Federal Circuit will Address PTAB Amendment Rules
In Fed. Cir. 2015-1177, the Federal Circuit granted Appellant Aqua Products, Inc.’s en banc rehearing request and vacated its earlier opinion in In re Aqua Products, Inc., 823 F.3d 1369 (Fed. Cir. 2016). The Court asked the parties to address the following questions:
(a) When the Patent Owner moves to amend its claims under 35 U.S.C. § 316(d), may the PTO require the Patent Owner to bear the burden of persuasion, or a burden of production, regarding patentability of the amended claims as a condition of allowing them? Which burdens are permitted under 35 U.S.C. § 316(e)?
(b) When the Petitioner does not challenge the patentability of a proposed amended claim, or the PTAB thinks the challenge is inadequate, may the PTAB sua sponte raise patentability challenges to such a claim? If so, where would the burden of persuasion, or a burden of production, lie?
PTAB Limits Cross Examination of Expert to Fourteen Hours
In IPR2016-00256, the PTAB granted the Patent Owner’s request to limit its cross examination of an expert to fourteen hours. The cross examination would cover six cases and more than one hundred claims. Thus, 37 C.F.R. § 42.54(c)(2) would generally provide forty-two hours for cross examination.
The parties raised the time-limit issue with the PTAB, which instructed the parties to file motions to limit the length of the expert deposition. Prior to briefing on the issue the PTAB also informed the parties it would choose one of the time limits proposed. The Petitioner’s proposed ten-hour limit was rejected by the PTAB. The PTAB cited Petitioner’s failure to offer a persuasive reason why it should limit the Patent Owner’s time further than the Patent Owner’s proposal as the basis for its rejection.
The default times of four hours for redirect examination and two hours of re-cross examination were unaffected by the PTAB’s ruling.
PTAB Grants Request to Reply to Preliminary Response
In IPR2016-00917, the PTAB granted Petitioner’s request to file a reply brief to respond to an argument in Patent Owner’s Preliminary Response. In its Preliminary Response, the Patent Owner stated that it had filed a statutory disclaimer disclaiming all of the claims challenged in the Petition. The Patent Owner additionally argued it was not requesting an adverse judgment by filing the disclaimer. Petitioner sought to file a reply brief to argue the Patent Owner’s disclaimer should be considered a request for adverse judgment. The Petitioner argued that entering adverse judgment as opposed to denying institution would clarify the estoppel effect under § 42.73(d)(3). The PTAB granted Petitioner’s request for additional briefing.
PTAB Denies Parties’ Request for Additional Briefing
In IPR2013-00340, following remand by the Federal Circuit, the PTAB denied the parties’ request to submit additional briefing regarding patentability of the claims at issue. Prior to the PTAB’s denial, the PTAB requested the parties address certain issues, including the matters to be reconsidered and the need for additional briefing. Based on the parties’ responses, the PTAB made three determinations. First, patentability would be considered based on the arguments and evidence already on record. Second, the PTAB would apply the Federal Circuit’s claim construction. Third, in relation to objective evidence of nonobviousness based on commercial success, the PTAB would take into account the Federal Circuit’s guidance, without additional briefing or evidence by the parties. Ultimately, the PTAB limited to the issues raised by the parties in the 2014 Final Written Decision and denied the parties’ request to submit further briefing.
DOJ Not Time Barred In IPR By Participation In Patent Litigation
In IPR 2016-00497, the PTAB recently issued a decision instituting inter partes review of claims 1-7 of U.S. Patent No. 6,111,506 (owned by IRIS Corporation Berhad) based on a Petition filed by the Department of Justice (DOJ), despite the fact that the DOJ had filed a notice of appearance in an infringement case filed by the Patent Owner against a third party more than one year prior to the Petition for IPR.
As background, the Patent Owner sued Japan Airlines Corporation for infringement of the ’506 Patent nearly 10 years prior to the DOJ’s filing of the Petition. The DOJ intervened in the lawsuit, which was subsequently dismissed on the basis that the Patent Owner’s exclusive remedy was an action against the United States Government. Accordingly, the Patent Owner sued the United States in the Court of Federal Claims less than 1 year prior to the filing of the Petition.
In their Preliminary Response during the IPR, the Patent Owner argued that the DOJ was time-barred from filing an IPR based on its participation in the Japan Airlines litigation. The PTAB disagreed, finding that the DOJ’s participation in the Japan Airlines litigation and its subsequent assumption of liability did not, without more, render it a real party at interest in the suit because the Patent Owner did not allege or provide evidence to support a contention that the DOJ could have exercised control over the infringement proceeding. Therefore, the PTAB concluded that the Petition was not time-barred and that the DOJ demonstrated a reasonable likelihood that it would prevail with respect to at least one challenged claim.
