INTELLECTUAL PROPERTY. PTAB Monitor: Developments in Inter Partes Review Practice

Transcription

1 INTELLECTUAL PROPERTY PTAB Monitor: Developments in Inter Partes Review Practice 1

2 Table of Contents The Federal Circuit Adopts a Redundancy Exception to Estoppel Following Inter Partes Review Katie J.L. Scott... 4 Winning It on Appeal: How to Avoid Remand and Reverse the Board s Validity Determination at the Federal Circuit James S. Blank, David Soofian Parallel Track Proceedings: Determining Whether to Stay Litigation Jeffrey A. Miller, James Lyons Making the Most of Limited Discovery Before the PTAB Deborah E. Fishman, Paul Margulies Kaye Scholer LLP

3 Foreword Proceedings before the Patent Trial and Appeal Board (PTAB) are a work in progress, with evolving legislation, rules and precedent to guide parties and practitioners. This report, PTAB Monitor: Developments in Inter Partes Review Practice, captures and assesses the ebb and flow of these still-emerging standards and procedures and the challenges they raise for successfully invalidating or defending a patent before the PTAB. The articles in this report offer practical guidance for effectively navigating the IPR process and other AIA proceedings. Key topics include the developments in the scope of estoppel following an unsuccessful IPR; ways to best position discovery requests before the PTAB to address the exceedingly narrow scope of discovery that is typically allowed in AIA trials; how to successfully navigate an appeal of a PTAB proceeding before the Federal Circuit, and considerations for using IPR to stay litigation. Kaye Scholer s nationally recognized patent litigation group has been at the leading edge of IPR practice since its inception. In 2012, we filed four of the very first IPRs challenging the validity of four patents. In early November 2015, we secured a first-in-kind decision in the Federal Circuit, reversing the Board s finding that certain claims were not unpatentable. In the interim, we have been actively involved on behalf of our clients with PTAB proceedings, as well as in parallel cases at the district court level. We hope that this report provides insight into the ever-evolving and increasingly important PTAB proceedings. As always, we welcome the opportunity to continue our discussion of these issues in person, and we look forward to working with you on your next patent-related dispute, whether it is in district court or the PTAB. 3

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5 2016 The Federal Circuit Adopts a Redundancy Exception to Estoppel Following Inter Partes Review Katie J.L. Scott Counsel In Shaw Industries Group, Inc. v. Automated Creel Systems, Inc., the Federal Circuit held that grounds not instituted by the PTAB on the basis of redundancy will not be subject to estoppel in later proceedings. 1 The court s decision is bound to be controversial because it gives petitioners an unexpected second chance to challenge the validity of claims that survive an IPR on prior art that was previously raised but on which review was not instituted due to redundancy. This is a significant decision, and may have broader impact than the court intended because the court s reasoning would suggest that estoppel only applies to grounds that were raised or reasonably could have been raised during the inter partes review post-institution, as opposed to all grounds the petitioner raised or reasonably could have raised in the petition. Even if this is not what the court intended, the court s decision and its reasoning will likely affect litigants strategies in IPRs and parallel district court litigation. Shaw Adopted the PTAB s Proposed Exception to Estoppel for Grounds Denied for Redundancy In Shaw, the petitioner sought a writ of mandamus to instruct the PTO to institute IPR of the claims that were denied institution on the basis of redundancy because otherwise it would be estopped from asserting those grounds in future proceedings. 2 The Federal Circuit panel (Judges Moore, Reyna and Wallach) unanimously held that mandamus was unwarranted because estoppel would not apply to grounds that were not instituted on the basis of redundancy including with respect to claims that were subject to a prior Final Written Decision by the Board. 3 The Panel adopted the PTO s argument that estoppel under 35 U.S.C. 315(e) only applies to grounds that were raised or reasonably could have been raised during that inter partes review, and because [t]he IPR does not begin until it is instituted[,] 4 the petitioner did not raise nor could it have reasonably raised the Payne-based ground during the IPR. 5 Accordingly, [t]he plain language of the statute prohibits the application of estoppel under these circumstances. 6 Thus, at least for now, petitioners and patent owners should be aware that any grounds that were denied by the Board on the basis of redundancy are still fair game for subsequent litigation before the PTAB, district court or ITC. 7 Until now, many practitioners have thought that the scope of estoppel following an IPR would be as broad as the language of the statute suggests, 8 such that it would apply to any patent claim that is subject to a Final Written Decision and any ground that the petitioner raised or reasonably could have raised in the prior petition, including those grounds that may be denied due to redundancy. 9 At the same time, because institution decisions are not appealable, many thought this breadth of estoppel was unfair to petitioners. Nonetheless, this interpretation was consistent with the legislative history, which describes the estoppel as precluding subsequent litigation on issues that were raised or reasonably could have been raised in the prior proceeding. 10 Under Shaw, the Federal Circuit s reasoning shifts the inquiry from what the petitioner raised in its petition to what was raised during the IPR after institution. 5

6 PTAB MONITOR: DEVELOPMENTS IN INTER PARTES REVIEW PRACTICE The Federal Circuit s adoption of the Board s position that there is an exception to estoppel for grounds that were previously denied on the basis of redundancy raises several practical implications for both petitioners and patent owners. 6 Kaye Scholer LLP

7 2016 Shaw s Reasoning Raises Additional Questions Unfortunately, the Federal Circuit s view of the plain language of the statute is arguably at odds with the application of estoppel to other grounds that could not have been raised during the IPR, but were clearly intended by the legislature to be subject to estoppel in later proceedings. 11 Like grounds denied on the basis of redundancy, grounds that were raised in the petition but denied on the merits (and arguably even grounds that were not raised in the petition) cannot be raised by the petitioner during the IPR after institution. Thus, under the court s reasoning, one could argue that estoppel should also not apply to those non-instituted grounds in a subsequent proceeding, should the claims survive the IPR on the instituted grounds. In particular, the reasoning in Shaw applies equally to grounds that were denied institution on the merits because nothing in the statute would suggest a distinction based on the reason for noninstitution (both were raised by the petitioner in the petition and neither could be raised during the IPR post-institution). It remains to be seen how this issue will play itself out as the case law develops. The Current Scope of Estoppel Before the PTAB Until the Federal Circuit weighs in on the issue again, estoppel will apply to grounds that the petitioner raised or reasonably could have raised in the prior petition, unless the ground was previously denied by the Board on the basis of redundancy. 12 For example, in Apotex v. Wyeth, the Board found that estoppel did not apply to a ground that was previously denied as redundant, 13 but found it did apply to a ground that was based on a new combination of prior art that the petitioner had cited in the prior petition. Grounds based on prior art known to the petitioner at the time of the prior filing will likely be estopped under the could have raised standard, 15 and the Board will consider whether other prior art reasonably could have been raised by determining whether the ground is Estoppel: Preparing for the Unknown Given the dearth of precedent to draw from, and the ambiguity over how courts will determine whether a prior art patent or printed publication reasonably could have been raised in a prior IPR, we suggest that petitioners focus on the legislative history s guidance to prepare themselves. Thus, a petitioner should consider how it would demonstrate that a later discovered prior art reference is not prior art which a skilled searcher conducting a diligent search reasonably could have been expected to discover prior to the IPR. 20 One recommended approach is for petitioners to document their diligent search efforts in a memorandum that answers the following questions: Who performed the search? Identify who performed the search and why they were selected. Describe the process of selecting a search firm, which firms were considered, and the qualifications of the firms and their employees conducting the search. Describe the qualifications of attorneys performing or supervising the search and reviewing the results (e.g., the years of experience and/or relevant technical degrees or background). Retain documentation of the hours billed by the search firm and attorneys supervising the search. What was searched for? Create or have the search firm provide documentation of the scope of the search. While the scope of search is often included in proposals from search firms, those proposals may not explain why a particular search scope is recommended or selected. Initial proposals also may not reflect any changes made to the scope after the search begins. Include justifications for any keywords that will be used in the search, as well as why any potentially important terms are omitted (e.g., certain claims were unlikely to be asserted in subsequent litigation). Identify and justify any date limitations that were placed on the search. Where was searched? Which databases were searched? What languages were included in the search? What languages did the searchers speak? What geographic choices were made, and why (e.g., for a particular technology, why searching prior art from one geography is more important than another)? Why? Remember that it may not be enough to state what was done the memo should also explain the reasoning behind each decision to show that the search was reasonable, performed by skilled searchers and completed in a diligent manner. Show the reasonableness of the selected search by documenting the additional cost that would have been necessary to expand the scope of the search. As for when this memo should be written, we recommend preparing it when memories are fresh and documents are easy to find ideally while the search is ongoing, but no later than right after the filing of the petition. By documenting these critical facts when they are most accessible, petitioners will be better positioned to demonstrate that a skilled searcher conducting a diligent search would not have found any later-identified prior art. Hopefully, these recommendations will avoid a scramble to reconstruct these facts years after they occurred, and prepare the petitioner to avoid a claim of estoppel if the IPR is not successful. by Katie J. L. Scott and Brandon Teachout 7

