Covered Business Methods

Petitioners seeking to invalidate patents via the new AIA inter partes review (“IPR”) proceedings at the U.S. Patent and Trademark Office (PTO) appear to be increasingly willing to file multiple petitions against the same patent. In several instances, the same petitioner has filed three, four or even five petitions against a single patent. An explanation for this tactic may lie in the Patent Trial and Appeal Board (PTAB) practice of culling the grounds that will be considered when an IPR is initiated by invoking its vertical or horizontal redundancy rules. (For our prior articles on the PTAB redundancy rules, click here and here.) However, this phenomenon may also reflect the formidable “fire-power” that can be mustered by some challengers (often multinational corporations) against patent owners.

For example, in December 2013, Subaru (together with a host of other car manufacturers) filed five IPRs against U.S. Patent No. 6,324,463 (relating to cruise control indicators). In October 2013, Apple filed four IPR petitions against U.S. Patent No. 7,010,536 (relating to multi-user networking systems). Similarly, Microsoft filed four IPR petitions in May 2013 against U.S. Patent No. 6,724,403 (relating to graphical user interfaces). By asserting different grounds in separate petitions, these challengers were apparently trying to minimize the likelihood of dismissal of any of their asserted grounds for invalidity based on redundancy.


Continue Reading If at First You Don’t Succeed: File, File And File Again

Patent owners enforcing their rights who seek to exclude testimony about a pending administrative challenge to the patent-in-suit may face a Hobson’s choice – at least in Nevada. Particularly, the price for excluding evidence of pending administrative challenges to a patent may be a loss of the presumption of the patent’s validity in a district court trial.

In federal courts, judges may preclude evidence from being presented to a jury, particularly where the evidence has the potential to cause unfair prejudice. Such an opportunity is provided by Rule 403 of the Federal Rules of Evidence, which states that a court may exclude relevant evidence if its probative value is substantially outweighed by a danger of unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, and/or needlessly presenting cumulative evidence.

Judges may use Rule 403 in patent infringement cases, particularly in cases where the patent in question is part of a concurrent reexamination proceeding in the Patent Office. In a recent ruling on a motion to preclude evidence concerning a concurrent reexamination of a patent, the District Court of Nevada held, consistent with precedent, that the evidence would be prejudicial, and therefore was inadmissible at trial. Server Technology, Inc. vs. American Power Conversion Corporation (3:06-CV-00698-LRH-VPC (D. Nev.)).

Particularly, District Court Judge Larry Hicks stated that the reexamination of the patent in question was not final, and that a final decision would not occur until long after the trial. Judge Hicks reasoned that the prejudicial effect of notifying the jury about the reexamination proceeding would influence the jury’s determination of the issues of infringement and invalidity. In addition, allowing the evidence would only confuse a jury because both the standard of proof and the applied claim construction by the Patent Office would be different from the standards to be applied at trial. Such differences, in addition to causing jury confusion, would also waste time and resources because it would be necessary to explain the differences to the jury.
Continue Reading What Should A Jury Be Told About A Concurent PTO Trial?

Several recent cases from the Court of Appeals for the Federal Circuit have confirmed that Congress has given the U.S. Patent Office a great deal of discretion in deciding whether or not to initiate a trial when a petition for patent review under the America Invents Act (AIA) is filed by a challenger. In each instance the Federal Circuit noted it was relying upon the clear wording of the statute that established the new procedures for administratively challenging patents. Under 35 U.S.C. §314(d), “The determination by the Director whether to institute an inter partes review (IPR) under this section shall be final and nonappealable.” (The same “nonappealable” language is found in the sections of AIA governing covered business method (CBM) and post grant review (PGR) challenges).

In St. Jude Med. v. Volcano Corp., Fed. Cir., No. 2014-1183, 4/24/14, the Federal Circuit ruled on an appeal filed St. Jude Medical Cardiology Division Inc. after the Patent Trial and Appeal Board (PTAB) denied St Jude’s petition for inter partes review of a patent on systems for cardiovascular imaging owned by Volcano Corp. (U.S. Patent No. 7,134,994). In ruling on the petition the PTAB never reached the merits of St. Jude’s arguments but instead found the petition to be barred under 35 U.S.C. 315(b) because St Jude had not challenged the patent within one year of having been served with complaint (or counterclaim) alleging infringement of the patent. In this case, litigation between the two parties had been going on for numerous years and the counterclaim of patent infringement of the patent had been raised by Volcano years before the enactment of the AIA. Volcano’s counterclaim was later dismissed without prejudice by stipulation of the parties.
Continue Reading PTAB Trial Institution Decisions – Are They Ever Appealable?

Much has occurred during the first year after the America Invents Act (AIA) established several new procedures for the public to challenge issued patents and a new administrative court to hear these cases. Here are some observations on the first year of this evolving practice.

1. Many More IPR Petitions Have Been Filed Than CBM Review Petitions.

Although Congress expected the Covered Business Method (CBM) review process would be widely used by irate businesses tired of dealing with so-called “business method” patents, only 67 CBM petitions were filed during the first year compared to nearly 500 petitions for Inter Partes Review (IPR). Many practitioners thought the more expansive grounds for challenge in CBM review (permitting challenges based on prior public uses and sales as well as prior art publications) would have piqued more interest, especially in tandem with recent Supreme Court decisions roundly criticizing non-technological patent claims. However, IPRs have been more widely invoked, probably reflecting the much larger number of non-business method patents being asserted in litigation.

2. The PTAB is Quite Willing to Initiate IPR Proceedings when a Petition is Filed

Over 86% of the IPR petitions filed in the first year have been granted –at least in part.
Continue Reading Lessons From The First Year Of Post Grant Proceedings In The U.S.

