The U.S. Supreme Court’s decision this week in SAS Institute v. Iancu has upended a major provision of the U.S. Patent and Trademark Office (PTO) regulations for inter partes and post grant review proceedings conducted by its Patent Trial and Appeal Board (PTAB).  By concluding in a 5-4 decision that the agency lacks the authority

The Patent Trial and Appeal Board (PTAB) has not taken kindly to a move by the Irish drug company Allergan to shield its key patents on its dry-eye drug Restasis from challenge at the U.S. Patent Office by assigning these patents to the Saint Regis Mohawk Tribe in return for a commitment by the tribe,

Under 35 U.S.C. 315(e)(1), a petitioner in an inter partes review of a claim in a patent that has resulted in a final written decision by the Board may not request or maintain a proceeding before the Patent Office with respect to that claim on any ground that the petitioner raised or reasonably could have

The USPTO has gone ahead and finalized new rules for post-grant proceedings under the America Invents Act (AIA) – despite heavy criticism that the rules do little to alter the lopsided nature of these proceedings. The new rules were published at 81 FR 18750 on April 1, 2016 and go into effect on May 2, 2016.

Technically this “final rulemaking” amends various portions of 37 C.F.R. 42, the rules that govern post-grant proceedings under the AIA, including inter partes review (IPR), covered business method review (CBM), and post-grant review (PGR).

Perhaps the most significant change is that under the new rules the patent owner will be able to submit testimonial evidence, such as an expert declaration, as part of a patent owner’s preliminary response to a patent challenge before the Patent Trial and Appeal Board (PTAB) decides to institute an IPR, CBM, or PGR trial. (Under the existing rules, the Patent Owner usually cannot present testimonial evidence until after the institution decision and the PTAB makes its decision to institute trial after hearing only one side of the story, e.g., from the petitioner’s expert.)

However, 37 CFR 42.108(c) has been revised such that if the patent owner presents testimonial evidence as part of a preliminary response, any “genuine issue of material fact created by such testimonial evidence will be viewed in the light most favorable to the petitioner solely for purposes of deciding whether to institute an inter partes review.” An analogous new rule in 37 CFR 42.208(c) for a post grant review has also been finalized. Under the new rules petitioners may also seek leave to file a reply to any preliminary response filed by the patent owner.

These changes beg the questions: what do the patent owners have left to say after institution if their experts’ opinions have already been considered and found unpersuasive, and will the PTAB judges ever change their minds during trials when the petitioner’s evidence is not viewed in its most favorable light?
Continue Reading New Final Rules for Post-Grant Proceedings Published by USPTO on April Fools Day

It’s time for an update on Kyle Bass’s efforts to rid America of the pharmaceutical patents that support high priced drugs.  Between February and September 2015, at least eleven investment funds organized by J. Kyle Bass and Erich Spangenberg (the Coalitions for Affordable Drugs Series I – XI) filed nearly three dozen different petitions for review of patents held by various drug companies.  The petitions were designed to take advantage of the new inter partes review (IPR) proceedings established under the America Invents Act (AIA) in 2012.

Speculation has been rampant as to how Bass’s investors will benefit.   Most people think that the funds have been shorting (or will short) the shares of the publicly traded pharmaceutical companies that own the patents; wait for the stock values to tumble and then cover their short positions by buying the stocks at a hefty discount caused by their patent challenges.  Others suggest that the funds will invest in generic drug manufacturers that will be able to compete once the drug patents are eliminated.

In the fall of 2015, Bass and Spangenberg appear to have switched gears and began filing petitions in their own names rather than in the names of the various Coalitions for Affordable Drugs (CAD) funds.  Whether this represents an actual change in the funding of the IPR challenges or just a legal nicety (i.e. a conclusion that the underlying CADs need not be named under USPTO rules) is not clear.

The hopes of the pharmaceutical industry that these petitions would be quickly dismissed out of hand have been dashed by the Patent Office.  Despite initial setbacks for the CADs early last year, over half of the petitions (18 out of 33) have now been found to present a reasonable likelihood of success.  In each of these instances, a trial is underway to determine whether the patent is invalid.  Given the high statistical likelihood (over ninety percent) that patents challenged under the AIA are ultimately found at least partially invalid once a trial is completed, the pharmaceutical companies have reason to be worried.
Continue Reading Bass Continues Fishing; Pharma Seeks Sanctuary

According to 35 U.S.C. §315(a), an inter partes review may not be instituted if, before the date on which the petition for such a review is filed, the petitioner or real party in interest filed a civil action challenging the validity of a claim of the patent.  In a recent decision, the Patent Trial and Appeal Board dealt with the issue of whether a petition would be barred under Section 315(a) when the petitioner previously had raised an affirmative invalidity defense as part of a motion to intervene as a defendant in a federal patent infringement suit.  The Board decided that the petition was not barred by Section 315(a) and instituted a trial on the merits.  (IPR2015-01872, Paper 10, March 14, 2016.)

