CAFC Decides Patent Reissue was Improperly Broadened Based on Previous Markman Definition

Yesterday, in ArcelorMittal France v. AK Steel Corp. (CAFC 2015), the CAFC considered the impact of a reissue of U.S. Patent 6,296,805 on a previous appeal decision.  The ‘805 patent, directed to rolled steel, recited the claim limitation “very high mechanical resistance.”  In an earlier infringement suit between the parties, the district court found this terminology to define “a tensile strength greater than 1500 MPa.” This construction was upheld by the CAFC on appeal, and the case as remanded as to other issues.

During the appeal of the claim construction, Patentee reissued the ‘805 patent as reissue patent RE44,153.  The reissue patent included a new claim, claim 23, that recited “mechanical resistance in excess of 1000MPa.”  The originally construed claims remained in the reissue patent. Once back in the district court, Patentee amended its complaint to include claim 23 of the new reissue patent.  Thereafter, on summary judgement, the district court ruled the reissue patent invalid for improper broadening. In the second appeal, decided yesterday, the CAFC agreed that claim 23 of the ‘153 reissue was improperly broadened.  

Ostensibly, the USPTO did not consider 1000MPa limitation as broadening relative to the specification of the ‘805 patent.  On the other hand, the CAFC found  “greater than 1000MPa” to be broadening based upon the district court’s previous construction that the scope of “very high mechanical resistance” was greater than 1500MPa. This difference in construction highlights the potential incongruity between USPTO and district court claim construction practices.

At the heart of the CAFC’s affirmance was the continued distaste for collateral attacks on previous judgments.  The Court explained that the “law of the case doctrine” prevents deviation from the decision of a prior appeal (i.e., claim construction) absent extraordinary circumstances tied to “new evidence”  — the CAFC did not find the patent reissue to constitute such.

The successful prosecution of the RE153 patent is not “new evidence” sufficient to trigger the extraordinary circumstances exception to the mandate rule and the law of-the-case doctrine. Permitting a reissue patent to disturb a previous claim construction of the original claims would turn the validity analysis under 35 U.S.C. § 251 on its head. The basic inquiry under § 251 requires comparing the scope of the claims of the reissue patent to the scope of the original claims to determine if the reissue patent “contains within its scope any conceivable apparatus or process which would not have infringed the original patent.” Tillotson, Ltd. v. Walbro Corp., 831 F.2d 1033, 1037 n.2, 1039 (Fed. Cir. 1987). If the reissue claim itself could be used to redefine the scope of the original claim, this comparison would be meaningless.

Note, the reissue that was pursued was not a “broadening reissue,” which is only possible if pursued within two years of original patent issuance. Instead, the ‘153 reissue was a narrowing reissue. Presumably the former would constitute new evidence under the law-of-the-case doctrine.

It is well established that a claim is considered to be broadening if the patent owner would be able to sue any party for infringement who previously could not have been sued for infringement. In this case, given the court’s earlier construction, if the defendant did not make steel of a strength greater than 1500MPA, claims that expanded the range down to 1000MPA would clearly permit a new infringement charge (assuming the defendant made steel with a strength of 1000MPa or greater).  On the other hand, if the baseline construction of the USPTO were applied, the broadening determination outcome in this case would have been different. 

Markman constructions may be considered by the USPTO, but are not binding on the agency. In re Trans Texas Holdings Corp., 498 F.3d 1290 (Fed. Cir. 2007).  However in this case, one might argue that the since the claims had been assessed by the courts as to infringement scope, regardless of any PTO analysis to the contrary, the court construction was of heightened importance from a public policy perspective.

All that said, since the original claims did not recite a numerical range at all, the examiner may have just missed the issue altogether. This is because, absent the history of the litigation (which was filed), the claims would seem to be narrowing to the naked eye. it is worth noting that there were no substantive rejections of the claims during reissue examination. More recently, reissue applications have been moved from the general examining corps to the to the Central Reexamination Unit (CRU).