Recently, in Apple. Inc. v. Virnetx, Inc. and Science Application International Corp. (IPR2013-00348), the PTAB found another opportunity to interpret 35 U.S.C. §315(b), a statue of limitations on instituting inter partes review (IPR) proceedings.  Section 315(b) bars the institution of an IPR: if the petition requesting the proceeding is filed more than 1 year after the date on which the petitioner, real party in interest, or privy of the petitioner is served with a complaint alleging the infringement of the patent.

In this case, the petitioner (Apple) was served with a complaint alleging the infringement of U.S. Patent No. 6,502,135 in 2010 as well as in 2012.  The 2010 complaint was served more than one year from the date at which the IPR request was filed while the 2012 complaint was served less than one year from that date.  In its Decision on Institution, The PTAB ruled that the petitioner’s request to institute a trial was time barred because the 2010 complaint was served more than one year before the petitioner filed its request.

In a Request for Rehearing, the petitioner argued that its petition was timely because Section 315(b) should be read as allowing the institution of an IPR if it were filed less than one year after the date on which “any complaint” was served.  In other words, the petitioner had argued that “[t]he August 2010 complaint does not foreclose the present petition, “as the Patent Owner served a new complaint on Petitioner asserting infringement of the ‘135 patent in December of 2012.”  In its Decision on Institution, the Board had rejected this argument and had held that “under the plain meaning of  ‘a complaint’ under 315(b), the 2010 complaint qualifies as ‘a complaint’ that time bars the Petition.” 
Continue Reading The PTAB Rules That Time Bar of Section 315(B) Applies Even To Complaints Served Prior To Enactment of AIA

As we had reported earlier, a patent owner has a heavy burden in amending claims in an inter partes review (IPR) proceeding.  The recent case of Nichia Corp. v. Emcore Corp. (IPR2012-00005) provides an example of obstacles that a patent owner may face when attempting to amend the challenged claims.  In this case, the patent owner (Emcore) filed a motion with the PTAB to request leave to cancel certain challenged claims and replace them with new claims.  The PTAB denied Emcore’s motion to amend.
Continue Reading The PTAB’s Denial of Patent Owner’s Motion to Amend Underscores the Obstacles that Patent Owners Face In Amending Challenged Claims

Last week we reported on a case (Blackberry v. MobileMedia Ideas) in which a PTAB panel refused to terminate an inter partes review proceeding with respect to the patent owner despite a settlement reached by the parties.  This was not the first instance of the PTAB deciding to continue a review on its own.  Back in November 2013, another PTAB panel had reached a similar decision in a covered business method (CBM) patent review proceeding despite a similar settlement and a joint petition to terminate.  The PTAB decision on the merits of the CBM case was handed down on January 30, 2014, finding all four contested claims patent ineligible and invalid – despite a federal district court’s judgment in favor of patent owner on these same issues and the expiration of the patent in the interim.
Continue Reading PTAB Strikes Down Patent Claims — Despite Settlement and Request from Parties to Terminate Proceeding

James Donald Smith, the Chief Administrative Patent Judge of the Patent Trial and Appeal Board (PTAB) was the keynote speaker at the Boston Patent Law Association (BPLA) Annual Meeting on December 11, 2013 and gave a comprehensive, albeit somewhat tongue-in-check, report on the state of the PTAB.

Judge Smith remarked that early in his career as an IP attorney he worked for Nokia and that his employment often took him to Nokia’s headquarters in Finland.  He claimed to have met Mr. and Mrs. Claus and to have spent many hours with the Clauses at their summer home and reindeer reserve in Lapland.

Santa apparently gave Judge Smith advice that he has followed in overseeing the PTAB, the new appellate body established by the America Invents Act to hear challenges to issued patents as well as patent application appeals.
Continue Reading PTAB Chief Judge Smith Shares Santa’s Secrets with Boston Patent Attorneys

As we’ve previously discussed, the inter partes review (IPR) and post grant review (PGR) procedures in the USPTO allow for parties to take discovery.  Specifically, Rule 42.51 enumerates the permitted categories of discovery, including: (a) mandatory initial disclosures, (b) routine discovery and (c) additional discovery.  Of particular interest is a subcategory of routine discovery that requires a party to serve relevant information that is inconsistent with a position advanced by the party.

Rule 42.51(b)(1)(iii) requires that “[u]nless previously served, a party must serve relevant information that is inconsistent with a position advanced during the proceeding concurrent with the filing or documents or things that contains the inconsistency.  This requirement does not make discoverable anything otherwise protected by legally recognized privileged such as attorney-client or attorney work product.  This requirement extends to inventors, corporate officers and persons involved in the preparation or filing of the documents and things.”
Continue Reading What Is Inconsistent Information and When Must Such Information be Disclosed?

The addition of discovery to review proceedings before the Patent Trial and Appeal Board (PTAB), such as inter partes review, and post-grant review, have opened up the doors to new kind of challenges before the PTO.  However, attempting to receive additional discovery beyond that required by the rules in proceedings before the PTAB is not as easy as in District Court litigation.  In post-grant and inter partes proceedings, 37 C.F.R. §42.51(b)(2) provides the rules for additional discovery: parties are given the option to agree to additional discovery between themselves, and if they are unable to do so, the moving party must present a reasoning to the PTAB as to why the additional discovery is necessary “in the interests of justice.”  In post-grant reviews, the moving party is restricted even more because it must show that the additional evidence is directly related to factual assertions advanced by either party in the proceeding (See 37 C.F.R. §42.224).
Continue Reading No Fishing Allowed – Limits on Discovery Before the PTAB