Cancellation of Patent Claims through Reexamination Insufficient to Mount Collateral Attack on Multimillion-Dollar Jury Verdict
by Caitlin E. Olwell, Matthew George Hartman & Rubén H. Muñoz District Court, Reexamination Proceedings, Eastern District of Texas
Mar. 02, 2020
Judge Gilstrap in the Eastern District of Texas has denied defendants’ motion to stay the post-trial phase of a patent infringement litigation pending ex parte reexamination where the request for reexamination was filed four months after the jury returned a $400 million verdict in favor of plaintiff.
KAIST IP US LLC sued several companies for infringement of U.S. Patent No. 6,885,055 (the “’055 Patent”). At the completion of trial, the jury found that defendants had infringed at least one asserted claim of the ’055 Patent and that none of the asserted claims were invalid. Four months later, one of the defendants filed a request for ex parte reexamination of the ’055 Patent, which was granted by the U.S. Patent and Trademark Office (PTO). On reexamination, the PTO rejected the asserted claims. Given that KAIST had not yet exhausted its appeals of that decision, the PTO’s rejection had not yet been deemed final.
Defendants subsequently moved to stay the post-trial phase of the litigation pending completion of the reexamination. The court denied the motion on the basis that: (1) a stay would prejudice KAIST’s right to rely on a jury verdict it expended substantial resources to obtain; (2) the litigation had reached an advanced stage, in that the case had reached trial and both the jury and court had rendered decisions on the merits; and (3) any simplification to the case would be de minimis because only post-trial motions remained, which the court decided contemporaneously with the motion to stay.
In deciding against a stay, two tactical decisions by defendants were of particular importance to the court. First, defendants waited months until after the jury returned a verdict in favor of KAIST before filing the ex parte reexamination request. Second, defendants asserted unpatentability grounds in that request which were not presented to the jury. In the court’s view, filing a request for reexamination post-trial with new unpatentability grounds amounted to a “manipulat[ion] [of] an administrative process designed to streamline disputes to avoid the need for a jury trial.” The court also characterized defendants’ tactics as “a fourth bite at the apple” because defendants had failed on multiple occasions to obtain institution of inter partes review of the ’055 Patent during the pendency of the litigation. Finally, the court cautioned that the administrative remedies afforded by the Patent Act “should not be used to effect a collateral attack on the verdict of a jury empaneled pursuant to the Seventh Amendment or the judgments of an Article III court.” Indeed, the court noted that if the case were stayed and no final judgment issued, “the issuance of a final reexamination certificate would effect the destruction of this lawsuit.”
Practice Tip: A defendant will face significant obstacles justifying a stay during the post-trial phase of a patent infringement litigation where a jury has rendered a verdict in favor of the plaintiff. Such a stay may be even less palatable to a district court if the basis for seeking the stay is the cancellation of the asserted patent claims via ex parte reexamination on unpatentability grounds not presented to the jury. Thus, accused infringers seeking prompt resolution in a patent infringement dispute should exercise diligence in pursuing multiprong patent challenges.
Kaist IP US LLC v. Samsung Elecs. Co. et al., 2:16-cv-01314-JRG (E.D. Tex. Feb. 13, 2020) (Gilstrap, J.)
District Court Awards Post-Markman Attorneys’ Fees After Plaintiff Continued to Litigate Claims That Became Baseless in Light of the Court’s Markman Order
by Brooks J. Kenyon, M. Andrew Holtman & Jason Weil
District Court, 35 U.S.C. § 101, 35 U.S.C. § 285, Attorneys’ Fees, Claim Construction
Mar. 4, 2020
A federal judge in the Eastern District of Virginia granted defendant Amazon.com, Inc.’s motion for attorneys’ fees under 35 U.S.C. § 285, ordering plaintiff Innovation Sciences, LLC to pay over $700,000 in fees that accrued after the court’s Markman order.
Plaintiff asserted 11 patents relating generally to methods of multimedia communications. The court found that eight of those patents claimed unpatentable subject matter and were invalid under 35 U.S.C. § 101. After claim construction the court granted defendant’s motions for summary judgment, finding that the defendant did not infringe one patent and that another was invalid under § 101. Plaintiff stipulated to noninfringement of the final remaining patent but reserved its right to appeal the claim construction issue. It later appealed.
The Federal Circuit affirmed the court’s summary judgment finding and all claim construction determinations but one. But because plaintiff had failed to articulate an infringement position under the affirmed claim constructions, the Federal Circuit had no choice but to remand the case. The parties eventually stipulated to dismissal and defendant moved for attorneys’ fees.
