Inter Partes and Covered Business Method Reviews A Reality Check

Transcription

1 Inter Partes and Covered Business Method Reviews A Reality Check Wab Kadaba Chris Durkee January 8, Kilpatrick Townsend

2 Agenda I. IPR / CBM Overview II. Current IPR / CBM Filings III. Lessons Learned So Far 2

3 IPR / CBM Overview 3

4 IPR / CBM Overview Timing Bases Standard Estoppel Discovery Lit. Stays C B M Once sued or charged w/ infringement (After PGR period for pats. filed on / after 3/16/13) 101, 102, 103, 112, 251 (102 / 103 art limited for pre- AIA pats.) More likely at least 1 claim not patentable; Novel or open legal question USPTO: raised / reasonably could have; Dist. Ct. & ITC: actually raised Evidence directly related to factual assertions by either party No, but immediate interloc. appeal from denial of stay (will delay lit.) I P R 9 mos. after. issue or end of PGR; w/in 1 yr. of service (No wait for pats. filed pre- 3/16/13) 102, 103 pats. and printed pubs. Reasonable likelihood at least 1 claim not patentable USPTO, Dist. Ct. & ITC: raised or reasonably could have raised Depos. of declarants & as necessary in interest of justice Only later actions for patent invalidity filed by petitioner 4

5 IPR / CBM Timeline (Typical) 3 Mos. 3 Mos. 3 Mos. 3 Mos. 1 Mo. 12 Mos. 5

6 PTO vs. Litigation Factors CBM IPR Litigation Burden of Proof Presumption of Validity Claim scope Decision maker Preponderance of Evidence No Broadest reasonable interpretation (Suitco) PTAB 3 Judge Panel Clear and Convincing Evidence Yes Contextual (narrow) construction (Phillips) Average Juror 6

7 IPR / CBM vs. Litigation 1. Compressed time: advantage or disadvantage? 2. Significant expense, but generally less than litigation 3. Well-managed discovery effort is very important (information needed, attacking other side s positions, defending your positions, cost management, ) 4. Real party-in-interest and privity issues: estoppel 5. Broadest reasonable interpretation standard applied by the PTO (can often work against the patent holder) 6. Similar opportunity for advocacy before the decision maker 7

8 Covered Business Methods Covered business method patents: claim 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 does not include patents for technological inventions Technological inventions not statutorily defined USPTO promulgated definition: the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution USPTO will consider AIA legislative history explaining that the definition of CBM was drafted to encompass patents claiming activities that are financial in nature, incidental to a financial activity or complementary to a financial activity 8

9 Current IPR / CBM Filings 9

10 IPR and CBM Filings (1/2/14) Petitions Granted IPR (10 joinders) Denied Disposals (69 settled; 10 final written decisions; 1 dismissed) CBM (7 settled; 1 final written decision) 7% 5% 1% Technologies Elec./ Comp. 15% Mech. 72% Chem. Bio / Pharma Design Patent Owners Preliminary Responses: ~ 75%+ of cases Settlements: ~ 25% of cases 10

11 Lessons Learned So Far 11

12 Versata: First CBM Granted SAP America, Inc. v. Versata Development Group, Inc., CBM (Jan. 9, 2013) First CBM petition to be granted. PTAB answered several interesting questions: Does a petitioner have standing to bring CBM review where patent was found valid and infringed in Dist. Ct. and on-going appeal does not involve validity issues? Must a patent claim be directed to or recite a financial product or a financial service? Why were the patent claims in this case not directed to a technological invention? 12

13 Standing In District Court, SAP was found to have infringed Versata s patent; case is on appeal to CAFC, but appeal does not involve validity issues Versata argued that the related litigation had progressed beyond the point where the statute contemplated it would be employed the validity of the patent had been finally determined PTAB gave AIA 18(a)(1)(B) its literal meaning: a party sued for infringement of a patent, and not otherwise estopped from challenging validity, may file a petition PTAB held that claim preclusion / issue preclusion had not attached because CAFC had not yet rendered final judgment 13

14 Financial Products / Services; Technological Inventions Financial Products / Services PTAB: CBM claims do not require literal recitation of the terms financial products or financial services. The term financial is an adjective that simply means relating to monetary matters Versata s patent claims are directed to methods and apparatuses for determining the price of a product offered to a purchasing organization Technological Invention PTAB: None of Versata s claim limitations, taken alone or in combination, rises to the level of a technological feature as the claimed method steps could be performed by one of ordinary skill in the art with pencil and paper 14

15 CBM: Representative Claim 17. A method for determining a price of a product offered to a purchasing organization comprising: arranging a hierarchy of organizational groups comprising ; arranging a hierarchy of product groups comprising ; storing pricing information in a data source retrieving applicable pricing information corresponding to the product, the purchasing organization, each product group ; sorting the pricing information according to the pricing types, the product, the purchasing organization, the hierarchy of product groups ; eliminating any of the pricing information that is less restrictive; and determining the product price using the sorted pricing information. 15

16 SAP v. Versata Final Decision Trial conducted April 17, 2013 Final Written Decision issued June 11, 2013 (Paper No. 70) First final written decision issued by PTAB; all challenged claims cancelled as unpatentable under 35 U.S.C. 101 Motion for rehearing denied Issues raised: not a CBM patent; 101 not valid basis for review; BRI improper in PTAB trial; claims recite patent eligible subject matter Notice of appeal filed (November 13, 2013) SAP faces final judgment of infringement and damages $300M in related litigation Fresenius v Baxter (Fed. Cir., July 2, 2013): cancellation of patent claims by PTO trumps non-final litigation judgment 16

