Inter Partes Review: What Practitioners Need to Know About Using and Defending Against This New Tool

West Legal Education Webinar Presented by: Dorothy Whelan and Karl Renner Principals and Co-Chairs of Post-Grant Practice, Fish & Richardson

June 26, 2013

Inter Partes Review

Agenda I. Overview of Inter Partes Review II. Statistics III. Reasonable Likelihood of Success Standard IV. Petition Drafting—Claim Construction and Patent

Owner Preliminary Response V. Petition Drafting—Redundancy VI. Discovery VII. Sanctions

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Availability • Any person, other than the patent owner, may file a petition for IPR nine

months after issuance of reissue or patent (non-anonymous) • Nine month waiting period does not apply to patents filed before 3/16/13

Grounds • 102 and 103, based on patents and printed publications Threshold • A reasonable likelihood that petitioner will prevail with respect to at

least one of the challenged claims Estoppel • Raised or reasonably could have raised

Inter Partes Review

Inter Partes Review: Details

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IPR Fees: 37 CFR 42.15(a)(1)-(4) There is a single fee structure for IPR: • $9K: Inter partes review request fee - Up to 20 claims • $14K: Inter partes review post-institution fee - Up to 15 claims • $200/claim: Inter partes review request of each claim in excess of 20 • $400/claim: Inter partes post-institution request of each claim in excess

of 15 • The post-institution fees represent fees that are paid upfront but are

refunded in the event that the petitioner's request for IPR is denied. • Bottom line: Filing fee will easily be about $30K

Inter Partes Review

Inter Partes Review: Cost

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Opens/closes quickly • Instituted within 6 months of petition • Dispensed within 12/18 months of

institution • Costs are frontloaded!

Inter Partes Review

Inter Partes Review: Speed

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Trial Proceeding Timeline

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Inter Partes Review

Inter Partes Review

II. Statistics (IPR)

• IPR’s Filed? • 298 filed through June 18, 2013

• Exceeds discretionary limit of 250 filings • Application of Threshold: Reasonable Likelihood of Success

• IPR has been instituted in all but 1 IPR Petition evaluated • In a number of cases where IPR was ordered, it was on only a

subset of petitioned claims

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Inter Partes Review

II. Statistics: Who is filing?

• By industry (IPR + CBM) ~60% software or EE ~20% mechanical ~20% bio/chemical

• Most challenged patents anchor pending litigations

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Inter Partes Review

III. Reasonable Likelihood of Success

Macauto U.S.A. v. Bos GmbH & KG, slip. Op. IPR2012-00004 (PTAB Jan. 24, 2013) • Reasonable Likelihood of Success (RLS) standard clarified

• Relevant Facts • The Macauto IPR Petition included multiple references • 3 of the references were included in an EPRx that IPR Petitioner had filed

on the subject patent • In EPRx, the CRU confirmed the patentability of all claims

• PTAB nevertheless instituted IPR based upon one of the references used in

EPRx • PTAB agreed with Petitioner that, during EPRx, the CRU Examiner gave

improper weight to two declarations that patent owner submitted

• Shows willingness by PTAB to consider rejections based upon references previously considered by the CRU (and hence, original examiners)

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IV. Claim Construction and Patent Owner Initial Response

Synopsys, Inc. v. Mentor Graphics Corp., slip op. IPR2012-00041 (PTAB Feb. 2, 2013)

• First IPR petition denied on all grounds • Notable Aspects

• Which/how many claim terms need construed in initial petition? • Effectiveness of preliminary patent owner’s response?

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Inter Partes Review

IV. Claim Construction and Patent Owner Initial Response

• Petitioner construed nothing (plain meaning) • Patent Owner preliminary response – advocated construction of a

claim term that distinguished petitioner’s prior art • With no extrinsic evidence, the PTAB construed claim terms in favor

of Patent Owner • Petitioner was left without any recourse, at this stage, other than

to re-file (if possible)

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Inter Partes Review

IV. Claim Construction and Patent Owner Initial Response

• Lesson: Omit constructions from petition at your peril

• Availability of preliminary patent owner response means that petitioner cannot hold back arguments and assume he/she can present them later in the proceeding

• Different from inter partes reexam, where there was no preliminary patent owner response

• Reinforces broader guidance to bring evidence at the earliest available opportunity

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Inter Partes Review

IV. Claim Construction and Patent Owner Preliminary Response

• Substantively: While largely limited to intrinsic evidence, this response

provides the patent owner with an opportunity to challenge on substantive grounds

• Tactically: This provides patent owner with the last word…

• In Synopsis, Patent Owner advanced a favorable construction, based on intrinsic evidence, which the USPTO adopted and reinforced using dictionary definitions

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Inter Partes Review

Inter Partes Review

V. Petition Drafting-Redundancy Liberty Mutual Insurance Co. v. Progressive Casualty Insurance Co., slip op. CBM2012-00003 (PTAB Oct. 25, 2012) • Liberty Mutual filed a covered business method review of

claims 1-20 of U.S. Patent No. 8,140,358. The petition included 422 grounds of rejection based on 10 references for these 20 claims. The PTAB required these grounds be substantially reduced.