The court noted that an infringement case that is substantively weak when filed can become exceptional if claim construction renders the claims-at-issue baseless. Here, plaintiff’s case was initially weak—its claims relating to eight of the patents were dismissed because the patents were invalid under 35 U.S.C. § 101. But the case was not so extraordinarily weak as to be exceptional at inception. After the Markman order, however, plaintiff should have known that each remaining claim was baseless. Specifically, the court’s later invalidation of the claims of one patent was the “clear and necessary consequence of the claim construction.” And for the claims of the patent for which the court ultimately granted summary judgment of no infringement, plaintiff’s continued infringement theory directly contradicted the court’s Markman order. Instead of dismissing its claims based on these patents, plaintiff “avoided summary judgment by stipulating to noninfringement, proceeded to appeal without a viable theory of infringement, and then prolonged case by insisting on remand—caused by [its] own lack of clarity and specificity in the stipulation—without an infringement theory.” Continuing to litigate was, thus, objectively unreasonable and the case was exceptional. The court therefore awarded attorneys’ fees pursuant to 35 U.S.C. § 285.
Practice Tip: In order for a party to recover attorneys’ fees, a case need not be exceptional at inception. A party should re-evaluate whether any asserted claims or defenses become baseless after potentially case dispositive events like claim construction.
Innovation Sciences, LLC v. Amazon.com, Inc., No. 1:16-cv-00861 (E.D. Va. Feb. 18, 2020) (Grady, J.)
Action Seeking Judgment of Compliance with FRAND Obligations Survives Only Insofar as it Relates to U.S. Patent Rights
by Thomas W. Landers IV & Rubén H. Muñoz
District Court, Eastern District of Texas
Mar. 11, 2020
Optis Wireless Technology, LLC filed a declaratory judgment action in the Eastern District of Texas seeking judgment that it complied with its fair, reasonable and non-discriminatory (FRAND) obligations when it offered a “global license” to Apple, Inc. for standard-essential patents (SEP) covering Long-Term Evolution (LTE) technology. Apple responded by filing a motion to dismiss arguing that the court lacked subject-matter jurisdiction to declare rights based on an offer involving foreign patents. Judge Gilstrap granted-in-part Apple’s motion by refusing to declare the parties’ rights with respect to any foreign patents or foreign obligations. But he did not dismiss the lawsuit in its entirety. As Judge Gilstrap explained, he was “not prepared to conclude, at [an] early stage, that the U.S. components of the license offers could not be extricated from the foreign components in any meaningful way.”
Under the applicable regional circuit law, before exercising jurisdiction in a declaratory judgment action, a district court must decide (1) whether an “actual controversy” exists between the parties; (2) whether it has authority to grant declaratory relief; and (3) whether to exercise its broad discretion to decide or dismiss a declaratory judgment action. Moreover, when assessing a Rule 12(b)(1) motion, “the district court is to accept as true the allegations and facts set forth in the complaint.”
Optis’ complaint alleged that it engaged in “good faith efforts to license [its] essential patents to Apple on FRAND terms” but that “Apple ha[d] not reciprocated [those] efforts.” Optis accordingly requested declaratory judgment that: (1) Optis’ efforts complied with the Intellectual Property Rights Policy of the European Telecommunications Standards Institute; (2) the efforts “were consistent with competition law requirements”; (3) Optis had “no US liability based on [its] conduct”; and (4) Apple “may no longer raise a FRAND defense in the US.”
In its motion to dismiss, Apple argued that “the [c]ourt did not have or should decline jurisdiction over [Optis’] claim as it relates to foreign patents.” Optis further argued that, as such, there would be no “actual controversy” set forth in the complaint because the alleged licensing efforts all included foreign patents and thus “any determination of whether a hypothetical offer for a U.S.-only license complied with FRAND obligations would be an [improper] advisory opinion.”
Judge Gilstrap agreed with Apple’s first argument and concluded that “foreign obligations under foreign laws related to foreign patents are best left to the courts of those foreign countries.” But he disagreed that there was no “actual controversy” simply because the alleged licensing offers all included foreign patents. According to the court, a patentee need not “make individual license offers for standard essential patents in each country in order to be deemed to have complied with its FRAND and other obligations in that country.” And “while a global license would involve foreign patents subject to foreign FRAND obligations, [it] would also involve U.S. patents subject to U.S. FRAND and anti-competition obligations.” As Judge Gilstrap explained, the U.S. components of the license could conceivably be “extricated” from the foreign components, and Optis should not be denied the opportunity to make such a showing.
To support its motion, Apple relied heavily on a prior case in which Judge Gilstrap dismissed both foreign and U.S. claims when a party sought judgment of FRAND compliance based on a “worldwide” licensing offer. See Optis Wireless Technology, LLC v. Huawei Technologies Co., No. 2:17-CV-00123-JRG-RSP, 2018 WL 3375192 (E.D. Tex. July 11, 2018). Judge Gilstrap determined that Huawei was distinguishable because of its “very different procedural posture.” In Huawei, dismissal occurred “after a bench trial in which [the plaintiffs] failed to present any evidence that they had offered a license to U.S.-only patents.” The plaintiffs’ expert in Huawei “testified that he ha[d] offered no opinions as to whether there was FRAND compliance by [the plaintiff] with respect to only U.S. patents.” According to Judge Gilstrap, “such a failure of proof in the Huawei case should not preclude [Optis] from attempting to offer such proof in this case.”
Practice Tip: Parties involved in foreign litigation related to the licensing of SEPs under FRAND terms must recognize the effects of foreign actions and foreign licensing activities on U.S. litigation. Jurisdiction and eventual judgment in the U.S. hinges on allegations and evidence that is tied to U.S. patent rights.