8 PTAB MONITOR: DEVELOPMENTS IN INTER PARTES REVIEW PRACTICE based on prior art which a skilled searcher conducting a diligent search reasonably could have been expected to discover. For example, in IBM v. Intellectual Ventures, the Board was persuaded to apply estoppel with evidence that a skilled searcher conducting a diligent search reasonably could have been expected to discover a prior art reference that was available in a full-text searchable database that was referenced in Patent Searching Tools and Techniques, and the reference could be found in the database by searching for terms used in the challenged claim. 17 Practical Implications of the Redundancy Exception to Estoppel The Federal Circuit s adoption of the Board s position that there is an exception to estoppel for grounds that were previously denied on the basis of redundancy raises several practical implications for both petitioners and patent owners. For petitioners, this exception to estoppel suggests that including additional grounds in the petition (even if they are likely to be denied on the basis of redundancy) could be a good strategy to preserve those additional grounds from being subject to estoppel in later proceedings. Notably, the unintended consequence of the PTO s position and Shaw s endorsement of that position is that petitioners will be incentivized to include as many grounds as will fit within the space constraints of a petition, contrary to the PTAB s oft-provided guidance to include fewer, more detailed arguments, rather than more, less-developed ones. 18 This strategy is also not without its risks, as the Board may not institute on the best grounds or may deny the petition entirely if it finds the arguments to be insufficiently developed. From the patent owner s perspective, the strategy of identifying redundancies in the patent owner s preliminary response will generally be unhelpful, given that a finding of redundancy would insulate those grounds from estoppel in future proceedings. Instead, patent owners should consider devoting the Preliminary Response to arguments that could result in noninstitution on the merits. With respect to motions to stay litigation pending IPR, the estoppel exception undercuts the rationale that an IPR will simplify a parallel litigation by precluding further litigation of invalidity based on patents or printed publications. 19 Indeed, the exception will likely allow petitioners to litigate invalidity challenges the PTAB found were redundant in subsequent proceedings if any instituted claims survive the IPR. Given that petitioners usually choose their strongest grounds to assert in an IPR, this means that estoppel will be far less meaningful to patent owners than it might have otherwise been. Additionally, defendants in multidefendant district court litigation should be very cautious before agreeing to be bound to an estoppel in exchange for a stay while another defendant s IPR proceeds. Given the lack of clarity surrounding the scope of estoppel following an inter partes review, a defendant may find itself having agreed to an estoppel that is broader than what would otherwise be imposed by developing case law. 20 While it remains to be seen how the PTAB, district courts and the ITC will apply the estoppel statute in specific situations, the Federal Circuit s opinion in Shaw is unlikely to be the last word on the issue of estoppel. Thus, as the scope of estoppel following an inter partes review is still being fleshed-out, practitioners are well advised to take this uncertainty into account as they devise their case strategies. 8 Kaye Scholer LLP

