Federal Circuit Clarifies That It Still Lacks Jurisdiction To Review Whether Petition Was Time-Barred

A “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).  A series of decisions from the Federal Circuit have clarified to what extent institution decisions are reviewable.  See St. Jude v. Volcano (CAFC lacks jurisdiction to review decision not to institute IPR); In re Dominion Dealer Sols. (denying mandamus petition seeking review of PTAB decision not to institute IPR); In re Cuozzo Speed (CAFC lacks jurisdiction to review institution decision even after a final decision); Versata v. SAP (CAFC has jurisdiction to review whether a patent is a “covered business method patent”); Achates v. Apple (CAFC lacks jurisdiction to review whether petition was time-barred); Synopsys v. Mentor Graphics (declining to review merits of PTAB decision to institute on some grounds but not others, but finding no statutory requirement that the Board address every claim raised in an IPR petition); Harmonic Inc. v. Avid Tech (CAFC lacks jurisdiction to review PTAB decision not to institute review on “redundant” grounds). 

The Federal Circuit’s Wi-Fi One v. Broadcom decision clarified that the Federal Circuit’s prior decision that it lacks jurisdiction to review whether a petition is time-barred remains good law after the Supreme Court’s Cuozzo Speed v. Lee decision. 

As background, Broadcom petitioned for IPR of the ‘215 patent, challenging numerous claims.  Prior to institution, Wi-Fi argued that Broadcom was in privity with entities involved in parallel district court litigation, and that because those entities would be time-barred from seeking IPR of the ‘215 patent, Broadcom was time-barred as well.  See 35 U.S.C. § 315(b).  Wi-Fi filed a motion seeking discovery to support its argument, but after briefing the Board denied the motion.  On appeal, Wi-Fi pressed its argument that Broadcom was barred from petitioning for IPR because it was in privity with a time-barred district court litigant.  While recognizing that Achates renders its challenge to the Board’s timeliness ruling nonappealable if Achates is still good law, Wi-Fi argued that the Supreme Court’s Cuozzo decision implicitly overruled Achates.  As noted by the Federal Circuit, the Cuozzo decision stated 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.”  The Federal Circuit characterized § 315 as “just such a statute.” 

USPTO Updates Accelerated Examination Program – Program Still Creates a Record That Could Be Cited Against Patent Owners in Post-Grant Trials

Today, the USPTO published a notice updating the accelerated examination program and noting that the USPTO plans to publish a request for comments to seek public input on whether there is value in retaining the program. Back in 2006, the USPTO introduced the accelerated examination program to allow for expedited prosecution if an applicant performed a pre-examination search and provided various information in an Accelerated Examination Support Document. The accelerated examination program predates the AIA and various rule changes, and this update brings the accelerated examination program up to date.

The accelerated examination program has had relatively low usage since the passage of the AIA. One reason applicants tend to avoid the accelerated examination program is because it requires the applicant to create an extensive record—a record that could create issues in later litigation or post-grant trials. For example, even under the updated requirements, an applicant must identify “where each limitation of the claims finds support under 35 U.S.C. § 112(a) in the written description of the specification” (81 FR 54566, col. 2), “[f]or each reference cited . . . all the limitations in the claims that are disclosed by the reference” (71 FR 36325, col. 1), and “a detailed explanation of how each of the claims are patentable over the references cited” (71 FR 36325, col. 1). Those disclosures in the support document could be cited by an IPR petitioner to support arguments that certain limitations are disclosed in the prior art, or to hold a patent owner to a specific claim construction. Accordingly, the accelerated examination program is rarely used today.

In contrast, the prioritized examination program created by the AIA—typically referred to as “Track 1”—provides for expedited examination without the burdensome search and support document requirements. Track 1 allows an applicant to pay a fee for prioritized examination. While it places some restrictions on expedited applications (e.g., they cannot include more than 30 total claims), it does not risk creating a record that could hurt a patent owner in later litigation or post-grant trials.

In sum, while the update modernizes the program, applicants that use the accelerated examination program risk creating a record that could be used against them in post-grant trials or litigation. In most cases, patent applicants would be better served by taking the “Track 1” route to speed up examination.

PTAB Institution Decision Does Not Shift Burden from the Patent Challenger to the Patentee

The Federal Circuit previously clarified that a petitioner’s burden to prove unpatentability never shifts to the patent owner.  See Dynamic Drinkware, LLC v. Nat’l Graphics, Inc.  On Monday, the Federal Circuit’s In re Magnum Oil Tools International, Ltd. decision clarified that the burden of production likewise never shifts from the patent challenger to the patentee.  Continue Reading

The Introduction of New Evidence Is Permitted During IPR Proceedings

Yesterday, the Federal Circuit issued an opinion clarifying that the introduction of new evidence is not only permitted, but “is to be expected,” in inter partes review proceedings.  As long as the opposing party is given notice of the evidence and an opportunity to respond to it, the introduction of new evidence is permissible under the Administrative Procedure Act (APA).