Optis Wireless Technology, LLC et al v. Apple Inc., 2:19-cv-00066-JRG (E.D. Tex. Mar. 2, 2020) (Gilstrap, J.)
On Remand, PTAB Reaches Opposite Conclusion and Finds that Patent Owner Successfully Antedated Key Prior Art Reference
by Jonathan James Underwood & Rubén H. Muñoz
Patent Trial and Appeal Board, Inter Partes Review
Mar. 20, 2020
In a remanded inter partes review (IPR) proceeding, the Patent Trial and Appeal Board (PTAB) held that Patent Owner Intellectual Ventures II LLC had successfully antedated a prior art reference asserted by Petitioner Motorola Mobility LLC in all of the unpatentability grounds.
Earlier in the IPR proceeding, the PTAB had partially instituted the IPR petition and reached a final written decision that the challenged claims (directed to a mobile wireless hotspot system) were unpatentable. Patent Owner appealed, and the Federal Circuit vacated the decision, finding error in the PTAB’s analysis of prior conception. In particular, the Federal Circuit remanded the case so that the PTAB could apply a “rule of reason analysis” and consider “all pertinent evidence.” On remand, the PTAB instituted all petitioned grounds in accordance with the Supreme Court’s ruling in SAS Institute Inc. v. Iancu, 138 S. Ct. 1348 (2018).
The PTAB began its analysis by laying out the respective burdens on the parties. Petitioner bore the burden of persuasion to show that the challenged claims were unpatentable, and therefore had the burden of establishing that any cited reference constituted prior art. Yet, because Petitioner’s reference was a patent application that qualified as § 102(e) prior art on its face, the burden shifted to Patent Owner to produce evidence antedating the reference.
On the merits of Patent Owner’s attempt to antedate the reference, the PTAB first rejected Petitioner’s argument that Patent Owner had failed to provide sufficient evidence that was authenticated. Patent Owner’s evidence included electronically stored notes, photographs and test results, along with corresponding metadata. The PTAB found that the evidence was properly authenticated through the metadata and inventor testimony.
Turning to conception, the PTAB found that the totality of Patent Owner’s evidence showed that the inventors had conceived the mobile wireless hotspot system prior to the critical date of the § 102(e) reference. Patent Owner provided inventor and expert testimony regarding how the inventors were able to use then-existing hardware to function as the recited elements of the claimed hotspot system. In particular, following the Federal Circuit’s guidance, the PTAB credited corroboration evidence that was created shortly after the critical date.
Analyzing reduction to practice, the PTAB found that Patent Owner’s evidence supported actual reduction to practice prior to the critical date. That evidence included photographs of the inventors building a prototype of the mobile hotspot system, installing it in a minivan and road-testing the device. Under rule of reason analysis, the PTAB found that the photographs gave credence to the inventor testimony.
The PTAB concluded that Patent Owner had successfully antedated the reference in question and rejected all the grounds that necessarily relied on the reference. However, because Petitioner had formulated two obviousness grounds as optionally including the reference, the PTAB analyzed those grounds without the reference. On the merits of those grounds, the PTAB found that Petitioner had failed to show that the claims were unpatentable for obviousness.
Practice Tip: When considering whether evidence is sufficient to corroborate a prior invention and reduction to practice argument, rule of reason analysis applies. The adjudicator must consider all pertinent evidence, including materials that were generated after the critical date of a putative prior art reference, and also undated documents. Authentication of an electronic document can be accomplished through metadata.
Motorola Mobility LLC v. Intellectual Ventures II LLC, IPR2014-00504, Paper 84 (PTAB March 13, 2020)
PTAB Designates Two Decisions as Precedential and One Decision as Informative, Clarifying Its Exercise of Discretion on Institution Under 35 U.S.C. § 325(d)
by Jason Weil & C. Brandon Rash
Patent Trial and Appeal Board, Inter Partes Review
Mar. 25, 2020
The Patent Trial and Appeal Board (PTAB or Board) recently designated two decisions as precedential and one decision as informative, marking its first precedential and informative designations for 2020. In two of the decisions, the Board exercised its discretion and declined to institute an inter partes review (IPR) because the examiner had considered the same prior art or arguments during prosecution and the petitioners failed to show that the examiner had erred. In the third decision, the Board instituted review, finding that one of the references relied on in the petition had not been considered during prosecution and that the reference taught a feature having a different structure and function than the art that had been considered during prosecution. The examiner erred by not considering the teachings from that new reference.
Advanced Bionics LLC v. MED-EL Elektromedizinische Geräte GmbH, IPR2019-01469, Paper 6 (Feb. 13, 2020) (Precedential)
In Advanced Bionics, the claims were directed to magnetic elements in implantable medical devices that allow fo magnetic resonance imaging. The petitioner asserted two obviousness grounds that relied on Zimmerling, a reference that had been the basis for rejections during prosecution, combined with other new references. In its preliminary response, the patent owner argued that the examiner had already considered Zimmerling and the petitioner’s arguments during prosecution.
