Design Patents and IPR: Challenging and Defending Validity at the PTAB

Presenting a live 90-minute webinar with interactive Q&A Design Patents and IPR: Challenging and Defending Validity at the PTAB Navigating Prior Art and Obviousness Analyses, Leveraging IPR for Design Patents TUESDAY, OCTOBER 18, 2016 1pm Eastern 12pm Central 11am Mountain 10am Pacific Today s faculty features: Elizabeth D. Ferrill, Partner, Finnegan Henderson Farabow Garrett & Dunner, Washington, D.C. Mark W. Rygiel, Director, Sterne Kessler Goldstein & Fox, Washington, D.C. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

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Agenda 1. Background on Design Patent Challenges 2. Similarities/Differences with Utility Challenges 3. Pre-Trial Trends and Best Practices 4. Post-Institution Considerations 5 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Design Patent Challenges The same PTO Litigation proceedings are available to design patents as utility patents. PTO Litigation: Inter partes proceedings created by the America Invents Act of 2012 for contesting the patentability of issued US patents at the PTAB (e.g. IPRs, CBMs, and PGRs) IPR: An inter partes review proceeding PGR: A post-grant review proceeding Ex Parte Reexaminations remain available. Some legacy inter partes reexaminations remain pending, but no new IPX proceedings are available. 6 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Comparison of the Proceedings IPR PGR Field Any Any Grounds Timing* Standard Patents and printed publications under 102 & 103 Pre-AIA Patents: Anytime Post-AIA Patents: Later of: 9 mos after issue or re-issue, termination of PGRs Reasonable likelihood that a claim is invalid 101, 112, and all 102 & 103 prior art Pre-AIA Patents: Not available Post-AIA Patents: Must file within 9 mos of issue More likely than not that a claim is invalid * Assuming no Petitioner filing bars (e.g. civil action bar or 1-year bar) apply 7 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

