Patent Owner Precluded from Asserting in Litigation Claims Obtained Through Ex Parte Reexamination
by Matthew George Hartman & Rubén H. Muñoz
District Court, Infringement, Inter Partes Review, Northern District of California
October 21, 2019
A district court has denied a request to amend patent infringement contentions to add claims obtained through ex parte reexamination after the case had been substantially narrowed through a parallel inter partes review (IPR) proceeding.
In 2014, Plaintiffs sued Defendants in district court for infringement of a patent directed to “mobile tethering” technology. In response, Defendants sought IPR, challenging the patentability of each of the claims that Plaintiffs asserted in their infringement contentions. The court then stayed the patent infringement action pending the Board’s resolution of the IPR. Ultimately, the Board found all challenged claims unpatentable except for one. Plaintiffs appealed the Board’s decision to the Federal Circuit. While their appeal was pending, Plaintiffs sought ex parte reexamination of the patent at issue in the IPR, and successfully obtained new claims through the reexamination process. With their new claims in hand, Plaintiffs sought leave from the court to amend their infringement contentions to add the newly acquired claims.
The court, applying a local rule that requires a party to show “good cause” to amend infringement contentions, denied Plaintiffs’ request. In doing so, the court explained that it had stayed the infringement action because of the possibility of “substantially streamlin[ing]” the case if the Board found unpatentable some or all of the claims at issue in the IPR. And that is exactly what happened. The IPR resulted in all but one claim surviving. The court found that allowing Plaintiffs to “re-expand the scope of the case, dramatically, by asserting what could be [numerous] claims generated in the reexamination” would render the stay “essentially pointless”—a result the court did not intend.
In analyzing whether “good cause” exists for Plaintiffs to amend their infringement contentions, the court determined that the two factors—namely, (1) whether the moving party was diligent in moving to amend its contentions, and (2) whether the non-moving party would suffer prejudice if leave to amend were granted—both weighed against allowing the amendment. Regarding diligence, the court first explained that Plaintiffs are not automatically entitled to amend their contentions simply because they obtained new claims through reexamination. The court further noted that because Plaintiffs failed to present to the court the new infringement contentions they are seeking to add, the court cannot ascertain how the new contentions differ from the initial contentions or when any newly-accused products entered the market. The court also found that Defendants would be unduly prejudiced by the amendment because they will have to “devote extensive time and resources to litigate [numerous] new claims” after the case had already been “substantially and successfully narrowed through years of PTAB proceedings.” The court noted that “judicial economy” weighs against allowing Plaintiffs to essentially start the case over with “scores of new claims.”
Practice Tip: Because ex parte reexamination does not reset the one-year deadline for filing a petition for IPR, new claims obtained through reexamination may be immune from IPR attacks. See Apple Inc., v. IXI IP, LLC, IPR2019-00124, -00125, -00139, -00140, -00141, -00181 (PTAB June 3, 2019) (Tierney). However, patent owners seeking to add claims obtained through reexamination to a district court litigation must recognize that amendment of infringement contentions is not automatic and instead carries a burden that may not be easily met.
IXI Mobile (R&D) Ltd. et al. v. Samsung Electronics Co., Ltd. et al., 4:15-cv-03752 (N.D. Cal. October 11, 2019) (Haywood S. Gilliam, Jr.)
PTAB Orders Production of Raw Data and Instructions Underlying Test Results
by Clayton N. Matheson, Matthew George Hartman & Rubén H. Muñoz
Patent Trial and Appeal Board, Inter Partes Review
November 11, 2019
The Patent Trial and Appeal Board (PTAB) recently issued an Order that illustrates the circumstances in which a party may obtain additional discovery in an inter partes review (IPR). In Apple Inc. v. Singapore Asahi Chemical & Solder Industries PTE Ltd., IPR2019-00377, Paper 22, the Petitioner sought production of documents related to certain “verification studies and tests” that the Patent Owner and its experts had relied on in formulating many of their key positions in the case. The tests were performed by the Singapore Institute of Manufacturing Technology (“SIMTech”). However, the Patent Owner chose not to disclose the actual test results or underlying raw data. The Patent Owner instead produced a collection of tables, charts, and graphs that it had prepared using the raw data.
The Patent Owner also produced a declaration from a doctor who directed the tests, but the declaration merely stated that the tests were conducted pursuant to certain American Society for Testing and Materials standards. The declaration did not describe any of the specific instructions that SIMTech followed in conducting the tests.
