September 2013
CIPA Journal
Authored by Timothy P. McAnulty and Anthony C. Tridico, Ph.D.
One of the most significant changes of the Leahy-Smith America Invents Act (AIA) was the creation of a new practice of patent trials to contest validity of issued patents before a newly formed Patent Trial and Appeals Board (the Board). These new patent trials went into effect on September 16, 2012, and in the last year, over 500 petitions challenging the validity of issued patents have been filed under the new system.
These new trials, which differ substantially from opposition proceedings before the European Patent Office, include two primary proceedings: Post-grant review (PGR) and inter partes review (IPR). PGRs generally apply to patents with at least one claim that has an effective filing date after March 16, 2013, and can be filed anytime within the first nine-months after a patent issues. IPRs, on the other hand, are available for any granted U.S. patent. For IPRs, petitioners are limited to raising grounds of unpatentability based on prior patents and printed publications. For PGRs, petitioners may raise any ground of unpatentability. The AIA also established a transitional program that allows petitioners to challenge "covered business method patents" under the PGR regime regardless of the effective filing date of the patent. To date, all of the PGRs that have been filed are for covered business method patents.
September 16, 2013 marks the one-year anniversary of the new procedures and in this last year, there have been a number of developments providing us insights into how the Board is handling and will continue to handle the trials. For example, the Board has outlined its framework for discovery—significantly limiting the amount of discovery that parties may seek from one another absent some other agreement between them. The Board has also outlined its framework for how patent owners can make amendments to challenged claims—generally restricting the patent owners' ability to change claim scope. In addition, the Board has provided some guidance on how it will construe the challenged claims—reaffirming that the U.S. Patent and Trademark Office's (USPTO) broadest reasonable interpretation standard applies as well as providing some insight as to how it is applying this standard, and how the parties' proposed constructions and statements regarding the prior art can affect the Board's construction. And finally, the Board has provided some guidance on how it is handling concurrent proceedings before the Office that are related to the patent challenged in an IPR or PGR, which may become more important given the Board's restrictions on presenting new claims during these proceedings.
Part of the legislative intent for the AIA is to provide "a less expensive and more efficient alternative to infringement litigation in Federal court."1 The rules governing the new patent trials provide a framework for limited discovery between the parties, and much less than what may be sought in a federal court litigation. The rules only provide for three categories of routine or required discovery. Unless the parties agree otherwise, a party (i) must serve any exhibit cited in a paper or in testimony, unless it has already been served, (ii) must serve relevant information that is inconsistent with a position advanced by the party, and (iii) may cross-examine the other party's declarants.2
Any other discovery must either be agreed to between the parties or ordered by the Board upon filing a motion.3 The trial rules set forth different standards for determining whether additional discovery is warranted. In IPRs, a party must show that the additional discovery is in the interests of justice.4 In PGRs, a party must show that the additional discovery is for a good cause and show that it is directly related to a factual assertion advanced by either party.5 These two standards are closely related, but the interests of justice standard is slightly higher.6
The Board has provided considerable guidance on each of these standards and has significantly limited the instances where parties will be allowed additional discovery. These limits, along with the general limits on discovery set forth in the rules, should help focus the issues and lower the overall costs in the new patent trials compared to the abundant discovery typically available in federal court litigations.
The Board has outlined five factors that it considers when determining if additional discovery is in the "interests-of-justice" in an IPR.7 And it has likewise outlined five factors that it considers when determining if additional discovery is for "good cause" in a PGR.8 Generally, both sets of factors require a request for additional discovery to (1) present more than a mere possibility or allegation of finding something useful, (2) ask for more than the party's litigation positions and underlying basis for them, (3) not ask a party to produce information that the requesting party can reasonably figure out or assemble without discovery, (4) present easily understandable and clear questions, and (5) not be overly burdensome.
