Post-SAS Implications On Parties to Inter Partes Review and Estoppel Issues

Post-SAS Implications On Parties to Inter Partes Review and Estoppel Issues Grant Shackelford Sughrue Mion, PLLC 2018 1

Agenda Background: PTAB's partial institution practice SAS Decision Application of SAS at the PTAB Impact of SAS at the Federal Circuit Impact of SAS at the District Court Strategic Considerations 2

PTAB Discretion to Institute [T]he PTO is permitted, but never compelled, to institute an IPR proceeding Harmonic Inc. v. Avid Tech, Inc., 815 F.3d 1356, 1367 (Fed. Cir. 2016) 3

Discretion to Institute: 35 U.S. Code 314(a) The Director may not authorize an inter partes review to be instituted unless the Director determines that the information presented in the petition filed under section 311 and any response filed under section 313 shows that there is a reasonable likelihood that the petitioner would prevail with respect to at least 1 of the claims challenged in the petition. 4

Federal Circuit: There is benefit in the PTO having the ability to institute IPR on only some of the claims and on only some of the proposed grounds, particularly given the Board s statutory obligation to complete proceedings in a timely and efficient manner. Shaw Indus. Grp., Inc. v. Automated Creel Sys., Inc., 817 F.3d 1293, 1298 (Fed. Cir. 2016). 5

PTAB Rules Authorized Partial Institutions 37 C.F.R. 42.108(a) When instituting inter partes review, the Board may authorize the review to proceed on all or some of the challenged claims and on all or some of the grounds of unpatentability asserted for each claim. 6

PTAB Favored Partial Institution Petition instituted in full Petition instituted in part Petition denied Data generated from Docket Alarm 7

Statutory Estoppel 35 U.S.C. 315(e) 1) PROCEEDINGS BEFORE THE OFFICE. The petitioner in an inter partes review of a claim in a patent... that results in a final written decision... may not request or maintain a proceeding before the Office with respect to that claim on any ground that the petitioner raised or reasonably could have raised during that inter partes review. 2) CIVIL ACTIONS AND OTHER PROCEEDINGS. The petitioner in an inter partes review of a claim in a patent... that results in a final written decision... may not assert... in a civil action... that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review. 8

Federal Circuit: No estoppel on noninstituted grounds Holding: Non-instituted grounds are not subject to estoppel under Section 315(e) Rationale: The petitioner could "not raise nor could it have reasonably raised the [noninstituted] ground during the IPR," because "[an] IPR does not begin until it is instituted." Shaw Industries v. Automated Creel Systems, 817 F.3d 1293 (Fed. Cir. 2016). 9

Pre-SAS Practice Limited Review IPR instituted on a claim-by-claim basis The vast majority of instituted proceedings were partially instituted IPR denied as to grounds that were "redundant" or "substantially similar" to ones previously considered by the USPTO Limited Appeal Final Written Decision limited to instituted grounds Federal Circuit appeal limited to instituted grounds No appeal of institution decisions Limited Estoppel Estoppel applied to grounds that were raised or reasonably could have been raised during an IPR proceeding 10

SAS: Case Posture SAS petitioned for inter partes review on claims 1-16 of U.S. 7,110,936. PTAB instituted review on a subset: claims 1 and 3-10 PTAB's FWD addressed only claims 1 and 3-10, finding claims 1, 3 and 5-10 unpatentable and claim 4 patentable SAS: the FWD is deficient for failing to address the patentability of all claims SAS included in its petition A split panel at the Federal Circuit affirmed the PTAB's decision Judge Newman filed a dissent on the issue of the PTAB's obligation to address all claims in the FWD 11

SAS: Issue Presented Whether PTAB is required under federal law to issue a final written decision as to every claim challenged in an IPR petition, as opposed to a subset of the challenged claims using a claim-byclaim approach 12

35 U.S. Code 318(a) If an inter partes review is instituted and not dismissed under this chapter, the Patent Trial and Appeal Board shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner and any new claim added under section 316(d). 13

Justice Gorsuch's Majority Holding The statute, we find, supplies a clear answer: the Patent Office must issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner. In this context, as in so many other, any means every. The agency cannot curate the claims at issue but must decide them all. 14

Justice Gorsuch's Majority Holding Much as in the civil litigation system it mimics, in an inter partes review the petitioner is master of its complaint and normally entitled to judgment on all of the claims it raises, not just those the decisionmaker might wish to address. 15

