September 5, 2019

Issue Nineteen: PTAB Trial Tracker

The availability of post-grant proceedings at the Patent Trial and Appeal Board (PTAB) has changed the face of patent litigation. This monthly digest is designed to keep you up-to-date by highlighting interesting PTAB, district court, and Federal Circuit decisions relating to emerging post-grant issues.

Time Bar Issues Under 35 U.S.C. § 315

Recent decisions have shed light on the application of the § 315 time bars. In GoPro v. 360Heroes, IPR2018-01754, Paper 38 (Aug. 23, 2019), the Precedential Opinion Panel (“POP”) found that the one-year clock to file an IPR begins running when a complaint alleging infringement is served, even if that complaint is legally deficient. 

GoPro sued 360Heroes for trademark and copyright infringement, inter alia, in April 2016, and 360Heroes responded with counterclaims of patent infringement in August 2016. 360Heroes’s infringement claims, however, were dismissed because 360Heroes lacked standing to assert the patent. After correcting its standing issues, 360Heroes again sued GoPro for patent infringement in September 2017, and GoPro filed its petition for IPR in September 2018, less than one year after the second infringement complaint was served. The Board instituted theIPR, rejecting Patent Owner’s argument that the petition was time-barred. The POP, in granting Patent Owner’s request for rehearing, held that GoPro’s petition was too late—360Heroes’s counterclaims of patent infringement, although legally deficient, started the one year time bar. The panel explained that it “follow[s] the Federal Circuit’s reasoning that a party served with a complaint remains served with the complaint, regardless of whether the serving party lacked standing to sue or the pleading was otherwise deficient.”

In DRL v. Horizon, IPR2017-01995, Paper 77 (Aug. 12, 2019), the Board denied a request for rehearing, finding that counterclaims of invalidity that are not filed in response to allegations of infringement of that patent are not covered by the exception in § 315(a)(3). Petitioner argued that § 315(a)(3) shields any counterclaim from application of the statutory bar under § 315(a)(1). The Board explained, however: “we interpret  § 315(a)(3) as exempting counterclaims that do not survive dismissal of the main case (compulsory counterclaims), but not declaratory judgment actions merely characterized as ‘counterclaims.’” 

In American National Mfg, Inc. v. Sleep Number Corp., IPR2019-00514, Paper 10 (Aug. 5, 2019), the Board rejected Patent Owner’s argument that the Petition was barred under § 315(a)(1) based on an antitrust action filed two years prior to the Petition. Patent Owner argued that the allegations of fraud in obtaining the patent-at-issue in the antitrust case impacted the validity of the patent, and therefore, the antitrust action was an action challenging validity. The Board rejected the argument, finding that § 315(a)(1) applies only to challenges to validity in the form of declaratory judgment actions.

Takeaway: Three points to help navigate the boundaries of the § 315 time bars.  First, the one-year clock under § 315(b) to file an IPR begins running when the complaint is served, regardless of  legal sufficiency of the complaint.  Second, declaratory judgment actions asserted as “counterclaims” are not exempt from the statutory bar under § 315(a)(1). Third, even if patent validity is implicated, antitrust actions are not necessarily deemed civil actions challenging the validity of the patent under § 315(a)(1).

The POP also recently designated as precedential Cisco Systems, Inc. v. Chrimar Systems, Inc., IPR2018-01511 (PTAB Jan. 31, 2019) (Paper 11), which addresses other aspects of § 315 and was addressed in more detail in Issue 12.

Failure to Comply with Statutory Requirements Cannot be Corrected as a Clerical Error

In Miami Int’l Holdings, Inc. v. Nasdaq, Inc., Paper 62 (Aug. 1, 2019), the Board denied Patent Owner’s request for rehearing on Patent Owner’s request to correct alleged clerical errors in its Motion to Amend. Patent Owner claimed that the Board abused its discretion in denying it leave to correct two alleged clerical errors: (1) not filing the appendix setting forth the basis of each amendment to the claims with its Motion to Amend, and (2) not reformatting the appendix to fit within the page limits of a motion to Amend. The Board rejected Patent Owner’s argument that these errors were “clerical in nature” and explained that “failing to comply with the statutory and regulatory requirements is not a clerical error.”

