Bill Meunier, Member Michael Newman, Member Peter Cuomo, Of Counsel July 18, 2016
Basics: Nomenclature "IPRs" = Inter partes review proceedings "PGRs" = Post-grant review proceedings "CBMs" = Post-grant review proceedings for "covered business method patents" Each one is a "Post-Grant Proceeding" aka "Patent Office Trial" before the Patent Trial and Appeal Board (PTAB) 2
Basics: "Post-Grant Proceeding" Adversarial litigation-like proceeding brought by one or more Petitioners (plaintiff) against a Patent Owner (defendant) to invalidate one or more claims of a patent Before 3-judge panel from PTAB Statutorily required to provide a decision within 1 year of institution 35 U.S.C. 6 (AIA 7): (a) IN GENERAL The administrative patent judges shall be persons of competent legal knowledge and scientific ability who are appointed by the Secretary, in consultation with the Director. 3
Post-Grant Proceedings: Overview Quicker, more efficient and less expensive version of inter partes reexamination Converts examinational procedure into an adjudicatory proceeding Allows for limited discovery Lower burden of proof than district court Broader claim construction than district court 4
Inter Partes Review (IPR) Any patent can be challenged. For patents under first-to-file regime, petition must be filed at least 9 months after issuance i.e., after time for PGR has passed or after completion of PGR, whichever date is later Any party other than the patent owner may file an IPR request so long as: 1. Petitioner did not previously file a Declaratory Judgment suit challenging validity» Declaratory Judgment suit asserting only non-infringement does not prevent petitioner from filing an IPR request» Counter claim in an infringement suit does not prevent petitioner from filing an IPR request 2. Petitioner was not served with a complaint for patent infringement more than one year before requesting an IPR 5
Post-Grant Review (PGR) Same as standing for IPR except that: Only patents filed under the first-to-file regime can be challenged PGR request must be filed within 9 months of patent issuance or date of broadening reissue patent 6
Covered Business Method (CBM) Review Limited to "covered business method" patents. Patent that "claims a method of data processing or other operations used in the practice, administration or management of a financial product or service" Does not include patents for "technological inventions" Only parties that have been charged with infringement may file a CBM petition "Charged with infringement" analyzed under declaratory judgment standards May be filed at any time except during the period in which a PGR could be filed 7
Estoppel IPR and PGR: after the PTAB has reached a final written decision as to the validity of a patent claim, the petitioner may not assert that the claim is invalid on any ground that the petitioner raised or reasonably could have raised during that proceeding CBM: after the PTAB has reached a final written decision as to the validity of a patent claim, the petitioner may not assert that the claim is invalid on any ground that the petitioner raised during that proceeding Estoppel in IPRs, PGRs and CBMs applies in both civil actions and ITC proceedings applies to any real party-in-interest or privy of the petitioner 8
The Proceedings: Detailed Comparison 9
The Proceedings: Detailed Comparison (cont.) 10
The Proceedings: Detailed Comparison (cont.) 11
The Proceedings: Detailed Comparison (cont.) 12
Why These Proceedings Matter: The Stats Petition Filings Post-grant proceedings (particularly IPRs and CBMs) continue to be a major defense strategy for accused patent infringers in district court litigation as of March 31, 2016 13
Why These Proceedings Matter: The Stats Petition Technology Breakdown no sector appears to be generally immune as of March 31, 2016 14
Why These Proceedings Matter: The Stats Institutions a majority of IPR and CBM petitions are being granted as of March 31, 2015 15
Why These Proceedings Matter: The BIG Stats IPR Cases Completed to Date (as of 6/31/16) In a majority of IPR FWDs, the PTAB is finding all instituted claims unpatentable 123 14% 131 15% 640 72% All Claims in Case Unpatentable Some Claims in Case Unpatentable No Claims in Case Unpatentable 16
Why These Proceedings Matter: The BIG Stats CBM Cases Completed to Date (as of 6/31/16) In a majority of CBM FWDs, the PTAB is finding all instituted claims unpatentable 20 19% 3 3% All Claims in Case Unpatentable Some Claims in Case Unpatentable No Claims in Case Unpatentable 85 79% 17
Why These Proceedings Matter: The Stats Settlement one thing to keep in mind, though, is more proceedings are settling than being finally adjudicated as of March 31, 2016 18
Timeline and Major Events Petition Filed (Optional) PO Preliminary Response Decision on Petition PO Response & Motion to Amend Claims Petitioner Reply to PO Response & Opposition to Motion PO Reply to Opposition to Amendment (if motion filed) Oral Hearing Final Written Decision 3 months No more than 3 months 3 months 3 months 1 month Hearing Set or Request 3 months PO Discovery Period Petitioner Discovery Period PO Discovery Period Period for Observations & Motions to Exclude Evidence 6 months No more than 12 months 19
The Petition A proceeding begins with the filing of a petition Statutory and PTO Requirements ( 312, 322; 37 C.F.R. 42.22) Fee Real parties in interest Identifies all claims challenged and grounds and supporting evidence on claimby-claim basis Specific content identified in 42.22 Expert declaration 20
Petition Major Required Components Identification of real party-in-interest Identification of other judicial or administrative matters that would affect, or be affected by, a decision in the proceeding Statement of precise relief requested Full statement of reasons for relief requested Identification of claims challenged Identification of specific statutory grounds on which the challenge is based Description of how the claim is to be construed. Mandatory for means plus function elements 21
