Alert November 15, 2019

Issue Twenty-One: 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. 

PTAB Proceedings Continue to Be Intertwined with District Court Litigation

Recent decisions illustrate the importance of understanding the relationship between PTAB proceedings and parallel district court proceedings.  

PTAB FWD of Unpatentability May Not Preclude District Court Litigation 

In Sanofi-Aventis U.S. LLC v. Mylan GmbH, No. 17-9105 (D.N.J. Oct. 2, 2019), the court denied a motion for summary judgment, which argued that the Board’s Final Written Decisions finding the asserted claims unpatentable estopped patent owner from asserting the patents in the litigation. The court found that collateral estoppel did not prevent patent owner from asserting the patents because the issues in the two forums were not identical due to differing legal standards. Because the Board assesses validity under a preponderance of the evidence standard, where courts apply a clear and convincing evidence standard, the Board’s decision did not trigger issue preclusion.

In separate case, the Court of Federal Claims granted patent owner leave to amend its complaint after the Board vacated a decision that found claims of the challenged patent unpatentable.  3rd Eye Surveillance, LLC v. United States, No. 15-501C (Fed. Cl. Sept. 26, 2019).  Patent owner previously filed an amended complaint dropping certain claims that the Board found unpatentable in a Final Written Decision. In light of intervening caselaw (Return Mail, Inc. v. United States Postal Serv.), however, the Board vacated that decision, and patent owner sought to reassert those claims.  Although the district court’s decision granting leave to amend was consistent with the Board’s ultimate decision, the court nonetheless noted that courts are not bound by decisions of the Board in favor of the validity of the patent because of the different evidentiary standards and procedural limitations between the forums.

TAKEAWAY: Petitioners looking to leverage PTAB decisions in parallel court proceedings should be aware that the Board’s findings of unpatentability may not be effective in cutting short parallel litigation. While the Board’s reasoning may be persuasive to a judge, the different legal standards in the two forums may prevent petitioners from using those decisions to dispose of litigations through procedural motions before the patent is cancelled at the PTO.  

District Court Intolerant of Gamesmanship Related to Parallel PTAB Proceedings 

A district court denied plaintiffs’ motion to amend their infringement contentions to assert new claims resulting from reexamination proceedings. IXI Mobile (R&D) Ltd. v. Samsung Elecs. Co. Ltd., No. 15-03752 (N.D. Cal. Oct. 10, 2019). The district court actions had been stayed in November 2015 after defendants filed IPR petitions challenging the patents asserted in the litigation. The PTAB found 40 of the 41 challenged claims unpatentable. While the appeal of the Board’s decisions in the IPRs was pending, Plaintiffs sought ex parte reexamination of one asserted patent and obtained amended and new claims in reexamination. Plaintiffs then filed a motion to amend their infringement contentions to assert the new and amended claims. The Court noted that “if Plaintiffs are allowed to proceed as they propose, the Court’s stay to permit completion of the IPR was essentially pointless, and accomplished nothing other than delaying resolution of this case by several years.” The Court did not reach the question of whether preclusion bars the new reexamination claims, but noted that this was an unresolved issue.

TAKEAWAY: Both the Board and district court judges have approached the intersection of proceedings in these forums with an eye toward fairness and practicality. Neither forum tolerates gamesmanship, so parties should develop a case strategy that reflects a good faith effort to efficiently resolve the dispute.

Disqualification Motions Lead to Different Outcomes 

In Miami Int’l Holdings, Inc. v. NASDAQ ISE, LLC, CBM2018-00020, Paper 81 (Oct. 1, 2019), the Board denied Patent Owner’s motion to disqualify Petitioner’s counsel. Petitioner’s counsel prosecuted patents for Patent Owner’s real-party-in-interest (“RPI”). Years later, the RPI and Patent Owner sued Petitioner in district court for infringement of both the patents that had been prosecuted by Petitioner’s counsel as well as other patents. When Petitioners filed CBM petitions challenging the asserted patents, they were represented by counsel that prosecuted the RPI’s patents, but only for the CBM petition challenging the patent that that firm did not prosecute, with another firm representing Petioners in the CBMs challenging the patents that were prosecuted by the RPI’s prosecution counsel. Patent Owner moved to disqualify Petitioner’s counsel in both the district court and PTAB.

In the litigation, the court granted the RPI and patent owner’s motion to disqualify petitioner’s counsel. The Board, however, did not simply adopt the district court’s reasoning. The board declined to disqualify petitioner’s counsel, finding that the challenged patents were not related to the patents prosecuted by the counsel in question, that there was no evidence of the exchange of confidential information, that any such confidential information would be of limited utility in the CBM proceeding, and that the arms-length relationship between the RPI and patent owner mitigated concerns of conflict.