Board Updates Public on Manner of Designating Expanded Panel

As the Patent Trial & Appeal Board (PTAB) is now issuing an increasing number of Final Written Decisions (FWD) in addition to Institution Decisions, it is, not surprisingly, experiencing an increasing number of Requests for Rehearing. Many such Requests are seeking expanded panel review.  To date, the Board has issued expanded panel decisions in a small handful of cases directed to fundamental questions of law and AIA trial practice. For example, expanded panels were used in Target Corp. v. Destination Maternity Corp., (IPR2014-00508), which was expanded twice to explore issue joinder authority of 35 U.S.C. §315(c), and Apple Inc., v. Rensselaer Polytechnic Instit., LLC., Case (IPR2014-00319) to explore 35 U.S.C. §315(b). Since these decisions, parties seeking rehearing have been asking for the same expanded panel treatment.

Last Friday the PTAB issued two informative decisions, which make clear that designation of an expanded panel is not by party request, but rather, and internal decision of the Board.

The intent of these informative decisions is clearly to eliminate such requests going forward.  However, it seems likely that such requests, or “suggestions”  will likely persist in one form or another.

For example, in the AOL decision the Board explained that the mere existence of a dissent in an FWD does not entitle one to an expanded panel on rehearing.  In doing so, the PTAB highlighted instances where an expanded panel was appropriate, noting:

[W]hether to expand the panel in an inter partes review matter on a “suggestion” [referring to an internal, PTAB suggestion] involves consideration of whether the issue is one of conflict with an authoritative decision of our reviewing courts or a precedential decision of the Board, or whether the issue raises a conflict regarding a contrary legal interpretation of a statute or regulation. 

This explanation will undoubtedly be interpreted by some as an invitation to “suggest,” rather than request, an expanded panel based upon a perceived inconsistency with an earlier decision. Indeed, given the number of decisions issuing from the PTAB, and the lack of precedential value accorded to the overwhelming majority of them, it is becoming increasingly common to see directly conflicting opinions on legal issues such as privity, real-party-in interest, evidentiary issues, etc. While some such inconsistencies are simply a difference in the underlying facts, others are not as cleanly distinguished.

Until the Board is able to reformulate the Standard Operating Procedures (SOP II) which govern the procedural requirements to designate decisions precedential (currently it is next to impossible given the requirement of a majority vote of all APJs, including those that are outside of the Trial Section), suggestions for expanded panels are likely to continue on this justification.  Steps taken now to increase consistency across PTAB panels will spare the agency unnecessary grief before the CAFC.   
 

Senate Bill Jumps to Forefront of Patent Reform Debate

Introduced just last week, the Patent Act of 2015 (S.1137) will be considered by the full Senate Judiciary Committee this Thursday.  The hearing, entitled Finding Effective Solutions to Address Abusive Patent Practices, will be the starting point for possible amendments.  That said, it seem unlikely that the Bill will be altered in any material respect given the significant compromises embodied by the current draft. Competing Senate efforts, such as the Strong Act, will now fall by the way side as consensus grows around this more measured effort.

New Decision Explores 315(e)(1) Estoppel

Today, the Patent Trial and Appeal Board (PTAB) added the recent Decision on Institution rendered in Dell, Inc. v. Electronics and Telecomms. Res. Inst., IPR2015-00549 Decision Denying Institution, Paper 10, Mar. 26, 2015, to the list of Representative Orders, Decisions, and Notices on its web page. (here)

The decision, like many recent representative decisions is rather straightforward. In this decision, the Board held that the Petitioner is estopped under 35 U.S.C. § 315(e)(1) from requesting inter partes review because: (1) the Petitioner was the same petitioner as in a prior proceeding; (2) the patent and claims challenged in both cases are the same; and (3) the prior art raised in the second petition and in the prior proceeding are the same. (The petitioner used the same prior art in a different combination to allege obviousness of the claimed subject matter). The decision held that the art of the second filing not only “could have been raised” in the first filing, but , in fact, was raised.

