AIA Post-Grant Proceedings: Lessons Learned from PTAB and Federal Circuit Decisions

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1 AIA Post-Grant Proceedings: Lessons Learned from PTAB and Federal Circuit Decisions Christopher Persaud, J.D., M.B.A. Patent Agent/Consultant Patent Possibilities Tyler McAllister, J.D. Attorney at Law Kilpatrick Townsend & Stockton LLP

2 Part I: Background and Lessons Learned from PTAB Decisions I. Background of the New Proceedings Created by the America Invents Act The Leahy-Smith America Invents Act (AIA) was signed by President Obama on September 16th, 2011, after passing both houses of Congress. Certain provisions of the AIA took effect on September 16th, The AIA created several new methods by which third parties may make postgrant challenges to granted patents. These methods include the inter partes review procedure (IPR) (not to be confused with the abolished inter partes reexamination procedure), the covered business method transitional procedure (CBM), and the post-grant review procedure (PGR). Trial proceedings before the PTAB employing these procedures will all be referred to as AIA proceedings for purposes of this paper, because they were created by the AIA. The petitions starting these proceedings will be referred to as AIA petitions, and a dispute where an AIA petition has been filed but the PTAB has not decided to institute a trial proceeding shall not be referred to as an AIA proceeding. A. Requirements and Timing for IPR, CBM, and PGR Proceedings Statutes governing the IPR procedure can be found at 35 U.S.C , and regulations specifically governing IPRs can be found at 37 C.F.R Statutes focused on PGRs are at 35 U.S.C , and regulations focused on PGRs are at 37 C.F.R CBMs are discussed at AIA 18, and regulations focused on CBMs, including the definition of a covered business method, are listed at 37 C.F.R The standards and regulations governing PGRs shall also be used for CBMs, with a few exceptions, some of which govern the available time period for filing a CBM petition. Rules governing trial practice in general before the PTAB, which are also applicable to AIA proceedings, are found at 37 C.F.R A third party wishing to challenge a patent via an IPR, CBM, or PGR must begin by filing a petition, and paying the appropriate fee. Inter partes review, covered business method proceedings and post-grant review are all trial proceedings, which have been delegated by the Director to the Patent Trial and Appeal Board (PTAB). The party that files the petition shall be called the petitioner here, for purposes of clarity; the claims that the petitioner challenges in the petition shall be referred to as challenged claims ; substitute claims that are accepted by the Board to replace the challenged claims will be referred to as substitute claims; and these will be referred to as proposed substitute claims prior to acceptance by the Board. A petition for an IPR, CBM, or PGR must meet substantial requirements, which are much more specific than those that generally apply to complaints in federal court. Furthermore, if a federal complaint does not meet the requirements, a court will generally grant the plaintiff at least one opportunity to fix the complaint. A petitioner for an AIA proceeding will have no such opportunity. A petition for an IPR, CBM, or PGR must: (a) certify that the patent is available for inter partes review and that the petitioner is not barred or estopped from requesting review of the patent claims identified in the petition, and (b) provide a statement of the precise relief requested for each challenged claim. This statement should include (1) the claim, (2) the specific statutory grounds under 35 U.S.C 102 or 103 as to why the claim is being challenged, and copies of the patents or printed publication on which the challenge is based, (3) an explanation of how the challenged claim is to be construed, (4) an explanation of the grounds for unpatentability of the challenged claim over the cited prior art, including specific citations to disclosure in the prior art where each element of the

3 challenged claim is to be found, and (5) the exhibit numbers of the supporting evidence relied upon to support the challenge and the relevance of the evidence to the challenge raised, including identifying specific portions of the evidence that support the challenge. The patent owner is allowed, but not required, to file a response, called a preliminary response to a petition for an IPR, CBM or PGR. The PTAB, after receiving the petition, and any response, will decide whether a proceeding for an IPR, CBM or PGR should be instituted before the PTAB. The Director has delegated decisions to institute IPR, CBM or PGR proceedings to the PTAB. The Board may only decide to institute an IPR proceeding if the Board concludes, based on the petition and any response, that there is a reasonable likelihood that the petitioner will prevail regarding at least one challenged claim. The threshold for instituting a post-grant review or CBM proceeding is higher; the Board must find that the information in the petition, if not rebutted, demonstrates that it is more likely than not that at least one challenged claim is unpatentable. Alternatively, the Board may find that the petition raises a novel or unsettled legal question that is important to other patents or patent applications. If the Board does not make the necessary finding, in the case of an IPR, CBM, or PGR, then the Board must decide against instituting a proceeding before the Board, and the Director must inform the petitioner and the patent owner. A decision not to institute an IPR, CBM, or PGR is final and nonappealable. The AIA mandates that the pendency of an IPR, a CBM, or a PGR before the PTAB after an AIA proceeding is instituted shall be no more than one year, but this period may be extended by the chief administrative patent judge for six months for good cause shown, or in case of joinder of two or more proceedings. B. After Institution of an AIA Proceeding Once the Board has decided to institute an AIA proceeding, the patent owner may file a written response