PTAB Grants Petitioner’s Motion to Correct a Filing Date
In IPR2016-01126, the PTAB granted the Petitioner’s Motion to Correct the Filing Date accorded to the Petition based on the Petitioner’s withdrawal of claims from the PTAB’s consideration. When the Petitioner filed its Petition for IPR, it failed to provide full payment based on the number of dependent claims that were challenged. The PTAB subsequently issued an Order to notify the parties that the filing date would be changed to the day that full payment was received, but authorized the Petitioner to file a motion to withdraw its challenge with respect to certain claims. The PTAB also authorized the Patent Owner to file an opposition to the Petitioners motion.
In its motion, the Petitioner argued that (1) post-filing corrections related to statutory petition requirements (e.g., full payment of fees) do not necessitate changing of the filing date of the Petition, and (2) that the Petitioner was able to maintain the original filing date by withdrawing challenges to dependent claims to reduce the number of challenged claims to the number initially paid for in the petition. The PTAB ignored the first argument due to the fact that this argument did not comply with the scope of authorization granted by the PTAB in the order authorizing the Petitioner to file a Motion to Correct. However, the PTAB agreed that the Petitioner could reset the filing date accorded to the Petition to the original filing date by withdrawing of challenges to dependent claims. Accordingly, at the Petitioner’s request, the PTAB withdrew dependent claims from consideration in the proceeding and reset the filing date of the Petition.
PTAB Grants Second Request for Authorization to Seek Subpoena When Supplemental Evidence Was Later Submitted as Substantive Evidence
In IPR2015-01453, the PTAB granted the Patent Owner’s second request for authorization under 37 C.F.R. § 42.52(a) to seek a subpoena from the district court for the cross-examination of a third-party witness. Prior to the Patent Owner’s second request, the Petitioner had served the third-party witness’s affidavit on the Patent Owner as supplemental evidence in response to evidentiary objections. Thereafter, the parties jointly requested, and were granted, authorization to seek a subpoena to cross-examine the third-party witness. However, neither filed a motion seeking such a subpoena. The Petitioner subsequently filed the affidavit as substantive evidence that asserted prior art documents qualified as printed publications under 35 U.S.C. § 102(b). Disputing that assertion, the Patent Owner sought authorization to cross-examine the witness for a second time. The PTAB disagreed with the Patent Owner’s characterization of the affidavit as new evidence merely because it was resubmitted. The PTAB, however, considered the Patent Owner’s request in light of the overall circumstances—that the evidence was not submitted with the Petition and was relied upon without an opportunity for the Patent Owner to test the witness’s statements in the affidavit. Accordingly, the PTAB granted the Patent Owner’s second request for authorization to seek a subpoena.
Federal Circuit Finds that PTAB Incorrectly Upheld Validity of Claims Based on Erroneous Claim Construction
In Fed. Cir. 2015-1485, the Federal Circuit reviewed an inter partes review filed by Respironics, Inc. against a patent owned by Zoll Medical Corporation. In the Institution Decision, the PTAB had construed the term “patient compliance data” to mean “data indicating whether a patient has followed instructions for use.” In the Final Written Decision the PTAB had noted that it would maintain this construction. However, upon appeal, the Federal Circuit held that the PTAB had impermissibly modified the construction of “patient compliance data” when it actually applied that construction to the prior art disclosure. In particular, the Federal Circuit held that the PTAB had required that the prior art disclose more than just “data indicating whether a patient has followed instructions for use.” Rather, the PTAB had required that the prior art store information not just about patient compliance but also about instructions it gave the patient. The Federal Circuit found that this additional limitation represented a modification to the PTAB’s original construction. The Federal Circuit noted that the fact that an unclaimed element may be necessary for a device to function as claimed does not, standing alone, allow courts to treat the unclaimed element as a claim limitation. Because it was clear from the Board’s opinion that the prior art had anticipated the original claim construction, the Federal Circuit therefore reversed the PTAB’s determination that the prior art did not meet the claim limitation.
Federal Circuit Reverses PTAB’s Unpatentability Finding Based on PTAB’s Application of “Common Sense”
In Fed. Cir. 2015-2073 (Arendi S.A.R.L. v. Apple, Inc.), the Federal Circuit reversed the PTAB’s decision from IPR2014-00208. The Federal Circuit held the basis of the Board’s determination—that it would have been obvious to impart a limitation absent from a prior art reference—misapplied the law on the permissible use of “common sense.”
In so holding, the Federal Circuit reiterated that common sense, along with common wisdom and common knowledge, has a proper place in an obviousness inquiry. The court went on to note three caveats in applying common sense in an obvious analysis. First, it is generally “invoked to provide a known motivation to combine” rather than supply a missing limitation. Second, in the rare instance common sense has been invoked to supply a missing limitation, the limitation was unusually simple and the technology was straight forward. Third, a “reference to ‘common sense’ . . . cannot be used as a substitute for reasoned analysis and evidentiary support.”
