Secondary Considerations and the Presumption of Nexus: Is This Any Help to Patent Owners?

Patent Owners have achieved little success with secondary considerations of nonobviousness in AIA trials at the Patent Trial and Appeal Board. The threshold for showing the proper nexus between the alleged secondary considerations and the claimed invention has been difficult to attain—and often it is found to be lacking.

With the recent decision in WBIP, LLC v. Kohler Co., 2016 WL 3902668 (Fed. Cir. July 19, 2016), the Federal Circuit emphasized that “there is a presumption of nexus for objective considerations when the patentee shows that the asserted objective evidence is tied to a specific product and that product ‘is the invention disclosed and claimed in the patent'” (emphasis added).

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The PTAB’s Determination of Whether Assignor Estoppel Precludes IPR Institution Cannot Be Appealed

The Federal Circuit recently added the PTAB’s decision on whether assignor estoppel precludes institution of an inter partes review (IPR) petition to the growing list of nonreviewable issues in an IPR. Husky Injection Molding Systems Ltd. v. Athena Automation Ltd. was an appeal from the PTAB’s final decision finding claims 1, 4-16, 18, and 20-22 of Husky’s U.S. Patent 7,670,536 (“the ‘536 patent”) anticipated. Husky appealed this decision, and Athena cross-appealed the Board’s decision, finding claims 2, 3, 17, and 19 of the ‘536 patent not anticipated.

Husky’s former owner and president Schad is a co-inventor of the ‘536 patent. In 2007, Schad assigned the ‘536 patent to Husky and subsequently sold Husky to a private-equity group and left to form Athena, the respondent in the case at issue. In 2012, Athena asserted that various claims of the ‘536 patent were anticipated by either U.S. Patent Application 2004/0208950 (“Glaesener”) in combination with its incorporation by reference of U.S. Patent 5,753,153 (“Choi”), or by U.S. Patent 5,417,913 (“Arend”). The Board rejected Husky’s argument that assignor estoppel barred Athena from filing an IPR petition and instituted review. In its final written decision, the Board found claims 1, 4-16, 18, and 20-22 anticipated by Arend.

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Federal Circuit Clarifies That Decisions on Time Bar Cannot Be Appealed

In a recent decision, the Federal Circuit affirmed that PTAB Board determinations regarding real parties in interest and privity cannot be appealed. Note to practitioners: Don’t waste your time arguing that a petition was time-barred under Section 315(b) once denied by the Board.

The patentee in WiFi One, LLC v. Broadcom argued that Broadcom was barred from petitioning for inter partes review (IPR) because it was in privity with a time-barred district court litigant. Despite the Board having already determined that no such time-bar existed, the patentee argued that the recent Supreme Court decision in Cuozzo Speed Technologies, LLC v. Lee overruled prior law.

The rules regarding real parties in interest and privity are defined in 35 U.S.C. § 315(b), which notes that the Board may not institute IPR “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.” To determine whether a petitioner is in privity with a time-barred district court litigant, the Office Patent Trial Practice Guide states that a Board must “determine whether the relationship between the purported ‘privy’ and the relevant other party is sufficiently close such that both should be bound by the trial outcome and related estoppels.”

The statute governing the Board’s institution of IPR provides that “[t]he determination by the Director whether to institute an inter partes review under this section shall be final and nonappealable.” 35 U.S.C. § 314(d). The Federal Circuit provided further clarity to this rule in Achates Reference Publishing, Inc. v. Apple Inc., noting that section 314(d) “prohibits this court from reviewing the Board’s determination to initiate IPR proceedings based on its assessment of the time-bar of § 315(b), even if such assessment is reconsidered during the merits phase of proceedings and restated as part of the Board’s final written decision.”

Despite acknowledging that Achates prevented an appeal of the Board’s prior decision regarding the petitioner’s ability to file the petition under 315(b), Wi-Fi argued that the Supreme Court’s recent decision in Cuozzo Speed Technologies, LLC v. Lee implicitly overruled Achates, by limiting the statutory bar against judicial review to the Board’s substantive determination at the time of institution and limiting the reviewability ban to issues arising under Section 314, and that time-bar issues should be reviewable because Board practice allows parties to argue those issues at trial.

The Federal Circuit denied each of WiFi’s arguments, holding that the prohibition against reviewability applies to “questions that are closely tied to the application and interpretation of statutes related to the Patent Office’s decision to initiate inter partes review” and noting that “Section 315 is just such a statute.”

