Upcoming Post-Grant CLE

The PatentsPostGrant.com free monthly webinar series will resume in March. For more comprehensive CLE programs, there are a number of marquee programs on the immediate horizon.

First up is this week’s Utah IP Summit  (Friday, February 27th), topics include Surviving PTAB Review & Insulating Your Patent Portfolio. 

Next, is the The 10th Annual Advanced Patent Law Institute at the U.S. Patent and Trademark Office’s main campus in Alexandria Virginia, March 12-13th. This program provides a comprehensive view of USPTO practice, including application prosecution issues. Multiple segments are specifically directed to PTAB practice, including Lessons learned:Tips and Strategies for Practicing Before the PTAB. Other segments include the participation of several current PTAB judges.
Register (here) 

Last, but certainly not least, is the most widely attended post-grant program of the year, Practicing Law Institute’s USPTO Post-Grant Patent Trials 2015. I am happy to return as chair of this program along with Rob Greene Sterne of Stern Kessler Goldstein & Fox. These programs are always the highlights of the CLE year.  (Register here)
Mar. 26, 2015 New York, NY
Apr. 17, 2015 San Francisco, CA (webcast available)

Hope to see you at one of these upcoming programs. 

Agency Discretion Dictated by Petitioner Joinder Rationale

As discussed previously, in Target Corp. v. Destination Maternity Corp (IPR2014-00508) a divided PTAB panel permitted issue joinder. While the dissent argued that acceptance of issue joinder might permit a proverbial “second bite at the apple,” the majority countered that such gamesmanshp could be thwarted by judicious use of agency discretion.

As I have pointed out, petitioner’s sometimes exclude claims from an IPR petition that are not asserted against them in an ongoing litigation. For example, a complaint is filed alleging infringement of claims 1-10, but not claims 11-15. After the 12 month IPR window has passed, and the IPR for claims 1-10 is timely filed, the patentee may then amend their complaint to add claims 11-15. In this way. when the motion to stay pending IPR is argued, the patentee emphasizes that claims 11-15 are not part of the IPR. That is, there is no reason to “stay” as trial will be necessary for claims 11-15 regardless of the IPR outcome. In such a case, issue joinder would seem warranted— as opposed to a case in which the petitioner fails as to claims 11-15, but files a second petition as a “do-over.”

It seems the PTAB agrees, as demonstrated recently in Amneal Pharmaceuticals LLC. v. Endo Pharmaceuticals Inc. (IPR2014-01365, Paper 13, February 4, 2015).

While Amneal was decided prior to the most recent Target decision, it nevertheless provides insight to the PTAB’s application of discretion (at least as to those panels aligned with the majority in Target).  In deciding to allow issue joinder for some claims of a second petition, but not all, the panel explained:

[W]hen a § 315(b) bar would apply absent joinder, we hesitate to allow a petitioner a second bite one month after institution in a first case, at the expense of scheduling constraints for everyone, as well as additional costs (and potential prejudice) to Patent Owner, absent a good reason for doing so.
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Based on the contentions of both parties here, and considering the particular facts of this case, we are not persuaded that Petitioner has shown that joinder is justified in relation to the ground challenging claims 5, 16, and 46. Petitioner has not articulated persuasive reasoning as to why this panel and Patent Owner should take the time and resources to address claims not at issue in a related district court case, when Petitioner could have challenged those claims, and provided analysis, in its original Petition or another petition filed before the relevant § 315(b) bar date. 

Challenges to claims 44 and 47, however, stand on different footing. In its Joinder Motion, Petitioner points out that Patent Owner asserted infringement of claims 44 and 47 of the ‘216 patent for the first time against Petitioner in a related district court case, Endo Pharms. Inc. v. Amneal Pharms., C.A. No. 12-CIV-8115 (S.D.N.Y.), on February 5, 2014. Joinder Motion 4, 7. Thus, Patent Owner asserted these two claims in a district court case after Petitioner filed its Petition in IPR2014-00360 on January 16, 2014, and after the § 315(b) bar date passed for Petitioner on January 17, 2014. Patent Owner concedes these facts . . .Because Patent Owner asserted claims 44 and 47 for the first time after Petitioner filed its first Petition, and after the § 315(b) bar date passed, we are persuaded that Petitioner has shown that joinder is justified in relation to the ground in the current Petition challenging claims 44 and 47

Going forward, at least for panels aligned with the majority in Target, petitioners will need to justify issue joinder in relation to what might have been done in a first filing. This practice will ensure that the agency’s discretion is not encouraging gamesmanship on either petitioner (i.e., “do-over”) or patentee (i.e., amended complaint) sides.  

