Posts Tagged ‘Tim Bianchi’

PTAB Narrows Its Preliminary Claim Interpretation To Uphold Cellular Patent

Monday, February 13th, 2017

In July, 2014 Ericsson Inc. and Telefonaktiebolaget LM Ericsson (“Ericsson”) petitioned for inter partes review of claims 1, 2, 8-12 and 18-22 of U.S. Patent No. 7,787,431 owned by Intellectual Ventures II  LLC (“IV”).  In February, 2015, the Board instituted trial on claims 1 and 2 based on obviousness grounds, but denied institution of obviousness grounds for claims 8-12 and 18-22.  In a final written decision dated January 29, 2016, claims 1 and 2 of the ’431 patent were determined to be unpatentable.  (IPR2014-01195, Paper 37.)

Ericsson filed a second IPR petition in August, 2015, again challenging claims 8-12 and 18-22.  (IPR2015-01664, August 3, 2015.)  Claim 8 is representative:

8. A cellular base station comprising:

circuitry configured to transmit a broadcast channel in an orthogonal frequency division multiple access (OFDMA) coreband, wherein the core-band is substantially centered at an operating center frequency and the core-band includes a first plurality of subcarrier groups, wherein each subcarrier group includes a plurality of subcarriers, wherein the core-band is utilized to communicate a primary preamble sufficient to enable radio operations, the primary preamble being a direct sequence in the time domain with a frequency content confined within the core-band or being an OFDM symbol corresponding to a particular frequency pattern within the core-band,

wherein properties of the primary preamble comprise:

an autocorrelation having a large correlation peak with respect to sidelobes;

a cross-correlation with other primary preambles having a small cross-correlation coefficient with respect to power of other primary preambles; and

a small peak-to-average ratio; and

wherein a large number of primary preamble sequences exhibit the properties; and

circuitry configured to transmit control and data channels using a variable band including a second plurality of subcarrier groups, wherein the variable band includes at least the core-band.

In its Institution Decision, the Board provided a preliminary construction of “transmit[ting] a broadcast channel in an orthogonal frequency division multiple access (OFDMA) core-band.”  (Institution Decision, p. 11.)  The Board stated: “the plain meaning of transmitting a broadcast channel in a core-band merely requires transmitting some part of the broadcast channel in a core-band and does not exclude transmitting another part of the broadcast channel outside the core-band.” Id.

IV disagreed with the Board’s preliminary construction, asserting that an ordinarily skilled artisan would have understood the limitation to exclude transmitting any portion of the recited broadcast channel outside of the core-band. (Patent Owner Resp., pp. 35–36.)  According to the Board, Ericsson did not agree with or dispute IV’s assertion, and only asserted that IV’s proposed construction adds no clarity and that no construction is necessary.

In its Final Written Decision, the Board decided that its preliminary construction was unreasonably broad in view of IV’s arguments and its expert’s testimony:

Upon further review of the ’431 patent, particularly in view of Patent Owner’s arguments supported by Dr. Zeger’s testimony discussed above, we are persuaded that our preliminary partial construction was unreasonably broad to the extent that construction indicated the transmitting a broadcast channel limitation would be met by the transmission of a broadcast channel that is only partially within the core-band. Thus, we agree with Patent Owner that to show that the transmitting “a broadcast channel in an” OFDMA core-band limitation is met, Petitioner must demonstrate that the prior art teaches or suggests transmitting a broadcast channel, wherein the entire channel is contained within the core-band.

(Final Written Decision, pp. 8-9.)  The Board determined that Ericsson’s prior art combination failed to teach transmitting a broadcast channel in an OFDMA core-band, as recited in independent claims 8 and 18.  The Board found that a particular prior art reference (Yamaura) did transmit in the OFDMA core-band at times, but it did not have sufficient evidence that at other times it did not transmit outside of that band, and therefore it did not teach the recited OFDMA core-band limitation.

Even though the second IPR was instituted for trial on claims 8-12 and 18-22 based on a broad construction of the claims, the claims were not shown to be obvious based on a narrowed interpretation of the claims adopted in the Final Written Decision.

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.

