How Post Grant Challenges Have Evolved from Proposed Rules to Practice. Prepared by W. Karl Renner Principal & Co Chair of Post Grant Practice

How Post Grant Challenges Have Evolved from Proposed Rules to Practice Prepared by W. Karl Renner Principal & Co Chair of Post Grant Practice Fish & Richardson May 8, 2013

Agenda I. Very Brief Orientation II. Evolution Moving from Rules to Practice A. Stays of Co pending District Court Likely B. Newness is Abolished PTAB is a Willing Audience C. Petitions Constructions and Patent Owner Preliminary Response D. Petitions The Redundancy Doctrine III. E. Routine and Additional Discovery Requests Scrutinized Background Materials Statistics on IPR/CBM More robust review of USPTO tools Other Resources 2

Types of Post Grant Tools Ex Parte Proceedings Several tools available for patent owner to fix problems Other tools allow third parties to instigate challenges Lower success rates Patent Owner interview Third party can only launch; cannot participate Third party not estopped from later challenging validity Anonymous Inter Partes Proceedings Challenger participates after launching challenge Higher success rates Third party is estopped from later challenging validity 4

Post Grant Procedures Inter Partes Post Grant Tools Post Grant Review (PGR) 42.200 42.224 All are initiated by third parties Inter Partes Review (IPR) 42.100 42.123 Covered Business Method (CBM) 42.300 42.304 All are governed by Trial Rules 42.1 42.80 These tools differ based on: 1. Timing 2. Grounds 3. Estoppel 5

Trial Proceeding Timeline 6

Stays of Co-Pending District Court Context and 3 District Court factors: Stage of litigation (discovery) Simplification of issues Undue prejudice or clear tactical disadvantage (speed) In granting stay, one Court recently recognized a liberal policy in favor of granting motions to stay proceedings pending the outcome of IPR proceedings. See SEL v. Chimei Innolux (C.D. of Cal, Dec. 19, 2012) 8

Stays of Co-Pending District Court (Survey) Contested motions to stay have largely been granted SEL v Chimei Innolux (C.D. Cal, Dec. 19, 2012) Progressive Casualty Ins. Co. v. Safeco Ins. Co. of Ill. (N.D. Ohio Apr. 17, 2013) Star Envirotech Inc. v. Redline Detection LLC (C.D. Cal. Apr. 3, 2013) Bergstrom, Inc. v. Idle Free Sys., Inc. (N.D. Ill. Mar. 21, 2013) Many examples of plaintiff patentee consent also granted Stay denied in SRAM, LLC v. HB Suspension Prods., LLC (Mar. 7, 2013 N.D. Ill.); likely revisited 9

Stays of Other Proceedings (Survey) IPRx/IPR: Concurrent IPRx stayed CBS Interactive et al. v. Helferich Patent Licensing (USPTO Nov. 6, 2012) EPRx/IPR: Concurrent EPRx stayed based on later filed IPR Invue Security Products Inc. v. Merchandising Technologies, Inc., slip. op. IPR2013 00122 (PTAB April 2, 2013) Supplemental Examination Request preceeded third party IPR While Supplemental Examination granted, USPTO stayed (did not merge) EPRx Motorola Solutions, Inc. v. Mobile Scanning Technologies, LLC, slip. op. IPR2013 00093 (PTAB Jan. 31, 2013) No stays yet in proceedings before the International Trade Commission or District Courts with speedy dockets (E.D. Virginia) 10

Newness Abolished A Willing PTAB Audience Macauto U.S.A. v. Bos GmbH & KG, slip. Op. IPR2012 00004 (PTAB Jan. 24, 2013 Reasonable Likelihood of Success (RLS) standard clarified Relevant Facts The Macauto IPR Petition included multiple references 3 of the references were included in an EPRx that IPR Petitioner had filed on the subject patent In EPRx, the CRU confirmed the patentability of all claims PTAB nevertheless instituted IPR based upon one of the references used in EPRx PTAB agreed with Petitioner that, during EPRx, the CRU Examiner gave improper weight to two declarations that patent owner submitted Shows willingness by PTAB to consider rejections based upon references previously considered by the CRU (and hence, original examiners) 12

