October 25, 2013
By Eric P. Raciti; Arpita Bhattacharyya, Ph.D.; Clara N. Jiménez
Authored by Arpita Bhattacharyya, Ph.D.; Clara N. Jimenez; and Eric P. Raciti
The new inter partes review proceeding conducted before the Patent Trial and Appeal Board can be used to levy challenges to the validity of an issued patent outside of district court litigation. The IPR provision went into effect on Sept. 16, 2012, and in just over a year, 550 petitions for IPR have been filed. The board has issued decisions on 180 (150 trials instituted, 23 denials, and seven joinders) of those petitions.1
Any party, except the patent owner, may file a petition to institute an IPR to attack a patent's validity either after the period during which post-grant review may be initiated (i.e., nine months after grant or reissue) or, if PGR is initiated, at the conclusion of the PGR. 2 A patent may be challenged only on grounds of novelty and nonobviousness based on patents or printed publications.3
To justify institution of an IPR, the petition must meet the threshold requirement of demonstrating that there is a "reasonable likelihood" that the petitioner would prevail as to at least one of the claims challenged.4 The "reasonable likelihood standard allows for the exercise of discretion but encompasses a 50/50 chance . . . of prevailing."5 To facilitate early resolution of the issues, petitioners will likely have to set forth the best ground of unpatentability as to each challenged claim.6
The decision of the board whether to institute a review is final and nonappealable.7 Parties, however, may move to have the board reconsider its decision through a motion for rehearing.8 The request must specifically identify all matters the party believes the board misapprehended or overlooked.9
At first blush, it appears that the standard for initiating IPR challenges at the board is higher than the "substantial new question of patentability" standard for ex parte reexamination. But despite the apparent high standard, the board has instituted trial (for at least one claim) in 150 out of the 180 decisions issued until Sept. 18, 2013, resulting in a whopping success rate of about 83 percent.
Much can be learned about the "reasonable likelihood" standard from the decisions issued by the board thus far. After exploring many of the issued decisions, we believe that the following factors are most critical in successfully instituting an IPR.
In determining whether to institute an IPR, "the board may take into account whether the same or substantially same prior art or arguments previously were presented to the [Patent and Trademark] Office."10 This provision provides a discretionary duty to take into account the previously considered prior art; however, it appears that the existence of a reasonable likelihood of success is not precluded by the fact that a patent or printed publication was previously submitted to or considered by the office.
For instance, in Macauto U.S.A. v. BOS GmbH & KG, IPR2012-00004, Paper 18 (Jan. 24, 2013), the patent owner argued that the IPR petition should be denied because the same arguments and prior art were before the office previously in an ex parte reexamination. The board rejected this argument, noting that even though some of the prior art was previously considered by the office in the prior reexamination, the reexamination "focused" on different prior art. The board further explained that it is "not required by statute to reject a Petition based upon the fact that certain arguments or art were previously considered by the Office."
In two petitions concerning the same parties, Illumina, Inc. v. Trs. of Columbia Univ. in the City of N.Y., IPR2012-00006, Paper 28 (Mar. 12, 2013), the petitioner submitted that none of the prior art references accompanying the petition (with the exception of one reference in the first petition) were "substantially considered" by the examiner, although several of the references were previously submitted to the office in an Information Disclosure Statement (IDS) "among an overwhelming number of references." The board did not appear to be swayed in any way by the fact that several of the references were previously before the office in an IDS, or that one of the references was applied by the examiner in an Office Action. The board ultimately found that the petitioner had demonstrated a reasonable likelihood that several of the claims would be found unpatentable over the references that were before the office during prosecution.