The Petitioner filed a motion seeking two categories of documentary evidence: (i) the instructions for conducting the verification tests that the doctor had provided to SIMTech, and (ii) the test reports and other raw data that SIMTech provided to the Patent Owner after completing the tests. Paper 22 at 3. The Petitioner also sought “any test results or other data that are inconsistent with a position advanced by the Patent Owner or its experts during the proceeding,” but the Board found this request moot based on the Patent Owner’s representation that it had already produced all such information as part of “routine discovery.” Id. at 16.
In deciding the motion, the Board first observed that under Section 42.51(b)(2)(i), “additional discovery” is permissible if the moving party shows that such discovery is “in the interests of justice.” To determine if the moving party has made this showing, the Board considers the so-called “Garmin Factors,” which include: (1) whether there is more than a mere possibility or allegation that something useful will be found; (2) whether the requesting party seeks the other party’s litigation positions; (3) the requesting party’s ability to generate equivalent information by other means; (4) whether the instructions are easily understandable; and (5) whether compliance with the requested discovery would be overly burdensome. The Board, in applying these factors, concluded that they weighed in favor of granting the motion. Id.
With respect to Factor 1, the Board ruled that the requested documents would be useful since they would help the Petitioner fully understand and evaluate—and thereby effectively rebut—the Patent Owner’s arguments and proffered evidence. The Board stressed that although the Patent Owner “relie[d] heavily on the results of the [verification] tests in contesting [the] Petitioner’s unpatentability arguments,” it had not provided the underlying test data or adequate detail about how the tests were performed. Id. at 4, 11. The Board reasoned that “[w]hen a party conducts tests in support of its positions and relies on those tests in its submissions to the Board, it is useful for the opposing party to understand how the tests were conducted.” Id. at 5. The Board emphasized that this “is true regardless of whether the information concerning how the tests were conducted ultimately reveals any information that undermines the credibility of the test data.” Id.
Turning to Garmin Factor 2, the Board found that the Petitioner’s requests did “not impermissibly seek [the Patent Owner’s] litigation positions,” but instead only sought information about the bases for the positions that the Patent Owner already had expressly adopted. Id. at 7, 12. The Board noted that Factor 2 “is implicated, for example, by a party seeking discovery on an issue that has not been raised by the opposing party.” Id. at 7. But as the Board added, the Patent Owner in this case “ha[d] already relied on the studies/tests that are the subject of [the] Petitioner’s discovery request[s].” Id.
On Factor 3, the Board’s analysis centered on the Patent Owner’s assertion that the Petitioner could simply run its own tests, using information obtained through depositions (such as “test parameters”). Disagreeing, the Board explained that “cross-examination [is not] a substitute for documentary evidence,” especially considering that such documents would “be useful to [the] Petitioner in preparing for the cross-examination.” Id. at 7, 13 (emphasis in original). The Board also observed that the “Petitioner’s potential ability to conduct its own tests [is not] particularly relevant,” given that “[d]ifferent data, obtained by a different party in a different facility using different  samples under different conditions, may be of limited use in helping [the] Petitioner to understand and respond to [the] Patent Owner’s particular data.” Id. at 13.
On Factor 4, the Board ruled that the Petitioner’s requests were unambiguous and “easily understandable.” Id. at 8, 14. As the Board explained, the “plain language” of the requests made clear which types of documents were being sought. Id. at 9.
Finally, the Board concluded that Factor 5 also supported granting the motion, agreeing with the Petitioner that the requested discovery was “‘not overly burdensome to answer’ because the requested documents ‘should be a confined set of documents easily gathered and produced.’” Id. at 9-10. The Board thus rejected the Patent Owner’s argument that the requests were “extremely overbroad and unclear,” which the Patent Owner advanced “[w]ithout significant elaboration or an attempt to quantify the number of documents that th[e] request[s] might encompass.” Id. at 10. The Board additionally overruled the Patent Owner’s privilege and work product objections, stating that because the Patent Owner “affirmatively relied on the studies/tests in support of [its] positions through the use of a testifying expert, [it] cannot shield from discovery information concerning how the test data was obtained.” Id.
