Top 5 Practice Changing PTAB Decisions of 2014

Since the start of the administrative patent trials of the America Invents Act (AIA) on September 16, 2012, much has changed at the Patent Trial & Appeal Board (PTAB). The number of AIA trial petitions has exploded. This increased workload has diminished the Board’s appetite for hand-holding, telephone conferences, and has arguably driven changes to once accepted procedural practices. Some might also argue that the ability to get a trial initiated has also become more difficult.

The coming months will bring further changes in the way of notice-and-comment rule making as well as a liberalization of current discovery and filing requirements. Before moving to that topic next week, let’s review the five most noteworthy decisions of 2014 for PTAB practitioners.

1.  Issue Joinder: 
Target Corp. v. Destination Maternity Corp (IPR2014-00508)
In September, the PTAB issued a rare expanded panel Order in Target Corp. v. Destination Maternity Corp., (here). In the Order, a divided panel denied issue joinder under 35 U.S.C. § 315(c) as a matter of law (i.e., the joining of two petitions of a same petitioning party). The decision was especially surprising given the fact that 315(c) had been previously interpreted by the PTAB as permitting such joinder practices to date. In fact, a previous decision with the exact opposite holding remains listed as a representative decision on the USPTO web site, Microsoft Corp. v. Proxyconn, Inc., (IPR2013-00109, Feb. 25, 2013)

In Target, as in Microsoft, the petitioner filed a second petition outside of their 12-month window to attack a claim that was excluded from the Trial Order of an earlier, timely filed petition (argued as being caused by the patentee’s failure to provide requested materials in litigation discovery). Since joinder is a codified exception to the 12-month window, absent joinder, the claim could not be attacked with a second “stand-alone” petition. The Target majority denied joinder in view of their statutory construction, and found the petition to be time barred under 35 U.S.C. § 315(b). This was a departure from earlier cases on point, and remains a point of inconsistency across PTAB panels.

Further discussion on this important case can be found (here). (A motion for rehearing remains outstanding)

2.  Real Party in Interest 35 U.S.C 312(a)(2): 
ZOLL Lifecor Corp. v. Philips Electronics North America Corp. (IPR2013-00609)
When considering Inter Partes Review (IPR) as an alternative to a recently initiated patent litigation, a threshold consideration for defendants is the timing and notice requirements of the IPR statutes: 35 U.S.C. §§ 312(a)(2); 315(b). The later (discussed in (3) below) is familiar to most, that is, to be timely filed with the Patent Trial & Appeal Board (PTAB), the IPR petition must occur within the 1-year window of 35 U.S.C. §315(b). (within 1 year of the service of a complaint for infringement of the subject patent on the petitioner, real party in interest, or privy of the petitioner). 

The latter notice requirement of 312(a)(2) is easily overlooked, and complicated by modern corporate structures. In ZOLL v. Philips, (March 20, 2014) (here), the PTAB determined that ZOLL Medical, the parent corporation of Petitioner ZOLL Lifecor, was both a real party-in-interest and a privy of the Petitioner. ZOLL.  The PTAB identified factors for determining whether a non-party, corporate affiliate is a real party-in-interest, including (1) the “existence of a financially controlling interest,” (2) the “non-party’s relationship with the petitioner,” (3) the “non-party’s relationship to the petition itself, including the nature and/or degree of involvement in the filing,” and (4) the nature of the entity filing the petition. 

Recently Zoll has filed petition for certiorari with the Supreme Court. Of course, review by the Court is highly unlikely, and, in the meantime, the PTAB has denied quite a few filings on similar grounds.
3.  315(a) Bar: 
Apple Inc. v. Rensselaer Polytechnic Institute et al., (IPR2014-00320)

As noted above, Petitioners seeking Inter Partes Review (IPR) must be mindful of the statutory bar of 35 U.S.C. § 315(b). This provision precludes IPR on any patent once 12 months have elapsed after service of a complaint alleging infringement of that patent. The rationale for the statutory bar of 315(b) is straightforward. That is, IPR was designed to be a true alternative to patent litigation, not an adjunct process that was typical of the inter partes patent reexamination proceeding it replaced. By mandating that an IPR filing be brought earlier in the litigation timeline, Congress hoped to avoid duplicative proceedings, avoid patentee harassment, and enhance the ability of the Patent Trial & Appeal Board (PTAB) to provide a timely resolution to such business disputes.