to the AIA petition, in addition to any preliminary response that the patent owner may have filed. Both parties may also file supplemental information, including expert declarations, and both parties may file various motions. Both parties may also offer testimony, and crossexamine witnesses, in accord with the rules governing trial practice. The burden of proof on the petitioner is unpatentability by a standard of preponderance of the evidence. At the end of the proceeding, the Board will issue a written decision. If the PTAB rules in favor of the petitioner, with reference to one or more claims of the challenged patent, then that claim (s) will be cancelled. In many cases, all challenged claims have been cancelled at the end of a Board AIA proceeding. In IPR, PGR, or CBM proceedings, the patent owner may file one motion to amend the patent, to cancel any challenged claim or propose a reasonable number of substitute claims. The patent owner may only file a motion to amend after conferring with the Board. This motion to amend must be filed no later than the due date of the patent owner response, unless a different date is provided. Additional motions beyond the first may be filed when authorized by the Board for "good cause shown" or upon the request of the parties to materially advance a settlement. A final ruling by the PTAB in an IPR, PGR, or CBM proceeding will have estoppel effects. The parties in an IPR, PGR, or CBM proceeding may settle the proceeding and terminate it by joint request, at any time before a final decision is made. Any settlement agreement between a patent owner and petitioner must be in writing, and a true copy of the agreement must be filed by the USPTO before the termination of the proceeding. If the parties settle an AIA proceeding before the

4 PTAB issues a final ruling, no estoppel shall attach to the petitioner. If the Board comes to a final decision in an IPR proceeding, the petitioner is estopped from requesting or maintaining a proceeding before the USPTO, upon any grounds that the petitioner raised or reasonably could have raised in the IPR proceeding. The petitioner is also estopped from asserting invalidity of the challenged patent claim in any federal civil suit or proceeding arising under the ITC, upon any grounds that the petitioner raised or reasonably could have raised in the IPR proceeding. The same estoppel effects apply to final decisions in PGR and CBM proceedings. Parties faced with an adverse judgment may appeal the decision of the Board to the Court of Appeals for the Federal Circuit. C. Time Limits An IPR petition must be filed no less than 9 months after the later of the grant of the patent, or conclusion of any instituted PGR proceeding. If a patent infringement lawsuit is filed against the petitioner, the IPR petition must also be filed no more than one year after the civil lawsuit is filed, alleging infringement of the patent, except in situations where multiple IPR proceedings are joined together. A petition for post-grant review, by contrast, must be filed no more than 9 months after the date of grant of the patent. Furthermore, a post-grant review proceeding challenging a claim from a reissue patent, which is identical to or narrower than a claim in the original patent, must be filed no more than 9 months after grant of the original patent. Transitional covered business method petitions may be filed at any time after this 9-month period, but only by a party being accused of infringement of the patent in question. A petition must meet all of the requirements for completeness to be assigned a filing date. This is important, because an incomplete petition that is filed before a deadline but completed after it will have a filing date that is after that deadline. This can result in dismissal of the petition. For example, if a PGR petition is not considered complete when it is filed, and then the 9-month deadline after issuance of the patent passes, the PGR petition will be dismissed. D. Stays on Actions and Their Application The opportunity to file an AIA petition is limited by other actions that the petitioner may have filed, and can also create stays of other actions. An AIA petition cannot be filed if the petitioner has already filed an action in civil court challenging the validity of a claim of the same patent. Furthermore, if the petitioner files a civil action alleging invalidity of a claim of the patent after having filed the AIA petition, that civil action will be stayed by operation of law until the occurrence of one of three conditions. Note that these rules apply even if the claims being challenged in civil court are not the same as the claims being challenged in the AIA petition, as long as the challenged claims all come from the same patent. Thus, AIA petitions can, in certain cases, be a more cost-effective method of resolving patent disputes rather than resorting to civil actions. E. More Information about the CBM Transitional Program The Covered Business Method (CBM) transitional program was authorized under 18 of the AIA. The program enables a party who is being accused of infringement of a business method patent to file a petition for review of that patent. A "business method patent is defined, for purposes of covered business method review, as "a patent that claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions." The Director decides on a case-by-case basis whether a patent claims a technological

