PTAB: Petitioner Not Obliged to Address Evidence of Object Indicia That is Neither Tethered to the Claim nor Previously Found Persuasive
by Jonathan James Underwood & Rubén H. Muñoz, Akin Gump Strauss Hauer & Feld LLP
Patent Trial and Appeal Board, Inter Partes Review, Non-Obviousness, America Invents Act
March 5, 2021
The Patent Trial and Appeal Board recently denied a patent owner’s request for rehearing of an institution decision, rejecting arguments that previously raised evidence of objective indicia should have been addressed in a petition for inter partes review (IPR).
The petitioner challenged claims of a patent whose parent had been challenged previously in an IPR by a third party. In that earlier proceeding, the board found that all of the parent patent’s claims were unpatentable for obviousness, despite the patent owner’s attempt to show nonobviousness by submitting evidence of objective indicia.
In the IPR challenging the claims of the child patent, the patent owner argued in its preliminary response that the petitioner should have addressed objective indicia evidence that was present in the specification. The board’s institution decision “did not expressly address” that argument. Following institution, the patent owner sought rehearing, arguing in part that the board had erred by overlooking the objective indicia evidence, and that the petition was “facially deficient” because it did not address the evidence present in the specification and original prosecution history.
The board rejected the patent owner’s contention that the board had erred. First, the board explained that the child patent did “not have an extensive litigation record of objective indicia supporting nonobviousness” and so case law requiring a petitioner to address such evidence was inapposite. Rather, in the IPR proceeding challenging the parent patent, the board had found that patent owner’s objective indicia evidence did not establish nonobviousness. Second, the board explained that the objective indicia evidence concerned a limitation that was not present in the challenged claims. As such, for either of those reasons, the petitioner did not have to address the evidence in the petition. The board further explained that to the extent the patent owner had submitted additional evidence on this issue, the petitioner had not yet had an opportunity to respond, and so the record could be developed during trial.
The board completed its analysis by turning to the merits of the patent owner’s evidence at the institution stage. The board found that the patent owner had made only “generalized arguments” and had not presented “sufficient factual evidence” to establish its allegations of unexpected results in support of nonobviousness. In conclusion, the board denied the request for rehearing for failing to show the board had abused its discretion in instituting the IPR.
Practice Tip: Both sides in America Invents Act (AIA) proceedings should carefully consider whether evidence of objective indicia that is relevant to the challenged claims has been fully developed in prior proceedings, such as during prosecution, reexamination, an AIA trial, an International Trade Commission (ITC) investigation or a district court litigation. A petitioner may need to address objective evidence of nonobviousness or risk denial of institution if the patent owner successfully argues that the evidence ought to have been addressed in the petition. Conversely, in the absence of a fully developed record of objective indicia evidence, a petitioner may not be obliged to address that evidence, and a patent owner may be better served by attacking the petition in other ways.
Liquidia Techs., Inc. v. United Therapeutics Corp., IPR2020-00770, Paper 14 (PTAB Mar. 1, 2021)
Patentability Challenges Not Raised in Prior Interference Foreclosed in Subsequent IPR
by Matthew George Hartman & Rubén H. Muñoz, Akin Gump Strauss Hauer & Feld LLP
Patent Trial and Appeal Board, Inter Partes Review, Patentability, 35 U.S.C. § 315(e)(2) estoppel
April 1, 2021
A panel at the Patent Trial and Appeal Board recently considered whether a petitioner was estopped from bringing an inter partes review (IPR) based on a judgment in a previous interference proceeding.
Patent owner Mexichem Amanco Holdings owns U.S. Patent No. 8,633,340, which covers processes for preparing chlorinated and fluorinated hydrocarbons. In September 2020, The Chemours Company (petitioner) filed a petition for IPR seeking review of certain claims of the ’340 patent.