The Board agreed with the patent owner and explained the two-part framework it uses in applying the factors set forth in Becton, Dickinson & Co. v. B. Braun Melsungen AG, IPR2017-01586, Paper 8 (Dec. 15, 2017) (precedential in relevant part), to decide whether to institute review under 35 U.S.C. § 325(d). The Board asks:
▪ Whether the same or substantially the same art previously was presented to the Office or whether the same or substantially the same arguments were previously presented to the Office [Becton, Dickinson factors (a), (b) and (d)].
▪ If either condition of the first part of the framework is satisfied, whether the petitioner has demonstrated that the Office erred in a manner material to the patentability of challenged claims [Becton, Dickinson factors (c), (e) and (f)].
In finding the first prong satisfied, the Board determined that, although the new references were not cited during prosecution, the petitioner relied on the new references in substantially the same way the examiner had already considered Zimmerling during prosecution. The petitioner admitted that Zimmerling and the new references disclose “a similar system” and the Board found that Zimmerling and the new references disclose “substantially the same magnet shape and configuration.” The Board also found that the petitioner relied on the new references in the same manner as the examiner relied on Zimmerling.
Turning to the second prong, the Board explained that during prosecution the applicant distinguished Zimmerling because it did not disclose “an implantable magnet having a dipole moment that remains parallel to the coil housing and the patient’s skin as the magnet rotates.” The petitioner, however, did not argue that the additional references cure Zimmerling’s deficiency related to magnet rotation. Accordingly, the Board was not persuaded that the examiner materially erred in deciding patentability, and the Board declined to institute review.
Practice Tip: When combining a new reference with a reference cited during prosecution, IPR petitioners should articulate how the new reference is materially different from the cited reference and how those material differences disclose any limitations added during prosecution to overcome the cited reference. If the new reference discloses substantially the same information as the cited reference, IPR petitioners should explain how the examiner erred by allowing the challenged claims.
Puma N. Am., Inc. v. Nike, Inc., IPR 2019-01042, Paper 10 (Oct. 31, 2019) (Informative)
In Puma, the claims were directed to articles of footwear with a base plate having certain specific structures (e.g., a cleated soccer shoe). The petitioner alleged that six claims were unpatentable as obvious over a combination of two references. The patent owner argued the Board should decline to institute review pursuant to 35 U.S.C. § 325(d) because the examiner considered that same combination of references during prosecution. The petitioner agreed that this combination was considered during prosecution but stressed that its petition presents new evidence and argument not considered during prosecution.
In declining institution under § 325(d), the Board applied the six Becton, Dickinson factors. The examiner twice rejected the challenged claims based on the same combination of references during prosecution, and, thus, factors (a), (b) and (c) weighed in favor of denying institution. Under factor (d), the Board found there was a high degree of overlap between the petition and arguments made during prosecution. Both proposed the same references for the same limitations, the same modification of the references and the same rationale for this modification. Under factor (e), the Board disagreed that petitioner had shown that the examiner erred. According to the Board, the petitioner’s argument about a motivation to combine the references was really directed to whether the references were analogous art, and the new expert testimony that the petitioner relied on was unsupported and merely rehashed arguments considered by the examiner. Finally, under factor (f), the parties agreed that the petitioner’s expert testimony was new, but the Board discounted it for the reasons explained under factor (e). Because all the Becton, Dickinson factors weighed against institution, the Board declined to institute an IPR.
Practice Tip: If the same combination of references asserted in an IPR was already considered during prosecution, IPR petitioners should articulate how the asserted combination is modified differently in the IPR or how the rationale for modification is different in the IPR. IPR petitioners should also present new evidence, such as expert testimony with fact-based reasoning, that supports these new modifications and rationales. Unsupported expert testimony that repeats arguments made during prosecution may be discounted by the Board.
Oticon Med, AB, et al. v. Cochlear Ltd., IPR 2019-00975, Paper 15 (Oct. 16, 2019) (Precedential)
In Oticon, the claims were directed to anchoring elements for bone anchored hearing devices. The petitioner asserted four grounds of obviousness, each including the Choi reference combined with other references. Although the other references had been considered during prosecution, Choi had not. The patent owner argued that the Board should decline to institute review under 35 U.S.C. § 325(d), because the Office had already considered art cumulative to Choi and the petitioner’s arguments overlapped with the arguments made during prosecution.
The Board disagreed based on application of the Becton, Dickinson factors. Under factors (a) and (b), the Board found that Choi was not cumulative because the feature that the petitioner relied on in Choi was structurally and functionally different from the features in the references cited during prosecution. Choi also provided an advantage that petitioner relied on to provide a motivation to combine the references. For the same reasons, factors (c) and (d) also cut against denying institution under § 325(d). Specifically, the petitioner relied on teachings in Choi that were not considered by the examiner. Finally, in considering factors (e) and (f), the Board concluded that the examiner had erred by not considering Choi, the teachings of which were noncumulative and would have been considered by one of skill in the art at the time of the invention. Accordingly, the Board instituted review.