TAKEAWAY: The Board took a practical approach to the motion to disqualify counsel and did not rely on the district court’s reasoning. The Board recognized the differences between the two forums and the impact of those differences with respect to ethical challenges. 

Notably, immediately after the Federal Circuit’s Arthrex decision, patent owner moved for rehearing on the grounds that the opinion was issued under an Appointments Clause Violation.

Real Parties in Interest May Not Be Barred From Filing Follow On Petitions

In Choirock Contents Factory Co., Ltd. v. Spin Master Ltd., IPR2019-00897, Paper 17 (PTAB Sep. 26, 2019), the Board granted institution and rejected Patent Owner’s arguments that it should deny the petition under 35 U.S.C. §§ 314(a) and 325(d) in view of a related petition challenging the same patent where Petitioner was listed as a real-party-in-interest. Despite the substantial identity between the current Petition and the one in the previous IPR, and despite the pre-existing contractual and indemnification business relationship between the current Petitioner and the prior one, the Board noted that it could not find any “rule or case law that prevents an RPI or privy of a previous petitioner, who is not barred under § 315(b), from filing its own petition.” The Board also noted that there was no gamesmanship where the Petitioner did not alter the previously raised arguments in view of the Patent Owner’s responses or findings from the previous panel and simply refiled the Petition after the parties to the prior proceeding settled.  

TAKEAWAY: The fate of follow-on petitions remains in flux as the Board clarifies the impact of Valve’s expansion of the application of the General Plastic factors to different petitioners. Until there is additional clarity, Patent Owners should we aware that a settlement may not necessarily preclude additional challenges to the patent—by related or unrelated parties. 

Prior Art Status For Reference Must Be Separately Demonstrated In Each IPR Proceeding

In Agilent Techs., Inc. v. Bio-Rad Labs, Inc., IPR2019-00266, Paper No. 10 (Oct. 23, 2019) (“the ’266 IPR”), the Board denied Petitioner’s request for rehearing of a decision denying institution because, among other things, the Board found that Petitioner had not adequately demonstrated that a reference qualified as prior art. This finding was in contrast with a decision of a different panel (with 2 overlapping judges) in a different IPR proceeding (IPR2017-0054) (“’054 IPR”) finding the same reference to be prior art to the same patent. In its request for rehearing, Petitioner pointed out that in the ’054 IPR, the Board had found that the reference qualified as prior art and argued that the record in that proceeding was substantively the same as the one in the ’266 IPR. The Board, however, disagreed, particularly because the level of ordinary skill in the art was assessed differently in the two IPRs.  

TAKEAWAY: One panel’s finding that a reference qualifies as prior art does not guarantee that the reference will be found to be prior art in a different proceeding. The prior art status of a reference should be separately demonstrated in each IPR proceeding.

Motions to Amend: Proposed Rulemaking

On October 21, the USPTO published a Notice of Proposed Rulemaking that addresses the allocations of the burdens on motions to amend. While the Board previously placed the burden of demonstrating patentability on the patent owner, the Federal Circuit in Aqua Products held that in the absence of rulemaking, the USPTO cannot place the burden of persuasion on the patent owner. 

The Notice proposes that the petitioner bears the burden to show unpatentability of substitute claims in a motion to amend, while the patent owner bears the burden to show the motion to amend complies with statutory and regulatory requirements.The Notice further proposes that the Board may, in the interests of justice, make a determination regardless of the burdens on either party, though the Office notes that it expects the Board will rarely exercise such discretion. This allocation of burdens is consistent with the Lectrosonics decision recently designated precedential. 

The public is invited to provide comments on or before December 23, 2019.  

TAKEAWAY: Petitioners looking to leverage PTAB decisions in parallel court proceedings should be aware that the Board’s findings of unpatentability may not be effective in cutting short parallel litigation. While the Board’s reasoning may be persuasive to a judge, the different legal standards in the two forums may prevent petitioners from using those decisions to dispose of litigations through procedural motions before the patent is cancelled at the PTO.  

Ongoing Constitutional Questions Surrounding AIA Reviews

As a result of the Federal Circuit’s Arthrex decision, it is clear that the Board, the Federal Circuit, and Congress will continue to weigh the constitutional question in the coming months. The Supreme Court, too, may weigh in on another challenge to the constitutionality of IPR proceedings from Collabo Innovations, who is arguing that IPR challenges to pre-AIA patents violate the takings clause and the due process clause of the Constitution.