As discussed during yesterday’s PatentsPostgrant.com webinar, the application of the “could have raised” standard in the estoppel context is required by statute. On the other hand, applying the “could have raised” standard outside of 315(e)(1) situations, such as to a follow-on petition that is not subject to estoppel is becoming worrisome for many filers.

As noted in the rehearing decision in IPR2014-00628, 3/20/15, Paper 23 (here). Some panels consider follow-on petitions as potentially abusive. That is, it is believed petitioners may hold back art, and file serial petitions to harass patentees, or use the Board’s decision as a roadmap to their next filing. As explained in this decision, the statute does not require the PTAB to institute IPR. So, the thinking is even where the second filing presents a reasonable likelihood of prevailing, actual trial institution is a matter of agency discretion.

While I don’t necessarily agree with the PTAB’s premise in this regard (because holding back based on 315(e)(1) would not be very smart at all, and serial filings are expensive—petitioners simply don’t behave this way), the concept of discretionary institutions based upon principles of equity is an interesting one.  I don’t find the hedge fund abuses equitable at all, and far worse than any follow-on petition of an interested party. In my view, to the extent the IPR statutes convey such discretion to the agency, preventing unquestionable abuses of the system is a far better use of agency discretion.   

New Senate Bill, Patent Act of 2015 Introduced

Today, key drafters of the America Invents Act introduced their own bipartisan patent reform bill in the Senate.  (Senators, Grassley (R – Iowa), Leahy (D- Vt.);  Coryn (R – Tx), Schumer (D -NY), Lee (R- UT), Hatch (R- UT), and Klobuchar (D – Minn.)). The bill entitled: Protecting American Talent and Entrepreneurship Act of 2015,  or Patent Act of 2015 for short (here), is a compromise version of H.R. 9 (The Innovation Act). The bill wisely steers clear of the most extremist proposals of the Strong Act and House Bill.

The bill attempts compromise on the controversial fee shifting proposal of the House bill (major sticking point) by creating and “objectively unreasonable standard” for such an award as opposed to the loser-pays presumption of the House Bill. This would keep the determination in control of the judiciary, as it should be.  Other key issues addressed include enhanced pleading requirements for patent suits, discovery changes, stays of customer suits, and provision to reign in abusive demand letters. The Patent Act leaves PTAB trial proceedings undisturbed. The one and only substantive change provided in the bill on the PTAB would fix the 102(e) drafting mistake of the AIA.  This technical fix is is long overdue.

Given the significant influence of the senators backing the Patent Act of 2015, and the attempt at compromise, it may be that there is hope for 2015 after all.  Stay tuned.

April PatentsPostGrant.com Free Webinar Tomorrow

Don’t forget to register for tomorrow’s webinar (Wednesday April 29th @12:30 (est)), entitled: Trends, Changes & Evolving PTAB Practices (speakers: Scott McKeown & Greg Gardella). As the title suggests, the webinar will cover important developments, rule changes and trends at the PTAB, as well as anticipated rule changes and legislative initiatives. Register (HERE). A sampling of tomorrow’s content is provided below.