5 invention, based on whether the claimed subject matter as a whole recites a technological feature that is novel and nonobvious over the prior art, and solves a technological problem with a technological solution. The Director has delegated this function to the Patent Trial and Appeal Board (PTAB). Rules governing the CBM transitional program are only valid until September 15th, 2020, although they shall remain valid for CBM review proceedings that have been initiated before that time. Section 18 of the AIA also states that CBMs shall proceed according to the statutes and rules related to PGRs, with a few exceptions. A CBM can be filed at any time after nine months have passed after grant of the patent. There must also be an actual controversy regarding whether the petitioner has infringed the patent, and this controversy must be definite enough for the CBM petitioner to have standing to seek a declaratory judgment of invalidity of the patent if he so chose. If a party seeks a stay of a civil patent infringement lawsuit, where the stay is based on a transitional proceeding related to that lawsuit, the court shall consider whether to enter the stay based on four factors enumerated in 18 of the AIA, as discussed earlier in this paper. II. Overall Picture of AIA Proceedings Since the AIA Became Effective Litigants have made substantial use of the new AIA proceedings, and IPR petitions are by far the most common of the AIA proceedings. A total of 3277 IPR petitions, 368 CBM petitions, and 10 PGR petitions had been filed with the USPTO between implementation of the AIA and July 31st, Most patent owners elected to file preliminary responses. Between January 1 st, 2013 and July 31 st, 2015, 83% of patent owners filed preliminary responses to IPR petitions and 90% of patent owners filed preliminary responses to CBM petitions. As of July 31 st, 2015, 1777 IPR petitions had reached final institution, and of these, trials were not instituted in 950 cases, and trials were instituted in the other 827 cases; 209 CBM petitions had been received, and trials had been instituted in 102 of them, with final decisions having been handed down in 54 of these. Of the above cases, 372 IPR petitions and 36 CBM petitions seem to have been settled prior to institution of the IPR proceeding. The USPTO elsewhere indicates that about 27% of IPR petitions, and 27.2% of CBM petitions were denied and no trial was instituted. However, of those IPR, CBM, and PGR petitions that had reached final decisions, most (428 out of 501) resulted in cancellation of at least one claim of the patent under consideration. The number of AIA petitions increased between 2014 and 2015, with 1436 IPR petitions, 135 CBM petitions, and 8 PGR petitions being filed in In other words, about 90% of the AIA petitions filed in 2015 were IPR petitions, and this process seems to have found favor among patent practitioners. In 2015 thus far, a total of 63% of AIA petitions were focused on electrical/computer inventions of the types handled by Technology Centers 2100, 2400, 2600, and This may be related to the concerns about overly broad patents in computer program-related fields which many commentators have voiced. III.Lessons from AIA Jurisprudence: Pitfalls to Avoid A. The petition must be complete in every respect to ensure the petition receives the earliest possible filing date 1. Pitfall: Failing to recognize what constitutes a party in interest In GEA Process Engineering, Inc. v. Steuben Foods, Inc., No. IPR , , -

6 00051, , (P.T.A.B. Dec. 23 rd, 2014), the Board dismissed five IPR proceedings involving the same parties as untimely because the petitions failed to mention all of the real parties in interest (RPIs), i.e., the petitions were incomplete. The petitions were therefore untimely because they were filed, incomplete, just one day shy of the one-year deadline after the petitioner has been sued for infringement, and the petitions were not corrected before the one-year deadline had passed. Steuben Foods, the patent owner, believed that GEA Process Engineering, Inc. had not disclosed the identities of all the real parties in interest (RPI) related to the case. The Board authorized Steuben Foods to file a motion for additional discovery related solely to the identity of the RPI, and authorized GEA to file opposition to that motion. The Board then examined the motion and opposition, and found that, first, 35 U.S.C 312(a) and 37 C.F.R required that all real parties in interest to an IPR petition be identified in order for the petition to be accorded a filing date. If a real party in interest was not identified, the filing date of the petition had to be moved to the date when this error was corrected. Identification of real parties in interest is important for deciding conflicts of interest for the USPTO, the credibility of evidence offered in a proceeding, and standing for a party that has previously filed a civil action regarding a patent for which an IPR is requested. The Board also needs all RPIs to be identified, to decide whether a petition is timely. Identification of RPIs also facilitates a determination of whether the IPR petition is barred under 315(a) or whether a party is estopped from requesting review under 315(e). 37 C.F.R provides that when a party files an incomplete petition, no filing date shall be accorded, and the Office will dismiss the petition if the deficiency in the petition is not corrected within one month of the notice of the incomplete petition. The Board explained that one factor indicating that a non-party is an RPI is whether the non-party exercised or could have exercised control over a party s participation in a proceeding, and that [t]his inquiry must consider the totality of the circumstances. The Board then noted that Procomac, which was not listed as a real party in interest, had paid the legal bills which GEA incurred for participating in the case. Furthermore, GEA and Procomac were both controlled by the same parent company, GEA Group, and were both defendants in a related district court patent infringement case, where they were represented by the same law firm. The Board therefore found that under the circumstances of this case, Procomac was a real party in interest because it could have exercised control over GEA s participation in the proceedings. The Board therefore found that the IPR petitions were incomplete on the day of their filing, which, in this case, was the last day that the petitions could be filed. The IPR petitions were therefore dismissed as untimely. Practice Tip: Practitioners should be extremely careful about identifying all real parties in interest, and should err on the side of caution, when filing an AIA petition. Practitioners should also identify any party contributing to the litigation expenses of the proceeding as a real party in interest, and ensure that an IPR petition is complete on the date that it is filed, or quickly correct any omissions. 2. Pitfall: Failure to include a mandatory notice of all related matters when filing an AIA petition In Apple, Inc. v. Contentguard Holdings Inc., No. IPR (P.T.A.B. July 2nd, 2015), The Board indicated that failure to include a mandatory notice containing information about all judicial or administrative matters that would affect, or be affected by, the AIA proceeding, when

