Posts Tagged ‘patent reform’

New PTAB Trial Practice Rules Effective May 2, 2016

Monday, May 23rd, 2016

On April 1, 2016 the PTO published its final rule on Amendments to the Rules of Practice for Trials Before the Patent Trial and Appeal Board.  A small correction to these Amendments was published on April 27.  I presented a summary of these rule changes at the AIPLA Spring Meeting in Minneapolis, MN on May 18, 2016.  The slides from my presentation are attached.

The comments in the final rule make it clear that the PTAB will be publishing an updated Office Patent Trial Practice Guide to address these new rules and changes in practice since publication of the first Office Patent Trial Practice Guide.

Federal Circuit Reinforces PTAB’s Authority to Institute Trial on Selected Claims in Synopsis v. Mentor Graphics Appeal

Thursday, February 11th, 2016

Newcomers to post-grant proceedings are often surprised by the PTAB’s claim-by-claim approach to patent challenges under the America Invents Act.  When reporting statistics about IPRs, commentators tend to ignore these considerations:

  • First, an IPR petition can be drafted to challenge all or some of the claims of a patent.  So the set of challenged claims can be less than the set of issued patent claims.
  • Second, if the PTAB decides to institute trial, it will exercise its authority to identify exactly which claims it will institute for trial.
  • Third, of the claims instituted for trial, should the case result in a final written decision, all or some of those claims may be found unpatentable and any remaining claims may pass through the process unscathed.

A recent Federal Circuit majority opinion reinforced the PTAB’s interpretation that the AIA gave it authority to institute trial on less than all of the challenged claims.  In Synopsis, Inc. v. Mentor Graphics the majority found that the PTAB could exercise its authority to institute trial on a subset of the challenged claims and to enter its final written decision on the instituted claims.  (Synopsis, Inc. v. Mentor Graphics v. Lee,  Fed. Cir., 2014-1516, 2/10/16).  Synopsis argued that the AIA required the PTAB to provide a patentability determination of every challenged claim.  But the Federal Circuit disagreed, finding instead that the PTAB need only issue its final written decision on the claims instituted for challenge.

Judge Pauline Newman dissented, arguing that the PTAB’s interpretation it is contrary to the AIA and to the AIA’s purpose to provide an alternative and efficient forum for resolving patent validity issues, and that it leads to duplicative proceedings in the PTAB and the district courts.  Her interpretation of the AIA urges a final written decision for each of the claims challenged.  However, absent a petition for cert, the PTAB’s institution and final written practices will not be reversed any time soon based on Synopsis.

 

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.

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.]

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)?

 

 

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.

Lex Machina’s 2013 Patent Litigation Report Shows Disparity Between Litigated Patents and those under PTAB Review

Wednesday, May 14th, 2014

Litigation and post-grant proceedings often go hand-in-hand. A new litigation report published by Lex Machina summarizes patent litigation data for 2013 and prior years.  It is an interesting report and very easy to digest.  Two findings caught my eye.  The first one relates to the overall number of patent litigation cases filed in 2013:

Plaintiffs filed 6,092 new patent cases in U.S. District Courts in 2013 . . .

The second finding is the number of U.S. Patents at issue in those filings:

4,917 patents were at issue in all cases filed during 2013.

That second number is surprising, because if understood correctly, the findings indicate that about 5 out of every 6 lawsuits filed in 2013 relate to different patents.  That ratio seems high — especially in view of the AIA litigation joinder provisions.  However, if we assume these numbers are roughly correct, they show a large difference between the number of patents asserted and the petitions filed in the PTAB.

For example, compare Lex Machina’s reported 4,917 patents at issue in 2013 suits with the 1,312 total IPR and CBM petitions on file in the PTAB from September 16, 2012 to May 8, 2014.  These numbers indicate that  at most about 1 out of 3 patents in litigation are the subject of a PTAB petition.  If true, that means several patents in litigation have not been submitted for review by the PTAB.