Factors 2-5 are substantially the same for both IPRs and PGRs. Factor 1 differs slightly between PGRs and IPRs regarding what the Board considers "useful." For IPRs, the Board explained that:
the requester of information should already be in possession of threshold amounts of evidence or reasoning tending to show beyond speculation that something useful will be uncovered. "Useful" in that context does not mean merely "relevant" and/or "admissible." In the context of Factor (1), "useful" means favorable in substantive value to a contention of the party moving for discovery.9
For PGRs, the Board explained that:
"[u]seful" means favorable in substantive value to a contention of the party moving for discovery. A good-cause showing requires the moving party to provide a specific factual reason for expecting reasonably [sic] that the discovery will be "useful."10
Thus, for IPRs, the moving party will need to have some initial amount of evidence or other rationale to persuade the Board it will discover additional information that will substantively help one of its contentions. Whereas in PGRs, the moving party will need a factual reason why it expects to discover additional information that will substantively help one of its contentions.
Notably, there have been very few instances to date where the Board granted a motion for additional discovery. For example, in Garmin, the Board denied the patent owner's request for discovery of information related to its potential assertion of secondary considerations of nonobviousness.11 In another unrelated IPR, the Board denied a patent owner's request for sales and marketing related to alleged secondary considerations of nonobviousness.12 In Bloomberg, the Board denied the patent owner's request for all prior art known to or considered by the petitioner in preparing the IPR petition.13 And in Innulox, the Board denied a patent owner's request seeking additional discovery about the real parties in interest.14 In making its decisions in these patent trials, the Board repeatedly explains that the legislative history and intent of the AIA was that the Board will be "conservative in its grants of discovery."15
So far, the Board has granted additional discovery in only three instances—two in covered business method PGRs and one in an IPR. In the first-filed PGR for a covered business method, the Board ordered the petitioner to produce non-redacted versions of five specifically referenced documents that were submitted in redacted form as part of the petition to institute the proceeding.16 In Bloomberg, the Board granted the patent owner's request for additional discovery and production of all documents and things reviewed or considered by the petitioner's expert in conjunction with preparing his declaration.17 And in Corning, the Board granted a patent owner's request for laboratory notebooks and other documents and things relating to protocols, procedures, and data prepared for and used by the petitioner as part of its petition requesting institution of a patent trial.18
After the Board institutes a PGR or IPR, the patent owner may file a motion to amend the patent.19 The rules set forth several limits on the scope of permissible amendments and several requirements for filing such a motion. The Board has explained that the ability to amend is not unfettered, and it has outlined a framework for what it expects in a patent owner's motion to amend.20
An amendment, or presentation of a proposed substitute claim, must respond to a ground of unpatentability in the trial.21 And a patent owner must show a patentable distinction for each proposed new claim over the prior art.22 As the Board explained in Idle Free Systems:
[a] patent owner should identify specifically the feature or features added to each substitute claim, as compared to the challenged claim it replaces, and come forward with technical facts and reasoning about those feature(s), including construction of new claim terms, sufficient to persuade the Board that the proposed substitute claim is patentable over the prior art of record, and over prior art not of record but known to the patent owner. The burden is not on the petitioner to show unpatentability, but on the patent owner to show patentable distinction over the prior art of record and also prior art known to the patent owner.