PTO Litigation Timeline Petition Filed PO Preliminary Response Decision on Petition PO Response & Motion to Amend Petitioner Reply & Opposition PO Reply Oral Hearing Final Written Decision 3 month no more than 3 mos 2-3 months 2-3 months 1 month 1-2 mos PO Discovery Period Petitioner Discovery Period PO Discovery Period Motions To Exclude Trial Phase: Must be completed within 12 mos (18 mos in exceptional circumstances) 8 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Design Patent Challenges Including non-aia proceedings, there is generally a rise in postgrant design patent challenges: 25 Design Patent Post-Grant Challenges By Year (through June 2016) 20 19 20 17 15 10 9 7 8 8 7 12 13 7 9 10 11 9 8 15 5 4 5 3 4 5 4 3 3 0 9 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Design Patent PTO Litigation To date, there have been 28 design patent proceedings since adoption of the AIA (26 IPRs and 2 PGRs). Design PTO Litigation per year 16 15 14 12 10 IPR PGR 8 6 4 5 4 3 2 1 2 0 2012 2013 2014 2015 2016 Design patent proceedings are less than 1% of total PTO litigation. 10 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Similar or Different? Big Picture: many believe PTO litigation favors the Petitioner. True for designs? - To date, only 21 institution decisions and 6 FWDs for designs - Institution rate (proceeding): Overall (71%); Designs (43%) - Institution rate (claim): Overall (62%); Designs (43%)* - FWD claim cancel rate: Overall (81%); Designs (100%) Broadest reasonable claim interpretation standard applies Trial conducted by a technically savvy panel of three judges - Better understanding of technical arguments and patent law than most district court judges - No Tech Center 2900 of PTAB 11 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Similar or Different? As with utility challenges, co-pending litigation at time of filing is prevalent When reexaminations are included, potential design infringers may be more proactive than others. Data relating to litigation stays is consistent with utility cases To date, predominately domestic petitioners (89%) for designs Designs covering a wide range of technology areas have been challenged - Apparel - Medical Equipment - Furnishings - Food and Beverage Equipment - Jewelry - Building materials - Transportation - Tools 12 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Pre-Trial: Petition The Petitioner must provide evidence (i.e. prior art and declarations) showing all required statutory, rule, and procedural thresholds are met Almost no further chance is provided for the Petitioner to remedy evidentiary gaps Not too early to take into account demonstratives and oral arguments Design IPR petitioner should be thinking about the same issues: strong prior art, convincing evidence, proper claim construction and complete analysis. 13 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Pre-Trial: Grounds for Rejection Anticipation 3 design IPR FWDs in which claim canceled under 102 The ordinary observer or purchaser More difficult with designs? IPR2015-01453, Decision Instituting (finding reasonable likelihood of Petitioner prevailing under 102 grounds where construction not limited to a specific color). Obviousness All 6 design IPR FWDs include claim canceled on 103 ground The designer of ordinary skill Number of Grounds 14 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Pre-Trial: Grounds for Rejection 112 PGR To date, 2 of the 37 PGR petitions filed challenge design patents Likely to see an upward trend in filings? Challenging the priority claim in IPR Figure 12A of Hakim '604 Publication IPR2013-00072 (Child Drinking Cup) Figure 3 of Challenged '465 Patent 15 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Pre-Trial: Prior Art With designs, Patent Owner s own prior art is often most useful. Utility patents can be (and have been) used successfully in design challenges. See, e.g., IPR2015-00306, FWD canceling claim (claim canceled as obvious over vanity light shade utility patent reference) Non-patent literature Was the prior art publically available? See, e.g., IPR2016-00434 (noting that no evidence was proffered that cited NPLs were publicly accessible) 16 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Pre-Trial: Prior Art Any use of modified drawings in Petition should be done carefully. Image from prior art Magnified image in Petition See, e.g., IPR2016-00130 (Building Insulation), Decision Instituting (magnified image of prior art reference supported by declaration) IPR2013-00259 (Building Panel), Decision Denying Institution (no indication of amount of magnification and no declaratory evidence) 17 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Pre-Trial: Experts In evaluating validity of design patents, two related concepts are relevant: the ordinary observer or purchaser of the patented article and the designer of ordinary skill. Expert does not have to be POSA necessarily but POSA must be properly identified Use of expert testimony is critical for Petitioner IPR2016-00434 (Diamond Jewelry) IPR2015-00947 (Bottle) Identifying the correct expert is also critical 18 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Pre-Trial: Patent Owner Preliminary Response Similar checklist of issues for the design Patent Owner: - Was the Person of Ordinary Skill in the Art properly identified? - Are all Real Parties-in-Interest properly identified? - Are claims properly construed? - Are all Graham requirements addressed including secondary considerations? - Are references properly combined? - Are the references actually prior art? - Did Petitioner adequately prove prior art publication date? 19 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Pre-Trial: Patent Owner Preliminary Response Heightened opportunity to attack obviousness analysis Claim construction IPR2015-00947, Decision Denying Institution (PTAB not persuaded by Petitioner s claim construction because it focuses on general dimensions, ratios, and elements common to many bottles. ) 20 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Pre-Trial: Patent Owner Preliminary Response Heightened opportunity to attack obviousness analysis Failure to focus on the overall appearance IPR2016-00767, Decision Denying Institution (expert s side-by-side comparison was merely a two-dimensional comparison and did not take into account entire design) Focus on design concepts rather than overall visual appearance IPR2016-00434, Decision Denying Institution (Petitioner focused on a general design concept mixing stones of different cuts rather than distinctive visual appearances.) IPR2016-01004, POPR (Petitioner focused on knitting concepts and manufacturing techniques rather than overall appearance) 21 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Pre-Trial: Patent Owner Preliminary Response For design PTO Litigation, is the calculus for using an expert at POPR stage different? Overall, used in about 37% cases since becoming available Use for factual attacks? (see, e.g., IPR2016-01044, Paper No. 6, where the Petitioner failed to explain why ordinary designer would select two shoe upper designs over the hundreds shown in the complete reference) Secondary Considerations Were they raised in prosecution (or other proceeding) and adequately addressed by Petition? Success rate in PTO litigation for Patent Owner generally is extremely low. Better or worse for designs? 22 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Post Institution Considerations Board is condensing trial to 6-7 months, and only 8-10 weeks to POR Objections to evidence must be made within 10 days of institution Patent Owner Response Expert considerations Deposing petitioner s expert Definition of POSA Claim construction Prior art teaching Qualifications to be an expert Claim Amendments? Petitioner Reply 23 S K G F. C O M 2016 Sterne, Kessler, Goldstein, & Fox P.L.L.C. All Rights Reserved.

Finnegan, Henderson, Farabow, Garrett & Dunner, LLP Trends in Design Patent Post-Grant Proceedings Elizabeth D. Ferrill October 18, 2016

Trends in Design Post-Grant Reviews 102 Anticipation cases 103 Obviousness cases Challenges to priority PGR petitions 26

IPR Petitions with Anticipation Grounds 27

Anticipation Framework Int l Seaway v. Walgreens [T]he ordinary observer test must logically be the sole test for anticipation as well. Ordinary Observer Test [Whether] an ordinary observer, familiar with the prior art designs, would be deceived into believing that the accused product is the same as the patented design. 589 F.3d 1233 (Fed. Cir. 2009) Richardson v. Stanley Works, 597 F.3d 1288 (Fed. Cir. 2010) 28

Trend No. 1: Design patent owner may be their own worst enemy. 29

Sensio Inc. v. Select Brands, Inc. IPR2013-00500 30

Trend No. 2: Scope of the claim matters. 31

Sensio Inc. v. Select Brands, Inc. IPR2013-00500 32

Sensio Inc. v. Select Brands, Inc. IPR2013-00500 33

Trend No. 3: The bulk of the utility patent precedent applies to design IPRs. 34

Sensio Inc. v. Select Brands, Inc. Select Brands attempted to antedate the references by showing a reduction to practice of the of the design before the earliest publication date of the references Supported by nearly identical declarations from three inventors regarding reduction to practice Sensio argued that patent owner had failed to show inventors conceived of the design 35