 

PTAB Dismisses Three IPR Petitions Based on Sovereign Immunity

Saturday, January 28th, 2017

Covidien LP had a license to U.S. Patent 7,062,251, owned by the University of Florida Research Foundation (UFRF, Patent Owner).  UFRF alleged breach of contract by Covidien, and sued Covidien in Florida state court for breach of license.  Covidien counterclaimed for a declaratory judgment that it does not infringe the ’251 patent, and removed the action to federal court.

In June of 2016, Covidien (Petitioner) filed three petitions seeking inter partes review (IPR) of the ’251 patent.  After the IPRs were filed, UFRF sought to dismiss the federal court action on the ground it was entitled to Eleventh Amendment immunity from Covidien’s declaratory judgment counterclaim.  The District Court agreed with UFRF and remanded the action back to state court.  Covidien’s appeal of this decision is pending in the Federal Circuit (Appeal No. 16-2422).

UFRF requested a conference call with the Board to ask for permission to file a motion to dismiss the IPR petitions on the basis of sovereign immunity.  The Board authorized UFRF to file its Motion to Dismiss, Covidien to file its opposition, and for UFRF to file a reply.

The Board went through a lengthy analysis of administrative precedent relating to sovereign immunity and comparisons of IPR practice with litigation.  On January 25, 2017, the Board dismissed the three IPRs finding “Eleventh Amendment immunity bars the institution of an inter partes review against an unconsenting state that has not waived sovereign immunity.”

The Board went through another lengthy analysis to determine that the UFRF is an arm of the State of Florida.

The Board concluded sovereign immunity applies:

For the foregoing reasons, we conclude that Eleventh Amendment immunity applies to inter partes review proceedings, and that UFRF, having shown it is an arm of the State of Florida, is entitled to assert its sovereign immunity as a defense to the institution of an inter partes review of the ’251 patent. Accordingly, the Petitions in IPR2016-01274, -01275, and -01276 are dismissed.

The Board went through great lengths and 39 pages to analyze and document UFRF’s sovereign immunity claim.  One has to wonder if the District Court decision remanding the case to state court weighed heavily on the Board’s decision to find sovereign immunity and dismiss the IPRs.  It will be interesting to see whether the appeal of the District Court remand is maintained and if this Board decision is appealed.  But at least for now, it appears that a state-owned patent will not be subject to IPR unless it has waived sovereign immunity.

Supreme Court’s Stryker/Halo Decision Makes it Easier for Courts to Award Enhanced Damages In Patent Infringement Cases

Tuesday, June 14th, 2016

The recent Supreme Court decisions in the Stryker and Halo cases just made it easier for courts to award enhanced damages in patent infringement cases, discarding Seagate’s “objective recklessness” test.

The Seagate Test

In 2007, the Federal Circuit announced a test for enhanced damages whereby a plaintiff seeking enhanced damages had to show that the infringement of his patent was “willful.”  In re Seagate Technology, LLC,  497 F. 3d, 1360, 1371.  The Federal Circuit set forth a two-part test to establish such willfulness: First, “a patentee must show by clear and convincing evidence that the infringer acted despite an objectively high likelihood that its actions constituted infringement of a valid patent,” without regard to “[t]he state of mind of the accused infringer.” Id., at 1371. This objectively defined risk is to be“determined by the record developed in the infringement proceedings.” Ibid. “Objective recklessness will not be found” at this first step if the accused infringer, during the infringement proceedings, “raised a ‘substantial question’ as to the validity or noninfringement of the patent.” That bar applied even if the defendant was unaware of the arguable defense when he acted.

Second, after establishing objective recklessness, a patentee had to show by clear and convincing evidence the risk of infringement “was either known or so obvious that it should have been known to the accused infringer.” Seagate, 497 F. 3d, at 1371. Only when both steps were satisfied could the district court proceed to consider whether to exercise its discretion to award enhanced damages. Ibid. 

Stryker / Halo Decisions Restore Courts’ Discretion to Award Enhanced Damages

The Supreme Court’s recent decision in the Stryker and Halo cases discarded the Seagate test and restored courts’ discretion to award enhanced damages.  The Court held “[t]he Seagate test is not consistent with §284.”  The relevant language of § 284 contains “no explicit limit or condition on when enhanced damages are appropriate, and this Court has emphasized that the “word ‘may’ clearly connotes discretion.”  So the Court found no explicit requirement for Seagate’s “objective recklessness” test.