Practice Tip: In an IPR petition, when relying on a new reference in combination with references considered during prosecution, petitioners should explain why the features in the new reference are structurally different from the features of the references cited during prosecution. If possible, petitioner should also explain why the features in the new reference are functionality different (e.g., it serves a different purpose) and how they provide different advantages than features of the references cited during prosecution.
Pre-Issuance, Industry-Standard Monitoring and Copying of a Product Does Not Support a Finding of Willful Infringement of Method of Use Patent
by Melissa R. Gibson & Rachel J. Elsby
District Court, Willful Infringement
Mar. 31, 2020
Despite evidence that defendants monitored plaintiffs’ product development and attempted to match its dosing intervals, the District Court of Delaware found no willful infringement because that activity took place before the patents issued and is considered standard within the pharmaceutical industry. Thus, absent additional evidence, defendants’ conduct did not rise to the level of wanton, malicious or bad-faith behavior required to support willfulness.
Plaintiffs Bioverativ Inc., Bioverativ Therpaeutics Inc. and Bioverativ U.S. LLC (collectively “Bioverativ”) sued defendants CSL Behring LLC, CSL Behring GmbH and CSL Behring Lengau AG (collectively “CSL”) for infringement of three patents directed to methods of treating hemophilia by administering a chimeric factor IX (FIX) polypeptide according to claimed dosing regimens. Bioverativ further alleged that CSL willfully infringed the claims based on its sale of Idelvion®, a chimeric FIX polypeptide that comprises FIX and albumin as its binding partner.
In support of its willfulness allegations, Bioverativ alleged that CSL developed its product using confidential information it obtained from Bioverativ’s predecessor during discussions to co-develop and manufacture a half-life extended FIX product—discussions that occurred before the priority date and nearly a decade before the patents issued. Bioverativ further alleged that CSL targeted the same dosing regimen that was disclosed in confidence. Bioverativ also pointed to CLS’s monitoring of Phase III clinical data to match the dosing interval, arguing that CSL was attempting to “match” Bioverativ’s dosing interval.
On summary judgment, the court disagreed that Bioverativ’s allegations could support a finding of willfulness or enhanced damages. Specifically, the court found that none of CSL’s pre-issuance activities constituted willful infringement. First, the court explained that monitoring clinical trials does not show copying. At most, it shows an interest in how clinical trials are progressing, which amounts to competitive intelligence gathering. And because the parties agreed that competitive intelligence is “standard in the pharmaceutical industry,” such pre-patent surveillance activities, without more, do not amount to “elaborate copying” or “consciously wrongful,” “malicious” behavior. Likewise, the use of confidential information obtained nearly seven years before the patents issued in 2017 relating to a pharmaceutical product could not support a finding of willful infringement of method of treatment claims.
The court also addressed the alleged post-issuance activities and found they too did not rise to the level of wanton, malicious and bad-faith behavior necessary for willful infringement. Notably, the product accused of practicing the claimed methods entered the market more than a year before the patents issued. In other words, at the time it was launched, it did not infringe any of the asserted patents. And, as a result, there could be no willful infringement until the litigation was filed. The court noted that this timeline necessarily complicated matters for both parties. For the plaintiff, it was difficult to identify any difference in the defendants’ pre-issuance and post-issuance activities. Here, knowledge of the patents at the time of their issuance was undisputed. But no other post-issuance evidence existed to support a finding of willful infringement, and there was no evidence that the claimed methods of treatment were copied. For these reasons, the court granted summary judgment of no willful infringement.
▪ Evidence that a party is acting consistently with industry standards may help refute allegations of willful infringement, but it may not be sufficient to negate evidence of direct copying. Therefore, companies engaged in competitive monitoring should be cognizant of the manner in which information is collected and disseminated.
▪ In a similar vein, patentees asserting claims of willful infringement should identify evidence that indicates an accused infringer’s conduct goes beyond standard monitoring. This may be particularly true in cases where a patent to methods of treatment issues after a product used in the method enters the market.
Bioverativ Inc. v. CSL Behring LLC, No. 17-914-RGA (D. Del. Mar. 23, 2020)
PTAB Institutes Later-Filed IPR and Consolidates with Earlier-Filed IPR Challenging Different Claims of Same Patent
by Karina J. Moy & M. Andrew Holtman
Patent Trial and Appeal Board, Inter Partes Review
Apr. 02, 2020
The Patent Trial and Appeal Board (PTAB or Board) denied a patent owner’s request for discretionary denial of a second petition to the same patent as the first petition where patent owner itself asserted the claims of the second petition for infringement in district court at a date after the first petition was filed. The Board instituted both petitions and consolidated the proceedings under 35 U.S.C § 315(d).
Patent owner Carucel Investments, L.P. owns Patent No. 8,718,543 (’543 Patent), titled “Mobile Communication System with Moving Base Station,” which is asserted against multiple parties in district court litigation, including the petitioner, Mercedes-Benz. The patent addresses a problem with mobile telephone systems wherein a mobile telephone user can experience a long handoff time when driving away from the cell signal of one base station and toward that of another base station. The patent interposes a moving base station that travels with traffic and provides signal to mobile telephones in between fixed stations.