7 filing an AIA petition, could potentially be grounds for denial of that petition. Apple, the petitioner, had filed a notice identifying some related matters, both civil cases and other AIA petitions. Contentguard Holdings, the patent owner, filed a preliminary response in which it indicated several other related matters, including pending patent applications that claimed priority from the patent at issue. The Board analyzed the nature of the alleged related matters, and clarified that related matters include actions involving the patent in federal court, and administrative matters include every application and patent claiming, or which may claim, the benefit of the priority of the party s involved application as well as any ex parte and inter partes reexaminations for an involved patent. By this standard, Apple had not identified several patent applications, and CBM proceedings, that were related matters. The Board said that the failure to identify these related matters could be grounds for them to deny instituting an IPR proceeding, although, in this particular case, the Board declined to institute the proceeding on unrelated grounds. Practice Tip: Counsel should take steps to err on the side of caution when identifying all related proceedings, when filing an AIA petition. Defense counsel should also investigate whether all related matters have been identified in an AIA petition, once the petition is served. All parties should also consult the Office Trial Practice Guide for aid in interpreting significant terms in the statutes and regulations governing IPR petitions. B. An AIA Petition Should Clearly State Exactly How The Prior Art References Can Be Used To Invalidate The Claims At Issue The Board in Apple, Inc. declined to institute an IPR proceeding because the petition was unclear, and therefore, the Board thought that there was no reasonable likelihood that the petitioner would prevail. A successful AIA petition must include a specific explanation of how the claim is unpatentable over the cited prior art, including specific citations to the disclosure in the prior art where each element of the challenged claim is to be found. Here, Apple did not sufficiently identify the differences between the claimed invention and the prior art, or how the prior art teachings were to be modified, or combined, if at all. The Board noted that Apple cited Ginter, a prior art reference, and claimed that Ginter could be combined with other prior art to make the claimed invention obvious, but did not specify which prior art Ginter could be combined with, or how. Apple also did not give any rational underpinning for why a person of ordinary skill in the art would be motivated to combine the prior art references in a way that mimicked the invention of the patent under scrutiny, and such a rational underpinning was necessary to show that the prior art references invalidated the challenged claims under 35 U.S.C 103. Apple s petition was unclear in other ways. Apple did not make a required specific identification explaining which of the evidence that they submitted supported Apple s challenge to each claim. Apple also attempted to incorporate declaration testimony by reference into their petition, which is forbidden. The PTAB also felt that Apple did not explain how the voluminous evidence that Apple submitted supported their position, and remarked that [t]he petitioners should avoid submitting all the evidence that a judge may possibly consider, and instead focus on concise, well-organized, easy-to-follow arguments supported by readily identifiable evidence of record. Here, Apple s failure to identify exactly how the evidence submitted supported Apple s arguments under the relevant case law interpreting 35 U.S.C 102 and 103 doomed the petition. Practice Tip: When writing an AIA petition, counsel should clearly reference, by page number, or another method, specific disclosures in each reference that contain the information

8 relevant to the challenge, and then explain how all of the relevant information in the references anticipates the claim in question under 35 U.S.C 102 or how the references can be combined to invalidate the claims as being obviousness under 35 U.S.C 103. Counsel should also review the petition to make sure that it fulfills the requirements of 37 C.F.R (b) for IPR petitions or for CBM or PGR petitions. 1. Pitfall: Presenting the same arguments regarding the same patent claims in two different proceedings In MaxLinear, Inc. v. Cresta Corporation, No. IPR (P.T.A.B. June 15 th, 2015), the Board denied a petition to institute an IPR proceeding because the same or substantially similar arguments that were made in the petition were also being presented in a related proceeding. The only difference noted by the Board was a declaration from a different expert that said substantially the same things as the expert declaration in the first proceeding. This was not sufficient to provide a basis for the second proceeding. Practice Tip: When filing an AIA petition, Counsel should always make sure that it uses arguments that are not mirrored by, or are simply cumulative of, another petition, which the client or someone else may have filed. Counsel should ensure that the arguments say something new and substantial. 