Patent Owners Continue to Fare (Comparatively) Well
Over the last month patent owners have continued to fare much better than they did during the first two years of AIA proceedings.  Patent owners prevailed on the merits for at least a portion of the claims in Apple Inc. v. WARF, IPR2014-01567 (obviousness argument rejected based on detailed consideration of motivation to combine); MasterImage 3D, Inc. v. RealD, Inc., IPR2015-00040; Perrigo Company v. Brigham and Women’s Hospital, IPR2014-01560, MasterImage 3D, Inc v. RealD Inc., IPR2015-00038;  Debasish Mukhopadhyay, IPR2014-01563; Aker Biomarine AS v. Neptune Tech, IPR2014-00003, GSI Technology, Inc., IPR2014-00121 (reference would require slight modification and thus was not a §102); Samsung Electronics Co., Ltd. v. Staightpath, IPR2014-01366; EMC Corporation v. Acquis, IPR2014-01452, Toshiba Corporation v. Optical Devices, IPR2014-01444; LG Display Co., Ltd. v. Acacia  IPR2014-01094 (“For anticipation, it is not enough that the prior art reference discloses multiple, distinct teachings that the ordinary artisan might somehow combine to achieve the claimed invention. . . .”); Samsung Electronics America, Inc. v. Smartflash LLC, CBM2014-00189, 190, 192, 196, 197, 198, 199, 200, 204; National Environmental Products Ltd., IPR2014-01502;  Hawaiian Telcom, Inc., CBM2014-00189;  Daicel Corporation v. Celanese Int’l , IPR2014-01515 and IPR2015-00170; Viglink v. Linkgine, CBM2014-00185; Bloomberg v. Quest, CBM2014-00205, 7,194,468 (“We agree with Patent Owner that this approach is conclusory and is contrary to the requirement that the claim as a whole must be considered, not individual elements.”); T-Mobile USA, Inc. v. Mobile Telecommunications Technologies, LLC, IPR2015-00017; Toshiba Samsung Storage Technology Korea Corporation, IPR2014-00205;   RF Controls, LLC v. A-1 Packing Solutions, IPR2014-01536; International Business Machines Corporation v. Intellectual Ventures, IPR2014-01516 and IPR2014-00180.

Significantly, secondary indicia carried the day in Intri-Plex Technologies, Inc. v. Saint-Gobain Performance Plastics Rencol Limited , IPR2014-00309. (“[W]e are persuaded that our finding of commercial success is particularly strong, as [the patent owner’s] patented invention has not only achieved significant sales in its relevant market, it rapidly ascended to the dominant position in the relevant market, eclipsing not only other tolerance rings, but all other competing technologies as well. . . . [W]e determine that commercial success alone sufficiently outweighs the other three factors, and that our finding of copying merely strengthens further our finding that secondary considerations weigh in favor of [the patent owner].”)

RPI and Privity Concepts Expand But Board Prefers That They Be Raised Early
In G.E. v. Transdata, IPR2014-01559 the Board found that privity with a previously-sued party barred the petitioner where the agreement provided that while Petitioner would “OG&E timely informed of all material activity in the case and will solicit OG&E’s input and assent on all material decisions in the case.”  However, the Board is becoming less tolerant to privity and RPI issues raised after the Preliminary Response. Askeladden LLC v. iSourceLoans, IPR2015-00129.

Petitions Are Being Held to Strict Standards
The Board denied institution in Apple v. SmartFlash, CBM2015-00015 due to failure to identify differences between the primary reference and the prior art.  The Board continues to ignore evidence not cited in the petition itself (as opposed to the declaration).  Tempur Sealy International, Inc. v. Select Comfort, IPR2014-01419; ZTE, Inc. v. ETRI, IPR2015-00028. 

Issue Joinder Debate Continues
The PTAB could not muster enough votes to designate the decision in Target precedential. So, some panels have continued to find that issue joinder is not permitted by the statute.  SkyHawke Tech. v. L&H Concepts, IPR2014-01485.

Follow-on Petitions Held to “Could Have Raised” Estoppel Standard
The Board is exercising its discretion to reject follow-on petitions which are filed prior to the one year statutory bar, at least where the art could have been located with reasonable diligence. Conopcco v. P&G, IPR2014-00628 (“Unilever does not show that we erred in selecting the result that removes an incentive for petitioners to hold back prior art for successive attacks, and protects patent owners from multifarious attacks on the same patent claims”); Dell, Inc. v. ETRI, IPR2015-00549 (“What a Petitioner ‘could have raised’ was described broadly in the legislative history of the America Invents Act (‘AIA’) to include ‘prior art which a skilled searcher conducting a diligent search would reasonably could have been expected to discover.’ 157 Cong. Rec. S1375 (daily ed. Mar. 8, 2011) (statement of Sen. Grassley).”)