The Court also found Seagate unnecessarily required a finding of “objective recklessness” even when wrongdoing was demonstrated by the facts of a case.  The Court also disagreed with Seagate’s requirement of a “clear and convincing evidence” standard for showing recklessness, and held that the proper standard for enhanced damages was a “preponderance of the evidence” — the same standard as for patent infringement determinations.

The Court explained that its decision did not contradict § 298, that failure to present advice to the court may not be used to prove willful infringement:

Section 298 provides that “[t]he failure of an infringer to obtain the advice of counsel” or “the failure of the infringer to present such adviceto the court or jury, may not be used to prove that the accused infringer willfully infringed.” 35 U.S.C. § 298. Respondents contend that the reference to willfulness reflects an endorsement of Seagate’s willfulness test. But willfulness has always been a part of patent law, before and after Seagate. Section 298 does not show that Congress ratified Seagate’s particular conception of willfulness. Rather, it simply addressed the fallout from the Federal Circuit’s opinion in Underwater Devices Inc. v. Morrison-Knudsen Co., 717 F. 2d 1380 (1983), which had imposed an “affirmative duty” to obtain advice of counsel prior to initiating any possible infringing activity, id., at 1389–1390. See, e.g., H. R. Rep. No. 112–98, pt. 1, p. 53 (2011).

Consequently, nine years after Seagate, the Supreme Court has made it easier for courts to make a determination of enhanced damages.  Time will tell if this decision will spur additional patent opinion practice, such as prior to the 2007 Seagate decision.

PTAB Relies on the Federal Circuit’s Recent § 101 Decision to Deny CBM Institution

Monday, June 6th, 2016

On May 12, 2016, the Federal Circuit issued a decision on 101 patent eligibility  that overturned a summary judgment finding of § 101 invalidity for software used for databases.  Enfish, LLC v. Microsoft Corp., No. 2015-1244, 2016 WL 2756266 (Fed. Cir. May 12, 2016).  The Enfish v. Microsoft decision interpreted the “abstract idea” first prong of patent eligibility under the Mayo/Alice line of cases.  It reversed the district court’s grant of summary judgement based on § 101, finding that the data storage and retrieval system for a computer memory recited by five claims on appeal of U.S. Pat. No. 6,151,604 were patent-eligible.

Two weeks later, in a CBM review, the Patent Trial and Appeal Board (PTAB) denied institution on the reviewed claims of U.S. Pat. No. 6,006,227 on § 101, referencing Enfish v. Microsoft.  Apple v. Mirror World Technologies, CBM2016-00019, Paper 12, May 26, 2016.  Mirror World’s ‘227 patent covers a “Document Stream Operating System,” as represented by claim 13:

13. A method which organizes each data unit received by or generated by a computer system, comprising the steps of:

generating a main stream of data units and at least one substream, the main stream for receiving each data unit received by or generated by the computer system, and each substream for containing data units only from the main stream;

receiving data units from other computer systems;

generating data units in the computer system;

selecting a timestamp to identify each data unit;

associating each data unit with at least one chronological indicator having the respective timestamp;

including each data unit according to the timestamp in the respective chronological indicator in at least the main stream; and

maintaining at least the main stream and the substreams as persistent streams.

The Board determined that the ‘227 was a covered business method patent eligible for review under AIA § 18, but that the claims do not recite an abstract idea.  The Board based its decision on a number of reasons, including:

  • Patent Owner demonstrated that the claims recite a solution to a problem that is “necessarily rooted in computer technology,”
  • Patent Owner identified a number of problems solved by the claimed invention that did not exist in the pre-computer world, and
  • The Board was persuaded by Patent Owner’s assertion that the claims cannot be performed entirely by the human mind or with pen or paper, and that certain steps of the claims specifically call for operations that must be performed by a computer.

The Board then relied on this excerpt from Enfish:

We do not read Alice to broadly hold that all improvements in computer-related technology are inherently abstract and, therefore, must be considered at step two. Indeed, some improvements in computer-related technology when appropriately claimed are undoubtedly not abstract, such as a chip architecture, an LED display, and the like. Nor do we think that claims directed to software, as opposed to hardware, are inherently abstract and therefore only properly analyzed at the second step of the Alice analysis. Software can make non-abstract improvements to computer technology just as hardware improvements can, and sometimes the improvements can be accomplished through either route. We thus see no reason to conclude that all claims directed to improvements in computer-related technology, including those directed to software, are abstract and necessarily analyzed at the second step of Alice, nor do we believe that Alice so directs. Therefore, we find it relevant to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea, even at the first step of the Alice analysis.

