current developments in inter partesreview...– “in an inter partes review, claim terms in an...

Current Developments in Inter Partes Review

Speakers:Peter Gergely, Merchant & Gould – Current DevelopmentsRyan Fletcher, Ph.D., Merchant & Gould – Hot TopicsChris Davis, Merchant & Gould – Trends and Statistics

Panel Discussion, In-House and Corporate Perspective:Jeff Hohenshell, Senior Patent Attorney, MedtronicStephen Perkins, Associate General Counsel – IP, MedtronicMatthew Fedowitz, Merchant & GouldModerator: Kathy Ott, Merchant & Gould

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SpeakersPeter Gergely – Merchant & Gould P.C. – DenverRyan Fletcher – Merchant & Gould P.C. – DenverChris Davis – Merchant & Gould P.C. – Minneapolis

Panel:Steve Perkins – Medtronic, Associate General Counsel IPJeff Hohenshell – Medtronic, Senior Patent CounselMatt Fedowitz – Merchant & Gould P.C. – Washington, DCKathy Ott – Merchant & Gould P.C. – Denver, Moderator

Note: The views expressed herein are those of the individual speakers and not of Merchant & Gould P.C., its clients, or Medtronic.

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Inter Partes Review Summary

• Mini-Trial on Patent Validity Before a Panel of Patent Experts – Patent Trial and Appeal Board

• Issues Limited to Anticipation (§ 102) and Obviousness (§ 103) Based on Printed Publications

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Game Changing Impacts of IPR

• Approximately 2000 IPR Filings in 2015• IPR is Displacing/Supplementing Litigation• Stay of Litigation – Discretionary• Driving Dismissals/Settlements• Levels Playing Field, Especially with NPEs

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Filing Considerations

• Strength of Non-Infringement Case• Strength of Invalidity Case• Estoppel• Expense of Litigation/Expense of IPR• Timing– Early: Stay More Likely; Accused Device

Functionality Could Be Unknown to Plaintiff– Later: Infringement Contentions and Claim

Construction Known

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Presentation Overview

• One Year Statutory Bar• Evidentiary Issues: Think Like A Litigator • Claim Construction: Broadest Reasonable

Construction• Narrowly Tailor Discovery• Successfully Amending Claims • Understanding Real Party-In-Interest • New Rules

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One Year Statutory Bar

• Petitioner’s have one year to file a request for IPR following service of a complaint.

• 35 U.S.C. § 315(b):– “An inter partes review may not be instituted if the

petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” (emphasis added.)

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• How does the PTAB view an amended complaint alleging infringement of the same patent?

• The one year statutory bar begins to run from the service date of the original complaint alleging infringement of the asserted patent.

• The PTAB denied institution of an IPR as untimely in Loral Space & Commc’n, Inc. v. Viasat, Inc. because:– “An amended complaint is just that—a complaint that has been

amended. The original complaint has been amended, and has not gone away in the same sense as a complaint dismissed without prejudice. No persuasive evidence has been presented that an original complaint that has been amended should be considered as if it had never been filed.” IPR2014-00236, Paper 7 at 7 (PTAB Apr. 21, 2014).

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• How does the PTAB view a motion for leave to amend a complaint to assert a new patent?– Specifically, does service occur upon service of the motion for leave attaching

the amended complaint or upon the Court’s grant of the motion for leave?• The one year statutory bar begins to run from the date the Court grants a

motion for leave to file an amended complaint alleging infringement of newly-asserted patents.

• The PTAB declined the invitation to bar the Petition under 35 U.S.C. §315(b) in TRW Auto. US LLC v. Magna Electronics, Inc. because: – “At the point of filing the Motion for Leave to file its Second Amended

Complaint, the attachment to the Motion for Leave was merely a proposed complaint, and Petitioner was not yet a defendant in a lawsuit with respect to the [newly-asserted] patents.” IPR2014-00293, Paper 18 at 10 (PTAB Jun. 27, 2014).