This was not the first time that petitioner had challenged the ’340 patent at the board. In 2018, the ’340 patent was involved in an interference with one of petitioner’s reissue applications. Pursuant to the board’s instruction, each party in the interference submitted a list of motions they intended to file. Notably, while patent owner sought permission to file motions challenging both priority and patentability of petitioner’s reissue claims, petitioner only included a single motion for judgment on the basis of priority on its motions list. After authorizing the motions, the board noted that petitioner did not include any responsive motion challenging patentability and invited petitioner to seek authorization if it wanted to do so. Ultimately, petitioner never sought authorization to file a responsive motion. After reviewing the parties’ papers, the board held that petitioner’s reissue claims were unpatentable for failing to comply with the written description requirement and entered judgment against petitioner. The board’s decision was affirmed by the Federal Circuit.
Later, in the IPR, patent owner argued that petitioner was estopped from asserting its grounds of unpatentability because petitioner could have, but did not, raise those grounds in the previous interference. Patent owner based its “interference estoppel” argument on 37 C.F.R. § 41.127(a), which provides that a judgment in an interference “disposes of all issues that were, or by motion could have properly been raised and decided.” The board agreed with patent owner and denied institution of the IPR.
In reaching its conclusion, the board first explained that “for more than 35 years” it has been deciding patentability challenges in interferences, including those based on anticipation and obviousness, and further noted there is “complete identity” between the ’340 patent claims challenged in the interference count and the IPR. Thus, it was “beyond dispute” that the patentability of the challenged claims could have been raised in the interference. The board also noted that despite having “repeated opportunity” in the interference to file a patentability motion—including an explicit invitation from the board for a conference call to seek authorization to file a patentability motion—petitioner declined to do so. The board also found that petitioner was “well-acquainted” with the asserted prior art at the time of the interference because that prior art was discussed in the interference and was considered during prosecution of the ’340 patent. Thus, there was no reason for petitioner not to raise the IPR grounds in the interference.
In arguing against estoppel, petitioner maintained that § 41.127(a) should be interpreted such that if a party chooses to challenge patentability, it is incumbent on the party to raise all known patentability arguments. But where, as petitioner did here, a party chooses to only challenge priority, its patentability challenges are not prohibited. The board found petitioner’s interpretation unpersuasive for several reasons. First, it is inconsistent with the text of the regulation because allowing a losing party to raise patentability issues in a subsequent IPR would mean that the prior interference judgment did not dispose of “all issues” that could have been raised in the interference. Second, petitioner’s interpretation improperly conflates the board’s discretion to decide patentability in an interference with a party’s obligation to preserve those issues. On this point, the board explained that “estoppel . . . depends on whether the losing party sought to raise the issue when it had the opportunity to do so and not whether the Board exercised its discretion to reach it.” Finally, the board found that petitioner’s interpretation was contrary to the purpose of § 41.127(a), which is to “encourage the parties to raise issues pertaining to the interfering subject matter, whether they be questions of priority or patentability, so that the Board can assess how best to resolve those questions within the full context of all the issues raised.”
Practice Tip: When deciding what challenges to make in an interference proceeding, a party should be aware of, and take into consideration, the possibility that it may be estopped from later challenging patentability in an IPR. A party involved in an interference should consider raising all patentability challenges of which it is aware, or risk the possibility of being foreclosed from raising them in a subsequent proceeding.
The Chemours Co. FC, LLC v. Mexichem Amanco Holdings SA de CV, IPR2020-01667, Paper 10 (P.T.A.B. March 25, 2021)
Knowledge of a Complaint May Be Insufficient to Support Claims of Indirect Infringement and Willfulness
by Andrew Schreiber, Jason Weil & Rachel J. Elsby, Akin Gump Strauss Hauer & Feld LLP
District Court, District of Delaware, Willful Infringement
April 7, 2021
A judge in the District of Delaware recently dismissed a plaintiff’s claims for indirect patent infringement and willfulness-based enhanced damages because the complaint alleged knowledge of the patents based solely on the complaint itself.
