September 28, 2017

Issue Eight: PTAB Trial Tracker

A Surprise Move Designed to Shield Patents from IPR

On September 8, 2017, Allergan announced that it had assigned its patents covering Restasis®, a dry eye treatment with a reported $1.4B in sales last year, to the Saint Regis Mohawk Tribe, and received an exclusive license to the patents.  These patents are the subject of both district court litigation and pending IPRs.  Following the assignment, the Tribe has moved to dismiss the pending IPRs, on the grounds that it is a sovereign government that is immune from IPR challenges.  The move follows precedent first set earlier this year in Covidien v. University of the State of Florida, in which the Board dismissed an IPR because the patent at issue was owned by an arm of the state of Florida, which has sovereign immunity.  (IPR2016-01274, Paper 21, Jan. 25, 2017).  

Under the agreement, Allergan reportedly paid the Tribe $13.75 million to take the patents, and the Tribe is eligible to receive $15 million in annual royalties.

The surprise move caused the Board to postpone the final oral hearing in the IPRs, which had been scheduled to take place less than a week after Allergan announced the transaction.  The Board ordered briefing limited to the issue of sovereign immunity, with the last brief due on October 13. 

Takeaway:  Allergan announced that its move is an attempt to avoid PTAB review of its patents.  According to news reports, at least one other party has transferred its patent to a Native American Tribe, potentially to leverage the Tribe's sovereign immunity to protect the patent from PTAB review.  Allergan’s move has certainly bought Allergan some time during which the PTO is working out the ramifications of the IP transfer on the pending IPRs.  But, the long-term ramifications of this move are less certain, and will remain so until the IP transfer is fully vetted by the PTO and potentially the courts.

Evidentiary Rulings

In disputes between Ultratec and Captioncall, the patentability of eight Ultratec patents in a single family was examined in both the District Court for the Western District of Wisconsin and at the PTAB.  Based on some of the same art and arguments, the district court found the patent claims not invalid and awarded Ultratec $44M in infringement damages.    

At the Board, three weeks before the oral hearing, Patent Owner sought to submit the district court trial testimony of Petitioner’s expert as supplemental evidence, arguing that it showed Petitioner’s expert lacked credibility.  In a conference call, and without having reviewed the trial testimony, the Board refused Patent Owner's request for authorization to submit it.  The Board then issued its final written decision finding the patent claims unpatentable.  The decision heavily relied on Petitioner’s expert’s declaration.

On appeal to the Federal Circuit, the court found that Patent Owner’s request to submit the testimony met the two-pronged test for the submission of supplemental evidence provided by the Board’s rules (37 C.F.R. § 42.123(b)), and that the Board had abused its discretion in not allowing the submission of the evidence.  (Appeal No. 2016-1706, Aug. 28, 2017.)  First, Patent Owner sought to submit the evidence as soon as it was available (within one week of the district court trial), and second, it would have been in the interests of justice to consider the proffered evidence.  Since “Ultratec sought to offer recent sworn testimony of the same expert addressing the same patents, references, and limitations at issue in the IPRs[,] a reasonable adjudicator would have wanted to review this evidence.”  (Page 11.) 

The court identified a “number of problems with the Board’s procedures” that contributed to its errors in this case.  First, the Board’s rules do not allow parties to submit the potential supplemental evidence to the Board so that the Board can make a reasoned decision on whether to admit it.  Second, there was no record of the conference call, leaving the Federal Circuit without the benefit of the Board’s reasoning underpinning its decision, which prevented meaningful review. 

The court vacated the IPR decisions and ordered the Board to admit and consider the trial testimony. 

Takeaway:  This case shows the Federal Circuit’s willingness to examine the Board’s rules and practices, and to require more clarity and rigor from the Board to enable meaningful review of their decisions.  Parties should carefully examine the record at the PTAB when devising an appeal strategy, and should pay particular attention to evidentiary rulings, as well as to rules and procedures that may have affected the outcome of the IPR, but which have not yet been tested and approved by the Federal Circuit.  Parties should also be mindful of providing a court reporter to record any oral discussions with the Board, to create a record for potential appellate review.  Aside from the evidentiary issues, this case also illustrates a court and the PTAB reaching the opposite result on the same patent.  Readers may wish to delve into the respective dockets of these cases to see how the different adjudicators treated the evidence.

Motions to Amend

In Securus Techs., Inc. v. Global Tel*Link Corp., PGR2017-00005, the Board found that Patent Owner had overcome the presumption that only one substitute claim may be included in a motion to amend for each challenged claim.  (Paper 11 at 2, Aug. 15, 2017.)  Since PGR had been instituted based on a number of grounds, Patent Owner was permitted to file a substitute claim responsive to each ground.  For example, institution of PGR for claim 1 was based on indefiniteness and obviousness.  The Board thus found it permissible for Patent Owner to propose three substitute claims: one to use if claim 1 was found indefinite, one to use of claim 1 was found obvious, and one to use if claim 1 was found unpatentable for both reasons.

