Alert June 14, 2022

Issue 37: PTAB Trial Tracker

Expert Testimony Alone Insufficient to Show Examiner's Material Error in Considering Prior Art

In Nespresso USA, Inc. v. K-fee System GmbH, IPR2021-01222, Paper 9, at 25 (PTAB Jan. 18, 2022), the Board denied institution under 35 U.S.C. § 325(d), rejecting Petitioner’s argument that “the examiner erred by allowing the challenged claims to issue ‘without comment and without considering the art in this petition.’” The Board explained that “[w]here ‘the record of the Office’s previous consideration of the art is not well developed or silent, then a petitioner may show the Office erred by overlooking something persuasive under’ Becton, Dickinson factors (e) [whether Petitioner has pointed out sufficiently how the examiner erred in its evaluation of the asserted prior art] and (f) [the extent to which additional evidence and facts presented in the Petition warrant reconsideration of the prior art or arguments].” Id. at 26. The Board stated that “[t]he closest Petitioner comes to addressing those issues is by observing ‘the obviousness analysis’ in the Petition ‘is supported by expert testimony, which the Examiner did not have.’” Id. Because this argument was “undeveloped by further analysis,” it was “ineffective to show that the Examiner materially erred by failing to discuss the same prior art combinations advanced in the Petition” or that “additional evidence and facts presented in the Petition warrant reconsideration of the prior art.” Id.

Takeaway: If relying on expert testimony to support an argument that the Examiner materially erred in considering the patentability of challenged claims, a Petitioner should “meaningfully assess the record of examination.” It is Petitioners’ burden to show error, and merely pointing to new expert testimony, without further analysis, will not suffice to meet that burden.

Strategic Considerations When Filing Multiple Petitions

Discretionary Denial Not Appropriate Where Multiple Petitions Present Substantively Distinct Challenges

In Trend Micro Inc. v. CUPP Computing AS, IPR2021-01236, Paper 16, at 22 (PTAB Jan. 19, 2022) the Board declined to exercise its discretion to deny institution based on the filling of multiple petitions because it found that “Petitioner’s approach — using two different petitions to present substantively distinct challenges — is not unreasonable.”

Petitioner originally filed two IPRs and two PGRs challenging the patent at issue; IPR2021-01236 and PGR2021-0100 challenged claims 1, 9, 16, and 24, while IPR2021-01237 and PGR2021-00101 challenged claims 1, 7, 9, 16, 22, and 24. Id. at 21. The Petitioner admitted that the PGRs were duplicative of the IPR petitions and were only filed in the event the Board decided the patent at issue was a post-AIA patent. Id. The Board held it was not a post-AIA patent and thus the PGR petitions were denied. Id. at 22.

Patent Owner argued that IPR2021-01236 should be denied institution under 35 U.S.C. § 314(a) because it was not necessary nor proper in light of IPR2021-01237. Id. at 21. Petitioner maintained that there were material differences between the IPR petitions that supported instituting both: (1) the IPR petition relied on different prior art references presenting materially different issues; (2) the different prior art references disclosed certain claim limitations in materially different ways; and (3) all of the principal prior art references would not have been adequately addressed in a single petition. Id. The Board ultimately agreed with Petitioner, holding that “two petitions are enough for Petitioner to clearly lay out three substantively distinct challenges based on three different primary prior-art references, while not overly burdening the Board.” Id. at 22.

Takeaway: Practitioners should consider filing multiple IPR petitions challenging a single patent where all of the issues cannot be adequately addressed in a single IPR petition. However, multiple IPR petitions are more likely to be instituted if they address materially different issues in materially different ways.

Parallel Proceedings Can Trigger Estoppel

In Intuitive Surgical, Inc. v. Ethicon LLC, 25 F. 4th 1035 (Fed. Cir. 2022), Petitioner filed three IPR petitions on the same day challenging claims of the same patent, but relying on different prior art references. The Board instituted all three IPR petitions, but they proceeded on different schedules with one proceeding lagging behind the other two. The Board issued a final written decision in the first two IPRs in January 2020, upholding the patentability of the challenged claims. Shortly thereafter, Patent Owner filed a motion to dismiss the third IPR, arguing that Petitioner was estopped from maintaining the third IPR after the issuance of the final written decision of the first two under 35 U.S.C. 315(e)(1). The Board issued a Final Written Decision on the third IPR in which it agreed that § 315(e)(1) applied and terminated Intuitive Surgical as a Petitioner and upheld the challenged claims as patentable on the merits.