Request for Discretionary Denial of ’1644 IPR
Patent owner requested discretionary denial of inter partes review (IPR) IPR2019-01644 (’1644 IPR), arguing that it used the same prior art and substantially similar arguments as the earlier-filed IPR2019-01441 (’1441 IPR), though it challenged different claims. The patent owner cited precedential PTAB decision General Plastic Industrial Co., Ltd. v. Canon Kabushiki Kaisha, IPR2016-01357, to argue that the ’1644 IPR was a “follow-on” to the ’1441 IPR and therefore merited denial of institution.
The PTAB considered the General Plastic factors and sided with petitioner. Under the first factor, the ’1644 IPR was not a follow-on petition because it challenged different claims than the ’1441 IPR. In the alternative, patent owner argued that the ’1644 IPR was a follow-on to a separate proceeding involving Volkswagen. While precedential decision Valve Corp. v. Electric Scripting Products, Inc., IPR2019-00062 allows the Board to apply the General Plastic factors to petitions filed by different petitioners with a “significant relationship,” in this instance, the Board found no such relationship. The Board observed that Mercedes-Benz and Volkswagen were not co-defendants against patent owner, and were, in fact, direct market competitors that had not coordinated their IPR filings.
Considering the third factor, the Board observed that neither patent owner nor the Board had responded to the ’1441 IPR by the time petitioner filed the ’1644 IPR. Thus, petitioner had not gained unfair advantage in its second petition by testing the waters with the first petition. Nor did Volkswagen’s IPR confer this advantage to petitioner because the Volkswagen IPR used different prior art and arguments than petitioner’s second IPR.
As to the fifth factor, petitioner argued that its second petition was necessary because patent owner had not asserted claims 34 and 66 of the ’543 Patent when petitioner filed its first petition. The PTAB considered this to adequately explain any delay between filings.
Finally, the sixth and seventh factors weighed in favor of petitioner because the substantial overlap in prior art and arguments of the two petitions would allow the PTAB to consider the second petition without impacting its resources or ability to meet the one-year deadline for a final determination.
Institution of ’1644 IPR
The PTAB instituted the ’1644 IPR, finding that petitioner had shown a reasonable likelihood of success in challenging at least one claim of the petition, as required under 35 U.S.C. § 314. Petitioner cited four prior art references, and, for all elements of the two challenged claims, the Board found that petitioner sufficiently showed a motivation to combine the prior art and a reasonable expectation of success. Meanwhile, patent owner had declined to address the petition on the merits.
Consolidation of ’1441 and ’1644 IPRs
Finally, the PTAB considered petitioner’s motion to join the ’1441 and ’1644 IPRs. The Federal Circuit had held on March 18, 2020, in Facebook, Inc. v. Windy City Innovations, No. 2018-01400, that 35 U.S.C. § 315(c) does not authorize joinder of a person to a proceeding in which that person is already a party. However, two proceedings brought by a single party could be consolidated, even by the Board acting sua sponte, under 35 U.S.C. § 315(d).
Thus, the PTAB treated petitioner’s request for joinder as a request for consolidation, and granted consolidation for the same reasons patent owner used to argue for discretionary denial of the ’1644 IPR. Both petitions used the same prior art and motivations to combine, and thus could be assessed using a single set of briefs, hearings, and expert testimony. Consolidation also would not prejudice patent owner because petitioner had not gained an advantage from filing two separate petitions challenging the ’543 Patent.
Practice Tip: A later-filed IPR petition may not merit discretionary denial if the petition was necessitated by actions of the patent owner, such as by the assertion of additional claims in a related district court action. Further, consolidation, instead of joinder, may be available where substantial overlap in prior art and argument exists between petitions filed by the same petitioner.
Mercedes-Benz USA, LLC v. Carucel Investments, L.P., IPR2019-01644, Paper 9 (March 26, 2020)
The USPTO Provides Deadline Extensions Through the CARES Act, Including for Inter Partes Reviews at the Patent Trial and Appeal Board
Intellectual Property Alert
April 7, 2020
▪ The CARES Act grants the Director of the USPTO temporary authority to “toll, waive, adjust, or modify” statutory deadlines under the Title 35 of the United States Code governing patent law.
▪ In a Notice published on March 31, 2020, the USPTO issued guidelines to allow 30-day extensions of certain filings and pleadings for those affected by the COVID-19 national emergency.
In addition, the USPTO provides for the extension of certain deadlines in inter partes reviews and other proceedings at the PTAB.
In response to this grant of authority under the CARES ACT, the USPTO published a notice on March 31, 2020, entitled “Notice of Wavier of Patent-Related Timing Deadlines under the [CARES] Act” (link here) (“Notice”). In that Notice, the Director of the USPTO determined that the national emergency relating to the COVID-19 outbreak “has prejudiced the rights of applicants, patent owners, or others appearing before the USPTO in patent matters, and has prevented applicants patent owners, or others appearing before the USPTO in patent matters from filing a document or fee with the [USPTO].” Accordingly, the USPTO will grant extensions of time for certain patent-related filings if a practitioner, applicant, patent owner, petitioner, third-party requester, inventor or other person associated with the filing or fee was “personally affected” by the COVID-19 pandemic.