Further, in LKQ Corp. v. Clearlamp, LLC, IPR2013-00020 Paper 18 (Mar. 29, 2013), the petitioner primarily relied upon a prior art reference ("Kuta") that was applied by the office during prosecution. Rejections based on that reference had been successfully traversed during prosecution. The petitioner argued in its IPR petition that the deficiency of Kuta (as identified by the office in the Notice of Allowance) could be cured by combining the teachings of Kuta with one or more other references. Despite the fact that Kuta was substantially considered during initial examination, the board concluded that the petitioner had demonstrated a reasonable likelihood of prevailing on its obviousness ground of patentability based on the combined teachings of Kuta and other submitted references.
Accordingly, it appears that the board gives little or no deference to previous decisions by the office in deciding whether to grant an IPR trial. As such, it is possible to successfully institute an IPR using prior art references that were previously considered by the office, even when any rejection based on such prior art was successfully traversed during prosecution.
The majority of the trials instituted thus far have been instituted on obviousness grounds. An empirical review of the decisions suggest that roughly 30 percent of the petitions granted include at least one anticipation ground, while the rest raise only obviousness challenges. This result primarily arises from the board's exercise of its discretion to institute trial on all or only some of the grounds raised by the petitioner. Indeed, the board has generally declined to institute trial on grounds that are redundant in light of the grounds upon which trial has been granted in an effort to preserve the efficiency of the IPR process. Oracle Corp. v. Clouding IP, LLC, IPR2013-00088, Paper 7 (May 14, 2013).
Nevertheless, where appropriate, the board will institute trial on multiple grounds. For example, in Adidas AG v. Nike, Inc., IPR2013-00067, Paper 18 (May 17, 2013), the board determined that certain challenges based on anticipation over a prior art reference also justified institution of trial on obviousness grounds over the same reference, expounding further that "anticipation is the epitome of obviousness, a disclosure that anticipates under 35 U.S.C. §102 also renders the claim unpatentable under 35 U.S.C. §103." The board relied on this same logic to grant obviousness challenges of other claims based on two other prior art references.
Inherent disclosure of a claimed element by the prior art appears to be the most challenging issue faced by petitioners raising anticipation challenges. The board expects a clear showing by the petitioner, or the petitioner's expert, of how the limitation is inherently present in the prior art. Consequently, the board has allowed a petitioner to rely on evidence extrinsic to the primary prior art reference to show that the primary reference inherently possesses a particular property. That is, the petitioner can rely on, for example, a third reference to show that the alleged property is "necessarily present in the thing described in the reference, and that it would be so recognized by persons of ordinary skill." Corning Inc. v. DSM IP Assets B.V., IPR2013-00043, Paper 14; IPR2013-00044, Paper 12; IPR2013-00047, Paper 11 (May 13, 2013).
Similarly, the board has also allowed a petitioner to show how the inherent properties were met by the prior art through testing performed after the time of the invention. Corning Inc. v. DSM IP Assets B.V., IPR2013-00048, Paper 15 (May 13, 2013). In Corning, the board rejected the patent owner's argument that ex post facto testing cannot be used in an obviousness analysis. Instead, the board found that, where the petitioner had already provided a rationale to support its obviousness analysis, there was no reason to preclude the petitioner from showing through testing that the claimed properties necessarily existed in the prior art. While the challenge in this case was one of obviousness, the rationale for accepting the later obtained testing results applies to inherent anticipation scenarios.
If relying on inherent disclosure, the petitioner should consider whether an expert declaration is needed to fully articulate the inherency argument. Similarly, if after careful analysis, the petitioner concludes that there is a possibility that some element may be found lacking in the prior art, the petitioner should consider providing sufficient facts or reasoning as to why a person of ordinary skill in the art would have found the claimed subject matter obvious based on the reference alone or in combination with any other reference.
