July 6, 2016
By Lionel M. Lavenue; R. Benjamin Cassady; Kara Specht
Authored by R. Benjamin Cassady, Lionel M. Lavenue, and Kara A. Specht
When the America Invents Act,1 creating the post-grant review process before the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board, was first implemented, a patent owner was barred from including testimonial evidence in the optional patent owner preliminary response.2 However, the PTO recently implemented a set of new rules for AIA inter partes review (IPR) petitions, which took effect May 2, 2016.
One of these newly implemented rules allows patent owners to provide more robust preliminary responses to petitions, which can now include testimonial evidence. In considering whether to broaden preliminary responses, the PTO weighed the unfairness of restricting the use of such evidence by patent owners3 against the unfairness of prohibiting a petitioner from responding to such evidence or cross-examine any declarant before the board makes a decision on institution.4 In the end, the PTO determined that "it would be fair and equitable to consider supporting evidence submitted with a preliminary response."5
In finalizing this new rule, the PTO opened the door to a number of strategic considerations for patent owners. Previously, after receiving a petition challenging a patent, a patent owner needed only decide if it would file a preliminary response within three months.6 Now, under the same time pressure,7 the patent owner must also decide whether to include expert testimony, which may effectively "lock in" the patent owner to the positions of that particular expert, not only for the post-grant challenge, but also potentially for any concurrent or subsequent litigation.
Despite the rush and the risk, inclusion of expert testimony in a preliminary response may be advantageous in some circumstances, particularly where the patent owner may have a strong opportunity to prevent institution. On the other hand, if a trial is instituted, the same three-judge panel will review both the preliminary and post-institution responses, so the patent owner may want to preserve some evidence or testimony initially, in case it cannot prevent institution. Going forward, allowing expert testimony in the preliminary response has now opened up a range of considerations for patent owners responding to AIA petitions.
Overall, the main goal in filing a patent owner preliminary response is to try to prevent institution of the petition. Considering the high rate of claim cancellation after institution of a petition, the preliminary response may be the patent owner’s first and best shot at protecting the patent from examination by the PTAB—and ultimately from cancellation. Also, the patent owner’s preliminary response is typically the last word before the board’s trial-institution decision, making it a valuable tool.
Yet, there are several reasons why a patent owner may choose not to file a preliminary response.
First, the AIA’s estoppel provisions, which prevent a petitioner from relying on any prior art that was raised or could have been raised in the petition,8 do not apply unless the PTAB issues a final written decision, which of course is predicated on institution of the petition in the first place.9 A patent owner, particularly one asserting the patent in a parallel district court litigation, may wish to estop the petitioner from reasserting the prior art in the litigation, if the patent owner prevails before the board.
Second, the patent owner may wish to keep an element of surprise to its response following institution. The preliminary response is limited to "the reasons why no inter partes review should be instituted,"10 and generally has a procedural focus, so a patent owner may choose to wait for the post-institution response to advance some of its substantive arguments. This desire to "hold some arguments back" is especially strong if there has not yet been a claim construction ruling in any related district court litigation, as a patent owner may wish to wait and consider any claim constructions adopted by the board in the institution decision before binding itself to particular arguments (which could be used at the district court). Additionally, a patent owner will not want the PTAB judges to be predisposed against its positions if trial is instituted, assuming that the patent owner presents all its strongest arguments in the preliminary response.
Third, the board presumably (and usually) will filter out weak or redundant challenges on its own, even without a preliminary response.11 Therefore, foregoing a preliminary response may conserve resources, minimize the risk of making unnecessary representations that may prove disadvantageous following institution, and allow a patent owner to focus its response specifically on instituted challenges with the beneficial context of the board’s reasoning.
In addition to these considerations for a patent owner facing IPR petitions, what other factors must a patent owner consider when deciding whether to include expert testimony in a preliminary response under the new rules? While the particular circumstances will vary, some of those factors include: 1) the perceived strength of the petition itself; 2) the number of grounds asserted in the petition; 3) whether the parties have already agreed on claim constructions (or whether there is a controlling district court opinion on claim construction); and 4) the anticipated usefulness of the expert testimony in preventing institution.
A. The Perceived Strength of the Petition Itself
The first consideration—the perceived strength of the petition itself—can play both ways. Assuming the patent owner finds the petition nonthreatening, it may not be worthwhile to expend resources to include expert testimony that may be seen as extraneous or unnecessary by the board. This is particularly true if there are procedural deficiencies in the petition that may prevent institution, regardless of any expert opinion.