Construction and PO Initial Response Synopsys, Inc. v. Mentor Graphics Corp., slip op. IPR2012 00041 (PTAB Feb. 2, 2013) First IPR petition denied on all grounds Notable Aspects Which/how many claim terms need construed in initial petition? Effectiveness of preliminary patent owner s response? 14

Claim Construction (Synopsys) Petitioner construed nothing (plain meaning) Patent Owner preliminary response advocated construction of a claim term that distinguished petitioner s prior art With no extrinsic evidence, the PTAB construed claim terms in favor of Patent Owner Petitioner was left without any recourse, at this stage, other than to re file (if possible) 15

Claim Construction (Synopsys) Lesson: Omit constructions from petition at your peril Availability of preliminary patent owner response means that petitioner cannot hold back arguments and assume he/she can present them later in the proceeding Different from inter partes reexam, where there was no preliminary patent owner response Reinforces broader guidance to bring evidence at the earliest available opportunity 16

Patent Owner Preliminary Response Substantively: While largely limited to intrinsic evident, this response provides the patent owner with an opportunity to challenge on substantive grounds Tactically: This provides patent owner with the last word In Synopsis, Patent Owner advanced a favorable construction, based on intrinsic evidence, which the USPTO adopted and reinforced using dictionary definitions 17

Petitions Redundancy Liberty Mutual Insurance Co. v. Progressive Casualty Insurance Co., slip op. CBM2012 00003 (PTAB Oct. 25, 2012) Liberty Mutual filed a covered business method patent review of claims 1 20 of U.S. Patent No. 8,140,358. The petition included 422 grounds of rejection based on 10 references for these 20 claims. The PTAB required these grounds be substantially reduced. 19

Legal Framework for Decision 1 Year Mandate The Director shall prescribe regulations... requiring that the final determination in any post grant review be issued not later than 1 year after the date in which the Director notices the institution of a proceeding under this chapter... 35 U.S.C. 326(a)(11). Mandate requires efficiency When promulgating the regulations, the Board considered the effect of the regulations on the economy, the integrity of the patent system, the efficient administration of the Office, and the ability of the Office to timely complete proceedings as mandated by 35 U.S.C. 326(b). Rules also require speed 37 C.F.R. 42.1(b) provides that Part 42 of the rules shall be construed to secure the just, speedy, and inexpensive resolution of every proceeding. Burden is therefore on requestor Under 37 C.F.R. 42.20(c), a petitioner has the burden of proof to establish that it is entitled to the requested relief. 20

Holding/Rule Based on this legal framework, the PTAB determined that multiple grounds, which are presented in a redundant manner by a petitioner who makes no meaningful distinction between them, are contrary to the regulatory and statutory mandates, and therefore are not all entitled to consideration. Two types of redundancy require meaningful distinction Horizontal Redundancy Vertical Redundancy 21

Horizontal Redundancy PTAB Explanation: All of the myriad references relied on provide essentially the same teaching to meet the same claim limitation, and the associated arguments do not explain why one reference more closely satisfies the claim limitation at issue in some respects than another reference, and vice versa. Examples Assume references A, B, and C are addressed in the petition Horizontal redundancy: Claim 1 is rendered obvious by each of A+B and A+C. Claim 1 is anticipated by each of B and C To gain consideration of each, must explain why each is needed Why are B and C based rejections insufficient? Why does each solve the other s deficiency? 22

Vertical Redundancy PTAB explanation: there is assertion of an additional prior art reference to support another ground of unpatentability when a base ground already has been asserted against the same claim without the additional reference and the Petitioner has not explained what are the relative strength and weakness of each ground. Examples Assume references A and B are addressed in the petition Vertical redundancy if claim 1 is rejected based on each of A and A+B To gain consideration of each, must explain why each is needed Why are B and C based rejections insufficient? Why does each solve the other s deficiency? 23

Avoiding Redundancy Issue: Not all references are equal in quality, so you may not want certain references adopted to the exclusion of others Recommendations: Self select Trim weak references Only apply references that will prevail alone, if needed Present arguments to justify inclusion of multiple grounds, where desired Why are B and C based rejections insufficient, AND why does each solve the other s deficiency? Also, indicate your election, in the event that the USPTO deems them redundant 24