On appeal, the Federal Circuit affirmed the Board’s termination of Intuitive Surgical as Petitioner in the third IPR, and as a result, found that Intuitive Surgical did not have standing to appeal the Board’s decision on the merits. The Federal Circuit rejected Petitioner’s argument that § 315(e)(1) should not apply to petitions filed on the same day, finding that such an interpretation is unsupported.

Takeaway: Petitioners with two or more parallel proceedings on the same patent should consider requesting that the schedules be consolidated. Petitioners may also consider asking the panel to issue the decisions at the same time.

Federal Circuit Confirms PTAB's Ability to Raise Its Own Invalidity Issues for Substitute Patent Claims

In its March 24 ruling, the U.S. Court of Appeals for the Federal Circuit addressed the Precedential Opinion Panel’s (“POP”) decision permitting the PTAB to raise possible arguments of patentability on its own, but only in “rare circumstances.” Hunting Titan, Inc. v. DynaEnergetics Eur. GmbH, 28 F.4th 1371 (Fed. Cir. 2022).

In the underlying proceeding, Hunting Titan Inc. v. DynaEnergetics GmbH & Co. KG, IPR 2018-00600, Petitioner argued that Patent Owner’s new proposed substitute claims in a motion to amend were not patentable because they were obvious. The Board refused to allow the substitute claims, but did so because the Board found the substitute claims anticipated by an earlier invention — the same reason it found the patent’s original claims to be unpatentable.

At Patent Owner’s request, the Precedential Opinion Panel (“POP”) granted rehearing, and vacated the Board’s decision. The POP found that Petitioner failed to show that the substitute claims were unpatentable and that this was not one of the rare circumstances in which the Board should look beyond the arguments advanced by the parties.

On appeal, the Federal Circuit confirmed that the PTAB does not have a duty to sua sponte identify patentability issues for proposed substitute claims based on all the evidence in the record. The Federal Circuit, however, called the POP’s reasoning confining the Board’s discretion to rare circumstances “problematic.” While the Federal Circuit did not provide clarity on the boundaries of the Board’s ability to look beyond the parties’ arguments, it confirmed that the Board has the authority to find substitute claims unpatentable for the same reasons it found the challenged claims unpatentable. This is precisely what the Board did in this case. The Federal Circuit ultimately concluded that substantial evidence supported the Board’s decision finding the amended claims unpatentable as anticipated.

Takeaway: The Federal Circuit rejected narrowing the circumstances in which the PTAB has the freedom to identify its own unpatentability grounds with respect to substitute claims to “rare circumstances.” While the Board does not have the obligation to sua sponte identify patentability issues, the Board is no longer restricted to doing so only in limited circumstances. The Board will continue to grapple with the boundaries of its ability to go beyond the parties’ arguments when considering motions to amend.

Agreements Related to Estoppel Impact Likelihood of Obtaining a Stay

In Harper Engineering Company v. FACC AG, 1:20-cv-00510 (S.D. Ala. Jan. 18, 2022), one defendant filed IPR petitions challenging the asserted patents. One defendant, Airbus, filed a motion to stay the litigation in light of Airbus’s pending IPRs. In its motion to stay, Airbus stipulated that if the Board instituted the IPRs, Airbus would not assert any prior art ground raised in the IPR petitions in the district court case, as well as any ground Airbus could reasonably have raised in the IPR. Id. at 11. Further, co-defendant FACC also agreed to a limited estoppel provision. FACC agreed “that, if Airbus’ motion to stay is granted and the PTAB issues a Final Written Decision in one or both of Airbus’s IPRs, FACC will not raise in this litigation any invalidity ground asserted by Airbus in its instituted IPR petition(s).”

In granting the stay, the court noted that Airbus’s agreement to be estopped “assures that the Court will benefit from the efforts before the administrative agency — and that the present litigation will be narrowed in scope — regardless of the outcome of the IPR proceedings.” Id. at 11-12. The Court also noted FACC’s agreement would also limit the issues pending in the district court case and also weighed towards a grant of a stay. Id. at 15.

