers receive no prior notice of Unified’s patent challenges. After filing a post-grant proceeding, Unified retains sole and absolute discretion and control over all strategy decisions (including any decision to continue or terminate Unified’s participation). Unified is also solely responsible for paying for the preparation, filing, and prosecution of any post-grant proceeding, including any expenses associated with the proceeding.

In the instant proceeding, Unified exercised its sole discretion and control in deciding to file this petition against the ‘444 Patent, including paying for all fees and expenses. Unified shall exercise sole and absolute control and discretion of the continued prosecution of this proceeding (including any decision to terminate Unified’s participation) and shall bear all subsequent costs related to this proceeding. Unified is therefore the sole real-party-in-interest in this proceeding.

(Pet. 2-4.)

In its Patent Owner Preliminary Response (which included redacted portions), the Patent Owner asserted:

As explained below, an inter partes review proceeding should not be instituted in this matter because Unified Patents has failed to establish that it is the “real party-ininterest,” and failed to identify the real party-in-interest when it filed its petition for inter partes review.

Unified Patents is an organization formed in 2012 for the purpose of filing and conducting inter partes review proceedings on behalf of its members so that the members can seek to avoid the estoppel provisions of 35 U.S.C. § 315. The primary value offered by Unified Patents’ to its members is the challenging through inter partes review and similar proceedings of patents asserted in litigation by non-practicing entities against Unified Patents’ members. Indeed, Unified Patents [text redacted]. Since its founding less than three years ago, Unified Patents has collected [redacted] from its members.

As a non-practicing entity itself, Unified Patents has no independent reason to challenge any patents in inter partes review, outside of Unified Patents’ interest in providing litigation “deterrence” services to members. [redacted]

Unified Patents [redacted] which include challenging patents in inter partes review proceedings. There can be no dispute that the money used to prepare and file the Petition, and the money that will be used to pay for prosecution of this proceeding, is sourced from [redacted]. Unified Patents has not identified the real parties-in-interest to this proceeding in its Petition, as it failed to identify the parties who provided the funding for Unified Patents to file this proceeding. The Board should not permit Unified Patents and its members the ‘”second bite at the apple”‘ the real party-in-interest requirement is intended to guard against. The Petition should be denied, and no trial should be instituted on the Unified Patents Petition.

(Patent Owner Preliminary Response, Paper 14, pp. 1-2.)

In its institution order, the Board rejected the Patent Owner’s challenge of the named RPIs:

Patent Owner is correct that the inquiry regarding real parties-ininterest is not limited to determining who directed or controlled a proceeding. On the record at this stage of the proceeding, however, we are not persuaded by Patent Owner’s contention that one or more other organizations paid Petitioner to file the Petition in this IPR. Patent Owner does not allege to have any direct evidence of any organization giving funds to Petitioner for the purpose of filing the Petition in this case. Additionally, even if we assume to be accurate all of Patent Owner’s allegations about circumstances related to the conduct of Petitioner’s business and the filing of the Petition in this case, they do not demonstrate that another entity paid Petitioner for the purpose of conducting this IPR proceeding. For example, even if we accept Patent Owner’s allegations that Petitioner engages in no activity of practical significance other than filing IPR petitions with money received from its members, this does not demonstrate that any member paid, directed, or suggested to Petitioner to challenge the ’444 patent, specifically. See, e.g., Prelim. Resp. 10. Nor do Patent Owner’s other circumstantial allegations, even if accurate, demonstrate as much.

(Decision on Institution of Inter Partes Review, Paper 37, p. 12.)

The Board then distinguished the present case over a collection of earlier proceedings between RPX and VirnetX that Patent Owner asserted (RPX Corp. v. VirnetX Inc.: IPR2014-00171, IPR2014-00172, IPR2014-00173, IPR2014- 00174, IPR2014-00175, IPR2014-00176, and IPR2014-00177 (“the RPX cases”)):

By contrast, in the RPX cases, the evidence demonstrated that the actions of RPX and Apple were like certain prohibited behavior discussed in In re Guan, Reexamination Control No. 95/001,045 (Aug. 25, 2008) (Decision Vacating Filing Date), which stated that

[a]n entity named as the sole real party in interest may not receive a suggestion from another party that a particular patent should be the subject of a request for inter partes reexamination and be compensated by that party for the filing of the request for inter partes reexamination of that patent without naming the party [as a real party-in-interest] who suggested and compensated the entity for the filing of a request for inter partes reexamination of the patent.

Guan at 7–8 (emphasis added); see, e.g., IPR2014-00171, Paper 57, 7. Here, the present record does not demonstrate that any of Petitioner’s members suggested or compensated Petitioner for the filing of the Petition challenging the ’444 patent.