Because the Board’s presumption was unsupported by substantial evidence, the missing limitation was not “peripheral,” and the record lacked support for the Board’s obviousness conclusion, the court reversed.
PTAB Partially Grants Patent Owner’s Request for Rehearing Based on Misapprehended or Overlooked Argument
In IPR2015-01869, the PTAB partially granted the Patent Owner’s Request for Rehearing. In its Request, the Patent Owner argued that the PTAB had misapprehended or overlooked arguments with respect to certain dependent claims. The PTAB agreed, noting that the Institution Decision had indicated incorrectly that certain grounds were redundant, and that the PTAB had failed to properly consider the Patent Owner’s arguments. The PTAB therefore reviewed the arguments and amended the Institution Decision to not institute as to the challenged dependent claims.
Automated Creel Systems Inc. Requests Supreme Court Clarification on which Institution Decisions are Appealable
In follow up to the Federal Circuit’s decision in 15-1116, Automated Creel Systems has filed a Petition for Writ of Certiorari regarding the permissible scope of judicial review available for PTAB trial institution decisions. The Petition is in response to the Federal Circuit’s decision barring review of the PTAB’s institution decision granting joinder of two IPR petitions separately filed by Petitioner Shaw Industries Group, Inc., even though their second IPR was filed over a year after being served with an infringement allegation. Automated Creel Systems argues,inter alia, that the Supreme Court’s decision in Cuozzo, in which the Court found that decisions to institute, inmost situations, are non-reviewable, and the Federal Circuit’s decision in Versata (in which Certiorari was subsequently denied), ruling that institution decisions can be appealed once a final written decision is rendered,are contradictory. Therefore, Automated Creel has requested the Court’s review for final clarification and resolution of this matter.
PTAB Institutes Inter Partes Review On All Claims and Grounds Despite Petitioner Only Demonstrating a Reasonably Likelihood of Success For Some of the Claims and Grounds
In IPR2016-00180, the PTAB decided to institute an inter partes review on all of the challenged claims and grounds from the Petition, despite the fact that the Petitioner had not shown a reasonable likelihood of success for all of the claims and grounds. The PTAB instituted on all of the claims and grounds because there were remaining issues about whether some of the references being relied upon were actually prior art. The PTAB noted that since the Petitioner had demonstrated a reasonable likelihood of success on at least one of the challenged claims and grounds, and that there was a commonality amongst the claims, that the PTAB could exercise its discretion under 37 C.F.R. § 42.108 to proceed with an inter partes review on all of the challenged claims and grounds and resolve the prior art issues during the trial.
Federal Circuit Reverses PTAB Decision Based on Improper Shift of Burden to Produce Evidence of Nonobviousness to Patentee
In Fed. Cir. 2015-1300, the Federal Circuit reversed the PTAB’s decision in IPR2013-00231 that found all challenged claims of U.S. Patent No. 8,079,413 to be obvious. In the inter partes review, McClinton Energy Group LLC filed a Petition challenging the patentability of the claims as obvious in view of two combinations of references having different base references but the same secondary and tertiary references. In the Petition, McClinton explicitly argued for the unpatentability of the claims based on a first combination of references and then ‘incorporated by reference’ arguments for the first combination with respect to the second combination. The Board instituted the inter partes review based on the second combination of the references, and subsequently found the challenged claims unpatentable in view of this combination.
The patent owner, Magnum Oil Tools International LTD., appealed to the Federal Circuit. McClinton withdrew from the appeal, and the PTO intervened pursuant to 35 U.S.C. § 143. In the appeal, the PTO argued that Magnum was improperly challenging the Institution Decision, which is non-reviewable. The Federal Circuit disagreed, noting Magnum was not challenging the Institution Decision but rather the PTAB’s statements made regarding obviousness, some of which were made in the Institution Decisions and were later relied upon in the PTAB’s Final Written Decision. The Federal Circuit noted that it has jurisdiction to review determinations made during institution that are subsequently incorporated into the Final Written Decision. During the appeal, Magnum also challenged whether the PTAB’s shifting of the burden of production to the patent owner after the Institution Decision was proper. The PTO argued that once trial is instituted, the burden of production shifts to the patent owner. The Federal Circuit disagreed, finding that the PTAB had erred in shifting the burden of producing evidence of nonobviousness to the patentee after the Institution Decision. More specifically, the Court found that the PTAB had erred in finding that the claims were obvious because Magnum had failed to prove otherwise, and noted that the PTAB had not properly required the petitioner to support its claim of obviousness by a preponderance of evidence.