Discovery Requests (Garmin) Garmin International Inc. v. Cuozzo Speed Technologies LLC, slip. op. IPR2012 00001 (PTAB Mar. 5, 2013) Patent Owner sought the following production from Petitioner: file histories Interrogatories document requests deposition notice of corporate entity In evaluating these requests, the PTAB did three things: 1 clarified metes and bounds of routine discovery 2 proposed standards for justifying requests for additional discovery 3 reinforced that discovery in PTAB trials will be much more limited than district court discovery 26

Discovery Requests (Garmin) Two types of discovery: routine and additional 37 C.F.R. 42.51(b)(1) defines categories of routine discovery to which party is entitled without prior PTAB authorization or consent of opposing party: Production of exhibits cited in a paper or testimony ( 42.51(b)(1)(i)) Cross examination of opposing declarants ( 42.51(b)(1)(ii)) Non cumulative information that is inconsistent with a position advanced during the proceeding ( 42.51(b)(1)(iii)) File histories: Not contemplated, and readily available to Patent Owner 27

Discovery Requests (Garmin) Patent owner interrogatories, document requests, and deposition notice of corporate entity denied Not contemplated by routine discovery categories Not cited by Petitioner Not cross examination of opposing declarant Not inconsistent positions provision of 41.51(b)(1)(iii) Hostile to requests for inconsistent positions If seeking, show motivation for asking and likelihood of existence 28

Discovery Requests (Garmin) PTAB must authorize discovery beyond routine discovery 35 U.S.C. 316(a)(5) and 37 C.F.R. 41.51(b)(2): moving party must demonstrate that additional discovery sought is in the interest of justice Garmin reinforces the challenge of this standard 29

Discovery Requests (Garmin) PTAB sets forth a 5 part test for establishing in the interest of justice (1) More Than a Possibility and Mere Allegation The mere possibility of finding something useful, and mere allegation that something useful will be found, are insufficient to demonstrate that the requested discovery is necessary in the interest of justice. The party requesting discovery should already be in possession of evidence tending to show beyond speculation that in fact something useful will be uncovered. (2) Litigation Positions and Underlying Basis Asking for the other party s litigation positions and the underlying basis for those positions is not necessary in the interest of justice. (3) Ability to Generate Equivalent Information By Other Means. (4) Easily Understandable Instructions. (5) Requests Not Overly Burdensome to Answer. 30

Additional Discovery: Interest of Justice Factor #1 More Than a Possibility and Mere Allegation is key factor. Underscores limited nature of PTAB discovery vs. district court The Essence of Factor (1) is unambiguously expressed by its language, i.e., the requester of information should already be in possession of a threshold amount of evidence or reasoning tending to show beyond speculation that something useful will be uncovered. Useful in that context does not mean merely relevant and/or admissible. In the context of Factor (1), useful means favorable in substantive value to a contention of the party moving for discovery. 31

Additional Discovery: Interest of Justice PTAB denied patent owner s motion for additional discovery relating to objective evidence of non obviousness for failure to meet threshold showings Commercial success: required patent owner to demonstrate nexus between commercial success and features of claimed invention Failure by others: required patent owner to show that others besides petitioner had tried and failed to show failure was widespread Copying: evidence of a telephone call between inventor and petitioner s lawyer regarding patent infringement insufficient ( Garmin might well have independently conceived of and developed the invention ) PTAB standards for threshold showing similar to standards for relevance of evidence in district court trial, not lower standard in district court for supporting a discovery request. 32

Additional Discovery: Interest of Justice PTAB s high standards for interest of justice must be viewed in context of PTAB s mandate to complete patent trials within 1 year of petition decision: [I]n inter partes review, discovery is limited as compared to that available in district court litigation. Limited discovery lowers cost, minimizes the complexity, and shortens the period require for dispute resolution. There is a one year statutory deadline for completion of inter partes review, subject to limited exceptions. 35 U.S.C. 316(a)(11); see also 37 C.F.R. 42.100(c). What constitutes permissible discovery must be considered with that constraint in mind. 33