Practice Tip: If a party to an IPR relies on test results to support its arguments, the opposing party should consider seeking production of the underlying raw data and instructions. That information may be helpful in assessing the reliability of the results and will afford the requesting party a fair cross-examination of a witness that relies on those results. In its request for “additional discovery,” a party should address each of the Garmin Factors to explain why production of such information is in “the interests of justice.”
Apple Inc. v. Singapore Asahi Chemical & Solder Industries PTE Ltd., IPR 2019-00377, Paper 22 (Oct. 21, 2019)
Invalidity Defenses Will Not Be Stricken at Pleading Stage Despite Defendant’s Earlier PGR Petition
by Jonathan James Underwood, Matthew George Hartman & Rubén H. Muñoz
District Court, Patent Trial and Appeal Board, 35 U.S.C. § 101, Inter Partes Review, Post-Grant Review
November 12, 2019
A district court has denied a patent owner’s motion to strike wholesale a defendant’s affirmative defense of invalidity. The key issue in the motion to strike was the application of the estoppel provision of 35 U.S.C. § 325(e)(2), which estops a post-grant review (PGR) petitioner from asserting in district court litigation that “a claim is invalid on any ground that the petitioner raised or reasonably could have raised during [the] post-grant review.”
The defendant first challenged the patent by filing a PGR petition approximately eight months after the issuance of the patent. In its petition, the defendant only raised 35 U.S.C. Section 101 unpatentability grounds. The PGR proceeding concluded in a final written decision in which seven of the 20 challenged claims survived. Shortly afterwards, the patent owner filed the patent infringement action. The defendant’s answer included invalidity as an affirmative defense, and the patent owner moved to strike under Rule 12(f), arguing that the defendant was statutorily estopped from raising that defense by Section 325(e)(2).
The court first explained that Rule 12(f) allows for considerable discretion, but that when a defense raises a question of fact, the court must deny a motion to strike.
The court began its analysis by setting out the framework for the scope of the “reasonably could have raised” provision. First, the court explained that prior questions about instituted versus non-instituted grounds were effectively mooted by the Supreme Court’s decision in SAS Institute, Inc. v. Iancu, 138 S. Ct. 1348 (2018), and the Federal Circuit’s post-SAS decisions. Under current Patent Trial and Appeal Board (PTAB) practice, a petition must be either fully instituted or fully denied, and therefore any defense that is included as a ground in an instituted petition will qualify as having been raised during PGR review.
Next, the court turned to whether non-petitioned grounds are subject to estoppel. After surveying the differing rulings by various district courts, the court rejected the view that a petitioner was allowed to raise defenses that had not been included in a petition. The court reasoned that in order for “‘reasonably could have raised’ to have any meaning at all, [those words] must refer to the grounds that were not actually raised in the PGR petition, but reasonably could have been included.” The court outlined legislative history and public policy considerations in support of including non-petitioned defenses under the estoppel umbrella.
Finally, the court set out the standard for deciding whether a defendant “reasonably could have raised” a defense, again drawing on legislative history. The court ruled that “reasonably could have raised” “include[s] prior art that a petitioner actually knew about or that ‘a skilled searcher conducting a diligent search reasonably could have been expected to discover.’” The court then explained that because this standard raises a question of fact as to whether a diligent, skilled searcher would have found the references that the defendant desires to assert, a motion to strike was an inappropriate way of challenging the sufficiency of the invalidity defenses.
Practice Tip: A patent owner may be successful in moving a court to strike specific invalidity defenses that were raised in inter partes review (IPR) or PGR proceedings, precisely because the record is clear that such defenses were raised. But the same patent owner may find a court less receptive to striking other defenses because of a lack of record evidence showing that those other defenses reasonably could have been raised. When a patent owner faces a declaratory judgment or counterclaim for invalidity, and there are parallel proceedings at the PTAB, the patent owner should consider raising statutory estoppel as an affirmative defense. Under such circumstances, parties should assess, and be prepared to eventually produce, evidence showing whether a skilled searcher conducting a diligent search reasonably could have been expected to discover particular prior art.
GREE, Inc. v. Supercell Oy, No. 2:19-cv-00071 (E.D. Tex. Oct. 30, 2019) (Payne, U.S.M.J.)