2. Pitfall: Insufficient support and explanation in a motion to amend the claims can result in denial of the motion Idle Free Systems, Inc. v. Bergstrom, No. IPR (P.T.A.B. June 11th, 2013) was one of the first AIA proceedings where the Board discussed the requirements for a motion to amend the claims. These requirements were discussed in the context of an IPR proceeding, but would probably apply in all AIA proceedings. Bergstrom, the owner of patent No. 7,591,303, filed two motions to amend, as discussed below. The first motion was denied without prejudice by the Board. The Board first noted that Bergstrom filed the first motion to amend without consulting the judges on the specific amendments Bergstrom contemplated, in violation of 37 C.F.R (a). In general, a patent owner must confer with the Board before making a motion to amend the patent claims in an IPR proceeding. With regard to the motions to amend, the Board noted that the presumption is that only one claim is necessary to replace each challenged claim. This presumption may be rebutted in certain circumstances. The Board also stated that the "just" resolution of the proceeding supported allowing a patent owner an opportunity to propose a substitute for each challenged claim. A competing consideration is that each proposed substitute claim adds to the cost of an AIA proceeding, because each proposed substitute claim needs to be briefed by the parties, and analyzed by the Board. Therefore, the moving party must identify the challenged claim that each proposed substitute claim is intended to replace. Otherwise the Board would have no way of evaluating what a "reasonable" number of proposed substitute claims is. A patent owner may propose more than one substitute claim for each challenged claim, but must confer with the Board about any such additional substitute claim ahead of time. Any proposed substitute claim is not responsive to a ground for challenge if it does not include or replace every element of the claim that it is intended to replace. In all situations where a patent owner proposes more than one substitute claim for a challenged claim, the patent owner must explain why each proposed substitute claim is patentably distinct over other proposed substitute claims for the same challenged claim.

9 If the patent owner proposes additional features, which are not present in the challenged claims, to be included in both dependent and independent substitute claims, and adds more additional features not present in the challenged claims to dependent substitute claims, the patent owner should also provide meaningful reasons why this is necessary and responsive to the arguments against patentability of the challenged claims that the petitioner presented. The Board also explained that the following requirements are necessary for such proposed substitute claims. "For each proposed substitute claim, we expect a patent owner: (1) in all circumstances, to make a showing of patentable distinction over the prior art; (2) in certain circumstances, to make a patentable distinction over all other proposed substitute claims for the same challenged claim; and (3) in certain circumstances, to make a showing of patentable distinction of patentable distinction over a substitute claim for another challenged claim. The Board further explained that the patent owner must discuss the prior art, and its similarities to and differences from the claimed invention, and the patent owner cannot rely on simple declarations of counsel that the proposed substitute claims are patentable. Such declarations are insufficient for this purpose. A patent owner may also propose substitution of a substitute claim for a challenged claim conditioned on the challenged claim being found invalid, or on some other contingency, but the "condition and target of substitution should be clearly stated, without ambiguity." For example, the patent owner may specify that Claim 20 should be substituted for Claim 1, or that Claim 20 should only be substituted for Claim 1 if Claim 1 is found to be unpatentable. The condition and target of substitution; namely, which proposed substitute claim substitutes for which challenged claim, and in what circumstance, should be specified. In Bergstrom's case, the first motion to amend claims was denied because Bergstrom failed to confer with the Board before filing the motion. However, since this was one of the first IPR proceedings instituted by the Board, the Board realized that Bergstrom may have erroneously thought that some of its other actions may have fulfilled the requirement to confer with the Board. Therefore, they gave Bergstrom another opportunity to file a motion to amend the claims. In future cases, the Board may not be willing to allow a patent owner a second opportunity to file a motion to amend, if the patent owner fails to confer with the Board before filing the first motion. The Board allowed Bergstrom to do this because very little guidance existed at the time regarding what constituted "conferring with the Board" in an IPR proceeding. Practice Tips: (1) Counsel should always confer with the Board specifically about the motion, before making a motion to amend in an IPR, CBM, or PGR proceeding; (2) a motion to amend should state the conditions and targeting of substitution, without ambiguity, and conditional substitution, where a claim may be substituted for another only if the challenged claim is found unpatentable, is allowed. (3) in all situations where a patent owner proposes more than one substitute claim for a challenged claim, the patent owner must explain why each proposed substitute claim is patentably distinct over other proposed substitute claims for the same challenged claim; (4) if the patent owner proposes additional features for both dependent and independent substitute claims, and adds additional features to dependent claims, not present in the challenged claims, then the patent owner should provide meaningful reasons why the addition of these features is responsive to the arguments in the petition which began the case; and (5) mere statements or remarks from the patent owner, or counsel, that the patent owner knows of no prior art that would render obvious the proposed substitute claims, or that one or more of the added features are not described in any prior art, and would not have been suggested or rendered obvious by prior art, are on their face inadequate to show patentability over the prior art in a motion to amend in an AIA proceeding.