Takeaway: A broad estoppel stipulation by a defendant/IPR Petitioner and a limited estoppel agreement by a co-defendant may be helpful when requesting a stay of co-pending district court litigation. Contrast this case with the facts in Gesture Technology Partners, LLC v. Huawei Device Co., Ltd. et al, No. 2:21-cv-00040 (ED Tex. Jan. 19, 2022), in which the court denied a stay because the defendant was not a party to the instituted IPR and was not subject to estoppel. In light of this, the court observed “that the absence of any estoppel binding on [the defendant] as a result of those proceedings renders the issue simplification factor either neutral or slightly against a stay.” Id. at 5.

Fintiv Updates

“Hypothetical Future District Court Litigation” Is No Reason To Deny Institution Under Fintiv Analysis

In Fresenius Kabi USA LLC v. Chugai Seiyaku Kabushiki Kaisha, IPR2021-01024, Institution Decision, Paper 23 (PTAB Jan. 6, 2022), the Board instituted IPR of two patents on Chugai’s drug Actemra®, ruling that “hypothetical future district court litigation” over Fresenius’s planned biosimilar did not constitute an “existing parallel proceeding” to warrant discretionary denial under Fintiv. Id. at 34. 

In its Patent Owner Preliminary Response (“POPR”), Chugai asserted that the “statutory scheme governing biosimilars like Petitioners’ copy of Actemra® all but guarantees patent litigation between Petitioners and Patent Owner.” IPR2021-01024, POPR, Paper 8 at 39 (Oct. 12, 2021). Petitioners responded that “Patent Owner’s novel argument should be rejected,” because the Fintiv analysis seeks to avoid duplicative efforts and applies when pending district court litigation is in an advanced stage. Here, “there is no pending litigation, much less one in an advanced stage,” and any suggestion that there will be one is “pure speculation.” IPR2021-01024, Pet. Reply to POPR, Paper 14 at 1-2. Petitioners stressed that “extending NHK Spring/Fintiv to situations where there is no pending litigation would be profoundly unfair to biosimilar developers because the IPR procedure would be effectively closed as a viable option for them to challenge patent validity.” Id. at 5. Ultimately, the Board was not persuaded by Patent Owner’s arguments and granted institution.

The Supreme Court Denies Challenge of NHK/Fintiv Framework

The Supreme Court denied Intel Corporation’s petition for writ of certiorari challenging the NHK/Fintiv discretionary denial framework at the PTAB. Intel filed the petition for certiorari seeking review of a ruling by the Federal Circuit that it lacked jurisdiction over Intel’s appeals of PTAB decisions denying IPRs of VLSI technology patents under the NHK/Fintiv framework.

Arthrex Updates

As a result of the Supreme Court’s decision in United States v. Arthrex, that administrative patent judges are not constitutionally permitted to wield “unreviewable authority” during IPR proceedings, Acting Director Hirshfeld used the power to review and vacate decisions sparingly, granting just three party requests and denying well over a hundred others. All three granted requests for Director Review involved cases where the Board made an incontrovertible legal error.

Ascend Performance Materials Operations v. Samsung SDI, IPR2020-00349

In Ascend, the Patent Owner requested Director Review following the Board’s final written decision finding all challenged claims anticipated or obvious over the prior art. One alleged basis for the requested relief was that the Board did not independently assess whether species-dependent claims found support in a provisional application from which the challenged patent claimed priority. More specifically, the request stated that the priority date of the species-dependent claims was not assessed when addressing the prior art status of an otherwise anticipatory reference. Director Hirshfeld granted Director Review only for this basis “because ‘patent claims are awarded priority on a claim-by-claim basis based on the disclosure in the priority applications.’” 

Proppant Express Investments v. Oren Technologies, IPR2018-00733

In Proppant, the Patent Owner requested Director Review because the Board’s analysis regarding Patent Owner’s secondary considerations was virtually identical to the analysis in a related case where the Federal Circuit found legal error and vacated the final written decision. Acting Director Hirshfeld agreed that the Board’s analysis was “substantially similar” and granted Director Review for the Board to address Patent Owner’s objective evidence of nonobviousness consistent with the Court’s guidance.

Apple Inc. v. Personalized Media Communications LLC, IPR2016-00754, IPR2016-01520 

In Apple, Patent Owner requested Director Review on the sole basis of intervening precedent from the Federal Circuit that was “irreconcilable with the Board’s determination.” In a prior case involving a related patent with “the same inventors and the same specification,” the Federal Circuit overturned the Board’s construction of a key claim term. Because the Board’s construction in the present cases was “substantially similar” to the overturned construction, Acting Director Hirshfeld granted Director Review and remanded to the Board for further consideration “in light of the Federal Circuit’s decision.”