Early on, there were some open questions as to the flexibility of the 12 month window. How would repeated assertions of the same patent be treated by the PTAB, that is, did the window reset? The PTAB answered this in the affirmative in MacAuto USA v. BOS gmbH & Co. KG (IPR2012-00004). In MacAuto, the PTAB made clear that an earlier complaint that was dismissed without prejudice, was treated consistent with the F.R.C.P, that is, as if it never existed. So, in the case of such a dismissal, the window would effectively reset. This bright line rule stood until 2014, with Apple Inc. v. Rensselaer Polytechnic Institute et al. 

In Apple, (here) the Board explained that service of a first complaint on October 23, 2012, rather than service of the second complaint on June 6, 2013, controlled for purposes of determining whether the requested inter partes review was time-barred under 35 U.S.C. § 315(b). This was despite the dismissal of the first complaint without prejudice. To reach such a conclusion, the Board relied on the district court’s consolidation order under Fed. R. Civ. P. 42, and the continuous treatment of the dispute as “live” by the court and parties. Currently, the Board is applying this decision to other “re-filing” fact patterns where the second complaint is filed close in time. Apple is not restricted to Rule 42 consolidations scenarios, although it probably should be. 

4.  Amendments: 
Corning Optical Communications RF, LLC v. PPC Broadband, Inc., (IPR2014-00441)
While unremarkable in most respects, the October 30th Order in this case (here) is noteworthy as signal to practitioners on a softening stance toward amendment formalities. In this Order, the Board authorized the patent owner to place its substitute claims in an appendix. Such requests were repeatedly denied by panels prior to this Order. Placing claims in an appendix excludes them from being counted toward the very tight 15-page limit for motions to amend claims. The Order was listed as “representative” on the PTO website, signaling to practitioner that, going forward, those patentees attempting amendment might want to seek similar relief.

In January the Board is expected to issue a series of rule changes that will liberalize such formalities.

5.  Claim Construction:
Cisco Systems Inc. v. AIP Acquisition LLC (IPR2014-00247)

Since the passage of the America Invents Act (AIA) some patentees have been advancing the notion that BRI should not be employed by the PTAB. Instead, they argue that BRI claim construction should be replaced with the claim construction practices of the district court (i.e., Phillips v. AWH). Complicating this debate is the fact that expired patents are accorded a Phillips construction, and that many patents expire during AIA trial proceedings. 

The BRI analysis focuses the meaning of a claim term on the supporting specification, as would be understood by one of skill in the art — Phillips does the same. A BRI analysis accords claim terms their plain meaning, as would be determined by one of skill in the art — Phillips does the same. To the extent that there is any demarcation in the two analyses it is the fact that a pure BRI analysis arguably places less weight on prosecution history (intrinsic record). Yet, as emphasized recently in Tempo Lighting Inc.,v.Tivoli LLC., (CAFC 2014), the USPTO must also consider prosecution history (at least for previously closed records). Thus, at the end of the day, the analyses are practically the same.

Illustrating this point, the PTAB recently has had multiple occasions in 2014 to analyze the same claims under both BRI and Phillips, and has yet to find a difference. In the most recent, Cisco Systems Inc. v. AIP Acquisition LLC (here), the PTAB determined that the subject patent needed to be reconsidered under Phillips due to imminent expiration. Upon initial consideration of the claim terms under the BRI, and subsequent reconsideration of the same terms under Phillips, the PTAB found the very same meaning. Going forward, it is expected that the PTAB will require dual constructions for patents that are within a certain time frame of expiration.

2015 will certainly bring more filings to the PTAB, and an increased output of orders and Final Written Decisions from the administrative patent judges. Together with the promised rule changes, 2015 will undoubtedly bring another year of significant practice changes.