Challenge to a Named Inventor’s Credibility on Case-Dispositive Issue Warrants Live Testimony in IPR
by Colin B. Phillips, Matthew George Hartman & M. Andrew Holtman
Patent Trial and Appeal Board, Inter Partes Review
November 20, 2019
The Patent Trial and Appeal Board allowed live testimony in MPOWERED INC. v. LuminAID Lab, LLC, IPR2018-01524, on November 1, 2019, where a panel granted Patent Owner’s Motion for Live Testimony from a named inventor of the contested patent, on the ground that she was a fact witness as to a case-dispositive issue.
“Occasionally, the Board will permit live testimony where the Board considers the demeanor of a witness critical to assessing credibility. […] Live testimony will be necessary only in limited circumstances and requests for live testimony will be approached by the Board on a case-by-case basis.” July 2019 Trial Practice Guide Update, 12. Factors the Board considers in deciding a motion for live testimony include the “importance of the witness’s testimony to the case, i.e., whether it may be case-dispositive,” and whether that person is a fact witness. K-40 Elecs., LLC v. Escort, Inc., Case IPR2013-00203, Paper 34, 3 (PTAB May 21, 2014) (precedential).
In MPOWERED, Patent Owner sought live testimony from Anna Stork, a named inventor of the challenged patent, regarding a few issues, including the dates of conception and reduction to practice. Patent Owner argued that emails contained within Ms. Stork’s Gmail account were necessary to prove dates of conception and reduction to practice, and that Ms. Stork’s live testimony was critical to establish the veracity of those emails. Patent Owner also argued that since Petitioner “made Ms. Stork’s credibility a central issue in this case by calling her biased and incomplete in her presentation of her invention story,” live testimony was warranted. Paper 33, 1.
Petitioner argued that any live testimony from Ms. Stork regarding her emails was irrelevant. It argued that an inventor’s testimony requires independent corroboration in order to prove conception and reduction to practice, and Ms. Stork’s emails were not “independent.” According to Petitioner, “[t]his case turns on independent corroboration – not on additional facts at Ms. Stork’s disposal.” Paper 34, 2. “Live testimony from Ms. Stork reiterating her declaration cannot cure the lack of corroborating evidence.” Id. at 3.
As to the witness credibility issue, the Board pointed out that in its Reply, Petitioner directly contradicted Ms. Stork’s testimony on the issue of whether another individual is a co-inventor of the claimed subject matter. Id. The Board went on to state that if it were to reject Petitioner’s argument that Ms. Stork’s emails were not independent corroboration, then “this case might well turn on Ms. Stork’s credibility.” Paper 40, 4. As such, the Board determined that “Ms. Stork’s testimony may be case dispositive. In addition, Ms. Stork is a fact witness and a named inventor who, like the witness in K-40 Electronics, seeks to offer testimony in support of an attempt to antedate prior art references. Under the facts and circumstances present here, we determine that Ms. Stork should be permitted to offer live testimony.” Id. In granting the motion, the Board limited the scope of Ms. Stork’s direct testimony to her declaration and deposition testimony in this proceeding.
Practice tip: In an IPR, live testimony from a fact witness is a feasible option, especially where the witness is an inventor on the contested patent or their credibility is at issue. To maximize the likelihood of success, a Motion for Live Testimony should emphasize the factors addressed in K-40 Electronics.
Citation: MPOWERED INC. v. LuminAID Lab, LLC, IPR2018-01524, Paper 40 (PTAB November 1, 2019)
Defendant’s “Staged Delay” in Withdrawing FRAND Affirmative Defenses Amounted to “Rank Gamesmanship” and Supported an Award of Attorneys’ Fees
by Karina J. Moy, John Wittenzellner & C. Brandon Rash
District Court, Infringement, Eastern District of Texas
December 02, 2019
Chief Judge Gilstrap of the Eastern District of Texas held that the litigation conduct of defendants Huawei Device USA, Inc. and Huawei Device (Shenzhen) Co., Ltd. (collectively, “Huawei”), in a patent infringement action, merited a finding of exceptional case status and an award of attorneys’ fees to the plaintiff patent holders.
On February 10, 2017, Plaintiffs Optis Wireless Technology, LLC, PanOptis Patent Management, LLC, and Optis Cellular Technology, LLC (collectively, “PanOptis”) sued Huawei for infringement of five standard essential patents (SEPs). Four of the patents were declared essential to the LTE cellular communications standard, and the fifth patent was declared essential to the H.264 video-coding standard. In Count IX, PanOptis sought a declaratory judgment that it had offered to license its SEPs to Huawei on fair, reasonable and non-discriminatory (FRAND) terms. Huawei countered with five FRAND affirmative defenses, alleging that PanOptis failed to offer a license on FRAND terms.