17 More Financial Services; Technological Inventions Volusion v. Versata CBM (Oct. 24, 2013) Database claims with no financial-oriented limitations Specification states that many embodiments have application to a wide range of industries including financial services and has additional disclosure that invention is applicable to financial services As described in specification, claimed invention has application in the field of e-commerce, in the form of e-catalogs used by potential buyers The claimed steps are not limited to any particular product or service Therefore, at least one claim covers operations used in the practice, administration, or management of a financial service. No technological invention: representing items hierarchically is more an organizational problem for grouping items than a technical problem 17

18 Interactive Question #1 (Discovery) What types of discovery will the Patent Owner be able to get in most IPR and CBM proceedings? A. Exhibits cited in a paper or in testimony B. Cross examination of experts C. Limited document requests and interrogatories relating to issues of secondary considerations of nonobviousness D. A and B only E. A, B and C 18

19 IPR First Final Written Decision Garmin Int l, et al., v. Cuozzo Speed Tech. LLC IPR Challenged claims found unpatentable by PTAB Observations re: PTAB written decision: detailed claim construction analysis considered at length issues of priority, conception and reduction to practice discounted Owner s expert testimony as being essentially argument vs. expert opinion supported by significant detailed and factual bases Owner s motion to amend was denied; PTAB did not find adequate support in specification for proposed amendment 19

20 More from Garmin: Discovery Owner requested additional discovery under necessary in the interest of justice standard Sought interrogatories, document requests and what amounted to a 30(b)(6) deposition of the corporate entity of Petitioner (Garmin) PTAB denied request and set out 5-factors that are important for determining whether an additional discovery request will be granted: 1. Provide evidence, rather than more than a possibility and mere allegation that something useful will be found; 2. Litigation positions and underlying basis are not necessary in the interest of justice ; 3. Ask whether equivalent information can be generated by other means; 4. Questions should be easily understandable; and 5. Requests should not be overly burdensome to answer 20

21 More Discovery Microsoft v. Proxyconn IPR (Sept. 18, 2012) IPR (Jan. 11, 2013) Owner requested additional discovery from petitioner relating to secondary considerations of nonobviousness (commercial success of allegedly infringing product) to support patentability arguments PTAB required Owner, in support of request, to address relevance of the information sought, including the nexus between the information sought and the allegation of commercial success. Owner asserted that this information was premature PTAB disagreed (Paper No. 32): interest of justice does not require conclusive showing of nexus, but some showing of relevance necessary Showing of relevance especially required where, as in this case, the claimed feature (remote differential compression) was only one characteristic of the allegedly infringing product (Windows Server) 21

22 Back to Question #1 What types of discovery will the Patent Owner be able to get in most IPR and CBM proceedings? A. Exhibits cited in a paper or in testimony B. Cross examination of experts C. Limited document requests and interrogatories relating to issues of secondary considerations of nonobviousness D. A and B only E. A, B and C 22

23 Interactive Question #2 (Litigation Bar) Facts: Patent Owner filed and then voluntarily dismissed without prejudice an infringement suit against Petitioner. More than one year later, Petitioner filed an IPR against asserted patent. Question: Does the 1-year litigation bar apply to IPR request? 23

24 Dismissal of Prior Litigation Macauto USA v. BOS GmbH & KG, IPR , filed September 16, 2012 Previous patent infringement suit against petitioner was voluntarily dismissed without prejudice; petition for IPR was granted despite being filed more than 1 year later The prior lawsuit was voluntarily dismissed without prejudice and, as such, under Federal Circuit law, the effect of such a dismissal leaves the parties as though the action had never been brought Also: Owner never filed proof of service or waiver of service in the litigation, so Owner never established service date for complaint; therefore the one year time limitation under Section 315(b) had not yet begun to run and the petition was not time barred 24

25 Back to Question #2 Facts: Patent Owner filed and then voluntarily dismissed without prejudice an infringement suit against Petitioner. More than one year later, Petitioner filed an IPR against asserted patent. Question: Does the 1-year litigation bar apply to IPR request? 25

26 Effect of Previous Action by PTO Research in Motion v. MobileMedia Ideas IPR , filed October 30, 2012 Patent at issue was subject of request for Ex Parte Reexam that was denied (3-examiner panel) prior to filing of the IPR Some references relied upon in IPR petition were before the examiners who denied the reexamination request Owner argued that IPR should be denied on basis that PTO already considered the cited references 35 U.S.C. 325(d) provides that PTO may take into account whether the same or substantially the same prior art or arguments previously were presented to the Office PTAB rejected argument that petitioner failed to explain why reexam examiners were wrong in denying request for ex parte reexamination; IPR request is not a renewed request for reexamination 26

27 DJ Bar and Standing Ariosa Diagnostics v. Isis Innovation, IPR , filed Sept. 17, 2012 Petitioner filed DJ Action for non-infringement; Owner asserted infringement and Petitioner raised affirmative defense of invalidity Petitioner later filed petition for IPR Section 315(a)(1): An IPR may not be instituted if petitioner or real party in interest previously filed a civil action challenging validity of the patent Section 315(a)(3): a party faced with a claim of infringement can bring a counterclaim of invalidity and still avail itself of inter partes review PTAB ruled that Petitioner had standing to file IPR petition: Filing civil action = filing a complaint with the court to commence the action A civil action for DJ of non-infringement is not a challenge of patent validity Asserting affirmative defense of invalidity is different than filing counterclaim for invalidity, and thus for the purposes of 315(a)(1) cannot be considered a filing of a civil action for invalidity 27

28 Questions? Thank you. 28