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• How does the PTAB view a complaint that was dismissed without prejudice?

• If the complaint was dismissed indefinitely then it does not appear to trigger the one year statutory bar under 35 U.S.C. § 315(b).

• The PTAB declined the invitation to bar the Petition under 35 U.S.C. § 315(b) in Macauto USA v. BOS GMBH & KG because:– “The dismissal of an action without prejudice leaves the

parties as though the action had never been brought.” IPR2012-00004, Paper 18 at 15 (PTAB Jan. 24, 2013).

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One Year Statutory Bar• But, if the complaint was dismissed without prejudice only to be directly

continued in another action then the original complaint does appear to trigger the one year statutory bar under 35 U.S.C. § 315(b).

• The PTAB denied institution of an IPR as untimely under 35 U.S.C. §315(b) in Apple Inc. v. Rensselaer Polytechnic Inst. because:– The PTAB “conclude[d] that the Dynamic I case did not cease in the same

sense as a complaint dismissed without prejudice and without consolidation—it was consolidated with another case, and its complaint cannot be treated as if it never existed.” IPR2014-00319, Paper 12 at 7 (PTAB Jun. 12, 2014).

• The PTAB denied institution of an IPR as untimely under 35 U.S.C. §315(b) in eBay, Inc. v. Advanced Auctions LLC because:– “At the time the Court dismissed the First Action without prejudice, it also

ordered ‘that the parties’ discovery and Rule 26(f) conference from’ the First Action, as well as ‘[t]he parties’ proposed ESI Order and Joint Discovery and Case Management Plan,’ would be treated as if they occurred in the Second Action.” IPR2014-00806, Paper 14 at 7 (PTAB Sep. 25, 2014).

– Therefore, the PTAB concluded “[f]rom the day the Petitioner was served with the complaint in the First Action to the present, Petitioner has been involved in litigation regarding its alleged infringement of the [asserted] patent.” Id.

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Evidence: Think Like A Litigator

• “Except as otherwise provided in this subpart, the Federal Rules of Evidence shall apply to a proceeding.” 37 C.F.R. § 42.62

• “With few exceptions, the Federal Rules of Evidence apply to inter partes proceedings.” Laird Tech., Inc. v. Graftech Int’l Holdings Inc., IPR2014-00024, Paper 46 at 37 (PTAB Mar. 25, 2015)

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Evidence: Think Like A Litigator• Do your references qualify as prior art?• The PTAB denied institution of an IPR in Google Inc. v. ART+COM

Innovationpool GmbH because:– The “bare date” in the footer of the prior art reference “without more,

does not provide any information about the date it was publicly accessible” and the “Petitioner provides no evidence linking the public accessibility of the document to the January 26, 1995 date.” IPR2015-00788, Paper 7 at 8 (PTAB Sep. 2, 2015).

• The PTAB explained “[i]t is not enough that a reference is accessible, we must ‘consider whether anyone would have been able to learn of its existence and potential relevance” and the “Petioner has not provided any evidence that an interested researcher could have located [the reference].” Id. at 10.

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Evidence: Think Like A Litigator• Does your Petition properly authenticate the prior art references?

• Newspapers, Periodicals, Official Publications are self-authenticating (Fed. R. Evid. 902) but what about Internet websites or evidence gathered from the “Internet Archive”?

• The PTAB denied a Patent Owner’s motion to exclude a document obtained from the Internet Archive as unauthenticated in Laird Tech., Inc. v. Graftech Int’l Holdings, Inc. because:– The challenged exhibit was authenticated by an affidavit from an Office

Manager at the Internet Archive, “who stated that that it is a true and correct copy of a printout of the Internet Archive’s records. The fact that ‘no [Petitioner] declarant has personal knowledge of the actual and complete content of the [printout],’ as asserted by Patent Owner, does not establish that it lacks authentication.” IPR2014-00024, Paper 46 at 39 (PTAB Mar. 25, 2015).