Justice Gorsuch's Majority Holding "[T]he petitioner's petition, not the Director's discretion, is supposed to guide the life of the litigation." The statutory "language indicates a binary choice either institute review or don t." 16

Summary 318(a): "If... review is instituted and not dismissed," at the end of the litigation the PTAB "shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner...." "any" means "every" "shall" means a nondiscretionary duty "claim challenged by the petitioner" means all claims specified in the petition 17

Justice Ginsberg's Dissent The PTAB could issue institution decisions identifying which challenges had merit and which did not and then exercise its discretion to deny review. The petitioner could then file a new petition limited to the meritorious challenges. 18

FWD on all claims and all grounds? PTAB: Yes Fed. Cir.: Yes Holding: The statute "requires a simple yes-or-no institution choice respecting a petition, embracing all challenges included in the petition. Rationale: [e]qual treatment of claims and grounds for institution purposes has pervasive support in SAS. PGS Geophysical AS v. Iancu, 891 F.3d 1354 (Fed. Cir. 2018) 19

Post-SAS Summary Broadened Review PTAB will institute on all challenges raised in the petition or not institute at all Institution of all claims and all grounds Broadened Appeal Final Written Decision and Federal Circuit appeal cover every ground raised in a petition, including those without a reasonable likelihood of unpatentability (end run Cuozzo) Broadened Estoppel Estoppel applies to all grounds that were raised or reasonably could have been raised in the petition 20

Impact at the PTAB Impact on pending cases Impact on Decisions to Institute 21

Removing additional claims and grounds by the parties By agreement: The parties can file a Joint Motion to Limit the Petition to remove claims and grounds on which the Board did not institute review Absent agreement: The patent owner can disclaim claims at any time The petitioner can request adverse judgment on claims and/or grounds at any time 22

Expanding Partially Instituted Proceedings: Statutorily Denied Grounds 35 U.S.C. 325(d): substantially similar to arguments previously before the Patent Office Evidence of prior submission weighed in the FWD 35 U.S.C. 112(f): grounds for which Petitioner failed to provide a sufficient means-plus-function construction Parties given opportunity to provide a construction 35 U.S.C. 315(e): grounds on which Petitioner is estopped FWD will decide in favor of the Patent Owner 23

Expanding Partially Instituted Proceedings The panel supplements its institution decision to institute on all asserted challenges Approximately 45% of pending IPRs have been expanded The parties meet and confer re. the need for additional briefing and/or adjustments to the schedule The panel may take further action to manage the trial: permitting additional time, briefing, discovery, and/or oral argument 24

Extend the due date for the Patent Owner Response to allow the Patent Owner to address additional claims and/or grounds; Adjust other procedural dates as necessary. Sughrue Mion https://www.uspto.gov/sites/default/files/documents/chat_with_chief PLLC 25 _sas_5.3.18.pdf

Extend the due date for a Petitioner Reply if Patent Owner requests to supplement Patent Owner Response and provide evidence to address additional claims and/or grounds; adjust other procedural dates as necessary. 26 Sughrue Mion https://www.uspto.gov/sites/default/files/documents/chat_with_chief PLLC _sas_5.3.18.pdf

Either party may request a conference call with the panel to discuss additional briefing and/or evidence; The hearing may proceed as scheduled with additional SAS issues being addressed post-hearing E.g., supplemental patent owner s response, supplemental reply, and supplemental hearing 27 Sughrue Mion https://www.uspto.gov/sites/default/files/documents/chat_with_chief PLLC _sas_5.3.18.pdf

Either party may request a conference call with the panel to discuss additional briefing, evidence, and supplemental hearing; The Board has permitted the Petitioner to file a Supplemental Reply Brief, the Patent Owner to file a Supplemental Response Brief, a final Sur-Reply from Petitioner, and a supplemental hearing 28 Sughrue Mion https://www.uspto.gov/sites/default/files/documents/chat_with_chief PLLC _sas_5.3.18.pdf

Either party can file a rehearing request to raise SAS-issues regarding all claims and/or all grounds challenged in the petition. The panel may extend the rehearing deadline if a party requests such an extension and the panel determines it is needed. Sughrue Mion https://www.uspto.gov/sites/default/files/documents/chat_with_chief PLLC 29 _sas_5.3.18.pdf