As background, the patents challenged in the IPRs on appeal relate to treating Pompe’s disease with injections of a human acid α-glucosidase.  The PTAB instituted IPR on various obviousness grounds.  After institution, the patent owner argued that, because of all of the combinations of references described in in vivo experiments, a person of ordinary skill in the art would not find those experiments predictive of results in a human patient.  The patent owner further argued that because the PTAB did not institute review based on any references that included in vivo data, the petitioner should not be permitted to use any prior art showing successful in vivo tests to demonstrate obviousness.  In reply, the petitioner cited to two in vivo studies that related to the relevant enzyme in the in vivo experiments discussed in the prior art references.  In its final written decision, the PTAB referred to those in vivo references as support for its findings as to the state of the art.  Thus, based on the evidence before it, the PTAB found that by a preponderance of the evidence, the challenged claims would have been obvious.

On appeal, the patent owner argued that the PTAB violated the APA’s requirements of notice and an opportunity to respond by relying in its final written decision on “facts and legal arguments” that were not set forth in the institution decisions.  The Federal Circuit disagreed, finding that the PTAB did not “change theories in midstream,” much less deny the patent owner notice of any change.  The PTAB’s final written decision found the claims unpatentable on the same grounds as set forth in the institution decision and no others.  The Federal Circuit explained that the “development of evidence in the course of the trial is in keeping with the oppositional nature of an inter partes review proceeding.”  The Federal Circuit further found that the patent owner received adequate notice of the issues that would be considered, and ultimately resolved, at the hearing.  The patent owner itself raised the issue of in vivo studies in its patent owner response.  The petitioner then referenced both in vivo references in its reply.  And the judges questioned patent owner’s counsel about the in vivo references at the hearing.  On this record, the Federal Circuit found that the patent owner had actual notice of the references and an opportunity to respond to them.

This IPR exemplifies that in some cases, a petitioner can benefit from introducing new evidence with its reply to rebut a patentee’s non-obviousness argument.  Additional evidence showing the state of the art at the time of the invention may be useful for rebutting a patentee’s argument regarding the knowledge a skilled artisan would bring to bear when reading the prior art identified as producing obviousness.  Patent owners should thus be selective in their patent owners’ response and be cautious of including arguments that could be undermined by additional evidence of the state of the art.  Additionally, if a petitioner does rely on additional evidence in its reply, a patent owner should consider whether it has grounds to file a motion to exclude the evidence and, if not, consider whether it should seek leave to file a surreply to respond to the new evidence.

USPTO Memo Updates Examiner Guidance On Subject Matter Eligibility In View Of Enfish

Just weeks after its May 2016 memorandum to examiners providing guidance on subject matter eligibility under § 101, yesterday the USPTO issued a new memo updating its guidance to examiners in view of the Federal Circuit’s Enfish decision.  As this memo points out, the Enfish decision gave a concrete example of claims directed to improvements in computer-related technology, including claims directed to software, that are not abstract under the first step of the Alice/Mayo analysis.  Going forward, it will be important for examiners and applicants to closely analyze the limitations of claims at issue to determine whether the claims are directed to a specific implementation of a solution to a problem in the software arts.  If so, they likely satisfy the requirements of § 101 under the Enfish decision. 


May 2016 Update to Examiner Guidance on Patent Subject Matter Eligibility

A Federal Register notice is scheduled to publish tomorrow (pre-publication PDF version is available here) updating the 2014 interim guidance on patent subject matter eligibility and the July 2015 update on subject matter eligibility.  Yesterday, a related examiner memorandum published to provide updated examination instructions.  Those instructions require examiners to articulate a reasoned rationale for any § 101 rejection under both steps of the Alice/Mayo test.  They require an examiner to identify specific claim limitations in support of a rejection under both steps of the two-step analysis.  Further, the instructions establish that it is a best practice for examiners to cite appropriate court decisions that support their position.  The instructions also establish that if an applicant challenges a rejection but the examiner finds it appropriate to maintain the rejection, a rebuttal must be provided in the next office action.  Hopefully, the requirements will lead to more consistent examination with respect to subject matter eligibility.  Additionally, if followed these instructions should facilitate creation of a more complete record for appeal where an examiner maintains a subject matter eligibility rejection.