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Claim Construction: Broadest Reasonable Construction

• A claim in an unexpired patent shall be given its broadest reasonable construction in light of the specification of the patent in which it appears. 37 C.F.R. § 42.100(b).

• In the first IPR, Garmin Int’l, Inc. v. Cuozzo Speed Techs., LLC, the PTAB held certain claims invalid after construing the claims according to their broadest reasonable construction:– “In an inter partes review, claim terms in an unexpired patent are

interpreted according to their broadest reasonable construction in light of the specification of the patent in which they appear.” IPR2012-00001, Paper 59 at 8 (PTAB Nov. 13, 2013).

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• The Patent Owner appealed to the Federal Circuit, which affirmed the PTAB’s use of the broadest reasonable construction by a 2:1 vote in In re Cuozzo Speed Techs., LLC, 793 F.3d 1268 (Fed. Cir. 2015). – The majority noted that “[n]o section of the patent statute

explicitly provides that the broadest reasonable interpretation standard shall or shall not be used in any PTO proceedings.” Id. at 1276.

– “Nonetheless, the broadest reasonable interpretation standard has been applied by the PTO and its predecessor for more than 100 years in various types of PTO proceedings” and “[35 U.S.C.] §316 provides authority to the PTO to adopt the standard in a regulation.” Id.

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• The Patent Owner filed a petition for rehearing en banc, which was denied by a 6-5 vote in In re Cuozzo Speed Techs., LLC, 793 F.3d 1297 (Fed. Cir. 2015).

• The vote was sharply contested.– Writing for the majority, Judge Dyk explained “[i]f the standard is to be

changed, that is a matter for Congress. There are pending bills which would do just that.” Id. at 1299.

– Writing for the minority, Chief Judge Prost explained “[t]his conclusion cannot stand, as it does, on a silent statute, a contrary legislative history, and a line of case law that counsels an opposite result.” Id.

• For now, and in the proposed new rules, the standard remains unchanged unless the patent will expire before the timeline for a final decision.

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Narrowly Tailor Discovery

• AIA proceedings potentially involve three categories of limited discovery pursuant to 37 C.F.R. § 42.51.

• Mandatory initial disclosures: there are two options but each generally tracks Rule 26(a)(1)(A) of the Federal Rules of Civil Procedure.

• Routine discovery: “any exhibit cited in a paper or testimony”; deposition of any person offering an affidavit; and “relevant information that is inconsistent with a position advanced by the party during the proceeding.”

• Additional discovery: a moving party must show that such additional discovery is in the interests of justice.

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Narrowly Tailor Discovery

• “[S]trong public policy exists to limit discovery in AIA proceedings.”

• Additional discovery in the “interests of justice” is measured using five factors:– Discovery requests must be based upon more than a possibility and

mere allegation;– Litigation positions and underlying basis is not in the interest of justice;– Information a party can reasonably figure out without a discovery

request is not in the interest of justice;– The discovery should be easily understandable; and– The discovery should not be a burden on resources, finances, or time.

Garmin Int’l, Inc,. v. Cuozzo Speed Techs., LLC, IPR2012-00001, Paper 26 at 6-7 (PTAB Mar. 5, 2013).

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Narrowly Tailor Discovery• The PTAB designated Arris Group, Inc. v. C-Cation Techs., LLC an

informative decision in July 2015. – Arris “provides guidance on the types of reasonable and narrowly

tailored requests for additional discovery concerning privity and real party-in-interest issues that the Board frequently grants.”

• In Arris, the Patent Owner requested indemnification agreements referencing or contingent on Petitioner’s ability to control related litigation.

• The PTAB granted the Patent Owner’s “very limited request” because the Patent Owner had “recently obtained additional information,” that when combined with the additional requested discovery, will be sufficient to demonstrate the Petitioner exercised control over related litigation. IPR 2015-00635, Paper 10 at 6 (PTAB May 1, 2015).– The Patent Owner’s request was narrow, identified how the request was

relevant to dispositive issues in the case, and how the request bolstered independently collected information.