PTAB Scheduling Orders Begin Suggesting ADR Statements

The Patent Trial & Appeal Board (PTAB) has the power to terminate an Inter Partes Review (IPR), Post Grant Review (PGR), or a Covered Business Method (CBM) proceeding upon request of the parties. This discretionary power to terminate a patentability challenge by agreement (37 C.F.R. § 42.74) is a fairly new concept for patentability challenges. Historically reexamination proceedings could not be terminated by agreement. In reexaminations (inter partes) where the contesting parties settled their dispute, the challenging party would simply drop out of the inter partes reexamination, but the Office would continue with the reexamination in the interests of public policy.  (cf. terminating an inter partes patent reexamination by operation of estoppel).

Since accepting AIA trial petitions, the PTAB has encouraged settlements in many instances. Typically, panels inquire as to settlement possibilities during teleconferences with the parties. More recently, the PTAB is encouraging settlement by assigning a date on the Scheduling Order for an explicit ADR statement from the parties.

For example, in CBM2015-00006 (Paper 7, April 21, 2015), the Board provided the following in the Scheduling Order (here):

ADR STATEMENTThe parties are encouraged to discuss promptly alternative means for resolving their disputes regarding the subject matter of this proceeding. To advance the opportunities for early disposition, petitioner is encouraged to notify the Board, by the due date identified in the Appendix to this Order, that the parties have conferred regarding alternative dispute resolution and whether the parties have reached any agreements.

DUE DATE APPENDIXINITIAL CONFERENCE CALL …………. UPON REQUEST
ADR STATEMENT DUE …………………………………………………. May 20, 2015
DUE DATE 1 ………………………………………………………………… June 22, 2015

Whether or not the new initiative (not universally followed by all panels) results in increased settlements remains to be seen, but it certainly can’t hurt. The PTAB greatly benefits from the ability to terminate post grant patent proceedings because Board resources can be moved away from post grant proceedings that are no longer commercially relevant (at least as to the present parties) to those newly initiated, and there are plenty of them.

For a refresher on recent changes, don’t forget to register for the April 29th PatentsPostGrant.com webinar entitled: Trends, Changes & Evolving PTAB Practices

April Webinar to Focus on Emerging Trends at The PTAB

It’s been a long time, been a long time,
Been a long lonely, lonely, lonely, lonely, lonely time. Yes it has.

Back from the dead….this month’s edition of the PatentsPostGrant.com free webinar series will be held on Wednesday April 29th @12:30 (est). The April webinar is entitled: Trends, Changes & Evolving PTAB Practices (speakers: Scott McKeown & Greg Gardella). As the title suggests, the webinar will cover important developments, rule changes and trends at the PTAB, as well as anticipated rule changes and legislative initiatives. Register (HERE).

The formal portion of the webinar will begin at 12:30 Eastern and will last for approximately 50-60 minutes. After the presentation there will be a Q&A period. To attend the webinar please sign up via the link above. You will receive a registration confirmation email immediately. One hour prior to the webinar you’ll receive another email with a link and instructions for joining the presentation. VA CLE credit will be provided.

House Judiciary Committee to Hear Testimony from USPTO & Industry Reps

Tomorrow, the House Judiciary Committee will conduct a hearing on the “Innovation Act” (H.R. 9).  Scheduled speakers include USPTO Director Lee, general counsel for BIO, and other in-house counsel. As most know, the Innovation Act is a re-presentation of the “Goodlatte Draft” that shot through the House in the waning days of 2013 only to die a slow death on the Senate side in 2014. Given last month’s introduction of a competing bill on the Senate side, and more bills promised from both houses, tomorrow will kick off a long and painful grind. Passage of anything substantial in 2015 is simply not happening. The last year of the Obama administration in 2016 will almost certainly present further political impediments.   