Given this, the alleged similarities between RPX and Petitioner do not persuade us that the result here should be the same as in the RPX cases. That Petitioner likens itself to a trade association does not persuade us that its members constitute real parties-in-interest. As the Office Trial Practice Guide (“Practice Guide”) explains, membership in a trade association does not make an entity automatically a real party-in-interest to a petition filed by the trade association. 77 Fed. Reg. 48,756, 48,760 (Aug. 14, 2012); see also Paper 20, 4. Additionally, without more compelling accompanying allegations, Patent Owner’s assertion that Petitioner faces no risk of having the ’444 patent asserted against it is unremarkable, as the filing of or threat of a lawsuit is not a prerequisite for a Petition for an IPR proceeding. See 77 Fed. Reg. at 47,459.

For the foregoing reasons, on this record, we are persuaded that Petitioner did not fail to name all real parties-in-interest in the Petition. We note, however, that this Decision does not foreclose Patent Owner from continuing to argue the real party-in-interest issue in the Patent Owner Response. If the record should evolve in favor of Patent Owner on this issue, we would take appropriate action at that time.

(Decision on Institution of Inter Partes Review, Paper 37, pp. 12-14.)

In its analysis, the Board applied In re Guan to clarify that RPX v. VirnetX involved suggestion of the review proceeding and compensation to the petitioner by the RPI.  The Board found that Dragon failed to show that the members of Unified Patents suggested an IPR to Unified Patents and compensated Unified Patents for the IPR.  However, the Board did not prevent Dragon from arguing the RPI issue in its Patent Owner Response.

Trade associations and other associations desiring to petition for review of patents will be monitoring this case closely in the months to come to learn more about how the Board handles real party in interest issues.

Target Wins Rehearing of IPR Joinder Decision with Expanded Panel

Friday, February 13th, 2015

Last fall, the Patent Trial and Appeal Board (PTAB or Board) interpreted the IPR joinder provision, 35 U.S.C. § 315(c), to require joinder requests by a non-party to an ongoing proceeding.  (Target Corp. v. Destination Maternity Corp., IPR2014-00508 and IPR2014-00509.)  Prior to that decision,  the Board had interpreted § 315(c) to allow for issue joinder by the petitioner of the original proceeding (see, for example Microsoft v. Proxyconn, IPR2013- 00109).  Of course, joinder was decided on a case-by-case basis, but had not previously been denied because the request was made by the petitioner of the original proceeding.

Target Corp. filed rehearing requests in both affected IPR proceedings in an effort to have the Board reconsider its interpretation of  35 U.S.C. § 315(c) with an expanded panel.  Target’s arguments are quite clearly stated in its Motion for Rehearing.  The Board granted Target’s rehearing request.  In a 4:3 decision,  the majority agreed that § 315(c) had been overly narrowly interpreted in the prior decision:

Turning now to the merits of the Request for Rehearing, the contention at the heart of Petitioner’s request for rehearing is that the denial of its Motion for Joinder was “based on an erroneously narrow interpretation of 35 U.S.C. § 315(c).” Paper 22, 1. We agree with Petitioner.

The majority read § 315(c)’s reference to “any person who properly files a petition under section 311” in conjunction with § 311′s requirement that the petition filer not be the patent owner, to broadly interpret § 315(c) to include any person except the patent owner.  This interpretation is at odds with the dissent’s analysis, which reads § 315(c)’s reference to “may join as a party” to literally require a new party for joinder:

The statute under which Petitioner seeks relief provides:

(c) JOINDER.—If the Director institutes an inter partes review, the Director, in his or her discretion, may join as a party to that inter partes review any person who properly files a petition under section 311 that the Director, after receiving a preliminary response under section 313 or the expiration of the time for filing such a response, determines warrants the institution of an inter partes review under section 314.

35 U.S.C. § 315(c) (emphasis added). The statute does not refer to the joining of a petition or new patentability challenges presented therein. Rather, it refers to the joining of a petitioner (i.e., “any person who properly files a petition”). Id. Further, it refers to the joining of that petitioner “as a party to [the instituted] inter partes review.” Id. Because Target is already a party to the proceeding in IPR2013-00531, Target cannot be joined to IPR2013-00531.