Sensio Inc. v. Select Brands, Inc. Patent Owner must show it conceived the design and communicated the design to [the third party] in order for the prototypes [made by the third party] to inure to Patent Owner s benefit. The Board dismissed the Patent Owner s arguments that the inurement precedent should be limited to the interference context or should not apply to design patents. 36

IPR Petitions with Obviousness Grounds 37

Obviousness Framework Primary Reference Secondary Reference Design characteristics of which are basically the same as the claimed design (1) discern the correct visual impression created by the patented design as a whole; (2) single reference that creates basically the same visual impression Can modify the primary reference to create a design that has the same overall visual appearance as the claimed design. Appearance of certain ornamental features in one would suggest the application of those features to the other 38

Trend No. 4: Carefully select the primary reference to make sure it is basically the same. Claimed Design Prior Art 39

Dorman Prods. v. Paccar IPR2015-00416 (June 14, 2016) 40

Dorman Prods. v. Paccar IPR2015-00416 (June 14, 2016) 41

Different visual impressions Dorman Prods. v. Paccar Relative length of sides, angles between sides Claimed Design Kobayashi IPR2014-00555 (Sept. 5, 2014) 42

Different visual impressions Dorman Prods. v. Paccar Relative length of sides, angles between sides Claimed Design Kobayashi IPR2014-00555 (Sept. 5, 2014) 43

Dorman Prods. v. Paccar D429 gives the visual impression of a four-sided trapezoid, while Kobayashi gives the impression of a right triangle with a hypotenuse formed by its top and right sides. Claimed Design Kobayashi IPR2014-00555 (Sept. 5, 2014) 44

Caterpillar v. Miller Int l IPR2015-00416(June 14, 2016) 45

Caterpillar v. Miller Int l IPR2015-00416(June 14, 2016) 46

Caterpillar v. Miller Int l IPR2015-00416(June 14, 2016) 47

Caterpillar v. Miller Int l The Coupler Manual is a suitable primary reference because the Coupler Manual warning symbol gives the same overall visual impression when compared to the claimed warning symbol design as a whole. Claimed Design Coupler Manual IPR2015-00416 (June 14, 2016) 48

Caterpillar v. Miller Int l The requirement that the design characteristics of the proposed primary reference be the same as the claimed design does not imply that the appearance of the prior art article must be identical to the claimed design. Claimed Design Coupler Manual IPR2015-00416 (June 14, 2016) 49

Caterpillar v. Miller Int l Hub is a suitable secondary reference because Hub, like the Coupler Manual, also discloses a coupler for an earthmoving machine. Coupler Manual Hub IPR2015-00416 (July 5, 2016) 50

Trend No. 5: For obviousness, motivation to combine the primary reference and secondary reference should not be overlooked. 51

Premier Gem v. Wing Yee Gems Not shown that POSITA would have used the reference to modify the primary Lotus Carat Claimed Design Heritage Art Deco IPR2015-00416 (July 5, 2016) 52

Premier Gem v. Wing Yee Gems Not shown that POSITA would have used the reference to modify the primary Lotus Carat Claimed Design Heritage Art Deco IPR2015-00416 (July 5, 2016) 53

Caterpillar v. Miller Int l Teo disclosed using a flexible magnetic material for the entire warning sign... permitting attachment of the warning sign... to a curved surface. Coupler Manual Hub Teo IPR2015-00416 (July 5, 2016) 54

Trend No. 6: Challenging priority is possible, but can be complicated. 56

Sketchers U.S.A., Inc. v. Nike, Inc. Priority Filing U.S. Design Application IPR2016-00870 57

Sketchers U.S.A., Inc. v. Nike, Inc. U.S. Design Application Priority Filing IPR2016-00870 58

Munchkin, Inc. v. Luv N Care, Ltd IPR2013-00072 59

Thank You 60

Speaker Information Elizabeth D. Ferrill (elizabeth.ferrill@finnegan.com/1.202.408.4445) Focuses her practice on all aspects of design patents, including prosecution, counseling, and litigation Extensive experience in utility patent litigation in the areas of softwareand hardware-related technologies 61

Disclaimer These materials are public information and have been prepared solely for educational and entertainment purposes to contribute to the understanding of U.S. intellectual property law. These materials reflect only the personal views of the authors and are not a source of legal advice. It is understood that each case is fact specific, and that the appropriate solution in any case will vary. Therefore, these materials may or may not be relevant to any particular situation. Thus, the authors and Finnegan, Henderson, Farabow, Garrett & Dunner, LLP cannot be bound either philosophically or as representatives of their various present and future clients to the comments expressed in these materials. The presentation of these materials does not establish any form of attorney-client relationship with the authors or Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. While every attempt was made to ensure that these materials are accurate, errors or omissions may be contained therein, for which any liability is disclaimed. 62