Additional Discovery: Interest of Justice Recent decisions: A survey of the following motions for additional discovery shows conservative treatment of such motions, with a partial grant only once, and denial otherwise IPR2013 00011, IPR2012 00006, IPR2012 00007 Petition for IPR by Illumina, Inc., (Request for additional discovery denied on January 9, 2013) IPR2012 00001, Petition for IPR by Garmin International, Inc., (Request for additional discovery denied on March 5, 2013) IPR2012 00026, Petition for IPR by Microsoft Corporation (Request for additional discovery denied on March 8, 2013) IPR2013 00081, IPR2013 00080, Petition for IPR by Apple Inc., (Request for additional discovery denied on April 3, 2013) IPR2013 00042, Petition for IPR by Synopsis (Request for additional discovery denied on April 25, 2013) IPR 2013 0038, Petition by patent owner seeking discovery related to identification of the real parties in interest. (Granted in part, April 26, 2013) 34

Additional Discovery: Interest of Justice Lessons and questions: In the absence of agreement, parties should assume that only routine discovery will be available/permitted Even if parties agree, will PTAB still limit discovery to meet 1 year deadline? Effect on overall cost vs. district court? Effect on petitioner s choice of forum? Effect on timing of petition relative to co pending district court litigation? 35

II. Statistics (IPR) IPR s Filed? 224 filed through May 3rd 27 filed in April Application of Threshold: Reasonable Likelihood of Success IPR has been instituted in all but 1 IPR Petition evaluated In a number of cases where IPR was ordered, it was on only a subset of petitioned claims 37

II. Statistics (CBM) CBM s Filed? 21 filed through May 3rd 4 filed in April Application of Threshold: Reasonable Likelihood of Success CBM has been instituted in all but 3 CBM Petitions evaluated In a number of cases, CBM was ordered on only a subset of petitioned claims 38

II. Statistics: Who is filing? By industry (IPR + CBM) ~60% software or EE ~20% mechanical ~20% bio/chemical Most challenged patents anchor pending litigations 39

II. Statistics (Stays) Granted (8): Bd. Of Trustees of the Univ. of Illinois v. Micron Tech., Inc. (C.D. Ill. Aug. 24, 2012); Clearlamp LLC v. LKQ Corp. (N.D. Ill. Oct. 18, 2012); Semiconductor Energy Lab Co., Ltd. v. Chimei Innolux Corp. et al. (C.D. Cal. Dec. 19, 2012); Network 1 Sec. Solutions, Inc. v. Alcatel Lucent USA Inc. et al. (E.D. Tex. March 5, 2013); Bergstrom, Inc. v. Idle Free Sys., Inc. (N.D. Ill. Mar. 21, 2013); Star Envirotech Inc. v. Redline Detection LLC (C.D. Cal. Apr. 3, 2013); Achates Reference Pub., Inc. v. Symantec Corp. (E.D. Tex. Apr. 5, 2013); Progressive Casualty Ins. Co. v. Safeco Ins. Co. of Ill. (N.D. Ohio Apr. 17, 2013) Denied (1): SRAM, LLC v. HB Suspension Prods., LLC, (Mar. 7, 2013 N.D. Ill.) 40

Ex Parte Post Grant Proceedings Post Grant Procedures Ex Parte Reexamination Initiated by patent owner or third party Supplemental Examination Reissue Initiated by patent owner (NOT third party) 42

Ex Parte Post Grant Proceedings Proceeding When Does It Apply? Legal standard Grounds (Prior Art) Estoppel? Ex parte Reexam (unchanged) Supplemental Examination Reissue (unchanged) Available now First available on Sept. 16, 2012 Available now Substantial new question of patentability Substantial new question of patentability would result in Ex parte reexam by PTO; otherwise, examination denied and claims are confirmed If more than two years after issuance, error to be corrected (over/under claiming sufficient 112 issue preferred). Otherwise no threshold Patents Published patent apps Printed publications No on sale or use art Any information N/A No Legal Estoppel* N/A N/A 43

Inter Partes Post Grant Proceedings Proceeding When Does It Apply? Legal standard Grounds (Prior Art) Estoppel? Post grant review (9 month window) First available on Sept. 16, 2012 Applies only to patents having a claim with a priority date on or after March 16, 2013 PTO can initially limit (e.g., 250/year) More likely than not that at least 1 claim is unpatentable Any invalidity ground Raised or reasonably could have raised Inter partes review (after PGR) First available on Sept. 16, 2012 Applies to all patents PTO can initially limit (e.g., 250/year) Reasonable likelihood that petitioner would prevail on at least 1 claim Patents Published patent apps Printed publications Raised or reasonably could have raised Covered Business Method First available on Sept. 16, 2012 Applies to all patents related to financial services but excludes technological inventions More likely than not that at least 1 claim is unpatentable Petitioner sued or charged with infringement Any invalidity ground Narrow: Raised (USPTO and Civil) or reasonably could have raised (USPTO)

