Petitioner Estopped from Asserting Arguments Not Made in IPR in Later Litigation
In American Technical Ceramics Corp. et al v. Presidio Components, Inc., 2:14-cv-06544 (E.D.N.Y. Jan. 30, 2019), the court rejected Presidio’s attempt to supplement its invalidity contentions to add an argument that it had not raised in a prior IPR. Presidio, relying on Shaw Indus. Grp., Inc. v. Automated Creel Systems, Inc., 817 F.3d 1293 (Fed. Cir. 2016), argued that because it did not petition the PTAB on the invalidity ground, it necessarily could not have raised the arguments during the IPR and should not be estopped from asserting them now. The court noted that Shaw did not address the question presently before the court: whether a litigant who did not include invalidity grounds in its IPR petition, but reasonably could have, should be permitted to argue invalidity on those grounds.
The court explained that endorsing Presidio’s view of § 315(e)(2) “would only trigger estoppel in the odd situation when a petitioner raises a ground in a petition, the PTAB subsequently institutes IPR on that ground, the petitioner then chooses not to argue invalidity on that ground during the IPR, but once again changes course to raise that invalidity ground in federal court.” The court found that this limited view did not comport with the policy goals of the IPR process and explained that “[w]hen a party chooses to seek IPR, but only on certain grounds, that choice comes with consequences, notably the risk of estoppel under § 315(e)(2).”
Takeaway: While estoppel does not apply to non-instituted grounds, estoppel will apply to grounds not included in the Petition that “reasonably could have been raised.” It is important that Petitioners consider all available invalidity arguments when choosing to file an IPR Petition and understand that any argument not raised in the Petition may be surrendered.
Testing the Limits of § 315’s Bars
In Cisco Systems, Inc. v. ChriMar Systems, Inc., IPR2018-01511, Paper 11 (Jan. 31, 2019) the Board dismissed Cisco’s petition as barred under § 315(a)(1). Cisco had previously filed suit for declaratory judgment of invalidity in district court, and then voluntarily dismissed its complaint. The Board found that while Cisco did not “actually ha[ve] a bite at the apple,” § 315(a)’s bar requires only that litigation is filed and does not require any substantive litigation to actually have occurred.
In Sling TV LLC et al. v. Realtime Adaptive Streaming LLC, IPR2018-01331, Paper 9 (Jan. 31, 2019), the Board found that while Petitioner was served with a complaint asserting the challenged patent over one year before filing the IPR Petition, this proceeding was not time barred under § 315(b) because the complaint was not filed by the entity who owned the patent. Because the plaintiffs who filed the complaint did not have standing to assert the patent, the Board found that this complaint could not trigger the one year clock.
Takeaway: Parties need to be aware of all the circumstances relating to potential triggers of the statutory bars to filing IPR Petitions. Specifically, Petitioners should note that an IPR will be barred upon the filing of a declaratory judgment suit, regardless of whether substantive litigation actually follows; and service of a complaint will not start the one-year clock unless it was filed by the patent owner.
No Violation of Due Process Rights When Parties Do Not Seek Opportunity to Be Heard
In AC Technologies S.A. v. Amazon.com, Inc., Nos. 18-1433, 17-1999 (Fed. Cir. Jan. 9, 2019), the Federal Circuit affirmed the PTAB’s decision on reconsideration that the challenged claims are invalid as anticipated or obvious in light of the prior art. The PTAB’s Institution Decision included preliminary claim construction, which according to the Board, rendered Ground 3 “moot.” The Board’s Final Written Decision found some claims of U.S. Patent No. 7,9044,680 invalid, but did not address Ground 3. Citing SAS, Petitioner requested reconsideration, and the Board agreed. With the Board’s permission, the parties submitted supplementary expert declarations and arguments addressing Ground 3, but neither party requested a rehearing. Upon reconsideration, the PTAB invalidated the remaining claims based on a ground of unpatentability that was raised in the petition but not addressed in the first written decision. Patent Owner appealed, arguing that the Board had (1) exceeded its authority and (2) deprived Patent Owner of due process.
In line with SAS, the Federal Circuit held that the Board properly considered all of the grounds of unpatentability raised in the instituted petition and therefore did not exceed its authority. The Court also found that Patent Owner’s due process rights were not violated because the parties were permitted to take additional discovery and submit additional briefing to the PTAB for the reconsideration.
Takeaway: In the wake of SAS, it is important that parties put forth evidence regarding all Grounds raised in the Petition, regardless of whether these issues are specifically addressed in the Institution Decision. Additionally, the Federal Circuit’s decision makes clear that parties should be proactive in seeking additional avenues to be heard—including additional discovery, briefing, and rehearing—if the party has not had sufficient notice and opportunity to respond to the arguments being considered. Due process protections will not protect parties who may have had an opportunity to be heard but did not request such an opportunity, such as through additional briefing or rehearing.
Standing to Bring IPR Appeal Exists Even Where Hatch-Waxman Action Cannot be Maintained
In Amerigen Pharmaceuticals Ltd. v. UCB Pharma GmbH, No. 2017-2596 (Fed. Cir. Jan. 11, 2019), the Federal Circuit upheld the Board’s finding that U.S. Patent No. 6,858,650, which covers Pfizer Inc.’s urinary incontinence drug Toviaz®, was not invalid as obvious. In its precedential decision, the court also addressed UCB’s argument that Amerigen lacked standing to appeal. UCB argued that because Amerigen cannot obtain FDA approval for its product before expiration of the ’650 patent and is therefore foreclosed from infringing, there cannot be a justiciable dispute between the parties. The court rejected UCB’s argument and concluded that Amerigen had standing to appeal because it had received tentative FDA approval and a decision from the Court invaliding the patent “would enable Amerigen to launch its competing product substantially earlier than it otherwise could.” Thus, Amerigen had a “concrete, economic interest in the sales of its tentatively approved drug obstructed by the listing of the ’650 patent.”