9 Shaw Indus. Group, Inc. v. Automated Creel Sys., Inc., No , 2016 WL , *5 (Fed. Cir. Mar. 23, 2016) ( We agree with the PTO that 315(e) would not estop Shaw from bringing its Payne-based arguments in either the PTO or the district courts.... In light of our construction of the statute, mandamus is not warranted. Thus, we deny Shaw s petition for writ of mandamus. ); see also id. at *9-10 (Reyna, J., concurring specially) ( The statutory scheme s estoppel provisions make such ambiguity in whether substantive determinations were made problematic. The effects of estoppel are profound. ). While the PTO argues that there is no Redundancy Doctrine, numerous Board decisions suggest otherwise. Id. at *8-9 ( Before this Court, the PTO argues efficiency; that is, the Board may choose among the grounds asserted because a particular ground may resolve the case and a multiplicity of grounds would increase the Board s workload and make it difficult to meet its statutory deadlines. ); see also Liberty Mut. Ins. Co. v. Progressive Cas. Ins. Co., CBM , 2012 WL , at *2 (PTAB Oct. 25, 2012) (designated representative ). 2. Shaw at * Id. 4. Id. (citing In re Cuozzo Speed Techs., LLC, 793 F.3d at 1268, 1272) ( IPRs proceed in two phases. In the first phase, the PTO determines whether to institute IPR. In the second phase, the Board conducts the IPR proceeding and issues a final decision. (citations omitted)). 5. Id. 6. Id. 7. Id. But see Shaw at *10 (Reyna, J., concurring specially) ( Whether estoppel applies, however, is not for the Board or the PTO to decide. Nor is it for us to decide in the first instance, despite the invitation from Shaw Industries, because the issue is not properly before us. See Appellant s Opening Br Instead, whether the redundant grounds are subject to estoppel must be determined in the first instance by the district court or the U.S. International Trade Commission. 35 U.S.C. 315(e)(2). These tribunals should not have to parse cryptic statements or search out uncited doctrines to make this determination. ) U.S.C. 315(e) ( Estoppel. (1) Proceedings before the office. The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, 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 inter partes review. (2) Civil actions and other proceedings. The petitioner in an inter partes review of a claim in a patent under this chapter that results in a final written decision under section 318(a), or the real party in interest or privy of the petitioner, may not assert either in a civil action... or in a proceeding before the [ITC]... that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review. ) (emphases added). 9. See, e.g., Richard Torczon, Redundant Grounds: A Growing Hazard In Post-Grant Practice, Law360 (Apr. 20, 2015) ( For example, denying review without deciding the merits leaves the petitioner in an ambiguous status for subsequent estoppel purposes. ); Ralph Loren, PTAB Use of Redundancy May Have Unfair Estoppel Effect, Law360 (Mar. 21, 2014) ( If the board then denies all but a single ground of each type, holding the remaining grounds as redundant, and the petitioner loses the IPR, the petitioner would not only lose its ability to pursue the alternative denied grounds during the proceeding, but would also lose the ability to pursue the denied grounds in litigation... ); David Cavanaugh, What We ve Learned from PTAB Decisions on Institution, Law360 (Oct. 10, 2013) ( A petitioner, because of the estoppel, is understandably wary of a practice that reduces the number of issues or grounds to be addressed in the proceeding. ) Cong. Rec. S , at S1376 (daily ed. Mar. 8, 2011) (statement of Sen. Jon Kyl) ( extending could-have-raised estoppel to privies will help ensure that if a review is instituted while litigation is pending, that review will completely substitute for at least the patents-and-printed-publications portion of the civil litigation. ); id. ( This [estoppel] effectively bars such a party... from later using inter partes review... against the same patent, since the issues that can be raised in an inter partes review... are those that could have been raised in [an] earlier post-grant or inter partes review. ); see 157 Cong. Rec S951-52, at S952 (daily ed. Feb ) (statement of Sen. Chuck Grassley) ( It also would include a strengthened estoppel standard to prevent practitioners from raising in a subsequent challenge the same patent issues that were raised or reasonably could have been raised in a prior challenge. ). 11. See note 10, supra. 12. See Apotex Inc. v. Wyeth LLC, IPR , 2015 WL , at *5 (PTAB Sept. 16, 2015) (applying estoppel to a ground based on prior art that was cited in the prior petition but not asserted as a ground, and denying estoppel with respect to a ground that was included in the prior petition but not instituted on the basis of redundancy). 13. Id. ( Ground 1 in the instant Petition was never raised during the 115 IPR, because the Board denied institution of Ground 6 as redundant, and Petitioner could not have raised Ground 6 again once institution was denied as to that ground. Estoppel under 35 U.S.C. 315(e)(1), therefore, does not bar Petitioner from maintaining a proceeding before the Office on Ground 1. ). 14. Id. 15. Dell Inc. v. Elecs. and Telecomms. Research, Inst., IPR , 2015 WL , at *3 (PTAB Mar. 26, 2015) (representative opinion) ( On this record, the differences in how the references have been asserted in these proceedings have no weight on our determination of whether the grounds raised in the instant Petition could have been raised in the 635 IPR. ); Ford Motor Co. v. Paice LLC, IPR , 2015 WL , at *7 (PTAB Dec. 10, 2015) ( Here, we need not speculate about what reasonably could have been discovered and proffered, because the record demonstrates that Ford must have known of Caraceni, Tabata 201, and Tabata 541 at the time of the -571 and -579 Petitions, and if not, such knowledge should be imputed to it. More specifically, with respect to the Tabata references, they were cited during prosecution that led to the 347 patent and are listed on the face of the patent. Ex. 1201, 3, 4. As such, Ford was on notice of the existence of the Tabata references as potential prior art to the 347 patent before it filed the -571 and -579 Petitions. ). 16. Intl. Bus. Machs. Corp. v. Intellectual Ventures II LLC, IPR , 2015 WL , Part II.i.c (PTAB Nov. 6, 2015) (quoting 157 Cong. Rec. at S1375 (statement of Sen. Jon Kyl)); see also Ford, IPR , 2015 WL , at *7 ( What a petitioner reasonably could have raised includes prior art that a skilled advocate would have been expected to discover and proffer in the course of conducting due diligence on the patent at issue. ). 17. IBM, 2015 WL , Parts II.i & III. 18. See U.S. Pat. Office, PTAB Roundtable Slides at 15 (Denver, May 8, 2015), available at slides_may_update pdf ( Better to provide detailed analysis for limited number of challenges than identify large number of challenges for which little analysis is provided.... ). 19. See Synopsys, Inc. v. Mentor Graphics Corp., No , 2016 WL , at *13 (Fed. Cir. Feb. 10, 2016) (Newman, J., dissenting) ( The court today holds, contrary to the AIA, that the PTAB can pick and choose which of the challenged patent claims and issues it will decide in these new proceedings. Maj. Op. at [*5]. The court endorses such partial decisions by the PTAB, and see[s] no inconsistency with leaving some of the challenged claims and issues undecided. Maj. Op. at [*5].... The present practice of partial decision by the PTAB leads to duplicative proceedings in the PTAB and the district courts. Since the AIA provides for a different standard of proof than in the district courts, this system of partial decision does not achieve the reliability and expedition for which the AIA was enacted, but instead can produce prolonged uncertainty and multiplied proceedings, at increased rather than reduced cost. In the case at bar, validity of all of the challenged claims was not decided by the PTAB, illustrating this concern. ). 20. For example, if a non-petitioning defendant previously agreed to an estoppel that did not account for the redundancy exception described in Shaw, such estoppel would arguably be broader than what would be applied to the petitioning defendant. A negotiation of the scope of estoppel is described in In re Protegrity Corp., MDL No. 2600, 2015 WL , *2 (N.D. Cal. Aug. 10, 2015), where in the context of a motion to stay pending CBM, the plaintiff argue[d] that each of the petitioning defendants should be required to agree that they will be estopped by the invalidity arguments raised in each others petitions, and that each of the non-petitioning defendants should agree to be bound to the same extent as the petitioning defendants. When the Court asked the non-petitioning defendants whether they would agree to this, all except for one said that they would agree to be estopped, but only as to any grounds on which PTAB issues a final written decision. ). 9

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11 2016 Winning It on Appeal: How to Avoid Remand and Reverse the Board s Validity Determination at the Federal Circuit James S. Blank Partner David Soofian Associate A final determination of validity or invalidity in an AIA trial is not the end of the road. Recent Federal Circuit cases show that despite the Federal Circuit s track record of affirming most appeals from AIA final determinations, it is possible to vacate and even reverse the Board s validity findings on appeal. But to do so, practitioners need to carefully establish a record during trial and tailor their arguments on appeal. Making the Right Arguments on Appeal Unlike other appeals to the Federal Circuit, when appealing an AIA final determination the appellant must have a good idea of what the issues are for appeal early on because the appellant must not only provide the typical brief statement of the issues to be raised on appeal required by Form 8, but must also provide sufficient information to allow the Director to determine whether to exercise the right to intervene. 1 In evaluating the issues to raise on appeal, practitioners should pay close attention to the applicable standards of review because in order to achieve a reversal the appellant will not only have to prove that the Board made a mistake below, but that the mistake was sufficient enough to warrant a reversal. If an appellant challenges a Board decision that is entitled to be reviewed with deference on appeal (e.g., the scope and content of the prior art, the differences between the prior art and the claims at issue, the level of ordinary skill in the art at the time the invention was made or objective evidence of nonobviousness), then practitioners typically need to prove that not only did the Board get it wrong, but that there isn t substantial evidence in the record that could even support the Board s position. For example, in Merck v. Gnosis S.P.A., the appellant argued that the Board erred in weighing its objective indicia of nonobviousness. 3 In rejecting Merck s argument, the majority explained that [a]lthough another factfinder may have reasonably evaluated Merck s evidence of objective indicia of nonobviousness differently in the first instance, the Board s conclusion that this evidence was not persuasively tied to the novel features of the asserted claims is supported by substantial evidence. 4 However, if arguing that the Board made an error that is reviewed with no deference (i.e., de novo) on appeal (e.g., claim construction, obviousness determination), then practitioners only need to convince the Federal Circuit that the Board got it wrong. 5 For example, there have been six Federal Circuit cases where the appellant successfully argued that the Board came to the wrong conclusion on claim construction, and consequently the Federal Circuit either vacated or reversed the associated invalidity finding on appeal. 6 In another example, in Belden v. Berk-Tek the (cross) appellant successfully argued that the Board made a legal error in its obviousness analysis and consequently the Federal Circuit reversed the Board s validity determination on appeal. 7 But practitioners should also pay close attention to the relief they are requesting from the Federal Circuit. For example, in Microsoft v. Proxyconn the (cross) appellant successfully convinced the Federal Circuit to reverse the Board s claim 11

