Alert April 08, 2020

Issue Twenty-Five: 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.

The PTAB and COVID-19

In response to the global pandemic, the USPTO has stated that “[u]ntil further notice, examiner and examining attorney interviews, Patent Trial and Appeal Board (PTAB) and Trademark Trial and Appeal Board (TTAB) oral hearings, and other similar in-person meetings with parties and stakeholders scheduled to take place at USPTO offices on or after Friday, March 13, 2020 will be conducted remotely by video or telephone. Parties will receive further instructions on how to participate by video or telephone in advance of the interview, hearing, or meeting.”; See USPTO notices regarding COVID-19,

The PTAB has issued Orders on Conduct of the Proceedings in cases that have upcoming trials, ordering the hearings to be conducted via video. See, e.g., Trend Micro, Inc. v. CUPP Computing AS, IPR2019-00368, Paper 20 (PTAB Mar. 13, 2020); Aligent Tech., Inc. v. Bio-Rad Labs., Inc., IPR2019-00271, Paper 20 (PTAB Mar. 13, 2020). The orders further state that if a video connection cannot be established, the hearings will proceed telephonically. The parties also have the option to appear telephonically should they so choose. Similar orders have been entered in cases set for trial in early April, but not those set in late April. Compare Canon, Inc. v. Avigilon Fortress Corp., IPR2019-00311, Paper 42 (PTAB Mar. 19, 2020) (order entered regarding trial via video), with Starbucks Corp. v. Fall Line Patents LLC, IPR2019-00610 (trial set for April 28, 2020, no order on conducting proceeding via video as of April 6, 2020).

The USPTO provided additional guidance on March 31, 2020, available here. Parties may request a thirty day extension for filings due between March 27, 2020 and April 30, 2020, including requests for rehearing, petitions to the Chief Judge, and patent owner preliminary responses and related responsive filings. For other situations, parties can seek an extension by contacting the PTAB.

TAKEAWAY: For now, the PTAB is continuing to go forward with trials as scheduled via video.

New Guidance from the PTAB on Discretionary Denial

The PTAB recently designated two cases as precedential and one case as informative, each of which dealt with discretionary denial under 35 U.S.C. § 325(d).

In Advanced Bionics, LLC v. MED-EL Elektromedizinische Geräte GmbH, IPR2019-01469 (PTAB Feb. 13, 2020) (Paper 6) (precedential), the Board outlined a two-part framework for evaluating its discretion to deny a petition under 325(d). First, the Board will determine if the prior art or arguments asserted in the petition is “the same or substantially the same” as the art and arguments that were presented before the USPTO during prosecution. Id. at 8. Next, if the first part of the framework is met the Board must evaluate whether the Petitioner “has demonstrated that the [USPTO] erred in a manner material to the patentability of challenged claims.” Id. The Board explained that the Becton, Dickinson factors are helpful in the fact-specific analysis of both factors, but that these factors should be read broadly to apply to any proceeding before the PTO. Id. at 9-10. In its consideration of the facts of this case, the Board found that although the specific references were not before the examiner in prosecution, the art was substantially the same as that before the examiner.

Further to the second step of the framework, the Board designated PUMA North America, Inc. v. NIKE, Inc., IPR2019-01042 (PTAB Oct. 31, 2019) (Paper 10) as informative. In PUMA, the Board used its discretion to deny institution under § 325(d) due to Petitioner’s failure to show and explain how the examiner erred during prosecution.