Along with the updated guidelines, the USPTO provided subject matter eligibility guidelines for life sciences claims.  The Examiner Memorandum, however, clarified that the examples are intended to show exemplary analyses only and should not be used as a basis for subject matter eligibility rejection or relied upon in the same manner as a court decision.  The USPTO also issued 2016 updates of its index of eligibility examples and index of subject matter eligibility court decisions.

If You Amend Claims In A Post Grant Proceeding, Don’t Forget To Supplement Infringement Contentions In Parallel Litigation

The Federal Circuit’s recent decision in Target Training International v. Extended Disc North America tells the cautionary tale of what can happen to a plaintiff who successfully navigates a post grant challenge by amending claims but does not promptly amend its infringement contentions in parallel litigation.

In this case, Target Training filed an infringement action against Extended Disc in the Southern District of Texas. Per the local rules, Target Training provided preliminary infringement contentions in 2011 alleging infringement of claims 1, 2, and 5-11. The PTO then instituted a reexamination of the asserted patent. The district court litigation was subsequently stayed. Fast forward a few years, and Target Training emerged from the reexamination with original claims 1-11 canceled but with new claims 12-41 confirmed as patentable. The district court reopened the litigation in January 2015. Less than two weeks later, Extended Disc moved for summary judgment of noninfringement and invalidity and, alternatively, moved to dismiss the action as moot because all asserted claims were canceled. A few days later, Target Training filed a notice with the court informing it of the reexamination certificate, stating that thirty new claims were added during the reexamination, and requesting a scheduling conference to discuss, among other things, contentions. The court never responded to Target Training’s request. In June 2015, the court agreed with Extended Disc that Target Training was bound by its preliminary infringement contentions unless it sought leave to amend its contentions. Accordingly, the court granted Extended Disc’s motion to dismiss the case as moot.

The question on appeal was whether it was appropriate for the district court to dismiss the case when Target Training failed to amend its infringement contentions to assert infringement of any of the thirty newly added claims. The Federal Circuit analyzed the record and found that Target Training failed to assert the newly added claims, despite opportunities to do so. Accordingly, it affirmed the district court’s dismissal of the case as moot.

Post grant proceedings are most often used in parallel with litigation, and the lesson here is that practitioners on both sides need to keep strategy for both district court litigation and Patent Office proceedings in mind at all times. Both parties knew when the reexamination was wrapping up, and Extended Disc was ready with both substantive and procedural motions to end the litigation just weeks after the stay was lifted. If Target Training had won the race to the courthouse by moving to supplement its preliminary infringement contentions to assert the new claims as soon as the stay was lifted, it likely could have avoided dismissal.


Petitioners that Rely on Deposition Testimony to Establish that a Publication Qualifies as Prior Art should be Prepared to Produce the Deponent for Cross

Routine discovery in review proceedings authorizes cross examination of affidavit testimony.  37 C.F.R. § 42.51(b)(1).  If a petitioner submits affidavit testimony to prove that a publication qualifies as prior art, the patent owner can depose the affiant.  But what happens if rather than submitting an affidavit, a petitioner submits deposition testimony to establish that a publication qualifies as prior art?  The routine discovery rule doesn’t specifically allow for the patent owner to cross examine the deponent from an earlier action. 

This issue recently came before the PTAB in a rather complicated fact pattern in CBM2015-00179.  There, the petitioner is relying on deposition testimony of Atsushi Kawashima taken over a decade ago during litigation between patent owner and a third party to establish that a Japanese publication is prior art.  Patent owner sought to depose Mr. Kawashima.  In response, the petitioner argued that cross examination is not permitted under the routine discovery rule.  Further, petitioner represented to the PTAB that Mr. Kawashima is unavailable.  Patent owner also sought a ruling from the PTAB indicating who is responsible for securing the availability of Mr. Kawashima. 

The PTAB’s order did not directly address what falls within the scope of routine discovery.  However, looking to the facts before it, the PTAB noted that the Kawashima testimony is a pivotal part of petitioner’s challenge—petitioner relies solely on that testimony to establish that a reference is prior art.  The PTAB determined that here it is the petitioner’s responsibility to secure the availability of Mr. Kawashima for deposition and that patent owner is authorized to cross examine him.  If the petitioner is unable to produce Mr. Kawashima for deposition, the PTAB noted that it will consider his unavailability when weighing his testimony.  It remains to be seen whether unavailability could disqualify the reference as prior art. 

One take away from this order is that petitioners should consider what evidence they choose to present to establish that a publication qualifies as prior art.  If possible, submitting a new affidavit from a witness capable of establishing that a reference qualifies as prior art may add a minor cost up front in comparison to relying on prior deposition testimony, but being able to produce the witness for cross examination could save the reference from being disqualified. 