Claim Construction PTAB generally applies the Broadest Reasonable Interpretation (BRI) standard for claim construction Exception: patent has expired Different from Philips standard used in district court The rational for BRI standard is that the patentee has the opportunity to amend although that has proved illusory Fed. Cir. recently affirmed use of the BRI standard. In re Cuozzo Speed Technologies, LLC, Case No. 2014-1301 (Fed. Cir. Feb. 4, 2015) 22
Expert Declaration Expert declarations are important to explain references and support conclusions formed in the petition PTAB routinely dismisses conclusory opinions lacking support The expert should explain in detail why a person of ordinary skill in the art would find claim anticipated by and/or obvious in view of the references Expert declaration may include technology tutorial The expert should not include arguments that are not discussed in the petition 23
Redundant Grounds Redundancy PTAB will not entertain arguments that it considers redundant even if the redundant arguments would likely invalidate the patent Vertical redundancy (i.e., A+B or A+B+C) Horizontal redundancy (i.e., A+B v. C+D; or A+B v. A+C) Petitioner can avoid a redundancy rejection if the Petitioner reasonably articulates why each ground has strength and weakness relative to the other. Liberty Mutual Ins. Co. v. Progressive Casualty Ins. Co., No. CBM2012-00003, paper 7 (Oct. 25, 2012) 35 U.S.C. 325(d): PTAB has discretion to reject a petition or request where the same or substantially the same prior art or arguments were previously presented to the Patent Office. Most commonly applied where multiple petitions are filed with respect to the same patent. 24
Patent Owner's Preliminary Response Within three months of notification of a filing date, Patent Owner may file a preliminary response, including a simple statement that Patent Owner elects not to respond Expert Testimony may now be included Board must view any genuine issue of material fact created by such testimonial evidence in the light most favorable to the petitioner solely for purposes of deciding whether to institute an inter partes review. No negative inferences will be drawn if the patent owner chooses not to file a declaration No claim amendments 25
Preliminary Response Optional filing by the patent owner Patent owner may waive the right to respond to expedite the proceeding Due 3 months from the USPTO notice that a filing date has been granted PTAB will decide whether to institute trial within 3 months of the due date for the preliminary response 26
POPR Filed v. POPR Not Filed (IPR data) as of March 31, 2016 27
POPR Filed v. POPR Not Filed (IPR data) Chem/biochem/material engineering POPR Filed (145) POPR Not Filed (42) Source: Strafford May 28, 2015 webinar 28
Preliminary Response: What to Include Evidence that can be included: Citations to evidence that existed before petition was filed Includes expert and inventor declarations Citations to to prior art references that contradict petitioners arguments New testimonial evidence* No limits on scope Evidence that cannot be included: Patent owner cannot amend claims in connection with preliminary response * Reflects 2016 rule change 29
Disavowing Claims Patent owner may disavow one or more challenged claims, precluding review of those claims by the PTAB Can potentially prevent a post-grant proceeding where only claims at issue have been disclaimed May render challenged patent ineligible for CBM review if the remaining claims do not cover activities that are financial in nature May focus argument on claims the patent owner has a better chance of prevailing upon Potential way to reduce the likelihood of a litigation stay if the litigation includes claims that are not subject to challenge before the PTAB, but comes at cost of disavowed claims 30
Institution Decision PTAB determines whether to institute a trial within three months of PO preliminary response due date or filed date, whichever is first In instituting trial, PTAB narrows the issues by authorizing trial to proceed only on the challenged claims for which threshold standards have been met Identifies, on a claim-by-claim basis, the grounds on which trial will proceed Any claim or issue not included in authorization for review will not be part of the trial 31
Institution Decision (cont.) A party dissatisfied with PTAB institution decision may request rehearing (37 C.F.R. 42.71(c) and (d)) Not appealable. Cuozzo Speed Techs., LLC v. Lee (SCOTUS June 20, 2016) PTAB issues a Scheduling Order concurrent with the Institution Decision that sets all dates for the trial, including a date for an initial conference call with the parties to discuss potential motions and any potential schedule adjustments 32
Joining Another Parties' Petition The Director may join as a party to an IPR any person who properly files a petition To join another proceeding, one must file a complete petition and pay the full filing fee Petition must be filed within one month of institution decision of prior proceeding 33
Joining Another Parties' Petition The one-year time bar does not apply to a request for joinder (35 U.S.C. 315(b) (" The time limitation set forth in the preceding sentence shall not apply to a request for joinder under subsection (c).")) PTAB has construed "any person" part of 315(c) broadly Can even include original petitioner New claims and art may be included in the second Petition, but adding claims or art may lead to non-joinder 34