* * *
A mere conclusory statement by counsel, in the motion to amend, to the effect that one or more added features are not described in any prior art, and would not have been suggested or rendered obvious by the prior art, is on its face inadequate.23
As the Board further explained in Avaya, such a showing of patentability "includes addressing the basic knowledge and skill set possessed by a person of ordinary skill in the art even without reliance on any particular item of prior art."24
The substitute claims cannot enlarge the scope of the patented claim and cannot introduce new subject matter.25 The exact standard that the Board will use to determine whether proposed claims enlarge the scope of a patented claim has not been specifically articulated by the Board. However, the Board will likely follow the standard previously used in ex parte reexamination proceedings (and reissue applications), which basically requires the scope of an amended claim to be narrower than the patented claim such that the new claim does not include any subject matter not covered by the patent claim.26 For example, in authorizing a patent owner to file a motion to amend, the Board cautioned:
[a] patent owner may not seek to broaden a challenged claim in any respect, in the name of responding to an alleged ground of unpatentability. A proper substitute claim under 37 C.F.R. § 42.121(a)(2)(i) must only narrow the scope of the challenged claim it replaces. Similarly, under 37 C.F.R. § 42.121(a)(2)(ii), a substitute claim may not enlarge the scope of the challenged claim it replaces by eliminating any feature.27
In addition to showing patentability, a motion to amend must set forth the support in the original disclosure and any earlier priority applications for each claim that is added or amended.28 Such a showing must be made with respect to the scope of the proposed claim as a whole; merely showing support for individual elements will likely be inadequate. A patent owner will need to explain why one of ordinary skill in the art would understand that the applicant had possession of the subject matter of the proposed claim.29 As the Board explained in Nichia:
. . . merely indicating where each claim limitation [sic, is] individually described in the original disclosure may be insufficient to demonstrate support for the claimed subject matter as a whole.
* * *
. . . the proposed substitute claims need not be described "in haec verba" in the original disclosure in order to satisfy the written description requirement. However, should the claim language does [sic] not appear in ipsis verbis in the original disclosure, a mere citation to the original disclosure without explanation as to why a person of ordinary skill in the art would have recognized that the inventor possessed the claimed subject matter as a whole may be similarly inadequate.30
Perhaps most notably, the rules set forth a presumption that only one substitute claim is needed to replace each challenged claim.31 As the Board emphasized in Idle Free Systems, IPRs (and PGRs) are focused, adjudicative proceedings and are different from the more examinational ex parte prosecution or reexamination proceedings.32 In addition, the Board has strict statutory time requirements to make a final determination in a patent trial. Thus, the Board has held that "in absence of special circumstance, a challenged claim can be replaced by only one claim."33
In Avaya, the Board further clarified what its limit of "only one" substitute claim means.34 In a preliminary conference conferring with the Board, the patent owner proposed two new dependent claims (one dependent upon the other) that would be contingent upon the Board determining the independent claim unpatentable.35 The Board explained that because each dependent claim included all of the features of the independent claim, each dependent claim would be considered a substitute for the independent claim.36 And the patent owner would need to "demonstrate a special circumstance for replacing" the challenged independent claim with more than one claim.37
Moreover, as the Board also explained in Idle Free Systems, a patent owner will likely be prohibited from proposing an entirely new set of claims having a different hierarchy from the patent claims in an IPR or PGR.38 If a patent owner desires a new claim set according to a different patentability strategy, it may do so in another proceeding such as an ex parte reexamination proceeding or, if appropriate, a reissue application.39
Strategies will vary among cases but patent owners may consider filing "cautionary" ex parte reexamination proceedings or reissue applications to hedge against the limited opportunities to amend patent claims during a patent trial. It may even be beneficial to seek reexamination or reissue concurrent with the patent trial, even though the second proceeding may be stayed pending resolution of the patent trial, if there is a risk that all patent claims (and any amended claims) will held unpatentable. On the other hand, petitioners can take solace in knowing that a patent owner cannot amend claims endlessly in the new trials.
According to the rules for patent trials, the claims of a challenged patent will be given their broadest reasonable construction in light of the specification during an IPR or PGR.40 In the Board's only final decision in a patent trial to date, it provided a lengthy explanation as to why the broadest reasonable interpretation (BRI) standard is the proper standard for interpreting claims in the new patent trials.41 The Board's reaffirmation of the rules is consistent with the USPTO's longstanding practice of using the BRI standard in ex parte prosecution, reissue applications, and reexamination proceedings.42
A petitioner must identify how the challenged claim is to be construed in its petition for review.43 The Board will determine the meaning of the claims when it is determining whether to institute a patent trial.44 Should the patent owner disagree with the petitioner's claim construction, it must do so at least in its response after the Board institutes the IPR or PGR, or its arguments will be waived.