12 PTAB MONITOR: DEVELOPMENTS IN INTER PARTES REVIEW PRACTICE construction, which resulted in the Federal Circuit vacating the Board s validity determination and remanding the IPR back to the Board for further proceedings consistent with the Federal Circuit s new claim constructions. 8 While that strategy gave the patent owner appellant another chance to defend the validity of its claims in front of the Board, in a December 9, 2015 decision the Board once again held those claims invalid on remand. 9 To avoid the risk of another Board trial, practitioners should attempt to tailor their appellate arguments so that they do not depend on additional factual determinations that have not yet been made. That way, if the Federal Circuit agrees that an error was made below, the record is clear as to what the resulting conclusion should be and the Federal Circuit can close the case without remand. For example, in Belden v. Berk-Tek the (cross) appellant successfully argued that the Board not only made legal errors when determining that certain claims were valid, but also erred in not affirmatively finding those claims invalid. As a result, because the Federal Circuit agreed that legal errors were made and that the record [was] one-sided, the Federal Circuit found no need to remand the case to the Board and itself entered a finding that the claims were obvious and invalid. 11 Practitioners should look beyond the AIA trial at hand and assure that they are creating the fullest record for appeal. In doing so, practitioners should make sure to articulate all of their affirmative arguments as well as sufficiently address each and every argument made by their opponent in their AIA trial papers in order to preserve those arguments for appeal. Building the Trial Record With an Eye for Appeal Unlike a district court trial, an AIA trial is short and can be somewhat rigidly formalistic, and as such, there are limited opportunities to add to the trial record. There is limited discovery, few documents are exchanged, typically a single expert deposition is taken and defended by each side, and one oral argument is conducted before the Board issues its final decision. 12 Similarly, there are limited opportunities to file papers with the Board. In a typical IPR each party only gets to file two papers; the petitioner gets to file a petition and reply 13 and the patent owner gets to file a preliminary response and response. 14 But in using those limited opportunities, practitioners should look beyond the AIA trial at hand and assure that they are creating the fullest record for appeal. In doing so, practitioners should make sure to articulate all of their affirmative arguments as well as sufficiently address each and every argument made by their opponent in their AIA trial papers in order to preserve those arguments for appeal. For example, in MCM Portfolio LLC v. Hewlett-Packard Co., the Federal Circuit found that MCM waived arguments made on appeal because in one instance MCM candidly admit[ted] that it only raised th[e] argument in a few scattered sentences at the oral hearing below and in another instance MCM provide[d] no citation to th[e] proposition. 15 Similarly, practitioners should make sure to get any and all relevant evidence into the record during the trial, so that if appealing an adverse position they have sufficient supporting evidence. For example, while the burden of proof in an AIA trial may be by a preponderance of evidence, 16 the Federal Circuit may require something more when deciding whether to enter a finding of invalidity for the first time on appeal or remand for further consideration by the Board. In Belden v. Berk-Tek, the Federal Circuit entered a determination that Berk-Tek proved invalidity of the claims by a preponderance of the evidence because the record [was] one-sided on the issue. 17 Tying It All Together The Federal Circuit has many reasons to defer to the Board s decisions in an AIA proceeding. Unlike a district court proceeding that is decided by a single judge, an AIA proceeding is decided by a three-judge panel. Additionally, 12 Kaye Scholer LLP

13 2016 unlike a district court judge, the three judges on the AIA trial panel typically have technical degrees and oftentimes experience in the technical area of invention. 18 Yet, the Federal Circuit has shown that it may vacate or even reverse a Board determination under the right circumstances. For example, recent Federal Circuit cases have illustrated (1) that the Federal Circuit will reverse the Board when its decision on a particular issue is not entitled to deference on appeal (e.g., claim construction and errors of law); (2) that the Federal Circuit will vacate the Board s Final Written Decision when it does not thoroughly address an issue and remand the case for further proceedings; and (3) that the Federal Circuit will even completely reverse a Board validity finding, if the record is one-sided, regarding the underlying issue. Thus, practitioners should not only be careful to create a full record during trial, but should also carefully focus the issues on appeal to those that are entitled to the least amount of deference and to those that, if won, demand that the desired judgment be entered on appeal C.F.R. 90.2(a)(3)(ii). 2. See e.g., Merck & Cie v. Gnosis S.P.A., 808 F.3d 829, 833 (Fed. Cir. 2015) (citing In re Gartside, 203 F.3d 1305, 1313 (Fed. Cir. 2000); In re Cuozzo Speed Techs., LLC, 793 F.3d 1268, 1280 (Fed. Cir. 2015); In re Mouttet, 686 F.3d 1322, (Fed. Cir. 2012)). 3. Merck, 808 F.3d at Merck, 808 F.3d at See e.g., Merck, 808 F.3d at 833 (citing In re Gartside, 203 F.3d at 1313; In re Cuozzo Speed Techs., 793 F.3d at 1280; In re Mouttet, 686 F.3d at ). 6. See Microsoft Corp. v. Proxyconn, Inc., 789 F.3d 1292, (Fed. Cir. 2015); Straight Path IP Grp., Inc. v. Sipnet EU S.R.O., 806 F.3d 1356, 1363 (Fed. Cir. 2015); Cutsforth, Inc. v. MotivePower, Inc., No , 2016 WL , at *4 (Fed. Cir. Apr. 6, 2016); Dell Inc. v. Acceleron, LLC, No , 2016 WL , at *7 (Fed. Cir. Mar. 15, 2016); Pride Mobility Prods. Corp. v. Permobil, Inc., No , 2016 WL , at *6 (Fed. Cir. Apr. 5, 2016); PPC Broadband, Inc. v. Corning Optical Commc ns RF, LLC, 815 F.3d 747, (Fed. Cir. 2016). 7. Belden Inc. v. Berk-Tek LLC, 805 F.3d 1064, 1075 (Fed. Cir. 2015). 8. Microsoft, 789 F.3d at Microsoft Corp. v. Proxyconn, Inc., IPR , 2015 WL , at *8 (Dec. 9, 2015). Similarly, there have been four appeals to the Federal Circuit where the appellant successfully argued that the Board s Final Written Decision was not thorough or clear enough on a specific issue. As a result, the Federal Circuit vacated and remanded the Board s Final Written Decision for further proceedings on those issues. See Nike, Inc. v. Adidas AG, 812 F.3d 1326, 1340 (Fed. Cir. 2016); Cutsforth, Inc. v. MotivePower, Inc., No , 2016 WL , at *4 (Fed. Cir. Jan. 22, 2016); Ariosa Diagnostics v. Verinata Health, Inc., 805 F.3d 1359, 1366 (Fed. Cir. 2015); PPC Broadband, Inc. v. Corning Optical Commc ns RF, LLC, 815 F.3d 734, 744 (Fed. Cir. 2016). 10. Belden, 805 F.3d at 1077 ( The Board erred in determining that Berk-Tek had not proven the obviousness of the methods of claims 5 and 6 of the 503 patent by a preponderance of the evidence. ). 11. Belden, 805 F.3d at See also Cutsforth, 2016 WL , at *4 (reversing the Board s claim construction and entering a validity finding on appeal); Pride Mobility, 2016 WL , at *6 (reversing the Board s claim construction and entering a validity finding on appeal) U.S.C. 316(a)(5); id. at 316(a)(10) U.S.C. 312; id. at 316(a)(13) U.S.C. 313; id. at 316(a)(8). 15. MCM Portfolio LLC v. Hewlett-Packard Co., 812 F.3d 1284, 1294 n.3 (Fed. Cir. 2015) U.S.C. 316(e). 17. Belden, 805 F.3d at Belden, 805 F.3d at 1079 ( Board members, because of expertise, may more often find it easier to understand and soundly explain the teachings and suggestions of prior art without expert assistance. ). 13

