Posts Tagged ‘motion to stay’

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.

 

Parties Terminate CBM Before They Settle Dispute to Avoid PTAB Decision

Monday, October 14th, 2013

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

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

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

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

PTAB Authorizes SAP to file Opposition to Versata’s Rehearing Request

Tuesday, July 16th, 2013

Even though the Rehearing Request filed by Versata last week is confidential, we can glean some insight about what it contained based on the publicly available documents of record.  Today the PTAB authorized SAP to file its motion to oppose Versata’s Rehearing Request, stating:

Patent owner Versata filed a motion for rehearing [ ] of the Board’s Final Written Decision [ ]. Versata’s motion raises at least two issues that SAP has not yet had an opportunity to brief. Specifically, SAP has not yet had an opportunity to brief how the following two Federal Circuit’s decisions affect this proceeding: Ultramercial, Inc. v. Hulu, LLC, 107 USPQ2d 1193 (Fed. Cir. 2013) and Versata Software Inc. v. SAP America Inc., 106 USPQ2d 1649 (Fed. Cir. 2013).

The Board authorizes SAP to file an opposition to Versata’s motion for rehearing. The opposition is limited to addressing the impact, if any, the two recent Federal Circuit decisions have on the Board’s Final Written Decision. SAP’s opposition is due no later than July 18, 2013.

The Ultramercial case resulted in a reversal of a district court holding of invalidity under 35 U.S.C. § 101.  You may recall that Ultramercial’s U.S. 7,346,545 patent (the ‘545 patent) claims relate to a method for distributing copyrighted products over the Internet where the the consumer received a copyrighted product for free in exchange for viewing an advertisement (and the advertiser pays for the copyrighted content).  The district court granted Wildtangent’s motion to dismiss pursuant to FRCP 12(b)(6), asserting that the method claims of the ‘545 patent did not claim statutory subject matter, but the Federal Circuit reversed the district court holding the subject matter patent-eligible under 35 U.S.C. § 101.  Therefore, it is not surprising that Versata cited Ultramercial in its Rehearing Request.

Of course, it is also not surprising that Versata cited decisions from its parallel Federal Circuit appeal given the fact that the Federal Circuit upheld Versata’s district court damages decision and recently denied stay of the Federal Circuit appeal in which the Federal Circuit recently remanded the case to the district court for correction of the injunction.

SAP has until July 18, 2013 to file its opposition; however, like Versata’s Rehearing Request, SAP’s opposition brief may not be publicly accessible if it addresses protected information from Versata’s Rehearing Request.

More Developments in the Patent Battle between SAP and Versata

Monday, July 15th, 2013

There has been a lot of activity in the litigations arising from the patent battle between SAP and Versata.  You will recall that there are parallel Federal Circuit, PTAB, and Eastern District of Virginia actions.  There have been activities in all of these courts since my last post.

Federal Circuit

After the Patent Office decided that the claims challenged in the related covered business method patent review were invalid, SAP motioned for a stay of proceedings in the Federal Circuit.  In a simple, one page document, the Federal Circuit denied that motion for stay on July 5, 2013 without providing further comment or opinion.

Patent Trial and Appeal Board (PTAB)

One month after the PTAB ruling, Versata filed a Rehearing Request.  That document shows up on the PTAB PRPS as being filed on July 11, 2013.  (It is currently showing availability to only the parties and the Board, so it was not available for download at the time of this post.)

Eastern District of Virginia

You may recall that Versata also challenged the institution of the CBM by suing the Patent Office in the Eastern District of Virginia.  As reported in a recent post, SAP intervened in that action.  On July 12, 2013, that court granted the Motion to Dismiss for Lack of Subject Matter Jurisdiction by the Patent Office and SAP.

So it appears that the contest is now boiling down to a race between a final judgment in the district court litigation and a final judgment in the PTAB proceeding.  Of course, this will likely amount to two cases before the Federal Circuit, because should Versata’s Rehearing Request fail, its recourse is an appeal to the Federal Circuit.  So that might mean two Federal Circuit cases:  (1) the existing appeal in the district court action (which was not stayed by the Federal Circuit) and (2) a (future) appeal from the PTAB decision if the rehearing request is denied.