It may be appropriate for a party to merely state that the claims are to be given their broadest reasonable interpretation, but if a party believes a specific claim interpretation is required, it should say so.45 On balance, the BRI standard generally construes claims more broadly than the "plain and ordinary meaning" standard that is used to interpret claims in federal court litigation. Although the BRI standard generally increases the amount of prior art available to show invalidity before the USPTO, seemingly more helpful to petitioners than patent owners, merely stating that the BRI standard should apply may have risks. For example, in an order denying a petition to institute an IPR, the Board explained that the petitioner implicitly asserted meanings to claim terms when comparing the patent claims to asserted prior art in claim charts, even though the petitioner stated that the claims should be construed under the BRI standard.46 Such an "implicit construction" by a petitioner (or by a patent owner in responding to patentability challenges) may have a bearing on the scope of the claims in concurrent litigation.
In all post-grant proceedings (including reexamination proceedings and reissue applications), a patent owner has an obligation to notify the USPTO of any prior or concurrent proceedings.47 The general trial and practice rules for IPRs and PGRs allow the Board to "exercise exclusive jurisdiction within the Office over every involved application and patent during the proceeding."48 And the specific rules for IPRs and PGRs allow the Board, where another matter involving the patent is before the USPTO, to "enter any appropriate order regarding the additional matter including providing for the stay, transfer, consolidation, or termination of any such matter."49
The Board, in several IPRs, issued sua sponte orders staying concurrent reexamination proceedings that involved the same patent. However, in two other IPRs, the Board denied requests by a petitioner to suspend ex parte prosecution of pending progeny applications to the challenged patent.
In a November 2012 order, the Board stayed a concurrent reexamination proceeding in an IPR involving the same patent.50 The reexamination request was filed on December 29, 2011, was granted, and the patent owner already filed a response to the order instituting the reexamination.51 The IPR was filed on October 25, 2012, almost one year after the reexamination request, and was instituted on March 25, 2013. Four of the five IPR petitioners were third-party requesters in the reexamination. However, different claims were challenged in the IPR and reexamination, although the grounds raised in the IPR were based on the same prior art as some of the rejections issued by the Examiner in the reexamination.
In a December 2012 order, the Board stayed three concurrent reexamination proceedings after another party filed a petition for an IPR on the same patent.52 One of the three reexamination proceedings was filed on May 20, 2011, the patent owner already filed a response to a rejection, and the third-party requester already filed comments on the response.53 The other reexamination requests were filed almost one year after the first reexamination request and were granted but had not yet undergone any substantive examination.54 Although there was not direct overlap between the challenged claims in the IPR and the reexamination proceedings, all of the claims challenged in the IPR were challenged in at least one of the reexamination proceedings and the IPR challenged those claims based on the same prior art.55
In an August 2013 order, the Board stayed a concurrent ex parte reexamination proceeding after another party filed a petition for an IPR against the same patent.56 The reexamination request was filed on September 15, 2012, was granted, and the patent owner already filed a response to a rejection of some of the claims.57 The petition for IPR was filed on July 10, 2013 by a different party. Although the petition challenged substantially the same claims as the reexamination request, it raised different grounds of unpatentability based on different prior art.
These IPRs were filed almost one year after a reexamination proceeding was filed and after it had undergone substantial reexamination. Nonetheless, the Board stayed each of them while it conducted its review of the IPR petitions. Although the Board did institute each IPR, it stayed the reexaminations before it made its determination.