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Successfully Amending Claims• A Patent Owner may file one motion to amend the patent requesting

cancellation of any challenged claim or proposing a reasonable number of substitute claims. 35 U.S.C. § 316(d); 37 C.F.R. § 42.121.

• To successfully amend challenged claims, the Patent Owner must “show general patentability over prior art.” Idle Free Sys., Inc. v. Bergstrom, Inc., IPR2012-00027, Paper 66 at 33 (PTAB Jan. 7, 2014); see also Corning Optical Commc’n RF, LLC v. PPC Broadband, Inc., IRP2014-00441, Paper 19 (PTAB Oct. 20, 2014).– The Patent Owner “bears the burden of proof in demonstrating

patentability of the proposed substitute claims over the prior art in general.” Id.

– The Patent Owner “is not assumed to be aware of every item of prior art presumed to be known to a hypothetical person of ordinary skill in the art. Nevertheless, [the Patent Owner] can, and is expected to, set forth what it does know about the level of ordinary skill in the art, and what was previously known, regarding each feature it relies and focuses on for establishing patentability of its proposed substitute claims. “ Id.

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Successfully Amending Claims• The PTAB granted the Patent Owner’s motion to amend

its claims in Reg Synthetic Fuels LLC v. Neste Oil OYJdespite the Patent Owner’s admission that each individual element was known in the art because:– “[T]here was [no] art-recognized benefit to using a

concentration of sulfur [as claimed]”; and– “Absent any indication of a benefit to be obtained from

adding even greater amounts of sulfur, the skilled artisan would have no reason to make the modifications [] necessary to result in the claimed invention” because such modifications would only increase costs and add processing steps. IPR2014-00192, Paper 48 at 29 (PTAB Jun. 5, 2015).

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Successfully Amending Claims

• PTAB Chief Judge James Smith has explained:– There has been a request to amend the claims in

less than 100 AIA review cases; – “If you look at the instances where motions were

granted, one develops appreciation that it’s perhaps not nearly as difficult as has been described”; and

– The PTAB has granted motions to amend where the Patent Owner made an “appropriate representation as to patentability.”

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Real Party-In-Interest

• A Petition must identify “all real parties in interest.” 35 U.S.C. § 312 (a)(2).

• The PTAB trial practice guide explains the real party-in-interest (RPI) may be the petitioner and/or the parties at whose behest the petition was filed. 77 Fed. Reg. 48,759 (Aug. 14, 2012).

• There is no bright line rule to identify a real party-in-interest.– Two important factors the PTAB considers:

• Control or direction over the proceeding; and• Payment of legal bills and fees. See Corning Optical Commc’n RF, LLC v. PPC

Broadband, Inc., IPR2014-00440, Paper 68 (PTAB Aug. 18, 2015).

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• The PTAB will deny a petition for failing to identify an RPI.• The PTAB denied institution of an IPR in Paramount Home Entm’t Inc. v.

Nissim Corp. because:– The unnamed parent company responded to the Patent Owner’s license offer

without referring the Patent Owner to the Petitioner;– The unnamed parent company engaged in numerous communications with the

Patent Owner;– The unnamed parent company referred to the Petitioner’s counsel as “my

counsel”; and – The unnamed parent company traveled to the office of Patent Owner’s attorney

to view settlement agreements. IPR2014-00961, Paper 11 at 9 (Dec. 29, 2014).• The PTAB concluded these actions “suggest an involved and controlling

parent corporation representing the unified interests of itself and [Petitioner].” Id.