If, however, the patent owner perceives the petition to be strong, expert testimony might be the best shot at preventing institution, especially as the petitioner almost certainly included its own expert testimony. But in the case of a strong petition, a patent owner may also choose to omit the expert testimony, or a preliminary response altogether, as resources may be better expended later, responding to the particularly instituted grounds of the petition rather than blindly striking out at all presented arguments.
B. The Number of Grounds Asserted in the Petition
As to the second consideration—the number of grounds asserted in the petition—a patent owner may find expert testimony more useful in the preliminary response, where relatively few grounds are asserted.
In this circumstance, an expert can address the few matters at issue, rather than resort to a scattershot attempt to address many grounds. And, as mentioned above, one of the benefits to filing a preliminary response is that it is the final word before the PTAB considers institution, so focused expert testimony may bolster the persuasiveness of this last word.
In contrast, if a petition includes many grounds, expert testimony, and a preliminary response generally, may be less useful, as a patent owner may have difficulty addressing each and every ground to the depth necessary to prevent institution, and this could introduce too much risk to the patent owner (and expert). Instead, it may be better to wait for the board to narrow the issues in its trial-institution decision.
C. Whether There Are Established Claim Constructions
A third possible consideration—whether there are established claim construction judgments—contributes to the overarching idea that the patent owner may be "locked in" to any statements made by the expert during the preliminary response phrase.
Binding oneself to particular statements categorizing the claims or prior art before claim construction has been decided is particularly risky. While an expert may be comfortable voicing opinions contingent on a particular construction, contingent opinions can quickly become complicated if the PTAB adopts a different construction, causing the expert to present different arguments in later opinions and opening up the possibility for inconsistent statements.
However, having already established claim constructions minimizes the risk of having to take inconsistent positions down the road, making expert testimony more viable at the preliminary response stage.
D. The Anticipated Usefulness of the Expert in Preventing Institution
Finally, the fourth consideration—the anticipated usefulness of the expert testimony in preventing institution— again simply depends on the particular facts of each case.
Important factors such as subject matter or whether the expert has already testified in a concurrent district court case may be relevant. For example, simple subject matter may make the use of expert testimony less critical, whereas a case with complex subject matter may benefit from an expert’s explanation. Additionally, in cases where claim construction is particularly important a patent owner may find benefit from expert testimony, as the PTAB often makes claim construction determinations in the institution decision. The patent owner may lose the opportunity if its expert does not weigh in on these issues prior to institution. Moreover, if the expert has already testified in district court cases, there is less risk of creating inconsistencies, as the expert is already bound by statements in the district court.
In these cases, where an expert’s opinion may be particularly useful, a patent owner may benefit from including expert testimony with its preliminary response regardless of other previously discussed considerations.
E. Competing Expert Declarations
Another final concern is the use of expert declarations when obviousness12 grounds of invalidity have been raised. For example, it is nearly impossible for a petitioner to get institution granted based on obviousness grounds without the use of expert testimony.13 As such, inclusion of expert testimony by a petitioner, particularly when arguing obviousness, has become nearly mandatory in order to achieve institution.14
In light of the new allowance of expert testimony by a patent owner, the board may similarly determine that its expert testimony is equally as material to preventing institution as it is for a petitioner achieving it. Including expert testimony when rebutting obviousness arguments, therefore, may be strongly in a patent owner’s favor, if not essential.
The implementation of the new rule was intended to even the playing field between the patent owner and the petitioner prior to institution, by allowing a patent owner the same opportunity to rely on testimonial evidence as a petitioner.15 After all, all things being equal, a judge may be more inclined to side with the only party submitting an expert declaration, if only one does. And, indeed, the PTO has now concluded that it is fair to allow a patent owner to fully defend itself by matching the integrity of a petition including testimonial evidence, if desired, particularly in circumstances where obviousness considerations are in play.
There are certainly circumstances in which it is in a patent owner’s best interest to include such evidence: When there is no risk that the institution decision might cause an expert to make inconsistent statements, when the subject matter is complex, or when claim construction is especially important and would benefit from an interpretation of one of skill in the art. However, this new rule allowing expert testimony in a patent owner’s reply also further complicates the already multifaceted strategic considerations facing a patent owner challenged by an IPR petition.
Although there are no clear answers to the questions of whether a patent owner should file a preliminary response, let alone whether a patent owner should include testimonial evidence with that response, there are certain factors a patent owner should consider, as outlined herein. These factors may help patent owners walk the fine line between filing beneficial and persuasive preliminary responses, and ones that do more harm than good.
1 Leahy-Smith America Invents Act, Pub. L. 112-129, H.R. 1249 (Sept. 16, 2011).
2 37 C.F.R. § 42.107(c) ("The preliminary response shall not present new testimony evidence beyond that already of record, except as authorized by the Board") (77 Fed. Reg. 48,680, Aug. 14, 2012, effective Sept. 16, 2012) (84 PTCJ 653, 8/17/12).