Takeaway: Know the rules. Compliance with the PTAB’s filing requirements is essential as failure to comply is not readily excused.

Conclusory Statements Insufficient to Establish Good Cause to Seal

The PTAB recently examined the issue of “good cause” for purposes of a Motion To Seal. In Great West Casualty Co. v. Intellectual Ventures II LLC, IPR2015-01706, Paper No. 60 (Aug. 6, 2019), Patent Owner filed an unopposed motion to seal exhibits that included infringement contentions and expert reports from a related district court litigation. The Board explained that to demonstrate “good cause” for a motion to seal the moving party must demonstrate that:

(1) the information sought to be sealed is truly confidential, (2) a concrete harm would result upon public disclosure, (3) there exists a genuine need to rely in the trial on the specific information sought to be sealed, and (4), on balance, an interest in maintaining confidentiality outweighs the strong public interest in having an open record.

Id. at 3 (citing Argentum Pharms. LLC v. Alcon Research, Ltd., IPR2017-01053 (Jan. 19, 2018) (Paper 27) (informative), Corning Optical Communications RF, LLC, v. PPC Broadband, Inc., IPR2014-00440 (April 6, 14, 17, 2015) (Papers 46, 47, 49).  

The Board noted that the motion set forth only conclusory assertions that the exhibits were “highly sensitive” and included “confidential information.” The Board found that Patent Owner failed to provide an explanation of why the information was sensitive or confidential and “essentially ask[ed the Board] seal this information because the parties say so, and it is sealed in district court.”

Takeaway: Parties submitting documents with sensitive information should take care to explain, in detail, why those documents should be sealed. The fact that the documents were sealed in a related district court litigation may not be sufficient to meet the standards for sealing that information before the Board.

Estoppel May Not Preclude Arguments Based on Physical Products Even if Described in Printed Publications

In Polaris Indus., Inc. v. Arctic Cat Inc. et al, Case No. 15-cv-04475, (MND Aug. 15, 2019), the district court held that defendant was not estopped from arguing invalidity based on prior art combinations using physical products. Plaintiff argued that 35 U.S.C. § 315(e)(2) estopped defendant’s invalidity combinations because defendant could have relied on the manuals for the products at issue in the IPR. While the court acknowledged that courts have suggested that adequate descriptions in printed publications may estop reliance on physical products in later litigation (citing Oil-Dri Corp. of Am. v. Nestlé Purina Petcare Co., discussed in Issue 13), the court rejected plaintiff’s arguments, noting that no court had extended § 315(e)(2) estoppel to arguments based on art that could not be relied on in an IPR, such as physical products.

Takeaway: Petitioners are becoming increasingly creative in exploring arguments that survive post-PGR/IPR estoppel. While courts continue to decline to extend IPR estoppel to bar invalidity defenses based on physical products, the boundaries of this approach are uncertain. For example, would a petitioner be estopped from relying on combinations with physical products in later litigation if it had actually relied on the product manuals (not merely “could have relied” on the manuals) during an IPR?

IPR Instituted Despite Denial of Prior IPR Petition Based on Same References

In Curt Mfg, LLC v. Horizon Global Americas Inc., IPR2019-00625, Paper 7 (August 12, 2019), the Board instituted trial, even though the petition relied on the same two references relied on in a prior IPR petition, which the Board did not institute. The Board noted that there was no evidence of gamesmanship in filing the petition and the prior petition was denied, at least in part, due to inadequacies in the information presented in the petition, not necessarily due to the quality of the arguments. The Board additionally noted that the arguments did not actually overlap—despite relying on common prior art, the present petition presents § 102 arguments, whereas the prior petition presented only § 103 arguments.

Takeaway: Relying on the prior art that was raised in a prior petition may not trigger the Board’s discretion to deny institution.