Issue Joinder within Statute, Matter of Agency Discretion 

At the outset of this year, I explained how Target Corp. v. Destination Maternity Corp (IPR2014-00508) was one of five Patent Trial & Appeal Board (PTAB) decisions that changed post-grant trial practice in 2014. Target was notable because it was a significant departure from previous PTAB practice. That is, up until Target, a same petitioner was able to join a first-filed petition with a later filed, second petition (i.e., “issue joinder). The Target decision found issue joinder outside of the statutory authority granted by 35 U.S.C. § 315(c). cf. 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 necessitated by the patentee’s failure to provide requested materials in litigation discovery). Since joinder is a codified exception to the 12-month window, absent issue joinder, the claim could not be attacked with a second “stand-alone” petition. The Target majority denied issue joinder back on the basis that § 315(c) is directed solely to joinder of parties. 

A Request for Rehearing was filed in November of 2014 challenging the Target Decision. Today, the PTAB issued a second expanded panel decision reversing the 2014 decision.

In a 4-3 Decision on Rehearing (here), the majority explains that, relative to the language of 315(c) :

If the legislature meant to exclude joining the same petitioner to an instituted inter partes review, it is unclear why it used the word “any” in the statute, such that “any person” who properly files a petition may be joined. Congress could have specified “any non-party” instead of “any person.” An interpretation that requires us to read “any party” as excluding a same petitioner, in essence, reads the word “any” out of the statute and ignores the statutory language of § 311(a).

The majority goes on to disagree that the statute is “unambiguous” (as argued by the dissent), arguing there is at least some ambiguity that justifies review of the legislative history. 

It is significant that a primary purpose of the AIA was to “limit unnecessary and counterproductive litigation costs.”    .     .     .The rules “shall be construed so as to ensure the just, speedy, and inexpensive resolution of every proceeding.” See also Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756, 48,758 (Aug. 14, 2012) (stating the same). Thus, even if some claims of the ’563 patent were to be found unpatentable in IPR2013-00531, by removing the discretion to join claim 21, as well as the new challenges presented in the instant proceeding, the case would necessarily have to go back to the district court for a separate determination as to those claims and challenges not at issue in IPR2013-00531. That could result in a waste of judicial resources, increase the litigation costs to both parties, and be contrary to the purpose of ensuring a “just, speedy, and inexpensive resolution.”

 On the dissent side, the statute is found to be unambiguous.

The majority reads § 315(c) as if it grants discretion for the Board to act in any way not expressly prohibited by the statute. By contrast, we interpret § 315(c) to grant discretion for the Board to act only in ways that are stated expressly in the statute.      .       .        . The statute does not refer to the joining of a petition or new patentability challenges presented therein. Rather, it refers to the joining of a petitioner (i.e., “any person who properly files a petition”). Further, it refers to the joining of that petitioner “as a party to [the instituted] inter partes review.” Because Target is already a party to the proceeding in IPR2013-00531, Target cannot be joined to IPR2013-00531.

Both sides of the statutory construction debate are well developed and articulated. Setting aside that legal debate, from where I sit, the ultimate outcome is most aligned with the needs of the public and the goals of the AIA statutes. 

(climbing on my soap box)

The reason for excluding claims from an IPR petition is often the result of patentee gamesmanship, more often than not non-practicing entities (NPEs). For example, a complaint is filed alleging infringement of claims 1-10. After the 12 month IPR window has passed, and the IPR for claims 1-10 timely filed, the NPE files an amended complaint adding claims 11-12. When the motion to stay pending IPR is argued, the patentee emphasizes that claims 11-12 are not part of the IPR. In other words, there is no reason to “stay” as trial will be necessary for claims 11-12 regardless of the IPR outcome. Congress certainly would not draft a statute with the intention of facilitating this kind of chicanery. Issue joinder is a strong control against the proliferation of this kind of abusive behavior.