Discovery Motions PTAB rules provide for routine discovery after institution PTAB has applied five factors referred to as "Garmin factors" (same test applied to motions for additional discovery post-institution) 1. More than a mere possibility and mere allegation that something useful will be found; 2. Litigation positions and underlying basis [prohibited]; 3. Ability to generate equivalent information by other means; 4. Easily understandable instructions; and 5. Requests not overly burdensome to answer. Must show additional discovery is necessary IPR: will serve the interests of justice CBM or PGR: is supported by good cause 35
Patent Owner Discovery Evidence Objections Patent Owner may object to evidence relied upon by Petitioner in the Petition Deposition(s) Patent Owner may begin deposing Petitioner's declarants Patent Owner's Response filed as an opposition to the Petition; may include expert testimony Motion to Amend optional and (thus far) rarely granted; Patent Owner must confer with PTAB first 36
Petitioner Discovery Deposition(s) - Petitioner may depose Patent Owner's declarant Petitioner's Reply - may only respond to arguments raised in the Patent Owner's opposition Oppose Motion to Amend - no authorization is needed from PTAB may respond to new issues arising from proposed substitute claims, including submitting new expert declaration 37
Patent Owner Reply and Motions for Observations and Exclusion Reply to Motion to Amend - may only respond to arguments raised in Petitioner's opposition Motion for Observations on Cross-Examination - may be filed to draw PTAB's attention to relevant cross-examination testimony of a reply witness because no further substantive paper is permitted Motion to Exclude Evidence - must be filed to preserve objections at trial; usually denied as moot 38
Motions Wide variety are available. Examples include motions: To Waive Page Limits (77 Fed. Reg. at 48762) For Additional Discovery (37 C.F.R. 42.51(b)(2)) To Exclude Evidence (37 C.F.R. 42.64) To Expunge Confidential Information/Evidence (37 C.F.R. 42.56) To Seal (37 C.F.R. 42.14 & 42.54) To Compel Testimony (77 Fed. Reg. at 48761) For Observations on Cross-Examination (77 Fed. Reg. at 48767-68) For Live Testimony (oral argument) (77 Fed. Reg. at 48768) For Rehearing (37 C.F.R. 42.71(c) & (d)) 339
Oral Hearing 37 C.F.R. 42.70 (a) Request for oral argument. A party may request oral argument on an issue raised in a paper at a time set by the Board. The request must be filed as a separate paper and must specify the issues to be argued. (b) Demonstrative exhibits must be served at least five business days before the oral argument and filed no later than the time of the oral argument. Either party may request oral argument on one or more issues relating to the instituted grounds, as well as any procedural or evidentiary issues previously preserved by the party 40
Final Written Decision (FWD) 35 U.S.C. 318, 328 PTAB shall issue an FWD as to the patentability of any patent claim challenged by the petitioner and any new claim added under 316. 35 U.S.C. 319, 329 Any party dissatisfied with the FWD may appeal the decision to the Federal Circuit Certificate of Cancellation If the PTAB issues an FWD and the appeal time has expired or appeal has terminated, the Director shall issue and publish a certificate canceling any claim finally determined to be unpatentable, confirming any claim to be patentable, and incorporating in the patent by operation of the certificate any new or amended claim determined to be patentable. 41
District Court/PTAB Interplay Patent Challenger Considerations in Deciding Whether to Petition Litigation is imminent or actually pending, particularly in a court where a judge/jury is unlikely to invalidate the patent(s) A granted petition will likely stay any related, pending district court litigation Weak non-infringement position and/or high past damages exposure USPTO already considered the best prior art during the original prosecution Post-grant prior art is strong and other strong defenses remain for the district court litigation (especially favors filing an IPR petition) Cost-savings versus invalidating the patent(s) in federal court 42
District Court/PTAB Interplay Patent Challenger Considerations in Deciding Whether to Petition Increases settlement leverage with respect to any pending or threatened litigation High chance of terminating the patent owner s patent rights if technology is complex, the PTAB is comprised of technical decision-makers Lower burden to prove invalidity - Broader claim construction standard - No presumption of validity - Claims are not construed with an aim towards preserving validity High risk of a retaliatory petition or litigation 43
District Court/PTAB Interplay Patent Owner Post-Grant Considerations in Filing Suit The best prior art (e.g., on-sale bar or prior public use) cannot be used The number of patents asserted in the related, pending district court litigation makes post-grant proceedings impractical (e.g., high costs) because a separate petition must be filed for each patent Arguments that would be used in the post-grant petition are similar to those presented in another, already-pending post-grant proceeding and would likely be rejected as redundant Interplay between infringement and invalidity arguments e.g., you are practicing the prior art might make district court better option The district court litigation is pending in a forum that is unlikely to stay the action in view of any post-grant proceeding (e.g., the International Trade Commission or the Eastern District of Virginia) 44
District Court/PTAB Interplay District Court Litigation most parallel district court cases are being stayed Motions to Stay as of March 31, 2016 45
Thank You! Email: WAMeunier@mintz.com Email: MCNewman@mintz.com Email: pjcuomo@mintz.com 46