In Sony Corp. of America v. Network-1 Security Solutions, Inc., IPR2013-00092, Paper 21 (May 24, 2013), the petitioner raised three anticipation contentions, each of which was rejected by the board. Given the claim construction that the board adopted, the board found that each and every limitation of the challenged claims was not disclosed by the prior art references. Further, the board rejected the petitioner's bare assertion that to the extent any element was not explicitly or implicitly disclosed by the prior art, "the addition of that element is a predictable variation that could have been implemented by a person of ordinary skill in the art at the time of the alleged invention." Specifically, the board found that the petitioner had not identified with any particularity which limitations were not disclosed by the prior art, and also failed to provide any facts or reasoning as to why a person of ordinary skill in the art would have found the claimed subject matter obvious based on the reference alone or in combination with any other reference. The board, therefore, rejected the petitioner's conclusory statement regarding obviousness, repeated for each asserted prior art reference.
In the arena of obviousness, the board has paid careful attention to how the petitioner presents and supports the rationale to modify or combine references to arrive at the claimed invention. The board has re-emphasized that the relevant inquiry for the alleged grounds of unpatentability based on obviousness is whether the petitioner has set forth "some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness." See Heart Failure Techs., LLC v. CardioKinetix, Inc., IPR2013-00183, Paper 12 (July 31, 2013) (citing KSR Int'l Co. v. Teleflex Inc., 550 U.S. 398, 418, 82 U.S.P.Q.2d 1385 (2007) (74 PTCJ 5, 5/4/07)).
Accordingly, the board has rejected obviousness arguments where the offered reason for combining references was that the prior art and the patent address the same problem. For instance, in Heart Failure Techs., the petitioner argued that the patent claims were obvious over a combination of references. In articulating the motivation for combining the references, the petitioner asserted that "a person having ordinary skill in the art would have had reason to combine the relevant teachings . . . to reach the claimed subject matter because these references 'are related to the repair of the human heart.'" The patent owner argued—and the board agreed—that the fact that the references were related to the repair of the human heart itself does not amount to "some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness."
Similarly, the board has held that an argument that it would have been obvious to combine the teachings of references that are analogous to each other and/or to the challenged patent is insufficient to amount to "an articulated reason with a rational underpinning to combine specific teachings in the references in a particular manner to arrive at the claimed invention, as required by a showing of obviousness. Rather the petitioner should explain how the references may be combined, from the perspective of one of ordinary skill in the art, to arrive at the claimed invention, and why the proffered combination accounts for all the features of each claim." See Dominion Dealer Solutions, LLC v. AutoAlert, Inc., IPR2013-00223, Paper 9 (Aug. 15, 2013).
Examples of arguments that have persuaded the board include a showing that the claimed invention amounted to nothing more than routine optimization of the variable in a known process, as in International Flavors & Fragrances Inc. v. U.S., as represented by the Secretary of Agriculture, IPR2013-00124, Paper 6 (June 27, 2013), and showing that the claims merely combine known elements for their own purpose to achieve a predictable result, as in St. Jude Medical v. Board of Regents of the University of Michigan, IPR2013-00041, Paper 12 (May 2, 2013).
Claim construction of the challenged claims has proven to be one of the most important factors in determining whether a trial is instituted or not. In IPR proceedings, the board gives the claim terms their broadest reasonable interpretation in light of the specification of the patent.11 Thus, claim terms are generally given their "ordinary and customary meaning" as would be understood by one of ordinary skill in the art in the context of the entire disclosure. The board has relied on dictionaries and the patent specification to help determine what the "ordinary and customary" meanings of the terms are. Adidas AG v. Nike, Inc., IPR2013-00067, Paper 18 (May 17, 2013).
Whether a claim term needs to be construed, as well as the appropriate construction of a claim term, is a decision that ultimately rests on the board. Consequently, the board may itself construe a claim term as a matter of law, even when the parties themselves did not propose any construction. Research In Motion Corp.v. Wi-LAN USA Inc., IPR2013-00126, Paper 10 (June 20, 2013). Nevertheless, the parties should carefully consider whether there are terms departing from common and ordinary meaning and thus needing construction, and provide well-articulated positions for all such terms. Failure to set forth a claim-construction position may result in the board adopting the position offered by the opposing party.