Whether you believe that a Board’s determination regarding potential time-bar issues under 315(b) is fair or proper, the determination is final and is a reality you must live with.

Motions to Exclude Rarely Successful at PTAB

deleteIn the several years of post-grant practice, the Patent Trials and Appeals Board has been reluctant to grant Motions to Exclude Evidence. Instead, the Board has made clear that it strongly favors maintaining a complete record, noting that “there is a strong public policy for making all information filed in a nonjury, quasi-judicial administrative proceeding available to the public, especially in an inter partes review which determines the patentability of claims in an issued patent.” Nichia Corp. v. Emcore Corp., IPR2012-00005, Paper 68 at 59 (PTAB Feb. 11, 2014). Additionally, the Board has explained that because it is “a non-jury tribunal with administrative expertise, [it] is well-positioned to determine and assign appropriate weight to evidence presented.” Gnosis S.P.A., et al. v. S. Alabama Medical Science Foundation, IPR2013-00118, Paper 64 at 43 (PTAB June 20, 2014); see also Xilinx, Inc. v. Intellectual Ventures I LLC, IPR2013-00112, Paper 51 at 44-45 (PTAB June 26, 2014). Thus, parties seeking to exclude evidence face a tough road ahead.

It is particularly difficult to exclude deposition testimony of expert declarants. For example, in A.C. Dispensing Equipment Inc., v. Prince Castle LLC, IPR2014-00511, the Board rejected Patent Owner’s argument that the expert failed to meet the definition of a person of ordinary skill in the art. The Board explained that “to testify as an expert under FRE 702, a person need not be a person of ordinary skill in the art,” but rather should be “qualified in the pertinent art,” and even though he has never worked as an engineer in the field of liquid dispensing equipment, his expertise in “disciplines like Thermodynamics, Heat Transfer and Fluid Mechanics” makes him qualified in the pertinent art. See also B/E Aerospace, Inc. v. MAG Aerospace Indus., LLC, IPR 2014-01513, Paper No. 104 at 14 (PTAB Mar. 18, 2016). Similarly, the Board noted that a witness’s testimony is admissible if his or her “qualifications align with the challenged subject matter sufficiently so that his knowledge is helpful in understanding the evidence and determining facts in issue,” and he or she may “competently opine on how a person having ordinary skill in the art would have understood the claims.” Motorola Mobility, LLC v. Intellectual Ventures I, LLC, CBM 2015-0004, Paper No. 33 at 13 (PTAB Mar. 21, 2016).

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Federal Circuit to Consider Motions to Amend En Banc

On August 12, 2016, in In re Aqua Products, Inc., the Federal Circuit granted a petition for rehearing en banc to address the standard for motions to amend claims during America Invents Act trials. Presently, Patent Owners may amend claims by cancelling challenged claims and “propos[ing] a reasonable number of substitute claims,” provided that the substitute claims do “not enlarge the scope of the claims of the patent or introduce new matter.”

Since the moving party bears the burden of proof for any motion in an AIA trial, the Patent Owner must show patentability of the claims, provide written support for the claims, and provide a proposed claim construction. Given this high burden, motions to amend are rarely used, and even more rarely granted. According to USPTO statistics, only 6 out of 112 (5.4%) motions to amend were granted. Several Federal Circuit panel decisions have endorsed these procedures.

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The PTAB’s Claim Constructions Will Likely Have Minimal Impact in the District Court

Network Connection CablesIt is an understatement that claim construction is important to the ultimate merits of non-infringement and invalidity. In many district courts, a claim construction decision is not issued until the parties are well into fact discovery, which could be a year or so from filing. With inter partes review (IPR), however, a decision construing claim terms by the Patent Trial and Appeal Board (PTAB) could occur as little as six months from the filing of a petition for invalidity. This has led some to question whether and how the PTAB’s claim constructions could later impact a district court litigation. A recent case from the Federal Circuit in PPC Broadband, Inc. v. Corning Optical Communications RF, LLC, 815 F.3d 734 (Fed. Cir. Feb. 22, 2016), seems to indicate that any influence will be minimal, given the different claim construction standards applied by a district court and the PTAB.

In PPC Broadband, Corning filed IPRs asserting that several patents were obvious over the prior art. The PTAB construed certain claim terms and found the claims invalid for obviousness. On appeal, PPC Broadband asserted (among other things) that the PTAB erred in construing the claims. The Federal Circuit held that although the claim term “continuity member” / “electrical continuity member” was not correctly construed under Phillips, it was properly construed under the broader PTAB standard. Id. at 741, 743. As such, the court affirmed the construction of this term.