While the majority decision does align with panel decisions on joinder prior to Target, one must ask whether this issue is finally resolved by this expanded panel decision.  For example, what happens if another panel does not follow this interpretation § 315(c)?  Or suppose this decision is appealed; would the Federal Circuit reverse a Board decision on joinder as it relates to institution given its recent interpretation of 35 U.S.C. § 314(d) in In re Cuozzo Speed Technologies? (“We conclude that § 314(d) prohibits review of the decision to institute IPR even after a final decision. . . . Section 314(d) provides that the decision is both ‘nonappealable’ and ‘final,’ i.e., not subject to further review. 35 U.S.C. § 314(d).”)  Would a Federal Circuit appeal have to be in the form of a petition for writ of mandamus?  If so, how would that square with the mandamus decisions in In re Dominion Dealer Solutions, LLC, 749 F.3d 1379, 1381 (Fed. Cir. 2014)(mandamus relief not available to challenge the denial of a petition for IPR) and in In re Proctor & Gamble Co., 749 F.3d 1376, 1378–79 (Fed. Cir. 2014)(mandamus relief not available to provide immediate review of a decision to institute IPR)?

 

 

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

Thursday, February 5th, 2015

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

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

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

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

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

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

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

Monday, December 29th, 2014

December 29, 2014

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

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

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

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

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

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

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

Table 1

Patent Board Denies First Data Corp. IPR Petitions Based on Real Party In Interest and One-Year Bar

Tuesday, October 21st, 2014

October 21, 2014

In 2013, Cardsoft, LLC (Patent Owner) sued First Data Corp. (Petitioner) and First Data Merchant Services Corp. for patent infringement in the Eastern District of Texas, serving its complaint on May 2, 2013.  (Cardsoft (Assignment for the Benefit of Creditors) LLC v. First Data Corp., Civil Action No. 2:13-cv-290 (E.D. Tex.).)  The complaint alleged infringement of U.S. 6,934,945 and U.S. 7,302,683, relating to sending and receiving information over a network.

On April 30, 2014, Petitioner filed IPR petitions requesting review of the ’945 and ’683 patents (IPR2014-00715 and IPR2014-00720, respectively).  An issue arose in the IPRs because VeriFone had a duty of indemnification to First Data Corporation. But VeriFone had been sued in 2008 by Cardsoft LLC for patent infringement of the same patents, and therefore was statutorily barred under 35 U.S.C. § 315(b).  (Cardsoft, Inc. v. VeriFone Systems, Inc., Civil Action No. 2:08-cv-00098 (E.D. Tex.).)

The Mandatory Notices of the ’945 IPR Petition state:

The real party in interest is First Data Corporation []. We believe that VeriFone is NOT a real party in interest. VeriFone, per an indemnity with First Data, is providing the funding for this petition. However, the sole and exclusive control over this petition rests entirely with First Data. To the extent that the VeriFone indemnity agreement provided for any ability to assume control of any litigation, VeriFone has disclaimed any right to such control (see Ex. 1011 ). First Data determined which counsel to use, and is using its normal patent counsel for this petition, not counsel for VeriFone. The prior art used in this petition was discovered from the Cardsoft v. VeriFone litigation records, but First Data decided which references to use. Copies of some prior art were obtained from VeriFone, and VeriFone counsel indicated certain references which it believed rendered the subject patent invalid, but First Data counsel exercised independent judgment in determining which prior art to use and in fact selected different prior art references than those which VeriFone believed were the strongest.

It should be noted that First Data was sued after Cardsoft obtained a jury verdict victory against VeriFone. Instead of suing VeriFone for willful infringement for post-verdict sales, Cardsoft elected to sue First Data, likely with knowledge of the indemnity which provides indemnification for some although not all of the accused devices. It would be contrary to the reasons for establishing Inter Partes Reviews to deny First Data the opportunity for an IPR challenge in such a situation.

(’945 Petition, pp. 1-2 (IPR2014-00715).)  The Petition summarized different PTAB decisions which declined to find a real party in interest based on funding and sharing of prior art.  It also referenced PTAB Chief Judge James Smith:

Chief Judge James Donald Smith of the BPAI explained that the Proposed Rules from February of 2012 deliberately declined to promulgate particular factors as the future Patent Trial and Appeal Board (PTAB) intends to consider each case on its specific facts. [Explanation of Real Party in Interest Requirement provided by Chief Judge James Donald Smith, Board of Patent and Appeals and interferences ("BPAI"). Available at http:/ /www.uspto.gov/aia implementation/smith-blogextravaganza. j sp#heading-2.]

(Id., p. 3.)  The ’683 Petition in the -00720 proceeding includes similar Mandatory Notices.