Takeaway: While a Petitioner need not worry about standing to file an IPR Petition, standing becomes an issue when a party seeks to appeal an IPR decision to the Federal Circuit. Here, even though there was no risk of infringement liability to serve as the basis for injury in fact, the court found that the delay of Amerigen’s launch of its product was sufficient to demonstrate a controversy to confer standing for the appeal.
Discretion Under § 314(a) and Parallel Proceedings
In Wirtgen America, Inc. v. Caterpillar Paving Prods., Inc., IPR2018-01201, Paper 13 (Jan. 8, 2019), Caterpillar Inc. argued that the Board should exercise its discretion under § 314(a) to decline review of U.S. Patent No. 7,140,693 due to parallel proceedings involving the same invalidity arguments at the ITC. In rejecting these arguments, the Board noted that “the ITC does not have the authority to invalidate a patent and ITC decisions do not necessarily pertain to the issues raised in an inter partes review petition because of the difference in evidentiary standards and burdens.” Thus, the Board’s resources would not be wasted with parallel proceedings.
In Expedia, Inc. et al. v. International Business Machines Corp., IPR2018-01354, Paper 8 (Jan. 15, 2019), the Board instituted the petition on U.S. Patent No. 5,961,601, rejecting IBM’s argument that the Board should exercise its discretion under § 314(a) and deny the petition based on a prior jury finding of infringement and validity. While acknowledging the substantial overlap between the invalidity arguments presented at trial and those in the petition, the Board noted that the challengers in the IPR were not parties to or otherwise involved in the district court suit. In response to IBM’s argument that reviewing the same invalidity arguments would be a waste of resources, the Board explained that parallel proceedings are just “one factor among many” to consider, and declined to deny the petition on that basis.
Takeaway: Not all parallel proceedings are created equal when it comes to the Board’s discretion under § 314(a). Although parallel proceedings in other judicial forums can be the basis for denial of a Petition, the existence of the proceedings alone will not preclude institution. The Board may exercise its discretion to institute even where arguments substantially overlap with those presented in other proceedings as long as the efforts of the Board will not be wasted.
Substitute Claims Are Subject to § 101 Inquiry
In Amazon.com, Inc. et al. v. Uniloc Luxembourg S.A., IPR2017-00948, Patent Owner filed a Motion to Amend and Petitioner opposed, arguing inter alia that the substitute claims were directed to non-statutory subject matter under § 101. The Board agreed that the substitute claims were not patent eligible, and the Patent Owner sought rehearing, arguing that Petitioner improperly raised § 101 arguments in an IPR.
The Board rejected Patent Owner’s Request for Rehearing, explaining that § 311(b) does not preclude Petitioner from arguing, or the Board from considering, whether substitute claims presented in a motion to amend were patent-eligible under § 101. While a patent owner does not bear the burden of persuasion on patentability in a motion to amend, there are no limits on the grounds of unpatentability which may be considered with respect to substitute claims presented in a motion to amend. The Board found that Petitioner “proved by a preponderance of the evidence that [the] substitute claims  recited non-statutory subject matter.” See Paper 34 at 4, n 2 (Jan. 18, 2019).
Takeaway: Patent Owners and Petitioners should be mindful that the limitations on arguments that can be raised in an IPR Petition do not apply to Oppositions to Motions to Amend. When crafting amended claims, Patent Owners must consider that any amended or substitute claims are subject to a full patentability review. Petitioners can capitalize on this opportunity to assert additional invalidity arguments beyond those based on §102 and § 103.
Revised Guidance on Subject Matter Eligibility for USPTO Examiners
The United States Patent and Trademark Office issued 2019 Revised Subject Matter Eligibility Guidance on January 7, 2019. The guidance is intended to provide consistency to patent eligibility determinations, in part by identifying three categories of inventions that fall under the abstract idea exception:
(1) Mathematical concepts (e.g. formulas, equations, calculations);
(2) Methods of organizing human activity (e.g. economic practices such as insurance);
(3) Mental processes performed in the human mind (e.g. observation, evaluation, judgment, and opinion).
The guidance further provides non-exclusive examples of subject matter in which abstract ideas are “integrated into a practical application,” and therefore may be patent eligible:
(1) the claim reflects an improvement in the functioning of a computer, or other technology or technical field;
(2) the claim applies the abstract idea to effect a particular treatment or prophylaxis for a disease or medical condition;
(3) the abstract idea is used in conjunction with a particular machine or manufacture that is integral to the claim;
(4) the claim effects a transformation or reduction of a particular article to a different state or thing;
(5) the abstract idea is used in some meaningful way beyond generally linking its use to a particular technological environment.
Takeaway: Consistency and predictability in eligibility decisions has been a challenge for USPTO examiners and courts following the Supreme Court’s decision in Alice. The PTO’s synthesis of existing precedent regarding subject matter eligibility can serve as guidance to examiners and courts alike, and should, for example, be taken into account by both Petitioners and Patent Owners when drafting and opposing substitute claims.
Linnea P. CiprianoPartner
Marta E. DelsignoreOf Counsel
Emily L. RapalinoPartner