3 80 Fed. Reg. 50,720 (Aug. 20, 2015) (90 PTCJ 2976, 8/21/15) ("Several commenters suggested that the patent owner should be allowed to rely on new testimonial evidence in its preliminary response to the petition given that the petitioner may rely upon such evidence in its petition, and that the current practice of not allowing a patent owner to rely on such evidence is unfair.").
4 Id. ("Other comments said that the current rule should not be changed because the time period prior to institution does not allow a petitioner to evaluate fully the new evidence, the petitioner would not have an opportunity to cross-examine the witness, and the patent owner has a full opportunity to submit evidence post-institution.")
5 Id.
6 37 C.F.R. § 42.107(c).
7 The patent owner is only given three months to respond to the petition, should it choose to file a preliminary response. 37 C.F.R. § 42.107 ("The preliminary response must be filed no later than three months after the date of a notice indicating that the request to institute an inter partes review has been granted a filing date.").
8 35 U.S.C. § 315(e)(2) ("The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not assert either in a civil action arising in whole or in part under section 1338 of title 28 or in a proceeding before the International Trade Commission under section 337 of the Tariff Act of 1930 that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review.").
9 It is worth nothing that the Federal Circuit has recently narrowed the impact of the estoppel provision, possibly shrinking the value in the patent owner strategy of seeking to enforce estoppel. See Shaw Industries Group Inc. v. Automated Creel Systems, 817 F.3d 1293, 118 U.S.P.Q.2d 1316 (Fed. Cir. 2016) (91 PTCJ 1483, 3/25/16) (holding that estoppel under 35 U.S.C. § 315(e) only attaches to those grounds which were instituted in the inter partes review, and does not apply to grounds that were denied in the institution decision).
10 37 C.F.R. § 42.107(a).
11 Although only the grounds instituted by the board are addressed in the final written decision, the Federal Circuit has recently affirmed that the board is not bound in its final written decision by the specific evidence relied on in the institution decision. See Genzyme Therapeutic Prods. v. Biomarin Pharms.,No. 2015-1720, 2016 BL 188470 (Fed. Cir. June 14, 2016) (92 PTCJ 489, 6/17/16). Instead, the board is free to consider and rely on additional and/or new evidence, as long as the parties are notified and given a chance to respond to any new evidence. This may further impact a party’s decision to rely on expert testimony initially, when it may need to adapt or modify any testimony according to any new evidence that may be presented during the course of the proceedings.
12 35 U.S.C. § 103.
13 Cases awarding institution without expert testimony presented by petitioner are the rare exception. See, e.g., Belden Inc. v. Berk-Tek, LLC, 805 F.3d 1064, 1071, 116 U.S.P.Q.2d 1869 (Fed. Cir. 2015) (91 PTCJ 91, 11/13/15) (affirming unpatentability of certain claims and reversing confirmation of remaining claims in IPR2013-00057, despite the petitioner not filing expert declaration with petition).
14 See InfoBionic, Inc. v. Braemar Manufacturing, LLC, IPR2015-01704, Paper 11 (denying institution). Although the petitioner did provide an expert declaration, institution was denied as the expert’s testimony was given no weight by the board. As the board explained, the petitioner’s obviousness argument was premised on an assertion of the meaning of a reference, but the petitioner’s expert merely repeated the argument about what the reference meant without explaining why he believed that meaning to be correct. Id. at 12-13. Therefore, the board rebuffed the expert’s testimony as "conclusory" and gave it little or no weight. Id. at 14–15 (citing 37 C.F.R. § 42.65(a) ("Expert testimony that does not disclose the underlying facts or data on which the opinion is based is entitled to little or no weight.")).
15 Supra note 3, 80 Fed. Reg. at 50,725.
Reproduced with permission from BNA’s Patent, Trademark & Copyright Journal, 92 PTCJ 698, July 6, 2016. Copyright © 2016 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.
June 10-12, 2024
San Francisco
Lecture
Patent Protection for Software-Related Inventions in Europe and the USA Training Course
June 5, 2024
Hybrid
Due to international data regulations, we’ve updated our privacy policy. Click here to read our privacy policy in full.
We use cookies on this website to provide you with the best user experience. By accepting cookies, you agree to our use of cookies. Please note that if you opt not to accept or if you disable cookies, the “Your Finnegan” feature on this website will be disabled as well. For more information on how we use cookies, please see our Privacy Policy.
Finnegan is thrilled to announce the launch of our new blog, Ad Law Buzz, devoted solely to breaking news, developments, trends, and analysis in advertising law.