Ericsson Inc. (the Petitioner) filed a petition to institute an inter partes review of claims 1-25 of U.S. Patent No. 7,385,994 of Intellectual Ventures II LLC (the Patent Owner).  In a preliminary response, the Patent Owner argued that the Petition was time barred under Section 315(a) because prior to the IPR Petition Ericsson had filed a motion to intervene as a defendant in a patent infringement litigation, initiated by the Patent Owner against AT&T and Cingular Wireless, along with an Answer in Intervention, in which the Petitioner had raised an affirmative defense of invalidity of the ‘994 patent.  The Patent Owner characterized the intervention initiated by the Petitioner as “initiating a new dispute,” when none existed beforehand.

The Board disagreed with the Patent Owner and relied on the reasoning put forth in Ariosa Diagnostics v. Isis Innovation Limited (IPR2012-00022) to hold that Ericsson’s answer did not constitute a civil action challenging the validity of a claim of a patent.
Continue Reading Affirmative Defense of Invalidity As Part of a Motion to Intervene Does Not Bar Filing of a Subsequent IPR Petition

In a rare case of disagreeing with the Patent Trial and Appeal Board (PTAB), the Court of Appeals for the Federal Circuit (CAFC) vacated and remanded a PTAB decision invalidating claims 10-25 of PPC Broadband, Inc.’s U.S. Patent No. 8,323,060, which were challenged in an inter partes review (IPR) proceeding by Corning Optical Communications RF, LLC. (IPR2013-00342).

The challenged claims of PPC’s patent relate to a coaxial cable connector and require that the cable connector include “a continuity member having a nut contact portion positioned to electrically contact the nut and positioned to reside around an external portion of the connector body when the connector is assembled …” The Board held that the broadest reasonable construction of “reside around” was “in the immediate vicinity of; near.” Based on this construction, the Board concluded that the claims were obvious in view of the references cited by the petitioner, Corning, against the claims.

The Board reached this construction by relying on the broadest dictionary definition of the term “around.” In contrast, PPC (the patent owner) had proposed that the broadest reasonable construction of the term “reside around” in light of the claims and the specification is “encircle or surround.”

The CAFC sided with the patent owner and held that in the context of the patent the Board’s construction was not reasonable. The CAFC explained that “[t]he fact that ‘around’ has multiple dictionary meanings does not mean that all of these meanings are reasonable interpretations in light of the specification.” The CAFC further stated that all of the claims of the patent are directed to coaxial cable connectors and the components of these connectors partially or wholly encircle the inner electrical conductor. The CAFC emphasized that “[g]iven the context of this technology, it seems odd to construe the term ‘reside around’ without recognizing the context of its use in terms of the coaxial cable at issue.”
Continue Reading CAFC Vacates a PTAB Decision Due To Faulty Claim Construction

The Court of Appeals for the Federal Circuit decided an appeal earlier this month in a long-running battle between footwear manufacturers Nike and Adidas that gives Patent Owner Nike a partial (and perhaps fleeting) victory. The Federal Circuit affirmed the Patent Office decision in-part, vacated-in-part and remanded the case for further proceedings.

On November 28, 2012, Adidas AG petitioned the Patent Trial and Appeal Board (the “Board”) to institute an Inter Partes Review (“IPR”) to invalidate all of the claims of Nike’s 7,347,011 patent. (IPR2013-00067). After a trial was instituted, Nike did not file a Patent Owner Response but instead filed a Motion to Amend, requesting the Board cancel claims 1-46 and add new substitute claims 47-50. The Board granted the motion to cancel all of the original patent claims but denied the motion as to the proposed new claims 47-50, stating that Nike provided only a conclusory statement that the proposed claims were patentable which failed to persuade the Board to grant the motion. In the alternative, the Board also stated that Nike failed to prove patentability of the substitute claims over the prior art references identified by Petitioner Adidas. Nike appealed the decision. Nike, Inc. v. Adidas AG, No. 2014-1719, 2016 BL 38897 (Fed. Cir. Feb. 11, 2016).

Under § 316(e), the Petitioner carries the burden of proving that the patented claims under attack in an IPR proceeding are unpatentable. Nike argued that this burden also applies to new substitute claims submitted by the patent owner in a Motion to Amend. In other words, Nike argued that it does not carry the burden of proving that its new substitute claims were patentable. However, the Federal Circuit did not agree and concluded that section 316(e) does not keep the burden of proving unpatentability with the Petitioner for new substitute claims. Id. at 4. Accordingly, Nike carries the affirmative duty to justify why the newly drafted claims, which had never been evaluated by the USPTO, should be entered. Id. at 5.

However, the Federal Circuit concluded that at least one of reasons advanced by the Board for denying the Motion to Amend as to Nike’s substitute claims was improper. The court concluded that the statement used by Nike, that the proposed substitute claims were patentable over the prior art of record and over the prior art not of record but known to the patent owner, was adequate to address “known prior art” not of record in the proceeding absent an allegation of conduct violating the duty of candor. Id. at 21.
Continue Reading Battle Between Sneaker Makers Nike and Adidas Will Go Another Round

Earlier this month, the Patent Trial and Appeal Board (PTAB) added two decisions to its list of “precedential” opinions for the USPTO’s new proceedings for challenging patents under the America Invents Act. The list (which now consists of three decisions out of the over 1000 opinions that have been rendered) is intended to bring to public’s attention cases that the PTAB has concluded settle aspects of the evolving law governing inter partes review (IPR), covered business method (CBM) review, supplemental examination and post grant review (PRG) proceedings.