Of course, bear in mind that this is just a rough, unscientific approximation because:

  • not every petition in the PTAB relates to a new patent,
  • not every patent being challenged in the PTAB is in litigation, and
  • this crude approach does not attempt to correlate the petitions before the PTAB with a certain year of patent assertion.

Not every patent in suit is eligible for a post-issuance proceeding in the PTAB, so there is no reason to expect that every patent in suit will be the subject of a petition.  But, this data seems to indicate that there is still a large number of litigated patents that could be subject to future post-grant challenges. Readers are invited to contact me with better data than this admittedly rough approximation.  Please send me that information and I will try to post it to give a more accurate representation of patents in litigation versus those challenged in the PTAB.

 

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

Friday, April 25th, 2014

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

_______

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

Board Proposes Solution for Petitioner if Expert Witness Not Available for Deposition in Patent Office Trial

Sunday, January 26th, 2014

In current post-grant practice, most petitions are accompanied by an expert declaration to support the assertions made by the petitioner.  If the petitioner successfully obtains institution of a patent office trial (inter partes review, covered business method patent review, or post-grant review), each declarant making a declaration for the petition must be made available for deposition.  But what happens if the declarant is not available?  One example is provided in Corning Gilbert Inc. v. PPC Broadband, Inc., IPR2013-00347.

In the Corning IPR, the Petitioner’s expert, Dr. Mroczkowski, signed a declaration that was submitted to support the IPR petition.  After institution of the IPR, the Board was informed that Dr. Mroczkowski had become ill with cancer and had to undergo surgery.  He was also undergoing weekly chemotherapy and daily radiation treatment during late December and scheduled for therapy up to early February.  Counsel for Petitioner requested a twelve week extension in order for Dr. Mroczkowski to recover and be available for deposition, noting that 35 U.S.C. § 316(a)(11) provides an additional  time (up to 6 months) to complete the IPR.

The Board declined a twelve week extension, and instead suggested that Petitioner attempt to locate another expert who would be willing to present the same testimony as Dr. Mroczkowski:

The Board considers reasonable an extension of approximately five weeks for Petitioner to locate and substitute, for Dr. Mroczkowski, another expert witness who would be willing to execute the same declaration executed by Dr. Mroczkowski, excluding the credentials and qualifications of Dr. Mroczkowski. Counsel for Petitioner expressed that obtaining another expert at this time would add to Petitioner’s cost, perhaps unnecessarily, because Dr. Mroczkowski may recover in time to be cross-examined.

The Board explained that five weeks will be provided to Petitioner to make an effort to resolve the difficulty presented by the illness of Petitioner’s original expert witness. Petitioner is free to forego that opportunity, and to depend on Dr. Mroczkowski’s getting well enough to be cross-examined at an appropriate time according to a revised schedule including the five-week extension. In that case, however, Petitioner will have made a litigation choice, and assumed the risk of events not proceeding according to plan.

(IPR2013-00347, Paper 18 at p. 3, December 23, 2013.)

The Board provided more guidance in its next order (Paper 20, January 2, 2014).  Counsel for Petitioner suggested that it file a declaration by a second expert “simply declaring that the second expert agrees with the opinions set forth in Dr. Mroczkowski’s declaration.”  The Board indicated that the proposed approach would still ultimately rely on the testimony of Dr. Mroczkowksi, “which is inappropriate if he cannot be cross-examined.”  (Paper 20 at p. 2.)  The Board offered another approach:

The Board inquired why the new expert could not execute a declaration literally having the same wording as in Dr. Mroczkowski’s declaration. Counsel for Corning replied that because the two experts will have different qualifications, paragraph numbers as referenced in Corning’s petition, directed to Dr. Mroczkowski’s declaration, likely will not match paragraph numbers in the declaration executed by the second expert witness.

To maintain the same paragraph numbers in the second declaration, however, Corning may present qualifications of its second expert witness in a separate exhibit or in later paragraphs, and then use blank spaces to occupy the paragraphs which, in the first expert declaration, express the qualifications of Dr. Mroczkowski. If such a substitute expert declaration is filed, however, Corning also should file a substitute petition that refers to the declaration by the substitute expert witness, and not the declaration of Dr. Mroczkowski.