New Rules of Practice for Trials before the PTAB

A final rule has been published with amendments to the rules of practice before the PTAB.  The amendments are effective May 2 and apply to both petitions filed on or after May 2 as well as ongoing AIA preliminary preceding or trial before the office.  The rules make several changes, the most notable being:

  • Allowing patent owners to submit expert declarations with their preliminary responses
  • Requiring a Fed. R. Civ. P. 11-type certification for papers filed in a preceding and procedures for sanctions if the certification has been violated
  • Allowing a party to request district court-type claim constructions for a patent if the party certifies that it will expire within 18 months of the Notice of Filing Date Accorded
  • Replacing page limits with word count limits for several documents

While it will take time for the impact of these rules on PTAB practice to become clear, we expect patent owners to immediately start submitting expert rebuttal declarations with their preliminary responses.  The PTAB’s statistics as of February 29, 2016 show that currently about 38% of IPR petitions are denied.  But if an IPR is instituted, then patent owners only have a 13% chance of having no instituted claims found unpatentable.  These numbers show that a patent owner should do what they can to avoid institution, and in many cases that will likely include taking advantage of this new opportunity to file expert declarations with their preliminary responses.

Does the ability of patent owners to submit expert testimony pre-institution mean that the institution rate will significantly drop? It will likely have an effect, but I wouldn’t expect a sea-change.  For one thing, amended rule § 42.108 provides that “a genuine issue of material fact created by [the patent owner’s] testimonial evidence will be viewed in the light most favorable to the petitioner solely for purposes of deciding whether to institute an inter partes review.”  See also § 42.208(c) (CBM/PGR counterpart).  While a patent owner’s expert declaration may prevent institution in some instances, it seems likely that more often than not a thorough declaration from a petitioner’s expert, even when contrasted with a rebuttal declaration, would at least create a genuine fact issue supporting institution.  Further, statistics show that patent owners face an up-hill battle post-institution even with the opportunity to submit expert testimony.  It follows that the ability to submit rebuttal expert testimony, whether pre- or post-institution, may have limited effect on the ultimate outcome.


Fed. Cir. Decision Reiterates The Importance Of Raising All Bases For Invalidity In An IPR Petition

On Tuesday, the Federal Circuit vacated the PTAB’s final rejection of a claim, finding that the rejection was procedurally improper because the PTAB relied on a basis raised for the first time during the oral argument. That decision highlights the importance of petitioners thoroughly developing all potential invalidity bases in the initial petition.

Specifically, Dell v. Acceleron (Fed. Cir. Mar. 15, 2016) involved a patent for a computer-network appliance containing hot-swappable components. Relevant to the issue of whether Dell disclosed the relevant basis for rejection in the petition, claim 3 recites “wherein the chassis comprises caddies providing air flow from the front to the rear of the chassis.”  In its petition, Dell argued that articulating door 262 in Fig. 12 of the Hipp reference performs the same function as the caddies in claim 3.  Dell’s reply after the patent owner response, however, argued that the caddies required by claim 3 are also found in Hipp’s power-supply mounting mechanism 278.  Acceleron requested a conference call with the PTAB to address invalidity arguments newly addressed in Dell’s reply, but the PTAB refused to hold a conference call.

FIG. 12 (HIPP)

At the oral argument, Dell maintained that Hipp’s articulating door 262 and power supply mounting mechanism 278 disclose the “caddies” limitation, but Dell also added a new argument. Dell then argued that Fig. 12 of Hipp shows unlabeled “slides” located below the power supplies 280 and that such slides also constitute caddies.  Acceleron disagreed on the merits and again objected on procedural grounds.  The PTAB ultimately found that Hipp anticipated claim 3, relying exclusively on Dell’s contention that Fig. 12 shows “slides.”  It concluded that Dell had pointed to that structure in its reply, and therefore rejected Acceleron’s argument that the contention was improperly raised for the first time at oral argument.

On appeal, the CAFC found that the “slides” structure was first identified as meeting the “caddies” limitation during the oral argument. The CAFC went on to analyze the requirements the Administrative Procedures Act imposes on the PTO for formal adjudication.  The CAFC ultimately vacated the PTAB’s ruling, holding that the PTAB denied Acceleron notice and a fair opportunity to respond to the “slides” basis of cancellation.  Given its finding that the “slides” basis was first identified at oral argument, the CAFC declined to address under what circumstances a cancellation may rely on a key factual assertion made for the first time in a petitioner’s reply.

This holding reiterates the importance of a thorough petition. Petitioners should not take the “kitchen sink” approach of citing to every possible alternative at the expense of developing complete and detailed arguments.  Petitioners, however, are well served to rigorously analyze prior art references before the petition and fully disclose all aspects of the prior art that they may need to rely on to prove invalidity.