SAP Moves for a Stay of Parallel Federal Circuit Action After PTAB Win

Saturday, June 22nd, 2013

SAP’s fight to dismiss Versata’s U.S. 6,553,350 patent assertion continues.  After SAP’s win in the PTAB on June 11, 2013, SAP filed a motion to stay the parallel Federal Circuit appeal on June 17th.  Now the Federal Circuit must decide whether to stay the ongoing appeal after upholding the district court judgment on damages and having remanding to that court on injunctive relief.  At stake is a nearly $400M judgment that SAP argues is based on invalid claims.

No one can accuse SAP of having delayed its efforts to challenge the patent under the provisions of the America Invents Act.  SAP’s counsel was the first petitioner to file a covered business method (CBM) patent review within minutes of the date it first became available on September 16, 2012.

SAP’s brief repeated the factors set forth by the AIA that are specific to CBM reviews.  SAP acknowledged that these factors were intended for use by a district court, but applied them by analogy to the Federal Circuit stay request:

Specific to CBM reviews, the AIA enumerates similar factors for determining whether to stay a case pending post-grant review. AIA § 18(b)(1), P.L. 112-29, 125 Stat. 284, 331 (2011) (factors include “(A) whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial; (B) whether discovery is complete and whether a trial date has been set; (C) whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and (D) whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court.”).

SAP’s Motion to Stay at p. 5.

The motion goes on to repeat the often-quoted remarks by Senator Schumer that the AIA “places a very heavy thumb on the scale in favor of a stay being granted.”  157 Cong. Rec. S1363 (Mar. 8, 2011).

It will be interesting to see Versata’s reaction to SAP’s arguments and even more interesting to see what the Federal Circuit will decide.

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

Thursday, June 13th, 2013

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

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

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

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

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

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

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

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

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

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

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

A Tale of Two Patent Litigation Stays

Tuesday, May 14th, 2013

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

The District Court Stay

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

The Reexamination Stay

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

Reasons for the Reexamination Stay

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

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

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

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

Summary

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

Progressive Casualty Litigation Stayed Pending Outcome of Liberty Mutual CBMs

Wednesday, April 24th, 2013

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

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

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

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

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

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

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

Declaratory Judgment Plaintiff and Stays Pending Reexamination

Monday, March 12th, 2012

In Interwoven, Inc. v. Vertical Computer Systems, Inc. (Case No. C 10-04645 RS, Northern District of California), Judge Richard Seeborg was less than persuaded by Interwoven’s attempt to obtain a stay after filing an ex parte reexamination of the patents in suit.

BACKGROUND

Vertical owns U.S. Pat. Nos. 6,826,744 and 7,716,629 relating to Internet technologies.  Vertical sued Microsoft in the Eastern District of Texas and settled in 2009.  Later, Vertical informed Interwoven that its products infringed the patents as well.   Interwoven filed a declaratory judgment action in the Northern District of California and Vertical countered with a counterclaim for patent infringement. (more…)

Stay of Litigation Pending Inter Partes Reexamination Warranted Despite Possible Lengthy Reexam Pendency

Thursday, July 21st, 2011

District courts are making increasingly detailed and sophisticated decisions on motions to stay litigation pending reexamination.  One example is the analysis performed in N Spine Inc. and Synthes USA Sales, LLC v. Globus Medical Inc., (1-1–cv-00300 (DED)).  N Spine and Synthes USA Sales (Plaintiffs) sued Defendant Globus for alleged infringement of U.S. Patent No. 7,326,210 (the ‘210 patent) on April 13, 2010.  On December 16, 2010, Globus filed an inter partes reexamination request of the ‘210 patent.  The reexamination was ordered by the Patent Office on February 1, 2011.  On March 2, 2011, a motion to stay the litigation was filed by Globus.  The stay was ordered in spite of a 6 to 8 year pendency of the inter partes reexamination.

Globus argued a number of factors to justify their motion to stay: (more…)