Alert December 15, 2021

Issue 36: PTAB Trial Tracker

Forum Selection Clauses May or May Not Preclude PTAB Review

In Kannuu Pty Ltd. v. Samsung Electronics Co., Ltd. & Samsung Electronics America, Inc., No. 21-1638 (Fed. Cir. Oct. 7, 2021), the Federal Circuit considered whether the forum selection clause in a non-disclosure agreement (NDA) prohibited Samsung from petitioning for inter partes review (IPR) of Kannuu’s patents. The Federal Circuit affirmed the district court’s denial of Kannuu’s motion for a preliminary injunction compelling Samsung to seek dismissal of its IPR petitions, holding that the forum selection clause in the parties’ NDA did not apply to IPR proceedings, and the IPR proceedings did not otherwise relate to any transaction contemplated under the agreement. In a dissent, Judge Newman emphasized that the agreement applied to “any legal action, suit or proceeding arising out of or related to this [NDA] or the transactions contemplated hereby,” and that it was undisputed that “Kannuu’s suit ‘aris[es] out of or relat[es] to ... the transactions contemplated hereby,’ the words of [the NDA].”

In In re: Maxpower Semiconductor, Inc., No. 2021-146 (Fed. Cir. Sept. 8, 2021), MaxPower sought mandamus from the Federal Circuit, arguing that the collateral doctrine warranted immediate review of the Board’s rejection of MaxPower’s argument that it should decline review of MaxPower’s patents because they were subject to an arbitration clause in a license agreement with Petitioner ROHM. The Federal Circuit denied the petition, finding that there was no showing that the facts of the case supported an exception to the nonappealability of institution decisions and unavailability of mandamus relief, and also holding that the Board was not bound by the private contract between the parties. The majority noted that MaxPower remained free to ask the courts to enjoin ROHM from proceeding with the IPRs.

Judge O’Malley dissented, opining that there should not be an exception from an arbitration agreement for IPR and the Board’s holding that arbitration provisions cannot prevent institution was incorrect.

Takeaway: The Federal Circuit previously held in Dodocase that a forum selection clause in a licensing agreement precluded a party from filing an IPR. See Issue 15 and Issue 24. The majority in Kannuu distinguished the Court’s holding in Dodocase based on the forum selection clause in Kannuu arising in the context of an NDA rather than a licensing agreement. Parties to agreements should be careful to consider whether a forum selection clause under these precedents could preclude PTAB review and should explicitly address PTAB jurisdiction if they wish to reserve (or not reserve) rights to challenge patents at the PTAB. Further, parties to license agreements should note that the Federal Circuit has taken the position that the Board is not bound by arbitration agreements in its institution decisions. 

PTAB’S Final Written Decision Cannot Revisit Arguments Dismissed in Institution Decision

In Baker Hughes Oilfield Operations, LLC v. Hirshfeld, No. 20-1932 (Fed. Cir. Sept. 16, 2021), the Federal Circuit held that the Board violated the Administrative Procedure Act (APA) after invalidating claims on grounds the Board had indicated it would not consider. In its Institution Decision, the Board refused to “sift through [Innovex’s] arguments and evidence in order to piece together its best arguments for each of its proposed combinations of references.” The Board, however, dedicated forty pages of analysis in its Final Written Decision discussing the arguments that it previously dismissed. Patent Owner appealed, arguing that the Board’s change in strategy, without notice to the parties, violated the APA.

The Federal Circuit found that Patent Owner was entitled to rely on the Board’s initial position, and its subsequent decision to not “use its allotted pages [in its Patent Owner Response] to rummage through” Petitioner’s theories was reasonable. The Federal Circuit held that the Board violated the APA in failing “to provide [Patent Owner] reasonable notice of its changed position.” The Board’s decision was vacated, and the Federal Circuit required the Board to afford Patent Owner “an opportunity to present additional arguments” on remand.