The Notice identified certain patent-related filings or fees that are due between March 27, 2020, and April 30, 2020, inclusive of both dates, for which the deadline will be extended 30 days from the date the filing or fee was originally due:
- Reply to an Office notice issued during pre-examination processing by a small or micro entity, with certain notices identified by example.
- Reply to an Office notice or action issued during examination or patent publication processing, with certain notices and actions identified by example.
- Issue fee
- Notice of appeal under 35 U.S.C. § 134 and 37 C.F.R. § 41.31
- Appeal brief under 37 C.F.R. § 41.37
- Reply brief under 37 C.F.R. § 41.41.
- Appeal forwarding fee under 37 C.F.R. § 41.45.
- Request for an oral hearing before the Patent Trial and Appeal Board (PTAB) under 37 C.F.R. § 41.47
- Response to a substitute examiner’s answer under 37 C.F.R. § 41.50(a)(2).
- Amendment when reopening prosecution in response to, or request for rehearing of, a PTAB decision designated as including a new ground of rejection under 37 C.F.R. § 41.50(b).
- Maintenance fee, filed by a small or micro entity.
- Request for rehearing of a PTAB decision under 37 C.F.R. § 41.52.
This 30-day extension will be granted if filing is accompanied by a statement that the “delay in filing or payment was due to the COVID-19 outbreak.” Acceptable explanations for the delay may include “office closures, cash flow interruptions, inaccessibility of files or other materials, travel delays, personal or family illness, or similar circumstances, such that the outbreak materially interfered with the timely filing or payment.” Importantly, these deadline extensions under the CARES Act apply only to granted patents and applications that have already been filed; patent application filing deadlines, for example, are not affected by these 30-day extensions.
The USPTO also established deadline extensions for certain events specific to proceedings before the PTAB, including exceedingly significant and popular inter partes reviews. Specifically, the USPTO will grant 30-day extensions for the following deadlines:
Requests for rehearing regarding a PTAB decision.
Petitions to the Chief Judge under 37 C.F.R. § 41.3.
Patent owner preliminary responses in trial proceedings under 37 C.F.R. § 42.107 or 42.207, or any related responsive pleadings.
Extensions must be requested by a party and accompanied by a statement explaining that the delay was due to the COVID-19 outbreak. If a patent owner preliminary response or related responsive filing is granted a 30-day extension, the deadline for institution of an inter partes review or post-grant review may also be extended by the USPTO. For all other situations not covered by the Notice, practitioners may contact the PTAB to request a time extension where the COVID-19 outbreak has interfered with a filing.
Under the CARES Act and its Notice of March 31, 2020, the USPTO provides generous relief, and clients with pending proceedings at the USPTO, including inter partes reviews at the PTAB, may be in a position to qualify for a 30-day deadline extension. Practitioners should carefully consider whether a time extension may be warranted, or even beneficial, in fully asserting their rights before the USPTO and meeting their business needs during this global pandemic.
If you have any questions concerning this alert, please contact:
David C. Vondle – Washington, D.C.
Sohrab Hajarian -Washington, D.C.
Priority Dispute Is Not Carte Blanche to Challenge Same Patent with Multiple IPR Petitions
by Matthew George Hartman & Rubén H. Muñoz
Patent Trial and Appeal Board, Inter Partes Review
April 08, 2020
A panel at the Patent Trial and Appeal Board (the “Board”) recently considered whether a dispute over a patent’s priority date justified filing two petitions for inter partes review (IPR) against the same claims.
The petitioner concurrently filed two IPR petitions challenging the same claims of a patent. In one petition, the petitioner challenged the claims with prior art that predated the filing date of the patent’s provisional application. In the other petition, the petitioner challenged the claim of priority to the provisional application and asserted prior art postdating the filing date of the provisional application. According to the petitioner, “[d]ue to the large number of claims and the volume of discussion on the priority deficiencies, these grounds could not be presented in a single filing.”
The Board instituted trial on the petition that did not challenge the priority date. The Board denied the other petition under 35 U.S.C. § 314(a) and found that the petitioner had failed to demonstrate the need for more than one petition to challenge the same patent claims.
In exercising its discretion, the Board first noted that the Trial Practice Guide (the “Guide”) states that “a substantial majority of patents have been challenged with a single petition.” And although, as the petitioner argued, the Guide expressly contemplates that multiple petitions directed to the same patent may be appropriate where “there is a dispute about priority date requiring arguments under multiple prior art references,” the Guide further instructs that “this should be rare.” In view of the Guide’s instruction, the Board explained that a petitioner is not automatically entitled to multiple reviews of the same patent claims whenever a priority issue arises. In this instance, the Board determined that the petitioner’s failure to adequately explain how this was one of those “rare” circumstances requiring the filing of two petitions weighed against institution.