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Holding/Rule • The PTAB determined that “multiple grounds, which are

presented in a redundant manner by a petitioner who makes no meaningful distinction between them, are contrary to the regulatory and statutory mandates, and therefore are not entitled to consideration.”

• Two types of redundancy require “meaningful distinction” • Horizontal Redundancy • Vertical Redundancy

V. Petition Drafting-Redundancy

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Inter Partes Review

• Horizontal Redundancy • PTAB Explanation: “All of the myriad references relied on provide essentially

the same teaching to meet the same claim limitation, and the associated arguments do not explain why one reference more closely satisfies the claim limitation at issue in some respects than another reference, and vice versa.”

• Examples • Assume references A, B, and C are addressed in the petition • Horizontal redundancy:

• Claim 1 is rendered obvious by each of A+B and A+C • Claim 1 is anticipated by each of B and C

• To gain consideration of each, must explain why each is needed • Why are B and C-based rejections insufficient? • Why does each solve the other’s deficiency?

Inter Partes Review

V. Petition Drafting-Redundancy

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• Vertical Redundancy • PTAB explanation: “there is assertion of an additional prior art reference to

support another ground of unpatentability when a based ground already has been asserted against the same claim without the additional reference and the Petitioner has not explained what are the relative strength and weakness of each ground.”

• Examples • Assume references A and B are addressed in the petition • Vertical redundancy exists if claim 1 is rejected based on each of

A and A+B • To gain consideration of each, must explain why each is needed

Inter Partes Review

V. Petition Drafting-Redundancy

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Avoiding Redundancy • Issue: Not all references are equal in quality, so you may not want

certain references adopted to the exclusion of others • Recommendations:

• Self select • Trim weak references • Only apply references that will prevail alone, if needed • Treat your petition as your trial brief, not your invalidity

contentions • Present arguments to justify inclusion of multiple grounds,

where desired

Inter Partes Review

V. Petition Drafting-Redundancy

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VI. Discovery Requests Garmin International Inc. v. Cuozzo Speed Technologies LLC, slip. op. IPR2012-00001 (PTAB Mar. 5, 2013) • Patent Owner sought the following production from Petitioner:

• file histories • Interrogatories • document requests • deposition notice of corporate entity

• In evaluating these requests, the PTAB did three things:

1 – clarified metes and bounds of “routine discovery” 2 – proposed standards for justifying requests for additional discovery 3 – reinforced that discovery in PTAB trials will be much more limited than district court discovery

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Inter Partes Review

VI. Discovery Requests • Two types of discovery: routine and additional

• 37 C.F.R. § 42.51(b)(1) defines categories of “routine discovery” to which

party is entitled without prior PTAB authorization or consent of opposing party: • Production of exhibits cited in a paper or testimony (§ 42.51(b)(1)(i)) • Cross-examination of opposing declarants (§ 42.51(b)(1)(ii)) • “Non-cumulative information that is inconsistent with a position

advanced during the proceeding” (§ 42.51(b)(1)(iii))

• File histories: Not contemplated, and readily available to Patent Owner

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Inter Partes Review

VI. Discovery Requests

• Patent owner interrogatories, document requests, and deposition notice of corporate entity denied • Not contemplated by routine discovery categories

• Not cited by Petitioner • Not cross examination of opposing declarant • Not “inconsistent positions” provision of § 41.51(b)(1)(iii)

– Hostile to requests for inconsistent positions – If seeking, show motivation for asking and likelihood of existence

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Inter Partes Review

VI. Discovery Requests

• PTAB must authorize discovery beyond “routine discovery”

• 35 U.S.C. § 316(a)(5) and 37 C.F.R. § 41.51(b)(2): moving party must demonstrate that additional discovery sought is “in the interest of justice”

• Garmin reinforces the challenge of this standard

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Inter Partes Review

VI. Discovery Requests PTAB sets forth a 5-part test for establishing “in the interest of justice”

“(1) More Than a Possibility and Mere Allegation—The mere possibility of finding something useful, and mere allegation that something useful will be found, are insufficient to demonstrate that the requested discovery is necessary in the interest of justice. The party requesting discovery should already be in possession of evidence tending to show beyond speculation that in fact something useful will be uncovered. (2) Litigation Positions and Underlying Basis—Asking for the other party’s litigation positions and the underlying basis for those positions is not necessary in the interest of justice. (3) Ability to Generate Equivalent Information By Other Means. (4) Easily Understandable Instructions. (5) Requests Not Overly Burdensome to Answer.”

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Inter Partes Review

VI. Discovery Requests--Additional Discovery

• Factor #1—”More Than a Possibility and Mere Allegation” is key factor.