In that case, the plaintiff sought damages for post-suit indirect infringement and willfulness for the first time in its second amended complaint, alleging that the defendant possessed knowledge of the patent “since at least the filing” of the original complaint. The defendant moved to dismiss, arguing that the plaintiff could not rely on the original complaint to establish knowledge of the patent.
In granting the defendant’s motion to dismiss, the district court first pointed out that there is no binding authority on the question of whether a defendant must have the knowledge necessary to satisfy a claim for indirect infringement or willfulness before a lawsuit is filed. District courts across the country have disagreed on the issue, including different judges within the District of Delaware, and neither the Supreme Court nor the Federal Circuit have ruled on the issue. Against that backdrop, the district court reasoned that no other area of tort law permits a plaintiff to establish an element of a legal claim simply with evidence it filed a complaint.
Thus, the district court held that the plaintiff’s complaint failed to state a claim for indirect or willful infringement where the defendant’s alleged knowledge of the asserted patents is based solely on the filing of a prior version of the complaint in the same lawsuit. The district court explained that “[i]t seems to me neither wise nor consistent with the principles of judicial economy to allow court dockets to serve as notice boards for future legal claims.” And with respect to enhanced damages under 35 U.S.C. § 284, that remedy is punitive and should be reserved for extraordinary cases. Enhanced damages do not exist to provide an incentive to sue innocent actors who have no knowledge of the patent. Finally, the court stressed the efficiency gained when a plaintiff provides a pre-suit notice letter, allowing the parties to potentially avoid an expensive patent infringement lawsuit.
Notwithstanding its decision here, the district court explained that pleadings that allege other facts from which it is plausible to infer that defendants had sufficient pre-suit knowledge may adequately plead such claims because, in those instances, the knowledge is not based solely on the filing of a complaint. Similarly, the district court noted that its decision does not prevent a plaintiff from filing a second lawsuit alleging that a defendant had the requisite knowledge based on the defendant’s awareness of the first lawsuit.
Practice Tip: To the extent possible, a plaintiff should include in its complaint all factual allegations that show or support an inference that the defendant knew of potential infringement of the asserted patent(s) prior to suit. If such facts do not exist, a potential plaintiff should consider whether a pre-suit notice letter might bolster its allegations of indirect or willful infringement.
ZapFraud, Inc. v. Barracuda Networks, Inc., No. 19-1687-CFC-CJB (D. Del. Mar. 24, 2021) (J. Connolly)
PTAB: Discovery Requests Targeting Objective Evidence of Nonobviousness Denied Under Garmin Framework
by Anthony David Sierra & Rubén H. Muñoz, Akin Gump Strauss Hauer & Feld LLP
Patent Trial and Appeal Board, Non-Obviousness, 37 C.F.R. § 42.51(b)(2), Inter Partes Review
April 26, 2021
The Patent Trial and Appeal Board denied a patent owner’s motion for additional discovery of documents—from petitioners, real parties-in-interest, and third parties—because patent owner failed to show that such discovery would support a showing of nonobviousness. In an inter partes review (IPR), under 37 C.F.R. § 42.51(b)(2), absent agreement of the parties, a moving party must establish that additional discovery is justified in the “interests of justice.” In making such a determination, the PTAB considers the five factors articulated in Garmin Int’l, Inc. v. Cuozzo Speed Techs. LLC, IPR 2012-00001, Paper 26 at 6-7 (PTAB Mar. 5, 2013): (1) whether the moving party possesses evidence tending to show beyond speculation that something useful will be uncovered; (2) whether the moving party is requesting the other party’s litigation positions and the underlying basis for those positions; (3) whether the moving party has the ability to generate the requested or equivalent information without discovery; (4) whether the moving party’s discovery requests are easily understandable; and (5) whether the requests are not overly burdensome to answer.
