Alert July 06, 2017

Issue Six: PTAB Trial Tracker

Supreme Court Grants Certiorari to Decide Whether IPRs Are Constitutional

The Supreme Court has granted certiorari to answer the following question:

Whether inter partes review – an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents – violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.

The case is Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712, and is scheduled to be heard in the Court’s October 2017 term.

  • Takeaway: A ruling that IPRs are unconstitutional could conceivably extend to other types of post-grant review at the patent office, and even to patent challenges at the ITC. Such a ruling would not only change patent strategies going forward, but would also raise questions regarding what becomes of patents that have already been cancelled by the PTAB. Oil States is definitely a case to watch.

District Courts Continue to Differ on the Scope of Estoppel

In Cobalt Boats, LLC v. Sea Ray Boats, Inc., the District Court for the Eastern District of Virginia broadly construed the estoppel statute, finding that “estoppel applies to grounds that the Petitioner raised at the IPR itself and could have raised in the IPR petition or at the IPR itself.”  (No. 15-21, E.D. Va. June 5, 2017.)  The Court held that a petitioner should raise all grounds of which it is aware in a petition for IPR, or forgo any omitted grounds in later litigation. 

Following the Federal Circuit’s 2016 Shaw decision, the Court found no estoppel for a reference that was included in the IPR petition, but on which the Board did not institute IPR.  In contrast, it found estoppel as to references that were easily found in a search on Google Patents, using key words taken from the patent-at-issue.  The Court deferred judgment on whether estoppel applied to grounds that included prior art products (which were possibly described in printed publication prior art) and product manuals (which depended on whether defendant knew of the manuals), preferring to decide those issues on a case-by-case basis.

In another recent decision, Advanced Micro Devices, Inc. v. LG Electronics, Inc., the District Court for the Northern District of California narrowly construed the estoppel statute.  It held that estoppel applied only to the identical combinations of references that were instituted by the PTAB, and did not apply to those same references when presented to the court in different combinations.  (No. 14-01012, N.D. Cal. June 26, 2017.)

  • Takeaway:  The estoppel case law continues to develop, with the scope of estoppel depending on the district court, and sometimes on the judge within a district.  For consistency in determining the scope of estoppel, we await weigh-in by the Federal Circuit.

Patentee is Held to Statements it Made in IPRs

In Princeton Digital Image Corp. v. Konami Digital Entertainment Inc., Magistrate Judge Burke of the District Court for the District of Delaware recommended that with respect to claim construction, the plaintiff, Patent Owner in two IPRs, be bound by issue preclusion and prosecution history disclaimer stemming from the earlier IPRs.  (No. 12-1461, D. Del. June 16, 2017.)  In contrast, the group of five defendants was not bound by issue preclusion or any other estoppel stemming from the IPRs because not all of the defendants were involved in them.

With respect to one contested claim term, a means-plus-function term, plaintiff had successfully advocated at the PTAB that the term be construed to encompass a specific function, yet later opposed this same construction at the district court.  Plaintiff explained that it was now represented by new counsel, who had taken a fresh look at the issues.  Nevertheless, Magistrate Burke recommended that issue preclusion be applied to limit the scope of the term to what plaintiff had sought at the PTAB, because all of the factors for issue preclusion applied (the identical issue was previously adjudicated; the issue was actually litigated; the previous determination was necessary to the decision; and the party being precluded from re-litigating the issue was fully represented in the prior action). 

With respect to a second claim term, because plaintiff had successfully avoided institution of IPR based on a proffered narrow claim construction, Magistrate Burke recommended that plaintiff be bound by prosecution history disclaimer from recapturing the scope of the term that it had disclaimed in its IPR preliminary response. 

  • Takeaway:  This case is a reminder that a litigant needs a single, cohesive patent litigation strategy, including across venues and across the different law firms representing the litigant in the different venues.   

PTAB Allows Post-Institution Deposition of Preliminary Response Declarant

In Reactive Surfaces Ltd. v. Toyota Motor Corp., the Board granted Petitioner’s request to depose Patent Owner’s expert declarant who had submitted a declaration supporting the Patent Owner Preliminary Response, but had not submitted a declaration post-institution.  (IPR2016-01462, Paper 30, P.T.A.B. May 31, 2017.)  According to the Board, the deposition was permitted as routine discovery pursuant to 37 C.F.R. 42.53(d)(5)(ii), which authorizes “cross-examination of affidavit testimony prepared for the proceeding.”  The Board limited the scope of the deposition to the grounds on which the IPR was instituted, and to matters affecting the witness’s credibility.

  • Takeaway:  Parties must be aware that depositions are available in all cases where a declaration is created for a post-grant proceeding.  As demonstrated by this case, this rule encompasses declarations submitted prior to institution, even if the declarant does not submit another declaration post-institution.

Board Denies Institution Where Petitioner Fails to Distinguish its Challenge from Those Raised During Prosecution

In Dorco Co. v. The Gillette Co., the Board denied institution because the Petitioner presented “the same or substantially the same prior art or arguments” that were previously presented to the Office during prosecution of the subject patent.  Petitioner had substituted a prior art reference considered by the Examiner with a new reference, but the Board found that Petitioner had identified no claim elements disclosed by the new reference that were not also disclosed by the art cited by the Examiner.  The Board noted that despite the close similarity of the prior art and arguments raised by the Petition and those before the Office during prosecution, Petitioner had not identified any errors made by the Office in the original allowance of the claims, and had not adequately explained why the Board should revisit issues that had already been decided.  As to Petitioner’s expert declaration, which had not been before the Office during prosecution, the Board agreed with Patent Owner that the testimony did not add facts or analysis substantially beyond what had been considered by the Office.  (IPR2017-00500, Paper 7, P.T.A.B. June 21, 2017.)

  • Takeaway:  The Board has discretion to deny institution where the petition re-treads arguments overcome during prosecution.  This case demonstrates that relying on a new prior art reference that was not cited during prosecution, and including a new expert declaration, may not be sufficient to avoid denial of institution.  Keep in mind that where the art and arguments are similar to those made during prosecution, petitioners should identify errors made by the Office in the original allowance of the claims, and/or explain why the Board should revisit issues that had already been decided, and patent owners should evaluate whether the petitioner has adequately done so.  

Board Grants Rare Allowance of Motion to Amend 

In Valeo North America, Inc. v. Schaeffler Techs AG, after finding the challenged claims unpatentable, the Board considered Patent Owner’s Motion to Amend.  (IPR2016-00502, Paper 37, P.T.A.B. June 20, 2017.)  First, the Board found that Patent Owner adequately demonstrated that the subject matter of the substitute claims had written description support in the patent specification.  Second, the Board found that Patent Owner satisfied the technical requirements for a motion to amend, such as proposing a single substitute claim for a single original claim, and providing claim constructions for newly-added terms.  Third, with respect to showing that the substitute claims are patentable over the prior art of record, Patent Owner did not contend that any of the limitations of the substitute claims were missing from the prior art, but rather based its patentability position solely on the objective indicium of unexpected results.  The Board found, however, that Patent Owner had established a nexus between the unexpected results and only two of the substitute claims.  Accordingly, it allowed only those two claims, and refused the remainder of the substitute claims as obvious.  Finally, the Board rejected Petitioner’s arguments that the substitute claims were indefinite and were not patent eligible because they claimed a law of nature.

  • Takeaway:  This case is worth studying for patent owners seeking to amend their claims. Here, Patent Owner successfully overcame the many hurdles necessary to amend the claims. Of note, it offered substitute claims of varying scope. This strategy resulted in partial granting of its motion to amend.