Takeaway: Although the Board continues to be stingy in granting motions to amend, this case provides insight for Patent Owners who chose to file such motions.  While there is a presumption that Patent Owners can offer only one substitute claim for each challenged claim, this case demonstrates that one way to try and overcome this presumption is to propose offering a different substitute claim for each ground of rejection. 


In Facebook, Inc. v. Windy City Innovations, LLC, IPR2016-01067, the Board denied Patent Owner Windy City’s request for rehearing of the decision instituting Facebook’s petition for IPR and joining it with an earlier IPR filed by Microsoft.  (Paper 54, Aug. 14, 2017.)  Facebook had filed a petition for IPR, along with a motion for joinder with an instituted IPR filed by Microsoft.  Windy City filed a patent owner preliminary response, but did not specifically oppose joinder.  While Facebook’s petition and motion were pending, Microsoft and Windy City settled the IPR that Facebook was seeking to join.  Following that settlement, however, the Board terminated the IPR only as to Microsoft.  It exercised its discretion to continue the IPR against Windy City, and then joined Facebook as a petitioner to that IPR. 

Windy City argued that the Board lacked authority to terminate only as to Microsoft, but not terminate the entire proceeding.  The Board disagreed, arguing that the applicable statutes and rules permit this outcome.  Windy City also argued that the Board lacked authority to join a party that challenges fewer than all of the claims challenged by the original petitioner.  The Board again disagreed, finding no such limitation on joinder. 

Takeaway:  In prior cases, the Board has denied motions to join where the original IPR settled prior to joinder being granted.  This case presents an interesting twist, where, despite settlement, the Board only partially terminated the original IPR, leaving a proceeding to which a second petitioner could join.  Patent owners seeking to avoid a similar fate are well-advised to oppose motions for joinder.    

Board Discretion to Institute IPR

In Apple, Inc. v. California Institution of Technology, IPR2017-00703, the Board denied institution, explaining that Apple asserted grounds that depended on a finding that the patent at issue was not entitled to its stated priority date, yet the Board had already decided, in an earlier IPR, that the patent was entitled to that priority date.  The Board’s earlier decision was available at the time Apple filed its petition, and according to the Board, Apple made “no attempt to distinguish its arguments from those made by [petitioner] in the earlier case.”  (Paper 11 at 9, Sept. 12, 2017.) 

Takeaway:  Petitioners should carefully scrutinize all available information regarding a patent when preparing its petition.  We have previously seen the Board deny petitions because, for example, the petitioner neglected to address secondary considerations raised by the patent owner in prior litigation on the patent.  Here, the Board denied the petition where petitioner failed to distinguish an already-decided priority issue.  A well-crafted petition will respond to all known arguments that have been asserted in favor of patentability of the patent claims at issue. 


Three recent cases, two from the Eastern District of Texas and one from the Eastern District of Wisconsin, added to the debate about the proper scope of petitioner estoppel to be applied following a final written decision at the PTAB.

In Cellular Comms. Equip. LLC v. HTC Corp., No. 17-00078, Judge Payne stayed the case pending resolution of IPRs on the two patents at issue, and indicated that defendant will be estopped from pursuing the following subject matter if and when the stay is lifted: (1) grounds that were instituted by the PTAB, and ultimately found to be insufficient to render the patent unpatentable; (2) grounds that were included in the petition but not instituted by the PTAB based on a merits decision that the grounds did not establish a reasonable likelihood that the patent was unpatentable; and (3) grounds not included in the petition, but which a “reasonably skilled searcher  conducting a diligent search reasonably could have been expected to discover.”  As to category 2, Judge Payne clarified that defendant would not be estopped from pursuing grounds that it included in the petition but for which the Board denied institution for procedural reasons, such as redundancy.  Judge Payne also specified that any IPR that is joined to the pending IPRs would be considered part of the pending IPR for estoppel purposes.  (Slip Op. p. 2; E.D. Tex. Sep. 13, 2017.)

In Milwaukee Elec. Tool Corp. v. Snap-on Inc., No. 14-1296, pending in the Eastern District of Wisconsin, the court ruled that estoppel applies to (1) instituted grounds; and (2) grounds that were not included in the petition but reasonably could have been included.  As to category 2, Magistrate Stadtmueller clarified that it includes alternative combinations and subsets of references that were included in the petitioned grounds.  Unlike Judge Payne, Magistrate Stadtmueller found no estoppel as to grounds that were included in the petition but not instituted, regardless of the reason for non-institution.  The court also found no estoppel as to prior art that cannot be raised in IPRs, such as a physical embodiment or a video. 

In Network-1 Techs. Inc. v. Alcatel-Lucent USA, Inc., No. 11-492, pending in the Eastern District of Texas, the court focused on non-petitioned grounds, holding that estoppel applies to individual references, and not to specific combinations.  (Slip. Op. p. 10; E.D. Tex. Sep. 25, 2017.)  That is, the defendant is estopped from using references that were reasonably available for use in the petition for IPR in any combination with other patents or printed publications.

Takeaway:  These three cases all agree that estoppel applies to grounds that were not included in the petition for IPR, but reasonably could have been, a position that has not been universally agreed to by the courts thus far.  Whether this is the beginning of a consensus as to this category of grounds is something we will continue to monitor.