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15 2016 Parallel Track Proceedings: Determining Whether to Stay Litigation Jeffrey A. Miller Partner James Lyons Associate The expansion of post-grant proceedings provided by the America Invents Act (AIA) presents new considerations for parties involved in patent litigation. Parties must now consider two mechanisms for challenging the validity of patents they have been accused of infringing: (1) validity challenges in district court and (2) the new covered business method (CBM) and inter partes review (IPR) proceedings administered by the Patent Trial and Appeal Board (PTAB) of the Patent and Trademark Office (PTO). 1 One factor that should be part of the calculus when determining whether to file a CBM or IPR petition is the potential for staying the litigation pending a possible validity determination by the PTAB, which could save, or at least delay litigation expense. A party considering whether to pursue a CBM or IPR should evaluate both the likelihood a court will grant a motion to stay and when to seek the stay. Whether a party is likely to obtain an order staying litigation depends on a number of factors and varies based on the jurisdiction in which the litigation is pending and the type of proceeding before the PTAB. Factors Governing Whether to Grant a Stay Courts look at several factors to determine whether to stay litigation. For CBMs, these factors are governed by statute, Section 18(b) of the AIA, which states that the following shall be considered: (A) Whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial; (B) Whether discovery is complete and whether a trial date has been set; (C) Whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party; and (D) Whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court. In contrast, the AIA does not explicitly provide a mechanism for district courts to stay litigation during IPR proceedings. However, it is universally accepted that district courts have this authority, which they apply by evaluating the traditional factors district courts use when determining whether to stay litigation during ex parte and inter partes reexamination proceedings. These traditional factors correspond to the first three factors of the statutory CBM test, while also examining the totality of the circumstances. 2 The fourth statutory CBM factor evaluates whether a stay will reduce the burden of litigation. Although it overlaps significantly with the first factor, courts are required to consider the first and fourth factors separately. 3 Note, however, that this fourth factor is seen as eas[ing] the movant s task of demonstrating the need for a stay, as it will usually favor the movant. 4 This is part and parcel with Congress stated intent that litigation should normally be stayed while a CBM proceeding is pending. See comments of Senator Schumer ( The amendment includes a four-factor test for the granting of a stay that places a very heavy thumb on the scale in favor of the stay. Indeed, the test requires the court to ask whether a stay would reduce the burden of the litigation on the parties and the court. Since the entire purpose of the transitional program at the PTO is to reduce 15

16 PTAB MONITOR: DEVELOPMENTS IN INTER PARTES REVIEW PRACTICE the burden of litigation, it is nearly impossible to imagine a scenario in which a district court would not issue a stay. ). 5 Two additional differences between CBMs and IPRs can affect the strategy for whether and when to seek a stay. First, the AIA provides for interlocutory appeal of district court decisions regarding stays pending CBM review. No such statutory right exists for IPRs. 6 Second, a CBM petitioner is only estopped from arguing in district court litigation that the claim is invalid on any ground that the petitioner raised during the CBM proceeding. In contrast, an IPR petitioner is estopped from asserting that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review. 7 An IPR proceeding s broader estoppel provisions can play a role in a court s decision whether to stay litigation. 8 Application of the Factors and How Each Can Affect Strategy The first factor courts evaluate when deciding whether to stay litigation is whether a stay, or the denial thereof, will simplify the issues in question and streamline the trial. In applying this factor, courts are more likely to grant a stay if all of the claims asserted in the suit are challenged in the PTO proceeding, since the PTO could resolve all of the patent issues in the litigation. 9 In contrast, a stay is less likely if there are non-patent claims in the suit (such as trade secret or contract claims), meaning that issues would remain to be litigated even if the patent issues are resolved by the PTAB. 10 Thus, when a stay of litigation is an important reason why a CBM or IPR proceeding is sought, a party should carefully consider the likelihood it can get a CBM or IPR trial instituted on all claims asserted in the litigation. Of course, this requires that the party filing the CBM or IPR petition know which claims the patent owner will assert. If the CBM or IPR petition is filed prior to learning which claims will be asserted, the petitioner should challenge every claim where a meritorious argument can be made. While the Federal Circuit has indicated that stays can be warranted even when a CBM does not address all asserted claims, 11 a stay is less likely when some of the asserted claims are not part of the trial at the PTAB, particularly in an IPR proceeding. The differing estoppel standards may also be relevant to the first factor of the test. Because an IPR petitioner is estopped from raising any arguments that could have been raised in the IPR, whereas a CBM petitioner is only estopped from raising arguments that were actually raised, some courts have emphasized that the extent the parties to a litigation will be estopped should be considered. 12 For example, when a party seeking a stay is not the petitioner in the pending IPR or CBM proceeding, the court may require that the non-petitioner agree to be estopped to the same extent as it would if it were the petitioner. 13 Thus, a party considering the filing of a CBM or IPR petition who has codefendants in the litigation should determine whether the other codefendants will consider either joining the PTO proceeding or at least agreeing to whatever estoppel might arise. If a party s codefendants will not agree to any estoppel, a stay may be less likely, and, depending on the case, may make filing of a CBM or IPR petition less advantageous. The second factor is whether discovery is complete and whether a trial date has been set. The further the litigation has progressed, the less likely a stay will be granted. Thus, when deciding whether to file a CBM or IPR petition, one should consider how advanced the litigation will be when the motion to stay can be filed, as well as when the court will consider whether to stay the case. If the case is fairly well advanced by the time a party is ready to file a CBM or IPR petition, a stay may be less likely, thus, eliminating one of the potential benefits of the PTAB proceedings. The third factor is whether a stay, or the denial thereof, would unduly prejudice the nonmoving party or present a clear tactical advantage for the moving party. Where parties are direct competitors, a stay is less likely. 14 When evaluating prejudice, courts may also consider whether the patent owner sought a preliminary injunction or waited too long before asserting the patent. 15 Thus, when determining whether to pursue a CBM or IPR proceeding, a party should consider whether the patent owner is a competitor or a nonpracticing entity. Likewise, a patent owner concerned about a stay should study whether the facts can support a motion for a preliminary injunction. The fourth factor, applicable to CBM proceedings due to its inclusion in the statute, is whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court. This factor generally favors a stay, particularly where a proceeding has been instituted, since a final decision from the Board will reduce the number of issues in the case. Note that while this fourth factor is not statutorily required for evaluating whether to stay litigation pending an IPR proceeding, some courts have found it instructive. 16 Strategically, however, one must consider this factor in view of the other factors, because they all play a part in whether a stay will in fact reduce the burden of litigation. 16 Kaye Scholer LLP

17 2016 Strategy on whether to file an IPR or CBM petition may depend, therefore, on the judge handling a particular case. 17