Finally, the Board designated Oticon Medical AB v. Cochlear Limited, IPR2019-00975 (PTAB Oct. 16, 2019) (Paper 15) precedential as to sections II.B (§ 325(d)) and II.C (§ 314(a)). The Board declined to exercise its discretion to deny institution under § 325(d) because it found that the art that was presented was not substantially the same as the art considered during prosecution (step 1) and that the examiner erred in not properly considering the impact the art had on patentability (step 2). Further, the Board declined to exercise its discretion to deny institution under § 314(a) because there was no evidence that the Board’s proceeding would be duplicative of another proceeding. The Board distinguished NHK Spring Co. v. Intri-Plex Technologies, Inc., IPR2018-00752 (PTAB Sept. 12, 2018) (Paper 8) (precedential), discussed in Issue 16, because in NHK there was a co-pending district court proceeding with trial set within six months, making the Board’s analysis directly duplicative.;

TAKEAWAY: The Board has provided guidance for a two-step framework for an analysis under § 325(d). Petitioners facing potential arguments under § 325(d) should address both steps of this analysis to argue against discretionary denial. Additionally, the decision in Oticon clarifies that the mere existence of parallel district court proceedings is not a basis for denial under § 314(a).

Petitioners Cannot Join as a Party to Their Own Prior Petition

In Facebook, Inc. v. Windy City Innovations, LLC, Nos. 2018-1400, 2018-1401, 2018-1402, 2018-1403, 2018-1537, 2018-1540, 2018-1541 (Fed. Cir. March 18, 2020), the Federal Circuit partially vacated decisions on certain challenged claims, finding that the Board had improperly joined Facebook’s later-filed petitions to those it previously filed.

Windy City asserted four patents against Facebook in district court. The asserted patents had a collective total of 830 claims, and under the case schedule in the district court, Windy City was not required to identify its asserted claims within one year of filing the complaint. Just before the one-year cutoff, Facebook filed IPR petitions challenging claims of each of the four asserted patents, and the Board instituted each petition. After Windy City identified its asserted claims—and more than one year after service of the complaint—Facebook filed two additional petitions challenging additional claims of the asserted patent. Facebook asked the Board to join these later-filed petitions with instituted IPRs. The Board instituted the later-filed petitions and joined them to the pending proceedings, finding that the complaint could not have reasonably been interpreted to be asserting all 830 claims of the asserted patents and Facebook did not delay in requesting that the Board add the additional asserted claims to the proceedings after receiving notice from Windy City. The Board’s Final Written Decisions were mixed, finding some of the claims invalid and some not invalid. Both Facebook and Windy City appealed.

On appeal, Windy City challenged the Board’s decision that allowed Facebook to join the later-filed IPRs with the instituted proceedings to include the new claims. The Court explained that “[t]he clear and unambiguous text of § 315(c) does not authorize same-party joinder, and does not authorize joinder of new issues.” The Court distinguished § 315(c) from § 315(d), which allows consolidation of multiple proceedings and the issues in each, and noted that the Board mistakenly used language that authorized joinder of the two proceedings, rather than joinder of a person as a party. When parties are properly joined pursuant to § 315(c), the joint proceeding is confined to the claims and grounds challenged in the initial petition. Thus, the Court found that the Board erred in allowing Facebook to join a proceeding where it was already a party and erred in allowing Facebook to challenge additional claims through that joinder.

In its decision, the Court noted that it agreed with Facebook that this interpretation of § 314(c) may incentivize patent owners to withhold disclosure of the claims they intend to assert in litigation. Despite recognizing that this may not further the goal of providing a “quick and cost effective alternative” to litigation, the court declined to stray from the text of the statute.

The Court also noted that this decision was in contrast to Proppant Express Investments, LLC v. Oren Techs., LLC, No. IPR2018-00914, Paper 38 (P.T.A.B. Mar. 13, 2019) (precedential), discussed in Issue 14, which analyzed the issue of same-party joinder and had come to the opposite conclusion. The Precedential Opinion Panel (“POP”) designated Proppant Express as precedential, which raised the issue of the amount of deference that the Federal Circuit owes to the PTAB’s interpretations of its governing statute. Because the Court found no ambiguity in the statute, it had no reason to afford deference to the POP opinion.

TAKEAWAY: The Federal Circuit made clear that § 315(c) does not authorize same-party joinder, i.e. the joinder of a person as a party to a proceeding where it is already a party, and that new issues may not be brought into a prior proceeding via joinder. The opinion also suggests that the designation of a PTAB decision as precedential does not insulate it from reversal on appeal.