10 Bergstrom later filed a second motion to amend, which the Board discussed in the final resolution of the case. Bergstrom asked to substitute proposed substitute claims for Claims The Board proceeded to analyze Bergstrom's motion to amend, and to deny the motion because Bergstrom did not explain what was known in the prior art, and the level of skill, and creativity in the prior art, regarding the added features that Bergstrom focused on in substitute Claims 24-26, when asserting that these claims were patentable. First, the Board considered whether the added features had written description support in the original specification. The Board examined several drawings of the specification, and concluded that such support existed. Idle Free Systems proffered an expert declaration to oppose Bergstrom, but the Board found this declaration unpersuasive, in part because the declaration did not explain how the invention described in the drawing could work without operating the way that Bergstrom claimed it operated. The declaration also failed to explain why the drawings would not be understood by someone of ordinary skill in the art to portray the invention claimed in substitute Claims Second, the Board examined whether or not Bergstrom had shown that the proposed substitute claims were patentable over the prior art. The Board found that Bergstrom said nothing about the level of ordinary skill, creativity, and knowledge in the prior art, related to the features that Bergstrom had added to the proposed substitute claims. Bergstrom also did not discuss the state of the prior art. Bergstrom had to discuss these matters, or, if Bergstrom had no knowledge, of these matters, Bergstrom had to represent that it had no knowledge of these matters. Bergstrom did neither. Therefore, the Board found that Bergstrom had not met its burden of proof, and denied the motion. In a motion to amend, in an AIA proceeding, it is necessary to explain how the invention in the proposed substitute claim(s) is patentable over the prior art, and, in order to do this, to explain what the prior art is, and the state of the prior art. This is more stringent than the requirements for filing a patent application. A patent applicant is not technically required to explain the state of the prior art, when filing his initial application, though patent applicants often make such an explanations. The Board explained that "[d]istinguishing the proposed substitute claims only from the prior art references applied to the original patent claims, however, is insufficient to demonstrate general patentability over prior art. This is because the proposed substitute claims would be added to the patent directly, without examination, if the motion was to be granted, unlike the situation in a patent application, where the claims are examined before being allowed. Additionally, the motion to amend should make some representation about the specific technical disclosure of the closest prior art that is known to the inventor. In this regard, the Board found that [a] showing of patentable distinction can rely on declaration testimony of a technical expert about the significance and usefulness about the feature(s) added by the proposed substitute claim, from the perspective of one of ordinary skill in the art, and also in terms of the level of ordinary skill, in terms of ordinary creativity and the basic skill set possessed by such a person. Bergstrom did not reveal what it thought was previously known in the field that the invention pertained to, and therefore did not show that its proposed substitute claims were patentable over the prior art in general. The Board also explained several presumptions that it made in finding the challenged claims in the IPR to be unpatentable. Claim terms in IPR proceedings are interpreted according to their

11 broadest reasonable construction in light of the specification. Claim terms are also given their ordinary and customary meaning, as would be understood by one of ordinary skill in the art in the context of the entire disclosure. The Board examined the specification of the '303 patent and concluded that the term "engine off" meant an engine that is not running and needs to be started to run, and not necessarily an engine which did not contain active electronic circuits when the engine itself was not running. The Board then employed this construction and examined an expert declaration provided by Idle Free to conclude that all of the challenged claims read on Iritani's published U.S. Patent Application No. 2002/ , one of the prior art references. The Board separately analyzed the teachings of U.S. Patent No. 4,015,182 to Erdman and Japanese Published Application JP-H to Yoshida, and concluded that it would have been obvious to a person skilled in the art to combine them to make the inventions disclosed in the challenged claims. The Board also interpreted some of the implications of the combined teachings of these two references by examining the testimony of the experts proffered by the parties. Bergstrom notably filed a motion to exclude testimony of an opposing witness, which was considered, discussed, and denied. This shows that the Board will consider such motions in AIA proceedings, in appropriate circumstances. Practice Tips: (1) Most Board AIA proceedings that proceeded to final judgment ended with at least one of the challenged claims being found invalid, and counsel should consider this when planning strategy, related to an IPR proceeding; (2) in a motion to amend, a proposed substitute claim should include, or alternatively narrow, each feature of the claim that it is intended to replace; (3) in all circumstances, a patent owner must make a showing of patentable distinction over the prior art for each proposed substitute claim in a motion to amend claims in an AIA proceeding; and (4) counsel should err on the side of caution regarding including large amounts of detail and written description support, when writing the original patent specification, because Counsel may have to write substitute claims later and show that they have written description support in the original specification, if claims of the patent are challenged in an AIA proceeding. IV. Lessons from Successful Motions To Amend Claims In AIA Proceedings Riverbed Technology, Inc. v. Silver Peak Systems, Inc., no. IPR (P.T.A.B. Dec. 30 th, 2014), and related case no. IPR (P.T.A.B. Dec. 30 th, 2014), are examples of cases where a patent owner s motion to amend claims was granted in part and denied in