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Suit Against USPTO Urges Defacto IPR Trial Orders

Posted On: Nov. 5, 2013   By: Scott A. McKeown
IPR-Denial- USPTODominion Dealer Solutions Confuses District Court Practices with PTAB

On March 28, 2013, Dominion Dealer Solutions filed 5 petitions for Inter Partes Review (IPR) against the patents of Auto Alert Inc. Dominion was sued by Auto Alert on October 1, 2012 in Central District of California for infringing 3 of the patents subject to the IPR filings (the other two IPR filings being directed to patents expected to be added to the suit).

On August 15, 2013 the Patent Trial & Appeal Board (PTAB) uncharacteristically denied all five petitions. The PTAB explained that the “real time” features of the claims had not been adequately addressed by the petitioner, or petitioner’s declarant, and that the obviousness analysis was lacking in requisite detail. In essence, the Board found that the mixing and matching of references in the claim charts (common in preliminary invalidity style charts of the district courts) was lacking in explanation as to reference interchangeability. Further the Board found the supporting declaration devoid of a developed rationale for combining the references (i.e., written in a notice style format of the district courts). Dominion sought rehearing arguing that since their declarant provided evidence that was not rebutted by the patentee, that the PTAB could not deny the petition. On October 10th the PTAB denied rehearing explaining that the declaration was indeed considered, but was found lacking in technical reasoning and substance. As the denial of an IPR petition cannot be appealed, the battle was over at the USPTO.

Days later, on October 15th, Dominion filed suit against the USPTO under the Administrative Procedure Act (APA). In their complaint (here) Dominion argues that where an IPR petition includes declaration evidence that stands unrebutted, it is arbitrary and capricious for the USPTO to deny such petitions. Yet, this evidentiary imbalance is present in virtually every PTAB preliminary proceeding by design.

As a reminder, 42.107/207 precludes declaration evidence from patentees in their preliminary responses. As a result, it is a best practice for a challenger petition to include declaration evidence as strong insurance against a denial, but the inclusion of such cannot be a guarantee against a denial. Perhaps in a district court setting the “lack of evidence from the other side” argument would be persuasive. Here, however, patentee evidence cannot be submitted until the trial is instituted. Further, the judges of the PTAB are not the generalist referees of the district courts. Rather, the judges of the PTAB have engineering and science training and routinely rebut the adequacy of such evidence.

One can only guess that the motivation to file suit against the USPTO is that the 12 month window to pursue revised IPR petitions is closed, thus, a lawsuit was the only avenue left to Dominion.

(Note: a more fruitful avenue of relief would have been to simply refile the petitions as Covered Business Method (CBM) challenges since the subject patents were classified as such by the PTO, appear to have covered claims, and there is no 12 month window for CBM challenges).

One Response to “Suit Against USPTO Urges Defacto IPR Trial Orders”

  1. Kip says:

    It sounds like the PTAB is getting split panel dependent outcomes on some of these issues of first impression. When one panel goes one way, and another panel goes another way, on essentially the same issue (esp. legal issue), that seems like a good “arbitrary and capricious” argument. Not sure how much that applies here. In general, petitioners need to resign themselves that Congress specifically refused to give them the right to appeal – putting a lot of power in the PTAB’s hands.