At Huawei’s urging, the Court bifurcated PanOptis’s claims into a jury trial and bench trial, with the declaratory action on FRAND relegated to the bench trial. In the jury trial, Huawei raised its FRAND defenses to argue that damages sought by PanOptis were not consistent with FRAND terms and that Huawei’s conduct was not willful because it sought only a FRAND license. When the Court proceeded to take up the bench trial while the jury was deliberating, however, Huawei dropped its FRAND defenses and argued that the Court lacked subject matter jurisdiction over Count IX. The jury ultimately found that the asserted patents were willfully infringed by Huawei and not invalid, and that Huawei owed PanOptis damages in the amount of $10,553,565. Over Huawei’s objection, the Court later held a bench trial, but based on insufficient evidence, the Court declined to issue a declaratory judgment on whether PanOptis complied with its FRAND obligations. The Court entered final judgment in favor of PanOptis and, in light of willfulness, enhanced the jury award by 25 percent. PanOptis then moved for a finding of exceptional case status and an award of attorneys’ fees under 35 U.S.C. § 285.
PanOptis asserted three grounds for exceptional case status: (1) Huawei’s use of timing and delay to force PanOptis to spend unnecessary resources; (2) Huawei’s assertion of weak infringement defenses; and (3) the jury’s willfulness finding. The Court found that PanOptis’s grounds were true and indicative of a “wide-spread pattern of litigation abuse.” The Court focused in particular on Huawei’s “staged delay” in withdrawing its FRAND defenses, characterizing it as “nothing less than rank gamesmanship that crossed the line of zealous advocacy.” The Court reasoned that Huawei was able to take advantage of its FRAND defenses before the jury, while depriving PanOptis of its opportunity for a declaratory judgment. According to the Court, the egregious nature of the conduct was compounded because Huawei would neither disavow that the delay was a planned tactic nor commit to refraining from this sort of conduct in the future. Based on the totality of the circumstances, the Court found exceptionality and awarded PanOptis all its attorneys’ fees and expenses.
Optis Wireless Technology, LLC et al. v. Huawei Device USA, Inc., No. 2:17-CV-00123-JRG (E.D. Tex. November 15, 2019)
Practice Tip: Although parties are encouraged to streamline issues for trial, they must do so in a timely manner so that their strategic decisions are not later viewed as exceptional litigation tactics unfairly timed to disadvantage and impose unnecessary costs on the opposing party.
Request for Letters Rogatory Denied Due to Tardiness and Likely Delay to Trial Date
by Jonathan James Underwood, Matthew George Hartman & Rubén H. Muñoz
District Court, Eastern District of Texas
December 04, 2019
Chief Judge Gilstrap of the Eastern District of Texas has denied a motion seeking foreign discovery from a third party pursuant to the Hague Convention, holding that the movant waited too long to seek such discovery. The court explained that allowing the “late breaking attempt at discovery,” coming two months after the close of fact discovery and two months before the start of trial, “would almost certainly delay trial, prejudice [the patent owner], and run counter” to the court’s previous clear direction to the parties.
The case began on July 19, 2018, when Luminati Networks Ltd. filed a complaint for patent infringement against UAB Tesonet (“Tesonet”). In its initial disclosures, Tesonet disclosed two witnesses who were on the board of directors of Luminati and also managing partners of EMK Capital, a non-party UK-based private equity fund that is an investor in Luminati.
The court issued a scheduling order setting September 16, 2019, as the close of fact discovery. On September 3, 2019, Tesonet and its codefendant filed a motion to compel Luminati to produce documents and emails from EMK. Following an October 1, 2019 hearing, the court denied the motion explaining that its ruling was based on Luminati’s representation that it had produced all relevant EMK documents in its possession. But the court added that Tesonet had leave to pursue discovery directly from EMK through the Hague Convention, in light of Tesonet’s representation that it would “not seek to change the trial date or any other deadline.”