In some cases, the board has indeed adopted the petitioner's proposed construction where the patent owner did not challenge such construction, as in Corning Inc. v. DSM IP Assets B.V., IPR2013-00043, Paper 14 (May 13, 2013). In some other cases, the board has adopted the patent owner's construction where the petitioner did not submit a claim construction, as in Synopsis, Inc. v. Mentor Graphics Corp., IPR2012-00041, Paper 16 (Feb. 22, 2013).
Consistent with its broad discretion on the matter of claim construction, the board has also proposed and adopted its own construction when neither party has suggested any specific construction, as in Research In Motion Corp. v. Wi-LAN USA Inc., IPR2013-00125, Paper 8 (July 29, 2013). Constructions applied by courts in related district court litigations, even if different from the constructions proposed by the parties, have also been adopted by the board. Veeam Software Corp. v. Symantec Corp., IPR2013-00151, Paper 7 (Aug. 7, 2013).
The board has clarified that unlike the parties themselves, the board is not subject to any estoppel that would prevent it from adopting claim-construction positions that a party could not have argued because of positions adopted in related cases. Research In Motion Corp. v. Wi-LAN USA Inc., IPR2013-00126, Paper 10 (June 20, 2013). In its response to the Research In Motion IPR petition, the patent owner urged the board to decline adopting the claim construction set forth by RIM because the offered claim interpretation was different and allegedly inconsistent with RIM's position in the related litigation. In adopting a claim construction similar to that proposed by RIM, the board explained that the patent owner had failed to adequately explain the allegations of inconsistency, and further held that "whether or not estoppel applies to RIM, it does not apply to the board."
The board has also declined to construe claim terms where the board considers that the meaning of the terms does not depart from their ordinary and customary meaning, even if the parties agree that construction is needed. Corning Inc. v. DSM IP Assets B.V., IPR2013-00046, Paper 12 (May 13, 2013).
In short, the board has taken a very flexible and sophisticated view of the claim-construction exercise, and has been willing to depart from the constructions proposed by the parties or adopted in related proceedings. This landscape makes it abundantly clear that the petitioner should pay significant attention to claim-construction issues in its petition.
First, the petitioner needs to carefully analyze where construction may be needed and ensure that the reasoning supporting its position is well articulated in the petition. Also, because the petitioner does not get an opportunity to reframe its arguments of patentability under the board's adopted construction, it is advisable to test the unpatentability theories under various possible constructions, including those adopted by the court or the office in related proceedings, or implicitly adopted by the patent owner in any formal or informal infringement allegations.
Petitioners are allowed to submit expert declarations to support the grounds for the challenge to each claim.12 Although expert declarations are not required, most of the petitions decided so far have been accompanied by declarations to bolster the grounds for challenge, and the testimonies of experts are given considerable weight by the board in determining the outcome.
In two cases concerning the same parties, Apotex Inc. v. Alcon Pharm., Ltd., IPR2013-00012, IPR2013-00015, Paper 35 (Mar. 19, 2013), the petitioner's expert declaration played a key role in demonstrating a reasonable likelihood of prevailing on at least one claim, as the board very favorably reviewed the qualifications of the expert and cited to the declaration on multiple occasions throughout the obviousness analysis.
The board may also view the expert declaration as presenting new arguments not previously considered by the office, particularly when the references relied upon were previously considered by the office during original prosecution or reexamination, as in the case of Chimei Innolux Corp. v. Semiconductor Energy Lab. Co., IPR2013-00038, Paper 9 (Mar. 21, 2013).13 The board has even allowed expert declarations showing that sample compositions prepared and tested based on prior art disclosures had the same inherent properties as the claimed composition. Corning Inc. v. DSM IP Assets B.V., IPR2013-00048, Paper 15 (May 13, 2013).