In doing so the Board recognized that the USPTO does not ordinarily stay reexamination proceedings because they are to be conducted with special dispatch. According to the Board, however, conducting two proceedings concurrently "would duplicate efforts within the Office and could potentially result in inconsistencies between the proceedings."58 In Lumondi, the Board provided three justifications for issuing the stay. First, it noted that the patent owner could amend the claims in the reexamination proceeding separate from the IPR. Second, it emphasized the time constraints that apply to IPRs. And third, it explained that decisions by the Board during the IPR may simplify the issues in the reexamination. The fact that different parties challenged the claims based on different prior art "did not weigh in favor of concurrent Office proceedings" given the fact that the same claims were challenged in both proceedings. The Board relied on similar justifications in Kyocera and CBS Interactive.
In two other IPRs, the Board denied motions that requested suspension of concurrent ex parte continuation applications under 37 CFR § 42.3.59 Rule 42.3 allows the Board to take exclusive jurisdiction over every involved application and patent during a proceeding. However, the Board explained that an "involved" patent is the patent in the proceeding and an "involved" application is an application subject to a derivation proceeding. Thus, the progeny applications were not "involved" in the proceeding. Notably, some of the concerns relied on by the Board in justifying the reexamination stays pertain to progeny applications. For example, a patent owner can amend and introduce new claims in the pending applications in light of developments in an IPR or PGR.
So far, it seems likely that the Board will stay concurrent proceedings that directly relate to the patent actually challenged in an IPR or PGR, e.g., concurrent reexamination proceedings and perhaps reissue applications.60 But the Board will likely not stay or suspend concurrent proceedings that are indirectly related to the challenged patent, e.g., pending ex parte continuation applications or proceedings involving other progeny patents.
While these are the major developments in the new AIA patent trials, the Board has also provided guidance in other areas that are beyond the scope of this paper. These decisions include guidance on how and when two or more patent trials will be combined into one proceeding, insight on procedures for terminating a trial before final judgment when the parties reach a settlement agreement, typical trial schedules and the parties' ability to adjust the schedule, and protective orders and procedures for filing and serving documents under seal. In addition, the Board has held two oral hearings, one in an PGR and one in an IPR. Each of these hearings has been more akin to an appellate oral hearing based on the record of the case rather than a typical trial with the presentation of evidence and witnesses. Stay tuned: we will provide further guidance on these and other lessons from the Board in the coming months.
Endnotes
1 77 Fed. Reg. 48612, 48638, Response to Comment 112 (Aug. 14, 2012).
2 37 C.F.R. § 42.51(b).
3 See 37 C.F.R. § 42.51.
4 37 C.F.R. § 42(b)(2).
5 37 C.F.R. § 42.224.
6 77 Fed. Reg. 48612, 48693 (Aug. 14, 2012).
7 Garmin Int'l, Inc. v. Cuozzo Speed Techs. LLC, IPR2012-00001, Paper 26 (Mar. 5, 2013).
8 See Bloomberg Inc. v. Markets-Alert Pty Ltd., CBM2013-00005, Paper 32 (May 29, 2013).
9 Garmin, Paper 26.
10 Bloomberg, Paper 32.
11 Garmin, Paper 26.
12 Microsoft Corp. v. Proxyconn, Inc., IPR2013-00026 and IPR2013-00109, Paper 32 (Mar. 8, 2013).
13 Bloomberg, Paper 32.
14 Innolux Corp. v. Semiconductor Energy Lab. Co., Ltd, IPR2013-00038, Paper 25 (May 21, 2013).
15 Bloomberg, Paper 32 (quoting 154 Cong. Rec. S9988-89 (daily ed. Sep. 27, 2008) (statement of Sen. Kyl)); see also Garmin, Paper 26; Microsoft, Paper 32; Innolux Corp., Paper 25.
16 SAP America v. Versata Development Group, Inc., CBM2012-00001, Paper 24 (Nov. 15, 2012).
17 Bloomberg, Paper 32.
18 Corning Inc. v. DSM IP Assets B.V., IPR2013-00043, Paper 27 (Jun. 21, 2013).
19 37 C.F.R. §§ 42.121(a)(1), 42.221(a)(1).