On November 15, 2019, Tesonet moved the court to sign a Letter Rogatory. Tesonet stated that while Luminati opposed the motion based on a purported delay, the delay was caused by Tesonet’s need to retain U.K. counsel and to prepare a conforming Letter Rogatory. In response, Luminati argued first that Tesonet’s request was irreconcilable with its earlier statement to the court that it did not want a delay and would not ask for a delay on account of the overseas discovery request. Luminati then argued that Tesonet had not identified a specific need for EMK documents, nor had Tesonet explained how any documents could be admitted at trial when no EMK witnesses were identified on its trial witness list. Finally, Luminati argued that allowing the discovery would delay trial because a request to the U.K. would take between six and twelve months to complete, and that numerous pretrial deadlines had already passed, and Luminati would be highly prejudiced by any ensuing delay.
The court denied Tesonet’s motion and stated that it was “not convinced” that the trial date would hold if it allowed Tesonet to pursue the EMK discovery. The court also explained that it “seriously doubt[ed]” whether the discovery could be completed in time given that trial was two months away. Furthermore, the court found that Luminati would be prejudiced.
Luminati Networks Ltd. v. UAB Tesonet, 18-cv-00299, slip op. (E.D. Tex. Nov. 27, 2019) (Gilstrap, C.J.)
Practice Tip: Litigants contemplating discovery through the Hague Convention should prepare early in the discovery period and seek overseas counsel as early as possible to minimize delays in preparing suitable foreign discovery requests for the court’s approval.
Patent Infringement Suit Against Product Manufacturer Partially Doomed by Prior Suit Against Component Supplier
by Jonathan James Underwood & Rubén H. Muñoz
District Court, Summary Judgment, Patent Infringement
December 16, 2019
Chief Judge Saris of the District of Massachusetts has granted-in-part a product manufacturer’s motion seeking summary judgment of claim preclusion based on patentee’s prior assertion of the same patent against a component supplier. The court explained that none of the patent claims could be asserted against products that used components supplied by a third party that had previously faced allegations of infringing the same patent but had successfully invalidated the only patent claim that had been asserted. The court also ruled, however, that the patentee could assert the remaining claims against products that used components made by other suppliers.
The case began in September 2013 when the Trustees of Boston University (BU) asserted U.S. Patent No. 5,686,738 against Kingbright Electric Co., Ltd. and Kingbright Corp. (collectively, “Kingbright”), manufacturers of LED package products that use LED chips. The 738 patent covers a process used in creating semiconductors for LED lights. Kingbright uses LED chips from three different suppliers—Epistar, Cree and Tekcore.
The court stayed the case in November 2014, pending the resolution of an earlier-filed case in which BU had asserted claim 19 of the 738 patent against Epistar. That case concluded when the Federal Circuit ruled that claim 19 was invalid for lack of enablement. The district court then lifted the stay, at which point Kingbright moved for judgment on the pleadings or partial summary judgment, arguing that the case against it was barred following the Federal Circuit’s decision.
The district court’s analysis began with a discussion of the Kessler doctrine, a doctrine from a 1907 Supreme Court decision holding that customers could not be sued when their seller had previously been accused of infringement but prevailed on a noninfringement defense. BU argued that Kessler did not apply when a seller had prevailed only on invalidity, but the district court disagreed citing two Federal Circuit opinions in support.
The court then turned to BU’s second argument—namely, that Kessler only prevented suits against post-judgment conduct. The district court found that this was a closer question because statements in Federal Circuit opinions, including as recently as 2015 and 2018, pointed in different directions. Although the district court stated that the 2015 decision—holding that pre and post-judgment activity was covered—was more consistent with Kessler’s purpose, the court found that even if Kessler did not apply, the matter could be resolved by applying traditional claim preclusion principles.
Under claim preclusion, the court explained, BU could not sue a privy of Epistar by asserting the same patent against the same product. BU challenged whether Kingbright was a privy, but the court explained that under First Circuit law, Kingbright had sufficiently shown it was a privy because it was a customer and indemnitee of Epistar. Accordingly, BU was precluded from asserting any claims of the 738 patent against the Kingstar products that used Epistar chips. However, the court found that neither the Kessler doctrine nor claim preclusion prevented BU from asserting the existing claims of the 738 patent against Kingstar products using Cree and Tekcore chips.
Practice Tip: Claim preclusion may protect customers of a previously successful seller from patent infringement claims. Thus, a patentee considering holding some patent claims in reserve if a suit against a seller fails should carefully consider whether a customer of that seller may be able to assert claim preclusion as a defense.