Decision at p. 16 citing Enfish v. Microsoft at *4,  (emphasis added).

The Board concluded that the first prong of the Mayo/Alice test was not met.  The Board also went on to find that the second prong of the Mayo/Alice test was not met, noting DDR Holdings.  Consequently, the Board issued its order denying CBMR.

As noted in earlier posts, the Board has been known to rapidly adopt decisions from the courts, and this case demonstrates the velocity at which decisions are integrated into practice before the Board.

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 Employs Phillips Claim Construction to Measure Claims Amended in Reexamination for Possible Intervening Rights

Monday, February 22nd, 2016

When patent owners sue an accused infringer for patent infringement, one way for the accused infringer to avoid liability is to show noninfringement of the patent claims.  But if the claims are extremely broad, the accused infringer may find it difficult to prove noninfringement and instead may have to rely on a showing of invalidity to avoid liability.  However, a showing of invalidity requires clear and convincing evidence, which is a high standard.  Enter post-grant proceedings, which provide the petitioner (or “requester,” when employing reexamination) a lower evidence standard for patent challenges.

Should the patent be subject to review under post-grant proceedings, the patent owner will likely want to avoid amendment if possible, because amendment that results in substantive changes to the claimed invention can trigger intervening rights, which may provide some reduction of infringement liability for the accused infringer should the claim be substantively narrowed in the post-grant proceeding.  Stakeholders want to know how to determine substantive amendment, triggering intervening rights.  For example, is substantive amendment to be measured by the claim construction standard typically used in the post-grant proceeding (currently “broadest reasonable interpretation,” but pending review by the Supreme Court in Cuozzo), or the claim construction standard used in district court (Phillips)?  The Federal Circuit recently addressed this question when considering amendments made in reexamination for using the Phillips standard in Convolve, Inc. v. Compaq Computer Corp. (Fed. Cir., 2014-1732, Feb. 10, 2016).

Convolve sued Compaq and others in 2000 for infringement of its U.S. Patent No. 6,314,473 relating to minimization of vibrations of a disk drive for quieter operation.  Convolve’s patent ultimately was reexamined and in 2008 certain words were added to the claims during the reexamination.  The court considered whether the amended claims were substantively identical to decide if intervening rights would apply:

“A patentee of a patent that survives reexamination is only entitled to infringement damages for the time period between the date of issuance of the original claims and the date of the reexamined claims if the original and the reexamined claims are ‘substantially identical.’” R & L Carriers, Inc. v. Qualcomm, Inc., [ ]. “[I]t is the scope of the claim that must be identical, not that identical words must be used.” Slimfold Mfg. Co., Inc. v. Kinkead Indus., Inc., [ ]. As a result, amendments made during reexamination do not necessarily compel a conclusion that the scope of the claims has been substantively changed. [ ] This is true even where the claims at issue were amended during reexamination after a rejection based on prior art. Laitram Corp. v. NEC Corp., [ ] Rather, “[t]o determine whether a claim change is substantive it is necessary to analyze the claims of the original and the reexamined patents in light of the particular facts, including the prior art, the prosecution history, other claims, and any other pertinent information.” Laitram[ ].

Accordingly, the Federal Circuit employed a Phillips standard when reviewing the claim amendments:

In determining the scope of the claims, we apply the traditional claim construction principles of Phillips v. AWH Corp.,[ ] (en banc), paying particular attention to the “examiner’s focus in allowing the claims” after amendment. R & L Carriers [ ]; see also Laitram Corp. v. NEC Corp., [ ] (When an amendment is made during the reexamination proceedings to overcome a prior art rejection, that is a “highly influential piece of prosecution history.”).

In one example, the original claims recited “acoustic noise,” but were amended in reexamination to “seek acoustic noise.”  The issue that the Federal Circuit considered is whether this narrowing was a substantive amendment for purposes of its intervening rights analysis.  It could have been deemed the amendment to have been a substantive change, because other types of motor noises could have been ruled out by the amendment, but instead the court considered:

  • the specification, which focused on the seek process and the noise it generates;
  • the claims, which relate “acoustic noise” to the seek time and seek process; and
  • the original prosecution history of the patent, where the patent owner argued that the reason for the amendment.