• Underscores limited nature of PTAB discovery vs. district court

“The Essence of Factor (1) is unambiguously expressed by its language, i.e., the requester of information should already be in possession of a threshold amount of evidence or reasoning tending to show beyond speculation that something useful will be uncovered. “Useful” in that context does not mean merely “relevant” and/or “admissible.” In the context of Factor (1), “useful” means favorable in substantive value to a contention of the party moving for discovery.”

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Inter Partes Review

VI. Discovery Requests--Additional Discovery

• PTAB denied patent owner’s motion for additional discovery relating to objective evidence of non-obviousness for failure to meet threshold showings

• Commercial success: required patent owner to demonstrate nexus between commercial success and features of claimed invention

• Failure by others: required patent owner to show that others besides petitioner had tried and failed to show failure was widespread

• Copying: evidence of a telephone call between inventor and petitioner’s lawyer regarding patent infringement insufficient (“Garmin might well have independently conceived of and developed the invention”)

PTAB standards for threshold showing similar to standards for relevance of evidence in district court trial, not lower standard in district court for supporting a discovery request.

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Inter Partes Review

VI. Discovery Requests--Additional Discovery

• PTAB’s high standards for “interest of justice” must be viewed in context of PTAB’s mandate to complete patent trials within 1 year of petition decision:

“[I]n inter partes review, discovery is limited as compared to that available in district court litigation. Limited discovery lowers cost, minimizes the complexity, and shortens the period require for dispute resolution. There is a one-year statutory deadline for completion of inter partes review, subject to limited exceptions. 35 U.S.C. § 316(a)(11); see also 37 C.F.R. § 42.100(c). What constitutes permissible discovery must be considered with that constraint in mind.”

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Inter Partes Review

VI. Discovery Requests--Additional Discovery

Lessons and questions: • In the absence of agreement, parties should assume that only “routine

discovery” will be available/permitted • Even if parties agree, will PTAB still limit discovery to meet 1-year deadline? • Effect on overall cost vs. district court? • Effect on petitioner’s choice of forum? • Effect on timing of petition relative to co-pending district court litigation?

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Inter Partes Review

37 C.F.R. § 42.11 DUTY OF CANDOR “Parties and individuals involved in the proceeding have a duty of candor and good faith to the Office during the course of proceeding.” • Applies to patent owner, petitioner, and their

representatives

Inter Partes Review

VII. Sanctions

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37 C.F.R. § 42.12 SANCTIONS • Empowers PTAB to impose sanctions for misconduct • Examples of misconduct include the following:

• Failure to comply with an applicable rule or order in the proceeding; • Advancing a misleading or frivolous argument or request for relief; • Misrepresentation of a fact; • Engaging in dilatory tactics; • Abuse of discovery; • Abuse of process; • Any other improper use of the proceeding, including actions that harass or

cause unnecessary delay or an unnecessary increase in the cost of the proceeding.

Inter Partes Review

VII. Sanctions

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37 C.F.R. § 42.12 SANCTIONS • Examples of sanctions include the following:

• An order holding facts to have been established in the proceeding; • An order expunging or precluding a party from filing a paper; • An order precluding a party from representing or contesting a particular

issue; • An order precluding a party from requesting, obtaining, or opposing

discovery; • An order excluding evidence; • An order providing for compensatory expenses, including attorney fees; • An order requiring a terminal disclaimer of patent term; • Judgment in the trial or dismissal of the petition.

Inter Partes Review

VII. Sanctions

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Inter Partes Review

• In Fish & Richardson’s initial 7-part webinar series titled “Challenging Patent Validity in the USPTO,” we explored details regarding several of the post grant tools, with 3 sessions dedicated to Inter Partes Review (IPR), and a final session walking through several hypotheticals, to help listeners understand how these apply to common situations.

• Audio and slides for these webinars are posted online at:

http://www.fr.com/post-grant-webinar-series/

• If you listen to these webinars, you will be well positioned to engage in a conversation over whether and when to use those tools and how to defend against them.

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Inter Partes Review

Resources • F&R web sites:

• Post-Grant for Practitioners: http://www.fr.com/post-grant-for-practitioners/ • General: http://www.fr.com/post-grant-practice/ • IPR: http://www.fr.com/reexam-services-post-grant-ipreview/ • PGR: http://www.fr.com/reexam-services-post-grant-pgreview/ • Rules governing post-grant: http://www.fr.com/post-grant-practice/

• USPTO sites:

• AIA Main: http://www.uspto.gov/aia_implementation/index.jsp • Inter Partes: http://www.uspto.gov/aia_implementation/bpai.jsp

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Inter Partes Review

Questions?

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Thank you!

Dorothy Whelan Principal, Twin Cities whelan@fr.com 612.337.2509

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Karl Renner Principal, Washington, DC renner@fr.com 202.626.6447

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