Expert declarations have proven to be particularly helpful if the patentee had relied upon expert declaration(s) during prosecution of the challenged patent. For instance, in Macauto U.S.A. v. BOS GmbH & KG, IPR2012-00004, Paper 18 (Jan. 24, 2013), the patentee had relied upon two declarations that apparently determined the outcome of an ex parte reexamination of the patent. Although the board was not persuaded by the declarations previously submitted in the reexamination, it nonetheless commented that the petitioner had failed to provide any expert declaration of its own to refute the patentee's expert declarations, "despite an opportunity to do so" in its petition. The board further remarked in the Macauto decision that such declarations by the petitioner "might be helpful in determining obviousness," even though they are not always a prerequisite.
However, for expert declarations to be given weight when instituting IPR, the declarations have to follow the requirements of 37 C.F.R. §42.65(a), which provides that "[e]xpert testimony that does not disclose the underlying facts or data on which the opinion is based is entitled to little or no weight."
In two decisions concerning the same parties, Monsanto Co. v. Pioneer Hi-Bred Int'l, Inc., IPR2013-00022, Paper 43, IPR 2013-00023, Paper 32 (Apr. 11, 2013), the petitioner relied heavily on an expert's declaration to establish how the prior art anticipated and/or rendered obvious the challenged claims. The patent owner argued—and the board agreed—that the requirements of 37 C.F.R. §42.65(a) were not met because the expert's testimony did not disclose the underlying facts or data on which the opinion was based. Without the declaration, the cited prior art references failed to establish a reasonable likelihood of success on any challenged ground, and the petition was denied in its entirety.
Thus far, petitioners have been very successful in instituting IPR trials. With each new decision further illuminating what the board is looking for in a petition, the "reasonable likelihood" standard for instituting IPR is appearing to be less and less daunting. Successful petitions include strong prior art, well-articulated unpatentability arguments that have been pressure-tested under various foreseeable claim constructions, claim construction positions that are well supported by the patent, and expert declarations that clearly outline the facts supporting the expert's declaration.
If the success rate for instituting IPR is any indication of success of patent challengers at PTAP trials, IPRs have the potential to change the face of patent litigation.
Endnotes
1 Data is current as of Sept. 18, 2013, available at http://www.uspto.gov/ip/boards/bpai/stats/aia_statistics_sep18_2013.pdf.
2 35 U.S.C. §311(a)-(c) (2011).
3 35 U.S.C. §311(b) (2011).
4 35 U.S.C. §314(a) (2011).
5 Message from Chief Judge James Donald Smith, Board of Patent Appeals and Interferences: USPTO Discusses Key Aspects of New Administrative Patent Trials [hereinafter "Message from Chief Judge Smith"], Uspto.gov, http://www.uspto.gov/blog/aia/entry/uspto-discusses-key-aspects-of (last visited Apr. 12, 2013).
6 See id.
7 35 U.S.C. §314(d) (2011).
8 37 C.F.R. §42.20(a) (2011).
9 37 C.F.R. §42.71(d) (2011).
10 35 U.S.C. §325(d) (2011).
11 37 C.F.R. §42.100(b); Office Patent Trial Practice Guide, 77 Fed. Reg. 48756, 48766 (Aug. 14, 2012).
12 35 U.S.C. §312(a)(3) (2011).
13 The patent owner contended that the IPR petition was improper under 35 U.S.C. §325(d) because the office considered the same prior art during original prosecution. In rejecting the patent owner's contention, the board argued that absent a showing of substantially the same arguments, and considering that the petitioner presented evidence not previously considered by the office, including the expert declaration, the patent owner did not show that IPR of the challenged patent would be improper under 35 U.S.C. §325(d).
Reproduced with permission from BNA's Patent, Trademark & Copyright Journal, Vol. 86, No. 1304, 10-25-13. Copyright © 2013 The Bureau of National Affairs, Inc. (800-372-1033) www.bna.com. 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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