USPTO Faces Litigation for Denial of IPR Petitions

In a complaint under the Administrative Procedure Act (APA) filed on October 15, 2013, in the Eastern District of Virginia, Dominion Dealer Solutions LLC accused the USPTO of exceeding its authority when it refused to grant Dominion’s five petitions for Inter Partes Review of patents owned by a competitor, AutoAlert Inc. AutoAlert and Dominion are involved in an infringement lawsuit involving three of the five patents challenged in the IPR petitions. The related litigation had been stayed in light of the IPR petition filings.

In declining to institute the IPR proceedings, the PTAB found that the obviousness analysis offered by Dominion’s expert in each of the five petitions was unpersuasive. Dominion sought rehearing before the PTAB, arguing that the Board erred by not giving proper credit to factual evidence proffered by its expert and by overlooking explicit disclosures in the cited references. When denying rehearing, the PTAB explained that it is not required to accept unsupported assertions or conclusions of a petitioner’s expert and that it had not overlooked any evidence that had been meaningfully discussed in the petitions. Because the denial of an IPR petition cannot be appealed, and the one-year window for filing new IPRs had closed, a lawsuit against the USPTO appears to have been Dominion’s only option.

Dominion’s complaint in the EDVA argued that the USPTO’s denials of the petitions should be set aside because they were “arbitrary, capricious, an abuse of discretion,” and exceeded the USPTO’s authority under the AIA. In particular, Dominion argued that the “reasonable likelihood” standard sets a low bar for IPR institution which it met; that the USPTO is required to accept unrebutted expert testimony unless the declarant is found to lack credibility; and that the USPTO improperly substituted its own assumed expertise for  expert testimony.

The PTAB rules preclude filing of new testimonial evidence as part of the patent owner’s preliminary response. See 37 C.F.R. § 42.107. Unless an expert declaration is already part of the original prosecution record, a patent owner is therefore limited to attorney arguments until after the IPR trial has been instituted. If the court accepts Dominion’s arguments, petitioners may have even more of an advantage.