But in parallel Decisions dated October 17, 2014, the Board disagreed with the Petitioner and found VeriFone to be a real party in interest in both proceedings.  The Board also decided that each petition was barred under 35 U.S.C. § 315(b), based on the following factors:

Petitioner’s Control and Funding:

The evidence demonstrates that VeriFone desires an inter partes review of the ’945 patent and has controlled, and/or has had an opportunity to control, the events leading up to the filing of the Petition. Petitioner acknowledges that “VeriFone, per an indemnity with [Petitioner], is providing the funding for this petition.” Corr. Pet. 1. Per the Letter Addendum, we understand this “funding” to include Petitioner’s attorney fees and at least the nearly $24,000 petition fees associated with filing the Petition. Ex. 1011, 1; Master Engagement Agreement, Section 6.1. We find that per this same indemnity agreement VeriFone had an opportunity to control all of the events leading up to the filing of the Petition. In particular, Section 6.1.3 of the Master Engagement Agreement indicates that VeriFone “shall have the right at its expense to employ counsel . . . to defend against Claims that VeriFone is responsible for . . . and to compromise, settle and otherwise dispose of such Claims.” Id., 3. The Letter Addendum indicates that “VeriFone has agreed to this associated indemnification as to the IPR.” Id., 1. Thus, up to April 28, 2014 (i.e., two days prior to the Petition being filed), VeriFone had every opportunity and right, per the indemnification agreement, to control the filing of the Petition and pursue an inter partes review of the challenged patent. That the opportunity to control ended just two days prior to filing the Petition, does not negate the control or opportunity to control the events leading up to the filing of the Petition. By Petitioner’s own admission, and during the period leading up to the filing of the Petition, counsel for VeriFone communicated with counsel for Petitioner about initiating an IPR, including discussing what prior art to assert. Corr. Pet. 2. Moreover, VeriFone agreed to, and did, pay for all costs associated with the filing of the Petition. We have considered Petitioner’s arguments that it alone decided to use different prior art for this proceeding compared to the prior art that VeriFone asserted in the 2008 Litigation. See id. Petitioner, however, does not provide sufficient evidence that would support this assertion, and in any event, even if true, that alone would not outweigh the other evidence of record that tends to show that VeriFone controlled and/or had the opportunity to control the filing of the Petition.

Decision Denying Institution, IPR2014-00715, Paper 9, Oct. 17, 2014, pp. 7-8.

VeriFone’s Current Interest in the Proceeding:

The Board found that VeriFone had an interest in the outcome of these IPR proceedings:

Moreover, we find that VeriFone has an interest in the review of the ’945 patent in this proceeding. VeriFone was found to have infringed the ’945 patent in the 2008 Litigation and was unable to invalidate the ’945 patent in that proceeding. See Ex. 1007 ¶ 8. VeriFone also must defend and indemnify Petitioner in the 2013 Litigation for Petitioner’s alleged willful infringement of the ’945 patent from the sale of VeriFone products that were found to have infringed the ’945 patent in the 2008 Litigation. Invalidity of the ’945 patent has been asserted in the 2013 Litigation that VeriFone is defending under its indemnity agreement with First Data Merchant Services. Ex. 2003, 3 (second affirmative defense). VeriFone has an interest in an inter partes review of the ’945 patent at least equal to that of Petitioner. The record evidence establishes, however, that VeriFone could not have pursued an inter partes review on its own or in conjunction with the Petitioner, because VeriFone would have been barred from doing so pursuant to 35 U.S.C. § 315(b).

Id., pp. 8-9.

Petitioner’s Failure to Name RPI Within One Year Bar

The Board also found that the Petition itself lacked a proper statement of the real parties in interest, and therefore was barred under § 315(b) because Petitioner’s correction would have occurred after the one year bar date:

Moreover, because VeriFone is a real party-in-interest, the Petition does not identify “all real parties in interest” as required by 35 U.S.C. § 312(a). As a result, the Board determines that the Petition is incomplete.

Section 42.106(b) of Title 37 of the Code of Federal Regulations provides:

(b) Incomplete petition. Where a party files an incomplete petition, no filing date will be accorded, and the Office will dismiss the petition if the deficiency in the petition is not corrected within one month from the notice of an incomplete petition.

Ordinarily, because the Petition is incomplete, the Board would give Petitioner one month from the date of this decision to correct the deficiency and list VeriFone as a real party-in-interest. In this instance, however, curing the omission of VeriFone as a real party-in-interest would be futile because, even if corrected, the earliest filing date that could be accorded to the Petition that identifies VeriFone as a real party-in-interest would not fall within the one-year period specified by 35 U.S.C. § 315(b).

Id., p. 10.

So the Board seems to have denied these IPR petitions on the grounds that: (1) a real party in interest (e.g., VeriFone) would have been barred due to the 2008 litigation, and (2) because, procedurally, any correction of the petition would also fall necessarily outside of the statutory one-year bar of the 2013 litigation.  This case provides another example of how the Board interprets facts relating to real parties in interest and an example of the Board’s decision to apply the one-year IPR bar under 35 U.S.C. 315(b) to corrections of real parties in interest in IPR petitions.

 

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

Friday, October 17th, 2014

October 17, 2014

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

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

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

On that last point Target’s motion states:

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

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

§ 42.122 Multiple proceedings and Joinder.

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

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

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