As the majority points out, in more questionable cases of joinder, agency discretion can protect patentees from harassment on an as-needed basis. 

I am heartened to see the PTAB give the debate the proper treatment it deserved. Should Congress disagree with this construction of their statute, with patent reform front and center this spring, we will know soon enough.   

Hearing to Assess Developments in Supreme Court Case Law

On the heels of last week’s re-introduction of the Goodlatte bill (now, recast as H.R. 9) At 1PM today, the House Judiciary Committee will hold a hearing, entitled Examining Recent Supreme Court Cases in the Patent Arena. A list of speakers is provided below along with a copy of their prepared testimony.

Witnesses

Mr. Herbert C. Wamsley
Executive Director
Intellectual Property Owners Association
Wamsley Testimony

Mr. Krish Gupta
Senior Vice President & Deputy General Counsel
EMC Corporation
Gupta Testimony

Mr. Andrew J. Pincus
Partner
Mayer Brown LLP
Pincus Testimony

Mr. Robert P. Taylor
Counsel
National Venture Capital Association
Taylor Testimony

Court Sheds Light on “Reasonably Could Have Raised” IPR Estoppel

The petitioner estoppel provision of Inter Partes Review (IPR), 35 U.S.C. § 315(e)(2), precludes a petitioner from asserting invalidity in a subsequent litigation or ITC action “on any ground that the petitioner raised or reasonably could have raised during that inter partes review.” Frequently, petitioners struggle with the metes and bounds of the language “reasonably could have raised.” Does it encompass only patents and printed publication that could have been uncovered in a reasonably diligent search, as suggested by some? What about the use of product manuals — does use of a printed manual foreclose later use of the underlying product in litigation?

While we await case law clarification on the former query, the latter was recently addressed in Star EnviroTech, Inc. v. Redline Detection, LLC et. al., 8-12-cv-01861 (CACD January 29, 2015, Order) 
In Star, defendant Redline sought IPR of two claims of U.S. patent 6,526,808 relating to leak detection in fluid systems. Although IPR was instituted by the USPTO Patent Trial & Appeal Board (PTAB), the proposed grounds of unpatentability were ultimately denied in a final written decision, and §315 (e)(2) estoppel attached to the petitioner, Redline.

Subsequently, Star argued that Redline should be estopped in the litigation from raising invalidity as to a certain physical system. Star noted that while the physical system could not be considered in IPR, the product manual could have been. And, that Star possessed the product manual at the time of IPR, and, thus,  “could have raised” it. 

The court rejected this argument distinguishing the manual from the product in terms of disclosure quality, explaining (Order here):

[T]he physical machine itself discloses features claimed in the ‘808 Patent that are not included in the instruction manual, and it is therefore a superior and separate reference. For example, claim nine of the ‘808 Patent requires “locating a heating element within a closed smoke producing chamber.” . . . .It is undisputed that the LeakMaster’s instruction manual does not describe the LeakMaster’s closed smoke producing chamber. However, the Leakmaster itself, if dissembled, could shed light on whether it practices this claim limitation.

Based upon this reasoning, it would seem that the breadth of estoppel for product manuals may depend on the technology. That is to say, physical products may not be explained in enough detail in their accompanying manuals to satisfy certain structural, claim details. See Also ACCO Brands, Inc. v. PC Guardian Anti-Theft Products, Inc.3-04-cv-03526 (N.D. Cal., December 4, 2008) On the other hand, software manuals are very likely to explain detailed functionality found in computer-implemented patent claims.

IPR Petitioners targeting computer-implemented functionality should be prepared to use available prior art manuals, or face the prospect of losing both the manual and associated software product to IPR estoppel.

This case was brought to my attention by the great Docket Navigator.

House Bill Re-ignites Patent Reform Debate 

As expected, House Judiciary Committee Chair Bob Goodlatte (R-VA) today introduced a revised version of his 2013 bill (H.R. 3309), as H.R. 9 (here). Aside from cosmetic changes, the new bill makes few substantive changes to the content of H.R. 3309. As a reminder, H.R. 3309 was quickly passed by the House at the close of 2013 only to be stalled on the Senate side at the approach to mid-term election season in 2014. 