Trs. of Boston Univ. v. Kingbright Elec. Co., 13-cv-12335, slip op. (D. Mass. Dec. 17, 2019) (Saris, C.J.)
Prior Art That Was Considered but Not Relied Upon by an Expert is Fair Game for Discovery in IPRs
by Karina J. Moy, Matthew George Hartman & Rubén H. Muñoz
Patent Trial and Appeal Board, Prior Art, Inter Partes Review
December 20, 2019
In inter partes review (IPR) proceedings of patents relating to printer technology, the Patent Trial and Appeal Board (PTAB) granted Patent Owner’s motion to compel testimony over Petitioner’s arguments that the information sought was protected by the attorney work product doctrine.
Petitioner Adobe Inc. initiated IPR proceedings against Patent Owner RAH Color Technologies LLC over four patents claiming a “system for distributing and controlling color reproduction at multiple sites.” On October 24, 2019, Patent Owner deposed Petitioner’s expert and asked three questions about the expert’s review of prior art: (1) whether the expert performed any prior art search, (2) whether the expert considered claim charts comparing the patents at issue to the prior art and (3) whether the expert determined that any prior art references rendered the patents at issue obvious. Petitioner instructed its expert not to answer these questions, invoking attorney work product protections and Rule 26 of the Federal Rules of Civil Procedure. On October 25, after a telephonic conference with the parties, the three-judge PTAB panel authorized the parties to submit briefing on the issue.
In support of its motion to compel testimony, Patent Owner argued that facts and data underlying an expert opinion are not only relevant to IPR proceedings, but necessary to assess the expert’s independence, reliability and credibility. Patent Owner further argued that Rule 26 does not apply to IPR proceedings, but even if it did, the rule would, nonetheless, compel disclosure of the facts and data that an expert considered. The Board agreed that the Patent Owner’s questions concerned underlying factual bases, not attorney communications or the content of prior art, and thus were within the scope of permissible discovery. The panel also credited the argument that Rule 26 would compel disclosure of underlying facts and data, even if the Federal Rules applied to IPR proceedings.
Turning to Petitioner’s assertions, the PTAB rejected the argument that prior art on which the Board had not instituted review was outside the scope of discovery. On the contrary, according to the Board, if expert testimony is to be given any weight, a party must disclose all art considered and reviewed in preparation of the testimony. The Board also disagreed that Patent Owner’s line of questioning would reveal the analysis and strategy of Petitioner’s attorneys, because Patent Owner asked for only the identities of the documents that Petitioner’s expert reviewed. The Board distinguished this inquiry from questions about attorney communications and suggestions for editing and drafting an expert opinion.
The PTAB ultimately granted Patent Owner’s motion, but—in the interest of efficiency—treated the questions as interrogatories and ordered Petitioner’s expert to provide certified written responses to be filed within a week of the order.
Practice tip: Though the scope of allowable discovery is more limited for IPR proceedings than for district court litigation, a party to an IPR may seek and obtain discovery related to the underlying facts and data informing the opinion of an opposing party’s expert. This includes prior art considered, but not relied upon by the expert in forming his or her opinions.
Adobe Inc. v. RAH Color Technologies LLC, IPR2019-00627, IPR2019-00628, IPR2019-00629, IPR2019-00646 (PTAB December 12, 2019)
PTAB Designates as Informative Three Decisions on Obviousness and Patent Eligibility
by C. Brandon Rash & M. Andrew Holtman
Patent Trial and Appeal Board, Obviousness, Prior Art, 35 U.S.C. § 101, 35 U.S.C. § 103
December 31, 2019
The Patent Trial and Appeal Board (PTAB) recently designated three more decisions as informative, bringing the total number of informative decisions to 13 for 2019. Two decisions—one final and one on institution—address examples of insufficient rationale for combining prior art references to support obviousness under 35 U.S.C. § 103. The third decision applies the United States Patent and Trademark Office’s (USPTO) 2019 guidance on patent eligibility under 35 U.S.C. § 101 to reverse an examiner rejection, where the Board found that the claimed computer-implemented method was not an abstract idea.
Hulu, LLC v. Sound View Innovations, LLC, Case IPR2018-00582, Paper 34 (Aug. 5, 2019).