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Real Party-In-Interest• The PTAB will dismiss an Investigation after institution for failing to identify an

RPI.• The PTAB granted Patent Owner’s motion to dismiss the Investigation in Corning

Optical Commc’n RF, LLC v. PPC Broadband, Inc. a year after institution because:– The Patent Owner timely raised the issue after discovering new information in another

proceeding;– The preponderance of the evidence indicated that “Petitioner’s actions have blurred

sufficiently the lines of corporate separation” and that a first unnamed RPI “could have controlled the filing and participation of the IPRs”; and

– That a second unnamed RPI “funded these IPR proceedings, and also exercised or could have exercised control over Petitioner’s participation in these proceedings.” IPR2014-00440, Paper 68 at 16 (PTAB Aug. 18, 2015).

• A motion to dismiss can be barred as untimely. See First Quality Baby Products, LLC v. Kimberly-Clark Worldwide, Inc., IPR2014-01021, Paper 42 (PTAB Jul. 15, 2015.)

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• A Petitioner will often lose its filing date following dismissal of its petition for failing to correctly identify an RPI.– The Petitioner may now be barred from filing its

corrected Petition. – “An inter partes review may not be instituted if the

petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging infringement of the patent.” 35 U.S.C. § 315(b).

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• Last month the USPTO’s Report to Congress recommended:– “that the statute be amended to allow for timely

correction of real party in interest identification where an error in identification arose without deceptive intent” because a “statutory change is necessary to avoid situations where petitions are denied based on good-faith, inadvertent errors in identifying all real parties in interest.”

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New Rules

• “Quick Fixes” in May 2015– The “quick fixes” raised page limits from 15 to 25

pages for motions to amend claims and reply briefs.• Currently Proposed New Rules– Clarify the claim construction standard, e.g., by

amending 37 C.F.R. § 42.100(b).• “A claim in an unexpired patent that will not expire before a

final written decision is issued shall be given its broadest reasonable construction in light of the specification of the patent in which it appears.”

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New Rules

– Permit the Patent Owner to include new testimonial evidence (expert declarations) with Preliminary Response, e.g., by deleting 37 C.F.R. § 42.107(c).• “No new testimonial evidence. The preliminary response

shall not present new testimony evidence beyond that already of record, except as authorized by the Board”

– Limit pleadings by word count rather than by the number of pages, e.g., by amending 37 C.F.R. §42.24(a)(1)(i) • “Petition requesting inter partes review: 14,000 words60

pages.”

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New Rules

– Add a Rule 11-type certification for all papers filed with the PTAB by amending 37 C.F.R. § 42.11 to include a provision for sanctions for noncompliance.

– The USPTO is accepting comments until October 19, 2015 at [email protected]

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Presentation Overview

• Why file an IPR?

• Petition Results

• Recent Trends – More Rejections

• Lessons and Questions

• Stay Results

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Why an IPR?• Litigation is Expensive

$3.35 million for $1-$25 Million Case in MSP Area

>$6 million for >$25 Million Case in MSP Area• AIPLA 2013 Economic Survey I-131, I-132

• Litigation Takes a Long Time

– 2+ Years to Trial• 2011 PWC Patent Litigation Study

• Litigation Stay ~78% and Rising

• On the Record Statements Regarding Patent Scope

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How Do You Get Into an IPR?• Anyone can File

• If Sued, Within 1 Year of Suit

• 60 Pages Max

• Claim Constructions

• Particulars of Invalidity

• Fee: $23,000 + Extra for >15 Claims

– Partial Refund for Denial

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Petitions Through October 4, 2015

• 3602 Petitions Filed Overall

• 1759 Petitions Filed in FY2015

– Originally Planned for 30 per Month

– Received ~182 in June 2015

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Monthly Petition Volume

-- Data from Aug, 2015 PTAB Statistics

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FY15 Petition Tech Breakdown

--Source: PTAB Statistics Through Aug. 31, 2015

61.8%

24.0%

5.1%

8.9%

0.2%

Electrical/Computer (1,088)

Mechanical / Bus. Method(423)Chemical (90)

Bio/Pharma (156)

Design (4)

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FY12-14 Petition Tech Breakdown

--Source: PTAB Update, Judge Smith (Sept 11, 2014)