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Federal Circuit Rejects PTAB Burden-Shifting Framework

oil drillThe USPTO has long applied a burden-shifting framework during prosecution of U.S. patent applications. Under that framework, the USPTO examiner bears an initial burden of providing a prima facie case of obviousness. After that, the burden shifts to the applicant, who may submit additional evidence of non-obviousness. This approach is said to further the goals of compact prosecution, and “relieves both the examiner and applicant from evaluating evidence beyond the prior art and the evidence in the specification as filed until the art has been shown to render obvious the claimed invention.” (MPEP 2142). Office personnel must weigh the proffered evidence and arguments in making a final obviousness determination, but the burden remains on the applicant to show the proffered evidence is relevant, for example, by establishing a nexus between the evidence and the claimed invention. (See MPEP 2145).

Until recently, the PTAB has adopted a similar approach for inter partes review (IPR) proceedings. The USPTO has taken the view that, after the Board issues an institution decision finding that the petitioner has demonstrated a “reasonable likelihood of success” on an obviousness ground, the burden of producing evidence of non-obviousness shifts to the patentee. This practice, however, has now been rejected by the Federal Circuit.

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As PTAB Hands Down First PGR Decision, the Overall Impact of PGR Practice Is Still an Unknown

Since the implementation of AIA trials in September of 2012, inter partes review (IPR) has increasingly become a popular procedure for invalidating patents, often supplementing district court litigation. As of June 2016, over 4,600 IPR petitions have been filed, compared to 30 post grant review (PGR) petitions. Unlike IPR, only AIA patents are eligible for PGR. Thus the disparity in petition numbers can be attributed to the relatively few AIA patents. As AIA trials are nearing their four-year anniversary, the Patent Trial and Appeal Board recently issued its first written decision in a post-grant review proceeding.

The PGR written decisions resolved two related proceedings, American Simmental Association v. Leachman Cattle of Colorado, PGR2015-00003 and PGR2015-00005. The patents at issue related to the evaluation of the relative market value of livestock based on genetic merit estimates of the herd. Petitioner challenged the patents on the grounds that the claims failed to recite statutory subject matter under 35 U.S.C. § 101, were anticipated under 35 U.S.C. § 102, and that the claims were obvious under 35 U.S.C. § 103 in view of two references. The Board instituted on the §§ 101 and 103 grounds only.

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Federal Circuit Clarifies Scope of Evidence Used In IPRs

As the America Invents Act (“AIA”) approaches its fifth birthday, the contours of one of its popular procedures, Inter Partes Review (“IPR”), continue to take form.  In Genzyme Therapeutics Products Limited Partnership v. Biomarin Pharmaceutical Inc., the Federal Circuit (“CAFC”) clarified what evidence the Board can consider in its final decisions.

The Genzyme patents relate to enzyme replacement therapy for treating Pompe’s disease, a genetic condition associated with glycogen deficiency.  In 2013, Biomarin filed petitions for IPR of these two patents, based on a number of invalidity grounds and combinations of prior art references.  Genzyme filed a preliminary response to one of Biomarin’s petitions.  The Board instituted review on both Genzyme patents.

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Business as Usual: Supreme Court Affirms Use of BRI in IPRs

By UpstateNYer (Own work) [CC BY-SA 3.0], via Wikimedia Commons

Earlier today, the Supreme Court affirmed the decision by the U.S. Court of Appeals for the Federal Circuit in Cuozzo Speed Technologies, LLC v. Lee on two key issues involving inter partes review (IPR) proceedings.

First, the Court confirmed that the agency’s decision to institute an IPR is generally not appealable. The Court explained that “that is what §314(d) says” when it says that the agency’s initial decision whether to institute an inter partes review is “final and nonappealable.” The Court found this result was consistent with legislative intent because one important congressional objective in creating IPR proceedings was “giving the Patent Office significant power to revisit and revise earlier patent grants.” In response to the dissent’s reference to potential “shenanigans,” the Court did not categorically preclude review of all institution decisions. Rather, the right to review an institution will be limited to general Administrative Procedure Act challenges, such as a due process problem with the entire proceeding or where the agency acts outside of its statutory limits, “for example canceling a claim for ‘indefiniteness under §112’ in inter partes review.”

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