The Board found the petitioner’s additional arguments equally unpersuasive to justify two petitions. Specifically, the Board held that the petitioner’s assertion that the petitions present “alternative arguments” that are “not cumulative challenges” did not provide a sufficient explanation of the differences between the petitions or the reasons why the Board should institute additional petitions if it identifies one that meets the institution requirements. The Board also rejected the argument that the large number of claims and volume of discussion on the priority deficiencies warranted two petitions. The Board determined that the 18 challenged claims was “not a significantly large number of claims to address in a single petition,” as evidenced by the fact that the petitioner was able to assert multiple grounds against all 18 claims in the instituted proceeding. The Board also found that, regardless of the alleged volume of discussion on priority deficiencies, the petitioner still failed to explain adequately why, if the Board institutes review on a petition where priority is not an issue, a second review that involves a priority dispute is necessary.
Practice Tip: When filing more than one inter partes review petition to address a dispute about the priority date of challenged claims, a petitioner should explain: (1) the differences between the petitions, (2) why the issues addressed by the different petitions are material and (3) why the Board should exercise its discretion to institute additional petitions if it identifies one petition that satisfies the institution standard. The petitioner should also explain how the circumstances surrounding its challenges, including a priority dispute, are “rare” and require multiple petitions.
Square, Inc., v. 4361423 Canada Inc., IPR2019-01626, Paper 14 (PTAB March 30, 2020)
Due to “Apparent Loophole” in Statutory Framework, District Court Permits Invalidity Challenge that Does Not Foreclose Later IPR
by Michael Francis Reeder II, Jason Weil & Rubén H. Muñoz
District Court, Patent Trial and Appeal Board, Inter Partes Review
April 15, 2020
When bringing a lawsuit for a declaratory judgment of non-infringement of a patent, careful pleading may allow plaintiffs to avoid the restrictions against later seeking inter partes review (IPR) of that patent, while also litigating patent invalidity in district court. This was the approach followed by a declaratory judgment (DJ) plaintiff in a recent spat with a patentee.
Epic Games originally filed a complaint for declaratory judgment of non-infringement—but not of invalidity—challenging several of Acceleration Bay’s patents. After Acceleration Bay filed its counterclaims of patent infringement, Epic Games filed counterclaims-in-reply seeking declaratory judgment of patent invalidity (of the same patents that were the subject of the original complaint). Acceleration Bay moved to strike Epic Games’ invalidity counterclaims-in-reply. Acceleration Bay argued that allowing Epic Games’ invalidity counterclaims-in-reply would be an end-run around the rules governing the availability of IPRs.
In analyzing the motion to strike, the court noted that there are two statutes that prevent an accused infringer from taking a “second bite at the apple” after challenging the validity of a patent at the district court. First, under 35 U.S.C. § 315(a)(1), no IPR may be instituted if, prior to filing its petition, the petitioner sought a declaratory judgment of invalidity of the challenged patent. Second, under 35 U.S.C. § 315(b), no IPR may be instituted if the petition was filed more than one year after the petitioner (or a real party-in-interest or privy) was served with a complaint alleging infringement of the challenged patent.
In analyzing the issues, the court noted that Section 315(a)(3) states that a counterclaim challenging the validity of a patent claim “does not constitute a civil action challenging the validity of a claim of a patent” for purpose of Section 315(a)(1). The court also noted the Patent Trial and Appeal Board (PTAB) has held that counterclaims-in-reply are not subject to the bar under § 315(a)(3) because they are not “civil actions” challenging validity. See Canfield Scientific, Inc. v. Melanoscan, LLC, IPR2017-02125 Paper 15, 2018 WL 1628565, at *2-3 (PTAB Mar. 30, 2018).
Ultimately, the court allowed Epic Games’ invalidity counterclaims-in-reply. The court reasoned that striking them would be futile because the court was going to hear the invalidity challenges through Epic Games’ affirmative defenses anyway.
In its penultimate paragraph, the court explicitly recognized that by allowing the invalidity counterclaims-in-reply, Epic Games was able to take advantage of an “apparent loophole” left by the statutory scheme governing IPRs. The court stated that “unlike a patent infringement defendant (which cannot bring an IPR more than one year after being sued) or a declaratory judgment plaintiff seeking a judgment of invalidity (which cannot seek an IPR at all), a declaratory judgment counterclaimant faces no apparent restrictions on seeking an IPR.” According to the court, this result could, in theory, allow a declaratory judgment counterclaimant to fully litigate the issue of patent validity in the district court, lose on the issue, and then seek a “redo” before the PTAB “while being subject to no estoppel or time limit whatsoever.” The court recognized that this result cannot be reconciled with the clear congressional intent to limit the availability of IPRs to litigants, but that issue is “one for Congress to resolve.”
Practice Tip: Potential infringers who wish to litigate validity in district court—while keeping intact their ability to challenge patentability at the PTAB—should consider seeking first a declaratory judgment of non-infringement. If that case proceeds, the patent holder will have to file a counterclaim of infringement or lose its ability to bring such a claim. That will allow the declaratory judgment plaintiff to litigate validity either through affirmative defenses in its answer to that compulsory counterclaim, or through declaratory judgment counterclaims-in-reply, neither of which—according to this district court decision—should foreclose a later petition for IPR.
Epic Games, Inc. v. Acceleration Bay LLC, 4-19-cv-04133 (N.D. Cal. Apr. 1, 2020)