The Board asked the parties to try to reach agreement as to the various specifics about Corning’s potentially filing of a substitute declaration from another expert witness, to replace that of Dr. Mroczkowski, before contacting the Board with a proposal.

The parties appear to have agreed to new dates, as set forth in a Notice of Stipulation to Extend Due Dates 1-3 (Paper 21, January 14, 2014).  However, there is nothing further in the record to reflect whether agreement was reached as to the possible filing of a substitute declaration as of the date of this post.

It remains to be seen if this approach is employed in other contested proceedings, since it is inevitable that an expert witness will occasionally be unable to testify after institution of a proceeding.

[Editor’s Note:   All of us who have had friends or family touched by cancer empathize with Dr. Mroczkowski’s situation, and we wish him a full and speedy recovery.]

Patent Office Board Takes a Bite out of Apple’s IPR Challenge of VirnetX Patents

Thursday, December 19th, 2013

In  mid-2013 Apple filed seven inter partes review petitions to challenge four VirnetX patents.  Recently, the Patent Trial and Appeal Board (the Board) denied all seven inter partes review (IPR) petitions.  This outcome demonstrates the Board’s current interpretation of the one-year bar applied in IPR proceedings and its position on joinder of petitions.

Apple’s Interpretation of the One Year Bar

Apple disclosed that its petitions were filed more than a year after service of a complaint asserting infringement of the subject patents, and understood that the petitions might be challenged depending on the Board’s interpretation of 35 U.S.C. § 315(b) (the statute barring IPR petitions filed after certain assertions of infringement):

Petitioner notes it was previously served with a complaint asserting infringement of the ’135 patent in August of 2010, which led to Civil Action No: 6:10-cv-417. During that action, the District Court established an additional civil action, Civil Action No. 6:13-cv-00211-LED, on February 26, 2013 (also pending in the Eastern District of Texas). The August 2010 complaint does not foreclose the present petition, as Patent Owner served a new complaint on Petitioner asserting infringement of the ’135 patent in December of 2012.

Apple Inc. v. VirnetX, Inc., et al., IPR2013-00348, Paper 1 (June 12, 2013), at p. 1 (emphasis in original).  Similar disclosures can be found in the other six related petitions:  IPR2013-00349, -354, 393, -394, -397, and -398.

Apple anticipated that the 2010 complaint service might cause a concern and argued that the 315(b) bar should not apply:

Petitioner submits this conclusion [that the petitions are not barred] is compelled by the plain language of § 315(b). Notably, § 315(b) does not specify a one-year deadline that runs from the date of the first complaint served on a petitioner. Rather, it states “[a]n 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.” Thus, a petition filed within 1 year of the date any complaint alleging infringement of the patent is served on a petitioner is timely under the plain statutory language of § 315(b). This is also the only reading of § 315(b) consistent with the statutory design. Congress designed the IPR authority to be option to contest validity of a patent concurrently with district court proceedings involving the same patent. A timely filed IPR proceeding in any action a patent owner elects to commence is perfectly consistent with this statutory design.

Reading § 315(b) in this manner also is the only way to effectively foreclose gaming of the system by a Patent Owner. Indeed, if § 315(b) were read to foreclose IPR proceedings in a second, independent action for infringement a patent owner elected to commence, it would unfairly foreclose use of the IPR system. For example, a patent owner could assert irrelevant claims in a first action, wait a year, and then assert different claims in a new action that do present risks to a third party. In this scenario, the patent owner would foreclose legitimate use of an IPR to contest validity of the patent claims asserted in the second action based on the third party’s reasonable business decision to not dispute validity of irrelevant claims in the first action. Rather than attempting to decipher which scenarios would be improper, the Board should follow the plain meaning of § 315(b), and find a petition timely if it is filed within 1 year of the date any complaint alleging infringement of the patent is served on a Petitioner.

Finally, reading §315(b) to foreclose this petition based on the August 2010 complaint would be particularly unjust in this case. The 1-year period following service of the August 2010 complaint expired before it was possible to submit an IPR petition – petitions could only be filed on or after September 16, 2012.