18 PTAB MONITOR: DEVELOPMENTS IN INTER PARTES REVIEW PRACTICE Application by Court and Judge The manner in which these factors are applied varies not only by judicial district, but may also vary among judges within a district. For example, the Northern District of California has granted, in whole or in part, motions to stay pending the outcome of PTAB proceedings in 75 percent of the cases where a motion was filed. 17 The Central District of California is somewhat less likely to grant a motion to stay than the Northern District, as it granted 60 percent of motions filed thus far. Note also that while many courts have been hesitant to stay litigation prior to the PTAB instituting an IPR or CBM proceeding, judges in the Central District have been willing to do so. 18 Judges in the Eastern District of Texas have been less likely to stay litigation while CBM or IPR proceedings are pending than their California peers (53 percent granted in whole or in part). Moreover, judges in the Eastern District have almost never granted a motion to stay litigation until after the PTAB has instituted a CBM or IPR proceeding. 19 This might impact a decision on whether and when to file an IPR petition. Because a defendant can file an IPR petition at any time up until the one-year anniversary of being served with a lawsuit, it is possible that the PTAB will not decide whether to institute an IPR proceeding as much as one and one-half years into the case. 20 This means that the litigation may be close to trial by the time the court considers whether to stay the litigation. 21 As discussed, this might make a stay less likely and thus may impact the decision of whether to file a CBM or IPR petition. Another factor in the Eastern District of Texas is which judge is assigned to a case. Magistrate Judges Love, Mitchell and Payne, and District Court Judge Gilstrap are collectively responsible for 98 of the 130 decisions in the District. There are differences among them in grant rate. For example, Judge Mitchell has granted, in whole or in part, 37.0 percent of the motions to stay she has When a stay of litigation is an important reason why a CBM or IPR proceeding is sought, a party should carefully consider the likelihood it can get a CBM or IPR trial instituted on all claims asserted in the litigation. considered, while Judge Payne has granted 65.6 percent of the motions to stay before him. Strategy on whether to file an IPR or CBM petition may depend, therefore, on the judge handling a particular case. Variance among judges is also seen in the District of Delaware, where Chief Judge Stark grants, in whole or in part, 46 percent of the motions to stay filed in his cases, while the district s average is 67 percent. One factor potentially pulling up the average in Delaware is a high number of cases where parties stipulate to stays. Even Judge Robinson, who has expressed strong views against staying litigation pending IPR, 22 has approved a number of stays where the parties have stipulated to them. Conclusion As parallel track proceedings are becoming the norm in patent litigation, litigators should remain aware of the factors used in determining whether to stay litigation, and the practical differences in outcomes across jurisdictions. Given current case law, defendants with meritorious patent validity challenges that want to pursue a CBM or IPR proceeding should file their petitions as early as possible. Likewise, defendants wanting to stay a parallel litigation should file their motion to stay shortly after filing their CBM or IPR 18 Kaye Scholer LLP

19 2016 petition, even though the Court may not consider the motion until after the PTO has determined whether to institute trial. 1. IPR proceedings can be used to challenge patents that are not in litigation as well as those that are. A party can initiate CBM proceedings only if they have been sued or threatened with suit under a patent. 2. E.g., Universal Elecs., Inc. v. Universal Remote Control, Inc., 943 F. Supp. 2d 1028, 1035 (C.D. Cal. 2013). 3. VirtualAgility Inc. v. Salesforce.com, Inc., 759 F.3d 1307, 1313 (Fed. Cir. 2014). 4. Mkt.-Alerts Pty. Ltd. v. Bloomberg Fin. L.P., 922 F. Supp. 2d 486, (D. Del. 2013); see also, e.g., Versata Software, Inc. v. Dorado Software, Inc., No. 2:13-cv MCE-DAD, 2014 WL , at *2 (E.D. Cal. Mar. 28, 2014) CONG. REC. S1053 (daily ed. Mar. 1, 2011). Note that contrary to Senator Schumer s remarks, a stay is not guaranteed pending a CBM proceeding. For example, Judge Gilstrap in the Eastern District of Texas, affirmed by the Federal Circuit, denied a motion to stay litigation pending a CBM trial when the motion was filed after trial. Smartflash LLC v. Apple Inc., 621 F. App x 995, 998, 1002 (Fed. Cir. 2015). In another example, Judge Coleman of the Northern District of Illinois denied a motion to stay litigation pending a CBM trial where the case was 73 days from trial when the motion to stay was filed, substantial litigation had taken place (including claim construction and summary judgment), the case had been pending for over ten years and the defendant was not the petitioner in the CBM proceeding. Trading Techs. Int l, Inc. v. CQG, Inc., No. 05-cv-4811, 2015 WL (N.D. Ill. Jan. 13, 2015). 6. Ultratec, Inc. v. CaptionCall, LLC, 611 F. App x 720, 721 (Fed. Cir. 2015) U.S.C. 315(e)(2). But c.f. Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., No , 2016 WL , at *5 (Fed. Cir. Mar. 23, 2016) (holding that there is no estoppel for grounds raised in a petition but denied as redundant by the PTAB). 8. See Universal Elecs., Inc., 943 F. Supp. 2d at E.g., Affinity Labs of Texas LLC v. Samsung Elecs. Co., No. 14-CV-2717 YGR, 2014 WL , at *3 (N.D. Cal. Aug. 1, 2014); Semiconductor Energy Lab. Co. v. Chimei Innolux Corp., No. SACV JST (JPRx), 2012 WL , at *2 (C.D. Cal. Dec. 19, 2012). 10. See, e.g., VirtualAgility Inc., 759 F.3d at 1314; Intertainer, Inc. v. Hulu, LLC, No. CV CJC (RNBx), 2014 WL , at *1 (C.D. Cal. Jan. 24, 2014) ( All the asserted patents in this infringement action are challenged in Hulu s CBM petitions and Intertainer does not bring any non-patent claims that would be unaffected by the CBM review. Accordingly, it is likely that the result of the CBM review will simplify issues in this case or possibly resolve this matter entirely. ). 11. See, e.g., Versata Software, Inc. v. Callidus Software, Inc., 771 F.3d 1368, (Fed. Cir. 2014), vacated as moot, 780 F.3d 1134 (Fed. Cir. 2015). 12. Tire Hanger Corp. v. My Car Guy Concierge Servs. Inc., No. 5:14-cv ODW(MANx), 2015 WL , at *3 (C.D. Cal. Feb. 27, 2015) ( The benefits of a stay are also contingent upon the application of IPR s estoppel effect. ). 13. Evolutionary Intelligence, LLC v. Sprint Nextel Corp., No. C RMW, 2014 WL , at *4 (N.D. Cal. Feb. 28, 2014) (conditioning stay on movant s agreement to be bound by estoppel); see also Semiconductor Energy Lab. Co., 2012 WL , at *2 (finding simplification of the issues weighed more strongly in favor of granting a stay where non-petitioner defendants agreed to be bound by the estoppel provisions for the IPR). 14. Compare 3rd Eye Surveillance, LLC v. City of Irving, Texas, No. 6:14-CV-535- JDL, 2015 WL , at *2 (E.D. Tex. Jan. 14, 2015) ( The delay caused by a stay is especially burdensome where, like here, the parties are competitors in the marketplace. ), and Verinata Health, Inc. v. Ariosa Diagnostics, Inc., No. C SI, 2014 WL , at *3 (N.D. Cal. Jan. 13, 2014) (holding the fact that the parties were direct competitors weighed heavily against a stay), with Princeton Digital Image Corp. v. Konami Digital Entm t Inc., No. CV LPS-CJB, 2014 WL , at *6 (D. Del. Jan. 15, 2014) (granting a stay were plaintiff was a nonpracticing entity so there is no dispute that the parties are not direct competitors ). 15. VirtualAgility Inc., 759 F.3d at Intellectual Ventures I LLC v. Toshiba Corp., No SLR/SRF, 2015 WL , at *1 (D. Del. May 15, 2015); accord Trover Grp., Inc. v. Dedicated Micros USA, Case No. 2:13-CV-1047-WCB, 2015 WL , at *2 (S.D. Tex. Mar. 11, 2015) (Bryson, J.). But see Mkt.-Alerts Pty. Ltd., 922 F. Supp. 2d at 489 ( The substantial difference between the test set forth in 18(b)(1) and that employed by courts in the ordinary patent reexamination context is the inclusion of a fourth factor, which requires the court to consider whether a stay, or the denial thereof, will reduce the burden of litigation on the parties and on the court. ). 17. See, e.g., Verinata Health, Inc., 2015 WL , at *2 (N.D. Cal. Feb. 2, 2015). All statistics are based on data from DocketNavigator, and include data through March 31, 2016 (data on file with authors). 18. Star Envirotech, Inc. v. Redline Detection, LLC, No. SACV JGB (MLGx), 2013 WL , at *2 (C.D. Cal. Apr. 3, 2013) (stating that [i]f the USPTO rejects the inter partes requests, the stay will be relatively short, so the possibility of simplifying this issue weighs in favor of granting a stay). 19. Trover Grp., Inc., 2015 WL , at *6 ( This Court s survey of cases from the Eastern District of Texas shows that when the PTAB has not yet acted on a petition for inter partes review, the courts have uniformly denied motions for a stay.... The situation is largely the same in the case of stays sought when the PTAB is considering whether to grant CBM review. In CBM review cases, where the PTAB has not yet determined whether to grant the petition for CBM review, courts in this district have denied stay applications in every case but one. ). 20. A party sued for infringement can file an IPR petition seeking institution of trial within one year of being served with a complaint for patent infringement, 35 U.S.C. 315(a)(1). The PTAB generally has up to six months after a petition is filed to determine whether to institute a trial based on the petition. Office Patent Trial Practice Guide, 77 Fed. Reg (Aug. 14, 2012). Thus, when a defendant files an IPR petition at the one-year anniversary of being served with a complaint, the parties will not know whether trial has been instituted until nearly one and one-half years after service of the complaint. 21. Unlike IPR petitions, CBM petitions can be filed at any time, and thus can be filed more than one year after service of a complaint for patent infringement. Thus, the PTAB may not decide whether to institute trial even later in time than for IPRs. 22. See, e.g., Intellectual Ventures I LLC, at *2, 4 (approaching the question with a degree of cynicism and stating that when you keep both the administrative and judicial tracks moving, the competitive business world benefits from the timely presentation of both in the Federal Circuit, the final arbiter of any substantive differences. ). 19