part, making them useful decisions to determine the most important requirements for a motion to amend claims in an IPR proceeding. The cases involved U.S. Patent No. 8,370,583 ( the 583 patent ) in case no. IPR (Riverbed I), and U.S. Patent No. 8,312,226 ( the 226 patent ) in case no. IPR (Riverbed II). Riverbed, the petitioner, filed petitions for IPR proceedings regarding both patents. Silver Peak, the patent owner, filed motions to amend the patents. The motion to amend the 583 patent proposed the cancelation of Claims 1-27 and the addition of substitute Claims The Board held a combined oral hearing for both cases on September 30 th, The Board s written decision regarding the 583 patent focused on whether the proposed substitute claims had written description support in the original disclosure, and whether they were patentable over the prior art. The details of Riverbed I are discussed below. C. Written description The Board explained that a motion to amend in an IPR proceeding must set forth the support in the original disclosure of the patent for each claim that is added or amended, and the support in the earlier-filed disclosure for each claim for which benefit of the filing date of the

12 earlier-filed disclosure is sought. The Board then listed the paragraphs in the original disclosure of the 583 patent which Silver Peak had cited in support of two of its proposed substitute Claims 29 and 31. The Board also noted that the proposed substitute claims added limitations to the cancelled claims, but did not omit any limitations, and so were considered not broadening. Therefore, the Board found that Substitute Claims 28, 29, 30, and 31 had written support in the original disclosure. Practice Tip: Counsel should err on the side of caution and include sufficient written description support in the original disclosure of a patent application for the subject matter of any substitute claims added during the IPR proceeding. D. Patentability over the prior art The patent owner bears the burden to show the patentability of proposed substitute claims over the prior art. Therefore, a patent owner should identify specifically the feature or features added to each substitute claim, as compared to the challenged claim it replaces, and come forward with technical facts and reasoning about these features. This should be sufficient to persuade the Board that the proposed substitute claim is patentable over prior art of record, and also prior art not of record but known to the patent owner. The Board also interpreted such claims using the broadest reasonable construction in light of the patent in which they appear. This standard has been adopted by the Office as 37 C.F.R (b) and in the Office Patent Trial Practice Guide. The Board then analyzed proposed substitute Claims 30 and 31, and the scope of a "reasonable" number of substitute claims in the context of an IPR proceeding. Particularly, the Board discussed a scenario where a challenged independent claim had dependent claims, and the patent owner proposed adding a substitute independent claim to replace the challenged independent claim, and adding other substitute claims depending on the first substitute claim, to replace the challenged dependent claims. The Board cited Bergstrom to state that if the patent owner added additional features to the dependent substitute claims, which were not present in the dependent challenged claims, and which were not responsive to the asserted grounds for unpatentability, then the patent owner should provide meaningful reasons for adding these additional features. Showing a patentable distinction between the proposed dependent substitute claims and the proposed independent substitute claim would be one such circumstance. The Board thus analyzed whether the patent owner had shown a special circumstance for adding the additional features into proposed substitute Claims 30 and 31. They considered the parent proposed substitute claims to be prior art over the dependent proposed substitute claims when they made this analysis. The proposed independent substitute claims contained limitations related to storing one copy of certain data. The proposed dependent substitute claims contained limitations related to storing another copy of the data. The patent owner cited no evidence for why this would not have been obvious over the parent claims. The patent owner did claim that McCanne, one of the prior art references, taught away from storing multiple copies of the data. The Board examined McCanne and decided that McCanne merely expressed a general preference, which was different from "teaching away from" the proposed substitute claims. A reference must "criticize, discredit, or otherwise discourage the solution claimed" in order to teach away from that solution. Furthermore, the patent owner's argument regarding McCanne did not account for the substitute independent claims, because it could only apply to substitute dependent claims. The court concluded that the patent owner had not shown a special circumstance for adding the additional features into proposed substitute Claims 30 and 31, and denied the motion regarding

13 Claims 30 and 31 under 37 C.F.R (a)(2)(i) and (a)(3). Practice tip: If, in an AIA proceeding, Counsel is filing a motion to amend claims, Counsel should specify which of the substituted claims is supposed to substitute for which of the challenged claims. The Board also discussed proposed substitute Claims 32 and 33. The patent owner bears the burden of persuading the Board that each proposed substitute claim is patentably distinguishable over the prior art. If any new term is introduced in a proposed substitute claim, the meaning of which reasonably can be anticipated as subject to dispute, the patent owner should provide a proposed claim construction in a motion to amend. If the proposed substitute claim adds a meansplus-function element, the corresponding acts, material, or structure in the specification should be identified. Here, the patent owner did not provide proposed claim interpretations for certain meansplus-function limitations in Claim 23. Proposed substitute Claim 32 depended from Claim 23, and proposed substitute Claim 33 depended from Claim 32. Therefore, the patent owner had not shown that proposed substitute Claims 32 and 33 were patentably distinct over the prior art. In addition, the patent owner listed two limitations in proposed substitute Claim 32 as "means for" performing certain functions. The patent owner identified the corresponding structure for