Inter Partes Review vs. Inter Partes Reexam Aspect Inter Partes Review (AIA) Inter Partes Reexam Timing for filing Barred by action/inaction After the later of closing of 9 month PGR window (or termination of PGR) Barred if: (1) Petitioner earlier filed DJ suit; or (2) Petition filed > 1 year after service Any time NA Grounds Patents and printed publications Same Threshold Reasonable likelihood that petitioner would prevail on at least one claim Same Tribunal PTAB Patent Trial and Appeals Board CRU Central Reexamination Unit Duration Fast. Conclusion within one year of commencement (+6 months for cause) Slow. Open ended Appeal From PTAB to Federal Circuit From CRU to PTAB, then to Federal Circuit Estoppel Immediately after PTAB final written determination Only after final decision (all appeals exhausted)

Post Grant Review vs. Inter Partes Review Post Grant Review ( 321 329) Inter Partes Review ( 311 319) When Within 9months of issuance or reissue of patent Basis Any ground of invalidity (not just patents or publications) Threshold More likely than not that at least 1 claim is unpatentable After 9 months of issuance or reissue of patent, BUT before civil allegation of invalidity, and not more than 1 year after being served Only prior art patents or printed publications Reasonable likelihood that petitioner would prevail on at least 1 claim Who Any person, other than the patent owner Must identify all real parties in interest (no anonymous submissions) Phase in PTO may limit number of PGRs/IPRs for first 4 years after enactment (2011 2015) Other procedures Patentee may respond (deadline to be determined) PTO issues preliminary response w/in 3 months of patentee statement, or lapse of patentee s window Completion w/in one year after institution (+ six month extension for good cause) Limited discovery allowable (to be addressed by PTO regulations) Patentee may amend claims, but amendments cannot expand claims or add new matter Conducted by new Patent Trial & Appeal Board, and appealable to Federal Circuit Preponderance of the evidence (more likely than not) standard applies May be settled by parties

Post Grant Review Comparison to Oppositions Aspect U.S. Post Grant Review EPO Oppositions Commencement Window 9 months from issuance 9 months from issuance Estoppel Challenger estopped from raising art in district court that was raised or reasonably could have been raised in PGR Prior art raised in the opposition is available in a later invalidity proceeding Duration 1 year (+ 6month extension for good cause) Typically 1.5 3 years Discovery Some discovery may be allowed No discovery Consolidation if multiple challengers Director may consolidate Consolidated Settlement Can be settled Opposition proceedings may be continued by the EPO on its own motion

Post Grant for Practitioners F&R Webinars Where? see invitation How often? monthly When? 2 nd Wednesday Topics? Important decisions Developments Practice tips 49

Initial Post Grant Webinar Series In an earlier 7 part webinar series titled Challenging Patent Validity in the USPTO, we explored details regarding several of the post grant tools, with 3 sessions dedicated to Inter Partes Review (IPR), and a final session walking through several hypotheticals, to help listeners understand how these apply to common situations. Audio and slides for these webinars are posted online at: http://www.fr.com/post grant webinar series/ If you listen to these webinars, you will be well positioned to engage in a conversation over whether and when to use those tools and how to defend against them. 50

Resources F&R web sites: Post Grant for Practitioners: http://www.fr.com/post grant for practitioners/ General: http://www.fr.com/post grant practice/ IPR: http://www.fr.com/reexam services post grant ipreview/ PGR: http://www.fr.com/reexam services post grant pgreview/ Rules governing post grant: http://www.fr.com/post grant practice/ USPTO sites: AIA Main: http://www.uspto.gov/aia_implementation/index.jsp Inter Partes: http://www.uspto.gov/aia_implementation/bpai.jsp 51

Thank you from the Fish & Richardson Post Grant Team! Karl Renner, DC renner@fr.com 202.626.6447 Special thanks to Dorothy Whelan (Practice Co chair), Adam Shartzer, and Josh Pond, for contributions. 52