20Idle Free Systems, Inc. v. Bergstrom, Inc., IPR2012-00027, Paper 26 (Jun 11, 2013).
21 37 C.F.R. 37 C.F.R. §§ 42.121(a)(2)(i), 42.221(a)(2)(i).
22 Idle Free, Paper 26.
23 Id.
24 Avaya Inc. v. Network-1 Security Solutions, Inc., IPR2013-00071, Paper 38 (Jul. 22, 2013).
25 37 C.F.R. §§ 42.121(a)(2)(ii), 42.221(a)(2)(ii).
26 See 37 C.F.R. §§ 1.552(b); see Tillotson, Ltd. v. WalbroCorp., 831 F.2d 1033, 1037 n.2 (Fed. Cir. 1987).
27 Idle Free, Paper 26.
28 37 C.F.R. §§ 42.121(b), 42.221(b).
29 Nichia Corp. v. Emcore Corp., IPR2012-00005, Paper 27 (Jun. 3, 2013).
30 Id. (emphasis original).
31 37 C.F.R. §§ 42.121(a)(3) 42.221(a)(3).
32 See Idle Free, Paper 26.
33 Id.
34 Avaya, Paper 38.
35 Id.
36 Id.
37 Id.
38 See Idle Free, Paper 26.
39 Id.
40 37 C.F.R. §§ 42.100(b), 42.200(b), 42.300(b).
41 SAP America, Inc. v. Versata Development Group, Inc., CBM2012-00001, Paper 70 (Jun. 11, 2013).
42 See SAP, Paper 70; see also In re Yamamoto, 740 F.2d 1569 (Fed. Cir. 1984).
43 See 42.104(b)(3)-(4), 42.204(b)(3)-(4), 42.304(b)(3)-(4).
44 Synopsys, Inc. v. Mentor Graphics Corp., IPR2012-00041, Paper 16 (Feb. 22, 2013); see also 77 Fed. Reg. 48612, 48627, Response to Comment 17 (Aug. 14, 2012).
45 77 Fed. Reg. 48756, 48764 (Aug. 14, 2012).
46 Synopsys, Paper 16.
47 37 C.F.R. §§ 1.565 (ex parte reexamination), 1.78 (reissue), 1.986 (inter partes reexamination).
48 37 C.F.R. § 42.3 (Jurisdiction).
49 37 C.F.R. §§ 42.122, 42.222 (Multiple proceedings and joinder).
50 CBS Interactive Inc. v. Helferich Patent Licensing, LLC, IPR2013-00033, Paper 15 (Nov. 6, 2012).
51 Inter Partes Reexamination Control Number 95/001,864.
52 Kyocera Corp. v. Softview LLC, IPR2013-00007, Paper 9 (Dec. 21, 2012).
53 Inter Partes Reexamination Control Number 95/000,634.
54 Ex Parte Reexamination Control Number 90/009,994; Inter Partes Reexamination Control Number 95/002,132.
55 Kyocera Corp., Paper 9.
56 Lumondi Inc. v. Lennon Image Tech., IPR2013-00432, Paper 7 (Aug. 6, 2013).
57 Ex Parte Reexamination Control Number 90/012,669.
58 Lumondi, Paper 7; see CBS Interactive, Paper 15.
59 Chi Mei Innolux Corp. v. Semiconductor Energy Lab. Co., Ltd., IPR2013-00028, Paper 8 (Nov. 28, 2012); Chi Mei Innolux Corp. v. Semiconductor Energy Lab. Co., Ltd., IPR2013-00038, Paper 7 (Nov. 28, 2012).
60 While both reexamination stays have been issued in IPRs it seems unlikely that the timing and broader invalidity grounds in PGRs would propel the Board to reach a different outcome.
Originally printed in CIPA Journal. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws. This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.
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