71.8%

15.5%

6.7%5.6%

0.4%


Mechanical (308)

Chemical (134)

Bio/Pharma (112)

Design (8)

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FY15 Petition Tech Breakdown

--Source: PTAB Statistics Through Aug. 31, 2015

61.8%

24.0%

5.1%

8.9%

0.2%


Mechanical / Bus. Method(423)Chemical (90)

Bio/Pharma (156)

Design (4)

Results of Petitions –Through October 4, 2015

• 2114 Petition Decisions on the Prior Art Grounds

– Not including terminations / dismissals

– 1625 Trials Instituted• Includes Joined

– 489 Denials

• 147 Denied for Technical Reasons

• 430 Terminated by Parties Prior to Institution

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Questions for the Data

• Do more filings mean lower quality of prior art, overall?

• Is the PTAB digging in less deeply? More?

• Is the PTAB feeling pressure to accept fewer petitions?

– Internal vs. External Pressure

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Results of Prior Art Grounds

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• ~77% Acceptance Rate of Decided Petitions

– Down: 72% in FY15 vs. 84% in FY12-14Some Claims Reviewed18.7%

No Claims Reviewed23.1%

All Claims Reviewed58.2%

Invalidity Grounds• Anticipation vs Obviousness

• Particularly Describe Combinations

• ~18% Grant IPR on All Grounds

– Up: 22.2% in FY15 vs. 12.6% in FY12-14

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Cumulative Grounds• PTAB Can Find Grounds Cumulative

~37% Petitions Have Cumulative Grounds

• Way down: 26% in FY15 vs. 53% FY12-14

– 12.3% difference attributable to more rejections

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Many Grounds Petitions• PTAB Typically Frowns on Too Many Grounds

14% Petitions have 10+ Obviousness Grounds

• Down: 4.8% in FY15 vs. 23.2% in FY12-14

>10 Grounds – 64% cumulative

• Also down: 45% in FY15 vs. 71% FY12-14

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Results - Anticipation• 55% Assert Anticipation

– Down: 45.6% in FY15 vs. 68.5% in FY12-14

• 22.5% Find Some Anticipation Cumulative– Down: 13.0% in FY15 vs. 31.8% in FY12-14

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Some Grounds Accepted31.2%

No Grounds Accepted38.6%

All Grounds Accepted30.3%

Results - Obviousness• ~97% Assert Obviousness

• ~36% Find Some Obviousness Cumulative– Down: 25.4% in FY15 vs. 50.7% in FY12-14

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Some Grounds Accepted51.1%

No Grounds Accepted27.7%

All Grounds Accepted21.3%

Recent Trend – Rejection of Petitions

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• Fully Rejected Petitions, by Month, FY15

– Data from Docket Navigator

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

55.0%

0 1 2 3 4 5 6 7 8 9 10 11 12

Questions to Consider

• Do more filings mean lower quality of prior art, overall?

• Is the PTAB digging in less deeply?

• Is the PTAB feeling pressure to accept fewer petitions?

– Internal vs. External Pressure

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Additional Lessons

• Secondary Considerations Rarely Matter

• Motions to Exclude Evidence Rarely Work

• Amendments Haven’t Worked Well

– This year, that seems to be changing!

• Motions to Compel Rarely Work

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Variabilities for IPRs

• Should Patent Owner Respond?

– Claim Construction

– 17.1% of Patent Owners Forego Response• Down: 14.4% in FY2015 vs. 20.5% in FY12-14

– Is this a good idea?

• How Preclusive is Estoppel?

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Overall Stays Pending IPR• (Data as of October 4, 2015)

~78% Motions for Stay Granted on Final

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Granted69%

Denied20%

Denied w/o Prejudice

11%

FY15 Stays Pending IPR• (Data as of October 4, 2015)

~80% Motions for Stay Granted on Final

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Granted70%

Denied18%

Denied w/o Prejudice

12%

Comments? Questions?

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