Federal Circuit Denies Arthrex Rehearing

On March 23, 2020, the Federal Circuit denied rehearing and rehearing en banc in Arthrex. Arthrex, Inc. v. Smith & Nephew, Inc. No. 18-2140 (Fed. Cir. Mar. 23, 2020) (per curiam). Four judges concurred in the denial of rehearing, four dissented from the denial, and four expressed no public view.

Concurring Opinions:

Judge Moore wrote the main concurring opinion for the majority, joined by Judges O’Malley, Reyna, and Chen. Judge Moore’s concurrence stated that the panel’s decision followed the Supreme Court’s precedent in concluding that the APJs of the PTAB were improperly appointed principal officers and properly remedied the constitutional defect by severing the offending portion of the statute. Id. at 5. The concurrence opined that the severance resulted in “minimal disruption to the inter partes review system,” and rehearing the case en banc “would have unraveled an effective cure and created additional disruption by increasing the potential number of cases that would require reconsideration on remand.” Id. at 11. The concurrence concluded that “Congress can legislate to restore the removal protections and adopt a different curative mechanism” if Congress prefers a different solution. Id. at 13.

Judge O’Malley provided the second concurrence, joined by Judges Moore and Reyna. Her concurrence addressed the issue of whether the judicial “fix” of severing the offending portions of the statute applied retroactively, making all previous PTAB decisions now constitutional, or only prospectively, applying to PTAB decisions arising after Arthrex. Judge O’Malley opined that Arthrex could not be applied retroactively, because “judicial severance of one portion of an unconstitutional statute is, by necessity, only applicable prospectively.” Id. at 17.

Dissenting Opinions:

Judge Dyk wrote a dissenting opinion, joined by Judges Newman, Wallach, and Hughes (in part). The dissent stated that the severance of removal protections was a “draconian remedy.” Id. at 21. Instead, Congress and USPTO should first have the opportunity “devise a less disruptive remedy,” and cases should be stayed in the interim. Id. Judge Dyk’s dissent also explained that if, for the sake of argument, severing removal protections is the proper solution, then the remedy should be retroactively applied to earlier cases and would not require remand to a new panel. Id. at 42. Finally, Judge Dyk’s dissent raised doubts as to whether APJs are principal officers that must be appointed by the President. Id. at 43.

Judge Hughes also provided a dissent, joined by Judge Wallach. Judge Hughes’s dissent opined that “viewed in light of the Director’s significant control over the activities of [the USPTO] and Administrative Patent Judges, APJs are inferior officers.” Id. at 45. He further opined that severance would be inconsistent with Congressional intent, and Congress should be “given the opportunity to craft the appropriate fix.”Id. at 46.

Judge Wallach wrote the third dissenting opinion. Judge Wallach opined that “[g]iven the significant direction to and supervision of” an APJ by the USPTO Director, “an APJ constitutes an inferior officer properly appointed by the Secretary of Commerce.” Id. at 59.

Denial of Government’s Motion to Stay Mandate:

On March 30, 2020, the Federal Circuit denied the USPTO’s request to delay issuing its mandate in Arthrex, even though the request was backed by both parties. Last week, the parties asked the Federal Circuit to stay its decision, with Arthrex confirming that it is working on a Supreme Court petition. The Federal Circuit denied the request, explaining that “[a]ll the cases in this court that are in posture similar to that of Arthrex involve patent claims deemed unpatentable by the Board,” and “the delay contemplated by the United States would cause the continuation of stays in those proceedings and in related proceedings in district courts.” The Order concludes, “[w]e do not believe this court should deviate from the normal practice and stay the mandate when such a stay has the potential to leave in force patents which were determined invalid by earlier panels of the board.”

TAKEAWAY: The final chapter of this analysis will play out after Arthrex files its petition for certiorari at the Supreme Court.