Takeaway: The APA prohibits the Board from reversing its earlier position in the proceedings with respect to its consideration of arguments by the parties without giving reasonable notice of the change and opportunity to present argument. In such a circumstance, to the extent a Final Written Decision raises new issues or issues that were not adequately addressed in the papers, parties may have success in securing additional briefing on those issues. 

Petitioners Cannot Seek Ex-Parte Reexam After Sequential IPRS

In In re Vivint, C.A. No. 2020-1992 (Fed. Cir. Sep. 29, 2021), the Federal Circuit vacated the Board’s affirmation of the examiner’s final rejection of a Vivint Inc. patent, noting that the ex-parte reexam raised some of the same arguments that were rejected as duplicative when raised in IPR petitions. Petitioner had previously filed three IPR petitions targeting the patent at issue on appeal. The Board denied institution of all three petitions, two for failing to show that the patent was likely invalid, and the third as an improper serial challenge. Petitioner then filed a petition seeking ex-parte reexamination of the patent, much of which was identical to a denied IPR petition. The Patent Owner unsuccessfully sought reconsideration from the USPTO of both the examiner’s final rejection and the Board’s affirmance of the rejection, arguing that institution was improper under 35 U.S.C. § 325(d). On appeal, however, the Federal Circuit held that the USPTO acted arbitrarily and capriciously in instituting the reexamination in light of the Board’s rejection of the same arguments in an IPR under § 325(d).

Takeaway: Section § 325(d) may have broad implications across all avenues of challenging a patent at the USPTO. Petitioners should judiciously file petitions to avoid running the risk of denial based on § 325(d).

Motions To Exclude Are Not The Proper Vehicle To Exclude Arguments Outside The Scope Of Reply

In Apple Inc. v. Paurus Holdings Inc., IPR2020-00686, Paper 37, at 41-42 (P.T.A.B. Sept. 9, 2021), the Board denied a motion to exclude arguments that exceeded the proper scope of reply evidence, holding that the proper avenue to challenge the scope of a paper is through a motion to strike. See also Apple Inc. v. Paurus Holdings Inc., IPR2020-00687, Paper 37, at 33-34 (P.T.A.B. Sept. 9, 2021).

Patent Owner’s motion to exclude sought exclusion of certain paragraphs of a supplemental declaration, arguing that: (1) the testimony did not respond to arguments raised in the Patent Owner Response; (2) the testimony was an unauthorized and late submission of supplemental information under 37 C.F.R. § 42.123(b); and (3) the testimony was improperly incorporated by reference into the Reply. The Board held that a motion to exclude is a vehicle to challenge the admissibility of evidence under the Federal Rules of Evidence. The Board noted that the Trial Practice Guide explains that a motion to strike, on the other hand, is the proper vehicle to address arguments relating to testimony exceeding the proper scope of a reply or sur-reply. The Board concluded that Patent Owner’s bases for exclusion were directed to scope rather than admissibility, and thus denied the motion to exclude.

Takeaway: The Board confirmed that the only arguments that should be made in a motion to exclude are those based on the admissibility of the evidence submitted in the proceeding. Parties who believe that arguments made in a Reply or Sur-Reply exceed the allowed scope should timely contact the Board to seek leave to file a motion to strike.

Extension Of Motion To Amend Pilot Program

On September 16, 2021, the USPTO announced that it was extending the Motion to Amend (“MTA”) Pilot Program (“Program”) by one year, through September 16, 2022. The Program first launched in March 2019 in response to concerns that the PTAB rarely granted MTAs. See previous client alert. The Program offers Patent Owners an option to receive preliminary guidance from the Board on an MTA and/or to file a revised MTA after receiving the guidance and petitioner’s opposition. According to statistics provided by the USPTO, 36% of MTAs are granted for Patent Owners who opted into the Program, as compared to 9% for those who do not. In sum, the Program continues to be a viable option for Patent Owners who are considering amending claims to overcome a patentability challenge at the PTAB.