After deadline for requesting rehearing and before deadline for appeal: Either party may request a conference call with the panel to discuss additional briefing and/or evidence to address additional claims and/or grounds. The panel may extend or waive the rehearing deadline. Sughrue Mion https://www.uspto.gov/sites/default/files/documents/chat_with_chief PLLC 30 _sas_5.3.18.pdf

Content of Institution Decisions PTAB SAS Q&As (June 5, 2018): PTAB will continue to issue detailed decisions on institutions in order to provide guidance to the parties and afford them a full and fair opportunity to develop a record for the trial portion of the proceeding. To the extent a panel finds certain challenges do not meet the reasonable likelihood standard at the institution stage... the panel will indicate its view in the decision to institute, even if the result is to institute on all challenges. 31

Seoul Semiconductor Co., Ltd. v. Document Security Systems, Inc. Section 314(a) does not require the Director to evaluate every claim individually [in an Institution Decision]. Instead, it simply requires a decision whether the petitioner is likely to succeed on at least 1 claim. IPR2018-00265 32

Seoul Semiconductor Co., Ltd. v. Document Security Systems, Inc. Patent Owner has not provided any persuasive justification for why we should interpret our Rules to require an evaluation and analysis of every claim and every ground notwithstanding the Supreme Court s instructions to the contrary. IPR2018-00265 33

Content of Institution Decisions Comcast Cable Communications LLC v. Promptu Systems: decision instituting IPR noted that challenges of several dependent claims and seven of the grounds lacked merit. ZTE (USA) Inc. v. Fundamental Innovation Systems International LLC: decision instituting IPR determined that several dependent claims were likely patentable over one of the grounds. 34

Content of Institution Decisions Huawei Device Co. Ltd. v. Maxell Ltd. instituted on seven claims and four grounds, but only analyzed two claims and one ground. Netlist Inc. v. SK Hynix Inc. instituted on 37 claims and nine grounds, but provided analysis for only two claims and one ground Seoul Semiconductor Co. Ltd. v. Document Security Systems Inc. instituted on nine claims and four grounds, but provided analysis of one claim and two grounds 35

Observations to date Institution rates remain substantially the same: January 2017 to April 2018: 62% petitions instituted April 2018 to present: 60% petitions instituted Data generated from Docket Alarm Institution decisions generally continue to be comprehensive and detailed, though PTAB is not required to address every claim and every ground 36

Impact of SAS at the Federal Circuit 37

Remands to the PTAB When requested, the Fed. Cir. has remanded cases to the PTAB so the Board may address noninstituted claims and grounds A petitioner "[does] not waive its right to seek remand by not arguing against partial institution before the Board." "[A] party does not waive an argument that arises from a significant change in law during pendency of an appeal" Polaris Indus. Inc. v. Arctic Cat, Inc., 724 Fed. App x 948 (Fed. Cir. 2018) Adidas AG v. Nike, Inc., 894 F.3d 1256 (Fed. Cir. 2018) S.-Tek Sys., LLC v. Engineered Corrosion Sols., LLC, No. 2017-2297, 2018 WL 38 4520013 (Fed. Cir. Sept. 20, 2018)

Federal Circuit will not remand to PTAB unless requested by the parties The PTAB's failure to issue a final written decision on all claims and grounds challenged in a petition does not deprive the court of appeals of jurisdiction. The Court will not act sua sponte to dismiss appeals of Board decisions where no party seeks relief. PGS Geophysical AS v. Iancu, 891 F.3d 1354, 1357, 1359 (Fed. Cir. 2018). BASF Corp. v. Iancu, No. 2017-1425, 2018 WL 3456307, at *5 (Fed. Cir. July 17, 2018). Yeda Research v. Mylan Pharm. Inc., No. 2017-1594, 2018 WL 4938974, at *3 (Fed. Cir. Oct. 12, 2018). 39

Impact of SAS at the District Court 40

Statutory Estoppel 35 U.S.C. 315(e) (2) CIVIL ACTIONS AND OTHER PROCEEDINGS. The petitioner in an inter partes review of a claim in a patent... that results in a final written decision... may not assert... in a civil action... that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that inter partes review. 41