20 20 Kaye Scholer LLP

21 2016 Making the Most of Limited Discovery Before the PTAB Deborah E. Fishman Partner Paul Margulies Associate The legislative history of the America Invents Act (AIA) conveys Congress s clear intent that discovery in proceedings held before the Patent Trial and Appeal Board (PTAB) of the Patent and Trademark Office should be limited. 1 Consistent with this Congressional intent, the administrative patent judges of the PTAB have narrowly construed the applicable laws and regulations, denying most requests for discovery. By tightly constraining discovery, the PTAB not only adheres to the mandate of the AIA to complete any review within one year, but also aims to achieve a key part of the legislative goal to provide a quick and cost effective alternative to federal district court patent litigation. 2 Nevertheless, the stakes in the trial proceedings under the AIA inter partes reviews (IPR) and post-grant reviews (PGR) (including the distinct but similar covered business method (CBM) proceedings) can be just as high as in district court. Therefore, understanding how to use the limited discovery process to your advantage is crucial, and the following practical tips gleaned from successes and failures to date will help you best position your request for, or opposition to, discovery before the PTAB. Know the Standards The AIA permits a bare minimum of routine discovery in any proceeding, including the right to cross-examine an adversary s declarant and the requirement to produce relevant information that is inconsistent with a position advanced by the party. 3 However, in the case of an IPR, any additional discovery beyond the routine is sharply constrained by statute to what is otherwise necessary in the interest of justice. 4 The standard for a PGR or CBM proceeding is a slightly more permissive good cause for additional discovery. 5 Regardless of the type of proceeding, however, the PTAB has interpreted the right to additional discovery to be very limited. When evaluating discovery requests, the PTAB considers five factors, identified in Garmin International, Inc. v. Cuozzo Speed Technologies, LLC, to be important. 6 PTAB decisions take these five points, and the failure to satisfy them, very seriously. Practitioners should be prepared to argue each of these factors during the conference call regarding whether the PTAB will allow the motion for additional discovery to be filed, as well as in any subsequent briefing. The Garmin factors are: More Than A Possibility And Mere Allegation. The broad, permissive scope of discovery available in district court proceedings is inapplicable before the PTAB. As the PTAB has held, to be entitled to discovery, the mere possibility of finding something useful, and mere allegation that something useful will be found, are insufficient to demonstrate that the requested discovery is necessary. 7 Instead, the movant must be in possession of evidence tending to show beyond speculation that discovery will yield something substantively valuable or useful in its favor. 8 This is a high bar. Allegations that discovery will lead merely to relevant or admissible evidence are insufficient. Even strong circumstantial evidence that discovery will be fruitful may be disregarded by the PTAB as mere speculation, and discovery denied. 9 If the party requesting discovery cannot say with certainty that the requested documents actually exist, it is unlikely the request will be granted. Litigation Positions And Underlying Basis. The PTAB will not accept attempts to alter the set timeline 21

22 PTAB MONITOR: DEVELOPMENTS IN INTER PARTES REVIEW PRACTICE for presentation of evidence, and therefore [a]sking for the other party s litigation positions and the underlying basis for those positions is not necessary in the interest of justice. 10 These broad, burden-shifting discovery requests common in district court will not be allowed. Ability To Generate Equivalent Information By Other Means. If a party can locate the desired information in publicly available materials whether via the Patent Office website, conducting its own survey, or even a Google search it is not an appropriate target for a discovery request. The PTAB has explained that [i]nformation a party can reasonably figure out or assemble without a discovery request would not be in the interest of justice to have produced by the other party. 11 The PTAB has even rejected the seemingly innocuous request for the production of the file histories of the prior art references relied on in a petition. 12 Easily Understandable Instructions. Drop the legalese. Discovery requests containing pages of complex instructions are unlikely to pass muster. And, more than merely containing straightforward instructions, the requests themselves must be very specific and straightforward. The questions should be easily understandable and open-ended requests may be rejected. 13 For example, the PTAB has rejected requests for documents sufficient to show a staple wording of district court discovery as unclear. 14 It has also rejected a proposed list of example deposition topics because the reference to an example left it unclear what topic, if any, is not available for discussion. 15 To maximize the likelihood of success, discovery requests should be drafted in clear, precise and straightforward language. Requests Not Overly Burdensome To Answer. While reams of discovery requests are common in district court litigation, discovery requests in a motion before the PTAB should be pared down to a bare minimum. The requests must not be overly burdensome to answer, given the expedited nature of the proceedings. 16 Because the proceedings must be completed within one year, the PTAB remains cognizant of time and scheduling burdens in deciding motions for additional discovery. Indeed, a successful strategy to oppose a request for additional discovery may include laying out the cost, staffing and time necessary to comply with the request. 17 In addition, where discovery will result in a burden on the proceedings overall, such as a trial within a trial on the issue of infringement, which may be needed to establish the relevance of the commercial success of a petitioner s product, that discovery will likely be denied. 18 Avoid Common Pitfalls The PTAB regularly rejects certain discovery requests. Secondary Considerations. It is well established that there must be a nexus between a claimed invention and the evidence of secondary considerations of nonobviousness. Nevertheless, the PTAB has repeatedly rejected requests for discovery on secondary considerations of nonobviousness for failure of a patent owner to establish this nexus. 19 Unlike district court litigation, and consistent with the first Garmin factor, the PTAB will not grant discovery on secondary considerations absent evidence of a nexus. In general, do not request discovery whose relevance is predicated on another factual showing unless you already have strong evidence of the predicate facts. Real Party-In-Interest. As the PTAB explained in deciding a request for discovery aimed at identifying the real party-in-interest, we consider whether the Patent Owner is already in possession of evidence tending to show beyond speculation that something useful will be discovered, consistent with the first Garmin factor. 20 Thus, a movant must have some knowledge of the particular facts at play before the PTAB will grant requests for additional discovery to support these facts. 21 In one case, for example, the existence of an indemnity agreement between the petitioner and third party that allowed the third party full control and authority over the defense of any proceeding brought against petitioner was a sufficient basis for allowing additional discovery on the issue. 22 However, even where circumstantial evidence seemed strong a suspected party-in-interest coordinated with the petitioner in a related district court litigation, is owned by the same entity as the petitioner, and shares counsel the PTAB still denied discovery because the moving party failed to establish beyond mere allegation and speculation that something useful would be uncovered by the grant of additional discovery. 23 The Federal Circuit has denied mandamus in such circumstances as well. 24 Once the movant has made the requisite showing that something useful is likely to be discovered, discovery requests must still be narrowly tailored to pass muster. In response to a petition filed by the Coalition for Affordable Drugs, the patent owner proposed nine discovery requests directed to the real party-in-interest. Although the PTAB found the patent owner had shown the threshold amount of evidence required, it nevertheless decided that the requests were unduly broad. 25 Ultimately, the PTAB allowed discovery of only one narrowed request directed to any agreements in the possession of the Coalition relating to the ability to control any aspect of the current proceeding Kaye Scholer LLP