Patent owner requested documents relating to a marketing video, U.S. and worldwide sales of a petitioner’s purportedly infringing systems, and first release dates of those systems. Patent owner also requested technical documents that had been largely produced by other petitioners, real parties-in-interest, and third parties in a co-pending district court litigation.
In support of the first Garmin factor, patent owner argued that it had viewed public documents that indicated petitioners’ use of its systems in an infringing manner, and that petitioners had experienced commercial success as a result of selling the systems. Furthermore, patent owner argued that the requested documents would confirm the extent of commercial success attributable to patent owner’s invention. Patent owner also argued that its counsel had firsthand knowledge that the evidence was highly relevant to commercial success and to copying of the claimed invention, and that this knowledge was based on review of the requested documents in a co-pending district court litigation.
Petitioners responded by arguing that patent owner did not show how the requested documents showed infringement, commercial success, or a nexus between the claims and commercial success. Instead, petitioners argued that the products in question were not infringing, that the alleged commercial success related to a feature that was within the scope of claims previously invalidated by the PTAB and found in the prior art, and that patent owner failed to show how dates of first release would help establish commercial success. As for the technical documents subject to the discovery requests, petitioners stated that a mere review by patent owner’s counsel, a general description of the documents, and a statement that the documents were relevant was insufficient, particularly because the description indicated that some of the documents were technical in nature and thus not helpful in assessing commercial success.
For the second Garmin factor, patent owner argued that the documents had already been produced in co-pending district court litigation, and those that had not related to secondary considerations of nonobviousness, not the parties’ litigation positions or the basis for any litigation position.
Regarding the third Garmin factor, patent owner emphasized that it could not independently obtain the information because it related to information internal to petitioners. In response to the request for the technical documents, petitioners noted that patent owner could have obtained the requested information without discovery by asking the district court for permission to use the documents or using procedures in the court’s protective order to use the requested documents in the current proceedings.
For the fourth factor, patent owner argued that its requests identified document types in sufficient detail to explain the scope of discovery. Patent owner added that, for certain documents, it had provided specific Bates numbers as well. For their part, petitioners argued that the requests were unclear because certain terms were vague in what they required.
Finally, patent owner argued that it met the fifth factor because its requests included only information that petitioners necessarily possessed and that was necessary to support patent owner’s commercial success arguments, and that patent owner would work to keep all confidential information protected. Petitioners responded that the requests were unduly burdensome because patent owner agreed that the products did not themselves infringe, petitioners did not have the requested documents, and that in any event, the requested documents would be voluminous.
The PTAB concluded that patent owner had not met its burden of showing that the additional discovery was in the interests of justice, focusing primarily on the first, third and fifth Garmin factors. The video touting the benefits of one of petitioners’ products did not provide any technical details that could be compared to the challenged claims nor suggested a nexus between the challenged claims and the systems discussed in the video. In the same vein, sales figures for some of petitioners’ systems or dates of first release did not support a showing of required nexus or that petitioner copied the claimed invention. Regarding technical documents, the PTAB agreed that patent owner’s own description of the documents indicated that they related to technical information, and so would not be likely to support a showing of nexus, commercial success, or copying. It was also unconvinced that patent owner could not generate equivalent information by other means, and emphasized that the number of documents it was requesting was overly burdensome in light of the expedited nature of the proceedings. Therefore, the motion was denied.
Practice Tip: To establish “beyond speculation” that useful objective indicia evidence will be uncovered from discovery, the moving party should demonstrate with specificity how the requested documents and information are relevant to the ultimate question of nonobviousness. Mere assertions that the documents are relevant or short descriptions of the contents will not meet this threshold, particularly where the requested documents do not clearly align with the elements supporting nonobviousness (e.g., technical documents that would not at first glance establish commercial success).
Atlas Copco Tools and Assembly Systems LLC v. Wildcat Licensing WI LLC; IPR2020-00891/IPR2020-00892, Paper 37 (PTAB Mar. 18, 2021)
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