In Hulu, the claims were directed to the real-time processing of events generated by an application, such as fraud detection in a telecommunications network, comprising a real-time processor and main-memory database. Petitioner argued that the primary reference, O’Neil, disclosed a real-time processor and a database, and that it would have been obvious to upgrade the database to a main-memory database taught in the secondary references, Kao and Dewitt. According to Petitioner, a person of skill would have been motivated to combine the references based on the “tight timing requirements” in O’Neil’s real-time call monitoring system.
Citing evidence from O’Neil and its expert, Patent Owner argued that Petitioner’s reasoning was inadequate because the “tight timing requirements” in O’Neil’s system did not warrant the use of a main-memory database. The Board agreed and highlighted uncontested expert testimony that the “vast majority” of database systems at the time of the patent were conventional disk-resident database systems, which had adequate timing for O’Neil’s purposes. The Board also noted disadvantages of main-memory databases, such as cost, limited capacity and volatility, which undermine the combination in the absence of other persuasive reasons to modify O’Neil.
Practice Tip: A generalized desire for improvement may not be sufficient motivation to combine if the improvement could already have been achieved by conventional means at the time of the invention, particularly when there are disadvantages to the proffered combination. The obviousness analysis is fact-specific and should be supported by documentary evidence and reasoned expert testimony.
Johns Manville Corp. v. Knauf Insulation, Inc., IPR 2018-00827, Paper 9 (Oct. 16, 2018).
In Johns Manville, the claims were directed to insulation material comprising glass fibers and a certain binder. Petitioner argued that a combination based on two references, Srinivasan and Worthington, was obvious because they were analogous and disclose binders containing “reactants in similar endeavors related to each other.” The Board rejected Petitioner’s reasoning because demonstrating that references are analogous art, relevant to the field of endeavor of the challenged patent and compatible is not sufficient to establish a reason to combine.
Petitioner also argued that Srinivasan teaches methods lending themselves to the use of certain binder compositions, and Worthington expressly teaches that its methods are appropriate for those compositions. The Board, however, found that Petitioner’s argument did not compare the binder in Worthington to the binder in Srinivasan and did not give a reason to substitute Worthington’s binder for the one in Srinivasan. The Board noted evidence in the references that the binders in each reference were “considerably different” and that Petitioner and its expert did not sufficiently explain and cite evidence for why the combination would have been predictable.
Practice Tip: To show a reason to combine and a reasonable expectation of success, Petitioners should provide explanation and evidence specific to the proffered combination required to achieve the claimed invention—mere compatibility of the references is insufficient. Also, bare assertions that a combination would have been predictable is entitled to little weight.
Ex Parte Linden, 2018-003323 (Apr. 1, 2019).
In Ex Parte Linden, the claims recited a computer-implemented method for transcribing speech. The Examiner found that the claims were directed to the abstract idea of “using the predicted character probabilities (mathematical formula) to decode a transcription of the input audio into words or text data.” Applying prong one of step 2A of the USPTO’s 2019 guidance on patent eligibility, the Examiner categorized the abstract idea under mathematical formulae, organizing human activity and mental processes because a human can transcribe the audio data.
The Board disagreed the claims recite a mental process. According to the Board, the claims recite steps that cannot be performed by a human, e.g., normalizing an input file, generating a jitter set of audio files, generating a set of spectrogram frames, obtaining predicted character probabilities from a trained neural network and decoding a transcription of the input audio using the predicted character probability outputs. The Board also disagreed that the claims recite organizing human activity because they do not include fundamental economic principles, commercial or legal interactions, or managing personal behavior or relationships or interactions between people.
The Board also found that the claims do not recite a mathematical algorithm. The claims recite using predicted character probabilities to decide a transcription of the input audio, and the specification describes an algorithm to obtain those probabilities. The claims, however, do not recite the described algorithm. Applying prong 2 of step 2A of the USPTO’s 2019 guidance, the Board reasoned that even if the claims recited a mathematical concept, the claims themselves are not directed to an abstract idea because the alleged abstract idea is integrated into a practical application—namely, the claims “include specific features that were specific designed to achieve an improved technological result” and “provide improvements to a technical field.”
Practice Tip: In prosecution, patent applicants should draft claims to avoid the list of abstract ideas in the USPTO’s 2019 guidance, e.g., methods organizing human activity and mental processes. Also avoid reciting mathematical concepts, but to the extent the claims do so, draft the claims to also include specific features designed to achieve an improved technological result, such as the trained neural network and improved language model in Ex Parte Linden.