Id., Paper 1 at pp. 2-3 (emphasis in original).

But Apple had one more card to play that could avoid the entire issue of the 315(b) bar:  a request for joinder with another IPR proceeding challenging the same patent.

Apple’s Joinder Request

Apple knew that if it could successfully join another IPR proceeding, such joinder under 35 U.S.C. § 315(c) (and  37 C.F.R. § 42.122(b)) would not be subject to the one year bar under the last sentence of 35 U.S.C. § 315(b).  Apple filed its Motion for Joinder on August 21, 2013, requesting joinder to IPR proceedings by New Bay Capital, LLC challenging the VirnetX patents:

Pursuant to the authorization granted by the Panel on August 14, 2013 in Paper No. 6, Petitioner Apple Inc. (“Petitioner” or Apple) moves to have the Board join IPR proceedings IPR2013-00348 & -00349 to each other and with IPR proceeding IPR2013-00375 filed by New Bay Capital, LLC (“NBC”), each of which concerns U.S. Patent No. 6,502,135.

Id., Paper 7 at p. 1.

Apple submits that joinder of the proceedings is fully warranted. See IPR2013-00004, Paper 15 at 4; Dell v. Network-1 Security Solutions, Inc., IPR2013-00385, Paper 17 at 2-3. Joinder is proper under the statutory design of inter partes review, will simplify and reduce the number of issues before the Board and will enable streamlined proceedings (i.e., one coordinated proceeding instead of three separate proceedings). In addition, the Board can manage the joined proceeding in a way that does not impact scheduling or conduct of the proceedings. See Motorola Mobility LLC v. Softview, LLC, IPR2013-00256, Paper 10 at 2-3.

Id., Paper 7 at p. 3.

So, it seemed like Apple had two independent avenues for potential institution of IPR:  (1) an interpretation of 315(b) that would result in no bar of the petitions, and (2) joinder with ongoing IPR proceedings filed by New Bay Capital, regardless of any potential 315(b) bar.

New Bay Capital Terminates its IPRs

On November 6, 2013, New Bay Capital filed unopposed motions to terminate its IPRs (IPR2013-00375, -376, -377, and -378):

Pursuant to 37 C.F.R. §42.73(b)(4) and the Board’s Order of November 1, 2013, Petitioner New Bay Capital, LLC (“New Bay”) moves to terminate the present inter partes review proceeding. Termination is appropriate because New Bay is abandoning this contest, VirnetX does not oppose and a trial has not been instituted.

The Board granted New Bay Capital’s motions and terminated those IPR proceedings on November 12, 2013.

Apple’s IPR Petitions Denied

The Board reviewed the facts of the complaints served on Apple in the past and decided that the 2010 complaint served on Apple barred its IPR petition under 315(b).  The Board also dismissed Apple’s joinder request because the Board had recently terminated the New Bay Capital IPRs:

The timeliness limitation of 35 U.S.C. § 315(b) does not apply to a request for joinder. As such, Petitioner filed a motion to join the instant proceeding with another proceeding, IPR2013-00375, pursuant to 35 U.S.C. 315(c). See Paper 7 (“Petitioner’s Motion for Joinder of Proceedings”). Granting the motion would obviate the time bar under 35 U.S.C. § 315 (b). The IPR2013-00375 proceeding, however, has been terminated. New Bay Capital, LLC v. Virnetx, Inc., IPR2013-00375, Paper 16 (PTAB Nov. 12, 2013). Accordingly, Petitioner’s motion for joinder is dismissed.

Id., Paper 14 at p. 5.

So both of Apple’s avenues for institution of trial in these seven IPR petitions were blocked by the Board.

Reconsideration Still an Option

Even though Apple’s seven IPR petitions were denied, Apple still has the right to request reconsideration and it remains to be seen if it will file requests for rehearing.  Such requests have historically proved to be unlikely to be granted.  Other Petitioners have sought additional avenues for institution that will be discussed in a future post.