With over 200 administrative patent judges and over 2000 pending proceedings being handled by a myriad of different panels of judges, precedential decisions are intended to resolve conflicts. However, the process for designating an opinion as “precedential” is quite cumbersome. The process starts by nomination of an opinion by a PTAB judge (or a member of the public within 60 days of the rendering of the opinion). The Chief Judge of the PTAB then circulates the opinion to all members of the PTAB with an invitation to comment (typically within 10 days) and then vote on whether the opinion should be designated as precedential. If a majority of the PTAB judges agrees, the Chief Judge notifies the Director of the Patent Office, who can concur or reject the recommended designation. If the Director concurs, then the opinion labeled as precedential and publishes as such on the USPTO website (http://www.uspto.gov/patents-application-process/appealing-patent-decisions/decisions-and-opinions/precedential).

In the first new precedential opinion, LG Electronics, Inc. v. Mondis Tech Ltd., IPR2015-00937, Paper 8 (PTAB Sept. 17, 2015), the PTAB found LG’s petition for inter partes review was barred by 35 U.S.C. § 315(b), even though LG had filed its petition within one year of being served with an infringement complaint in 2014. The opinion concluded that the one-year bar of section 315(b) applies because petitioner had also been served with an earlier infringement complaint in 2008 on the same patent. There’s a certain irony in this decision because IPR proceedings did not come into existence until 2012 – so LG could never have petitioned for IPR the first time around. The effect of this decision apparently is that anyone sued more than a year before the AIA proceedings became available is effectively barred from petitioning for inter partes (or CBM) review.

The LG opinion notes but does not necessarily endorse an earlier PTAB decision (Oracle Corp. v. Click-to-Call Techs., LP, Case IPR2013-00312, Paper 40 (PTAB Dec. 18, 2013) ) in which a panel held that the 315(b) bar is not triggered by an earlier complaint – more than one-year before the petition – if the action is dismissed without prejudice. The panel in the LG case distinguished the Oracle decision because in the present case the dismissal of Mondis’s 2008 complaint was dismissed partial with prejudice and partially without prejudice.

In the second decision designated as precedential on January 12, 2016, Westlake Services, LLC v. Credit Acceptance Corp., (CBM2014-00176, Paper 28 (PTAB May 14, 2015) the Board interpreted the estoppel provision of 35 U.S.C. § 325(e)(1), ruling that the estoppel that prevents a petitioner from bringing a second CBM or PGR proceeding following “a final written decision” in the statute refers only to a decision on the specific claims on which the proceeding was instituted. Westlake was thus not estopped from bringing a second petition and challenging different claims.
Continue Reading Patent Trial and Appeal Board Adds Two More Cases to its List of Precedential and Informative Decisions

In the case of Square, Inc. v. Unwired Planet, LLC (CMB2015-00148), the PTAB held that the grounds raised by Square, Inc. (Petitioner) to challenge the validity of claims 1-4 of Unwired Planet’s U.S. Patent No. 7,711,100 could have been raised in a previous petition filed by Square, Inc. against the same patent, and hence denied the institution of a covered business method (CBM) review. In particular, the Board relied on the estoppel provision of 35 USC 325(e)(1), to deny the institution of a CBM review. This portion of section 325 mandates that the petitioner, or the real party in interest or privy of the petitioner, in a post-grant review of a claim that results in a final written decision “may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that post-grant review.”

The Petitioner had previously filed a CBM petition challenging claims 1-4 of the ‘100 patent (CBM2014-00156), which relates to methods for coordinating financial transactions via a wireless network, such as a wireless telephone network. In that proceeding, the petitioner argued that the claims at issue were invalid under 35 U.S.C. §101 as drawn to patent ineligible subject matter as well as invalid under 35 U.S.C. §102 and 103 as either anticipated or rendered obvious by a prior art reference (a thesis by Vazvan). The PTAB initiated a trial on the §101 ground but declined to include the §102 and 103 grounds in the trial because it found the evidence of public availability of the Vazvan thesis deficient. Ultimately, in a final written decision, the PTAB held that the challenged claims were not eligible for patenting pursuant to 35 U.S.C. §101.

Not satisfied with the decision invalidating the claims as patent ineligible subject matter, Square, Inc. filed a second petition arguing that claims 1-4 were invalid under 35 U.S.C. §102 and 103 as anticipated or rendered obvious by a different prior art reference (U.S. Patent No. 5,579,535 of Orlen).
Continue Reading No Second Bite Of The Apple for Square, Inc. – PTAB Applies Estoppel Provision Of 35 U.S.C. §325(e)(1) TO CBM Review