these two distinct limitations in the specification as "at least the hardware and/or software elements" of a branch appliance or central appliance. The Board found this definition to be impermissibly vague, and insufficient. Some type of data structure, or alternatively a specially programmed computer, would have to be recited, and neither of these items was recited in proposed substitute Claim 32. Silver Peak System s Inc., the patent owner's, analysis of the prior art was also not directed towards the patent owner's interpretation of the above-identified limitations. The patent owner analyzed the proposed claims as two groups, instead of analyzing them individually, which weakened the persuasiveness of Silver Peak s argument. The Board concluded that the patent owner had not met its burden of proof, in showing by a preponderance of the evidence that its proposed substitute Claims 32 and 33 were patentable over the prior art. Practice Tips: (1) If, in filing a motion to amend during an IPR, CBM, or PGR proceeding, the patent owner wishes to propose substitute claims that contain features not present in the claims that they are substituting, the patent owner should show special circumstances which necessitate that proposal; (2) the patent owner should make clear that, with the additional features included, the substitute dependent claims would be patentably distinct from any claims that they might depend on; (3) if Counsel intends to argue that prior art references teach away from a proposed substitute claim, Counsel should cite, in the motion, specific places where the reference "criticizes, discredits, or otherwise discourages the solution claimed" in order to teach away from that solution; (4) if in a motion to amend a claim in an AIA proceeding, any new term is used in a proposed substitute claim, the meaning of which reasonably can be anticipated as subject to dispute, the patent owner should provide a proposed claim construction in a motion to amend; and (6) if the proposed substitute claim adds a means-plus-function element, the corresponding acts, material, or structure in the original specification should be identified. In another case, between the two same parties, case IPR , Riverbed Technology filed a motion to amend, in which it requested cancellation of all of its 14 claims, which were involved in the proceeding. Silver Peak agreed, and thus, the Board treated Riverbed Technology s motion as a request for judgment against itself. The Board then canceled all 14 claims and

14 concluded the case. This shows another option available to patent holders. E. International flavors: the first successful motion to amend International Flavors & Fragrances, Inc., v. The United States of America as represented by the Secretary of Agriculture was the first AIA proceeding where the Board granted a motion to amend, related to U.S. Pat. 7,579,016. The patent related to the use of compounds belonging to a chemical family known as isolongifolanone analogs to repel arthropods such as insects. The details of the motion and decision in this case are discussed below, to discern some of the components of a successful motion to amend. The IPR petition argued that, first, the challenged claims in the patent were anticipated by PCT publication WO 2000/ to Behan et. al., and second, that the challenged claims were obvious over Behan in light of a prior art article by Grieco et. al., and third, that the challenged claims were obvious over Behan in light of a prior art article by Carroll et. al. The patent owner did not file a preliminary response. The motion to amend stated that challenged Claims 1-26 should be cancelled, and new Claims should be entered instead. The patent owner also specifically noted that not more than one substitute claim was offered for each challenged claim, and that each substitute claim had support in the original disclosure. The motion then listed the proposed substitute claims, listing them each as a "proposed new claim". The patent owner also explained the difference between proposed substitute Claim 27, the substitute independent claim, and Claim 1, the challenged independent claim. In part, the proposed substitute claim required that one of the isolongifolanone analogs in the patent-protected composition be selected from among a specific group. Next, the patent owner cited the paragraphs in the original patent application where support for each of the proposed substitute claims could be found, and included the original application as an exhibit. The motion then discussed the cited prior art, and noted that none of the cited references included using the isolongifolanone analogs listed in proposed substitute Claims 27 as arthropod repellants. The motion also discussed several scientific papers and declarations that were included as exhibits to the motion. The motion argued that the scientific papers showed that "a person of ordinary skill in the art would expect that minor structural changes to a known insect repellant often result in a modified compound that does not repel insects." Therefore, the motion concluded, the proposed substitute claims were not anticipated, and were not obvious over the cited prior art. No opposition was filed. The Board analyzed the motion, and concluded, first, that the proposed substitute claims included all of the limitations of the challenged claims and therefore did not impermissibly enlarge their scope. Next, the Board analyzed the original specification of the patent at issue, and concluded that it provided written description support for the proposed substitute claims. The Board then examined patentability of the proposed substitute claims over the prior art using the principles explained in Idle Free. The Board noted that, [p]atent owner provides several publications, as well as the declaration of Dr. Aijun Zhang (Ex. 2005; "Zhang Declaration"), to demonstrate the level of ordinary skill in the art, as well as the unobviousness of features being relied upon to demonstrate patentability of the proposed claim". The Board then discussed the publications in some detail. The publications indicated that small modifications in an arthropod repellant chemical compound could result in a compound that did not repel insects. There was nothing in the prior art that suggested that isolongifolanone could be modified to create the isolongifolanone analogs in proposed amended Claims 27, or that these analogs could be used to repel arthropods, because the prior art was unpredictable, and even though closely related