23 2016 Make Your Motion Promptly Do not delay in making your discovery requests. As a patent owner, the time for seeking discovery is generally during the three months between the PTAB s decision to institute and the patent owner s response. 27 However, there is reason to file requests for discovery directed to a real party-ininterest even earlier in a proceeding. In one case, the PTAB found that a patent owner s delay in requesting additional discovery weigh[ed] against granting the motion, where the patent owner waited until nearly three months after Apple s petitions were filed and one week prior to the due date for its preliminary responses to seek discovery. 28 Given the compressed timeline of these proceedings, it is important to move promptly. Moreover, if you do not receive the discovery to which you are entitled whether routine or additional discovery you must affirmatively raise the issue with the PTAB in order to rectify the failure. 29 Negotiate First Parties to a proceeding are allowed to agree to additional discovery between themselves. 30 Where possible, reaching agreement on additional discovery even if it means providing some discovery to the opposing party in exchange is the easiest way to obtain discovery without the worry of meeting the PTAB s high bar. Indeed, the PTAB may instruct parties to make a good faith effort to agree to discovery amongst themselves before authorizing a motion. 31 Adjust Your Expectations While the PTAB says that it will be conservative in granting additional discovery, 32 most practitioners recognize this is an extreme understatement. According to DocketNavigator s analytics, less than half (approximately 46.6 percent) of motions for additional discovery are granted in whole or in part, but this statistic does not take into account the numerous requests for leave to file a motion for additional discovery that are denied during conference calls with the PTAB. Final Thoughts Remember that IPR, PGR and CBM proceedings are before the Patent Office; discovery standards and practices useful in district court are largely irrelevant before the Board. Rather than the district court practice of sweeping discovery requests, the greatest chance of success in discovery before the PTAB comes from focusing on narrow issues that can be resolved expeditiously based on targeted requests. Ultimately, the PTAB grants discovery requests only after very exacting standards are met and only by adhering closely to the Garmin factors can you prevail on a motion for additional discovery. 1. Innolux Corp v. Semiconductor Energy Laboratory Co., IPR , Paper 25 at 2 (PTAB May 21, 2013). 2. Microsoft Corp. v. Proxyconn, Inc., IPR , Paper 32 at 3 (PTAB March 8, 2013) (representative opinion) C.F.R (b)(1) U.S.C. 316(a)(5)(B) C.F.R ; Bloomberg Inc. v. Markets-Alert PTY Ltd., CBM , Paper 32 at 2-3 (PTAB May 29, 2013) (representative opinion). 6. Garmin Int l, Inc. v. Cuozzo Speed Technologies, LLC, IPR , Paper 20 at 2-3 (PTAB Feb. 14, 2013). 7. Id. at Garmin Int l, Inc. v. Cuozzo Speed Techs. LLC, IPR , Paper 26 at 6 (PTAB March 5, 2013) (informative opinion). 9. See, e.g., GEA Process Engineering, Inc. v. Steuben Foods, Inc., IPR , Paper 23 at 3 (PTAB April 22, 2014); see also Innolux, IPR , Paper 25 at Garmin, IPR , Paper 20 at Id. at Garmin, IPR , Paper 26 at 3, Garmin, IPR , Paper 20 at Apple Inc. v. Sightsound Techs., LLC, CBM , Paper 40 at 7 (PTAB Dec. 11, 2013). 15. Cardiocom, LLC v. Robert Bosch Healthcare Sys., Inc., IPR , Paper 43 at 3 (PTAB May 12, 2014). 16. Garmin, IPR , Paper 20 at See, e.g., Garmin, IPR , Paper 26 at See, e.g., Apple, CBM , Paper 40 at 6 ( The discovery would result in a trial within a trial on the issue of infringement, with associated evidence, arguments, and (potentially) declarants from SightSound, and then the same from Apple in response. ). 19. See, e.g., id. at 9; Zodiac Pool Sys., Inc. v. Aqua Prods., Inc., IPR , Paper 26 at 4-5 (PTAB Oct. 18, 2013); Google Inc. v. Jongerius Panoramic Techs., LLC, IPR IPR , Paper 27 at 4-6 (PTAB Sept. 30, 2013). 20. Samsung Electronics Co., Ltd. v. Black Hills Media, LLC, IPR , Paper 17 at 2 (PTAB Oct. 2, 2014). 21. See, e.g., Medtronic, Inc. v. Robert Bosch Healthcare Sys., Inc., IPR , Paper 25 at 5-6 (PTAB Nov. 5, 2014); Zerto, Inc. v. EMC Corp., IPR , Paper 15 at 6 (PTAB Nov. 25, 2014). 22. See Samsung, IPR , Paper 17 at 3; see also Arris Grp., Inc. v. C Cation Techs., LLC, IPR , Paper 10 at 6 (PTAB May 1, 2015) (informative opinion). 23. GEA Process Eng g, IPR , Paper 23 at In re Telefonaktiebolaget LM Ericsson, 564 F. App x 585, 586 (Fed. Cir. 2014) (unpublished). 25. Coalition for Affordable Drugs II LLC v. NPS Pharms., Inc., IPR , Paper 14 at 6 (PTAB July 2, 2015). 26. Id. at See Office Patent Trial Practice Guide, 77 Fed. Reg at Apple Inc. v. Achates Reference Publishing, Inc., IPR , Paper 18 at 7 (PTAB April 3, 2013); see also RPX Corp. v. Macrosolve, Inc., IPR , Paper 9 at 4 (PTAB May 16, 2014) ( The time for Patent Owner to have sought discovery on this issue was during the three months between Patent Owner s receipt of the Petition... and Patent Owner s filing of its Preliminary Response. ) C.F.R (a)(2); id (a)(2) C.F.R (b)(2). 31. See, e.g., Accord Healthcare Inc., USA v. Daiichi Sankyo Co., IPR , Paper 28 at 10 n.11 (PTAB Sept. 15, 2015). 32. Garmin, IPR , Paper 20 at 2. 23

24 Contributors James S. Blank Partner Deborah Fishman Partner Jeffrey A. Miller Partner Katie J.L. Scott Counsel James Lyons Associate Paul Margulies Associate David Soofian Associate Brandon Teachout Summer Associate Attorney advertising. Prior results do not guarantee future outcomes Kaye Scholer LLP, 250 West 55th Street, New York, NY ( ) 24 Kaye Scholer LLP