It concluded:

On their face, the original claims recite only “acoustic noise,” which could encompass any manner of acoustic noise, including that generated from the spindle. But when read in conjunction with the remaining claim limitations and in light of the specification and prosecution history, a person of ordinary skill in the art would understand the claims to be limited to seek acoustic noise.

Consequently, the Federal Circuit decided the claim amendments resulted in substantively identical claims before and after amendment, and therefore intervening rights do not apply:

In sum, we conclude that the addition of the term “seek” before “acoustic noise” did not alter the scope of the claim.  [] Here, the language of the claims, read in light of the specification and prosecution history, especially the applicant’s 2001 remarks and amendment, compel a conclusion that the claims as originally drafted were limited to seek acoustic noise despite the lack of an express recitation in the claims.

The Federal Circuit reversed the lower court’s grant of summary judgment of noninfringement based on the lower court’s determination that liability was precluded by intervening rights.

The Federal Circuit concluded that the claim scope prior to the amendment would have been interpreted to be the same as the scope after amendment using a Phillips construction based on the specification, claims, and prosecution history.  Had the court instead relied upon the broadest reasonable interpretation from reexamination as its gauge, the claims would presumably have been deemed substantively different and the district court summary judgment would have been affirmed.  Convolve allows patent owners an opportunity to avoid intervening rights when amended claims would obtain the same Phillips claim construction as the claims prior to amendment.

 

IPRs And Settlement of Patent Infringement Cases

Sunday, February 14th, 2016

The passage of the AIA is still relatively recent, yet statistics are starting to emerge that demonstrate the effective use of IPRs to settle patent infringement cases.  IAM magazine recently published an interesting report by Unified Patents showing that IPRs have the effect of increasing the median time to settle litigations (from 211 to 420 days), but when viewed from the time that the first IPR filing is made, the median time of the “adjusted duration” (163 days) is shorter than the median time for litigations without IPRs (211 days):

For the 15,000 cases filed between 2012 and 2014 that settled before the end of 2015, the median duration was around 211 days. By contrast, for the much smaller subset of 1,100 cases which were identified as related matters to at least one inter partes review proceeding, the median overall duration was 420 days.

At first glance, this result seems counter-intuitive and contrary to the America Invents Act’s efficiency and cost-saving goals. However, a closer look at this subset of 1,100 related matters reveals that most settled within 180 days of the earliest inter partes review filing date. Specifically, the median adjusted duration for these cases was 163 days as of the end of 2015.

This timing data demonstrates that settlement is statistically likely before an institution decision is made (which can take place as late as 6 months after the filing date of the petition).  The report offers a few explanations for the observed data:

One explanation for the increase in pre-institution settlements may be that settling the dispute earlier allows patent owners to eliminate the risk that an adverse decision could be used as grounds for institution in a later case. [ ]

A second explanation may be that defendant petitioners have an increased incentive to settle claims before institution due to the low rate of institution – although this seems less likely.

Other potential reasons why IPRs encourage settlement include:

  • Weak patent assertions are more likely to attract IPR petitions by defendants.
    • Well-educated defendant petitioners are incentivized to file IPR petitions to combat weak patents.
    • As long as there is an inexpensive validity challenge option, weak patent assertions are inherently easier to settle than cases involving strong patents.
  • IPR filings quickly inform the parties about the strengths and weaknesses of each other’s case.
    • Strong IPR petitions educate the patent owner about any potential weaknesses of the challenged patent.
    • Weak IPR petitions inform the patent owner about the weakness of the publication prior art.
    • Expectations of each party will converge more quickly if they learn more about their case early in the patent contest.
  • IPRs require the parties to communicate relatively early in a patent assertion.  These communications provide more opportunities for the parties to understand their case and to discuss and settle the dispute.

Those active in post-grant proceedings know that IPRs also provide a limited mechanism for settlement before the IPR petition is filed.  Of course, it is difficult to account for settlements that occur before an IPR petition is filed, but pre-filing settlements were discussed in an earlier post, and will be part of a half hour presentation I will be making for Patexia’s webinar series on March 24, 2016: “Posturing IPRs for Early Settlement.”  More information about that seminar can be found by clicking on this link.

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

 

Patent Trends to Watch in 2016

Friday, January 29th, 2016

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

AIA 2015 Stats

 

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