Of particular note among the in-house counsel is the Senior VP of intellectual property of Salesforce.com. Salesforce.com has had particular success employing the Covered Business Method (CBM) review option of the America Invents Act (AIA).  All too often speakers are drawn from an industry or organization that has completely ignored the AIA, but yet asks for new laws —strange concept.

Judging by the lineup, it is highly likely that the topic of the PTAB’s use of BRI will come up, usefulness of CBM (one would hope), as well as the recent hedge fund abuses. Should make for an interesting hearing.

Petition Dismissal is Appropriate for Improper Use of PTAB Resources
(This post ran yesterday on IPWatchdog.com for those that may have missed it.)

I first discussed the potential abuse of PTAB post-grant patent trial proceedings back in 2013.  Since that time, attempts by profiteers to leverage the PTAB for improper purposes have failed. The most recent incarnation of this strategy is being advanced in the name of Hayman Capital, a hedge fund. As detailed Wednesday by IPWatchdog.com, a recent Wall Street Journal article outlined the true purpose of these filings is to influence stock prices of smaller bio/pharma patent holders to the negative (via PTAB IPR filings) while simultaneously investing in their close competitors. The Journal also explains that members of the fund invest a minimum of $1million each, with Hayman Capital earning a 20% return.  The Journal notes that those behind the filings have also created an organization referred to as the “Coalition for Affordable Drugs,” but strongly implies this entity exists only for optics.

With the negative publicity surrounding these filings, and, if true, their reported abusive purposes, can the PTAB shut them down?
Yes, and I expect that they will.

There are several avenues for the PTAB to deny the petitions without reaching the merits (RPI being one, given the anonymity of fund investors and their reported interest in competitors of targeted patentees), but let’s focus on the easiest way for the agency to halt this reported abuse.

35 U.S.C. § 316(a)(6) mandates the USPTO Director prescribe regulations:

prescribing sanctions for abuse of discovery, abuse of process, or any other improper use of the proceeding, such as to harass or to cause unnecessary delay or an unnecessary increase in the cost of the proceeding;

(emphasis added)

The Director has done exactly that with Rule 42.12:

(a) The Board may impose a sanction against a party for misconduct, including:                                                   .         .         .          .          .
        (7) Any other improper use of the proceeding, including actions that harass or cause unnecessary delay or an unnecessary increase in the cost of the
             proceeding.                  .         .         .          .          .
(b) Sanctions include entry of one or more of the following:
                                                  .         .          .         .          .
        (6) An order providing for compensatory expenses, including attorney fees;
                                                  .          .         .         .          .
        (8) Judgment in the trial or dismissal of the petition.

(emphasis added)

Congress created AIA trial proceeding to combat trolls, not create an altogether new class of them. Since the initial filings of Hayman, the STRONG ACT has been introduced in the Senate and includes a provision that would require standing for IPR petitioners (presumably to thwart such filings). However, companies not only employ IPR as an alternative to ongoing litigation but as a due diligence tool to avoid such situations in the first instance. Innovators looking to develop a new product line, or new area of business should have the freedom to clear the landscape of improvidently granted patents via the PTAB without having to wait for a lawsuit, or threat of one. Such knee-jerk legislative fixes will have unintended, and unfortunate consequences.

Instead, to put a halt to these filings the Board need only issue an Order to Show Cause as to why the petitions should not be dismissed under 42.12 as an improper use of limited agency resources— citing the journal article. The agency is on solid footing in this regard. (Heckler v. Chaney, 470 U.S. at 831 (indicating an agency, when deciding whether to take action in a particular matter, must determine whether its resources are best spent on one matter or another)). 

Given that the Board’s resources are already taxed due to the significant demand of these proceedings for their intended use, shutting off a workflow that Congress clearly did not intend, and that is plainly abusive, is necessary to maintain the integrity of the system. Moreover, if investors are profiting off of the mere filing of a petition (i.e., spooking stock prices upon mere filing, irrespective of the merits) an award of attorneys’ fees may be strong deterrent to copycat filings going forward.

The PTAB was given the power to police such behavior, and it should.