The House appears to be set to act quickly, yet again, with a judiciary hearing scheduled for 1PM next Thursday, February 12, entitled “Examining Recent Supreme Court Cases in the Patent Arena.”

Here we go again.

CAFC Decides First IPR Trial Appeal

Today, in In Re Cuozzo Speed Technologies, LLC, the Court of Appeals for the Federal Circuit (CAFC) decided that the broadest reasonable interpretation (BRI) construct was appropriate for interpreting patent claims in AIA trial proceedings. (here)

As previously discussed, oral argument in Cuozzo was held back on November 3, 2014. The notable issues in dispute included: (1) whether the Patent Trial & Appeal Board (PTAB) was free to depart from the district court style claim construction standard enunciated in Phillips v. AWH (CAFC 2005) in favor of BRI as applied by the USPTO in all agency proceedings; and (2) whether trial institution decisions become appeallable once a final written decision is issued. (Note: Interlocutory appeal of such decisions had already been foreclosed by the CAFC).

In a 2-1 decision, the majority held that Congress passed legislation fully aware of BRI practices at the PTAB, especially as it related to patent reexamination. And, in any event, the USPTO was given rule making authority by statute for implementing specifics of AIA trial proceedings. Further, the majority found the ability to amend, long the justification for applying BRI, is available during AIA trials.

On the question of institution decision review, the Court found that a complete bar to appeal was intended by the language of  35 U.S.C. § 314(d), which states institution decision are final and non-appealable.

Judge Newman authored the dissent as to both issues.

Judge Newman, long a vocal opponent of inconsistent results between the USPTO and courts took issue with the ability to amend as illusory, and in any event, not the same opportunity as compared to the “give and take” of examination practices. She also cited the statute’s recitation of  “invalidity” as opposed to patentabiliity, and, more aggressively, concluded that the intent of Congress cannot be served by a BRI standard.

Although the PTAB is authorized to apply trial and evidentiary procedures, my colleagues hold that the PTAB need not apply the same rules of law and evidence as in the district courts. It is critical to the success of Inter Partes Review that it serve its purpose as a district court surrogate, yet it is not disputed that the “broadest reasonable interpretation” of claims and technology can differ from the ultimately correct decision on the standards of Phillips v. AWH Corp., 45 F.3d 1303 (Fed. Cir. 2005) (en banc). This built-in discrepancy defeats the legislative purpose of substituting administrative adjudication for district court adjudication, for a PTAB decision based on this artificial “broadest” standard cannot substitute for litigation directed to the correct result.    
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Adoption of a broadest interpretation renders the PTAB rulings legally unreliable, leaving the parties to district court proceedings, whatever the decision of the PTAB. That was not the legislative plan.

While the dissent is correct that the PTAB cannot be a true, “surrogate” using different standards, I don’t agree that was the intention of the AIA statutes. That is, the reason patent challengers went to the USPTO for patent reexamination was to avail themselves of more favorable standards (i.e., evidentiary, claim construction, lack of presumption of validity). Congress looked at reexamination as a base model for IPR, saw favorable results for challengers, but concluded it needed to be faster. There was never any consideration of making it harder. Indeed, the AIA was drafted against the backdrop of the dreaded “patent troll” crisis.  

As to the diseent’s reference to parties needing to resort to district court proceedings no matter what the PTAB decision, I’m not sure I follow. The patentee’s claims in this case are now cancelled, there is no ability to go to court—this is the true intention of IPR. Likewise, successful patentees would still need to go to court as infringment issues are not considered at the PTAB.

On the issue of reviewing institution decisions once a final written decision issues, the dissent argues 314(d) to provide only an interlocutory bar.

The ultimate authority regarding what a statute says and how it applies is the judiciary. The purpose of the “nonappealable” provision apparently is to bar interlocutory proceedings and harassing filings by those seeking to immobilize the patent or exhaust the patentee. The bar of interlocutory appeals is routine. However, sensitive scrutiny is required, not blanket enlargement for all circumstances.

With patent reform back on tap for Congress this spring, presumably any needed change to this decision can be efficiently legislated away in the short term. Yet, in my opinion, this decision needs to be maintained, as-is, to achieve the goal of Congress.  IPR was designed, in large part, to provide relief from the costs of defending frivolous patent litigation, not to simply provide another forum for it. In this regard, Congress has hit it out of the park with the AIA.