Estoppel effect of waiving previously denied grounds "At the time the Supreme Court handed down [SAS Institute], [defendant s] time to appeal the PTAB s decision had not yet run.... [Defendant] could have appealed and sought such a remand in order to allow the PTAB evaluate the claims and grounds that it raised in its petition on which the PTAB did not institute review. It therefore reasonably could have raised those grounds before the PTAB against any claim in the [patent], and is estopped from raising them again before this Court." SiOnyx, LLC v. Hamamatsu Photonics K.K., 330 F. Supp. 3d 574 (D. Mass. 2018) 42

CAFC Shaw Decision: broad or narrow impact? Facts: Petitioner petitioned for a writ of mandamus, requiring the PTAB to reevaluate its denial of IPR as to certain grounds and argued that petitioner would be estopped from pursuing those grounds. Holding: Non-instituted grounds are not addressed during the IPR and therefore are not subject to estoppel under Section 315(e). Rationale: The petitioner could "not raise--nor could it have reasonably raised the [non-instituted] ground during the IPR," because "[an] IPR does not begin until it is instituted." Shaw Industries v. Automated Creel Systems, 817 F.3d 1293 (Fed. Cir. 2016) 43

Broad Intreperation of Shaw " 315(e)(2) estoppel applies only to grounds that were both raised in the IPR petition and instituted in the IPR proceeding." Finjan, Inc. v. Blue Coat Sys., LLC, 283 F. Supp. 3d 839, 856 57 (N.D. Cal. 2017) Finjan v. Blue Coat (N.D. Cal.): Defendant not estopped on any of its invalidity combinations, because "[n]one of the IPRs were instituted on these precise combinations." Intellectual Ventures v. Toshiba (D. Del.) (defendant allowed to present invalidity grounds that were not raised during the IPR). Intellectual Ventures I LLC v. Toshiba Corp., 221 F. Supp. 3d 534, 553 54 (D. Del. 2016) 44

Narrow Intreperation of Shaw "[A] petitioner is estopped from asserting invalidity contentions based on prior art that it could reasonably have included in its IPR petition but did not," "which includes prior art that a skilled searcher conducting a diligent search reasonably could have been expected to discover. Milwaukee Elec. Tool Corp. v. Snap-On Inc., 271 F. Supp. 3d 990, 1029 30 (E.D. Wis. 2017); Oil-Dri Corp. of America v. Nestle Purina Petcare Co., 2017 WL 3278915, *8 (N. D. Ill August 2, 2017); and Clearlamp, LLC v. LKQ Corp., 2016 WL 4734389, *8 (N.D. Ill. March 18, Sughrue 2016) Mion PLLC 45

Milwaukee Elec. Tool Corp. v. Snap-On: reasonably could have raised estoppel District court considered estoppel as applied to: (1) additional grounds for invalidity that could have been asserted based on the references included in the petition and (2) grounds based on references not mentioned at all in the IPR petitions 46

Grounds of invalidity based on references included in a petition Snap On was indisputably in a position to assert all potential arguments based on a single reference, and its choice to assert some and not others falls within the scope of IPR estoppel. 47

Grounds based on references not mentioned in an IPR petition Standard: "A skilled searcher's diligent search" No estoppel for physical devices A skilled searcher would not have uncovered manuals for physical devices, given asserted deficiencies with patent marking No estoppel as to videos showing operation of devices. Videos are not printed publications, and a diligent searcher could not have located underlying written materials for the videos 48

"A skilled searcher's dilligent search" Plaintiff submitted evidence of patent search results: No estoppel for publications not uncovered in Plaintiff's search Estoppel applied to publications uncovered in Plaintiff's search Court discounted defendant s conclusory arguments, which criticized plaintiff s search parameters as driven by hindsight 49

Takeaways 50

Broadened Scope Of Estoppel Scope of estoppel resulting from a FWD applies to all petitioned claims and all raised grounds Scope of reasonably could have raised estoppel is unsettled may be very narrow or very broad Petitioners in parallel litigation should consider thejr particular court's precedent on "reasonably could have raised" estoppel when selecting grounds to petition review Petitioners should conduct a thorough prior art search prior to filing an IPR petition Battle in many courts will be what prior art was readily identifiable through a diligent search 51

Selecting Grounds To Challenge Patentability Consider multiple IPRs at the same time when: Many claims Many prior art references Focus on different claims or different prior art combination in each IPR Minimize estoppel group stronger challenges in one IPR and weaker challenges in others May also avoid PTAB discretionary denial resulting from petitioning on too many grounds and claims 52

THANK YOU! 53