PTAB Bi-monthly Webinar Series Starts Today

As a reminder, the PTAB’s “Boardside Chat” Webinar series kicks off today with an overview of PTAB statistics and key decisions.

The Instructions for today’s webinar are provided below.

Webcast Instructions for Tuesday, February 3:

Event address for attendees: https://uspto-events2.webex.com/uspto-events2/onstage/g.php?MTID=e26061533ffc851f338af0ad718660c3f
Event number: 313 818 218
Event password: 123456
Dial In: 1-571-270-7000
Captions Link:http://www.captionedtext.com/client/embed.aspx?EventID=2532507

Bi-monthly Program Will Address AIA Trials & Ex Parte Appeals

Starting next week, February 3rd, the USPTO’s Patent Trial & Appeal Board (PTAB) will host its inaugural “Boardside Chat” lunch webinar. The purpose of the chats is to update the public on current Board activities and statistics as well as to regularly gather feedback. The schedule of topics through October is listed below.

Date

 Time

 Topic

 Speakers
Tuesday, February 3

 Noon to 1 pm Eastern Time

 PTAB Statistics and Key Decisions

Chief Judge James Donald Smith
Tuesday, April 7

 Do’s and Don’ts for Ex Parte Appeals

 Panel of Administrative Patent Judges
Tuesday, June 2

 Discovery in AIA Trials

 Panel of Practitioners and Administrative Patent Judges
Tuesday, August 4

 AIA Rulemaking and Guidance Changes

 Lead Judge Susan Mitchell
Tuesday, October 6

 Best Practices before the PTAB

 Panel of Administrative Patent Judges

Note the February, June and August topics are dedicated to trial practice, the April program to ex parte appeals. As discussed previously, some notice and comment rule making on AIA trial procedures is expected in the spring, hence the August topic. The “quick-fix” changes expected this month appear to be delayed a few weeks due to typical complications pertaining to the Federal Register publishing.

The Boardside Chat series will be a valued source of information for both the PTAB and interested public and should not be missed. The Instructions for next week’s webinar are provided below.

Webcast Instructions for Tuesday, February 3:

Event address for attendees: https://uspto-events2.webex.com/uspto-events2/onstage/g.php?MTID=e26061533ffc851f338af0ad718660c3f
Event number: 313 818 218
Event password: 123456
Dial In: 1-571-270-7000
Captions Link: http://www.captionedtext.com/client/embed.aspx?EventID=2532507

Proponents of Further Reform Beginning to Scramble 

This time last year, further patent reform efforts had steamrolled their way through the House. While the House passed the Goodlatte Bill with surprising urgency, efforts on the Senate side became hopelessly deadlocked last spring on a variety of contentious issues. Since that time, a significant amount of change has come to the world of patent law thanks to a number of significant Supreme Court rulings. At the same time, the administrative patentability trials of the 2011 America Invents Act (AIA) continue to wreak havoc on the business model of patent assertion entities. 

So, it is no surprise that further patent reform has lost some of its 2013 mojo on Capitol Hill.

During last week’s State of the Union proponents of further patent reform bemoaned the failure of the president to mention it as an agenda item, as he had done on two previous occasions. At roughly the same time, Director of the USPTO Michelle Lee was fielding questions from the Senate (at her confirmation hearing) on whether or not the patentability trials of the AIA were unfair to patentees, and whether or not further reform was needed at all. Shortly thereafter a number of anti-patent “coalitions” began churning out press releases about the need for further reform, and pointing to the past Congressional momentum. Problem is, many of these lobbyists are still living in 2013.

While there has been much hype on demand letter practices used to shake down retailers and small businesses, this practice is limited to a very small group of bad actors. Should there be a law to prevent such idiocy?  Yes, of course. But, the push to further constrain all patent rights in light of this isolated abuse is unwarranted. Surely, there is always additional fine tuning to be done. Yet, the body language coming from lawmakers is that any further bill will be much more focused, and targeted on bad actors. A recalibration away from the systemic changes of the Goodlatte bill sounds about right to me.